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2014 (4) TMI 813 - AT - Income TaxDeletion of estimated addition of interest Violation of Rule 46A of the Rules Admission of additional evidence Held that - CIT(A) has correctly accepted the additional evidences - It cannot be said that AO was denied any opportunity to go through the additional evidences - AO has asked three months time, for submission of the Remand Report, CIT(A) has duly given the time - AO did not analyze the additional evidences properly - CIT(A) evaluated the additional evidences and gave a very cogent and speaking order on all issues concerned thus, the AO has been given proper opportunity by the CIT(A) to examine the additional evidence - CIT(A) s order cannot be said to be suffering from any shortcoming Decided against Revenue. Deletion of investment in property Held that - The assessee has duly explained that the property was purchased by assessee jointly with Smt. Swati Paliwal, with each of them made an investment of Rs. 1 crore - The assessee has duly explained that she has paid her share of Rs. 1 crore for purchase of land through her bank account - it has been duly explained that other expenses on account of stamp duty and Registrar fees was shared 50 50 by her along with co purchaser Smt. Swati Paliwal - As regards the source, the assessee has duly explained that she had taken a loan of Rs. 1 crore from her husband Sh. Mahender Pal Paliwal by transfer from his account - The original source of money in the hands of the family of the assessee as well as Smt. Swati Paliwal was amount received as compensation on account of acquisition of land by the Government - CIT(A) rightly held that the assessee has submitted all the necessary documents to establish the genuineness and veracity of the source of investment Decided against Revenue. Claim of agricultural income Agricultural income treated as income from other sources - Held that - CIT(A) has noted that assessee has submitted a copy of ownership of agricultural land and earning of agricultural income. - The assessee submitted that she has been earning agricultural income regularly and she had also declared the same in the Asstt. year 2005-06, 2006-07 and 2007-08 which has been accepted by the Department - CIT(A) has held that the AO has made a mistake by assessing an agricultural income declared by the assessee at Rs. 1 lakh under the head income from other sources the order of the CIT(A) upheld as the assessee has duly established the ownership of land Decided against Revenue. Addition of interest income on FDR Held tha - CIT(A) was of the view that the assessee has submitted complete details of FDRs along with interest and TDS deducted, copies of Form No. 16A was also enclosed - CIT(A) held that adhoc addition made by the AO by mentioning that the value of principal amount invested in FDRs is not disclosed and in the absence of details the interest income is taken at Rs. 5.50 lacs as against Rs. 3,43,026/- is not tenable Decided against Revenue. Deletion of capital gain Held that - CIT(A) set aside the additions on the submissions made by the assessee, the assessee had dealt with the purchase and sale of the shares during the year under consideration - The details of purchase and sale of shares were filed along with return of income and the assessee had incurred a loss - these were declared in the computation of income - the loss was not adjustable under any other head being Short Term Capital Loss, therefore, the income under the head Capital Gain was taken at NIL - CIT(A) properly taken into account the submissions made by the assessee - Assessee has submitted the details of share transactions made by her thus, the order of the CIT(A) upheld Decided against Revenue.
Issues Involved:
1. Deletion of estimated addition of interest. 2. Deletion of addition on account of estimated short-term capital gain on sale of shares. 3. Deletion of addition on account of unexplained investment in property. 4. Direction to treat income as agricultural income. 5. Acceptance of additional evidence and self-serving documents by the assessee. 6. Request to set aside the CIT(A)'s order and remit the matter back to the AO. Detailed Analysis: 1. Deletion of Estimated Addition of Interest: The Revenue argued that the CIT(A) violated Rule 46A by accepting additional evidence regarding the estimated addition of interest of Rs. 5,50,000/- without it being presented to the AO during the assessment proceedings. The CIT(A) accepted the additional evidence due to the assessee's reasonable cause for the delay, which was the severe health condition of the assessee's accountant. The AO was given three months to prepare a Remand Report but failed to address the merits of the additional evidence. The Tribunal found that the CIT(A) correctly accepted the additional evidence and provided the AO sufficient opportunity to examine it. Therefore, the deletion of the addition was upheld. 2. Deletion of Addition on Account of Estimated Short-Term Capital Gain on Sale of Shares: The AO estimated a capital gain of Rs. 2 lakhs without any basis, while the assessee declared a short-term capital loss of Rs. 39,375/-. The CIT(A) found that the assessee had provided detailed records of share transactions, which the AO did not dispute. The Tribunal agreed with the CIT(A) that the AO's estimation was baseless and upheld the deletion of the addition. 3. Deletion of Addition on Account of Unexplained Investment in Property: The AO added Rs. 2,16,60,000/- as unexplained investment in property. The assessee explained that the property was purchased jointly with another individual, each investing Rs. 1 crore. The CIT(A) found the assessee's explanation and supporting documents, including bank statements and affidavits, credible. The Tribunal concurred, noting that the assessee had adequately demonstrated the source of funds for the investment, and upheld the deletion of the addition. 4. Direction to Treat Income as Agricultural Income: The AO treated Rs. 1 lakh declared as agricultural income as income from other sources due to a lack of evidence of land ownership. The CIT(A) accepted the assessee's documentation proving land ownership and a history of declaring agricultural income, which had been accepted in previous years. The Tribunal found the CIT(A)'s decision reasonable and upheld the treatment of the income as agricultural. 5. Acceptance of Additional Evidence and Self-Serving Documents by the Assessee: The Revenue contended that the CIT(A) accepted additional evidence and self-serving documents without proper examination. The CIT(A) accepted the additional evidence due to the reasonable cause for the delay and provided the AO with ample opportunity to review it. The Tribunal found no violation of Rule 46A and upheld the CIT(A)'s decision. 6. Request to Set Aside the CIT(A)'s Order and Remit the Matter Back to the AO: The Tribunal found that the CIT(A) had given the AO sufficient opportunity to review the additional evidence and that the AO failed to address the merits of the evidence. Therefore, the Tribunal dismissed the Revenue's appeal to set aside the CIT(A)'s order and remand the matter back to the AO. Conclusion: The Tribunal upheld the CIT(A)'s decision on all counts, finding that the additional evidence was properly accepted and the AO was given adequate opportunity to review it. The deletions of the additions and the treatment of income as agricultural were found to be justified. The Revenue's appeal was dismissed.
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