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Facts
The assessee purchased a flat for Rs. 55,48,000/- and paid an additional Rs. 4,99,525/- in cash. The Assessing Officer treated this cash payment as unexplained income under Section 69A of the Income Tax Act, 1961. The assessee claimed the cash payment was for repairs and maintenance incurred later.
Held
The Tribunal held that the seized documents indicated the cash payment was made in FY 2017-18 (AY 2018-19) for parking and maintenance charges, not for the purchase of the flat in AY 2013-14. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted.
Key Issues
Whether the cash payment made for the flat purchase, allegedly for repairs and maintenance, could be added as unexplained income in the assessment year of the initial purchase.
Sections Cited
148, 147, 69A, 132(4), 69, 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “I” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
This appeal by the assessee is directed against order dated 10.02.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – 58, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2013-14. The relevant grounds raised by the assessee, which were revised through letter dated 10.10.2024, are reproduced as under:
A. Ground No A. Ground No-1: - 1) The Assessing officer has issued 1) The Assessing officer has issued notice u/s 148 on dated notice u/s 148 on dated 31.03.2021 which is uploaded on portal on 01/04/2021) So 31.03.2021 which is uploaded on portal on 01/04/2021) So 31.03.2021 which is uploaded on portal on 01/04/2021) So the service of Notice considered as 01/04/2021. As per the service of Notice considered as 01/04/2021. As per the service of Notice considered as 01/04/2021. As per Finance Act,2021, The New Provision of Reassessment has Finance Act,2021, The New Provision of Reassessment has Finance Act,2021, The New Provision of Reassessment has been introduced in FY 2021 been introduced in FY 2021-22 which effective from 22 which effective from 01/04/2021. S 01/04/2021. So, as per the consideration of provision o, as per the consideration of provision mentioned in Section 148A/149/151 of the Income Tax Act, mentioned in Section 148A/149/151 of the Income Tax Act, mentioned in Section 148A/149/151 of the Income Tax Act, 1961 the Issuance of the Notice u/s148 under the older 1961 the Issuance of the Notice u/s148 under the older 1961 the Issuance of the Notice u/s148 under the older regime on 01/04/2021 should not prevail. regime on 01/04/2021 should not prevail. B. Ground No B. Ground No-2: - 1) We would like to inform your honor that, 1) We would like to inform your honor that, Appellant has Appellant has purchase flat in FY 2012 purchase flat in FY 2012-13 for the sale consideration of Rs. 13 for the sale consideration of Rs. 55,48,000/- and Our Sale Agreement are register on dated and Our Sale Agreement are register on dated 20/12/2012. As per Ld. Assessing Officer observation, we 20/12/2012. As per Ld. Assessing Officer observation, we 20/12/2012. As per Ld. Assessing Officer observation, we have paid cash over and above the sale consideration for have paid cash over and above the sale consideration for have paid cash over and above the sale consideration for purchasing the flat. The Cash payment was made by g the flat. The Cash payment was made by g the flat. The Cash payment was made by Assessee to Bhagwati Developers after 5 years since the Assessee to Bhagwati Developers after 5 years since the Assessee to Bhagwati Developers after 5 years since the purchased of Flat for parking and installation of grills, society purchased of Flat for parking and installation of grills, society purchased of Flat for parking and installation of grills, society and Club charges, which are related to repairs & maintenance and Club charges, which are related to repairs & maintenance and Club charges, which are related to repairs & maintenance in FY 2017-18. 18. 2) Unexplained Mo 2) Unexplained Money: Section 69A of Income Tax act, 1961 In ney: Section 69A of Income Tax act, 1961 In our case, we would like to inform you that, we have explained our case, we would like to inform you that, we have explained our case, we would like to inform you that, we have explained the nature of expense and the source of cash payment along the nature of expense and the source of cash payment along the nature of expense and the source of cash payment along with bank statements. Hence, concern matter in this no more with bank statements. Hence, concern matter in this no more with bank statements. Hence, concern matter in this no more unexplained. So, it is Unjustif unexplained. So, it is Unjustifiable to Add the same in the total iable to Add the same in the total income.
