2023 (4) TMI 528 - AT - Income Tax

Transaction by way of agreement to sell - Addition based on document seized during search - Addition based on unsigned draft agreement and the amounts were also cut and trimmed - HELD THAT - The entire addition was based on the documents which has no evidential value. The assessee primarily decided to purchase the property but later on changed the decision and has taken the property on lease - The lease rent was paid and the TDS was deducted at source. Only 2 kanal property was purchased in later from the party by the assessee. The copy of the financial statement duly filed related to Baba Shrichand Educational Society which is depicted that the amount debited against lease from the M/s Amar Singh Educational Charitable Trust represented by Mr Gurdeep Singh. Copy of the balance sheet of society Baba Shrich and Educational Society is annexed - AO had not able to correlate any such payments which are mentioned in the assessment orders. The property is still in the possession of M/s Amar Singh Educational Charitable Trust. We find that there is no infirmity in the order of the ld. CIT(A) so the ground of the revenue is dismissed. Assessment u/s 153A - Addition of stamp duty in cash - HELD THAT - In factual matrix it is correct that the addition for payment of stamp duty is not part of the incriminating documents and will not be come under purview of section 153A of the Act. We relied on the order of ITAT-Amritsar Bench in the case of Gaurav Narula 2022 (10) TMI 1162 - ITAT AMRITSAR So the addition amount is quashed. Addition u/s 69A related to loan with the party and related to investment in the property - HELD THAT - Related to loan amount of Rs.40 lacs the ld. counsel pointed out that the addition was made for unexplained investment u/s 69A. Whereas the ld. CIT(A) has directed for violation of section 269SS and 269T for accepting and repaying the loan in cash exceeding the prescribed limit against Mr Prem Pal Singh. Both the provisions cannot run together. We find that there is no merit in the order of the revenue. There no statement was recorded from Sh. Prem Pal Singh in relation of the transaction of loan. The documents are already denied by the ld. Counsel on which thereliance was made for addition. We find no merit in addition Rs.40 lacs with the total income of the assessee. So the addition is quashed. Investment in property - The addition can not be done on basis of any assumption or any guess work. The ld. CIT-Dr was not able to place any contrary judgment against the submission of assessee. We find that the addition is not proper against the assessee. So the addition is liable to be quashed. Expenditure on construction of college building - Assessee had made surrender on account of construction of house which was clearly mentioned in the surrender letter and the seized documents clearly show that expenditure is incurred on civil work in the college - HELD THAT - The assessee surrendered Rs.2.5 crore made out of which amount of Rs.1.75 crore relates to construction. Under these circumstances of the case Rs.38, 07, 065/- is related to out of the declared construction. CIT-DR has not brought any contrary fact against the submission of assessee. We find that there is no infirmity in the order ld. CIT(A) accordingly the appeal of the revenue bearing ground no. 6 is dismissed. Ground no. 7 is general in nature. Accordingly the appeal of the revenue is dismissed. Addition u/s 69 on account of unexplained cash deposits - CIT-A deleted addition as deposits are out of surrendered income - HELD THAT - It is very clear from the order of the ld. CIT(A) that the assessee has deposited cash in the bank out of his surrendered income and the tax was paid accordingly. The copy of the ITR is duly annexed copy of surrendered letter u/s 132(4) of the Act providing the fact that assessee surrendered Rs.7.5 crores as its income - We find no infirmity in the order of the ld. CIT(A) accordingly the ground of the revenue is quashed

Summary

Issues Involved:

1. Validity of additions based on an unsigned draft agreement to sell.
2. Additions under Section 69A for unexplained investments.
3. Validity of additions for unexplained expenditure on construction.
4. Treatment of cash deposits as unexplained income.

Summary:

1. Validity of Additions Based on an Unsigned Draft Agreement to Sell:

The revenue challenged the relief granted by the CIT(A) regarding an addition of Rs. 2,87,50,000/- based on an unsigned draft agreement to sell. The Tribunal upheld the CIT(A)'s decision, emphasizing that the addition was made on the basis of an unsigned, undated draft agreement with cut and trimmed amounts, which lacked evidential value. The Tribunal noted that the property in question was taken on lease, and the lease rent was paid with TDS deducted. The property was still in the possession of the original owner, and no sale deed was executed. Therefore, the addition was not sustainable and was deleted.

2. Additions Under Section 69A for Unexplained Investments:

In ITA No. 51/Asr/2020, the Tribunal quashed the addition of Rs. 12 lakh for stamp duty payment in cash, stating that it was not part of incriminating documents and could not be assessed under Section 153A of the Act. In ITA No. 53/Asr/2020, the Tribunal quashed the addition of Rs. 40 lakh based on unsigned, handwritten documents, as there was no corroborative evidence. Similarly, the addition of Rs. 1.45 crore for investment in property was quashed, as it was based on assumptions and not substantiated by evidence.

3. Validity of Additions for Unexplained Expenditure on Construction:

In ITA No. 88/Asr/2020, the Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 38,07,065/- for unexplained expenditure on construction. The Tribunal noted that the assessee had already surrendered Rs. 2.5 crore, including Rs. 1.75 crore for construction, and paid taxes accordingly. Therefore, any further addition would amount to double taxation.

4. Treatment of Cash Deposits as Unexplained Income:

In ITA No. 90/Asr/2020, the revenue challenged the deletion of an addition of Rs. 5,67,04,000/- for unexplained cash deposits. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had surrendered Rs. 7.5 crore as undisclosed income, which was included in the return and taxes were paid. The cash deposits were out of the surrendered income, and any further addition would lead to double taxation.

Conclusion:

The Tribunal dismissed all appeals filed by the revenue and allowed the appeals filed by the assessees, emphasizing the lack of evidential value in the documents relied upon by the revenue and the risk of double taxation. The Tribunal upheld the CIT(A)'s decisions, which were based on proper consideration of facts and evidence.