2012 (4) TMI 677 - AT - Income Tax

Summary

Issues Involved:
1. Legality and factual correctness of the assessment order and the CIT(A)'s order.
2. Addition of Rs. 53,00,000/- without reasonable opportunity of being heard.
3. Addition of Rs. 53,00,000/- as unexplained investment for land purchase.
4. Source of investment from M/s. Star Stitchers (P) Ltd.
5. Consideration of facts, material, and documents by the authorities.
6. Justification of the addition confirmed by the CIT(A).
7. Charging of interest u/s 234A, 234B, 244A(3), and 234D.

Summary:

1. Legality and Factual Correctness:
The assessee contended that both the assessment order and the CIT(A)'s order were against the facts and untenable in law.

2. Addition Without Reasonable Opportunity:
The assessee argued that the CIT(A) erred in confirming the addition of Rs. 53,00,000/- without providing a reasonable opportunity of being heard.

3. Unexplained Investment:
The AO added Rs. 53,00,000/- as unexplained investment for the purchase of land. The assessee claimed that this amount was received from M/s. Star Stitchers (P) Ltd. and later returned. The AO doubted this explanation, considering it an afterthought and against the statement recorded u/s 131.

4. Source of Investment:
The assessee provided evidence that M/s. Star Stitchers (P) Ltd. was an existing assessee and the source of investment was explained through their account. The AO, however, did not accept this explanation, treating the amount as unexplained.

5. Consideration of Facts and Documents:
The CIT(A) confirmed the addition without appreciating the facts, material, and documents provided by the assessee. The assessee argued that the source of the credit was duly proved with necessary evidence.

6. Justification of Addition:
The CIT(A) was not justified in confirming the addition as the explanation and evidence provided by the assessee were not properly considered. The Tribunal found that the assessee had discharged her onus of explaining the source of the payment and the department failed to prove the assessee's explanation as false.

7. Charging of Interest:
The assessee contended that the interest charged u/s 234A, 234B, 244A(3), and 234D was unjustified as no reasonable opportunity of being heard was provided.

Conclusion:
The Tribunal held that the assessee had adequately explained the source of Rs. 53,00,000/- and the addition made by the AO was not justified. The Tribunal directed the AO to delete the addition and reversed the order of the CIT(A). The appeal of the assessee was allowed.