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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. N. K. Saini
ORDER This is an appeal by the assessee against the order dated 16.04.2015 of ld. CIT(A), Aligarh.
2. Following grounds have been raised in this appeal: “1. That the addition made on account of balance payment of Rs. 4,00,446/- other than bank loan and registration expenses of Rs. 3,20,000/- on purchase of stamps totaling Rs.7,20,446/- U/s 69 of IT. Act 1961 is unjust and bad in law and CIT(A) is also in error to reduce the amount Rs.1,00,000/- out of Rs. 7,20,446/-.
2. That the addition is made on account of amount paid for repayment of housing loan of Rs. 3,18,280/- U/s 69 of IT. Act, 1961 in unjust and not according to law and CIT(A) is in error in confirming the same.
3. That the assessee has right to add/delete or modify any grounds during the appeal proceeding.”
2 Khalid Anwar Khan 3. Facts of the case in brief are that the AO received the AIR information that the assessee had purchased property for Rs.32,00,000/- on 09.05.2008. For verification of the above information, copy of sale deed was obtained from the office of sub Registrar, Meerut which revealed that the assessee had purchased house property no. 160, Patel Nagar (South), Meerut for a sum of Rs.32,00,000/-. On the basis of AIR information, the AO issued notice u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) requiring the assessee to explain the investment made. In response, the assessee submitted as under: “1. It is to confirm that assessee along with his wife Smt. Farida Begum, purchased a residential house at Patel nagar, Meerut for Rs 32,00,000/- as per registration deed dated 09/05/2008 (copy attached).
It is further confirm that assessee borrowed Rs.28,27,321/- as loan from ICICI Bank. Copy of loan repayment schedule and provisional interest certificate is attached for confirmation. Further as assessee was not aware hence assessee has not claimed any deduction u/s 24(b) or u/s 80C(2) in his ITR for A.Y 2009-10. However, interest paid on self occupied property as per certificate was Rs.2,75,199/- and principal repaid wasRs.43,081/-.
Pl. find attached copy of ITR filed vide ack. no. 1403005321 dated 19.11.2009 at your office alongwith computation of income and challan of Rs 7,770/- for self assessment tax paid."
The AO again asked the assessee to file the source of the balance payment for the purchase of house, source of income of wife, copy of bank account and details of other properties etc. In response, the assessee submitted as under:
3 Khalid Anwar Khan “As discussed, the property under consideration has been purchased by assessee alongwith his wife Smt. Farida Begum. Amount paid by assessee alongwith his wife excluding housing loan was Rs.3,20,679/-. Further registration expenses including stamp value was Rs.3,20,000/-. As confirmed by the assessee this entire amount of Rs.6,40,000/-approx. was paid by the assessee alongwith his wife out of their personal savings accumulated over the past years. Further, Smt Farida Begum is into business of trading of handloom cloth and has filed her income tax return with taxable income of Rs.2,58,577/- vide ack. 1402004216 dated 19/11/2009 and deposited tax challan of Rs.5,150/- for self assessment tax paid. Sir, jointly their taxable income during A.Y. 2009-10 comes to Rs.5,56,795/- and further they were having their past personal savings as well. Hence you are requested to kindly accept the submission and process.”
