2019 (6) TMI 540 - AT - Income Tax

Unexplained investment u/s 69 - cashless transaction - four immovable properties registered with Sub-Registrar, Melapalayam, Tirunelveli - HELD THAT - It is not in dispute that the land owners, power of attorney holders and the assessee firm are all inter related. Assessee firm is the concern of the land owners and the power of attorney holders and these facts are not in dispute - cashless transaction is quite possible as explained by the assessee and further evidenced by affidavits of all the concerned parties. Further, it was explained before the AO that the assessee company paid the sale consideration to the land owners during the subsequent two financial years. It appears that neither the Ld.AO has verified the same nor disputed the same. AO has arrived at his decision only based on the registered document closing his eyes on all other events and transactions. From the conduct of the AO it appears that the assessee has paid the sale consideration in the two subsequent years which the AO has taken note off as it was brought to his notice by the assessee however the AO has restrained to address or comment on the same. If the sale consideration is not paid then it cannot be said that the sale had taken place. In the case of the assessee it appears that the sale consideration is paid only in the subsequent years and therefore transfer as per Section 2(47) of the Act should be construed to have taken place at the most when part consideration is paid coupled with handing over possession of the land. - Decided against revenue.

Summary

Issues:
Appeal against deletion of addition made by AO under Section 69 of the Act for unexplained investment in immovable properties.

Analysis:
1. The Revenue appealed against the deletion of an addition made by the AO under Section 69 of the Act regarding unexplained investment in four immovable properties. The assessee firm engaged in construction work filed its return for the assessment year 2013-14 admitting total income of ?1,04,62,826.
2. The AO observed discrepancies in the purchase of land by the firm and made an addition of ?1,60,51,200 under Section 69 of the Act. The AO relied on the registered documents over self-serving affidavits, treating the purchase consideration as unexplained investment.
3. The CIT(A) analyzed the case and held in favor of the assessee. The CIT(A) noted that the firm had reasonable explanations supported by agreements and affidavits for the delayed payment of the purchase consideration over two years. The CIT(A) found the AO's reliance on a specific case law misplaced in the current scenario.
4. During the appeal, the DR supported the AO's order, while the AR relied on the CIT(A)'s decision. The ITAT Chennai emphasized that in income-tax proceedings, actual facts should be considered, and documentary evidence may not always be conclusive. The ITAT Chennai upheld the CIT(A)'s decision, emphasizing the interrelation of the parties involved and the plausibility of a cashless transaction due to family connections.
5. The ITAT Chennai concluded that the CIT(A) correctly accepted the explanations provided by the assessee, finding no fault in the order. The appeal by the Revenue was dismissed, confirming the CIT(A)'s decision in favor of the assessee.