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2023 (1) TMI 759 - AT - Income TaxDisallowance of business loss - AO disallowed the said business loss on the ground of non-production of relevant supporting documents - HELD THAT - We find that the expenditure claimed by the assessee are petty expenses, out of which, the major expenses are in respect of salary to staff - Once the assessee has furnished the relevant documents before the Ld. CIT(A) and after admitting the same, the Ld. CIT(A) has called for remand report from the AO therefore, the Ld. CIT(A), in our view, ought to have looked into these documents. Thus we do not find any justification on the part of the lower authorities for disallowing the business loss. Addition u/s 68 - amount credited in the capital account of the assessee - HELD THAT - We find that the assessee has successfully proved the sale transaction of the land for Rs. 95 lacs out of which, the assessee received Rs. 47,50,000/-which were directly deposited interest eh firm s loan account. Therefore, the addition made into the capital account of the said amount cannot be doubted. Relating to the rest of the amount, the Ld. Counsel for the assessee has submitted that some of the amount was withdrawn from its firm M/s Akshit Enterprises and some of the amount was received from withdrawals of its Yes bank account. The copy of the bank account statement were furnished before the CIT(A), however, CIT(A) failed to look into the aforesaid bank statement etc. No justification on the part of the CIT(A) in sustaining the aforesaid additions, the same is accordingly ordered to be deleted. Unsecured loans received u/s 68 - loan received by the assessee from brother - HELD THAT - From the perusal of the confirmed copy of the accounts, it was clear that one cheque amounting to Rs. 12,39,500 taken from Dyal Sarup (HUF) was wrongly issued / repaid to Dyal Sarup Instead of Dyal Sarup (HUF) and thus, it was paid back to the assessee subsequently. Thus, the same needs to be accepted. Regarding the balance amount,it is submitted that the said amount was not actually received from Dyal Sarup (HUF) but was merely a book entry made from M/s Dhruv Impex and the same has been submitted before the Ld. AO during the remand proceedings. Worthy CIT(A) have not even cared to look into the said facts and in a presumptive manner rejected the submissions of the assessee and upheld the additions. Thus, the assessee has filed confirmed copy of accounts to show that it was merely a book entry. The assessee has also filed his bank statement, wherein, no such amount has been received and no adverse inference with regard to the same has been drawn by the Department. Thus, the addition made with regard to the same also deserves to be deleted. Long Term Capital Gains - Nature of property sold - commercial property or residential property - AO not referred the matter to the DVO to get the market value of the property - HELD THAT - Assessee initially had purchased the property as commercial property but while selling the property the assessee sold the property as residential property. The Stamp Duty Authority has accepted the said property as residential property. Apart from this, the assessee produced on file the Certificate issued by the Assistant Town Planner supporting that the property sold by the assessee falls within the Ludhiana Residential Town Planning Scheme and hence residential property. In this case, the assessee has claimed to have sold the property as per the Value assessed by the Stamp Valuation Authority. Apart from that, the assessee has also furnished a Certificate from the concerned authority i.e. Assistant Town Planner that the property in question falls in the residential area. However, it has not been explained as to why the assessee had purchased the said property as commercial property. May it be so, the Assessing officer at most, can have referred the matter to the District Valuation Officer but the Assessing officer himself did not have any authority to apply the value of the Circle rate of commercial property, especially when the Stamp Duty Authority / Registering Authority had accepted this sale deed as per the Circle rate meant for residential property. Since the value shown by the assessee has been accepted by the Stamp Duty Authority and further the Assessing officer has not referred the matter to the DVO to get the market value of the property, therefore, we do not find any justification on the part of the Assessing officer to himself made the additions by applying circle rate meant for commercial property. In view of this, the addition made by the Assessing officer relating