2022 (9) TMI 812 - AT - Income Tax

Unexplained cash credits u/s. 68 - As assessee failed to prove that the credits in the bank accounts was nothing but the cash received as advance for purchase of flats from the buyers - HELD THAT - Assessee filed written submissions before the Ld. CIT(A), but the Ld. CIT(A) without considering the written submissions erroneously dismissed the assessee's appeal. Therefore, he pleaded for one more opportunity of being heard before the CIT(A). Considering the facts and circumstances of the case and in order to meet the principles of natural justice, we remit the matter back to the file of the Ld. CIT(A) for fresh adjudication after giving opportunity of being heard to the assessee. The assessee is also directed to comply with the notices and directions of the revenue authorities. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
1. Dispute over long term capital gains calculation.
2. Addition of unexplained cash credits under section 68.

Issue 1: Dispute over long term capital gains calculation

The appellant contested the Commissioner of Income Tax (Appeals)'s decision to confirm the addition made by the Assessing Officer regarding long term capital gains. The case involved the appellant receiving a property as a gift and subsequently selling a portion of it, leading to long term capital gains. The Assessing Officer calculated the gains based on the cost of acquisition as on 15.08.1982, while the appellant argued that the date of acceptance of the gift by the previous owner should be considered. The Commissioner held that the cost to the original purchaser as on 21.12.1974 should be deemed the cost to the assessee, as the appellant failed to provide the cost as on that date. The Tribunal remitted the matter back to the Commissioner for fresh adjudication, emphasizing the principles of natural justice and directing the appellant to comply with revenue authorities' notices and directions.

Issue 2: Addition of unexplained cash credits under section 68

The appellant challenged the addition of Rs. 70,50,278 as unexplained cash credits under section 68. The Assessing Officer observed significant cash deposits in the appellant's bank accounts and concluded that the deposits might be unexplained credits from real estate transactions. The Commissioner upheld the addition, noting that the appellant failed to prove that the deposits were advances received from buyers of flats, as claimed. The Tribunal, however, found that the appellant had provided proper explanations and details to the Assessing Officer, and the Commissioner's decision lacked valid material. Therefore, the Tribunal set aside the Commissioner's order and allowed the appeal for statistical purposes.

In summary, the judgment addressed disputes related to long term capital gains calculation and unexplained cash credits under section 68. The Tribunal remitted the long term capital gains issue back to the Commissioner for fresh adjudication, emphasizing natural justice principles. Additionally, the Tribunal overturned the Commissioner's decision on unexplained cash credits, finding that the appellant had provided adequate explanations and details to the Assessing Officer, leading to the appeal being allowed for statistical purposes.