2021 (2) TMI 1056 - AT - Income Tax

Addition u/s 68 - Eligibility for deduction u/s 54 - CIT-A held on perusal of the details filed by the appellant makes it clear that the appellant is eligible for relief u/s 54 on his Capital Gains and additions made u/s 68 in the impugned order on the bank interest, it is observed that these are found in the appellant's Capital Gains Account and therefore, the appellant's explanation on this is plausible - Whether CIT (A) has erred in admitting the additional evidence furnished before him by the assessee in contravention of the provisions contained under Rule 46 of the Income-tax Rules, 1962 - HELD THAT - CIT (A) has not erred in admitting the additional evidence furnished before him by the assessee in the face of the impugned order passed by the ld. CIT(A). Because in para 4.1 it is specifically recorded by the ld. CIT (A) that detail filed by the assessee was duly sent to AO for a remand report who has given remand report extracted in para 4.1 stating therein that despite giving numerous opportunities to file evidence/details, assessee has not turned up. However, assessee duly filed rejoinder to the remand report in the appellate proceedings before the ld. CIT (A) stating therein that he has submitted all the documents and evidences now relied upon in the appellate proceedings with the AO during assessment proceedings but has not been considered by the AO and that AO refused to admit the reply dated 04.03.2016 in response to notice dated 24.02.2016. CIT (A) after examining the remand report and original assessment record pertaining to 213 pages and 6 order sheet pages noticed that in reply to the notice u/s 142 (1) dated 20.04.2015 issued to the assessee, entire detail of the capital gains and income from other sources have been attached with letter dated 01.05.2015 bearing pages 11 to 40. Aforesaid information also contains photocopies of the assessee s capital gains earned with Corporation Bank, Dwarka, New Delhi jointly opened in assessee and his wife s name on 06.02.2012 and has also filed copy of registered sale deed of the property in question. When the assessee has duly filed requisite details during the assessment proceedings with copy of his bank statement showing investment of capital gain in capital gain accounts to the extent of sale proceed of his 1/5th share and also brought on record copy of registered deed for purchase of new residential property on 11.11.2013 and its cost is more than the capital gain received by the assessee and thereby satisfied the provisions contained u/s 54F of the Act, addition made by the AO is apparently not sustainable. When all the documents were placed before the AO who has not taken note thereof for the reasons best known to him particularly when AO has not raised any objection to the documents sent to him for comment, the ld. CIT (A) was well within his right to decide the controversy by examining all the documents himself. When the assessee has been found to be eligible u/s 54 qua his capital gains which have been duly explained by virtue of the sale deed qua the property in question, bank statements and sale deed of the new residential property purchased with the capitals gains received, the ld. CIT (A) has rightly and legally deleted the additions by accepting the appeal. Finding no illegality or perversity in the impugned order passed by the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed.

Summary

Issues:
1. Admission of additional evidence by CIT(A) without satisfaction under Rule 46A
2. Deletion of additions made by AO under section 68 of the Income-tax Act
3. Allowance of exemption claimed under section 54 of the IT Act
4. Legality of the impugned order passed by CIT(A)

Issue 1: Admission of Additional Evidence by CIT(A) without Satisfaction under Rule 46A
The Revenue challenged the admission of additional evidence by the CIT(A) without recording satisfaction under Rule 46A of the Income Tax Rules. The CIT(A) deleted additions made by the AO after considering the remand report and evidence submitted by the assessee. The CIT(A) found that the assessee had filed requisite details during assessment proceedings, which were not properly examined by the AO. The CIT(A) noted that the assessee was eligible for relief under section 54 of the Act. The Revenue's contention that the CIT(A) erred in admitting additional evidence was dismissed as the CIT(A) had thoroughly examined the facts and evidence presented.

Issue 2: Deletion of Additions Made by AO under Section 68 of the Income-tax Act
The AO had made additions under section 68 of the Income-tax Act regarding unexplained income and interest income. The CIT(A) deleted these additions after reviewing the documents submitted by the assessee during assessment proceedings. The CIT(A) found that the assessee had provided detailed evidence of capital gains and income from other sources, including bank statements and sale deeds. The CIT(A) concluded that the additions made by the AO were not sustainable as the assessee had satisfied the provisions under section 54F of the Act. The CIT(A) upheld the deletion of these additions, stating that the assessee had explained the capital gains adequately.

Issue 3: Allowance of Exemption Claimed under Section 54 of the IT Act
The CIT(A) allowed the exemption claimed by the assessee under section 54 of the IT Act, even though the assessee had not specifically sought this relief in the grounds of appeal. The CIT(A) found that the assessee had provided necessary details and evidence to support the claim for relief under section 54. The CIT(A) concluded that the assessee was eligible for the exemption based on the evidence presented. The Revenue's challenge regarding the allowance of this exemption was dismissed by the Tribunal.

Issue 4: Legality of the Impugned Order Passed by CIT(A)
The Tribunal dismissed the Revenue's appeal against the impugned order passed by the CIT(A). The Tribunal found that the CIT(A) had thoroughly examined the facts, evidence, and remand report before deleting the additions made by the AO. The Tribunal upheld the CIT(A)'s decision, stating that the assessee had provided sufficient evidence to support the claims and that the additions made by the AO were not sustainable. The Tribunal emphasized the importance of proper scrutiny by senior officers before filing appeals to prevent unnecessary litigation.

This detailed analysis covers the issues involved in the legal judgment delivered by the Appellate Tribunal ITAT Delhi, highlighting the key arguments, findings, and conclusions related to each issue.