SHRI MAHENDRA KUMAR PANDEY INDORE,INDORE vs. ITO 2 (1), INDORE, INDORE

The Assessee has raised following grounds of appeal:

Briefly stated facts as culled out from the records are that the assessee is an individual earning income from salary and share of profit from firm. Income of Rs.71,510/- was declared in the e-return filed on 17.11.2007. Subsequently, notice u/s 148 of the Act was issued for reopening of the assessment for the alleged escapement of unaccounted or investment of Rs.5,06,100/- towards purchase of property. During the course of reassessment proceedings assessee gave various details about the source of investment for the purchase of property valuing at Rs.17,06,100/-. Learned Assessing Officer (in short Ld. AO) was not convinced with the source of investment totalling to Rs.5,08,100/- and added it to the income disclosed by the assessee at Rs.1,40,873/- in the return of income filed in compliance to notice u/s 148 of the Act. Income assessed at Rs.6,48,973/-.

Aggrieved the assessee preferred an appeal before the ld. CIT(A) but failed to get any relief, as the ld. CIT(A) considered the date of purchase of property as 31.03.2006 on the basis of stamp purchased but the registration formalities were completed on 13.04.2006. Ld. CIT(A) only accepted the loan amount received from Mahendra Kumar Pandey ITANo.601/Ind/2018 HSBC, Bank at Rs.11,98,000/- and confirmed the addition of Rs.5,08,100/- made by the Ld. AO. 5. Now the assessee is in appeal before the Tribunal. 6. Ld. counsel for the assessee referring to the statement of facts furnished before the ld. CIT(A) submitted that the complete details of sources of payment of Rs.17,06,100/- for purchase of property were filed which included the loan from HSBC Bank, advance rent deposit, receipt from sale of property, loan from wife and cash withdrawals from banks. He prayed that the impugned addition may be deleted, as the source stands explained. 7. Per contra Ld. Departmental Representative (DR) vehemently argued supporting the order of the both lower authorities. 8. We have heard rival contentions and perused the record placed before us. Sole grievance of the assessee is against the finding of the Ld. CIT(A) confirming the addition for unexplained investment of Rs.5,08,100/- made by the Ld. AO. We observe that the assessee had purchased property situated at Moti Tavela Indore for a consideration of Rs.15,51,000/- and incurred stamp duty and registration charges of Rs.1,55,100/- thereby making total investment of Rs.17,06,100/-. The sale deed of the above stated property were prepared on the stamp paper dated 31.03.2006 and it was finally registered on 13th April 2006. In the instant case the dispute is only with regard to the source of investment of Rs.5,08,100/- which is claimed by the assessee to have been paid on various dates after 31.03.2006. For sake of clarification we need to state that in the present case we are not adjudicating the issue Mahendra Kumar Pandey ITANo.601/Ind/2018 relating to transfer of property and also not deciding the issue as to whether the purchase of property falls under F.Y. 2005-06 or F.Y. 2006-07. We are only confined to the adjudication of the issue about the source of investment alleged to be made by the assessee for purchase of property. 9. The source of the investment of Rs.17,06,100/- as stated by the ld. counsel for the assessee is reproduced as follows:

From perusal of the above chart which was also furnished by the assessee before first appellate authority, source of funds have been explained with respective dates. As regards the HSBC Bank loan of Rs.11,98,000/-, there is no dispute at the end of both the Mahendra Kumar Pandey ITANo.601/Ind/2018 lower authorities. The dispute is only with regard the source of Rs.5,08,100/-.

The assessee’s claim of investment of Rs.2,50,000/- out of the received from sale of other house property have merit as the assessee has shown the gross consideration in its income tax return along with placing proof of having received sale consideration in cash during the first two weeks of April 2006. The genuineness of the transactions of receiving sale consideration in cash from sale of property is not disputed. We, therefore, allow the assessee’s claim of source of funds of Rs.2,50,000/- used to investing in the purchase of property. 12. As regards the advance rent deposit and advance rent of Rs.88,000/- is concerned, we observe that the assessee is regularly showing income from house property. Necessary explanation were given before the Ld. AO which seems to have been misinterpreted by the Ld. AO and therefore, the source of Rs.88,000/- used in purchase of property is also explained. 13.The assessee also deserves relief for the cash withdrawal of Rs.10,000/- made through ATM on 7th April 2006, misc. cash payment of Rs.14,100/- having its source from accumulated past savings. 14. However, we find no merit in the contention of the Ld. counsel for the assessee for the source of investment claimed to have been received from loan taken from wife at Rs.1,21,000/- vide cheque dated 16.05.2006 and withdrawal from Bank post 13.04.2006 at Rs.15,000/- and Rs.10,000/- as all these transactions have taken Mahendra Kumar Pandey ITANo.601/Ind/2018 place after 13th April 2006. Since the sale deed has been registered on 13.04.2006 wherein the seller has accepted to have received the total sale consideration, their hardly remains any possibility to accept the contention that some part of the sale consideration was paid in cash to the seller after 13.04.2006 and therefore, the alleged investment of Rs.1,21,000/- having its nexus from loan taken from wife and cash of Rs.25,000/- paid out of the withdrawals from bank after 13.04.2006 cannot be treated as payment made for purchase of the property in question and therefore the sum of Rs.1,46,000/- (Rs.1,21,000+15,000+10,000) has been rightly added as unexplained investment u/s 69 of the Act. 15. To summarize, we are of the considered view that out of the total addition for unexplained investment of Rs.5,08,100/- assessee deserves relief of Rs.3,62,100/- as the source of the said amount is explained from genuine sources. We, accordingly partly allow the assessee’s appeal and sustain the addition u/s 69 for unexplained investment of Rs.1,46,000/-. 16. In the result, the appeal of the assessee is partly allowed.