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2022 (3) TMI 32 - AT - Income TaxComputation of long term capital gains from transfer of property - AO came to the conclusion that cash consideration claimed by the assessee is nothing but income from unexplained source - whether cash consideration claims to have been received for transfer of property or income from undisclosed source? - reason given by the AO for the simple reason that the assessee (HUF) does not own any other property except the property sold during the impugned assessment year - HELD THAT - When the assessee has claimed that it has received sale consideration in cash for transfer of property, it is for the AO to disprove the claim of the assessee with cogent reason and sufficient evidences. In this case, the AO has simply gone on the basis of Sale Deed executed by the assessee and also statement of the buyer of the property. It is accepted but not admitted fact that there is a vast difference between guideline value of the property and market value of the property and the guideline value of the property not necessarily be Fair Market Value of the property. In the present case, consideration shown in the Sale Deed is more or less equivalent to guideline value of the property fixed by the Stamp Duty Authority as on the date of sale. Therefore, if you consider the arguments of the assessee in light of prevailing fact that there will be a difference between guideline value of the property and Fair Market Value of the property, then, the claim of the assessee that it has received cash consideration cannot be doubted, more particularly if you consider the location of the property - There is no error in the reasons given by the Ld.CIT(A) to accept the arguments of the assessee that it has received sale consideration for sale of property, even though, the Sale Deed shown only ₹ 2.50 Crs. and also the buyer has denied having paid any cash consideration. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. Addition u/s 68 - CIT(A) after taking into consideration various facts has given categorical findings that the source for cash deposit into assessee s bank account is out of distribution of assets by HUF and thus, there is no reason to the AO to disbelieve the claim of the assessee that the source for cash deposit is out of amount received from HUF. We find that the reasons given by the Ld.CIT(A) to delete the addition made by the AO, cannot be faulted, because the Revenue has failed to bring on record any evidences to counter the findings of the facts recorded by the Ld.CIT(A). Hence, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the Revenue.
Issues Involved:
1. Whether the addition made under the head "income from unexplained sources" should be modified to "Long Term Capital Gains". 2. Whether the assessee's claim that the cash credits represent the sale consideration of the property is valid. 3. Whether the assessee is entitled to exemptions under Sections 54 and 54EC of the Income Tax Act. 4. Whether the unexplained cash deposits found in the assessee's bank accounts should be allowed. Detailed Analysis: Issue 1: Modification of Addition to Long Term Capital Gains The Revenue contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in modifying the addition made under the head "income from unexplained sources" to "Long Term Capital Gains." The CIT(A) accepted the assessee's claim that the property was sold for ?7,61,82,000, even though the sale deed showed only ?2.50 crores. The CIT(A) based this decision on circumstantial evidence, including the property's location and fair market value, which indicated that the assessee's claim was plausible. Therefore, the CIT(A) directed the Assessing Officer (AO) to adopt the sale consideration of ?7,61,82,000 for computing long-term capital gains. Issue 2: Validity of Cash Credits as Sale Consideration The AO argued that the buyer of the property denied paying any amount over the registered value, and there was no evidence to prove the receipt of cash. However, the CIT(A) held that the HUF did not own any other property or carry out any business to generate such a huge cash amount. The CIT(A) found the assessee's claim credible based on circumstantial evidence and the fact that the HUF's only source of income was the property in question. The Tribunal upheld the CIT(A)'s decision, stating that the AO did not provide sufficient evidence to counter the assessee's claim. Issue 3: Entitlement to Exemptions under Sections 54 and 54EC The AO denied the exemptions claimed under Sections 54 and 54EC, arguing that the assessee did not make the total consideration received from the property transfer on or before the due date for filing the return of income under Section 139(1). The AO also noted that the HUF ceased to exist after the partition and distribution of sale proceeds among its members. The CIT(A) sustained the AO's denial of exemptions, stating that the investment made by the assessee in another residential property could not be treated as an investment made by the HUF. The Tribunal agreed with the CIT(A) and upheld the denial of exemptions. Issue 4: Unexplained Cash Deposits in Bank Accounts The AO assessed the unexplained cash deposits found in the assessee's bank accounts as income from unexplained sources. The CIT(A) accepted the assessee's explanation that the cash deposits were from the distribution of assets by the HUF from the sale proceeds of the property. The Tribunal noted that the assessee received ?2,36,00,000 from the HUF, which included the cash deposits in question. The Tribunal upheld the CIT(A)'s decision, stating that the Revenue failed to provide evidence to counter the CIT(A)'s findings. Conclusion The Tribunal dismissed the appeals filed by the Revenue, upholding the CIT(A)'s decisions on all issues. The Tribunal found that the CIT(A) correctly modified the addition to long-term capital gains, accepted the cash credits as sale consideration, denied the exemptions under Sections 54 and 54EC, and allowed the unexplained cash deposits in the assessee's bank accounts.
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