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Facts
The assessee, a Non-Resident individual, purchased an immovable property for Rs. 71 lakhs and did not file an income tax return for AY 2016-17. The Assessing Officer reopened the assessment and added Rs. 71 lakhs as unexplained investment. The CIT(A) confirmed the addition of Rs. 44 lakhs, accepting Rs. 27 lakhs paid through banking channels.
Held
The Tribunal held that the payment of Rs. 27 lakhs through banking channels was explained. However, the claim of Rs. 44 lakhs paid in cash by the assessee's father from 2005 onwards was not substantiated with corroborative documentary proof and remained unexplained. The Tribunal found no error in the CIT(A)'s order.
Key Issues
Whether the cash payment of Rs. 44 lakhs towards the purchase of an immovable property is unexplained, and whether the assessee's claim of source from father's withdrawals prior to the agreement is acceptable.
Sections Cited
147, 148, 144C(3), 69, 115BB, 194IA
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Income Tax Appellate Tribunal, Hyderabad ‘ DB-B ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia
Per Vijay Pal Rao, Vice President
This appeal by the assessee is directed against the order dated 25/02/2025 of the learned CIT (A)-10, Hyderabad for the A.Y.2016-17.
The assessee has raised the following grounds of appeal:
1. In the facts and circumstances of the case the respected CIT(A) ought to have considered that the assessee had explained the sources, during the remand proceedings, for Page 1 of 10 the entire investment of Rs. 71,00,000/- in the immovable property.
2. In the facts and circumstances of the case the respected CIT(A) ought to have considered the reason for cash payment of Rs.44,00,000/- to the vendor.
3. In the facts and circumstances of the case the respected CIT(A) ought to have considered that the peculiar circumstances narrated during the remand proceedings for non-production of ledger account, receipts etc., from the builder.
4. The assessee may be permitted to add, alter, modify or drop any ground that may be urged at the time of hearing with the previous approval of the Hon’ble ITAT.”
3. The solitary issue arises in the appeal of the assessee is whether in the facts and circumstances of the case, the learned CIT (A) has erred in confirming the addition of Rs.44 lakhs on account of unexplained investment in purchase of immovable property being Flat in Bangalore vide Sale Deed dated 07/07/2015. The assessee is an individual and Non-Resident during the A.Y 2016-17. The assessee did not file any return of income for the year under consideration. The Assessing Officer received the information that the assessee has purchased an immovable property being Flat No.206, Sindhu Amazon, 2nd Tower, Bellandur, Bangalore for a total consideration of Rs.71 lakhs vide sale deed dated 07/07/2015 on which TDS u/s 194IA has been deducted. Accordingly, he Assessing Officer reopened the assessment by issuing a notice u/s 148 on 28/03/2023. In response to the notice u/s 148, the assessee filed the return of income on 09/06/2023 declaring total income of Rs.1,51,200/-.
Page 2 of 10 The Assessing Officer issued a show-cause notice to the assessee to explain the source of purchase consideration of Rs.71 lakhs for the said immovable property and also asked the assessee to furnish the purchase deed, bank account statement highlighting the transaction reflecting the source and subsequent payment made to the vendors. However, the assessee neither complied with the show cause notice nor sought any adjournment and consequently the Assessing Officer framed the assessment u/s 148 r.w.s. 144C(3) of the Act whereby made this addition of the said amount of Rs.71 lakhs as unexplained investment u/s 69 r.w.s. 115BB of the I.T. Act.
The assessee challenged the action of the Assessing Officer before the learned CIT (A) and furnished the bank account statement as well as the copy of sale deed, agreement of sale and copy of the undertaking given by the builder/vendor with postdated cheques. The learned CIT (A) has forwarded the said documentary evidence produced by the assessee to the Assessing Officer for verification and remand report. The Assessing Officer in the remand report given the details about the payment of purchase consideration to the extent of Rs.27 lakhs through banking channel and rest was claimed by the assessee as paid in cash which was rejected by the Assessing Officer for want of any supporting documentary evidence. The learned CIT (A) passed the impugned order whereby the payment through banking channel was accepted and the balance amount of Rs.44 lakhs is confirmed
Page 3 of 10 as unexplained investment and thereby sustained the addition to the extent of Rs.44 lakhs against Rs.71 lakhs made by the Assessing Officer.
