SH. INDERJEET SINGH ARORA,BATHINDA vs. THE INCOME TAX OFFICER, BATHINDA

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A No.310/Asr/2014 Assessment Year: 2008-09 Inderjeet Singh Arora, vs. ITO, Ward-1(1), Standard Sweet Corner, Bathinda. Bibiwala Road, Bathinda. [PAN: ADVPA 0985G] (Appellant) (Respondent) Appellant by: Sh. P.N. Arora (C.A) Respondent by: Sh. Charan Das (D.R) Date of hearing : 22.10.2018 Date of pronouncement: 31.12.2018 ORDER Per Sanjay Arora, A.M. This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals), Bathinda (‘CIT(A)’ for short) dated 08.01.2014, dismissing the assessee’s appeal contesting his assessment u/s. 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for Assessment Year (A.Y.) 2008-09 vide order dated 20.12.2010.

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The Assessing Officer (AO) accepting the assessee’s explanation for Rs.5.50 lacs, i.e., the sale of his residential house, added the balance Rs.6.43 lacs (Rs.11.93 lacs - Rs.5.50 lacs) as unexplained cash deposit in bank. The purchase of the residential house sold (on 17/12/2007), duly evidenced by the sale deed, reflected it to have been purchased on 31.12.2004 for Rs. 2.90 lacs, so that the difference of Rs.2.60 lacs (i.e., Rs.5.50 lacs - Rs.2.90 lacs) was liable to be assessed as short-term capital gain (STCG). The assessee explained to have incurred Rs.2.89 lacs on the repairs/ improvement, and that therefore no income accrued as STCG, which plea, on account of it being unevidenced, was not accepted. The assessment was confirmed for the same reasons, i.e., the assessee’s case being wholly unsubstantiated, even as the ld. CIT(A) allowed relief in respect of contribution by wife, at Rs.50,000/-. Aggrieved, the assessee is in second appeal.

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a reasonable estimate is required to be made. On the basis of the purchase and sale deeds, he would further point out that some construction activity had taken place inasmuch as there was a difference between what was purchased and what was sold. The Bench noticing that the assessee before the ld. CIT(A) submitted that he had obtained a housing loan from Citi Bank towards house construction, for which evidence, though produced, had not been considered by the AO (refer paragraph 2.3/pg. 3 of the impugned order), Shri Arora would explain that the construction activity having taken place during financial years 2004-05 to 2005-06 and, thus, being old, could not be produced. The same, he added, even if unexplained as to its source, could not be deemed as the income for the current year. The ld. Departmental Representative (DR) would, on the other hand, submit that the assessee’s case is wholly unsubstantiated, with he in fact having been already allowed reasonable relief by the Revenue authorities.

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matter) had been furnished before him in the assessment proceedings. The assessee in any case has preferred not to rely thereon even as, without doubt, it could directly evidence the construction and, further, the investment/expenditure thereon made in f.ys. 2004-05 and 2005-06 during which the construction is stated to have taken place, or the loan taken for the purpose repaid during the earlier years, and which, as submitted by the ld. counsel, could not be included in the current year’s income even if unexplained as to its source. Presumably, some expenditure, or repayment of loan, stands incurred or as the case may be made during the current year, for the assessee to have not produced his loan statement. In fact, the loan, if not assumed (taken over) by the purchaser of the house, would apparently be liquidated by the assessee during the current year, i.e., prior to its’ sale on 17/12/2007. There is, in any case, no basis to determine the volume of the expenditure, which definitely appears to have been incurred by the assessee, even assuming the entire of it to be in the nature of improvement – and thus deductible in computing STCG, and not in the nature of current repairs. The description of the property, to the variation in which the ld. counsel adverts, to show that some construction had been carried out, does not describe the extent of the construction/ modification. In fact, the same is incomplete. For example, as noticed during hearing, the description in the sale deed does not mention ‘kitchen’, which is incomprehensible as a residential house is not complete without it, and in fact finds mention in the purchase deed. Then, again, there is nothing on record to show the area constructed, much less the period of construction, which could have taken place even during the current year prior to the sale. Rather, as afore-noted, if not so, or no part of the loan repaid during the current year, what, one wonders, stopped the assessee from furnishing evidence in this regard, particularly the bank loan account. Non-production of evidence available with the assessee, or which he

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ought to or is excepted to possess in the normal course of events, entitles the court to draw an adverse inference (refer: Union of India v. Rai Deb Singh Bist [1973] 88 ITR 200 (SC); Kalayani Medical Store v. CIT [2016] 386 ITR 387 (Cal)). This non-production is indeed surprising as in the instant case, as it appears, and even as afore-noted, the construction may have started before the commencement of the current year, so that to the extent paid for prior to the current year, could not possibly be assessed as the income for the current year. So, however, the loan could be repaid during the current year, so that to the extent it is, it would warrant being assessed as income on account of unexplained deposit. Again, needless to add, it is only the ‘improvement’, and not repairs, that would stand to be deductible, even as, even assuming it to be the former, the same is not substantiated either as to its’ extent or the expenditure incurred thereon. The assessee, in my view, has been very fairly allowed a credit of Rs.0.50 lacs by the ld. CIT(A) in explaining the cash deposit in his bank account during the year. The other component of the assessee’s explanation toward the same, which did not find acceptance by the Revenue, is the opening cash-in-hand, stated to be at Rs.3 lacs. The same, again, is without any supporting data, viz., the assessee’s return for the past years, cash flow statement, etc., which, to have credence, would itself have to have its genesis in some disclosed basis. Under the circumstances, I only consider it proper to allow the assessee a further relief of Rs.1 lac. This is for the reason that, as it appears, some construction activity had taken place, so that to the extent it is prior to the current year, it would stand to be allowed in computing STCG, while no part thereof could be added as unexplained investment where paid for prior to the current year. The STCG as assessed would accordingly stand to be reduced by Rs. 1 lac. I decide accordingly.

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Sd/- (Sanjay Arora) Accountant Member Date: 31.12.2018 PKK Copy of the order forwarded to: (1) The Appellant: Inderjeet Singh Arora, Prop. M/s. Standard Sweet Corner, Bibiwala Road, Bathinda. (2) The Respondent: ITO, Ward-1(1), Bathinda. (3) The CIT(Appeals), Bathinda (4) The CIT concerned (5) The Sr. D.R., I.T.A.T.