Ms. Savita Gupta, Noida V. ITO, Noida

ITA 6475/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2342 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K C GARG
• Keywords: Unexplained cash credit; Capital asset; Cost of acquisition
• Section: 54; 54F; 2(14)

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.N.CHARY, JUDICIAL MEMBER ITA NO. 6475/DEL/2016 (ASSESSMENT YEAR: 2013 - 14 ) SAVITA GUPTA, A - 46, SECTOR - 23, NOIDA PAN: AFWPG3726L VS. ITO, WARD - 3(3), NOIDA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. C. GARG, CA REVENUE BY: SHRI N. K. BANSAL, SR. DR DATE OF HEARING 25/02 / 201 9 DATE OF PRONOUNCEMENT 0 8 / 03 / 2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - I, NOIDA DATED 28.10.2016 FOR THE ASSESSMENT YEAR 2015 - 16. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN REFUSING THE ADJOURNMENT AND DECIDING THE CASE EX - PARTE WITHOUT ANY JUSTIFICATION. 2. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE LD AO WITH REGARD TO ALL THE 3 ADDITIONS MADE BY THE AO. A. IN ENHANCING THE CAPITAL GAINS TO RS. 75,31,058/ - OVER THE RETURNED GAIN OF RS. 48,348/ - . B. IN ASSESSING THE CAPITAL GAINS UNDER THE HEAD INCOME FROM OTHER SOURCES. IN DISALLOWING RS. 2,09,415/ - ON ACCOUNT OF COST OF ACQUISITION. C. IN ASSESSING A SUM OF RS. 10,00,000/ - AS UNEXPLAINED CASH CREDIT. 3. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE LD AO REJECTING THE CLAIM OF THE ASSESSEE OF EXEMPTION U/S 54F CLAIMED AT RS. 60,06,378/ - . 4. THE LD CIT(A) HAS ERRED ON FACT S AND IN LAW IN TREATING THE CAPITAL ASSET IN TERMS OF RIGHTS IN LEASEHOLD PROPERTIES IN NOIDA AS NO RIGHTS ON IRRELEVANT CONSIDERATION, WHICH ARE CONTRARY TO LAW. PAGE | 2 3 . THE BRIEF FACT SHOWS THAT ASSESSEE IS AN INDIVIDUAL FILED RETURN OF INCOME ON 22/7/2013 SH OWING TOTAL INCOME OF INR 23 3820/ - WHICH INCLUDES INCOME FROM LONG - TERM CAPITAL GAIN OF INR 4 8348/ . THE LEARNED ASSESSING OFFICER PASSED ORDER U/S 143 (3) OF THE INCOME TAX ACT ON 8/1/2016 WHEREIN HE COMPUTED THE NET GAIN ON SALE OF THE PROPERTY OF INR 7 531058/ AS INCOME FROM OTHER SOURCES AND REJECTED THE CLAIM OF THE ASSESSEE AS CAPITAL GAIN. HE FURTHER DENIED DEDUCTION UNDER SECTION 54F OF THE ACT WHERE THE ASSESSEE INVESTED THE SALE PROCEEDS OF THE PROPERTY IN PURCHASING THE NEW HOUSE FOR INR 85 93825 / . THE LEARNED AO FURTHER MADE AN ADDITION OF LOAN OF INR 1,000,000 FROM M/S JAY SIYARAM ROAD CARRIER AS INCOME FROM OTHER SOURCES BEING UNEXPLAINED CASH CREDIT. CERTAIN OTHER MINOR ADDITIONS WERE ALSO MADE AND THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT INR 8 925950/ AGAINST THE RETURNED INCOME OF THE ASSESSEE OF INR 2 33820. 