1 I.T.A. No.124 /Mum/2015 IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H , MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. No. 124/Mum/2015 (Assessment Year : 2010-11) ITO 34(1)(4) vs Smt Hima B Gharat (also known Hima Jitendra Gharat), 72, Nandanvan, K Wing Shahji Raje Road, Vile Parle(E) Mumkbai 57 PAN : ACTPV3331L (Appellant) (Respondent) Appellant by Shri Sunil Kumar Agarwal Ra Shri Rakesh Kapoor Date of hearing : 16-08-2016 Date of pronouncement : 19-08-2016 ORDER Per ASHWANI TANEJA, AM This appeal has been filed by revenue against order of Commissioner of Income-tax (Appeals) [hereinafter called CIT(A)] dt 14- 10-2014 passed against assessment order dt 28-3-2013 passed by AO u/s 143(3) for A.Y. 2010-11 on following grounds: 1) "On facts and in circumstances of case and in law, 2 I.T.A. No.124 /Mum/2015 Ld. CIT(A) erred in law and on facts in deleting addition made u/s. 69 ignoring fact that materials available was not sufficient to prove creditworthiness of lender and donor, and thereby investment made in purchase of flat remained unexplained. 2) 'On facts and in circumstances of case and in law, powers of Ld. C 11(A) are co-terminus with that of A.O. Ld. C[T (A) has erred in law, in not curing t he defect s, if any , in t he assessment order (including Remand Report), when he was duty bound to do so as has been held in following judicial pronouncement i) CIT VS Kanpur Coal Syndicate, (1964) 53 ITR 225 (SC) ii) CIT vs Jay Textile (1981) 128 ITR 480 (Punj. & Har.) iii) Subramania lyer vs. CIT (1978) 113 hR 685 (Kerala) 3) "On facts and in circumstances of case and in law, Ld. C 11(A) has erred in Law and on facts in accepting sources of funds for loans and gifts taken by assesse for investment in flat amounting to Rs.22,00,000/- & Rs. 26,00,000/- respectively by simply relying on second remand report of Assessing Officer and not arriving at independent conclusion particularly when additional evidence filed before him by assesse was not proof enough to explain sources of loan and gift and also fact that assesse mad irreconcilable contradictory claims before A.O. at time of assessment and at time of second remand report. 4) On facts and in circumstances of case and in law, Ld.CIT(A) has erred in law and on facts, in deleting addition of Rs.50,24600/- on account investment in purchase of flats u/s. 69 of l.T. Act, 1961. 2. During course of hearing, ld.DR relied upon assessment order whereas ld.counsel of assessee relied upon order of Ld.CIT(A). All grounds relate to common issue of addition made by Assessing Officer u/s 69 aggregating to Rs.50,24,600 on account of investment in purchase of flats u/s 69 of Act, which was deleted by Ld. CIT(A) in first appeal. Being aggrieved, revenue filed appeal before Tribunal. 3. brief background and facts of case are that assessee, individual, was asked to explain source of investment in flat purchased by her for Rs.62 lakhs during course of assessment proceedings. 3 I.T.A. No.124 /Mum/2015 assessee explained that total investment in house property was Rs.65,24,060 including registration charges, etc. It was further explained that said investyment was made out of following sources:- Housing loan 15,00,000 Loan from Mr. Vanmali 22,00,000 Loan from Provident Funds 2,79,500 Gift from father 26,00,000 65,79,500 4. Out of above, Assessing Officer accepted sources to extent of Rs.15 lakhs only and balance amount of Rs.50,24,060 was treated as unexplained investment. Being aggrieved, assessee filed appeal before Ld.CIT(A) where exhaustive submissions were filed along with further evidences to explain sources. Accordingly, Ld CIT(A) sent above said submissions and evidences to Assessing Officer for his examination and remand report. Assessing Officer examined submissions, details and evidences furnished by assessee to justify and substantiate aforesaid sources of investment in flat purchased by assessee and furnished remand report dt 16-09-2014; relevant portion of which is reproduced hereunder: In remand proceeding, representative of assessee submitted sources / payment of funding for investment in immovable property, details of which are as under . Mr. Pravin Vanmali paid R. 10,00,000/- directly to builder on behalf assessee on 01-02-2010 details of cheque payment is mentioned in property agreement. Further, Mr. Pravin Vanmali paid Rs. 12,00,000/- directly to builder on behalf of assessee on 16-02-2010 details of cheque payment receipt enclosed. assessee stated that amount of Rs. 22,00,000/- received from Mr. Pravin Vanmali is unsecured loan taken during year. In this regard, assessee furnished loan confirmation letter from Mr. Pravin Vanmali alongwith copy of bank statement and copy of IT return. Further, notice u/s. 133(6) is 4 I.T.A. No.124 /Mum/2015 issued to Mr. Pravin Vanmali for cross verify said loan transaction. In response to said notice, Mr. Pravin Vanmali filed letter dated 15-07-2014 in which he confirmed loan transaction between him and assessee. 2.Assessee, further furnish that sources payments of Rs. 24,99,000/- from his own A/cs and rest payment of Rs. 15,00,000/- is from housing loan taken by assessee during year. In this regard, assessee furnished her bank a/c. maintained with Municipal Co-op Bank in which payments were made to builder is reflected. Further, assessee submitted that her father Bhalchandra Gharat has given gift of Rs. 26,00,000/- during year under consideration. Assessee furnished copy of gift confirmation letter from her mother since her father is expired without making any gift deed and furnished copy of bank statement of late Bhalchandra Gharat. aforesaid loan transaction is appearing in bank statement of late Bhalchandra Gharat as well as assessee's bank statement. Further, assessee submitted sources of fund of her father is sale proceeds of agricultural land submitted copy of sale agreement of agricultural land by her father. Further, assessee has withdrawn Rs.2, 79,500/- GPF A/c and furnished copy of GPF Application and copy of ECS certificate in respect of amount paid. In view of above, case may be decided on merit of case." 5. Ld CIT(A) considered remand report and also considered evidences furnished by assessee and found that assessee had discharged its onus under law to substantiate source of investment and accordingly, he deleted addition made by Assessing Officer with following observations: I have considered submission of Authorised Representative and order of Assessing Officer as well as remand report. It is seen that total expenditure towards purchase of property, including stamp duty and registration charges comes to Rs.65,24,060/-, which has been financed as under: 5 I.T.A. No.124 /Mum/2015 Application for purchase Purchase cost of property 62,00,000 Stamp Duty 2,93,000 Registration 31,060 65,24,060 Housing loan 15,00,000 Loan from Mr. Vanmali 22,00,000 Loan from Provident Funds 2,79,500 Gift from father 26,00,000 65,79,500 Assessing Officer has already considered and accepted in assessment order housing loan of Rs. 15.00,000/-. In respect of payments made by Shri Vanmali of Rs.22,00,000/-, Assessing Officer found that payments of Rs. 10,00,000/- and Rs. 12.00,000/- were made by him directly to builder, on behalf of assessee. Confirmation has been filed by Mr. Vanmali before Assessing Officer alongwith copy of bank statement and copy of Income Tax Return. No adverse view / inconsistency has been found by Assessing Officer in respect of this claim. Accordingly, loan of Rs.22,00,000/- from Mr. Vanmali has to be accepted as source of purchasing immovable property by assessee. Similarly, gift of Rs.26,00,000/given by assessee's father to assessee and GPF withdrawal of Rs.2,79.500/- has also been verified by Assessing Officer during assessment proceedings and no adverse comment has been made by him in Remand Report dated 16-09-2014. Assessing Officer has mentioned that transaction appears in bank statement of assessees father as well as that of assessee's. sources of gift are stated to be sale proceeds of agricultural land. in respect of which relevant documents were furnished before Assessing Officer. It has been stated by Authorised Representative that case of assessee's father has been reopened to further verify taxability of sale of agricultural land and other issues. Thus, since identity of donor and genuineness of transaction has been established gift of Rs 26 00 000/- has to be accepted as valid for purposes of sources of purchase of 6 I.T.A. No.124 /Mum/2015 immovable property. Even if sale of agricultural land has not been offered to tax by assessee's father, necessary action would lie in his hands, for which steps have already been initiated by Assessing Officer. In view of all above, sources of finance for purchase of immovable property stand duly explained. Assessing Officer is, therefore, directed to delete addition of Rs. 50,24,060/- made in assessment order in this regard. 6. We have gone through evidences shown to us by ld.counsel of assessee as enclosed in paper book and also orders passed by lower authorities. It is noted by us that all evidences were duly examined by AO also during course of remand proceedings and nothing adverse has been noted therein. It appears that addition was made in assessment order for want of proper evidences. required evidences have been furnished by assessee before Ld.CIT(A) which were duly examined by AO as well as Ld.CIT(A) and accordingly, addition was deleted by Ld.CIT(A). Thus, taking into account totality of facts and circumstances of case, we find that assessee has been successfully able to substantiate sources of investment made in flat. assessee has duly explained transaction and substantiated transaction of receiving unsecured loans as well as amount of gift from her father. In our view, addition was not sustainable in view of facts of this case and, therefore, it was rightly deleted by Ld.CIT(A). We do not find any need for interference in order of Ld.CIT(A) and, therefore, same is hereby confirmed. Accordingly, grounds raised by revenue are dismissed. 7 I.T.A. No.124 /Mum/2015 7. As result, appeal filed by revenue is dismissed. Order pronounced in court on this19th day of Aug, 2016. Sd/- sd/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dt : 19th August, 2016 Pk/- Copy to : 1. appellant 2. respondent 3. CIT(A) 4. CIT 5. Ld. Departmental Representative for Revenue, H-Bench (True copy) By order ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES ITO, 34(1)(4) v. Hima B Gharat (also known Hima Jitendra Gharat)