2015 (1) TMI 507 - AT - Income Tax

Undisclosed investment in land - nature of land - agriculture land or not - Held that - Only basis on which impugned addition was made was answer No. 18 of the statement recorded from Shri Mavjibhai on 29.03.2007. Said Mavjibhai was not even clear on the exact quantum of the consideration. This statement was not supported by any evidence in the form of banakhat, dates and mode of payment with regards to on money received. Assessing Officer failed to make any efforts to go beyond the statement given by Shri Mavjibhai (for whatever reasons best known to him) to justify the allegation that on money was paid to assessee. Mere statement of a third party could not be the basis for making addition in absence of any corroborative evidence. Assessee is agriculturalist and was not filing returns of income. For the year under consideration, return of income was filed in response to notice u/s. 148 admitting only agricultural income. The immovable property under consideration is agricultural land and there is nothing on record to suggest that agricultural land sold was capital asset within the meaning of Section 2(14) and hence liable to capital gains. Thus CIT(A) was justified in deleting addition in question - Decided in favour of assessee.

Summary

Issues Involved:

1. Deletion of addition on account of undisclosed investment in land.
2. Initiation of proceedings under section 147 of the Income Tax Act, 1961.
3. Deletion of addition on account of undisclosed income from land transactions.
4. Validity of notice issued under section 148 of the Income Tax Act, 1961 to a deceased person.

Detailed Analysis:

1. Deletion of Addition on Account of Undisclosed Investment in Land:

The Revenue challenged the deletion of Rs. 17,82,750/- made on account of undisclosed investment in land by the CIT(A). The CIT(A) granted relief to the assessee, who argued that the statement of Shri Mavjibhai M. Desai, which was the basis for the addition, did not mention any disclosure of on money and lacked supporting documentary evidence. The Tribunal upheld the CIT(A)'s decision, noting that the statement of Shri Mavjibhai was not corroborated by any evidence such as banakhat, dates, or mode of payment. The Tribunal emphasized that mere statements without evidence could not justify the addition.

2. Initiation of Proceedings Under Section 147 of the Income Tax Act, 1961:

The assessee contested the initiation of proceedings under section 147, arguing that there was no material to support the belief of income escapement. The CIT(A) dismissed this ground, and the Tribunal noted that the reopening was based on information from the Central Circle and was within the statutory period. However, the Tribunal found that the addition made by the Assessing Officer was not justified due to the lack of supporting evidence and upheld the CIT(A)'s decision to delete the addition.

3. Deletion of Addition on Account of Undisclosed Income from Land Transactions:

In multiple appeals, the Revenue contested the deletion of additions made on account of undisclosed income from land transactions. The CIT(A) had deleted these additions, and the Tribunal upheld these deletions. The Tribunal found that the statements of Shri Mavjibhai, which were the basis for the additions, were not supported by any documentary evidence. The Tribunal reiterated that mere statements without corroborative evidence could not justify the additions.

4. Validity of Notice Issued Under Section 148 of the Income Tax Act, 1961 to a Deceased Person:

In one appeal, the Revenue issued a notice under section 148 to a deceased person. The Tribunal dismissed the appeal, noting that an appeal against a deceased person is not maintainable. The Tribunal allowed the Revenue the liberty to rectify its mistake as per law within a reasonable time.

Conclusion:

The Tribunal consistently upheld the CIT(A)'s decisions to delete additions made on account of undisclosed investments and income from land transactions due to the lack of supporting evidence. The Tribunal also emphasized the procedural correctness in the initiation of proceedings under section 147 but dismissed an appeal against a deceased person on technical grounds. The Tribunal's decisions highlight the importance of corroborative evidence in upholding additions and the procedural adherence required in tax assessments.