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Facts
The assessee filed a revised return of income and was found to have jointly purchased an immovable property with his wife, which was not disclosed. Proceedings under Section 147 were initiated. The Assessing Officer made additions, which were partly confirmed by the CIT(A) to the extent of Rs. 60,50,000/- for the assessment year 2017-18, as the sources of funds were not adequately explained.
Held
The Tribunal held that the assessee failed to discharge the onus of proving the genuineness of the sources of investment, including savings and loans from family and friends, despite several opportunities. The Tribunal found the assessee's conduct wanting as the property was not disclosed initially and complete details were not provided during assessment and appellate proceedings.
Key Issues
Whether the assessee has adequately explained the sources of funds for the purchase of the impugned immovable property, including savings and loans, to discharge the onus under Section 68 of the Income Tax Act, 1961.
Sections Cited
147, 148, 144, 68
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI AMITABH SHUKLA
Assessment Years: 2017-18 M.Chinnan Vaithyalingam, Income Tax Officer, No.19/8, Kirupasankari Street, Non-Corporate Ward-19(6), West Mambalam, Chennai. Chennai- 600 033. [PAN: AASPV5447L] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee by : Shri T.Vasudevan, Advocate, प्रत्यर्थी की ओर से /Revenue by : Ms.R.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 12.06.2025 घोषणा की तारीख /Date of Pronouncement : 03.09.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M :
This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA / NFAC / S / 250 / 2024-25 / 1070630573(1) dated 26.11.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A)], National Faceless Appeal Centre(NFAC), Delhi for the assessment year 2017-18. The reference to the word “Act” in this order hereinafter shall mean the Income Tax Act, 1961 as amended from time to time.
2.0 The only issue seminal to the present appeal is regarding the addition of Rs.60,50,000/- confirmed by the Ld.CIT(A) vide his appellate order supra. 3.0 Brief factual matrix of the case is that the appellant had filed its original return declaring its income of Rs.2,13,600/- which was subsequently revised to Rs.10,06,620/-. The Ld.AO was in possession of the information that the assessee had jointly purchased an immovable property along with his wife which was not disclosed in the return of income. Proceedings u/s 147 were initiated. No return of income was filed in response to notice u/s 148. The Ld.AO had issued several notices to the assessee which were uncompiled leading to conclusion of assessment u/s 144 whereby the Ld.AO made an addition of Rs.78,99,403/-. In appeal, the assessee provided some details to the Ld.First Appellate Authority as well as to the Ld.AO during the remand proceedings. After considering the remand report of the Ld.AO as well as rejoinder to the same given by the assessee, the Ld.CIT(A) concluded that source of funds for the investment in the impugned immovable property to the extent of Rs.60,50,000/- (Rs.50 lakhs plus Rs.10,50,000/-), comprising own and borrowed funds were not adequately explained. 4.0 It is the case of the assessee that the decision of Ld.CIT(A) is not based upon correct understanding and facts of the case. It has Page - 2 - of 10 been argued that all the source of investment in immovable property was duly explained in assessment and appellate proceedings and hence the addition was unwarranted. It has been argued that loan of Rs.29 lakhs from family members and friends was through banking channels and hence the requirement of genuineness u/s 68 stood discharged by the assessee. Further, the amount of Rs.31,50,000/- was relatable to its own savings in bank and cash balances. It was argued that as on 31.03.2016 the cash and bank balance was Rs.19,14,734/- and there were sundry debtors of Rs.21,50,000/-. The Ld.Counsel vehemently argued that it has discharged the onus placed upon it u/s 68 of the Act. 5.0 Per contra, the Ld.DR relied upon the orders of lower authorities. It was stated that the assessee did not comply with AO’s notices in the assessment proceedings. It was argued that even during the remand stage full details and evidences were not provided and hence no relief can be allowed. 6.0 We have heard rival submissions in the light of material available on records. We have noted that the principal issue seminal to the controversy is as to whether the assessee has provided all the documents and evidences to the lower authorities during appellant / remand proceedings so as to discharge of its responsibilities u/s 68 of the Act. In para 7.6 of the appellate order, the Ld.CIT(A) has pointed towards finding of the Ld.AO that as regards the amount of Page - 3 - of 10 Rs.31,50,000/-, no documentary evidences were furnished to allude that the same were utilized for the purchase of impugned property. In response, the assessee had stated that an amount of Rs.10 lakhs and Rs.18,50,000/- was transferred to the seller on 12.04.2016 and 31.05.2016 , further another amount of Rs.3 lakhs was spent for purchase of stamp duty. The Ld.CIT(A) has noted in para 7.8 of his order that the entries in bank statement prior to 12.04.2016 and 31.05.2016 were proceeded by bank transfer from different parties as high value cash deposits. The genuineness thereof was thus questionable. The Ld.CIT(A) has held that despite several opportunities the appellant failed to provide cogent and credible evidences. Similarly as regards, loans of Rs. 29 lakhs from friends and family members, the Ld.CIT(A) concurred with Ld.AO’s findings that the assessee had not fully discharged the responsibilities placed on its shoulders for establishing identity and creditworthiness of parties as well as genuineness of transactions. 7.0 The Ld.CIT(A) has extensively dealt the issue from para 7.1 on page 14 to para 7.18 on page 18 of the appellate order. The same is reproduced hereunder:- “……7. Decisions on Grounds of Appeal 7.1 I have gone through the facts of the case and have considered the submissions filed by the appellant as well as material on record.
