2014 (1) TMI 843 - AT - Income Tax

Addition made u/s 69 of the Act Unexplained Investment Held that - It is beyond the purview of the lower authorities to suspect a transaction solely on the ground of adequacy/ inadequacy of consideration in the absence of any other corroborating evidence and thereby making any adverse inferences - the value as adopted by AO is based on the valuation determined by the stamp duty authorities while registering the agreement dated 07.10.2005 - The authorities below have done/confirmed the addition without bringing any positive material to hold that the investment in the flat in Ramgiri Paradise is made by the assessee out of his unexplained income - Mere suspicion without evidence on record cannot be basis for making an addition to income u/s 69 of the Act - The addition is entirely on a presumptive basis which is purely based on surmises - Thus, the addiction u/s 69 could not be made Decided in favour of Assessee. Addition made u/s 68 of the Act Unexplained cash credits Bank deposits made Held that - During the assessment proceedings, the assessee has replied the query regarding source/explanation in respect of cash credits - By simply recording that the explanation given by the assessee is not acceptable as no corroborative evidence has been furnished to substantiate his claim, the addition is made by the AO order set aside and the matter remitted back to the AO for fresh consideration Decided in faovur of Assessee.

Summary

Issues involved:
1. Addition of Rs.50,34,897 under section 69 of the Income Tax Act.
2. Addition of Rs.5,64,500 under section 68 of the Income Tax Act.

Issue 1: Addition of Rs.50,34,897 under section 69 of the Income Tax Act.
The appeal was against the order of the Ld.CIT(A) confirming the addition made by the AO under section 69. The assessee, engaged in the occupation of a goldsmith, declared a total income of Rs.79,890 but had purchased a property worth Rs.50,34,897 during the year. The assessee claimed that the new flat was acquired in lieu of surrendering tenancy rights, hence not taxable under section 54F. The tribunal noted that the flat was indeed acquired in exchange for surrendering tenancy rights, supported by agreements and documentation. The lower authorities were criticized for not considering the evidence provided by the assessee. The tribunal held that the addition made was based on presumption and suspicion without concrete evidence, thus deleting the addition under section 69.

Issue 2: Addition of Rs.5,64,500 under section 68 of the Income Tax Act.
The AO added various bank deposits as unexplained cash credit under section 68. The assessee failed to provide satisfactory explanations or evidence for the credits. The Ld.CIT(A) partially confirmed the addition. The tribunal observed that the assessee requested another opportunity to reconcile the details before the AO, which was opposed by the Ld. DR. The tribunal, considering the circumstances, decided to set aside the matter to the AO for fresh consideration, allowing the assessee to present all relevant records and materials to support the claim. The tribunal directed the AO to re-examine the issue after giving the assessee a fair opportunity to be heard. Therefore, the appeal was allowed on this ground for statistical purposes.

In conclusion, the tribunal allowed the appeal filed by the assessee, deleting the additions made under sections 69 and 68 of the Income Tax Act. The judgment was pronounced on June 12, 2013, by the tribunal.