2020 (9) TMI 818 - AT - Income Tax

Assessment u/s 153A - Addition on account of scrap trading - HELD THAT - As gone through the orders of the authorities below and found from the record that during the course of regular assessment, the A.O. has not brought on record any evidence to the effect that the assessee has sold any capital asset nor any finding was recorded to the effect that when such asset was acquired to whom it is sold and for what consideration, in absence of any material describing nature of asset, year of acquisition, year of transfer consideration accruing as a result of transfer, the provisions of Section 45 of the Act cannot be applied. A detailed finding has been recorded by the ld. CIT(A) to this effect in para 8 of his appellate order which has not been controverted by the ld. DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings so recorded by the ld. CIT(A) and we uphold the same. Undisclosed expenditure u/s 69 - Investment in land jointly with his 2 family members - HELD THAT - CIT(A) had deleted the addition by observing that this plot was belonging to Shri Mangi Lal Kandoi and the sale proceeds of the same is also added in his end being father of the assessee. The ld. CIT(A) has further held that since the sale of plot has been taxed in the hands of the father of the assessee i.e. Shri Mangi Lal Kandoi, the cost of acquisition should also be considered in the hands of Shri Mangi Lal Kandoi and not in the hands of the assessee. Accordingly, no addition is warranted in the hands of the assessee on account of cost of acquisition. A detailed finding has been recorded by the ld. CIT(A) to this effect in para 11 of his appeal order which has not been controverted by the ld. DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of the ld. CIT(A) for deleting the said addition. Hence, we uphold the same.

Summary

Issues Involved:

1. Deletion of addition on account of scrap trading.
2. Deletion of addition on account of long-term capital gain.
3. Deletion of addition on account of undisclosed expenditure under Section 69 of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Scrap Trading:

The revenue challenged the deletion of ?7,50,000/- added by the Assessing Officer (A.O.) due to alleged scrap trading income. The CIT(A) observed that no material was found during the search to suggest the assessee was involved in scrap trading. The income was declared before the Settlement Commission solely to fulfill the application requirement, and the Settlement Commission rejected this declaration due to lack of evidence regarding scrap trading activities. The CIT(A) noted that the A.O. failed to provide any material evidence to support the claim of income from scrap trading. The ITAT upheld the CIT(A)'s decision, agreeing that there was no substantial evidence to prove the income from scrap trading.

2. Deletion of Addition on Account of Long-Term Capital Gain:

The A.O. added ?68,30,220/- as long-term capital gain based on the assessee's declaration before the Settlement Commission. The CIT(A) found that there was no evidence or finding by the Settlement Commission indicating the assessee earned such income. The A.O. did not identify any capital asset sold, its acquisition details, or the sale consideration. The CIT(A) held that without specific details of the asset, the provisions of Section 45 could not be applied. The ITAT upheld the CIT(A)'s decision, noting the absence of material evidence to justify the addition.

3. Deletion of Addition on Account of Undisclosed Expenditure under Section 69:

The A.O. added ?88,69,780/- as undisclosed expenditure related to the purchase of property at Hanuman Vatika, claimed to be funded by on-money received from the sale of Arpit Nagar land. The assessee and his family members admitted to receiving ?2.43 crores as on-money, but affidavits stated that this amount was received and used by the assessee's father, Shri Mangi Lal Kandoi. The CIT(A) observed that since the on-money was taxed in the hands of Shri Mangi Lal Kandoi, the investment should also be considered in his hands, not the assessee's. The CIT(A) also noted that the source and application of income could not be taxed simultaneously. The ITAT upheld the CIT(A)'s decision, agreeing that the on-money and related investment should be attributed to Shri Mangi Lal Kandoi.

Conclusion:

The ITAT dismissed the revenue's appeal, upholding the CIT(A)'s decisions on all three issues. The ITAT found no reason to interfere with the CIT(A)'s findings, as the revenue failed to provide any positive material evidence to counter the detailed findings of the CIT(A). The appeal was dismissed, and the order was pronounced in the open court on 07th September 2020.