2017 (12) TMI 416 - AT - Income Tax

Unexplained investment from accumulated savings of agriculture income - Held that - No agriculture income was shown in the return of income filed on issue of notice under section 142(1) of the Act. The assessee did not have any evidence of accumulation of past agriculture income. Merely because assessee was holding agricultural land holdings of 20 bigas would not prove that assessee earned any agricultural income or has any past savings so that to make any investment in the property. In the absence of any evidence on record, no further interference is called for in the matter. The Ld. CIT(A) has already given sufficient benefit of ₹ 55,000 to the assessee. This ground No.2 of appeal of assessee is dismissed. Addition on account of gifts received from Shri Karan Singh Tyagi and Shri Mukesh Tyagi - Held that - there is nothing on record to show as to what was the financial capacity of the donors and the creditworthiness of the donors, what kind of relationship the donors had with the assessee, what were the source of funds gifted to the assessee and whether they had any capacity of giving such huge amount of gift to the assessee. Thus, the assessee failed to prove the basic ingredients of genuineness of gifts in the matter. It, therefore, appears that the assessee when cornered by the Revenue Department came up with an afterthought story to explain investment in property through the gifts from the relatives. Therefore, it is clear that gifts in the matter are not genuine. Gifts are arranged affairs of the assessee. The assessee failed to prove the creditworthiness of the donors and genuineness of the gifts in the matter. The additions were rightly made by the authorities below. Addition of difference on account of investment in cost of construction of banquet hall as per DVO report - Held that - Restore this issue to the file of A.O. with a direction to apply UP PWD rates for the purpose of ascertaining the cost of construction of investment in construction of banquet hall. The A.O. shall re-decide this issue after giving reasonable, sufficient opportunity of being heard to the assessee. Ground No.4 of appeal of assessee is treated as allowed for statistical purposes.

Issues Involved:
1. Unexplained investment from accumulated savings of agricultural income.
2. Unexplained gifts received from relatives.
3. Difference in investment in cost of construction of banquet hall as per DVO report.
4. Unexplained deposits in the bank account.
5. Reopening of assessment under section 148 of the I.T. Act.

Detailed Analysis:

Issue 1: Unexplained Investment from Accumulated Savings of Agricultural Income
The assessee claimed an investment of ?3 lakhs from agricultural income. The Assessing Officer (A.O.) added this amount under section 69 of the I.T. Act due to the lack of documentary evidence and the absence of declared agricultural income in the return filed on 29th January 2010. The assessee's explanation of past savings from agricultural income was considered an afterthought. The Ld. CIT(A) confirmed the addition but gave a benefit of ?55,000 to the assessee. The Tribunal upheld this decision, noting that merely holding agricultural land does not prove the earning of agricultural income or past savings. Therefore, the addition of ?2,45,000 was confirmed.

Issue 2: Unexplained Gifts Received from Relatives
The assessee claimed to have received gifts totaling ?13 lakhs from relatives. The A.O. found the genuineness of these gifts questionable due to the lack of specific dates and previous gift transactions. The Ld. CIT(A) confirmed part of the gifts but upheld the addition of ?1,50,000 from Shri Karan Singh Tyagi and ?72,000 from Shri Mukesh Tyagi due to insufficient evidence of withdrawals. The Tribunal agreed with the lower authorities, emphasizing the failure to prove the creditworthiness of the donors and the genuineness of the transactions. The gifts were deemed arranged affairs, and the additions were upheld.

Issue 3: Difference in Investment in Cost of Construction of Banquet Hall as per DVO Report
The Ld. CIT(A) enhanced the income by ?3,24,467, noting a difference between the DVO report and the approved valuer’s report. The assessee argued for the application of UP PWD rates. The Tribunal set aside the orders of the authorities below and directed the A.O. to apply UP PWD rates for ascertaining the cost of construction, following the decision of the Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar. This issue was remanded to the A.O. for re-evaluation.

Issue 4: Unexplained Deposits in the Bank Account
For A.Y. 2007-2008, the A.O. added ?2,15,000 as unexplained deposits due to the lack of details and evidence. The Ld. CIT(A) confirmed this addition. The Tribunal upheld the decision, noting the assessee's failure to explain the source of the deposits.

Issue 5: Reopening of Assessment under Section 148 of the I.T. Act
The assessee did not press the ground challenging the reopening of the assessment under section 148 of the I.T. Act for any of the assessment years. Consequently, this ground was dismissed in all appeals.

Conclusion:
The appeals were partly allowed, with specific issues remanded for re-evaluation, particularly concerning the application of UP PWD rates for the cost of construction. Other additions made by the A.O. and confirmed by the Ld. CIT(A) were upheld by the Tribunal due to the lack of sufficient evidence provided by the assessee.

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