2014 (10) TMI 466 - ITAT MUMBAI

Undisclosed income - Sale consideration of flats sold by assessee – on-money transactions - Held that:- Addition was made by the AO on the basis of documentary evidence found during the course of search at the premises of buyer of the flat M/s Unimark Remedies Ltd. - As per the seized document found at the premises of M/s Unimark Remedies Ltd., there was on-money transaction for payment of 4 flats purchased at 10th & 11th floor at Kamaleshwar II, Tagore Road, Santacruz, Mumbai constructed by the assessee firm. During the course of search itself, statement of Shri Mehul Parekh (Director Finance, M/s Unimark Remedies Ltd.) were recorded - In respect of transaction appearing in the incriminating documents inventorised as Annexure-A-2, Mehul Parekh admitted on behalf of URL the payment of on-money to the assessee - the admission of Mehul Parekh was on the basis of documentary and corroboratory evidence - This admission of Director on behalf of URL has been confirmed by another director Mr. Yogesh Parekh, who is also a CA. In his statement, Shri Yogesh Parekh admitted that he was looking after accounts, administrative and financial affairs of M/s URL and that they have purchased two floors at 10th & 11th Floor in Kamaleshwar Tower from assessee and as per the diary seized at the time of search action, Shri Mehul Parekh, Director of the company has paid ₹ 75,20,000/- in cash on different dates of the year 2005 to Mr. Rajubhai Dhiru, partner of assessee firm M/s Orbit Enterpises as on-money for purchase of two floors. M/s Unimark had also admitted this payment as its income in the block assessment.

In view of documentary evidence found during the course of search along with statement of the payees recorded u/s.132(4), further fortified by cross examination allowed to the assessee clearly proves that assessee was in respect of on-money on sale of flats which were not accounted for in the regular books of accounts - the AO was justified in adding the same in assessee’s income and it was correctly confirmed by the CIT(A) after recording detailed finding of his appellate order which has not been controverted by the assessee by bringing any positive material on record – thus, the order of the CIT(A) is upheld – Decided against assessee.

Reopening of assessment – Held that:- There was sufficient material before the AO to form an opinion that there was an escapement of income in respect of payments made by the buyers of flats to the assessee firm as per the seized document found during the course of search of Unimark Remedies Ltd., which was not found recorded in the assessee’s books of account – there was no infirmity in the reopening of the assessment by issue of notice u/s.148 of the I.T. Act - Decided against assessee.