SATIDHAM SYNTEX LTD,BANGALORE vs. ITO WD 5(3)(2), MUMBAI

O R D E R

PER RAM LAL NEGI, JM

(1) were issued calling the details. In response to the said notices, the authorized representative of the assessee appeared before the AO and filed the details. After hearing the assessee, the AO inter alia made addition of Rs.

2 Assessment Year: 2010-11 41,91,163/- on account of unexplained source of registration expenses of land at Madhurvada. In the first appeal the Ld.CIT (A) confirmed the addition made u/s 69 of the Act with regard to the registration expenses of Rs. 41,91,163/-. The assessee has filed the present appeal challenging the impugned order passed by the Ld. CIT (A) by raising the following effective ground of appeal:

On the facts and circumstances of the case as well as in Law, the Learned CIT (A) has erred in confirming the action of Learned Assessing Officer in disallowing the claim of registration expenses of Rs. 41,91,163/- u/s 69 of the Income Tax Act, 1961 by treating the same as alleged Unexplained Investment, without considering the facts and circumstances of the case.

3. At the very outset, the Ld. counsel for the assessee submitted that in the assessment year 2009-10, the ITAT has restored the similar issue to the file of Assessing Officer for examining the issue afresh in accordance with the law. The Ld. Counsel further submitted that as per the settled law an investment made in a particular Financial Year cannot be treated as unexplained investment in the subsequent financial year. The Ld. counsel further pointed out that the AO has made addition u/s 69 on the ground that in the previous assessment year 2009-10, the assessee company failed to give the source of investment of Madhurvada land purchase and the ACIT-5 had made the addition in question. The ultimate source for acquisition of land was not explained nor the source of money for payment of stamp duty and registration claimed of Rs. 41,91,163/- was explained in the year 2010-11.

4. On the other hand the Ld. Departmental Representative (DR) relying on the findings of the Ld. CIT (A) submitted that since the assessee has failed to explain the source of expenses incurred on registration of land purchased at Madhurawada, the Ld. CIT(A) has rightly confirmed the addition made by the AO.

3 Assessment Year: 2010-11 In the light of the rival contentions of the parties, we have perused the material on record including the orders passed by the authorities below for the assessment year under consideration and the order of coordinate Bench passed in the assessee’s own case A.Y. 2009-10. We notice that the coordinate Bench has restored the matter to the file of AO for examining the issue relating to unexplained investments afresh, holding as under:- “21. The Hon’ble High Court also held that an investment made in a particular Financial Year, the same, cannot be treated as unexplained investment in the subsequent Financial Year. In other words, it should be treated as investment in the year in which it is recorded in the Books of Accounts relevant to that particular Financial Year. As could be seen form the above the Hon’ble High Court held that for applying section 69 of the Act the Assessing Officer must first come to a finding that the assessee has made investments which are not recorded in the Books of Accounts and thereafter call for an explanation from the assessee about the nature and source of investments. In the case on hand the Assessing Officer without examining the Books of Accounts property and without giving a finding that the transactions occurred outside the Books of Accounts invoked provisions of section 69C of the Act. We also find that the Assessment Year 2008-09 as the sale agreement entered into is in the Financial Year 2007-08 and in such circumstances, whether the addition can be made in the Assessment Year 2009-10 is also not examined by the Assessing Officer.”

In the result, appeal filed by the assessee for assessment year 2010- 2011 is allowed for statistical purposes.