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2018 (1) TMI 890 - AT - Income TaxAddition on account of income from house property - Held that - There is no basis or evidence on record to estimate the rental income as done by the AO. In the result, addition so made by the AO is clearly on an adhoc basis and cannot be sustained in the eyes of law and the same are hereby deleted. In the result, ground of appeal is allowed. Addition on account of commission & brokerage - Held that - There is no basis or evidence on record to estimate the commission and brokerage income as done by the AO. In the result, addition so made by the AO is clearly on an adhoc basis and cannot be sustained in the eyes of law and the same are hereby deleted. In the result, ground of appeal is allowed. Unexplained investment in building construction - Held that - The assessee having failed to offer any explanation regarding the source of investment in construction of the building by the name of the Pawan Towers amounting to ₹ 1,14,75,402 during the financial year 2006-07 relevant to impunged assessment year, the addition made by the Assessing officer as so confirmed by the ld CIT(A) is hereby sustained. In the result, ground of assessee s appeal is dismissed.
Issues Involved:
1. Proper opportunity of hearing. 2. Addition of ?46,200 on account of income from house property. 3. Addition of ?1,19,730 on account of commission and brokerage. 4. Addition of ?1,14,75,042 on account of unexplained investment in building construction. Issue-wise Detailed Analysis: 1. Proper Opportunity of Hearing: - The first ground of appeal, which contended that proper opportunity of hearing was not provided, was not pressed during the course of hearing and hence, dismissed as not pressed. 2. Addition of ?46,200 on Account of Income from House Property: - The assessee declared gross rental income of ?84,000 and after deduction u/s 24(a), offered net income of ?58,800. The AO estimated the rental income at ?1,50,000 and after deduction, determined net rental income at ?1,05,000, making an addition of ?46,200. - The CIT(A) confirmed the addition as the assessee did not provide evidence against the AO's estimation. - The Tribunal found no basis or evidence on record for the AO's estimation, deemed it adhoc, and deleted the addition, allowing the ground of appeal. 3. Addition of ?1,19,730 on Account of Commission and Brokerage: - The assessee declared income from job work at ?1,30,270, but the AO estimated it at ?2,50,000, resulting in an addition of ?1,19,730. The CIT(A) upheld the AO's estimation due to lack of details from the assessee. - The Tribunal noted the absence of evidence for the AO's estimation, deemed it adhoc, and deleted the addition, allowing the ground of appeal. 4. Addition of ?1,14,75,042 on Account of Unexplained Investment in Building Construction: - The assessee did not dispute the quantum of investment estimated by the Valuation Officer but contested the timing and source of the investment. - The AO initiated proceedings u/s 147 based on information about investments in land and building construction. The Valuation Officer estimated the investment in the building at ?1,14,75,042 for FY 2006-07. The assessee did not respond to the valuation report. - The AO concluded the investment was made in FY 2006-07 based on the assessee's statement of affairs and field enquiry. - The CIT(A) upheld the AO's findings, noting the lack of cooperation from the assessee and the absence of any explanation or objection to the valuation report. - The Tribunal examined the agreement to sell and the Additional Civil Judge's order. It found no evidence of construction during FY 2006-07 and noted that the assessee did not contest the valuation report. The Tribunal concluded that the assessee failed to explain the source of investment and sustained the addition, dismissing the ground of appeal. Conclusion: - The appeal was partly allowed, with deletions of the additions on account of income from house property and commission and brokerage, but sustaining the addition on account of unexplained investment in building construction. The order was pronounced in the open court on 15/01/2018.
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