2023 (7) TMI 502 - AT - Income Tax

Additions u/s 68 - Unexplained cash credit in bank account subsequent to sale deed - HELD THAT - Once the supplementary / rectification deed is accepted by Sub-Registrar the fact that subsequent payment was part of sale consideration also, the matter ends. So far as sale consideration is concerned, once the sale consideration is accepted as a sale consideration by Sub-Registrar local (Revenue) / Sub-Registrar concerned, it cannot be treated illegal by Income Tax Department, when the assessee right from the very beginning is asserting that credit in his bank account is a part of sale consideration on rural agricultural land. As reiterated that agricultural land is also a rural agricultural land and purchaser party has also accepted this fact, in filing confirmation by way of affidavit as well as in supplementary / rectification deed - Therefore,no justification in treating the credit as unexplained credit. Decided in favour of assessee.

Issues Involved:
1. Reopening of assessment u/s 147 after issuing notice u/s 148.
2. Addition made without addressing the reasons recorded u/s 148(2).
3. Addition of Rs. 25,00,000/- as unexplained income from the sale of agricultural land.
4. Validity of assessment framed u/s 143(3) r.w.s 147.

Issue-wise Comprehensive Details:

1. Reopening of assessment u/s 147 after issuing notice u/s 148:
The assessee contested the reopening of the assessment u/s 147 after the issuance of notice u/s 148. The Assessing Officer (AO) had received information about the sale of immovable property by the assessee and believed that income had escaped assessment. Consequently, a notice u/s 148 was issued on 24.03.2017, and the assessee filed a return declaring an income of Rs. 36,690/- for the assessment year 2012-13.

2. Addition made without addressing the reasons recorded u/s 148(2):
The assessee argued that the AO erred in making an addition without addressing the issues pertaining to the reasons recorded u/s 148(2). The AO made an addition of Rs. 25,00,000/- received from the sale of agricultural land, which was not initially mentioned in the sale deed but later included in a supplementary/rectification deed.

3. Addition of Rs. 25,00,000/- as unexplained income from the sale of agricultural land:
The AO found that the assessee received Rs. 15,00,000/- on 27.07.2011 and Rs. 25,00,000/- on 03.03.2012 from the sale of agricultural land but only Rs. 15,00,000/- was recorded in the sale deed. The AO treated the Rs. 25,00,000/- as unexplained income. The assessee contended that the amount was part of the sale consideration, which was mistakenly not included in the sale deed but later rectified in a supplementary deed dated 12.04.2018. The Tribunal found that the supplementary deed was accepted by the Sub-Registrar and thus the Rs. 25,00,000/- should be considered part of the sale consideration, making the addition unjustified.

4. Validity of assessment framed u/s 143(3) r.w.s 147:
The Tribunal noted that since the primary issue regarding the addition of Rs. 25,00,000/- was resolved in favor of the assessee, the question of the validity of the reopening of the assessment became academic. The Tribunal allowed the appeal, deleting the addition and rendering the issue of reopening moot.

Conclusion:
The Tribunal allowed the appeal, deleted the addition of Rs. 25,00,000/-, and concluded that the reopening of the assessment u/s 147 was academic in light of the decision on the merits. The order was pronounced on 10/07/2023.

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