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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” : HYDERABAD
Before: SMT. P. MADHAVI DEVI & SHRI S. RIFAUR RAHMAN
PER Smt. P. MADHAVI DEVI, J.M. :
These appeals of the assessee and the Revenue were 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
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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.
The assessee has raised the following grounds of appeal:
“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.
The learned First Appellate Authority is not justified in sustaining the addition to the extent of Rs.3,00,900/- on account of the claim of cash in hand as sources for the purchase of property.
The learned first Appellate Authority officer is not justified in sustaining the addition of Rs.2,00,000/- u/s. 68 ignoring the claim that the lender of the money i.e., the creditor Smt. Rama Bai explained the sources with regard to the jewellery sale and evidence thereon.
The appellant craves leave to add amend or alter any of the grounds at the time of the hearing of the appeal”.
As regards Ground No.1, we find that similar issue had arisen in the case of Shri Manoj Kumar Sharma, co-owner of the property in ITA No.1141/Hyd/2012 by order even dated. For the sake of ready reference, relevant paras of the said order are re-produced herein:
“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
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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 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.
Ld.DR, on the other hand, supported the orders of the authorities below and submitted that one of the vendors have given the statement and his bank account shows the deposits of cash are after the period of agreement of sale and the execution of sale deed. Therefore, he submitted that the addition made by the Assessing Officer and confirmed by the CIT(A) should be sustained.
Having regard to the rival contentions and material on record, we find that undisputedly the consideration mentioned in the registered agreement of sale is Rs.1,26,00,000/- and the consideration mentioned in the registered sale deed is Rs. 1,15,92,000/-. Thus, there is a difference of Rs.9,08,000/-. The reason for the difference was investigated by the Assessing Officer by calling the vendors and recording their statements. The vendors had admitted that they have received consideration as mentioned in the agreement of sale and that the cash was deposited in one of the vendors’ account, but it is seen that the total deposits into the vendors’ account is only Rs. 5,50,000/- and not Rs. 10 Lakhs. Further, there is no mention of any payment in cash either in the agreement of sale or the sale deed. It is for the vendor to explain the sources for making the cash deposit into his account and assessee cannot be fastened with the liability of the vendors. In the absence of any evidence to corroborate the statement of the vendors, we are inclined to accept the contention of the assessee that the addition of
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Rs. 10 Lakhs is not justified. Thus, addition of Rs. 2,52,000/- made in the hands of assessee and confirmed by the CIT(A) is deleted. Thus, Ground No. 1 is allowed”.
For the detailed reasons given therein, the addition made is deleted. In view of the above, Ground No.1 is allowed.
As regards Ground No.2, we find that when the assessee was asked to explain the sources of investment for purchase of the property, which is mentioned in Ground No.1, assessee had explained that Rs. 4,00,900/- was from her past savings and that she had further taken loans from her mother and other parties. As regards the claim of personal savings, Assessing Officer verified the total income admitted by the assessee for the AYs. 2003-04 to 2006-07 and observed that assessee had disclosed a total sum of Rs. 5,03,995/- only and therefore he concluded that the assessee did not have sufficient funds to make the investment. Thus, he made an addition of Rs.4,00,900/-.
4.1. Further, with regard to other hand loans also, the Assessing Officer observed that the creditors did not have the creditworthiness to advance the loans to the assessee. Thus, he did not accept the contentions of assessee and brought the loans to tax as ‘un-explained cash credits’. On further appeal to the CIT(A), the CIT(A) granted partial relief of Rs.1,00,000/- with regard to past savings of assessee and sustained the addition to the extent of Rs.3,00,900/-. He also sustained the addition of Rs.2 Lakhs u/s. 68 i.e., hand loan taken from her
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mother, Smt.Rama Bai. Against the order of the CIT(A), the assessee is in second appeal before us.
