2021 (5) TMI 966 - AT - Income Tax

ITAT upholds addition of unaccounted cash for land sale, citing evidence. Land not agricultural.

Asst. Commissioner of Income-tax, Circle – 15 (1), Hyderabad. Versus V.V. Rajam, Hyderabad.

Asst. Commissioner of Income-tax, Circle – 15 (1), Hyderabad. Versus V.V. Rajam, Hyderabad. - TMI Issues Involved:1. Legality and correctness of the CIT(A)'s order.2. Deletion of addition of Rs. 1,87,32,500/- by the CIT(A).3. Explanation of receipt and utilization of sale consideration for land by the assessee.4. Classification of the land as agricultural or non-agricultural at the time of sale.Issue-wise Detailed Analysis:1. Legality and Correctness of the CIT(A)'s Order:The primary issue was whether the CIT(A) erred in law and on facts in their decision. The revenue contended that the CIT(A) failed to consider the findings and documents found during the search and seizure operation under section 153A of the Income Tax Act, 1961. The revenue argued that the CIT(A) should have examined the issue more thoroughly, including calling relevant parties for further clarification.2. Deletion of Addition of Rs. 1,87,32,500/- by the CIT(A):The CIT(A) deleted the addition made by the Assessing Officer (AO) of Rs. 1,87,32,500/-. The AO had assessed this amount as unaccounted cash based on the search operation and subsequent statements. The revenue challenged this deletion, asserting that the CIT(A) did not adequately consider the evidence and findings from the search operation. The ITAT observed that the AO had rightly made the addition for unaccounted cash, as the assessee had admitted to receiving and utilizing the cash during the search proceedings.3. Explanation of Receipt and Utilization of Sale Consideration for Land by the Assessee:The assessee, a GPA holder, was unable to satisfactorily explain the source of investment and the receipt of the sale consideration. The sale agreement dated 23rd July 2012 was not canceled, and the property was sold again on 2nd August 2012. The AO noted that the assessee had received payment as per the sale deed and had invested the sale proceeds in purchasing land and a house property. The ITAT found that the AO's addition of unaccounted cash was justified based on the statements and evidence gathered during the search operation.4. Classification of the Land as Agricultural or Non-Agricultural at the Time of Sale:The revenue argued that the land in question was not agricultural at the time of sale and that no agricultural activities were carried out. The assessee claimed the land was agricultural, supported by documents like the pattadar passbook. However, the ITAT observed that the sale deed executed on 2nd August 2012 did not mention any well or bore-well, contradicting the assessee's claim. The ITAT concluded that the land was not agricultural at the time of sale, and the sale agreements indicated a lower sale price than previously agreed, suggesting concealment of facts.Conclusion:The ITAT set aside the order of the CIT(A) and restored the AO's order, making the addition of Rs. 1,87,32,500/- for unaccounted cash towards the sale of land. The appeal of the revenue was allowed, and the ITAT relied on the judgments of the Hon'ble Supreme Court in the cases of Sumati Dayal Vs. CIT and CIT Vs. Durga Prasad More to support their decision. The judgment was pronounced in the open court on 28th May 2021.