2021 (7) TMI 206 - AT - Income Tax

Addition u/s 69C/68 - case of the assessee was selected for scrutiny assessment under Computer Aided Scrutiny Selection - investments in property made by her during the year were not commensurate to her returned income - CIT-A deleted the addition admiring additional evidence - HELD THAT - A.O in the course of the assessment proceedings had called for the copies of the agreements in question from the Joint Sub-registrar(s), Mumbai. The aforesaid factual position can safely be gathered from a perusal of assessment order. On being confronted with the said fact, D.R could not rebut the same - as the copies of the agreements in question were there before the A.O in the course of the assessment proceedings, therefore, the claim of the ld. D.R that the CIT(A) had admitted the same in violation of Rule 46A of the Income-tax Rules, 1962, is devoid of any merit, and thus, is rejected. Unexplained investment - As revealed beyond any doubt that as observed by the CIT(A), and rightly so, except for a payment of ₹ 13,32,000/- (supra) that was made by the assessee with respect to an agreement pertaining to one of the property, viz. Flat No. 101 201 Insignia; dated 05.05.2014, no other investment as regards either of the aforesaid properties in question was made by her during the year under consideration. We, thus, are in agreement with the view taken by the CIT(A) that as the assessee had during the year under consideration not made any investment with respect to the properties in question, except for an amount that was sourced from her returned income, thus, the addition made by the A.O u/s. 69 or u/s. 68 could not be sustained and was liable to be vacated - neither there is anything discernible from the records nor any material has been brought to our notice by the ld. D.R which would prove that the assessee had made any investment qua the properties in question during the year under consideration. Accordingly, finding no infirmity in the view taken by the CIT(A) that no part of the addition made by the A.O either u/s 69 or u/s 68 can be sustained, we, thus, uphold his order. - Decided against revenue.

Summary

Issues Involved:
1. Deletion of addition under Section 69C of the Income Tax Act.
2. Deletion of addition under Section 69 of the Income Tax Act.
3. Interpretation and application of Rule 46A.
4. Request to set aside the CIT(A) order and restore the Assessing Officer's order.

Detailed Analysis:

1. Deletion of Addition under Section 69C of the Income Tax Act:
The revenue challenged the CIT(A)'s decision to delete the addition of ?6,64,12,312/- under Section 69C. The case was selected for scrutiny as the investments in property were not commensurate with the returned income. The Assessing Officer (A.O) issued multiple notices under Section 142(1), but the assessee failed to provide the requisite details. Consequently, the A.O proceeded ex-parte under Section 144 and, based on the Annual Information Return (AIR), observed that the assessee had purchased immovable properties worth ?6,64,12,312/-. The A.O treated this amount as unexplained investments under Section 69 and alternatively under Section 68. The CIT(A), upon review, found that the assessee had only invested ?13,32,000/- during the year, which was sourced from her disclosed income. Therefore, the CIT(A) deleted the addition.

2. Deletion of Addition under Section 69 of the Income Tax Act:
The revenue also contested the deletion of the addition under Section 69. The assessee argued that the A.O made the addition based on agreements obtained from the Joint Sub-registrar without perusing their contents. The assessee claimed that the properties were under construction, and most of the payments were made in earlier years, except for ?13,32,000/- paid during the year in question. The CIT(A) agreed with the assessee, noting that the A.O had merely added the stamp duty value from the AIR without considering the actual transaction values. The CIT(A) found that the actual payments were less than the stamp duty values and were mostly made in earlier years. Therefore, the CIT(A) concluded that no addition under Section 69 or Section 68 was warranted.

3. Interpretation and Application of Rule 46A:
The revenue argued that the CIT(A) admitted additional evidence (agreements) in violation of Rule 46A without calling for the A.O's objections. However, it was established that the A.O had already obtained copies of the agreements from the Joint Sub-registrar during the assessment proceedings. The CIT(A) reviewed these agreements and found that the A.O had not considered their contents. Therefore, the claim of violation of Rule 46A was dismissed as the agreements were already part of the assessment records.

4. Request to Set Aside the CIT(A) Order and Restore the A.O's Order:
The revenue requested that the CIT(A)'s order be set aside and the A.O's order be restored. However, the Tribunal found no merit in this request. The CIT(A) had thoroughly reviewed the agreements and found that the actual investments made during the year were only ?13,32,000/-, which was duly explained by the assessee. The Tribunal upheld the CIT(A)'s order, noting that the A.O had not properly assessed the evidence and had incorrectly added the stamp duty values as unexplained investments.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the addition of ?6,64,12,312/- under Sections 69 and 68. The Tribunal agreed that the assessee had only invested ?13,32,000/- during the year, which was sourced from her disclosed income, and found no violation of Rule 46A in admitting the agreements as evidence. The appeal was pronounced dismissed on 24/06/2021.