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TMI Blog2017 (7) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction by making verification of the various payments made for the construction of the property from that bank account. Needless to say that proper opportunity of hearing may be granted to the assessee to substantiate the amount of expenditure incurred by issue of cheques from his non-resident bank account and also opportunity to ld AO Addition u/s 68 - Held that:- We do not agree with the order of the Ld. CIT (A) in deleting the whole addition of ₹ 2.68 crores on account of money received from his wife. Furthermore the Ld. CIT (A) also has given a wrong finding that she is an income tax assessee, in fact she has filed her last return of income for assessment year 2005 – 06 and not for assessment year 2008 – 09 which is the impugned assessment year. In the result, we agree with the finding of the Ld. CIT appeal in deleting the addition of on account of loan from Mrs. Poonam Singh wife of the assessee except the sum of ₹ 25 Lacs which is deposited in cash by her in her bank account for which the assessee has not given any source of income in cash in her hand in India. Therefore we set aside the issue of examination of the sources of this ₹ 25 Lakhs which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts and circumstances of the case, the CIT(A) has erred in deleting the addition made on account of cash credit ignoring evidence marshaled by AO had established the deposit of cash and the advancement of loan entries immediately thereafter stating that the AO did not ask for clarification without discharging his onus for establishing the veracity as per Rule 46A(4) r.w.s. 251(1). 6. Whether on the facts and circumstances, of the case the order of the CIT(A) is perverse and liable to be quashed. 3. The brief facts of the case is that the assessee is an individual who filed its return of income on 15.04.2009 showing income of ₹ 926166/-. Assessment u/s 143(3) was made on 31.12.2010 at an income of ₹ 76168626/-. The appeal was preferred by the ld CIT(A), who allowed the appeal of the assessee in toto. Therefore, the revenue is in appeal before us. 4. Despite notice, none appeared on behalf of the assessee and therefore the appeal is decided based on the material available on record and the appeal is decided on merits. 5. Ground No. 1,2 and 3 are on the issue of capital gain and admission of additional evidence by ld CIT(A) in violation of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objected the admission of additional evidence in remand report and therefore same were admitted as these documents according to him were vital for deciding the issue. The full facts are mentioned at Para 3.1 of the order of the ld CIT(A) which could not be controverted by the ld DR. In view of this, we dismiss ground No. 2 and 3 of the appeal of the revenue on admission of additional evidence. 9. Coming to the ground No. 1 of the appeal of the revenue according to section 48 the income chargeable under the head capital gain is required to be computed by deducting from the full value of consideration received a. Expenditure incurred wholly and exclusively in connection with such transfer and b. The cost of acquisition of the asset and the cost of any improvement thereto. 10. Therefore, according to Clause (b) what is required to be deducted from the actual sale consideration is the cost of acquisition and the cost of any improvement of the asset. Therefore, what is granted as deduction is actual cost and not its estimates unless provided by the law. The ld CIT(A) has decided this issue in para No. 5.2.2 of his order as under:- 5.2.2 The computation of long term ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred by the assessee. Merely saying that the entire expenditure for construction was incurred by cheque withdrawals from NRI bank account without examining the evidence of cost incurred and only on the basis of valuation report regarding the estimated cost of construction of the house, deduction cannot be allowed. Further valuation report merely an opinion cannot be the basis for granting deduction of actual cost and actual cost of improvement from the sale consideration for working capital gain. The ld. AO has never raised the question of the source of the funds but has only asked about the actual cost of improvement i.e. the construction cost of the building. Further it is also not in doubt that whatever is sold by the assessee is a three-storey building with basement for which the land was acquired in 1983 and 1994, construction was completed in September 2002 and occupation certificate obtained in February 2003. Therefore, it cannot be said that the assessee has not incurred any cost of construction for construction of a three-storey building. Further, also it cannot also be substituted by the estimated cost of construction based on some valuation report as fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;any sum credited'. That sum can be either a loan received or repayment of loan already given. 6.2.2 It is undisputed that the appellant has submitted confirmation from all the parties. The nature of transaction was also explained to AO. As required by the AO, copy of return and copy of bank account of all the three entities were duly filed. Various judicial decisions have laid down that following three things have to be established to prove genuiness of a credit: Identity of creditor Financial capacity of creditor Genuiness of transaction The appellant had furnished requisite evidence to satisfy the above mentioned requirements. Therefore, the appellant has discharged the onus placed on him and burden of evidence shifted to AO. According to appellant, the AO did not raise any further query, rather he asked the appellant to explain the source of cash deposited in bank account of creditors on various dates just before the dates when credits were given to the appellant. This amounts to asking for explanation regarding source of source which is not permitted under the law on the issue. 6.2.3 The appellant has made detailed submissions on merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT (A ) has erred in deleting the addition. With respect to the other two parties he relied upon the order of the Ld. assessing officer.. 14. We have carefully considered the contentions raised in the orders of the lower authority. During the year the assessee has received a sum of ₹ 2.68 crores from time to time on different dates from his wife Smt. Poonam Singh who is also a non-resident Indian. She does not have any taxable income in India for the year however she deposited this sum from her bank account. out of the sum of ₹ 2.68 crores a sum of ₹ 1.96 crore is transferred from her fixed deposit account with Indian overseas bank in her bank account and subsequently to the account of her husband( assessee). Further a sum of ₹ 42.43 Lacs was also received by her on maturity of the fixed deposit with ICICI bank which was transferred to another bank account and then to the bank account of her husband. In support of this the assessee submitted the copies of the bank account as well as the copies of the fixed deposit receipt as a source of money deposited by her with her husband. Before the Ld. assessing officer assessee submitted the confirmation of Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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