2014 (4) TMI 968 - AT - Income Tax

Addition on account of sale of furniture personal effects - Held that - There is no evidence of the user of the bunglow by the assessee for the purpose of his residence or even his family - the CIT(A) have not accepted the additional evidence sought to be adduced before him, and toward which no argument or ground stood raised - there is no evidence with regard to the user of the building for the purpose of own residence the assets was held for personal user, so as to be excepted from the definition of a capital asset u/s. 2(14) - The assessee shall be entitled to some relief for the cost of the assets which are to be only considered as capital assets - The acquisition of the assets is taken as during the year 1999 at the time the bunglow was given on lease for the first time - while the total sale consideration shall continue to be assessed as that against furnished bunglow, its cost shall be increased by Rs. 2 lacs, taken as expended during the F.Y. 1999-00, considering them as a part of the capital assets sold along with thus, partial relief granted. Credit for house-hold and living expenses Held that - The nature and source of the credit to the assessee s account has been explained - The quantum of the living expenses incurred by the assessee has not been questioned - No enquiry has been made to ascertain if the assessee is indeed living with his family, as a joint family, and whether their total household expense, i.e., as incurred by the assessee is in consonance with the needs and the living standards of the extended/joint family - The Revenue cannot merely reject an explanation convert a good explanation into a bad one - The source of the credit is a corresponding debit to the account of the father in the books of UC, a family partnership concern - It is not necessary for the assessee to maintain a loan account of his father, which is an irrelevant consideration - No case for the non-acceptance of the assessee s explanation is made out the addition is set aside Decided in favour of Assessee.

Summary

Issues:
1. Addition of Rs.8,50,000 against sale of furniture.
2. Credit of Rs.60,000 for household/living expenses.

Analysis:

Issue 1: Addition of Rs.8,50,000 against sale of furniture
The appeal revolves around the addition of Rs.8,50,000 against the sale of furniture by the assessee along with a bungalow. The assessee claimed the amount was consideration for the sale of furniture, which was not disclosed in the return of income due to personal use. However, the Assessing Officer rejected the claim citing lack of supporting documents and evidence of use. The Tribunal noted discrepancies in the explanation provided by the assessee, including the absence of proof of furniture transport and mismatch between descriptions. The Tribunal accepted part of the claim, estimating the cost of assets at Rs.2 lakhs, but upheld the addition of Rs.8.50 lakhs as part of the bungalow sale consideration. The Tribunal found the assessee's claim to be made to evade tax and granted partial relief.

Issue 2: Credit of Rs.60,000 for household/living expenses
The second issue pertains to a credit of Rs.60,000 in the assessee's account from M/s. Universal Chemphour Manufacturing Corp. The credit was explained as a transfer from the father's HUF account for household expenses. The Assessing Officer deemed the explanation unacceptable and added the credit as unexplained under section 68. The Tribunal disagreed with the Revenue's stance, highlighting that the source of credit was explained, and the living expenses were not disputed. The Tribunal emphasized the lack of inquiry into the family's living arrangements and expenditure. The addition was deemed unjustified, and the Tribunal deleted the same, allowing the assessee's appeal partially.

In conclusion, the Tribunal partially allowed the assessee's appeal, rejecting the addition against household/living expenses and granting partial relief regarding the sale of furniture.