Ashim Ashitbaran Desai Vs DCIT (ITAT Mumbai)
AO Compared Wrong Years, Taxed Sale Proceeds Twice & Gave HUF Partition a “Nil Cost”: ITAT Deletes Additions u/s 68 & Restores Indexed Cost u/s 49(1)(i)
Summary:
The assessee, an individual practising as an ENT specialist, filed his return declaring total income of ₹3,26,67,910. The case was selected for scrutiny concerning substantial capital-gain set-off & investment in property.
The AO completed the assessment at ₹42,07,62,833, making additions of:
- ₹15,79,17,123 for alleged unexplained increase in capital;
- ₹15,20,64,000 as unexplained bank credit;
- ₹20,93,000 toward cash deposits;
- ₹6,60,01,104 as LTCG on sale of immovable property; &
- ₹1,00,19,696 by denying set-off of property-related LTCL against LTCG from shares.
The CIT(A) partly allowed the appeal. Both the assessee & Revenue approached the ITAT.
₹15.79-Crore Addition Based on Wrong-Year Comparison
The AO compared the capital balance of ₹19,72,88,298 as on 31.03.2020 with the balance of ₹35,52,05,421 as on 31.03.2022. On that basis, the difference of ₹15.79 crore was added u/s 68.
The Tribunal held that comparing capital balances of two non-consecutive years was an elementary error that destroyed the computation itself.
The capital account for the relevant year opened with ₹21,00,66,964. Credits included professional profit, house-property income, capital gains, LLP profit, income from other sources, PPF interest, tax refund & ₹6,73,03,842 received on partition of the HUF.
