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2012 (10) TMI 119 - AT - Income TaxDisallowance u/s 68 - Assessee has taken loan from company for house property Deduction of interest claim u/s 24 out of rental income Assessee has taken another fresh loan from same company & also paid sum amount out of rental income Loan amount and its balance confirmed by the lender Held that - As assessee has filed copy of agreement for sub-lease of property which was acquired out of loan. The AO has examined the director of lender company u/s 131 who has affirmed the loan also show interest received in his ITR. Assessing Officer had not brought any material on record to prove that it was assessee s own income. Decision in favor of assessee. Contravention of Rule 46A Assessee withdrawn household expense as drawing AO made addition on the basis of minimum household expense - Assessee submit additional evidence with CIT(A) Held that - CIT(A) has accepted the contention of the assessee without providing an opportunity of being heard to the AO. Therefore CIT(A) violate the provision of Rule 46A. Decision is in favor of revenue.
Issues:
1. Addition of Rs.15,00,000/- on account of unexplained sources. 2. Addition of Rs.72,000/- on account of low household expenses. 3. Addition of Rs.30,000/- on account of non-production of documentary evidence for deduction U/s 80C. 4. Addition of Rs.7,52,982/- on account of disallowance of interest claimed on loan for property acquisition. Analysis: Issue 1: Addition of Rs.15,00,000/- on account of unexplained sources: The Assessing Officer suspected that the assessee had routed her own money through M/s. Keshav Shares & Stocks Ltd., leading to an addition of Rs.15,00,000 as undisclosed income. However, the CIT(A) found the addition baseless considering the past history of the assessee's accepted loans and interest sources. The CIT(A) noted the confirmation of the loan by the company director and deleted the addition. The ITAT upheld this decision, emphasizing the lack of concrete evidence to support the suspicion, thus justifying the deletion of the addition. Issue 2: Addition of Rs.72,000/- on account of low household expenses: The AO added Rs.72,000 as household expenses, assuming a minimum monthly expense. The CIT(A) accepted the explanation that the husband of the assessee, a retired Income-tax Inspector, contributed towards household expenses, and deleted the addition. However, the ITAT found a procedural error in admitting additional evidence without the AO's opportunity to comment. The matter was remanded to the AO for verification. Issue 3: Addition of Rs.30,000/- for non-production of documentary evidence for deduction U/s 80C: The AO disallowed Rs.30,000 of the Rs.1,00,000 claimed under section 80C due to lack of documentary evidence. The CIT(A) directed verification and allowance if satisfactory, but the ITAT noted the absence of proof before the AO and remanded the matter for verification. Issue 4: Addition of Rs.7,52,982/- on disallowance of interest claimed on loan for property acquisition: The AO disallowed interest claimed on a loan for property acquisition, suspecting income routing through M/s. Keshav Shares & Stocks Ltd. The CIT(A) allowed the interest deduction, considering past loan evidence and service tax payments. The ITAT found the evidence presented before the CIT(A) but not the AO, leading to a remand for proper examination by the AO. In conclusion, the ITAT partly allowed the Revenue's appeal for statistical purposes, emphasizing the importance of following procedural rules and ensuring proper verification of claims and evidence by the Assessing Officer.
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