2022 (11) TMI 1162 - AT - Income Tax

Unexplained investment in purchase of agriculture land u/s 69C - value determined by stamps authority - addition on the basis of difference in actual purchase price and valuation made by stamps authority - HELD THAT - There is no evidence or basis available to the lower authorities for making this addition. On a careful reading of section 69C, we observe that the said section empowers the assessing authority to make addition where unexplained expenditure is found but then the unexplained expenditure has to be real and not notional. Had there been any evidence in the possession of revenue authorities which could establish that the assessee has actually expended a sum on purchase of the property, the authorities would have been within power to treat the difference as income of assessee but this is not so in present case. The authorities do not have any evidence whatsoever by which it can be said that the assessee has expended a sum on purchase of the impugned property. From the decision of Bharat Sanchar Nigam Limited 2022 (7) TMI 1350 - SUPREME COURT that the value determined by stamps authority is merely for collection of stamps duty. Also find merit in the submission of Ld. AR that the realising the absence of provision, the Parliament has introduced newer section 56(2)(x) but that section does not support revenue s case for AY 2013-14. With this discussion, we do not hesitate in concluding that the revenue authorities are not justified in making addition u/s 69C in this case. Ground raised by assessee is allowed.

Summary

Issues involved:
- Addition of Rs. 18,82,500/- on account of alleged unexplained investment in purchase of agricultural land u/s 69C.

Detailed Analysis:
The case involved an appeal against the order passed by the Ld. Commissioner of Income-Tax, National Faceless Appeal Centre, Delhi, arising from an assessment order for the Assessment Year 2013-14. The primary issue was the addition of Rs. 18,82,500/- by the Ld. AO under section 69C of the Income-tax Act, 1961, regarding an alleged unexplained investment in the purchase of agricultural land.

The Ld. AO made the addition based on the discrepancy between the declared purchase price of Rs. 49,89,500/- and the stamp duty valuation of Rs. 68,72,000/-. The Ld. CIT(A) upheld the addition, citing the decision of the Hon'ble ITAT Delhi Bench in a similar case. The appellant contested the addition, arguing that the source of the expenditure was explained as it was recorded in the books of account. The appellant further contended that the valuation by the stamps authority did not represent the actual expenditure incurred.

During the hearing, the Ld. AR representing the assessee argued that section 69C does not cover the difference between the actual purchase price and the stamps authority valuation as income. The Ld. AR referred to a decision of the Hon'ble Supreme Court to support the argument that stamps authority valuation may not reflect the fair value. Additionally, it was highlighted that a newer provision, section 56(2)(x), introduced by the Parliament, did not apply to the relevant assessment year.

After considering the submissions, the tribunal observed that there was no evidence to support the addition apart from the difference in valuations. The tribunal emphasized that section 69C requires real unexplained expenditure, not a notional one. The tribunal also noted the introduction of a new provision for such differences, which was not applicable to the assessment year in question. Consequently, the tribunal concluded that the revenue authorities were unjustified in making the addition and decided to delete the same, allowing the appeal of the assessee.