2023 (9) TMI 1539 - AT - Income Tax

Unexplained investment u/s 69 - assessee has paid unaccounted on-money in cash from undisclosed sources - HELD THAT - The registered sale-deed 19.03.2013 was for plot (with under structure-level house) only and the construction was to be done subsequently for which the assessee was required to make independent payments. This also corroborates with the seized document Page No. 58 of LPS-1 re-produced above which clearly mentions Percentage completion as on 30.11.2016 90% . In fact this also meets the contention raised by DR for revenue that the cash-component is always paid before execution of registered-deed because in the present case the registered-deed is for plot and cash-component (even if believed to paid) was for construction-work and not for plot. In any case the seized document Page No. 58 of LPS-1 clearly shows date of 05.11.2013 which falls within previous year 2013-14 relevant to AY 2014-15 therefore the Ld. AR is very much correct and justified in arguing that there was no cash-payment during the previous year 2012-13 relevant to AY 2013-14. Hence the addition made by AO in AY 2013-14 is patently wrong and unsustainable. Being so we are inclined to delete the addition made by AO on this reasoning itself. Appeal of assessee is allowed.

Summary

Issues:
Assessment order validity, Opportunity to furnish documents, Addition of income from unexplained investment, Interest levy under section 234B.

Analysis:
1. The appellant challenged the assessment order, claiming it was unjustified, void ab initio, and illegal. The appellant argued that the Assessing Officer (AO) did not provide sufficient opportunity to submit supporting documents and wrongly added Rs. 56,00,000 as unexplained investment income under section 69 without considering the facts. Additionally, the appellant disputed the interest levy under section 234B. The AO issued a show-cause notice under section 147 to re-open the case based on information received regarding the purchase of a property for an undisclosed amount, leading to the addition of Rs. 56,00,000.

2. The appellant's representative contended that the documents seized from a third party during a search were unreliable and lacked evidentiary value. The appellant argued that the documents did not specify the date of the alleged payment and fell outside the relevant assessment year. The representative also raised a jurisdictional issue, claiming that the assessment was made under the wrong section.

3. The Departmental Representative (DR) argued that the seized documents were crucial evidence, as confirmed by the Disputes Resolution Panel (DRP). The DRP noted that the transactions in the documents matched the declared consideration and involved real persons. The DR further argued that the cash payment must have been made before the execution of the registered sale deed, justifying the addition in the relevant assessment year.

4. The Tribunal analyzed the seized document and other relevant papers. It found that the cash payment mentioned in the seized document was for construction work, not the plot purchased under the registered sale deed. The Tribunal concluded that the cash payment date fell within the relevant assessment year, rendering the AO's addition incorrect. Consequently, the Tribunal allowed the appeal, deleting the addition based on the incorrect assessment year.

5. The Tribunal's decision was based on the discrepancy between the seized document's date and the relevant assessment year, leading to the deletion of the addition. Other contentions raised by the appellant were left undecided due to the primary issue's resolution. The appeal was allowed, and the addition was deleted based on the incorrect assessment year.

6. In conclusion, the Tribunal's detailed analysis focused on the validity of the assessment order, the reliability of seized documents, and the correct assessment year for the addition. The decision highlighted the importance of aligning the evidence with the relevant assessment period and ensuring proper jurisdiction for assessments.