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TMI Blog2016 (6) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... es under Section 260-A of the Income Tax Act, 1961 (for short "the Act") against the order of the Income Tax Appellate Tribunal, Hyderabad in I.T.A.Nos.1386, 1387 and 1388 of 2014 dated 14.01.2015. The assessees, in these three appeals, are two brothers and their mother. They were assessed as individuals deriving income from salary, share income from M/s.Hansa Overseas Enterprises (a partnership firm) and income from other sources. Returns of income were filed by the assessees declaring certain income. While the returns were initially processed under Section 143(1) of the Act, subsequently, on the basis of the information available on record and as the Assessing Officer had reason to believe that the assessees' income had escaped assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort term Fixed Deposits, and the interest earned thereon was also offered as income in the assessment years under consideration. In his order, the Assessing Authority held that the claim of the assessees that they did not receive the sale consideration, and the Bank had appropriated the entire sale consideration against the dues of the company, was not tenable; on being confronted with these facts, the assessees had stated that they had made short term deposits with the State Bank of Hyderabad from out of the sale proceeds, thereafter, they had made payment to the bank towards the dues of the company, and since the sale proceeds were utilised for clearing the debts of the company, no capital gains arose. The Assessing Officer subjected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the amounts, introduced in the names of the two directors through journal entries, as unexplained cash credits; and when cheques were given by the assessees from their individual accounts, to discharge the debts of the company and the partnership firm, and when the bank had also confirmed this in the course of investigation made by the Assessing Officer, they could not be subjected to tax under the head "capital gains". The assessees also contended that the assessment made in the hands of the company, treating the amounts paid by the directors towards OTS as an unsecured loan and, at the same time, charging the sale consideration again in the hands of the assessees as capital gains, would amount to assessing the same income twice over; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directors/partners; the amount used for repayment of the loan was credited, in the books of accounts of the company, as a loan from the directors who were shown as creditors to the company; the amount paid to the bank, through the books of accounts of these concerns credited in the name of the directors, could not be treated as expenses incurred by the assessees in connection with the transfer of property; the assessees were independent entities different from the concerns which had availed the loans; the properties were also sold independently by their owners, irrespective of the fact that there was a mortgage or an OTS; as the sale consideration had no connection with repayment of the loan, the consideration received, from such transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners; the contention of the assessees, that the bank had appropriated the sale consideration towards discharge of the debt as per the OTS, was not acceptable; there was no direct nexus between the receipt of the sale consideration, and the payment made to the bank towards discharge of the debt; the unsecured loan, of the amount claimed to have been received from the directors, was disbelieved by the Department while completing assessment in the case of M/s. Hoe Leather Garments Private Limited, and additions were made under Section 68 of the Act which also stood confirmed; the claim of unsecured loans from the directors, of the amount utilised towards discharge of the debt, had also not been accepted; and, therefore, the assessees claim tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and the firm, the same could not be subjected to tax in the hands of the individual assessees also. Learned counsel would further submit that the very fact that the Tribunal had subsequently waived the penalty, imposed by the Assessing Authority, itself proved that the Tribunal also believed that the same transactions had been subjected to tax twice. As noted both by the Adjudicating Authority and the Appellate Authority, the subject property was sold even before the bank had offered OTS; the property was sold despite an existing mortgage in favour of the bank; the sale proceeds were not utilised directly for repayment of the loan, but were kept in the form of short term fixed deposits in the names of the assessees; and the int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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