2015 (8) TMI 972 - AT - Income Tax

Addition made u/s 69C - addition under head of property purchase on the sale consideration in cash from her husband in proper state of mind without any coercion, in ignoring the facts that the AO has given sufficient opportunity to explain - CIT(A) deleting an addition - Held that - In the present case, it is noticed that the transaction on the basis of which the addition was made by the AO was declared as Null & Void by the Ld. Sub-Judge, Ghaziabad vide his order dated 16.10.2010. Thereafter, the assessee and her husband moved an application dated 22.10.2010 before the Ld. Sub Registrar, Ghaziabad that the Sale Deed in question may be cancelled with immediate effect as per the order of Ld. Sub-Judge, Ghaziabad. Since the order of the Ld. Sub-Judge, Ghaziabad was delivered after the order of the A.O., the assessee moved an application for admitting the additional evidences under Rule 46A of the I.T.Rules. In the present case, it is noticed that the Ld. CIT(A) received a remand report from the AO vide his letter no. 431 dated 12.01.2011 which is apparent from the Page no. 1 of the impugned order. Thus, it is clear that the vary basis for making the addition i.e. the Sale Deed was declared as Null & Void and there was no evidence available on the record to substantiate that the cash transaction had ever passed hands, therefore, the impugned addition made by the A.O. was rightly deleted by the Ld. CIT(A). We do not see any infirmity in the order of Ld. CIT(A) on this issue. - Decided against revenue.

Summary

Issues:
Appeal against deletion of addition made under section 69C of the IT Act regarding property purchase for Rs. 46,00,000 in cash.

Analysis:

Issue 1: Deletion of addition under section 69C of the IT Act
The department appealed against the deletion of an addition of Rs. 46,00,000 made by the Assessing Officer (AO) under section 69C of the IT Act. The AO received information that the assessee had purchased property worth Rs. 46,00,000 in cash. The assessee explained that no cash transaction took place and that the property was intended to be gifted, not sold. The AO was not convinced and made the addition. The CIT(A) considered the submissions and deleted the addition, citing that the transaction was declared null and void by the Civil Judge, Ghaziabad. The CIT(A) emphasized that since the transaction was deemed void, there was no taxability. The department contended that additional evidence was entertained in violation of IT Rules, but the CIT(A)'s decision was upheld. The Tribunal noted that the transaction was declared null and void by the Sub-Judge, Ghaziabad, and no evidence supported the cash transaction. Consequently, the addition made by the AO was rightfully deleted by the CIT(A), leading to the dismissal of the department's appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the addition under section 69C of the IT Act, as the transaction was declared null and void by the Civil Judge, Ghaziabad, and lacked evidence of the alleged cash transaction. The department's appeal was dismissed, affirming the CIT(A)'s ruling.