Unexplained investment addition in one co-owner unsustainable if no addition in other co-owners

Sanjaykumar Ramanbhai Patel Vs ITO (ITAT Surat)

ITAT Surat held that addition as unexplained investment in the hands of one of the co-owner unsustainable as department didn’t made proportionate addition in the hands of other co-owners.

Facts- During the course of assessment proceedings, it was noticed by AO that the assessee had purchased immovable property. It was noticed by AO that the assessee along with three other co-owners have purchased the said property for a consideration of Rs. 84,85,600/-. The assessee has not furnished any details of the property and source of investment. Accordingly, the assessee was asked to show cause why the purchase consideration should not be treated as his unexplained investment and added to his total income.

It is interesting to note that while purchasing the property, the assessee has shown 1/4th share but while selling the same property, his share in the property is shown at 50% of the total booking advance received i.e. Rs.52,02,500/-. This contradiction itself indicates the entire investment in property is bogus and the source of investment is also bogus. It is again pertinent to mention here that vide the above referred show cause notice dated 02.12.2016 the assessee was asked to explain the source of cash deposit of Rs.19,66,000/- made in saving bank account.

AO concluded that how the 1/4th share in the purchase of property becomes 1/2th share on sale of the property. Further the evidence furnished by the assessee are simply laughable i.e. self-serving confirmation certificates and booking advance received from so called customer. The assessee has completely failed to prove that the source of investment made in property and the source of cash deposited in saving bank account are from booking advance received from the customers for sale of plots. In view of the above facts, the submission of the assessee was rejected by AO and the amount of Rs.42,12,615/- (22,46,615 + 19,66,000) was added to the total income of the assessee.

Please become a Premium member. If you are already a Premium member, login here to access the full content.