2023 (8) TMI 641 - AT - Income Tax

Reopening of assessment - Undisclosed long term capital gain - AO granting cost of indexation to the assessee and thereafter calculated the long term capital gain on the 50% share of the assessee in the property sold - HELD THAT - As we in agreement with the contention AO as well as CIT DR that the said excel sheet was containing all details including description of land, sale consideration as per registered sale deed, cash payment of part consideration and amount written in an appropriate form. Assessee is merely taking shelter that the sale consideration mentioned in the sale deed is the only amount which is received by cheque but he has no explanation regarding mentioning of transactions and payment of cash to the purchaser to the sellers including the assessee in cash. At the cost repetition, we may point out during the assessment proceeding the assessee did not appear before the AO and AO passed ex parte order u/s 147/ 144 of the Act on the basis of material available, particularly report of Investigation Wing supported by excel sheet recovered from the Assistant Manager of Accounts Ms. Dadlani of the purchaser entity. In our considered opinion the ld CIT(A) was not correct and right in granting relief to the assessee ignoring the vital self speaking evidence showing cash payment by the purchaser to the seller assessee and his co owner out of which assessee received 50% amount in cash. Accordingly, the AO was right and justified in calculating long term capital gain after allowing index cost of acquisition to the assessee. CIT(A) granted relief to the assessee without any basis therefore, impugned first appellate order is set aside by restoring the assessment order passed u/s 147/144 as well as addition made therein. Accordingly, grounds of revenue are allowed.

Summary

Issues involved:
The issues involved in this legal judgment include the deletion of undisclosed long term capital gain by the Ld CIT(A), the appreciation of facts related to evidence found during a search operation, the application of yardsticks to different parties involved in a transaction, and the consideration of seized documents as evidence for computation of long term capital gains.

Deletion of undisclosed long term capital gain:
The revenue appealed against the Ld CIT(A)'s deletion of the addition made by the AO amounting to Rs. 5,17,11,467 on account of undisclosed long term capital gain for AY 2006-07. The revenue contended that the Ld CIT(A) erred in not appreciating the evidence found during a search operation by DRI, Mumbai, which indicated that a significant portion of the sale proceeds was in cash, not recorded in the sale deed. Additionally, the revenue argued that the Ld CIT(A) failed to consider that different parties were involved in the transaction, and the seized documents had evidentiary value showing cash transactions that should be considered part of the sale consideration for computing long term capital gains.

Appreciation of facts and seized documents:
The Ld CIT DR argued that the AO was correct in dismissing the assessee's claim of no relationship with certain parties involved in the transaction. The Investigation Wing provided evidence that the assessee had received a total sum of Rs. 5,46,23,012, out of which a significant amount was received in cash. The Ld CIT DR emphasized that the seized documents revealed cash transactions matching the amounts in registered sale deeds, supporting the addition of income from long term capital gain. The Ld AR, on the other hand, supported the Ld CIT(A)'s decision to recompute long term capital gain based on the sale consideration mentioned in the registered sale deed, highlighting the lack of evidence to substantiate unrecorded cash transactions.

Judgment and decision:
Upon careful consideration, the Tribunal noted that the property sold was a capital asset, and the AO was justified in initiating reassessment proceedings due to the undisclosed long term capital gain. The Tribunal found that the Ld CIT(A) erred in granting relief to the assessee without sufficient basis, ignoring vital evidence of cash payments in the transaction. Therefore, the Tribunal set aside the Ld CIT(A)'s order and restored the assessment order passed by the AO, allowing the revenue's appeal. The Tribunal emphasized the importance of considering all evidence, including seized documents, in calculating long term capital gains.

Separate Judgement:
No separate judgment was delivered by the judges in this case.