2021 (10) TMI 19 - AT - Income Tax

Addition u/s 69A - cash deposits made during the demonetization period in specified bank notes - HELD THAT - In this case, there is no dispute that the assessee furnished the details before the Ld.CIT(A) and copy of the paper book was placed before us. As per the information placed in the paper book it is evident that the assessee has sold the shares of Legacy Mercantile Limited and received an amount on sale of shares and claimed the same as exempt u/s 10(38) of the Act. The assessee sold the shares through DEMAT account. CIT(A) verified the entire issue and decided the appeal. As per section 69A, where the assessee is found to be owner of any money, bullion, jewellery which is not recorded in the books of accounts, the same required to be brought to tax. In the instant case, the assessee had sold the shares and received the sale proceeds, thus, the source stands explained. What was claimed by the assessee was exemption u/s 10(38) which ought to have been disallowed by the AO. In the instant case, the assessee has recorded the transactions in the books of accounts as evident from the cash book and financial statements furnished by the assessee along with paper book. Therefore, there is no case for making addition u/s 69A and we do not find any reason to interfere with the order of the Ld.CIT(A) and the appeal of the revenue on this ground is dismissed. Addition on profit from sale of car - assessee reduced the said amount from P L account, but not offered the same under the head Capital Gains - HELD THAT - In the instant case, the assessee credited the profit on sale of car in Profit Loss account, but the car is part of the block of assets and the sale consideration of the car required to be reduced from the block of assets. As per the computation given by the Ld.CIT(A) in appeal order, we find that the assessee has rightly reduced the sale of old car from the block of assets and claimed the depreciation on the written down value hence, there is no case for making the addition on sale of car. Therefore, we hold that the Ld.CIT(A) rightly deleted the addition and the same is upheld. Appeal of the revenue on this ground is dismissed Admission of additional evidence by CIT-A - department s contention that the assessee has filed additional information in respect of long term capital gains and sale of old car, therefore, contended that the Ld.CIT(A) ought to have remitted the matter back to the file of the AO - HELD THAT - As per the provisions of section 250(4 )of the Act, the Ld.CIT(A) is permitted to make further enquiries before disposing the appeal. The assessee has filed paper book and furnished the information that was placed before the CIT(A) or lower authorities.The information with regard to addition u/s 69A, sale of shares and depreciation on car are very simple issues and the department did not bring any defect or error in the information filed in the paper book. Since, the Ld.CIT(A) duly verified the information placed before him and for which he is permitted to cause enquiries, we find that ground raised by the department under Rule 46 is only for the sake of continuation of litigation and no fruitful purpose would be served. In the facts and circumstances, we do not see any valid reason to remit the matter back to the file of the AO. Therefore this ground of appeal of the department is dismissed.

Summary

Issues:
1. Addition of cash deposits made during demonetization period.
2. Addition of long term capital gains.
3. Addition of profit from sale of car.
4. Contention regarding additional information filed by the assessee.
5. Cross objections filed by the assessee.

Issue 1: Cash Deposits during Demonetization Period
- The appeal was filed by the revenue against the CIT(A)'s order regarding the addition of cash deposits made during demonetization.
- The AO added ?42,00,000 under section 69A as the source of the cash deposits was not explained by the assessee.
- CIT(A) found that the cash deposits were explained from the entries in the books of accounts, following a decision by ITAT Mumbai, and deleted the addition.
- The department appealed before the Tribunal, arguing that the addition deletion was unjustified, but the Tribunal upheld CIT(A)'s order as the deposits were duly explained from the books of accounts.

Issue 2: Long Term Capital Gains
- AO added ?77,74,373 as long term capital gains, which was deleted by CIT(A) as the AO erroneously invoked section 69A.
- Tribunal found that the assessee had furnished details and claimed exemption under section 10(38) for the sale of shares, which was recorded in the books of accounts, hence no addition was warranted under section 69A.

Issue 3: Profit from Sale of Car
- AO added ?1,67,983 as profit from the sale of a car under section 69A, which was deleted by CIT(A) as the sale proceeds were correctly adjusted in the depreciation statement.
- Tribunal upheld CIT(A)'s decision as the sale consideration of the car was reduced from the block of assets, and no separate addition was required.

Issue 4: Additional Information
- Department contended that additional information was filed by the assessee, arguing for remitting the matter back to the AO.
- Tribunal held that CIT(A) is empowered to make further inquiries, and since the information provided was verified, there was no need to remit the matter back to the AO.

Issue 5: Cross Objections
- Assessee filed cross objections supporting CIT(A)'s order, which became infructuous as the appeal of the revenue was dismissed.
- Therefore, the cross objections were also dismissed.

In conclusion, the Tribunal dismissed the revenue's appeal and the cross objections of the assessee, upholding the decisions made by the CIT(A) in all issues discussed.