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Facts
The assessee purchased an immovable property, and the source of funds was questioned by the AO. A significant portion of the investment was claimed to be from a loan from a friend, with a 14-month gap between receiving the loan and investing it in property. The assessee explained this gap by stating the funds were used to purchase buffaloes and mustard, which were later sold.
Held
The Tribunal condoned the delay in filing the appeal. Upon reviewing the evidence, including an affidavit, the Tribunal found the explanation for the time gap to be genuine and the source of cash transactions to be established and fully explained.
Key Issues
Whether the explanation provided by the assessee for the time gap between receiving funds and investing them in property, supported by an affidavit, is sufficient to establish the genuineness of the transaction and source of funds.
Sections Cited
147
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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’’ : NEW DELHI
Before: SHRI MAHAVIR SINGH, HON’BLE
Date of Hearing 05.05.2025 Date of Pronouncement 11.06.2025 ORDER
This appeal by the assessee is emanating from the order dated 06.08.2024 of the Ld. Addl/JCIT(A)-3, Delhi in Appeal No. ITBA/APL/S/250/2024- 25/1067366274(1) relevant to assessment year 2012-13. 2. Heard both the parties and perused the records.
At the threshold, it is noted that there is a delay of 102 days in filing the appeal before the Tribunal. However, it is observed during the hearing that reasonable cause has been attributed to the assessee for filing belated appeal before the Tribunal, hence, I condone the delay in dispute in filing the appeals before the Tribunal and proceeded further.
Brief facts of the case are that AO had information that assessee had purchased an immovable property for consideration of Rs. 69,00,000/- + Rs. 3,43,000/- during the year in which assessee has 5/38th share. The share of assessee comes to Rs. 9,53,290/-. The case was therefore opened u/s. 147 with the approval of PCIT, Rohtak to examine the source of investment. The assessee explained the source as Rs. 2.50 lacs from her father in law and amount of Rs. 6,92,000/- is invested by her husband Shri Hawa Singh out of loan received from his friend Shri Kapil Dev. The AO accepted the amount of Rs. 2.50 lacs received from father in law of assessee. The AO further noted that the amount of Rs. 6,92,000/- was withdrawn in the bank account of Shri Kapil Dev on 31.12.2010 whereas the property was purchased on 23.02.2012. thus, there was a time gap of 14 months from the said receipt of loan and investment in property. The AO confronted the discrepancy to assessee with regard to huge time gap. The assessee explains to AO and submitted an affidavit that she had purchased 4 buffaloes and mustard out of loan receipt and the same was sold for purchase of property next year. The AO did not accept the explanation in the absence of evidence and treated the amount of Rs. 7,03,290/- to the income of the assessee, which was sustained by 2 | P a g e the Ld. CIT(A). Against the aforesaid action of the lower authorities, assessee is in appeal before me.
At the time of hearing, Ld. AR for the assessee submitted that AO vide questionnaire dated 09.08.2019 asked the assessee to explain the source of such investment made for purchase of property and in response thereof, the assessee submitted that she had purchased an agricultural land situated at Village Payga, Mahinderagarh as co-owner and her share in the said property is 5/38. The total land has been purchased as co-owner and her share comes to Rs. 9,07,895/- only. Out of this payment of Rs. 6,92,000/- has been paid by husband from amount taken from his friend Kapil Dev S/o Dev Dutt R/o Vill. Palri, from withdrawal of his bank account with SBI, Mohindergarh and another payment of Rs. 2,50,000/- has been paid by her father in law. On instructions from AO, the assessee produced Shri Kapil Dev and his statement was recorded wherein, it was stated that he had given Rs. 6,92,000/- on 31.12.2010 to his friend Hawa Singh after withdrawing the same from his SBI bank account. The assessee had received the said amount on 31.12.2010 but she had invested the said amount on 23.02.2012 after about 14 months time gap also there was no documentary evidence and any witness of this transaction. In this behalf, the assessee filed an affidavit stating therein that she had received Rs. 6,92,000/- on 31.12.2010 and invested the such money to purchase of four buffaloes and mustard and sold out the said buffaloes and mustard before purchase of agricultural land on 23.2.2012. Hence, it was pleaded that the source of 3 | P a g e cash transactions has been established, thus the addition in dispute may be deleted. Ld. DR relied upon the orders of the authorities below.
I have heard the rival contentions and perused the records. Upon careful consideration, I find that the payment of Rs. 6,92,000/- has been paid by husband from amount taken from his friend Kapil Dev S/o Dev Dutt R/o Vill. Palri, from withdrawal of his bank account with SBI, Mohindergarh and another payment of Rs. 2,50,000/- has been paid by her father in law. The assessee produced Shri Kapil Dev before the AO and his statement was recorded wherein, it has been stated that he had given Rs. 6,92,000/- on 31.12.2010 to his friend Hawa Singh after withdrawing the same from his SBI bank account and Rs. 11,290/- is paid by the assessee herself out of her previous savings. The assessee had received the said amount of Rs. 6,92,000/- on 31.12.2010 but she had invested the said amount on 23.02.2012 after about 14 months time gap. In the absence of any documentary evidence, the assessee filed an affidavit stating therein that she had received Rs. 6,92,000/- on 31.12.2010 and invested the such money to purchase of four buffaloes and mustard and sold out the said buffaloes and mustard before purchase of agricultural land on 23.2.2012, which in my considered view seems to be genuine one and moreover, the source of cash transactions has been established and fully explained, thus the addition of Rs. 7,03,290/- deserve to be deleted. Accordingly, I set aside the orders of the authorities below and delete the addition of Rs. 7,03,290/-. Resultantly, the issue in dispute is decided in favour of the assessee. 4 | P a g e