4 . THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 1, NOIDA. THE LEARN ED CIT A PASSED ORDER WHERE HE HAS REJECTED ALL THE CONTENTIONS OF THE ASSESSEE AND DISMISSED THE APPEAL. THEREFORE, ASSESSEE IS IN APPEAL BEFORE US. 5 . AS PER GROUNDS OF APPEAL, IT IS APPARENT THAT ONLY TWO ISSUES ARE INVOLVED IN THIS APPEAL, (1) COMPETITION OF CAPITAL GAIN IN THE HANDS OF THE ASSESSEE AND EXAMINATION OF THE CLAIM OF EXEMPTION UNDER SECTION 54F, (2) ADDITION OF INR 1,000,000 AS UNEXPLAINED CASH CREDIT. 6 . THE FACTS RELATING TO THE 1 ST ISSUE OF COMPUTATION OF CAPITAL GAIN AND CONSEQUENT CLAIM OF EXEMPTION UNDER SECTION 54F OF THE ACT ARE THAT ON 5/10/2012 ASSESSEE HAS SOLD A RESIDENTIAL PLOT NUMBER BE 87, SECTOR 72, NOIDA INR 4 8750000/ . THE ABOVE PROPERTY WAS PURCHASED BY THE ASSESSEE AS P ER AGREEMENT TO SALE DATED 22/9/2004 AND LEASE DEED DATED 6/12/ 2004 FOR INR 1486554/ - . THE LEARNED ASSESSING OFFICER EXAMINED THE SALE DEED BY WHICH THE ASSESSEE HAS SOLD THE PROPERTY. SUCH SALE DEED WAS EXECUTED BETWEEN SHRI LILENDAR JHA AS THE VENDOR ( SELLER) AND MRS. INDRAWATI ALONG WITH OTHER PARTIES WERE BUYERS OF RESIDENTIAL PLOT NUMBER 87 SITUATED IN BLOCK BE SECTOR 72, NOIDA AND MEASURING 25 0 M FOR A CONSIDERATION OF INR 8 760000/ . THE ABOVE PLOT WAS ORIGINALLY ALLOTTED TO THE SELLER AS PER A LLOTMENT LETTER NUMBER 11793 DATED 30/3/2002. AS PER PAGE | 3 THE LETTER DATED 30/3/2002 OF ALLOTMENT THE SELLER WAS SUPPOSED TO DEPOSIT CERTAIN SUMS WITH THE NOIDA DEVELOPMENT AUTHORITY AFTER ADJUSTING ALREADY DEPOSITED MONEY OF INR 1 67500/ AND THE BALANCE AMOU NT WAS TO BE PAID AT THE TIME OF REGISTRATION OF THE DOCUMENT. 7 . FURTHER THE SELLER ENTERED INTO AN AGREEMENT TO SALE ON 22/9/2004 WITH THE ASSESSEE FOR A TOTAL CONSIDERATION OF INR 2 55000/ . THE CONSIDERATION OF RUPEES TO 50000 WAS PAID TO THE SELLER BY CHEQUE DATED 20/9/2004 AND THE BALANCE SUM OF INR 5000 WAS TO BE PAID AT THE TIME OF FINAL TRANSFER DEED EXECUTIVE SHALL AND PAYMENT OF ALL DUES OF NOIDA BY THE ASSESSEE TO THE AUTHORITY AS PER SCHEDULE. ACCORDING TO THE TERMS OF THIS AGREEMENT TO SALE , THE SELLER WAS TO OBTAIN THE PERMISSION FOR TRANSFER OF THE ABOVE PROPERTY IN FAVOUR OF THE ASSESSEE OR HER NOMINEE. THEREFORE, THE CLEAR INTENTION OF THE ABOVE AGREEMENT WAS THAT ASSESSEE HAS ACQUIRED THE ABOVE PROPERTY FROM THE SELLER ON PAYMENT OF IN R 25 5000/ AND FURTHER PAYMENT OF ALL DUES FROM THE DATE OF THE AGREEMENT UNTIL THE DATE OF FINAL TRANSFER DEED TO THE NOIDA DEVELOPMENT AUTHORITY. ACCORDING TO THIS, THE ASSESSEE GETS RIGHT TO GET THE ABOVE PROPERTY TRANSFERRED IN HER NAME OR IN THE NAM E OF THE NOMINEE OF THE ASSESSEE. 8 . SUBSEQUENTLY ON 06/12/2004 NOIDA, DEVELOPMENT AUTHORITY IN FAVOUR OF THE SELLER EXECUTED THE LEASE DEED . AS PER THE ABOVE LEASE DEED THE TOTAL CONSIDERATION OF THE PREMIUM WAS DETERMINED AT INR 8 25000/ AND 10 INSTALLMEN TS OF INR 5 7750/ WERE DETERMINED TO BE PAID BY THE SELLER TO THE NOIDA DEVELOPMENT AUTHORITY. 