SHEEJAMOL SAINABABEEVI ALIYARUKUNJU,TRIVANDRUM V. .THE INCOME TAX OFFICER, WARD 1(3), TRIVANDRUM

ITA 758/COCH/2023

AI Insights

This case involves an appeal by Ms. Sheejamol Sainababeevi Aliyarukunju against the order of the National Faceless Appeal Center (NFAC), New Delhi, which confirmed the additions made by the Income Tax Officer, Ward 1(3), Trivandrum, under the head 'unexplained investments' and 'unexplained cash deposit' for the Assessment Year 2015-16. The primary contention revolves around the alleged unexplained investments in a residential property and unexplained cash deposits following the sale of her immovable properties. The assessee argued that the investments were funded through loans from relatives and the sale proceeds of her properties, which were directly paid to the seller via demand drafts. The lower authorities had rejected these explanations, leading to the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471725 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 30-10-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRLY ALBERT; SNR
• Assessee Lawyers: JAIKRISHNAN
• Keywords: Opportunity of being heard; Unexplained investment; Source of fund; Assessment record
• Section: 143(3); 142(1); 143(2); 131; 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH : COCHIN BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER S.A. No. 204/Coch/2023 (Arising out of ITA No. 758/Coch/2023) & ITA No. 758/Coch/2023 Assessment Year : 2015-16 Ms. Sheejamol Sainababeevi Aliyarukunju, Elambayil – BN11, Sreekrishna Nagar, Pongamoodu Medical College Post, Thiruvananthapuram – 695 011. PAN: FVHPS7645E Vs. The Income Tax Officer, Ward – 1(3), Trivandrum. APPELLANT RESPONDENT Assessee by : Shri Jaikrishnan, Advocate Revenue by : Smt. Girly Albert, Snr.DR Date of Hearing : 12-09-2024 Date of Pronouncement : 11-12-2024 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 31/07/2023 in respect of the A.Y. 2015-16. 2. The brief facts of the case are that the assessee is an individual and filed her return of income on 31.08.2015 declaring a total income of Rs. 25,000/-. The case was selected for scrutiny under CASS and statutory Page 2 of 9 S.A. No. 204/Coch/2023 & ITA No. 758/Coch/2023 notices u/s. 143(2) and 142(1) were issued and thereafter the assessment was completed u/s. 143(3) of the Act by assessing the income at Rs. 86,99,400/- in which the AO had made an addition of Rs. 86,74,400/- under the head unexplained investments. As against the said proceedings, the assessee filed an appeal before the Ld.CIT(A) and submitted that the assessee had invested in the residential building by getting loans from her relatives and also from the sale consideration received by her on the sale of her immovable property. The assessee also filed the details from whom she had obtained the loans but the ld CIT(A) had not properly considered the details and without conducting proper enquiry, had confirmed the addition made under unexplained investments. Not satisfied with the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal with the following grounds: “1. This present appeal is with respect to AY 2015-2016 (PY 2014-2015) against order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Center (NFAC), New Delhi dated 31.7.2023 in Appeal no. ITBA/NFAC/S/250/2023-4/1054744842(1) as well as the assessment order issued by Income Tax Officer, Ward 1(3), Income Tax Department, Thiruvananthapuram (hereinafter referred to as the Assessing Authority dated 29.12.2017 for AY-2015-2016 under Section 143(3) of the Income Tax Act, wherein he had an addition of Rs 76,74,400 to the total income as the alleged unexplained investment in the residential building and a further addition of Rs 10,00,000/- as the alleged unexplained cash deposit. 2. The appellant herein is an assessee with PAN FVHPS7645E. The appellant during the assessment year 2015-2016, effected sale of her immovable properties vide Sale Deeds no. 2668/2014 dated 15.11.2014, 331/2015 dated 12.2.2015 and 332/2015 dated 12.2.2015 and has received a total consideration of Rs 53,25,600/-. 3. Thereafter, utilizing the above consideration and her own funds totaling a sum of Rs 55,00,000/- and also with the aid of unsecured loans from her friends for a sum of Rs 75,00,000/-, on 13.2.2015 she has purchased an immovable property with residential building in Re SY. No. 395/4 having an extent of 6 ares and 3.4 ares of Page 3 of 9 S.A. No. 204/Coch/2023 & ITA No. 758/Coch/2023 Cheruvakkal Village, Thiruvanathapuram for total sale consideration of Rs 1,30,00,000/- by sale deed nos. 482/1/2015 and 483/1/2015. 