INCOME TAX ON SALE OF PROPERTY BELONGING TO FATHER IS NOT LEVIABLE ON SON

INCOME TAX ON SALE OF PROPERTY BELONGING TO FATHER IS NOT LEVIABLE ON SON

IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR

BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER
AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

Gurbinder Singh Mahal
Vs
ITO (ITAT Amritsar)

Appeal Number : I.T.A. No. 22/Asr/2023
Date of Judgement/Order : 24th April 2023

Assessment Year: 2014-15

FACTS–

The addition was made by Assessing Officer for The addition was made by Assessing Officer for depositing of cash total amount of Rs.1,98,58,499/- in two bank accounts of the assessee. As per observation of the ld. AO amount to Rs.74,90,000/- was deposited in Punjab & Sind Bank and Rs.1,23,68,499/- cash was deposited in HDFC Bank. Considering the disclosed business income Rs.3,10,540/-, the addition was confirmed amount to Rs.1,95,47,959/- and the assessment was completed u/s 144 of the Act. The assessee prayed that the entire amount of deposit was not properly reconciled by the AO. The withdraw of cash was also not considered in the assessment order. Further, the source of the cash deposit was from sale of the immovable properties, loan from the father of the assessee.
The assessee is power of attorney holder of the property (land) which was owned by his father. So, the entire amount related to sale of land would not be taxed in the hands of the assessee. Aggrieved assessee filed an appeal before CIT(A). CIT(A) upheld the order of the ld. AO. Being aggrieved assessee filed the present appeal. Point No 7. During hearing, the ld. AR respectfully relied on the order of the Hon’ble Jurisdictional High Court and the order of the Tribunal the details are as follows:

Point No:- 7.1) Shiv Charan Dassvs. CIT 126 ITR 263 [1980] (Punj. & Har.)

“Income from undisclosed sources—Unexplained investment—Amount disclosed by HUF under Voluntary Disclosure Scheme—
Thereafter kept lying in assessee’s house with his wife till her death— ITO questioning its source after the same had subsequently been deposited with a bank in the names of assessee’s then major daughters— In the absence of any evidence to the effect that the said sum was utilized by the assessee in any other manner, the Department was not justified in unreasonably rejecting a good explanation and adding the amount as income from undisclosed sources.”

Point No:- 7.2) Late Sh. Parveen Kochhar, Legalheir Kamini Choudhary vs ITO, Wd-5 (4), Amritsar.2022 (9) TMI 924 – Itat Amritsar

“Unexplained Cash withdrawn out of bank account – Gap between withdrawal and deposit of the cash – withdrawn and deposit of cash with a gap of 70 days – HELD THAT:- The withdrawn and deposit of cash with a gap of 70 days which was considered by the ld. AO as seven months. The ld. Counsel clearly stated that the sufficient cash was withdrawn in same bank account and after part utilization of the same; the amount was deposited in same HDFC Bank account. Appellate authority without considering the proper fact and submission of the assessee had passed the order ex parte. CIT(A) was failed to dispose the appeal on merits and has not contended the explanation of the assessee.
As stated in the submission that the assessee was not able to present before the CIT(A) due to the fact that the appellant expired on 23.10.2020 thereafter her husband also expired on 03.11.2020. The copy of the death certificate of the assessee and her husband are being enclosed – In these circumstances here the genuine cause for non-appearance before the CIT(A). We are in opinion that the assessee has sufficient cause during the depositing of cash in her bank account. The hefty amount was withdrawn 70 days ago for utilising the same for the business of her son. Unused amount was deposited in the same bank account of the assessee. The source of deposit of cash was well explained before the revenue authorities by the assessee. Therefore, AO was indeed in error in adopting a wrong fact in his order. The grievance raised by the ld. Sr. Dr. in this appeal, is, therefore, devoid of any legally sustainable merits. We reject the addition amount of made by the ld. AO..”

