No Evidence to prove lack of ownership: ITAT upholds order of CIT(A) accepting LTCG [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the order of CIT(A) which accepts the Long Term Capital Gain ( LTCG )without evidence to prove ownership.

The Revenue challenged the impugned order dated 16/11/2018, passed under section 250, of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)–49, Mumbai, [CIT(A)], for the assessment year 2015-16.

The CIT(A) directed the AO to accept long term capital gain shown by the assessee without appreciating the fact that the assessee had failed to furnish concrete evidence in respect of payment of Rs. 4.25 lakhs towards acquiring the flat at Skylark Society in the year 1992.

Shri Sujan Azad Parikh, the assessee is an individual and during the year under consideration,the assessee’s main source of income consists of salary, income from house property, capital gain, and income from other sources. The return filed by the assessee was selected for limited scrutiny through CASS.

 During the assessment proceedings, it was observed that the assessee has claimed to have sold a flat at Skylark Co-operative Housing Society Ltd (‘Skylark flat’) declaring a long-term capital gain of Rs. 7,25,08,820, against consideration of Rs. 7,62,50,000, (being 50% sale consideration of the flat).

The remaining long-term capital gain was reinvested in another flat purchased for Rs. 4,90,35,672, and reinvestment in REC bonds for ₹ 21 lakhs. The Assessing Officer (‘AO’) vide order dated 30/12/2017, passed under section 143(3) of the Income Tax Act held that the said flat was decreed in favour of the mother of the assessee, however, without any sanction of law and based on flimsy grounds, the half share of the flat was transferred in the name of the assessee.

The assessee has also furnished a copy of the bank statement of the assessee’s account in Bombay Mercantile Co-operative Bank, forming part of the paper book on page 28, to substantiate the payment of Rs. 4,25,025 on 23/09/1992 as part of the purchase consideration of the Skylark flat.

It was evident that the said flat was subsequently sold in July 2014 to a third party by the assessee and his wife and as per the registered deed of transfer dated 18/07/2014, forming part of the paper book from page nos. 2335, the purchaser has agreed to pay the total consideration in equal proportion to the assessee and his wife.

A Coram comprising of Shri Prashant Maharishi, Accountant Member and Shri Sandeep Singh Karhail, Judicial Member observed that since nothing has been brought on record due to the alleged lack of ownership of the assessee, the title in the property has not been legally transferred to the purchaser. The Tribunal held that CIT(A) has rightly accepted the long-term capital gain in the hands of the assessee and dismissed the appeal of the revenue.

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