PR COMMISSIONER OF INCOME TAX-I vs. M/S SHRI NAV CHITRA DISTRIBUTORS

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ITA/228/2017HC RajasthanRJHC02097577201719 December 20173 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal's decision was upheld. Regarding the first issue, the Tribunal was justified in not restoring the addition of Rs. 69,00,000/-. The reasoning was that the assessee-company did not exist at the time the alleged unaccounted payments were made. Furthermore, the Assessing Officer (AO) lacked sufficient material to estimate the sales price at Rs. 10,00,000/- per bigha. The property was also under a serious threat of acquisition, which was ultimately refused by the development authority. Consequently, the Tribunal found that the entire additions deserved to be deleted. For the second issue, the Tribunal justified the deletion of the addition made under Section 69B, as the amount was not disclosed in the books of accounts, but this was in the context of the overall facts leading to the deletion of the addition. The issues were answered in favour of the assessee against the department. The appeal filed by the department was dismissed.

What were the facts?

The appellant, Principal Commissioner of Income Tax-I, challenged a judgment of the Income Tax Appellate Tribunal (ITAT) which had dismissed the department's appeal. The ITAT had confirmed the order of the Commissioner of Income Tax (Appeals) and reversed the Assessing Officer's (AO) view. The case involves an addition of Rs. 69,00,000/- made by the AO on account of unexplained investment in the purchase of agricultural land. The department contended that this investment was confirmed by the seller's statement and bank account. The ITAT, however, deleted the addition, finding that the assessee-company did not exist when alleged unaccounted payments were made, and the AO lacked material to estimate the sales price. The property was also under threat of acquisition, which was ultimately refused by the development authority.

What were the issues?

1. Whether on the facts and circumstances of the case, the Tribunal was justified in not restoring the addition of Rs. 69,00,000/- made on account of unexplained investment in purchase of agricultural land when the same was confirmed by the statement and the bank account of the seller? (Question of law turning on Section 69 of the Income Tax Act, 1961). 2. Whether the Tribunal was justified in deleting the addition made u/s 69B of the Act when the said amount was not disclosed in the books of accounts of the assessee? (Question of mixed law and fact turning on Section 69B of the Income Tax Act, 1961). Assessee's Contentions: The assessee relied on the judgment in D.B. Income Tax Appeal No. 150/2009, Commissioner of Income Tax-1 vs. M/s Okay Plus Land Developers (P) Ltd., decided on 24.07.2017. The assessee's counsel presented documents including agreements for further consideration, a power of attorney, and a Will. The original transaction was for Rs. 1,65,00,000/-, confirmed by documents between the power of attorney holder and the assessee, and the Khatedar bank account. The ITAT noted that the assessee-company did not exist at the time of alleged payments, the AO had no material to estimate sales price, and the property was under threat of acquisition. Revenue's Contentions: The revenue, as the appellant, challenged the ITAT's decision to delete the addition. They relied on the statement and bank account of the seller to confirm the investment. The revenue also referred to a previous judgment in D.B. Income Tax Appeal No. 25/2012, Commissioner of Income Tax vs. Smt. Manju Devi, decided on 26.08.2016, in view of low tax effect circular.

Which sections of the Income-tax Act were involved?

Section 69,Section 69B

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 228 / 2017 Principal Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus M/s. Shri Nav Chitra Distributors (Multiplex) (P) Ltd., Mukhija Chamber, M.I. Road, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. Anant Kasliwal with Ms. Charu Pareek _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 19/12/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department by confirming the order of CIT (A) and reversing the view taken by AO. 2. This Court while admitting the appeal on 10.08.2017 framed following substantial questions of law:- “i) Whether on the facts and circumstances of the case, the Tribunal was justified in not restoring the addition of Rs. 69,00,000/- made on account of unexplained investment in purchase of agricultural land when the same was confirmed by the statement and the bank account of the seller.? ii) Whether the Tribunal was justified in deleting the addition made u/s 69B of the Act when the said amount was not disclosed in the books of accounts of the assessee?”

(2 of 3) [ITA-228/2017] 3. Against the judgment which has been sought to be relied upon by the Tribunal in D.B. Income Tax Appeal No.25/2012, Commissioner of Income Tax vs. Smt. Manju Devi, decided on 26.08.2016 dismissed the appeal in view of low tax effect circular. 4. Even otherwise, counsel for respondent has relied upon the judgment in D.B. Income Tax Appeal No.150/2009, Commissioner of Income Tax-1 vs. M/s Okay Plus Land Developers (P) Ltd., decided on 24.07.2017, wherein it has been observed as under:- 3. Counsel for the appellant Mr. Singhi has produced certain documents on record where it has come on record that originally the land was entered by two agreements for further consideration to one M/s Navchitra Distributors (Multiplex) Private Limited. We have also perused the power of attorney which is on record and Mr. Singhi has also taken us to the Will made in favour of third party and ultimately also the power of attorney ultimately made on 24th March, 2005, by which the property has been disposed of. However, from the statement of three land owners, it has come on record that original transaction was for Rs. 1, 65,00,000/- which confirms the documents entered into between the power of attorney holder and the assessee to the tune of Rs. 1,65,00,000/-. He has also contended that over and above the Khatedar bank account was also there. 5. In para 9 over and above the documents which are sought to be relied upon after considering the registered sale deed of all the Khatedars the Tribunal has held as under:- “Thus, considering the fact that the assesseecompany did not exist at the point of time when the alleged unaccounted payments if any were made and further considering the fact that the AO had no material with him to estimate the sales price at Rs. 10,00,000/- per bigha coupled with the fact that the property under transfer was under a serious threat of acquisition which ultimately turned right by the development authority having refused to allow the conversion of land for the

(3 of 3) [ITA-228/2017] desired purposes, in our opinion, the entire additions deserve to be deleted.” 4. Therefore, the issues are required to be answered in favour of assessee against the department. 5. The appeal stands dismissed. (VIJAY KUMAR VYAS), J. (K.S. JHAVERI), J. B.M.Gandhi/Dheeraj/52

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