2015 (2) TMI 200 - AT - Income Tax

Expenditure incurred for leveling the land and construction of boundary walls - denial of claim of deduction by holding that no evidence was furnished in support of claim of expenditure - expenditure incurred was duly recorded in the books of accounts in the preceding assessment years - Held that - We have perused the relevant documentary evidence filed by the assessee in the Paper Book containing pages 1 to 37 as well as the order passed by the Revenue Authorities, we are of the view that in the interest of justice, the issue requires re-examination at the level of the AO, because some relevant evidence assessee has produced before the Revenue Authority, has not been appreciated by them. In the interest of justice, we set aside the issue to the file of the AO, with the direction to decide the same afresh under the law, after adequate opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Unsecured loan - amount received from husband of the appellant Shri Manoj Kumar who is an independent assessee - Held that - assessee has produced necessary evidence before the AO to prove the genuineness and creditworthiness of Sh. Manoj Kumar who had advanced the loan of ₹ 4 lacs to her wife i.e. assessee. Assessee has filed the return of income of her husband Sh. Manoj Kumar and copy of the bank account in which her husband has deposited money on 5.12.2008, 10.12.2008 and 16.12.2008 and advanced the same to the assessee on 16.12.2008 through cheque. The important basis of evidence is the statement of Sh. Manoj Kumar, husband of the assessee has also been recorded by the AO on 19.10.2011 and he stated that he is doing Kiryana business and he has deposited the amount in the Bank and advanced the amount in dispute to her wife from her Kiryana business. The assessee has discharged her onus to prove the genuineness and creditworthiness of her husband who has given the loan to the unsecured loan to her wife i.e. assessee. Thus the amount of ₹ 4 lacs has been fully explained by the assessee, therefore, the addition in dispute is hereby cancelled. - Decided in favour of assessee. Advances made in earlier years and received in the instant year - addition to income - Held that - At the time of hearing, Ld. Counsel of the assessee filed the documentary evidence and draw our attention towards the relevant evidence which support the claim of the assessee qua the addition of ₹ 5,50,000/-. We are of the view that relevant evidence produced by the assessee, has not been appreciated by the revenue authorities which requires examination at the level of AO.- Decided in favour of assessee for statistical purposes.

Issues Involved:
1. Denial of claim of deduction for expenditure incurred for leveling land and construction of boundary walls.
2. Addition of Rs. 4,00,000/- representing unsecured loan received from the appellant's husband.
3. Addition of Rs. 5,50,000/- representing advances made in earlier years and received in the instant year.

Detailed Analysis:

Issue 1: Denial of Claim of Deduction for Expenditure Incurred for Leveling Land and Construction of Boundary Walls

The appellant contested the denial of a deduction claim amounting to Rs. 1,88,100/- for expenses incurred in leveling land and constructing boundary walls. The appellant argued that these expenses were recorded in the books of accounts for the preceding assessment years and had been accepted without dispute. The appellant emphasized that the expenditure was incurred in AY 2008-09 and was duly reflected in the financial records, which had attained finality. The appellant argued that the Assessing Officer (AO) disallowed these expenses without any material evidence and that the Commissioner of Income Tax (Appeals) [CIT(A)] affirmed the AO's decision without proper appreciation of the facts.

The Tribunal noted that the appellant had provided relevant documentary evidence and that the revenue authorities had not adequately considered this evidence. Therefore, the Tribunal remanded the issue back to the AO for re-examination, directing the AO to decide the matter afresh under the law, ensuring that the appellant is given an adequate opportunity to be heard.

Issue 2: Addition of Rs. 4,00,000/- Representing Unsecured Loan Received from the Appellant's Husband

The appellant challenged the addition of Rs. 4,00,000/- as an unsecured loan received from her husband, arguing that the AO had wrongly added this amount under section 68 of the Income Tax Act on the grounds that the creditworthiness of the appellant's husband was not proven. The appellant provided evidence, including the husband's income tax returns, bank statements showing the deposit and subsequent transfer of funds, and a recorded statement from the husband confirming the loan.

The Tribunal found that the appellant had sufficiently demonstrated the genuineness and creditworthiness of the loan transaction. The Tribunal noted that the AO had recorded the husband's statement, which confirmed the source of funds from his Kiryana business. Consequently, the Tribunal concluded that the addition of Rs. 4,00,000/- was unjustified and cancelled the addition, ruling in favor of the appellant.

Issue 3: Addition of Rs. 5,50,000/- Representing Advances Made in Earlier Years and Received in the Instant Year

The appellant disputed the addition of Rs. 5,50,000/- related to advances made in earlier years and received back in the current assessment year. The appellant provided evidence, including confirmations from the parties involved, explaining that the amounts were advances for land purchases that did not materialize and were subsequently returned. The appellant also highlighted that these transactions were reflected in the financial records of the previous assessment year.

The Tribunal observed that the revenue authorities had not adequately considered the documentary evidence provided by the appellant. Therefore, the Tribunal remanded this issue back to the AO for re-examination, directing the AO to consider the evidence afresh and make a decision under the law, ensuring the appellant is given an adequate opportunity to present her case.

Conclusion:

The Tribunal partly allowed the appeal for statistical purposes, remanding issues 1 and 3 back to the AO for re-examination and deciding in favor of the appellant on issue 2 by cancelling the addition of Rs. 4,00,000/-. The Tribunal emphasized the need for the revenue authorities to adequately consider the evidence provided by the appellant and ensure a fair hearing.

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