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2020 (12) TMI 1 - AT - Income TaxAddition of unexplained income - earnest/advance money under agreement to sell - credit entries received by assessee from M/s True Value Contractors P. Ltd . - income from other sources - HELD THAT - Assessee received an amount on account of sale of property and received money from one entity namely True Value Contractors Pvt. Ltd. whose name has been changed to Jaffna Contractors . The amount has been duly reflected in the bank account of the assessee and a certificate from the State Bank of India that the payments have been received from Axis Bank into the account of the assessee. The copy of the bank statements have been duly provided to the revenue authorities. The amount forfeited subsequently of ₹ 1,80,00,000/- is not taxable under income from other sources u/s 56(2)(ix) in the assessment year 2014-15 but is a subject matter of provisions of Section 51 of the Act effective for the year under consideration. Hence, we decline to interfere with the order of the ld. CIT (A) on this issue. The appeal of the revenue is dismissed.
Issues Involved:
1. Disallowance of Short Term Capital Loss 2. Disallowance of Interest Claimed under Section 24(b) 3. Addition on Account of Unexplained Income Issue-wise Detailed Analysis: 1. Disallowance of Short Term Capital Loss: The assessee contested the disallowance of ?2,02,65,593/- on account of Short Term Capital Loss incurred from the sale and purchase of equity shares. The CIT(A) sustained this disallowance, failing to appreciate the submissions and evidence provided by the assessee. The assessee argued that the reliance on the statement of an Axis Bank official, without providing an opportunity for cross-examination, was against natural justice. Furthermore, both the AO and CIT(A) were said to have exceeded their jurisdiction by questioning the investment in India Infotech & Softwares Ltd. and upholding the disallowance based on suspicion, ignoring direct evidence. 2. Disallowance of Interest Claimed under Section 24(b): The CIT(A) upheld the disallowance of ?1,16,04,591/- made out of interest claimed under Section 24(b) of the Income Tax Act, 1961. The details of the arguments or the rationale behind this disallowance were not elaborated in the judgment. 3. Addition on Account of Unexplained Income: The revenue appealed against the deletion of ?1,80,00,000/- received from M/s True Value Contractors P. Ltd. The AO argued that the transaction was bogus, involving a property sold at an inflated value through an unregistered agreement, and that the assessee failed to prove the genuineness of the forfeiture of the advance amount. The AO's findings were based on the non-verification of the bank account details and the alleged false bank statements provided by the assessee. The CIT(A) examined the additional evidence, including certificates from SBI confirming the RTGS payments from True Value Contractors and affidavits from the buyer. The CIT(A) found that the AO had erred in holding the amount as unexplained income, as the payment was duly credited in the assessee's bank account and reflected in the books. The CIT(A) noted that the forfeiture of the advance money should reduce the cost of acquisition under Section 51, not be treated as income under Section 56(2)(ix) for the assessment year 2014-15. Conclusion: The Tribunal dismissed both the appeals. The assessee's appeal was dismissed as infructuous due to opting for the "Direct Tax Vivad se Vishwas Act 2020." The revenue's appeal was dismissed, upholding the CIT(A)'s decision that the addition of ?1,80,00,000/- as unexplained income was incorrect, given the corroborative evidence provided by the assessee. The Tribunal confirmed that the forfeited amount was not taxable under "income from other sources" for the assessment year in question.
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