2016 (3) TMI 47 - AT - Income Tax

Undisclosed Investment - ₹ 7 lakhs representing loan amount from Sundaram Home Finance as the source of investment in the purchase of land by the assessee; and ₹ 10,75,000 representing the amount invested by Shri Viswanath in the purchase of land jointly with the assessee - Held that - We find that except for stating that ₹ 7 lakhs which has been advanced to the assessee s wife by Sundaram Home Finance, the assessee has not filed any document before us to demonstrate that these funds were withdrawn for payment of the same to the vendor before the date of agreement. The assessee has not filed copy of the bank statement of the assessee s wife to prove this fact. In view of the same, we deem it fit and proper to remand this issue to the file of the Assessing Officer for reconsideration and verification of bank statement of the assessee s wife, and if it is found that the said amount of ₹ 7 lakhs has not been utilised for the purpose of construction of house of Smt.Vasumathi and if it is found that the said amount has been withdrawn very much before the date of entering into the agreement of sale for purchase of land, then the same shall be accepted as proved source for investment in the land. However, as regards the investment made by Shri Viswanath, we find that Shri Viswanath has reflected in his bank statement, the advance paid for the purchase of the land through the assessee herein. Copies of the returns of income filed by Shri Viswanath are also filed before us and there is no adverse finding that the copies of these returns filed by Srhi Viswanath are not correct. Therefore, in our opinion, the assessee has filed the details before the authorities below. In this view of the matter, we are of the opinion that since he has reflected the said transaction in his Balance Sheets as well as in the returns of income, it has to be taken as proved source for investment of amount. - Decided in favour of assessee for statistical purposes.

Issues:
1. Tax effect less than Rs. 10 lakhs leading to dismissal of Revenue's appeal.
2. Disputed additions in the assessment related to loan amount and investment in land by the assessee.
3. Rejection of certain claims by the Assessing Officer.
4. CIT(A)'s decision to partially grant relief to the assessee.
5. Arguments presented by both parties regarding the source of funds for investments.
6. Remand of the issue of loan amount to the Assessing Officer for further verification.
7. Acceptance of the investment made by Shri Viswanath based on documented evidence.
8. Direction to allow consequential relief for charging of interest under S.234B.

Analysis:
1. The judgment involved cross appeals for the assessment year 2004-05. The Revenue's appeal was dismissed due to the tax effect being less than Rs. 10 lakhs, as per CBDT Circular No.21/2015. The assessee's appeal contested two additions made by the Assessing Officer and the imposition of interest under S.234B of the Income Tax Act, 1961.

2. The Assessing Officer questioned the source of funds for the assessee's investments in land, leading to disputed additions. The CIT(A) partially granted relief to the assessee after reviewing the documents submitted, including sale deeds, agreements, and returns filed by related parties.

3. The Assessing Officer rejected the assessee's submissions citing lack of evidence, such as proof of loan utilization, sale agreements, and investment sources. The CIT(A) disagreed with the Assessing Officer on certain claims, leading to the partial relief granted to the assessee.

4. The assessee's arguments focused on providing evidence for the source of funds, including loan documents and related party returns. The Departmental Representative emphasized the lack of documentary proof to support the investments made by the assessee.

5. The Tribunal remanded the issue of the Rs. 7 lakhs loan amount to the Assessing Officer for further verification, specifically requesting scrutiny of the bank statement of the assessee's wife. However, the investment made by Shri Viswanath was accepted based on documented evidence provided, including bank statements and filed returns.

6. The Tribunal directed the Assessing Officer to allow consequential relief concerning the charging of interest under S.234B. As a result, the assessee's appeal was partly allowed for statistical purposes, while the Revenue's appeal was dismissed due to the low tax effect.

7. In conclusion, the judgment highlighted the dismissal of the Revenue's appeal, the partial relief granted to the assessee, and the detailed analysis of the disputed additions and source of funds for investments, emphasizing the importance of documentary evidence in tax assessments.

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