9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2009 (10) TMI 900 - AT - Income TaxPayment of on money for investment in flat - Undisclosed sources of income - unexplained payment made by the assessee to the developer - search and seizure operation carried - reliance on amount written in the seized document - AO in view of clinching evidences in the form of seized loose paper and also in the light of the statement made by Shri Ketan O. Der there was no doubt about the payment of on money made by the assessee and added the said amount to the total income treating the same as payment made out of undisclosed income - CIT(A) confirmed the addition - HELD THAT - We find that in the instant case the assessee has purchased one flat from M/s Ohm Developers in which case a search and seizure operation was carried out on 29.10.99. In the course of the search a book marked was found and on this book name of the assessee was written and against his name it was written amount received upto 31-3-99 Rs. 4, 83, 101/-. Further partner of M/s. Ohm Developers has in his statement admitted to have received this amount from assessee in respect of sale of flat. However the assessee has claimed to have made payment of Rs. 1, 01, 687/- only upto 31-3-99 and has consistently taken the stand that it has not paid balance amount of Rs. 3, 81, 414/- as stated in the seized document. We find that no evidence could be brought on record by the Revenue to show that in fact the assessee only had paid the amount of Rs. 3, 81, 414/- to Ohm developers. No document containing signature of the assessee or handwriting of the assessee to corroborate the above making of payment by the assessee was found during the course of the search. We find that the Hon ble Supreme Court in the case of K.P.Varghese 1981 (9) TMI 1 - SUPREME COURT had held that mere seizure of note books or documents at the personal residence of an employee would not conclude the issue against the employer company that on money has been received by the employer company. The onus of proving the charging of on money lies on the department. We find that even at time of cross examination by the assessee the partner of M/s. Ohm Developers could not produce any evidence that the amount written in the seized document was in fact received from the assessee. In the instant case as the assessee has categorically denied to have made any payment in excess of Rs. 101, 687/- upto 31-3-99 in respect of purchase of flat in our considered view the said denial cannot be brushed aside without bringing any positive material on record. Merely recording made by a third party or statement of a third party cannot be treated as so sacrosanct so as to read as a positive material against the assessee. Decided in favour of assessee.
Issues Involved:
1. Confirmation of addition of Rs. 3,81,414/- on account of alleged "on money" paid by the assessee for investment in a flat. Issue-wise Detailed Analysis: 1. Confirmation of Addition of Rs. 3,81,414/- on Account of Alleged "On Money": The sole issue in this appeal revolves around the confirmation of an addition of Rs. 3,81,414/- by the Commissioner of Income Tax (Appeals) [CIT(A)], which was alleged to be "on money" paid by the assessee for the purchase of a flat. Facts of the Case: The assessee purchased a flat in the housing scheme "Chandan Park" developed by M/s. Ohm Developers. During a search at the business premises of M/s. Ohm Developers, certain papers were seized. One such paper indicated that the assessee had made a total payment of Rs. 6,69,725/-, out of which Rs. 4,83,101/- pertained to the year under consideration. However, the assessee's records showed a payment of only Rs. 1,01,687/- to M/s. Ohm Developers, resulting in a difference of Rs. 3,81,414/-. The Assessing Officer (AO) issued a show-cause notice to the assessee regarding the unexplained payment of Rs. 3,81,414/-. The assessee requested and was allowed to cross-examine Shri Ketan O. Der, a partner of M/s. Ohm Developers, who admitted to receiving "on money." Despite the assessee's denial of making any such payment, the AO added the amount to the assessee's total income as an unexplained payment. Appeal Before CIT(A): The assessee argued that the seized document was not written by them or their representatives but by an employee of M/s. Ohm Developers at the instance of its partner, Shri Ketan O. Der. The assessee contended that there was no other evidence to support the payment of "on money" and that the story of such payment was fabricated. The CIT(A) upheld the addition, citing the statement of Shri Ketan O. Der and the common practice of part payment in cash in property transactions. Arguments by Assessee's Representative: The assessee's representative argued that besides the statement of Shri Ketan O. Der, there was no evidence to prove that the assessee had paid any "on money" for the flat. They cited the case of Additional Commissioner Of Income Tax vs. Miss Mangeshkar (1974) 97 ITR 696 (BOM), where the Tribunal had rejected entries in a ledger due to lack of corroborative evidence and reliability issues. They also referenced the case of Assistant Commissioner Of Income Tax vs. Prabhat Oil Mills (1995) 52 TTJ (Ahd) 533, where it was held that mere entries in a seized book without corroborative evidence cannot substantiate unrecorded transactions. Tribunal's Findings: The Tribunal observed that the AO and CIT(A) relied heavily on the seized document and the statement of Shri Ketan O. Der. However, no corroborative evidence was presented to prove that the assessee had paid the alleged "on money." The Tribunal noted that the seized document was not in the handwriting of the assessee or their representatives, and no document containing the assessee's signature or handwriting was found during the search. The Tribunal emphasized that the onus of proving the payment of "on money" lies with the department, referencing the Supreme Court's decision in K.P. Varghese V. ITO [1981] ITR 597, which held that mere seizure of documents does not conclusively prove the receipt of "on money." Conclusion: The Tribunal concluded that the CIT(A) was not justified in confirming the addition of Rs. 3,81,414/- based solely on the seized document and the statement of a third party without any corroborative evidence. The Tribunal deleted the addition of Rs. 3,81,414/- and allowed the appeal of the assessee. Result: The appeal of the assessee was allowed, and the addition of Rs. 3,81,414/- was deleted. Order Pronouncement: The order was pronounced at the close of the hearing in the presence of the parties in the Court on 9/10/2009.
|
