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II. Direct Taxes Case Laws:
1. CIT Vs. Harjeev Aggarwal, I.T.A. No. 8/2004, Date of Judgment: 10.03.2016, High Court of Delhi
Issue:
Whether the amount used by the assessee for the purchase of
property paid in cash is liable to be taxed as undisclosed income as per
Section 158BB of the Income Tax Act?
Held_Yes
Brief Facts:
A search was conducted on the premises of the non-resident, Mr.
Arvind Seth which led to a finding of a sale agreement of a property
with Mr. Harjeev Aggarwal worth Rs. 86 Lakh out of which Rs. 74 Lakh was
paid in cash and rest Rs. 12 Lakh was paid by cheque. Following that, a
search was conducted on the premises of Mr. Harjeev Aggarwal. He
submitted that the property was jointly purchased by Mr. Harjeev
Aggarwal, Mrs. Anita Aggarwal and Harjeev Aggarwal and Sons (HUF) and
out of Rs. 74 Lakh paid in cash, Rs. 12 Lakh was paid from accumulated
cash and Rs. 60 Lakh from unaccounted sale of stock. Later, assessee
explained that Rs. 45 lakh (out of Rs. 74 lacs) was earnest income
received as advance for sale agreements. The Revenue also found a diary
containing the records of unaccounted sales and purchases.
Therefore,
AO made an addition of Rs. 86 Lakh in the income of the assessee on
account of undisclosed income while CIT (A) upheld the addition of Rs.
74 Lakh and deleted the addition of Rs. 12 lakh as cheques were not
en-cashed. Further, ITAT deleted the addition of Rs. 74 lakh also.
Aggrieved by the order, the Revenue appealed in the High Court of Delhi.
Held:
The Hon’ble High Court of Delhi held that there is no explanation as
why such large payments were made in cash when they are not recorded in
the books of accounts. A diary found during the search proceedings also
indicate Rs. 60 lakh as for unaccounted sale and purchase which is in
support of the assessee earlier statement. Further assessee produced no
document in support of his claim of back to back sale agreements at the
material time. Also, there was no explanation as why cash was withdrawn
in trances much before the payment was made to Mr. Arvind Seth.
Therefore, in consideration of the facts the assessee was liable to pay
tax on the undisclosed amount. The appeal of the Revenue was allowed.
(Please click here for judgment)
2. Mahesh Chandra Chaurasia Vs. DCIT, I.T.A. No. 267/LKW/2015, Date of Order: 17.03.2016, ITAT - Lucknow
Issue
Whether the ld. AO is justified in considering the sale proceeds
of shares as Income from Other Sources in case of the uncertainty about
the date and rate of purchase of shares by the assessee?
Held: No
Brief facts
The assessee sold certain shares of Allahabad Bank in AY 2011-12
which were dematerialised in AY 2008-09. As per the assessee, same were
purchased in AY 2003-04, however, no supportive documents were furnished
for the same. The AO, doubting the date and rate of purchase of these
shares, denied the exemption of Long Term Capital Gain and considered
the same as Income from Other Sources.
Held
The Hon’ble ITAT held that the AO is not justified in making addition
in the AY 2011-12. The AO is at liberty to examine the evidence and
source of acquisition of these shares and in case the assessee is not
able to explain the source, the addition may be made in the year of
purchase which may be AY 2003-04 or AY 2008-09 but no addition can be
made in the year of sale of shares.
In
respect of LTCG on sale of these shares, it was held that even if the
date of purchase is taken as December, 2007 being the date of credit in
DEMAT account of the assessee then also, the period of holding is more
than 1 year and therefore, the gain is LTCG on sale of quoted shares
which is exempt. The cost of acquisition and the amount of capital gain
becomes irrelevant because whatever be the gain, the entire gain will be
exempt. Thus, the Hob’ble ITAT found the addition to be unjust &
allowed the appeal of the assessee.
(Please click here for judgment)
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