2015 (10) TMI 2170 - AT - Income Tax

Unaccounted investment u/s.69 - CIT(A) deleted the addition - Held that - CIT(A) proceeded on the assumption as if the housing loan of Rupees Ten lacs was obtained for the construction of house. No material has been placed in respect of the housing loan obtained from Central Bank of India and whether the amount was utilized for renovation of the house or construction of building is not clear. The assessee has also not placed any material with regard to presentation of house construction plan to the local authority and approval thereof to substantiate his claim that he had only purchased vacant piece of land. The assessee has placed on record affidavits of the vendor in Gujarati and the veracity of the contents needs verification at the end of the AO. Under these facts and circumstances, we are unable to accept the reasoning given by the ld.CIT(A) and hereby set aside the impugned appellate order and restore the appeal to the file of AO for de novo assessment. The assessee is hereby directed to place all the evidences relating to purchase and construction of the property in question to AO who would make further inquiries if so needed. - Decided in favour of revenue for statistical purposes.

Issues Involved:
1. Deletion of addition of Rs. 41,00,000/- made by the AO on account of unaccounted investment under Section 69 of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 41,00,000/- Made by the AO on Account of Unaccounted Investment Under Section 69 of the Act:

The Revenue's appeal contests the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which deleted the addition of Rs. 41,00,000/- made by the Assessing Officer (AO) as unaccounted investment under Section 69 of the Income Tax Act, 1961. The AO had initially added this amount based on the observation that the assessee had not disclosed the investment in his books of account.

Facts and Findings:

- The case was reopened for assessment, and the AO made the addition of Rs. 41,00,000/- for unexplained investment.
- The assessee had purchased a residential house property, including land and a bungalow, for Rs. 12,35,000/- during the financial year 2008-09, but the AO alleged that the assessee purchased a fully constructed bungalow and did not disclose the actual investment value.
- The AO's addition was based on statements from the vendor and the non-disclosure of the investment in the assessee's return of income.
- The CIT(A) deleted the addition, reasoning that the transaction related to the subsequent assessment year (2009-10) and that the assessee had taken a housing loan for construction, which justified the arrangement shown in the books.

Assessment by the Tribunal:

- The Tribunal noted that the AO had made the addition based on the vendor's statement without allowing the assessee to cross-examine the vendor, which is against the principles of natural justice.
- The Tribunal observed that the CIT(A) did not address the AO's detailed findings in paragraphs 5.10 to 5.15 of the assessment order, which included the AO's conclusion that the assessee had purchased a fully constructed bungalow on 31/03/2008.
- The Tribunal highlighted that the assessee's claim of obtaining a housing loan for construction lacked clarity and supporting evidence, such as house construction plans approved by local authorities.
- The Tribunal found that the affidavits provided by the vendor needed verification by the AO.

Conclusion and Directions:

The Tribunal set aside the CIT(A)'s order and restored the appeal to the AO for a de novo assessment. The Tribunal directed the assessee to provide all relevant evidence regarding the purchase and construction of the property. The AO was instructed to grant sufficient opportunity to the assessee and complete the assessment within six months from the receipt of the Tribunal's order.

Final Judgment:

The appeal of the Revenue was allowed for statistical purposes, and the order pronounced in the Court on 24th September 2015 at Ahmedabad.

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