2017 (5) TMI 487 - HC - Income Tax

Addition on undisclosed investment - assessee had sold the land - Held that - Though the land was purchased by the assessee along with one Bharatbhai Patel, addition made only in the case of the assessee and no addition was made in the hands of his partner Bharatbhai Patel. Considering the above facts and circumstances, when the learned CIT(A) has deleted addition made by the A.O. made on account of undisclosed investment and when the same has been confirmed by the learned tribunal, it cannot be said that the learned CIT(A) and learned tribunal have committed any error. We see no reason to interfere with the impugned orders. - Decided in favour of assessee.

Summary

Issues:
- Appeal against the order passed by the Income Tax Appellate Tribunal for A.Y. 2006-07
- Addition of undisclosed investment made by Assessing Officer
- Deletion of addition by the CIT(A) and confirmation by the Tribunal
- Proposed question of law regarding the deletion of the addition

Analysis:
The appellant challenged the order of the Income Tax Appellate Tribunal for A.Y. 2006-07, which confirmed the deletion of an addition made by the Assessing Officer (A.O.) of ?3,37,58,8900 as undisclosed investment. The appellant contended that the Tribunal erred in law by deleting the said addition. The assessee had declared a total income of ?1,58,290 for the relevant assessment year, showing income from business/profession and purchasing land with another individual. Subsequently, incriminating documents were seized during a search at another individual's residence, leading the A.O. to make the addition based on the seized material.

The A.O. added the undisclosed income based on the price mentioned in the sale deed/books of accounts and a specific amount related to the land purchase. However, the CIT(A) found no evidence in the seized material to support the additional amount claimed by the A.O. The CIT(A) noted that the land was jointly owned and purchased with another individual, who did not face a similar addition. Consequently, the CIT(A) allowed the appeal and deleted the additions made by the A.O. The Tribunal upheld the CIT(A)'s decision, prompting the appellant to challenge the order.

During the hearing, the appellant's advocate argued that the A.O. mistakenly treated the land purchase as a sale, despite the assessee being the purchaser. Moreover, there was no evidence to suggest that the additional amount claimed was received by the individual from whom the documents were seized. The advocate highlighted that the partner involved in the land purchase did not face a similar addition, emphasizing the inconsistency in the A.O.'s approach. The Court concurred with the CIT(A) and Tribunal's findings, noting the lack of substantial questions of law. Consequently, the Court dismissed the appeal, affirming the deletion of the addition made by the A.O. for undisclosed investment.