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Facts
The assessee is appealing an order confirming an addition of ₹46,90,385/- on account of land purchased. The addition was made by the AO under section 69 of the Income Tax Act, 1961, as unexplained investment, relying partly on a statement from Shri Asad Idris, who claimed to be a 'benamidar' for the assessee. The assessment proceedings were conducted during the COVID-19 period.
Held
The Tribunal held that the addition was unsustainable as it was based on a third-party statement that was not confronted to the assessee. The assessee had provided documentary evidence, including sale deeds and cheque payments, to establish the source of funds for the land purchase, which was registered in the name of Shri Asad Idris. The Tribunal also noted that the addition made in the case of Shri Asad Idris was on a substantive basis, not protective.
Key Issues
Whether the addition made under section 69 as unexplained investment is sustainable when based on an un-confronted third-party statement and the assessee has provided documentary evidence to establish the source of investment?
Sections Cited
69, 143(3)
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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 17/06/2025 Date of Order – 17/06/2025
O R D E R PER K.M. ROY, A.M.
This appeal by the assessee is against the impugned order dated 27/01/2025, passed by learned Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi, [for short, “learned CIT(A)”] for the assessment year (for short, “A.Y.”) 2014–15.
In this case, the Assessing Officer (for short, “the A.O.”), vide assessment order dated 29/03/2022, has made the addition of ` 46,90,385/– mainly on account of land purchased i.e., 11,220 sq.ft.
2 Mohd. Zubair Asharafi ITA no.94/Nag./2025 situated at Zingabai Takli, Nagpur. Admittedly, the assessment proceedings were carried out during the COVID–19 period, when the entire nation was at halt and, therefore, the assessee failed to comply with the notices issued by the A.O., which resulted in making the aforesaid addition being unexplained investment under section 69 of the Income Tax Act, 1961 (for short "the Act") and mainly on the reason that identical addition has also been made in the case of Shri Asad Idris, under section 143(3) of the Act passed by the ITO, Ward– 2(4), Indore, on protective basis. Whereas, it is a fact that from the assessment order dated 23/12/2016, under section 143(3) of the Act, it nowhere appears “whether the identical addition under section 69 of the Act has been made on protective basis”.
The learned counsel for the assessee drew the attention of this Court to the statement recorded of Shri Asad Idris, by the then A.O. Mr. Idris has stated that he is “benamidar” of Shri Mohd. Zubair Asharafi (brother–in–law) and also has immovable property standing (including agricultural land on which he showed agricultural income in his return of income) in his name which was purchased by brother– in–law Shri Mohd. Zubair Asharafi, Nagpur, Bank account maintained in the ICICI Bank, is also operated by Shri Mohd. Zubair Asharafi, and only signature is put in, as and when required by Shri Mohd. Zubair Asharafi. Admittedly, the statement was not confronted to the 3 Mohd. Zubair Asharafi ITA no.94/Nag./2025 assessee herein and simply on the basis of third-party statement addition has made, which is unsustainable. Coming to the peculiar facts and circumstances, as the assessee, by filing relevant documents before the Ld. Commissioner as well as before this Court, has demonstrated that the land which is under controversy, is registered vide sale deed dated 11/08/2013, standing in the name of Shri Asad Idris, and there is no litigation pending before any Court of law with regard to the said property under consideration, disputing the title. The assessee from payments made through cheques, is also being able to establish the source of payments made by Shri Asad Idris. We observe that the addition under section 143(3) of the Act made in the hands of Shri Asad Idris, vide assessment order dated 23/12/2016, in fact is on substantive basis, but not on protective basis, as observed by the Assessing Officer.
Thus, on the aforesaid peculiar facts and circumstances in totality, and the documents available on record as well as the findings of the authorities below, the addition in the hands of the assessee is unsustainable. Thus, we are inclined to delete the same by allowing the grounds raised by the assessee. The relevant proceedings in the case of Shri Asad Idris, will not get influenced by any observation made by us in this order and there will be no impediment for deciding that particular case of Shri Asad Idris.
4 Mohd. Zubair Asharafi ITA no.94/Nag./2025
In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on 17/06/2025