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Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
O R D E R
PER MANISH AGARWAL, AM:
This appeal is filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (‘the CIT(A)’ in short) dated 04.06.2024 passed u/s 250 of the Income Tax Act, 1961 in Appeal No. NFAC/2016-17/10133933 against the order passed u/s 147 r.w.s 144 of the Act dated 31.03.2022 for Assessment Year 2017-18.
Brief facts of the case are that assessee is an individual and filed her return of income on 20.06.2017 declaring total income at Rs.7,66,590/-. Based on the information available with the AO that assessee has introduced capital of Rs.7.00 Crores in GSGK Hotels LLP during the previous relevant to assessment year under appeal, the case of the assessee was reopened by issue of notice u/s 148. In response Suman Sangwan vs. ITO the assessee filed return of income declaring same income as was declared in the return of income filed u/s 139(1) of the Act. Thereafter noticesu/s 142(1) alongwith questionnaires were issued from time to time. The assessee has objected the reopening of assessment and stated that contribution of assessee was Rs.3.50 crores and remaining Rs.3.50 crores was of her husband Sh. Mewa Singh, who actually paid the contribution of the assessee alongwith his own contribution in the partnership firms. The assessee further submits that since assessee’ contribution was paid by assessee’s husband and in support of the claim, copy of his bank statements were also filed before the AO. However, the submissions made by the assessee were not accepted and AO is treated the entire contribution of Rs.3.50 crores as unexplained investment of the assessee u/s 69A of the Act.
Against the said order, the assessee is in appeal before the Tribunal wherein the assessee has taken following grounds of appeal:
1. General The orders passed by the Lower Authorities are bad in law, are against facts and circumstances of the case, are against principle of natural justice and are against the provisions of the Income Tax Act.
2. Issue of notice u/s 147 Commissioner of Income Tax (Appeals) has grossly erred in confirming the order of Assessing Officer who had grossly erred under law and facts of the case while recording/confirming reasons to believe for issue of notice u/s 147.
3. Order Passed u/s 144 is Bad in Law Commissioner of Income Tax (Appeals) has grossly erred in confirming the order of Assessing Officer who had grossly erred under law and facts of the case while passing order/ confirming order u/s 147 read with Section 144, when there were no such circumstances to pass order u/s 144, which is illegal and bad in Law.
4. Basis of information Commissioner of Income Tax (Appeals) has grossly erred in confirming the order of Assessing Officer who had grossly erred while recording reasons to believe for issue of notice u/s 147 on the basis of information received through “Insight Portal” based upon survey operation on M/s GSGK, without carrying any independent investigation of its own in any manner.
Suman Sangwan vs. ITO 5. Material for Recording Reasons to Believe not disclosed Commissioner of Income Tax (Appeals) has grossly erred in confirming the order of Assessing Officer who had grossly erred in not confronting material in its possession relied upon by him if any for recording reasons to believe or making Assessment Order, therefore order of AO is against Principal law of natural justice and is bad in Law.
6. Disposing of objections to issue of Notice u/s 147 in flimsy manner. Commission of Income Tax (Appeals) has grossly erred in confirming the order of Assessing Officer who had grossly erred in disposing off the objections raised by Assessee on issue of notice u/s 147 in flimsy manner which is against principal of natural justice, is illegal and is bad in law.
7. Assessment/ Appellate order made without considering Documents submitted in Assessment/ Appellate Proceedings: - Lower Authorities have grossly erred in making/confirming addition of Rs.3,50,00,000/- under section 69 on account of unexplained investments without considering the facts of the case, submissions made by Assessee and documents produced by Assessee in assessment and appellate proceedings, therefore addition made in assessment order is against the provisions of Income Tax Act, is against principal of natural justice and is bad in law.
Assessing Officer has erred in asking to prove source of source funds:- The Lower Authorities have grossly erred in presuming that Assessee is supposed to submit source of source of funds, which is against Law as laid down by many Judgements of Courts and also under the Principal of Natural Justice.
General The assessee reserves right to amend, add or modify any grounds of appeal
before the disposal of the appeal.”
4. During the course of hearing, vide application filed under Rule 29 of the ITAT, Rules, 1963, the assessee has taken additional ground which are as under: “That the assessment proceedings initiated under Section 148 and concluded under Section 147 of the Income-tax Act, 1961 are without jurisdiction, illegal, and void ab initio.”
5. Regarding admission of additional ground of appeal, assessee has placed reliance on the judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC) and submits that the additional ground taken is purely legal in nature and does not require any further investigation in the matter.
On the other hand the Ld. Sr. DR vehemently objected to the admission of the additional grounds of appeal and requested not to admit the same.
Heard both the parties and perused the materials available on record. From the perusal of the additional ground taken, it is seen that additional ground of appeal
is legal in nature. Thus, the same is admitted for adjudication.