9 . THE ASSESSEE CLAIMED TO HAVE PAID A SUM OF RUPEES 1129379/ IN FINANCIAL YEAR 2004 5 WITH RESPECT TO THE VARIOUS EXPENDITURE INCLUDING THE COST OF REGISTRATIO N ET CETERA. FOR THE FINANCIAL YEAR 2004 05, SOME OF THE EXPENSES WERE PAID IN CASH AND SOME OF THE EXPENDITURE ARE PAID BY CHEQUE. FOR FINANCIAL YEAR 2005 06, ASSESSEE MADE A PAYMENT OF INR 2 37820/ BY THREE CHEQUES FROM THE BANK ACCOUNT OF THE ASS ESSEE. IN FINANCIAL YEAR 2006 07 THE ASSESSEE HAS MADE A PAYMENT OF INR 1 19355/ BY TWO CHEQUES. THEREFORE, THE AGGREGATE EXPENDITURE INCURRED BY THE ASSESSEE FOR THE PURPOSE OF ACQUISITION OF THE ABOVE PROPERTY WAS CLAIMED TO BE INR 1 486554/ INCURR ED BY THE ASSESSEE FROM FINANCIAL YEAR 2004 05 TO FINANCIAL YEAR 2006 07. PAGE | 4 10 . SUBSEQUENTLY ON 05/10/2012 , THE ABOVE PROPERTY WAS SOLD INR 4 8760000/ BY AN AGREEMENT TO SELL (WITHOUT POSSESSION) EXECUTIVE BY THE SELLER IN FAVOUR OF MS. INDRAWATI AND OTHERS . OUT OF THE CONSIDERATION OF INR 8 750000/ WAS PAID BY FIVE CHEQUES WHICH WAS RECEIVED BY THE ASSESSEE. IN THIS AGREEMENT, THE ASSESSEE SIGNED AS ONE OF THE WITNESS. NEXT PER ON THE BASIS OF THE ABOVE FACTS THE ASSESSEE OFFERED THE CAPITAL GAIN ON SAL E OF THE ABOVE PLOT STATING THAT THE SALE CONSIDERATION RECEIVED IS INR 8 750000/ AND THE COST OF THE ACQUISITION OF THE ABOVE PROPERTY IS INR 1 486554/ INCURRED IN 3 FINANCIAL YEARS. 11 . AS ACCORDING TO THE ASSESSEE IT HAS EARNED CAPITAL GAIN IT PURCHASED P ROPERTY NUMBER D/287/SECTOR 108 NOIDA INR 4 8593825/ AS PER TRANSFER FROM SALE DEED DATED 31/10/2012 AND CLAIMED EXEMPTION U/S 54F OF THE INCOME TAX ACT OF INR 6 006378. 12 . THE LEARNED ASSESSING OFFICER HELD THAT THOUGH ASSESSEE HAS RECEIVED THE SALE CONSIDE RATION OF INR 8,750,000 AS STATED IN PARA NUMBER 3.2 OF HIS ORDER, ASSESSEE ENTERED INTO AN AGREEMENT TO SALE ONLY ON 22/9/2004 THAT TOO WITHOUT POSSESSION OF THE PROPERTY AND THEREFORE ACCORDING TO HIM THE ASSESSEE WAS NEVER IN POSSESSION AND LEGAL OWNER OF THE PLOT NUMBER BE/87. HE WAS FURTHER OF THE VIEW THAT IN THE SALE DEED DATED 5/10/2012 WHICH IS EXECUTIVE BY THE SELLER AND NOT THAT THE ASSESSEE, ASSESSEE IS MERELY A WITNESS IN THE DEED, THEREFORE DESPITE THE ABOVE SALE PROCEEDS RECEIVED BY THE ASSE SSEE THROUGH CHEQUES CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE THE ABOVE SUM OF INR 8 750000/ IS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT INCOME FROM CAPITAL GAINS. 13 . ON APPEAL BEFORE THE LEARNED CIT A ABOVE ORDER WAS CONFIRMED. 14 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSEE IS THE OWNER OF THE PROPERTY, WHICH WAS ACQUIRED BY HER AS PER AGREEMENT TO SALE DATED 22/9/2004. HE SUBMITTED THAT THAT ORIGINAL LETTER OF ALLOTMENT IN THE FAVOUR OF THE SELLER WAS PURCHASED B Y THE ASSESSEE BY PAYMENT OF ADEQUATE CONSIDERATION, ASSESSEE INCURRED EXPENDITURE BY PAYMENT TO NOIDA DEVELOPMENT AUTHORITY SUBSEQUENTLY, THE VARIOUS CONDITIONS OF THE AGREEMENT TO SALE SHOWS