THE COMMISSIONER OF INCOME TAX V. SMT. BHARATHI DEEPAK THAKKAR

ITA/566/2013

AI Insights

The case involves an appeal by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against Smt. Bharathi Deepak Thakkar concerning an addition made under Section 68 of the Income Tax Act, 1961. The assessee had received Rs.1.00 crore in cash, which was later explained as an advance for a property sale. The lower authorities found the transaction genuine based on the agreement of sale and the repayment of the amount through cheques. The revenue's appeal contended that the burden of proof was not met by the assessee, but the court dismissed the appeal, agreeing with the findings of the lower authorities.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 728943 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-10-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A SHANKAR; M LAVA
• Assessee Lawyers: K V ARAVIND
• Keywords: Advance for Sale of Property; Genuine transaction; Sale agreement; Unexplained cash credit; Unsecured loan
• Section: 68; 271-D; 269(SS); 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 13TH DAY OF OCTOBER, 2014 PRESENT THE HON’BLE Mr. JUSTICE N. KUMAR AND THE HON’BLE Mr. JUSTICE B. MANOHAR I.T.A. No. 566/2013 BETWEEN : -------------- 1. THE COMMISSIONER OF INCOME TAX, C.R. BUILDING QUEENS ROAD BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(1) No. 59, HMT BHAVAN 6TH FLOOR, BELLARY ROAD GANGANAGAR BANGALORE – 560 032. … APPELLANTS (BY Sri. K.V. ARAVIND, ADV.) AND : ------- Smt. BHARATHI DEEPAK THAKKAR, 2ND FLOOR 2 VISHWAGANDHI COMPLEX G.P. STREET BANGALORE – 560 002. … RESPONDENT (BY Sri. A. SHANKAR & M. LAVA, ADVS.) --- THIS I.T.A. IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 ARISING OUT OF THE ORDER DATED 12.07.2013 PASSED IN ITA No. 1518/BANG/2012 FOR THE ASSESSMENT YEAR 2009-10 AND TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT AND ETC. THIS I.T.A. COMING ON FOR ADMISSION THIS DAY, N. KUMAR, J, DELIVERED THE FOLLOWING; J U D G M E N T The revenue has preferred this appeal against the order passed by the Appellate Authority holding the addition made under Section 68 of the Income Tax Act is unsustainable and accordingly deleting the same. 2. The assessee was in receipt of a sum of Rs.1.00 crore by cash. When enquired into, the assessee explained it by saying that the said amount was received by M/s. Hari Om Enterprises 3 by way of deposit/loan relating to an agreement of sale dated 19.06.2008 in respect of a property at Basavanagudi. There were three different deposits on 20.06.2008 aggregating to Rs.1.00 crore. The assessee produced a copy of the agreement of sale to substantiate her contention. Infact, in the balance sheet it was shown as an unsecured loan of M/s. Jalaram Enterprises of which the assessee was the proprietor. The Assessing Authority did not accept the explanation on the ground that if it had been received as an advance for sale of property, it should have been shown in the individual balance sheet filed separately and that too not as an unsecured loan and therefore the unexplained cash credit under Section 68 of the Income Tax Act, 1961 (for short `the Act’) was added. Aggrieved by the said order the assessee preferred an appeal to the Commissioner of Income Tax (Appeals). The first Appellate Authority was of the view that when the assessee has produced the agreement of sale and also has repaid the said amount by way of account payee cheques to M/s. Hari Om Enterprises, coupled with the fact that the department had issued 4 a notice under Section 269-SS of the Act and penalty proceedings under Section 271-D of the Act, the transaction in question cannot be said to be not genuine. Though the assessee was maintaining 2 accounts, one in her individual capacity and another account in the capacity of proprietor of M/s. Jalaram Enterprises, only one return has to be filed by the assessee and the property agreed to be sold was shown in the balance sheet and therefore of the view that as the assessee has properly explained this amount and invoking Section 68 of the Act was not proper and therefore the order of the Assessing Authority was set aside. Aggrieved by the said order the revenue preferred an appeal to the Tribunal. The Tribunal has confirmed the said finding and dismissed the said appeal. Aggrieved by the said order the present second appeal is filed. 3. Learned counsel for the revenue assailing the impugned order contends, that firstly in the balance sheet the said amount of Rs.1.00 crore was shown as unsecured loan and there was no 5 whisper about the same being sale consideration. The burden of proving that Rs.1.00 crore was capable of being paid by M/s. Hari Om Enterprises was squarely on the assessee which she has not discharged and therefore submits that the finding recorded by the two Appellate Authorities is unsustainable and requires to be set aside. 4. We do not see any merit in this contention. The assessee was owning the property which she agreed to sell. It was reflected in the balance sheet. She has produced an agreement of sale with M/s. Hari Om Enterprises showing the total consideration as Rs.1,35,00,000/- and Rs.1.00 crore advance having been paid. The authorities initiated proceedings under Section 269SS and 271-D of the Act treating the said transaction as genuine and receipt of cash was contrary to the said provisions. Therefore from their own action when they have treated the sale transaction as genuine, it is not open to the authorities now to contend that the said transaction is not 6 genuine. Secondly when questioned the asessee has produced the agreement of sale. She has also produced the material to show that there was breach of contract and consequently and she has repaid the entire amount of Rs.1.00 crore by way of 10 cheques which are duly encashed by M/s. Hari Om Enterprises. The said fact is not disputed by the revenue. The said repayment was made between 07.12.2010 and 10.12.2010 and the assessment order is passed on 30.12.2011. Under these circumstances the Assessing Authority was wrong in adding the amount of Rs.1.00 crore at the time of passing of the order as roughly one year prior to that the amount has been repaid. The material on record shows that the department treated the transaction as genuine. When the two fact finding authorities, on appreciation of the legal evidence on record, recorded a finding that the sale transaction is genuine and amount received under the agreement of sale has been repaid one year prior to the date of assessment order the contention that the transaction in question is not a genuine transaction and the assessee has failed 7 to prove the ability of M/s. Hari Om Enterprises to pay Rs.1.00 crore do not have any substance. In that view of the matter we do not see any substantial question of law arising for our consideration in this appeal. Accordingly, the appeal is dismissed at the stage of admission. Sd/- JUDGE. Sd/- JUDGE. LRS. "