8. Before us, in support of the ground No.7 taken on the merits of the addition, Ld. AR submits that total investment of Rs. 7.00 crores (including Rs. 3.50crores of assessee) in the capital of the firm was contributed by husband of the assessee who was NRI and transferred the same from his bank accounts. The Ld. AR drew our attention to the bank statements of the husband of the assessee with HDFC Bank from where three payments of (i) Rs.1.89 Crs. (ii) 2.00 Crs. & (iii) 3.00 Crs. were transferred to the bank account of the firm M/s GSGK Hotels LLP on 17.03.2017. Besides this, remaining amount of Rs. 11 lacs were transferred out of the Axis bank account of Sh. Mewa Singh Sangwan from where Rs. 5.00 lacs were transferred on 25.10.2016 and further Rs. 6.00 lacs were transferred on 26.10.2016. The Ld. AR submits that all payments were made from the regular bank accounts of the husband of assessee and copies of the same were filed before the lower authorities who failed to appreciate the same. The Ld. AR further submits that even source of the source in the hands of assesse was also explained as he has taken loan against property amounting to Rs. 1.80 Crs. from ICICI Bank which was credited in the HDFC Bank Account on 04.03.2017 and another loan of Rs.1.80 Crs. was taken from ICICI Bank which was credited in his account on 28.02.2017 out of which the amount was paid to the partnership firm. The Ld. AR also submits that from perusal of the bank statement, it could be seen that Sh. Mewa Singh Sangwan has sufficient balances in the bank and there was also a credit balance at the end of the previous year in HDFC Suman Sangwan vs. ITO Bank account after debiting the amount transferred to the partnership firm. The Ld. AR submits that when the husband of the assessee has admitted the transfer of entire contribution of assessee and further discharged the burden by filing the relevant bank statements to establish that the funds were transferred by him to the partnership firm, no addition should be made in the hands of the assessee for the same. He thus, requested for the deletion of the addition so made.
9. Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submits that claim of the before the AO and CIT(A) was rejected on the ground that the assessee has failed to establish the creditworthiness of Sh. Mewa Singh Sangwan, husband of the assessee for providing the funds towards capital contribution on her behalf, therefore, he requested for the confirmation of the addition so made.
10. Heard the both parties and perused the materials available on record. The sole issue in this case is with respect to the addition of Rs.3,50,00,000/- being investment in the partnership firm made by the assessee, source of which remained unexplained.
11. Before us, claim of the assessee was that entire funds of Rs.3,50,00,000/- were provided by the husband of the assessee who has a NRI and residing at Dubai, and transferred the same from his bank accounts. In support of the claim, assessee filed copies of bank statements of NRE & NRO accounts of Sh. Mewa Singh with HDFC Bank and Axis bank from where the funds were transferred.
12. From the perusal of the statement of account with HDFC A/C No.00901010000112 under category NR IMPERIAL available in PB pages 25 to 26 back side, it is seen that there were three payments made from this bank account (i) Rs.1.89 Crs. (ii) 2.00 Crs. (iii) 3.00 Crs. each on 17.03.2017. The immediate source Suman Sangwan vs. ITO of these amounts was out of the balance available of Rs.1,10,51,221 as on 22.02.2017. Besides this a sum of Rs.1,80,00,000/- got credited on 28.02.2017 from ICICI Bank loan account bearing No.LBGUR00003213529, which is a loan taken by him against property from ICICI Bank on 28.02.2017 and on the same date this amount of Rs.1.80 Crs. was transferred to above stated HDFC Bank Account of Sh. Mewa Singh Sangwan for making the partnership firms. Further a sum of Rs.1,47,86,210/- got credited in HDFC bank Account from another ICIC Bank Loan Account No.LBGUR00003399192 which is second loan taken by Sh. Mewa Singh Sangwal against property of Rs.1.80 Crs., sanctioned and disbursed on 28th Feb. 2017 and on the same date Rs.14,786,210/- were transferred to the HDFC Bank Account. All these funds were utilized for making payments towards the capital contribution at Rs.3.50 Crs. of the assessee as well as of Sh. Mewa Singh Sangwan himself of Rs.3.50 Crs. each. Further from the perusal of the HDFC Bank account it is seen that after transferring the funds to the partnership firm, this account had closing debit balance of Rs.2,24,22,678/- i.e. the loan from HDFC bank. It is further seen that Sh. Mewa Singh has aone more account with HDFC Bank bearing A/C no.009010600243 under the category NRE & NRO where funds sent from Dubai in US$ were credited and there was closing balance of Rs.1,63,22,969/- as on 31.03.2017 and from this account payment of Rs. 12 lacs on 22.03.2017 was made to the partnership firm. The copy of this account is available in PB pages 27 to 29. Besides this, there is another bank account with Axis Bank bearing No.911010061959659/- with category NRI and NRO from where Rs. 11 lacs were transferred to the partnership firm M/s GSGK Hotels LLP. From the perusal of the said account, it is seen that the maximum funds in the said account were out of remittance from outside India. All the bank accounts and financial statements filed before the lower authorities are available in paper book pages 26 to 36 filed by the Suman Sangwan vs. ITO assessee. The assesse also filed copy of return of income of Sh. Mewa Singh Sangwan as per which he has paid taxes on the interest income and it is further declared in the computation that he is working with Emart Maritime, Dubai and getting monthly salary of AED Rs.54,000/- which is not taxable in India. Further, an income of Rs.74,59,552/- was also claimed as exempt income. From all these facts, it could be seen that Sh. Mewa Singh Sangwal has sufficient creditworthiness to advance a sum of Rs. 3.50 crores to the assessee for contributin her share in the partnership firm alongwith his own capital contribution of Rs.3.5 Crs..
13. In view of above discussion, in our considered opinion, once the assessee has been able to establish the creditworthiness of Shri Mewa Singh Sangwan from whose bank accounts contribution towards partners capital were transferred, no addition could be made by treating the same as unexplained. Accordingly, we direct the AO to delete the addition of Rs.3.5 Crs. made u/s 69A of the Act.
As a result, Grounds of appeal
No.7 taken by the assessee is allowed.
15. Since, we have already allowed ground No.7 of appeal and deleted the additions on merits, other grounds of appeal including the additional ground of appeal challenging various legal issues on reopening require no adjudication.
In the final result, appeal of the assessee is allowed. Order pronounced in the open Court on 19.12.2025.