SHEETAL VINOD GANJU,MUMBAI vs. ITO 25(1(2), MUMBAI

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ITA 4848/MUM/2013Status: DisposedITAT Mumbai27 September 2017AY 2010-114 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) had passed a cryptic and non-speaking order by merely copying the AO's order. Therefore, the matter was remanded back to the CIT(A) to pass a reasoned and speaking order.

What were the facts?

The assessee declared a loan of Rs. 70 lakhs, which the Assessing Officer (AO) treated as a gift under Section 56(2)(vi) of the Income Tax Act. The AO found discrepancies in the loan arrangement and the assessee's repayment capacity. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the CIT(A) passed a proper and reasoned order. Whether the loan transaction was genuine and not a disguised gift.

Which sections of the Income-tax Act were involved?

Section 56(2)(vi),Section 131,Section 143(3),Section 254(1)

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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य लेखा सद�य,राजे�� के अनुसार लेखा सद�य लेखा सद�य राजे�� के अनुसार राजे�� के अनुसार -Per Rajendra,AM: राजे�� के अनुसार Challenging the order,dt.23/04/2013 of CIT(A) -35,Mumbai the assessee has filed the present appeal.Assessee,an individual filed her return of income on 30/07/2010,declaring total income of Rs.3.23 lakhs.The Assessing officer(AO)completed the assessment on 29/3/1, u/s. 143(3) of the Act,determining her income at Rs.73.23 lakhs. 2.Effective Ground of appeal

is about treating loan of Rs.70 lakhs as gift u/s. 56. (2)(vi) of the Act.During the assessment proceedings the AO found that the assessee was one of the allottees in Adarsh Housing Society.He directed her to file complete details of purchase / allotment of the flat along with source of investment. In her explanation the assessee stated that she had obtained loan of Rs.70 lakhs from Mrs. Neelu T. Kaul (NTK) .The AO recorded her statement u/s. 131 of the Act and directed her to furnish the bank statement of the creditor to prove the genuineness and creditworthiness with a copy of return of income. On perusal of the return of income of NTK,the AO observed that the transaction raised doubt about the genuineness of the loan,that loan was repayable, within a period of 15 years after getting possession of flat in the society at three different interest rates i.e. 3% for 1st five years, 5%

4848/M/13-(10-11) Sheetal Vinod Ganju for another 5 years and 7.5% for the remaining 5 years, that the assessee had repaid Rs.1 lakhs to the lender on 30/12/2010 and 10/03/2011, that the assessee was not having sufficient income to repay the loan amount in the specified years as per the loan agreement, that the source of income of the assessee was not commiserating with the liability credited by her in the form of so called loan, that the onus was on the assessee to prove the genuineness of the transaction by showing her repayment capacity, she could not take shelter of being a relative of NTK.The AO issued summons to NTK and recorded her statement also.

After considering both the statements the AO held that assessee was only a benamidar of the property funded by NTK, that the cheque was given directly to Aadarsh Housing Society , that it was only a mutual adjustment between the assessee and NTK along with her husband to get allotment of the adjacent flat in same society and on the same floor to avoid enquiries of concerned authorities.The AO asked the assessee to explain as to why the loan amount of Rs.70 lakhs should not be treated as receipts in her hands as per the provisions of section 56 (2)(vi)of the Act .

After considering the submission of the assessee ,dtd. 9/3/2012,the AO held that same was not acceptable,that the husband of the alleged loan creditor was also an allottee on the same floor of the assessee,that she had no capacity to repay the loan, that the intention of the loan creditor was malafide, that the explanation of the assessee was a lineal decedent of loan creditor.Finally,he held that loan of Rs.70 lakhs received by the assessee from NTK was to be treated as receipt u/s.56 (2)(vi) of the Act.

3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority and made detailed submissions.After considering the available material, the FAA reproduced the part of the order of the AO as it was and he dismissed the appeal filed by the assessee .

4848/M/13-(10-11) Sheetal Vinod Ganju 4.During the course of hearing before us the Authorised Representative(AR)contended that the FAA had not applied his mind,that he had passed an order by merely copying the assessment order in verbatim without taking cognizance of the submissions and arguments of the assessee, that the order of the FAA was arbitrary and unjust ,that the colour of transaction from loan to gift could not be unilaterally changed when the assessee as well as lender had confirmed the transaction.He referred to the case of Chardrakant S. Shah (124ITD177) that was confirmed by the Hon'ble Bombay High Court on 06.09.2010 (Income tax Appeal No. 3154 of 2009). The Departmental Representative(DR) stated that the FAA had passed the order after applying his mind.

5.We have heard the rival submissions and perused the material before us. We find that the assessee had claimed to have received a loan of Rs.70 lakhs from NTK,that the AO had rejected the claim made by her,that he had recorded the statements of assessee and the creditor,that he held that the amount in question was to be taxed as per provisions of section 56(2)(vi) of the Act, that the FAA has passed a very cryptic and non speaking order.We find that at para 5.3.10.1 to 5.3.10.6 he had simply copied the order of the AO. He had not given any reasons as to why he was not convinced by the submissions made during the appellate proceedings.In our opinion being FAA,the CIT(A) should pass a reasoned and speaking order.The size of the order may not be of material importance,but what is important is reasoning for accepting/rejecting the arguments/submissions of the AO/assessee. It is right of AO as well as assessee to get a reasoned and speaking order.Considering the facts and circumstances of the case,we are of the opinion that in the interest of justice matter should be sent back to the file of FAA and he is directed to pass a reasoned and speaking order after considering the submissions of the assessee and case laws relied upon by the assessee.

Effective Ground of appeal , raised by the assessee is allowed her favour in part.

As a result, appeal filed by assessee stands partly allowed.

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