2016 (12) TMI 869 - AT - Income Tax

Disallowance of interest claimed by the assessee on house building advance - Held that - Looking into the factual matrix of the case, it is observed that the property in question is not in the name of the assessee which only concerns with the mother of the assessee i.e. Smt. Usha Sawhney. Since the property in question does not belong to the assessee, therefore, the interest claimed by the assessee on house building advance is not allowable u/s 24(b) - Decided against assessee Unexplained income u/s 69A - Held that - Certificate of Registration of the Car bearing No. RJ-14-CA-6520 which establishes that the assessee was the owner of the Car -Maruti Wagon R which had been sold to Shri Hari Om Bhardwaj and the date of transfer was mentioned in the R.C. on 05-05-2010. The deposit of an amount of ₹ 1.50 lacs in HDFC Bank shows on 19-04-2010 and the transfer of the registration of the car in Registration Certificate of RTO shows on 5-05-2010 which establishes that whenever the old car is sold to the party then it takes time to change the ownership from seller to buyer. It is also noted from the Registration Certificate that transfer of the car was made on 05-05-2010 in the name of Shri Hari Om Bhardwaj S/o Shri Chiranji Lal R/o 18-A, Sri Ram Nagar Jhotwara, Jaipur. Hence, in view of the above facts and circumstances of the case, the assessee deserves relief on this count and the addition sustained by the ld. CIT(A) to the extent of ₹ 1.00 lac is deleted - Decided in favour of assessee

Summary

Issues Involved:
1. Disallowance of interest payment claimed under section 24(b) of the Income Tax Act, 1961 for a self-occupied property.
2. Addition made under section 69A of the Income Tax Act, 1961 for cash deposits in the bank account.

Analysis:

Issue 1: Disallowance of Interest Payment
The appellant appealed against the disallowance of interest payment claimed under section 24(b) of the Income Tax Act, 1961 for a self-occupied property. The Assessing Officer noted that the property was not owned by the appellant but by the mother. The appellant and the mother had a joint loan for the property. The appellant's representative initially claimed joint ownership but later clarified that the property belonged solely to the mother. The appellant argued that since the loan was in joint names, the interest should be allowed. However, both the Assessing Officer and the CIT(A) upheld the disallowance as the property did not belong to the appellant. The CIT(A) emphasized that previous returns processed under section 143(1) did not constitute scrutiny assessments under section 143(3). Consequently, the deduction was not allowable, leading to the dismissal of the appeal.

Issue 2: Addition under Section 69A for Cash Deposits
The appellant contested an addition made under section 69A of the Income Tax Act, 1961 for cash deposits in the bank account. The appellant deposited a sum in the bank, claiming it was from selling an old car. However, no documentary evidence was provided to support this claim during the assessment. The Assessing Officer treated the amount as undisclosed income. The CIT(A) partially allowed the appeal, reducing the addition to ?1.00 lakh and confirming ?50,000 as unexplained deposits. The appellant argued that the registration certificate of the car and an affidavit from a broker supported the sale of the car. During the appeal, the appellant presented evidence showing the transfer of ownership of the car to the buyer, establishing the sale. Consequently, the addition was reduced to ?1.00 lakh, and the appeal was partly allowed.

In conclusion, the appeal was partly allowed concerning the addition under section 69A, while the disallowance of interest payment under section 24(b) was upheld.