2023 (9) TMI 147 - AT - Income Tax

Addition on account of Capital Introduction - source of principal amount of FDRs remained unexplained - neither the assessee could establish the relationship with his aunt from whom the disputed amount was received through FDRs and signatures of legal heirs was also found to be different in gift deed and passport - CIT(A) confirmed the addition - HELD THAT - As the assessee was made a joint holder in those FDRs by her aunt, we do not find any reason to record the same in the books of account of the assessee. Further that, once family tree has been filed by the assessee showing relationship between the assessee and said Smt. Sushilaben Patel, which is definitely come under the purview of the definition of relatives as envisaged under Section 56 of the Act, we do not find any merit in rejecting the claim of the assessee. We also note that the assessee has declared total income and we do not find any reason or any apprehension in evading tax on the credits of capital account as gift from his aunt. Considering the entire aspect of the matter, particularly, the constant effort made by the assessee to justify his stand that the credit is from maturity of old FDRs made by his aunt who was taken care of by the assessee only in the absence of her relative staying abroad which fact was also confirmed by other relatives of the assessee with supporting evidences as we have already discussed hereinabove, we find that the impugned addition made by the Department is of no basis and thus, deleted. Income from house property - Staff quarter for MRI Staff - Fair rent estimation - HELD THAT - The property purchased by the assessee at Baroda where he is running OPD being a self-occupied property, no addition on account of notional income is called for. The residential house being ancestral house situated at Village Karamsad which is old and uninhabitable condition belongs to appellant s HUF. In our considered opinion, it cannot be said to be a residential house in individual capacity. However, the house purchased by the assessee at Ahmedabad to meet the needs of medical facilities at Ahmedabad Balasinor, where assessee stays for five days, as much nearer to Ahmedabad rather than Baroda, though, the same has been claimed not let out during the year under consideration cannot be accepted by us as the assessee failed to show that he has tried his best for letting out this property and ultimately becomes unsuccessful. We, thus, direct the Ld. AO to estimate the fair rent @15% of the value of this particular property and to pass order accordingly. This ground of appeal is, therefore, partly allowed.

Summary

Issues Involved:
1. Addition on account of unexplained credits to capital account.
2. Addition on account of income from house property.

Summary:

1. Addition on Account of Unexplained Credits to Capital Account:
The assessee, a practicing doctor, filed an appeal against the order confirming the addition of Rs. 13,69,371/- as unexplained credits to the capital account. The assessee claimed the amount was received from matured Fixed Deposit Receipts (FDRs) held jointly with his aunt, Smt. Sushilaben Patel, who had passed away. The assessee provided FDRs and other documents, including a family tree and a gift confirmation letter from the aunt's son, to substantiate the claim. However, the Assessing Officer (AO) and the First Appellate Authority did not find the explanation satisfactory, citing issues such as the unexplained source of the FDRs and discrepancies in signatures. The Tribunal, upon considering the facts and evidence, found that the relationship between the assessee and the aunt was established under Section 56 of the Income Tax Act, and the credits were from matured FDRs made by the aunt. Thus, the addition was deleted.

2. Addition on Account of Income from House Property:
The AO assessed an annual let-out value for three out of four residential properties owned by the assessee, estimating a fair rent at 15% of the total investment and adding Rs. 6,67,492/- as income from house property. The assessee argued that none of the properties were actually let out and claimed vacancy allowance, which would render the income as nil. The Tribunal considered the details of each property:
- A house used as a staff quarter for MRI staff at Baroda.
- A self-occupied flat at Baroda for personal stay.
- An ancestral house in Karamsad, which is old and uninhabitable and belongs to the appellant's HUF.
- A house in Ahmedabad purchased for medical needs but not let out.

The Tribunal accepted the assessee's claims for the first three properties but directed the AO to estimate the fair rent at 15% for the Ahmedabad property, as the assessee failed to show efforts to let it out. Consequently, this ground of appeal was partly allowed.

Conclusion:
The appeal was partly allowed, with the addition on account of unexplained credits deleted and the addition on account of income from house property partly upheld.