The Vishkhapatanam bench of the Income Tax Appellate Tribunal (ITAT) has held that a mere arrangement between a husband and wife without real money exchange cannot be doubted as an unexplained investment under section 69 of the Income Tax Act, 1961.
The assessee is an individual has purchased an immovable property in Survey No. 174/175, Since the assessee did not respond to this notice, the AO completed the assessment U/s. 144 of the Act and added a sum of Rs. 6 lakhs towards unexplained investment to the total income returned by the assessee.
The assessee claimed that the assessee’s husband Sri SNN Bhogalingeswararao acquired the said property by way of General Power of Attorney in order to sell the property at a later date. The Ld. AR further submitted that the assessee later on decided to retain the property and in order to secure the document the assessee has executed a sale deed in favour of his wife Smt. Adilakshmi.
The assessee’s representative appeared before the CIT(A) and argued that the transaction was between husband and wife and was no real money exchange in the registration.
A bench of Shri Duvvuru Rl Reddy, Judicial Member & Shri S Balakrishnan, Accountant Member observed that the transactions has been registered as a document styled as “General Power of Attorney clubbed with possession” and that the husband of the assessee in order to retain the property got the property registered in the assessee’s name and has repaid the loans borrowed by him by sale of gold jewellery and personal savings of the assessee.
Deleting the addition, the Tribunal held that “We also find merit in the argument of the Ld. AR that the transactions are between the husband and wife and there was no actual consideration passed on between the husband and wife. The consideration mentioned in the sale deed was only for the purpose of stamp duty determination and hence it cannot be treated as a consideration received by the husband of the assessee nor paid by the assessee. Considering the peculiarity in the nature of transaction in the instant case, we find merit in the Ld. AR’s argument that no real consideration has been transferred by the assessee for the purchase of land. In view of the disclosure made by the assessee while filing the return of income as required U/s 148 of the Act, we are of the considered opinion that section 69 of the Act cannot be invoked as it applies only to the investments which are not recorded in the books of accounts. Considering the peculiar facts and circumstances in the instant case, actual transfer of money was not done by the assessee to her husband and since the registration was done only to save the property without real consideration, we are of the considered view that the order of the ld. CIT(A) deserves to be quashed and we allow the appeal of the assessee.”
Sri Subrahmanyam, CA appeared for the assessee.
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