The Income Tax Officer vs. M/S. Atmiya Infrastructure - (Income Tax Appellate Tribunal) (30 Apr 2021)

Mere suspicion without any evidence on record could not be the basis for making an addition to income under Section 69 of IT Act

MANU/IB/0074/2021

Direct Taxation

The instant appeal filed by the Revenue is directed against the order passed by the Commissioner of Income Tax (Appeals) arising out of the order passed by the ITO under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2011-12. The deletion of addition of Rs. 3,50,00,000 made on account of unexplained investment under Section 69 of the Act has been challenged before present Tribunal. The appellant is engaged in the business of real estate development.

The AO has not suspected or questioned the transaction with the confirming party on the ground of adequacy/inadequacy of consideration but has merely doubted the genuineness of the payment made solely on the ground of non-attendance of the said party in response to summons issued. It is by now settled law that, mere suspicion without any evidence on record could not be the basis for making an addition to income under Section 69 of the Act, 1961. Thus, the addition of Rs. 3,50,00,000 made by the AO is deleted.

Further, payments were made to TIPL through banking channel. The learned AO has failed to disprove such facts. The statement of TIPL confirming the payment of Rs. 3.50 crores made by the Appellant supported by corroborating evidence being the return of income and the balance sheet of the year under consideration keeps no scope of questioning the genuineness of the payment made by the appellant. The source of payment made by the appellant has neither been doubted by the Learned AO. Therefore, under the circumstances the provisions of Section 69 of the Act are not applicable in the absence of primary condition for invoking the said section that the investment made is not recorded in the books of accounts.

The ratio laid by the jurisdictional High Court in the case of CIT vs. M.B. Patel is rightly applicable to the instant case; the investment made by the assessee were duly shown; the source of investment as made from the assessee's account has neither been doubted by the Ld. AO. The plea of the learned AO of not being able to verify the genuineness of the transaction with TIPL in their absence cannot be said to be justified when all other evidences speak otherwise. The Appellant Company and the confirming parties as well regularly assessed to tax and the amount received is duly reflected in their books of accounts.

Neither it is the case of the Revenue that, the declaration made by the confirming party through its director is false and, therefore, considering entire aspect of the matter the addition on account of unexplained investment is not sustainable in the eye of law fact of which has rightly been taken care of by the Learned CIT(A) while deleting addition as it reflects from the order impugned without any ambiguity so as to warrant interference and hence appeal preferred by the Revenue is found to be devoid of any merit. Revenue's appeal is dismissed.

Tags : ASSESSMENT ADDITIONS LEGALITY