2012 (3) TMI 535 - AT - Income Tax

Unexplained investment - addition made by AO merely on the basis of stamp valuation adopted by the Registrar for the purpose of registration of the document - Held that - There is nothing on record to support the finding of the AO for making the addition on account of unexplained investment in property. There is no law to justify the findings of the AO to adopt the stamp valuation for the purpose of making addition in the case of the purchaser. It was a case of search and nothing was found against the assessee if the assessee or his wife made any undisclosed investment in property. According to the ld. DR, the AO has not invoked the provisions of section 50C of the IT Act, but no other provision has been brought to our notice under which such an addition can be made against the assessees. In view of the finding of fact given by the ld. CIT(A) and in absence of any incriminating material against the assessee brought on record for the purpose of making above addition, we do not find any infirmity or illegality in the order of the ld. CIT(A) in deleting the addition. Addition on account of household expenses - Held that - No merit in this ground of appeal of the Revenue. The AO purely made estimated addition without bringing any material against the assessee for estimating household expenses. The contention of the ld. counsel for the assessee that in other cases similar additions have been deleted, has not been rebutted through any material on record. In the absence of any material on record in favour of the revenue, we do not find any justification to interfere with the order of the ld. CIT(A). Same is confirmed and thus, the appeal of the Revenue is dismissed. Unexplained investment in plot at Sirole - Held that - Since the AO has not brought any evidence on record that the assessee made payment of ₹ 1,30,00,000/- to the seller and no cogent and reliable corroborative evidence have been filed on record, we do not find any justification to interfere with the order of the ld. CIT(A). The finding of fact recorded by the ld. CIT(A) support the contention of the ld. counsel for the assessee that it is not a fit case for taking a contrary view what has already been taken by the ld. CIT(A). Accordingly, we do not find any merit in this ground of appeal of the Revenue. The departmental appeal is, accordingly, dismissed on this ground as well

Summary

Issues Involved:
1. Deletion of addition on account of unexplained investment in plot.
2. Deletion of addition on account of low household withdrawals.
3. Deletion of addition on account of unexplained investment in another plot.

Issue-Wise Detailed Analysis:

1. Deletion of Addition on Account of Unexplained Investment in Plot:
The Revenue challenged the deletion of an addition of Rs. 14,71,000/- made by the AO on account of unexplained investment in a plot. The AO noted that the assessee and his wife purchased a commercial plot for Rs. 25,08,000/-, but the Registrar charged stamp duty based on a market value of Rs. 54,50,000/-. The AO added Rs. 14,71,000/- each to the income of the assessee and his wife as unexplained investment. The CIT(A) deleted the addition, noting that the AO did not provide any evidence that the assessee paid more than the declared amount. The Tribunal upheld the CIT(A)'s decision, stating there is no law justifying the AO's findings based on stamp valuation for making additions in the purchaser's case. The Tribunal emphasized the absence of incriminating material against the assessee and dismissed the Revenue's appeal.

2. Deletion of Addition on Account of Low Household Withdrawals:
The Revenue contested the deletion of an addition of Rs. 78,000/- made by the AO for low household withdrawals. The AO estimated household expenses at Rs. 4,30,000/- for the assessee's family, attributing Rs. 90,000/- to the assessee and adding Rs. 78,000/- as unexplained. The CIT(A) deleted the addition, noting the AO's estimation lacked material evidence and was inconsistent with previous years' withdrawals. The Tribunal confirmed the CIT(A)'s decision, highlighting the absence of material evidence against the assessee and the consistency of withdrawals with previous years. The Tribunal dismissed the Revenue's appeal on this ground.

3. Deletion of Addition on Account of Unexplained Investment in Another Plot:
The Revenue challenged the deletion of an addition of Rs. 1,20,00,000/- made by the AO for unexplained investment in a plot at Sirole. The AO noted the assessee purchased the plot for Rs. 10,00,000/-, but a seized document indicated payments of Rs. 1,30,00,000/-. The CIT(A) deleted the addition, finding the seized document unsigned, undated, and consisting of rough jottings. The CIT(A) also noted the seller confirmed receiving only Rs. 10,00,000/- and no corroborative evidence supported the AO's claim. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of material evidence and the need for corroborative evidence in search-related assessments. The Tribunal dismissed the Revenue's appeal on this ground.

Conclusion:
The Tribunal dismissed both appeals of the Revenue, confirming the CIT(A)'s deletion of additions on account of unexplained investments and low household withdrawals. The Tribunal emphasized the necessity of material and corroborative evidence for making additions in search-related assessments.