Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI O.P. KANT
O R D E R PER AMIT SHUKLA, JM:-
The aforesaid appeal has been filed by the assessee against the impugned order dated 23.12.2015 passed by Commissioner of Income Tax (Appeals), Ghaziabad for the quantum of assessment passed u/s.143(3) for the Assessment Year 2012-13. In the grounds of appeal
, the assessee has raised following grounds:-
1. That on facts and circumstances of the case, the order passed by the Ld. CIT (Appeal) is bad both in the eyes of law and on facts.
2. That the Ld. CIT (Appeal) has erred in law and on facts in confirming the additions made by the AO without appreciating the documentary evidences on record.
3. That the Ld. CIT (Appeal) has erred in law and on facts in sustaining the addition of Rs. 32,00,000/-,as investment out of undisclosed sources, despite the fact that the amount represents withdrawal / advances from the proprietary concern of the husband of the assessee and which were duly recorded in the audited books of accounts of proprietary concern of the husband of the assessee. 4. That the Ld. CIT (Appeal) has erred in law and on facts in sustaining the addition of Rs. 24,21,235/-(i.e. total of the credit side of bank a/c with ICICI Bank), 'despite the fact that the amount represents unsecured loans / reimbursements etc. which were duly explained with confirmations. 5. That the Ld. CIT (Appeal) has erred in law and on facts in sustaining the addition of Rs. 12,50,00/- despite the fact that the amount represents unsecured loans which were duly explained with confirmations and reply filed by the party in response to notice u/s 133(6).
6. That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.”
The facts in brief qua the issue involved are that assessee is an individual who has filed her return of income on 09.08.2004 showing total income of Rs.7,66,400/- from salary income received from M/s. North East Logistics, which is proprietary concern of her husband, Shri Naveen Gupta. Later on, a revised return was filed on 07.01.2014 at a total income of Rs.7,83,720/- showing interest income of Rs.17,319/-. An AIR information was received wherein it was informed that assessee has made investment in purchase of immovable properties amounting to Rs.56,81,000/- on 20.05.2011 and Rs.52,60,000/- on 25.01.2012. Since, these transactions were not shown by the assessee in her statement of affairs, therefore, Assessing Officer required the assessee to explain the source of investment. In response the assessee had submitted that during the year under consideration, assessee got registered two properties in her name, details of which were as under: (i) B-29, Chander Nagar, Ghaziabad - This property was purchased on 25.01.2012 for Rs.44,07,642/- (Stamp value Rs. 52,60,000/-) Investment claimed to have been made out of the funds received from husband. (ii) A-241/24 Surya Nagar, Ghaziabad - This property was purchased on 20.05.2011 in the name of three individuals jointly for Rs. 46,00,000/- (Stamp value Rs. 56,81,000/-). Investment claimed to have been made 1/3rd by Sh. Atul Kumar Gupta, 1/3rd by Sh. Naveen Gupta (husband of the assessee) and 1/3rd by the assessee herself.
