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2013 (6) TMI 350 - AT - Income TaxDeduction claimed u/s. 54 denied - AO concluded that what was constructed by the assessee was not a residential house as envisaged in sec. 54 & as the assessee did not come forward with any evidence to prove the existence of the house with a built up area of 600 sq. ft., assessee had accepted his conclusion that the house transferred through the sale deed was not in existence at all as on date - Held that - The assessee taken a plea before the lower authorities that this construction was used by servants as their residence. However, the Assessing Officer brought on record that the said construction was not fit for human habitation and also there is no evidence of carrying out any improvement after purchasing the property by the assessee. It is also brought on record that the assessee failed to substantiate the claim that some servants are staying in that construction. Before us, the assessee repeated the arguments as made before the lower authorities but has not placed necessary evidence in support of the claim of whatsoever to show that the said construction is in habitable condition. A construction in inhabitable position cannot be equated with a residential house. If a person cannot live in a premises, then such premises cannot be considered as a residential house. Thus investment in the construction would be complete as a house only when such house becomes habitable as supported by the decision of Saleem Fazelbhoy vs. DCIT (2006 (6) TMI 139 - ITAT BOMBAY-G). The evidence brought on record by the Assessing Officer clearly shows that the property purchased by the assessee would not fall within the description of residential house. Being so, the claim of the assessee cannot be allowed u/s. 54F. Also see Smt. Rohini Reddy 2008 (4) TMI 363 - ITAT HYDERABAD-B . Against assessee. Claim for construction expenditure denied - Held that - The assessee not placed before the Assessing Officer the required information like the details from whom the assessee purchased construction material. Further it is also brought on record by the Assessing Officer that the contractors to whom payments were made withdrew the amount from their accounts in a short time and closed the accounts within a few months. The evidence brought on record by the Assessing Officer shows that the alleged improvements or construction made by the assessee is false. Being so, we are inclined to uphold the argument of the DR and dismiss the ground taken by the assessee.Against assessee. Addition u/s. 68 - Held that - The assessee only provided address of parties. Genuineness of the transaction and capacity of the parties are not proved. It is the burden cast on the assessee u/s. 68 to prove the genuineness of the transaction and capacity of the parties is not discharged by the assessee. The transaction is in the form of cash. Being so, there is heavy burden on the assessee to prove that the transaction is genuine. See R.B. Mittal vs. CIT (2000 (8) TMI 54 - ANDHRA PRADESH High Court) wherein similar view has been taken, thus inclined to confirm the addition made u/s. 68. Against assessee.
Issues Involved:
1. Denial of deduction under Section 54 of the IT Act, 1961. 2. Validity of the cost of improvement claimed by the assessee. 3. Addition under Section 68 of the IT Act, 1961. Detailed Analysis: 1. Denial of Deduction Under Section 54 of the IT Act, 1961: Facts and Arguments: - The assessee sold a house at Dwarakapuri Colony, Hyderabad, and claimed a deduction under Section 54 for investing in a new residential house. - The Assessing Officer (AO) found discrepancies in the claimed investment and the actual existence of the residential house. The AO's investigation revealed that the house claimed to be purchased was not habitable and did not meet the criteria of a "residential house" as per Section 54. - The CIT(A) upheld the AO's findings, noting that the structure on the plot did not qualify as a residential house and that the assessee failed to provide sufficient evidence to support the claim. Judgment: - The Tribunal agreed with the AO and CIT(A), concluding that the structure was not fit for habitation and thus did not qualify as a residential house under Section 54. The Tribunal emphasized that a residential house must be habitable, and mere construction without basic amenities does not suffice. 2. Validity of the Cost of Improvement Claimed by the Assessee: Facts and Arguments: - The assessee claimed substantial costs for improvements on the properties sold, including construction of new structures and other works. - The AO found that the claimed improvements were not substantiated with adequate evidence. Summons issued to contractors were returned unserved, and the statements of the contractors who were examined did not support the assessee's claims. - The CIT(A) upheld the AO's findings, noting discrepancies in the statements and the lack of credible evidence to support the claimed improvements. Judgment: - The Tribunal upheld the findings of the lower authorities, noting that the evidence provided by the assessee was insufficient to substantiate the claimed improvements. The Tribunal emphasized the importance of credible and verifiable evidence to support such claims. 3. Addition Under Section 68 of the IT Act, 1961: Facts and Arguments: - The assessee received loans from various persons and provided confirmation letters and landholding certificates to substantiate the loans. - The AO added a sum of Rs. 47 lakhs under Section 68, finding that the assessee failed to prove the genuineness of the transactions and the creditworthiness of the lenders. - The CIT(A) upheld the AO's addition, noting that the assessee did not provide sufficient evidence to establish the genuineness of the transactions. Judgment: - The Tribunal upheld the addition under Section 68, agreeing with the lower authorities that the assessee failed to discharge the burden of proving the genuineness of the transactions and the creditworthiness of the lenders. The Tribunal cited the judgment of the jurisdictional High Court in R.B. Mittal vs. CIT to support its decision. Conclusion: - The Tribunal dismissed all three appeals of the assessee, upholding the findings of the AO and CIT(A) on all issues. The Tribunal emphasized the importance of credible evidence and the need for the assessee to discharge the burden of proof in claims for deductions and in substantiating the genuineness of transactions.
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