2017 (10) TMI 599 - HC - Income Tax

Addition u/s 69B - Assessee acquired 1.65 acre of land in excess for which no value was shown in the books of accoun - whether he benefit in question in any case covered under the head Profits and gains of business or profession in view of Section 28 (iv)? - Held that - Shares were not exchange and there was exchanges of Land in the same locality and the duration of purchase of land and its exchange i.e. four-five months was very short. Furthermore, land rates are never uniform as in the share market and the A0 has not brought on record . - any allegation, material, evidence or document on record supported by proof of any rate variation resulting in a profit and addition has been made purely on the estimate basis. In absence of any material or evidence or documents to establish that the assessee has made investment and amount expended on making such investments or acquiring land exceeds the amount recorded in this behalf in the books of accounts, which has been properly audited and accepted by the department. - Decided against revenue

Summary

Issues:
- Appeal against ITAT order for AY 2006-07
- Addition of ?15,77,59,691 under Section 69B
- Applicability of Section 28(iv) for taxing differential amount
- CIT (A) and ITAT findings

Analysis:

The High Court dealt with an appeal against the ITAT order for the Assessment Year 2006-07. The primary issue revolved around the addition of ?15,77,59,691 under Section 69B of the Income Tax Act. The Assessing Officer contended that the Assessee had acquired 1.65 acres of land in excess without showing its value in the books, leading to the addition. However, the Assessee argued that the land was exchanged, not purchased, resulting in no profit or gain. The CIT (A) analyzed the case law and held that the burden lay on the Revenue to prove understatement of consideration, which was lacking in this scenario. The CIT (A) also rejected the alternative submission of taxing the differential amount under Section 28(iv) as there was no evidence of excess receipt funded from outside the books.

The ITAT upheld the CIT (A) findings, emphasizing that there was no evidence to establish that the Assessee made investments exceeding the recorded amounts. The Court noted that the Revenue failed to demonstrate any perversity in the factual findings of the CIT (A) and ITAT. The Court dismissed the appeal, emphasizing the lack of substantial legal questions and upheld the decision based on the factual findings. The judgment highlighted the importance of evidence and burden of proof in taxation matters, ultimately leading to the dismissal of the Revenue's appeal without costs.