2015 (10) TMI 2 - AT - Income Tax

Addition towards cash found at the time of survey - Held that - There is no dispute that the amount belongs to assessee and was found in the course of survey. It was the contention of assessee that the sources are withdrawals from bank accounts and firm s accounts but no such evidence was furnished either before A.O. or before appellate authority. Even before us, except making the arguments, no evidence has been furnished. In the absence of any supporting contentions, we are of the opinion that the authorities are justified in confirming the addition. - Decided against assessee. Addition towards unexplained withdrawals - Held that - Assessee could not substantiate by way of any confirmation or account copies of the so-called withdrawals from the firms. By a separate order, we have also dealt with the appeal in the case of M/s. Ramaswamy & Sons which is supposed to have been advanced ₹ 1 lakh to assessee. In that case, there are no books of accounts and assessments have been completed on estimation basis as that assessee has not even filed return. In the absence of any evidence with reference to confirmation of amounts received as credits, the amount of ₹ 2,50,000 was rightly confirmed by Ld. CIT(A). We see no reason to interfere with the order - Decided against assessee. Claim of exemption under section 10(37) - Held that - Capital gains is exempt in the case of assessee being an individual arising from the transfer of agricultural land where such transfer is by way of compulsory acquisition under any law as per Sec. 10(37)(iii) . There is nothing on record to indicate that the land which is acquired by HUDA as stated by assessee was agricultural land under the definition of the I.T. Act, even though the land may be used for agricultural purposes. Since, assessee himself offered the capital gain. A.O. had no occasion to examine this issue, whether the land in question is exigible to capital gains or not. Before the Ld. CIT(A) when assessee has raised as an additional ground, he should have examined the facts required and should have adjudicated the same on legal principles as it goes to the root of the matter whether capital gains can be offered or not. Since the Ld. CIT(A) rejected without adjudicating the same/examining the same, we are of the opinion that assessee should be given an opportunity to explain whether the capital gains offered in the return of income is correct or not. Therefore, in the interest of justice, we are of the opinion that this matter is to be re-examined by A.O. after obtaining necessary information/evidence or facts for establishing that the land in question is agricultural land as per the definition of the I.T. Act and the same is compulsorily acquired by HUDA and provisions of section 10(37) are applicable. Assessee is directed to file necessary evidence before A.O. in order to examine the issue. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Addition of unexplained cash found during survey.
2. Addition of unexplained withdrawals from firm accounts.
3. Claim of exemption under section 10(37) for capital gains.

Issue 1: Addition of unexplained cash found during survey

The Assessing Officer (A.O.) made an addition of Rs. 3,52,315 towards cash found during a survey, as the source of funds provided by the assessee was not substantiated. The assessee claimed the funds were from bank withdrawals and firm accounts for his son's marriage, but failed to provide evidence. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed the addition as the explanation was deemed insufficient. The Income Tax Appellate Tribunal (ITAT) upheld the decision, stating that without supporting evidence, the addition was justified.

Issue 2: Addition of unexplained withdrawals from firm accounts

The A.O. added Rs. 2,50,000 as unexplained withdrawals from firm accounts, which the assessee failed to substantiate with evidence. The CIT(A) deleted Rs. 9 lakhs but confirmed Rs. 2,50,000 as the assessee could not provide confirmation or account copies of the withdrawals. The ITAT supported the decision, emphasizing the lack of evidence and upheld the confirmation of the Rs. 2,50,000 addition.

Issue 3: Claim of exemption under section 10(37) for capital gains

The assessee claimed exemption under section 10(37) for capital gains on the sale of agricultural land, contending that the land was compulsorily acquired by the Hyderabad Urban Development Authority. The CIT(A) dismissed the additional ground raised regarding the claim. However, the ITAT allowed the ground for statistical purposes, directing the A.O. to re-examine whether the land in question qualifies as agricultural land under the IT Act and whether the provisions of section 10(37) are applicable. The assessee was instructed to provide necessary evidence for further assessment.

In conclusion, the ITAT partially allowed the appeal for statistical purposes, directing a re-examination of the claim for exemption under section 10(37) for capital gains. The tribunal emphasized the importance of providing evidence to support claims and decisions in tax matters.