Briefly stated, facts of the case are that the assessee had filed Briefly stated, facts of the case are that the assessee had filed Briefly stated, facts of the case are that the assessee had filed its original return of income on 30.07.2013 declaring total income its original return of income on 30.07.2013 declaring total income its original return of income on 30.07.2013 declaring total income at Rs.2,500/-. The return of income was processed u/s 143(1) of . The return of income was processed u/s 143(1) of . The return of income was processed u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) on 14.12.2013. x Act, 1961 (in short ‘the Act’) on 14.12.2013. x Act, 1961 (in short ‘the Act’) on 14.12.2013. Subsequently, Subsequently, Subsequently, information information information was was was received received received from from from the the the Asst. Asst. Asst. Commissioner of Income Commissioner of Income-tax, Central Circle (3), Mumbai that tax, Central Circle (3), Mumbai that during the course of search/survey action conducted in the case of during the course of search/survey action conducted in the case of during the course of search/survey action conducted in the case of M/s Bhagwati Developers on M/s Bhagwati Developers on 15.10.2018, certain incriminating certain incriminating material was seized which reflected that assessee had purchased a material was seized which reflected that assessee had purchased a material was seized which reflected that assessee had purchased a flat viz A-1102, Sky Oasis for an agreement value of Rs.55,48,000/ 1102, Sky Oasis for an agreement value of Rs.55,48,000/- 1102, Sky Oasis for an agreement value of Rs.55,48,000/ and cash of Rs.4,99,525/ and cash of Rs.4,99,525/- was paid on and above the agreement was paid on and above the agreement value. Accordingly, the As value. Accordingly, the Assessing Officer recorded reason to believe recorded reason to believe that income escaped assessment and that income escaped assessment and issued notice u/s 148 of the issued notice u/s 148 of the Act. The Assessing Officer on page 6 of the The Assessing Officer on page 6 of the reassessment order assessment order dated 25/05/2022 has reproduced the relevant document which has reproduced the relevant document which has reproduced the relevant document which was seized in search of M/ in search of M/s Bhagwati Developers s Bhagwati Developers. The assessee contended that entire money contended that entire money for acquisition of flat for acquisition of flat was paid out of his bank account. The contention of the assessee was rejected by his bank account. The contention of the assessee his bank account. The contention of the assessee AO and he made the addition for the addition for Rs.4,99,525/- in the order passed in the order passed u/s 147 dated 25.05.2022. On further appeal, the Ld. CIT(A) also 25.05.2022. On further appeal, the Ld. CIT(A) also 25.05.2022. On further appeal, the Ld. CIT(A) also upheld the addition observing as under: upheld the addition observing as under:
“6.2 The assessee during the course of appellate proceedings “6.2 The assessee during the course of appellate proceedings “6.2 The assessee during the course of appellate proceedings has mentioned that he had made cash payment to the builder has mentioned that he had made cash payment to the builder has mentioned that he had made cash payment to the builder after the purchase of flat for parking and in after the purchase of flat for parking and installation of grill stallation of grill and society and club charges which are related to repair and and society and club charges which are related to repair and and society and club charges which are related to repair and maintenance in F.Y.2017 maintenance in F.Y.2017-18. The assessee further stated that 18. The assessee further stated that cash payment was made after cash withdrawal from the cash payment was made after cash withdrawal from the cash payment was made after cash withdrawal from the bank account of the assessee and also from cash in hand of bank account of the assessee and also from cash in hand of bank account of the assessee and also from cash in hand of his mother and grandmother. s mother and grandmother. 6.3 Order of the AO and submission of the assessee have 6.3 Order of the AO and submission of the assessee have 6.3 Order of the AO and submission of the assessee have been examined. During the course of search action on been examined. During the course of search action on been examined. During the course of search action on Bhagavati Developers and its group concerns from which the Bhagavati Developers and its group concerns from which the Bhagavati Developers and its group concerns from which the assessee had purchased a flat, the documents were seized assessee had purchased a flat, the documents were seized assessee had purchased a flat, the documents were seized which show that the assessee had paid an amount of show that the assessee had paid an amount of show that the assessee had paid an amount of Rs.60,47,525/ Rs.60,47,525/- against the purchase of flat no. A- -1102 in Sky Oasis. Further, statement