Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 127408 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 11 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-06-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
B
Next Hearing Date
19-04-2023
Assessment Year
2015-2016
Appeal Filed On
28-06-2020
Judgement Text
आयकर अपील य अ धकरण, च डीगढ़ यायपीठ, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’, CHANDIGARH BEFORE SHRI A.D. JAIN, VICE PRESIDENT & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं ./ITA No. 281/CHD/2020 नधा रण वष / Assessment Year : 2015-16 Raghubir Kumar H.No. 3129, Sector 22-D, Chandigarh बनाम The CIT-1, Chandigarh थायीलेखासं./PAN NO: AFBPK2946P अपीलाथ /Appellant यथ /Respondent नधा रतीक ओरसे/Assessee by :Sh. Parikshit Aggarwal, CA and Sh. Aditya Jain, CA राज वक ओरसे/ Revenue by : Sh. Sarabjeet Singh, CIT DR स ु नवाईक तार%ख/Date of Hearing : 20.04.2023 उदघोषणाक तार%ख/Date of Pronouncement : 16.06.2023 आदेश /Order Per A.D. Jain, Vice President: This is assessee’s appeal against the order dated 18.03.2020 of the ld. Commissioner of Income Tax-1, Chandigarh u/s 263 of the Income Tax Act, 1961 (hereinafter called 'the Act') . 2. The following grounds have been taken:- 1. On the facts and in the circumstances of the case and in law, ld. Commissioner of Income Tax (CIT) erred in passing order u/s 263 of the Income Tax ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 2 Act, 1961 (the Act), when the assessment for the impugned assessment year had already been concluded by Assessing officer (AO), u/s 143(3) of the Act after seeking explanations and making all the enquiries necessary for the completion of assessment. Appellant prays order so passed u/s 263 may please be held as bad in law. 2. On the facts and circumstances of the case the order passed by the 1d. Commissioner of Income Tax. U/s 263 of the Income tax Act, 1961 dated 18 03/2020 is illegal and be held as bad in law. 3. On the facts and circumstances of the case, and in law the ld. Commissioner of Income tax, has erred in concluding that order passed by the ld. Income Tax Officer U/s 143(3) dated 27/04/2017 is erroneous and is prejudicial to the interests of revenue and in directing the ld. Assessing officer to reexamine and re-determine the accounts and income as accounted for in the books of account in respect of. (i) Gift from relatives (ii) Loans from Shri Suresh Kumar, Smt. Nirmala Aggarwal, Smt. Rajni Agarwal, M/s Nanuram (HUF), M/s Sri Sai Nath Enterprises, and M/s Diamond Transport. (iii) Sale of Jewellery and (iv) Source of repayment of Housing Loan. The appellant prays that the said direction by the ld. Commissioner of Income Tax may be held to be bad in law. ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 3 3. There is a delay of 71 days in filing the appeal. The Assessee, vide Application dated 09.09.2022, annexed with letter dated 10.7.2020 and an Affidavit dated 17.9.2022 for condonation of delay, has submitted the detailed reasons, which was on account of complete lockdown from 25.3.2020 till 5.5.2020. The ld. Counsel for the Assessee has also stated that the Hon'ble Supreme Court of India has directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as has been prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, in view of the spread of new variant of COVID 19 and the drastic surge in the number of COVID cases across the country. It is submitted that due to the aforesaid reasons, the Assessee was prevented by genuine cause for filing the appeal in time. A request has been made to condone the delay in filing the appeal 4. We have considered the facts and reasoning furnished by the Assessee. In view of the detailed explanation and reasoning given by the Assessee, finding that the Assessee was prevented by sufficient cause from filing the Appeal in time, the delay of 71 days in filing the appeal is condoned. 5. The facts are that Show Cause Notice u/s 263 of the Act was issued on 4.2.2020, as follows:- ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 4 ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 5 6. The Assessee filed the following reply dated 11.2.2020: ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 6 7. The Assessee filed further reply dated 28.2.2020: ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 7 8. A further reply dated 4.3.2020, as follows, was filed by the Assessee: ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 8 9. By virtue of the impugned order, the ld. CIT observed as follows:- “5. The reply/ documents submitted by the counsel of the assessee have been considered and it has been observed that a loan of Rs. 25,00,000/- was sanctioned by the bank on 21.4.2014, which was liquidated by the assessee on 24.11.2015. On perusal of Repayment of loan statement, it has been observed that the monthly EMI of the loan was being paid by the assessee in cash. The source of such cash payment has not been examined and needs to be investigated. 