2020 (11) TMI 598 - AT - Income Tax

Unexplained investment - income earned from the source not disclosed to the Department - no plausible explanation is filed to explain the source of investment made in purchase of immovable property amounting to ₹ 25 lakhs being her half share in the property registration expenses - HELD THAT - Sale deed as explained above and the receipt executed later on, on behalf of the mortgagee would clearly show that the agricultural land purchased by the assessee was for a consideration of ₹ 50 lakhs, however, at the time of execution of the sale deed, ₹ 30 lakhs was paid by assessee and other co-owner. The remaining consideration of ₹ 20 lakhs was to be paid by assessee and the co-owner to the mortgagee for redeeming the mortgage agricultural land under consideration. The amount of ₹ 20 lakhs is paid to the mortgagee on 20.11.2012. Thus the assessee and the co-owner have paid ₹ 30 lakhs only in assessment year under appeal. The share of the assessee comes to ₹ 15 lakhs only and if the stamp charges are also added, it would make a total of ₹ 15,67,500/- which is below the amount of ₹ 18 lakhs accepted as source of income from agricultural activity by the A.O. for the purpose of making the above investment. Thus, there were no justification by the A.O. to make any addition against the assessee. In view of the above, we set aside the Orders of the authorities below and delete the addition of ₹ 7,67,500/-. - Decided in favour of assessee.

Summary

Issues involved:
Reopening of assessment under section 147/148 of the I.T. Act, 1961 and addition of ?7,67,500 on account of property purchased during the year.

Analysis:

Reopening of Assessment:
The appeal was directed against the Order of the Ld. CIT(A), challenging the reopening of the assessment under section 147/148 of the I.T. Act, 1961. The Assessing Officer (A.O.) had information that the assessee purchased immovable property for ?50 lakhs during the assessment year under appeal. Despite issuing notices and directing the assessee to explain the source of investment in the property, no plausible explanation was initially provided. The A.O. estimated the source of income from agriculture and accepted the investment for the purchase of land out of such income at ?18 lakhs. However, a balance of ?7,67,500 was treated as unexplained investment, leading to the addition.

Addition on Account of Property Purchase:
The assessee challenged the addition before the Ld. CIT(A), but the appeal was dismissed. The Counsel for the Assessee argued that the actual investment made in the agricultural land was only ?15,67,500, contrary to the ?18 lakhs considered by the A.O. The sale deed and subsequent receipts supported the claim that only ?30 lakhs was paid at the time of purchase, with the remaining amount paid later for mortgage redemption. The Tribunal analyzed the facts presented and concluded that the addition of ?7,67,500 was unjustified. The Tribunal found that the assessee's share of investment in the property was below the amount accepted by the A.O., leading to the deletion of the addition.

Conclusion:
After considering the submissions and evidence, the Tribunal set aside the Orders of the authorities below and deleted the addition of ?7,67,500. The Tribunal found no justification for the A.O. to make any addition against the assessee, as the actual investment was lower than previously estimated. The issue of reopening the assessment was considered academically due to the deletion of the entire addition, resulting in the allowance of the assessee's appeal.