2023 (12) TMI 497 - AT - Income Tax

Reopening of assessment - Addition made u/s.69A - difference between agreement value and market value - HELD THAT - Assessee has purchased the premises in question by virtue of the sale agreement from M/s. Trincas Agencies Commerce Pvt. Ltd. reopening in case of the assessee for A.Y. 2011-12 is not sustainable in the eyes of law. Even on merits the assessee has proved on record the ledger account of M/s. Trincas Agencies Commerce Pvt. Ltd. showing payment through banking channel. The assessee has also brought on record his bank statement available wherein payment of the sale consideration is shown to have been made through Union Bank of India from his bank account. When we examine sale agreement between M/s. Trincas Agencies Commerce Pvt. Ltd. and the assessee for a consideration of Rs. 9,92,00,000/-. From the document available it is proved that the assessee has purchased the property in question more than the fair market value - Assessee has nothing to do with M/s. Sunshine Housing Infrastructure Pvt. Ltd. rather purchased the property in question in A.Y. 2013-14 in second sale from M/s. Trincas Agencies Commerce Pvt. Ltd. at the rate more than the fair market value. Reopening made on the basis of search conducted at the M/s. Sunshine Housing Infrastructure Pvt. Ltd. and the statement of Shri N.K. Vora recorded under section 132(4) of the Act reopening of the assessment in A.Y. 2011-12 is invalid and not sustainable in the eyes of law. Even on merits the addition made in the hands of the assessee in A.Y. 2011-12 in which no such property was purchased by the assessee is sustainable in the eyes of law, hence ordered to be deleted. Appeal filed by the assessee is allowed.

Summary

Issues involved:
The issues involved in this case are the validity of the reopening of assessment and the addition made under section 69A of the Income Tax Act.

Reopening of Assessment:
The appellant sought to set aside the impugned order dated 23.06.2023 passed by the National Faceless Appeal Centre regarding the reopening of the assessment for AY 2011-12. The appellant contended that there was no tangible material in possession of the AO to support the reopening, and the reasons recorded were based on incorrect information. The appellant argued that there was no escapement of income and thus, the reopening was bad in law. The Tribunal found that the appellant had purchased the property in question in AY 2013-14, not during the year under consideration. Therefore, the reopening based on incorrect facts was deemed unsustainable in the eyes of the law.

Addition under Section 69A:
The appellant challenged the addition made under section 69A of the Act, contending that it was unjustified and should be deleted. The appellant argued that there was no transaction of purchase of property during the year under consideration and that the addition was without any justification. The Tribunal noted that the appellant had purchased the property in question in AY 2013-14, not during the relevant assessment year. The Tribunal found that the addition made under section 69A was unsustainable in the eyes of the law and ordered it to be deleted.

Conclusion:
In conclusion, the Tribunal allowed the appeal filed by the appellant, ruling in favor of the appellant on both the issues of the validity of the reopening of assessment and the addition made under section 69A of the Income Tax Act. The Tribunal held that the reopening was invalid and not sustainable in the eyes of the law, and the addition made in the hands of the appellant for the assessment year in which no such property was purchased was ordered to be deleted.