2021 (11) TMI 54 - AT - Income Tax

Unexplained income of the assessee - Unexplained cash deposits - Assessee submitted that the assessee has deposited an amount out of the amount given by his son Mr. Tinku Chaudhary after sale of his buffalows, cow and popular trees - HELD THAT - Admittedly, the assessee during the course of assessment proceedings had explained before the A.O. regarding the source of cash which was given by his son Mr. Tinku Chaudhary after sale of his Buffallows, cow and popular trees. Neither the A.O. asked the assessee to produce his son for examination nor the assessee had volunteered to produce him before the A.O. Now that Assessee is willing to produce Mr. Tinku Chaudhary before the A.O. for his examination and substantiate the cash payment therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, I deem it proper to restore the issue relating to addition to the file of A.O. with a direction to give an opportunity to the assessee to substantiate the cash deposit by producing cogent evidence - Decided in favour of assessee for statistical purposes. Addition of long term capital gains - As per Assessee when the property was purchased by the wife of the assessee and sold by the wife of the assessee, no addition on account of long term capital gains can be made in the hands of the assessee and the lower authorities have not properly appreciated the facts of the case - HELD THAT - We deem it proper to restore the issue to the file of A.O. for adjudicating the issue afresh as per fact and Law, after giving due opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes.

Summary

Issues Involved:
1. Reopening of assessment under Section 147/143(3) of the I.T. Act, 1961.
2. Addition of ?5,75,000 as unexplained income.
3. Addition of ?7,80,851 as Long Term Capital Gains (LTCG).

Detailed Analysis:

1. Reopening of Assessment under Section 147/143(3):
The assessee challenged the reopening of the assessment on the grounds that statutory conditions under Sections 147 to 151 were not complied with and that the notice under Section 143(2) was not issued/served correctly. However, during the hearing, the assessee's counsel did not press these grounds, leading to their dismissal as not pressed.

2. Addition of ?5,75,000 as Unexplained Income:
The A.O. added ?5,75,000 as unexplained income, which the assessee claimed was given by his son from the sale of buffaloes, cow, and popular trees. The Ld. CIT(A) upheld this addition, noting that the assessee failed to provide credible evidence such as khasra, khatauni, or proof of sale of cattle. The Tribunal found merit in the assessee's argument that the A.O. did not examine the son and allowed the assessee to produce his son for examination. The issue was restored to the A.O. for fresh adjudication, with directions to give the assessee an opportunity to substantiate the cash deposit with cogent evidence.

3. Addition of ?7,80,851 as Long Term Capital Gains (LTCG):
The A.O. added ?7,80,851 as LTCG from the sale of land, which the assessee claimed belonged to his wife. The Ld. CIT(A) upheld this addition, stating that the assessee had initially treated the property as his own for capital gain computation. The Tribunal found force in the assessee's argument that the property was in his wife's name and restored the issue to the A.O. for fresh adjudication. The A.O. was directed to decide the issue as per fact and law, after giving due opportunity to the assessee.

Conclusion:
The appeal was partly allowed for statistical purposes. The Tribunal directed the A.O. to re-examine the addition of ?5,75,000 as unexplained income and the addition of ?7,80,851 as LTCG, giving the assessee an opportunity to present evidence and arguments. The judgment emphasized the need for a thorough and fair examination of the facts and evidence presented by the assessee.

Order Pronouncement:
The order was pronounced in the open Court on 29.10.2021.