2024 (6) TMI 937 - AT - Income Tax

Addition u/s 69 - difference in agreed and actual deal - addition towards source of stamp duty being paid during registration time and remained unexplained - HELD THAT - It is observed that the assessee has submitted copy of purchase deed wherein the value of property was taken at Rs. 30 Lacs and duly accepted by the State Stamp Authorities. Here it is pertinent to mention that such type of transactions is being covered by the provisions of section 50C (In case of the assessee it will be section 43CA as the seller is a builder and property under consideration is assuming to be his inventory and not a capital asset) r.w.s. 56(2)(vii) Here it is pertinent to mention that in such type of transactions of property it is appropriate and rather the AO is duty bound to apply provisions of section 43CA/50C r.w.s. 56(2)(vii) of the Act. In this case there is no finding against the assessee that transaction entered into violates section 43CA at the end of seller and section 56(2)(vii) of the Act at the end of buyer i.e. the assessee under consideration. The paramount evidence against the assessee would have been the violation of section 43CA and 56(2)(vii) of the Act. It is also not demonstrated by the authorities below that what action they have taken against the seller i.e. M/s. Gour and Suhane Associates Makronia Sagar. As far as the difference between the value of agreement i.e. 36 Lacs vis- -vis registry value is concerned we have gone through the registry document (Purchase deed) and found no anomaly in the same. Provisions of section 68 to 69B of the Act applicable only in those cases where the assessee is duty bound to maintain the books of accounts as per the provisions of section 44AA of the Act. In this case the assessee lady is a salaried employee at State Govt. owned Medical College and is not liable to maintain the books of accounts as prescribed u/s. 44AA of the Act. Secondly the provisions of section 68 to 69B of the Act are deeming provisions and can be applied only when there is some strong glitching evidence found against the assessee. Like in an action u/s. 132(Search and seizure) or 133A (Power of survey) of the Act revenue discovered any evidence which the assessee is not able to explain. AO wrongly applied the provisions of section 69 of the Act which is further changed by the Ld. CIT (A) to section 69A of the Act as the explanation of the assessee alongwith the above discussion found to be reasonable and the assessee is able to discharge her duty. AO and the Ld. CIT (A) applied wrong provisions of the Act. Based on above we are not inclined to confirm the orders of authorities below as the same are based on wrong application of law and the assessee s contentions found to be bonafide. In these terms the AO is directed to delete the addition - Appeal of assessee allowed.

Issues Involved:
1. Addition of Rs. 6 lacs towards difference in agreed and actual deal.
2. Addition of Rs. 2.14 lacs towards unexplained source of stamp duty.
3. Legality of reopening of assessment u/s 148.
4. Consideration of submissions made during assessment proceedings.
5. Applicability of section 68 for additions.

Summary:

1. Addition of Rs. 6 lacs towards difference in agreed and actual deal:
The assessee contended that the flat was purchased for Rs. 30 lacs in an unfurnished state, contrary to the agreed Rs. 36 lacs. The Tribunal noted that the purchase deed mentioned Rs. 30 lacs, accepted by the State Stamp Authorities. The Tribunal emphasized that such transactions are covered by sections 43CA and 56(2)(vii) of the Act. It found no violation of these sections and no anomaly in the registry document, leading to the deletion of the Rs. 6 lacs addition.

2. Addition of Rs. 2.14 lacs towards unexplained source of stamp duty:
The assessee provided affidavits from persons who paid the stamp duty on her behalf. The Tribunal observed that the provisions of sections 68 to 69B apply only when the assessee is required to maintain books of accounts u/s 44AA. As the assessee, a salaried employee, was not liable to maintain such books, and no strong evidence was found against her, the Tribunal directed the deletion of the Rs. 2.14 lacs addition.

3. Legality of reopening of assessment u/s 148:
The assessee argued that the reopening was based on borrowed reasons and done mechanically. The Tribunal did not find substantial discussion on this issue in the provided judgment but inferred that the assessment was reopened due to information on the property transaction.

4. Consideration of submissions made during assessment proceedings:
The assessee claimed that the AO made additions based on assumptions without considering her submissions. The Tribunal found the AO's and CIT(A)'s application of sections 69 and 69A incorrect and the assessee's explanations reasonable, thus not confirming the lower authorities' orders.

5. Applicability of section 68 for additions:
The Tribunal highlighted that section 68 applies when there is strong evidence found against the assessee, typically during actions u/s 132 or 133A. As no such evidence was presented, and the assessee was not required to maintain books of accounts, the Tribunal ruled the application of section 68 inappropriate.

Conclusion:
The Tribunal directed the deletion of the total addition of Rs. 8.14 lacs, allowing the appeal of the assessee. The judgment emphasized the correct application of legal provisions and the necessity of substantial evidence for additions u/s 68 to 69B.

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