2022 (8) TMI 286 - AT - Income Tax

Reopening of assessment u/s 147 - addition u/s 69 - difference in the value of purchase consideration and the cash available with the assessee in his bank account at the time of purchase of land - HELD THAT - The explanation of the assessee was found acceptable by the AO taking note of the agricultural land sold. There is no dispute on the quantity of the land sold or the price for which it was sold. However, the AO questioned the investment in agricultural land made by the assessee which included the purchase price of the land plus the stamp duty taxes thereon. The explanation to the extent of Rs. 10,53,000/- was found to be wanting. Considering explanation offered by the assessee before the CIT(A) by way of fresh evidences which have been confronted to the AO, reasons for discarding the explanation of the assessee set out cannot be upheld As in the peculiar facts of the present case in the face of the assessee's pleading that Smt. Gurdial Kaur was mother of Shri Jasveer Singh which remains unrebutted on record and the fact that late Shri Jasveer Singh also had interest in the land being purchased and hence was paid. This fact also remains unrebutted on record, the availability of funds doubted by the AO stands explained by way of cheque payments made by the assessee from another bank account No. 55110180046 of SBOP, Jakhwali branch which initially had remained unnoticed. This fact also remains unrebutted on record. We find that in the peculiar facts and circumstances, the sustaining of the addition or the further enhancement of the addition is unwarranted on facts. Considering the record and the explanations, the addition made is directed to be deleted and the enhancement challenged vide ground No. 6 also set aside. Accordingly, the appeal of the assessee is allowed. Said order was pronounced in the Open Court at the time of hearing itself.

Summary

Issues:
1. Correctness of the order dated 10.12.2019 of CIT(A)-1 Chandigarh for the 2009-10 assessment year.
2. Addition of Rs. 10,53,000/- under section 69 of the Act.
3. Erroneous addition by the AO under section 147 of the Act.
4. Enhancement of Rs. 10,00,000/- in total income for unexplained investment under section 69 of the Act.
5. Tax liability arising due to erroneous additions.
6. Initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
1. The appeal challenged the correctness of the CIT(A)'s order dated 10.12.2019 for the 2009-10 assessment year. The AO had added Rs. 10,53,000/- under section 69 of the Act, alleging unexplained investment in the purchase of land. The assessee contended that the AO's reasons for reopening the case under section 147 of the Act were no longer valid as no addition was made based on those grounds. The CIT(A) also enhanced the income by Rs. 10,00,000/- for unexplained investment, leading to a tax liability of Rs. 5,99,505/-. The appeal also challenged the initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.

2. The AO's addition of Rs. 10,53,000/- was based on the deposit of Rs. 80 lacs in the assessee's bank account, which the AO deemed unexplained. The CIT(A) upheld this addition, despite the assessee's explanations and evidence of payments made from another bank account. The CIT(A) rejected the explanation regarding a payment of Rs. 10 lacs to Smt. Gurdial Kaur, citing lack of evidence from the deceased seller's family members.

3. The CIT(A) dismissed the assessee's explanations, including the payment to Smt. Gurdial Kaur, due to insufficient evidence. However, the Tribunal found the explanations credible, noting that the payment was made on the deceased seller's instructions. The Tribunal also accepted the explanation regarding funds availability, as evidenced by cheque payments from another bank account, which had been initially overlooked.

4. Considering the peculiar facts and unrebutted explanations, the Tribunal concluded that the additions and enhancements were unwarranted. The Tribunal found the explanations satisfactory, deleted the addition of Rs. 10,53,000/-, and set aside the enhancement of Rs. 10,00,000/-, thereby allowing the appeal. The order was pronounced in the Open Court on 13th July, 2022.