2018 (10) TMI 1672 - AT - Income Tax

Unexplained investment u/s 69 - in survey u/s 133A a sheet, vide impounded with the title 'Final Statement' given by M/s. Aadhlthiya Constructions was taken from the business premises - assessee has not agreed with the statement, since the amount does not confirm with their books of accounts - HELD THAT - AO is directed to call for the complete details of M/s. Aadhithiya Constructions and verify the accountability of all the payments stated to have been received by it in the final statement in that company s books of account and decide the issue afresh. In case the payments stated to have been received as per final statement is duly reflected in the company s account, then, due credit should be given to the token advance paid by the assessee on 14.01.2003, which is not reflected in the final statement or otherwise. The assessee has raised an alternative plea that the payments numbered as 1 to 4 fall in the financial year 2002-03 relevant to assessment year 2003-04, which is barred by limitation. Admittedly, the transaction entered into viz., agreement of sale of undivided share of land and department store to be constructed with Aadhithiya Constructions is single property spread over to various years and when the sources are in question, the said sources are to be seen for the property as a whole as has been rightly observed by the CIT(A). The contention of the assessee that the amounts paid in the financial year 2002-03 got barred by limitation is not acceptable. Thus, the alternative plea rejected by the CIT(A) stands confirmed.

Summary

Issues:
1. Addition of unexplained investment under section 69 of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the addition of unexplained investment made under section 69 of the Income Tax Act, 1961. The assessee had filed the return for the assessment year 2005-06, which was processed initially accepting the returned income. Subsequently, a survey was conducted at the business premises, revealing discrepancies related to a property transaction with M/s. Aadithiya Constructions. The Assessing Officer reopened the assessment and added the difference in amounts as unexplained investment. The Commissioner confirmed this addition based on impounded documents from the survey.

During the appeal, the assessee argued that complete explanations were provided regarding the transaction, emphasizing the payments made and duly reflected in the accounts. The Tribunal reviewed the agreement details and other submissions. It noted the discrepancy between the amounts mentioned in the agreement and the impounded document. The Tribunal directed the Assessing Officer to verify the details of M/s. Aadithiya Constructions and reconcile the payments mentioned in the impounded document with the company's accounts. The Tribunal highlighted the importance of accounting for the token advance paid by the assessee as per the agreement.

Additionally, the assessee raised an alternative plea regarding the limitation period for certain payments made in the financial year 2002-03. The Tribunal rejected this plea, emphasizing that the transactions related to a single property spread over various years should be seen in totality. The Tribunal upheld the Commissioner's decision in this regard.

Ultimately, the appeal was partly allowed for statistical purposes, indicating a detailed analysis of the issues involved and the directions provided for further assessment and verification.