2024 (8) TMI 1228 - AT - Income Tax

Addition u/s 69A r.w.s 115BBE - During the search operation statement u/s 132(4) was recorded in which the assessee surrendered lumpsum for alleged long term capital gains earned from sale of shares as additional income - AO completed assessment by recharacterizing the income surrendered as income u/s 69A and made addition HELD THAT - Assessee admitted that he has earned long term capital gain along with his wife which has been claimed as exempt income and offered the same for taxation. However the assessee realized that actual gain earned by him was Rs. 20, 57, 590/- and no such gain was earned by his wife. Immediately the return was revised. Since the assessee himself has declared income as income from other sources we do not find any merit in recharacterising the same as income u/s 69A of the Act. Further on verification of the return of the wife of the assessee we find that she has not earned any long term capital gain and the entire addition has been made only on the basis of surrender made by the assessee at the time of search. As decided in 2023 (11) TMI 333 - ITAT DELHI assessee has not offered the income under Section 69A of the Act. Even the Assessing Officer has not made any separate addition under Section 69A of the Act. He has merely re-characterized the nature of income offered by the assessee. Thus in our considered opinion the provisions of sections 115BBE would not be applicable to the facts of the present appeal. Decided in favour of assessee.

Summary

Issues:
Assessment order additions under sections 69A and 69C r.w.s 115BBE challenged by assessee.

Analysis:
The appeal pertains to an assessment order for A.Y. 2014-15 where the assessee contested additions made by the Assessing Officer under sections 69A and 69C r.w.s 115BBE of the Act. The assessee initially surrendered a lump sum amount during a search operation, later revising the return to declare income from other sources and denying long-term capital gains in his wife's name. The Assessing Officer recharacterized the surrendered income as per sections 69A and 69C. The CIT(A) upheld the additions, citing the assessee's retraction from the initial statement. The assessee argued against the recharacterization, emphasizing discrepancies in the capital gains claimed by him and his wife. Reference was made to the Supreme Court decision in Abhisar Buildwell to challenge the incriminating nature of the statement under section 132(4) of the Act.

Upon review, the Tribunal considered the documentary evidence and the assessee's admission of earning capital gains along with his wife, subsequently revising the return to reflect only his actual gain. The Tribunal found no merit in recharacterizing the income surrendered as per section 69A, especially since the wife had not earned any long-term capital gains. Citing a previous decision, the Tribunal clarified the applicability of section 115BBE, which did not cover the present scenario where the Assessing Officer merely recharacterized the income without a separate addition under section 69A. Consequently, the Tribunal directed the Assessing Officer to delete the impugned addition, allowing the assessee's appeal.

In conclusion, the Tribunal ruled in favor of the assessee, directing the deletion of the additions made under sections 69A and 69C r.w.s 115BBE in the assessment order for A.Y. 2014-15. The decision was based on the assessee's revised return, discrepancies in the capital gains, and the inapplicability of section 115BBE to the recharacterization of income without a separate addition under section 69A.