Loan - purchase of property - treated as unaccounted money

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Querist : Anonymous

Querist : Anonymous (Querist)

27 February 2015 My client has purchased an immovable property. As per the purchase agreement, he can use the said property only against full payment towards the said property.
Due to financial issues, only part payment has been made and the rest of the amount has been treated as loan. My client has already started using the aforesaid property.
The officer in his Audit observations has observed this amount as unaccounted investments u/s 69.
Kindly help with case law favouring my client.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 February 2015 Section 69 does not provide any guideline about the extent and length of the discretionary power given to AO in the matter of treating the investment as income which is unexplained or unsatisfactorily explained by the investor-assessee. Therefore, Assessing Officer is expected to appreciate the reasonable explanation offered to him, the evidences produced before him about the nature and source of investment and he can not make the addition merely on surmises, conjectures as well as without any supporting evidences. (Ashok Kumar Rastogi V CIT (1991) 100 CTR 204.).

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Querist : Anonymous

Querist : Anonymous (Querist)

27 February 2015 Thanks for your quick reply! Appreciated. Also, I wanted to know if there is any case law which is more specific to my case. Given that, my client has made recorded the loan amount in his books. The only argument here is the situation that he was given possession of the premise without the full payment (which happens to be an important point in the agreement). Hence the officer feels the presence of an unaccounted cash transaction.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 February 2015 I am not aware of any case law specific to your case. You have accounted the transactions in the books of accounts and also offering sufficient explanations. Under these circumstances the law is clear the officer can't assume any unaccounted cash transaction.

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Querist : Anonymous

Querist : Anonymous (Querist)

27 February 2015 Ok!
Thanks a lot for your help and advice in my case.

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