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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 20/06/2024 Date of Order – 20/06/2024
O R D E R PER BENCH
The aforesaid appeals have been filed by the assessee challenging the impugned orders of even dated 07/08/2021, passed by the learned Commissioner of Income Tax (Appeals)–3, Nagpur, [“learned CIT(A)”], for the assessment year 2010–11, 2011–12, 2013–14 and 2014–15 respectively.
./2021 Assessee’s Appeal – A.Y. 2010–11
The assessee has raised following grounds:–
Naresh Vasantrai Trivedi ITA no.108/Nag./2021
“1) On the facts and circumstances of the case and in law, the entire assessment framed and the additions to the extent confirmed are bad in law and liable to be quashed in the interest of justice. 2) The Ld. AO grossly erred in making and the Ld. CIT(A) 3, Nagpur grossly erred in confirming the addition to the extent of Rs. 5,00,000 treating the same in the nature of unexplained deposits in bank account ignoring the submission of the Appellant. The source of the amount of Rs. 5,00,000 being from explainable sources, the addition deserves to be deleted in the interest of justice. 3) The Ld. CIT(A) grossly erred in assessing the capital gains from sale of jewellery as short-term capital gains. The capital gains on the sale of jewellery ought to be assessed based on the period of holding and in accordance with the provisions of the Income Tax Act, 1961 in the interest of justice. 4) The Ld. CIT(A) grossly erred in enhancing the income of the Appellant by an amount of Rs. 68,568 on account of interest income which is illegal, and the addition so made by enhancing the income of the Appellant deserves to be deleted in the interest of justice. 5) The Ld. CIT(A) grossly erred in enhancing the income of the Appellant on account of income from house property from the houses owned by the Appellant without providing any cogent reasons for the same and further by ignoring the submissions of the Appellant that the Appellant has not earned any income from the said properties. The additions emanating from enhancement of income by CIT(A) relating to income from house property deserve to be deleted in the interest of justice. 6) The Appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of appeal with the kind permission of the Hon'ble Tribunal.”
3. Ground no.1, being general in nature, hence no separate adjudication is needed.
4. Ground no.2, relates to addition to the extent of ` 5 lakh, being treated as unexplained deposit in the bank account.
Brief facts are, the assessee is mainly engaged in the spiritual activities and charitable works. A search action under section 132 of the Income Tax Act, 1961 ("the Act") was conducted in case of M/s. Concrete Developer on 01/12/2015, during which certain documents pertaining to the assessee were Page | 2
Naresh Vasantrai Trivedi ITA no.108/Nag./2021 found and seized. Since assessee’s total income did not exceed the basic exemption limit, hence he was under the bona fide belief that he was not required to file return of income and thus, the initially the assessee did not file his return of income. The assessee, however, filed computation of income under the belief that it would be sufficient compliance which is duly disclosed all the particulars of his income. The Assessing Officer held that the assessee has neither filed any return of income nor responded to any queries raised by the Department. The Assessing Officer, on the basis of information from the two bank accounts in Central Bank of India and State Bank of India and on the basis bank extracts of the accounts of the assessee, treated the receipt of ` 7,29,500 as income of the assessee for the year under consideration, as the assessee failed to file his return of income. The Assessing Officer also initiated penalty under section 271(1)(c) of the Act. Aggrieved, the assessee carried the matter before the first appellate authority.
The learned CIT(A) stated in his order that the learned Authorised Representative has filed explanation for the deposits in the bank account which is summarised in the table below:–
Source explained by the appellant Total Bank Account Receipts S.no. details Number Income Loan Sale of Contra (`) earned obtained Jewellery Entries Central 1. Bank of 3061529168 7,29,500 1,000 5,00,000 93,500 1,35,000 India Total:– 7,29,500 1,000 5,00,000 93,500 1,35,000
The learned CIT(A) held that since the learned Authorised Representative has not filed any documentary evidence in support of the loan of ` 5 lakh claimed to have been received by the assessee, therefore, the said Page | 3
Naresh Vasantrai Trivedi ITA no.108/Nag./2021 loan amount of ` 5 lakh was treated as unexplained deposit in the bank account.
Before us, the learned Counsel for the assessee explained that the assessee has received ` 5 lakh on 29/01/2020, from the mother of the assessee Smt. Pushpavati Vasantrai Trivedi, who had expired on 30/01/2010. Copy of Bank Statements was filed to demonstrate the transactions of loan given by a mother to a Son. A duly sworn Affidavit of the assessee was also filed. The learned Counsel accordingly submitted that the sum of ` 5 lakh is duly explained.
The learned Departmental Representative relied upon the order passed by the learned CIT(A).
We have heard both the parties and perused the material available on record and find substantial merit in the submissions of the learned Counsel for the assessee. Since the Mother of the assessee has expired long ago and sufficient evidences have been filed by the assessee to demonstrate the transaction, we set aside the impugned order passed by the learned CIT(A) on this issue and delete the addition of ` 5 lakh on account of unexplained deposit. Now, there remains a small deposit of ` 1,000, which is unexplained and this amount can be ascribed out of past savings. Hence, addition of ` 1,000, is also hereby deleted. Thus, ground no.2, is hereby allowed.
