2014 (6) TMI 209 - AT - Income Tax

Deletion towards investment in purchase of property Held that - The credit entries in the Axis bank account reflected the amounts received from various persons to whom the properties were sold by him as mediator earning commissions from transactions - the debit entries in the said bank account represented the amounts of purchase price handed over to the sellers after retaining commission on sale properties - the assessee s explanation about the source of deposits in the bank account has not been contradicted by the AO, who chose to make addition by considering only the credit entries in the Pass book by virtually ignoring that there were debit entries in the same bank account the order of the CIT(A) is upheld - Decided against Revenue. Deletion of unexplained credit in bank account Held that - The assessee tendered an explanation to the effect that he received a sum of Rs. 10 lakh against the tentative purchase of property from Shri Ram Karan Garg - the assessee gave explanation about the source of deposit along with complete particulars of the party issuing cheque, there remains nothing with the Revenue to make any addition on this account, more so, when the explanation so given by the assessee has not been faulted with thus, the order of the CIT(A) is upheld - Decided against Revenue. Estimated addition of Dhaba income Held that - The assessee filed his return declaring income from Dhaba at Rs. 68,193/- against the gross receipts at Rs. 1,60,683 - A copy of Income and Expenditure account is available on record - When the amount of gross receipt is not disputed at Rs.1.60 lakh, there is no logic in sustaining the estimated income of Rs. 2 lakh from Dhaba the order of the CIT(A) is upheld Decided against Revenue.

Summary

Issues:
1. Deletion of addition towards investment in purchase of property.
2. Deletion of unexplained credit in the bank account.
3. Deletion of estimated addition in respect of Dhaba income.
4. Alleged contravention of Rule 46A of IT Rules 1962.

Deletion of Addition towards Investment in Purchase of Property:
The appeal involved the deletion of an addition made by the Assessing Officer towards investment in the purchase of property. The assessee explained that the cash deposits in the bank were from selling properties on behalf of customers and the debit entries represented purchase prices paid to sellers after retaining commissions. The CIT(A) ordered the deletion of the addition based on the explanations provided by the assessee, which were not contradicted by the Assessing Officer. The Tribunal upheld the decision, stating that once an explanation is given and not rejected with material evidence, it is presumed accepted. The Assessing Officer's focus on credit entries without considering debit entries was deemed incorrect.

Deletion of Unexplained Credit in the Bank Account:
The second issue revolved around the deletion of an addition for an unexplained credit in the bank account. The assessee clarified that the amount deposited was received against a tentative property purchase, later refunded. Despite the Assessing Officer citing a violation of Sec. 269SS, the Tribunal found the explanation satisfactory and approved the CIT(A)'s decision to delete the addition.

Deletion of Estimated Addition in Respect of Dhaba Income:
Regarding the estimated addition in Dhaba income, the Assessing Officer estimated income at Rs. 2 lakh, exceeding the declared amount of Rs. 68,193. The CIT(A) deleted the additional estimation, emphasizing that the declared income was supported by the available Income and Expenditure account. The Tribunal concurred, rejecting the estimation of Rs. 2 lakh and upholding the declared income.

Alleged Contravention of Rule 46A of IT Rules 1962:
The final issue pertained to the alleged contravention of Rule 46A of IT Rules 1962. The Tribunal dismissed the grounds, noting that no additional evidence was admitted in violation of Rule 46A. The evidence submitted by the assessee was sent for a remand report twice, indicating compliance with the rule. Consequently, the appeal was dismissed, affirming the decisions made by the CIT(A) on the various issues.

In conclusion, the Tribunal's judgment favored the assessee on all issues, emphasizing the importance of accepting valid explanations and adhering to procedural rules during assessment proceedings.