Before the Tribunal, the learned Counsel for the assessee has submitted that the assessee produced the joint bank account of the assessee in the name of the assessee and Smt. Devabathini as well as the bank account statement maintained jointly by the father of the assessee Mr. Hanumantha Rao Devabathini and Smt. Vasantha Lakshmi Devabathini to show that the entire source of the purchase consideration was through the remittance from the assessee’s account to the account of the father from where the father of the assessee withdrew a sum of Rs.62,57,000/- over a period from December 2008 to May, 2013 out of which the said amount of Rs.44 lakhs was paid to the developer/vendor since 2008 onwards. The learned Counsel for the assessee has thus, submitted that the assessee has produced the bank account statement showing that the source of the cash payment was withdrawals from the bank account in the joint name of the father and mother of the assessee and out of the said withdrawals, the payment was made. The learned Counsel for the assessee has further submitted that since the vendor was involved in various mischievous activities of the double sale of single property and therefore, was absconding. Hence, the assessee could not obtain the receipts against the cash payment as demanded by the Assessing Officer. He has further submitted
Page 4 of 10 that the said developer/vendor also indulged in making a duplicate sale of the said plot which was purchased by the assessee and even he has given an undertaking a copy of which is placed at page Nos. 1113 to 114 of the paper book along with post dated cheques at page 115 to 118 of the paper book which were not presented by the assessee. Thus, the learned AR has submitted that since the vendor was not available beyond the access of the assessee therefor, the assessee could not obtain any receipts against the cash payments. However, once the assessee has produced the details and bank account of the assessee as well as the father to show that sufficient fund was withdrawn from the bank account of the assessee then the addition sustained by the learned CIT (A) to the extent of Rs.44 lakh is unjustified and highly arbitrary. Thus, the learned Counsel for the assessee has pleaded that the addition sustained by the learned CIT (A) be deleted.
On the other hand, the learned DR has submitted that the assessee has failed to explain the sou7rce of the payment of the alleged cash of Rs.44 lakhs. He has referred to the agreement of sale dated 08/05/2013 and submitted that the developer obtained the plan sanction only on 02/03/2012 and thereafter, the agreement dated 08/05/2013 was entered into between the parties. Thus, the claim of the assessee that the payment was made in cash from time to time from December, 2008 to May, 2013 is contrary to the fact that prior to the sanction of plan on Page 5 of 10 02/03/2012, the developer was not in a position to develop the property in question and particularly the construction of Towers I & II. He has further submitted that the assessee has failed to explain the source of the payment of the balance amount of Rs.44 lakhs at the time of execution of the agreement of sale or at the time of the sale deed dated 07/07/2015. The withdrawals as shown by the assessee from the bank account of the father is in the year 2008 to 2013 and therefore, the withdrawals prior to the agreement and that too 5 years prior to the agreement cannot be accepted as a source of payment of Rs.44 lakhs. He has relied upon the orders of the authorities below.
We have considered the rival contentions as well as the relevant material available on record. The assessee purchased the flat in question bearing No.206 of 2nd Tower, Block-A of the building known as Sindhu Amazon, 2nd Tower, Bellandur, Bangalore for a total consideration of Rs.71 lakhs vide sale deed dated 07/07/2015. As per the Bank Account details the payment of Rs.27 lakhs was made through 3 cheques of Rs.9 lakh each dated 06/07/2015, 06/07/2015 and 07/07/2015. Thus, payment of Rs.27 lakhs was accepted by the learned CIT (A) while passing the impugned order, however, that the balance amount of Rs.44 lakhs was sustained by the learned CIT (A) on the ground that the assessee has failed to explain the source of the said payment. It is pertinent to note that the assessee has claimed that the payment of Rs.44 lakhs was made by the assessee out of the Page 6 of 10 withdrawals made by the father of the assessee from 11/12/2008 to 07/05/2013. It is pertinent to note that as per the agreement to sell, dated 08/05/2013, the developer/vendor agreed to sell the said flat against the purchase consideration of Rs.71 lakhs out of which Rs.70 lakhs was stated to be received on the date of the said agreement. This statement in the agreement is contrary to the fact that the payment of Rs.27 lakhs was made only on 06/07/2015 and 07/07/2015 through three cheques and therefore, the credibility of the unregistered agreement is doubtful on this very fact. Further, there was a joint development agreement between the owners and the developer dated 24/11/2004. Thereafter, a supplementary agreement was also entered into on 2nd April, 2012 whereby the property under the joint development was demarcated and the share of the owners as well as the developer was also determined. Thus, it is clear that prior to the supplementary agreement dated 02/04/2012, the developer was not having a specific demarcated area as his share to be sold to the prospective buyers. Hence, the claim of payment prior to the agreement of sale dated 08/05/2013 or even prior to the supplementary agreement dated 02/04/2012 cannot be accepted. The learned CIT (A) has considered the remand report of the Assessing Officer and then given his finding, the relevant portion of the same is reproduced as under:
Accordingly, in the facts and circumstances as discussed above, we do not find any error or illegality in the impugned order of the learned CIT (A) and the same is upheld.
In the result, appeal filed by the assessee is dismissed.