2021 (7) TMI 206 - AT - Income Tax

Tribunal upholds CIT(A)'s decision on Income Tax Act additions

ACIT-22 (3) Mumbai Versus Saeeda Yusuf Saikh

ACIT-22 (3) Mumbai Versus Saeeda Yusuf Saikh - TMI Issues Involved:1. Deletion of addition under Section 69C of the Income Tax Act.2. Deletion of addition under Section 69 of the Income Tax Act.3. Interpretation and application of Rule 46A.4. Request to set aside the CIT(A) order and restore the Assessing Officer's order.Detailed Analysis:1. Deletion of Addition under Section 69C of the Income Tax Act:The revenue challenged the CIT(A)'s decision to delete the addition of Rs. 6,64,12,312/- under Section 69C. The case was selected for scrutiny as the investments in property were not commensurate with the returned income. The Assessing Officer (A.O) issued multiple notices under Section 142(1), but the assessee failed to provide the requisite details. Consequently, the A.O proceeded ex-parte under Section 144 and, based on the Annual Information Return (AIR), observed that the assessee had purchased immovable properties worth Rs. 6,64,12,312/-. The A.O treated this amount as unexplained investments under Section 69 and alternatively under Section 68. The CIT(A), upon review, found that the assessee had only invested Rs. 13,32,000/- during the year, which was sourced from her disclosed income. Therefore, the CIT(A) deleted the addition.2. Deletion of Addition under Section 69 of the Income Tax Act:The revenue also contested the deletion of the addition under Section 69. The assessee argued that the A.O made the addition based on agreements obtained from the Joint Sub-registrar without perusing their contents. The assessee claimed that the properties were under construction, and most of the payments were made in earlier years, except for Rs. 13,32,000/- paid during the year in question. The CIT(A) agreed with the assessee, noting that the A.O had merely added the stamp duty value from the AIR without considering the actual transaction values. The CIT(A) found that the actual payments were less than the stamp duty values and were mostly made in earlier years. Therefore, the CIT(A) concluded that no addition under Section 69 or Section 68 was warranted.3. Interpretation and Application of Rule 46A:The revenue argued that the CIT(A) admitted additional evidence (agreements) in violation of Rule 46A without calling for the A.O's objections. However, it was established that the A.O had already obtained copies of the agreements from the Joint Sub-registrar during the assessment proceedings. The CIT(A) reviewed these agreements and found that the A.O had not considered their contents. Therefore, the claim of violation of Rule 46A was dismissed as the agreements were already part of the assessment records.4. Request to Set Aside the CIT(A) Order and Restore the A.O's Order:The revenue requested that the CIT(A)'s order be set aside and the A.O's order be restored. However, the Tribunal found no merit in this request. The CIT(A) had thoroughly reviewed the agreements and found that the actual investments made during the year were only Rs. 13,32,000/-, which was duly explained by the assessee. The Tribunal upheld the CIT(A)'s order, noting that the A.O had not properly assessed the evidence and had incorrectly added the stamp duty values as unexplained investments.Conclusion:The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the addition of Rs. 6,64,12,312/- under Sections 69 and 68. The Tribunal agreed that the assessee had only invested Rs. 13,32,000/- during the year, which was sourced from her disclosed income, and found no violation of Rule 46A in admitting the agreements as evidence. The appeal was pronounced dismissed on 24/06/2021.