2020 (12) TMI 1108 - AT - Income Tax

Addition u/s 68 - unexplained land advances received back by the appellant - HELD THAT - Transaction is a genuine transaction and the amount is arranged by the mediator-Mr.Badarinarayana Panigrahi. Though the names of the land owners who wanted to sale the land not mentioned, but the fact remains that Mr.Badarinarayana Panigrahi who is the mediator arranged the refund, therefore it cannot be disbelieved that the identity of the parties are not proved. It is a fact that assessee has advanced the amount and also a fact that transaction is not materialized because the legality of the agricultural land is the issue. It is also a fact that mediator is arranged repayment of the amount. By considering the facts and circumstances of the case, in our opinion, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is not correct and we delete the addition - Decided in favour of assessee.

Summary

Issues:
- Addition of ?20,00,000 made by the Assessing Officer under section 68 of the Income Tax Act.
- Confirmation of the order by the Commissioner of Income Tax (Appeals).
- Appeal by the assessee before the tribunal.

Analysis:

Issue 1: Addition of ?20,00,000 under section 68 of the Income Tax Act
The assessee, engaged in running a hospital, declared income and agricultural income for the Assessment Year 2009-10. The Assessing Officer made an addition of ?20,00,000 citing that the amount was credited in cash in the ledger account as 'land advance'. The assessee explained that the amount was given for acquiring agricultural lands, which could not be completed due to defective titles. The advocate involved arranged the refund of the amount to the assessee. However, the Assessing Officer contended that the burden of proof regarding the identity and genuineness of the transaction was not discharged by the assessee, leading to the addition.

Issue 2: Confirmation of the order by the Commissioner of Income Tax (Appeals)
The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's order, confirming the addition of ?20,00,000. The order was challenged by the assessee before the tribunal, disputing the correctness of the addition based on the explanation provided and documentary evidence presented.

Issue 3: Appeal by the assessee before the tribunal
During the tribunal proceedings, the assessee highlighted details from the balance sheet and submissions regarding the mediator advocate who arranged the refund of funds from the landowners. The advocate's confirmation and the reflection of the payment in the balance sheet for the relevant assessment year were emphasized. The tribunal, after considering the material on record and the arguments presented, concluded that the transaction was genuine. It noted that the mediator facilitated the refund, supporting the authenticity of the transaction. Consequently, the tribunal allowed the appeal, overturning the addition of ?20,00,000 made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals).

In conclusion, the tribunal allowed the appeal filed by the assessee, emphasizing the genuine nature of the transaction and the mediator's role in arranging the refund, leading to the deletion of the addition of ?20,00,000.