2023 (12) TMI 925 - AT - Income Tax

Unexplained money u/s. 69A - AO rubbished the entire transaction by dismissing the gift as the same was not evidenced by a registered gift deed - AO came to the conclusion that no portion of the property at Rani Jhansi Chowk, Delhi has been transferred to the assessee by way of gift, therefore, the assessee could not have sold and earned long term capital gains, therefore, the amount credited in her bank account was treated as income of the assessee u/s. 69A - HELD THAT - It is true that the impugned property was purchased by the husband of the assessee and 1/3rd share in the said property was subsequently gifted by him to the assessee. No doubt the gift deed was not registered but the same cannot be rubbished as the sham transaction since the assessee was in full possession of the said property which was subsequently sold by her by way of a registered sale deed for a consideration of Rs. 12.50 crores which was credited to her bank account held with HDFC Bank. By no stretch of imagination provisions of section 69A can be applied on such transactions as the credit is outcome of the sale of property. It is not a case of the revenue that the assessee has introduced her own unaccounted money by depositing the same in her bank account in the garb of sale of some immovable property. Decided against revenue.

Summary

Issues involved:
The judgment pertains to the deletion of an addition of Rs. 12.50 crores made by the Assessing Officer (AO) to the income of the assessee on account of unexplained money under section 69A of the Income Tax Act.

Facts of the case:
During scrutiny assessment proceedings, the AO observed that the assessee had shown long-term capital gain on the sale of a property at Rani Jhansi Chowk, Delhi, and claimed exemption under section 54 of the Act. The property was initially purchased by the husband of the assessee and later gifted a 1/3rd share to the assessee, which was subsequently sold by her, resulting in long-term capital gains.

AO's findings and addition:
The AO dismissed the gift transaction as the gift deed was not registered and noted that the property deed was executed by a third party after the alleged gift date. Consequently, the AO treated the amount of Rs. 12.50 crores credited to the assessee's bank account as her income under section 69A of the Act and made the addition.

CIT(A)'s decision:
The CIT(A) considered the provisions of section 2(47)(vi) related to the transfer of immovable property and opined that the assessee, being in possession of the property, had the right to sell it. The CIT(A) further highlighted that the amount from the sale was reinvested in another property, justifying the claim of exemption under section 54.

Appellate Tribunal's ruling:
The Appellate Tribunal upheld the CIT(A)'s decision, emphasizing that the unregistered gift deed did not invalidate the transaction, especially since the assessee was in possession of the property and the sale proceeds were genuine. The Tribunal rejected the application of section 69A, as the credited amount stemmed from the legitimate sale of property, not unaccounted funds.

Conclusion:
After careful consideration, the Tribunal found no grounds to interfere with the CIT(A)'s findings and dismissed the revenue's appeal. The judgment was pronounced on 3.11.2023.