HAZURA SINGH SAINI,MUMBAI vs. ITO 21(3)(1), MUMBAI
What did the Tribunal hold?
The Tribunal set aside both issues to the file of the AO for fresh examination. The AO was directed to re-examine the claim of set-off of business loss against salary income and the addition made for unexplained investment, considering the explanations and documents to be furnished by the assessee.
What were the facts?
The assessee declared salary income and a business loss, which he sought to set off against salary. The AO disallowed the set-off and also added a significant amount related to unexplained investments in immovable properties. The CIT(A) upheld the disallowance of loss set-off and confirmed an addition of Rs. 8,92,437/- towards unexplained investment.
What were the issues?
Whether the business loss can be set off against salary income and whether the investment in immovable properties was adequately explained.
Which sections of the Income-tax Act were involved?
Section 71(2A)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H” Bench, Mumbai
Before: Shri B.R. Baskaran (AM) & Shri Amit Shukla (JM)
O R D E R Per B.R. Baskaran (AM) :-
The appeal filed by the assessee is directed against the order dated 16- 01-2015 passed by Ld CIT(A)-38, Mumbai and it relates to the assessment year 2009-10. The assessee has raised grounds on the following issues:- (a) Confirmation of addition towards unexplained investment – Rs.8,92,437/-
(b) Rejection of set off of loss – Rs.2,62,665/-
We heard the parties and perused the record. The assessee is an individual. He declared income from salary by way of pension from Indian Navy and salary received from Antony waste handling cell P Ltd. The assessee also declared loss from business/profession and set it off against salary income. The AO disallowed the claim of set off of loss by following the provisions of sec. 71(2A), which provide that the loss from business cannot be set off against
2 Hazura Singh Saini salary income. The AO also noticed from AIR information that the assessee has purchased two immovable properties for an aggregate amount of Rs.1,00,33,550/-. Since the assessee did not offer proper explanations with regard to the sources, the AO assessed the amount of Rs.1,00,33,550/- as income of the assessee.
The Ld CIT(A) upheld the disallowance of claim of loss from business against salary income. Before Ld CIT(A), the assessee offered explanations with regard to the sources available with him for purchasing the immovable properties. The Ld CIT(A) examined the explanations of the assessee and came to the conclusion that the sources to the extent of Rs.8,92,437/- (Rs.8,31,385/- and Rs.61,052/-) could not be explained by the assessee. Accordingly he confirmed the addition to the extent of Rs.8,92,437/-. Still aggrieved, the assessee has filed this appeal before us.
With regard to the first issue of disallowance of claim for set off of loss, the assessee submitted that he has provided consultancy services to a company named M/s Antony Waste Handling Cell P Ltd. He submitted that the above said company issued Form No.16 for some months and Form No.16A for some other months. He further submitted that the return of income was filed in accordance with the TDS certificates and hence there was confusion. He submitted that nature of receipt of payment from the above said company was identical throughout the year. Accordingly he submitted that the amount received from the above said company should be assessed in uniform manner.
The Ld D.R submitted that there is confusion with regard to the nature of receipt and accordingly suggested that this matter may be set aside to the file of the AO for carrying out necessary examination.
3 Hazura Singh Saini
Having regard to rival submissions, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine the claim of the assessee and take appropriate decision in accordance with the law.
The next issue relates to the addition of Rs.8,92,437/- confirmed by Ld CIT(A). The assessee submitted that he has got following sources and they were inadvertently omitted to be furnished to the Ld CIT(A):- (a) Gratuity + CAP value received from Indian Navy on 10-06-2002- Rs.8,81,385/-.
(b) Retirement dues received on 25.11.2004 - Rs.52,938/- (c) Monthly salary received on 31.01.2004 - Rs. 8,114/- The assessee submitted that the addition confirmed by Ld CIT(A) shall be liable to be deleted, if the above said sources were considered.
The Ld D.R submitted that the details now furnished by the assessee require verification at the end of the AO.
Having heard rival submissions, we are of the view that this issue also requires examination at the end of AO. Accordingly, we set aside the addition confirmed by Ld CIT(A) and restore the same to the file of the AO with the direction to examine the same afresh by considering the information and explanations furnished by the assessee and take appropriate decision in accordance with the law.
Needless to mention, the assessee should be provided with adequate opportunity of being heard.
4 Hazura Singh Saini
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order has been pronounced in the Court on 7.12.2016
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