2015 (7) TMI 732 - AT - Income Tax

Addition u/s 69B - unaccounted investment of ₹ 57,85,000/- in purchase of a land measuring 5160 meter situated at survey no. 731 Makarba - CIT(A) deleted the addition - Held that - The basis condition for applying under section 69B is that it should be found that the assessee has made investment or the assessee found to be owner of the money, bullion and jewellery. In the present case, assessee was found to have made investment for purchase of plots. The next question is whether the assessee has made investment exceeding the amount recorded in the books. This is a crucial question, which demonstrates factual position. It is to be proved with the help of evidence available on record. According to the assesee, he was made investment in purchase of plot equivalent to the one disclosed in the sale deed. It is the Assessing Officer who is disputing and harbouring a belief that the assessee has made investments, over and above, the amount so disclosed in the sale deed. His belief is based on the basis of loan liability discharged by the vendor. This type of evidence possessed by the Assessing Officer is of not such a nature, which empowers him to invoke section 69B of the Act. Assessee failed to make reference of any evidence which demonstrate that assessee has made unexplained investment. The assumption of the Assessing Officer is based on the fact that vendors have discharged their loan liability meaning thereby they would have not sold the property below the liability they have discharged. To our mind, this is a far fetched inference. The Ld. First Appellate Authority has analyzed the bank statement and inferred that loan taken by the vendors was of ₹ 205 lacs, they have mortgaged other properties also. They have paid other amounts also. there is no direct co-relation between the discharge of loan liability vis- -vis sale of this plot. The only connection between the bank and this property was that it was under mortgage. Vendors have got it released from the bank and it is sold to the assessee. No addition against higher capital gain has been made in the hands of the vendors. It is for the vendors to explain the source of what amount which they have discharged towards their loan liability. It cannot be presumed that it must be taken from the assessee in cash over and above the amounts stated in the sale deed. In our opinion, ld. Commissioner of Income Tax (Appeals) has appreciated the facts and circumstances in right perspective. There is no evidence with the Assessing Officer to suggest that assessee has made unexplained investment in the purchase of the property - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of addition of Rs. 27,85,000/- under Section 69B of the Income Tax Act.
2. Determination of unaccounted investment in the purchase of land.
3. Validity of the Assessing Officer's assumptions and evidence.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 27,85,000/- under Section 69B of the Income Tax Act:
The revenue's grievance was that the Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs. 27,85,000/- made by the Assessing Officer under Section 69B of the Income Tax Act. The Assessing Officer had added this amount, believing that the assessee made unaccounted investments in purchasing land. However, the Commissioner of Income Tax (Appeals) found no evidence to support this claim and deleted the addition.

2. Determination of Unaccounted Investment in the Purchase of Land:
The sole issue was whether the assessee made an unaccounted investment of Rs. 57,85,000/- in purchasing land. The land in question was initially purchased by Swadias for Rs. 3,50,000/- and later sold to the assessee for Rs. 7,15,000/-. The Assessing Officer suspected that the assessee paid unaccounted money to the vendors, which was then deposited in the bank to release the mortgaged property. This suspicion was based on the fact that the vendors had deposited Rs. 65 lacs to release the property from the bank's mortgage.

3. Validity of the Assessing Officer's Assumptions and Evidence:
The Commissioner of Income Tax (Appeals) analyzed the bank's letter and statements, which revealed that the loan amount was Rs. 205 lacs and not Rs. 65 lacs. The bank statements showed various debit and credit entries, with the maximum debit balance being Rs. 1,34,06,165/- as of 30th June 1998. The Commissioner concluded that the loan was not solely against the mortgaged plot and that the vendors had other properties and transactions. The Commissioner emphasized that for an addition under Section 69B, there must be evidence of unaccounted investments, which was not present in this case. The Assessing Officer's assumption that the vendors would not sell the property below their loan liability was deemed speculative and not supported by concrete evidence.

In conclusion, the Tribunal found no merit in the appeal, agreeing with the Commissioner of Income Tax (Appeals) that there was no evidence to suggest the assessee made unexplained investments in the property purchase. The appeal was dismissed, and the order pronounced in the open court on 17-07-2015.