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Income Tax Appellate Tribunal, A/“SMC” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
1. This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-7, Chennai dated 21.06.2017 pertaining to assessment year 2012-13.
2. There was a delay of 03 days in filing this appeal. Consequent to this, the ld. Authorised Representative of assessee filed a condonation petition dated 14.11.2017 for condoantion of delay. I have gone through the condonation petition stating that the delay was occurred on the reason that the appeal paper was prepared and sent for counsel on 21.08.2017 and thereafter, the appeal papers received was misplaced in ld.A.R’s office. Hence, the ld.A.R was not able to prepare the paper for filing the appeal in time. After tracing the appeal papers, he filed the appeal in the Registry immediately on 04.09.2017 due to intervening Saturday on 2/3/17 and Sunday on 3/3/17. Therefore, lar prayed that delay of 03 days is condoned. In my opinion, the reasons shown are justified and hence, delay in filing the appeal belatedly for 03 days before the Tribunal is condoned and appeal is admitted for adjudication.
The main grievance of assessee in her appeal is with regard to challenging the addition of `16,47,357/- towards unexplained investments u/s.69 of the Act.
The facts of the case are that the assessee and her spouse, Shri P.H.Subramoni are the Directors in M/s.Val-Met Engineering (P)
Ltd. The assessee during the period under consideration had purchased land and building at No.AE-278, Plot No.2264, 4th Avenue, Anna Nagar, Chennai-40 along wither husband for a consideration of `1,45,00,000/-. The total expenditure claimed including registration charges is `1,57,55,120/-. During the course of assessment proceedings, after reconciling the investments made by the assessee and source explained thereon, the AO noticed that there was no evidence/confirmation in support of the investments made to the extent of `16,47,357/- and hence, the AO treated same as unexplained investments and added to the total income of assessee u/s.69 of the Act. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, the Ld.CIT(A) sustained the addition towards unexplained investment u/s.69 of the Act. Against the order of Ld.CIT(A), now the assessee is in appeal before us.
Before us, ld.A.R submitted that the assessee received that amount from assessee’s mother, Mrs.Gowri Venkatesan and from assessee’s sister, Mrs.Harini and the assessee furnished the details of returns of income filed by the said relatives. Even, they confirmed that they had given the above money to the assessee, even that was not accepted by the Department.
On the other hand, ld.D.R submitted that when the letters issued to them were returned and the return filed by the assessee does not the capacity of them to lend money to the assessee.
7. I have heard both the parties and perused the material on record. Admittedly, in this case, during the appellate proceedings, the Ld.CIT(A) called for the Remand Report. In the Remand Report, the AO mentioned as follows:-
‘Now the assessee has filed evidence by way of confirmation letters from Smt.Gowri Venkatesan and Smt. V.Harini totaling Rs.20,00,000/-. The evidences filed by the assessee before the CIT(A) by way of confirmation letter has been pursued. The assessee was also given opportunity to prove the same. Accordingly the assessee representative appeared and filed a reply on 23.02.2017. After examining the, evidences furnished and after going through the submissions made by the assessee, the following issues are brought out.
The confirmation letters submitted by the assessee are not admissible as evidence as the mode and date of payment are not mentioned therein. In the absence of the mode and date payment, it is not worth to rely on the confirmation letter. During the course of the assessment proceedings, all the credits and withdrawals were duly considered and the assessment was finally made.
The assessee has furnished the details of the Income-tax return filed by respective loan creditors. Mere filing of copy of I.T return, cannot be accepted as evidences for having extended loan to the assessee. It should further be strengthened by filing relevant bank statements. In the absence of balance sheet and statement including withdrawals, it is not worth to rely on the confirmation letter filed.
Besides, as per the letter dated 21.02.2017 filed by the assessee, it has been claimed that the amount was received in cash. The assessee has failed to prove that the persons who have advanced loan, have sufficient cash balances and sources for extending such loans. In this background, it is submitted that the evidences submitted are insufficient and the Commissioner of Income-tax(Appeals), may kindly decide based on the merits of the case.”
1 There was once again verification of loan creditors and genuineness by the AO vide letter dated 08.03.2017 stating as follows:-
“As per your letter to examine the identity, genuineness and credit worthiness of loan creditors of the assessee summons were issued to the following loan creditors on 17.03.2017.
Suit. Gown Venkatesan No.117, Vinayaga Nagar, Trivandrum-695 002.
Smt. Harini V D-22, Rosariya Apartments, Thorai Pakkam Chennai-600 097. The above two summons were returned un-served by the postal authority and mentioned as ‘Left’.
