The Surat Bench of Income Tax Appellate Tribunal (ITAT) has quashed the disproportionate addition towards co-owners of land as the booking advances were treated as unexplained cash credits.
The assessee, Sanjaykumar Ramanbhai Patel was engaged in the business of purchasing land, plotting and sale to the customers during the year under consideration. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee had purchased immovable property. it was noticed by the Assessing Officer that the assessee along with three other co-owners have purchased the above mentioned property
The assessee had 1/4th share in the property and his share. On perusal of the purchase deed, it is seen that the stamp duty paid by assessee along with co-purchasers and registration fees. It had been mentioned in the purchase deed that the entire purchase consideration had been made in cash and the source of investment in the property is again cash received from customers from booking advance of sale of plots.
It is interesting to note that while purchasing the property, the assessee has shown 1/4th share but while selling the same property, his share in the property is shown at 50% of the total booking advance received.
The Assessing Officer noted that the assessee had shown fictitious sources of investment in the said property and the assessee had also completely failed to prove that the source of investment made in property and the source of cash deposited in the savings bank account were from booking advance received from the customers for sale of plots.
Sapnesh Sheth on behalf of the assessee submitted that the statement of source of cash deposits and the list of the parties from whom booking advances were received in cash and ID Proof along with the confirmation of parties from whom advance booking amount was received had been produced. If the Department wanted to make further enquiry, the Assessing Officer should have issued notices to these persons from whom the assessee had received advances and could have made the further enquiries.
Vinod Kumar on behalf of the revenue submitted that the assessee was a co-owner of the land and other co-owners were not allowed to sell the property unless it was determined and agreed by other co-owners. He also submitted that the assessee had not explained the source of the cash deposit; hence the entire cash deposit was added in the hands of the assessee.
The two-member Bench of Pawan Singh, (Judicial Member) and A. L. Saini, (Accountant Member) allowed the appeal holding that the addition in the hands of the co-owners, therefore the assessee under consideration should not be treated differently.
The Bench further observed that the Assessing Officer had failed to conduct the enquiry and issue the notice under Section 131 of the Income Tax Act to the persons from whom the assessee had received booking advances and assessee’s mother was one of the co-owners of the land and whose assessment was framed under section 143(3) of the Income Tax Act, wherein the Assessing Officer had not made any addition in her hand.
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