ITO 34(1)(4), MUMBAI V. HIMA B GHARAT, MUMBAI

ITA 124/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3524 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Additional evidence; Cost of acquisition
• Section: 143(3); 133(6); 69

Judgement Text

1 I.T.A. NO.124 /MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO. 124/MUM/2015 (ASSESSMENT YEAR : 2010-11) ITO 34(1)(4) VS SMT HIMA B GHARAT (ALSO KNOWN HIMA JITENDRA GHARAT), 72, NANDANVAN, K WING A SHAHJI RAJE ROAD, VILE PARLE(E) MUMKBAI 57 PAN : ACTPV3331L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SUNIL KUMAR AGARWAL R A SHRI RAKESH KAPOOR DATE OF HEARING : 16-08-2016 DATE OF PRONOUNCEMENT : 19-08-2016 O R D E R PER ASHWANI TANEJA, AM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS) [HEREINAFTER C ALLED CIT(A)] DT 14- 10-2014 PASSED AGAINST THE ASSESSMENT ORDER DT 28-3 -2013 PASSED BY THE AO U/S 143(3) FOR A.Y. 2010-11 ON THE FOLLOWING G ROUNDS: 1) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE 2 I.T.A. NO.124 /MUM/2015 LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING TH E ADDITION MADE U/S. 69 IGNORING THE FACT THAT THE MATERIALS AVAILABLE WAS NOT SUFFICIENT TO PROVE THE CREDITWORTHINESS OF LENDER AND DONOR, AND THEREBY THE INVESTMENT MADE IN PURCHASE OF FLAT REMAINED UNEXPL AINED. 2) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE POWERS OF THE LD. C 11(A) ARE CO-TERMINUS WITH THAT OF THE A.O. THE LD. C[T(A) HAS ERRED IN LAW, IN NOT CURING THE DEFECTS, IF ANY, IN THE ASSESSMENT ORDER (INCLUDING THE REMAND REPORT), WHE N HE WAS DUTY BOUND TO DO SO AS HAS BEEN HELD IN FOLLOWING JUDICI AL PRONOUNCEMENT I) CIT VS KANPUR COAL SYNDICATE, (1964) 53 ITR 225 (SC ) II) CIT VS JAY TEXTILE (1981) 128 ITR 480 (PUNJ. & HAR. ) III) SUBRAMANIA LYER VS. CIT (1978) 113 HR 685 (KERALA) 3) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. C 11(A) HAS ERRED IN LAW AND ON FACTS IN ACCEPTING THE SOURCES OF FUNDS FOR LOANS AND GIFTS TAKEN BY THE ASSESSE FOR INVEST MENT IN FLAT AMOUNTING TO RS.22,00,000/- & RS. 26,00,000/- RESPE CTIVELY BY SIMPLY RELYING ON THE SECOND REMAND REPORT OF THE ASSESSIN G OFFICER AND NOT ARRIVING AT INDEPENDENT CONCLUSION PARTICULARLY WHE N THE ADDITIONAL EVIDENCE FILED BEFORE HIM BY THE ASSESSE WAS NOT PR OOF ENOUGH TO EXPLAIN THE SOURCES OF LOAN AND GIFT AND ALSO THE F ACT THAT THE ASSESSE MAD IRRECONCILABLE CONTRADICTORY CLAIMS BEFORE THE A.O. AT THE TIME OF ASSESSMENT AND AT THE TIME OF SECOND REMAND REPORT. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS, IN DELETING THE ADDI TION OF RS.50,24600/- ON ACCOUNT INVESTMENT IN PURCHASE OF FLATS U/S. 69 OF THE L.T. ACT, 1961. 