Case Law Details
Rukshana Begum Vs ITO (ITAT Delhi)
The crux of the appeal lies in understanding whether funds invested for a spouse’s financial security, in this case, an investment made by a husband for his wife, can be considered unexplained. The appellant, Rukshana Begum, argued that the investment was made out of explainable funds. The case’s primary grounds of appeal revolve around errors in law, facts, and misinterpretation of surrounding circumstances that led to the dismissal of the appeal by the Ld. CIT(A).
The ITAT analyzed whether the amount, considered an unexplained investment by the assessing officer (AO), should indeed be categorized as such. The ITAT found that the husband’s contribution to his wife’s financial security in old age, funded by explained sources, should not be deemed an unexplained investment.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This is an appeal filed by the assessee against the order of the ld CIT(A)-2, Noida dated 30.03.2018 for Assessment Year 2008-09.
2. The assessee has raised the following grounds of appeal:-
“1. That the Ld. CIT(A), erred in law, on facts and in surrounding circumstances in dismissing the appeal arbitrary by overlooking incurable fundamental errors of law, leading to miscarriage of justice.
2. That the Ld. CIT(A), erred in law, on facts and in surrounding circumstances in failing to appreciate that since the Ld. A. O. was not having any tangible and specific material such as, the sale deed in question except vague AIR information at the time of forming opinion, the impugned belief so entertained by him is not only speculative in nature but also inaccurate particular and incorrect facts in assessment order thereby rendering the whole assessment void in law, ab-initio
3. That in doing so, the Ld. CIT(A), erred in law, on facts and in surrounding circumstances in failing to appreciate that his appellate order too, based on inaccurate particulars/incorrect facts appearing in reasons and in the impugned assessment order, has also been rendered null and void accordingly.
4. That the Ld. CIT(A), further erred in law, on facts and in surrounding circumstances in failing to appreciate that issuance of impugned notice u/s 148 of I. T. Act after expiry of period of more than 6 years is barred by limitation.
5. That the Ld. CIT(A), also erred in law, on facts and in surrounding circumstances in failing to appreciate that valid service of notice u/s 148 of I.T. Act, whereas no supporting evidence has been brought on record to prove validity of service mere issuance of notice itself, does not tantamount to valid service as per law.
6. That the Ld. CIT(A), also erred in law, on facts and in surrounding circumstances in failing to appreciate the that sale consideration is to the tune of Rs. 1500000 and not Rs. 3029000 (being only a value for stamp duty purposes).
7. That the Ld. CIT(A), further erred in law, on facts and in surrounding circumstances in failing to appreciate that Rs 3029000 (being only a value for stamp duty purposes) cannot be treated as sale consideration without applying the provisions of section 50C of I. T. Act and that too without adhering to the procedure laid down therein.
8. That without prejudice to above legal grounds, the Ld. CIT(A), on the issue of investment, erred in law, on facts and in surrounding circumstances in failing to appreciate the humane aspects of relationship between husband and wife. Contribution by husband for investment in question out of explainable funds, is a sacred task for affording financial security/financial independence, to his wife in her old age and it cannot be regarded as a “sin” or unexplained investment.
9. That in doings so, the Ld. CIT(A), erred in law, on facts and in surrounding circumstances in holding, the entire investment of Rs 3020000 to be unexplained in the hands of appellant merely on illogical ground “no evidence is furnished for the other half investment in the said property.”
3. The assessee’s representative (the ld AR) submitted that the assessee does not want to press legal grounds Nos. 1 to 5 hence, same are dismissed as not pressed.
