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2015 (1) TMI 1066 - AT - Income TaxAddition u/s 69 - Assessment u/s 153A - unaccounted investment - Held that - Department could not bring on record any reliable material to prove that the assessee made actual investment of ₹ 3,25,51,000/- in the previous year relevant to Assessment Year 2005-06, ₹ 6,51,00,000/- in Assessment Year 2006- 07 and ₹ 3,25,50,000/- in Assessment Year 2007-08. As per the provisions of Section 69, before making an addition under that section, the onus is on the Revenue to bring on record the material to conclusively prove the factum of making an investment by the assessee and only thereafter the onus shifts upon the assessee to explain the nature and source of such investment. In the instant case, we find that the only reliable material which was brought on record by the Revenue was agreement to sale dated 18.01.2005. The assessee has not denied the fact that the agreement was executed by him also. The agreement only proves that ₹ 11,00,000/- was paid by the assessee on 18.01.2005 and agreed to pay the balance amount on future dates. In the facts of the instant case, the said agreement does not prove the balance agreed amount was actually paid at any time leave aside at the stipulated time. Therefore, in our considered view, the agreement is a material to conclude that investment of ₹ 11,00,000/- was made by the assessee on 18.01.2005 and for no further investment. Therefore, in the circumstance, the addition of an amount more than ₹ 11,00,000/- made in the Assessment Year 2005-06 and the amounts for which the additions were made in Assessment Year 2006-07 and 2007-08 are not sustainable. Further, in respect of ₹ 11,00,000/-, the assessee claimed that the amount was paid by cheque and the said cheque was taken back by the assessee; whereas, Shri Somabhai A. Prajapati in his statement claimed that ₹ 11,00,000/- was received by him in cash. We find from a reading of the agreement that nowhere the agreement shows that ₹ 11,00,000/- was paid by cheque. The assessee could not bring any material to show that ₹ 11,00,000/- was paid by him to Shri Somabhai A. Prajapati was by cheque and was not cash. In this circumstance, we find that the assessee making investment of ₹ 11,00,000/- is established and not even denied by the assessee. The assessee claimed source of the same from bank but the same could not be satisfactorily substantiated by the assessee. Therefore, in our considered view, addition to the extent of ₹ 11,00,000/- made in Assessment Year 2005-06 is justified and needs to be upheld. - Decided partly in favour of assessee for Assessment Year 2005-06 and allow the appeals of the assessee for Assessment Years 2006-07 and 2007-08.
Issues Involved:
1. Validity of jurisdiction of AO for issuing notice u/s 153C. 2. Addition made by the Assessing Officer on a protective basis u/s 69 for various assessment years. Issue-wise Detailed Analysis: 1. Validity of Jurisdiction of AO for Issuing Notice u/s 153C: - Ground No.1: The appellant challenged the validity of the jurisdiction of the Assessing Officer (AO) for issuing notice u/s 153C. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the jurisdiction of the AO in a one-line summation, ignoring the appellant's submissions. The appellant argued that the notice should have been quashed. - Hearing Outcome: The Authorised Representative (AR) of the assessee did not press this ground of appeal, leading to its dismissal for want of prosecution. 2. Addition Made by the Assessing Officer on a Protective Basis u/s 69: - Common Ground: The CIT(A) confirmed the addition made by the AO on a protective basis u/s 69 for Rs. 3,25,51,000/- for AY 2005-06, Rs. 6,51,00,000/- for AY 2006-07, and Rs. 3,25,50,000/- for AY 2007-08. Facts and Arguments: - Search and Seizure: During a search in the case of Shri Somabhai Ambalal Prajapati, documents indicated agreements for the purchase of various plots of land by the appellant. - Agreement to Sell (Banachithi): An agreement dated 18.01.2005 indicated the sale of land at Bhadaj, with rates fixed for different types of land. The agreement was signed by both parties. - Disputed Plots: Some plots were not transferred due to pending civil suits. Alternate plots were transferred instead. - Cash Receipts: Documents seized indicated cash receipts by the sellers as per the agreed rates. Assessing Officer's Observations: - The AO noted that the agreement created a charge in favor of the appellant and that cash receipts were recorded by the sellers. The AO added the amounts as undisclosed income u/s 69 on a protective basis, as the final buyers denied any additional payments. CIT(A)'s Decision: - The CIT(A) upheld the AO's additions, citing the categorical statement of Shri Somabhai Prajapati that he received the full payment of Rs. 13.02 crores in cash from the appellant. The burden was on the appellant to disprove this statement, which he failed to do. Appellant's Contentions: - The appellant argued that the agreement was not acted upon, and the advance payment was returned. The appellant provided various documents and statements to support this claim. - The appellant also highlighted inconsistencies in the statements of the sellers and the lack of corroborative evidence. Tribunal's Analysis: - The Tribunal noted the contradictions in the statements of the sellers and the lack of material evidence to substantiate the claims of cash payments. - The Tribunal found that the only reliable material was the agreement to sell, which indicated an initial payment of Rs. 11,00,000/-. There was no evidence to prove further payments. - The Tribunal concluded that the addition of amounts more than Rs. 11,00,000/- was not sustainable. Final Decision: - The Tribunal set aside the orders of the lower authorities, upholding the addition of Rs. 11,00,000/- for AY 2005-06 and deleting the additions for AY 2006-07 and 2007-08. Conclusion: - The appeal for AY 2005-06 was partly allowed, confirming the addition of Rs. 11,00,000/-. - The appeals for AY 2006-07 and 2007-08 were allowed, deleting the additions made by the AO. Order Pronouncement: - The order was pronounced in the Court on January 9, 2015, at Ahmedabad.
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