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2015 (7) TMI 732 - ITAT AHMEDABAD

2015 (7) TMI 732 - ITAT AHMEDABAD - TMI - Addition u/s 69B - unaccounted investment of ₹ 57,85,000/- in purchase of a land measuring 5160 meter situated at survey no. 731 Makarba - CIT(A) deleted the addition - Held that:- The basis condition for applying under section 69B is that it should be found that the assessee has made investment or the assessee found to be owner of the money, bullion and jewellery. In the present case, assessee was found to have made investment for purchase of plot .....

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sclosed in the sale deed. His belief is based on the basis of loan liability discharged by the vendor. This type of evidence possessed by the Assessing Officer is of not such a nature, which empowers him to invoke section 69B of the Act.

Assessee failed to make reference of any evidence which demonstrate that assessee has made unexplained investment. The assumption of the Assessing Officer is based on the fact that vendors have discharged their loan liability meaning thereby they woul .....

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under mortgage. Vendors have got it released from the bank and it is sold to the assessee. No addition against higher capital gain has been made in the hands of the vendors. It is for the vendors to explain the source of what amount which they have discharged towards their loan liability. It cannot be presumed that it must be taken from the assessee in cash over and above the amounts stated in the sale deed. In our opinion, ld. Commissioner of Income Tax (Appeals) has appreciated the facts and .....

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the order of ld. Commissioner of Income Tax (Appeals) dated 27th June, 2011 passed for Assessment Year 2003-04. 2. The solitary grievance of the revenue is that ld. Commissioner of Income Tax (Appeals) has erred in deleting the addition of ₹ 27,85,000/- which was added by the Assessing Officer with the aid of section 69B of Income Tax Act. 3. With the assistance of ld. representatives, we have gone through the record carefully. The sole issue for our consideration is whether assessee has m .....

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r sale of this land on 21st January, 2003 for a consideration of ₹ 7,15,000/-. The sale deed was ultimately executed and assessee became owner and in possession of this land by virtue of the sale deed executed on 21st January, 2013. The ld. Assessing Officer found that Ahmedabad Mercantile Co-operative Bank (AMCO) had sanctioned a loan of ₹ 205 lacs to M/s. Akar Organizer and M/s. Ranjit Ele. Pvt. Ltd. This property was mortgaged with the bank. Before sale of this property, a sum of .....

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Officer harboured a belief that assessee must have paid unaccounted money to the vendors which was ultimately deposited in bank and got released the land. He further formed an opinion that bank sanctioned loan against the mortgage of the immovable property up to 80% of its value. Therefore, he construed that assessee must have paid a sum of ₹ 57,85,000/- over and above the consideration stated in the sale deed. He made an addition of this amount in the income of the assessee. 4. On appeal, .....

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rcle -2(2), the contents of which are reproduced as under: amco-738-2010-11 November 12, 2010 To, Mr. Saurabh Singh Asstt. Commissioner of Income-tax Central Circle-2(2), Ahmedabad Room No.309, Aayakar Bhavan, Ashram Road, Ahmedabad. Dear Sir, Sub : Furnishing of information u/s.133(6) of the I.T.Act-1961 in the case of Shri Jashraj Multanmal Jain This has reference to your letter dated 20.10.2010 on the above cited subject. In this connection we furnish the details as here under: Bank has sanct .....

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, Sd/- (M.C. Shah) Asstt. General Manager." 3.3 In other words, as per the letter of the bank, the loan amount was not rupees 65 lacs sanctioned to Akar Organisers and Ranjeet Electric Private Limited. As per the bank statement of the account number 066016354000016 of Akar Organisers it is seen that as on 29/11/1999 the bank has given loan of Rs. one crore to Akar Organisers. There are many debit entries and also credit entries in this account. The .maximum debit balance of ₹ 1,34,06, .....

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#8377; 37,27,725/- as on 27/3/2001. As on 1/2/2003 the loan has been repaid by this party by making the credit entry, of ₹ 1,53,469/-. As on 1/2/2003, the closing balance is shown at Rs. nil. The bank has also given the bank statement of the account number 066016332000153 for the period 1/1/2001 to 22/1/2003 in the case of Ranjit Electric Private Limited. As per this account the maximum balance of ₹ 10,37,060/- has been paid by the party on 22/1/2003 when the closing balance as per t .....

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s on 31/1/2003 is approximately ₹ 1.50 Lacs' and the debit balance as on 30/1/2003 is ₹ 11.43 lakhs approximately. It can be seen from these two bank statements that the debit balance in the account of Akar Organisers and Ranjit Electric Private Limited as on 22/1/2003 (the affidavit is dated 21/1/2003 on the basis of which the AO has presumed that the cost of the plot was not less than ₹ 65.Lacs) is ₹ 55 Lacs plus ₹ 21.33 Lacs= ₹ 76 Lacs approximately. Si .....

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w the Swadias to transfer the said plot of land. The AO has wrongly presumed that ₹ 65 lakh was the mortgaged value of the plot of land. In other words the AO has presumed that ₹ 65 Bank loan was received by the appellant against the mortgaged of the said plot of land. In my opinion, the presumption of the AO is not correct particularly when the loan sanctioned by the bank to the concerns of Swadias namely Akar Organisers and Ranjit Electric Private Limited was ₹ 205 Lacs and n .....

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king addition under section 69B of the Income Tax Act, it has to be proved first that the assessee has made unaccounted investments. If the source of such unaccounted investments is not explained by the assessee, then only, the addition under section 69B can be made. In the present case, there is no evidence whatsoever which even remotely says that the appellant has made investment over and above the amount of ₹ 7,15,000/-. It is possible that in the land transactions, there is some elemen .....

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e Income Tax Act can be made even in that case, if Swadias had mortgaged the land with the bank for rupees 65 Lacs. 3.6 Further, as stated by the AR, the said plot of land was purchased by Swadias in December 1997 for ₹ 3,50,000/- which was sold by them to the appellant in January 2003 for ₹ 7,15,000/- . In the absence of any evidence contrary to this fact, there cannot be more than 100 percent return in five years particularly when the land prices in Ahmedabad went down substantiall .....

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found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfac .....

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in this behalf in the books of accounts maintained by the assessee. The Ld. Assessing Officer would call for an explanation of the assessee about source of income for making such investment, and if explanation offered by the assessee is not, in the opinion of the Assessing Officer satisfactory, then, the excess amount would be treated as income of the assessee for such financial year. Thus the basis condition for applying under section 69B is that it should be found that the assessee has made i .....

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losed in the sale deed. It is the Assessing Officer who is disputing and harbouring a belief that the assessee has made investments, over and above, the amount so disclosed in the sale deed. His belief is based on the basis of loan liability discharged by the vendor. This type of evidence possessed by the Assessing Officer is of not such a nature, which empowers him to invoke section 69B of the Act. 7. The ld. Assessing Officer has assumed that assessee has made unexplained investment in purchas .....

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