2022 (6) TMI 232 - AT - Income Tax

Addition u/s 69C - Unexplained expenses/premium - assessee did not furnish the source of payment of such expenses/premium - HELD THAT - There is no dispute that that the assessee was co-owner of agricultural land having 6.67% share in the said agricultural land. The assessee before transferring the land, paid conversion charges along with other co-owners. The case of assessee throughout the proceedings was that she is not having sufficient income. The expenses incurred by the other co-owners on her behalf and that no such similar addition was made in case of other co-owners, on whose behalf similar expenses were incurred by other co-owners. We find that the assessee has placed on record the copy of two assessment orders passed u/s 143(3) of the Act, in the name of Kantaben Patel and Vipul Champakbhai Patel, though by different Assessing Officers of different wards. However, the facts remained the same that no such addition was made in case of other co-owners thought similar expenses were spent on their behalf by their relative and co-owners. It is settled law that the assessee cannot be treated as indifferently in respect of expenses or treatment of capital gain. The Hon'ble Madras High Court in CIT vs. Kumararani Meenakshi Achi 2006 (10) TMI 123 - MADRAS HIGH COURT held that during the same assessment year same quantity of wealth in possession of co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. If such an action on the part of the assessing authorities is sanctioned it would militate against the principle of equality of laws enshrined in Article 14 of the Constitution. Revenue cannot treat the assessee in different way, therefore, the addition on account of unexplained source under section 69C is deleted. In the result the grounds of appeal raised by the assessee are allowed.

Summary

Issues Involved:
1. Addition under Section 69C of the Income Tax Act - Whether the addition of Rs. 1,62,437/- made by the Assessing Officer was justified.

Detailed Analysis:

Issue 1: Addition under Section 69C of the Income Tax Act
The appeal was against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 1,62,437/- made by the Assessing Officer under Section 69C of the Act for the Assessment Year 2015-16. The Assessing Officer noted that the assessee, along with other co-owners, sold agricultural land and incurred expenses for conversion charges to non-agricultural use. The assessee failed to provide the source of payment for these expenses. The Assessing Officer found discrepancies in the cash books of the co-owners who claimed to have made the payments, leading to the disallowance. The Commissioner upheld the Assessing Officer's decision, stating that the assessee's explanation lacked evidence.

The authorized representative of the assessee argued that the expenses were paid by family members and co-owners due to the lack of regular income of the assessee. Similar expenses were incurred by other co-owners, but no additions were made in their cases. The representative cited legal precedents to support the argument that the assessee should receive similar treatment as the other co-owners. The Revenue, however, contended that the assessee's explanation lacked documentary evidence and that different Assessing Officers may have been satisfied with the explanations provided by other co-owners in their assessments.

The Tribunal observed that the assessee was a co-owner of the land and had paid conversion charges along with other co-owners before selling the land. It noted that similar expenses incurred by other co-owners were not added in their assessments. Citing legal principles of equality and fairness, the Tribunal held that the assessee should not be treated differently from other co-owners in similar situations. Referring to relevant case laws, the Tribunal concluded that the addition under Section 69C was unjustified and deleted the addition, allowing the appeal raised by the assessee.

In conclusion, the Tribunal allowed the appeal, emphasizing that the revenue cannot treat the assessee differently from other co-owners in similar circumstances, and deleted the addition made under Section 69C of the Income Tax Act.