2022 (5) TMI 229 - AT - Income Tax

Unexplained investment on account of difference in source of investment while buying new residential property vis- -vis old residential property - On the strength of cash flow statement the assessee contends that he would be able to discharge the burden of proving the source of investment as well as that of stamp duty and registration also - HELD THAT - We find that these documents were not filed before the Ld CIT(A) because at that time, the assessee s wife was suffering from cancer and the assessee was looking after her treatment and unfortunately, she expired on 30/10/2020. So we find that there was sufficient cause for not presenting the detail / cash flow statement before the Ld.CIT(A), which occasioned the Ld.CIT(A) confirming Rs.37,43,100/-. AR undertakes before us that given an oppurtunity, the assessee is ready to go before the AO and explain the source of investment not only to the tune of Rs.37,43,100/- but also in respect of the value of stamp duty and registration which approximately comes to Rs.55 lakhs. Since it is a factual aspect, which requires verification, we remand the issue to the AO for the limited purpose of verifying the source of investment not only to the tune of Rs.37,43,100/- but also in respect of the value of stamp duty and registration which approximately comes to Rs.55 lakhs . And if the AO finds after verifaication, the the explanation given by the assessee to be satisfactory, then no addition is warranted on this issue. Addition disbelieving the gift received by the assessee - HELD THAT - It is noted that the assessee had filed the copy of the gift letters of both the donors and also the respective bank statements - However, we note that these facts could not be placed before the Ld. CIT(A) because, she was undergoing treatment for cancer which eventually took her life on 30.10.2020. So the Ld.CIT(A) confirmed Rs.26 lakhs. We note that the assessee had reasonable cause for not submitting the aforesaid evidence before the Ld.CIT(A), therefore, the impugned confirmation was made by the Ld.CIT(A) to the tune of Rs.26 lakhs. However, since these facts need to be verified, for the ends of justice, the issue is also remanded to the file of the Assessing Officer for verification in accordance with law.

Summary

Issues Involved:
1. Confirmation of Rs.37,43,100/- as unexplained investment.
2. Double addition of Rs.2.35 crores in the hands of Smt. Shehla Akhtar.
3. Confirmation of Rs.26 lakhs as disbelieved gift received by Smt. Shehla Akhtar.

Issue-wise Detailed Analysis:

1. Confirmation of Rs.37,43,100/- as Unexplained Investment:
The assessee, a senior citizen, sold a residential property at Samundra Setu for Rs.2.35 crores and subsequently purchased a new property at Ocean View for Rs.2.60 crores. The Assessing Officer (AO) reopened the assessment under section 147 of the Income-tax Act, 1961, due to non-filing of the return and added the entire sale consideration as income. The Commissioner of Income-tax (Appeals) [CIT(A)] provided partial relief, confirming only Rs.37,43,100/- as unexplained investment under section 69C. The CIT(A) noted that the sale proceeds available for investment were Rs.2,22,56,900/- after repaying a loan of Rs.12,43,100/-, thus leaving a shortfall of Rs.37,43,100/- in the purchase of the new property. The assessee contended that due to his wife's illness, he could not provide the source of this amount during the appellate proceedings. The tribunal remanded the issue back to the AO for verification of the source of the unexplained investment and related stamp duty and registration charges, which approximately totaled Rs.55 lakhs.

2. Double Addition of Rs.2.35 Crores in the Hands of Smt. Shehla Akhtar:
The AO had made a duplicate addition of Rs.2.35 crores in the hands of Smt. Shehla Akhtar for the same property transaction. The CIT(A) deleted this duplicate addition. However, the CIT(A) confirmed the addition regarding the claim of receiving a gift of Rs.26 lakhs from her uncle and brother-in-law. The tribunal noted that the assessee had reasonable cause for not presenting evidence earlier due to her illness and remanded the issue to the AO for verification.

3. Confirmation of Rs.26 Lakhs as Disbelieved Gift Received by Smt. Shehla Akhtar:
Smt. Shehla Akhtar claimed to have received Rs.20 lakhs from her paternal uncle and Rs.6 lakhs from her brother-in-law as gifts. The CIT(A) confirmed the addition of Rs.26 lakhs, disbelieving the gifts. The tribunal observed that the assessee provided evidence of the gifts, including bank statements and gift letters, which were not presented earlier due to her illness. The tribunal remanded the issue to the AO for verification of the facts and directed that if the AO finds the evidence satisfactory, no addition should be made.

Conclusion:
The tribunal allowed both appeals for statistical purposes, remanding the issues to the AO for verification of the sources of investment and the gifts received, ensuring due opportunity for the assessee to present evidence. The tribunal emphasized the need for a thorough factual verification by the AO to ensure justice.