2021 (4) TMI 684 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decisions, Dismisses Revenue Appeals for 2013-14, 2014-15; Emphasizes Need for Corroborative Evidence.

The Tribunal dismissed the Revenue's appeals for Assessment Years 2013-14 and 2014-15, affirming the CIT(A)'s decisions. Additions under Section 69B were ... Undisclosed investment u/s 69B as per DVO’s report - CIT-A deleted the addition - HELD THAT:- As respectfully following the decision of this Tribunal in the case of another group concern M/s Signature Builders [2021 (1) TMI 945 - ITAT INDORE] wherein held as the assessee has maintained regular books of accounts which are not found to be incomplete or unreliable and also have not been rejected by the Ld. A.O and secondly Valuation was done of the incomplete project which has been valued not on the basis of local price but on the basis of Delhi rates which are universally accepted on higher side. Therefore since no defects were pointed out in the books of accounts regularly maintained by the assessee and are duly audited and no incriminating material was found in the search to show that unaccounted investment in the building project has been made, addition made purely on the basis of Departmental Valuation Report, we find no reason to interfere in the finding of Ld. CIT(A) who was rightly deleted the addition for the alleged undisclosed investment u/s 69B of the Act made by the Ld. A.O - Decided against revenue. Unexplained investment u/s 69 in Purchase of land at Sernari Kalan - Assessee offered ₹ 225 lakhs as voluntary disclosure towards investment in land in a general manner without any reference to any specific land - HELD THAT:- CIT(A) has given telescoping benefit to the assessee against the income surrendered during the course of search. Revenue failed to prove that the alleged surrender for ₹ 225 lakh was given with regard to a specific transaction. It was a general surrender not having any nexus with any specific transaction to land and therefore Ld. CIT(A) has rightly given the credit for income declared in such declaration. We therefore confirm the finding of Ld. CIT(A) deleting the addition for₹ 21,50,000/- treating it to be a part of surrender of ₹ 225 lakh made by the assessee during the course of search. Thus Ground No.3 of the revenue stands dismissed. Disallowance u/s 40A(3) - cash paid against purchase of land at Semri Kalan, Bhopal - HELD THAT:- The cash payment of ₹ 4,90,000/- was made at the time of registering purchase deed. The payment made is duly recorded in the books of accounts as well as in the purchase deed which was registered before the registering authority. It is not the case of the revenue that the assessee had attempted to evade any tax liability by making payment in cash. Genuineness of the transaction is not in doubt. Assessee being in the business of real estate has entered into such transaction for business and commercial expediency. We therefore are of the considered opinion that Ld. CIT(A) has rightly deleted the disallowance in light of settled judicial precedence and the decisions referred by him in his appellate order, which do not call for any interference. Accordingly Ground No.4 raised by the revenue is dismissed. Issues Involved:1. Deletion of addition on account of undisclosed investment under Section 69B based on DVO’s report for Assessment Years 2013-14 and 2014-15.2. Direction to provide deduction/set off of the addition made under Section 69B in view of Section 115BBE.3. Allowing relief against the addition made on account of unexplained investment under Section 69 in the purchase of land.4. Deletion of addition made under Section 40A(3) for cash payment against the purchase of land.Issue-wise Detailed Analysis:1. Deletion of Addition on Account of Undisclosed Investment under Section 69B Based on DVO’s Report:The Revenue challenged the deletion of additions made by the Assessing Officer (AO) based on the Departmental Valuation Officer's (DVO) report for Assessment Years 2013-14 and 2014-15. The Tribunal noted that similar issues were raised in the case of another group concern, M/s Signature Builders, where the addition based on the DVO's report was deleted by the CIT(A) and confirmed by the Tribunal. The Tribunal emphasized that no incriminating material was found during the search, and the books of accounts were neither found to be incomplete nor rejected by the AO. The Tribunal reiterated that additions cannot be made solely based on the DVO’s report without rejecting the books of accounts and without any corroborative evidence of unaccounted investment. Therefore, the Tribunal dismissed the Revenue's appeal on this ground.2. Direction to Provide Deduction/Set Off of the Addition Made under Section 69B in View of Section 115BBE:Since the Tribunal confirmed the deletion of the addition made under Section 69B, the ground raised by the Revenue regarding the direction to provide deduction/set off of the addition under Section 115BBE became infructuous. Consequently, this ground was dismissed.3. Allowing Relief Against the Addition Made on Account of Unexplained Investment under Section 69 in the Purchase of Land:The AO made an addition of Rs. 21,50,000 on account of unexplained investment in the purchase of land at Semri Kalan. The CIT(A) allowed relief by giving telescopic benefit to the assessee against the income of Rs. 225 lakhs surrendered during the search, which was not linked to any specific transaction. The Tribunal upheld the CIT(A)’s decision, stating that the Revenue failed to prove that the surrendered amount was related to a specific transaction. The Tribunal confirmed the deletion of the addition, treating it as part of the general surrender made by the assessee.4. Deletion of Addition Made under Section 40A(3) for Cash Payment Against the Purchase of Land:The AO disallowed Rs. 4,90,000 under Section 40A(3) for cash payment against the purchase of land. The CIT(A) deleted the disallowance, noting that the genuineness of the transaction was established, and the payment was recorded in the books of accounts and the purchase deed. The Tribunal agreed with the CIT(A), emphasizing that the payment was made for business expediency, and there was no attempt to evade tax liability. The Tribunal upheld the deletion of the disallowance, citing settled judicial precedents that genuine business transactions should not be disallowed merely on technical grounds.Conclusion:The Tribunal dismissed the appeals filed by the Revenue for both Assessment Years 2013-14 and 2014-15, confirming the CIT(A)’s decisions on all grounds. The Tribunal emphasized the importance of corroborative evidence and proper examination of books of accounts before making additions based on valuation reports.