2013 (12) TMI 1749 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition under Section 69 of Rs. 69,000/- for insufficient cash for making a Fixed Deposit.
2. Deletion of addition of Rs. 8,49,000/- on account of long-term capital gain.
3. Deletion of addition under Section 68 of Rs. 2,58,000/- on account of deposits in a joint loan account with State Bank of India.
4. Deletion of addition under Section 69 of Rs. 11,19,980/- on account of transactions with the Indian Bank Loan account.
5. Violation of Rule 46A of the Income Tax Rules regarding additional evidence admitted by CIT(A).

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 69 of Rs. 69,000/- for Insufficient Cash for Making a Fixed Deposit:
The Assessing Officer (AO) added Rs. 69,000/- under Section 69, citing insufficient cash for making a fixed deposit. The CIT(A) deleted this addition, noting the appellant had an opening cash balance of Rs. 25,224/- and sufficient cash inflow from a fruit and cold drinks business. However, the CIT(A) estimated a sum of Rs. 30,000/- as income, granting partial relief. The Tribunal confirmed the CIT(A)'s action to the extent of Rs. 55,224/-, confirming a balance addition of Rs. 13,776/-.

2. Deletion of Addition of Rs. 8,49,000/- on Account of Long-Term Capital Gain:
The AO denied the exemption under Section 54F, as the long-term capital gains were invested in the name of the assessee's wife, not the assessee. The CIT(A) deleted the disallowance, referencing judicial pronouncements, including the Madras High Court's ruling in CIT vs. V. Natarajan, which allowed such exemptions. The Tribunal upheld this deletion, citing the Delhi High Court's decision in CIT vs. Kamal Wahal, which supported the exemption even if the property was purchased in the spouse's name.

3. Deletion of Addition under Section 68 of Rs. 2,58,000/- on Account of Deposits in a Joint Loan Account with State Bank of India:
The AO added Rs. 2,58,000/- under Section 68, suspecting unexplained deposits in a joint loan account. The CIT(A) deleted this addition, noting the loan was for purchasing a shop where the appellant's wife conducted business. The payments were made by the wife, who had sufficient income to justify the deposits. The Tribunal partly upheld this deletion, restricting the addition to Rs. 83,000/- based on the wife's income.

4. Deletion of Addition under Section 69 of Rs. 11,19,980/- on Account of Transactions with the Indian Bank Loan Account:
The AO added Rs. 11,19,980/- under Section 69, questioning the deposits in the Indian Bank loan account. The CIT(A) deleted this addition, clarifying that the deposits were from a mortgage loan and additional loan accounts, used for property purchase, then redeposited when the purchase did not materialize. The Tribunal upheld this deletion, confirming the availability of funds from the loan accounts.

5. Violation of Rule 46A of the Income Tax Rules:
The Revenue argued that CIT(A) violated Rule 46A by admitting additional evidence without calling for a remand report from the AO. The Tribunal noted that the CIT(A) had considered all relevant accounts and found the deposits were from loan accounts, thus not interfering with CIT(A)'s findings.

Conclusion:
The Tribunal partly allowed the Revenue's appeal, confirming some additions and upholding deletions based on the evidence and judicial precedents. The order was pronounced on 31st December 2013.