MAHESH CHAND SINGHAL,NEW DELHI vs. ACIT, CIRCLE-35(1), NEW DELHI
Facts
During a search operation, the assessee surrendered Rs. 40 lakhs as long-term capital gains (LTCG) in a statement under Section 132(4). Later, he filed a revised return showing Rs. 20,54,688/- as 'income from other sources' and claimed no LTCG existed for Rs. 19,45,312/- in his wife's name. The Assessing Officer re-characterized the Rs. 20,54,688/- as income under Section 69A and added Rs. 19,45,312/- under Section 69C (LTCG in wife's hands), applying Section 115BBE. The CIT(A) upheld these additions, stating the assessee had retracted from his Section 132(4) statement.
Held
The Tribunal found no merit in re-characterizing the income declared by the assessee as 'income from other sources' under Section 69A, nor in the addition for LTCG in the wife's name, as verification showed she earned no such gain. It held that the provisions of Section 115BBE were not applicable as the Assessing Officer merely re-characterized income without making a separate addition under Section 69A, citing a similar decision by a coordinate bench. Therefore, the Tribunal directed the deletion of the entire impugned addition.
Key Issues
Whether the Assessing Officer was justified in re-characterizing the assessee's declared income under Section 69A and making additions under Section 69C, and if Section 115BBE is applicable when income is merely re-characterized without a separate addition.
Sections Cited
69A, 69C, 115BBE, 132(4), 143(2), 139, 68, 69, 69B, 69D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,
Before: SHRI SAKTIJIT DEY, & SHRI N.K. BILLAIYA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the ld. CIT(A) - 12, New Delhi dated 18.01.2019 pertaining to A.Y. 2014-
15.
The sum and substance of the grievance of the assessee is that
the CIT(A) erred in confirming the assessment order wherein the
Assessing Officer has made addition of Rs. 20,54,688/- and Rs.
19,45,312/- u/s 69A and 69C respectively r.w.s 115BBE of the Act.
Briefly stated, the facts of the case are that the assessee filed
his original return of income on 22.09.2014. Search and seizure
operation was carried out on 28.10.2015. The date of expiry of time
limit of notice u/s 143(2) of the Act expired on 30.09.2015. Therefore,
the year under consideration is an unabated A.Y.
During the search operation, statement u/s 132(4) of the Act was
recorded in which the assessee surrendered lumpsum of Rs. 40 lakhs
for alleged long term capital gains earned from sale of shares as
additional income. However, when the assessee filed revised return on
19.11.2015, he returned Rs. 20,54,688/- as income from other sources
and claimed that no long term capital gain existed in the name of his
wife amounting to Rs. 19,45,312/-.
The Assessing Officer completed assessment by recharacterizing
the income surrendered by the assessee as income u/s 69A of the Act
and made addition of Rs. 20,54,688/- and further made addition of Rs.
19,45,312/- u/s 69C of the Act being long term capital gain in the
hands of the wife of the assessee.
When the addition was challenged before the ld. CIT(A), he
dismissed the appeal holding that the assessee has retracted from the
statement given by him u/s 132(4) of the Act.
Before us, the ld. counsel for the assessee vehemently stated
that the Assessing Officer could not have recharacterised the income
returned by the assessee under the heard ‘income from other sources’
and there is no such capital gain in the hands of wife and, therefore,
the entire addition of Rs. 19,45,312/- is uncalled for.
Further, reliance was placed on the decision of the Hon'ble
Supreme Court in the case of Abhisar Buildwell 459 ITR 212 claiming
that statement u/s 132(4) of the Act as not incriminating material.
Per contra, the ld. DR strongly supported the findings of the
Assessing Officer/ld. CIT(A) and vehemently stated that the assessee
cannot be allowed to retract from his statement.
We have given thoughtful consideration to the orders of the
authorities below and have carefully considered the relevant
documentary evidence brought on record. It is equally true that while
giving answer to Question No. 29, exhibited at page 4 of the
assessment order, the assessee admitted that he has earned long term
capital gain of Rs. 40 lakhs alongwith his wife which has been claimed
as exempt income and offered the same for taxation.
However, the assessee realized that actual gain earned by him
was Rs. 20,57,590/- and no such gain was earned by his wife.
Immediately the return was revised. Since the assessee himself has
declared income as income from other sources, we do not find any
merit in recharacterising the same as income u/s 69A of the Act.
Further, on verification of the return of the wife of the assessee, we
find that she has not earned any long term capital gain and the entire
addition has been made only on the basis of surrender made by the
assessee at the time of search.
On identical set of facts, the coordinate bench in ITA No.
1344/DEL/2021 had the occasion to adjudicate similar issue. The
relevant findings read as under:
“9. Having held so, we may further add that a reading of section 115BBE of the Act makes it clear that the special rate of tax provided under the said provisions shall be applicable under two conditions. Firstly, where the total income includes any income referred to in 6 ITA Nos. 1344 /Del/2021- AY: 2017-18 sections 68, 69A, 69B, 69C or 69D and reflected in the return of income under Section 139 of the Act. Secondly, if the income determined by the Assessing Officer includes any income referred to, in sections 68, 69, 69A, 69B, 69C or 69D, if such income is not covered under the first condition. In the facts of the present appeal, admittedly, assessee has not offered the income under Section 69A of the Act. Even, the Assessing Officer has not made any separate addition under Section 69A of the Act. He has merely re-characterized the nature of income offered by the assessee. Thus, in our considered opinion, the provisions of sections 115BBE would not be applicable to the facts of the present appeal.”
Considering the facts in totality, we do not find any merit in the
impugned addition. We, accordingly direct the Assessing Officer to
delete the same.
In the result, the appeal of the assessee in ITA No.
3807/DEL/2019 is allowed on the ground argued before us.
The order is pronounced in the open court on 07.02.2024.
Sd/- Sd/-
[SAKTIJIT DEY] [N.K. BILLAIYA] VICE PRESIDENT ACCOUNTANT MEMBER
Dated: 07th FEBRUARY, 2024.
VL/
