2010 (7) TMI 1074 - AT - Income Tax

Summary

Issues involved: Appeal against addition made u/s 69 of the Income Tax Act, 1961.

Ground 1: The Learned CIT(A) confirmed the addition of Rs. 21,87,041 u/s.69.

Ground 2: The CIT(A) should have considered that legal fiction u/s 50C is for capital gains, not u/s 69.

Ground 3: The CIT(A) should have given a specific opportunity to the assessee before sustaining the addition.

The case involved an appeal by the Assessee against an addition made u/s 69 of the Income Tax Act, 1961, based on the order of the Learned CIT(Appeals)-II for Assessment Year 2005-06. The Assessing Officer noted a difference between the consideration paid by the assessee for agricultural land and the value assessed by the Stamp Duty Authorities, treating it as unexplained investment. The assessee contended that the Jantri value considered by the authorities for stamp duty purposes should not be the basis for the addition u/s 69. The Assessing Officer, however, made an addition of Rs. 21,87,041, which was challenged by the assessee.

The Learned CIT(A) upheld the addition, citing the applicability of section 50C of the Income Tax Act, 1961. The CIT(A) rejected the argument that section 50C was not applicable to the purchaser, as in this case, and affirmed the Assessing Officer's action. However, upon review, it was found that there was no concrete evidence to prove that the assessee had actually paid more than the documented consideration for the agricultural land. The provisions of section 50C were deemed inapplicable as the assessee was the purchaser, not the seller, as clarified in relevant case law.

In line with previous judicial decisions and the provisions of the law, it was concluded that there was no justification for confirming the addition u/s 69. The findings of the Learned CIT(A) were reversed, and the grounds of the Assessee were allowed. Consequently, the appeal of the Assessee was allowed, and the order was pronounced on 23/07/2010.