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2025 Supreme(Online)(ITAT) 3449
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
Madhumita Roy, JM, Annapurna Gupta, AM
Rajeev Kumar Gupta – Appellant
Versus
ACIT, Circle 25(1) – Respondent
ITA No.66/Del/2023
For the Appellants/Petitioners: None
For the Respondents: Sh. Harpreet Kaur Hansra, Sr. DR
Recorded investments in audited accounts cannot be deemed unexplained under Section 69, and agricultural land sold does not qualify as a capital asset under Section 2(14) of the Income Tax Act.
Headnote:(A) Income Tax Act, 1961 - Sections 69 and 45 - Assessment for AY 2018-19 - Appeal against additions of unexplained investments and long-term capital gains - Condonation of delay of 44 days in filing appeal granted - Addition of Rs. 5,00,000/- for unexplained investments deleted as they were recorded in audited accounts - Profit on sale of agricultural land treated as long-term capital gain was also deleted as the land was established to be agricultural and not a capital asset. (Paras 3, 8, 9.2)
(B) Principles of Taxation - Burden of proof lies on the assessing officer to substantiate claims made against the taxpayer - Evidence submitted by taxpayer must be adequately considered before concluding assessments. (Paras 9.1, 9.2)
Facts of the case:
The assessee filed an appeal against the assessment order which included an addition of Rs. 5,00,000/- for unexplained investments and Rs. 3,94,36,125/- for long-term capital gains on the sale of agricultural land. The appeal was filed after a delay of 44 days.
Findings of Court:
The Tribunal found that the advances were recorded in the books of accounts, and the land sold was agricultural, thus reversing the lower authorities' decisions.
Issues: The primary issues were whether the advances were unexplained investments and whether the profit on the sale of the land qualified as long-term capital gain.
Ratio Decidendi: The court held that recorded investments in accounts cannot be deemed unexplained under Section 69, and the evidence presented confirmed the land's agricultural status, exempting it from capital gains tax.
Result: Appeal allowed.
| Table of Content |
|---|
| 1. issues raised in the appeal (Para 4 , 6) |
| 2. factual background of the appeal (Para 5) |
| 3. court's observations on evidence and arguments (Para 7 , 8) |
| 4. court's reasoning on capital asset determination (Para 9) |
| 5. conclusion and order of the court (Para 10) |
ORDER
PER MADHUMITA ROY, JM:
The instant appeal filed by the assessee is directed against the order dated 27.09.2022 passed by the National Faceless Appeal Centre (NFAC), Delhi, arising out of the assessment order passed by the Assessment Unit, Income Tax Department dated 16.01.2021 under Section 143(3) read with 144B of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) for Assessment Year 2018-19.
2 At the time of hearing, none appeared for the assessee though hearing notices have been sent through registered email id as brought on record before the Tribunal. As there is no appearance from the assessee's side, the submissions of the Ld. Sr. DR are recorded, the documents and materials including written submissions and paper book filed by assessee are perused and the matter is taken as heard.
3 The appeal is time barred by 44 days. An application dated 09.01.2023 requesting condonation of delay perused and even Learned DR has not seriously disputed the delay aspect. Thus, delay of 44 days in filing the instant appeal is condoned.
4. In the instant appeal two issues involved. One is in respect of addition of Rs. 5,00,000/- sustained by Ld. CIT(A) out of total addition of Rs. 5,40,00,000/- made by Ld. AO, representing advances made by assessee held as unexplained investment u/s 69 read with section 115BBE of the Act. Second issue is of addition of Rs. 3,94,36,125/- made by Ld. AO and sustained by Ld. CIT(A) representing profit on sale of agricultural land treated as Long Term Capital Gain and added to the total income of the assessee u/s 45 of the Act.
5. The brief facts leading to the case are that the assessee has e- filed the return of income for the Assessment Year 2018-19 on 31.10.2018, declaring income of Rs. 29,56,570/- and thereafter has filed return of income on 10.06.2019 in response to notice issued u/s 139(9) of the Act. The case was selected for scrutiny through CASS on the issues “Sources of Loan Advanced” and “Capital Gain/income on sale of property” vide notice dated 22.09.2019 u/s 143(2) of the Act. Ld. AO from books of accounts has observed that the schedule to secured loans indicates that the secured loans have been procured for purchase of commercial vehicles; however assessee has investment in the shape of loans and advances of Rs. 5,40,00,000/-; including loan to M/s Vishwaa Carrier of India of Rs. 5,00,000/- which is under consideration. Ld. AO by recording his final conclusion that the assessee could not submit any documentary evidence to prove the identity, credit worthiness and genuineness of the source of loan received by assessee, thus the source of loan advanced by assessee is also not proved. Apart thereof Ld. AO has also show caused as to why Rs. 3,94,36,125/ representing profit on sale of land claimed as exempt on account that the land is agricultural land, should not be treated as Long Term Capital Gain and added to the total income of the assessee u/s 45 of the Act. In response thereto in support of the stand of assessee, he placed reliance upon sale deed itself, certificate dated 10.02.2021 issued by Tehsildar and khasra khatauni of land under consideration, however learned AO, being not impressed with the reply of assessee, has held that the profit on sale of land as Long Term Capital Gain and added to the total income u/s 45 of the Act. Ld. CIT(A) has sustained the addition of Rs. 5,00,000/- being advances to M/s Vishwaa Carrier of India and Long Term Capital Gain of Rs. 3,94,36,125/-.
6. Thus the assessee filed an appeal against the order of First Appellate Authority before us, raising two issues (supra). Ld. DR supported the order of First Appellate Authority sustaining the additions made by AO. On the other hand, non
