Kavitha Gampa, Hyderabad vs Assessee

Smt. Kavitha Gampa, vs. Income Tax Officer, Ward - Hyderabad 5(1), Hyderabad.

PAN - AAPPG 6475 N (Appellant) (Respondent)

Assessee by : Shri A.V. Raghuram Revenue by : Shri Rajat Mitra

Date of hearing 04-02-2015 Date of pronouncement 13-02-2015

O RDE R

PER SAKTIJIT DEY, J.M.:

The aforesaid appeal of assessee is directed against order dated 30/06/2014 of ld. CIT(A)-V, Hyderabad pertaining to AY 2009-

10.

2. The only issue in the appeal is in relation to addition as unexplained investment of an amount of Rs. 31,28,514 by AO and enhanced to Rs. 35,74,082 by ld. CIT(A).

3. Briefly the facts relating to the issue in dispute are, assessee is an individual. For the AY under consideration she filed her return of income on 31/07/2009 declaring total income of Rs. 4,40,570. During the relevant FY, assessee along with her husband entered into a registered sale deed vide sale deed No. 10106 dated 11/08/2008 with a number of companies, including M/s Mytas Properties Ltd. for purchasing a property consisting of semi-finished house with plinth 2 ITA No. 1614/Hyd/2014 Smt. Kavitha Gampa

area of 2757 sq.ft. on a plot of 301 sq.yds. in plot No. 263, Hill Country situated in Survey Nos. 192P to 198P, 201P and 282P of Bachupally village, Qutubullapur Mandal, R.R. District for a consideration of Rs. 34,52,000. On the very same day, assessee along with her husband also entered into a separate agreement registered as document No. 10107 dated 11/08/2008 with M/s Maytas Properties Ltd. for construction of the semi-finished house with plinth area of 2757 sq.ft. for an agreed consideration of Rs. 39,73,608. The construction agreement also provided, the finished property will have to be handed over to assessee and her husband by 31/08/2008. On examining these facts, AO called upon assessee to explain the source of investment made in purchase as well as construction of house property. After verifying the information submitted by assessee, it was noticed by AO that total investment in the property claimed to have been made by assessee and her husband was to the tune of Rs. 82,51,980. AO taking the aforesaid total investment into consideration, computed assessee's share in the total investment at Rs. 41,25,990, the source of which, assessee was called upon to explain. As noted by AO, assessee could prove the source of investment to the extent of Rs. 9,97,476 lakh being outgoing from the bank account. However, as noted by AO, assessee could not explain the source of investment of balance amount of Rs. 31,28,514. AO, therefore, treated the same as unexplained investment of assessee and added to her income for the impugned AY. Being aggrieved of such addition, assessee preferred appeal before ld. CIT(A).

4. In course of hearing of appeal before ld. CIT(A), assessee explaining the source of investment submitted that out of total investment of Rs. 82,51,980, investment made by her is to the tune of Rs. 11,94,074, an amount of Rs. 14,83,823 is by other coowner i.e. assessee's husband and an amount of Rs. 52,02,683 was by way of housing loan from SBI. That besides, an amount of Rs. 3,75,000 was taken as loan from assessee's brother Shri G. Amarpal. On the basis 3 ITA No. 1614/Hyd/2014 Smt. Kavitha Gampa

of the submissions made by assessee, ld. CIT(A) called for a remand report from AO. However, ultimately, ld. CIT(A) approved the view of AO that assessee has not been able to explain the source of investment except an amount of Rs. 9,97,476, hence, the balance amount of investment from assessee's share amounting to Rs. 31,28,514 remained unexplained. Further, ld. CIT(A), noticed that in the meanwhile Departmental Valuation Officer (DVO) has also submitted his report by determining the value of the property at Rs. 91,43,117 and as per such valuation of DVO, assessee's share in the investment is enhanced to Rs. 45,71,559. Accordingly, ld. CIT(A) treated the differential amount also as unexplained investment of assessee, hence, total addition was enhanced to Rs. 35,75,082.