5.1 The assessee has submitted the following details of the persons from whom he has received gifts. Name of the donor Relation with Assessee Amount Relative as per se.56 Santosh Wife Rs. 2,00,000/- yes Sudhir Son Rs. 2,00,000/- yes Mohit Son Rs. 2,50,000/- yes Raj Kumar Brother Rs. 1,70,000/- Yes (as per affidavit on record) Jai Bhagwan Not established Rs. 5,00,000/- no Deepak Garg Son Rs. .4,00,0007- yes As per section 56 of the Income Tax Act and as relevant in the present context, if any sum of money exceeding twenty five thousand is received without consideration by an individual, the same should be taxed as income from other sources if it is received from a person who is not a relative as per definition of relative given in this section. The issue deserves to be examined with reference to the section 56 of the Income Tax Act. ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 9 5.2 On examination of ITRs and Bank Statements available on record, it is evident that 'relatives' from whom gifts have been claimed as received also lack creditworthiness. 5.3 Further, perusal of documents submitted by the counsel of the assessee of the persons, from whom the assessee has taken gifts, it has been observed that these persons were mostly family members and close relatives of the assessee. On perusal of bank statements of these persons, it has been observed that in most cases, cash deposits were being made by these persons in their bank accounts immediately before transferring the funds to the assessee meaning thereby the funds so deposited and thereafter transferred to the assessee were the assessee's own funds which were being routed through the bank account of the family members/ close relatives. 5.4 The assessee has submitted the following details of the persons from whom he has received un-secured loans. Name of the lender Amount Nanuram(HUF) Rs. 5,00,000/- Sri Sai Nath Enterprises Rs. 9,00,000/- Rajani Agarwal Rs. 2,00,000/- Nirmala Agarwal Rs. 4,00,000/- Suresh Kumar Rs. 3,00,000/- Diamond Transport Rs. 15,00,000 5.5 During the instant proceedings, the copy of acknowledgment of returns of income of different persons/firms who have advanced un-secured loans to the assessee has been furnished. No bank statement or any document showing source/mode of loan payment has been provided by the Assessee during the assessment proceedings or instant proceedings. There is ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 10 no document available on record which could establish creditworthiness of these parties. The current status of un-secured loans is also not known. The assessee had failed to establish the genuineness of transaction and creditworthiness of the lenders. 5.6 Further, on perusal of purchase vouchers submitted by the Assessee with regard to sale of gold, it has been observed that two bills bearing No. 1 & 3 dated 20.2.2014 & 26.2.2014 of Dhami Jewellers, Raikot Road, Purani Mandi, Mullanpur (Ludhiana) have been submitted. The bills appear ingenuine as only one bill has been issued by the shopkeeper in a week between issue of these two bills to the Assessee. Further, bills do not specify the items of gold claimed to be sold. 6. In view of the above, it is held that this is a fit case for invoking the provisions of section 263 of Income Tax Act, 1961 as the assessment framed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. Accordingly, the assessment order u/s 143(3) of Income Tax Act, 1961 dated 27.4.2017 for the A.Y. 2015-16 is cancelled u/s 263 of Income Tax Act, 1961 and the Assessing Officer is directed to frame assessment order afresh after making necessary enquiries and cross-verification of evidences submitted on points/issues as discussed above. The Assessing Officer would also ensure that the assessee gets reasonable opportunity of being heard in this regard.” 