2014 (5) TMI 694 - AT - Income Tax

Addition u/s 69A of the Act Unexplained cash deposits in back account - Date of purchase and sale of land do not match Documents not made available Held that - The facts involved in the subject matter have not been streamlined in a proper manner and the adverse inferences have been summarily drawn - If the assessee is owner of above pieces of land holding GPA, it gives a fair assumption that the land could be sold - if there is no subsequent deposit in assessee s bank account which may give indication that the sale price have been fetched by the assessee, then the issues are to be decided on the basis of preponderance of probabilities - such preponderance has to be reasonably worked out - besides, copy of AIR information needs to be given to the assessee and the summons having not come back unserved or marked as no such person, implies that persons are available Relying upon Commissioner of Income-Tax, Orissa Versus Orissa Corporation Pvt. Limited 1986 (3) TMI 3 - SUPREME Court - the AO has to bring the summons proceedings to a logical conclusion - Merely because summoned person did not respond, cannot be held against assessee - thus, the matter is required to be remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Issues Involved:
1. Sustaining addition under Section 69A of the Income Tax Act for unexplained cash deposits.
2. Verification of the sources of cash deposits claimed to be from the sale of plots.
3. Procedural fairness in the assessment process, including the issuance of summons under Section 131 and provision of AIR information to the assessee.

Detailed Analysis:

1. Sustaining Addition Under Section 69A:
The core issue in the appeal was whether the addition of Rs. 20,97,900/- under Section 69A of the Income Tax Act, 1961, for allegedly unexplained cash deposits in the assessee's bank accounts was justified. The assessee argued that these deposits were from the sale proceeds of land plots. However, the assessing officer (AO) did not accept this explanation due to inconsistencies in the dates of purchase and sale of the plots and the lack of supporting documentation.

2. Verification of Sources of Cash Deposits:
The assessee claimed that the cash deposits were sourced from the sale of land plots, which were purchased from one Mr. Anil Kumar Mittal. The AO found discrepancies in the dates of purchase and sale, noting that the plots were claimed to be sold before the purchase date. Additionally, the AO pointed out that the receipts and sale deeds for some transactions were missing or not credible. The CIT(A) upheld the addition, emphasizing that the assessee failed to conclusively prove the source of the cash deposits, as the documents provided were not registered and were merely notarized, self-serving documents.

3. Procedural Fairness in Assessment Process:
The assessee contended that the AO did not provide the AIR information, which was crucial for reconciling the facts and figures. Furthermore, the AO did not effectively pursue the summons issued under Section 131 to the persons who allegedly bought the plots. Only one out of seven individuals responded, and his statement contradicted the assessee's claims. The CIT(A) noted that the AO's remand report indicated non-compliance by the summoned individuals, except for one, and this non-compliance was held against the assessee.

Tribunal's Observations and Decision:
The Tribunal observed that the facts regarding the purchase of land from Mr. Anil Kumar Mittal were not disputed by the revenue. However, the main issue was the inconsistency in the dates of purchase and sale and the lack of credible documentation. The Tribunal noted that the adverse inferences drawn by the lower authorities were based on assumptions and the failure to provide the AIR information to the assessee. It emphasized that the AO should have brought the summons proceedings to a logical conclusion, as per the Supreme Court judgment in Orissa Corporation.

Conclusion:
The Tribunal set aside the issue and remanded it back to the AO for a fresh decision, emphasizing the need for procedural fairness and a thorough examination of the facts. The AO was directed to provide the AIR information to the assessee and ensure that the summons proceedings were concluded logically. The appeal was allowed for statistical purposes, with instructions for a fresh assessment in accordance with the Tribunal's observations.

Order Pronounced:
The order was pronounced in open court on 09-05-2014.

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