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TMI Blog2024 (5) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... nor was it the case of the revenue that additional evidence was not permissible at all before the first appellate authority. On the contrary, rule 46A of the Income-tax Rules permits the Commissioner (Appeals) to admit additional evidence if he finds that the same is crucial for disposal of the appeal. In the facts of the instant case, therefore, no substantial question of law arose Thus we reject this ground and hold that the Ld. CIT(A) was perfectly justified in admitting the additional evidence produced by the assessee before him. Unexplained receipts - Addition of receipts as per cash book maintained by the assessee - copy of sale deed of the property sold by the assessee to authenticate the said receipts shown in assessee s cash book was not submitted - HELD THAT:- Before the Ld. CIT(A) the assessee not only produced sale deed but also sale agreement between assessee and M/s. S.R. Forging Ltd. showing advance given to the assessee and confirmation of M/s. S.R. Forging Ltd. whom the assessee sold the property. It is quite evident that the source of receipt of the impugned sum been explained. Therefore the Ld. CIT(A) was convinced about the genuineness of the advances of Rs. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no such allegation at all. The impugned disallowance, in our view, does not rest on any solid legal foundation. In this view of the matter, the alternate plea raised by the assessee that rate of interest has been applied for the whole year and not only for the period of advances given becomes infructuous. We therefore decide the main ground in favour of the assessee. Addition commission expenses for want of documentary evidence - disallowance has been maintained by the Ld. CIT(A) with the observation that he was not convinced that the payments were made through accounted money of the assessee - HELD THAT:- The assessee brought on record before the Ld. CIT(A) party-wise details of commission paid by him along with PAN and addresses of the recipients of the impugned commission. Evidence produced before CIT(A) were examined in remand proceedings by the AO and no fault was found by him. The sustenance of the claim of impugned commission expenses by the Ld. CIT(A) is based on conjecture and surmises alone and not on facts. We, therefore, hold that the impugned disallowance is not warranted. We, therefore direct the Ld. AO to delete the same. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and circumstance of the case and without observing the principles of natural justice." 4. Briefly stated, the facts are that the assessee individual is engaged in the business of trading in Real Estate. For AY 2014-15, he e-filed his return on 23.09.2014 declaring income of Rs. 37,57,280/-. His case was selected for limited scrutiny under CASS. Statutory notices were issued/served along with queries which were complied with. During assessment proceedings the Ld. Assessing Officer ("AO") found from the cash book (page 11 of Paper Book) that the assessee had received during the year Rs. 40,00,000/- on 01.08.2013 and Rs. 1,07,00,000/- on 12.11.2013 as advance against house at Sector-10. The assessee furnished a copy of purchase deed of the property H. No. 70, Plot No. 1-P, Street-D, Sector 10A Chandigarh executed on 31.03.2010. Since sale deed of the said property was not submitted, the Ld. AO treated the receipts totalling Rs. 1,47,00,000/- as unexplained under section 68 of the Income Tax Act, 1961 (the "Act") and added the same to the income of the assessee. The Ld. AO further found on perusal of Trading and P&L account that the Trading account is debited by a sum of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the appellate order. 8. On the issue of addition of Rs. 1.47 crores under section 68 of the Act, the Ld. CIT(A) recorded his finding in para 16 as under:- "16. I have carefully considered the facts of the case and gone through the submissions filed by the counsel of the appellant during appellate proceedings together with Remand Report of the AO and rejoinder filed by the appellant. As evident from the remand report of the AO as reproduced above it is evident that the source of Rs. 1.47 Crores received by the appellant stands explained in view of the fact that the sale deed for the piece of land for which the advance had been received by the appellant (during the Asstt. Year under consideration) has been executed. The fact that this advance was made by M/s S.R. Forging Pvt. Ltd. to the appellant is borne from the narration of the sale deed and the execution of the sale deed between the appellant and M/s S.R. Forging puts beyond doubt any suspicion about the genuineness of the advances received by the appellant. The sale deed has been executed on 16.01.2018 and thus the capital gain on the same shall be assessable in Asstt. Year 2019-20. Thus keeping in view the entire fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to the tune of Rs. 15,28,008/- is reduced by Rs. 24,000/- and the balance addition of Rs. 15,04,008/- is confirmed." 11. The Ld. CIT(A) also confirmed the disallowance of commission expenses of Rs. 1,10,000/- claimed by the assessee by recording his findings in para 31 of his order as under:- "31. I have carefully considered the facts of the case and gone through the submissions filed by the counsel of the appellant during appellate proceedings together with Remand Report of the AO and rejoinder filed by the appellant. I find that since the appellant has been unable to provide the evidence that these payments were routed through his bank account or from his cash book, I am not convinced that these payments were made by the appellant through his accounted money. In view of these facts this addition made by the AO is confirmed." 12. Dissatisfied, the Revenue is in appeal before the Tribunal challenging admission of additional evidence by the Ld. CIT(A); deletion of addition of Rs. 1.47 crore under section 68 of the Act; deletion of addition of Rs. 90 lacs under section 40A(3) and deletion of disallowance of Rs. 24,000/- observing it to be calculation mistake. All the ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e produced by the assessee before him. 16. Apropos Ground No (ii): The Ld. AO made the impugned addition of receipts of Rs. 1.47 crore as per cash book maintained by the assessee only because the copy of sale deed of the property sold by the assessee to authenticate the said receipts shown in assessee's cash book was not submitted, though copy of purchase deed of the same property was furnished before him. Before the Ld. CIT(A) the assessee not only produced sale deed dated 16.01.2018 but also sale agreement dated 01.08.2013 between assessee and M/s. S.R. Forging Ltd. showing advance given to the assessee and confirmation of M/s. S.R. Forging Ltd. whom the assessee sold the property. These form part of the additional evidence admitted by the Ld. CIT(A). It is quite evident that the source of receipt of the impugned sum of Rs. 1.47 crore has been explained. Therefore the Ld. CIT(A) was convinced about the genuineness of the advances of Rs. 1.47 crore received by the assessee. We find no reason to interfere with the findings of the Ld. CIT(A). Only because documentary evidence was not filed at the time of assessment which were filed by way of additional evidence before the Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g therein that out of total loans and advances Rs. 25 lakhs were given for purchase of property. He further submitted that Rs. 10 lacs to Anil Nibber was given on 10.01.2014; Rs. 24,45,000/- to Ishan & Co. was given on 21.03.2014 and Rs. 57,88,400/- was given to NKM Buildtech in two instalments of Rs. 31,15,925/- on 07.01.2014 and Rs. 26,72,475/- on 10.01.2014. However, the Ld. AO applied interest rate for the whole year. He contended that the impugned disallowance under section 36(1)(iii) of the Act is not at all justified. 22. The Ld. DR submitted that there was no business exigency for the assessee to obtain funds and pay interest thereon. 23. We have given careful thought to the rival submission and perused the records. It is not in dispute that the assessee is engaged in the business of trading in Real Estate. Undoubtedly, the assessee can borrow capital for the purposes of his business and pay interest thereon. Section 36(1)(iii) of the Act provides that the interest paid in respect of capital borrowed for the purposes of business is an allowable deduction in computing the income from business. There is no finding either of the Ld. AO or of the Ld. CIT(A) that interest of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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