2. DURING THE COURSE OF HEARING, LD.DR RELIED UPON THE ASSESSMENT ORDER WHEREAS THE LD.COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF LD.CIT(A). ALL THE GROUNDS RELATE TO COMMON ISSUE OF ADDITION MADE BY THE ASSESSING OFFICER U/S 69 AGGREGATING TO RS.50,24,600 ON ACCOUNT OF IN VESTMENT IN PURCHASE OF FLATS U/S 69 OF THE ACT, WHICH WAS DELETED BY THE L D. CIT(A) IN THE FIRST APPEAL. BEING AGGRIEVED, THE REVENUE FILED APPEAL BEFORE TH E TRIBUNAL. 3. THE BRIEF BACKGROUND AND FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, WAS ASKED TO EXPLAIN THE SOURCE OF INVE STMENT IN THE FLAT PURCHASED BY HER FOR RS.62 LAKHS DURING THE COURSE OF ASSESSM ENT PROCEEDINGS. THE 3 I.T.A. NO.124 /MUM/2015 ASSESSEE EXPLAINED THAT THE TOTAL INVESTMENT IN THE HOUSE PROPERTY WAS RS.65,24,060 INCLUDING REGISTRATION CHARGES, ETC. IT WAS FURTHER EXPLAINED THAT THE SAID INVESTYMENT WAS MADE OUT OF THE FOLLOWING SOURCES:- HOUSING LOAN 15,00,000 LOAN FROM MR. VANMALI 22,00,000 LOAN FROM PROVIDENT FUNDS 2,79,500 GIFT FROM FATHER 26,00,000 65,79,500 4. OUT OF THE ABOVE, THE ASSESSING OFFICER ACCEPTED TH E SOURCES TO THE EXTENT OF RS.15 LAKHS ONLY AND THE BALANCE AMOUNT O F RS.50,24,060 WAS TREATED AS UNEXPLAINED INVESTMENT. BEING AGGRIEVED, THE AS SESSEE FILED APPEAL BEFORE THE LD.CIT(A) WHERE EXHAUSTIVE SUBMISSIONS WERE FIL ED ALONG WITH FURTHER EVIDENCES TO EXPLAIN THE SOURCES. ACCORDINGLY, THE LD CIT(A) SENT THE ABOVE SAID SUBMISSIONS AND EVIDENCES TO THE ASSESSING OFF ICER FOR HIS EXAMINATION AND REMAND REPORT. THE ASSESSING OFFICER EXAMINED THE SUBMISSIONS, DETAILS AND EVIDENCES FURNISHED BY THE ASSESSEE TO JUSTIFY AND SUBSTANTIATE THE AFORESAID SOURCES OF INVESTMENT IN THE FLAT PURCHAS ED BY THE ASSESSEE AND FURNISHED REMAND REPORT DT 16-09-2014; RELEVANT POR TION OF WHICH IS REPRODUCED HEREUNDER: IN REMAND PROCEEDING, THE REPRESENTATIVE OF ASSESSE E SUBMITTED THE SOURCES / PAYMENT OF FUNDING FOR IN VESTMENT IN IMMOVABLE PROPERTY, THE DETAILS OF WHICH ARE AS UN DER . MR. PRAVIN VANMALI PAID R. 10,00,000/- DIRECTLY TO THE BUILDER ON BEHALF ASSESSEE ON 01-02-2010 DETAILS OF CHEQUE PAY MENT IS MENTIONED IN PROPERTY AGREEMENT. FURTHER, MR. PRAVI N VANMALI PAID RS. 12,00,000/- DIRECTLY TO THE BUILDER ON BEH ALF OF ASSESSEE ON 16-02-2010 DETAILS OF CHEQUE PAYMENT RE CEIPT ENCLOSED. THE ASSESSEE STATED THAT AN AMOUNT OF RS. 22,00,000/- RECEIVED FROM MR. PRAVIN VANMALI IS UNSECURED LOAN TAKEN DURING THE YEAR. IN THIS REGARD, ASSESSEE FURNISHED LOAN C ONFIRMATION LETTER FROM MR. PRAVIN VANMALI ALONGWITH COPY OF BA NK STATEMENT AND COPY OF IT RETURN. FURTHER, NOTICE U/ S. 133(6) IS 4 I.T.A. NO.124 /MUM/2015 ISSUED TO MR. PRAVIN VANMALI FOR CROSS VERIFY THE S AID LOAN TRANSACTION. IN RESPONSE TO THE SAID NOTICE, MR. PR AVIN VANMALI FILED LETTER DATED 15-07-2014 IN WHICH HE CONFIRMED THE LOAN TRANSACTION BETWEEN HIM AND ASSESSEE. 