THAT ASSESSEE CAN GET THE ABOVE TRANSFER DEED REGISTERED IN THE NAME OF THE ASSESSEE OR HER NOMINEE, THEREFORE THERE AROSE A CAPITAL GAINS IN THE HANDS OF THE ASSESSEE ON TRANSFER OF THE ABOVE PAGE | 5 PROPERTY. EVEN OTHERWISE HE SUBMITTED THAT ASSESSEE HAS GOT A RIGHT IN THE ABOVE PROPERTY WHICH ITSELF IS A CAPITAL ASSET U/S 2 (14) OF THE ACT. WHEN SUCH PROPERTY HAS BEEN TRANSFERRED, THE CAPITAL GAIN AROSE IN THE HANDS OF THE ASSESSEE. HE RELIED ON THE SEVERAL DECISIONS ON THIS ASPECT. HE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONOURABLE DELHI HIGH COURT IN 302 ITR 255 AND SIMKO HOTELS AND RESORTS VS DCIT DATED 17/1/2013. IN VIEW OF THIS, HE SUBMITTED THAT ASSESSEE HAS TRANSFERRED A CAPITAL ASSET AND RECEIVE D A CONSIDERATION IN HER BANK ACCOUNT ON TRANSFER OF SUCH ASSETS; THEREFORE, THE CAPITAL GAIN AROSE IN THE HANDS OF THE ASSESSEE, WHICH CANNOT BE TAXED AS INCOME FROM OTHER SOURCES. WITH RESPECT TO THE COST OF ACQUISITION INCURRED BY THE ASSESSEE HE SUBMI TTED A DETAILED CHART AND STATED THAT ALL THESE EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUE AND ALSO CERTAIN EXPENDITURE HAVE BEEN INCURRED IN CASH WHICH WERE REQUIRED TO BE PAID FOR MISCELLANEOUS EXPENDITURE. HE THEREFORE SUBMITTE D THAT ASSESSEE DESERVES THE DEDUCTION OF COST OF ACQUISITION WHILE CALCULATING CAPITAL GAIN ON TRANSFER OF THE ABOVE CAPITAL ASSET. HE SUBMITTED THAT IF IT IS HELD THAT ASSESSEE HAS SOLD CAPITAL ASSET THEN IT IS ENTITLED TO DEDUCTION U/S 54F OF THE ACT. 15 . THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER AND THE LEARNED CIT A. IT WAS STATED THAT ASSESSEE WAS NEVER THE OWNER OF THE PROPERTY, AS IT WAS NEVER TRANSFERRED IN HER NAME. IT WAS FURTHER MENT IONED THAT THE TRANSFER DEED WAS EXECUTIVE BY NOIDA IN THE FAVOUR OF THE ORIGINAL SELLER AND SUCH REGIONAL SELLER TRANSFERRED IN THE NAME OF THE ULTIMATE BUYER WHERE THE ASSESSEE WAS ONLY A WITNESS. THEREFORE IT WAS STATED THAT THE AMOUNT OF CONSIDERATION OF INR 8 750000 RECEIVED BY THE ASSESSEE IN HER BANK ACCOUNT WAS NOT ON ACCOUNT OF TRANSFER OF ANY CAPITAL ASSET AS ASSESSEE WAS NOT LEGAL OWNER OF THE PROPERTY AND WAS NOT HAVING ANY POSSESSION OF THAT PROPERTY, THE SUM WAS RIGHTLY TAXED AS INCOME FROM O THER SOURCES. 16 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. LOOKING AT THE FACTS CULLED OUT BY US , A DMITTEDLY IN THE PRESENT CASE THE AGREEMENT TO SALE DATED 22/9/2004 WAS WITHOUT POSSESSION AND THE TR ANSFER DEED WERE NOT REGISTERED IN THE NAME OF THE ASSESSEE TILL THAT PROPERTY WAS SOLD BY MR LILADHAR JHA TO MRS INDRAWATI PAGE | 6 & OTHERS. THE LEARNED ASSESSING OFFICER HAS HELD THAT FOR THESE REASONS CONSIDERATION RECEIVED BY THE ASSESSEE IS NOT CHARGEAB LE TO TAX AS CAPITAL GAIN BUT AS INCOME FROM OTHER SOURCES. IN FACT ACCORDING TO THE PROVISIONS OF SECTION 2 (14) THE CAPITAL ASSET MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION. THEREFORE, BY ENT ERING INTO THE AGREEMENT TO SALE ON 22/9/2004 THE ASSESSEE ACQUIRED THE RIGHT TO GET THIS PROPERTY REGISTERED IN HER NAME OR HER NOMINEES NAME. FOR ACQUISITION OF THE ABOVE RIGHT, THE ASSESSEE HAS PAID CONSIDERATION ON 22/9/2004 AND SUBSEQUENTLY DEPOSITE D ALL THE DUES OF NOIDA DEVELOPMENT AUTHORITY. WHEN THE SELLER SOLD THE ABOVE PROPERTY TO THE THIRD PARTY , ASSESSEE RECEIVED ALL THE CONSIDERATION IN HIS BANK ACCOUNT, WHICH HAS NOT BEEN DISPUTED BY THE LEARNED ASSESSING OFFICER. THEREFORE, THE ASSESSEE EARNED THE TOTAL CONSIDERATION RECEIVED ON SALE OF THE PROPERTY BY THE ORIGINAL SELLER TO MRS. INDRAWATI AND OTHERS . ASSESSEE BEING WITNESS IN THE SALE DEED DOES NOT GO AGAINST THE ASSESSEE . IT IS NOT IN DISPUTE THAT ASSESSEE HAS PAID SUBSTANTIAL SU M TO NOIDA FOR TRANSFER DEED REGISTERED IN THE NAME OF MR. LILADHAR JHA . ALL THESE FACTS SHOW THAT ASSESSEE HAS ACQUIRED RIGHT IN THE PROPERTY ON 22/9/2004. SUCH RIGHT IS ALSO A PROPERTY U/S 2(14) OF THE ACT AND HENCE CAPITAL ASSET, TRANSFER OF WHICH IS CHARGEABLE TO TAX AS CAPITAL GAIN. IT HAS BEEN HELD BY THE HONOURABLE DELHI HIGH COURT IN 302 ITR 255 IN JK KASHYAP VS ASST COMMISSIONER OF INCOME TAX THA T UNDER SECTION 2(47) EXTINGUISHMENT OF ANY RIGHT IN A CAPITAL ASSET WAS ALSO CONSIDERED TO BE TRANSFER FOR THE PURPOSE OF THE ACT. SINCE THE PROPERTY HAD NOT BEEN TRANSFERRED IN THE NAME OF THE ASSESSEE, THE ASSESSEE BECAME A PARTY TO THE AGREEMENT AS A W ITNESS HAVING ACQUIRED INTEREST IN THE PROPERTY BY VIRTUE OF THE EARLIER AGREEMENT. EVEN IF THE ASSESSEE HAD NOT BECOME THE OWNER OF THE PROPERTY DUE TO LITIGATION, THE FACT REMAINED THAT HE PAID CONSIDERATION FOR ACQUIRING INTEREST IN THE PROPERTY AND THA T INTEREST WAS ULTIMATELY RELINQUISHED BY HIM IN FAVOUR OF THE NEW VENDEE BY VIRTUE OF THE AGREEMENT AND THE CONSIDERATION RECEIVED BY HIM FOR RELINQUISHING HIS RIGHT IN THE PROPERTY, THUS ATTRACTED THE PROVISIONS OF SECTION 45(1) OF THE ACT MAKING HIM LIA BLE TO CAPITAL GAINS TAX. FURTHER AS SUCH RIGHT WAS HELD BY ASSESSEE SINCE 22/9/2204 AND TRANSFERRED ON 5 /10/2012 ASSESSEE WAS LIABLE TO LONG - TERM CAPITAL GAINS TAX. HENCE THE ACTION OF THE LD AO IN TAXING PAGE | 7 THE SUM OF SALE CONSIDERATION OF RS 7531058/ - AND ITS CONFIRMATION BY THE LD CIT (A) IS REVERSED. FURTHER THE LD AO HAS FOUND THAT COST OF ACQUISITION OF THE ABOVE PROPERTY SHOWN BY THE ASSESSEE OF INR 1 486554/ CANNOT BE GRANTED AN ASSESSEE HAS FAILED TO SHOW THE SOURCE OF INR 2 67612 PAID TO THE SELLER ON 9/9/2004. THE ASSESSEE COULD NOT SHOW US ANY EVIDENCE THAT ASSESSEE HAS MADE SUCH PAYMENT. IT IS ALSO NOT BACKED BY ANY AGREEMENT. IN VIEW OF THIS WE CONFIRM THE ACTION OF THE LEARNED ASSESSING OFFICER IN REDUCING THE COST OF ACQUISITION OF THE ABOVE PLOT TO INR 1 218942/ . ACCORDINGLY THE SALE CONSIDERATION OF THE