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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI B. R. BASKARAN, AM (A.Y:2009-10) Suresh Kumar Fatechand Jain, 2nd Vs. The Income Tax Officer, Ward- 14(3) (3), 6th floor, floor, 257/259, B. B. Bhawan, Dr. C. H. Street, Dhobi Talao, Mumbai 400002 Earnest House, Nariman PAN:AABPJ 2930 K Point, Mumbai 400 021 .. Appellant Respondent Appellant by .. Shri K. Gopal, AR .. Respondent by Ms. Beena Santosh, DR Date of hearing .. 01-09-2016 .. Date of pronouncement 01 - 09-2016 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of order of CIT (A)-, Mumbai in appeal No.CIT (A) - 25, Mumbai dated 30-08-2013. Assessment was framed by ITO, Ward-14(3) (3), Mumbai for assessment year 2009-10 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide his order dated 30-12-2011.
2. The only issue in this appeal of assessee is against the order of the CIT (A) confirming the action of the AO in making addition on account of unexplained cash credit u/s 68 of the Act amounting to Rs.65,66,244/- and consequential disallowance u/s 69C of the Act amounting to Rs.3,42,340/-.
Briefly stated facts of the case are that the Revenue received AIR information that the assessee has purchased immovable property i.e. flat No.A-7 at Poonam Apartment for a sum of Rs.65 lacs on 25-08-2008. The assessee was asked to furnish the details of payment of the property including stamp duty and registration fee and other incidental expenses. The assessee submitted copy of the sale deed and rectification deed in respect of the said flat before the AO. As regards the sources of investment, the assessee furnished copy of several Demand Drafts amounting to Rs.65 lacs issued by Vijaya Bank in favour of the seller. On going through the demand drafts the AO noticed that the remitter of the said
M/s. Kshipra Enterprises. The AO noticed from the personal balance sheet of the assessee that it has shown an amount of Rs.65,66,179/- as loan taken from M/s. Kshipra Enterprises. The assessee was asked to furnish the confirmation along with copy of return of income, balance sheet and capital account of loan of M/s. Kshipra Enterprises. Nothing was produced before the AO. Hence, the AO made addition of this amount of Rs.65,66,247/- as unexplained cash credit u/s 68 of the Act. Further, the AO also made addition of stamp duty, registration charges and registration fee etc. of sale deed and deed of rectification and made addition of Rs.3,42,340/-u/s 69C of the Act. Aggrieved, the assessee preferred appeal before the CIT (A).
The CIT (A) after taking remand report from the AO and evidences from the assessee noted that the assessee failed to prove the creditworthiness, genuineness of the loan transaction of M/s. Kshipra Enterprises and confirmed the addition made by the AO on account of unexplained cash credit. Similarly, the CIT (A) in respect to unexplained expenditure u/s 69C of the Act amounting to Rs.3,42,340/- was also confirmed. Aggrieved, now the assessee is in second appeal before us.
We have heard the rival contentions and also gone through the facts and circumstances of the case. We find that the assessee received loan from M/s. Kshipra Enterprises of Rs.65,66,179/-, which consists of direct payment in regard to purchase of flat for a sum of Rs.65,08,444/- to the seller of the flat through the account of M/s. Kshipra Enterprises. We find from the facts of the case that M/s. Kshipra Enterprises is a sister concern in which wife, brother and father of the assessee are partners. The assessee purchased this flat and the payment was routed through M/s. Kshipra Enterprises, which has paid payee’s account demand draft as instructed by the assessee to the seller of the flat as under:- Date of payment Amount(Rs) Particulars of payment 18/08/2008 15,01,935/- D.D. to Banker of Seller 21/08/2008 10,01,290/- D. D. to Seller 21/08/2008 10,01,290/- D.D. to seller 21/08.2008 2,50,323/- D.D. to Seller 21/08/208 10,01,290/- D.D. to Seller 23/08/2008 5,00,645/- D.D. to Seller 23/08/2008 5,00,645/- D.D. to Seller 23/08/2008 7,50,968/- D.D. to Seller Total 65,08,386 Further, the assessee had also taken an additional loan of Rs.55,000/- on 28-07- 2008, which is reflected in the bank statement of M/s. Kshipra Enterprises. The total loan amount from M/s. Kshipra Enterprises to t he assessee was to the extent of Rs.65,66,179/-. The following is the loan account in the books of account of the assessee as on 31-03-2009:- LOAN A/C Date Particulars Amount Date Particulars Amount 31/03/2009 To. Cl. Bal c/d 65,66,179 01/04/2008 By op bal 1,935 28/07/2008 b/d 55,800 31/03/2008 By Bank 65,08,444 By Flat The assessee before the AO as well as before the CIT (A) submitted the following documents to prove the genuineness of transaction, creditworthiness and source:- i) Bank account statement of M/s. Kshipra Enterprises ii) Agreement for purchase of flat iii) Tax audit report of M/s. Kshipra Enterprises iv) Loan confirmation account statement of M/s. Kshipra Enterprises v) Confirmation letter from Vendor for payment of stamp duty and registration fee of flat 6. We find from the order of the CIT (A) before whom these documents were submitted by the assessee and the same were referred to the AO for his remand report and the AO in his remand report admitted that M/s. Kshipra Enterprises has admitted the transaction and submitted the supporting documentary evidences. The relevant remand report reads as under:- “1. In the case the scrutiny u/s 1`43(3) has been completed assessing total income at Rs.70,11,310 against the returned income of Rs.1,35,552/-. In the course of assessment proceedings the A. O. called for the details of payments made for purchase of immovable property valued at Rs.65,00,000/-. The assessee submitted that the payment were made out of loan of Rs.65,66,179/- taken from M/s. Kshipra Enterprises. The above payment was made directly to the parties through demand draft. The same was recorded in the books of M/s. Seven Srartex Industries, a proprietary concern of Shri Sureshkumar F. Jain and shown in his personal balance sheet on 31.03.2009. The above said loan of Rs.65,66,179/- was added to the income of the assessee as the assessee failed to furnish proper loan confirmation, bank account statement, return of income and balance sheet of the above said creditor. The matter is now subjudice with your good self and the assessee vide his letter dated 04.07.2012 claimed before you that he
Bank account statement of M/s. Kshipra Enterprises.