Assessee vide reply dated 04.03.2014, filed property-wise details of investment as well as source thereof and it was explained that for the purchase of property at B-29, Chander Nagar, Ghaziabad, total investment made was Rs.47,66,142/- out of which sum of Rs.32 lacs was from M/s. North East Logistics, a proprietary concern of her husband; and from ICICI bank account sum of Rs.12,07,642/-; and cash Rs.3,58,500/-. In support, copy of unsecured loan account as appearing in the name of assessee in the books of M/s. North East Logistics was furnished. Further, assessee had shown share of investment of Rs.17,50,000/- in purchase of property at A-241/24 Surya Nagar, Ghaziabad for which it was explained that sum of Rs.12.50 lac was from M/s. Omkar Transport Corporation and from ICICI bank account for Rs.5,00,000/-. However, the Assessing Officer observed that assessee could not file any confirmation regarding loan from the said party. Later on, assessee had furnished the confirmation of loan of Rs.12.50 lac from M/s. Omkar Transport Corp. For the amount explained from ICICI Bank, it was stated that loan was taken from three parties, sum of Rs.8,25,413/- from M/s. Gee Bee Enterprises; loan of Rs.4,08,952/- from M/s. Om Enterprises; and loan of Rs.4,00,000/- from M/s. Sunshine Enterprises. Besides, copy of Auditor’s report and audited balance-sheet of M/s. North East Logistics was furnished. However, Assessing Officer noted that the confirmations of loans which have been furnished by the assessee were without mentioning their addresses, assessment particulars, PAN etc. and these loans have not been disclosed by the assessee in her earlier replies. Thereafter, Assessing Officer proceeded to examine the advances from M/s. North East Logistics as on 31.03.2012 and found that M/s. North East Logistics has shown total loan and advance of Rs.35,93,533/-. Out of which major item of Rs.22,19,755/- relates to advances in advance tax/TDS and petty advance to different parties. Thus, such loan advances shown by the assessee from the said concern was found not correct. Further, copy of capital account of her husband, Shri Naveen Gupta showed total drawing of Rs.30,17,258/- out of which payment of Rs.17,50,000/- was made to the assessee during the year under consideration, besides various drawings on account of house hold expenses. Thus, he concluded that source of loan/advances of Rs.33,20,000/- from M/s. North East Logistics is not verifiable. AO has also highlighted various infirmities and contradiction in the said stand of the assessee which has been discussed in detail and has been reproduced at pages 3 and 4 of the assessment order. Accordingly, he proceeded to make addition of Rs.32 lacs on account of unexplained loan from M/s. North East Logistics and added the same to the income of the assessee u/s.69.
In so far as credit in the bank account with ICICI bank of Rs.24,21,235/- for which the assessee had stated that these are out of loan from four parties again, AO found they were contrary confirmation of loan account and in the first confirmation there was no address mentioned and in the second confirmation certain addresses and PAN were furnished, but there were contradictions in the confirmation and in the entries of the amount credited. Even the PAN mentioned belongs to some other person and ITR also did not revealed any loan and advance. Accordingly, he made the addition of Rs.24,21,235/- taken by way of loan from four parties. Lastly, he has also added the amount of advances from M/s. Omkar Transport Corporation of Rs.12,50,000/- after giving detailed reasoning.
Ld. CIT (A) has confirmed all the additions in the following manner:
Addition of Rs.32 lacs.
“5 Having perused the purchase deed of the property and copies of bank accounts of the appellant and her husband as well as the confirmations of creditors as well as contentions made before the A.O., I find the appellant has been charging her story at every moment. Initially she did not disclose her property transactions, the bank accounts and the receipt of so called loans on specific queries in this regard by the AO. In the revised return of income also, there was no such disclosure. The A.O. had specifically raised queries relevant to these issues, but the assessee all along kept on denying having purchased any property or receiving/advancing any loans. When the A.O. confronted the assessee with AIR information in his possession, regarding investments in property, the assessee tried to explain the source of investment out of loans from her husband’s concern where she is an employee and also from her own sources and loans. The assessee never came out clean with her affairs before the AO in her ever changing story. The bank accounts of the assessee showed deposits at far off places which cannot be explained out of past savings. The loans advanced by various persons were not satisfactorily confirmed in the sense that onus cast u/s 68 was not discharged to prove the identity of creditors, their creditworthiness and the genuineness of transactions. The payments shown in the sale deed are through RTGS of ICICI Bank of husband of the assessee to PNB loan A/c of seller. The appellant has not given any details as to whose bank account has been credited by these RTGS. Secondly in the bank A/c of the assessee the RTGS numbers are not mentioned but only cheque numbers are mentioned. The appellant has failed to prove how the outgoing from account of assessee’s husband are related to her purchase of property. The claim of employee advance received from husband’s concern was never made before the A.O. despite so many opportunities by him. Secondly from the schedule 4 of balance sheet it is not ascertainable that this advance is to the assessee. It could be advance to any of employees. The appellant is thus trying to take advantage of this entry in schedule 4 of balance sheet and that she is an employee. Such contention not having been made before the A.O. is thus nothing but an unsubstantiated afterthought raised for the first time during appellate proceedings. The same is not tenable. Thus the assessee has failed to prove satisfactorily that she received impugned loan and salary advance from her husband. Action of AO in treating this unexplained investment is therefore confirmed. The ground of appeal 2 is rejected.