4. Regarding the grounds on merits the ld AR submitted that the ld CIT(A) has erred on fact and in surrounding circumstances in failing to appreciate that sale consideration was Rs. 15 lakhs and not Rs. 30,29,000/- which was taken only for the purpose of stamp duty The ld counsel also submitted that the stamp valuation amount cannot be applied and treated as sale consideration without applying provisions of section 50C of the Act and without following the due procedure laid down by the Act. The ld AR also submitted that the authorities below have failed to appreciate that humane aspects of relationship between husband and wife. Contribution by the husband for investment in question out of explainable funds is a bias task in complete financial security and financial independence to his wife in her old age and it cannot be regarded as sin or unexplained investment. The ld AR vehemently submitted that the ld CIT(A) has also erred in holding that the entire investment of Rs. 30,29,000/- to be unexplained in the hands of the appellant merely on illogical ground ‘no evidence is furnished for the other half investment in the said property. The ld AR submitted that the baseless addition made by the AO may kindly be deleted.
4.1 The ld DR supported the orders of the authorities below and reiterated findings of the AO and the ld CIT(A).
5. On careful consideration the above submission, first of all, from the material available on record I note some undisputed facts viz i. the impugned property was purchased in the joint names of the appellant and her mother in law, ii. Appellant share is therefore only to the extent of 50% in such property, iii. Total expenses incurred towards purchase of impugned property was Rs. 15 lakhs as consideration of 2,63,000/- as stamp duty and thus, appellant share purchase gross was only Rs. 8,81,500/-, iv. The assessee contended before the AO and ld CIT(A) that the appellant share has been made out of gift of Rs. 8 lakhs received from her husband Sri Kjhalid Qureshi and the balance from appellant’s past savings.
6. The source of such amount of Rs. 8,81,500/- as per the assessee is gift of Rs. 8 lakhs from her husband which was received as 50,000/- in cash and Rs. 7,50,000/- as direct payment through cheques to the seller Shri Dharam towards purchase of impugned property towards 50% share of appellant. It was also explained that the source of Rs. 8 lakhs in the hands of the assessee was gift from husband, which was accrued to him from the sale proceedings two plots sold for Rs. 4 lakhs each. The AO in the remand report noted that no evidence as to how the sale proceeds of Rs. 8 lakhs shown was received by seller Khalid Qureshi have been accounted by him in his accounts and no evidence has been produced in respect of remaining half investment.
7. From the assessment order I note that the AO proceeded to make addition on account of unexplained investment out of amount earned undisclosed source of Rs. 30,29,000/-. Copy of purchase deed available at page 4 to 60 of assessee’s paper book reveals that the property was purchased by assessee with her mother in law Smt. Shahjahan wherein sale consideration has been shown as Rs. 15 lakh and stamp valuation has been shown as Rs. 30,29,000/- and paid stamp duty of Rs. 2,63,000/-. From the pages 48 and 49 from the registered sale deed I also note that seller on received of sale consideration of Rs. 15 lakhs in the form of two cheques of Rs. 7,50,000/- each dated 09.05.2007 vide cheque No. 834051 and 834052 drawn on Punjab National Bank, Branch Ambedkar Road, The copies of agreement to sale available at page 61 to 62 & 63 and 64 reveals that the husband of the assessee Khalid Qureshi on 26.02.2007 had entered into agreements to sale of his two residential plots situated in village Mirzapur with Gaurav Kumar and Smt Usha and received Rs. 4 Lakh each from said two purchaser in cash against the agreement of sale. The copy of purchase deed reveals that the assessee paid Rs. 7,50,000/- through cheque which was given to him by her husband as gift towards direct payment to the seller Shri Dharampal on 09.05.2017.
8. First of all from the relevant para 2 of assessment order and para 4.1 of first appellate order I clearly note that the authorities below have not invoked provisions of section 50C of the Act. It is also pertinent to mention that this provision is applicable to the seller of the property and not to the purchaser of the property. The AO have treated the entire amount of stamp duty valuation of R. 30,29,000/- in the hands of the assessee as explained investment. The ld CIT(A) has noted that the husband of the appellant deposited an amount of Rs. 10 lakhs in cash in the bank account and concluded that no evidences has been furnished for the other half investment in the said property. Therefore, the ld CIT(A) concluded that the entire investment of Rs. 30,29,000/- unexplained investment in the hands of the appellant.
