Deletion of Income Tax Addition on Account of Unexplained Investment due to Absence of Documents and Evidences: ITAT upholds CIT(A) Order [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) held that the Revenue was unable to demonstrate documents or evidence, as to the basis with the AO for treating the assessee to have invested the piece of land i.e. survey no.1/2. and hence upheld the decision of Commissioner Of Income Tax [CIT(A)] as to deletion of addition, on account of one piece of land i.e. survey no.1/2.

The assessee Jakshibhai Dahyabhai Bharvad for the impugned year was framed under Section 147 of the Income Tax Act and addition made to his income on account of unexplained source of investment in land amounting to Rs.2,44,77,373 and on account of short term capital gain earned on sale of this land amounting to Rs.3,90,72,307 resulting in addition of Rs.6,35,49,680 being made to the income of the assessment.

Aggrieved by the order of the AO the assessee filed an appeal before CIT (A), where he explained reasons for not appearing in the assessment proceedings, and further he filed evidence revealing the amount of investment made in the properties and also tried to explain the source of the same. The assessee had furnished all evidences for purchase of properties and taking note the value mentioned therein, he computed unexplained investment made by the assessee for the same.

The CIT(A) noted, one of the properties alleged by the AO to have invested by the assessee, was without any basis and accordingly , it deleted the addition made on account of the same, and in the result, the addition made by the AO on account of unexplained investment of Rs.2,44,77,373/- was restricted by the CIT(A) to Rs.1,95,52,180/-, thus giving a relief of Rs.49,25,127/-, based on the purchase price.

Aggrieved by this relief granted by the CIT (A) the revenue filed an appeal before the Tribunal.

The Bench noted that the deletion of addition, on account of one piece of land i.e. survey no.1/2, the CIT (A) has noted that there was no information with the AO with respect to the said piece of land and that even in the reasons recorded by the AO for reopening the case of the assessee, this land was not mentioned as investment made by the assessee, and even the assessee had claimed to have made no investment in this piece of land.

It was further observed that DR was unable to demonstrate documents or evidence, as to the basis with the AO for treating the assessee to have invested inthis piece of land i.e. survey no.1/2, thus the Tribunal finds no reason to interfere in the order of the CIT(A) deleting the addition made on account of unexplained investment in the impugned land to the tune of Rs.1.13 crores.

The Two Member Bench comprising of Annapurna Gupta, Accountant Member and T.R. Senthil Kumar, Judicial Member upheld order of the CIT (A) in treating unexplained investment made by the assessee in the land relating to only 4 piece of land to the tune of Rs.1,95,52,180/- as opposed to the addition made by the AO in relation to five piece of land to the tune of Rs.2,44,77,073/-.

Hence the appeal of the Revenue was dismissed.

To Read the full text of the Order CLICK HERE

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