No addition can be made on value of purchase of Lands are recorded Books of Account of Assessee: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Chennai bench held that no addition could be made on the value of purchase of lands that are recorded in the books of account of assessee.

Assessee, Om Shakthy Agencies (Madras) Pvt.Ltd.is engaged in business of real estate  income arising therefrom constitutes business income for the assessee. During the assessment proceedings AO  alleged that there was inflation of purchases for Rs.101.84 Lacs and purchases to the tune of Rs.129.96 Lacs were not accounted for in the books of accounts. Thereafter the AO concluded the assessment by making addition on account of inflation of purchases for Rs.101.84 Lacs towards land business.

Aggrieved by the order, the assessee filed an objection   before the Commissioner of Income Tax (Appeals) (CIT(A)) who allowed the appeal of the assessee.  Thereafter the  revenue filed an appeal before the tribunal .

Before the bench R. Clement Ramesh Kumar , counsel for the assessee submitted that the transaction between assessee and his intermediaries are fully and correctly reflected in the books of accounts. 

Further additions made  towards inflated/unaccounted purchases based on the inquiries made to the villagers behind back of the assessee.

K.R. Vasudevan  , Counsel for the revenue,  submitted that  there was violation of Rule 46A Income Tax Rules. Also the assessee is in the habit of  inflating purchase cost

The tribunal observed that the addition is made  merely based on some discreet enquiry made by AO at the back of the assessee from a few of the land sellers. Assessee recorded every transaction and value of purchase of lands in their book of account.

After considering  the facts submitted by both parties, the two member bench of Manoj Kumar Aggarwal (Accountant Member ) and V. Durga Rao, (Judicial Member)held that no addition could be made on the value of purchase of lands that are recorded in the books of account of assessee.

To Read the full text of the Order CLICK HERE

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