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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
PER RAJPAL YADAV, JUDICIAL MEMBER:
Assessee is in appeal against order of ld.CIT(A)-VI, Ahmedabad dated 30.9.2013 passed for the Asstt.Year 2009-10.
Assessee has taken four grounds of appeal along with sub-grounds. However, grounds no.1 and 4 including sub-grounds are general grounds of appeal, which do not call for recording of any specific finding, hence rejected.
In ground no.2, the assessee has pleaded that the ld.CIT(A) has erred in confirming addition of Rs.11.00 lakhs which was added by the AO with the aid of section 68 of the Income Tax Act, 1961.
ITA No.2754/Ahd/2013
2 4. Brief facts of the case are that the assessee at the relevant time was running proprietorship concern in the name and style of “Dev Satya Corporation”. He has filed his return of income on 20.9.2009 through electronic media declaring total income at NIL. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee has taken cash loan of Rs.11 lakhs from Jayaben Balkrishna Oza. He directed the assessee to prove genuineness and credit worthiness of the transaction. The assessee failed to prove ingredients of section 68 of the Act. Accordingly, the AO has made addition. On appeal, the ld.CIT(A) has confirmed the addition by observing as under:
“4.4. Having considered the facts of the issue, I am not inclined to accept the contentions of the appellant. As seen from the agreement of sale dated 28.08.2008 appellant was supposed to have received Rs.11,00,000/-, being part of the sale consideration of Rs.18,00,000/-, on the same date in cash. The said amount of Rs.11,00,000/- was found credited in the books of accounts of the appellant. As stated by the A.O in the assessment order the creditworthiness of Smt.Jayaben was not established. Appellant failed to furnish either the PAN or the Income- tax particulars of Smt. Jayaben. He failed to produce the legal heir of Smt. Jayaben before the A.O, in spite of being specifically asked to. Apparently, the sale of the property at Shefali Appartment was not effected later, leading to the suspicion regarding the genuineness of the agreement of sale. Appellant had not demonstrated the repayment of Rs. 11,00,000/- to Smt. Jayaben, consequent on the sale being aborted. As seen from the affidavit of Shri Vinodbhai D. Soni dated 22.12.2008 (referred to in the written submission reproduced above), appellant in turn was supposed to have lent the money of Rs.11,00,000/- to Shri Vinodbhai D. Soni. The date of lending is not mentioned in the affidavit. Having considered all these facts, I uphold the finding of the A.O. that the appellant failed to establish the creditworthiness of Smt. Jayaben and the genuineness of the transaction of sale of immovable property (and the pursuant receipt of cash of Rs.11,00,000/- from her towards part of sale consideration).”
ITA No.2754/Ahd/2013
3 5. With the assistance of the ld.representatives, we have gone through the record carefully. Section 68 of the Income Tax Act contemplates that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof, or the explanation offered by the assessee is not, in the opinion of the AO satisfactory, then the sum so credited in the accounts may be treated as income of the assessee of that previous year.
A perusal of record would show that the assessee miserably failed to submit any details with respect to Rs.11 lakhs received from Jayaben Balkrishna Oza. The assessee had developed a story that this amount was taken as an advance for sale of flat at Shefali Apartment, but he failed to demonstrate execution of any sale deed to legal heirs of Jayaben Balkrishna Oza. He failed to demonstrate refund of this amount to L/R of Smt. Jyababen Balkrishna Oza. The ld.CIT(A) has considered all these aspects in the finding extracted supra. After going through well reasoned finding of the ld.CIT(A) we do not see any error in it. Accordingly, this ground of appeal is rejected.
In ground no.3, grievance of the assessee is that the ld.CIT(A) has erred in confirming addition at Rs.62,34,953/ which was added by the AO on account short term capital gain accrued to the assessee on sale of a land.
Brief facts of the case are that the assessee has purchased a plot comprised in Final Plot no.19/1 situated at Vadodra from Kirti Developer for a consideration of Rs.62,35 lakhs. An agreement to purchase was executed on 7.5.2008. It emerges out from the record that this plot was finally sold to M/s.Rajeshwar Corpaotion for a consideration of Rs.1,24,70,000/- on 31.7.2008. The case of the AO is that at the time of execution of agreement
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4 to purchase, the assessee has obtained possession which was handed over to M/s.Rajeshwar Corporation on 31.7.2008, when the agreement to sell was executed. On the other hand, the case of the assessee is that possession was handed over in the subsequent assessment year. Capital gain was arisen in the Asstt.Year 2010-11 and the assessee has duly offered the amount for taxation. The AO rejected this contention of the assessee and assessed short-term capital gain in the Asstt.Year 2009-10. The appeal to the ld.CI(A) did not bring any relief to the assessee.