Page - 4 - of 10 7.2 The appellant's case was selected for scrutiny on the ground that his acquisition of a property for Rs.3 crore along with his spouse was not commensurate with the known sources of income. 7.3 The assessment was completed u/s 144 of the Act on account on non- compliance to various notices issued by the Assessing Officer. In the impugned assessment order, the following additions were made. i. Rs.50,00,000/-on account of amount to the seller ii. Rs.28,99,403/- on account of EMI paid to M/s Sundaram BNP Paribas 7.4 In the appellate proceedings, the appellant submitted that: i. He had acquired a property along with his spouse (with 50% share each) for an amount of Rs.3,00,00,000/- and the stamp duty paid on the transaction was Rs.21,00,000/-. ii. The appellant's share in the total purchase consideration was, thus, Rs. 1,60,50,000/-. iii. To finance the said purchase, he had availed home loan of Rs.2,25,00,000/- from M/s Sundaram BNP Home Finance Ltd. along with his spouse. The appellant's share in the said loan was 50% i.e., Rs. 1,12,50,000/-. iv. The balance source of funds amounting to Rs.60,50,000/- comprises of savings of Rs.31,50,000/- and loans from family members and friends amounting to Rs.29,00,000/-. v. During the year under consideration, an amount of Rs.24,94,130/- was paid to M/s Sundaram BNP Home Finance Ltd. as EMI towards repayment of loan and his share in the said EMI works out to Rs. 12,47,065/-.
7.5 With regard to claim of own savings of Rs.31,50,000/-, the appellant submitted in the remand proceedings that the said amount was part of his cash & bank balances of Rs.17,36,6000/- and loans & advances of Rs.21,50,000/- as on 01/04/2016. 7.6 In the remand report, the Assessing Officer has given the finding that Page - 5 - of 10 "On examination of the details furnished, it is found that the assessee has not furnished any details with respect to the payments made from his savings to the tune of Rs. 31,50,000/-...
No documentary evidences were furnished for the claim that the cash and bank balances & Loans and advances were utilised for purchasing the property."
7.7 In his rejoinder to the remand report, the appellant submitted that out of the said amount of Rs.30,50,000/-, an amount of Rs. 10,00,000/- was transferred to the seller on 12/04/2016 and an amount of Rs.38,50,000/- (comprising of loan of Rs.20,00,0000/- from his sister and Rs. 18,50,000/- from his savings) was transferred to the seller on 31/05/2016 from his savings bank account maintained with ICICI Bank. The balance amount of Rs.3,00,000/- were stated to be utilized towards payment of stamp duty.
7.8 The material available on record has been carefully perused and analyzed It is seen from the relevant bank statement that preceding the transfers to the seller on 12/04/2016 and 31/05/2016, there were bank transfers from different parties as well as high value cash deposits.
7.9 The onus is on the appellant to prove his claim that he had savings of Rs.30,50,000/- which were utilized towards acquisition of the property in question. He has been afforded more than adequate opportunities in both the appellate and remand proceedings to place the relevant evidence on record. The mere fact that transactions were carried out through banking channels does not, by itself, constitute discharge of this onus.
7.10 The quantum of total income disclosed in the appellant's returns of income prima facie does not justify the claim of such large savings to the tune of Rs.30,50,000/-, Therefore, it was imperative for the appellant to establish the veracity of his claim with necessary documentary evidence especially when the same was at the core of the issues involved in the instant appeal.
Page - 6 - of 10 7.11 In view of the above discussions, the failure of the appellant to discharge his onus of proving his claim of possessing adequate savings to partly fund the purchase of property is now established. Accordingly, this claim of the appellant is rejected as unsubstantiated.
