ACIT vs Meenu Ahuja

“1.

On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs. 1,87,60,000/- on account of unexplained income u/s 68 of the IT Act, 1961 without appreciating the facts that the assessee was failed to prove, credit worthiness of the lenders and genuineness of the transaction?

2.

On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs. 1,11,34,764/- on account of unexplained income u/s 68 of the IT Act, 1961 without appreciating the facts that the addition was based on absence of satisfactory explanation and documentary evidence from the assessee.

3.

On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs.1,11,34,764/- on account of unexplained income u/s 68 of the IT Act, 1961 without appreciating the facts that the assessee’s claim regarding payment of EMI’s to HDFC was accepted without ensuring proper verification of the source of such payments.

4.

The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”

“Comments of the AO

The decision of the Ld.CIT(A) is not acceptable on merits as it does not appropriately address or resolve the core issues raised during the course of assessment proceedings. During the assessment proceedings, the assessee was specifically asked to furnish the source of investment of Rs.1,87,60.000/-. In response to this, the assessee stated that the funds came from past savings and unsecured loans from friends/relatives, however, despite repeated opportunities, the assessee to substantiate these claims with adequate evidence. No confirmation letters or supporting documents from the lenders were submitted to validate the genuineness of the said unsecured loans. Thus, the identity, creditworthiness and genuineness of the transactions remain unverified. The assessee failed to provide any documentary evidence regarding the claimed of past savings. No income proof or accumulation trail was provided to justify the existence or source of such savings.”

“Comments of the AO

The decision of the Ld.CIT(A) is not acceptable on merits as during the assessment proceedings, the assessee was requested to explain the source of income used for making EMI payments to HDFC. However, the assessee was failed to justify the claim of source of income on account of installment paid to the HDFC, it is noticed that, during the year under consideration the total EMI paid to the HDFC of Rs.1,11,34,764/-, however, the assessee has not furnished any details in respect of source of fund for the said EMI paid to the HDFC, with supporting all the evidences, to substantiate the said claim. Further, assessee was failed to provide detailed explanation or documentary trail of how each EMI was funded.”

“7.3.1

In the submissions made during appeal proceedings the appellant has reiterated the submissions made during assessment proceedings. The appellant has stated that the consideration of Rs.12,37,60,000/- for purchase of immovable property was paid in two financial years being F.Y. 2018-19 and F.Y. 2019-20. The appellant has stated that an amount of Rs.4,00,00,000/- was paid during F.Y. 2018-19 and Rs.7,90,00,000/-plus stamp duty and registration charges were paid during F.Y. 2019-20. The appellant further stated that the amount of Rs.4,00,00,000/- paid during F.Y. 2018-19 was sourced from loans taken from friends/relatives and own source income. The amount of Rs.7,90,00,000/- paid during FY 2019-20 was from Housing Loan disbursed by HDFC and the stamp duty & registration charges of Rs.59,50,000/- was sources from loan taken from husband/family friend and own source income.

7.3.2

The appellant has therefore submitted that for the impugned AY 2020-21 the amount of investment made/ amount paid for purchase of immovable property during the FY 2019-20 was only relevant and the same was met entirely from the housing loan taken from HDFC. For the amount of Rs.59,50,000/- paid towards the stamp duty & registration charges during FY 2019-20 relevant for impugned AY 2020-21 the appellant has filed confirmation, bank statement and ITR copies of Shri Shashank Jain (Friend) and Shri Anil Ahuja (Husband) to explain the sources. The appellant has submitted that the Assessing Officer has failed to consider the fact that an amount of Rs.4,00,00,000/- was paid during FY 2018-19 and therefore was not relevant for the AY 2020-21 for which assessment was made.

7.3.3

The Assessing Officer in the assessment order has reproduced the reply/ submission made by the appellant during assessment proceedings from pages 9 to 12. From the contents of the above page 9 of the assessment order it can be clearly seen that the appellant in her submission has brought to the notice of the Assessing Officer that out of sale consideration of Rs.11,90,00,000/- a sum of Rs.4,00,00,000/- has been paid during FY 2018-19 and only the remaining sum of Rs. 5,90,00,000/- was paid in FY 2019-20 relevant to the impugned AY 2020-21. The copy of sale deed in respect of the immovable property also confirms the statement made by the appellant. Further, the appellant has also brought to the notice of the Assessing Officer that the balance sum of Rs.5,90,00,000/- was paid during FY 2019-20 directly by the HDCF bank to the seller the source of which was the housing loan taken by the appellant. The Assessing Officer has failed to consider the above submissions ofthe appellant and the evidences furnished in support of the same and without any rebuttal of the claims made has proceeded to quantify the amount of Rs.1,87,00,000/- as unexplained investment/income made in purchase of the immovable property during FY 2019-20.