COST OF PROPERTY IS TO BE CONSIDERED AS INR 8 750000/ AND THE COST OF ACQUISITION FOR THE PURPOSE OF THE INDEXATION IS REQUIRED TO BE TAKEN AT INR 1 218942/ . THEREFORE, THE LEARNED ASSESSING OFFICER IS DIRECTED TO GRANT THE INDEXED COST OF ACQUISITION OF INR 1 218942/ - WHILE WORKING THE CHARGEABLE CAPITAL GAIN PRIOR TO DEDUCTION UNDER SECTION 54F OF THE ACT. 17 . AS THE ASSESSEE HAS ACQUIRED THE RESIDENTIAL HOUSE IN WHICH ALL TH E CONDITIONS OF SECTION 54 F OF THE ACT IS FULFILLED ASSESSEE IS ALSO ELIGIBLE FOR THE SAME. IN VIEW OF THIS, THE LD AO IS DIRECTED TO GRANT THE BENEFIT OF SECTION 54 F OF THE ACT TO THE ASSESSEE. ACCORDINGLY GROUND NUMBER 2 (EXCEPT GROUND NUMBER 2 (C)) 3 AND 4 O F THE APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED. 18 . THE 2 ND ISSUE IN GROUND NO 2 (C ) OF THE APPEAL IS WITH RESPECT TO ADDITION OF INR 1,000,000 BEING SUM OF INR 500,000 EACH RECEIVED THROUGH CHEQUES FROM JAYSHREE RAMA ROAD CARRIER INTO THESE BANK ACCOUNT OF THE ASSESSEE WITH THE STATE BANK OF INDIA ON 27/6/2012 AND 5/12/2012 WHICH WAS ADDED BY THE LEARNED ASSESSING OFFICER AS INCOME FROM OTHER SOURCES AS THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE ABOVE CASH CREDIT. THE ABOVE ADDITION WAS CONFIRMED BY THE LEARNED CIT A. BEFORE THE ASSESSING OFFICER, THE ASSESSEE AS PER THE LETTER DATED 4/9/2015 FI LED CONFIRMATORY LETTERS AND COPIES OF THE BANK ACCOUNTS. THE LEARNED ASSESSING OFFICER NOTED THAT IN THE BANK ACCOUNT OF SRI JAYSHREE RAMA ROAD CARRIER IMMEDIATELY BEFORE THE DEBIT OF THE CHEQUES ISSUED TO THE ASSESSEE THERE WERE CREDIT ENTRIES OF INR 50 0,000 EACH IMMEDIATELY A DAY BEFORE THE ADVANCEMENT OF THE LOAN TO THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE ABOVE LOAN HAS BEEN TAKEN FROM THE BROTHER - IN - LAW OF THE ASSESSEE AND SUBMITTED THE CONFIRMATORY LETTER PAGE | 8 ALONG WITH THE BANK STATEMENT AND COPY OF THE ACKNOWLEDGEMENT OF THE INCOME TAX RETURN FOR ASSESSMENT YEAR 13 - 14. HOWEVER, ASSESSEE DID NOT FILE ANY BALANCE SHEET ET CETERA AND THE LEARNED AO NOTED THAT THE INCOME TAX RETURN SHOWS THE TOTAL INCOME OF INR 279,000 IN THE HANDS OF THE LENDER, WH ICH IS INSUFFICIENT TO PROVE TO ADVANCE SUCH A HUGE LOAN OF INR 1,000,000. THEREFORE, THE LEARNED AO WAS OF THE VIEW THAT THE ASSESSEE HAS FAILED TO SHOW THE CREDITWORTHINESS OF THE ABOVE PARTY AND HENCE THE ABOVE SUM OF INR 1,000,000 IS ADDED AS UNEXPLAI NED CASH CREDIT AS INCOME FROM OTHER SOURCES. 19 . THE LEARNED AUTHORISED REPRESENTATIVE REFERRED TO PAGE NUMBER 127 134 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THE COMPLETE DETAILS WITH RESPECT TO THE ABOVE CREDITORS IN THE FORM OF CO NFIRMATION, COPY OF THE INCOME TAX RETURN AND THE BANK STATEMENT OF THE LENDER. THE ABOVE AMOUNT HAS BEEN CONFIRMED AND RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND THEREFORE THE LEARNED ASSESSING OFFICER HAS INCORRECTLY MADE THE ADDITION AS INCOME FROM OTH ER SOURCES. