2010 (6) TMI 790 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of quantum addition.
2. Reopening of assessment.

Summary:

1. Deletion of Quantum Addition:
The revenue challenged the deletion of Rs. 1,03,36,300/- in the case of M/s. Lhasa Construction Pvt. Ltd. and Rs. 1,00,86,300/- in the case of Smt. Madhu Arora. The AO alleged that the purchasers understated the purchase price of a property, leading to a reference to the DVO, who valued the property at Rs. 2,84,72,600/-. The difference was added as unexplained investment in the hands of the purchasers and as undisclosed business income for M/s. Lhasa Construction. The Tribunal upheld the CIT(A)'s deletion of these additions, noting that no material evidence was provided by the AO to prove that any amount over and above the declared sale consideration was paid. The Tribunal emphasized that the burden of proving understatement or concealment lies with the revenue, as held in the case of K.P. Varghese vs. ITO, 131 ITR 597.

2. Reopening of Assessment:
The revenue also contested the CIT(A)'s decision that the reopening of assessment was incorrect. The AO had issued a notice u/s 148 based on information that the sale proceeds of a property were understated. The CIT(A) held that the reopening was invalid, citing that the AO did not dispose of the objections filed by the assessee against the reopening. The Tribunal, however, found that there was sufficient information for the AO to form a prima facie opinion that income had escaped assessment. The Tribunal reversed the CIT(A)'s finding on this issue, allowing the ground of appeal related to the reopening of assessment.

Conclusion:
The Tribunal dismissed ITA No. 1197/Del/2007 (Smt. Madhu Arora) and partly allowed ITA No. 3806/Del/07 (M/s. Lhasa Construction Pvt. Ltd.), upholding the deletion of quantum addition but reversing the CIT(A)'s decision on the reopening of assessment.