Addition of Rs.24,21,235/-
5. Having considered facts and circumstances of the case and rival contentions, I find that the lessee has been changing her story at every moment. Initially she denied having made any investments in property or having received or advanced loans. When confronted with the fact that she had made investments in property she came out with explanation that she had received loans from the said concerns, The deposits of Rs. 24,21,235/- in ICICI Bank initially was explained out of loans. Now cash deposits of Rs.6,60,000/- is being claimed as out of savings. As discussed in details above the AO has elaborately established that the assessee has failed to prove the genuineness of the credits as well as the genuineness of sources in her hands for cash deposits. The A.O. has also noted that the deposits have been made at far off places. Therefore, these cash deposits as well as cheque deposits have not been proved to be out of explained sources. The reliance of AO on cases cited supra is well placed in facts and circumstances of the case. In view of above discussion and discrepancies brought out by the A.O. in assessment order as well as appellate proceedings in ever charging version of the A.O., I am of the considered opinion that the appellant has failed to prove satisfactorily that:-
1. 1. The credits from M/s North East Logistic, M/s Gee Bee Enterprises, M/s Om Enterprises & M/s Sunshine Enterprises are genuine.
3. The source of cash and other deposits in her account is out of explained source. Therefore, the additions made by the A.O. as contested in ground of appeal no. 3 are confirmed. The ground of appeal is rejected.” Addition of Rs.12,50,000/-
“4.4.44 Having considered the facts and circumstances of the case and rival contentions, I find that the assessee has been changing her story at every moment. Initially she denied having made any investments in property or having received or advanced loans. When confronted with the fact that she had made investments in property she came out with explanation that she had received loans from the said concern and that part investment is out of her know sources. As discussed in details above the Assessing Officer has elaborately established that the assessee has failed to prove the genuineness of the credits. The reliance of Assessing Officer on cases cited supra in ground of appeal no.3 is well placed in facts and circumstances of the case and is relevant for this ground as well. In view of above discussion and discrepancies brought out by the Assessing Officer in assessment order as well as appellate proceedings in ever charging version of the Assessing Officer I am of the considered opinion that the appellant has failed to prove satisfactorily that the credit of Rs.12.50 lacs from M/s. Omkar Transport is genuine. Therefore, the addition made by the Assessing Officer as contested in ground of appeal no.4 is confirmed. The ground of appeal is rejected.”
Before us, ld. counsel for the assessee, Mr. Prakash Yadav submitted that assessee has explained the source in the following manner: Firstly; assessee has purchased an immovable property for Rs.44,07,642/- located at B-29, Chander Nagar, Ghaziabad.
Out of the above mentioned amount, Rs. 12,07,642 was paid partly by the assessee from her bank a/c and a sum of Rs. 32.00 lacs was paid through M/s North East Logistics i.e. the proprietary concern of her husband. Out of the above said amount of Rs. 32.00 lacs, Rs. 25,00,000/- (17.50 + 7.50) has been reflected as drawings in the books of North East Logistics i.e. the proprietary concern of her husband. The copy of Drawings Account was enclosed in the paper book. The assesse is also an employee of the North East Logistics and has received Employee Advance amounting to Rs. 7,00,000 /- from the concern. The amount is duly reflected in Schedule 4 under head “loans and advances “of the Financial Statements of the proprietary concern. Thus the source of payment of 32.00 lacs was fully explained with documentary evidences.