10. The ld. Counsel for the Assessee has contended before us that on the facts and in the circumstances of the case and in law, the ld. Commissioner of Income Tax (CIT) erred in passing order u/s 263 of the Income Tax Act, 1961, when the assessment for the impugned assessment year had been concluded by Assessing officer (AO), u/s 143(3) of the Act after seeking explanations and making all the ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 11 enquiries necessary for the completion of assessment; that the order so passed u/s 263 may be held as bad in law; that the ld. Commissioner of Income tax has erred in concluding that the order passed by the ld. Income Tax Officer U/s 143(3) dated 27/04/2017 is erroneous and is prejudicial to the interests of the Revenue, and in directing the ld. Assessing officer to reexamine and re-determine the accounts and income as accounted for in the books of account in respect of (i) Gift from relatives (ii) Loans from Shri Suresh Kumar, Smt. Nirmala Aggarwal, Smt. Rajni Agarwal, M/s Nanuram (HUF), M/s Sri Sai Nath Enterprises, and M/s Diamond Transport. (iii) Sale of Jewellery and (iv) Source of repayment of Housing Loan. The appellant prays that the said direction by the ld. Commissioner of Income Tax may be held to be bad in law. 11. It was further contended that during the year in question, the Assessee purchased a residential house for a consideration of Rs. 111.50 Lacs + Stamp duty of Rs. 5.58 Lac., aggregating to Rs. 117.08 Lacs. Copy of Purchase deed is at Pg. 23 to 31 of PB. This deed was executed on 28.04.2014 ( PB Pg. 23). However, the Stamp duty of Rs. 5.58 Lacs was paid on 14.03.14, which fell in the preceding year AY 2014-15 (PB Pg 23). Then, out of total consideration of Rs. 111.50 Lacs, Rs. 80 Lacs was paid through cheques which were cleared in the preceding year AY 2014-15 (PB Pg 25), where 5 different cheques ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 12 aggregating to Rs. 80 Lacs have been mentioned in the deed and all fall in the preceding year. The fact that these were cleared from the Assessee’s bank account in the preceding year is evident from the bank statement of the earlier year, at PB Pg 32 to 39. For the rest of the consideration of Rs. 31.50 lacs paid during the year in question, i.e., AY 2015-16, the bank paid home loan amount of Rs. 25 lacs directly to the seller by debiting the loan account, as at PB Pg 25, where 2 banker cheques of Rs. 12.50 lacs each have been mentioned. Then, at PB Pg 108 is the home loan statement of Rs. 25 lacs. For the rest of just Rs. 6.5 lacs, the Assessee had raised loans of Rs. 12 lacs at that time from the following persons : i. Sainath Enterprises Prop. Nanu Ram Rs. 5 Lacs ii. Smt Rajni Aggarwal Rs 2 Lacs iii. Diamond Transport Rs 5 Lacs Total Rs. 12 Lacs 12. The confirmation, ITR, etc., of the above lenders are at PB, Pages 41 to 64. A summary of the above source of purchase of residential property is at PB Pg. 22. This, as per the Assessee, also shows that Rs. 80 lacs (consideration) and Rs. 5.58 lacs as stamp duty was paid in the preceding year. Further, the list of these sources of purchase of property was declared as part of Computation of Income filed for AYs 2014-15 (PB Page 14) and 2015-16 (PB Page 10). ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 13 Even regarding the source documents of amount of Rs. 80 lacs paid to the seller during the preceding year, it was stated to be from : i) Sale of 30% share in H.No. 3129/22, Chd Rs. 34.00 Lacs, (PB Pg 110 to 128) ii) Unsecured Loans raised Rs. 26.00 Lacs (PB Pg 40 to 64) iii.) Gifts received Rs. 17.20 Lacs (PB Pg 68 to 107) iv) Gold sold Rs. 2.96 Lacs (PB Pg 65 to 67) Total Rs. 80.16 Lacs 13. It was further contended that all the above information was called for by the AO, and duly replied and filed by Assessee during assessment proceedings via his replies and, thereafter, the AO accepted the returned income. The Assessee’s replies filed before the AO, are at PB Pg.19 to 21. But thereafter, the worthy PCIT issued SCN (PB Pg 1 to 2) dt. 04.02.2020 u/s 263, proposing to revise the assessment on the issues of non-furnishing of documents of sale of property of Rs. 34 lacs, Gold sold of Rs. 2.96 lacs and unsecured loans raised of Rs. 38 lacs. In response, the Assessee filed detailed replies (PB Pg 3 to 6) before the Worthy CIT and prayed that on the basis of these documents, the proceedings u/s 263 may be dropped. It was contended that based on the above facts and circumstances, the impugned order u/s 263 deserves to be quashed, due to the following counts : ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 14 a. When the AO could not have gone beyond the mandate of Limited Scrutiny issue, the PCIT, in proceedings u/s 263, could have also not held that the AO should have enquired such other issues. For this, the Assessee relies upon: • M/s Shark Mines and Minerals Pvt. Ltd. vs PCIT [ITA No.1 of 2023] (Orissa HC) dtd.02.03.2023 (Copy enclosed) • Taj Paul Bhardwaj vs. PCIT [ITA No. 463/Chd/2019] (Chd. Trib.) dt. 13.05.202l (Copy enclosed) b. It is also evident that out of total investment in purchase of house of Rs. 117.08 Lacs, Rs. 85.58 Lacs pertain to the earlier year and the source is also in the earlier year. Therefore, even if any addition was possible, the same could have been made in the earlier year and for that revisionary order u/s 263 for the year in question was not possible. For this, the Assessee, relies on ‘Gurmeet Kaur vs CIT’, ITA 46/Chd/2021 (copy enclosed). c. It is also evident that all the issues of the source for purchase of property were enquired by the AO during the assessment proceedings. Therefore, even if any further enquiry was thought proper by the PCIT in the order u/s 263, the same was impermissible, since it is not a case of total lack of enquiry. ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 15 Further, even in the impugned order, the PCIT has not demonstrated as to which further enquiry the AO has failed to conduct. For this, the Assessee relies on : • PCIT vs. M/s. Singhal Enterprises Pvt. Ltd. [ITAT/103/2022] (Cal. HC) (Copy enclosed) • Sh. Sanjay Jain vs. PCIT [ITA No.l40/CHD/2021] (Chd. Trib.) dtd. 23.03.2022 (Copy enclosed) 14. On the other hand, the ld. DR has placed strong reliance on the impugned order. It has been contended that no doubt, certain amounts were received in the earlier years; that payment was made in cash as bank installments, sources whereof were not examined by the AO; that then, Rs. 12 lacs were received from different parties where cash deposits have been made immediately before the amount was given to the Assessee; that this has not been seen by the AO; that the scope of limited scrutiny has not been transgressed by the ld. CIT; that so, the amount beyond Rs. 85 lacs was wrongly explained and the AO did not take any action; that therefore, the order under appeal is a well justified order, not requiring any interference; and that therefore, there being no merit in the Assessee’s appeal, the same be dismissed. 15. We have heard the parties and have perused the material on record. First off, apropos the Assessee’s contention, by way of ground ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 16 No.3, that since the case was picked up under limited scrutiny u/s 143(2) of the Act, for examining the issue of ‘purchase of property’, the AO could not have gone beyond such mandate and the ld. CIT, as such, could not have held that the AO should have enquired other issues, we do not find this contention to be tenable. Enquiry into the issue of purchase of property but necessarily, obviously, entailed enquiry into the issues of home loan raised from bank, sale of house property, gifts and loans from family members and known persons, and sale of gold. This is because as stated by the Assessee’s himself, all these were the sources of funds for the purchase of the residential house in question by the Assessee. 16. Reliance, in this regard, has been misplaced on ‘M/s Shark Mines’ (supra). Therein, as noted by their Lordships in para 10 of the Order, the limited scrutiny was in respect of excess disallowance u/s 40A(3) of the Act, whereas the Show Cause Notice u/s 263 was regarding the FIFO method of valuation of closing stock adopted by the Assessee. The ITAT had held these to be unconnected issues, which finding was upheld by the Hon'ble High Court. In the present case, however, as noted, the limited scrutiny was with regard to purchase of property and the Show Cause Notice u/s 263 was regarding home loan raised from bank, sale of house property, gifts and loans from family members and known persons, and sale of gold. ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 17 All these being the sources of funds for the purchase of property, as contended by the Assessee himself, they cannot at all be said to be unconnected therewith, rather, they are directly connected with the purchase of property, which was the issue for enquiry of which the limited scrutiny was invoked. 17. Likewise, in ‘Taj Paul Bhardwaj’ (supra), the case was selected for limited scrutiny for the reason that there was a substantial increase in the capital during the year, whereas the show cause notice u/s 263 was issued for the reasons (i) that the assessee filed his return of income for the assessment year under consideration on 25.05.2015, and the due date was 31.07.2015 and the assessee had not deposited the capital gain in the Capital Gain Deposit Account before the specific date. Therefore, the assessee was not entitled to claim exemption u/s 54 of the Act. Since the AO had failed to make any enquiry or verification, the assessment order was erroneous and prejudicial to the interests of the revenue; (ii) that the assessee had shown opening balance of capital as on 01.04.2013 at Rs. 65,91,538/-, however, he did not file his return for the A.Y. 2013-14. Since the genuineness of the opening balance was doubtful and the AO failed to examine this issue, the assessment order was erroneous and prejudicial to the interests of the Revenue and (iii) that since the AO had failed to bring on record any evidence with regard to ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 18 agricultural income claimed by the assessee, the assessment order was erroneous and prejudicial to the interests of the Revenue. The assessee filed reply to the said notice and contended that the assessment order was neither erroneous, nor prejudicial to the interests of the Revenue. 