4. The appellant filed her return of income on 31.8.2015 declaring a total income of Rs 25,000/-. The appellant case was taken up for scrutiny and in pursuance thereof notice under Section 142(1) was issued to the appellant by the assessing officer. In response to the notice, the appellant filed a reply on 1.12.2017, wherein she has explained the cash deposit in her bank account i.e Rs 53,25,600/- as one toward the sale consideration received by her pursuant to the sale of her immovable properties. The appellant also explained the utilization of the same towards purchase of immovable property with residential building in Re SY. No. 395/4 having an extent of 6 ares and 3.4 ares of Cheruvakkal Village, Thiruvanathapuram. 5. The appellant further explained that the additional considerations of Rs 75,00,000/- was received from 8 individuals as unsecured loans, whose details along with PAN cards, confirmation letters were produced before the assessing officer. The assessing officer, issued summons under Section 131 to the said individuals. To said summons three individual viz Ms. Rajila, Mr Abdul Rasheed and Mr Santhoshkumar appeared before the officer had given their statement. Though the copy of the statements were not furnished to the appellant, it was brought to her notice that they had agreed they given the amount to the appellant. The assessing officer, discarding the confirmations of the lenders, proceeded to complete the assessment by order dated 28.12.2017 making additions of Rs 76,74,400 to the total income as the alleged unexplained investment in the residential building and a further addition of Rs 10,00,000/- as the alleged unexplained cash deposit. 6. Aggrieved by assessment order the appellant preferred appeal 6.2.2018 before CIT(A) Thiruvananthapuram, which later got transferred to National Faceless Appellate Center. The First Appellate Authority relying on very same finding of the Assessing Officer and proceeded to confirm the assessment by its order dated 31.7.2023. 7. The authorities below, failed to note that sale deed nos. 482/112015 and 483/1/2015 clearly reveals that the sale consideration were give to Francis D Fernades who is Page 4 of 9 S.A. No. 204/Coch/2023 & ITA No. 758/Coch/2023 seller through Demand Drafts. The details of the Demand Drafts are clearly narrated in the sale deed. 8. Sale consideration of Rs in Sale Deed no. 482/1/2015 was passed on to Francis D Fernandes by (i) Najeeb through DD No. 113603 dated 13.2.2015 of Catholic Syrian Bank, Murukumpuzha for Rs 700000 (ii) Khalid (expired) through DD No. 54317 dated 13.2.2015 of SBT Chembakamangalam for Rs 900000/- (iii) Shafeela through DD No. 54319 dated 13.2.2015 of SBT Chembakamangalam for Rs 900000/- (iv) Rajila Beevi through DD No. 54320 dated 13.2.2015 of SBT Chembakamangalam for Rs 900000/- (v) Santhosh through DD No. 582897 dated 13.2.2015 of SBT Karyavattom for Rs 20,00,000 (vi) Abdul Rasheed through DD No. 567100 dated 13.2.2015 of Indian Oversees Bank for Rs 900000/- (vii) Kumar through DD No. 024435 dated 13.2.2015 of SBT, Kazhakootam for Rs 900000/- (viii) Sheejamol (Appellant) through DD No. 502770 dated 13.2.2015 of SBT Pothankodu for Rs 200000/- (ix) Sajid AN through DD No. 347759 dated 13.2.2015 of BOB Pothankodu for Rs 300000/- 9. Sale consideration in Sale Deed no. 482/1/2015 was passed on to Francis D Fernandes by the Appellant through DD No. 502765 dated 13.2.2015 of SBT Pothankodu for Rs 35,00,000/-. 10. In order to prove the loan obtained from the person viz. (i) Santhosh for a sum of Rs 20,00,000/- - PAN ADJPN5986G (ii) Abdul Rasheed for a sum of Rs 9,00,000/- - PAN BOGPA4916L (iii) Rajila for a sum of Rs 9,00,000/- - PAN ALQPA1703M, (iv) Kumar for a sum of Rs 9,00,000/- PAN AGJPP7911J (v) Khalid for a sum of Rs 9,00,000/- - [Expired](vi) Shafeela for a sum of Rs 9,00,000/- - PAN CEMPK4531G (vii) Najeeb for a sum of Rs 7,00,000/- NRI and (viii) Saj id for a sum of Rs 3,00,000/- PAN BHFPN0420E,the appellant produced confirmations letter from the parties and produced before the assessing officer. 