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Facts
The Assessee challenged an order that added Rs. 8,09,600/- for an unexplained investment in a property and Rs. 41,664/- due to a difference in claimed deductions. The Assessee claimed the property was purchased for Rs. 8,09,600/-, while the market value was Rs. 22,06,000/-. The Assessee claimed the investment was made through a partnership firm. For deductions, the Assessee claimed Rs. 1,12,700/- in the revised return, a difference from the Rs. 71,036/- claimed in the original return.
Held
The Tribunal held that the Assessee had sufficiently demonstrated the source of investment for the property purchase through the partnership firm, making the addition of Rs. 8,09,600/- unsustainable and deleted it. Regarding the deduction difference of Rs. 41,664/-, the Tribunal observed that the Assessee is entitled to statutory deductions, and the addition was deleted subject to verification of documents by the AO.
Key Issues
Whether the addition of Rs. 8,09,600/- for unexplained investment in property is justified. Whether the addition of Rs. 41,664/- on account of difference in claimed deductions under Chapter VI-A is sustainable.
Sections Cited
147, 148, 56(2)(vii)(b), 69, 115BBE, VIA, 80C, 80G, 80TTA, 250
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Income Tax Appellate Tribunal, MUMBAI “SMC” BENCH, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
निर्ाारिती की ओर से /Assessee by : Shri Vimal Punmiya, Ld. CA राजस्व की ओर से /Revenue by : Shri Srinivas P., Ld. Sr.DR सुनवाई की तारीख / Date of Hearing : 28/11/2024 घोषणा की तारीख/Date of Pronouncement : 19/02/2025 आदेश / O R D E R
The Assessee has preferred this appeal against the order dated 29.08.2024, impugned herein, passed by the National Faceless Appeal Centre (NFAC), Delhi/ Ld. Commissioner of Income Tax (Appeals) {in short “Ld. Commissioner” } u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the assessment year 2015-2016.
2. In the instant case, original return of income filed by the Assessee declaring total income at “Rs. Nil” on dated 31.10.2015, was re-opened u/s 147 of the Act, on the reason/information flagged by Directorate of System on INSIGHT PORTAL uploaded by DDIT (Inv.)-(4)(1), Thane to the effects that the Assessee had purchased an immovable property of Rs.22,06,000/-.
2.1 On analysis of the information, it was seen that the Assessee had purchased the shop in Janki Heights Bhayandar for a consideration of Rs.8,09,600/-, whereas market value of the same was Rs.22,06,000/- and therefore the AO construed that the Assessee has not offered the difference of consideration as envisaged in section 56(2)(vii)(b) of the Act and consequently issued the notice dated 31.03.2021 u/s 148 of the Act to the Assessee who in response filed his return of income on dated 10.08.2021 declaring total income at Rs.13,54,740/-.
2.2 Thereafter various statutory notices were issued against, which the Assessee vide reply dated 19.01.2022 has given following information/submission that “the Assessee had purchased a shop at Motinagar, Meera Road (E) on 26.12.2014 on a consideration of Rs.8,11,600/- detailed below :-
PAYMENT MADE FOR PURCHASE OF SHOP NO.1 Sr. Particulars Cheque Date Amount No No. . 1 S.V. DEVELPERS 557142 30.09.2006 391600 2 S.V. DEVELPERS 171691 18.10.2006 180000 3 S.V. DEVELPERS 567728 17.11.2006 200000 4 S.V. DEVELPERS 971487 22.12.2006 40000 811600 2.3 The Assessee also provided a copy of stamp duty challan wherein Government stamp duty valuation to the tune of Rs.22,06,000/- has been mentioned. The Assessee has also provided the details of the payments made/source of income qua purchase of the property under consideration, which reads as under:
SOURCE OF INCOME FOR THE PAYMENT OF SHOP NO.1, MOTI NAGAR
Sl. Particulars Ch.No. Date Amount No. 1 Amount Transferred from 557142 30.09.2006 979000 M/s Sonam Builders, where he is partner 2 Amount Transferred from 171691 18.10.2006 450000 M/s Sonam Builders 3 Amount Transferred from 567728 17.11.2006 500000 M/s Sonam Builders 4 Amount Transferred from 971487 22.12.2006 100000 M/s Sonam Builders 2.4 The Assessee, therefore on the aforesaid facts and circumstances and the details filed, claimed that agreement value of the property was Rs.8,09,600/- whereas stamp duty value was Rs.22,06,000/- and therefore the Assessee has duly offered the amount of Rs.13,96,400/- being difference between the stamp duty value and the agreement value, for the taxation as per the provision of section 56(2)(vii)(b) of the Act, by filing his return of income on dated 10.08.2021 in response to the notice u/s 148 of the Act.
3. The AO on verifying the return of income filed in response to section 148 of the Act, though accepted the said claim of the Assessee, however made the addition of Rs.8,09,600/- u/s 69 of the Act as unexplained source of income and taxed as per the provision of section 115BBE of the Act.
3.1 The AO further by perusing the old and new return filed by the Assessee also observed that the Assessee has claimed deduction of Rs.1,12,700/- under chapter VIA of the Act by filling his latest return of income in response to the notice u/s 148 of the Act but the Assessee has not submitted any proof of the same, whereas in the original return filed for the A.Y. 2015-16 dated 31.10.2015 the Assessee has claimed the deduction of Rs.71,036/- under chapter VIA only and therefore the difference of Rs.41,664/- (Rs.1,12,700/- - Rs.71,036/-) is added to the total income of the Assessee.
