NITTEN SHRIKANT CHOUGULE,KOLHAPUR vs. DEPUTY COMMISSIONER OF INCOME-TAX, KOLHAPUR

आदेश / ORDER

PER ANIL CHATURVEDI, AM :

Assessee is an individual stated to be engaged as Estate Broker and Commission Agent. Assessee electronically filed his

return of income for A.Y. 2010-11 on 09.09.2010 declaring total

income of Rs.19,19,260/-. The case was selected for scrutiny and

thereafter assessment was framed u/s 143(3) of the Act vide order

dt.26.03.2013 and the total income was determined at

Rs.1,67,45,510/-. Aggrieved by the order of AO, assessee carried

the matter before Ld.CIT(A), who vide order dt.23.02.2015 (in

appeal No.KOP/182/2013-14) granted partial relief to the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal

before us and has raised the following grounds :

“1. On facts and circumstances of the case and in law the Ld.CIT(A) has erred in law and on merit in upholding additions of Rs.36.00 lakhs as unexplained cash credit instead of capital gains. 2. On facts and circumstances of the case and in law the Ld.CIT(A) has erred in law and on merit in appreciating that the property purchased was out of his books in A.Y. 1988-89 and when the property was sold it was chargeable to tax as Capital Gains and not as unexplained cash credit. 3. On facts and circumstances of the case and in law the Ld.CIT(A) has erred in law and on merit in not allowing deduction 54F.”

. 3 All the grounds being inter-connected are considered

together.

that assessee had sold half share of his property at C.S.No.517-A/2

for Rs.36 lakhs. The aforesaid property was purchased by the

assessee for Rs1,85,340/- in F.Y. 1988-89. The source of purchase

of said property was stated to be out of withdrawals from

partnership firm and accumulated savings. AO noted that assessee

had not produced any personal Balance-Sheet which shows the

aforesaid asset in the Balance-Sheet. He further noted that the

long term capital gains on sale of land was not disclosed by the

assessee in the original return of income. However, during the

course of assessment proceedings, assessee filed revised

computation of income showing long term capital gains of

Rs.3,48,373/- and offered the same for tax. The reason for non-

inclusion of the long term capital gains in the original return of

income was stated by the assessee to be on account of the

deduction claimed u/s 54F of the Act. AO did not accept the

submissions of the assessee. AO noted that the purchase of land in

F.Y. 1988-89 was made out of the books and therefore it was not

shown in the personal Balance-Sheet. AO noted that the

consideration of Rs.36 lakhs on sale of land was not received by the

assessee in his own name but was received in the name of Amal M.

Mahadik. AO also noted that assessee in the assessment

proceedings of Amal M. Mahadik for A.Y. 2010-11 had given a

statement that a sum of Rs.36 lacs was advanced by him to Amal

M. Mahadik in F.Y. 2009-10 and the advance was outstanding as

on 31.03.2010. AO noted that Rs.36 lacs advanced by him to Amal

M. Mahadik was not shown in the Balance-Sheet. He held that the

purchase of property, sale of property and long term capital gains

on such property came to the light only because of the assessment

proceedings. He accordingly treated the entire amount of Rs.36

lakhs, being the sale proceeds of land that was given directly by the

purchaser of land to Mr. Amal M. Mahadik as unexplained cash

credit and made its addition u/s 68 of the Act. Aggrieved by the

order of AO, assessee carried the matter before Ld.CIT(A), who

upheld the order of AO by observing as under :

“10. Ground no. 3 relates to addition of Rs. 36.00 lakhs on account of sale of plot which was not reflected in assessee's returns. Facts are that assessee had sold one half share of his property at C.S. No. 517- A/2 for Rs. 36.00 lakhs. The said property was purchased in financial year 1988-89 for Rs. 1,85,340/-. Assessee has not shown any capital gain on sale of the property. Since the plot was purchased in financial year 1988-89 out of books, therefore, it was not shown by the assessee at the time of sale also. Therefore, the amount of Rs. 36.00 lakhs was added by the assessing officer as unexplained cash credit.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal

before us.

