TaxTMI 
TaxTMI 
2026 (4) TMI 1187
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..... Manoharan vide registered Sale Deed No.10626/2016 for a sale consideration of Rs.35,50,000/-, according to which Rs.33,00,000/- was received in bank and Rs.2,50,000/- was received in cash. Simultaneously in the event of such sale, the assessee had also separately disposed off imported household utensils, electronic items etc. of her apartment at Rajparis, Crystal- Spring to several vendors and had realized Rs.8,09,600/- in cash. The assessee is found to have deposited the cash of Rs.2,50,000/- received from sale of flat, Rs.8,09,600/- received from sale of household items, Rs.1,00,000/- received by way of gift from her husband and daughter along with her cash balance of Rs.20,400/-, aggregating to Rs.11,80,000/- in her bank account. Thereafter, the assessee invested the ibid sale-consideration, by purchasing a Residential Flat viz., Flat No.B-3,Third-Floor, Raj Castle, Medavakkam from the seller represented by Shri Mr. M.S. Swaminathan, Power of Attorney-holder (PoA) of vendor, Shri Vijay Guruswami, son-in-law of the assessee at a cost of Rs.35,00,000/- vide registered deed D.No.123/2017 dated 05.01.2017. The assessee had incurred stamp duty and registration charges of Rs.2,80,33....
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....had been leased by the latter to certain tenant(s), who had sought time to vacate the premises until they got suitable alternative accommodation. Accordingly, she had proposed to the seller [her son-in-law] that the cheque issued by her upon registration ought to be encashed only when the tenant(s) vacate the flat and the physical possession is given to her. The assessee submitted that, though she was given symbolic possession vide registered deed in January 2017, but the physical possession was received only in August 2017 and accordingly, the seller had encashed the cheque then, which was issued in January 2017. The AO is noted to have asked the assessee to adduce proof in support of this explanation. In response, the assessee furnished a copy of the lease agreement dated 05.01.2017 between her and the seller. The AO however doubted the veracity of the said lease deed since it was executed on a stamp paper dated November 2017, and the stamp paper was also issued in someone else's name. The AO thus disbelieved the entire transaction, as explained by the assessee. The AO is found to have curiously not only denied the deduction claimed u/s 54 of the Act, but he went on reject the na....
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...., the Ld. AR showed us that, the said payment was indeed cleared later on in August 2017, which is verifiable from the bank statements, and supported by the confirmation furnished by the vendor. The Ld. AR submitted that, the time gap between the execution of deed and the clearance of cheques and/or the explanation of the same, was totally indecisive to ascertain the eligibility of exemption claimed u/s 54 of the Act or for that matter make any addition u/s 69A of the Act, when the fact remains that, the source of payment towards the flat acquired by the assessee was evidently out of the proceeds of flat sold by the assessee. 7. The Ld. AR reminded us that registration of the purchase of Raj- Castle apartment made in January, 2017 had not been questioned, and that without payment of registration charges/stamp-duty of Rs.35,330/- & Rs.2.45 lakhs, it was impossible to register the property in assessee's name. The Ld. AR showed us that, even this payment was added by the AO way of unexplained monies u/s 69A of the Act, which according to him, exposes the whimsical attitude and arbitrary exercise of power by the AO/Ld.CIT(A). The Ld. AR further brought to our notice that, the source....
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....f Rs.33,00,000/- in cheque [out of total consideration of Rs.35,50,000/-] upon sale of her flat at Crystal Palace is found to be verifiable from assessee's bank statements as well. As regards the discharge of purchase consideration of flat at Raj Castle Apartment is concerned, it is seen that, the assessee is shown to have issued and handed over cheques on 05.01.2017 of Rs. 35 lacs and Rs. 12 lacs each, which was albeit encashed by the vendor in August 2017. 11. According to the Revenue however, the amount was actually paid to the vendor in January 2017 along with registration and stamp duty charges out of unexplained sources and therefore the monies of Rs.49,80,330/- was added u/s 69A of the Act. We find that this assertion of the Revenue is not based upon the facts, as is verifiable from the records before us. We find that the vendor had confirmed the sale made in January 2017 and that the consideration of Rs. 47 lacs, in aggregate, was received by him in August 2017. The payment of registration charges and stamp duty charges is also traceable to the bank statement of the assessee. We further observe that, the assessee had sufficient bank balance on 04.01.2017 to issue and han....
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....ls of payment of Rs 12 Lakhs in August 2017 through bank. This confirmation further affirms the case of the assessee that, there was no unexplained payment made towards the purchase of the flat at Raj Castle in January 2017 and that the cheques issued then had been encashed by the vendor in August 2017 and therefore there was no involvement of any unexplained monies. It is also seen that the source of payment is found to be out of the proceeds received upon sale of flat at Crystal Spring by the assessee. It is also not the Revenue's case that, the payment was not cleared within the time limit specified in Section 54 of the Act viz., two years from the date of sale of capital asset, which could have otherwise resulted in denial of deduction u/s 54 of the Act. The Ld. DR was also unable to clarify that, if for the sake of argument, it is assumed that, the assessee had discharged the sale consideration out of unexplained sources in January 2017, then for what purpose could have the same amount been paid and cleared to the vendor from her bank account in August 2017. We thus are in agreement with the Ld. AR that the case made out by the lower authorities was bereft of logic and fraught....
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.... thus direct the AO to delete the impugned addition of Rs.49,80,330/- holding it to be erroneous and allow the deduction claimed by the assessee u/s 54 of the Act. 15. Now coming to the addition of Rs.10,80,000/- on account of cash deposited by the assessee in her bank account. It is seen that, the assessee had deposited sums aggregating to Rs.11,80,000/-. When asked to provide the nature and source of the same, the assessee is noted to have furnished confirmations of Rs.50,000/- each from her husband & daughter as gift, which was deposited in her bank account. These gifts were accepted by the AO. In respect of the balance amount of Rs.10,80,000/-, the assessee explained that, portion of it represented the cash received upon sale of her flat i.e. Rs.2,50,000/- and the balance was represented by the proceeds from sale of expensive imported house-hold utensils, electronic gadgets, etc., which she had to dispose of in the event of her selling her Crystal-Spring apartment. The assessee is noted to have provided the details of the purchasers along with the relevant bills and invoices in support of the same. The AO however disbelieved the explanation of the assessee, on the ground tha....