MANJULA M.,SHIMOGA vs. ITO, SHIMOGA

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ITA 450/BANG/2014Status: DisposedITAT Bangalore26 August 2016AY 2009-104 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that considering the social status and employment of both the assessee and her husband, the loan of Rs. 6,75,000/- from the husband ought not to have been disbelieved. Therefore, the addition made by the AO was deleted.

What were the facts?

The assessee, a salaried employee, declared her income and showed receipts of Rs. 6,75,000/- in cash from her husband for house construction. The Assessing Officer (AO) added back Rs. 3,60,000/- to her income, disbelieving the source of funds.

What were the issues?

Whether the cash received by the assessee from her husband as advances for house construction is a genuine source of income and if the addition made by the AO is justified.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCH C, BANGALORE

For Appellant: Shri. A. R. Vivek, Advocate
For Respondent: Shri. Bipin C. N, JCIT

PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :

1.

In this appeal filed by assessee, its grievance is that CIT (A)

sustained an addition of Rs.3,60,000/- disregarding the explanation for source of money.

ITA.450/Bang/2014 Page - 2

2.

Facts apropos are that assessee a salaried employee of Canara Bank had filed her return declaring income of Rs.3,10,446/-. During the course of assessment proceedings it was noted by the AO that she had received substantial advances from her husband Shri. K. M. Dharmappa, for construction of a house. Assessee had shown a sum of Rs.6,75,000/- as received in cash from Shri. K. M. Dharmappa which was used for investment in construction of a residential house. AO was of the opinion that except for a sum of Rs.3,15,000/- which was paid by Shri. K. M.

Dharmappa directly, the other amounts shown by the assessee as given by Shri. K. M. Dharmappa, could not be accepted. He made an addition of Rs.3,60,000/-.

3.

Assessee’s appeal before the CIT (A) did not meet with any success.

According to him cash withdrawals of assessee’s husband from his bank account which was considered by assessee as source for advances given to her could not be tallied. He sustained the addition.

4.

Now before us, Ld. AR submitted that Shri. K. M. Dharmappa was himself a Class I Gazetted Officer of Karnataka Government. According to him he had sufficient salary to give a loan of Rs.6,75,000/-. According to ITA.450/Bang/2014 Page - 3 Ld. AR, lower authorities had taken a very narrow view and made an addition.

5.

Per contra Ld. DR supported the orders of lower authorities.

6.

I have perused the orders and heard the rival contentions. It is not disputed that K. M. Dharmappa was serving as a Gazetted Officer for long.

It is also not disputed that assessee was herself an officer in Canara Bank.

The amount shown by assessee as received from her husband was only Rs.6,75,000/- which was used for construction of a residential house and also for some other investments. It is normal in a family that construction of residential house is jointly taken up by husband and wife even though the property will be in the name of one. Considering the social status of husband and wife, I am of the opinion that the loan of Rs.6,75,000/- claimed by assessee to have been received from her husband ought not have been disbelieved. I therefore have no hesitation in deleting the addition.

ITA.450/Bang/2014 Page - 4

7.

In the result, appeal of the assessee stands allowed.

Order pronounced in the open court on 26th day of August, 2016.

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