11. The lenders has substantial assets and creditworthiness to them to lend the amounts to the appellant to purchase of the immovable property. Further as has been alleged in the assessment order that Mr Santhosh Kumar stated that amount given a consideration of sub contract service. Upon the confronting Mr Santhosh Kumar on the same he has denied it, instead what was Page 5 of 9 S.A. No. 204/Coch/2023 & ITA No. 758/Coch/2023 explained to the officer was his vocation which is of a contractor engaged in works contract service. The assessing officer mistook the statement as wrong description on the nature of transaction. 12. The appellant submits that all the lenders except Khalid (expired) is willing to give statements to assessing officer if one more opportunity is afforded to them. 13. The appellate authority in paragraph 14 of the appellate order made and erroneous observations that - \"there is nothing to substantiate that the confirmation are actually by the alleged creditors\". The first appellate authority failed to note that 3 of the creditors has deposed before the assessing officer and has corroborated to the fact that they have loaned the amount the appellant. There the above observation is false and unwarranted. 14. The authorities below also failed not note that the none of the above amounts were received by the appellant directly, instead all the lenders made the payment directly to the seller – Mr Francis Fernandes directly through Demand Drafts payable at Mumbai at is instructions. In such even, assessment now completed under Section 143(3) of the Income Tax Act, by make an addition of Rs 76,74,400 to the total income as the alleged unexplained investment in the residential building. Hence this appeal” 3. The assessee also filed a condonation application to condone the delay of 31 days in filing this appeal and enclosed an affidavit in support of the application and submitted that the assessee had not received any alert messages and therefore she had not verified the portal and therefore she was not able to find out the appeal order in time and therefore there is a delay of 31 days occurred. The assessee further submitted that only after the Chartered Accountant had verified the portal, on a later date, he came to know about the appeal order and thereafter the appeal was made ready and the present appeal has been filed with a delay of 31 days. 4. We have considered the submissions made by the assessee and also considered the fact that the delay is only a minimal one and in order to Page 6 of 9 S.A. No. 204/Coch/2023 & ITA No. 758/Coch/2023 render substantial justice, we are condoning the said delay and proceeded to take up the appeal on merits. At the time of hearing, the Ld.AR submitted a paper book enclosing the copies of the five sale deeds and also enclosed the demand drafts taken in the name of the seller Francis D Fernandes and submitted that the loans were given by the 9 persons that too by way of Demand Draft in the name of the seller and therefore this could not be treated as an unexplained investment u/s. 69C of the Act. The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal. 5. We have heard the arguments of both sides and perused the materials available on record. 6. As seen from the assessment order, the AO had alleged that the assessee had purchased an immovable property for Rs. 1,30,00,000/- when admittedly the assessee was in possession of Rs. 55 Lakhs being the sale consideration received by her by selling his immovable property. The Ld.AO accepted her claim that the sum of Rs. 55 Lakhs was received by her while selling her property but not accepted the balance Rs. 76,74,400/- which is alleged to be received from her relatives for effecting the purchases of the house at Rs. 1,30,00,000/-. 7. We have perused the paper book in which the copies of the Demand Drafts taken by the relatives of the assessee were enclosed who had offered loan for purchasing the immovable property from Mr. Francis D Fernandes. No doubt all the payments were made by way of DD and the said DDs were purchased by the persons through their bank accounts and also in the name of the seller who is in Mumbai. The AO on the reason that the lenders had no credit worthiness and also the loan amount given seems to be a not genuine one and therefore the AO had not accepted the loan amount offered by the lenders but arrived a conclusion that the assessee himself had Page 7 of 9 S.A. No. 204/Coch/2023 & ITA No. 758/Coch/2023 unexplained sources of income and utilising the said income, property was purchased. The Ld.AO further stated that the assessee might have sold her properties more than the value shown in the sale deeds and the balance sale consideration might have been received by her in