2013 (2) TMI 402 - HC - Income Tax

Capital Gain - Appellant failed to adduce Corroborative documentary evidence - Whether the assessee was entitled to claim deduction of Rs. 3.5 lakhs on account of expenses from the sale consideration of Rs. 9.25 lakhs received by him from the sale of the shop Held that - The onus was upon the assessee to substantiate that Rs. 3,50,000/- had been spent by him as he had claimed deduction on that account but had failed to produce any material to establish the same. The nature and source of Rs. 3,50,000/- had also not been proved. In fact, the expenditure had not been disclosed in the books of account which were produced at the appellate stage by the assessee. In favour of revenue

Summary

Issues:
- Whether the ITAT was justified in reversing the order of CIT(A) regarding the addition made by the assessing authority for lack of corroborative documentary evidence.
- Whether the order passed by the ITAT confirming the lower authorities' decision is against the provisions of law.
- Whether the assessee was entitled to claim a deduction of Rs. 3,50,000/- on account of expenses from the sale consideration received.

Analysis:
1. The appeal was filed under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal (ITAT) regarding the addition made by the assessing authority. The appellant questioned the justification of ITAT's decision to reverse the order of the Commissioner of Income Tax (Appeals) and confirm the addition, citing lack of corroborative documentary evidence for the expenditure incurred in settling a property dispute. The issue revolved around whether the appellant failed to provide sufficient proof of the expenses claimed.

2. The facts of the case involved the appellant, engaged in business, who sold a disputed shop and claimed an expense deduction of Rs. 3,50,000/- from the sale consideration. The Assessing Officer initially made an addition on account of short-term capital gain, which was later deleted by the CIT(A). However, the ITAT reversed the CIT(A)'s decision, leading to the current appeal. The key contention was whether the appellant could substantiate the claimed expenses and prove the nature and source of the amount in question.

3. The Tribunal disallowed the claim of the appellant, emphasizing the lack of evidence to support the expenditure incurred for the property settlement. It was noted that the appellant failed to provide any credible evidence, such as receipts or documentation, to establish the purpose of the expense. The Tribunal highlighted that the onus was on the appellant to prove the expenditure claimed, which was not disclosed in the books of account produced during the appellate stage. Reference was made to legal precedents to support the Tribunal's decision regarding the burden of proof on the assessee.

4. The Tribunal concluded that the appellant did not meet the burden of proof required to substantiate the claimed expenses. Despite attempts by the appellant's counsel to challenge the Tribunal's findings, no errors or perversions in the Tribunal's decision were identified. Consequently, the Tribunal dismissed the appeal, stating that no question of law arose in the case. The decision was based on the appellant's failure to provide sufficient evidence to support the deduction claimed, ultimately leading to the dismissal of the appeal.