2012 (3) TMI 650 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition for unexplained investment in land purchase.
2. Deletion of addition for undisclosed profit from land transactions.
3. Admissibility of additional evidence under Rule 46A(3) of the I.T. Rules, 1962.

Summary:

Issue 1: Deletion of Addition for Unexplained Investment in Land Purchase
The Revenue challenged the deletion of an addition of Rs. 1,42,00,000/- made by the Assessing Officer (AO) on account of unexplained investment for land purchase. The AO alleged that the assessee purchased land from M/s Ambika Corporation and sold it to M/s Trimurti Associates, making payments of Rs. 5,00,000/-, Rs. 98,00,000/-, and Rs. 39,00,000/- without disclosing the source. The CIT(A) deleted the addition, noting that the payments were made from the sale proceeds received from M/s Trimurti Associates, except for an initial payment of Rs. 5,00,000/- which was contributed by co-owners and taxed in their respective hands. The Tribunal upheld the CIT(A)'s decision, confirming the deletion of the Rs. 1,42,00,000/- addition.

Issue 2: Deletion of Addition for Undisclosed Profit from Land Transactions
The Revenue also contested the deletion of Rs. 36,52,656/- as undisclosed profit from land transactions. The AO calculated the profit based on the difference between the purchase price of Rs. 605 per sq. yd. and the sale price of Rs. 801 per sq. yd. The CIT(A) found no transfer of land within the block period as possession was handed over only after a civil suit settlement in 2003. Consequently, the profit was declared in A.Y. 2003-04. The Tribunal agreed with the CIT(A)'s findings, confirming the deletion of the Rs. 36,52,656/- addition.

Issue 3: Admissibility of Additional Evidence under Rule 46A(3)
The Revenue argued that the CIT(A) admitted additional evidence in contravention of Rule 46A(3). The Tribunal found no merit in this argument, stating that the evidence considered by the CIT(A) was already part of the Revenue record, including ledger accounts, cash books, and return filings. The Tribunal rejected the Revenue's objection, confirming that the CIT(A) did not rely solely on new evidence but also on existing records and legal provisions.

Conclusion
The Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s decisions to delete the additions for unexplained investment and undisclosed profit, and rejecting the objection regarding the admission of additional evidence.