Case Law Details
Hari Krishan Thaman Vs ITO (ITAT Chandigarh)
ITAT Chandigarh set aside the addition u/s 69 of the Income Tax Act to the file of AO to test the enforceability of agreement to sell as per relevant statue vis-à-vis fresh affidavit.
Facts- The assessee had deposited cash amounting to Rs. 43,15,000/- as auction money with M/s GLADA against sale of trees standing at Sidwa Kanal to MC Limit Ferozepur Road, Ludhiana. Basis the said information, the reasons for reopening were recorded and notice under section 148 was issued and served on the assessee on 30/03/2018. In response to the notice, the assessee filed his return of income on 05/09/2018 declaring total income of Rs. 1,59,910/-. Subsequently, notices under section 143(2), 142(1) and detailed questionnaire were issued, and after taking into consideration the submissions and documentation filed by the assessee, the AO made an addition of Rs. 43,15,000/- being amount paid to M/s GLADA for purchase of trees/ timber treating the same as unexplained investment under section 69 of the Act.
Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who have since confirmed the said addition and against the findings of the Ld. CIT(A), the assessee is in appeal before us.
Conclusion- The explanation of the assessee explaining the source of cash payment have to be tested on the touchstone of enforceability of such agreement to sell as per relevant statue and only where it is determined that such an agreement to sell is enforceable in hands of both the parties and/or the parties have actually taken certain steps to enforce their respective rights emanating from such agreement to sell, the same can act as a relevant and credible evidence in support of the explanation of the assessee. On perusal of records, we however find that there is no explanation of the assessee in this regard and in the interest of justice, it would be relevant to allow an opportunity to the assessee and consider his submissions and it would be appropriate that the matter is set-aside to the file of the AO to examine the same after providing reasonable opportunity to the assessee. Further, we find that the affidavit of the buyer is already available on record and a fresh affidavit of Shri Naveen Goyal has been filed before us. The AO is also directed to consider these affidavits while examining the enforceability of the agreement to sell. The matter is accordingly set-aside to the file of the AO and the ground no. 3 is thus allowed for statistical purposes.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
