2015 (9) TMI 1677 - AT - Income Tax

Addition of claim u/s. 54EC of REC bond hutment charges paid and brokerage paid - Whether CIT(A) has erred in law and on facts in admitting the fresh evidences and submission without giving any opportunity to the A.O. being heard on the principles of law and natural justice and thereby violated the provision of Rule 46A of the I.T. Rules - HELD THAT - Deductions claimed by the assessee are reasonably supported by documentary evidences and just because the AO has some apprehensions without any supporting material the disallowances cannot be made. It was not for the AO to consider what ought to have happened in ideal circumstances. All that he was to see whether there were any inconsistencies in the claim made by the assessee or whether the claim so made was devoid of supporting evidences. Clearly that was not the case. There was thus no good reasons to reject the claim of deduction for brokerage and removal of hutments. Learned CIT(A) was thus quite justified in giving the impugned relief. We approve the relief so granted by the ld. CIT(A) and decline to interfere in the matter.

Summary

Issues Involved:
Challenge to order dated 11th August, 2011 passed by the ld. CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961 for the assessment year 2008-09.

Analysis:

1. Disallowance of Brokerage and Hutment Charges:
The Assessing Officer disallowed the deduction claimed by the assessee for brokerage and hutment charges paid during the sale of a plot of land. The Assessing Officer raised concerns about the legitimacy of the payments, suggesting the possibility of cash transactions and lack of legal actions to vacate the hutments. However, the ld. CIT(A) allowed the deductions after considering the documentary evidence provided by the assessee. The ld. CIT(A) noted that the brokerage amount was in line with market trends, and the source of payment was explained with the recipient's identity proven through an affidavit. Similarly, for the hutment charges, the ld. CIT(A) found evidence of legal actions taken by the assessee to obtain vacant possession of the land, including notices from the advocate and the Municipal Corporation. The ld. CIT(A) concluded that the payments were legitimate and necessary for the sale of the land, thus allowing the deductions.

2. Admission of Fresh Evidences:
The Assessing Officer also challenged the admission of fresh evidence by the ld. CIT(A) without providing an opportunity to be heard, citing a violation of Rule 46A of the Income Tax Rules. However, the Tribunal found that the Assessing Officer's concerns lacked supporting material and that the deductions claimed were well-supported by documentary evidence. The Tribunal upheld the ld. CIT(A)'s decision to admit the fresh evidence and grant relief to the assessee, emphasizing that the Assessing Officer's apprehensions alone were insufficient grounds for disallowance.

3. Tribunal's Decision:
After considering the arguments presented by both parties and examining the material on record, the Tribunal found no valid reasons to interfere with the relief granted by the ld. CIT(A). The Tribunal agreed with the ld. CIT(A)'s reasoning that the deductions claimed were supported by sufficient documentary evidence. The Tribunal emphasized that the Assessing Officer's doubts without concrete evidence were not grounds for disallowance. Consequently, the Tribunal dismissed the appeal and upheld the relief granted by the ld. CIT(A) regarding the disallowance of brokerage and hutment charges.