Smt. Gown Venkatesan one of the loan creditor appeared along with Shri R. Ganesh, CA on 12.04.2017 and filed a letter dated 12.04.2017, in that letter she has stated that “Her permanent address is Flat No.32, Block 5, Manasarovar, Raja Apartment, 11A Arcot Road, Porur, Chennai-600 116, for the proof of her identity, she has furnished copy of the identity card issued by Election Commission of India and copy of the Adhar Card issued to her”.
For the genuineness and credit worthiness of the loan advanced to the assessee Smt. V. Meenakshi, it has been stated that Smt. Gown Venkatesan was an employee of a company namely M/s. Hamon Shriram Cottrel (P) Limited in support of the above. Copy of TDS certificate in Form No.16 has been furnished. As per TDS Certificate the total income of Smt. Gown Venkatesan was Rs.1,87,630/- only. Further, it is informed that she has got some money from her father-in-laws property.
During the discussion, she informed that from the salary saving and money received by way of her father in law property. She had given hand loan to her daughter Smt. Meenakshi i.e. assessee. She has confirmed that she has given hand loan of Rs.10 lakhs by cash only. She was requested to furnish the Bank statement for the period of loan for which she informed as below:
I could not immediately trace the bank statement relevant to the period of loan. Hence I am not submitted them.
Further Smt. Gown Venkatesan has explained that she is having two daughters namely Smt. Meenakshi ‘Assessee) and Smt. V. Harini one of the loan creditor. Smt. Gown Venkatesan has given 10 lakhs loan to the assessee and Smt. V. Harini also has given Rs.10 lakhs loan to the assessee. Smt. Gown Venkatesan informed that, at present Smt. V. Harini is settled in Australia since Smt. V. Hanini has not appeared details from her could not be verified.”
7.2 In response, the assessee replied vide letter dated 27.05.2017 as follows:
“Please refer to the remand report copy of which has been shared to offer the comments thereon.
Regarding the return of the summons originally served with the endorsement as “Left”, Mrs. Gown Venkatesan (mother of the appellant) has already clarified that she was shortly in Trivandrum when she gave the confirmation letter and has clarified about her permanent residential address which is as per IT records. The same is also verifiable from the IT return copies filed with the learned CIT(A) during the course of hearing.
Regarding the other creditor, Mrs. Harini (sister of the appellant), Mrs. Gown Venkatesan has clarified that she is settled in Australia and hence the summon was returned with the endorsement as “Left”.
Regarding source, the learned AO has taken just one year’s income. She was more than 50 years as on 2012 and has been employed for quite some time. Her husband was also earning income and she had the necessary source to give the loan.
Regarding giving of loan by way of cash, the appellant has already clarified vide letter dated 21 February, 2017 (copy attached herewith as Annexure) relevant portion of which is extracted herein below:
The same was given by them to me with a very clear understanding that the loan will have to be returned at the shortest possible time as the funds were specifically earmarked by them for the purpose of my sister’s marriage.
Actually, my husband was about to get loan, from his sister (My husband is also the co-owner of the property purchased). But since it was not immediately forthcoming, I have to urgently borrow from my mother and sister as we did not want the idea of purchase of property slip out of our hands.
As the amount was immediately required, myself and my husband did not have any other option except to receive in cash. So, the loan amount was received in cash and paid as advance for the purchase of property. As agreed upon, once my husband’s sister gave Rs.20.00 lakhs loan by way of cheque in March 2012, the same was withdrawn and immediately returned to my mother and sister.”
The above facts will amply prove the circumstances under which loan was received in cash. Further, as the transaction is between close family member, it is quite natural that some times, transactions take place by cash mode.
The creditor having confirmed the loan transaction and identity having proved and source being satisfied, it is requested that the loan transaction be accepted and addition he deleted and justice rendered.”
7.3 However, the Ld.CIT(A) declined to accept the contention of the assessee stating that these parties are having very meager amount in their returns. In my opinion, the decision taken by the lower authorities is not appropriate to sustain the addition at this stage. The Department has not doubted the identity of the parties, and only the A.O doubted the capacity of the parties to lend the money to the assessee. I am of the considered view that if these advances are duly reflected in their return of income and confirmed by them, then the Department cannot doubt the same. Further, the due credit is to be given to the confirmation letters filed by the assessee and income tax returns filed by the them. Therefore, I direct the assessee to furnish all the requisite details to prove the credit worthiness of the creditor to lend the money to assessee and thereupon decide afresh by ld. Assessing Officer. Hence, the issue in dispute is remitted to the file of ld. Assessing Officer for fresh consideration.