2019 (9) TMI 296 - AT - Income Tax

Assessment u/s 153A - undisclosed purchase price of society plot - transaction was not found recorded in the regular books of account in the year of purchase - assessee contended that, as alleged assessment being not pending on the date of search and no incriminating material was found during the course of search - HELD THAT - In both the cases before us i.e. Dr. Swati Tomar and Dr. Anurag Tomar, assessments were pending. In so far as in case of Dr. Swati Tomar is concerned, the return for the relevant assessment year was filed on 04/6/2014 and six months for the issue of notice u/s 143(2) of the Act was not expired and the search took place on 30/10/2014. In the case of Dr. Anurag Tomar, return was filed on 30/05/2014, the time period of issue of notice U/s 143(2) was very much there in so far as search was undertaken on 30/10/2014. Thus, we found that in both these cases, assessments were abated meaning thereby these were pending as on the date of search. As during the course of search, Pattas of these two plots were found and the amount paid for acquisition of these plots were not found recorded in the books of account. The pattas of these plots constituted incriminating material, therefore, there is no merit in the contention of the AR that the addition should be deleted by following the decision of the Coordinate Bench. So far as the merit of the addition is concerned, we found that the A.O. has correctly taken value of these plots so determined by the JDA, the registered value of plots as per JDA pattas and Sub-Registrar, Jaipur-4. Thus, we confirm the addition so made by the A.O. subject to further direction to the A.O. to reduce this addition only to the extent of any investment, if any, shown by the assessee in regular books of account before the date of search in respect of any of these plots so acquired.

Issues Involved:
1. Sustaining addition as undisclosed purchase price of society plots.
2. Justification of addition based on the value adopted by the Sub-registrar.
3. Non-allowance of benefit under Section 48 of the IT Act on account of cost inflation.
4. Validity of addition without incriminating material found during the search.
5. Applicability of previous judgments in similar cases.

Detailed Analysis:

1. Sustaining Addition as Undisclosed Purchase Price of Society Plots:
The issue revolves around the addition of ?13,73,372/- treated as the undisclosed purchase price for plots B-142 and B-143 in Shivaji Nagar, Jaipur. The assessee argued that the plots were originally purchased in 1997 and later re-allotted by the Jaipur Development Authority (JDA) in 2014. The Assessing Officer (A.O.) found that these plots appeared for the first time in the balance sheets for AY 2013-14, suggesting they were actually purchased in FY 2012-13. The A.O. concluded that the assessee had made an undisclosed investment, adding the registered value of the plots as per JDA and Sub-Registrar records.

2. Justification of Addition Based on the Value Adopted by the Sub-registrar:
The A.O. justified the addition by taking the registered value of ?6,86,686/- for each plot, as opposed to the minuscule amounts claimed by the assessee. The A.O. argued that the backdated pattas from Baba RN Gaur Grah Nirman Sahakari Samiti were obtained to deflate the purchase cost. The CIT(A) confirmed this action, stating that the facts and inquiries conducted by the A.O. were not rebutted by the assessee.

3. Non-Allowance of Benefit Under Section 48 of the IT Act on Account of Cost Inflation:
The assessee contended that the lower authorities did not allow the benefit of cost inflation under Section 48 of the IT Act. The plots were sold in 2016, and the sale price was lower than the value fixed by JDA. The assessee argued that the rates fixed by JDA should not form the basis for the presumption of higher sums paid in purchasing the plots.

4. Validity of Addition Without Incriminating Material Found During the Search:
The assessee argued that no incriminating material was found during the search to justify the addition. The ITAT considered previous judgments, including the case of Smt. Pallavi Tomar, where additions were deleted due to the absence of incriminating material. However, in this case, the ITAT found that the assessments were pending as on the date of the search, and pattas of the plots were found, which constituted incriminating material.

5. Applicability of Previous Judgments in Similar Cases:
The ITAT referred to the decision in the case of Smt. Pallavi Tomar and other family members, where similar additions were deleted. However, the ITAT distinguished these cases, noting that the assessments in the current case were pending as on the date of the search. Therefore, the addition was justified based on the incriminating material found.

Conclusion:
The ITAT confirmed the addition made by the A.O., taking the value determined by JDA and the Sub-Registrar. The addition was subject to reduction by any investment shown in the regular books of account before the date of the search. The appeals were allowed in part, and the order was pronounced in the open court on 20th August 2019.

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