of Kulin Shantilal Voha, key person Oasis. Further, statement of Kulin Shantilal Voha, key person Oasis. Further, statement of Kulin Shantilal Voha, key person of the developers was recorded during the search action u/s. of the developers was recorded during the search action u/s. of the developers was recorded during the search action u/s. 132(4) of the Act wherein 132(4) of the Act wherein he had admitted that the Bhagvati he had admitted that the Bhagvati Developers had received on money from various clients Developers had received on money from various clients Developers had received on money from various clients against the sale of flats. The assessee, during the course of against the sale of flats. The assessee, during the course of against the sale of flats. The assessee, during the course of assessment proceedings has mentioned he has not made any assessment proceedings has mentioned he has not made any assessment proceedings has mentioned he has not made any cash payment to the builder and he was not party cash payment to the builder and he was not party cash payment to the builder and he was not party to the entries made in respect of purchase of flat reflected in the entries made in respect of purchase of flat reflected in the entries made in respect of purchase of flat reflected in the seized document. Now, before the appellate proceedings, the seized document. Now, before the appellate proceedings, the seized document. Now, before the appellate proceedings, the assessee has come out with a totally new theory that he has assessee has come out with a totally new theory that he has assessee has come out with a totally new theory that he has made cash payment after the purchase of flat for parking, made cash payment after the purchase of flat for parking, made cash payment after the purchase of flat for parking, installation of grills, society and club charges which are ion of grills, society and club charges which are ion of grills, society and club charges which are related to repair and maintenance in F.Y.2017 related to repair and maintenance in F.Y.2017-18. 18. 6.4 However, the contention of the assessee is without merit 6.4 However, the contention of the assessee is without merit 6.4 However, the contention of the assessee is without merit as the seized document has clearly mentioned that the value as the seized document has clearly mentioned that the value as the seized document has clearly mentioned that the value of the flat at Rs.60,47,525/ of the flat at Rs.60,47,525/- which has already included has already included these charges, i.e.parking, installation of grills, society and these charges, i.e.parking, installation of grills, society and these charges, i.e.parking, installation of grills, society and club charges and the assessee has paid Rs.55,48,000/ club charges and the assessee has paid Rs.55,48,000/ club charges and the assessee has paid Rs.55,48,000/- as per agreement value and Rs.4,99,525/ per agreement value and Rs.4,99,525/-paid in cash over and paid in cash over and above the agreement value in A.Y.2013 above the agreement value in A.Y.2013-14 only. Further 14 only. Further, the assessee has not furnished any supporting documents assessee has not furnished any supporting documents assessee has not furnished any supporting documents received from the builder regarding cash payment made by received from the builder regarding cash payment made by received from the builder regarding cash payment made by him against repairs and maintenance in F.Y.2017 him against repairs and maintenance in F.Y.2017- him against repairs and maintenance in F.Y.2017-18. 6.5 The assessee has relied on decision of the ITAT, Delhi in 6.5 The assessee has relied on decision of the ITAT, Delhi in 6.5 The assessee has relied on decision of the ITAT, Delhi in the case of Ram Kishan VS I the case of Ram Kishan VS ITO (ITA No. 1909/Del/2020). TO (ITA No. 1909/Del/2020). However the same is not applicable to the facts of the case as However the same is not applicable to the facts of the case as However the same is not applicable to the facts of the case as the assessee could not explain the source of cash of Rs. the assessee could not explain the source of cash of Rs. the assessee could not explain the source of cash of Rs. 4,99,525/- paid to the builder in A.Y.2013 paid to the builder in A.Y.2013-14. 6.6 In view of the above facts, an addition of Rs.4,99,525/ 6.6 In view of the above facts, an addition of Rs.4,99,525/ 6.6 In view of the above facts, an addition of Rs.4,99,525/- made by the AO on account of cash payment made to M/s. made by the AO on account of cash payment made to M/s. made by the AO on account of cash payment made to M/s. Bhagavati Developers Pvt. Ltd. over and above the agreement Bhagavati Developers Pvt. Ltd. over and above the agreement Bhagavati Developers Pvt. Ltd. over and above the agreement value towards the purchase of flat u/s.69A of the Act as value towards the purchase of flat u/s.69A of the Act as value towards the purchase of flat u/s.69A of the Act as unexplained money has been confirmed.” unexplained money has been confirmed.”
