2012 (2) TMI 67 - AT - Income Tax

Best Judgement assessment unexplained credit deposit of Rs 16 lacs in bank a/c of assessee failure to furnish evidences to prove source of deposit - assessee submitted that no land has been sold - agreement with the colonizer was cancelled and the amount has been returned, therefore, no amount has been accrued to the assessee Held that - We find that the matter needs re-verification. Assessee has taken a plea that amount has been refunded due to cancellation of agreement. It was further submitted that the land in question is in possession of the assessee till date and it can be verified. Assessee has issued receipt with his signatures without mentioning the amount. Agreement for sale of land needs to be examined. Since assessment was completed u/s 144 and full details of additional evidences could not be filed, we are of the considered view that the matter should go back to the file of the A.O. to examine the case once again Decided in favor of assessee for statistical purposes.

Summary

Issues:
1. Confirmation of addition made by AO under section 144
2. Confirmation of addition of Rs.16.00 lakhs made by AO under section 69 of the Act

Issue 1: Confirmation of addition made by AO under section 144
The AO noticed a deposit of Rs.16.00 lakhs in the assessee's bank account and issued multiple notices under section 142(1) to which no response was received. The assessee claimed no land was sold but had entered into an agreement for colonization. The AO made the addition of Rs.16 lakhs as the assessee failed to explain the source of the deposit. The CIT (A) rejected the plea that no notice was received, admitted additional evidences, but found them insufficient to prove the source of the deposit, confirming the addition.

Issue 2: Confirmation of addition of Rs.16.00 lakhs made by AO under section 69 of the Act
The assessee argued before the Tribunal that the agreement with the colonizer was cancelled, and the amount was returned, hence no income accrued. The Tribunal noted the need for re-verification as the agreement was signed by both parties and the land was still in possession of the assessee. The Tribunal found the matter required further examination and directed the AO to re-examine the case after affording a reasonable opportunity to the assessee. The Tribunal allowed the appeal for statistical purposes, remitting the matter back to the AO for fresh consideration.

In conclusion, the Tribunal found the need for re-verification of the case regarding the addition of Rs.16.00 lakhs made by the AO under section 69 of the Act. The Tribunal directed the AO to re-examine the case in accordance with the law after providing a reasonable opportunity for the assessee to be heard. The appeal was allowed for statistical purposes, and the matter was remitted back to the AO for further proceedings.