MOHAN R. GUPTA,MUMBAI vs. ITO 19(2)(4), MUMBAI

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ITA 7020/MUM/2013Status: DisposedITAT Mumbai27 May 2016AY 2009-103 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the AO made the addition solely based on a clause in the agreement without examining the vendor. Therefore, the issue needed to be re-examined by the AO.

What were the facts?

The assessee purchased a house property and claimed to have financed it through a bank loan and a loan from the vendor. The AO made an addition for unexplained investment based on an advance payment mentioned in the agreement.

What were the issues?

Whether the addition for unexplained investment was justified without examining the vendor and verifying the claim of an outstanding advance payment.

Which sections of the Income-tax Act were involved?

Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI

Before: Shri Mahavir Singh & Shri Rajesh Kumar

For Respondent: Shri G N Maknana
Hearing: 23.05.2016Pronounced: 27.05.2016

O R D E R Per Mahavir Singh, Judicial Member

This appeal by assessee is arising out of the order of the CIT(A) – 30, Mumbai, in appeal No.CIT(A)-230/ACIT-19(2)(4)/IT-325/11-12 dated 25.09.2013. The assessment was framed by the ITO 19(2)(4), Mumbai, for A.Y. 2009-10 vide his order dated 28.12.2011 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act).

2.

The only issue in this appeal of the assessee is against the order of the CIT(A) confirming the action of the AO in restricting the addition of unexplained investment u/s. 69 of the Act to the tune of Rs.4,90,458/- out of the total addition made by the AO of Rs.21 lacs.

3.

Briefly stated the facts of the case are that the assessee has purchased a house property for a sum of Rs.54,67,077/-. The AO noted this fact from AIR information. When enquiry was made by the AO, it was found that the assessee has purchased a house for a sum of Rs.22 lacs and subsequently paid stamp duty and registration charges amounting to Rs.2,86,000/-. The assessee filed explanation in respect to the source of investment of Rs.22,00,000/- stating that he had taken loan from the Standard Chartered Bank for an amount of Rs.17,50,000/- and Rs.3,50,000/- as loan from Leena Gupta from whom the property had been purchased by him. The AO going though clause 4 of the agreement at page 4 noted that Leena Gupta has received the sum of 4,50,000/- as advance against the said flat and made addition of the sum as unexplained investment u/s. 69 of the Act. The AO also made addition of loan taken from the Standard Chartered Bank amounting to Rs.17,50,000/-. Aggrieved the assessee preferred appeal before the CIT(A), who deleted the addition of Rs.17,50,000/- but sustained the addition of Rs.4,50,000/- observing as under:

“5.3 Upon perusal of the loan Account No.43834787, I find that Smt. Leena Sharad Gupta, vendor with her husband as co-borrower was advanced loan amount of Rs.18,00,000/- on 21.03.2005 by the Standard Chartard Bank. Upto the date of Agreement sale, i.e. 2.2.09, she had made payment of Rs.7,53,705/-. The appellant, therefore, has made total payment of Rs.19,42,563.07, including Rs.17,63,109.07 on 02.11.2009. Thus, out of total repayments of Rs.19,42,563.07 made by the appellant, two payments have been made during the year after signing of the agreement dtd. 02.02.09 between the vendor and the purchasers. The said payments are dtd. 25.02.09 and 20.03.09 for Rs.20,229/- on each of the above dates, i.e. total of Rs.40,458/-, and have been paid by the appellant in the said account, as per clause 4 of the above agreement. As the appellant has not furnished source of payment of the above amount, I hold the same as unexplained and uphold the addition of the amount to the income of the appellant during the year. The total addition confirmed, therefore, is Rs.4,90,458 (4,50,000 + 40,458).”

Aggrieved against the action of the CIT(A), the assessee preferred second appeal before the Tribunal.

4.

We have heard the learned senior DR and gone through the facts and circumstances of the case. We find that the AO has simply gone by clause 4 of the agreement that Leena Gupta has received the sum of Rs.4,50,000/- as advance against the said flat. We also find that apart from the above no other adverse finding is given by the AO in respect of this payment and the claim of the assessee that this amount was outstanding in the name of Leena Gupta the owner of the house. In view of this fact, we are of the view that this issue needs to be examined by the AO afresh for the reason that the party must be examined before making the addition. Accordingly, we restore this matter back to the file of the AO qua the addition of Rs.4,50,000/-

5.

In the result, the assessee’s appeal is allowed for statistical purposes.

Order pronounced in the open court on this day of 27th May 2016.

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