TMI Blog2012 (4) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... of the asset by the assessee and in the entire transaction of forfeiture of advances, no assets are owned by the assessee and nothing is transferred - there was no question of invoking any of the provisions of the Income-tax Act to allow capital loss - a colourable device was designed so as to get set off against the capital gains earned by the assessee on sale of jewellery declared under the VDIS - tax appeals dismissed. - 1762 and 1763 of 2010 - - - Dated:- 23-1-2012 - AKIL KURESHI, SONIA GOKANI MS., JJ. JUDGMENT Ms. Sonia Gokani J.- 1. As both these appeals of different assessment years, i.e., 1999-2000 and 2000-01 arise out of the common order of the Tribunal, both are being decided by way of this common order. 2. The appellant-assessee, being aggrieved and dissatisfied by the order of Income-tax Appellate Tribunal, Ahmedabad, dated March 31, 2010 ("the Tribunal" for short) has preferred the present appeal under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act") proposing the following questions of law for determination of this court : Issues arising in Tax Appeal No. 1762 of 2010 "A. Whether, on the facts and in the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal to uphold the disallowance of set off of short-term capital loss of Rs. 6,50,000 on cancellation of the agreement of sell (banakhat) is such as could have been arrived at from the material on record or is reasonable ? E. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding the gifts received from Shri Biral Patel by taking into consideration the fac- tors which were never confronted to the appellant by the lower authorities ?" 3. Heard learned counsel Mr. S. N. Divatia appearing for the appellant and with his assistance examined the record. 4. The facts bereft of details need reproduction at the outset. It emerges from the record that on August 26, 2003, at the premises of M/s. Kalgi at Old Sharda Mandir Road, Ahmedabad, police had made a raid on account of illegal cricket betting activity. Statements of one Shri Tarun D. Karia and other persons who were arrested by the police, were recorded under sec- tion 131(1A) of the Act. It got revealed that Shri Tarun Karia was an employee of the present appellant Shri Dinesh B. Thakkar and all pay- ments and receipts in cash were made as per the instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authorities surely can be termed as perverse and, therefore, the same would require interference. 9. There are separate questions for both the appeals, however, they can be considered together broadly dividing them all under two heads and resultantly as only two proposed questions, namely, (1) Gifts received from Shri Biral M. Patel (2) short-term capital loss. 10. With regard to the addition of Rs. 1,42,845 and Rs. 12,00,000 as unexplained cash credit for both the assessment years respectively. The assessee had claimed that he received the gift from one Mr. Mahendra Ambalal Patel in the assessment year 1999-2000 and Rs. 12,00,000 in the year 2000-01. 11. The Assessing Officer required details of the donor and evidence estab- lishing the creditworthiness of his father and power of attorney holder of Shri Biral Patel donor gave confirmation with regard to such gift. Copy of the NRE account from July 7, 1999, onwards was also filed and source of gift was conveyed being sale of certain assets in the USA. The Assessing Officer treated the entire amount as undisclosed income on the ground that Shri Biral Patel had sent fax message stating that he was engaged in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove the genuineness of the gift, the Tribunal referred to the various judgments and concluded as under : "We infer from the discussion made in these judgments that the Revenue authorities are entitled to consider the genuineness of the transactions and to generate (penetrate) the veil and ascertain the truth. They are entitled to look into the surrounding circumstances to find out the realities of the transactions shown to have been entered into by the parties. The other factors, e.g., relationship, occasion for giving gifts, and gifts not given by the donee to the family members of the donor, etc. In the present case, also all these factors put together leave no doubt that it is a fit case where form has to be ignored and one has to go into the realities of the transaction. " 15. As far as the question of gift is concerned which was received from Shri Biral Patel donor, considering the judgment of this court in the case of Murlidhar Lahorimal [2006] 280 ITR 512 (Guj) the source of the source is not and cannot be required to be ascertained by the adjudicating autho- rities, however, in this matter from the evidence on record authorities have question marked the very sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spectively in the assessment years 1999-2000 and 2000-01. This entire transaction was found by the Assessing Officer to be non-genuine and too much of a coincidence. In fact, the same was found to be contrived loss only with a view to off set the long-term capital gains arose on account of sale of diamond and jewellery. Accordingly, the Assessing Officer disallowed such claims. 18. The Commissioner of Income-tax (Appeals) also doubted seriously credibility and legitimacy of such documents, original of which were missing. Affidavit were also found to have been prepared in a slip shod manner. 19. Before the Tribunal when this was argued at length, it held that no capital loss would be allowed if it is more than the cost of an asset. It also noted that there could be transfer of the asset by the assessee and in the entire transaction of forfeiture of advances, no assets are owned by the assessee and nothing is transferred. In the absence of any tangible, or intangible asset, by mere agreement with the alleged power of attorney holder of the land owners no rights get accrued examining some of the provisions of the Income-tax Act. It held that for charging the capital gains or a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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