Property purchase through banking channels proves legitimate transaction under section 69A deletion allowed

ITAT Mumbai held that reopening of assessment for A.Y. 2011-12 under section 69A was invalid and unsustainable. The assessee purchased property from one entity through banking channels at consideration of Rs. 9,92,00,000/-, proving payment through bank statements and ledger accounts. The reopening was based on search at a different entity and statement under section 132(4), which had no connection to assessee's transaction. Since no property was purchased by assessee in A.Y. 2011-12, the addition was deleted and appeal was allowed.

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Issues involved:
The issues involved in this case are the validity of the reopening of assessment and the addition made under section 69A of the Income Tax Act.

Reopening of Assessment:
The appellant sought to set aside the impugned order dated 23.06.2023 passed by the National Faceless Appeal Centre regarding the reopening of the assessment for AY 2011-12. The appellant contended that there was no tangible material in possession of the AO to support the reopening, and the reasons recorded were based on incorrect information. The appellant argued that there was no escapement of income and thus, the reopening was bad in law. The Tribunal found that the appellant had purchased the property in question in AY 2013-14, not during the year under consideration. Therefore, the reopening based on incorrect facts was deemed unsustainable in the eyes of the law.

Addition under Section 69A:
The appellant challenged the addition made under section 69A of the Act, contending that it was unjustified and should be deleted. The appellant argued that there was no transaction of purchase of property during the year under consideration and that the addition was without any justification. The Tribunal noted that the appellant had purchased the property in question in AY 2013-14, not during the relevant assessment year. The Tribunal found that the addition made under section 69A was unsustainable in the eyes of the law and ordered it to be deleted.

Conclusion:
In conclusion, the Tribunal allowed the appeal filed by the appellant, ruling in favor of the appellant on both the issues of the validity of the reopening of assessment and the addition made under section 69A of the Income Tax Act. The Tribunal held that the reopening was invalid and not sustainable in the eyes of the law, and the addition made in the hands of the appellant for the assessment year in which no such property was purchased was ordered to be deleted.

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