2019 (5) TMI 104 - AT - Income Tax

Addition u/s 69B for unexplained investment - immovable property at Mehrauli - search u/s 132 - agreement to sell mentioned consideration of ₹ 5.95 crores where as in sale deed consideration mentioned is ₹ 60 lakhs - as per assessee agreement to sell have not been acted upon between the parties - During the course of search, no evidence was found to show assessee made payment of money to the extent of ₹ 5.95 crores - addition made alleging cash payment - CIT-A deleted part addition - HELD THAT - Assessee has been able to prove that agreement to sell have not been acted upon between the parties. As per the agreement to sell, the balance amount shall have to be paid within 45 days, but, there is no evidence on record to prove that assessee has actually paid the balance amount to the sellers. No evidence of any payment later on was also found or brought on record. Since it was conditional agreement and as such it was to be proved by the Revenue, whether the terms of the agreement have been complied with, which the A.O. in this case has failed to do so. The valuation of the property as per circle rate have not been disputed by the authorities below. No enquiry have also been made to the witness to the agreement to sell. Thus, on 18th November, 2008 the deal through agreement to sell deemed to have been cancelled as the time was the essence to the agreement. The Inspector is not a technical person to give report of valuation of the property. Therefore, no reliance could be placed upon his report. No infirmity in the order of the Ld. CIT(A) in deleting the addition of ₹ 4,85,74,816/-. It may also be noted here that the Ld. CIT(A) maintained addition of ₹ 50 lakhs on account of cash of ₹ 25 lakhs mentioned in each agreement to sell. Since the explanation of assessee was not called for at the time of search proceedings or thereafter and that the sellers have denied to have executed any agreement to sell or have received any sale consideration as per the agreement to sell, there was no justification for the Ld. CIT(A) to have maintained the addition of ₹ 50 lakhs. It may also be noted here that the assessee explained before Ld. CIT(A) that whatever amount was paid initially to the seller was duly explained through the cash book maintained by the assessee and accepted in the impugned assessment. Therefore, these facts would show that the matter requires reconsideration at the level of the Ld. CIT(A) with regard to addition of ₹ 50 lakhs. In view of the above discussion, we do not find any justification to interfere with the orders of the Ld. CIT(A) in deleting the addition. Appeal of the Assessee is allowed for statistical purposes Addition of investment made in plots at Aya Nagar - consideration in sale deed vs consideration in agreement to sale - D.R. merely relied upon Order of the A.O. without pointing-out any infirmity in the Order of the Ld. CIT(A) in deleting the addition. The assessee explained before the authorities below that investment made in purchase of plots, assessee filed copies of the purchase deed with bank statements, details of the mode of payment supported by documents of bank statements and entire consideration have been paid by Account Payee Cheques out of the Bank account. All the documentary evidences were placed on record. CIT(A) considering the details on record noted that assessee has been carrying on proprietorship business and maintained books of account which are duly audited and such business have been disclosed to the Revenue Department in income tax returns. CIT(A) found that payments for purchase of plots have been made out of the said disclosed source of the assessee which have not been controverted by the A.O. The finding of fact recorded by the Ld. CIT(A) have not been rebutted through any evidence or material on record. - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of addition on account of unexplained investment in immovable property at Mehrauli.
2. Deletion of addition on account of unexplained investment in immovable property at Arya Nagar.
3. Upheld addition under section 69B of the Act.

Issue-wise Detailed Analysis:

1. Deletion of Addition on Account of Unexplained Investment in Immovable Property at Mehrauli:
The Revenue challenged the deletion of ?4,85,74,816/- out of ?5,35,74,816/- added by the AO for unexplained investment in immovable property at Mehrauli. The AO based the addition on two agreements to sell, which indicated a higher consideration than what was recorded in the sale deeds. The AO presumed that the balance amount was paid in cash. However, the CIT(A) found that no evidence was presented to establish the payment of the alleged additional amount. The sellers denied receiving any amount over what was recorded in the sale deeds, and the assessee provided valuation reports supporting the sale consideration mentioned in the sale deeds. The CIT(A) concluded that the agreements to sell were not acted upon and deleted the addition. The Tribunal upheld the CIT(A)’s decision, emphasizing the lack of corroborative evidence and the failure of the AO to conduct an independent inquiry.

2. Deletion of Addition on Account of Unexplained Investment in Immovable Property at Arya Nagar:
The AO added ?14,55,000/- for unexplained investment in nine plots at Arya Nagar. The CIT(A) deleted the addition, noting that the assessee provided purchase deeds, bank statements, and details of the mode of payment, all of which were made through account payee cheques from disclosed sources. The CIT(A) found no evidence of unaccounted income used for the purchases. The Tribunal upheld the CIT(A)’s decision, noting that the Revenue did not provide any evidence to rebut the findings.

3. Upheld Addition under Section 69B of the Act:
The assessee contested the upholding of ?50,00,000/- under section 69B. The CIT(A) maintained this addition, reasoning that the agreements to sell, although denied by the sellers, were admitted by the appellant, indicating that ?50,00,000/- was paid in cash. The Tribunal found that the matter required reconsideration by the CIT(A) to verify the facts from the cash book maintained by the assessee. The Tribunal set aside the CIT(A)’s order on this issue and remanded it for re-examination.

Conclusion:
The Tribunal dismissed the Departmental appeal regarding the deletion of ?4,85,74,816/- and ?14,55,000/-, finding no infirmity in the CIT(A)’s decisions. However, it allowed the assessee's appeal for statistical purposes by remanding the issue of ?50,00,000/- back to the CIT(A) for reconsideration and verification from the cash book.