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2015 (10) TMI 79 - AT - Income TaxUnexplained investment - CIT(A) granted partial relief - the only reason for which ld. CIT(A) has sustained the addition of an amount, such payments were made after registration of the sale deed - Held that - n this regard, assessee s explanation that the registered sale deed was not for the entire extent of land as mentioned in the agreement of sale, hence, the amount was withheld and subsequently paid after the transfer of land, in our view, is believable. Moreover, it has been contended before us by ld. AR, when the payments were admittedly made after the end of relevant FY, they cannot be considered as unexplained investment of assessee for the impugned AY. We f ind merit in the aforesaid submissions of ld. AR. As can be seen from the details, as extracted in para 5.3 of ld. CIT(A) s order, the amount o was paid to Shri Syed Asif between 31/05/08 to 12/01/09. Therefore, as the payments were made after the end of the relevant FY i.e. FY 2007-08, such payments, if at all, are to be treated as unexplained investment of assessee, they cannot be considered for addition in the impugned AY. Accordingly, we delete the addition sustained by ld. CIT(A). - Decided in favour of assessee.
Issues Involved:
1. Addition of Rs. 33,50,000 sustained by CIT(A) out of the total addition of Rs. 80 lakhs made by AO on account of unexplained investment. 2. Partial relief granted by CIT(A) contested by the department. Issue-Wise Detailed Analysis: 1. Addition of Rs. 33,50,000 Sustained by CIT(A): The assessee, a company engaged in construction and logistics, was subjected to a search operation where documents were seized indicating an agreement to purchase 14.36 acres of land for Rs. 5,17,50,000, but the registered sale deed showed only Rs. 4 crores. The AO observed a discrepancy and added Rs. 80 lakhs as unexplained investment. The assessee contended that all payments were accounted for in the books, including payments to Shri G. Ranganath and Shri Syed Asif. The AO accepted Rs. 34,05,000 paid to G. Ranganath but disputed Rs. 50 lakhs paid to Syed Asif, treating it as unrelated to land purchase. The CIT(A) observed that payments made after the registration of the sale deed could not be considered as payments towards land purchase and sustained the addition of Rs. 33,50,000. 2. Partial Relief Granted by CIT(A) Contested by the Department: The department contested the relief granted by CIT(A), arguing that the payments to Syed Asif were not related to land acquisition. The CIT(A) had accepted payments made to Syed Asif between the date of the agreement of sale and the registration of the sale deed but did not accept payments made after the registration of the sale deed. The assessee argued that the payments were made through cheques and were accounted for in the books, and the payment of Rs. 33,50,000 was withheld initially and paid later upon further land transfer. Judgment Analysis: The tribunal considered submissions from both parties and observed that the assessee had shown an amount of Rs. 5.89 crores towards land acquisition in its books. The AO had accepted Rs. 34,05,000 as a legitimate payment but disputed the remaining Rs. 80 lakhs. The CIT(A) accepted the explanation for Rs. 50 lakhs paid to Syed Asif but sustained the addition of Rs. 33,50,000 made after the sale deed registration. The tribunal found the assessee's explanation for withholding and later paying Rs. 33,50,000 to be believable. The payments were made after the end of the relevant financial year, and thus could not be considered as unexplained investment for the impugned assessment year. Conclusion: The tribunal deleted the addition of Rs. 33,50,000 sustained by the CIT(A) and dismissed the department's appeal. The assessee's appeal was allowed, and the department's appeal was dismissed.
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