Before us, the ld.counsel for the assessee contended that a memorandum of understanding was executed between representatives of Rajeshwar Corporation and the assessee on 27.12.2009. According to this MOU payments have been made to the assessee on 1.4.2008, 13.8.2008, 9.6.2009, 25.6.2009 and 27.9.2009. The sale deed was executed subsequently. The assessee was a confirming party and possession was handed over through MOU. Thus, according to the assessee possession was handed over in the accounting year relevant to the Asstt.Year 2010-11. The ld.counsel for the assessee further contended that the assessee offered the amount for taxation in the subsequent year.
On the other hand, the ld.DR relied upon order of the AO. He pointed out that deal was finalized in the accounting period relevant to the Asstt.Year 2009-10 and short term capital gain deserves to be assessed in this assessment year.
We have duly considered rival contentions and gone through the record carefully. As far as assessment of Rs.62.35 lakhs as short term capital gain is concerned, there is no dispute between the parties. The capital gain has arisen
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5 to the assessee and it has to be assessed in his hand. The dispute is about the year of taxability. According to the assessee, it is taxable in the Asstt.Year 2010-11 whereas the according to the Revenue it is taxable in the Asstt.Year 2009-10. As far as rates of taxability is concerned, there is no dispute between the parties. The rate of short-term capital gain is being assessed at the same rate of tax in both these years. It is also pertinent to observe that neither in this year nor in subsequent assessment years, there is any capital loss against which this gain can be set off. After making this analysis we confronted the ld.counsel for the assessee to demonstrate how this gain has been offered in the Asstt.Year 2010-11. The assessee’s plea before the ld.CIT(A) was, that he had converted this land as stock-in-trade and thereafter sold it. The amount was credited in the profit & loss account, and it has been offered as business profit. We have examined the computation of income submitted by the assessee for the Asstt.Year 2010-11, and other details. It is pertinent to observe that the assessee has not acquired absolute right in the property. He has acquired only right to obtain sale deed, by virtue of agreement dated 7.5.2008. He has signed subsequent sale deed in favour of Rajeshwar Corporation as a confirming party. Original owner has signed the sale deed in the capacity as vendor. In this situation, how the assessee can convert this right as stock-in-trade. Apart from the above, when this right is to be converted in stock in trade, then in such conversion any gain arisen to the assessee ought to be offered as a capital gain. No such exercise has been done by the assessee. He has not computed conversion gain and offered for it taxation in the year 2010-11. We further find that the assessee has played a fraud on the Revenue by taking a plea that he has offered this amount for tax in subsequent year. In fact, he has actually not converted the land in stock-in- trade, but in the computation of income, considered it as a business profit.
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6 The ultimate income offered by the assessee in subsequent year is very a negligible income. Copy of the acknowledgement for the Asstt.Year 2010-11 is placed on page no.199. The tax shown as payable is of Rs.1,17,172/- . The assessee has shown income at Rs.6,63,825/- from business & profession. All these details would indicate that the assessee has not given effect to this transaction in true sense. When we confronted this aspect to the ld.counsel for the assessee, then he conceded that this amount is taxable in the Asstt.Year 2010-11 and necessary direction be issued as contemplated in section 153(6) r.w. Explanation 2(a) of the Income Tax Act, 1961. In order to appreciate the details in more scientific way, we deem it appropriate to take note of sub-section (6) and Explanation 2(a) of section 153. They read as under: Section 153 …… …… 6) Nothing contained in sub-sections (1) and (2) shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of sub-sections (3) and (5), be completed— (i) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the Principal Commissioner or Commissioner, as the case may be; or (ii) where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. .…
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7 …. Explanation 2.—For the purposes of this section, where, by an order referred to in clause (i) of sub-section (6),— (a) any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order; or
As observed earlier, the assessee did not dispute about taxability of short term capital gain. He has disputed the year of taxability. We find that this amount of Rs.62.35 lakhs is taxable in the hands of the assessee. It is also pertinent to observe that it is taxable in the Asstt.Year 2010-11. The assessee has tried to withhold information about taxability of this amount in the Asstt.Year 2010-11 by offering this amount as business profit, which is not appreciable step at the end of the assessee. Considering these details and exercising power contemplated under section 153(6)(i) r.w. Explanation 2(a) of the Income Tax Act, 1961, we direct the AO to assess short term capital gain at Rs.62,34,953/- in the Asstt.Year 2010-11. With the above directions, we reject this ground of appeal of the assessee.
In the result, the appeal of the assessee is dismissed. Order pronounced in the Court on 9th October, 2017 at Ahmedabad.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 09/10/2017