CIT V. MOUNTAIN TOUCH BUILDERS P. LTD

ITA/388/2012

AI Insights

The case involves the Commissioner of Income Tax (CIT) appealing against Mountain Touch Builders P. Ltd., challenging the ITAT's decision which upheld the CIT (A)'s deletion of an addition made by the Assessing Officer (AO) under Section 69A of the Income Tax Act. The addition pertained to an amount of Rs.9,19,89,841 claimed as unexplained investment in agricultural land purchases. The assessee argued that the purchases were made through third parties, specifically M/s Jindal Reality Pvt. Ltd. and M/s Shikhar Real Estates Pvt. Ltd., who paid the consideration directly to the farmers. The CIT (A) and ITAT found that the assessee had adequately explained the source of the investment and that the transactions were recorded in the books of account.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 687713 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 17-07-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: SANJEEV SABHARWAL; PUNEET GUPTA
• Keywords: Agricultural Land; Appeal; Assessment; CIT(A); ITAT; Real Estate; Unexplained investment
• Section: 69A

Judgement Text

",-n { ? s-l * IN THE HIGH COURT OF DELHI AT NEW DELHI -1\" CIT versus MOUNTAIN TOUCH BUILDERS P. LTD Through: None. CORAM: IION'BLE MR. JUSTICE S. RAVINDRA BHAT I{ON'BLE MR. JUSTICE R.V.EASWAR ..... Respondent *: o ORDER t7.07.2012 1. '.[he Revenue claims to be aggrieved by the order of the ITAT in ITA No.444 1/DeVl 0 dated 30.09.20 1 l. 2. The question of law sought to be urged is as to the correctness of the order of CIT (A) as confirmed by the ITAT in regard to fhe deletion of the amount of Rs.9,19,89,841/- rnadc by the Assessing Offrcer under Section 694. of the Income Tax Act as uncxplained investment. 3. The necessary facts for the purpose of this order are that the assessee was incorporated during the previous year with the object of inter alia trading in real estate. It claimed that some agricultural land at Sonepat was purchased from various farmers for a consideration of Rs.9,Ig,8g,84l/-. The assessee did not pay thesc amounts but instead the consideration was paid by two concerns i.e. lvVs Jindal Reality Pvt. Ltd. and iWs Shikhar Real Estates Pvt. Ltd. The assessee stated that no bank accounts were maintained and had filed the return declaring loss of Rs.14,7751-. After eliciting details about the purchase and examination of the source for consideralion, the AO directed .. .-.1\" fG,, rrA388/20t2 ..... Appellant Through: Mr. Sanjeev Sabharwal, Sr. Standing Counsel with Mr. Puneet Gupta, Jr. Standing Counsel. !:4r,..''-:.' Digitally Signed By:AMULYA Signature Not Verified EI assessment after including said amount in terms of Section-69A, reasoning that the assessee had not satisfactorily explained the source of investment and the unsecured loans and that the amount had not gone through its account books. The assessee carried the matter in appeal. The CIT (A) after considering all the submissions of the assessee and the Revenue held that the explanation furnished was proper and that the mere circumstance that the entire consideration for acquisition of assets was paid by third parfy or parties did not render it unexplained. The CIT (A) also noted that the transaction was fully recorded in the books of accounts, i.e., the land was shown as \"current assets\" and the loans were shown as \"unseen - red creditors\" in the balance sheet. The CIT (A) also noted that the existing laws in Haryana had constrained the parties from holding the extent of land since it exceeded the permissible area of agricultural land. 4. The Revenue carried the matter further in appeal to the ITAT contending that the deletion of the sum was unjustified. The Tribunal, in its impugned order, held as follows: - . \"10. That AO has not cast any doubt about joint development agreement and for purchases assessee filed all the necessary copies of agreement to purchase fromfarmers, confirmations from ArI/s Jindal Reality Pvt. Ltd. & ItrI/s Shikhar Real Estates pvt. Ltd, which are available on record. Since the assessee has discharged the onus that lay on it and the unsecured loans are duly reflected in assessee's accottnt, as mentioned above, addition on account of sec.69 was unjustified, which has been rightly deleted by the CIT (A). His order may be upheld. II. We have heard rival contentions and gone through the relevant material available on record. The AO has placed no doubt or objection on the purchase and sale agreements with farmers. The fact about payment of consideration by associate concerns lms been accepted by AO which are duly supported with confirmations and copies of account. No doubt has been raised on the joint development agreement. In view of these facts, we see no justification for the addition made by the AO, CIT (A) has rightly deleted the addition by observing that the transactions have routed through assessee's books of account by above entries. In viev, thereof, we uphold the order of CIT (A) on the issue in question.\" 5. We have heard the counsel for the Revenue. In view of the fact that there is no other material on the record to suggest that the transaction - whereby the assessee received amounts from the two unrelated companies - was not genuine, and also having /i regard to the circumstance that the purchase took place in the very first year of its incorporation, the court finds no infirmity in the reasoning of the Tribunal. 6. The appeal - ITA-388120-12 - does not require resolution of any substantial question of law and is accordingly dismissed. S. RAVINDRA BHAT, J l- llt \"*-l -. R.V.EASWAR. J JULY 17,2012 /vks/ {. "