2015 (9) TMI 18 - AT - Income Tax

Addition u/s 69B - unaccounted investment in property - CIT(A) deleted addition accepting addition evidence - Held that - hatever evidence narrated by the Assessing Officer and CIT(A) shows that the assessee had purchased plot No. 168 Shyampuri Kalwad Road, Jaipur at ₹ 16 lacs. The assessee had shown only ₹ 1,01,000/- paid on date of agreement i.e. on 24/4/2007 but the remaining amount of ₹ 14,99,000/- was paid from undisclosed source. The assessee s explanation is after thought when he has disclosed this plot in purchase as well as closing stock in P&L account and balance sheet submitted before the CIT(A) during the appeal proceedings. The affidavit filed by the appellant has partly considered by the ld CIT(A), which also goes against the fact of the case that Shri Murlidhar Purohit filed affidavit on 02/5/2011 and admitted the possession of plot with him. However, the registered deed with the third party was dated 20/10/2008, which is contradictory the fact of affidavit. We have considered view that this issue required further investigation from the side of seller of plot, from Shri Ramesh Sharma purchaser of plot, actual possession of plot etc. The Assessing Officer is directed to take final decision on the basis of enquiry and evidences. Accordingly, this ground of appeal is set aside for de novo. The Assessing Officer is directed to give sufficient time to the assessee before deciding this issue.- Decided partly in favour of assessee for statistical purposes. Addition on account of 1/3rd disallowance out of taxi running expenses - Held that - The assessee had shown total tour and travel receipt at ₹ 1,59,454/- against which he claimed expenses at ₹ 37,540/-. The assessee had not produced any evidence before the Assessing Officer as well as CIT(A) in support of expenses. However, without expenses, the income cannot be earned. The expenses claimed on diesel, petrol, salary of driver can be collected by the appellant but this business is totally unorganized. Therefore, we confirm addition at ₹ 5,000/- in place of disallowance made by the Assessing Officer at ₹ 11,893/- in the interest of justice. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Rejection of additional evidence under Rule 46A of Income Tax Rules, 1962.
2. Addition of Rs. 11,893 on account of 1/3rd disallowance out of taxi running expenses.
3. Addition of Rs. 14,99,000 under Section 69B of the Income Tax Act on account of alleged undisclosed investment in the purchase of a plot.

Issue-Wise Detailed Analysis:

1. Rejection of Additional Evidence under Rule 46A of Income Tax Rules, 1962:
The assessee's request for admitting additional evidence under Rule 46A was rejected by the CIT(A) on the grounds that these evidences should have been produced before the Assessing Officer (AO). The assessee argued that the additional evidence was crucial for equity and natural justice, but the CIT(A) held that the case was not covered under Rule 46A. The assessee contended that a feud with the seller prevented the timely submission of evidence, and the seller's subsequent death complicated matters further. However, the CIT(A) maintained that the additional evidence was inadmissible.

2. Addition of Rs. 11,893 on Account of 1/3rd Disallowance out of Taxi Running Expenses:
The AO disallowed Rs. 11,893, which is 1/3rd of the claimed taxi running expenses of Rs. 37,540, due to lack of supporting vouchers and records. The CIT(A) confirmed this disallowance, noting that the assessee failed to substantiate the expenses with reliable documents. The assessee argued that the disallowance was not specific and should be deleted based on past history, where similar disallowances were reduced by the ITAT to token amounts. The ITAT, considering the unorganized nature of the business, confirmed a reduced addition of Rs. 5,000 instead of Rs. 11,893.

3. Addition of Rs. 14,99,000 under Section 69B of the Income Tax Act:
The AO observed that the assessee paid Rs. 1,01,000 in cash for a plot with a sale consideration of Rs. 16,00,000, and treated the balance Rs. 14,99,000 as undisclosed income. The CIT(A) confirmed this addition, noting that the agreement dated 24/04/2007 indicated a sale for Rs. 16 lacs, with Rs. 1,01,000 paid upfront and the balance due within 15 days. The CIT(A) found no evidence of cancellation of this agreement and noted that the plot was shown as closing stock in the assessee's books. The assessee's affidavit from the seller was deemed false as the plot was sold to a third party on 20/10/2008. The ITAT directed further investigation into the matter, requiring the AO to verify the seller's and third party's statements and the actual possession of the plot before making a final decision.

Conclusion:
The appeal resulted in a mixed outcome. The ITAT ordered a de novo investigation for the Rs. 14,99,000 addition under Section 69B, partially allowed the appeal regarding the Rs. 11,893 disallowance by reducing it to Rs. 5,000, and upheld the rejection of additional evidence under Rule 46A. The case highlights the importance of providing timely and adequate evidence to substantiate claims and expenses in tax assessments.