2021 (7) TMI 189 - AT - Income Tax

Short term capital gain - assessee submits that the AO made addition solely on the basis of AIR information that assessee sold piece of land along with co-owner - assessee is having 1/4th share in property - HELD THAT - AO made addition on the basis of AIR information despite the facts that the assessee explained that the asset/ land is not transferred the purchaser and the assessee is still occupying the said land. The Ld. CIT(A) affirmed the action of the A.O. by taking view that transaction of sale rook place in A.Y. 2010-11 and that in case the assessee succeed in Civil Suit and incase interest or damage is awarded to the assessee would be treated under the head other sources . In our view the addition on the sole basis of AIR is not sustainable unless the same are not supported some other corroborated evidences. The assessing officer has not brought any evidence on record that the transaction of the land is completed, particularly, when the assessee reight from the beginning took his stand that the sale consideration was not passed to the assessee and the assessee has filed civil suit for declaration and cancellation of instrument of sale. Considering the facts that on common set of facts the revenue has granted relief to the co-owner 2021 (2) TMI 345 - ITAT SURAT therefore, in our view, the Revenue cannot treat the assessee indifferently as of his co-owner. - Decided in favour of assessee. Disallowance of Vehicle Expenses - disallowance of depreciation of motor vehicle and vehicle expenses by taking view that assessee has not carried out any business activities - HELD THAT - CIT(A) after appreciating the fact that assessee has derived remuneration from three partnership firms held that depreciation on bike cannot be allowed that car is being sued by assessee for earning remuneration. The Ld. CIT(A) allowed depreciation @ 50% on Motor Car. Further the disallowance on expenses were restricted to 50% by taking view that no break up vehicle is used for earning the remuneration income. We have noted that on similar disallowances, the Revenue has allowed full relief in case of other partners of common firms. Therefore assessee cannot be treated indifferently on similar relief, therefore, this ground of appeal is allowed.

Summary

Issues Involved:
1. Addition of ?21,35,877/- as short-term capital gain.
2. Disallowance of ?31,690/- out of various expenses claimed against income from partnership firm.

Issue 1: Addition of ?21,35,877/- as Short-Term Capital Gain

Facts and Arguments:
The Assessee contested the addition of ?21,35,877/- as short-term capital gain, arguing that the sale transaction of the property was not completed due to a dispute between the seller and the purchaser. The cheques issued for the sale consideration were dishonored, and the parties were litigating in Civil Court. The Sub-Registrar held the registration of the conveyance deed, and the Assessee continued to occupy the property. The Assessee presented evidence, including a certified copy of the Civil Suit and an affidavit confirming possession of the property.

Tribunal's Analysis:
The Tribunal noted that the Assessing Officer (AO) made the addition based solely on AIR information without corroborative evidence. The AO failed to prove that the transaction was completed, especially since the Assessee had consistently maintained that the sale consideration was not received and a civil suit was filed for the cancellation of the sale deed. The Tribunal also considered a similar case involving the Assessee's co-owner, where the Commissioner of Income Tax (Appeals) [CIT(A)] deleted the entire addition, emphasizing that AIR information alone could not justify the addition without supporting evidence.

Conclusion:
The Tribunal concluded that the addition based on AIR information was unsustainable without corroborative evidence. The Tribunal allowed the Assessee's appeal on this ground, emphasizing that the Revenue should treat similarly situated taxpayers equally.

Issue 2: Disallowance of ?31,690/- Out of Various Expenses Claimed

Facts and Arguments:
The Assessee argued against the disallowance of ?31,690/- out of expenses claimed against income from partnership firms. The AO disallowed the expenses, including depreciation on vehicles, on the grounds that the Assessee did not carry out any business activities. The Assessee contended that the expenses were incurred for business purposes as a partner in three firms, and the remuneration and interest income from these firms were taxable under the head "Business Income."

Tribunal's Analysis:
The Tribunal noted that the CIT(A) had partly upheld the AO's disallowance but allowed 50% of the vehicle expenses and partial depreciation. The Tribunal observed that similar disallowances were fully allowed in the case of other partners of the same firms. The Tribunal emphasized that the Assessee should not be treated differently from other similarly situated partners.

Conclusion:
The Tribunal allowed the Assessee's appeal on this ground, directing the AO to verify that similar depreciation and expenses were not claimed by the Assessee against the income of the three firms. The Tribunal highlighted the principle of equal treatment for similarly situated taxpayers.

Final Judgment:
The appeal of the Assessee was allowed, and the Tribunal ordered the deletion of the additions and disallowances made by the AO. The order was announced on 14 June 2021.