2. Agreement of purchase of flat. 3. Tax audit report of M/s. Kshipra Enterprises. 4. Loan confirmation A/c statement of M/s. Kshipra Enterprises. 5. Confirmation letter from vendor of Flat for payment of stamp duty and registration fee. 6. Ledger extract of Mediclaim premium A/c. 2. The undersigned would like to draw attention of your good self towards the date of confirmation of loan A/c statement from M/s. Kshipra Enterprises furnished by t he assessee before you, i.e. 01.04.2009. During the assessment proceedings the assessee furnished the same confirmation of loan A/c from M/s. Kshipra Enterprises on 16.12.2011, but the same confirmation of loan A/c statement did not bear signature of the either party. In view of the above fact it can be easily concluded that the confirmation filed before your good self has been signed by the parties post 16.12.2011 though it bears a date i.e. 01.04.2009 and it appears an afterthought arrangement. If it is not so, what prevented assessee to file the proper confirmation A/c before the undersigned during assessment proceedings. Without prejudice to the above conclusion the undersigned would register her reservation and pray your good self not to consider the above confirmation under rule 46A as the same was not furnished before the undersigned during assessment proceedings in its current form despite given several opportunities and without any justified/sufficient cause. 3. Bank Account statement of M/s. Kshipra Enterprises, confirmation from Vendor of flat regarding payment of stamp duty and registration fee have been never furnished before undersigned and the assessee is making a false claim before your good self that he has already submitted the same before the undersigned during assessment proceedings. In view of the above undersigned prays to your good self not to consider the above evidences as the same was not produced before the undersigned despite given opportunities and without any justified/sufficient cause….. 4. Your good self is requested to decide the matter on merit”.
Further, the AO submitted another remand report in respect to explanation of the assessee vide letter dated 12-03-2013 as under:-
“1. In this connection vide letter dated 07.11.2012 your good self has directed the undersigned to verify the transaction of the above referred assessee with M/s. Kshipra Enterprises and report accordingly. Without prejudice to the conclusion submitted vide earlier remand report dated 20.09.2012 that the assessee did not submit proper confirmation of the transaction despite given several opportunities and without any justified / sufficient cause, the transaction was verified from M/s. Kshipra Enterprises vide notice u/s 133 (6) of the IT Act, 1961 dated 07.12.2012. In response to notice u9/s 133 (6) of the IT Act, 1961 M/s. Kshipra Enterprises confirmed the transaction and submitted the supporting documentary evidences ….
Your good self is requested to decide the matter on merit.”
From the above, it is clear that the assessee has produced the bank statement of M/s. Kshipra Enterprises and other details to prove the genuineness of the transaction and creditworthiness and identity of M/s. Kshipra Enterprises. From the above, we find that the AO has not doubted the genuineness of the transaction and the fact that the payments to seller were made by account payee DDs directly from the account of M/s. Kshipra Enterprises. These payments are clearly depicted in the bank statement of M/s. Kshipra Enterprises in the copy of bank statement with marking of each payment and we have verified the same. There is ample cash balance available in the bank account of M/s. Kshipra Enterprise, the copy of which is enclosed in the assessee’s paper book. The assessee has also filed copy of audited balance sheets, reconciliation of flat payments with the account of M/s. Kshipra Enterprises and confirmation from M/s. Kshipra Enterprises. The copy of bank statement of Vijaya Bank Chirabazar, Mumbai, A/c. No.501500300005201 is enclosed in assessee’s paper book at pages 7 to 9. In view of these facts we are of the view that the assessee is able to prove that the loan of M/s. Kshipra Enterprises is a genuine loan and the sources are explained., and hence, we delete the addition made by the AO and confirmed by the CIT (A) by treating this loan as unexplained u/s 68 of the Act. The orders of the lower authorities are set aside and this issue of assessee’s appeal is allowed.
In regard to addition made by the AO and confirmed by the CIT (A) u/s 69C of the Act of stamp duty paid by the seller amounting to Rs.3,42,340/-, we find from the facts of the case that the seller party has confirmed the payment of stamp duty and confirmation was filed before the AO as well as before the CIT
(A). This fact is also recorded in the sale deed i.e. the deed of rectification that the stamp duty was paid by the seller and this fact has not been negated by the lower authorities. Accordingly, we are of the view that this addition deserves to be deleted. We order accordingly.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 01-09-2016.