4.2. After hearing both the parties and perusal of the material on record, we find that CIT(A) has considered the income returned by the assessee in the earlier years and observed that assessee is a lady with no personal expenses. But he has held that the contentions of assessee that these savings were available for investment intoto without spending the same for personal usage cannot be accepted. Therefore, he granted relief only to the extent of Rs.1 Lakh. In our opinion, the CIT(A) having observed that assessee has admitted a sum of Rs.5,03,995/- in the earlier four years and also that assessee has no personal expenses, granting relief only to the extent of Rs.1 Lakh is not justifiable. The assessee has admitted income to the tune of Rs.5 Lakhs and even if some of the savings are spent towards personal expenses, say 20% of the same, the balance of Rs.4,00,000/- would still be available with her. Therefore, we are satisfied with the explanation about the sources to the extent of Rs.4,00,900/- as past savings. Therefore, the entire addition is liable to be deleted. Ground No.2 is accordingly allowed.
As regards Ground No.3, we find that Smt. Rama Bai had sold her jewellery to advance the sale consideration as loans to her son and daughter. Pursuant to the directions of ITAT in the case of Shri Manoj Kumar Sharma and other co-owners of the property in the earlier proceedings, the Assessing Officer
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had made the enquiries and on verification, found the contentions to be correct. In ITA No. 1141/Hyd/2012, by order even dated, we have allowed the ground of appeal and for the sake of ready reference, the same is reproduced here under:
“8.2. As regards Ground No. 4, it is brought to our notice by both the parties that in the earlier proceedings, ITAT had remanded the issue to the file of Assessing Officer for verification of the assessee’s contentions and pursuant thereto the Assessing Officer had verified whether Smt. Rama Bai had sold gold ornaments to M/s. Bajranglalsons and also wrote a letter to the said concern to confirm the transaction of purchase of gold from Smt. Rama Bai and also to furnish bank account copy, through which the amount has been paid; and that vide letter dt.30-01-2014, M/s. Bajranglalsons has confirmed the purchase of gold from Smt. Rama Bai and also furnished copies of invoices issued along with bank account copies, through which the cheques were paid. Taking the same into consideration, Assessing Officer has accepted the sale and also the gifting of the sale proceeds to the assessee and his sister. Since the Assessing Officer had himself verified the transaction and has accepted the source of Rs. 3 Lakhs from Smt. Rama Bai, Ground No.4 raised by the assessee is accordingly treated as allowed”.
Therefore, the addition of Rs.2 Lakhs is liable to be deleted in the case of the assessee herein also. Hence, Ground No.3 is allowed.
In the result, the appeal of assessee is allowed.
Revenue’s Appeal in ITA No.1133/Hyd/2012:
As far as the appeal of Revenue is concerned, the Revenue has raised the following grounds:
“1. The order of the CIT(A) is erroneous both on facts and on law.
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The CIT(A) is not justified in deleting the addition made u/s. 68 of the I.T. Act.
The CIT(A) is not justified in deleting the addition made u/s. 68 of the I.T. Act even when the creditworthiness of the creditors was not proved by the assessee.
Any other ground that may be urged at the time of hearing”.
Though the Ld.DR relied upon the order of the Assessing Officer, we find that CIT(A) has granted relief to the assessee, only after verification of the contentions of assessee and the material on record and the Revenue has not brought any evidence on record to rebut the findings of the CIT(A). Therefore, we see no reason to interfere with the same. Therefore, the appeal of Revenue is dismissed.
To sum-up, the appeal of assessee is allowed and the appeal of Revenue is dismissed.
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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Copy to :
Smt. Sunitha Sharma, Hyderabad. C/o. Ch. Parthasarathy & Co., 1-1-298/2/B/3, 1st Floor, Sowbhagya Avenue, St.No.1, Ashoknagar, Hyderabad.
The Deputy Commissioner of Income Tax, Central Circle-2, Hyderabad.
CIT(A)-I, Hyderabad.
CIT(Central)-Hyderabad.
D.R. ITAT, Hyderabad.
Guard File.