5. Ld. AR reiterating the submissions made before the departmental authorities contended that assessee has fully explained the sources with supporting evidences. It was submitted that assessee's father Shri Raghava Rao issued a cheque for Rs. 11,07,821 through cheque No. 885945 to M/s Maytas Properties Ltd. on behalf of assessee, which was returned back by her through cheque No. 184826 dated 07/02/06. In this regard, ld. AR drew our attention to the financial statement of account of M/s Maytas Properties Ltd and the bank account copy of assessee. Ld. AR submitted that AO as well as ld. CIT(A) also totally ignored the house loan advanced by SBI in the joint name of assessee and her husband for an amount of Rs. 52,02,683. Ld. AR submitted that since the source of investment is fully explained with supporting evidence addition made is not justified. As far as the difference in valuation of the property arising due to valuation by DVO, ld. AR submitted that no addition can be made on that account as assessee has not constructed house herself but has got it constructed through a third party. Therefore, if there is any difference in valuation, assessee cannot be held responsible for that as payment made by assessee to the contractor is as per the terms of the agreement between the 4 ITA No. 1614/Hyd/2014 Smt. Kavitha Gampa

parties. Thus, ld. AR submitted, the addition made should be deleted. Ld. DR on the other hand, relied upon the orders of AO and ld. CIT(A).

6. We have heard the parties and perused the orders of revenue authorities as well as other materials on record. After going through the documentary evidences submitted by assessee before ld. CIT(A), which were also examined by AO during the remand and forms part of paper book submitted before us, we are of the view that the addition made cannot be sustained. As can be seen from the materials on record, before ld. CIT(A) assessee while explaining the source of investment has brought it on record that an amount of Rs. 52,02,683 was taken as loan from SBI. This fact is also proved from the sanction letter dated 10/10/06 of SBI, Hyderabad. Further, final statement of accounts received from M/s Maytas Properties Ltd., who constructed the house not only establish the fact of housing loan but, also actual investment made by assessee and her husband. In these circumstances, the addition made by ignoring such evidences cannot be upheld. Moreover from the final statements of accounts of M/s Maytas Properties Ltd., a copy of which is submitted in the paper book as well as assessee's bank account copy it appears claim of assessee that she paid an amount of Rs. 11,07,821 is correct. Therefore, without properly appreciating evidences brought on record AO has made the addition purely on conjectures and surmises. Unfortunately, ld. CIT(A) also has not properly appreciated the evidences brought on record. Therefore, considering the totality of facts and circumstances of the case, we are of the view that no addition can be made on account of unexplained investment as assessee has explained the sources of investment with supporting evidence. As far as the addition made on account of difference in valuation as per the DVO, we are of the view that it is totally uncalled for. It is not disputed that assessee has entered into registered agreement with M/s Maytas Properties Ltd. for purchase and 5 ITA No. 1614/Hyd/2014 Smt. Kavitha Gampa

construction of the property along with her husband for a total consideration of Rs. 82,51,980 which is also reflected in final statement of accounts also of M/s Maytas Properties Ltd.. It is also not disputed that the property was constructed by M/s Maytas Properties Ltd. In these circumstances, we fail to understand how the so called difference in valuation can be treated as unexplained investment of assessee when the construction has been made by a third party. When payments have been made to person constructing property as per the terms of the agreement and there is no evidence before the department that assessee has paid more than what is shown in the agreement, no addition can be made at the hands of assessee on the basis of valuation made by DVO. In the aforesaid view of the matter, we hold that the addition made in the present case is not justified and accordingly, we delete the same.

7. In the result, appeal of assessee is allowed.

Pronounced in the open court on 13/02/2015.

Sd/- Sd/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Hyderabad, Dated: 13 th February, 2015 kv

Copy to:-

1) Smt. Kavitha Gampa, C/o A.V. Raghuram, Advocate, 610, Babukhan Estate, Basheerbag, Hyderabad - 500 020.

2) ITO,Ward - 5(1), Hyderabad

3) CIT(A)-V, Hyderabad.

4) CIT-IV, Hyderabad

5) The Departmental Representative, I.T.A.T., Hyderabad.

6 ITA No. 1614/Hyd/2014 Smt. Kavitha Gampa

Description Date Intls 1. Draft dictated on Sr.P.S. 2. Draft placed before author Sr.P.S Draft proposed & placed before AM 3 the second Member 4 Draft discussed/approved by VP second Member 5 Approved Draft comes to the Sr.P.S. Sr.P.S./PS 6. Kept for pronouncement on Sr.P S. 7. File sent to the Bench Clerk Sr.P.S. 8 Date on which file goes to the Head Clerk 9 Date of Dispatch of order