MEGHA BANSAL,DEHRADUN V. ITO, WARD-1(5), NEW DELHI

ITA 3940/DEL/2018

AI Insights

The case involves Megha Bansal, an individual engaged in real estate, who appealed against the decision of the Commissioner of Income Tax (Appeals), Dehradun, which upheld the Income Tax Officer's (ITO) decision reclassifying her capital gains as business income and disallowing certain cash expenditures under section 40A(3). The ITO's decision was based on information from the Investigation Wing suggesting extensive property transactions by the assessee, leading to the belief that these constituted a business under section 2(13) of the Act. The Tribunal, referencing a similar case involving the assessee's mother-in-law, found that the assessee's intention was that of an investor, not a businessman, and thus her income should be classified under capital gains, not business income.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474671 (ITAT-DEHRADUN)
• Duration Of Justice: 6 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-10-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 24-05-2018
• Other Referred Cases: Late Smt. Saroj Bansal vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. S. RANA
• Assessee Lawyers: RAKESH GUPTA; DEEPESH GARG
• Keywords: Business income; Sale consideration of property below Jantri Value; Capital Gains
• Section: 143(3); 143(1); 54F; 40A(3); 50C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH : DEHRADUN BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.3940/DEL/2018 Assessment Year: 2013-14 Megha Bansal, C/o Matta Garg & Co., 15, Astley Hall, Dehradun. PAN: AGPPB8027M Vs ITO, Ward 1(5), Dehradun. (Appellant) (Respondent) Assessee by : Dr. Rakesh Gupta, Advocate & Shri Deepesh Garg, Advocate Revenue by : Shri A.S. Rana, Sr. DR Date of Hearing : 24.10.2024 Date of Pronouncement : 07.11.2024 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the Assessee against the order dated 06.03.2018 of the Commissioner of Income Tax (Appeals), Dehradun (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeal No.10/10325/CIT(A)/DDN/2017-18 (195392651110616) arising out of the appeal before it against the order dated 11.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Income Tax Officer, Ward 1(5) Dehradun (hereinafter referred to as the Ld. AO). ITA No.3940/DEL/2018 2 2. The assessee is an individual and is engaged in the business of commission agent of real-estate. She claimed that during the relevant assessment year, she has earned income from capital gain as well as on the sale of immovable property. The assessee had invested in the immovable property during the year for which part payments totaling to Rs.25,60,430/- were made in cash. The assessee filed the return of income declaring total income at Rs.9,14,101/- including capital gains of Rs.6,88,777/- after claiming deduction of Rs.80,91,127/- u/s 54F of the Act. The case of the assessee was selected for scrutiny under CASS. The AO mentions that during the pendency of the assessment, information was received from the Investigation Wing, Dehradun, which showed that the assessee had made sale and purchase of properties at a very large scale in FY 2007-08, 2010-11, 2011-12 and 2012-13. Therefore, based upon these transactions, the AO was of the belief that the same fall under the definition of ‘business’ for the purpose of section 2(13) of the Act. Accordingly, the assessee was show caused to explain as to why the long-term capital gain be not considered under the head ‘Profit and gains from business and profession.’ An explanation was also sought for the cash payments in immovable property as to why the same be not disallowed u/s 40A(3) of the Act. The AO also raised a query for audited Profit & Loss Account and other financials. The assessee had filed reply which was not found sustainable and, accordingly, the addition of income from ‘business and profession’ was made and an addition on account of disallowance of cash expenditure was made. The ITA No.3940/DEL/2018 3 same were challenged by the assessee before the CIT(A) where the appeal was dismissed. Accordingly, the assessee is in appeal before the Tribunal raising the following grounds:- “1. The denial of capital gains and deduction u/s 54F of the Income Tax Act, 1961 and considering the same as business income is an arbitrary decision, which is against facts and law, and is not acceptable. 2. The disallowance made u/s 40A(3) of the Income Tax Act, 1961 is based on surmise and conjecture and is against the facts and law and is not acceptable. 3. Any other ground before and during the hearing of appeal.” 3. At the time of hearing, the ld. counsel appearing for the assessee submitted that in ITA No.3941/Del/2018 in the case of Late Smt. Saroj Bansal, who is the mother in law of the assessee, similar allegations were enquired into and additions were made which have been deleted by order dated 23.06.2023. The ld. DR could not point out any distinguishing facts between the two assessees. The ld. counsel for the assessee has successfully pointed out that in the case of Late Smt. Saroj Bansal (Supra), so also in the case of the assessee, the intention of the assessees at the time of purchase of property was in the capacity of investor and rather, the AO does not dispute the same. The capital gains arising out of sale have been disclosed by the assessee in AY 2011-12 and accepted by the Revenue u/s 143(1) of the Act. Similar was the case of Late Smt. Saroj Bansal (supra). It also comes up that both these women were co- sharers of 50% share each in one of the properties. The ld. counsel also submitted that like in the case of Late Smt. Saroj Bansal (supra), the assessee ITA No.3940/DEL/2018 4 had also taken the sale price u/s 50C of the Act as actual sale consideration in case where the circle rate was higher and, thus, it was not justified to consider the transactions giving rise to business income. Thus, we are of the considered view that the ld. tax authorities below have fallen in error to treat the gains arising out of sale of property as a business income. Consequently, the disallowances made u/s 40A(3) of the Act also cannot be sustained. 4. In the light of the aforesaid, the grounds stand allowed and setting aside the impugned assessment order, the AO is given liberty to examine the quantum of deduction u/s 54F and in case the AO proceeds to examine the quantum of deduction or eligibility of deduction u/s 54F of the Act, an opportunity of hearing to the assessee shall be given. 5. In the result, the appeal is allowed. Order pronounced in the open court on 07.11.2024. Sd/- Sd/- (BRAJESH KUMAR SINGH) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:07th November, 2024. dk ITA No.3940/DEL/2018 5 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, Dehradun "