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2016 (8) TMI 870

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..... is ₹ 49,03,162/- and the said value as of 31.03.2007 is ₹ 1,24,45,907/- and the differential value of construction cost spent during the financial year is ₹ 75,42,745/- and the assessee supported the cost with Karnataka Bank loan and disbursement from the Standard Chartered Bank Housing loan amount of ₹ 1,07,00,000/-. Further, the loan source cannot be treated as income for assessment. Therefore, we are of the opinion that Commissioner of Income Tax (Appeals) has elaborately discussed viz-a-viz considered the assessee submissions and the loan documents and allowed the appeal. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) and dismiss the grounds of the Revenue. - Decided in favour o .....

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..... ailed to appreciate that the remaining loan amount of 40.78 lakhs ad not been disbursed as on 31/3/2007 However the same has been claimed to have b en spent by the assessee and hence constitutes concealment of the income out of which the investment has been made . 3. The Brief facts of the case is that the assessee is in the business of money lending and filed return of income on 27.12.2007 declaring total income of ₹ 1,03,412/- for the assessment year 2007- 2008 and the return of income was processed u/s.143(1) of the Act and the case was selected for scrutiny under CASS and notices u/s.143(2) and 142(1) of the Act were issued. In compliance to notices, the ld. Authorised Representative of assessee appeared from time to time an .....

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..... ld. Assessing Officer made addition of ₹ 40,78,232/- to the returned income as unexplained investments and assessed total income ₹ 41,81,644/- and passed order u/s.143(3) of the Act dated 29.12.2009. Aggrieved by the order, the assessee filed an appeal before Commissioner of Income Tax (Appeals). 4. In the appellate proceedings, the ld. Commissioner of Income Tax (Appeals) dismissed the appeal for non prosecution and assessee has accepted the decision of the Commissioner of Income Tax (Appeals)-IV, Chennai dated 29.12.2011 and paid the disputed taxes. Subsequently, the ld. Assessing Officer initiated penalty proceedings and issued notice. In compliance to notice, the ld. Authorised Representative appeared and the case was di .....

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..... ssessing Officer has made an observation that the assessee could not explain the remaining loan amount of ₹ 40,78,232/- and raised the doubts. In the absence of any explanation by the assessee, the ld. Assessing Officer has treated the disputed amount as unexplained investments and the ld. Commissioner of Income Tax (Appeals) emphasized loan liability cannot be a source of income for addition and is of the opinion that the levy of penalty is unwarranted and deleted the penalty referred at para 13 of his order as under:- 13. Further, the AO has not countered the basic reasoning of the AR that the loan account with Karnataka Bank was closed out of the initial advances made by Standard Chartered Bank. The loan amount from Standard C .....

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..... 78,232/- was not disbursed before 31.03.2007, which was claimed to be spent by the assessee in the construction and prayed for set aside of the order of Commissioner of Income Tax (Appeals). 7. Contra, ld. Authorised Representative submitted the genuine facts and loans obtained by the assessee in development of House property, the ld. Assessing Officer has disallowed ₹ 40,78,232/- as unexplained investments as the same was not disbursed before 31.03.2007. Further to substantiate the arguments, the ld. Authorised Representative submitted copy of certificate from Karnataka Bank Ltd dated 19.02.2010 certifying ₹ 40,29,328/- was disbursed on 22.03.2007 and the loan account was closed alongwith the sanction copy letter of Standard .....

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..... the assessee s saving bank account was credited with ₹ 66,21,768/- on 30.03.2007 and supported the loan transactions with bank statements, certificates and loan against properties letter dated 15.03.2007. Further, we found that on comparison with the value of property disclosed by the assessee as on 31.03.2006 is ₹ 49,03,162/- and the said value as of 31.03.2007 is ₹ 1,24,45,907/- and the differential value of construction cost spent during the financial year is ₹ 75,42,745/- and the assessee supported the cost with Karnataka Bank loan and disbursement from the Standard Chartered Bank Housing loan amount of ₹ 1,07,00,000/-. Further, the loan source cannot be treated as income for assessment. Therefore, we are o .....

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