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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” (SMC
Before: SHRI J. SUDHAKAR REDDY
This is an appeal filed by the assessee, directed against the order of the Commissioner of Income Tax (Appeals)-10, Hyderabad, dated 30-12-2016. The sole issue that arises for my adjudication is whether the Ld.CIT(A) is correct in confirming the addition of Rs. 24,87,000/- made u/s. 69 of the Income Tax Act, 1961 [the Act] on the ground that the assessee has made unexplained investment in house property. The assessee had claimed the sources of investment as, amounts received from father-in-law and mother-in-law. She also submitted that the amounts-in-question were directly paid by her father-in-law, as well as her mother-in-law to the builder and the builder has confirmed the receipt of this money
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directly from them. Evidences by way of bank statements, confirmation letters, both from the builder as well as from Shri D. Chandra Mouli, father-in-law and Smt. D. Annapurni, mother-in-law (copy of agreement to sale and sale deed etc., were filed). The AO as well as the Ld.CIT(A) held that the assessee has not -
(a) Proved the creditworthiness of Shri D. Chandra Mouli and Smt. D. Annapurni; (b) That the alleged gifts received by the assessee are not reflected in her bank statements; (c) Just filing confirmation letter, without explaining the sources of funds would lead to a conclusion that the donors have no creditworthiness;
Ld. Counsel for the assessee submits that all the evidences were filed before the lower authorities and that they have ignored the same and came to a factually incorrect conclusion that the assessee has not explained the sources of investment in the house property. He further submitted that two of the amounts received were in November, 2006 and do not pertain to the AY. 2009-10 and this aspect was also ignored by the authorities below. He took this Bench through each of the evidences filed by the assessee and contended that the assessee has discharged the burden of proof that lay on her in this regard.
Ld.DR, on the other hand vehemently opposed the contentions of the assessee and submitted that the
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creditworthiness of the donor has not been proved. She took this Bench through the confirmation letters filed by the assessee and submitted that nowhere therein, the sources of the gift has been mentioned. She further submitted that a mere examination of bank statements is not enough to come to a conclusion that the source of the funds for investment are examined. She referred to para 7 of the assessment order as well as to para 8.6 of the Ld.CIT(A)’s order and submitted that the assessee has not explained the nexus between the source of funds and investment in the house property. She relied on the decision in the case of E. Ummer Bava Vs. CIT [77 taxmann.com 1] (SC) for the proposition that when the creditworthiness of the donor and the genuineness of the transaction is not established, the addition can be made u/s. 68 of the Act. She relied on the decision in the case of R. Mallika Vs. CIT [79 taxmann.com 117] (SC) for the proposition that even where an amount has been directly given to the vendor, when assessee did not discharge the burden of proof as regards the source of funds, the addition can be made. She further relied on the decision of the Hon'ble Calcutta High Court in the case of CIT Vs. Maithan International [375 ITR 123] for the proposition that mere perusal of a bank statement is not to prove enough creditworthiness and judgment of the Hon'ble Andhra Pradesh High Court in the case of R.B. Mittal Vs. CIT [246 ITR 283] for the proposition that all the three elements i.e., identity, creditworthiness and genuineness of transaction have to be proved.
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In reply, Ld. Counsel for the assessee has distinguished these case laws on facts and submitted that factually, the assessee has proved the sources, genuineness as well as creditworthiness of the funds.
After hearing the rival contentions, I find that the father- in-law of the assessee, Shri. D. Chandra Mouli, is a retired Chief Engineer of CPWD, who worked in Chennai i.e., as a Senior Contract Govt. official and the mother-in-law, Smt. D. Annapurni is an income tax assessee having her own sources of income. They have filed confirmation letters, confirming the fact that they have given gifts to their daughter-in-law. Donors have also filed copies of bank statements, which demonstrate that a number of deposits held by them in the banks have been encashed on maturity and the proceeds there from, have been given directly to the builder through a/c payee cheques. The builder has also confirmed that the cheques were received directly by it on behalf of the assessee from Shri Chandra Mouli and Smt. Annapurni. The assessee has filed an agreement of sale executed by the builder, wherein the consideration is Rs. 8 Lakhs was received vide Cheque No. 819486, dt. 17-11-2006 drawn on ICICI Bank, Besant Nagar Branch, Chennai as consideration and this tallies with the confirmation letters filed. This cheque was given directly to the builder by Shri D. Chandra Mouli, the father-in-law of the assessee. The genuineness of the transaction cannot be doubted because the gifts are by the father-in-law and the mother-in-law to their own daughter-in-law. Such genuine transactions have been unnecessarily doubted by the Revenue.
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In view of the overwhelming evidences filed in support of the sources of funds, I find that the order of the Ld.CIT(A) as well as the AO to be perverse and against the facts of the case. Hence, I delete the entire addition and allow the appeal of the assessee.
Order pronounced in the open court on 9th May, 2018
Sd/- (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER Hyderabad, Dated 9th May, 2018 TNMM
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Copy to : 1. Smt. Kavita Pabbisetty, C/o. Ch. Parthasarathy & Co., 1-1-298/2/B/3, 1st Floor, Sowbhagya Avenue, St. No. 1, Ashok Nagar, Hyderabad. 2. Income Tax Officer, Ward-8(1), Hyderabad.
CIT (Appeals)-10, Hyderabad. 4. Pr.CIT-2, Hyderabad.
D.R. ITAT, Hyderabad.
Guard File.