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2018 (5) TMI 1026 - AT - Income TaxAddition on account of cash surrendered at the time of survey - Held that:- We are of the view that assessee is a medical practitioner and it receives fees from the patients. It is normal that the patient is accompanied by his/her relatives, thus, the difference in name per se cannot be a ground to reject assessee’s explanation. Further, assessee has filed reconciliation regarding the difference in the amount. Another reason which appears to us is logical that the dispute was of non-inclusion of an amount of ₹ 17,98,122/-. This amount having been included in the cash book by the assessee, post survey in the books of account and thus form part of the income declared in the return. The same amount cannot be added again and hence addition of the same amount on the above reasoning is not justified. - Decided in favour of assessee Addition on account of the difference in stock at the time of the survey - Held that:- this issue has arisen as the survey team did not appreciate the fact that stock in the trail balance as per the tally software represents the opening stock of the year and does not represent the stock of the day. The survey team on the basis of this, worked out the difference of ₹ 3,99,951/- and on being confronted the assessee being a doctor and not aware of the facts accepted the same and agreed to offer as income at the time of the survey. But later on, on examination, he could point out the error. Thus, this amount cannot be added as income of the assessee. It is a settled law, an amount offered or surrendered under a mistaken belief cannot be a ground for making addition - Decided in favour of assessee Addition on account of business promotion expenses - denial by receiver of payment of any receipt - cross-examination denied - Held that:- The basis for drawing adverse inference against the assessee is the statement of Mr. Hardeep Bisht. Since, cross-examination of Mr. Hardeep Bisht has not been given to the assessee, the said statement cannot be used against the assessee. Cross-examination is an important aspect of appreciation of evidence. Mere denial by a person in the statement may not be sufficient to lead to the conclusion that the transaction is not genuine. Such person need to be confronted with the other evidences such as signature, etc. to find out the truth. In the absence of cross-examination, the statement recorded at the back of the assessee cannot be relied upon. Thus remit this issue back to the AO with a direction that he will allow cross-examination of Mr. Hardeep Bisht before relying upon the same for rejecting the claim of the assessee. - Decided in favour of assessee for statistical purpose. Addition on account of electricity expenses disallowed invoking explanation below Section 37(1) on the ground that such expenses are penal in nature - Held that:- This payment has been made by the assessee to the municipality for use of the electricity for commercial purposes. The assessee is carrying on its profession in a residential property. However, since the property is being used for profession, the corporation consider the use as commercial and hence levy commercial charges. Accordingly, in our view such charges cannot be considered to be a penalty so as to fall in the Explanation to Section 37(1) of the Act. Hence, the addition in dispute is deleted - Decided in favour of assessee Addition on account of Sundry Creditors - Held that:- Addition to the extent of ₹ 5,07,741/- in respect of the difference in the opening balance cannot be sustained in the year under consideration. CIT(A) was justified in directing the AO to examine the opening balance and delete the addition of ₹ 5,07,741/- on account of the difference in the opening balance. Accordingly, we uphold the order of the CIT(A). Denial of exemption u/s 54 - long term capital gain in respect of the residential property sold - use of the property as relevant criteria to consider the eligibility of the benefit - Held that:- The property sold by the assessee during the year was first floor and barsati floor. The said property was a residential property as is evident from the lease deed as well as other documents confirming to the fact that the first floor and barsati floor was constructed as residential and the other facts analysed herein above. There is no evidence that the said property has been reconstructed as commercial property. In fact it is not the case of the AO. Accordingly, we hold that the property sold by the assessee during the year was residential property and hence assessee is entitled for exemption under section 54 of the Act. We are also in agreement with the alternative contention of the learned AR that the use of the property is not the relevant criteria to consider the eligibility of the benefit of section 54 of the Act. There is no such condition that the property should be occupied as a residence for claiming the exemption. As against this it may be relevant to mention that section 54B providing for exemption in respect of agriculture land specifically provides that such agriculture land was being used for agricultural purposes. In the absence of any such specific condition in Section 54, no such condition can be read. - Decided in favour of assessee.
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