2016 (7) TMI 852 - AT - Income Tax

Tribunal confirms addition of unexplained investment in land purchase

Shri Chandrakant N. Patel Versus The Income-tax Officer, Ward 14 (3), Ahmedabad

Shri Chandrakant N. Patel Versus The Income-tax Officer, Ward 14 (3), Ahmedabad - TMI Issues Involved:1. Section 69 addition of unexplained investments in the purchase of agricultural land.2. Validity of the sale deed and its subsequent cancellation.3. Contradictory claims regarding the source of the purchase consideration.4. Substantive assessment in the hands of the co-purchaser.5. Applicability of the Benami Transactions (Prohibition) Act, 1988.Detailed Analysis:1. Section 69 Addition of Unexplained Investments:The primary issue is the CIT(A)'s affirmation of the Assessing Officer's (AO) action of making a Section 69 addition of Rs. 83,13,850/- as unexplained investments in the purchase of agricultural land. The AO treated the assessee as the sole vendee who invested the entire amount, despite the assessee's claim that the co-purchaser, Shri Girish Ramanlal Vyas, was the real purchaser.2. Validity of the Sale Deed and its Subsequent Cancellation:The assessee and Shri Girish Ramanlal Vyas purchased agricultural land through a registered purchase deed dated 29.09.2008. The sale deed was later canceled on 30.06.2010. The AO noted that the cancellation of the sale deed did not affect the source of the purchase consideration. The CIT(A) also emphasized that the sale deed's cancellation was irrelevant to the source of the investment.3. Contradictory Claims Regarding the Source of the Purchase Consideration:The assessee claimed that the entire purchase price was paid by Shri Girish Ramanlal Vyas, who supported this claim with an affidavit. However, Shri Girish Ramanlal Vyas later contradicted this in his own assessment, stating that no payment was made as the transaction was based on a fraudulent power of attorney. The AO found inconsistencies in the statements and treated the assessee as the sole investor.4. Substantive Assessment in the Hands of the Co-Purchaser:The assessee argued that the addition should be made in the hands of Shri Girish Ramanlal Vyas, as the same amount was assessed in his case. The CIT(A) rejected this argument, stating that parallel proceedings and protective assessments are justified when there is doubt about which party is liable. The tribunal upheld this view, noting that the substantive assessment in the co-purchaser’s case does not affect the findings against the assessee.5. Applicability of the Benami Transactions (Prohibition) Act, 1988:The tribunal observed that Shri Girish Ramanlal Vyas, being a cloth trader, could not have purchased agricultural land under Section 63 of the Bombay Tenancy and Agricultural Land’s Act, 1948. Therefore, even if he had paid the consideration, the land would be considered benami, with the assessee as the sole owner under the Benami Transactions (Prohibition) Act, 1988.Conclusion:The tribunal concluded that the assessee failed to substantiate his claim that the co-purchaser had borne the entire purchase consideration. The assessee's arguments regarding the sale deed's cancellation and the co-purchaser's affidavit were found to be unconvincing. The tribunal upheld the CIT(A)'s order, confirming the addition of Rs. 83,13,850/- as unexplained investment under Section 69 of the Act. The assessee's appeal was dismissed.