2020 (7) TMI 173 - AT - Income Tax

Addition u/s 68 - cash deposit in bank account - HELD THAT - It is pertinent to note that the assessee has not maintained books of account and it s an admitted position. The other relevant fact is that the assessee has not mentioned the agricultural income while filing the returns. But during the course of assessment proceedings, the assessee produced the evidence of holding of agriculture land and confirmation from brother regarding receipt on 02.03.2013 as share in the agriculture income of HUF. As regards to explanation the same was submitted as family savings by the assessee. These aspects were not at all taken into account by the Assessing Officer as well as by the CIT(A). The contention of the Assessee that in absence of maintenance of books of accounts, no addition can be made u/s 68 of the Act on account of cash deposit in bank account, appears to be correct as the assessee is not maintaining any books as mentioned in Section 68 - assessee has given the details of cash deposits to the Assessing Officer as well as the same was produced before the CIT(A), but both the authorities ignored the same and sustained the addition under Section 68 of the Act which is not as per the provisions of the said Section. Deduction under section 54F - HELD THAT - The assessee has filed a paper book consisting documents as additional evidence, which developed and possessed by the assessee post passing of order by CIT(A) on 24.01.2018. The assessee has filed affidavit along with application under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 along with the documents such as NOC from original Applicant to developer to include Balwant Singh as Joint owner also undertaking from new applicant along with detail of changes in the allottee/applicants. These documents were not before the Revenue authorities. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for proper verification and after verifying the same to decide whether the claim of the assessee is tenable or not - Appeal of the assessee is partly allowed for statistical purpose.

Summary

Issues Involved:
1. Addition of ?2,49,900/- representing cash deposits in the bank account.
2. Addition of ?35,73,050/- representing the claim of deduction under section 54F of the Income Tax Act.
3. Non-credit of tax of ?80,000/- against the demand computed in the order of assessment.

Issue-wise Detailed Analysis:

1. Addition of ?2,49,900/- Representing Cash Deposits in the Bank Account:

The assessee contested the addition of ?2,49,900/- as unexplained cash deposits. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the addition, disregarding the assessee's explanation that the deposits were from agricultural income and family savings of the Hindu Undivided Family (HUF). The Assessing Officer (AO) noted that the assessee did not provide any explanation or evidence during the assessment proceedings. However, during the appeal, the assessee presented evidence of holding agricultural land and a confirmation from his brother regarding receipt of ?2,00,000/- as a share in agricultural income of HUF. The Tribunal observed that the AO and CIT(A) ignored these explanations and sustained the addition under Section 68 of the Income Tax Act, which was incorrect as the assessee did not maintain books of accounts. Consequently, the Tribunal allowed Ground No. 1 to 1.1, deleting the addition of ?2,49,900/-.

2. Addition of ?35,73,050/- Representing the Claim of Deduction Under Section 54F of the Income Tax Act:

The assessee claimed a deduction under Section 54F for capital gains amounting to ?35,73,050/- from the sale of a flat, which was invested in purchasing a residential plot for constructing a house. The AO denied the deduction on the grounds that the investment was made in the name of the assessee's wife and that no amount was deposited in the capital gain account scheme before the due date of filing the return. The CIT(A) upheld this decision, stating that the assessee failed to construct the residential property within three years and did not utilize the amount towards construction or deposit it in a specified account by the return filing date.

The Tribunal noted that the assessee provided various documents supporting the claim of deduction, including a copy of the buyer agreement and evidence of payments made. The Tribunal also considered additional evidence submitted by the assessee, such as an NOC from the original applicant to include the assessee as a joint owner. Given that these documents were not before the Revenue authorities, the Tribunal remanded the issue back to the AO for proper verification, allowing Ground No. 2 to 2.5 for statistical purposes.

3. Non-Credit of Tax of ?80,000/- Against the Demand Computed in the Order of Assessment:

The Tribunal did not specifically address this issue in the judgment provided. Therefore, it is assumed that this ground was either resolved or not pursued further by the assessee during the appellate proceedings.

Conclusion:

In conclusion, the appeal was partly allowed for statistical purposes. The Tribunal deleted the addition of ?2,49,900/- related to unexplained cash deposits and remanded the issue of the deduction claim under Section 54F back to the AO for further verification. The order was pronounced in the Open Court on 03rd July 2020.