2.ASSESSEE, FURTHER FURNISH THAT SOURCES PAYMENTS O F RS. 24,99,000/- FROM HIS OWN A/CS AND REST PAYMENT OF R S. 15,00,000/- IS FROM HOUSING LOAN TAKEN BY ASSESSEE DURING THE Y EAR. IN THIS REGARD, ASSESSEE FURNISHED HER BANK A/C. MAINTAINED WITH MUNICIPAL CO-OP BANK IN WHICH PAYMENTS WERE MADE TO BUILDER IS REFLECTED. FURTHER, ASSESSEE SUBMITTED THAT HER FATHER BHALCHANDRA GHARAT HAS GIVEN GIFT OF RS. 26,00,000/- DURING THE YEAR UNDER CONSIDERATION. ASSESSEE FURNISHED COPY OF GIFT CONF IRMATION LETTER FROM HER MOTHER SINCE HER FATHER IS EXPIRED WITHOUT MAKING ANY GIFT DEED AND FURNISHED COPY OF BANK STATEMENT OF L ATE BHALCHANDRA GHARAT. THE AFORESAID LOAN TRANSACTION IS APPEARING IN BANK STATEMENT OF LATE BHALCHANDRA GHA RAT AS WELL AS ASSESSEE'S BANK STATEMENT. FURTHER, ASSESSE E SUBMITTED SOURCES OF FUND OF HER FATHER IS SALE PROCEEDS OF A GRICULTURAL LAND SUBMITTED COPY OF SALE AGREEMENT OF AGRICULTUR AL LAND BY HER FATHER. FURTHER, ASSESSEE HAS WITHDRAWN RS.2 , 79,500/- GPF A/C AND FURNISHED COPY OF GPF APPLICATION AND C OPY OF ECS CERTIFICATE IN RESPECT OF AMOUNT PAID. IN VIEW OF THE ABOVE, CASE MAY BE DECIDED ON MERIT OF THE CASE.' 5. THE LD CIT(A) CONSIDERED THE REMAND REPORT AND ALSO CON SIDERED THE EVIDENCES FURNISHED BY THE ASSESSEE AND FOUND THAT THE ASSESSEE HAD DISCHARGED ITS ONUS UNDER THE LAW TO SUBSTANTIATE T HE SOURCE OF INVESTMENT AND ACCORDINGLY, HE DELETED THE ADDITION MADE BY THE AS SESSING OFFICER WITH THE FOLLOWING OBSERVATIONS: I HAVE CONSIDERED THE SUBMISSION OF THE AUTHORIS ED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFIC ER AS WELL AS THE REMAND REPORT. IT IS SEEN THAT THE TOTAL EXPEN DITURE TOWARDS PURCHASE OF PROPERTY, INCLUDING STAMP DUTY AND REGI STRATION CHARGES COMES TO RS.65,24,060/-, WHICH HAS BEEN FIN ANCED AS UNDER: 5 I.T.A. NO.124 /MUM/2015 APPLICATION FOR PURCHASE PURCHASE COST OF THE PROPERTY 62,00,000 STAMP DUTY 2,93,000 REGISTRATION 31,060 65,24,060 HOUSING LOAN 15,00,000 LOAN FROM MR. VANMALI 22,00,000 LOAN FROM PROVIDENT FUNDS 2,79,500 GIFT FROM FATHER 26,00,000 65,79,500 THE ASSESSING OFFICER HAS ALREADY CONSIDERED AND AC CEPTED IN THE ASSESSMENT ORDER THE HOUSING LOAN OF RS. 15. 00,000/-. IN RESPECT OF THE PAYMENTS MADE BY SHRI VANMALI OF RS.22,00,000/-, THE ASSESSING OFFICER FOUND THAT PAYMENTS OF RS. 10,00,000/- AND RS. 12.00,000/- WER E MADE BY HIM DIRECTLY TO THE BUILDER, ON BEHALF OF THE ASSES SEE. CONFIRMATION HAS BEEN FILED BY MR. VANMALI BEFORE T HE ASSESSING OFFICER ALONGWITH COPY OF BANK STATEMENT AND COPY OF INCOME TAX RETURN. NO ADVERSE VIEW / INCONSISTENCY HAS BEEN FOUND BY THE ASSESSING OFFICER IN RESPECT OF THIS CLAIM. ACCORDINGLY, LOAN OF RS.22,00,000/- FROM MR. VANMALI HAS TO BE ACCEPTED AS A SOURCE OF PURCHASING IMMOVABLE PROPERTY BY THE ASSESSEE. SIMI LARLY, THE GIFT OF RS.26,00,000/GIVEN BY THE ASSESSEE'S FATHER TO THE ASSESSEE AND GPF WITHDRAWAL OF RS.2,79.500/- HAS AL SO BEEN VERIFIED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AND NO ADVERSE COMMENT