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2010 (8) TMI 752 - AT - Income TaxUnexplained credit - availability of cash - HELD THAT - Once the department accepted the return of income for the assessment year 1999-2000 it is to be construed that they accepted the computation of income and also cash-flow statement and the balance sheet enclosed with the return of income. They have not questioned the cash-flow statement regarding the availability of funds thereon. Later on the department cannot say this fund is not available to the assessee. Due credit to this should be given. It is not open to the department to pick and chose the contents of the return as suits to them. Accordingly in our opinion the credit is to be given to the availability of cash to the tune of Rs. 2, 14, 012. Hence this ground taken by the assessee is allowed to that extent of Rs. 2, 14, 012. Addition of Low drawing - assessee paid a Municipal Property Tax at Rs. 12, 752 and the assessee s family consists of 5 members and the drawings of Rs. 20, 000 is not enough to meet the monthly expenditure of the family - HELD THAT - AO has not brought on record anything other than payment of municipal tax of Rs. 12, 752. Unless the AO brought on record any evidence regarding the exact amount of expenditure incurred by the assessee in the form of bills vouchers or bank withdrawals we are not in a position to confirm this issue in its entirety. Accordingly we confirm the addition to the tune of Rs. 12, 752 paid towards municipal tax for which there is an evidence of expenditure. Thus Appeal is partly allowed. Exemption u/s 54F - assessee not utilized the capital gains in purchase of plot and construction of house thereon. The plot was purchased much before the capital gain accrued/received by the assessee and the assessee has not produced any evidence to prove that he has constructed the house within a period of 3 years from the date of sale of the property- Also assessee has not invested the unutilized long-term capital gain in a specific bank account - HELD THAT - From a bare reading of section 54F we find that sub-section (1) should be read along with sub-section (4). If both these sub-sections are read in a conjunction only one inference is drawn that to avail the benefit of section 54F the assessee is required either to purchase a residential house out of the sale proceeds or long-term capital asset within a period of one year before or 2 years after the date on which transfer took place or within a period of 3 years after that date construct a residential house. In that case gain shall be computed as per clauses ( a ) and ( b ) of sub-section (1). In the present case it is admitted fact that the assessee has brought an asset in the month of September 2000 though the assessee sold the property in the month of January 2001. Thus the assessee has fulfilled the conditions laid down in this. The assessee invested the capital gain arised from the transfer of long-term capital asset not being a residential allowance invested in residential house. The assessee is entitled for deduction to that extent and the findings of the CIT(A) in accordance with the provisions of section 54F and the same is confirmed. Thus appeal is dismissed. Addition as receipts - Year of assessment - assessee received remittance - AO concluded the remittance should have come only during that year to explain such liability - Since the remittance has come in the earlier year the CIT(A) deleted the addition - HELD THAT - These facts were not controverted by the departmental representative and hence in our opinion the addition cannot be made in the assessment year 2003-04. The deletion of addition by CIT(A) is justified and same is confirmed.
Issues Involved:
1. Sustaining additions of Rs. 2,57,792 on account of unexplained credit. 2. Sustaining additions of Rs. 34,000 towards low drawings. 3. Granting the benefit of exemption under section 54F to the assessee. 4. Deletion of addition of Rs. 8,85,200 as unexplained credit. Issue-wise Detailed Analysis: 1. Sustaining Additions of Rs. 2,57,792 on Account of Unexplained Credit: The assessee purchased a property for Rs. 2.25 lakhs and incurred Rs. 37,792 towards registration, totaling Rs. 2,57,792. The Assessing Officer (AO) found no bank entries to support this investment and called for an explanation. The assessee claimed the funds came from the sale of a shop for Rs. 4 lakhs, but the sale occurred after the property purchase. Thus, the AO taxed the amount under section 69, which was upheld by the CIT(A). The assessee argued the availability of an opening cash balance of Rs. 2,14,012 as on 1-4-1999, supported by a cash-flow statement filed with the return for the assessment year 1999-2000. The department accepted this return without disputing the cash-flow statement. Hence, the Tribunal concluded that the department cannot later dispute the availability of these funds and allowed the ground to the extent of Rs. 2,14,012. 2. Sustaining Additions of Rs. 34,000 Towards Low Drawings: The assessee declared drawings of Rs. 20,000, which the AO considered low, adding Rs. 34,000 to the income. The departmental representative highlighted the payment of Rs. 12,752 in municipal property tax and argued the drawings were insufficient for a family of five. The Tribunal noted that the AO did not provide sufficient evidence, such as bills or vouchers, to support the additional expenditure. Therefore, it confirmed the addition only to the extent of Rs. 12,752 for the municipal tax payment, partially allowing the appeal. 3. Granting the Benefit of Exemption Under Section 54F: The assessee claimed exemption under section 54F for selling a shop in January 2001 and investing Rs. 2,57,792 in a plot purchase. The AO denied the exemption, arguing the plot was bought before the capital gain and no evidence of house construction within three years was provided. The Tribunal emphasized that section 54F should be read with sub-section (4), allowing exemption if the net consideration is used to purchase or construct a residential house within the specified period or deposited in a specified account. The Tribunal found that the assessee met these conditions by purchasing the plot within the stipulated time and confirmed the CIT(A)'s decision to grant the exemption, dismissing the revenue's appeal. 4. Deletion of Addition of Rs. 8,85,200 as Unexplained Credit: The AO added Rs. 8,85,200 as unexplained credit, noting no remittance in the relevant assessment year 2003-04. The assessee argued the amount was received in the previous year 2001-02 and continued as a liability. The Tribunal reviewed the evidence, including cheque details showing the remittance dates in 2001-02, and found no contradiction from the departmental representative. Thus, it upheld the CIT(A)'s deletion of the addition, dismissing the revenue's appeal. Conclusion: - The assessee's appeal in ITA No. 1061/Hyd./2008 is partly allowed. - The revenue's appeals in ITA Nos. 1073 and 1074/Hyd./2008 are dismissed.
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