2019 (12) TMI 204 - AT - Income Tax

Condonation of delay in filing appeal - Addition of unexplained investment - Delay of 50 days - unexplained investment - It is submitted that property is belong to her, as GPA holder, it took 12 years to get the name registered in assessee s name - HELD THAT - The matter requires reconsideration at the level of the A.O. In the case of Smt. Upma Shukla UPMA SHUKLA PROPRIETOR TROUBLESHOOTERS VERSUS ITO WARD 2 (2) , GURGAON. 2019 (10) TMI 628 - ITAT DELHI also on the same reasoning delay in filing of the appeal for 50 days was condoned because the assessee Shri Vikas Shukla was suffering from cancer. The same reasoning is given in the present appeal. Therefore, following the same reasoning in the case of Smt. Upma Shukla, the delay in filing the appeal is condoned. Since in the case of Smt. Upma Shukla she has acted as GPA holder of the original owner Shri Umed Singh, it was, therefore, held that no long term capital gains is liable to be taxed in her hands. However, in the case of the deceased assessee Shri Vikas Shukla, he has purchased the property through the documents in the year 1996. Therefore, the issue shall have to be re-examined in the light of the Order in the case of Smt. Upma Shukla. The matter in issue is restored to the file of A.O. with a direction to re-decide the matter in issue as per Law - appeal of Assessee allowed for statistical purposes.

Issues Involved:

1. Legality of the order passed by the Ld. CIT(A) confirming additions made by the Assessing Officer on account of unexplained investment.
2. Partial confirmation of the addition of ?17,50,000/- as unexplained investment in land and building under Section 69 of the Income Tax Act.
3. Ownership of the land and building during the assessment year 2009-2010.
4. Transfer of land and/or building under Section 2(47) of the Income Tax Act by the assessee's wife.
5. Application of Section 50C of the Income Tax Act to determine the full value of consideration.
6. Basis of investment in the building during the assessment year 2009-2010.
7. Reliance on incorrect entry made by the assessee in the books of accounts.
8. Condonation of delay in filing the appeal.

Issue-wise Detailed Analysis:

1. Legality of the Order Passed by the Ld. CIT(A):
The assessee challenged the legality of the order passed by the Ld. CIT(A), which confirmed the additions made by the Assessing Officer (A.O.) on account of unexplained investment. The A.O. observed that the assessee purchased land and building for ?3,20,000/- but the Sub-Registrar valued the property at ?20,00,000/-. The A.O. added ?17,50,000/- as unexplained investment due to the discrepancy between the declared and assessed value.

2. Partial Confirmation of Addition of ?17,50,000/-:
The Ld. CIT(A) partially confirmed the addition of ?17,50,000/- as unexplained investment in land and building under Section 69 of the Income Tax Act. The assessee argued that the land was sold to him in 1996 and was in his custody since then, but the registry was delayed due to restrictions. The Ld. CIT(A) granted partial relief based on the detailed reasoning given in the case of the assessee's wife, who was charged with long-term and short-term capital gains.

3. Ownership of the Land and Building:
The Ld. CIT(A) held that the assessee's wife was the owner of the land and building during the assessment year 2009-2010. The assessee contended that the property was in his custody since 1996, and the registry in 2008 was merely a formalization of the earlier transaction. The Ld. CIT(A) relied on the fact that the property was registered in the assessee's wife's name, leading to the conclusion that she was the owner.

4. Transfer of Land and/or Building:
The Ld. CIT(A) held that there was a transfer of land and/or building under Section 2(47) of the Income Tax Act by the assessee's wife to the assessee during the assessment year 2009-2010. The assessee argued that the transfer did not result in the transfer of the superstructure/building, and the land was already in his possession since 1996.

5. Application of Section 50C:
The Ld. CIT(A) applied Section 50C of the Income Tax Act to determine the full value of consideration for the land at ?10,00,000/-. The assessee contended that the investment in the land was ?7,50,000/- (?10,00,000/- minus ?2,50,000/-), but the Ld. CIT(A) upheld the A.O.'s valuation.

6. Basis of Investment in the Building:
The Ld. CIT(A) held that the investment of ?5,00,000/- in the building during the assessment year 2009-2010 was based on conjectures and surmise. The assessee argued that the investment was incorrectly attributed to him and was merely a book entry.

7. Reliance on Incorrect Entry:
The Ld. CIT(A) relied on an incorrect entry made by the assessee in the books of accounts, which showed an addition of ?2,50,000/- for the sale of land and building. The assessee contended that this was a notional entry and not an actual transaction.

8. Condonation of Delay:
The appeal was time-barred by 50 days, but the delay was condoned based on the precedent set in the case of the assessee's wife, where the delay was due to the illness and subsequent death of the assessee's husband. The ITAT condoned the delay and allowed the appeal for statistical purposes, directing the A.O. to re-examine the matter in light of the decision in the case of the assessee's wife.

Conclusion:
The ITAT set aside the orders of the authorities below and restored the matter to the file of the A.O. for re-examination in light of the decision in the case of the assessee's wife. The appeal was allowed for statistical purposes, and the A.O. was directed to re-decide the matter as per law.

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