The court ruled that documentary evidence substantiating a gift and capital gains claims must be considered, and the Assessing Officer's denial of deductions was unjustified.

ORDER

The aforesaid appeal by the assessee is emanating from the impugned order dated 27/08/2020, passed by the learned Commissioner of Income Tax (Appeals)–1, Nagpur [“learned CIT(A)”], for the assessment year 2008–09.

2. In its appeal, the assessee has raised following grounds:–

“1. The learned AO erred in Issuing notice under section 148 and assessment order passed under section 147 read with section 143(3) of the Act is bad in law.

2. The learned AO erred in making an addition of Rs.3,00,000 by alleging it to be an addition on account of asset over liability without appreciating that, the amount was a gift given by assessee’s wife which was supported by withdrawals in the wife’s bank account and confirmation given by the wife.

3. The learned AO erred in making an addition on account of long- term capital gain at Rs.20,34,726 on sale of Shantinagar, Nagpur house property against long-term capital gains of Rs.73,041 offered by the assessee. In doing so, the learned AO erred in not providing benefit of indexed cost of improvement of Rs.4,55,185 incurred during FY 2006-07, brokerage fees on sale of plot of Rs.25,000 and deduction under section 54 claimed by the assessee on new investment of Rs. 17,00,000 made in another residential property situated at Janaki Nagar, Nagpur.

4. Without prejudice to Ground number 3 above, the assessee submits that, the learned AO and learned CIT(A) erred in not referring the valuation of the property sold i.e situated at Shanti Nagar, Nagpur to DVO as per section 50C(2) since, the assessee had objected that stamp duty valuation exceeded the fair market value of the property sold.

5. The learned AO erred in not providing benefit of deduction under section 54 on the erroneous understanding that, the construction of new house property i.e situated at Janaki Nagar, Nagpur was made between the period 01/10/2006 to 31/07/2007 which actually related to the improvements made on the house property sold i.e at Shanti Nagar, Nagpur. The investment in new house property Janaki Nagar was in fact made during the period 01/10/2007 to 31/07/2008. Thus, the construction of new house property was completed on 31/07/2008 i.e within three years of sale deed of property sold dt. 06/11/2007.

6. That apart from incorrect appreciation of fact regarding period of construction, there is no other objection/s raised with regards to deduction u/s 54 by the learned AO during assessment proceedings and remand proceedings as well as by learned CIT(A) during appellate proceedings and hence claim of deduction under section 154 by making Rs.17,00,000 should be granted to the assessee.

8. The learned AO erred in making an addition of Rs. 13,00,000 towards cash deposited in the bank account without appreciating the fact that, there were corresponding cash withdrawals made during the year from time to time amounting to Rs.23,78,000 and; out of which the unutilised cash was re- deposited in the intervening period from time to time, totalling to Rs.13,00,000. That the cash deposits are fully explainable from the cash withdrawals made during the year, opening cash balance available, income earned during the year and hence, addition made of Rs.13,00,000 u/s 68 is unwarranted, unjustified and bad in law.

8. The learned AO and learned CIT(A) erred in not appreciating the facts emanating from the documentary evidences filed by the assessee and merely dismissing the claims of the assessee on the ground that, the assessee had taken separate stand earlier and subsequent submissions were an afterthought.

9. Whether on the facts and circumstances of the case, the learned AO erred in levying excess interest u/s 234B & 234C of the Act.

10. The Appellant prays leave of the Hon’ble Tribunal to add, amend, alter any of the Grounds of appeal.”

2. During the course of hearing, the Registry has poin