2016 (5) TMI 799 - HC - Income Tax

Addition on account of unexplained unsecured loans - Held that - We find no merit in the said ground of appeal raised by the revenue in view of the confirmations being filed by the assessee in respect of the balance three loan creditors i.e. S/Shri Deepak Mahindra, Dr. Murari Lal Aggarwal and Rajinder Mohan Singla. The assessee has also furnished on record the confirmation of the aforesaid parties. The addition was made by Assessing Officer for non furnishing of balance confirmation of loan creditors. In view thereof where the assessee has duly complied with the requisitions of the Assessing Officer, there is no merit in any disallowance - Decided in favour of assessee Addition on account of alleged unexplained payment for purchase of land - Held that - The assessee during the year under consideration had purchased a plot of land for a total consideration of ₹ 2,15,90,000/-. However, the market value of the said land was taken at ₹ 2,37,45,000/- by the registering authorities. The seller of the property had reflected the sale price i.e.Rs. 2,15,90,000/- in their hands and the same was accepted while assessment order passed under section 143(3) of the Act. The assessee has furnished on record the information sought by the Assessing Officer in the case of the seller under section 133(6) of the Act which are placed at pages 20 to 22 of the paper book. The CIT(A) has observed that price of the land as mentioned in the sale deed and not the market price has been confirmed by the seller in response to the queries raised by the Assessing Officer directly to them. Further, there is no evidence of payment of any amount over and above the sale consideration recorded in the sale deed. In the absence of the same, we are in conformity with the order of the CIT(A) in deleting the addition of ₹ 21,55,000/-. In any case, the addition, if any, under the provisions of section 50C of the Income Tax Act are attracted in the hands of the seller and not in the hands of the purchaser - Decided in favour of assessee Addition on unexplained payment of stamp duty etc. for the purchase of land - Held that - he assessee claims that the said stamp duty has been paid out of the cash available in its books of account. The learned DR for the revenue had not controverted the findings of the CIT(A). In the absence of any contrary findings, we are in conformity with the order of CIT(A) in deleting the addition of ₹ 24,10,000/-. The source of credit also stands explained being out of the unsecured loans raised by the assessee which in turn were looked into by the Assessing Officer that since the assessee has also explained the source of the cash in hand and established the availability of cash, we uphold the order of CIT(A) in deleting the addition - Decided in favour of assessee Unexplained deposits in the bank account of the assessee - Held that - Assessee had furnished the copy of bank statement of Shri Gulshan Arora, from whom a sum of ₹ 90,000/- was received by cheque and the balance ₹ 40,000/- was deposited out of cash in hand available with the assessee and the photocopy of relevant pages of cash book was furnished on record. The CIT(A) deleted the addition of ₹ 1,30,000/-. We are in conformity with the order of CIT(A) in view of the explanation of the assessee wherein a sum of ₹ 90,000/- has been received vide cheque from Shri Gulshan Arora, who in turn has confirmed the same. The balance ₹ 40,.000/- is claimed by the assessee to have been deposited in cash out of the cash available, which is evidenced by the entries in the cash book.- Decided in favour of assessee

Summary

Issues:
1. Addition of unexplained unsecured loans
2. Under hand payments made for purchase of land
3. Stamp duty paid
4. Unexplained cash deposit in OBC

Analysis:

1. Addition of unexplained unsecured loans:
The Assessing Officer made an addition of &8377; 38,50,000 due to unexplained unsecured loans raised by the assessee. However, the CIT(A) and Tribunal found that the assessee had provided confirmation statements of the loan creditors, including PAN numbers, which satisfied the requirements. The Tribunal upheld the CIT(A)'s decision, stating that there was no merit in the addition as the assessee had complied with the Assessing Officer's requisitions. The Tribunal's conclusion was considered justified and not erroneous.

2. Under hand payments made for purchase of land:
The Assessing Officer added &8377; 21,55,000 to the income of the assessee, alleging unexplained payment for the purchase of land. However, the CIT(A) and Tribunal noted that the price of the land had been confirmed by the sellers, and there was no evidence of excess payment beyond what was recorded in the conveyance deed. The Tribunal agreed with the CIT(A) that there was no case for the addition, and that the provisions of section 50C of the Income Tax Act applied to the seller, not the purchaser. The Tribunal's decision was found to be in line with the facts of the case.

3. Stamp duty paid:
An addition of &8377; 24,10,000 was made by the Assessing Officer for alleged unexplained payment of stamp duty on the purchase of land. The CIT(A) observed that the payments were made through the cash book of the assessee, and once all credits were considered, the source of the payment was explained. The Tribunal concurred with the CIT(A), stating that the source of credit was established by the assessee, and the addition was rightly deleted. The findings were considered reasonable and based on the evidence presented.

4. Unexplained cash deposit in OBC:
The Assessing Officer added &8377; 1,30,000 to the income of the assessee for unexplained deposits in the bank account. However, the CIT(A) noted that the amount was shown to be paid through the cash book of the assessee, and the deletion was made. The Tribunal upheld the CIT(A)'s decision, as the assessee provided explanations and evidence regarding the source of the deposits. The Tribunal found no perversity in the findings and upheld the deletion of the addition.

In conclusion, the findings of the CIT(A) and Tribunal were based on a thorough examination of the evidence and material on record. The appellant-revenue failed to demonstrate any errors in these findings, leading to the dismissal of the appeal.