2024 (8) TMI 44 - AT - Income Tax

Addition of cash deposits in the bank - contention of the assessee is that the assessee received back Rs. 20 lakhs paid as advance for purchase of plot in cash - HELD THAT - The assessee had issued receipt against cash received from Madhur Infra Developers Pvt. Ltd. - The cash deposits in the bank account is the amount received by assessee from Madhur Infra Developers P. Ltd. The proximity of receipt of cash by the assessee from Madhur Infra Developers P. Ltd. and cash deposits of Rs. 20 lakhs reflected in the bank account on 01.10.2024 fairly indicate the possibility of deposit of cash received by the assessee from Madhur Infra Developers P. Ltd. Thus, deposit of cash in the bank account stands explained by the assessee. A specific query was made to assessee as to whether the documents on which reliance has been placed before the Tribunal were furnished to the AO and CIT(A), he made statement at Bar that all these documents were furnished to the authorities below and a certificate to this effect has also been given by him after the Index of paper book. In light of the facts of case and the documents on record ground no. 1 2 of the appeal are allowed. Long Term capital Gain (LTCG) - contention of the assessee is that the assessee has offered long term capital gain to tax in AY 2019-20 i.e. the year of receipt of total consideration - HELD THAT - AO has computed long term capital gains in the impugned assessment year on the presumption that the entire consideration has been received by the assessee , as the Sale Deed was executed registered in the relevant period and accordingly worked long term capital gain on sale of land at Rs. 45,79,404/- - CIT(A) noted the fact that Rs. 35 lakhs was not received by the assessee, the CIT(A) directed the AO to recalculate capital gain on the sales consideration to the extent actually received i.e. Rs. 20,33,320/- only. After examining peculiar facts of case, we are of considered view that the computation of LTCG in the impugned AY is not in accordance with the provisions of the Act. As assessee has pointed that the assessee has discharged his tax liability on Long Term Capital Gains in the year of receipt of entire sale consideration i.e. AY 2019-20. We deem it appropriate to restore this issue to the AO for limited purpose to verify whether the assessee has offered long term capital gains to tax in the year of receipt of entire consideration, if it is so no addition in the impugned assessment year on this account is warranted.

Summary

Issues:
1. Addition of Rs. 20 lakhs for cash deposits in the bank.
2. Addition of Rs. 45,79,404/- for alleged Long Term capital Gain (LTCG).

Analysis:

Issue 1: Addition of Rs. 20 lakhs for cash deposits in the bank:
The appellant contested the addition of Rs. 20 lakhs in cash deposits in the bank, arguing that the amount was received as a refund of advance payment for a plot purchase. The appellant provided evidence of receiving Rs. 20 lakhs in cash from a developer and subsequently depositing the same amount in the bank. The Tribunal found the proximity of events and documents submitted by the appellant to be convincing, thus allowing the appeal and deleting the addition.

Issue 2: Addition of Rs. 45,79,404/- for alleged Long Term capital Gain (LTCG):
Regarding the addition of LTCG, the appellant sold land for Rs. 55,33,320/- but received only Rs. 20,33,320/- due to dishonored cheques. The remaining amount of Rs. 35 lakhs was disputed and later paid by the purchaser. The CIT(A) directed the AO to recalculate LTCG based on the consideration actually received. The Tribunal agreed that the computation of LTCG in the impugned assessment year was incorrect. The issue was remanded to the AO to verify if the appellant had declared LTCG in the year of receiving the entire consideration, suggesting no addition in the current assessment year if the tax liability was discharged in the relevant year.

In conclusion, the appeal was partly allowed, with specific grounds upheld for statistical purposes, and the matter of LTCG recalculated based on actual consideration received was remanded for further verification by the AO.