2019 (11) TMI 330 - AT - Income Tax

LTCG - Claim of exemption u/s. 54 - HELD THAT - The certificate issued by the Bank and reproduced verbatim by the CIT(A) at page 3 is self-contradictory, which reveals that the amount was deposited in SB A/c and then it was transferred to fixed deposit account No.31117783705 but no proof or account detail or statement of account was filed by the assessee before the authorities showing that fixed deposit was in the capital gain scheme, which could enable the assessee for making the claim of exemption u/s.54 of the Act. However, it is not disputed that the amount was initially parked in the capital gains account and later on the same was transferred to fixed deposit account. No details of the same were furnished before us at the time of hearing. Hence, we set aside the addition of ₹ 26 lakhs to the file of the Assessing Officer to verify once again whether the deposit of money of ₹ 26 lakhs in bank account fulfil the requirement of section 54 of the Act.Accordingly, this part of ground is restored to the file of the AO for verification and decision afresh about claim of exemption u/s.54 of the Act. So far as remaining amount of ₹ 3 lakhs is concerned, undisputedly, the assessee issued a cheque to West Bengal Housing Board alongwith application for allotment of house, but the same was not allowed and no allotment was made to the assessee. In our humble understanding, the provisions of section 54 of the Act making an application for allotment of a house with West Bengal Housing Board or any other Housing Board is not sufficient to claim exemption u/s.54 of the Act. Therefore, the authorities below are right in dismissing the claim of exemption u/s.54 of the Act pertaining to claim of ₹ 3 lakhs. Hence, Ground No.1(B) is dismissed. Addition of foreign trip - HELD THAT - Neither before the lower authorities nor before this Bench, the assessee has filed any cogent and reliable evidence to show that the expenses incurred in Vietnam and UAE tour were borne by the host The CBDT Circular No.5 /2012 dated 1.8.2012 clearly provides that the expenses incurred in providing freebees to medical practitioner by Pharmaceutical and allied health sector industries and inadmissible expenses. In the present case, admittedly, the assessee made foreign tour to Vietnam and UAE during the relevant financial period and do not show or procure any expenses incurred towards such foreign trips. Therefore, the authorities below were right in making addition u/s.69C of the Act treating the same as undisclosed expenditure of the assessee during the relevant financial period. Accordingly, Ground No.2 of appeal is dismissed. Addition of share of agricultural income - HELD THAT - We find that similar agricultural income has been accepted by the department in assessment years 2005-06 to 2007-08, 2010-2011 and subsequent assessment year 2016-17. The departmental authorities have also not doubted the holding of agricultural land of 45 acres in the name of the father of the assessee and only disbelieved the income towards agricultural income as the same was not reflected in the bank account of the assessee. There may be various reasons to park the fund out of agricultural income in the bank or in hand to meet further expenditure for this purpose. It is not the case of the revenue that similar amount of agricultural income should be reflected in the bank account to prove the agricultural income. There was no evidence to establish that the assessee has sold the agricultural land or that the assessee has stopped the agricultural operations. The Revenue has not placed on record any positive material to disbelieve the agricultural income claimed by the assessee, therefore the addition cannot be sustained. Hence, we set aside the orders of lower authorities and direct the Assessing officer to delete the addition - Appeal of the assessee is partly allowed.

Summary

Issues:
1. Exemption under section 54 of the Income Tax Act for deposits in capital gain deposit account and with West Bengal Housing Board.
2. Addition of expenses for foreign trips as undisclosed income under section 69C of the Act.
3. Disallowance of agricultural income claimed by the assessee.

Issue 1 - Exemption under section 54:
The appeal involved a dispute regarding the exemption claimed by the assessee under section 54 of the Income Tax Act for deposits made in a capital gain deposit account and with the West Bengal Housing Board. The Assessing Officer disallowed the claim, stating that the amount was transferred to a fixed deposit account without evidence of investment in the capital gains account. The CIT(A) upheld the addition, emphasizing the lack of proof. The Tribunal noted that the initial deposit was made in the capital gains account but later transferred to a fixed deposit account. However, as no conclusive evidence was provided to establish the fixed deposit was in the capital gain scheme, the Tribunal set aside the addition for further verification by the Assessing Officer.

Issue 2 - Addition of expenses for foreign trips:
The appeal also addressed the addition of expenses for foreign trips as undisclosed income under section 69C of the Act. The assessee's claim for the expenses incurred during trips to Vietnam and UAE was challenged by the Assessing Officer and CIT(A). The Tribunal observed that the assessee failed to provide substantial evidence that the expenses were borne by the hosts, leading to the confirmation of the addition as undisclosed expenditure. Citing a CBDT Circular, the Tribunal dismissed the appeal, ruling that the expenses were inadmissible and treated as undisclosed income.

Issue 3 - Disallowance of agricultural income:
The final issue involved the disallowance of agricultural income claimed by the assessee. Despite the department accepting similar income in previous years, the Assessing Officer disbelieved the claimed income due to the absence of corresponding bank deposits. The Tribunal noted the lack of evidence to refute the agricultural income claim and emphasized the absence of proof of sale of agricultural land or cessation of agricultural operations. Relying on the rule of consistency and lack of concrete evidence by the revenue, the Tribunal directed the Assessing Officer to delete the addition of the disputed agricultural income, allowing this ground of the assessee.

In conclusion, the Tribunal partly allowed the appeal, addressing the issues of exemption under section 54, addition of foreign trip expenses, and disallowance of agricultural income, providing detailed reasoning and directives for each matter.