2018 (8) TMI 1711 - AT - Income Tax

Addition u/s 68 - evidences about the receipt of the cash and repayment of the cash despite those persons having proper bank account - Held that - Bayana Slip was not produced. Further, the earlier letters written to the Assessing Officer as claimed by the assessee were also not found on the record by the ld CIT (A). In another person s case, the same reasons were found which were explained by the assessee with respect to the third person who is son of the assessee also did not remember any reference of cash receipt from the assessee. In absence of any such evidences about the receipt of the cash and repayment of the cash despite those persons having proper bank account and absence of any purchase of land by the assessee, whole explanation of the assessee lacks credibility. With respect to the agricultural income, the reasons given by the CIT (A) are sound. Merely possession of land does not entitle assessee to claim any amount of income as agricultural income. The agricultural income is also required to be demonstrated by proper evidences which assessee has failed to show. No infirmity in the order of the Ld. CIT(A) in confirming the addition u/s 68 Addition u/s 69B - Held that - Most of the properties are merely backed by agreement to sell and therefore there cannot be any document price for sale. However, the argument of the assessee with respect to property which were purchased in the auction from the debt recovery tribunal the valuation of same cannot be different from the value shown by the assessee. However, such facts were not produced by the assessee before the assessing officer. In view of this to the extent of the valuation of property purchased by the assessee in auction cannot have different market value. The addition made by AO for that property is ₹ 5, 15,000/- as assessee has shown the purchase consideration of ₹ 14.85 Lacs whereas the assessing officer has valued at ₹ 20 lakhs cannot be sustained. Therefore we direct AO to delete the addition of ₹ 5, 15, 000/ out of the total addition of ₹ 2 6, 15, 000. For the balance addition of ₹ 21 Lacs, We do not find any infirmity in the order of the Ld. CIT(A). Hence, the addition made by the Ld. Assessing Officer is confirmed to the extent of ₹ 21 lakhs only.

Issues Involved:
1. Legality of the assessment proceedings and the authority of the Income Tax Officer (ITO).
2. Addition of ?1,29,15,000 under Section 68 of the Income Tax Act.
3. Addition of ?26,15,000 under Section 69B of the Income Tax Act.
4. Addition of ?25,597 on account of purported interest.
5. Charging of interest under Sections 234A and 234B of the Income Tax Act.
6. Reliance on ex-parte evidence by the ITO.
7. Consideration of submissions and evidence by the assessee.
8. Opportunity of hearing provided to the appellant.
9. Observations made by the ITO and Commissioner of Income Tax (Appeals) [CIT(A)].
10. Overall legality and factual accuracy of the CIT(A)'s order.

Detailed Analysis:

1. Legality of the Assessment Proceedings and Authority of the ITO:
The appellant contended that the assessment proceedings were invalid as the ITO who initiated and passed the assessment order was not empowered to do so. Additionally, the selection of the case for scrutiny under CASS allegedly violated Section 143(2) of the Income Tax Act, rendering the notice under this section invalid. However, these general contentions were dismissed by the tribunal as they lacked specific arguments or evidence to substantiate the claims.

2. Addition of ?1,29,15,000 under Section 68 of the Income Tax Act:
The assessee argued that the cash deposits in his bank accounts were from agricultural income and repayments from three individuals to whom he had advanced money for purchasing agricultural land. The CIT(A) and the tribunal found discrepancies in the statements of these individuals, lack of documentary evidence, and the improbability of the transactions being in cash despite the availability of bank accounts. The tribunal upheld the CIT(A)'s decision, stating that the assessee failed to provide credible evidence to explain the source of the cash deposits. The agricultural income claimed was also not substantiated with detailed expenses and gross receipts, leading to the dismissal of the assessee's ground on this issue.

3. Addition of ?26,15,000 under Section 69B of the Income Tax Act:
The addition was based on the local inquiries conducted by an Income Tax Inspector, which estimated the market value of the properties purchased by the assessee to be higher than the declared value. The tribunal noted that the assessee did not cooperate with the District Valuation Officer (DVO) and failed to provide evidence to counter the inspector's report. However, the tribunal partially allowed the appeal by excluding the addition related to properties purchased through auction from the Debt Recovery Tribunal, where the declared value was accepted. The remaining addition was confirmed due to the lack of evidence from the assessee.

4. Addition of ?25,597 on Account of Purported Interest:
No specific arguments were advanced by the assessee on this issue, leading to its dismissal by the tribunal.

5. Charging of Interest under Sections 234A and 234B of the Income Tax Act:
Similarly, no specific arguments were presented regarding the charging of interest, resulting in the dismissal of this ground as well.

6. Reliance on Ex-Parte Evidence by the ITO:
The assessee contended that the ITO relied on evidence collected ex-parte without providing copies or an opportunity for rebuttal. However, this argument was not substantiated with specific instances or evidence, and thus, it was dismissed.

7. Consideration of Submissions and Evidence by the Assessee:
The tribunal found that the CIT(A) and the ITO had considered the submissions and evidence provided by the assessee but found them lacking in credibility and detail. Therefore, this ground was dismissed.

8. Opportunity of Hearing Provided to the Appellant:
The assessee argued that proper opportunity of hearing was not provided. However, the tribunal found no merit in this argument as the assessee had multiple opportunities to present evidence and arguments during the proceedings.

9. Observations Made by the ITO and CIT(A):
The tribunal upheld the observations made by the ITO and CIT(A), finding them consistent with the evidence and circumstances of the case. This ground was dismissed.

10. Overall Legality and Factual Accuracy of the CIT(A)'s Order:
The tribunal found the order of the CIT(A) to be legally sound and factually accurate, dismissing the appellant's contention that the order was against the facts and law.

Conclusion:
The appeal was partly allowed, with the tribunal directing the deletion of ?5,15,000 from the addition under Section 69B, while confirming the remaining additions and dismissing other grounds. The order was pronounced on 23rd August 2018.

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