DCIT Vs Vaishali Pigments Pvt. Ltd. (ITAT Pune)
Conclusion: Additions made by AO on account of unaccounted amount under Section 69A of Income Tax Act received on sale of plot at CIDCO, Aurangabad was to be deleted as amounts with regard to the sale of a certain plot were not received by the assessee as no incriminating material was found during search from the premises of the assessee and the amount was not received by assessee in the relevant assessment year.
Held: Assessee-company was carrying out the business of manufacturing and trading of dies and pigments, but no business activity was carried out during the period when the assessment proceedings were carried out. After the search and seizure conducted under Section 132 at the residential premises of one of its directors, K K Sadani, AO made an addition of Rs. 3,79,00,000/-. AO passed the assessment order under Section 143(3), calculating total income at Rs. 3,79,00,000 against the assessee’s declared NIL income, which was based on the documents seized from the residence of director Mr. K K Sadani. Assessee, being aggrieved by the order of AO, approached CIT(A). CIT(A) allowed the appeal filed by asseseee. On appeal by Revenue. It was held that since no material was found during search from the premises of the assessee regarding unaccounted amount u/s 69A received on sale of plot at CIDCO, Aurangabad, the same was not sustainable. Moreso, there was a Memorandum of Understanding (MOU) between Wellworth Securities Ltd. as the first party, the assessee as the second party, and the purchaser as the third party. Here the assessee, who owned the plot, was indebted to banks, and in order to free the plot from bank lien, the party of the first part had lent the assessee a certain amount. Thus, according to the above-mentioned agreement, the seller was to pay Wellworth Securities Ltd., who was the party to the first part, and not to the assessee. Assessee was never to receive the payment, and under the above-mentioned circumstances, the addition could not be made in the hands of the assessee. And it was pertinent to note that the said property was sold in the Assessment Year (AY) 2014-2015 and here the AY in consideration by AO was 2011-2012. Thus, additions was not sustainable as the amount was not received by assessee and that too in the relevant year.