18. These reasons, again, as evident from a bare perusal thereof, unlike in the case before us, are totally unconnected with the issue of limited scrutiny. Reliance on this decision, therefore, is also of no avail to the Assessee. 19. Accordingly, ground No. 3 is rejected. 20. Coming to the merits of the case, the first issue raised by the Commissioner is that loan of Rs. 25 lacs was sanctioned by the bank on 21.4.2014, which was liquidated by the Assessee on 24.11.2015; that as per the repayment of loan statement, the EMI of the loan was being paid by the Assessee in cash; and that the source of such cash had not been examined by the AO. This finding of the ld. CIT, we find, is incorrect, being against the evidence brought on record by the Assessee, not only before the AO, but also before ld. Commissioner himself. In this regard, it is seen that the AO, vide notice (APB 18) dated 9.8.2016, issued u/s 142(1) of the Act, asked the Assessee to furnish copy of ITR along with computation of income, tax audit report ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 19 along with annexures, balance sheet, profit and loss, etc., copy of bank statement w.e.f. 1.4.2014 to 31.3.2015 and details of nature of Assessee’s business to justify large investment in property (AIR) as compared to the total income. The Assessee, vide Reply (APB 19), dated 18.8.2016, filed (also filed before the ld. CIT) return of income and computation of income (APB 7-14), for assessment years 2015-16 (APB 7-10) and 2014-15 (APB 11-14). In the Notes (APB 10 & 14), appended to both the computations of income, it was, inter alia, stated that loan of Rs. 25 lacs from State Bank of Bikaner and Jaipur was one of the sources of funds for the purchase of residential house No. 3126, Sector 22-D, Chandigarh, for Rs. 1,17,08,960/-. The Assessee also filed before the AO (as also before the ld. CIT) a copy of Purchase Deed (APB 23-31) dated 28.4.2014, regarding purchase of residential house No.3126, Sector 22-D, Chandigarh, as per which Purchase Deed (APB 25), an amount of Rs. 25 lacs , by way of two Banker’s cheques of Rs. 12.50 lacs each, dated 21.4.2014 would be paid to the vendors at the time of registration of the Deed. Thus, the bank paid the home loan of Rs. 25 lacs directly to the sellers, by debiting the loan account. The Assessee also filed before the AO (and the CIT), a copy of the statement of loan (APB 108-109) from State Bank of Bikaner and Jaipur, for the year in question, for the period form 21.4.2014 to 3.8.2015. As per this statement, advance loan of Rs. 25 ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 20 lacs stands debited on 21.4.2014 and amounts of Rs. 30,000/- each stand credited on 2.5.2014, 2.6.2014, 2.7.2014, 1.8.2014, 2.9.2014 and 29.9.2014, respectively, and amounts of Rs. 15,000/- each stand credited on 2.12.2014, 2.1.2015 and 2.2.2015, respectively, as ‘cash payment’, total amounting to Rs. 2.25 lacs, representing payment of installment of the home loan. Moreover, the gross total income as per form ITR-V (APB 7) and computation of income (APB 9), for assessment year 2015-16, is Rs. 4,00,466/-. Thus, the observation of the ld. CIT is palpably wrong. The source of Rs. 25 lacs stands adequately explained as home loan taken from the bank. 21. The second issue taken up by the ld. CIT is that receipt of money exceeding fifty thousand rupees (erroneously mentioned by the CIT as twenty five thousand rupees) without consideration from a non-relative deserves to be examined with reference to section 56 of the Act; that the ITRs and Bank statements on record showed that the relatives shown giving gifts lacked creditworthiness; and that in most cases, cash deposits were observed made immediately before transfer of funds to the Assessee, indicting a re-routing of the Assessee’s own funds amounting to Rs. 17.20 lacs. The Assessee states that this issue was not there in the show cause notice issued u/s 263; that therefore, its expansion in the order u/s 263 was impermissible. Reliance in this regard has been placed on ‘CIT v. Amitabh Bachan’, ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 21 384 ITR 200 (SC). It has further been contended that moreover, this matter was duly enquired into by the AO during