2015 (10) TMI 587 - AT - Income Tax

Unexplained investment made in house property - CIT(A) deleted the addition - Held that - The UIT Kota had allowed to transfer this plot no. 573, Basant Vihar, Kota vide its order no. 569-70 dated 22.07.2008 by charging Urban Tax @ 25% in the name of assessee. It is proved that plot was really purchased by the assessee in 1988. However, there is no evidence regarding investment made in construction of the house as well as payment of Urban Tax @ 25% paid to the UIT, Kota. Thus this issue is set aside to the AO to reconsider this aspect. The Sale Deed registered on 16.05.2008 by Shri Gajanand Verma in favour of the assessee is mere technical formality and the AO had not brought on record any evidence that assessee had passed on any consideration in cash to her husband from unaccounted sources. Therefore, Revenue s appeal on this account is dismissed. However, above observation required to be verified by the AO by allowing opportunity to the assessee, being the finding of last fact finding authority i.e. ITAT. The aspect of construction made on this plot and Urban tax @ 25% paid by the assessee to the UIT, Kota need to be verified after allowing reasonable opportunity of being heard to the assessee. For limited purpose, this case is set aside to the AO. - Decided partly in favour of revenue for statistical purposes.

Summary

Issues:
Appeal against deletion of addition on unexplained investment in house property.

Analysis:
1. The AO observed that the assessee, involved in building material business, filed a return declaring income as per section 44AF of the IT Act, but scrutiny revealed an unexplained investment of Rs. 30,00,000 in a house property purchased in 2008. The AO found discrepancies in ownership proofs provided by the assessee for the property purchased in 1988, leading to the addition of Rs. 31,84,270 as unexplained investment.

2. The CIT (A) allowed the appeal, noting sufficient evidence of the property's ownership dating back to 1988. The CIT (A) held that the property transfer was completed in 1988-89, with no consideration paid by the assessee to her husband, the power of attorney holder. The addition of Rs. 30,00,000 was deleted, but the source of Rs. 1,84,270 for registration remained unexplained, leading to its confirmation.

3. The ITAT found that the property was originally allotted in 1987 and transferred to the assessee in 2008 for Rs. 30,00,000. The ITAT set aside the issue of construction investment and urban tax payment for reevaluation by the AO. The sale deed in 2008 was deemed a formality, with no evidence of consideration passed from unaccounted sources. The appeal was partly allowed for statistical purposes, directing the AO to verify the construction and tax payment aspects.

In conclusion, the ITAT partially allowed the revenue's appeal, emphasizing the need for further verification on construction investment and urban tax payment, while dismissing the appeal on the unexplained investment aspect.