Land purchase price discrepancy leads to unexplained expenditure addition while solar plant depreciation allowed

ITAT Bangalore rejected assessee's appeal regarding unexplained expenditure addition. Assessee purchased land showing Rs. 50,000 per acre in sale deed but Rs. 5 lakhs in agreement, claiming higher value was for loan purposes. However, adjacent land sold by same vendor to another party at Rs. 5 lakhs per acre contradicted assessee's explanation. Addition confirmed as assessee failed to provide convincing justification for price discrepancy. Separately, ITAT allowed depreciation on solar plant as assessee generated and sold power, establishing actual use despite AO's denial.

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Issues Involved:

1. Validity of the assessment order under Section 143(3) read with Section 153A of the Income Tax Act.
2. Sustenance of addition as unexplained expenditure under Section 69B of the Income Tax Act.
3. Allowance of depreciation on the solar power plant.

Detailed Analysis:

1. Validity of the Assessment Order:

The assessee challenged the validity of the assessment order passed under Section 143(3) read with Section 153A of the Income Tax Act, arguing that the search conducted was invalid, and thus, the provisions of Section 153A were not applicable. However, this ground was not pressed by the assessee during the appeal, leading to its dismissal.

2. Sustenance of Addition as Unexplained Expenditure:

The core issue was the addition of Rs. 1,01,34,000/- as unexplained expenditure under Section 69B, related to the purchase of land from Smt. Rekha Venugopal and Shri G.N. Venugopal. The assessee contended that the higher value in the sale agreement was shown to avail a higher bank loan and not the actual consideration. Despite an affidavit from the vendor confirming the sale at Rs. 50,000 per acre, the AO and CIT(A) sustained the addition, citing comparable sales at Rs. 5 lakh per acre to M/s Emmvee Energy Ltd. The Tribunal upheld the lower authorities' decision, stating the explanation lacked a basis, especially when adjacent lands were sold at a higher rate.

3. Allowance of Depreciation on Solar Power Plant:

The Revenue's appeal focused on the denial of depreciation on the solar power plant, arguing it was not put to use before 31.03.2013. The assessee provided a chronology of events showing the plant was operational and generating power by 30.03.2013, supported by bills and statutory approvals. The CIT(A) accepted these claims, noting the plant's use in generating and selling power, thus allowing depreciation. The Tribunal affirmed this decision, emphasizing that the plant's operational status and power generation were sufficient for depreciation, irrespective of grid synchronization.

In conclusion, the Tribunal dismissed both the assessee's and the Revenue's appeals, upholding the decisions of the lower authorities on all contested issues.

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