The AO was not satisfied from the submissions of the assessee by observing that mere filing of return by the wife and declaring income u/s 44AF of the Act did not establish the fact that the wife of the assessee was doing any business. He, therefore, made the additions of Rs.7,20,446/- and Rs.3,18,280/- by observing as under: “6. In view of the above facts, it is held that property was purchased by the assessee only. However, benefit of loan taken from ICICI and payment of Rs.27,99,554/- through pay order no. 027895 dated 30/04/2008 is considered as source of investment. Regarding balance payment of Rs.4,00,446/- through ch. No. 353883 dated 9/05/2008 of State Bank of India, copy of bank account or source of deposit in this bank account is not furnished by the assessee hence this is considered as unexplained investment. Further registration amount of Rs.3,20,000/- incurred 4 Khalid Anwar Khan on purchase of stamp and registration expenses is also considered as unexplained. Total unexplained investment comes to Rs.7,20,446/- (4,00,446+3,20,000) which is added as unexplained investment u/s 69 of the IT Act, 1961. (addition of Rs.7,20,446/-) 7. Further the source of repayment of loan is not explained and from the statement of loan account no. LB MRT 00001739490 dated 18/10/2013, it is seen that assessee has to make repayment of house loan @ of Rs.31,828/- pm. First installment is due on 10/06/2008 and upto 10/03/2009 total EMI conies to Rs.3,18,280/- source of this repayment is also not explained and added to the income of the assessee u/s 69 of the IT Act, 1961.” (addition of Rs.3,18,280/-) 6. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted as under: “The property under consideration has been purchased by assessee along with his wife Mrs. Farida Begum, Amount paid by the assessee along with his wife excluding housing loan was Rs.3,20,679/-. Further, registration expenses including stamp value was Rs.3,20,000/-. As confirmed by the assessee this entire amount of Rs. 6,40,000/- approx was paid by the assessee along with his wife out of their personal savings accumulated over the past years. Further, Mrs. Farida Begum is into business of trading of handloom cloth and has filed her Income Tax Return with taxable income of Rs. 2,58,577/- vide Ackn. No. 1402004216 dated 19-11-2009 and deposited tax Challan of Rs.5,150/- for Self Assessment Tax paid. That the jointly taxable income during the A.Y. 2009-10 comes to Rs.5,56,795/-and further they were having their past personal savings as well. The above facts shows that the property was joint property for which a sum of Rs. 28,79,321/- was financed by the bank and 5 Khalid Anwar Khan balanced amount was made by the assessee from his own saving, therefore, addition made by the A.O. of Rs. 7,20,446/- was not justified.”
As regards to the addition of Rs.3,18,280/-, the submissions of the assessee were as under: “Regarding, second addition, it is submitted that the assessee and his wife has paid monthly installment of Rs.7,455/- for ten months out of which assessee share is 1/2 of Rs.74,550/- i.e., Rs.37,275/- rest of amount was given for calculation basis. Therefore, there is no jurisdiction of A.O. to add Rs.3,18,280/- because the assessee's share is only Rs.37,275/-. Hence, the addition made by the A.O. is without any basis.”
The ld. CIT(A) after considering the submissions of the assessee observed that the assessee claimed that half of the amount i.e. Rs.3,20,000/- was invested by his wife and that no explanation was given regarding the payment of Rs.4,00,446/- made vide Cheque No. 353883 dated 09.08.2008. The ld. CIT(A) further observed that no proper explanation has been given regarding to the stamp and registration expenses. However, he was of the view that every person has some cash, therefore, he considered Rs.1,00,000/- as explained and confirmed the addition of remaining amount of Rs.6,20,446/-. As regards to the another addition of Rs.3,18,280/-, the ld. CIT(A) observed that as per the schedule for payment of the bank loan. The monthly installment comes to Rs.3,18,280/- for which no explanation was given, therefore, the said addition was also confirmed.
6 Khalid Anwar Khan 9. Now the assessee is in appeal. The ld. Counsel for the assessee submitted that the assessee is a co-owner in the property with his wife, both of them were having half share each. He further submitted that the wife of the assessee was also assessed to tax but the addition had been made in the hands of the assessee for total amounts without considering the explanation given by the assessee. It was further submitted that wife of the assessee is assessed to tax and was having the sufficient amount for making the investment. A reference was made to page nos. 37 & 38 of the assessee’s paper book which are the copies of acknowledgment of return filed by Smt. Farida Begum, wife of the assessee and computation of her income. It was stated that neither the AO nor the ld. CIT(A) appreciated the facts in right perspective and the impugned addition was arbitrarily made/sustained.
In his rival submissions the ld. Sr. DR strongly supported the orders of the authorities below and reiterated the observation made in their respective orders.
I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that the total investment in the property has been considered in the hands of the assessee inspite of the fact that his wife is also co-owner in the property under consideration which is evident from the copy of the sale deed placed at page nos. 7 to 27 of the assessee’s paper book. It 7 Khalid Anwar Khan also noticed that the wife of the assessee who is co-owner in the property under consideration was assessed to tax and filing the return of income but the said fact has not been considered while making the additions in the hands of the assessee. I, therefore, deem it appropriate to remand the matter back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 29/09/2017)