2021 (9) TMI 1123 - AT - Income Tax

Short term capital gain addition on protective basis - Real beneficiary under Prohibition of Benami Transaction - HELD THAT - We find no merit in the Revenue's instant sole substantive grievance seeking to revive the impugned protective addition in the assessee's hands due to the clinching reason that the prescribed Adjudicating Authority u/s. 71 of the Prohibition of Benami Transaction Act, 1988's order dt. 19-12-2017 has already given a conclusive finding of the fact that the real beneficiary herein is one Smt. Renuka Datla only. We thus uphold the learned CIT(A)'s action deleting the impugned addition(s) for this precise reason alone as there is no basis left for assessing the sum in issue in assessee's hands on protective basis. - Decided against revenue.

Issues:
1. Delay in filing the appeal by the Revenue.
2. Assessment of short-term capital gains on a protective basis.
3. Allegation of the assessee being a benamidar.
4. Interpretation of the findings of the Adjudicating Authority under the Prohibition of Benami Transaction Act, 1988.
5. Deletion of the protective addition in the hands of the assessee.

Issue 1: Delay in filing the appeal by the Revenue
The Revenue's appeal faced a delay of 108 days, which was attributed to reasons mentioned in the condonation petition. The delay was condoned due to no rebuttal from the assessee's side regarding the reasons provided by the Revenue.

Issue 2: Assessment of short-term capital gains on a protective basis
The Revenue contended that the CIT(A) erred in reversing assessment findings by treating the assessee as a benamidar and making a short-term capital gain addition on a protective basis of ?4,52,40,000. The Assessing Officer assessed the capital gains in the hands of the assessee, considering the appellant as a benamidar with Smt. Renuka Datla as the beneficial owner. The Adjudicating Authority under the Prohibition of Benami Transaction Act, 1988, conclusively found that Smt. Renuka Datla was the real beneficiary, leading to the deletion of the impugned addition in the assessee's hands.

Issue 3: Allegation of the assessee being a benamidar
The Revenue alleged that the appellant was a benamidar in a property transaction, with Smt. Renuka Datla being the actual owner. The Adjudicating Authority's order confirmed Smt. Renuka Datla as the real beneficiary, resulting in the deletion of the addition in the assessee's hands.

Issue 4: Interpretation of the findings of the Adjudicating Authority
The Adjudicating Authority's order under the Prohibition of Benami Transaction Act, 1988, played a crucial role in determining the real beneficiary in the property transaction. The conclusive finding that Smt. Renuka Datla was the actual owner led to the deletion of the addition in the assessee's hands.

Issue 5: Deletion of the protective addition in the hands of the assessee
Based on the Adjudicating Authority's findings and the lack of basis for assessing the sum in issue in the assessee's hands on a protective basis, the learned CIT(A)'s action of deleting the impugned addition was upheld. No other arguments or grounds were presented, leading to the dismissal of the Revenue's appeal.

This detailed analysis covers the key issues addressed in the judgment, focusing on the delay in filing the appeal, assessment of short-term capital gains, allegations of being a benamidar, interpretation of the Adjudicating Authority's findings, and the deletion of the protective addition in the assessee's hands.

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