2014 (11) TMI 632 - HC - Income Tax

Assessment u/s 153A - unexplained investment in purchase of land - principles of natural justice - Held that - The Tribunal was rightly of the view that details were never given by the assessee either before the AO or before the CIT(A) - the assessee has not been very clear on his stand on the investment, on the contrary, it has been recorded by the AO that the assessee in his letter dated 19.11.2004 has accepted the investment as unexplained investment - the assessee has assailed the addition confirmed by the CIT(A) with regard to the investment made in SIDCO land - no reason whatsoever is given as to what prevented the assessee to furnish the details before lower authorities - the assessee had submitted that he would admit the whole amount of 35.00 Lakhs for purchasing land from SIDCO as un-explained investment as the loan taken for the above investment is un-explainable - the assessee had not produced any additional evidence to show that the assessee had borrowed any funds from M/s. New Ashok Finance, Ellampillai, or Ellampillai Ashok Corporation for utilizing the same for investment in SIDCO the order of the Tribunal is upheld Decided against assessee. Investments made in land at Ariyanoor Held that - The Tribunal was rightly of the view that the subsequent sale in favour of the assessee vide registered document dated 17.3.2004 was for ₹ 2.00 lakhs only and it is not a case of distress sale by C. Balan in favour of the assessee - there was no decline in the real estate prices during the relevant period and on the contrary the value of another piece of land purchased by Devabala Group showed appreciation in price - even as per the translated copy of the agreement, he did not show that it is in respect of developed residential plots - The assessee tried to explain the difference in value between February, 2001 agreement and the present one as a distress sale, but that was found to be not correct - mere statement of the Vanaja saying that she did not pay money or receive money will be of no avail, when she herself admits that she signed on the back of the agreement having received the money on the cancellation of the sale agreement - Her statement throws more light that is was not a clear transaction - The entire transaction was shrouded in mystery and the AO has correctly made addition as such no substantial question of law arises for consideration Decided against assessee.

Summary

Issues:
1. Addition of unexplained investment in SIDCO land.
2. Addition of investments made in land at Ariyanoor.

Analysis:

Issue 1: Addition of unexplained investment in SIDCO land
The case involved the appellant challenging the addition made by the Assessing Officer towards the investment in SIDCO land. The Tribunal noted that the appellant had not provided necessary details before the lower authorities and had changed their stance regarding the source of funds for the investment. The Tribunal found that the appellant had taken different stands before the authorities, leading to a lack of reliability in their submissions. The Tribunal declined to interfere with the order of the Commissioner of Income Tax (Appeals) based on these grounds, considering it a question of fact that should have been pursued earlier in the proceedings.

Issue 2: Addition of investments made in land at Ariyanoor
Regarding the addition made in respect of investments in land at Ariyanoor, the Tribunal reviewed the sale agreement dated 07.02.2001 and subsequent transactions. The Tribunal found discrepancies in the transactions and noted that the appellant's explanations did not align with the evidence presented. The Tribunal concluded that the Assessing Officer had rightly made additions based on the evidence and circumstances of the case. The appellant's attempt to rely on a statement from a related party was dismissed by the Tribunal, emphasizing that the entire transaction was unclear and shrouded in mystery. The Tribunal upheld the additions made by the Assessing Officer, considering them to be based on factual analysis.

In conclusion, the High Court found that both issues raised by the appellant were questions of fact that had been thoroughly analyzed by the lower authorities and the Tribunal. As such, the High Court declined to interfere with the Tribunal's order, stating that no question of law, much less any substantial question of law, arose for consideration in the case. Therefore, both Tax Case (Appeals) were dismissed with no costs awarded.