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Income Tax Appellate Tribunal, “A’’ BENCH : BANGALORE
Before: SHRI B.R BASKARAN & SMT. BEENA PILLAI
O R D E R Per B.R Baskaran, Accountant Member :
The appeal filed by the assessee is directed against the order dated 20/12/2018 passed by ld CIT(A)-10, Bengaluru and it relate to the asst. year 2012-13.
The solitary issue urged in this appeal is related to addition of 65.00 lakhs made by the AO as unexplained investment.
The facts relating to the above said issue are stated in brief:
During the course of asst. proceedings, the AO noticed that the assessee has purchased 17 guntas of land located at Uttarahalli Hobli, Bengaluru South Tq. for a sum of Rs.65.00 lakhs. Hence, the AO asked the assessee to prove the sources for making above said investments. In reply, the assessee submitted that the above said property was purchased on 16/5/2011 by HUF of the assessee family i.e Mariappa Shashikumar (HUF). It was further submitted that PAN of individual was given inadvertently while registering the conveyance deeds. The AO was not convinced with the above said explanations and accordingly asked the assessee to furnish any credible evidence to prove that the property was purchased by HUF. Since the assessee failed to produce any document, the AO treated the above said amount of Rs.65.00 lakhs as unexplained investments in the hands of the assessee and added the same to the total income of the assessee.
In the appellate proceedings before ld CIT(A), the assessee offered a new explanation. The assessee submitted that the Mariappa Shashikumar (HUF) had entered into a work contract from the seller of land. The work undertaken was shifting and realignment of a high-tension electric wire and also constructing a compound wall for the property. It was further submitted that the Mariappa Shashikumar (HUF) incurred a sum of Rs.90.00 lakhs toward labour, material, KPTCL permission and supervision charges. In the mean time, the project was abandoned due to delay and adverse market conditions. When Mariappa Shashikumar (HUF) demanded money from the seller of land, he could not pay the money Mariappa Shashikumar (HUF). Hence, in full and final settlement of the dues, land was sold for a sum of Rs.65 lakhs to Mariappa Shashikumar (HUF).
In view of the new explanations offered by the assessee, the ld CIT(A) called for a remand report from AO. The AO furnished following remand report.
“As per assessees submission the property purchased amounting to Rs.65,00,000/- belongs to Shashi Kumar M. HUF and while registering at Sub- registrar Office the PAN of the assessee has been given an ID proof document and some PAN is uploaded by Sub-registrar in AIR(Annual Information Report) filing. The sole deed does not contain any PAN of the assessee-individual or H(JF. As per the Sole deed consideration of Rs.65,00,000/- has been paid in CASH for the purchase of property. Assessee submits that he has not paid the any CASH to the seller, but it was paid from the year 2006 to 2011, as expenditure against work carried out relating to the seller of the property. The MOU entered between the HUF and Seller of the property is furnished at time of filing appeal. The MOU purpose was shifting and realignment of HT line and providing compound wall for the property and work done to the extent of Rs.90,00,000/- In the meanwhile, project was abandoned due to delay and adverse market condition and Shashi Kumar M. HUF has to recover work done amount of Rs.90,00,000/-. As the seller of the land has not having any money to repay the work done, has offered his land in lieu of the expenses carried which is settled after negotiation for Rs.65,00,000/-. The above income is not unexplained investment as it is declared in the HUF capacity. In support of this, assessee has furnished Shashi Kumar M HUF details of statement of affairs as an 31 March, 2012, copy of MOU, copy correspondence and loon statement from bank.
On the above issue assessee has not furnished the information at time of assessment and now filed before the Hon'ble CIT(A). The additional information submitted by the assessee has been carefully verified. It is fact that, assessee in HUF capacity obtained the loan of Rs,54,00,000/- from M/S. Sir.M. Visvesvaraya Co-operative Bank in the year 2008, for the purpose of shifting of High tension power line. Before the CIT(A) assessee submitted copies of works carried out bills, MOU for HT line shifting work and other correspondence for cancellation the work.
The assessee contention has been verified with reference to document furnished and it is found in order. The above said property purchased is appearing in the statement affairs of the Shashi Kumar M. HUF furnished before this office at the stage of appellate proceedings.
In view of above additional submission made by the assessee has been considered and appeal may be decided an the merits the case.”
It can be noticed that the AO has reported that the purchase of above said property is appearing the statement of affairs Mariappal Shashikumar (HUF) which was filed before ld CIT(A). However the ld CIT(A) was not convinced with the remand report furnished by the AO. The ld CIT(A) took the view that the AO has given a remand report without examining the seller of land and further confining himself to the documents furnished by the assessee. He took the view that the documents submitted by the assessee are not reliable at all as they have not been registered with any authority. Further there is no proof to show that the assessee has indeed undertaken any such activity. The ld CIT(A) also noticed that the expenditure claimed to have been incurred by HUF have not been paid by way of cheque. It was also not shown that the HUF was undertaking these kinds of activities earlier. Accordingly he took the view that the claim of incurring expenditure of Rs.90 lakhs for the year from 2006 to 2011 does not hold good. Further he observed that the conveyance deed clearly mentions that the amount of Rs.65.00 lakhs was paid in cash only. Accordingly he took the view that the explanations furnished by the assessee are not reliable. Accordingly he rejected the remand report furnished by the AO also. Accordingly he confirmed the addition of Rs.65 lakhs.
We heard the parties and perused the record. It is the case of the assessee that the land was purchased by Mariappa Shashikumar (HUF) and in the conveyance deed, the PAN number of the assessee was given wrongly. Since the PAN number of the assessee was so given, the details of above said investment have been reflected in Annual Information Report (AIR) of the assessee. The question under consideration is the source for making those investments. It is the submission of the assessee herein that the investment has been made by HUF only. Though the assessing officer has stated that the Statement of Affairs of Mariappa Shashikumar (HUF) was given before Ld CIT(A) at the time of appellate proceedings, yet the Ld A.R submitted that the Statement of Affairs of Mariappa Shashikumar (HUF) was attached with the Return of income filed by HUF on 30-09-2012, i.e, much prior to the date of passing of impugned assessment order.
We notice that the Ld CIT(A) has disbelieved the explanations furnished before him for want of evidences to show that the HUF did undertook contract work from the seller of land, evidences for spending of money. It has been claimed that the HUF has spent about Rs.90.00 lakhs over the years from 2006 to 2011 in executing the contract work undertaken from the seller of land. If the HUF is able to show documents to prove its submissions that it has spent Rs.90.00 lakhs from 2006 to 2011 along with the sources thereof, then the sources for purchasing land for a value of Rs.65.00 lakhs shall stand explained. This is for the reason that the land has been sold on full and final settlement of Rs.90.00 lakhs due to the assessee. Hence what is required to be examined is Whether the HUF has spent the above said sum of Rs.90.00 lakhs during the period from 2006 to 2011 and whether the sources for the same were available with HUF? Admittedly, the issue under consideration has not been examined in this perspective. Accordingly, in our view, this issue requires fresh examination. Since it requires verification of various documents, we prefer to restore this issue to the file of the assessing officer. Accordingly, we set aside the order passed by the Ld CIT(A) and restore all the issues to the file of the AO for examining them afresh in the light of discussions made supra. After examining the information and explanations furnished by the assessee, the AO may take appropriate decision in accordance with law.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the Open Court on 21st January, 2019.