2024 (5) TMI 155 - AT - Income Tax

ITAT Delhi upholds section 69 additions for agricultural land purchases with incriminating evidence but deletes unrelated additions

Smt. Kusum Lata Versus Dy. CIT Central Circle Noida

Smt. Kusum Lata Versus Dy. CIT Central Circle Noida - TMI Issues Involved:1. Jurisdiction and validity of notice u/s 153A.2. Addition of unexplained investment u/s 69.3. Denial of deduction u/s 54F.4. Addition on account of unexplained investment in shares.5. Addition of unexplained investment in immovable property.6. Adequacy of opportunity of hearing and principle of natural justice.Summary:1. Jurisdiction and Validity of Notice u/s 153A:The assessee contested the jurisdiction and validity of the notice issued u/s 153A r/w section 143(3), arguing that the assessment proceedings were void-ab-initio as basic jurisdictional conditions were not met. The Tribunal, however, observed that a search and seizure operation u/s 132 was conducted, and incriminating documents were found, establishing a direct link between the search findings and the material submitted during assessment proceedings. Thus, the Tribunal upheld the jurisdiction and validity of the notice u/s 153A, partly allowing the grounds as some additions were not based on incriminating material.2. Addition of Unexplained Investment u/s 69:The Assessing Officer made additions for unexplained investment in land, noting that the properties were purchased below Fair Market Value (FMV) and the difference was paid in cash. The Tribunal observed that the assessee had demonstrated sources of income and bank withdrawals for payments to farmers. The Tribunal directed the AO to adjust the payments made from the bank account and sustain the addition only for the differential amount not covered by bank withdrawals.3. Denial of Deduction u/s 54F:The AO disallowed the deduction claim u/s 54F due to lack of adherence to provisions. The Tribunal, however, found no incriminating material related to this disallowance during the search and directed the AO to delete the addition, allowing the ground raised by the assessee.4. Addition on Account of Unexplained Investment in Shares:The AO added Rs. 6,60,000/- for unexplained investment in shares. The Tribunal noted that the investments were made through banking channels and there was no incriminating material found during the search. Hence, the Tribunal directed the deletion of this addition.5. Addition of Unexplained Investment in Immovable Property:The AO added Rs. 20,39,810/- as unexplained investment in immovable property based on the difference between the declared investment and the valuation report. The Tribunal found that the addition was not based on any incriminating material found during the search and directed the AO to delete this addition.6. Adequacy of Opportunity of Hearing and Principle of Natural Justice:The assessee claimed that the AO did not provide adequate opportunity of hearing and violated the principle of natural justice. The Tribunal did not find merit in this ground and dismissed it as not pressed.Conclusion:The appeals for the assessment years 2009-10 to 2013-14 were partly allowed, with specific directions to the AO to delete additions not based on incriminating material found during the search. The Tribunal emphasized adherence to judicial precedents and the principle that no additions can be made in unabated assessments without incriminating material.