2022 (4) TMI 1053 - AT - Income Tax

Unaccounted investment u/s 69 - Addition on account of suppressed purchase price of land purchased - HELD THAT - A glaring mistake was committed by the AO while computing the differential amount between purchase cost shown in purchase deed and market value determined by Stamp Valuation Authority. During search, original purchase deed and photocopies thereof were found and seized and the Assessing Officer inadvertently taken into consideration both the documents i.e. original purchase deed and photocopies thereof treating the same two different and distinct documents. We find that neither the sellers of impugned lands have admitted that impugned lands were sold over and above the amount disclosed in the registered deed nor any incriminating evidence was found and seized during the course of search to corroborate the allegation of the Assessing Officer and only making guesswork on the guideline value of the land and the transaction value, AO presumed that cash transaction was made. AO noted an example in the assessment order that one Mr. Sanjay Sharma sold 18 acres land to Mr. Mukesh Jhaveri and admitted on money receipt - However, having gone through the remand report, the ld. CIT(A) recorded that the assessee firm never purchased any land from Mr. Sanjay Sharma. We are of the view that under Section 69 the onus is on the Assessing Officer to prove that the assessee made some unaccounted investment in purchase of property but in the present case, the Assessing Officer failed to discharge his onus and simply on guesswork, the addition was made. Since the Assessing Officer failed to pinpoint any instance by bringing any cogent and corroborative evidence on record where the assessee is found guilty of making payments to sellers over and above the value shown in the registered deed, the general remarks recorded by the Assessing Officer on the basis of presumption and assumption cannot be the basis for making the addition. Thus, we find that the ld. CIT(A), having made discussion on facts and relevant judicial pronouncements thereof, rightly held that the addition made is not based on any tangible evidence and there are no corroborative evidences in the hands of Revenue to substantiate the allegations of cash transaction - Decided against revenue.

Summary

Issues Involved:
1. Whether the addition of ?5,15,14,000/- made by the Assessing Officer (AO) on account of suppressed purchase price of land is justified.
2. Whether the AO erred in making a double addition based on original and photocopies of the same purchase deeds.

Issue-wise Detailed Analysis:

1. Addition of ?5,15,14,000/- on Account of Suppressed Purchase Price:

The AO added ?10,08,02,000/- to the total income of the assessee, treating it as unaccounted investment under Section 69 of the Income Tax Act, based on the difference between the purchase price shown in the registered deeds and the guideline value determined by the Stamp Valuation Authority. The AO presumed that the assessee paid the difference in cash from unaccounted income. However, the CIT(A) deleted the addition, observing that there was no tangible evidence to support the AO's claim. The CIT(A) noted that neither the sellers admitted to receiving any amount over the registered value, nor was there any incriminating evidence found during the search. The CIT(A) also highlighted that the AO's reliance on the guideline value alone was insufficient to prove unaccounted cash transactions. The ITAT upheld the CIT(A)'s decision, emphasizing that the AO failed to discharge the onus of proving unaccounted investment and that mere suspicion or presumption could not replace concrete evidence.

2. Double Addition Based on Original and Photocopies of Purchase Deeds:

The CIT(A) identified a glaring mistake by the AO, who made a double addition by considering both the original purchase deeds and their photocopies as separate transactions. The CIT(A) called for a remand report, in which the AO admitted the mistake. The CIT(A) deleted the addition of ?4,91,28,000/- attributable to this error. The ITAT agreed with the CIT(A)'s findings, noting that the AO's error led to an inflated calculation of the differential amount between the purchase price and the guideline value. The ITAT confirmed that the assessee had actually purchased 7.128 hectares of land, not 14.258 hectares as alleged by the AO, and upheld the deletion of the double addition.

Conclusion:

The ITAT dismissed the Revenue's appeal, confirming the CIT(A)'s decision to delete the entire addition of ?10,08,02,000/-. The ITAT found that the AO's addition was based on assumptions and lacked corroborative evidence. The ITAT emphasized that the AO failed to establish any unaccounted investment by the assessee and that the reliance on guideline values without concrete proof was insufficient for making such additions. The ITAT also upheld the CIT(A)'s correction of the double addition error.