Seyadu Beedi Company Vs ACIT (Madras High Court)
The petitioner, a partnership firm, challenged an assessment order dated 27.03.2024 for Assessment Year 2022-23 and consequential penalty orders issued under Sections 270A and 271AAC of the Income-tax Act, 1961. The firm had filed its return declaring income of ₹23.37 crore. During scrutiny proceedings, the Assessing Officer sought information regarding seven properties valued at ₹3.60 crore that had been reflected as assets in the firm’s books.
The petitioner explained that the properties originally belonged to a deceased individual, whose legal heirs inherited them under Shariyat. According to the petitioner, the legal heirs subsequently transferred the properties to the firm, and the consideration was recorded by crediting the accounts of the respective legal heirs in the firm’s books. The petitioner relied on Section 53A of the Transfer of Property Act, 1882, contending that the transaction constituted a transfer and was duly recorded in its books of account. Ledger statements, valuation details, and property tax receipts were furnished in support of the claim.
The Assessing Officer later issued a show-cause notice stating that if supporting documents relating to the transfer were not produced, the value of the properties would be treated as unexplained investment under Section 69 read with Section 115BBE of the Act. The petitioner responded that Section 69 could not be invoked because the investments had been recorded in its books of account.
