2012 (10) TMI 791 - AT - Income Tax

Tribunal upholds CIT(A)'s decision deleting addition under Section 69B

Deputy Commissioner of Income-tax, Circle-9 Versus Virjibhai Kalyanbhai Kukadia

The Tribunal upheld the Commissioner of Income Tax (Appeals)' decision to delete the addition made under Section 69B of the Income Tax Act. It emphasized ... Addition on account of undisclosed investment u/s 69B - Assessee had acquired land and paid the consideration in F.Y. 2000-01 - Got the possession of land in F.Y. 2000-01 and get registered in the F.Y. 2005-06 - AO has relied on the jantry price or minimum price of land in a particular area - And presumed that the amount expended is more than the amount recorded in the books – AO made addition u/s 69B of difference amount – Held that:- As the provisions of Sec.50C cannot be applied for making addition u/s. 69B. AO has relied on the jantry rates without bringing any material on record to prove that assessee has in fact made investments over and above than that recorded in the books, no addition required to be made. In favour of assessee Issues Involved:1. Deletion of addition made by the Assessing Officer (A.O.) under Section 69B of the Income Tax Act.2. Use of jantri rates and comparable sale instances to estimate undisclosed investment.Issue-wise Detailed Analysis:1. Deletion of Addition Made by the A.O. under Section 69B:The Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which deleted the addition of Rs. 2,56,26,205/- made by the A.O. under Section 69B. The A.O. argued that the assessee had made unaccounted investments, as evidenced by the discrepancy between the purchase price shown and the jantri rates.The assessee, engaged in diamond manufacturing and trading, declared a total income of Rs. 77,63,910/-. During the scrutiny, the A.O. noticed significant discrepancies between the purchase prices of certain properties and the jantri rates. The A.O. estimated the value of the properties based on jantri rates and concluded that the assessee had undisclosed investments amounting to Rs. 2,56,26,205/-. The CIT(A) disagreed with the A.O., noting that Section 69B requires a factual finding that the investment exceeds the recorded amount in the books, which the A.O. failed to establish. The CIT(A) emphasized that the jantri rates alone could not justify the addition without corroborative evidence.The Tribunal upheld the CIT(A)'s decision, stating that Section 69B is a deeming provision requiring the A.O. to prove that the actual investment exceeds the recorded amount. The A.O. failed to provide concrete evidence beyond the jantri rates to substantiate the claim of undisclosed investments.2. Use of Jantri Rates and Comparable Sale Instances to Estimate Undisclosed Investment:The A.O. relied on jantri rates and comparable sale instances to estimate the value of the properties acquired by the assessee. The assessee contended that the jantri rates could not be used to estimate investment in the absence of corroborative evidence. The assessee also argued that the properties were purchased earlier, at prevailing market prices, and that Section 50C, which deals with stamp duty valuation, could not be invoked under Section 69B.The CIT(A) agreed with the assessee, stating that the jantri rates could only serve as a guide and not as conclusive evidence for making additions under Section 69B. The Tribunal supported this view, noting that Section 50C is specific to capital gains computation for sellers and cannot be extended to purchasers under Section 69B. The Tribunal cited various judicial precedents, including the Delhi High Court's decision in CIT v. Naresh Khattar HUF and the Rajasthan High Court's decision in Smt. Amar Kumari Surana v. CIT, which held that the burden of proof lies with the Revenue to demonstrate that the actual investment exceeds the recorded amount.The Tribunal concluded that the A.O. failed to bring any independent enquiry or corroborative evidence to justify the addition based solely on jantri rates. The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal.Conclusion:The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the addition made under Section 69B. The Tribunal emphasized that the A.O. must provide concrete evidence beyond jantri rates to substantiate claims of undisclosed investments. The burden of proof lies with the Revenue to demonstrate that the actual investment exceeds the recorded amount in the books of accounts.