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2011 (11) TMI 508 - AT - Income TaxUnexplained Investments - sale of agricultural land - Held that - It is the case of the assessee that he has received a sum of Rs. 8.00 lakhs, being the amounting actually paid by the buyer on transfer of land by the assessee to him. There is no material on record to hold that the buyer of the agricultural land has paid anything over and above Rs. 8.00 lakhs. Since there is no evidence on record that the buyer has paid anything over and above Rs. 8.00 lakhs, being the amount stated in the conveyance deed to have actually been paid by the buyer to the assessee on transfer of agricultural land, it is not possible to hold that the assessee has received a sum of Rs. 38.00 lakhs from the buyer. The legal fiction created by section 50C is limited to the purposes of section 48 alone. It cannot be extended further to mean that the consideration deemed to be so received u/s 50C was actually available in cash with the assessee for making investments or meeting expenses. Further, no material has been placed to establish that assessee has actually received any amount over and above Rs. 8 lakhs. Thus, assessee cannot be said to have satisfactorily explained the nature and source of the investment and expenses - Decided against the assessee. Dis-allowance on failure to explain bank entries - Held That - The AO has estimated the income from commission on account of property dealing at Rs. 3.00 lakhs as against Rs. 1.50 lakhs shown by the assessee. The AO has given no reason for estimating the income from commission at Rs. 1.50 lakhs. CIT(A) has also given no reason for confirming the same. Therefore the addition made by the AO and confirmed by the CIT(A) is deleted - Decided in favor of assessee.
Issues Involved:
1. Validity of proceedings initiated under Section 153A. 2. Confirmation of additions made by the Assessing Officer (AO). 3. Charging of interest under Section 234B. 4. Explanation of unexplained investments and expenses. 5. Treatment of deemed consideration under Section 50C. 6. Double addition of household expenses. 7. Estimation of income from commission. 8. Adjustment and telescoping of additions. Issue 1: Validity of Proceedings Initiated Under Section 153A The assessee argued that the proceedings initiated under Section 153A were not proper. However, during the hearing, the counsel for the assessee did not press this issue, and thus, it was dismissed as not pressed. Issue 2: Confirmation of Additions Made by the AO 1. Assessment Year (AY) 2005-06: - The AO added Rs. 18,54,705 as unexplained investment. The assessee claimed that the amount should be considered explained due to the deemed consideration of Rs. 38 lakhs under Section 50C. However, the AO and CIT(A) rejected this, stating that only the actual received amount of Rs. 8 lakhs could be considered. The Tribunal upheld this view, emphasizing that Section 50C's deeming provision is limited to capital gains computation and cannot be extended to actual cash availability for investments. 2. AY 2006-07: - The AO added Rs. 34,33,567 as unexplained investment and Rs. 1,50,000 as undisclosed commission. The Tribunal followed the reasoning from AY 2005-06 and dismissed the ground regarding unexplained investment. However, the addition of Rs. 1,50,000 as undisclosed commission was deleted due to lack of reasoning provided by the AO and CIT(A). 3. AY 2007-08: - The AO added Rs. 3,86,360 as unexplained investment and Rs. 21,95,364 on account of various investments and expenses. The Tribunal dismissed the ground regarding unexplained investment following the reasoning from AY 2005-06. The addition of Rs. 70,000 as undisclosed commission was deleted for similar reasons as in AY 2006-07. Issue 3: Charging of Interest Under Section 234B The assessee argued against the charging of interest under Section 234B. However, the Tribunal noted that the levy of interest under Section 234B is mandatory and automatic upon completion of assessment. Thus, the ground was dismissed. Issue 4: Explanation of Unexplained Investments and Expenses The assessee failed to satisfactorily explain the nature and source of investments amounting to Rs. 27,90,000 in AY 2005-06. The AO considered only Rs. 8 lakhs, the actual amount received from the sale of land, as available for investments. The Tribunal upheld this view, stating that deemed consideration under Section 50C could not be treated as actual cash available for investments. Issue 5: Treatment of Deemed Consideration Under Section 50C The assessee argued that the deemed consideration of Rs. 38 lakhs under Section 50C should be treated as actual income available for investments. The Tribunal rejected this argument, stating that Section 50C's deeming provision is limited to the purposes of Section 48 for capital gains computation and cannot be extended to actual cash availability for investments. Issue 6: Double Addition of Household Expenses In AY 2005-06, the AO added Rs. 90,000 towards household expenses, which was upheld by CIT(A). However, the Tribunal noted that the AO had already considered Rs. 90,000 as expenses/investment, resulting in double addition. Therefore, the addition was reduced by Rs. 36,000. Issue 7: Estimation of Income from Commission In AY 2006-07, the AO estimated the income from commission at Rs. 3 lakhs as against Rs. 1.5 lakhs shown by the assessee. The Tribunal deleted this addition due to the lack of reasoning provided by the AO and CIT(A). Issue 8: Adjustment and Telescoping of Additions The assessee requested adjustment and telescoping of additions. However, this ground was not pressed during the hearing and was dismissed as not pressed. Conclusion: - Appeal for AY 2005-06 (ITA No. 571/Chd/2011) is dismissed. - Appeals for AY 2006-07 (ITA No. 572/Chd/2011) and AY 2007-08 (ITA No. 573/Chd/2011) are partly allowed.
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