2018 (6) TMI 166 - AT - Income Tax

Additions made u/s 68 as unexplained credit - Held that - The affidavit filed by the assessee was not examined by the lower authorities - it is incumbent upon the lower authorities to examine the deponent therein and thereafter, accept or reject the same. It is not appropriate to overlook the affidavit filed by the assessee without examining the deponent therein - thus we remit this issue to the file of the AO for consideration of the affidavit in accordance with law after giving opportunity of hearing to the assessee - partly allowed for statistical purposes. Additions u/s 68 - Held that - The facts of this issue are similar to the facts in the assessment year 2009-10 the issue is remitted to the file of the AO for the purpose of examining the affidavit filed by the assessee. Addition made towards investment as advance for purchase of land - Held that - The letter filed by the assessee stating that the assessee has not invested in the company M/s. Parathode Granites Pvt. Ltd. does not borne out of records and thus the letter is a self serving document, not corroborated by any evidence and this letter cannot be acted upon - hence addition made by the AO is to be confirmed.

Summary

Issues Involved:
1. Addition of ?15,00,000/- made under Section 68 of the Income Tax Act.
2. Addition of ?59,45,000/- for AY 2009-10 and ?10,48,000/- for AY 2010-11 under Section 68 of the Income Tax Act.
3. Addition of ?95,00,000/- as unexplained investment towards the purchase of 28.75 acres of land.

Detailed Analysis:

1. Addition of ?15,00,000/- under Section 68 of the Income Tax Act:

The first issue pertains to an addition of ?15,00,000/- made under Section 68 of the Income Tax Act. The assessee argued that this amount was received from Shri Abdul Latheef as an investment contribution for Parathode Granites Pvt. Ltd., where the assessee is the managing director. The assessee provided an affidavit from Shri Abdul Latheef affirming the contribution. However, the CIT(A) did not consider the affidavit's contents. The Tribunal noted that the affidavit was referenced but not examined by the lower authorities. It emphasized that it is essential for the lower authorities to examine the deponent before accepting or rejecting the affidavit. The Tribunal remitted the issue back to the Assessing Officer to consider the affidavit in accordance with the law, relying on the Supreme Court judgment in Mehta and Parikh & Company vs. CIT (30 ITR 181). Consequently, this ground of appeal was partly allowed for statistical purposes.

2. Addition of ?59,45,000/- for AY 2009-10 and ?10,48,000/- for AY 2010-11 under Section 68 of the Income Tax Act:

The second issue involves the addition of ?59,45,000/- for AY 2009-10 and ?10,48,000/- for AY 2010-11 under Section 68. The assessee claimed that these amounts were received from multiple NRIs as investment contributions. Detailed affidavits and bank statements were provided to substantiate these claims. The Assessing Officer and CIT(A) did not accept these submissions, leading to the additions. The Tribunal observed that the facts of this issue are similar to the earlier year and remitted the matter back to the Assessing Officer for fresh consideration of the affidavits. The Tribunal instructed the Assessing Officer to examine the affidavits and provide an opportunity for the assessee to be heard. This ground of appeal was also partly allowed for statistical purposes.

3. Addition of ?95,00,000/- as unexplained investment towards the purchase of 28.75 acres of land:

The third issue concerns the addition of ?95,00,000/- as unexplained investment towards the purchase of 28.75 acres of land. The Assessing Officer added this amount based on the sworn statement of the assessee, which indicated that ?95,00,000/- was paid as an advance for land purchase for Parathode Granites Pvt. Ltd. The assessee later claimed that the investment was made from the company's funds, not personal funds. However, the Tribunal found that the company's records did not support this claim. The Tribunal held that the letter submitted by the assessee was self-serving and not corroborated by evidence. Therefore, the addition made by the Assessing Officer was confirmed, and this ground of appeal was rejected.

Conclusion:

In conclusion, the Tribunal partly allowed the appeals for statistical purposes regarding the additions under Section 68 for ?15,00,000/-, ?59,45,000/-, and ?10,48,000/- by remitting the issues back to the Assessing Officer for fresh consideration. However, the addition of ?95,00,000/- as unexplained investment was confirmed and the appeal on this ground was rejected. The order was pronounced in the open court on May 31, 2018.