the assessment proceedings; that all these gifts were received in the preceding year, and were utilised for making payment for purchase of house in the preceding year; that, therefore, this issue was beyond the scope of assessment for the year in question and, as such, it was also outside the scope of revision for the year under consideration. It has further been stated that even on merits, based on the confirmations and ITRs of the donors (APB 68-107), these gifts stand fully explained and could not have been added u/s 68 of the Act; that also, the issue of taxability of these gifts from non-relatives u/s 56 of the Act was not taken up in the show cause notice issued u/s 263 ; and that further, invocation of section 56 on the gifts from non-relatives was outside the scope of limited scrutiny, as the issue therein was examination of purchase of property, for which, addition, if at all, could have been made only u/s 69 of the Act. It has lastly been submitted that in any case, gifts of Rs. 2 lacs from non-relatives had suo motu been offered to tax by the Assessee in the income tax return (APB-9), as income from other sources. 22. The grievance of the Assessee in this regard is found to be correct. In his Reply dated 18.8.2016 (APB 19), the Assessee stated that gifts from family members were amongst the major sources of the ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 22 investment made in purchase of property; and that the details of the sources, including the gifts received, were given in the computations of income (APB 10 & 14) for assessment years 2015-16, and 2014-15. A summary (APB 68) of the gift providers showing the assessment year in which the gifts were received, was filed both before the AO and the CIT. Further, copies of ITRs along with computation chart for A.Ys. 2014-15 and 2015-16, bank statements and affidavits of four out of six gift providers (but for Jai Bhagwan and Raj Kumar) were filed (APB 69-107) before both the authorities. A summary of the source of payment of funds for purchase of house (APB 22) was also filed before the authorities below. Therein, the gifts received amounting to Rs. 17,20,000/- were shown to be a source for such purchase. It is seen that these gifts were received in the preceding year, i.e., assessment year 2014-15 and not during the year under consideration. They were also utilised for making payment for purchase of house in the earlier year and not in the present year. These gifts, therefore, could not have been assessed to tax for the year under consideration. Hence, these were also outside the scope of revision u/s 263 for the year under consideration. 23. Accordingly, the finding of the ld. CIT in this regard is also not sustainable in law. 24. The next objection of the ld. CIT is as follows: ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 23 “5.4 The assessee has submitted the following details of the persons from whom he has received un- secured loans. Name of the lender Amount Nanuram(HUF) Rs. 5,00,000/- Sri Sai Nath Enterprises Rs. 9,00,000/- Rajani Agarwal Rs. 2,00,000/- Nirmala Agarwal Rs. 4,00,000/- Suresh Kumar Rs. 3,00,000/- Diamond Transport Rs. 15,00,000/- 5.5 During the instant proceedings, the copy of acknowledgment of returns of income of different persons/firms who have advanced un-secured loans to the assessee has been furnished. No bank statement or source/mode of loan payment has been provided by the Assessee during the assessment proceedings or instant proceedings. There is no document available on record which could establish creditworthiness of these parties. The current status of un-secured loans is also not known. The assessee has failed to establish genuineness of transaction and creditworthiness of the lenders”. 25. In his reply dated 18.8.2016 (APB 19), the Assessee contended before the AO that loan from relatives was also a source of purchase of property. The details of loans were enumerated in the computation of income for A.Y. 2015-16 (APB 10) and the computation for assessment year 2014-15 (APB 14), amounting to Rs. 38 lacs. In ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 24 Reply dated 7.3.2017 (APB 20), the Assessee enclosed copies of acknowledgments of the unsecured loans received. Along with Reply dated 20.3.2017 (APB 21), copies of income tax returns along with computation of income of the parties from whom the unsecured loans had been taken were enclosed (APB 41-60). APB 22 contains the details of these unsecured loans. These details, as noted, were filed before both the authorities below. It is seen that out of the total loans of Rs. 38 lacs, loans of Rs. 26 lacs were received in the earlier year and they were also utilised for making payment for purchase of house in the earlier year. As such, these loans of Rs. 26 lacs could not have been assessed for the year under consideration and, likewise, they were also outside the scope of revision for the year in question. 