Tribunal rejects Revenue's addition under Income Tax Act, upholds CIT(A)'s decision.

The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 3,41,29,844 under Section 69 of the Income Tax Act. The Tribunal found no merit in the AO's assumptions, concluding that the assessee did not make any unexplained investment in the year under consideration. The appeal of the Revenue was dismissed, affirming the CIT(A)'s order and rejecting the addition made by the AO under Section 69.

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Issues Involved:
1. Deletion of addition under Section 69 of the Income Tax Act for unexplained investment in land purchase.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 69 of the Income Tax Act:

The primary issue revolves around whether the CIT(A) was correct in deleting the addition of Rs. 3,41,29,844 made by the AO under Section 69 of the Income Tax Act, which pertains to unexplained investment by the assessee in the purchase of land.

Facts and Assessee's Submissions:
- The assessee, a private limited company engaged in land development, filed its return declaring a total income of Rs. 766. The AO observed that the assessee did not reflect the purchase of land in its balance sheet despite entering into a sale deed for land worth Rs. 3.22 crores.
- The AO added Rs. 3,41,29,844 to the income of the assessee under Section 69, assuming the land was purchased from unexplained sources.
- The assessee contended that the land purchase was part of a joint venture with Shri Dilipbhai Purshotambhai Suthar, who was to invest Rs. 30 lakhs and bear no losses. The land was to be developed jointly, with profits shared in a 10:90 ratio.
- The land was under encroachment, and Rs. 2.82 crores was to be paid to M/s Shubham Granite Ltd for clearing it. The assessee issued cheques for these amounts, but they were not encashed due to disputes and non-possession of the land.

CIT(A)'s Findings:
- The CIT(A) noted that the cheques issued by the assessee were not encashed, and the land possession was not transferred to the assessee due to disputes.
- The CIT(A) observed that the actual payment made was only Rs. 5 lakhs in cash, paid by Shri Dilipbhai Purshotambhai Suthar, and the registration charges of Rs. 19,29,844 were also borne by him.
- The CIT(A) concluded that no unexplained investment was made by the assessee in the year under consideration, as the payments were not cleared, and the land was not in the assessee's possession.

Tribunal's Analysis:
- The Tribunal examined whether the assessee made investments not recorded in the books and failed to explain the source of such investments.
- The Tribunal noted that the AO assumed the existence of the investment based on the mercantile system of accounting without concrete evidence.
- The Tribunal concurred with the CIT(A) that no asset came into existence in the name of the assessee in the year under consideration, and no unexplained investment was made.
- The Tribunal emphasized that the addition under Section 69 requires concrete evidence of unexplained investment, which was not present in this case.

Conclusion:
- The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 3,41,29,844 under Section 69, finding no merit in the AO's assumptions and concluding that the assessee did not make any unexplained investment in the year under consideration.

Final Judgment:
- The appeal of the Revenue was dismissed, and the CIT(A)'s order was affirmed, deleting the addition made by the AO under Section 69 of the Income Tax Act.

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