Point No:- 7.3) Principal CIT, Belagavi vs Basetteppa B Badami, [2018] 93 taxmann.com 66 (Karnataka)

“Section 69A of the Income-tax Act, 1961 – Unexplained money (Cash deposits) – Assessment years 2006-07, 2008-09, 2010-11 and 2011-12 – For preceding assessment year, sufficient amount of cash in hand to be brought forward had reached finality – During current year, on basis of cash deposits in assessee’s bank accounts, Assessing Authority made addition of unexplained money – Whether since brought forward cash in hand of preceding assessment year was sufficient, addition on account of unexplained cash deposit in bank account of assessee was unjustified ”

Point No:- 7.4) J’Jaspal Singh Sehgal v. ITO WD 21(2)(1), Mumbai, [2017] 83 taxmann.com 246 (Mumbai – Trib.)

“Section 68 of the Income-tax Act, 1961 – Cash credit (Cash) – Assessment year 2009-10 – Where assessee submitted detailed cash summary showing inflow and outflow of cash for relevant year, in absence of any materials to show that cash withdrawn was utilized elsewhere by assessee, benefit of cash withdrawn by assessee from bank account against
amount of cashdeposit into bank should be given”

Point No:- 7.5) IN THE HIGH COURT OF DELHI ITA NO 315/2005 JAYA AGGARWAL VS ITO

“Addition u/s 68 for cash withdrawn and cash deposited – Assessee withdrew Rs.2 lakhs to buy immovable property in cash from bank account and re-deposited cash of Rs. 1,60,000/- from the amount withdrawn after more than 7 months as the deal could not be finalized. HC held that addition u/s 68 of amount re-deposited was unjustified, noting that one should not consider and reject an explanation as concocted and contrived by applying the prudent man’s behavior test; Principle of preponderance of probability as a test is to be applied and is sufficient to discharge the onus. Probability here means likelihood of anything to be true.”

Point No:- 7.6) CIT vs Veena Awasthi, TS-10298-ITAT 2018(LUCKNOW)
“ITAT: there is no law in the country which prevents citizens from frequently withdrawing and depositing his own money – ITAT dismisses revenue’s appeal, notes that entire transaction of withdrawals and deposits are duly reflected in the assessee’s bank account and even documentary evidences furnished before the Revenue clearly clarify that on each occasion at the time of deposit in her bank account, assessee had sufficient availability of cash, which is also not disputed by the Revenue;
ITAT upholds Ld. CIT(A)’s order that the AO was not justified in treating the deposits as unexplained deposits, and the AO’s addition is unjustified and contrary to the provisions of the IT Act and was liable to be deleted.”

Point No:-8. The ld. DR vehemently argued and placed that all the issues had not agitated before the ld. CIT(A). The ld. DR fully relied on the order of the revenue authorities.
Point No:- 8.1 In argument the ld. AR invited our attention in APB pages14 to 15related to the assessee’s submission which were placed before the ld. CIT(A) and copy of the forwarding letter is annexed herewith

Point No:- 9. We heard the rival submission and considered the documents available on the record. From the above discussion, it is very clear that the assessee filed the return for the impugned assessment year and the cash deposited from the well explained source for selling of the property of his father. The assessee is a power of attorney holder of his father for selling the land, copy of the power of attorney dated 17.02.2012 along with English Translation are duly annexed in APB page nos. 48 to 54. The documents are duly filed before both the authorities. After considering the factual matrix the assessee cannot be deemed assessee as mentioned by the ld. AO in the remand report. In remand report the ld. AO accepted the fact that the properties are not related with the assessee and the cash was originated from the sale of property and the assessee’s own source which is explained in cash account of assessee. Finally, the concept of the deemed assessee cannot be sustained as per the explanation of section 159 and 160 r.w.s 2(7) of the Act. We fully respectfully relied on the order of the apex court and the assessee is not liable for payment of tax related to sale of property which belong to his father. The source of cash deposited in bank accounts is well explained considering the cash trial of the assessee. The ld. AO had only considered the cash deposit. The deposit of cash was duly explained during the remand before the ld. AO. Entire issue was explained before both the lower authorities by the assessee. The ld. DR has not submitted any contrary fact or any judgment against the submission of the ld. AR. So,
the addition made by the ld. AO amount to Rs.1,95,47,959/- is quashed.
Point No: -10. In the result, the appeal of the assessee bearing ITA No. 22/Asr/2023 is allowed.