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Facts
The assessee, a senior citizen, purchased a property and adjusted Rs. 5 Lakhs from a security deposit paid to MESCOM towards the sale consideration. The AO treated this as an unexplained investment under Section 69 as the date and source of payment were not furnished. The CIT(A) accepted the assessee's contention that the payment was made in FY 2013-14 but remitted the issue to the AO for verification.
Held
The Tribunal condoned the delay in filing the appeal. It noted that while the sale deed reflected the adjustment of the security deposit, the date of payment to MESCOM was not provided, making it difficult to ascertain if it was made in FY 2013-14. The Tribunal found no error in the CIT(A)'s order to remit the issue to the AO for verification.
Key Issues
Whether the Rs. 5 Lakhs security deposit paid to MESCOM, adjusted towards property sale consideration, constitutes an unexplained investment under Section 69 of the Act for AY 2015-16, and whether the CIT(A)'s remittance to AO for verification was appropriate.
Sections Cited
69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 17/01/2025 in respect of the A.Y. 2015-16 and raised the following grounds: “1. On the fact and circumstances of the case, the learned CIT(A) erred in uploading the order of Assessing Officer, in the manner in which he did.
2. On the facts and circumstances of the case, the learned CIT(A) erred in not providing sufficient opportunity to the Appellant to put forth the submissions of the Appellant.
3. On the facts and circumstances of the case, the learned CIT(A) erred in directing the Assessing Officer to verify the bank account of the Appellant for the F.Y. 2013-14, when the adjustment of security deposit had been mentioned in the registered sale deed dated: 22.12.2014, 4. On the facts and circumstances of the case, the learned CIT(A) ought to not have remanded the matter back to the Assessing Officer to verify the security deposit of Rs. 5,00,000/-.
5. For these and such other grounds that may be raised at the time of hearing. The Appellant prays that the appeal may please be allowed to meet the ends of justice.”
The assessee filed this appeal with a delay of 15 days and filed an affidavit to condone the said delay. We have perused the reasons stated in the delay condonation affidavit and also considering the said delay is only a minimal one, we condone the delay in filing the appeal and proceed to decide the appeal on merits.
The brief facts of the case are that the assessee is a senior citizen and during the A.Y. 2015-16, he had purchased a property for a vlue of Rs. 76 Lakhs. Therefore the AO had issued a notice for verification of the sources of income. During the course of assessment proceedings, the assessee explained the source and submitted that a sum of Rs. 5 Lakhs which was available with the vendor as security had been adjusted towards the total sale consideration. The AO had not accepted the explanation insofar as the security deposit adjusted towards the sale consideration for the reason that the details of the security deposit payment were not furnished. The AO had alleged that the date of payment of the advance and the reason for such payment and the source for the said payment was not explained by the assessee and therefore treated the said advance as unexplained investment u/s. 69 of the Act.
As against the said order, the assessee filed an appeal before the Ld.CIT(A) and contended that the said amount was not paid during the A.Y. in question but paid in the previous year 2013-14 and therefore the same could not be treated as income for the current A.Y. 2015-16. The assessee also relied on the confirmation letter given by the vendor as well as the sale deed in support of its claim that the said payment is made by way of an advance for purchasing the property in the F.Y. 2013-14. The Ld.CIT(A) had considered the confirmation letter as well as the sale deed and accepted the case of the assessee but remitted the same to the AO for verification of the details of the payments made by way of an advance and thereafter decide the liability accordingly.
The assessee is in appeal before this Tribunal challenging the said order of the Ld.CIT(A).
At the time of hearing, the Ld.AR submitted that the assessee paid the advance amount of Rs. 5 Lakhs directly to MESCOM since the vendor is liable to pay the dues to the said MESCON and treated the said direct payment made to MESCOM as security deposit to buy the property from the vendor which was confirmed by the said vendor which was also mentioned in the sale deed executed on 22/12/2014. Therefore the Ld.AR submitted that the said security deposit paid to the MESCOM was adjusted towards the sale consideration and therefore the said payment made during the F.Y. 2013-14 would not be treated as unexplained investment u/s. 69 of the Act. The Ld.AR also filed the copy of the sale deed in support of his arguments.
The Ld.DR submitted that the Ld.CIT(A) had remitted the issue to the AO for verification of the bank accounts of the assessee and to find out the date on which the payment was made by the assessee and if the AO found that the payment was made during the F.Y. 2013-14, the same could not be taxed during the A.Y. 2015-16 and therefore the order of the Ld.CIT(A) requires no interference.
We have heard the arguments of both sides and perused the materials available on record.
The only dispute is with regard to the payment of security deposit of Rs. 5 Lakhs by the assessee to the vendor in discharging his liability to pay the dues to the MESCOM and the period in which the said payment was made to the said MESCOM. All along the case of the assessee was that he had paid Rs. 5 Lakhs as security deposit to MESCOM which was adjusted as advance for the purchase of the property from the vendor which was also reflected in the sale deed and therefore the same could be taken as the payment made during the F.Y. 2013-14. We have perused the copy of the sale deed furnished by the assessee from which it is evident that a sum of Rs. 5 Lakhs which was paid as security deposits was adjusted towards the sale consideration but the details of the date of payment of the said security deposit to MESCOM was not found place in the sale deed. It is the case of the assessee that the payment was made during the F.Y. 2013-14 but unfortunately, no documents are made available to establish the fact that the payment was made during the F.Y. 2013-14. The sale deed also does not contain the date of payment of security deposit. In such circumstances, the Ld.CIT(A) had accepted the case of the assessee but to find out the period during which the security deposit was paid by the assessee, had remitted the issue to the file of the AO for verifying the bank statements as well as other documents and to find out the year in which the payment was made and if the AO found that the payment was made during the F.Y. 2013- 14, the said payment could not be treated as an income for the A.Y. 2015- 16. Even before us also, the assessee had not furnished any details about the date of payment of the security deposit to MESCOM on behalf of the vendor which was later on adjusted in the sale deed. Therefore, we are also not able to find out the period in which the payment was made. In such circumstances we do not find any mistake in the order of the Ld.CIT(A) in remitting the issue to the file of the AO for verification of the bank statements of the appellant to find out the date on which the payment was made. We also permit the assessee to file other evidences such as the receipt issued by the MESCOM to show that the payment was made during the F.Y. 2013-14. We also made it clear that if the assessee is not able to substantiate its submission, it is open to the AO to decide the issue on merits and in accordance with law. With the above observations, we remit the issue to the file of the AO.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 06th October, 2025.