No Evidence to Prove that Assessee made Payment beyond Sale Agreement: ITAT deletes Addition for Unexplained Investment [Read Order]

Unexplained investment - ITAT - Taxscan

The Income Tax Appellate Tribunal (ITAT), Delhi bench has recently deleted the addition for unexplained Investment made by the tax department as there was no evidence to prove that the assessee has paid more than what is mentioned in the Sale agreement.

During the assessment proceedings, the Assessing Officer noticed the assessee has purchased two properties during the year and both the properties were situated in the slum area and were very old and tenanted properties. Since he found that there is a huge difference in the purchase price and circle rate, the AO asked the assessee to explain with evidence as to how the properties were purchased at such a lower value as against the higher circle rate. An addition under section 69 of the Income Tax Act was framed by him against the assessee.

The Tribunal noted that the AO has conducted independent inquiry by recording the statement of the seller of both the properties wherein he has categorically admitted by stating the reason for selling the property at price below the prevalent circle rates.

“Further nothing has been brought on record to prove that the assessee has paid anything extra over and above the value of agreement in any other form of consideration. Nothing has been brought on record that money has emanated from the assessee’s coffers,” the Tribunal observed.

The ITAT noted that the sole reliance in the instant case is the basis of estimates made by the DVO in the valuation report. Referring to a catena of decisions, the Tribunal also noted that additions cannot be made on the basis of surmises and conjectures in the absence of any tangible material on record.

“Since in the instant case assessee has purchased old tenanted properties situated in slum areas, filed copies of sale deeds of properties in the similar vicinity at about the same time which were sold at price below the circle rate also filed valuation report of registered valuer and the seller of the properties has appeared before the AO and has confirmed to have sold the property at the price mentioned in the sale deed only and there is no material available before the revenue authorities that assessee has paid anything more than what is mentioned in the sale deed, therefore, the ITAT has opined that no addition is warranted against unexplained investment in the instant case by invoking the provisions of section 69 of the Act, IT 1961. We, therefore, set aside the order of the CIT(A) and direct the AO to delete the addition,” the ITAT observed.

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