MR. SHIV KUMAR SHARMA,HYDERABAD vs. DCIT, CENTRAL CIRCLE-2, HYDERABAD

PER Smt. P. MADHAVI DEVI, J.M. :

This appeal of the assessee was earlier disposed-of along with the appeals of the co-owners by a common and consolidated order of this Tribunal. The respective assessees had challenged the orders of the Tribunal in both the Assessees as well as the Revenues appeals and the Hon'ble High Court has remitted the appeals back to the file of this Tribunal with a direction to decide all these appeals afresh independently. That is how all the appeals have been listed before us for hearing and we are thus disposing-of each of the appeals individually.

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Rs. 2,52,000/- was added as unexplained investment in the hands of assessee.

3.1. Aggrieved, assessee preferred an appeal before the CIT(A), who confirmed the order of Assessing Officer and the assessee is in second appeal before us.

“1) The learned First Appellate Authority is not justified in sustaining the addition of Rs.2,52,000/- made U/s.69 ignoring the fact that there is no evidence with regard to extra sale consideration paid by the appellant. 2) The learned First Appellate Authority is not justified in sustaining the addition of Rs.1,00,000/- made u/s 68 being the credit from Smt. Mandakini ignoring the fact that the said creditor is assessed to tax and had confirmed the loan given to the appellant. 3)a. The learned First Appellate Authority is not justified in sustaining the addition of Rs.3,00,000 made, u/s 68 being the credit from Sri Sunil Dayal ignoring fact that the said is assessed to Income Tax and

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the loan given to appellant is duly reflected in his statement of affairs.

b) The learned First Appellate Authority failed to appreciate the fact that issue of repayment of loan cannot be the sole reason for sustaining the addition u/s 68 especially when the creditor is assessed to tax and the loan given to appellant is reflected in his returns.

4) The appellant craves leave to add amend or alter any of the grounds at the time of the hearing of the appeal”.

“6. In support of the first Ground of Appeal, Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that in the agreement of sale, the total consideration was mentioned at Rs. 1,26,00,000/- but in the final sale deed, it was mentioned as Rs. 1,15,92,000/- after negotiations between the parties. He submitted that there was no cash paid either at the time of agreement of sale of at the time of execution of the sale deed. He submitted that the addition is only on the basis of statement of vendors and there is no other evidence brought by the Revenue authorities to state that any cash payment was made. He also submitted that the entire payments are through banking channels only and further, that the dates of deposit into the vendor’s bank account do not match with the date of agreement of sale or the sale deed. He further drew our attention to the fact that total deposits made by the vendor into his bank account are only Rs. 5,50,000/-, whereas the addition made in the hands of assessee is Rs. 10 Lakhs. He submitted that the onus is on the vendor to explain the sources for the said deposits and not on the assessee. He submitted that assessee had denied the payment of cash at the time of search itself and therefore, it cannot be treated as an afterthought. The assessee

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also submitted that the vendors have admitted to the payment only on account of application of Section 50C and they have also filed revised returns of income, applying the said provision and only to safeguard their interest and avoid levy of penalty etc. Therefore, according to him, the addition of Rs.10 Lakhs in the hands of the all the purchasers and accordingly Rs. 2,52,000/- in the hands of assessee, is not sustainable.

Respectfully following the same, we delete the addition made in the case of assessee as well. In view of the above, Ground No.1 is allowed.

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6.1. As regards Ground No.2, assessee had stated to have received sum of Rs. 1,00,000/- from Ms. Mandakini, who did not file any confirmation letter or bank account copies of the creditors. Assessing Officer had therefore not accepted the creditworthiness of the creditor and brought the same to tax u/s. 68 of the Act. However, before the CIT(A), assessee had filed confirmation letter and also bank account copies of the creditor. The CIT(A), at para 9.1 of his order recorded that the deposits into the bank account were by means of cheques received from HDFC Bank and not in cash deposits and that out of these amounts received, a sum of Rs.1 Lakhs was given to the assessee. However, CIT(A) has also recorded that advancing to Rs.1 Lakh to the assessee was not reflected in the return of income filed by the loan creditor for the AY.2007-08 and therefore, he confirmed the addition made by the Assessing Officer.

6.1.i. After hearing both the parties, we find that the CIT(A) has accepted that the payment of Rs.1 Lakh was made by Ms. Mandakini to the assessee through banking channels as reflected in the bank account statement. Since the loan creditor had not mentioned the same in the statement, accompanying the return, he has confirmed the addition. The assessee cannot be found fault with for the default in the statement filed by the loan creditor along with her return of income. Since advancing of Rs.1 Lakh is proved by way of bank statement and the creditworthiness of the loan creditor is also proved, we are of the opinion that the addition of Rs.1

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Lakh is not sustainable. The said addition is accordingly deleted. Hence, Ground No. 2 is allowed.

6.2. As regards Ground No.3, we find that the Assessing Officer had disbelieved the loan of Rs.3 Lakhs advanced to assessee by Shri Sunil Dayal, who has only filed the copies of confirmation letters.

6.2.i. Before the CIT(A), assessee stated that bank account copies and also the relevant income tax returns were filed before the Assessing Officer and had also filed copies of the same before the CIT(A). However, CIT(A) confirmed the addition only on the ground that the loans have not been repaid by the assessee to the creditors, even till the date of assessment or the appellate order. He also observed that Shri Sunil Dayal had also advanced a loan to Ms. Rashmi Sharma and that he did not have the creditworthiness to advance such huge amounts. On the copy of the return filed by the creditor for the AY. 2007-08, CIT(A) observed that the returns were filed only after the search took place against the assessee’s family and therefore much credence cannot be given to such return. He therefore confirmed the addition. Ld. Counsel for the assessee submitted that CIT(A) is not justified in confirming the loan taken, solely on the basis of non- repayment of the loan, particularly when the assessee has been shown as a debtor in the creditor’s Books of Account and was shown as a debtor in his return of income, which was filed belatedly. Thus, he prayed for deletion of the addition.

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6.2.ii. Ld.DR, however, supported the orders of the authorities below.

6.3. Having regard to the rival contentions and material on record, we find that the creditor is not stated to be related to the assessee in any way and has also filed confirmation letter and bank account copies in support of the advancement of loan to the assessee. It is also not recorded that there were cash deposits prior to advancement of loan to the assessee. Therefore, we are inclined to accept the contentions of assessee and direct the Assessing Officer to delete the addition. Hence, Ground No.3 is allowed.

Order pronounced in the open court on 3rd May, 2019

Sd/- Sd/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated 3rd May, 2019 TNMM

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