LATE PRATAPSINH SHOORJI VALLABHDAS,LOWER PAREL V. INCOME TAX OFFICER, MUMBAI

ITA 2187/MUM/2025

AI Insights

The case revolves around an appeal against the order of the National Faceless Appeal Centre (NFAC), which upheld the addition of Rs.60,46,000 as unexplained money under Section 69A of the Income Tax Act, 1961. The assessee, Late Pratapsinh Shoorji Vallabhdas, through his legal heir, argued that this amount represented the cash equivalent of a property sale transaction for which capital gains had already been taxed in a previous assessment year. The Tribunal examined the facts, including the non-deposit of cheques as per the buyer's instructions and the subsequent cash payments, and found merit in the assessee's arguments, referencing a similar case involving another co-owner of the property.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360599 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2013-2014
• Other Referred Cases: ITA No. 5960/Mum/2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA JOSHI
• Keywords: Cost of acquisition; Capital Gains
• Section: 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, V.P. AND SHRI BIJAYANANDA PRUSETH, AM ITA No. 2187/Mum/2025) (Assessment Year: 2013-14) Late Pratapsinh Shoorji Vallabhdas, Through his legal heir Aditya Pratapsinh Shoorji, W-1501 World Crest Senapati, Bapat Marg Lower Parel, Mumbai 400013 Vs. Income Tax Officer, Piramal Chambers Lalbaug, Mumbai 400012 PAN/GIR No. AAIPS 0383A (Applicant) : (Respondent) Applicant by : Shri B.V. Jhaveri Respondent by : Shri Rajendra Joshi (Sr. DR) Date of Hearing : 14.05.2025 Date of Pronouncement : 23.05.2025 O R D E R Per Saktijit Dey, VP: This is an appeal filed by the assessee against order dated 20.02.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi for the Assessment year (AY) 2013-14. 2. The only dispute arising in the appeal, is in relation to addition made of an amount of Rs.60,46,000/- under Section 69A of the Income Tax Act, 1961 (in short the ‘Act’). 3. Briefly the facts are, the assessee, since deceased, was a resident individual. For the assessment year under dispute, the assessee had filed his return of income on 26.07.2013, declaring income of Rs.15,34,330/-. In course of assessment proceeding, the Assessing Officer (AO) found that as per AIR information, in the 2 ITA No.2187 /Mum/2025 Late Pratapsinh Shoorji Vs. Income Tax Officer year under consideration, the assessee had deposited cash amounting to Rs. 60,46,000/- in his bank account with Axis Bank. He therefore, called upon the assessee to explain the source of such cash deposits. In response to the query raised by the AO, the assessee furnished replies stating that he along with all other co- owners had sold a immovable property to M/s. Kanchi Koncept Builders & Developers for a total sale consideration of Rs.1,80,00,000/- in Financial Year (FY) 2010-11. It was submitted by the assessee that the buyer of the property issued three cheques of Rs.60,00,000/- each representing 1/3rd share in sales consideration of the three co-owners. It was submitted, however, the buyer had given strict instruction to the assessee and another co-owner, namely, Smt. Jyotsna Vikramsinh not to deposit cheque in their account. It was submitted, since the cheques were not in cash, the buyer eventually paid equivalent cash amount to co-owners during the F.Y. 2012-13 and it was deposited in the Bank accounts. Since, the capital gain arising on sale of the said immovable property had already been offered to tax in A.Y. 2011-12, the cash amount received in lieu of sales consideration in the impugned assessment year was not offered to tax. The AO, however, did not find merit in the submission of the assessee. The AO observed, efforts made to ascertain the veracity of assessee’s claim by issuance of notice u/s. 133(6) of the Act to the buyer did not materialize as the buyer did not respond to such notices. Thus, ultimately the AO treated the cash deposit made in the bank account as unexplained money and added back u/s. 69A of 3 ITA No.2187 /Mum/2025 Late Pratapsinh Shoorji Vs. Income Tax Officer the Act. Though, the assessee contested the aforesaid addition before learned First Appellate Authority, however, he was unsuccessful. 4. Before us, learned counsel appearing for the assessee reiterated the stand taken before the Departmental Authorities. He submitted, identical addition was made at a hands of the other co-owner, namely, Ms. Jyotsna Vikramsinh in the very same assessment year. However, he submitted, when the issue finally came up before the Tribunal, the Tribunal vide order dated 28.06.2019 in ITA No. 5960/Mum/2017 deleted the addition. Thus, he submitted, the issue is squarely covered by the decision of the Tribunal in case of another co-owner. 5. Leaned D.R. strongly relied upon the observations of the AO and learned First Appellate Authority. 6. We have considered rival submissions and perused the materials on record. It is the case of the assessee that he along with two other co-owners had sold a property to a Builder & Developer for a total sale consideration of Rs.1,80,00,000/- in F.Y. 2010-11 corresponding to A.Y. 2011-12. It is the further say of the assessee that 1/3rd share falling to each of the co-owners was offered as capital gain in A.Y. 2011-12. It is further case of the assessee that since the cheques issued by the Builder were not deposited in the bank accounts of the co-owners as per the instructions of the Builder subsequently cash equivalent sale consideration was paid by the Builder to the co-owners in F.Y. 2012-13, which was deposited in the Bank account. 4 ITA No.2187 /Mum/2025 Late Pratapsinh Shoorji Vs. Income Tax Officer 7. On perusal of bank statement of the assessee for the F.Y. 2010-11, we have not noticed any credit of Rs.60,00,000/- through the cheque issued by Builder in favour of the assessee. Thus, the contention of the assessee that the cheque issued by the Builder towards sale consideration of the property never credited in the bank account remains uncontroverted. In view of the aforesaid, the claim of the assessee that the cash amount received in F.Y. 2012-13, represents sales consideration appears plausible. In fact, while considering identical dispute arising in case of another co-owner, namely, Smt. Jyotsna Vikramsinh, the Coordinate Bench in ITA No. 5960/Mum/2017 vide order dated 28.06.2019 has held as under: “7. We have considered rival contentions and carefully gone through the orders of the authorities below. From the record, we found that assessee had sold the land jointly owned by her with Mr. Pratapsinh Shoorji Vallabhdas and Mr. Dilipsinh Shoorji Vallabhdas. Thus, the assessee was having 1/3rd share therein. The plot was sold for Rs.1.80 Crores through conveyance deed on 03/11/2010. According to the conveyance deed, assessee was entitled to receive Rs.60,00,000/- (equivalent to her 1/3rd right in the land) which was paid through cheque by the purchaser M/s. Kanchi Koncept Builders & Developers Pvt. Ltd. Subsequent to the execution of the conveyance deed, the buyer asked the assessee not to deposit the cheque till he gives the clearance. However, thereafter, the buyer has paid Rs.60,00,000/- in the F.Y.2012- 13 on different dates as stated above. The said amount was deposited by the assessee in her bank account. It is also a matter of record that profit earned on the sale proceeds of Rs.60,00,000/- out of the sale of land was already offered as capital given in the A.Y.2011-12 which was under scrutiny by the Assessing Officer and assessment order was passed on 30/03/2014 for the A.Y.2011-12. The AO had dealt with the issue of capital gains on sale of this land at para 13 and after giving deduction on account of indexed cost of acquisition brought capital gain of Rs.52,09,409/- to tax net. It is also a matter of record that tax liability on the said capital gains was also paid by the assessee in the A.Y.2011-12, no further liability remain to be paid on the said transactions. It is also not a case of AO that cheques received in the A.Y.2011-012 was credited by assessee in her bank account. On the 5 ITA No.2187 /Mum/2025 Late Pratapsinh Shoorji Vs. Income Tax Officer contrary, the audited balance sheet clearly indicates that the amount of Rs.60,00,000/- given by cheque which was not cleared was shown in the audited balance sheet under the head ‘loans and advances’ in the A.Y.2011-12 and 2012-13. This clearly establishes the fact that the said amount of Rs.60,00,000/- was not recovered by the assessee from the purchaser in the A.Y.2011-12 and 2012-13. Since the assessee has correctly disclosed and offer to tax capital gains on the said transactions in the A.Y.2011-12, the same cannot be brought to tax once again by the AO in the A.Y.2013-14. No positive material was brought on record by the AO to decline the explanation of the assessee with regard to receipt of cash during the year in respect of the cheque which could not be deposited in the bank account in the A.Y.2011-12. Therefore, the action of the AO to bring the amount of Rs.60,00,000/- to tax which was already offered by the assessee in the A.Y.2011-12 is bad in law. The observation of CIT(A) to the effect that the amount received by the assessee in the A.Y. 2013-14 and the sale of the said land in the A.Y. 2011-12 are separate transactions is incorrect since the amount recoverable from the Purchaser is not only shown in the audited accounts of the assessee but also can be clearly seen from the bank statements of the assessee which corroborate the fact that the said amount of Rs. 60,00,000/- was never received by the assessee in the A.Y. 2011-12. Therefore, the amount received by the assessee during the A.Y. 2013-14 is nothing but the consideration received as part of the said transaction of sale of land and the stand taken by the A.O. and upheld by the CIT(A) is erroneous on the facts and in the circumstances of the case. 8. Further, the CIT(A) has also erred in observing that the assessee did not advance any reason as to why the cheque of Rs. 60,00,000/- received from the Purchaser was not deposited in the bank. In fact the assessee has offered the explanation that the assessee along with other co- owner, Mr. Pratapsinh Shoorji Vallabhdas, were restrained by the Purchaser from depositing the cheques and were warned of the consequences such as cheques being dishonoured due to insufficiency of the balance in the bank account of purchaser M/s. Kanchi Concept Builders and Developers Pvt. Ltd. As a result, the assessee and Mr. Pratapsinh Shoorji Vallabhdas did not deposit the cheques in the bank account. At this backdrop it was factually incorrect on the part of the CIT(A) to conclude that the assessee did not offer any reason for holding the cheque and not deposited the same for a long period of time and such conclusion deserves to be quashed.” 6 ITA No.2187 /Mum/2025 Late Pratapsinh Shoorji Vs. Income Tax Officer 8. On careful scrutiny, we find no difference in the factual position, qua the issue so far as the present assessee is concerned. Therefore, respectfully following the decision of the Coordinate Bench in case of the co-owner, we hold that the addition is unsustainable. Accordingly, we direct the AO to delete the addition. 9. In the result, appeal is allowed. Order pronounced in the open court on 23.05.2025 Sd/- Sd/- (BIJAYANANDA PRUSETH) (SAKTIJIT DEY) Accountant Member Vice President Mumbai: Dated : 23.05.2025 Aks/- Copy of the Order forwarded to : 1. The Applicant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "