2020 (2) TMI 585 - HC - Income Tax

Unexplained investment u/s 69 - Section 50C applicability - Purchase of land - HELD THAT - Tribunal had concluded that the Assessing Officer had made the additions on the basis of the statement of the partner namely Shri Prem Kumar Agrawal. However the said statement was retracted on the very next day of completion of survey proceedings by way of duly signed affidavit signed by all the partners. Further except for the retracted statement of the partner there was no other material with the Assessing Officer to make such an addition. The addition was made on the basis that the sale consideration which was shown in the two sale deeds dated 28.09.2006 and 09.10.2006 was Rs. 31, 01, 000/- and Rs. 31, 10, 000/- whereas the Stamp Valuation Authority had determined the market price of this land at Rs. 42, 69, 500/- and Rs. 42, 44, 000/- respectively resulting in the difference of Rs. 23, 02, 500/-. Applying the provisions of Section 50C of the Act the addition was sought to be made. However the provisions of Section 50C of the Act were not available to the Revenue as the assessee was the purchaser of the land. CIT(A) has rightly adopted this view holding that provisions of section 50C were not applicable on the assessee being the purchaser of the property and also during the survey proceedings no documentary evidence was found which may prove that the assessee has made payment over and above the registered valuation of the property. In lack of any incriminating material no addition was called for by the AO Addition on the basis of the provision of 50C - difference of market value and purchase cost of the plots purchased as discussed hereinabove made the remaining addition as unexplained investment in the properties. This was done on the basis of the surrender made by the partner at Rs. 52 Lac. - HELD THAT - The law with regard to an admission or confession is well settled. An admission may be a strong piece of evidence but it is not conclusive evidence. The veracity of such evidence can be judged vis-a-vis the material evidence and the obtaining circumstances of the case in which it was made because it can always be explained by the person who has made such confession or admission. In the present case a perusal of the findings recorded by the Tribunal shows that the aforesaid two additions of Rs. 23, 02, 500/- and Rs. 28, 97, 500/- towards unexplained investments were made by the Assessing Officer merely on the basis of the statements given during the course of survey and that there is no incriminating material or documentary evidence available with the Assessing Officer to substantiate the said additions for the assessment year 2007-08. That apart the retraction was immediately made on the very next day by filing an affidavit signed by all the partners. Therefore in the given facts and circumstances of the case the retraction cannot be said to be for extraneous reason Addition of suppressed sales - HELD THAT - Revenue was unable to demonstrate that the case of the assessee for the assessment year 2007-08 for which addition was sustained only to the extent of Rs. 17, 05, 082/- was different from the earlier decision of the Tribunal or that the earlier decision of the Tribunal was set aside or reversed by the High Court or the Supreme Court. Apart from the aforesaid the findings recorded by the CIT(A) and upheld by the Tribunal on the issues raised in the present appeal are based on appreciation of evidence on record. The learned counsel for the Revenue has failed to point out as to how and in what manner such findings of fact are illegal or perverse. The findings arrived at by the CIT(A) and affirmed by the Tribunal are just and reasonable. The only endeavour of the learned counsel for the appellant was to re-appreciate the evidence so as to persuade this Court to take a different view which is not permissible under Section 260A of the Act.

Summary

Issues Involved:
1. Deletion of addition of Rs. 23,02,500/- made on account of unexplained investment.
2. Deletion of addition of Rs. 28,97,500/- made on account of unexplained investment.
3. Deletion of addition of Rs. 3,72,79,410/- by taking net profit rate on unaccounted sales.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 23,02,500/- Made on Account of Unexplained Investment:
The Tribunal concluded that the Assessing Officer (AO) made the addition based on a retracted statement of a partner, Shri Prem Kumar Agrawal, without any corroborative evidence. The addition was based on the difference between the sale consideration in the sale deeds and the market price determined by the Stamp Valuation Authority. However, the provisions of Section 50C of the Income Tax Act, 1961, were not applicable as the assessee was the purchaser, not the seller. The Tribunal upheld the CIT(A)'s decision to delete the addition, noting that no documentary evidence was found during the survey to prove payment over the registered valuation. The Tribunal referenced the case of ACIT vs. Raj Homes P. Ltd. Bhopal and CIT vs. Dheengar Metal Works, emphasizing that an admission is not conclusive and can be retracted.

2. Deletion of Addition of Rs. 28,97,500/- Made on Account of Unexplained Investment:
The Tribunal observed that the AO made this addition based on the partner's surrender of Rs. 52 Lac, subtracting the previously discussed Rs. 23,02,500/-. The Tribunal found that the AO erred in making this addition without any evidence, relying solely on a retracted statement. The Tribunal upheld the CIT(A)'s deletion of the addition, reiterating that additions cannot be made merely on the basis of statements given during surveys without incriminating material. The Tribunal referenced its earlier decision regarding unexplained investments under Section 69, confirming the CIT(A)'s decision.

3. Deletion of Addition of Rs. 3,72,79,410/- by Taking Net Profit Rate on Unaccounted Sales:
The Tribunal found that the CIT(A) had reasonably estimated the sales at Rs. 2.5 Crores and applied an 8% net profit rate, sustaining an addition of Rs. 17,05,082/- and deleting the remaining Rs. 3,55,74,328/-. The Tribunal noted that this issue had been similarly adjudicated in an earlier assessment year, with no dispute on the similarity of facts. The Tribunal upheld the CIT(A)'s decision, finding no error or perversity in the findings. The Tribunal emphasized that the Revenue failed to demonstrate any difference in the facts or any reversal of the earlier Tribunal decision by higher courts.

Conclusion:
The High Court dismissed the appeal, finding no merit in the substantial questions of law raised by the Revenue. The Court emphasized that the findings of the CIT(A) and the Tribunal were based on a proper appreciation of evidence and were neither illegal nor perverse. The Court reiterated that re-appreciation of evidence to take a different view is not permissible under Section 260A of the Income Tax Act, 1961.