2023 (9) TMI 750 - AT - Income Tax

Tribunal allows appeal, deems stamp-duty addition unjustified. Co-owners' challenge on land holdings ratio not considered.

Manish Ramanbhai Patel Versus The Income Tax Officer, Ward-3, Gandhinagar

Manish Ramanbhai Patel Versus The Income Tax Officer, Ward-3, Gandhinagar - TMI Issues involved:The appeal is against the order dated 19-08-2016 passed by ld. CIT(A) for assessment year 2009-10.Issue 1: Addition of INR 13,07,000The AO allowed an addition of INR 13,07,000 in the hands of the assessee, despite the payment being made by co-owners and accepted on record. The AO erred in law by not considering that the payment was made by the co-owners.Issue 2: Addition of Rs. 11,30,000 under section 69CThe AO made an addition of Rs. 11,30,000 under section 69C of the Income Tax Act, 1961 as unexplained income incurred towards land purchase. The assessee contended that the entire transaction was through bank accounts and the co-owners admitted to paying the 'on-money.' The CIT(A) erred in confirming this addition without proper consideration of facts.Issue 3: Addition of INR 1,77,000 towards stamp-dutyAn additional INR 1,77,000 was added presuming share paid towards stamp-duty, despite one co-owner admitting sole payment. The assessee argued that the payment arrangement was accepted by all parties involved, and the addition was not justified.Key Judgments and Rationale:- In the case of PCIT v Bhagwanbhai K. Patel (2019), it was held that an assessee is liable to explain the sources for their share in a transaction. The assessee justified their payment for the transaction, supported by cross-examination of facts.- Referring to CIT, Kottayam v. Sree Ganesh Trading Company (2019), it was emphasized that if the source of funds of a donor/creditor was doubted, the addition should be made in their hands. The addition in the present case was deemed unjustified as the payment arrangement was acknowledged by all parties involved.Judgment:The Tribunal allowed the appeal, noting that the assessee's portion of share was only 20% and the addition of Rs. 1,77,000 towards stamp-duty was not justified. The co-owners' challenge to the ratio of land holdings and the explanation regarding the on-money payment were not considered by the AO and CIT(A). Therefore, the appeal of the assessee was allowed, and the addition was deemed unwarranted.Separate Judgment by Ms. Suchitra Kamble, Judicial Member: The appeal was allowed, and the addition of Rs. 1,77,000 was deemed unjustified based on the explanations provided by the assessee and the co-owners.