Assessee had declared an income by filing its return. The said return was selected for scrutiny through CASS on the basis of AIR. Assessment u/s 144 was made, resulting in an addition of Rs. 28,50,000/- as the assessee was found to have failed to explain the source of investment.
In appeal before the first appellate authority the assessee explained that investments had been sourced partly out of the redemption amount of Rs. 19,09,029/- of Birla Sun Life Mutual Fund and partly out of loans of Rs. 17,00,000/- from close friends and relations.
The CIT(A) forwarded these submissions and facts to the AO and a remand report was invited. Considering the same, the CIT(A) after hearing the assessee deleted the additions made. Aggrieved by this, Revenue is in appeal before the Tribunal.
We have heard the rival submissions and perused the material available on record. It is seen that qua the amounts of Rs. 8 lacs as loan from Shri Ajay Sood father-in-law of assessee’s sister and Rs. 2.5 lac each from Shri Satish Vohra and his wife we find that considering the nature of evidences placed by the assessee on record which have not been rebutted we find that the revenue’s arguments have no merits. It is further seen that the factum of loan from Ms. Bhamti Mehrotra the assessee’s sister who was married in November 2008 the arguments that it was returned by incurring expenditure on her marriage in November 2008 cannot be doubted. The material fact is that the loan was advanced by her. Similarly we find merit in the arguments of Ld. AR who while addressing ground 4 raised by the revenue has contended that the factum of redemption of Birla Sun Life Mutual Fund is not doubted by the revenue and the ground itself suggest that the grievance is based only to the fact that whether it was short term capital gain or long termcapital gain:
Thus the factum of redemption stands accepted and has not rebutted before us. Considering the peculiar facts and circumstances we find that the said ground of the revenue also does not have any merit. In view of the above mentioned peculiar facts and circumstances of the case, we find ourselves in agreement with the following findings of the CIT(A) recorded in para 15 to 18 and hold that the departmental appeal, being devoid of merit deserves to be dismissed. The relevant findings are reproduced herein :-
“15. I have considered the submissions of the appellant and the documentary evidence in respect of the said issues. The purchases of Birla Sun Life Mutual Fund had been clearly proved in the previous year ending on 31st March, 2004 for Rs. 17,65,000/- as per the statements issued by Birla Sun Life Mutual Fund copies whereof were filed before the Assessing Officer. The same had been redeemed for Rs. 19,09,029/- on 1.4.2004 as per the copy of statement issued by the said Mutual Fund. The proceeds of the said Mutual Fund were reflected in the Bank account of the appellant of HSBC Bank on 1.4.2004. The purchase and redemption of the said Mutual Fund stand clearly proved with the help of the statements issued by the Birla Sun Life Mutual Fund. It appears that the Assessing Officer has not considered the said statements nor the Bank account of the appellant on this account. He proceeded wrongly in assuming that the proceeds of the said Mutual Fund of Rs. 19,09,029/- were not bonafide. The stand of the Assessing Officer is apparently contrary to the statements issued by the said Mutual Fund. In view of the said statements issued by the Mutual Fund I am of the opinion that the proceeds of the said Mutual Fund of Rs. 19,09,029/- stand fully proved.
16. I have considered the statements filed by S/Shri Ajay Sood, Satish Vohra and his wife Smt. Rohini Vohra in response to the requisitions issued by the Assessing Officer under section 133(6) of the Income Tax Act. Their statements clearly proved the advance of the said loans to the appellant and the repayment thereof within a few days. The loans and the repayments thereof by means of account payee cheques stand proved from the two Bank accounts of the appellant. In the light of the said documents, it could not be made out that the said loans were not bonafide. I am, therefore, of the view that the said loans were bonafide.
17. So far as the loan from Ms. Bhamti Mehrotra (nee Bhamti Sood) is concerned, the said loan had been received by means of account payee cheque and the same had been utilized at the time of here marriage in November, 2008. The requisition had been issued to her at the old address without appreciating that she was married in November, 2008 and has been residing thereafter with her husband in USA. The Assessing Officer did not require the appellant to furnish the latest whereabouts of his sister. In these circumstances, it could not be made out that the said loan was not bonafide.
18. The appellant has submitted that he had received the redemption amount of Rs. 19,09,029/- in respect of Birla Sun Life Mutual Fund on 1.4.2004. Further he had received loans of Rs. 17,00,000 from ShriAjay Sood, Ms. Bhamti Mehrotra (nee Bhamti Sood), Shri Satish Vohra and his wife Smt. RohiniVohra, all of which stand proved as mentioned hereinabove. The appellant submitted that out of the said total amount of Rs. 36,09,029/- (Rs. 19,09,029 + Rs. 17,00,000), he had made investment of Rs. 28,50,000 in the Mutual Funds in the month of April, 2004. Thus the investments of Rs. 28,50,000 in the Mutual Funds stand proved out of the redemption amount of Birla Sun Life Mutual Fund and the said loans. The addition of Rs. 28,50,000, therefore, cannot be sustained. The same is, therefore, deleted.”
In the result appeal of the revenue is dismissed.