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2017 (6) TMI 344 - AT - Income TaxAddition on account of difference between 26-AS & return of income - Held that - We take notice of the persistent claim of the assessee that the differential receipt of ₹ 15,24,175/- has been duly and correctly recorded in the hands of the Pvt.Ltd.Co. which has ultimately taken over the business of the present assessee. If that is so, the department ought to have taxed the receipt in the hands of one person who is rightful and legitimate claimant of the receipt. We find that the CIT(A) is merely influenced by the claim of TDS by Assessee herein without declaring the corresponding receipt which, in our view, cannot be seen in isolation to the other attendant facts. The CIT(A), in our view, has accordingly committed error in not appreciating the facts in perspective. We consider it just and expedient to remitting the matter back to the file of the AO for de novo adjudication of the issue in accordance with law after examining the attendant facts for rightful taxation of differential receipts in question. - Decided in favour of assessee for statistical purposes. Claim towards purported cost of improvement disallowed - computation of capital gains - Held that - We find that in support of the cost of improvement so claimed, the assessee has failed to adduce any proper evidence. The assessee has only relied on its claim on the basis of two loans of ₹ 3 lacs and ₹ 1,98,000/- as noted above. However, there is no evidence on record to establish that the aforesaid loans were actually spent on improvement of house. There is nothing on record to suggest that any payment was made through banking channels. No bills, vouchers etc. relating to purported cost of improvement were produced before the lower authorities or before us. Thus, the assessee has failed to establish the veracity of impugned claim. The loan statement is extraneous for determination of issue. Consequently we find no reason to interfere with the order of the CIT(A) in disallowing the claim of the expenditure toward cost of improvements. - Decided against assessee.
Issues:
1. Discrepancy in receipts between financial statements and 26-AS statement. 2. Disallowance of cost of improvement claimed for capital gains computation. Analysis: Issue 1: Discrepancy in receipts - The appellant's appeal was against the addition of ?15,24,175 due to a difference in receipts as per financial statements and 26-AS statement for AY 2011-12. - The Assessing Officer (AO) found a mismatch and treated the difference as suppressed sales, adding it to the total income. - The CIT(A) upheld the AO's decision, stating that the TDS claimed by the appellant implied ownership of the corresponding income. - The appellant argued that the differential receipts were correctly recorded in the Pvt.Ltd.Co.'s return and should not be taxed twice. - The Tribunal noted that the receipts were claimed by the Pvt.Ltd.Co., which took over the business, and remitted the matter to the AO for proper examination. - The Tribunal found errors in the CIT(A)'s approach and allowed the appeal for statistical purposes, directing the AO to verify the taxation of the receipts by the Pvt.Ltd.Co. Issue 2: Disallowance of cost of improvement - The appellant claimed a cost of improvement of ?8,88,704 while computing Long Term Capital Gains on the sale of a property. - The AO rejected this claim, which was upheld by the CIT(A). - The appellant provided evidence of loans taken for improvements, but failed to produce conclusive evidence of actual expenditure on improvements. - The Tribunal found the lack of proper evidence to support the claim and upheld the disallowance of the cost of improvement. - The appeal on this issue was dismissed, as the appellant failed to establish the veracity of the claimed expenditure. In conclusion, the Tribunal partly allowed the appellant's appeal regarding the discrepancy in receipts by remitting the matter to the AO for proper examination. However, the appeal concerning the disallowance of the cost of improvement was dismissed due to insufficient evidence supporting the claim.
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