2014 (2) TMI 788 - AT - Income Tax

Addition on account of Long Term Capital Gain on sale of immovable property Held that - CIT(A) was of the view that the facts namely that against the deduction u/s 54B, Assessee had only shown new purchase of land - the new asset purchased was a residential land and not an agricultural land and the land that was sold was converted into land for non-agricultural purpose prior to its sale have not been rebutted by the Assessee - the land sold was not an agriculture land nor was the subsequent land which was purchased an agriculture land - the value of land purchased were also less than required for claiming the exemption - no material has been brought on record to controvert the findings of CIT(A) thus, there is no reason to interfere with the order of CIT(A) Decided against Assessee. Lump sum addition made on account of Low Household withdrawal Held that - The Assessee has submitted that he had made a withdrawal of 62,700/- for meeting the household expenses - A.O. found the withdrawals not commensurate with the requirement of the family and made an addition of Rs. 20,000/- on estimated basis which was also confirmed by CIT(A) - the estimate made by the A.O. was not based on any material on record and is also not supported by any evidence - even the submission of Assessee is also not supported by any evidence thus, the addition is restricted to 10,000/- as against 20,000/- made by the A.O Decided partly in favour of Assessee.

Summary

Issues:
1. Addition of Long Term Capital Gain on sale of immovable property.
2. Lump sum addition on account of Low Household withdrawal.

Issue 1: Addition of Long Term Capital Gain on sale of immovable property:
The appellant, an individual engaged in cloth trading, filed a return of income for A.Y. 2008-09, declaring total income. The Assessing Officer (A.O.) noted the sale of immovable property and non-disclosure of capital gain. The appellant claimed the capital gain was reinvested as per Section 54B, but evidence provided was insufficient. The A.O. calculated the long term capital gain and added it to the income. The CIT(A) upheld the A.O.'s decision, stating the land sold was not agricultural, and the purchased land did not meet exemption criteria. The appellant's appeal was dismissed. The ITAT found no material to challenge the CIT(A)'s findings, thus dismissing the appeal.

Issue 2: Lump sum addition on account of Low Household withdrawal:
During assessment, the appellant submitted household expense withdrawals. The A.O. considered the withdrawals inadequate and added a lump sum to the income, which the CIT(A) upheld. The ITAT observed that the A.O.'s estimation lacked evidence, and the appellant's submission was unsupported. To ensure fairness, the ITAT reduced the addition from Rs. 20,000 to Rs. 10,000. Consequently, this ground of the appellant was partly allowed.

In summary, the ITAT upheld the addition of Long Term Capital Gain on the sale of immovable property due to insufficient evidence and non-compliance with exemption criteria. The ITAT partially allowed the appeal concerning the lump sum addition for Low Household withdrawals, reducing the amount added to the income. The judgment was pronounced on 14-02-2014.