7.3.4

Further, from the content of page 10 of the assessment order it is seen that the appellant has submitted that for payment of stamp duty and registration charges of Rs.59,20,000/- the appellant has taken loans from Shri Shashank Jain (Friend) and Shri Anil Ahuja (husband) totaling to Rs. 56,00,000/- and the balance Rs.3,20,000/- was paid out of current year income. The appellant has not only furnished confirmation of both Shri Shashank Jain (Friend) and Shri Anil Ahuja (husband) but has also furnished copies of their bank statements and IT returns. The Assessing Officer during assessment proceedings failed to scrutinized the bank statements and IT returns of the lenders as no defects has been pointed out on the same in the assessment order.The Assessing Officer in assessment order has mentioned that genuineness of the unsecured loans has not been proved by the appellant without pointing out any deficiencies in the documents submitted by the appellant. The appellant has therefore discharged her onus by providing the documents with regard to genuineness of transaction and creditworthiness of the lenders and the onus was shifted on the Assessing Officer to establish by conducting necessary enquiry that the creditworthiness of lenders and genuineness of transaction of unsecured loans was not established.

7.3.5

It will be pertinent to mention here that the Assessing Officer has arrived at the amount of Rs.1,87,60,000/- as investment made in purchase of property the sources of which were not explained i.e. unexplained investment. However, the Assessing Officer then proceeded to treat this amount of Rs.1,87,60,000/- as unsecured loans taken by the appellant during FY 2019-20 and proceeded to treat the same as unexplained cash credits u/s 68 of the Act without bringing on record any evidence to establish that appellant has taken unsecured loans of Rs.1,87,60,000/- during FY 2019-20. During the FY 2019-20 the appellant has taken unsecured loans from Shri Shashank Jain (Friend) and Shri Anil Ahuja (Husband) totaling to Rs.56,00,000/- which are credited directly to the bank account of the appellant. The ITR copies of Shri Shashank Jain (Friend) and Shri Anil Ahuja (Husband) and their bank account statements furnished during the assessment as well as appeal proceedings establish their creditworthiness and genuineness of these loan transaction. The claim of the appellant that it has not maintained any books of accounts wherein the amount/sum (of Rs.1,87,60,000/-) is found credited and therefore provisions of section 68 of the Act cannot be invoked is also found to be acceptable. In view of the discussion made the action of the Assessing Officer in treating the amount of Rs.1,87,60,000/- as unexplained credits/income by invoking provisions of section 68 of the Act cannot besustained. Accordingly, the addition made by the Assessing Officer of Rs.1,87,60,000/- in the assessment order passed u/s 143(3) r.w.s 144B of the Act dated 21/09/2022 is hereby deleted.

7.4

Now, coming to another addition made by the Assessing Officer for an amount of Rs.1,11,34,764/- with regard to the EMI paid to HDFC in respect of housing loan taken by the appellant for purchase of property.

7.4.1

From the contents of the above page 12 of the assessment order it can be clearly seen that the appellant in her submission during the course of assessment proceedings has stated as under:

“A perusal of the Bank Statement of the Asssessee, attached as Annexure 1 indicate that the Bank disbursed the balance loan amount of Rs.2,60,00,000/- on 27/05/2019 by way of reimbursement of the amount paid by the assessee in the year 2018-19. The above amount of Rs.2,60,00,000/- as well as other credits on account of the income for the year as evident from the bank statement of the assessee attached as Annexure 1, were used for payment of the EMI of Rs.1,11,34,764/-. The evidence of HDFC loan account have already been placed on records.

In view of the above explanations, the payment of EMI should not be considered as out of unexplained credits.”

7.4.2

The Assessing Officer has incorporated the above submissions of the appellant in the assessment order therefore it is expected that the Assessing Officer before arriving at any conclusion on the issue would have verified the submission and examine the bank statement of the appellant. However, in the assessment order the Assessing Officer mentions that the appellant has not furnished any details in respect of source of fund for the said EMI (Rs. 1,11,34,764/-) paid to the HDFC with supporting all the evidences to substantiate the said claim. The above conclusion arrived at by the Assessing Officer is apparently seen to be without conducting any verification/examination of the bank statement furnished by the appellant. The Assessing Officer is seen to have made a generic remark with specifically pointing out what supporting evidences has not been furnished by the appellant to establish the source of payment of EMIs.

7.4.3

The copy of the said bank statement of account no. 01230400100006984 maintained with Jammu and Kashmir Bank Ltd., Karol Bagh, New Delhi has been furnished during appeal proceedings. The entries in the said bank statement clearly depicts that amount of EMI of Rs. 9,27,897/- is being paid from the credits in the said bank account. ………………”