cash and utilised in the purchase of the residential house by utilising the names of the lenders. In support of his conclusion, the Ld.AO also stated that the summons were issued to the six lenders u/s. 131 of the Act. For the said summons, two letters were written by the postal authorities with an endorsement that not known and three persons were deposed and their statements were also recorded. The another person has not turned up for the summons. The Ld.AO based on the statements had come to the conclusion that the lenders have no credit worthiness and the Ld.AO observed that a cloud of ambiguity looms over the transactions and confirmed the addition u/s. 69C of the Act. From the above facts, we came to the conclusion that the AO had no concrete proof to disbelieve the statements given by the lenders. Further, the statements recorded by the AO were also not communicated to the assessee in order to give her explanation and if necessary for availing the cross examination. Further, the AO also not summoned the 9 persons but only summoned six persons. 8. The Ld.DR also not able to furnish any contra evidences in support of the AO and also not able to submit any proof that the statements recorded were given to the assessee and the assessee was also granted an opportunity to decide the genuineness of the lenders. Further, the AO also failed to consider the fact that the loan amounts were given by way of DDs drawn in the name of the seller and therefore without having any other corroborative evidence, the assessing officer had made the addition u/s. 69C of the Act. The Ld.CIT(A) also not considered the arguments placed by the assessee and he had simply rejected the confirmation letters, on the ground that the three confirmation letters filed by the assessee are similarly worded. The Ld.CIT(A) also not agreed with the case of the assessee by saying that the source of the amount said to have been received by the assessee had not been properly Page 8 of 9 S.A. No. 204/Coch/2023 & ITA No. 758/Coch/2023 explained. Further, the Ld.CIT(A) had also on mere surmise had accepted the case of the AO. As far as the non-furnishing of the statements and the opportunity to the assessee to rebut the same, nothing has been stated by the Ld.CIT(A). We have seen that both the AO as well as the Ld.CIT(A) had decided the issue without granting a reasonable opportunity to establish the case of the assessee by not providing the statements recorded from the lenders. This argument of the Ld.AR seems to be a reasonable one and we have also gone through the assessment records and found that the statements of the lenders have not been given to the assessee before arriving the negative conclusion. Moreover, the lenders are available and they had also responded to the summons issued by the AO and the AO also recorded the statements at the time of enquiry. Therefore, the AO ought to have furnished the said statements to the assessee before passing the assessment order. The findings of the AO as well as the Ld.CIT(A) does not point out any contra evidence but only alleged that the loan transactions may not be a genuine one. Similarly, the assessee also submitted the confirmation letters given by the 8 individuals but the AO had not stated anything about the same in the order. 9. In such circumstances and in order to render substantial justice, we are of the view that the matter can be remitted to the AO for denovo consideration after furnishing the statements given by the lenders and also after granting an opportunity to examine the lenders and also by considering the confirmation letters given by the lenders. The assessee is also at liberty to furnish further details in support of their claim before the AO. We also make it clear that the above said exercise should be completed after granting reasonable opportunity of being heard to the assessee. In view of the disposal of the main appeal, the stay petition becomes infructuous and the same is dismissed. 10. In the result, the appeal filed by the assessee is allowed for statistical purposes and the stay petition is dismissed as infrutuous. Page 9 of 9 S.A. No. 204/Coch/2023 & ITA No. 758/Coch/2023 Order pronounced in the open court on 11th December, 2024. Sd/- Sd/- (WASEEM AHMED) (SOUNDARARAJAN K.) Accountant Member Judicial Member Bangalore, Dated, the 11th December, 2024. /MS / Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Cochin 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Cochin "