2022 (7) TMI 812 - AT - Income Tax

Addition u/s 69B - investment not fully disclosed as per loose sheets impounded from the residence of the assessee - survey proceedings u/s 133A - excel statement which was in the process of preparation on a Cut, Copy, Past mode, taken as a print out from the computer of the Assessee in survey proceedings relied - HELD THAT - Admittedly, the ld. CIT(A) has not given any cognizance over the impounded materials from the residence of the assessee, which was the base for assessing the purchase consideration at ₹.1,15,29,000/- by the Assessing Officer by adopting per acre cost at ₹.5.40 lakhs. It is also an admitted fact that the Assessing Officer has failed to summon the seller under section 133(6) of the Act to verify the actual sale consideration received by him or verified seller s return of income or recorded any statement of the seller. On perusal of the orders of authorities below, the assessee has purchased for himself 16.075 acres of land and arranged four of his friends to purchase a large extent of 354.185 acres for a sale consideration of ₹.5.40 lakhs per acre, we are of the opinion that there is every possibility of getting much lesser price for assessee s portion even book value. In the absence of any verification from the seller under section 133(6) of the Act as well as seller s return of income and ignorance of impounded materials from the residence of the assessee by the ld. CIT(A) and also absence of referring to DVO for determining the FMV, we direct the Assessing Officer to adopt stamp duty value of the SRO as actual purchase consideration per acre. Thus, the ground raised by the assessee is allowed.

Summary

Issues involved:
1. Assessment of undisclosed income based on land purchase cost discrepancy.
2. Jurisdiction issue regarding survey conducted under section 133A.
3. Adjudication of the cost of land purchase and tax implications under section 69B.

Detailed Analysis:
1. The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the assessment year 2007-08. The Assessing Officer initiated proceedings under section 147 of the Income Tax Act based on a survey conducted at the assessee's business premises. The issue revolved around the discrepancy in the cost of land purchase, with the Assessing Officer assessing undisclosed income under section 69B. The Commissioner directed adoption of a higher cost per acre, which was contested by the assessee in the appeal before the Tribunal.

2. The Tribunal addressed the jurisdiction issue raised in ground No. 6, which was remitted back to the Commissioner for adjudication. The matter was recalled for adjudicating other grounds raised by the assessee. The Tribunal proceeded to adjudicate the issue of fixing the cost of land purchase on merits, considering the impounded materials from the survey and the assessment completed by the Assessing Officer. The Tribunal noted the absence of verification from the seller and the failure to consider impounded materials by the Commissioner.

3. The Tribunal analyzed the orders of the authorities below and observed that the Commissioner had not given cognizance to the impounded materials crucial for assessing the purchase consideration. The Tribunal disagreed with the Commissioner's concept that the cost paid by the assessee should be at least as much as others paid to the seller. Considering the lack of verification and absence of reference to determining the fair market value, the Tribunal directed the Assessing Officer to adopt the stamp duty value of the Sub-Registrar Office as the actual purchase consideration per acre. Consequently, the Tribunal allowed the ground raised by the assessee, resulting in the appeal being allowed.

This detailed analysis covers the issues involved in the legal judgment comprehensively, highlighting the key arguments and decisions made by the Tribunal.