2017 (11) TMI 1553 - AT - Income Tax

Addition u/s 69C - unexplained expenditure - Held that - The assessee has not incurred expenditure in respect of which she has not been able to explain the source of such expenditure and hence the addition of ₹ 20,89,000/- is not tenable as the same amount of ₹ 20,89,000/- sum which is an amount received by the assessee and is thus fully explained and assessee has laid complete documentary evidences to establish the same as such, addition made and sustained is wholly unsustainable in law. Apart from above, the identity of the creditor and existence and identity cannot be doubted or disputed. Further merely because, such person on account of medical ground did not appear, but had duly filed all necessary detail, no adverse inference can be drawn against the assessee, as the power to enforce the attendance of a witness is with the AO. In fact it is settled law that if a creditor ignore the summons or don t appear before the AO could not be a ground to draw adverse inference against the assessee. In view of above, the addition in dispute is hereby deleted. Unexplained credit - Addition of sum received on 04.01.2011 from sale of plot at Nangloi, New Delhi - Held that - The aforesaid sum of consideration had been received against the transfer made by the assessee through account payee cheque and same was also acknowledged by the assessee. Hence, the entire receipt is well explained and has not been doubted as an unexplained credit. The AO has again made no attempt to dispute the receipt through bank account of the vendee to whom the land was transferred which fact has duly been admitted by the transferee. In view of the above, the addition in dispute is hereby deleted. Amount received from sale of old furniture etc. - Held that - Neither the identity of the creditor nor the creditworthiness can be disputed. Further merely because, such a person on account of medical ground did not appear in response to summons, but file all necessary detail, no adverse inference can be drawn against the assessee, as power to enforce the attendance of a witness is with the AO, as per settled law. In fact, it is settled law that if a creditor ignore the summons or don t appear before the AO could not be a ground to draw adverse inference against the assessee. In view of the in my opinion, since the assessee has discharged its burden and not an iota of material has been brought on record, except of harboring the suspicion, addition made by the AO and sustained by the learned CIT(A) is not tenable, hence, the same is deleted. Assessee appeal allowed.

Summary

Issues Involved:
1. Addition of ?28,89,000 to the income of the appellant.
2. Dismissal of appeal by CIT(A) and upholding the addition.
3. Genuineness of transactions and documentary evidence provided by the appellant.

Detailed Analysis:

1. Addition of ?28,89,000 to the Income of the Appellant:

The appellant contested the addition of ?28,89,000 made by the Assessing Officer (AO) under Section 69C of the Income Tax Act, 1961, which includes:
- ?20,89,000 received from the transfer of booking rights in property No. 618-A, Spaze Towers, Sohna Road, Gurgaon.
- ?5,00,000 received from the sale of a plot at Nangloi, New Delhi.
- ?3,00,000 received from the sale of old furniture.

The appellant argued that the addition was unfounded and unwarranted, providing detailed explanations and documentary evidence for each transaction.

2. Dismissal of Appeal by CIT(A) and Upholding the Addition:

The CIT(A) dismissed the appellant's appeal and upheld the addition, citing several reasons:
- The appellant failed to provide documents proving the genuineness of the transactions.
- Bank statements and photo identification of involved persons were not submitted.
- The appellant did not establish the genuineness, identity, and creditworthiness of the persons involved in the transactions.
- The explanation provided by the appellant regarding the source of funds was deemed unsatisfactory.

3. Genuineness of Transactions and Documentary Evidence Provided by the Appellant:

a. Transfer of Booking Rights in Property No. 618-A:
The appellant provided evidence that ?20,89,000 was received from M/s Sanjiv Bindra HUF for transferring booking rights in property No. 618-A, Spaze Towers, Sohna Road, Gurgaon. The transaction was supported by:
- An agreement to sell and purchase.
- Confirmation from the vendee.
- Bank statements showing the receipt of ?20,89,000 on 01.03.2011.

b. Sale of Plot at Nangloi, New Delhi:
The appellant explained that ?5,00,000 was received from the sale of an agricultural plot at Nangloi, New Delhi, through account payee cheques. The transaction was supported by:
- General Power of Attorney.
- Agreement to sell and purchase.
- Affidavit and possession letter.
- Bank statements showing the receipt of ?5,00,000 on 04.01.2011.

c. Sale of Old Furniture:
The appellant received ?3,00,000 from Mrs. Sashi Aggarwal for the sale of old furniture. This transaction was supported by:
- Confirmation from Mrs. Sashi Aggarwal.
- Receipt of the cheque.
- Bank statements showing the receipt of ?3,00,000 on 08.01.2011.

Tribunal's Findings:
The Tribunal found that:
- The appellant had satisfactorily explained the source of the ?28,89,000 and provided sufficient documentary evidence.
- The AO's addition under Section 69C was not sustainable as the transactions were well-documented and the funds were traceable to legitimate sources.
- The CIT(A) erred in upholding the addition without properly considering the evidence provided by the appellant.

Conclusion:
The Tribunal allowed the appeal, deleting the addition of ?28,89,000 to the appellant's income, and concluded that the transactions were genuine and supported by credible evidence. The order was pronounced on 27/11/2017.