During a search operation, the assessee surrendered a lump sum ...

Assessee's Surrendered Gains Deemed Legitimate; Recharacterization u/s 69A Overturned, Section 115BBE Inapplicable.

August 28, 2024

Case Laws     Income Tax     AT

During a search operation, the assessee surrendered a lump sum amount as alleged long-term capital gains from the sale of shares as additional income u/s 132(4). The Assessing Officer (AO) completed the assessment by recharacterizing the surrendered income as income u/s 69A and made an addition accordingly. However, the assessee admitted to earning long-term capital gains along with his wife, which was initially claimed as exempt income but later offered for taxation. The assessee revised the return, declaring the actual gain of Rs. 20,57,590/- earned solely by him, not his wife. Since the assessee voluntarily declared the income as income from other sources, recharacterizing it u/s 69A was deemed unjustified. Additionally, upon verifying the wife's return, no long-term capital gain was earned by her. The addition was made solely based on the assessee's surrender during the search. As per the precedent, the assessee did not offer income u/s 69A, and the AO merely recharacterized the nature of the offered income. Consequently, the provisions of Section 115BBE were deemed inapplicable. The case was decided in favor of the assessee.

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