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TMI Blog2014 (12) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... evious year in which the search was conducted - the Tribunal has rightly understood the factual matrix and concluded that when the extent of five transactions are prior to 1-4-1997, and three transactions have not been interfered with and sent back to the file of the AO for verification, then what would be the governing factor is the year in which the expenditure, which is unexplained, can be deemed to be income of the Assessee – assessee has not incurred any expenditure in the financial year in question - the plots were acquired admittedly prior to 1-4-1997 - It is only the pro-rata deduction which was claimed and in the form of adjustment against this purchase price as the plots were sold - the primary condition which has to be fulfilled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of construction. His premises was searched on 9-10-2003. In the previous year relevant to Assessment Year 2002-03, it was found by the Assessing Officer that the Assessee had effected sale of plots and land amounting to ₹ 13,02,000/- out of stock appearing as opening stock in the previous year relevant to Assessment Year 1998-99. The Assessee claimed deduction of ₹ 13,00,800/- on account of pro-rata cost. The Assessing Officer held that since the investments were held as unexplained expenditure to which section 69C of the Income Tax Act, 1961 (For short Income Tax Act ) is applicable, and in terms of the proviso thereto no part of the expenditure can be allowed as deduction against any head of income in any assessment year in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained income. However, the Tribunal lost sight of the fact that sale of the stock was effected during the assessment year when the proviso was admittedly in force. It is in these circumstances that the Assessing Officer applied the proviso and made the addition. This should not have been deleted. 5. Mr.Mistri, learned Sr.Counsel appearing for the Assessee, would submit that the view taken by the Tribunal cannot be said to be perverse or vitiated by an error of law apparent on the face of record. He submits that section 69C is applicable where in any financial year the Assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof or such expenditure as offered is not in the opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rement thereof is where in any financial year an Assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or offers an explanation, but which in the opinion of the Assessing Officer is not satisfactory, the amount covered by such expenditure or part thereof, as the case may be , may be deemed to be the income of the Assessee for such financial year. 8. The Tribunal has in para 57 of the order under challenge referred to the facts on record. It is not disputed that the Assessee is in the business of real estate and land development. He purchases lands, develops them and sells thereafter the same. He claimed that the expenditure on purchase of land is allowable as deduction on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g factor is the year in which the expenditure, which is unexplained, can be deemed to be income of the Assessee. The Assessee, admittedly, has not incurred any expenditure in the financial year in question. The plots were acquired admittedly prior to 1-4-1997. It is only the pro-rata deduction which was claimed and in the form of adjustment against this purchase price as the plots were sold. In such circumstances, the primary condition which has to be fulfilled so as to apply section 69C was not at all fulfilled. That did not, therefore, enable the Assessing Officer to apply this section. Once this factual position was noted, then, the proviso also could not have been invoked. 10. We find substance in the contention of the Assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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