TMI Blog2018 (1) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... profit is liable to be taxed as Short Term Capital Gains only. Unexplained cash credit - Held that:- The whole narrative of receipt of disproportionate cash of such large amount out of the estate of late brother is highly improbable and a sad spectacle of a make believe story devoid of any credence. The cross-examination of legal heirs or otherwise is inconsequential for understanding the legal effect of a void in the absence of WILL or other tangible document. Incidentally, it is also not known as to when the socalled cash was given to the assessee and by whom and before its transfer, it was lying in whose custody. The facts towards credits are not clear at all. Circumstances do not stand to reasons and indicates otherwise to take the transaction out of ambit of section 68. The hawkish narrative given by the assessee was rightly denounced by the revenue authorities. In the absence of any documentary evidences and in view of totally improbable and unsubstantiated circumstances, we are unable to affirmatively appreciate the stand of the assessee on this score. Therefore, we decline to interfere with the orders of the authorities below - I.T.A. No.1142/Ahd/2015 - - - Dated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming addition made by AO of ₹ 19,05,489/- received from deceased brother of the appellant as unexplained cash credit u/s.68 of the Act. Ld. CIT(A) erred in not appreciating that the impugned amount received according to wish direction of deceased man further corroborated by affidavits of legal heirs remained fully explained. Ld. CIT(A) ought to have deleted addition made by AO. It be so held now. 6. Ld.CIT(A) erred in law and on facts in confirming addition of cash credit holding failure of appellant to explain receipt of impugned amount from the deceased despite accepting veracity of the affidavits of the legal heirs. Ld.CIT(A) ought to have deleted addition made by AO without cross verification with legal heirs wish of the deceased to give impugned amount to his own brother. It be so held now. 7. Levy of interest u/s.234A/234B 234C of the Act is not justified. 8. Initiation of penalty proceedings u/s.271(1)(c) of the Act is not justified. 3. Ground Nos.1 to 4 of the appeal concern computing the taxable income of ₹ 67 lakhs on sale of immovable property as Short Term Capital Gain (STCG) instead of Long Term Capital Gain (LTCG) of ₹ 21,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supportable by evidences on record. The AO accordingly held that gains arising on sale of property is susceptible to tax as applicable to Short Term Capital Gains. 6. As regards second issue, the AO observed that assessee has shown receipt of cash of ₹ 19,05,489/- from estate of late brother Shri Rajaram Baijnath Jaiswal. The AO noted the contention of the assessee that it has received aforesaid amount in cash from the estate of Shri Rajaramji on his death pursuant to his wishes. A copy of capital account of Shri Rajaramji as on 31/03/2011 duly signed by son of the deceased (Amarchand R.Jaiswal) was furnished to support receipt. The AO further observed that the assessee claimed that the aforesaid amount in cash was given to him by deceased brother out of his assets as per WILL along with cash given to son amounting to ₹ 4,88,068/-. The AO rebutted the aforesaid claim of receipt in cash in terms of a WILL inter alia on the ground that during the year aggregate cash receipt of ₹ 2,11,000/- only was available in the hands of deceased. The AO found that receipt of staggering amount of cash of ₹ 19,05,489/- claimed to have been received from the estate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for AY 2008-09. The CIT(A) also noted that evidence in the form of rent agreement or receipt of rent in the bank account is also not available. The rent is also shown to be received in cash and therefore not verifiable. In short, there was no way to relate the rent receipt, if any, with the property. The CIT(A) therefore came to the conclusion that assessee did not have the possession of the property on 29/03/2007 as claimed. The CIT(A) accordingly endorsed the action of the AO in treating the capital gain arising from the property as STCGs instead of LTCGs. 10. As regards second ground agitated, the CIT(A) noted that the assessee filed affidavit of the son and wife of the deceased brother as additional evidence of the receipt of cash on death of brother. However, the CIT(A) noted that the assessee has failed to file any evidence such as WILL etc. of deceased brother. The CIT(A) after considering various submissions of the assessee found that cash of ₹ 19,05,489/- allegedly received from the estate of deceased brother to justify corresponding investments, is not supportable by any credible documentary evidences. The CIT(A) accordingly upheld the addition of ₹ 19,05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year (FY) relevant to AY 2008-09. The Ld.Counsel accordingly submitted that the rights towards the property was accrued in favour of assessee by virtue of the allotment letter and possession letter and therefore the property before its sale is to be reckoned as Long Term Capital Asset and the gain on sale thereof ought to have been treated as LTCGs as characterized by the assessee. The Ld.Counsel also placed reliance upon the decision of the Coordinate Bench of Tribunal in Dy.CIT vs. Shri Dilip Ramanlal Parikh In ITA No.914/Ahd/2016 order dated 16/10/2017 for the proposition that subsequent purchase-deed relates back to the date of allotment for the purposes of determination of period of holding. 13. As regards the second issue, Shri Soparkar once again broadly reiterated the facts placed before the lower authorities and submitted that the affidavits of the legal heir of the deceased brother goes to support the claim of the assessee towards receipt of ₹ 19.05 lakhs received from the estate of late brother in cash. On query from the Bench, the Ld.Counsel submitted that no written WILL was codified. The wishes of the deceased brother expressed orally were fulfilled by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted money of assessee by way of cash. The Ld.DR accordingly contended that it is ostensible that the assessee has failed to discharge its onus miserably. 