The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner by filing first appeal and reiterated his claim as made before the AO, however, of no avail, as the Ld. Commissioner by dismissing the appeal of the Assessee affirmed the said addition by observing and holding as under:
5.4 The ground no.1, written submissions and assessment order are considered carefully and examined in the light of documentary evidence placed on record and case laws relied upon. It is seen that the appellant had purchased a shop on 26.12.2014 for consideration of Rs.8,09,600/-. However, the market value of the property was at Rs.22,06,000/-. During the course of assessment proceedings, the appellant filed return of income by offering difference of consideration amount of Rs.13,96,400/- and the same was accepted by the AO. For the source of Rs.8,09,600/-, the appellant has stated that the amount was paid to the builder i.e M/s. S V Developers during the FY 2006-07 through M/s. Sonam Builders in which the appellant was partner having 40% share.) Further, the appellant stated that an agreement for sale cum development executed between J.B. Construction with SV Developers and M/s. Sonam Builders on 18.05.2010. As per the agreement the incomplete building was to be demolished and reconstruct a multi-storeyed building by loading extra FSI by way of TDR at the cost of J B Construction.) Further, the appellant stated that out of the 46 shops the appellant had sold 45 shops which were duly accounted for in the respective & retaining only one shop with the appellant at a prorate cost of Rs.8,09,600/-) In support of his claim the appellant furnished the ledger copies of M/s. S V Developers, M/s. Sonam Builders and purchase deed.) However, the appellant has not produced the bank statement evidencing the payment of money to the builder. Further, it is seen that the payments were made to the builder in the year 2006-07 that to through the partnership firm M/s. Sonam Builders not by the appellant and purchase agreement was executed on 26.12.2014.) In view of the facts and circumstances of the case, I am of the considered view that the appellant has not justified the source of investment for purchase of property satisfactorily. Therefore, the addition of Rs.8.09.600/- made by the AO u/s 69 of the Act towards unexplained investment is confirmed. Accordingly, the ground no. 1 is dismissed.)
5.5 In the ground no.2, the appellant has contented the action of AO for making addition of Rs.41,664/- on account of disallowance of deduction claimed under Chapter VI-A. It is seen that the appellant had claimed deductions of Rs.71,036/- under Chapter VI-A in his original return of income and he claimed deductions of Rs.1,12,700/- in the return of income filed in response to notice u/s 148 of the Act. There is a difference of Rs.41,664/- in the claim of deductions. However, the appellant has not produced any documentary evidences in support of his claim during the assessment proceedings as well as appeal proceedings. Therefore, the amount of Rs.41,664/- added to the returned income by the AO is confirmed in the absence of any documentary evidence. Accordingly, the ground no.2 is dismissed.
The Assessee, being aggrieved, is in appeal before this Court. The Assessee controverted the findings of the authorities below,
Heard the parties and perused the material available on record. The Assessee had purchased the property under consideration of Rs.8,09,600/- and before the authorities below has demonstrated that he is a 40% partner in M/s. Sonam Builders, who had paid the amount of Rs.8,11,600/- through four cheques in 2006, as detailed below:
PAYMENT MADE FOR PURCHASE OF SHOP NO.1 Sr. Particulars Cheque Date Amount No No. . 1 S.V. DEVELPERS 557142 30.09.2006 391600 2 S.V. DEVELPERS 171691 18.10.2006 180000 3 S.V. DEVELPERS 567728 17.11.2006 200000 4 S.V. DEVELPERS 971487 22.12.2006 40000 811600 6.1 The aforesaid payments were disclosed as drawing in the books of Sonam Builders and consequently the partner’s capital account was reduced by their respective shares. The Assessee had purchased the shop under consideration from SV Developers on a consideration of Rs.8,09,600/- paid through proper banking channel and therefore the source of investment in Assessee’s partner’s capital fund in the account of M/s. Sonam Builders is devoid of doubts. Admittedly, the aforesaid relevant documents, have been filed and facts and circumstances and resource of investment has also been demonstrated by the Assessee before the authorities below, however, the authorities below still doubted the said transaction of Rs.8,09,600/- simply on the assumption and presumption and by sidelining such documents/details submitted by the Assessee and therefore in the considered view of this Court, the
Coming to the second addition of Rs.41,664/- on account of being difference between the deductions claimed under chapter VIA of the Act in the original return of income and return of income filed in response to the notice u/s 148 of the Act. The Assessee has demonstrated that the amounts of Rs.1,00,000/-, Rs.2700/- and Rs.10,000/- have been claimed u/s 80C of the Act as life insurance premium and u/s 80G of the Act and u/s 80TTA of the Act respectively .
This Court observe that originally the Assessee had claimed the deduction under chapter VIA of the Act to the tune of Rs.71,036/- only mainly on the reason that the total income as per original return was Rs.71,036/- itself. The AO made the addition under consideration on the reason that there is difference in the claim of the Assessee in original and new return filed in response to notice u/s 148 of the Act and no proof regarding the same was submitted, whereas the Assessee has claimed that he has duly submitted the relevant details as submitted before the Tribunal. The Assessee no doubt is entitled to get the statutory deductions under chapter VIA of the Act as per limit prescribed and cannot be denied benefit of the same simply on the reason that earlier in the original return of income, the Assessee has claimed lower amount than the claimed amount in the subsequent return of income filed in response to notice u/s 148 of the Act, especially when the subsequent return is accepted. And therefore in order to cut short the controversy and for substantial justice, the addition of Rs.41,664/- is also deleted, however, subject to verification of the relevant documents and clarification pertaining to the issue under consideration, by the AO.
In the result, the appeal filed by the Assessee is allowed in the aforesaid terms. Order pronounced in the open court on 19/02/2025.