2022 (12) TMI 215 - AT - Income Tax

Addition u/s 68/69 - undisclosed income - absence of source of purchase of the property - AO has made addition of 50% of the total value of the land as the appellant has not been able to explain the source of payment made in respect of purchase of land - HELD THAT - As it appears from the detailed submissions made by the assessee supported by the sufficient documents, particularly, the cash book of the company, namely, Iscon Procon Pvt. Ltd. showing the source of investment made for such purchase of land situated at Ambapur, Gandhinagar, with another company, namely, Chehar Realty Pvt. Ltd., which establishes the fact of purchase of land by both the companies. Merely, because the assessee s PAN number was mentioned as he was the Director of one of the company, the purchase cannot be said to be made by him when the purchase has been shown in the P L account by the said company itself as well as part of the closing stock of the said company, namely, Iscon Procon Pvt. Ltd. In that view of the matter, the addition made by the Ld.AO has been rightly found to be not justified and deleted by the Ld.CIT (A), which, in our considered opinion is just and proper so as to warrant interference. In that view of the matter, the Revenue s ground of the appeal is found to be devoid of any merit and thus dismissed. Revenue s appeal is dismissed.

Summary

Issues:
Deletion of addition under Section 68 of the Income Tax Act on account of undisclosed income.

Analysis:
The judgment pertains to an appeal filed by the Revenue against an order passed by the Ld. Commissioner of Income Tax (Appeals), Gandhinagar, Ahmedabad, arising from an order by the Income Tax Officer, Ward-1, Gandhinagar, under Section 143(3) of the Income Tax Act, 1961, for Assessment Year 2014-15. The key issue in question was the deletion of an addition of Rs.2,64,88,300/- under Section 68 of the Act concerning undisclosed income. The appellant, an individual, had filed a return of income declaring total income and agricultural income. The case was selected for scrutiny due to a large investment in a property compared to the total income, as the appellant was involved in a brokerage business of Real Estate and a color shop. The appellant was linked to the purchase of a property through AIR Information, leading to a discrepancy in the PAN details. A show cause notice was issued, and upon investigation, the Ld.CIT(A) deleted the addition, prompting the Revenue's appeal.

The appellant argued that the investment in the property was made by a company, not by the appellant personally. The Ld.CIT(A) considered the submissions and evidence provided by the appellant, including the cash book of the company, to support the source of investment for the property purchase. It was highlighted that the companies involved in the purchase had confirmed the transaction and provided relevant documents. The Ld.CIT(A) found that the addition made by the Ld.AO was unjustified, as the purchase was clearly attributed to the companies involved, and the appellant's PAN being mentioned erroneously did not imply personal ownership. The Ld.CIT(A) directed the deletion of the addition based on the evidence presented by the appellant, indicating that the addition was not warranted under the law.

Upon review, the Tribunal found that the Ld.CIT(A) had correctly analyzed the situation and concluded that the addition made by the Ld.AO was not justified. The Tribunal agreed with the decision to delete the addition, emphasizing that the evidence provided, including the cash book of the company, established the purchase of the property by the companies involved. The Tribunal dismissed the Revenue's appeal, affirming the deletion of the addition under Section 68 of the Income Tax Act related to undisclosed income.