16. We have carefully considered the rival submissions. The first issue concerns as to whether the gains arising on sale of immovable property in question is to be considered as Short Term Capital Gain (STCG) or Long Term Capital Gain (LTCG) in the facts of the case. 16.1 The scheme of taxation provides for concessional tax treatment on gains arising from sale of Long Terms Capital Assets (LTCA). The prescribed period holding of capital asset in question is 36 months immediately preceeding its transfer to enjoy the concessional treatment attributable to LTCA. In the backdrop of this, the assessee claims that the property in question was held for more than 36 months prior to its transfer and thus eligible for favourable tax treatment. 16.2. In this regard, we first take note of the foremost plea of the assessee that the rights in the property under sale stands acquired by virtue of allotment letter dated 19/02/2007 towards its acquisition. It is the case of the assessee that the allotment letter has vested the rights a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted claim of possession. The possession letter also strangely claims a vacant and peaceful possession without receipt of consideration which is beyond understanding. Besides, it is also contended that building use permission of the property was approved at quite subsequent stage on 27/10/2008 pursuant to application dated 16/10/2008. In these circumstances, the possession claimed to have been given in March-2007 prior to use permission is beyond comprehension. 16.4. To appreciate the perspective of the assessee towards claim of holding the impugned asset for more than 36 months, we have perused the allotment letter dated 19/02/2007 (as appearing at page No.10 of the paper-book) filed after the completion of the assessment before the CIT(A) as an additional evidence . A mere glance of the allotment letter gives unflinching impression that no right can be said to have been created in favour of the assessee by virtue of the aforesaid letter. The allotment letter merely stipulates that the seller has received a sum of ₹ 15 lakhs as against the total proposed consideration of ₹ 160 lakhs. By virtue of clause no. 2, 3 4 of the allotment letter, certain obligations ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and other joint-owner in case of any default. Ostensibly, the impugned possession letter is seeking to grant absolute authority in favour of the assessee without any fetters and recourse for cancellation or repossession under any circumstances. This is quite inexplicable. It is hard to understand that a building/developer would part with possession of property to its customers in haste at such a premature stage without any cover for realization of the balance consideration agreed upon. It is only to state the obvious that the possession of a property under construction cannot be given in such a nonchalant manner which would in fact impede a developer to complete its obligation of construction of the property stated to be in possession of its customer. The vacant possession as claimed cannot be visualized for completion of construction. We also do not see any perceptible occasion for a purchaser (assessee) to get hold of the possession when the property is under ongoing construction phase and even Building Use permission has neither been applied for or no approved by the competent authority. It is uncharacteristic of a developer to create a crucial right of possession in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus not habitable. Rent was claimed to be received in cash from an unidentifiable user. The entire action of the assessee defies legitimacy of any sort and is clearly devoid of any strength whatsoever. Thus, the period of holding of the asset/property cannot be reckoned from the date of allotment letter or possession letter as claimed. In this view of the matter, we decline to interfere with the conclusion of the CIT(A) that the asset under sale was short term capital asset and consequently profit is liable to be taxed as Short Term Capital Gains only. 17. Ground Nos.1 to 4 of assessee s appeal concerning first issue are dismissed. 18. We shall now turn to dwell upon the other issue raised by the assessee towards addition of ₹ 19,05,489/- assessed as an unexplained cash credit in the hands of the assessee. 18.1. While it is the case of the Revenue that receipt of cash amounting to ₹ 19,05,489/- from the estate of deceased brother (Shri Rajaram Baijnath Jaiswal) remains unexplained in terms of section 68 of the Act, the assessee, on the other hand, has taken a stand (on his death on 8/12/2010) that the aforesaid amount was received from the estate of the late br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The affidavit of legal heirs towards purported oral wishes of the deceased is thus not conclusive. 18.3. The whole narrative of receipt of disproportionate cash of such large amount out of the estate of late brother is highly improbable and a sad spectacle of a make believe story devoid of any credence. The crossexamination of legal heirs or otherwise is inconsequential for understanding the legal effect of a void in the absence of WILL or other tangible document. Incidentally, it is also not known as to when the socalled cash was given to the assessee and by whom and before its transfer, it was lying in whose custody. 18.4. The facts towards credits are not clear at all. The circumstances do not stand to reasons and indicates otherwise to take the transaction out of ambit of section 68 of the Act. The hawkish narrative given by the assessee was rightly denounced by the revenue authorities. 18.5. The case-laws relied upon on behalf of the assessee are rendered in its own set of facts which are materially different. Therefore, we do not consider it necessary to deal with the same out of context. 18.6. In the absence of any documentary evidences and in view of totally ..... X X X X Extracts X X X X X X X X Extracts X X X X
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