2022 (6) TMI 455 - AT - Income Tax

Unexplained investment u/s 69 - family transaction - assessee has submitted that the assessee s husband was a power of attorney holder of the property and could not convey the property as an agent and therefore, to avoid future litigation and to secure better title over the property, a sale deed in favour of the assessee, being the wife was executed - AO not accepted the reply submitted by the assessee for the reason that the above sale is a Pucca Sale as the assessee had paid Stamp duty on the market value of the propert possession and the Title of the property was transferred in the assessee's name - HELD THAT - As gone through the registered sale deed, which is part of appellate order, wherein, it has been clearly mentioned that Shri S.V. Rajagopal, represented by his Power Agent Shri V. Sekar as Vendor executed the sale deed, which was duly registered in SRO, Neelankari, in favour of Smt. Geetha Sekar, the assessee towards transfer of scheduled property for a sale consideration and the vendor also admitted and acknowledged the receipt of the sale consideration. In the appellate order, CIT(A) has observed that if we go by the narrations in the Sale deed, then the assessee s claim that the impugned transaction is a family transaction where no consideration has passed is liable to be rejected since the actual vendor of the impugned property is not Mr. V. Sekar, as is claimed, but Mr. S.V. Rajagopal is the actual owner of the property and Mr. V. Sekar is only the power agent acting on behalf of Mr. S.V. Rajagopal. CIT(A) was of the opinion that the transaction is not a family transaction as is being claimed. CIT(A) has further observed that even if it is presumed for a moment that the vendor is Mr. V. Sekar, husband of the assessee, the claim that the sale consideration was not received by the vendor is unproved and is difficult to believe in the light of the fact that the Sale Deed expressly states the facts to the contrary. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed. Rental receipts - As during the course of assessment proceedings, the Assessing Officer has asked the assessee to explain and reconcile the gross receipts with bank account - Before the Assessing Officer, the assessee has explained that the gross receipts of ₹.2,20,000/- was accumulated rental income received and deposited in the bank account on 08.01.2012 of ₹.1,72,000/- and on 15.03.2012 of ₹.50,000/-. However, the Assessing Officer has not accepted the reply and only allowed two month rent i.e. (₹.12000 x 2) and the balance of ₹.1,98,000/- was disallowed and treated as income by stating that a businessman will not keep the rent received ideal. On appeal, the ld. CIT(A) confirmed the disallowance. We also find no error in the orders of authorities below on this issue and dismiss the ground raised by the assessee.

Summary

Issues involved:
1. Treatment of unexplained investment under section 69 of the Income Tax Act.
2. Disallowance of accumulated rental income.

Analysis:

Issue 1: Treatment of unexplained investment under section 69 of the Income Tax Act
The case involved an appeal against the order of the Commissioner of Income Tax (Appeals) regarding the treatment of an investment made by the assessee in a property. The Assessing Officer noted a sale deed registered in the name of the assessee, with the vendor being her husband, for a consideration of &8377;75,00,000. The assessee claimed no payment was made, stating it was a transfer from her husband out of love and affection. However, the Assessing Officer treated the purchase consideration as unexplained investment under section 69 of the Act. The CIT(A) upheld this decision, emphasizing that the sale deed clearly mentioned the consideration, and the claim of no payment was unproved. The Tribunal found no fault in the CIT(A)'s order, dismissing the appeal.

Issue 2: Disallowance of accumulated rental income
Another ground of appeal related to the disallowance of &8377;1,98,000 of accumulated rental income. The Assessing Officer disallowed this amount, considering that a businessman would not keep the rent received idle. The CIT(A) affirmed this disallowance. The Tribunal concurred with the decisions of the lower authorities, finding no error in disallowing the accumulated rental income. Consequently, the appeal filed by the assessee was dismissed, upholding the orders of the authorities below.

In conclusion, the Tribunal upheld the treatment of the unexplained investment under section 69 of the Income Tax Act and the disallowance of accumulated rental income. The appeal was dismissed, and the order was pronounced on the 8th of June, 2022 in Chennai.