In support, he has also drew our attention to the copy of balance sheet of North East Logistics placed in the paper book at pages 35-40 and also employee advance schedule of Rs.7,08,162/- which included advance to the assessee amounting to Rs.7 lac which is appearing at Schedule-4 of the balance sheet. He further pointed out that both the authorities have overlooked the balance advance of Rs.25 lacs reflected in the drawing account in the books of M/s. North East Logistics. Further, the transactions of Rs.17,50,000/- and Rs.7,50,000/- were duly reflected in the drawings account which too has been ignored by the Assessing Officer.
Regarding addition of Rs.24,21,235/-, he submitted that credits mainly consists of unsecured loan from three parties, reimbursements from M/s. North East Logistics and cash deposits out of withdrawals. The summary of credits was summarized as under:
S No. Amount (Rs.) Description
1 1,20,000/- Reimbursements from M/s North East Logistic 2 6,870/- Interest provided by the bank 3 4,08,952/- Loan from M/s Om Enterprises 4 4,00,000/- Loan from M/s Sunshine Enterprises 5 8,25,4.13./- Loan from M/s Gee Bee Enterprises
6 6,60,000/- Cash deposits out of withdrawals and small savings of the assessee 24,21,235/-
The assessee during the course of assessment proceedings has narrated complete details of information as well as confirmation along with address and name of the parties along with PAN and before the ld. CIT (A) the discrepancy pointed out by the Assessing Officer was already explained with cogent evidences and reasons.
Regarding addition of Rs.12,50,000/- as unexplained investment in the property, his submissions in sum and substances were as under: The assesse has purchased 1/3 share in immovable property, on 20.05.2011, located at A-241/24 HIG, Duplex, Surya Nagar, Ghaziabad. For Rs.17,50,000/-. Out of the abovementioned amount, Rs. 5,00,000/- was paid by the assessee from her bank account and the balance was paid through unsecured loan from M/s Omkar Transport Corporation amounting to Rs. 12,50,000/-. The copy of confirmation of the said concern and its current account bank statement was enclosed. The assesse established identity and creditworthiness of the lenders and genuineness of the transactions by providing relevant bank statements, confirmations and PAN. All the amounts have been received/paid through the banking channels and are being reflected in the bank statement of the assessee.
On the other hand, ld. DR strongly relied upon the order of the Assessing Officer and ld. CIT (A) submitted that the assessee at all stage has changed her stand even thereafter no proper explanation or reasons could be given on the infirmities and discrepancies pointed out by the Assessing Officer. The Assessing Officer has not only given detailed reasoning in the assessment order but has also given proper rebuttal in his remand report to the submission made by the assessee which has been duly incorporated in the assessment order. He thus, strongly relied upon the order of the Assessing Officer and ld. CIT (A).
We have considered the rival submissions and also perused the relevant findings given in the impugned orders as well as material referred to before us. In so far as first addition of Rs.32 lacs which has been added as unexplained investment in the property, it is seen from the assessment order that, assessee firstly tried to contend that the amount of Rs.32 lac was received as a loan from M/s. North East Logistics. Thereafter, it was submitted that amount of Rs.25 lac was given out of drawings in the books of M/s. North East Logistics which is a proprietary concern of her husband and the copy of drawings account has been furnished before us. Besides this, the assessee has also submitted that she was an employee of M/s. North East Logistics and had received amount of Rs.7 lac as advance. These facts were duly explained before the ld. CIT (A) also. However, ld. CIT (A) has mainly gone through the fact that assessee has changed her stand and initially she has not disclosed her property transactions, bank accounts despite specific queries. Though, assessee may not have explained the things properly, but if during the course of assessment proceedings itself and again before the appellate proceedings, assessee with documentary evidences has filed her explanation with regard to the investment of Rs.32 lac that it was out of drawings in the books of proprietary concern of her husband, then Assessing Officer should have inquired from her husband as to how the drawings in the books have been utilized. Copy of ledger account of drawing in the books of M/s. North East Logistics clearly shows that huge withdrawals were made and whether these withdrawals were purely for house-hold expenses or for the purchase of the property should have been examined atleast. There is a presumption by the Assessing Officer that drawings account of assessee’s husband to the extent of Rs.17,50,000/- if it is considered to be advance given to the assessee then investments made by her husband at Rs.17,50,000/- remain unexplained. If that was his presumption, then Assessing Officer should have inquired or asked for the explanation from assessee’s husband as to how he has made the investment and how the withdrawals from his capital account has been utilized. Even in the remand report, he has reiterated the same reasoning and explanation without verifying what happened in the case of her husband, Shri Naveen Gupta. More so, when the sources of income of the assessee is merely a salary income and investment have been made to the extent of Rs.44 lacs in the property and the source is being explained from withdrawal from husband’s proprietary concern. In such a situation it was all the more incumbent that Assessing Officer should have examined her husband, Mr. Naveen Gupta to explain the source and how the money was utilized which was withdrawn. Even the employee advance of Rs.7 lac should have been confirmed from Mr. Naveen Gupta who has shown it in the balance- sheet that assessee was given employee advance of Rs.7 lac. Under these facts and circumstances of the case, in our opinion are that the matter should be restored back to the file of the Assessing Officer who should examine the source after calling Mr. Naveen Gupta and seeking his explanations with regard to the withdrawals and its utilization and whether such withdrawals in any manner have been utilized for the purchase of the property. Thus, this issue is remanded back to the file of the Assessing Officer to be decided as fresh.
In so far as addition of Rs.24,21,235/- is concerned, the assessee had shown that these were credits in the bank account with ICICI bank and the source of these credits were out of loan taken from three parties or reimbursement from M/s. North East Logistics and cash deposits out of withdrawals. The Assessing Officer has pointed out certain discrepancies and defects in the confirmation of the parties who have given the loan, that is, M/s. Om Enterprises, M/s. Sunshine Enterprises and M/s. Gee Bee Enterprises. From the documents placed in the paper book, it is seen that assessee has filed confirmed copy of ledger account alongwith the bank account and in the case of M/s. Omkar Transport Corporation, which reflects amounts given to the assessee. In the case of other parties, only confirmations have been given. Assessing Officer has pointed out defects in these confirmations, and also no bank statements have stated to have been furnished. These infirmities have been stated to be removed, but no finding has been given on this issue thereafter. We are of the opinion that on this issue also matter should be restored back to the file of the Assessing Officer and assessee is directed not only to file the bank statement of these parties but also their relevant income tax return and balance-sheets from where it can be examined, whether these parties have shown the loan given to the assessee and had the creditworthiness to advance loan to the assessee. The onus would be heavily on the assessee to prove that loan taken from these parties are genuine and they had the creditworthiness of advancing such loan.
As regards reimbursement from M/s. North East Logistics for amount of Rs.1,20,000/- is clearly reflected from the balance-sheet and the Assessing Officer should have examined whether these are reimbursements and the credit appearing in the bank account is out of reimbursement from the said concern. Accordingly this issue should also be examined by the Assessing Officer; And with regard to cash deposits also the assessee should furnished the fund flow statement to justify the same.
Lastly, with regard to Rs.12,50,000/- also the unsecured loan taken from M/s. Omkar Transport Corporation should have been examined from the bank statement as the assessee has filed the copy of bank statement of the said party wherein this amount has been reflected. The Assessing Officer should examine the bank account and also call for any information from the assessee about the creditworthiness of the said party. Accordingly, all these additions are remanded back to the file of the Assessing Officer to be decided a fresh after giving effective opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 17th September, 2019.