Ground no.3, relates to the addition on account of capital gain from sale of jewellery as short term capital gain.
Naresh Vasantrai Trivedi ITA no.108/Nag./2021
During the course of hearing, the learned Counsel for the assessee argued that the authorities below have assessed the amount received from sale of jewellery which was assessed at ` 93,500, as short term capital gain that too without giving benefit of cost of acquisition of ` 27,531. We also find that the learned Counsel also filed two purchase bills wherein the year of purchases is 1998. In view of this, we direct the Assessing Officer to compute the long term capital gain as enunciated below:–
Sale Consideration ` 93,500 Less:– Index Cost of ` 27,531 x 632 / 351 ` 49,571 Acquisition Long Term Capital Gains ` 43,929
Thus, ground no.3, is partly allowed.
Ground no.4, relates to enhancing the income of the assessee by an amount of ` 68,568, on account of interest income of the assessee.
After hearing arguments of both the parties, we find that in the remand report dated 20/02/2020, the Assessing Officer stated that the assessee has received interest income of ` 68,568, which has not been included in the total income. The learned CIT(A) observed that in the reply filed by the assessee in response to the remand report, has not made any comment on this issue and hence the addition was confirmed. The learned Counsel for the assessee fairly accepted that the addition of ` 68,568, be confirmed. Consequently, no interference is warranted in the order of the learned CIT(A) on this issue. Thus, ground no.4, is dismissed.
Naresh Vasantrai Trivedi ITA no.108/Nag./2021
Insofar as ground no.5, is concerned, we find that the learned CIT(A) has granted sufficient opportunities to enable the assessee to counter the remand report which the assessee failed to do so and hence the direction of the learned CIT(A) on this issue is found appropriate and no interference is called for in the order passed by the learned CIT(A) on this issue. Accordingly, ground no.5, is also dismissed.
In the result, appeal filed by the assessee for the assessment year 2010–11 is partly allowed. ./2021 Assessee’s Appeal – A.Y. 2011–12
The assessee has raised following grounds:–
“1) On the facts and circumstances of the case and in law, the entire assessment framed and the additions to the extent confirmed are bad in law and liable to be quashed in the interest of justice. 2) The Ld. CIT(A) grossly erred in enhancing the income of the Appellant by an amount of Rs. 11,18,783 on account of long-term capital gains on sale of flat. The addition so enhanced is illegal invalid and deserves to be deleted in the interest of justice. 3) The Ld. CIT(A) grossly erred in enhancing the income of the Appellant by Rs. 11,18,783 on account of long-term capital gains on sale of Flat without giving the benefit of indexed cost of acquisition which is illegal, and which deserves to be allowed in the interest of justice. 4) The Ld. CIT(A) grossly erred in invoking the provisions of section 50C of the Act while enhancing the income of the Appellant on the account of long-term capital gains from sale of flat without complying with the requirements of section 50C including but not limited to referring the valuation to the valuation officer as is statutorily required to be done under law. The invocation of section 50C is thus bad in law and the same deserves to be ignored for calculation of capital gains in the interest of justice. 5) Under any case, the fair market value of the Flat sold being the price at which the property has been sold by the Appellant, the valuation under section 50C deserves to be ignored in the interest of justice.
Naresh Vasantrai Trivedi ITA no.108/Nag./2021
6) The Ld. CIT(A) grossly erred in enhancing the income of the Appellant on account of income from house property from the houses owned by the Appellant without providing any cogent reasons for the same and further by ignoring the submissions of the Appellant that the Appellant has not earned any income from the said properties. The additions emanating from enhancement of income by CIT(A) relating to income from house property deserve to be deleted in the interest of justice. 7) The Appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of appeal with the kind permission of the Hon'ble Tribunal.”
During the course of hearing, the learned Counsel for the assessee fairly submitted that the addition of ` 68,662, on account of interest and other income earned may be added to the income of the assessee, as he is not in possession of any evidence to adduce in support of such claim. Consequently, addition of ` 68,662, is hereby sustained and no interference is called for in the order passed by the learned CIT(A) on this issue.
Insofar as the computation of capital gain on the basis of the value adopted for registration process, we find that there is a difference between sale consideration of ` 14,43,000 and value as per registration is at ` 18,75,500. We strongly feel that it was bounden duty of the Assessing Officer to refer the matter to the Valuation Officer in accordance with the judgment of the Hon’ble Calcutta High Court in Sunil Kumar Agrawal v/s CIT, 372 ITR 83 (Cal.). Accordingly, we set aside the impugned order passed by the learned CIT(A) on this issue and restore the matter to the file of the Assessing Officer and direct him to re–compute the capital gain in accordance with law.
