2014 (3) TMI 1044 - AT - Income Tax

Addition u/s 69 - unexplained investment - Held that - The statement is not relatable to any seized material and therefore the statement cannot be the basis for making any addition. Considering the above decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. K. Bhuvanendran & Others reported in 2006 (12) TMI 127 - MADRAS HIGH COURT , we do not have any hesitation to delete the addition made by the Ld. Assessing Officer, which was further sustained by the Ld. CIT (A) because the statement of the assessee was not based on any seized material, but a blend admission to the opinion imposed by the Ld. Assessing Officer. Further, the Revenue has not produced any material before us other than the statement of the assessee to establish that the assessee had paid on-money. Accordingly the addition made by the Ld. Assessing Officer for U/s. 69 of the Act stands deleted - Decided in favour of assessee

Summary

Issues:
1. Appeal against order of Learned Commissioner of Income Tax (Appeals)-II, Chennai.
2. Addition of unexplained investment of Rs. 29,10,162.

Analysis:

Issue 1: Appeal against order of Learned Commissioner of Income Tax (Appeals)-II, Chennai
The appellant filed an appeal against the order of the Learned Commissioner of Income Tax (Appeals)-II, Chennai dated 15.03.2013 in ITA No.363/10-11 passed under sections 153A r.w.s 143(3) and section 250 of the Income-tax Act, 1961. The primary contention was related to the additions made towards unexplained investment.

Issue 2: Addition of unexplained investment of Rs. 29,10,162
The assessee raised grounds in the appeal against the addition of Rs. 29,10,162 made towards unexplained investment. The case involved the purchase of an immovable property for Rs. 34,75,000, with a guideline value of Rs. 64,10,625. The Assessing Officer treated the difference as unexplained investment under section 69 of the Act. The assessee contested this addition, arguing that the Assessing Officer ignored detailed replies during assessment, and there was no evidence of the higher amount being paid. The appellant also highlighted that the statement was not a conscious admission and relied on judicial precedents to support their case.

The Learned CIT (A) confirmed the addition based on the appellant's admission during a statement recorded under section 132(4) of the Act. The CIT (A) emphasized the prevalence of on-money payments in real estate transactions and the variance between the sale deed value and guideline value. The appellant's retraction statement under section 133(4) was also considered, with references to relevant case laws.

Upon careful consideration of the facts and arguments presented, the Tribunal observed that the addition was made based on the presumption of on-money payment. The Tribunal noted that there was no conscious admission by the assessee and that the CIT (A) merely endorsed the Assessing Officer's view. Citing a similar case from the jurisdictional High Court, the Tribunal concluded that the statement was not based on seized material and could not be the sole basis for the addition. Consequently, the addition of Rs. 29,10,625 under section 69 of the Act was deleted.

In conclusion, the Tribunal allowed the appeal of the assessee, pronouncing the order on 14th March, 2014 at Chennai.