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2016 (1) TMI 240 - AT - Income TaxUnexplained investment- Held that - is evident from the material on record that the sale consideration was at ₹ 11,40,000 which was received by the vendor. In my view mere payment of extra stamp duty to fulfil the Government norms, may not come in the line of any unexplained investment by the assessee and his brothers in purchase of property in question, unless any evidence is available with the department that the assessee and his brothers has paid any extra sum, for invoking the provisions of section 69B. In the instant case, the A.O. has made the addition on two counts i.e., (1) the sum of ₹ 3,80,000 is only an advance and (2) though, the plots were allotted in the year 2005, the registration took place in the year 2007 by paying the balance consideration. As could be seen from the allotment letter dated 30.07.2005 as well as the explanation offered by the assessee vide letter dated 07.02.2014 during the course of assessment proceedings, the registration could not take place due to mortgage of plots with the HUDA and on release of the mortgaged plots by HUDA on 31.01.2007 vide Lr.No.7676/MP2/PLG/HUDA, the registration took place on 09.03.2007. The A.O. could not produce any documentary evidence that the assessee and his brothers made unexplained investment in purchase of property. Even if at all any unexplained investment has been made by the assessee and his brothers in purchase of property, the said sum could not be brought to tax in this year as assessee purchased same in an earlier year. A.O. simply came to the conclusion that unexplained investment has been made by the assessee and his brothers in purchase of property in question in this year even though the deed itself specifies the fact of purchase in an earlier year and reasons for non-registration in that year. Even the consideration paid by assessee in advance was specified. - Decided in favour of assessee
Issues:
1. Interpretation of Section 53A of Transfer of Property Act regarding property transfer. 2. Determination of taxable income based on property valuation discrepancies. 3. Application of sections 50C and 69B of the Income Tax Act in assessing undisclosed income. 4. Burden of proof on Revenue to establish unexplained investment by the assessee. Issue 1: Interpretation of Section 53A of Transfer of Property Act The Revenue contended that property transfer under Section 53A occurs only after registration, citing a Supreme Court decision. The assessee argued that the amount paid was an advance and not the full consideration. The CIT(A) observed that registration was delayed due to mortgage release by HUDA, and the payment made was not undisclosed. The AO added an amount invoking Section 69B, but the CIT(A) found no evidence of unexplained investment by the assessee. Issue 2: Determination of Taxable Income A survey revealed a property sale discrepancy where the market value was higher than the registered value. The AO added the difference to the assessee's income, alleging undisclosed investment. The CIT(A) disagreed, stating that the sale deed amount was valid, and extra stamp duty did not indicate unexplained investment. The burden was on the Revenue to prove additional payment, which was not established. Issue 3: Application of Sections 50C and 69B The AO incorrectly applied Section 50C instead of Section 69B, which applies to sellers, not purchasers. The CIT(A) ruled that the AO's presumption of unrecorded payment was unfounded. The AO failed to establish unexplained investment or provide evidence of extra payment, leading to the deletion of the addition under Section 69B. Issue 4: Burden of Proof The Revenue appealed the CIT(A)'s decision, but the Tribunal upheld it. The Tribunal found no merit in the Revenue's grounds, as the property purchase occurred in a previous year, and no unexplained investment was proven for the current year. The burden of proof was on the Revenue to establish undisclosed income, which was not met in this case. This judgment clarifies the interpretation of property transfer laws, the importance of accurate valuation for tax assessment, and the necessity for the Revenue to substantiate claims of undisclosed income with concrete evidence. The Tribunal's decision emphasizes the need for proper application of tax provisions and the burden of proof in tax disputes.
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