2013 (5) TMI 587 - AT - Income Tax

Undisclosed investment - CIT(A) deleted the addition - Held that - Assessee in his wisdom has agreed to the proposition that the Cross Objection for considering a part portion on the AO s order u/s 251 remains a question to be addressed by the CIT(A) in so far as the whole of the amount on Rs.18,65,190/- stood explained cannot be taxed in the hands of the assessee alone. Assessee therefore has rightly pointed out that the direction was not proper in so far as the factual facts as brought on record by the AO was dealt with in detail and not to be split for considering otherwise the amount of interest as not shown but this has been accepted by the AO. In the result the appeal of the Revenue is dismissed and the Cross Objection by the assessee with respect to the direction to the AO by the CIT(A) is futile exercise to be conducted for the AO in view of the assessment of 50% share of the co-owners has not been brought on record in the specific accounting therein was submitted by the assessee at the time of assessment. The amounts shown as investment on behalf of the mother has been taxed in the hands of the assesee would have resulted in double taxation in the impugned assessment in so far as the disallowance or addition made u/s 69 was not existing. The amount of investment whether in the flat or with the mother, who is co owner had been correlated by the CIT(A), therefore was rightly considered for deletion by the CIT(A). The same did not require further verification as directed by him to the AO in view of the provision of the Income tax Act in respect of A.Yr.2001-02. The Cross Objection stands allowed to the extent that the AO is directed to delete Rs.18,65,190/- and give effect accordingly. In favour of assessee.

Summary

Issues:
1. Whether the addition of Rs.18,65,190/- on account of undisclosed investment was justified.
2. Whether the amount paid by the assessee on behalf of her mother should be taxed in the hands of the assessee.
3. Whether the direction given to the AO by the ld. CIT(A) regarding the addition made under section 69 of the Act was appropriate.

Issue 1:
The Revenue appealed against the deletion of the addition of Rs.18,65,190/- made by the ld. CIT(A) on account of undisclosed investment. The AO observed that the assessee had invested in a flat co-owned by the assessee's mother, and a sum of Rs.18,65,190/- was paid by the assessee and remained undisclosed. However, it was explained that the amount paid by the assessee on behalf of her mother was duly reflected in the books of accounts and was later refunded by her mother. The ld. CIT(A) found this explanation justified after verification and deleted the addition, which was upheld by the ITAT Kolkata.

Issue 2:
The assessee had purchased a flat jointly with her mother, and the AO added Rs.18,65,190/- to the assessee's income, presuming the real cost of her share was higher. However, the ITAT Kolkata noted that the amount paid by the assessee on behalf of her mother was properly accounted for in the books of accounts and was refunded by the mother. The AO's decision to tax this amount in the hands of the assessee was deemed incorrect, and the ld. CIT(A)'s deletion of the addition was upheld.

Issue 3:
The direction given by the ld. CIT(A) to the AO regarding the addition made under section 69 of the Act was considered by the ITAT Kolkata. The tribunal observed that the facts regarding the investment made by the assessee on behalf of her mother were duly presented during assessment and before the ld. CIT(A). The tribunal concluded that the ld. CIT(A) had appropriately considered the correlation between the investment in the flat and the amount paid on behalf of the mother, leading to the deletion of the addition. The ITAT Kolkata dismissed the Revenue's appeal and allowed the Cross Objection of the assessee, directing the AO to delete Rs.18,65,190/- and give effect accordingly.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented, and the final decision rendered by the ITAT Kolkata in this case.