26. Apropos the remaining loan of Rs. 12 lacs, all details had been filed before the AO. These details comprise of summary of unsecured loans raised showing the date and assessment year of receipt thereof (APB 40), copy of ITR along with Computation Chart (APB 41-60) of the following lenders, from whom unsecured loans for the earlier year, assessment year 2014-15, were raised. 1. Rajni Agarwal 2. Diamond Transport 3. Nanuram 4. Sri Sai Nath Enterprises 5. Nirmala Agarwal 6. Suresh Kumar ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 25 27. Copy of balance sheet along with profit and loss account of Sri Sai Nath Enterprises and Nanuram for the assessment year 2014-15 were filed. At APB 50 to 53 are the confirmations of the creditors Nanuram (HUF), Sri Sai Nath Enterprises, Nirmala Agarwal and Diamond transport. It is, thus, seen that these loans of Rs. 12 lacs stand duly explained by the Assessee, as enquired into by the AO. The finding of the ld. CIT in this regard, is therefore, also not sustainable. 28. The last issue raised by the ld. CIT is that with regard to sale of gold, two bills bearing Nos. 1 & 3, dated 20.4.2014 and 26.2.2014, of Dhami Jewellers, Raikot Road, Purani Mandi, Mullanpur, Ludhiana appeared in-genuine, as only one bill had been issued by the shopkeeper in a week between the issue of these two bills to the Assessee; and that further, the bills did not specify the items of gold claimed to be sold. In this regard, it is seen that sale of this gold was declared by the Assessee as capital gains in the ITR for assessment year 2014-15. This is reflected in the computation of income (APB 13) as sales consideration of jewellery on 26.2.2014, at Rs. 2,96,150/-. The two bills in question are at APB 66 and 67, for Rs. 1,47,002/- and Rs. 1,49,149/-, respectively, totaling to Rs. 2,96,151/-. These documents were also furnished before the AO. ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 26 29. Therefore, this issue was also enquired into by the AO. Besides, the sale was made in the earlier year and the proceeds were also utilised for purchase of house in earlier year. As such, it was outside the scope of revision for the year under consideration. The CIT’s observations in this regard, as such, are also without merit. 30. In view of the above, the Assessee is correct in contending that since out of the total investment in purchase of house, amounting to Rs. 117.08 lacs, a sum of Rs. 85.58 lacs pertains to the earlier year and the source thereof is also in the earlier year, the addition thereof could not have been made in the year under consideration and, therefore, revision qua this amount could also not have been done in the year under consideration, as held in ‘Smt. Gurmeet Kaur v. PCIT, Patiala’, order dated 26.8.2021 passed by the Chandigarh Bench of the Tribunal in ITA No. 46/Chd/2021, for assessment year 2015-16. All the issues, as deliberated upon, were duly enquired into by the AO during the assessment proceedings. That being so, the ld. CIT has erred in holding the assessment order to be erroneous and prejudicial to the interests of the Revenue. The grievance raised by the Assessee in this regard is found to be justified and is accepted as such. ITA No.281-Chd-2020 - Raghubir Kumar, Chandigarh 27 Accordingly, the order under appeal is reversed and the assessment order is revived. 31. In the result, the appeal is partly allowed. Order pronounced on 16.06.2023 Sd/- Sd/- (VIKRAM SINGH YADAV) ( A.D. JAIN ) Accountant Member Vice President Dated : 16.06.2023 “आर.के.” आदेशक त+ल,पअ-े,षत / Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकरआय ु 2त/ CIT 4. ,वभागीय त न6ध, आयकरअपील%यआ6धकरण, च8डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशान ु सार / By order, सहायकपंजीकार/ Assistant Registrar
AI Insights
The case involves an appeal by Raghubir Kumar against the order of the Commissioner of Income Tax-1, Chandigarh, which was passed under section 263 of the Income Tax Act, 1961. The CIT had directed a re-examination of various financial transactions including gifts, loans, and the sale of jewelry, which were sources of funds for a property purchase. The Tribunal examined whether the CIT's order was justified in light of the original assessment conducted under section 143(3), which had concluded after thorough inquiries. The Tribunal found that the CIT's order was not sustainable as the issues were either previously examined or pertained to transactions outside the relevant assessment year.
