PAVAN GOPAL CHOTIYA,PUNE vs. INCOME TAX OFFICER, WARD 10(2), PUNE

The captioned appeal at the instance of assessee pertaining to A.Y. 2016-17 is directed against the order dated 17.02.2025 of Addl/JCIT (A)-1, Gurugram passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 14.12.2018 passed u/s.143(3) of the Act.

Assessee has raised three grounds of appeal which are against the addition of Rs.89,218/- for the amount received from relatives not proved, Rs.66,516/- towards excess HRA claimed, and unexplained investment in shares at Rs.4,14,590/-.

Brief facts of the case are that the assessee is an individual and income of Rs.2,67,350/- declared in the return of income e-filed for A.Y. 2016-17 on 12.07.2016. Case picked up for scrutiny to verify large value of sale of shares or units reported in Securities Transaction Tax followed by validly serving statutory notices u/s.143(2) and 142(1) of the Act. Various details called for by ld. Assessing Officer (AO) were submitted by the assessee from time to time. Ld. AO concluded the proceedings making additions totalling to Rs.5,70,324/- and assessed income at Rs.8,37,674/-.

Dissatisfied with the additions made by ld. Assessing Officer, assessee filed appeal before ld.CIT(A) but failed to succeed. Now the assessee is appeal before this Tribunal.

Ld. Counsel for the assessee made detailed submissions referring to the paper book running into 42 pages and also referred to the submission filed before ld.CIT(A) placed at page 20 to 24 in support of the contention that impugned additions are uncalled for.

On the other hand, ld. DR supported the order of ld.CIT(A).

I have heard the rival contentions and perused the record placed before me. First issue is against the disallowance of HRA at Rs.66,516/-. Assessee has claimed deduction of HRA at Rs.1,29,766/-. Ld. AO after calling for the details and the Rent Agreement observed that the Agreement has been made between the landlord and the assessee and his brother. Assessee has claimed that the brother is one of the licensee and name added only for security reasons to avoid future conflict between the landlord and the assessee and that total rent of Rs.1,26,500/- has been paid by the assessee. It was also submitted before the Assessing Officer that the brother of the assessee namely Mr. Preetam Chotiya has not claimed any benefit of HRA. During the course of hearing before this Tribunal, when ld. Counsel for the assessee was asked to demonstrate as to whether the assessee has mentioned the total amount of rent or half of the rent paid by him in Form No.16 submitted to his Employer to which there was no reply. Under these given facts and circumstances and since in the Rent Agreement name of the assessee and his brother is appearing, therefore, eventhough assessee had made the payment, such payment is held to be made on behalf of his brother but for claiming the HRA deduction, only 50% of the rent paid is to be considered. We therefore fail to find any infirmity in the finding of ld.CIT(A) and the disallowance for HRA at Rs.66,516/- stands confirmed.

Next addition is regarding unexplained investment in shares at Rs.4,14,590/-. During the course of assessment proceedings, ld. AO observed that assessee had invested Rs.10,51,934/- in shares. To examine the source for making the said investment, assessee provided the information about the income for the year including salary, HRA conveyance allowance, Gratuity PF, receipt from sale of shares and after showing the application of income towards Chapter VIA – household expenses, amount actually available with the assessee is shown at Rs.10,87,170/-. However, as per the AO, the amount actually available with the assessee is Rs.6,37,344/- and he accordingly made addition for the difference between the investment in shares and the amount available with the assessee. Before me, Ld. Counsel for the assessee has successfully demonstrated that ld. AO erred in not including the amount received towards conveyance allowance, medical allowance and the amount received from relatives but on the other hand expenses incurred against such allowance have been reduced by the ld. AO. On going through the details, I notice that there are certain clerical mistakes in the calculation made by ld. AO and the amount actually shown by the assessee available for investment at Rs.10,87,170/- is correct. Finding of ld.CIT(A) is set aside and addition of Rs.4,14,590/- towards unexplained investment in shares is hereby deleted.

Third issue relates to the addition of amount received from relatives at Rs.89,218/-. During the assessment proceedings, ld. AO noticed that the assessee has received loan of Rs.1,44,000/- from his brother which has been used for making investment in shares. Further, ld. AO observed that assessee has transferred Rs.67,500/- to his brother. The net amount remaining is Rs.76,500/-. This observation of the ld. AO has been rebutted by ld. Counsel for the assessee submitting that the assessee has received loan from his brother in the preceding year also and the amount repaid was for the loan taken in the preceding years. To this effect, confirmation letter has been filed as per which the outstanding balance payable to the brother as on 31.03.2016 is Rs.1,08,954/-. Further, ld. AO has also not considered the amount of loan received from relatives at Rs.21,718/-. After carefully going through the submissions made by ld. Counsel for the assessee and the details filed in the paper book, I find that addition of Rs.89,218/- for the amount received from relatives is not justified and the same is hereby deleted. Finding of ld.CIT(A) is reversed and the grounds raised by the assessee are partly allowed.

In the result, appeal filed by the assessee is partly allowed.