2012 (7) TMI 98 - AT - Income Tax

Tribunal directs re-examination of capital gains appeal, stresses verification & reasoning

The Tribunal allowed the Revenue's appeal for statistical purposes, directing the CIT(A) to re-examine the reduction of short-term capital gain and ... Reduction of addition made by the AO - revenue contested that CIT(A)allowed the assessee’s claim of expenses without any documentary evidences - Held that:- The explanation pertaining to non judicial stamp paper and loan interest necessarily have to be allowed as non-withstanding the alleged claim of loss of documents in the theft of car which is disputed by the department the fact remains that these are evidences available before different Governmnetal authority namely purchase of non-judicial stamp paper. The factum of loan interest is an evidence available in the bank account of the assessee. The remaining claim of legal charges of deed writer, repair, carpentry, white wash etc. may be examined in the light other than the theft of car also as the Paper Book relied upon before the CIT(A) has not been placed as before - the reasoning given by the CIT(A) namely that the documents were lost in theft in the face of the departmental objection that the theft took place subsequently may not be relevant reasoning as such we restore the issue back to the file of CIT(A) with the direction to pass a speaking order in accordance with law after due verification - in favour of revenue for statistical purposes. Issues Involved:1. Reduction of addition made by the AO on account of short-term capital gain.2. Deletion of addition made by the AO under Section 68 of the I.T. Act, 1961.Issue-Wise Detailed Analysis:1. Reduction of Addition on Account of Short-Term Capital Gain:The Revenue contested the CIT(A)'s decision to reduce the addition made by the AO concerning short-term capital gain by allowing the assessee's claim of expenses amounting to Rs. 11,05,618/-. The AO had initially disallowed these expenses due to the lack of documentary evidence, which the assessee attributed to the theft of his car containing the relevant documents. The AO calculated the capital gain at Rs. 28,64,375/- after disallowing the claimed expenses, while the assessee had declared a capital gain of Rs. 16,96,697/-.The CIT(A) accepted the assessee's explanation regarding the incurred expenses and the theft of documents, except for the commission payment of Rs. 60,000/-. The CIT(A) directed the AO to allow the expenses amounting to Rs. 13,43,303/- and upheld the addition of Rs. 60,000/-.The Tribunal noted that the major expenses such as non-judicial stamp paper and loan interest were substantiated with documentary evidence and should be allowed. However, other expenses like legal charges, repair works, and carpentry charges needed further examination. The Tribunal restored the issue to the CIT(A) for a detailed verification and a speaking order in accordance with the law.2. Deletion of Addition under Section 68:The AO added Rs. 2,36,000/- to the assessee's income, which the assessee explained as redeposits of excess amounts withdrawn through ATM. The CIT(A) deleted this addition without providing detailed reasoning.The Tribunal observed that the CIT(A) failed to give a proper explanation for the deletion of the Rs. 2,36,000/- addition. The Tribunal restored this issue to the CIT(A) to pass a speaking order after due verification and providing the assessee a reasonable opportunity of being heard.Conclusion:The Tribunal allowed the Revenue's appeal for statistical purposes, directing the CIT(A) to re-examine the issues concerning the reduction of short-term capital gain and the deletion of the addition under Section 68, and to pass a speaking order in accordance with the law. The Tribunal emphasized the need for proper verification and detailed reasoning in the CIT(A)'s order.