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2019 (7) TMI 1880 - AT - Income TaxAddition u/s 69 - addition of undisclosed investment in land made by the AO on the basis of seized material - whether corroborative material found during search? - HELD THAT - In the case of Sahitya Housing (P) Ltd. 2014 (2) TMI 811 - ITAT HYDERABAD some entries were found in a pen drive which pertained to two persons, one of whom accepted the entries and offered for taxation while the other did not do so. It was held that it is not substantiated by any corroborative evidence that the second assessee was involved in the transaction so as to make addition in the hands of the second assessee. In absence of corroborative evidence, the addition was held to be not justified. Addition made by the AO on account of purchase of 32.68 acres of land merely on the basis of the excel sheet contained in the seized pen drive and entries in loose papers in the seized documents, unsubstantiated with any corroborative evidence, is not justified, which has been rightly deleted by learned CIT(A) - Decided in favour of assessee.
Issues Involved:
1. Deletion of addition under Section 69 of the IT Act, 1961, for Assessment Years 2008-09, 2009-10, and 2010-11 on account of undisclosed investment in land based on seized material. Detailed Analysis: Assessment Year 2008-09: Issue 1: Deletion of Addition of ?10,06,43,050 - Background: The addition was made by the AO based on seized material, including a pen drive and loose papers, during a search under Section 132. The AO inferred undisclosed investment in land and made additions under Section 69. - AO's Observations: The AO found discrepancies between the tally data in the pen drive and the regular books of the assessee. The AO concluded that the assessee made undisclosed investments in land, invoking Section 69. - Assessee's Explanation: The assessee contended that the entries in the pen drive were fake, created by an alcoholic family member for practice purposes. The assessee argued that the data did not represent true business transactions. - CIT(A)'s Decision: The CIT(A) deleted the addition, observing that the AO's reliance on the pen drive data was not substantiated by any corroborative evidence. The CIT(A) emphasized that the burden of proof was on the Revenue to show that the assessee had understated the investment. - Tribunal's Decision: The Tribunal upheld the CIT(A)'s decision, noting that the AO failed to provide concrete evidence of actual payment or investment by the assessee. The Tribunal highlighted that the journal entry and the details in the pen drive did not constitute sufficient evidence to invoke Section 69. Assessment Year 2009-10: Issue 2: Deletion of Addition of ?2,59,57,040 - Background: Similar to the previous year, the addition was based on the pen drive data and loose papers found during the search. - CIT(A)'s Decision: The CIT(A) granted relief to the assessee, following the same reasoning as in the previous year. - Tribunal's Decision: The Tribunal affirmed the CIT(A)'s findings, applying the same rationale as in the 2008-09 assessment year. The Tribunal reiterated that the AO did not provide sufficient evidence to substantiate the addition under Section 69. Assessment Year 2010-11: Issue 3: Deletion of Addition of ?57,63,597 - Background: The addition was again based on the pen drive data and loose papers. - CIT(A)'s Decision: The CIT(A) deleted the addition, consistent with the decisions for the previous years. - Tribunal's Decision: The Tribunal noted that the tax effect in this year was less than ?20 lakhs. Citing the CBDT Circular No. 3 dated 11th July 2018, the Tribunal dismissed the Revenue's appeal as not maintainable due to the low tax effect. Conclusion: The Tribunal dismissed all three appeals by the Revenue, affirming the CIT(A)'s deletion of additions under Section 69 for the assessment years 2008-09, 2009-10, and 2010-11. The Tribunal emphasized the lack of corroborative evidence to substantiate the AO's claims of undisclosed investments based on the pen drive data and loose papers. The Tribunal also considered the CBDT Circular regarding the monetary limit for appeals, leading to the dismissal of the 2010-11 appeal on the grounds of low tax effect.
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