and Ld.CIT(A) and further submitted that assessee had purchased

the plot of land located at C.S.517-A/2, Kolhapur along with

Pandurang D. Jadhav in 1988 for Rs.1,70,000/- and spent

Rs.13,600/- towards Stamp Duty and Rs.1,740/- towards

Registration Fee. The aforesaid plot was sold on 02.03.2010 for

Rs.36 lakhs. He submitted that after the sale of plot assessee had

purchased house property at Kolhapur for Rs.36,63,390/-. The

assessee was under bonafide impression that the capital gains on

sale of plot was not required to be disclosed in the return of income

since the entire capital gain was used for purchase of the aforesaid

property. However, the revised computation of long term capital

gains showing the exemption u/s 54F of the Act was furnished

during the assessment proceedings. He submitted that the

aforesaid land was in the physical possession of Amal M. Mahadik

and while selling the plot, Amal M. Mahadik was made as a

consenting party and the amount was accordingly paid to Amal M.

Mahadik. He pointed to the copy of the agreement placed in the

Paper Book. He therefore submitted that the addition has been

made by the AO on the basis of presumption without any

supporting evidence. He therefore submitted that the addition be

deleted. Ld.D.R. on the other hand, pointed out to the findings of

AO and submitted that the aforesaid property was never disclosed

by the assessee in his personal Balance-Sheet and the claim of

deduction of capital gains was also not made in the original return

of income but made during the course of assessment proceedings.

He further pointing to the deed for the purchase of aforesaid

property by the assessee which is placed in the Paper Book to the

fact that assessee had paid only Rs.51,000/- in cash and a balance

of Rs.1,19,000/- was to be paid by the assessee on or before

31.05.1989. He submitted that there is no evidence of the amount

of Rs.1,19,000/- paid by the assessee. He further submitted that

the claim of deduction of capital gains u/s 54F of the Act has not

been examined by the lower authorities. He therefore submitted

that the matter with respect to the capital gains be sent back to the

AO for verification. Ld.A.R. in the rejoinder submitted that he does

not have any objection if the issue of capital gains is remitted back

to AO.

material on record. The issue in the present case is with respect to

the addition of Rs.36 lakhs. We find that the addition of Rs.36

lakhs which is stated to be the sale consideration has been given by

the purchaser to Amal M. Mahadik on behalf of assessee and this

amount has been considered by the AO to be as unexplained cash

credit u/s 68 of the Act. The submission of the assessee that he

was not maintaining personal Balance-Sheet and therefore the plot

was not reflected in the Balance-Sheet has not been controverted

by the Revenue. We find that the addition of Rs.36 lakhs has been

added to the income by the AO on the basis of conclusion that the

amount of Rs.36 lacs advanced by assessee to Amal M. Mahadik as

admitted by assessee has also not been reflected in assessee’s

Balance-Sheet. We find that the AO has proceeded to tax the

addition u/s 68 of the Act on the basis of presumption. The sale of

property by the assessee has not been disputed by the AO. We

further find that the issue of capital gains has not been examined

by the AO or by Ld.CIT(A) and there is no mention of it in their

orders. We are therefore of the view that the matter of computation

of capital gains needs examination at the end of the AO. We

therefore set aside the issue of taxing of capital gains back to the

file of AO for examination of the claim of assessee and thereafter

decide the same in accordance with the law. Needless to state that

AO shall grant adequate opportunity of hearing to the assessee.

Assessee is also directed to promptly furnish all the required

details called for by AO. With these directions, the grounds of

the assessee are allowed for statistical purposes.

Order pronounced on 17th day of July, 2018.

Sd/- Sd/- (VIKAS AWASTHY) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 17th July, 2018.

Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. The CIT-(Appeals) 1&2, Kolhapur. 4. CIT(Central), Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; 5. गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER,स T// ///True True copy // True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.