to this amount is ordered to be deleted. Allowing the assessee the brought forward loss - assessee has submitted that the aforesaid brought forward losses of AY 2012-13 and AY 2013-14 inadvertently could not be claimed in the relevant column of the return. However, during the course of assessment proceedings, the same were very much claimed - HELD THAT - We have considered the rival contentions. It has been time and again held that the Income Tax Authorities should charge legitimate taxes from the assessee. An assessee should not be punished for his/ her bonafide mistake. The Instructions in this respect have also been issued by the CBDT from time to time that the Income Tax Authorities should assist the assessee in correctly making their claim in the return. 19. In view of this, we direct the Assessing officer to verify the claim of the assessee regarding the brought forward losses of the previous years i.e. AYs 2012-13 and 2013-14 and if the claim of the assessee is found correct, then to give set off adjustments of the same in the current year under considerations
Issues Involved:
1. Confirmation of income assessment at Rs. 1,24,53,530/- against declared loss. 2. Disallowance of business loss of Rs. 10,34,164/-. 3. Addition of Rs. 64,47,530/- u/s 68 on account of capital account credit. 4. Addition of Rs. 59,89,500/- on account of unsecured loans u/s 68. 5. Addition of Rs. 38,00,196/- on account of long-term capital gain and disallowance of long-term capital loss. 6. Consideration of documentary evidence and submissions during remand proceedings. 7. Set-off of brought forward losses of AY 2012-13 and AY 2013-14 against current year's income. Issue-wise Detailed Analysis: 1. Confirmation of Income Assessment: The first ground of appeal was general and did not require specific adjudication. 2. Disallowance of Business Loss: The assessee claimed a business loss of Rs. 10,34,164/- in the profit and loss account. The Assessing Officer disallowed the claim due to non-production of supporting documents. During the appellate proceedings, the assessee submitted additional evidence, which the CIT(A) refused to consider, upholding the disallowance. The Tribunal found that the expenses were petty, mainly salary and day-to-day expenses, and that the assessee had furnished relevant documents before the CIT(A). The Tribunal ordered the disallowance to be deleted. 3. Addition of Rs. 64,47,530/- u/s 68: The Assessing Officer noticed an addition of Rs. 64,47,530/- to the assessee's capital account, explained as proceeds from land sale and withdrawals from Akshit Enterprises and Yes Bank. The CIT(A) confirmed the addition due to lack of evidence during assessment. The Tribunal found that the sale transaction of Rs. 47,50,000/- was proven and that the CIT(A) failed to consider the bank statements for the remaining amount. The Tribunal ordered the deletion of the addition. 4. Addition of Rs. 59,89,500/- on Account of Unsecured Loans: The assessee received a loan of Rs. 47,50,000/- from his brother and Rs. 12,39,500/- from Dyal Sarup (HUF). The CIT(A) confirmed the addition due to insufficient evidence. The Tribunal found that the sale transaction and the loan from the brother were proven, and the amount from Dyal Sarup (HUF) was a book entry. The Tribunal ordered the deletion of the addition. 5. Addition of Rs. 38,00,196/- on Account of Long-Term Capital Gain: The Assessing Officer applied the circle rate for commercial property to compute capital gains, while the assessee claimed the property was residential. The CIT(A) confirmed the addition. The Tribunal found that the property was accepted as residential by the Stamp Duty Authority and the Assistant Town Planner. The Assessing Officer should have referred the matter to the District Valuation Officer instead of applying the commercial rate. The Tribunal ordered the deletion of the addition. 6. Consideration of Documentary Evidence: Ground No. 6 was general and did not require specific adjudication. 7. Set-off of Brought Forward Losses: The assessee claimed brought forward losses of Rs. 78,354/- and Rs. 45,66,708/- for AY 2012-13 and AY 2013-14, which were not claimed in the return but were claimed during assessment and appellate proceedings. The Tribunal directed the Assessing Officer to verify the claim and allow the set-off if found correct. Conclusion: The Tribunal allowed the appeal for statistical purposes, directing the deletion of disallowances and additions made by the Assessing Officer and CIT(A), and instructed the Assessing Officer to verify and allow the set-off of brought forward losses.
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