Income Tax Officer vs Asteroid Shelters Limited

1.

“Whether on the facts and circumstances as well as in law, the Ld. CIT(A) is correct in deleting the addition made u/s 68 of Rs.41,20,000/-;

2.

Whether on the facts and circumstances as well as in law, the Ld. CIT(A) is correct in deleting the addition made u/s 68 of Rs.41,20,000/- without appreciating the facts that the assessee had purchased property and not able to explain the source of same during the assessment proceedings.

3.

Whether on the facts and circumstances as well as in law, the Ld. CIT(A) is correct in deleting the addition made u/s 68 of Rs.2,23,75,000/-.

4.

Whether on the facts and circumstances as well as in law, the Ld. CIT(A) is correct in deleting the addition made u/s 68 of Rs.2,23,75,000/- without appreciating the facts that the assessee has not been able to prove the genuineness and creditworthiness of the funds utilized by the assessee for the purchase of property during the assessment proceedings.

5.

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.”

“6.2

The appellant states that in the reply dated 14.11.2019, the appellant had attached a copy of account of Mr. Bhüllan Prasad and clarified that it had paid Rs.36,50,000/- only and not Rs.41,20,000/-The appellant has furnished a copy of this account, from which it is seen that three cheques of Rs. 10 lakhs each were issued to Mr. Bhullan Prasad on 17/08/2009 (FY 2009-10) and a cheque of Rs. 6,50,000/- was issued on 2/9/2009. The appellant has also uploaded a copy of the registered sale deed, as per which the registration has been done on 02/08/2011, for a sale consideration of Rs.36,50,000/-and the market value is Rs.41,20,000/- The cheques issued in FY 2009-10 are duly recorded in this registration deed. The source of payments made for the property have also been provided, in the form of loans from Shri Anurag Kushwaha and Dwiti Construction P. Ltd. Though the market value of the property is Rs.41,20,000/-, the actual fund investment is only Rs.36,50,000/-Moreover, these funds were clearly invested in FY 2009-10 and not in the present FY. Hence, no adverse inference regarding source of funds, if any, can be taken in the present FY. Further, since this is a case of property purchase, section 50C/43CA is not applicable. The provisions of section 56(2)(x) also do not apply for the current FY. Hence there is no justification for the addition u/s 68 of Rs.41,20,000/- and the same is hereby deleted.

6.3

The next specific ground is regarding the addition u/s 68 of Rs.2,23,75,000/- The AO noted that the appellant had purchased a property for Rs.2,23,75,000/- The source of investment was stated to be loans from various entities. The AO issued notices u/s 133(6) and notes that "some of the letters received back in this office and some confirmations are received in this office. It is found that transaction of the giver and receivers are not matching each other in the bank account of both". The AO was therefore not satisfied with the details provided by the appellant and stated that neither has the appellant shown this property in his ITR nor established his credit worthiness to buy the property. The AO thus taxed the sum of Rs.2,23,75,000/- u/s 68.

6.4

The appellant has stated that the purchase of aforesaid property was duly recorded in the books. The ledger account of the purchase has been produced and is reproduced below for ease of reference: …………….

Payment of Rs.2,05,00,000/- is made through cheques drawn on Bank of India and a cash payment of Rs.10,00,000/- has also been made. The details match the payment details given in the registered sale deed, which has also been produced. The cash has been withdrawn from the same Bank of India account from which cheques have been issued, as seen from the cash book. The account in question is account no. 690220110000240. The source has been explained through loan from parties, who have duly filed confirmations and also submitted copies of their ITRs and bank account statements. The same have been perused. The AO has not listed the parties from whom replies to notices u/s 133(6) were not received by him. Further, though he has referred to details not matching between givers and receivers, specifics of mismatch have not been pointed out or noted in the order.

6.5

I have examined the confirmations produced before me. I have also perused the bank account statements of the appellant and the loan givers and no specific discrepancy or mismatch has come to notice. The debits in the bank accounts of the lenders are appearing as credits in the bank account of the appellant. Hence, in the absence of any specific finding by the Assessing officer as to which parties did not respond and as to what mismatches were found by him, the initial onus cast upon the appellant stands discharged and there is no justification for making the addition u/s 68 of Rs.2,23,75,000/-. The addition u/s 68 of Rs.2,23,75,000/- is hereby deleted.”