9. On careful consideration of the facts and circumstances of the present case, first of all, I note that when the purchase deed has been executed in the names of the assessee and her mother in law Smt Shahjhan, then the entire investment cannot be treated as unexplained investment in the hands of the assessee. The assessee liable to explain the source of investment pertaining to the 50% part of property. As per copy of purchase deed the assessee and her mother in law had jointly purchased the property having equal shares against the consideration of Rs. 15 lakh which was paid through cheques issued by husband of assessee on behalf of his wife and mother from his bank account. Rs. 2,63,000/- were also incurred on stamp duty payment therefore, the half share of total investment in the hands of the assessee goes to Rs. 8,81,500/-. From the copy of purchase deed I also note that Rs. 7,50,000/- has been paid through cheques by the husband of assessee directly to the seller Shri Dharampal out of amount received by him against sale of two plots to Shri Gaurav Kumar and Smt Usha. Copies of said agreements to sale are available at page 61 to 64 of assessee’s paper book. Said documentary evidence was filed before the authorities below by the assessee but there is no discussion thereon.
10. Regarding remaining amount of Rs. 1,31,500/- it has been explained before the authorities below that the husband of assessee gifted Rs. 8 lakhs to assessee and Rs. 7,50,000/- was directly paid to seller Shri Dharampal through cheques and Rs. 50,000/- in cash to the assessee to support the payment of stamp duty and remaining amount of Rs.81,500/- was paid by the assessee out of her past savings. In my humble understanding, when the husband of assessee has come forward with explanation that he had given Rs. 8 lakhs gift to his wife and the AO without further any verification and examination of assessee or her husband had proceeded to dismiss the explanation of assessee then such kind of action cannot be held as valid and sustainable. The factum of gift by husband on the special occasions, festivals etc and other occasions at the time of buying immovable property or other valuable articles is normal practice in the civilized society. The factum of saving by the laid for further emergency time is also a well accepted and well adopted practice of ladies in civilized society. Therefore, when the assessee has successfully demonstrated the source of Rs. 8,81,500/- by way of submitting sufficient documentary evidences then the orders of the authorities below cannot be held as sustainable particularly when in they are wrongly alleging that entire investment has been made by the assessee from out of her income from undisclosed source treated the same as income.
11. I have noted above that the copy of registered sale deed clearly reveals that the assessee had been purchased property with her mother in law having equal share and sale consideration has been shown as Rs. 15 lakhs and stamp duty has been paid amounting to Rs. 2,63,500/- and without any other adverse positive evidence or The stamp valuation amount cannot be taken as sale consideration and the assessee cannot be held liable to explain the source of such stamp valuation sum. I am aso unable to understand any reason as to how authorities below have ignored the amount of Rs. 2,63,000/- paid towards stamp duty while passing the orders.
12. The ld CIT(A) has noted that the husband of assessee deposited Rs. 10 lakhs in cash to his bank account prior to issuance of cheques to the seller. On this allegation I am of the considered view that first of all the assessee has submitted the copies of two agreement of sale of two plots to Gaurav and Smt Usha received advance of Rs. 4 lakhs totaling to Rs. 8 lakhs in cash on 26.02.2007 and cheques were issues subsequently on 09.05.2007 therefore, the factum of cash deposit to the bank account of the husband of assessee is supported by the copies of notarized agreement to sale. Even if agreements to sale are kept aside then also the AO was eligible to ask the husband of assessee to submit source of cash deposit to his bank account and not from the assessee. I am also unable to understand the basis taken by the authorities below to attribute the entire investment on the shoulders of assessee by taking stamp valuation of Rs. 30,29,000/- and keeping aside the amount of stamp duty paid Rs. 2,63,000/-. I am of the considered view that the provision of section 56(2)(b) of the Act, applicable to the case of the purchaser, is applicable w.e.f. 01.04.2014 from AY 2014-15 onwards and not present AY 2008-09. Therefore, grounds of assessee on merits are allowed and entire baseless addition made by the AO and upheld by the ld CIT(A) is directed to be deleted.
13. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 07/07/2023.