Before us, the assessee has challenged the Before us, the assessee has challenged the validity of the notice issued u/s 148 of the Act and also challenged the addition notice issued u/s 148 of the Act and also challenged the addition notice issued u/s 148 of the Act and also challenged the addition on merit.
We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant materials on record the relevant materials on record. On verification of the document . On verification of the document seized from the premises of M/s Bh seized from the premises of M/s Bhagwati Developers agwati Developers, which has been reproduced by the Assessing Officer on page 6 of the been reproduced by the Assessing Officer on page 6 of the been reproduced by the Assessing Officer on page 6 of the assessment order. We find that developer has charged total assessment order. We find that developer has charged total assessment order. We find that developer has charged total Rs.60.47,525/- to the assessee along with parking club etc. to the assessee along with parking club etc. to the assessee along with parking club etc. facilities, whereas the value in the agreement for sale dated facilities, whereas the value in the agreement for facilities, whereas the value in the agreement for 20.12.2012 agreement value is only Rs.55,42,000/- and balance 20.12.2012 agreement value is only Rs.55,42,000/ 20.12.2012 agreement value is only Rs.55,42,000/ amount has been worked amount has been worked to Rs.4,99,525/-. In the said seized . In the said seized paper, this amount has been shown to have been paid his amount has been shown to have been paid his amount has been shown to have been paid as Rs.3,00,000/- on 29.09.2017 on 29.09.2017 and Rs.1,99,525/- on 10.11.2017. Thus, it is evident that said amount of cash of Rs.4,99,525/ it is evident that said amount of cash of Rs.4,99,525/ it is evident that said amount of cash of Rs.4,99,525/- has been paid in the period corresponding to period corresponding to assessment year 2018 assessment year 2018-19 and not in the assessment year under consideration. In the and not in the assessment year under consideration. In the and not in the assessment year under consideration. In the assessment year 2013 assessment year 2013-14 only the under construction properties 14 only the under construction properties has been booked and agreement to sale was registered whereas booked and agreement to sale was registered whereas booked and agreement to sale was registered whereas property has completed later on and therefore, tho eted later on and therefore, those payment se payments have been paid in the financial year corresponding to the assessment been paid in the financial year corresponding to the assessment been paid in the financial year corresponding to the assessment year 2018-19. In our opinion, when the cash has been paid in the 19. In our opinion, when the cash has been paid in the 19. In our opinion, when the cash has been paid in the financial year corresponding to the assessment year 2018 al year corresponding to the assessment year 2018 al year corresponding to the assessment year 2018-19, no addition could have been made in the year under consideration addition could have been made in the year under consideration addition could have been made in the year under consideration under section 69 of the Act under section 69 of the Act. Accordingly, the addition made by the . Accordingly, the addition made by the Assessing Officer and upheld by the Ld. CIT(A) is hereby deleted. Assessing Officer and upheld by the Ld. CIT(A) is hereby deleted. Assessing Officer and upheld by the Ld. CIT(A) is hereby deleted. The ground No. 2 of the appeal is accordingly allowed. ground No. 2 of the appeal is accordingly allowed. ground No. 2 of the appeal is accordingly allowed.
4.1 Since we have already allowed the appeal of the assessee on Since we have already allowed the appeal of the assessee on Since we have already allowed the appeal of the assessee on merit, the ground No. 1 challenging the validity of the reassessment ground No. 1 challenging the validity of the reassessment ground No. 1 challenging the validity of the reassessment proceedings is accordingly rendered academic. Therefore, we are not proceedings is accordingly rendered academic. Therefore, we are not proceedings is accordingly rendered academic. Therefore, we are not adjudicating upon the same udicating upon the same at this stage.
In the result, the appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed.