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2021 (5) TMI 688 - AT - Income TaxUndisclosed investment - Addition u/s 69 treating the same as income from other sources - survey u/s 133A - addition based on loose documents found - CIT(A) confirmed the addition made by the AO by holding that the evidence is compelling that the land deal was actually done by the assessee and the on money was also paid by the assessee and only the name of M/s SMV agencies was placed - HELD THAT - In the case under consideration, the AO has relied on only dumb documents, which are not having any evidentiary value as per the ratio laid down in the said judgment. The registered sale deed pertaining to the land purchase is not in the name of the assessee, but, the AO alleged that the name on the sale deed is wrongly mentioned as M/s SMV Agencies Pvt. Ltd., the observations of the Assessing Officer are not believable/ acceptable as there is no material brought on record to establish the same by the AO. We observe that the AO failed to discharge his duty by making the addition without undertaking any independent enquiry as to whether the property belonged to assessee or M/s SMV Agencies, he could have made an enquiry to establish that who is the owner of the land. He could have further enquired with the vendors regarding sale consideration. He failed to do so. We set aside the order of the CIT(A) and direct the AO to delete the addition made on this count. Accordingly, the ground raised by the assessee on this issue is allowed.
Issues:
1. Addition of income under section 69 of the Income Tax Act, 1961 based on impounded documents. Analysis: The appeal filed by the assessee was against the CIT(A) - iii, Hyderabad's order for the assessment year 2006-07 involving proceedings under section 143(3) of the Income Tax Act, 1961. The primary issue in this appeal was the addition of ?1,37,69,626 under section 69 of the Act, treating it as 'income from other sources'. The assessing officer observed that certain documents found during a survey indicated the purchase of land by the assessee for a significant amount, part of which was paid in cash. The assessee contended that the land deal was not done by them but by another company belonging to the same group. However, both the AO and CIT(A) concluded that the land deal was indeed done by the assessee based on the impounded documents, rejecting the assessee's submissions. The assessee challenged the addition before the ITAT, arguing that the authorities erred in considering loose sheets of paper as conclusive evidence without any corroborative evidence. The AR of the assessee cited legal precedents to support this argument. Additionally, it was contended that the AO failed to conduct an independent inquiry or obtain statements from relevant parties to confirm the ownership of the land. The entire addition was deemed based on presumption and conjectures, which the assessee argued was unsustainable in law. The AR also highlighted discrepancies between the impounded documents and subsequent registered sale deeds to support their case. Upon considering the rival submissions and the material on record, the ITAT found that the AO's reliance on the impounded documents alone was not sufficient to establish the ownership of the land by the assessee. The ITAT referred to a landmark judgment and held that the documents lacked evidentiary value, and the AO failed to discharge his duty by not conducting a thorough independent inquiry. Consequently, the ITAT set aside the CIT(A)'s order and directed the AO to delete the addition made under section 69. The appeal of the assessee was partly allowed in this regard. In conclusion, the ITAT's judgment emphasized the importance of corroborative evidence and independent inquiry in making additions under section 69 of the Income Tax Act. The decision highlighted the necessity for proper verification and substantiation of claims by tax authorities to ensure fair and just assessments.
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