2013 (1) TMI 479 - AT - Income Tax

Tribunal Decision: Appeal partly allowed on investment, additional evidence, and capital gain addition

INCOME TAX OFFICER. WARD-4. HISAR Versus USHA RANI

INCOME TAX OFFICER. WARD-4. HISAR Versus USHA RANI - TMI Issues Involved:1. Deletion of addition made on account of alleged investment in construction of house.2. Deletion of addition made on account of capital gain.3. Acceptance of additional evidence under Rule 46A(3) of the Income Tax Rules, 1962.Issue-wise Detailed Analysis:1. Deletion of Addition Made on Account of Alleged Investment in Construction of House:The Revenue contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erroneously deleted the addition of Rs. 2,23,602/- made by the Assessing Officer (AO) regarding the indexed cost of construction claimed excessively by the assessee. The AO had asked the assessee to furnish evidence for the investment made in the construction of the house during AY 1996-97 to 2000-01. The assessee provided copies of capital accounts, but the AO found discrepancies and made the addition. The CIT(A) invoked proviso (b) to Section 142(1)(iii) of the Act, which prohibits the AO from requiring the production of accounts relating to a period more than three years prior to the previous year. Consequently, the CIT(A) deleted the addition, and the Tribunal upheld this decision, dismissing the Revenue's ground.2. Deletion of Addition Made on Account of Capital Gain:The Revenue argued that the CIT(A) wrongly deleted the addition of Rs. 12,53,500/- made by the AO on account of capital gain, asserting that the assessee failed to provide supporting evidence for the construction of house no. 634, Sector-14P, Hisar, and the deposit of capital gains from the sale of an old house. The CIT(A) directed the AO to consider this issue in AY 2007-08, as the investment in the purchase and construction of the residential building was relevant for that assessment year. The Tribunal noted that the assessee had purchased and sold properties within the stipulated time frames and directed the AO to re-examine the issue, considering the intention of the assessee and the relevant provisions of Section 54 and 54F of the Act. The Tribunal restored the issue to the AO for de novo adjudication, setting aside the CIT(A)'s findings.3. Acceptance of Additional Evidence under Rule 46A(3):The Revenue contended that the CIT(A) erred in law and fact by accepting additional evidence under Rule 46A(3) without a request from the assessee and allowing exemption under Section 54 of the Act. The Tribunal observed that the CIT(A) had considered the AO's version regarding the additional evidence and admitted it under Rule 46A(3) for deciding the issue. The Tribunal noted that the CIT(A) has the statutory power to admit additional evidence and relied on the judgments of the Hon'ble Supreme Court in the cases of Kanpur Coal Syndicate and Jute Corporation of India. Consequently, the Tribunal upheld the CIT(A)'s decision to admit the additional evidence, dismissing the Revenue's contention.Conclusion:The Tribunal partly allowed the Revenue's appeal for statistical purposes, upholding the CIT(A)'s decisions on the deletion of the addition made on account of the alleged investment in construction of house and the acceptance of additional evidence under Rule 46A(3). However, the Tribunal restored the issue of the deletion of the addition made on account of capital gain to the AO for re-examination and de novo adjudication.