2021 (3) TMI 46 - AT - Income Tax

Unexplained investment - whether assessee has executed sale deed less than Jantri rate or whether assessee has made on-money payment as alleged by the A.O. or not? - addition has been made on the basis of information received from the Investigation Wing of the Department at Mehsana that there has been escapement of income on the ground that actual deed was executed at ₹ 95 lacs whereas the agreement to sell for the same land was entered at ₹ 10,95,58,873/- and hence sale deed was executed at undervalued consideration - HELD THAT - Revenue has not given any comparable and moreover matter was not referred to the DVO for ascertaining actual cost of the land. In our considered opinion, the appropriate person was DVO who would have been able to ascertain the actual cost of the land, but Ld. A.O. has not exercised such practice and same is amounting to miscarriage of justice. Merely on the ground of information, addition cannot be sustained and for making any addition there has to some corroborative evidences as well on the basis of surmises and conjectures addition cannot be sustained. The assessee has filed an assessment order in assessee's own case for A.Y. 2011-12 wherein assessee has sold that land at ₹ 1,25,00,000/- in 2020 meaning thereby that assessee earned profit of ₹ 30 lacs in three years and same contention has been accepted by the Ld. A.O. with regard to same land when department has accepted the sale price of the said land at ₹ 1,25,00,000/- how that land could be alleged to have been purchased at ₹ 10,95,58,873/- and department has not brought anything on record to controvert the finding of the Ld. CIT(A). Thus, in view of the above, we are not inclined to interfere in the order passed by the Ld. CIT(A). - Appeal filed by the Revenue is dismissed.

Summary

Issues Involved:
1. Deletion of addition made by the Assessing Officer (A.O.) on account of unexplained investment.
2. Whether the sale deed was executed at an undervalued price or if there was an on-money payment.
3. Validity of the directions issued under Section 144A of the Income Tax Act.
4. Sufficiency of evidence to support the addition made by the A.O.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made by the A.O. on Account of Unexplained Investment:
The Revenue challenged the deletion of an addition of ?10,00,58,873/- made by the A.O. on account of unexplained investment. The A.O. had added this amount based on the difference between the market value of the land (?10,95,58,873/-) and the purchase price (?95,00,000/-). The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, stating that the sale deed was executed at the prevailing jantri rate and no corroborative evidence was provided to prove that the appellant made an on-money payment.

2. Whether the Sale Deed was Executed at an Undervalued Price or if there was an On-Money Payment:
The core issue was whether the sale deed was executed at an undervalued price or if there was an on-money payment. The A.O. based the addition on information from the Investigation Wing, which suggested that the actual sale value was ?10,95,58,873/- as per an agreement, but the registered sale deed showed only ?95,00,000/-. The CIT(A) found no evidence to support the claim of on-money payment and noted that the sale deed was executed at the jantri rate, which is the government-determined value for property transactions.

3. Validity of the Directions Issued Under Section 144A of the Income Tax Act:
The A.O. acted under the directions issued by the Joint Commissioner of Income Tax (JCIT) under Section 144A, which mandated adding the difference between the agreement value and the sale deed value as unaccounted investment. The Tribunal noted that while the directions under Section 144A are binding, they must be supported by tangible evidence, which was lacking in this case.

4. Sufficiency of Evidence to Support the Addition Made by the A.O.:
The Tribunal emphasized that for any addition to be sustained, there must be corroborative evidence. The A.O. did not refer the matter to the District Valuation Officer (DVO) to ascertain the actual cost of the land, which the Tribunal considered a significant oversight. The Tribunal cited precedents from the Gujarat High Court, emphasizing that additions based solely on information without tangible evidence are not sustainable. The Tribunal also noted that the department accepted the sale price of ?1,25,00,000/- for the same land in a subsequent assessment year, further weakening the case for the addition.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to delete the addition, finding that the A.O. did not provide sufficient evidence to support the claim of unexplained investment. The appeal by the Revenue was dismissed, and the order was pronounced in open court on 23-02-2021.