2022 (6) TMI 1247 - AT - Income Tax

Addition u/s. 69/69B - Unexplained investment - variation between the sale (purchase) deeds and the accounts - purchase of land, which was from farmers, was completed over a period of 3 years (beginning with the year immediately preceding the relevant previous year), resulting in a mismatch when the sale deeds were sought to be compared with the entries in the accounts for the relevant year only - HELD THAT - The land cost as per the assessee s accounts to be rather on a higher side, which does not agree with the AO s finding of unexplained investment. The ld. CIT(A) has toward this end considered the entire purchase, which also addresses the differences by observed the AO with reference to the audit report, as well as the aspect of payment to the creditors, summarizing the transactions As sale deeds being a part of the record, each of which stands reflected in the assessee s accounts, CIT-DR was required by the Bench to show as to which entries are stated by the AO to have not been paid by the assessee till the date of registration, inasmuch as each of the four sale deeds clearly mentions of the entire sale consideration having been paid by that date, or otherwise any discrepancy observed by the AO that remains to be satisfactorily resolved, to no answer, even as the matter was kept part-heard twice Further still, inasmuch as the land purchase details per the impugned order did not agree with that by the AO, the Bench made it a point to, during hearing, reconcile the two apparently different set of transactions, with a view to the confirm that the same are qua the same transactions, to find them as indeed so. The difference in the dates between the two tables, i.e., by the AO and the ld. CIT(A), as we find, is on account of the fact that while the tabulation by the AO is as per the date of the presentation of the sale agreement for registration, that by the latter records the date of registration. There is as such no difference between the two. - Decided against revenue.

Summary

Issues: Deletion of addition under section 69/69B of the Income Tax Act

Analysis:
The appeal before the Appellate Tribunal ITAT Jabalpur pertains to the deletion of an addition of Rs. 480.66 lacs made under section 69/69B of the Income Tax Act by the Assessing Officer (AO) in the assessment. The assessee, a registered society, was involved in the acquisition of land for plotting and subsequent sale. The AO found a discrepancy between the amount paid for land purchases and the figures in the tax audit report, leading to the addition of Rs. 480.66 lacs as unexplained investment under section 69. However, the ld. CIT(A) examined the relevant records, verified the payments from bank statements, and noted that the society had purchased land through account payee cheques shown in registries and bank accounts. The ld. CIT(A) deleted the addition after considering the entire purchase transaction and reconciling the differences observed by the AO with reference to the audit report.

The Tribunal observed that there was no admission of additional evidence by the first appellate authority, and all land purchase deeds and accounts were before the AO during the assessment. The confusion arose due to the land purchases being completed over a period of 3 years, resulting in a mismatch when comparing sale deeds with entries in the accounts for the relevant year only. The Tribunal also noted that the land cost in the assessee's accounts was higher than the AO's finding of unexplained investment. The ld. CIT(A) considered the entire purchase transaction, including payment details and ledger accounts, to address the differences observed by the AO.

During the hearing, the Tribunal requested the Revenue to show any entries stated by the AO to have not been paid by the assessee till the date of registration, but no satisfactory response was provided. The Tribunal reconciled the apparent differences in the land purchase details between the AO and the ld. CIT(A) to confirm that they pertained to the same transactions. The Tribunal clarified that the difference in dates between the two sets of transactions was due to the presentation date of sale agreements for registration versus the date of registration itself. Consequently, the Tribunal found no reason to interfere with the ld. CIT(A)'s order and dismissed the Revenue's appeal.

In conclusion, the Appellate Tribunal upheld the deletion of the addition under section 69/69B of the Income Tax Act and dismissed the Revenue's appeal.