2016 (6) TMI 126 - AT - Income Tax

Addition on unexplained investment u/s 69B - Held that - Here is a case in which the assessee claimed to have purchased the property for a sum of ₹ 40,00,000/- and the Assessing Officer has made addition of ₹ 90,64,575/- on the basis of difference between the market price and apparent sale consideration. No attempt has been made for verifying the price from the seller of the property. In other words, there is no positive material evidencing the making of actual investment by the assessee over and above ₹ 40,00,000/-. Under such circumstances, there can be no point in making any addition towards unexplained investment u/s 69B of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Acceptance of additional evidence in violation of Rule 46A of the Income Tax Act.
2. Deletion of addition on account of purchase of immovable property.
3. Deletion of addition made on account of loan under section 68 of the Income Tax Act.

Analysis:

Issue 1: Acceptance of additional evidence
The Assessing Officer added an amount on account of purchase of immovable property, invoking section 50C and section 56(2)(vii) of the Income Tax Act. The CIT(A) deleted the addition, citing that section 50C is applicable only for computing capital gains and cannot be applied to the buyer of the asset. The CIT(A) relied on various judgments, including the jurisdictional High Court's ruling in CIT vs. Khoobsurat Resorts P. Ltd., to support the decision. Additionally, the CIT(A) noted that section 56(2)(vii) was not applicable due to amendments in the Finance Act, 2009 and 2010, and hence, the Assessing Officer's reliance on it was incorrect.

Issue 2: Deletion of addition on purchase of immovable property
The Assessing Officer made an addition on account of unexplained cash credit under section 68 of the Act, related to a loan taken from the father of the assessee. The CIT(A) deleted this addition after considering the evidence presented during the appellate proceedings, including bank statements, return of income, and a confirmation from the lender. The CIT(A) found the loan to be explained based on the documents provided by the assessee.

Judgment Summary:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order. The Tribunal concurred with the CIT(A)'s reasoning, citing precedents and legal provisions. It was emphasized that in the absence of concrete evidence, additions cannot be made towards unexplained investments. The Tribunal's decision was supported by previous rulings and legislative amendments. Ultimately, the Tribunal confirmed the CIT(A)'s order, leading to the dismissal of the appeal by the Revenue.