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TMI Blog2013 (8) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of property is not necessary within the prescribed time, the only condition is the investment which in the present case the assessee has made - Decided in favour of assessee. Addition u/s 69C - Low withdrawals for household expenses - CIT upheld additions - Held that:- in the immediately preceding year, the assessee along with his family members had made total withdrawals of Rs.3,62,868/- and assessment of the assessee was completed u/s 143(3), copy of which is placed at page 60 and there was no addition made by the Assessing Officer on account of low withdrawals. Though principle of res judicata does not apply to Income tax proceedings and every year is considered a separate year yet on the basis of consistency the facts and circumstances of the present year remains same as Assessing Officer did not point out any specific circumstances by which he assumed that assessee had made low withdrawals as against the assumed expenses of Rs.15 lakhs p.a. However, on the basis of financial position of the assessee, withdrawals made by him do not match with his probable actual expenditure. The addition made by the Assessing Officer by assuming an annual expenditure of Rs.15 lakhs is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .7.50 lakhs as brokerage paid on the above sale. The assessee was asked to submit the proof of brokerage and in response the assessee submitted photo copies of receipt of Rs.15 lakhs issued by one Shri Ashok K Singhal. The receipt further contained particulars of cheques amounting to Rs.10 laklhs received from the assessee. It was explained by the Ld AR that the assessee had entered into an agreement to sell the house property to Mr. Ashok K Singhal and had received Rs.10 lakhs as advance money. However, subsequently the assessee backed out of the deal and had to pay Rs.15 lakhs to Shri Ashok K Singhal as full and final settlement cost including refund of Rs.10 lakhs. Thus, it was claimed that an extra amount of Rs.5 lakhs had to be paid which by mistake was shown as brokerage in the computation of capital gain. The assessee submitted that the deed was cancelled because the assessee was getting better price from another party and therefore he had paid Rs.5 lakhs for better price and with regard to Rs.2.50 lakhs to Shri Rajat Kapoor it was submitted that the amount was paid to broker on 4.2.2005 after finalization of agreement of sale. Further a photo copy of receipt dated 4.2.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details of withdrawals made by other family members living along with him and submitted that in all a sum of Rs.3,34,216/- was withdrawn for household expenses. The Assessing Officer, however, from the pattern of withdrawals made by family members of assessee held that these were scattered and lump sum one time withdrawals and cannot be said to have been incurred for household expenses. Moreover he held that assessee was living in a posh bunglow at Jor Bagh and the withdrawals made by the assessee and his family members were insufficient and therefore he estimated annual expenditure of Rs.15 lakhs against which withdrawals made by the assessee was only Rs.3,34,216/-. Therefore, he made an addition of Rs.11.65,784/- as un-explained expenditure u/s 69C of the Act. 6. The Assessing Officer also noted that during the year the assessee had declared short term capital gain of Rs.16,84,538/- and long term capital gain of Rs.10,11,345/- from sale of mutual funds units and assessee had claimed short term capital gain to be taxable at 10% and long term capital gains to be exempt. In order to examine the admissibility of the claim, the assessee was asked to furnish transaction statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Shri Ashok K Singhal was placed wherein he has accepted the fact about cancellation of deal. Therefore, in view of the above documents, it was argued that the expenditure was actually paid through cheque and represented the penal amount paid for backing out of earlier deal. As regards the amount of Rs.2.50 lakhs our attention was invited to paper book p[age 29-30 wherein a copy of receipt by Shri Rajat Kapoor indicating PAN No. was also placed. In view of the facts that payment was made by cheque and against duly signed receipts wherein PAN number of payee was also mentioned, it was argued that Assessing Officer was not justified in making the disallowance. 10. Regarding the disallowance of exemption u/s 54 of the Act, the Ld AR argued that assessee had entered into a purchase agreement for purchase of house and had paid Rs.61,15,000/- upto 12.5.2006 and as per agreement dated 9.2.2006 the completion was expected within 36 months and the balance payments were linked with the stage of construction. Our attention was invited to Circular No. 471 dated 15.10.1986 issued by the CBDT clarifying therein that in cases of allotment of flats under Self Financing Scheme of the Delhi Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 MP Maliwal v. JCIT 10 SOT 319. 13. As regards action of Assessing Officer in denying the benefit of capital gain and denying the benefit of lower taxation on short term capital gain u/s 111A of the Act, it was argued that Assessing Officer denied exemption without verifying the certificates submitted at the time of hearing. It was argued that at the time of redemption of units security transaction tax was not charged separately as it was borne by the Manager of such funds. 14. The Ld DR, on the other hand, argued that cancellation expenses of earlier deed cannot be allowed as expenses against the sale consideration as the section requires that only those expenses can be reduced from sale consideration which are wholly and exclusively incurred for the transfer of such assets. Thus it was argued that expenses of Rs.7.50 lakhs claimed by the assessee do not relate to transfer of the transaction under consideration. As regards disallowance u/s 54, the ld DR argued that construction was to be completed within 36 months and therefore the Assessing Officer had rightly denied the exemption as the assessee was not able to construct within the stipulated period. Reliance was placed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any other person. Therefore, the assessee has incurred these expenditure to finalize the sale transaction, therefore, expenses incurred by the assessee in connection with the said property for the purpose of final sale is to be treated as expenditure in connection with such transfer. It is not the case of Assessing Officer that expenditure was not incurred and rather he disallowed it treating it as relating to earlier deal. In view of the above circumstances, we hold that expenditure was necessary as it related to house property the income of which has been declared as capital gain. 17. As regards the claim of assessee regarding investment in house property u/s 54, we find that assessee had necessarily complied with the conditions for allowability of claim as assessee had entered into an agreement for purchase of house and had invested more than capital gain in the said house property. The CBDT Circular No.672 dated 16.12.1993 states as Under which was more than capital gains. "The Board has considered the matter and has decided that if the terms of the scheme of allotment and construction of flat/house by the cooperative society or other institutions are similar to those me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding addition u/s 69C of the Act, we observe that Assessing Officer made disallowance on account of low withdrawals for household expenses. The addition made by the Assessing Officer is based upon only on surmises and conjectures and is not based upon on any factual facts. The Ld AR has relied upon a number of case laws wherein it was held that addition on the basis of estimate without bringing any other fact is not legal. Moreover, we find from paper book page 62 that in the immediately preceding year, the assessee along with his family members had made total withdrawals of Rs.3,62,868/- and assessment of the assessee was completed u/s 143(3), copy of which is placed at page 60 and there was no addition made by the Assessing Officer on account of low withdrawals. Though principle of res judicata does not apply to Income tax proceedings and every year is considered a separate year yet on the basis of consistency the facts and circumstances of the present year remains same as Assessing Officer did not point out any specific circumstances by which he assumed that assessee had made low withdrawals as against the assumed expenses of Rs.15 lakhs p.a. However, on the basis of financ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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