2023 (7) TMI 236 - AT - Income Tax

Capital gain - STCG or LTCG - assessee has sold crusher plant (Rohit Stone Product) at Kali Pahari ( Black Mountain) Mahoba along with land and office situated therein - ownership right over the said land granted under lease to mine - HELD THAT - The assessee has not filed even before us, the details of land transferred. It is also pertinent to mention that claim is made that the assessee declared capital gain during the assessment year 2015-16, which was accepted by department in scrutiny assessment u/s 143(3) read with Section 143(2) for assessment year 2015-16 by the AO. On perusal of the assessment order for assessment year 2015-16 passed by AO, it transpires that the case of the assessee was selected for framing limited scrutiny assessment for ay 2015-16 owing to large cash deposits in the bank, and thus, it was not the case selected for framing complete scrutiny, or limited scrutiny to verify capital gain declared by the assessee. The assessee has sold crusher plant (Rohit Stone Product) at Kali Pahari ( Black Mountain) Mahoba along with land and office situated therein, as it emerges from the sale agreement dated 01.04.2013. The details of land transferred in not furnished by the assessee. The stone crushed is mined.There is no ownership right over the said land granted under lease to mine(unless contrary is brought on record by the assessee through cogent evidences), nor is the lessee entitled to transfer the same without permission of Government. Rule 37 of Mining Concession Rule, 1960 is relevant. The consequences for breach are also stipulated in the law. DR has contended that it was not a case of slump sale, as complete assets and liabilities of Rohit Stone Product, were not transferred. The complete details are not on record as the assessee has not furnished the same and also the authorities below have not comprehensively looked into the issue . Thus, it is considered fit and proper, in the interest of justice, to restore the matter back to the file of the AO for fresh determination(denovo assessment) of the issue on merits in accordance with law. The assessee is directed to produce all details before the AO, in set aside proceedings for denovo assessment by the AO. In case, the assessee do not cooperate before the AO during set aside proceedings for framing denovo assessment, the AO shall be free to decide the issue on merits in accordance with law. The AO also has ample powers under the 1961 Act to collect information directly from authorities as well other persons considered deemed fit. The AO is directed to give fair hearing to the assessee in accordance with principles of natural justice. Thus, the appeal of the assessee on this issue is allowed for statistical purposes Addition of gift - We find merits in the contentions of the assessee that all the documents which were filed by the assessee, needed to be verified and considered by authorities below. Thus, it is also considered fit and proper, in the interest of justice, to restore the matter back to the file of the AO for fresh determination(denovo assessment) of the issue on merits in accordance with law. The assessee is directed to produce all details before the AO in his defense, in set aside proceedings for denovo assessment by the AO. Unexplained cash deposits in bank - HELD THAT - Issue needs proper verification by authorities below for which cogent evidences to be brought on record by the assessee, that both the income, firstly Rs. 50 lacs which is accepted by Hon ble Income Tax Settlement Commission, as well secondly income of Rs. 50 lacs as income from commission from stone grit, both have suffered taxation and was offered to tax by the assessee, and no income has escaped assessment while Revenue has got its due taxes . The complete facts are not on record, and balled statements are made by the assessee before the authorities below, while assessee is required to file cogent evidences to demonstrate that no income has escaped assessment and all dues taxes stood paid to Revenue. The authorities below are also required to verify comprehensively that both the income aggregating to Rs. 100 lacs have suffered taxation and no income escapes taxation - restore the matter back to the file of the AO for fresh determination.

Summary

Issues Involved:
1. Addition of Short Term Capital Gain for Assessment Year 2014-15.
2. Addition on account of Gift for Assessment Year 2014-15.
3. Addition of Unexplained Cash Deposits for Assessment Year 2015-16.

Summary:

Issue 1: Addition of Short Term Capital Gain for Assessment Year 2014-15

The assessee challenged the addition of Rs. 35,23,514/- as short term capital gain made by the Assessing Officer (AO) under section 143(3) of the Income-tax Act, 1961. The AO observed that the assessee transferred the Rohit Stone Products Plant including land and machinery to M/s Hanumant Enterprises for Rs. 1,30,00,000/- and received Rs. 78,00,000/- during the assessment year 2014-15. The AO invoked section 50 of the Act, considering the difference between the written down value and the sale consideration as short term capital gain. The CIT(A) upheld the AO's decision, stating that transfer occurred as per section 2(47) of the Act since possession was handed over. However, the Tribunal set aside the matter for fresh determination, directing the AO to verify the details comprehensively and consider the assessee's claim that the transfer was not complete due to the unregistered agreement.

Issue 2: Addition on account of Gift for Assessment Year 2014-15

The AO added Rs. 1,80,000/- to the assessee's income, questioning the genuineness of the gift received from Sh. Saurabh Vaish. The CIT(A) upheld the addition, noting the assessee failed to provide adequate evidence. The Tribunal restored the matter to the AO for fresh determination, directing the assessee to produce all necessary details to substantiate the genuineness of the gift.

Issue 3: Addition of Unexplained Cash Deposits for Assessment Year 2015-16

The AO observed unexplained cash deposits of Rs. 1,43,20,000/- in the assessee's bank accounts. The assessee claimed Rs. 50,00,000/- was declared before the Income Tax Settlement Commission and another Rs. 50,00,000/- as income from other sources. The CIT(A) granted relief for the Rs. 50,00,000/- declared before the Settlement Commission but upheld the addition for the remaining Rs. 50,00,000/-, finding the explanation unsatisfactory. The Tribunal restored the matter to the AO for fresh determination, directing the assessee to provide comprehensive evidence to prove that both amounts were duly taxed and no income escaped assessment.

Conclusion:

Both appeals for the assessment years 2014-15 and 2015-16 were allowed for statistical purposes, with directions for fresh determination by the AO in accordance with the law.