The Delhi Bench of Income Tax Appellate Tribunal (ITAT) chaired by Saktijit Dey (Judicial Member) deleted the addition sustained by the Commissioner of Income Tax (Appeals) [CIT(A)].
The issue at hand in this appeal is centered on the addition of Rs. 20,63,695 pursuant to Section 68 of the Income Tax Act of 1961.
Sanjeev Kumar Malik, a resident, was indeed the assessee. The AO reopened the assessment under Section 147 of the Income Tax Act after learning that the assessee had invested Rs. 85,000 in buying immovable property during the year under consideration.
Further, in the course of proceedings, the assessee was called upon to explain the source of such investment.
From the details furnished by the assessee, the AO found that the assessee had purchased agricultural land jointly with another person and made an investment of Rs.45,78,550. Therefore, called upon the assessee to explain the source of such investment.
The assessee submitted that he received a loan of Rs. 4,00,000 from his mother, Rs. 3,00,000 from his brother and he received an amount of Rs. 24,00,000 from sale of potato crops.
After considering the submissions of the assessee, the AO partly accepting assessee’s explanation accepted the source of investment to the extent of Rs.14,78,550.
Whereas, AO treated the balance amount of Rs.31,00,000 as unexplained cash credit under Section 68 of the Income Tax Act and added to the income of the assessee.
The Assessee contested the treatment of AO before the CIT(A) and during the proceedings the assessee furnished further additional evidence, which were forwarded to the Assessing Officer for examination.
On examining the additional evidence, the AO reported that out of the claim of income from sale of agricultural produce amounting to Rs. 24,00,000, an amount of Rs.10,36,305 appears to be genuine. Accordingly, out of the addition of Rs.31,00,000 made by the AO, CIT(A) deleted an amount of Rs.10,36,305 and confirmed the balance amount.
The bench highlighted that the assessee’s claim that he received Rs.24,00,000 from sale of potato, can be accepted. Further concluded that the source of investment in purchase of land stands explained and the addition cannot be sustained.
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