INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - AO assumed existence of unexplained asset - No asset having come into existence in assessee's name during the year

As per AIR information assessee had entered into sale/conveyance deed dt. 7-12-2011 for purchase of land for a consideration of Rs. 3 crores. However, AO noticed that assessee had not shown any purchase of immovable property either under the head 'fixed assets' or under the head 'current assets' in balance sheet. AO obtained details from the office of Sub-Registrar by using power under section 133(6) and took the view that assessee had failed to recognize 'asset' in balance sheet. Thus, AO construed that land must have been purchased by assessee from unexplained sources of income and accordingly, AO made addition under section 69. Held: Land under consideration was under encroachment and sum of Rs. 2.82 crores was required to be paid to assessee had issued 12 cheques of Rs. 2.82 crores to Shubham Granite Ltd. but deal could not be materialized as per terms and conditions and hence, payments of cheques were stopped, and they became time barred. Thus, no asset came into existence in the name of assessee, which required to be shown in books of account. Accordingly, AO was not justified in making addition simply based on assumption of certain facts, and assumed existence of unexplained asset.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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