7.12 With regard to the loans amounting to Rs.29,00,000/- from family members and friends, it is a settled position of law that the tests of identity, genuineness and creditworthiness have to be applied to each of the component transactions.
7.13 In this regard, the Assessing Officer has given the following categorical finding in the remand report that:
"On examination of the details furnished, it is found that the assessee has not furnished any details with respect to the payments made from his savings to the tune of Rs. 31,50,000/- and also not furnished any other details like, identity of the creditors, creditworthiness of the creditors etc., to substantiate his claim. The AR of the assessee was required to furnish the above details along with copy of bank account statement of the creditors, copy of return of income filed by the creditors....
….The AR of the assessee was specifically required to furnish the copy of bank account statement of the loan creditors, which the AR has not furnished. …… Hence, the source of Rs. 60,50,000/- (Cost excluding the Loan amount (50%) = Rs.50,00,000+ Cost of registration (50%) = Rs. 10,50,000) are not properly explained by the assessee. The onus is on the part of the assessee to substantiate his claim, which the assessee has failed to do so, even after availing opportunities.
7.14 On being confronted with the above findings, the appellant submitted in his rejoinder that: i. Bank statements of his sister viz., A. Vijaya could not be obtained and certificate from bank has been filed to the effect that amounts of Rs.20,00,000/- and Page - 7 - of 10 Rs.1,00,000/- were transferred to his savings bank account on 30/05/2016 and 03/06/2016 ii. PANs of the other 3 (three) creditors viz., R. Sathish Kumar, Shimon Chris Thomas and A. Anandhan were furnished along with Income Tax Return (ITR) filed by Shimon Chris Thomas. The other two creditors viz., R. Sathish Kumar and A. Anandhan have not filed their ITRs.
7.15 From the facts brought on record as elucidated above, the only logical inference to be drawn is that the appellant has failed to discharge his burden of proof regarding the genuineness of loan transactions and creditworthiness of loan creditors in respect of the said loan from family members and friends amounting to Rs. 29,00,000/-. In the result, the amount of Rs.29,00,000/- is liable to be treated as unexplained and added back to the total income of the appellant.
7.16 In view of the facts and circumstances of the case as discussed above, the sources of funds amounting to Rs.60,50,000/- are unexplained and I agree with the findings of the Assessing Officer that "the source of Rs. 60,50,000/- (Cost excluding the Loan amount (50%) = Rs.50,00,000+ Cost of registration (50%) = Rs. 10,50,000) are not properly explained by the assessee".
7.17 The Assessing Officer has given the factual finding that the amount paid by the appellant towards EMI and other charges during the year under consideration is Rs.11,94,564/- (instead of Rs.12,47,065/- as claimed by the appellant). The unexplained source of investment in the property is calculated as under.
Cost of property along with stamp duty: Rs. 1,60,50,000/- Loan repayment during the year. Rs. 11,94,564/-
Rs. 1,72,44,564/- Less: Loan from M/s Sundaram BNP Paribas: Rs.1,12,50,000/-
Page - 8 - of 10 Unexplained source of investment Rs. 59,94,564/- 7.18 In view of the above, the Assessing Officer is directed to add an amount of Rs.60,50,000/- to the appellant's total income of Rs. 10,06,620/- as per revised return filed. No separate addition is required to be made with regard to Rs.59,94,564/-determined in Para 7.17 above as the same is to be treated as application of the amount of Rs.60,50,000/-.
7.19 The grounds of appeal agitated by the appellant are partly allowed as above….”
8.0 Thus we have noted that the assessee has not been forthcoming in providing complete and correct details to the lower authorities to establish sources of investments made in the impugned property. Its conduct at both assessment as well at appellate stage has been found to be wanting. For one assessee did not disclose the impugned property in its Return of Income and thereafter during assessment, remand and Ld.First Appellate proceedings it did not file complete details. It is trite law that law aids only those who are vigilant towards their cause. Section 68 of the Act squarely places primary responsibility of establishing identity and creditworthiness of parties as well as genuineness of transactions upon the taxpayer. The same has not been appropriately and adequately availed by the assessee. Accordingly, we are of the considered view that there is no case made out for any intervention in the order of Ld.CIT(A) at this stage. Accordingly, we
Page - 9 - of 10 Ld.CIT(A) and dismiss all the grounds of appeal raised by the assessee. 9.0 In the result, the appeal of the assessee is dismissed. Order pronounced on 3rd , Sept-2025 at Chennai.