Absence of Seller before AO not Ground to Allege Unexplained Investment: ITAT Deletes Addition u/s 69B of Income Tax Act [Read Order]
Absence of Seller before AO not Ground to Allege Unexplained Investment – ITAT Deletes Addition Income Tax Act – TAXSCAN
Absence of Seller before AO not Ground to Allege Unexplained Investment – ITAT Deletes Addition Income Tax Act – TAXSCAN
The Indore Bench of the Income Tax Appellate Tribunal (ITAT), deletes addition under Section 69B of the Income Tax Act and noted that the absence of seller before the Assessing Officer (AO) not a ground to allege unexplained investment.
The assessee, Sanjeev Agrawal,is a partner in the firm M/s Shiva Reality. The Assessing Officer made addition only on the strength of copy of registered sale deed executed by Amit Kumar Patni in favour of partnership firm M/s. Shiva Reality wherein the assessee was also a partner. The Assessing Officer noted that the assessee purchase land of 0.67 hectare, showing consideration of Rs. 35 lakhs therein as against fair market value based on registrar stamp duty of Rs. 57 lakhs.
Except copy of registered sale deed executed in favour of firm of M/s. Shiva Reality, there was nothing else in the hands of Assessing Officer in support of addition made by him under Section 69B of the Income Tax Act. The CIT(A) rightly observed that the deeming fixation of Section 50C of the Income Tax Act can be applied in the case of seller only and not in the case of purchaser and the provision of Section 56(2)(vii)(b) of the Income Tax Act is applicable with effect from A.Y. 2014-15 onward and not for A.Y. 2012-13.
Section 69B of the Income Tax Act, 1961, deals with the unexplained expenditure of a taxpayer. It states that if a taxpayer incurs any expenditure and the expenditure cannot be satisfactorily explained, then such an expenditure will be deemed as the taxpayer's income for that particular financial year.
In ITO vs. Inderjeet Kaur, wherein it was held that the deeming fiction created in Section 50C of the Income Tax Act cannot be extended to the provision of section 69 or 69B or any other of the Act in the case of purchaser to make the purchaser liable for tax.
The Two-Member Bench of the Tribunal comprising Chandra Mohan Garg, Judicial Member and Bhagirath Mal Biyani, Accountant Member observed that “Merely because the seller was not present in person before the Assessing Officer, the assessee cannot be alleged to have made any unexplained investment which could entitle the Assessing Officer to make addition under Section 69B of the Income Tax Act. Therefore, the CIT(A) was right in deleting the addition on this issue.”
To Read the full text of the Order CLICK HERE
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