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Facts
The assessee, an individual NRI, purchased an immovable property for Rs. 50,11,727/- for AY 2016-17 without filing a return of income. The AO reopened the assessment to ascertain the source of funds, which the assessee claimed was a loan from City Bank.
Held
The Tribunal noted that while part of the payment was explained by savings, the larger amount claimed as a loan from City Bank lacked sufficient evidence before the AO. Therefore, the Tribunal set aside the AO's order and remitted the issue back for verification of the loan documents.
Key Issues
Whether the assessee could substantiate the source of the loan amount for the purchase of immovable property, and if the DRP/AO erred in not considering the evidence presented.
Sections Cited
144, 144C(13), 147, 148, 69
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the final assessment order passed by the Assessing Officer (hereinafter referred to as ‘AO‘) dated 15.01.2025 u/s.144 r.w.s.144C(13) of the Income Tax Act, 1961 (hereinafter referred to as "the Act”) pursuant to the Dispute Resolution Panel-2, Bangalore (hereinafter referred to as ‘the DRP‘)
1. directions dated 26.12.2024. The only issue is in respect of addition made by the AO amounting to Rs.46,78,750/- since the assessee couldn’t prove the source of the said amount which assessee claimed to have been given as loan by the City Bank.
The brief facts are that the assessee is an individual/NRI, who didn’t file any return of income (RoI) for AY 2016-17. And the AO received information that the assessee has purchased immovable property by making payment of Rs.50,11,727/-. The AO taking note that assessee despite making such payment, had neither filed any RoI for the relevant assessment year nor explained the source of income towards purchase of immovable property, therefore, in order to find out the source of purchase consideration, he reopened the assessment u/s.147 of the Act by issuing notice u/s.148 of the Act dated 31.03.2023. Thereafter, the AO asked the assessee to file relevant documents to substantiate the source of Rs.50,11,727/- for purchase of the property and noted that the assessee couldn’t explain the source; therefore, the AO passed the draft assessment order on 11.03.2024 proposing addition of Rs.50,11,727/- u/s.69 of the Act.
Aggrieved, the assessee preferred his objections before the DRP and the DRP partly allowed the objections by directing the AO to give relief to the assessee to the tune of Rs.3,22,826/- since assessee could prove the source of it as from his own savings [salary received from M/s.IQOR India Services Pvt. Ltd.]. However, since the assessee couldn’t prove the source of the balance amount of Rs.46,78,750/- which he claimed to be loan availed from City Bank, the DRP concurred with the AO in respect of addition of Rs.46,78,750/-. Pursuant to the DRP directions, the AO has passed the final assessment order dated 15.01.2025 assessing income of Rs.46,78,750/- u/s.69 of the Act.
Aggrieved, the assessee is in appeal before this Tribunal.
We have heard both the parties and perused the material available on record. It is noted that the assessee is an individual NRI for AY 2016- 17, who purchased an immovable property from M/s.Puravankara Ltd. (seller) by making payment of Rs.50,01,576/-. Out of this amount, Rs.3,22,826/- was paid during AY 2014-15 from the ICICI Bank account of the assessee and the source of the same was salary received from M/s.IQOR India Services Pvt. Ltd. We are concerned with the source of balance amount of Rs.46,78,750/-, which was paid during FY 2015-16 [AY 2016-17]. The assessee is noted to have claimed before the AO/DRP that the source of Rs.46,78,750/-, was loan availed from City Bank and submitted a Certificate from City Bank. However, since the details of loan etc., were not mentioned in the certificate, the DRP/AO didn’t accept the source of the fund of Rs.46,78,750/- and made addition u/s.69 of the Act.
Before us, the assessee has filed Paper Book which contains the assessee’s City Bank loan statement [refer Page Nos. 3 to 7 of the Paper Book] and brought to our notice that the assessee received the relevant statement by e-mail from City Bank on 12.12.2024 at 07:36 PM and duly submitted the same to the DRP on 13.12.2024 by e-mail. However, according to the Ld.AR, despite the relevant documents which evidenced the disbursement of loan of Rs.1 lakh on 19.05.2015 and Rs.45,78,750/- on 18.08.2015 [total Rs.46,78,750], the DRP failed to consider the same and therefore, confirmed the addition of Rs.46,78,750/- which action of the DRP according to the Ld.AR is erroneous. Be that as it may, since it is an admitted fact that relevant documents (discussed supra) to show the source of the loan of Rs.46,78,750/- given to the assessee by City Bank on 19.05.2015 & 18.08.2015 has not been placed before the AO, in the interest of justice and fair play, we set aside the impugned order of the AO dated 15.01.2025 and remit the issue back to the file of the jurisdictional AO (JAO) for limited purpose of verification of the relevant documents [City Bank loan statement of the assessee] and if it is found to be correct, then no addition is warranted u/s.69 of the Act. The AO is directed to give opportunity to the assessee and thereafter verify the relevant documents and thereafter pass order in accordance to law.