2018 (7) TMI 585 - AT - Income Tax

Income from other sources - transaction of sale of furniture - sale of personal effects under section 2(14)(ii) - sale consideration of the property at Mohan Garden included an amount towards sale of furniture available in the house at the time of sale of property - Held that - Contention of the Assessee is not acceptable because the personal effects would not be included in the capital asset under section 2(14)(ii) of the I.T. Act. Therefore, it shall have to be considered under the residuary clause Income from other sources . CIT(A) noted that since the value of the house hold items i.e., Sofa etc., which were genuinely found to be at ₹ 3 lakhs only as against the inflated amount of ₹ 10 lakhs, therefore, ₹ 7 lakhs shall have to be considered as income from other sources. Since the transaction of sale of furniture etc., was sham and to inflate the value of the furniture etc., to evade stamp duty and evade long term capital gains, therefore, no benefit could be given to assessee on such agreement to sale. The assessee is not able to explain as to for what consideration ₹ 7 lakhs have been received by assessee, therefore, it was correctly treated as income from other sources. - Decided against assessee

Summary

Issues:
Challenging addition of ?7 lakhs on account of income from other sources for A.Y. 2013-2014.

Analysis:
1. Facts of the Case:
- Assessee sold a house property and purchased another.
- Sale consideration included amount for furniture.
- AO conducted enquiries related to sale of furniture.
- Sale consideration of long term capital gains determined at ?60,10,000.
- ?7 lakhs treated as unexplained cash credit under section 68 of the I.T. Act, 1961.

2. Assessee's Challenge:
- Assessee claimed amount was received through cheque against registered sale deed.
- Contended that long term capital gain should be allowed on ?7 lakhs.
- Claimed to have proved identity, creditworthiness, and genuineness of transaction.
- Argued that ?10,00,000 received against sale of personal effects not liable to tax.

3. CIT(A) Decision:
- CIT(A) noted sale of furniture inflated to evade stamp duty.
- Real value of sale of furniture determined at ?3 lakhs.
- Long term capital gain already determined, no further benefit allowed.
- Value of household articles found to be ?3 lakhs only.
- Added ?7 lakhs as income from other sources, dismissed appeal.

4. ITAT Decision:
- ITAT reviewed submissions and material on record.
- Found no merit in assessee's appeal.
- Assessee received ?10 lakhs for furniture, agreement dated 19.10.2012.
- Enquiries confirmed sale consideration of furniture at ?3 lakhs.
- Assessee failed to dispute statements of involved persons.
- Authorities justified in adding ?7 lakhs in assessee's income.
- Sale of personal effects not exempt from tax under section 2(14)(ii).
- Upheld addition of ?7 lakhs as income from other sources.
- No interference needed, confirmed addition, and dismissed appeal.