2007 (8) TMI 742 - AT - Income Tax

Summary

Issues Involved:
1. Opportunity of being heard to the Assessing Officer.
2. Relief on addition made on account of low household withdrawals.
3. Deletion of addition made on account of short-term capital gain and computation of NIL long-term capital gain.
4. Disallowance of expenses on different heads and addition in household expenses.

Summary:

Issue 1: Opportunity of being heard to the Assessing Officer

The revenue contended that the Ld. CIT(A) erred in not allowing proper opportunity of being heard to the Assessing Officer. However, it was found that the Assessing Officer was present during the appellate proceedings and had submitted written submissions and arguments. Thus, the contention was rejected, and the ground was dismissed.

Issue 2: Relief on addition made on account of low household withdrawals

The Assessing Officer estimated household expenditure at Rs. 1,80,000 per annum and added Rs. 94,500 to the income of the assessee. The Ld. CIT(A) reduced the estimation to Rs. 1,20,000 per annum, sustaining an addition of Rs. 34,500. Considering the facts, the Tribunal further reduced the estimation to Rs. 1,00,000, allowing the objection partly.

Issue 3: Deletion of addition made on account of short-term capital gain and computation of NIL long-term capital gain

The Assessing Officer added Rs. 18,60,292 as short-term capital gain, questioning the assessee's computation of NIL long-term capital gain. The Ld. CIT(A) deleted the addition, accepting the assessee's computation. The Tribunal upheld this decision, noting that the assessee had provided sufficient evidence, including valuation reports, LBT orders, and approval from local authorities. The Assessing Officer's reliance on estimations and presumptions was deemed unjustified.

Issue 4: Disallowance of expenses on different heads and addition in household expenses

The assessee objected to the disallowance of expenses totaling Rs. 60,136 and an addition of Rs. 35,500 in household expenses. The Tribunal found the disallowances to be on the higher side given the turnover of Rs. 79.96 Lac and restricted the disallowance to Rs. 2,500 in lumpsum for telephone and scooter/petrol expenses. The objection was partly allowed.

Conclusion:

The appeal by the revenue was dismissed, and the cross objection by the assessee was partly allowed. The order was pronounced in the open court on 27-8-2007.