The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the undisclosed sale consideration of the property can be subject to tax as “capital gain”under the provisions of section 48 of the Income Tax Act, 1961.
The department initiated proceedings under section 147 of the Act against the assessee for the amount received against the sale of the property as it was found that the amount of sale consideration received by the assessee stands at ₹3,05,010,00.00 whereas the assessee has disclosed of sum of ₹1.50 crores in the books of accounts against the sale of the property. However, the AO has made the addition for Rs. 1,55,01000.00 under the provisions of section 56(2)(vii)(a) of the Act on account of the money received by the assessee without consideration. As per the AO, the money has been received by the assessee without any consideration and therefore the same should be treated as income of the assessee under the head income from other sources under the provisions of section 56(2)(vii)(a) of the Act.
The Tribunal bench comprising Shri Waseem Ahmed, Accountant Member and Ms. Madhumita Roy, Judicial Member observed that the amount which has not been disclosed by the assessee represents the sale consideration of the property which can be subject to tax under the provisions of section 48 of the Act.
“Furthermore, the assessee has shown the sale consideration of ₹1.50 crores under the head capital gain and the amount in dispute directly relates to the same property and therefore the same can only be brought to tax under the head capital gain. In other words, the same cannot be made subject to the tax under the provisions of section 56 of the Act. In our humble understanding, the principles laid down by the ITAT in the own case of the assessee (Supra) are directly applicable to the issue on hand. Hence, we are of the view that the initiation of the proceedings under section 147 of the Act are bad in law. Hence, the ground of appeal of the assessee is allowed,” the Tribunal said.
Shri A.L.Thakkar appeared for the assessee.
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