ITO Vs Inder Jaggi (ITAT Raipur)
ITAT Raipur held that tax implication of the gift transaction shall arise in the year in which the said asset will be sold/transferred. Thus, addition based on the notional / fictitious entry of asset made in books of account unjustified.
Facts- The assessee is an individual have filed his return of income (ROI) for the AY 2017-18, electronically, on 07.11.2017, declaring total taxable income of Rs.8,90,050/-. During the year under consideration, the assessee was engaged in the business through three proprietorship firms namely Siddhi Vinayak Baxi Motors, Siddhi Vinayak Purti Gas and Taxi Owners United Transport Company. Case of the assessee has been selected for limited scrutiny under “CASS”, statutory notices u/s 143(2) and 142(1) along with questionnaire were issued. In response, assessee made compliances from time to time. During the assessment proceedings, on the basis of submission and evidence of the case, the Ld. AO has observed that an addition on account of unexplained income u/s 68 of the I.T. Act is required to made in the case of assessee.
CIT(A) vacated the addition made by AO. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that the notional / fictitious entry of asset made by the assessee in his books of account cannot be the basis for determining the cost of acquisition either at any stage, the cost of acquisition has to be decided under the prescribed provisions of Act u/s 49(1) r.w.s. 55(2) or relevant provisions prevailing at the time of sale or transfer of the property.