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE PARTY AND THEREFORE THE LEARNED ASSESSING OFFICER HAS C ORRECTLY MADE THE ADDITION. HE FURTHER REFERRED TO THE RETURN OF INCOME OF THE LENDER AND SUBMITTED THAT SUCH A SMALL INCOME CANNOT SUPPORT THE ADVANCE OF LOAN OF INR 1,000,000 TO THE ASSESSEE. IT WAS FURTHER ARGUED THAT ASSESSEE COULD NOT PROVE WHEREFRO M INR 500,000 ON EACH OF THE OCCASION IN THE ACCOUNT OF THE LENDER HAS BEEN CREDITED FROM. HE THEREFORE SUBMITTED THAT THE ADDITION DESERVES TO BE CONFIRMED. 20 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES . APPARENTLY, ASSESSEE HAS OBTAINED LOAN OF INR 500,000 ON 27/6/2012 AND FURTHER INR 500,000 ON 5/12/2012 FROM SRI JAYSHREE RAMA ROAD CARRIERS. IMMEDIATELY PRIOR TO CLEARING OF THE CHEQUE FROM THE BANK ACCOUNT OF THE LENDER, THERE WAS DEPOSIT OF IDENTICA L AMOUNT, SOURCE OF WHICH WAS NOT EXPLAINED BY THE ASSESSEE. THOUGH ASSESSEE HAS SUPPORTED THAT THE ABOVE SUM HAS BEEN RECEIVED FROM HER NEAR RELATIVE THEN IT IS MORE FOR THE ASSESSEE TO SHOW ALSO THAT WHEREFROM THE LENDER GOT THE MONEY. FURTHERMORE, AS THE LENDER IS CARRYING ON BUSINESS IN HIS PAGE | 9 PROPRIETARY CONCERN THE ASSESSEE SHOULD HAVE PRODUCED THE COPY OF THE BALANCE SHEET TO SHOW THE CREDITWORTHINESS OF THE LENDER. THE LEARNED ASSESSING OFFICER HAS OBSERVED THAT AS THE LENDER HAS SHOWN ONLY INCOME O F INR 279,000 HE HAS REACH AT A CONCLUSION THAT ABOVE AMOUNT IS IN A SUFFICIENT TO ADVANCE SUCH A HUGE LOAN OF INR 1,000,000/ - . WE ARE OF THE OPINION THAT MERE THE RETURNED INCOME CANNOT BE A BASIS FOR REACHING A CONCLUSION ABOUT THE CREDITWORTHINESS OF THE LENDER. AS THE LENDER IS CARRYING ON THE BUSINESS IS A PROPRIETOR OF M/S JAY SIYARAM ROAD CARRIER, THE LENDERS BOOKS OF ACCOUNTS WILL SHOW THE SOURCE OF THE ABOVE SUM CREDITED IN THE BANK ACCOUNT OF THE PROPRIETARY CONCERN. IT IS ALSO NOT COMING OUT FROM THE RECORD THAT WHETHER THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO EXPLAIN THE SOURCE AND SOURCE OF THE ABOVE SUM OR NOT. IN VIEW OF THE ABOVE FACTS THE ISSUE OF THE ADDITION OF INR 1,000,000 IN THE HANDS OF THE ASSESSEE AS INCOME FROM OTHER SO URCES ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF LOAN RECEIVED IS SET ASIDE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE ABOUT TRANSACTION. ACCORDINGLY, GROUND NUMBER 2 (C) OF THE APPEAL OF THE ASSESSEE IS ALLOWED WITH ABOVE DIRECTION. 21 . WITH RESPECT TO GROUND NUMBER 5 OF THE APPEAL, NO ARGUMENTS WERE ADVANCED BEFORE US AND HENCE IT IS DISMISSED. 22 . ACCORDINGLY, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN T HE OPEN COURT ON 0 8 / 03 / 2019 . - SD/ - - SD/ - ( K.N.CHARY ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 8 / 03 / 2019 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI