SHRI SUBASH GUPTA,JAMMU vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, JAMMU
Facts
The assessee, engaged in the business of purchasing and selling immovable properties, declared a business loss in the return of income. During assessment, an addition of Rs. 1.81 crores was made by the AO under Section 69 for unexplained investment in immovable property, based on TDS reflection in Form 26AS. The CIT(A) upheld this addition, concluding that the assessee's explanations lacked substantive evidence to overturn the AO's findings.
Held
The Tribunal observed that all payments for the immovable properties were made through banking channels between FY 2013-14 and FY 2017-18, recorded in the books of accounts as stock-in-trade, and requisite TDS was deducted. The source of the investment was found to be fully explained from the assessee's regular bank account, and no suppression of payments was identified. Consequently, the Tribunal deleted the addition of Rs. 1.81 crores made under Section 69.
Key Issues
Whether the addition under Section 69 of the Income Tax Act, 1961, for unexplained investment in immovable property was justified, given that the assessee claimed all payments were made through banking channels, recorded in books, and TDS was deducted and reflected in Form 26AS.
Sections Cited
250, 143(3), 144B, 194IA, 69, 115BBE, Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. UDAYAN DASGUPTA
Per Udayan Dasgupta, J.M.:
This appeal is filed by the assessee against the order of the ld. CIT(A) NFAC, Delhi dated 18.11.2024 passed u/s 250 of the Income Tax Act, 1961 which has emanated from the order of the AO, NFAC, Delhi u/s 143(3) r.w.s. 144B of the Act,
1961 dated 24.08.2021.
2 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19
The grounds of appeal taken by the assessee in form 36 are as follows:
“1. That on the facts and circumstances of the case and law, the Ld. CIT (A)-NFAC, Delhi has confirmed the addition made by the Ld. AO without application of mind and the order of the Ld. CIT(A), NFAC is illegal and unjustified.
That on the facts and circumstances of the case, the Ld. CIT(A) has erred in dismissing the appeal of the assessee on the ground that explanation of the assessee lacks substantive evidence to overturn the AO's conclusion without appreciating the full facts of the case brought to his knowledge during the course of appellant proceedings.
The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal.”
Brief facts emerging from records are that the assessee is a partner in partnership
firms (PFAS) deriving income from firm by way of share in profits and has rental
income under the head income from house property and other source income by way
of bank interest. Apart from above the assessee is engaged in the business of purchase
and sales of immovable properties and investment in immovable property are held as
stock in trade and reflected in audited balance sheet and income tax returns year to
year.
Return of income filed in regular course declaring business loss of Rs. 40.01
lakhs, was selected for scrutiny and in course of assessment proceedings replies and
submissions were filed in response to various notices issued and finally the assessment
3 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19 was completed with an addition of Rs. 1.81 crores, on the basis of TDS reflection u/s
194 IA of the Act 61, as reported in income tax portal in form 26AS amounting to
Rs.1,81,175/-, which was alleged to be one percentage of the total purchase value of
immovable property during the year, which according to the AO has remained
undisclosed.
In proceedings before the Ld. first appellate authority , detail submissions were
filed along with paper book containing documentary evidences and copies of
agreement of purchase of immovable property , audited accounts, bank statements,
along with year wise break up of payments made for such purchase to the promoter
builder M/s M3M India Pvt Ltd , routed through bank channel and year wise deposit of
TDS u/s 194 IA of the Act , to the credit of the income tax authorities (the assessee
being the buyer and transferee in this case) has also been filed and duly reflected in
(page –9 of the CIT (A) order, but the Ld. CIT(A) has dismissed the appeal by
observing as follows:
“6.1 1 have carefully reviewed the assessment order passed by the Assessing Officer (AO), the grounds of appeal, and the submissions made by the appellant during the appellate proceedings
6.2 The central issue under adjudication pertains to the addition of Rs. 1,81,17,500/-under Section 69 of the Income Tax Act, which was made on account of unexplained investment.
6.3. The appellant stated to be engaged in the sale/purchase of immovable property, rental income, and is a partner in a partnership firm. He filed a return declaring a loss of
4 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19
Rs.40,01,629/-. During scrutiny, the AO observed a transaction of Rs. 1,81,17,500/-for the purchase of property from M3M India Pvt. Ltd., reflected in Form 26AS. Despite multiple opportunities, the appellant failed to provide satisfactory explanations regarding the source of this investment. The AO, relying on the available material and in the absence of a credible explanation, invoked Section 69, treating the investment as unexplained and assessed it under Section 115BBE.
6.4 The appellant contends that the investment was duly recorded in his financial statements, including payments towards stamp duty, registration charges, and other related expenses. He attributes discrepancies in the opening stock figures to typographical errors, clarifying that the amounts were correctly accounted for as purchases in the trading account. The appellant argues that all payments were made through banking channels, and requisite TDS was deducted and deposited.
6.5 The appellant's accounts were audited, and any significant errors or omissions impacting the computation of taxable income should have been certified by the auditors. However, no such certification was provided to corroborate the appellant's revised claims neither during the assessment proceedings nor during appellate proceedings. The appellant's attempt to rectify errors in computation after the audit is not sufficient to disprove the AO's findings. Such changes, unsupported by corresponding audit revisions, lack the requisite credibility.
Secondly, despite requests made by the AO, the seller did not furnish specific transactional details that could clarify the nature and source of the funds. This lack of cooperation further constrained the AO's ability to independently verify the transactions.
The appellant asserts that the documents provided during the appellate proceedings were also submitted during the assessment. As such, these do not qualify as additional evidences.
6.6 In light of the above, the addition made under Section 69 is upheld. The appellant's explanations lack substantive evidence to overturn the AO's conclusions. Consequently, the appeal is dismissed, and the assessment order is sustained.”
5 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19 6. Now the assessee is before the tribunal on the grounds contained in the
memorandum of appeal.
The Ld. AR in course of hearing filed a short paper book containing copies of
audited financials, for the asst year 2017-18 ( earlier year ) and also for the year under
appeal, copies of agreement of purchase of two residential flats , bank statement of
assessee with J & K Bank A/c xxxxxxx10301 , through which payments made, copies
of written submissions filed before AO and before Ld. CIT(A) along with supporting
evidences, ledger A/c of the builder promoter M3M India Pvt Ltd, and other allied
papers .
The Ld. AR submitted that during the financial year 2012-13 (relevant to Asst
year 2013-14) the assessee entered into agreement for purchase of two residential flats
from two different parties namely:
Vijay Lakshmi Agarwal agreement dated 3rd August, 2012, for apartment No 21C (i) / Tower 09 , Project M3M Golf Estate, Gurgaon, for Rs. 2.90 crores, out of which 2.01 crores remains outstanding to be paid to the promoter builder M3M India Pvt Ltd, and the remaining balance of Rs. 89 lakhs payable to vendor, Mr Agarwal. Mr. Hemand Dhingra agreement dated 14th June, 2012, for apartment no 04B, (ii) Tower – 7, Project M3M Golf Estate, Gurgaon, for Rs. 4.76 crores, out of which 3.60 crores remains outstanding to be paid to the promoter builder M3M India Pvt Ltd, and the remaining balance of Rs. 1.15 crores lakhs payable to vendor, Mr Dhingra.
6 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19 9. He further submitted that as per terms of the agreement the assessee has paid the
purchase amount to the promoter builder M3M ,over the period from FY 2013-14 till
FY 2017-18, as per stage of progress of construction of the building , all through bank
channel and all payments are duly reflected in the J & K Bank A/c of the assessee, over
the years and are also recorded in regular books of accounts and audited balance sheets
and are considered as stock in trade of the assessee over the years, and in compliance
to the provisions of the Act, TDS has been deducted from all such payments made , the
assessee being the buyer ( transferee ) and duly deposited to the credit of the
Government (income Tax a/c) and duly reflected in Form 26AS year to year.
He further submitted that copies of the ledger A/c of the builder M3M are duly
filed before the AO and CIT(A) which is also a part of the pb and all payments made
through bank channel and TDS deposits are clearly ascertainable and a year wise
summary of the same are also reflected in page – 9 of the CIT(A) order including the
payment of Rs. 86,57,299/-, on account of stamp duty, registration charges and GST.
He further explained that the figure of Rs. 1,81,175/- is the TDS amount which
has been paid to the credit of the income tax authorities during the FY 2017-18, and is
duly reflected in form 26AS, (for Asst year 2018-19) which is just a part of the entire
TDS figure amounting to Rs. 6,63,531/-, covering the entire transactions.
7 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19 12. He further submitted that the AO has wrongly alleged that the investment made
for purchase of the immovable property are not recorded in books of account when the
said investment made over the period of FY 2013-14 to FY 2017-18, are duly reflected
in books of accounts and bank statements over the years because all payments are made
through bank channel and there are no cash transactions at all.
For easy understanding the Ld. AR referred to the summary contained in the
appellate order which is reproduced below:
8 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19 14. He further referred to the bank statement of the assessee to point out that all
payments made to promoter builder M3M during the FY 2017-18 , are also evident and
reflected in bank statement and there is no doubt regarding the source authenticity and
genuineness of payments made and he prayed for deletion of the addition which has
been made simply on the basis of presumption and surmise without looking into
materials and evidence on record.
9 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19
Overall Summary is as under:
M3M India Ltd (Flat 3,60,54,71 4B/ Tower -7) 5.00 Agreement 14/06/2012 M3M India, Flat 21C / 2,01,04,37 Tower - 9) 0.00 Agreeme nt 3/08/201 2 Stamp Duty, Regd 86,57,299. charges, GST 00 Payments through Bank : FY 2013- 1,18,12,88 Including 14 8.00 TDS
FY 2014- 3,73,89,18 15 3.00 Do
FY 2015- 15,33,414. 16 00 Do
FY 2017- 1,40,80,89 18 9.00 Do
6,48,16,38 6,48,16,38 4.00 4.00
TDS deposited: 93,129.00 FY 2013-14
1,14,642.00 FY 2014-15 76,060.00 FY 2014-15 1,72,187.00 FY 2014-15 11,004.00 FY 2014-15 15,334.00 FY 2015-16 1,81,175.00 FY 2017-18
6,63,531.00
10 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19 15. The Ld. DR relied on the order of the Ld. CIT (A), but he did not dispute the
entries in the bank statement regarding payments made by assessee over the years,
supported by the copies of agreements of purchase and the TDS as reflected in form
26AS.
We have heard the rival submissions and considered the materials on record and
we are of the opinion that there are no suppression of payments made for purchase of
the residential flats , which are all made over the years starting from FY 2013-14 till
FY 2017-18 and TDS are also deducted u/s 194 IA at the time of payments being made
to the builder M3M India PVT LTD and all payments are through bank channel
including the payments made during the year under appeal .
As such considering the entire factual aspect of the matter supported by
payments reflected in bank statements and investment accounted for in regular books
under stock in trade and duly reflected in audited balance-sheet we have no hesitation
in deleting the addition of Rs. 1.81 crores made u/s 69 of the Act 61, the source being
fully explained to have been made out of regular bank account of the assessee.
11 I.T.A. No. 671/Asr/2024 Assessment Year: 2018-19 18. In the result, the appeal of the assessee is allowed.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate
Tribunal) Rules, 1963 as on 25.11.2025
Sd/- Sd/- (Dr. M. L. Meena) (Udayan Dasgupta) Accountant Member Judicial Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T True Copy By Order
