9911796707
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Issues Involved:
1. Classification of income as 'capital gains' vs. 'business income'. 2. Addition on account of investment made out of undisclosed sources. 3. Deletion of estimated income from real estate business. 4. Deletion of addition due to unexplained cash-in-hand. Summary: Issue 1: Classification of Income as 'Capital Gains' vs. 'Business Income' The revenue contended that the CIT(A) erred in deleting the addition by treating the income under the head 'capital gains' as 'business income'. The assessee argued that the land was purchased as a capital asset and sold after nine years, indicating it was not stock in trade. The CIT(A) agreed with the assessee, noting that the intention at the time of purchase was to hold it as a capital asset, supported by agricultural income disclosed in earlier years. The Tribunal upheld the CIT(A)'s findings, relying on case laws such as Indian Hume Pipe Co. Ltd V. CIT, CIT v. Smt. Bilkishbai, and CIT v. Sushila Devi Jain, confirming the income should be assessed under 'capital gains'. Issue 2: Addition on Account of Investment Made Out of Undisclosed Sources The AO added Rs. 30 lakhs to the assessee's income, suspecting it was made from undisclosed sources, questioning the genuineness of cash deposits and the source of funds. The CIT(A) deleted the addition, accepting the assessee's explanation that Rs. 10 lakhs were contributed for his sister's marriage, and the remaining funds were from bank drafts and cash flow. However, the Tribunal found that the CIT(A) did not provide adequate opportunity for the AO to verify the claims and remanded the issue back to the AO for fresh adjudication. Issue 3: Deletion of Estimated Income from Real Estate Business The AO estimated Rs. 2 lakhs as income from real estate business, arguing the assessee was a prominent real estate dealer. The CIT(A) deleted the addition, stating no concrete evidence was provided by the AO to support this estimation. The Tribunal upheld the CIT(A)'s decision, finding the AO's addition was purely on an estimate basis without corroborative material. Issue 4: Deletion of Addition Due to Unexplained Cash-in-Hand The AO added Rs. 763,254/- as unexplained cash-in-hand, doubting the source and the circumstances under which it was kept. The CIT(A) deleted the addition, noting the cash flow statement showed this as a closing balance and there was no provision under the Income Tax Act to treat it as income from other sources. The Tribunal, however, found the CIT(A)'s acceptance of the assessee's self-created evidence without proper verification untenable and upheld the AO's findings, reinstating the addition. Conclusion: The Tribunal upheld the CIT(A)'s decision on treating the income as 'capital gains' and deleting the estimated income from real estate business but remanded the issue of unexplained investment back to the AO and reinstated the addition for unexplained cash-in-hand.
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