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Facts
The assessee purchased an immovable property for ₹15,00,000, while its market value was ₹36,50,000, leading the Assessing Officer to add the difference of ₹16,75,000 as unexplained investment. The assessee claimed the funds originated from an oral HUF family partition, affirmed by a memorandum, but failed to provide confirmations. The CIT(A) confirmed the full addition due to lack of confirmation.
Held
The Tribunal noted the Assessing Officer's failure to conduct an inquiry into the assessee's claim of funds from HUF partition, alongside the assessee's failure to provide necessary confirmations. Consequently, the Tribunal restricted the addition to 50% of the original amount, i.e., ₹8,37,500, confirming the remaining half. A cost of ₹1,000 was also imposed on the assessee.
Key Issues
Whether the addition representing the difference between the property's purchase consideration and its market value was justified, and whether the assessee adequately explained the source of funds from an oral HUF partition.
Sections Cited
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Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 08.01.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2018-19. 2. The assessee raised 4 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in restricting the addition to an extent of ₹.16,75,000/-.
It is noted that the assessee is an individual and filed return of income on 18.03.2019. According to the Assessing Officer, the assessee purchased an immovable property for a consideration of ₹.15,00,000/- on 31.08.2017 and the market value as per the document is ₹.36,50,000/-. The Assessing Officer added the difference between the sale consideration and market value to an extent of ₹.16,75,000/-
Before the ld. CIT(A), same submissions as advanced before the Assessing Officer regarding the investment were reiterated, which are reproduced in page 6 of the impugned order. The ld. CIT(A) held that there was no confirmation in respect of the cash received from assessee’s father HUF and accordingly confirmed the addition made by the Assessing Officer on account of difference between sale consideration and market value.
Before us, the ld. AR Shri T.S. Lakshmi Venkataraman, F.C.A. drew our attention to the Memorandum affirming prior oral partition dated 30.08.2016 between Co-parceners of Hindu Undivided Family. The ld. AR submits that assessment has been framed in the hands of the individual in respect of immovable property purchased by the 3 assessee. The said property was purchased by the assessee out of funds brought in by family partition. The said oral partition was affirmed by Memorandum dated 30.08.2016. The said amount got in partition is the source for purchasing the property on 31.08.2017. He argued vehemently that the Assessing Officer should have summoned all the signatories and brought no material on record for non acceptance of the memorandum, without doing such exercise, the addition made by the Assessing Officer and confirmed by the ld. CIT(A), is bad in law.
The ld. DR relied on the order of the ld. CIT(A).
Heard both the parties and perused the material available on record. The assessee made submissions before the Assessing Officer regarding the source of investment of immovable property are out of capital from HUF and admittedly, no enquiry was conducted to prove the contention of oral partition by examining the parties therein. Before the ld. CIT(A) also, though the same submissions were reiterated, the ld. CIT(A) could not exercise the jurisdiction in seeking remand report from the Assessing Officer. Further, we note that the assessee also did not take any step in furnishing confirmation from other 2 signatories, who are father and brother of the assessee, which is clear from para 5.4.1 at page 6 of the impugned order. In view of the same, we deem it proper to restrict the addition to an extent of 50% of total addition of ₹.16,75,000/- [₹.16,75,000/50%] at ₹.8,37,500/- stands explained and remaining addition of ₹.8,37,500/- is confirmed.
We note that the notice send by RPAD was returned unserved with an endorsement “addressee cannot be located (not known). But however, the ld. AR filed power of attorney on behalf of the assessee to represent the case. In view of the same, cost of ₹.1,000/- is imposed and payable in favour of the State Legal Aid Authority, Hon’ble High Court of Madras within 30 days from the date of receipt of this order and otherwise, the relief granted vide this order stands cancelled.
In the result, the appeal filed by the assessee is partly allowed.