DURAI PUGAZHENTHI,SALEM vs. ACIT CENTRAL CIRCLE, SALEM

This appeal of the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-16, Chennai dated 12.02.2019 and pertains to the assessment year 2007-08.

Shri G. Baskar, the Ld. Representative for the assessee submitted that the only issue arising in this appeal is confirming the Rs. 22,50,000/- u/s. 69B of the Income Tax Act, 1961 (in short ‘the Act’). According to the Ld. Representative, there was a search at the premises of the assessee on 10.02.2012. During the course of search operation, an agreement of sale dated 09.01.2007 entered into between the assessee and one Mr. Pongopal was found. As per the agreement dated 09.01.2007, the assessee agreed to purchase 11 residential flats from Ponram Promoters for total consideration of Rs. 1,10,00,000/- and the assesssee has paid Rs. 40,00,000/- as advance in cash. The Assessing Officer (AO) doubted the source of payment of Rs. 22.50 lakhs out of the advance of Rs. 40 lakhs. The assessee explained before the AO that a sum of Rs. 6.50 lakhs was received as advance in the year 2003. Another sum of Rs. 1 lakh was paid from the accumulative income of the earlier years the assessee has also have agricultural income from HUF to the extent of Rs. 8.50 lakhs. The assessee has received Rs. 6.50 lakhs from his wife from agricultural income. This explanation of the assessee was not accepted by the AO since there was a contradictory statement recorded u/s. 131(1A) of the Act. The assessee appears to have explained that the source for purchase of residential flat was from business and HUF income and wife’s income therefore, the AO made an addition. Referring to the assessment order, the Ld. Representative

On the contrary, Shri A.R.V. Sreenivasan, the Ld. Departmental Representative submitted that the assessee has to establish the identity of creditors, the genuineness of the transaction and creditworthiness of the creditor. In this case, the assessee has explained the identity of the creditors however, the genuineness of the transaction was not established. The assessee could not even give the address of the creditors even though he claims that they are close relatives. Therefore, the Ld. CIT(A) was rightly confirmed the addition made by the AO.

Having heard the Ld. Representative for the assessee and the Ld. Departmental Representative, this Tribunal is of the considered opinion that the assessee has explained before the Assessing Officer, the source of deposit of Rs. 22.50 lakhs. The AO in fact reproduced the explanation of the assessee at para 6 of his order. Since, the AO doubts the genuineness of the transaction, the CIT(A) confirmed the addition made by the AO. It is not known how one could establish the agricultural income. In this country agriculture is an unorganized sector. Expecting evidence from the agriculturist for their agriculture income is something

In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open court on 03rd February, 2020 at Chennai (Camp at Coimbatore).