2018 (7) TMI 1986 - AT - Income Tax

Unexplained investment in immovable property - addition only on the basis of surrender made by the assessee during the course of survey though there was an agreement found during the survey action - HELD THAT - As per the agreement found only ₹ 1,00,000/- was found to be paid by the son of the assessee as an advance for purchase of the plot of land and, therefore, to that extent the addition can be made if assessee has not surrendered the amount. Since the assessee has already surrendered the amount of ₹ 1,00,000/-, therefore no further addition can be made on account of investment in the land when the said agreement found during the course of survey was not given effect by the parties and the plot of land was sold by the owner to some third party vide sale deed dated 18th May, 2012. Hence, when the facts were brought on record by the assessee regarding the sale of plot of land to the third party, then the statement recorded under section 133A which is contrary to the actual facts, cannot be a basis of addition. Accordingly, in the facts and circumstances of the case, the addition made by the AO is not sustainable in law and the same is deleted. - Decided in favour of assessee.

Summary

Issues:
1. Addition of unexplained investment in immovable property.

Analysis:
The appeal before the Appellate Tribunal ITAT Jaipur was against the order of the ld. CIT (A), Alwar regarding the addition of ?5,75,000 on account of unexplained investment in immovable property for the assessment year 2013-14. The assessee, engaged in trading of Fertilizers and pesticides, had a survey conducted at their business premises under section 133A of the I.T. Act. During the survey, an agreement to sale a plot of land was found, where the son of the assessee agreed to purchase the land for ?6,75,000 with an advance payment of ?1,00,000. The assessee surrendered ?5,75,000 as undisclosed income during the survey. Subsequently, the assessee claimed that the agreement was canceled by the son, and the surrender was a mistake. The AO made an addition of ?5,75,000 not declared in the return but surrendered during the survey. The assessee challenged this before the ld. CIT (A) but was unsuccessful.

Upon considering the submissions and evidence, the Tribunal noted that a sale deed dated 18.05.2012 showed the land was sold to a third party, not to the assessee or his son. Therefore, the question of the ?5,75,000 investment did not arise. The AO's addition was solely based on the surrender made during the survey, despite the land being sold to a third party. As only ?1,00,000 was paid as an advance according to the agreement, any addition beyond that was unwarranted. Since the assessee had already surrendered the advance amount, no further addition was justified. The Tribunal held that the addition made by the AO was unsustainable in law and thus deleted it.

In conclusion, the appeal of the assessee was allowed, and the addition of ?5,75,000 on account of unexplained investment in immovable property was deleted. The order was pronounced in the open court on 24/07/2018.