In the result, appeal filed by the assessee for the assessment year 2011–12 is partly allowed. Page | 7
Naresh Vasantrai Trivedi ITA no.108/Nag./2021 ./2021 Assessee’s Appeal – A.Y. 2013–14
The assessee has raised following grounds:–
“1) On the facts and circumstances of the case and in law, the entire assessment framed and the additions to the extent confirmed are bad in law and liable to be quashed in the interest of justice. 2) The Ld. AO grossly erred in making and the Ld. CIT(A) -3, Nagpur grossly erred in confirming the addition to the extent of Rs.8,18,488 treating the same in the nature of unexplained deposits in bank account ignoring the submission of the Appellant. The source of the amounts totalling to Rs.8,18,488 being from explainable sources, the addition confirmed deserves to be deleted in the interest of justice. 3) The Appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of appeal with the kind permission of the Hon'ble Tribunal.”
23. Grounds no.1 and 3, being general in nature, hence no adjudication is required.
24. Ground no.2, relates to addition of ` 8,18,488, on account unexplained deposits in bank account sustained by the learned CIT(A) for the credit entries appearing in two bank accounts bearing no.65160155050 and 61158733841 in the State Bank of India.
25. The Assessing Officer has made the addition with respect to sum total of credits appearing in the bank account of the assessee.
26. Before the learned CIT(A), the assessee has given narrations and copies of bank account statements in order to substantiate his claim and hence, the learned CIT(A) granted substantial relief to the assessee by reducing the credit entries by ` 63,18,648, and the Assessing Officer was directed to Naresh Vasantrai Trivedi ITA no.108/Nag./2021 reduce this amount from the addition of ` 71,37,136, made by the Assessing Officer, thus confirming addition of ` 8,18,488.
We have heard both the parties and perused the material available on record. The addition has been sustained with reference to the credit entries in the bank account. During the course of hearing, the learned Counsel for the assessee fairly submitted that he is not in a position to explain the same in view of the long passage of time. He requested before the Bench to take a reasonable view in this regard. Consequently, keeping in view the withdrawals which may have been re–circulated and keeping in mind that the litigation is pending for over a decade and the assessee has tried to co–operate at all levels, we confirm the addition of ` 3 lakh in lump sum to end the dispute. Accordingly, the assessee gets relief of ` 5,18,488.
In the result, appeal filed by the assessee for the assessment year 2013–14 is partly allowed. ./2021 Assessee’s Appeal – A.Y. 2014–15
The assessee has raised following grounds:–
“1) On the facts and circumstances of the case and in law, the entire assessment framed and the additions to the extent confirmed are bad in law and liable to be quashed in the interest of justice. 2) The Ld. AO grossly erred in making and the Ld. CIT(A) - 3, Nagpur grossly erred in confirming the addition to the extent of Rs.7,82,294 treating the same in the nature of unexplained deposits in bank account ignoring the submission of the Appellant. The source of the amounts totalling to Rs. 7,82,294 being from explainable sources, the addition confirmed deserves to be deleted in the interest of justice.
Naresh Vasantrai Trivedi ITA no.108/Nag./2021 3) The Appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of appeal with the kind permission of the Hon'ble Tribunal.”
30. Grounds no.1 and 3, being general in nature, hence no adjudication is required.
31. Ground no.2, relates to addition of ` 7,82,294, on account unexplained deposits in bank account.
32. The Assessing Officer has made the addition with respect to sum total of credits appearing in the bank account of the assessee.
The learned CIT(A) granted substantial relief to the assessee. Out of the total credit entries, since the assessee has successfully explained the credit entries of ` 34,32,773, therefore, the Assessing Officer was directed to reduce ` 34,32,773 from the addition of ` 42,15,067, made by the Assessing Officer on account of unexplained credit entries in the bank account. The balance credit entries totalling to ` 7,82,294, was sustained by the learned CIT(A).
We have heard both the parties and perused the material available on record. The learned Counsel for the assessee explained us by inviting our attention to Page–56 of the pb that ` 3,00,000, was transfer from UCO Bank and it is merely a contra entry and ` 3,93,000, is an auto sweep transaction indicating automatic closure of Fixed Deposit upon maturity which is credited to saving bank account as per the extent procedures of the Bank and hence, the sum of ` 6,30,938, cannot be considered to be unexplained credit in the bank account. As per the balance amount of ` 1,51,358, he fairly submitted that ` 25,202, is income from interest which merits addition in full. The Page | 10
Naresh Vasantrai Trivedi ITA no.108/Nag./2021 balance amount of ` 1,26,156, is income from house property as it is evident that the credit on account of rent. The addition under section 24 of the Act to the extent of 30% is allowable on such income and so the net addition may be restricted to ` 88,309, as income from house property. Upon careful consideration and analysis of the material and evidence on record, the addition is restricted to ` 88,309, as income from house property and ` 25,202, towards interest aggregating to ` 1,13,511. So the assessee gets relief of ` 6,68,783.
In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open Court on 20/06/2024