2022 (1) TMI 30 - AT - Income Tax

Unexplained money u/s 69A - assessee had not filed her wealth tax return to substantiate possession of gold jewellery - HELD THAT - AR could not produce any materials to prove the genuineness of the transaction other than reiterating the submissions made before the Ld. Revenue Authorities. It is apparent from the admission of the seller of jewellery that there was no sale transaction with the assessee. The assessee had also not declared the jewellery before the Revenue earlier by filing wealth tax return. Therefore, we do not find it necessary to interfere with the order of Revenue authorities on this issue. Hence, the ground No.1 raised by the assessee is devoid of merits. Bogus LTCG - disallowance u/s 10(38) - HELD THAT - The alleged shares were dematerialized in the Demat account of the assessee after eleven months of the purchase which appears to be abnormal. The sale consideration received from sale of share was also after a substantial delay which also raises doubt about the bonafide of the transaction, because as per norms of the Stock Exchange the stockbroker it is required to deliver the security and make payment within 48 hours of settlement of trade by the stock exchange. It was informed by RoC, Mumbai vide letter dated 13/1/2015 that no such transaction had taken place. The purchaser of share from the assessee did not have good credentials and appears to be bogus. The assessee has not furnished any convincing evidence to dispute these findings of the Ld. Revenue Authorities - AR also could not present any cogent materials before us other than the manipulated documents to establish the transaction to be genuine or to counter the theory of preponderances of human probability as enlightened by the Hon ble Supreme Court in the case relied upon by the learned AO (supra). Further it is apparent from the orders of the Ld. Revenue Authorities that the assessee is in the habit of introducing unexplained funds. In this situation, we do not find it necessary to interfere with the order of learned Revenue authorities on this issue Unexplained loan - HELD THAT - As the facts of the case, it also appears that all the loan creditors were persons of meagre income. It is also apparent that the loan creditors had deposited cash in their accounts and mostly on the very same day they had transferred the same to the assessee s bank account - there were no significant bank transactions in the bank accounts of the loan creditors. Needless to mention that banking transaction alone will not make the transactions to be genuine. From the above it is crystal clear that the creditworthiness of the loan creditors is not established. Further, the proximity between the loan creditors and the assessee is also not established for extending loan to the assessee. On perusing the orders cited by the Ld. AR in page no. 1 to 98 of the paper book, we do not find the facts to be identical to the facts in the case of the assessee and on the other hand the decision cited by the Ld. Revenue Authorities support the case of the Revenue. Therefore, we do not find it necessary to interfere with the orders of the learned Revenue authorities. Appeal of the assessee is dismissed.

Summary

Issues Involved:
1. Treatment of long-term capital gains from the sale of jewelry as unexplained income.
2. Treatment of income from the sale of securities as income from other sources, disallowing exemption under Section 10(38) of the Income Tax Act.
3. Treatment of certain loans as unexplained income.

Issue-wise Analysis:

1. Treatment of Long-term Capital Gains from Sale of Jewelry as Unexplained Income:
The assessee declared long-term capital gains of ?31,29,215 from the sale of jewelry and claimed a deduction under Section 54F of the Income Tax Act. The Assessing Officer (AO) observed discrepancies in the purchase and sale of the jewelry, including the inability of the jeweler to confirm the transaction and the lack of wealth tax returns to substantiate the possession of the jewelry. The AO treated the sale as a colorable device to convert unexplained money into accounted money, invoking Section 69A of the Act. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this view, stating that the assessee failed to satisfactorily explain the acquisition or disposal of the jewelry. The Tribunal found no reason to interfere with this decision, noting the lack of evidence to support the genuineness of the transaction.

2. Treatment of Income from Sale of Securities as Income from Other Sources:
The assessee sold shares worth ?1,86,32,023 and claimed exemption under Section 10(38) of the Act. The AO found that the shares were acquired through a scheme of amalgamation involving companies linked to money laundering activities. The AO, relying on the theory of preponderance of human probabilities, treated the transaction as sham and added the amount as income from other sources. The CIT(A) upheld this decision, noting the dubious nature of the companies involved and the abnormal transaction patterns. The Tribunal agreed, highlighting the manipulated nature of the transaction and the lack of credible evidence to substantiate the genuineness of the sale.

3. Treatment of Certain Loans as Unexplained Income:
The assessee received loans totaling ?1,37,45,000 during the assessment year, of which ?61,00,000 was deemed unexplained. The AO found that the loan creditors were individuals with meager incomes and that the loan amounts were deposited and transferred in a suspicious manner. The CIT(A) upheld the AO's decision, emphasizing the failure to establish the creditworthiness of the creditors and the genuineness of the transactions. The Tribunal concurred, noting the lack of evidence to support the creditworthiness of the loan creditors and the proximity between the creditors and the assessee.

Conclusion:
The Tribunal dismissed the appeal, upholding the decisions of the lower authorities on all three issues. The order was pronounced in the Open Court on December 10, 2021.