2022 (8) TMI 941 - AT - Income Tax

Capital gain - main contention of the assessee is that the assessee has not received any sale consideration, therefore, capital gains does not arise - contention of the revenue is that the statement was recorded u/s 131 and the assessee has confirmed that the assessee along with 8 others executed the sale deed and received his share of sale consideration through cheques - HELD THAT - Since the property was registered from the seller to the buyer and the landlord registered the sale transaction as completed, it gives rise to capital gains as defined u/s 2(47) of the Act and attracts short term capital gains u/s 45 of the Act. On this aspect, the assessee has not filed any evidence to establish that the buyer did not present the cheques in the bank due to some personal reasons. Assessee has not substantiated his case except orally pleaded before the AO, CIT(A) and even before us and has not filed any document. Inspite of receipt of notice the assessee did not appear before the ITAT to substantiate his case with proper evidence. In the absence of such evidence, we do not find any infirmity in the orders passed by the lower authorities. Therefore, we uphold the order passed by the CIT(A) and dismiss the grounds raised by the assessee.

Summary

Issues:
Assessment of short term capital gains on the sale of immovable property for A.Y. 2011-12 without actual receipt of consideration by the assessee.

Detailed Analysis:

1. Assessment of Short Term Capital Gains:
The case involved appeals filed by the assessees against the orders of the Commissioner of Income Tax (Appeals) for the Assessment Year 2011-12. The assessees had sold immovable property but did not disclose the capital gains on the sale in their income tax returns. The Assessing Officer treated the gains as short term capital gains as the property was sold within 36 months of purchase. The assessees contended that they did not actually receive the sale consideration, leading to the dispute. The Tribunal noted that the assessees confirmed the sale and receipt of consideration during a statement recorded under section 131 of the Income Tax Act. Despite the assessees' claims of not encashing the cheques due to personal reasons, they failed to provide any evidence to support their case. The Tribunal upheld the lower authorities' decision to assess short term capital gains, as the property transaction was completed and the assessees did not substantiate their claims with proper evidence.

2. Contentions Before CIT(A) and Tribunal:
Before the CIT(A), the assessees argued that they did not realize the cheques given by the buyer, citing litigations and pending permissions as reasons for non-encashment. However, the CIT(A) observed that a Memorandum of Understanding (MoU) between the parties did not mention any conditions related to litigations or permissions. The MoU only postponed the realization of consideration for financial convenience. The CIT(A) referred to the Transfer of Property Act to establish that even a promise of consideration is sufficient for a transfer. The Tribunal considered the arguments of both parties but ultimately found in favor of the revenue, as the assessees failed to provide concrete evidence to support their contentions.

3. Tribunal's Decision:
After hearing both parties and reviewing the material on record, the Tribunal upheld the CIT(A)'s decision to assess short term capital gains on the sale of property. The Tribunal noted that the assessees did not present any evidence to prove their claims that the cheques were not encashed due to personal reasons. Despite multiple opportunities, the assessees did not provide any documentation to support their case. Consequently, the Tribunal found no merit in the assessees' arguments and dismissed their appeals. The orders passed by the lower authorities were upheld, and the appeals of the assessees were dismissed.

In conclusion, the Tribunal's decision emphasized the importance of providing concrete evidence to support claims during tax assessments. The case highlighted the significance of substantiating contentions with proper documentation and the consequences of failing to do so in tax disputes.