2021 (9) TMI 458 - AT - Income Tax

Addition u/s 69A r.w.s.115BBE - assessee purchased land and paid on-money in cash over and above the sale consideration mentioned in the registered sale deed and agreed to disclose the same as additional income - assessee has admitted the same as income in the return of income u/s 56(2)(viia) - CIT(A) deleted the addition holding that there is no case for making the addition u/s 69A since the assessee has recorded the source in the books of accounts and admitted the income in the returns filed by him - HELD THAT - In the instant case, the assessee has purchased a piece of land for which the source was explained as gifts, partly and partly the amount was paid through cheques. Thus, the gifts were recorded in the books of accounts and also offered to tax u/s 56(2)(vii)(a) - assessee also furnished the details to the DDIT/ AO, with names and addresses of the persons from whom the gifts were received vide letter dated 30.03.2018. Assessee furnished the details before the AO also vide letter dated 11.12.2019. Neither the DDIT nor the AO found any deficiency in the information submitted by the assessee and has not caused any enquiries. Since, the assessee has already explained the source as gifts and offered the same to tax u/s 56(2)(vii)(a), which was not being disproved by the AO, the credits made in the books of accounts stands explained and there is no case for invocation of section 69A - No reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed.

Summary

Issues:
Appeal against deletion of addition made under section 69A r.w.s. 115BBE of the Income Tax Act, 1961 for A.Y. 2017-18.

Analysis:

1. Background and Assessment Proceedings:
The appeal was filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-1, Visakhapatnam for the Assessment Year (A.Y.) 2017-18. The case involved the deletion of an addition made by the Assessing Officer (AO) under section 69A r.w.s.115BBE of the Income Tax Act, 1961. The assessee, an individual deriving income from various sources, was scrutinized under CASS, and discrepancies were found related to the purchase of land and gifts received.

2. AO's Addition and CIT(A)'s Decision:
The AO added a substantial amount under section 69A due to unexplained cash payments made by the assessee for land purchase and gifts received. However, the CIT(A) deleted this addition, stating that the assessee had disclosed the sources of income in the books and returns filed. The CIT(A) emphasized that the gifts were duly recorded, explained, and taxed under relevant sections, and no adverse conclusions were drawn by the investigating authorities.

3. ITAT Decision and Rationale:
The ITAT upheld the CIT(A)'s decision, noting that the assessee had admitted the income in the return under the appropriate section. The ITAT highlighted that the gifts were properly recorded, explained, and offered for taxation, with details provided to the authorities. As no discrepancies were found in the information submitted by the assessee, the ITAT found no basis for invoking section 69A. The ITAT dismissed the revenue's appeal, affirming the CIT(A)'s order.

4. Cross Objections by Assessee:
The assessee filed cross objections, with one ground supporting the CIT(A)'s order. Since the ITAT upheld the CIT(A)'s decision, this ground became infructuous and was dismissed. Another ground challenged the validity of scrutiny selection under CASS guidelines, which the ITAT deemed unnecessary to address due to the dismissal of the revenue's appeal.

5. Final Verdict:
The ITAT dismissed both the revenue's appeal and the assessee's cross objections. The decision was pronounced in an open court on 8th September 2021. The ITAT's judgment emphasized the importance of proper disclosure, explanation, and taxation of income to avoid invoking provisions like section 69A of the Income Tax Act, ensuring transparency and compliance with tax laws.