HAS BEEN MADE BY HIM IN THE REMAND REPORT DATED 16-09-2014. THE ASSESSING O FFICER HAS MENTIONED THAT THE TRANSACTION APPEARS IN THE BANK STATEMENT OF ASSESSEES FATHER AS WELL AS THAT OF ASSESSEE'S. THE SOURCES OF THE GIFT ARE STATED TO BE SALE PROCEEDS OF AGRICULT URAL LAND. IN RESPECT OF WHICH RELEVANT DOCUMENTS WERE FURNISHED BEFORE THE ASSESSING OFFICER. IT HAS BEEN STATED BY THE AU THORISED REPRESENTATIVE THAT THE CASE OF ASSESSEE'S FATHER H AS BEEN REOPENED TO FURTHER VERIFY THE TAXABILITY OF SALE OF AGRICUL TURAL LAND AND OTHER ISSUES. THUS, SINCE THE IDENTITY OF THE DONOR AND T HE GENUINENESS OF THE TRANSACTION HAS BEEN ESTABLISHED THE GIFT OF RS 26 00 000/- HAS TO BE ACCEPTED AS VALID FOR THE PURPOSES OF THE SOURCE S OF PURCHASE OF 6 I.T.A. NO.124 /MUM/2015 THE IMMOVABLE PROPERTY. EVEN IF THE SALE OF AGRICUL TURAL LAND HAS NOT BEEN OFFERED TO TAX BY ASSESSEE'S FATHER, NECES SARY ACTION WOULD LIE IN HIS HANDS, FOR WHICH STEPS HAVE ALREAD Y BEEN INITIATED BY THE ASSESSING OFFICER. IN VIEW OF ALL THE ABOVE, THE SOURCES OF FINANCE F OR THE PURCHASE OF IMMOVABLE PROPERTY STAND DULY EXPLAINED. THE ASSE SSING OFFICER IS, THEREFORE, DIRECTED TO DELETE THE ADDITION OF RS. 5 0,24,060/- MADE IN THE ASSESSMENT ORDER IN THIS REGARD. 6. WE HAVE GONE THROUGH THE EVIDENCES SHOWN TO US BY T HE LD.COUNSEL OF THE ASSESSEE AS ENCLOSED IN THE PAPER BOOK AND ALSO THE ORDERS PASSED BY THE LOWER AUTHORITIES. IT IS NOTED BY US THAT ALL THE EVIDENCES WERE DULY EXAMINED BY THE AO ALSO DURING THE COURSE OF REMAND PROCEEDI NGS AND NOTHING ADVERSE HAS BEEN NOTED THEREIN. IT APPEARS THAT ADDITION W AS MADE IN THE ASSESSMENT ORDER FOR WANT OF PROPER EVIDENCES. THE REQUIRED E VIDENCES HAVE BEEN FURNISHED BY THE ASSESSEE BEFORE THE LD.CIT(A) WHIC H WERE DULY EXAMINED BY THE AO AS WELL AS LD.CIT(A) AND ACCORDINGLY, THE AD DITION WAS DELETED BY THE LD.CIT(A). THUS, TAKING INTO ACCOUNT THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT ASSESSEE HAS BEEN SUCCESSFUL LY ABLE TO SUBSTANTIATE THE SOURCES OF INVESTMENT MADE IN THE FLAT. THE ASSESS EE HAS DULY EXPLAINED THE TRANSACTION AND SUBSTANTIATED THE TRANSACTION OF RE CEIVING UNSECURED LOANS AS WELL AS AMOUNT OF GIFT FROM HER FATHER. IN OUR VIE W, THE ADDITION WAS NOT SUSTAINABLE IN VIEW OF FACTS OF THIS CASE AND, THE REFORE, IT WAS RIGHTLY DELETED BY THE LD.CIT(A). WE DO NOT FIND ANY NEED FOR INTERFE RENCE IN THE ORDER OF LD.CIT(A) AND, THEREFORE, THE SAME IS HEREBY CONFIR MED. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7 I.T.A. NO.124 /MUM/2015 7. AS A RESULT, APPEAL FILED BY THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON THIS19TH DAY OF A UG, 2016. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 19 TH AUGUST, 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , H-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES