2018 (10) TMI 1218 - AT - Income Tax

Unaccounted investment and interest income accrued on FDR - Undisclosed income - laptop seized in search operation from the assessee - as per assessee amount belonged to sister residing in USA for purchasing FDRs to be spent by her as and when she visits India - Held that - When the addition has been made on the basis of seized material u/s 132(4)/292C and the assessee has failed to rebut the presumption that the amount of FDRs belongs to her, there is no scope to interfere into the findings returned by ld. CIT (A) moreover when sister of the assessee is residing in USA, there is not an iota of evidence on the file as to how the amount of ₹ 4,00,000/- has travelled to the assessee to be deposited in the FDR with Bansal Credits Ltd.. Such a huge amount in 2007-08 must have been transferred through banking channel, but no evidence is there on file. Furthermore when the interest on these FDRs has been accruing on year to year basis at least the same might have been declared by her sister in her return of income. Merely on the basis of contentions of the assessee that US authorities had not kept the record intact does not absolve the assessee to rebut the presumption attached to the fact that the FDRs are admittedly in the name of the assessee as per seized material. Assessee has also failed to prove if the remaining amount of ₹ 2,00,000/- has been transferred to her by her mother and fatherin- law by proving the fact that if they had shown the same in their return of income. Similar are the facts to the addition of ₹ 3,00,000/- as assessee has taken the defence that the amount of ₹ 3,00,000/- belonged to her sister residing in USA for purchasing FDRs to be spent by her as and when she visits India. So, for this amount also, except confirmation no document has been brought on record by the assessee to prove as to how this amount was transferred to the assessee or if the sister of the assessee was in possession of such an amount with her - addition of ₹ 6,00,000/- and ₹ 3,00,000/- for AYs 2007-08 & 2008-09 respectively as unexplained income of the assessee confirmed - decided against the assessee. Explained property flat) purchased - Held that - Assessee to rebut the information contained in the seized material only relied on the fact that subsequently assessee preferred to buy a 2BHK flat for ₹ 42,48,072/- instead of 3BHK flat for ₹ 60,00,000/- and relied upon the confirmation given by Vatika Limited showing details of payment of ₹ 42,48,072/-. First of all, confirmation letter relied upon by the assessee does not disclose the name of the issuing authority. Secondly, un-rebutted seized document Annexure B categorically shows that the payment of ₹ 17,00,000/- in cash was made by the assessee to Vatika Limited on behalf of her husband. The assessee has also not brought on record sale deed / allotment or transfer deed for purchasing 2BHK instead of 3BHK for which amount of ₹ 57,00,000/- is proved to have been paid. Furthermore, when the assessee has spent an amount of ₹ 3,00,000/- on the sale deed for 3BHK flat, she has failed to clarify on file if that sale deed has got cancelled for executing of the new sale deed of 2BHK by paying stamp duty of ₹ 2,28,481/-. Thus CIT (A) after appreciating the facts in the light of the settled principles of law in CIT vs. Sonal Construction 2012 (11) TMI 11 - DELHI HIGH COURT has rightly confirmed the addition made by the AO in view of the provisions contained u/s 132 (4) of the Act read with section 292C. - decided against assessee. Unexplained expenditure in marriage of daughter on stay expenses, videography, flower decoration etc. - Held that - We are of the considered view that when the misc. expenses of ₹ 4,20,000/- has been accepted by the Revenue authorities, there is no need to go for estimation. Moreover, in the marriage of a daughter, some expenses are invariably made from the savings made by the family members. So, we are of the considered view that addition made by the AO and sustained by ld. CIT (A) is not sustainable. So, we order to delete the amount of ₹ 1,00,000/-.

Summary

Issues Involved:
1. Sustaining the addition on account of unaccounted investment and interest income accrued on FDRs.
2. Confirming the addition as income from undisclosed sources.
3. Confirming the addition on an ad hoc basis for expenditure met from undisclosed sources in the marriage of the assessee's daughter.

Issue 1: Sustaining the Addition on Account of Unaccounted Investment and Interest Income Accrued on FDRs

The appellant challenged the additions made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT (A)] regarding unaccounted investments and interest income accrued on Fixed Deposit Receipts (FDRs) from Bansal Credits Limited for the assessment years (AY) 2007-08, 2008-09, 2009-10, and 2010-11. The AO had added ?6,27,000 for AY 2007-08, ?3,64,545 for AY 2008-09, ?76,008 for AY 2009-10, and ?44,253 for AY 2010-11 to the assessee's income, claiming that these amounts represented undisclosed income.

The Tribunal noted that the FDRs in question were in the name of the assessee and that the interest accrued on these FDRs was paid to her. The assessee failed to provide substantial evidence to prove that the funds for these FDRs were received from her sister in the USA or from her mother and father-in-law. The Tribunal upheld the CIT (A)'s findings, stating that the additions were justified as the assessee could not rebut the presumption that the FDRs belonged to her. Consequently, the grounds challenging these additions for AYs 2007-08, 2008-09, 2009-10, and 2010-11 were determined against the assessee.

Issue 2: Confirming the Addition as Income from Undisclosed Sources

For AY 2010-11, the AO made an addition of ?17,00,000 as income from undisclosed sources based on entries in a seized laptop, which indicated that the assessee had paid this amount in cash for purchasing a plot at "Vatika." The Tribunal allowed the assessee to introduce a confirmation letter from Vatika Limited, which was initially omitted due to ignorance of procedural requirements. However, the Tribunal found that the confirmation letter lacked the name of the issuing authority and did not sufficiently rebut the seized material, which clearly indicated the cash payment. The Tribunal affirmed the CIT (A)'s decision to uphold the addition, determining that the amount was rightly treated as unexplained investment.

Issue 3: Confirming the Addition on an Ad Hoc Basis for Expenditure Met from Undisclosed Sources in the Marriage of the Assessee's Daughter

The AO made an ad hoc addition of ?2,50,000 for unexplained expenditure on the marriage of the assessee's daughter, which the CIT (A) reduced to ?1,00,000. The Tribunal observed that the Revenue authorities had accepted the details and sources of expenditure provided by the assessee, except for the disputed ?1,00,000. The Tribunal concluded that the addition was based purely on estimation and not supported by evidence. It noted that some expenses in a daughter's marriage could be met from family savings. Therefore, the Tribunal ordered the deletion of the ?1,00,000 addition, determining the ground in favor of the assessee.

Conclusion:

The appeals for AYs 2007-08, 2008-09, and 2009-10 were dismissed, while the appeal for AY 2010-11 was partly allowed, with the deletion of the ?1,00,000 addition for marriage expenses. The Tribunal's decision was pronounced in open court on October 8, 2018.