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2023 (4) TMI 291 - AT - Income TaxDeduction u/s 54F - investment in the purchase of new property - AO negatived the assessee s claim as entire payment towards purchase of the new property was not made by the assessee alone. Other family members, i.e. her husband, his HUF and son of the assessee also made payments towards purchase of the new property - Whether assessee did not utilise the sale consideration of the old property towards purchase of the new property? - HELD THAT - Where investment made by the assessee, although not entirely sourced from capital gain, but was within stipulated time and more than capital gain earned by him, the assessee was entitled to exemption under section 54F. The assessee brought on record evidence to show that the family members paid the amounts from their respective bank accounts to meet the cost of the new property purchased by the assessee. In Sunil Sachdeva s case 2013 (10) TMI 746 - ITAT DELHI held that section 54F does not require one to one co-relation between capital gain arising out of transfer of long term capital asset and utilisation thereof for purchase /construction of residential house. Therefore, the argument of the Ld. DR and objection of the Ld. AO that sale consideration obtained from the old property has not been utilised by the assessee has no legal basis and cannot be a hindrance to the assessee for claiming exemption under section 54F of the Act. Decided in favour of assessee. Surrendered income - Surrender by the son of the assessee during the course of survey - difference of stock and unexplained cash found during survey - Whether surrender was voluntary ? - Surrender was made on 30.05.2018 and the assessee retracted on 05.01.2021 - CIT-A deleted the addition - HELD THAT - The difference of stock mentioned by the AO was only due to the fact that the approved valuer valued the stock on the basis of market price whereas the assessee had valued the closing stock as per accounting policy, namely cost or realisable value whichever is lower which method the assessee had followed year after year consistently. Since it is not a case where excess stock in quantity was found in survey, difference on account of valuation cannot form the basis of any addition. The assessee had produced before the Ld. AO all the bills which constituted the stock as on the date of survey which has not been considered and reliance was placed on the value adopted by the approved valuer as prevailing on the date of survey. This approach is not correct. CIT(A) considered the statement of the son of the assessee recorded during survey and noticed that he had explained that the shortage in cash and cash found at the time of survey was due to the fact that all the entries in the account books were not written up to date. To our mind, the delay in retraction by the assessee as pointed out by the Ld. AO cannot be of much significance when admittedly the assessee did not declare the surrendered amount in the return filed by her on 31.10.2018 just after a few months of the survey. This is also indicative of the fact that the surrender was not voluntary and with the consent of the assessee. The CBDT circulars mentioned by the Ld. CIT(A) his appellate order emphasise that there should be no coercion to admit undisclosed income and that admissions should be backed by credible evidence. Facts reveal that during survey, element of coercion cannot be ruled out and credible evidence to support the surrender was also lacking. We, therefore, concur with the findings of the Ld. CIT(A) and reject ground No. 2.
Issues Involved:
1. Restriction of addition related to the investment in new property. 2. Deletion of addition of surrendered income. 3. Misreading of facts by the CIT(A). Summary: Issue 1: Restriction of Addition Related to Investment in New Property The Revenue contended that the Ld. CIT(A) erred in restricting the addition to Rs. 14,93,596/- as the investment in the new property was made by family members, not the assessee herself. The assessee, engaged in the jewelry business, sold an old property and claimed exemption under section 54F of the Income Tax Act, 1961. The Ld. AO denied this exemption, arguing the payments for the new property were made by the husband, his HUF, and the son of the assessee. The Ld. CIT(A) allowed partial relief by computing the exempt value of capital gain at Rs. 14,93,596/-. The Tribunal upheld the Ld. CIT(A)'s decision, citing legal precedents that do not require the sale proceeds to be used exclusively by the assessee for the new property purchase. Issue 2: Deletion of Addition of Surrendered Income The Revenue challenged the Ld. CIT(A)'s deletion of a Rs. 1 crore addition based on the son's voluntary surrender during a survey. The survey revealed a difference in stock valuation and unexplained cash. The Ld. CIT(A) observed that the difference in stock value was due to market price valuation versus book value, and the surrender lacked credible evidence. The Tribunal concurred, referencing the Supreme Court's ruling in CIT vs. S. Khader Khan Son, which states that statements during surveys have no evidentiary value unless backed by credible evidence. The Tribunal found the surrender was not voluntary and lacked the assessee's consent, thus upholding the Ld. CIT(A)'s deletion of the addition. Issue 3: Misreading of Facts by the CIT(A) The Revenue argued that the CIT(A) misread the facts and circumstances to arrive at the conclusion. However, the Tribunal found no merit in this ground, as the CIT(A)'s findings were based on a thorough examination of the evidence and legal precedents. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the Ld. CIT(A)'s decisions on all grounds. The order was pronounced in the open court on 6th April, 2023.
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