2011 (12) TMI 551 - AT - Income Tax

Income on account of receipts by way of undisclosed income - violation of principle of natural justice - Held that - There is violation of principle of natural justice and evidences not established against the assessee and hence the ld. CIT(A) was not justified in confirming the addition. We accordingly delete the addition. In the instant case secondary evidences cannot be relied on as neither the witnesses produced or the person who prepared the documents were produced. Thus the sale consideration as shown in the documents is to be accepted.

Summary

Issues Involved:
1. Addition of Rs. 4.07 crores as undisclosed income.
2. Levying interest under sections 234B and 234D.

Issue-wise Detailed Analysis:

1. Addition of Rs. 4.07 crores as Undisclosed Income:
Assessee's Grounds of Appeal:
- The assessee contested the addition of Rs. 4.07 crores as income on account of receipts by way of undisclosed income, arguing that the addition was unjustified, baseless, and contrary to the material on record.
- The assessee argued that the reliance on the statement of Shri Ravindra Singh Thakkar was unsupported by corroborative evidence and violated principles of natural justice as the right to cross-examine was not provided.
- The assessee highlighted that the sale price recorded in the registered sale deed was substantially higher than the prevailing DLC price and that there was no evidence of any cash/on-money component in the transaction.

Revenue's Position:
- The Revenue argued that during the search on Unique Builders Group, incriminating documents reflecting the payment of 'on-money' were found, and the addition of Rs. 4.07 crores was based on seized documents and the statement of Shri Ravindra Singh Thakkar.
- The AO contended that the seized document clearly indicated that Rs. 4.07 crores was paid in cash as on-money and that such transactions invariably involve cash components.

Tribunal's Findings:
- The Tribunal noted that the assessee was not provided with the complete statement of Shri Ravindra Singh Thakkar or the opportunity to cross-examine him, which violated principles of natural justice.
- The Tribunal observed that the presumption under Section 292C is rebuttable and cannot be applied against the assessee without providing an opportunity to rebut the evidence.
- The Tribunal emphasized that the burden of proof lies on the Revenue to establish that the assessee received the amount, which was not adequately discharged.
- The Tribunal found that the addition was made based on circumstantial evidence and conjectures without concrete proof of receipt by the assessee.
- The Tribunal concluded that the assessment order was passed in violation of principles of natural justice and that the evidence did not conclusively establish the receipt of Rs. 4.07 crores by the assessee.

Conclusion:
- The Tribunal deleted the addition of Rs. 4.07 crores, holding that the Revenue failed to provide sufficient evidence and violated principles of natural justice.

2. Levying Interest under Sections 234B and 234D:
Assessee's Grounds of Appeal:
- The assessee argued that the lower authorities erred in levying interest under sections 234B and 234D as there was no liability for such interest.

Tribunal's Findings:
- Given that the primary addition of Rs. 4.07 crores was deleted, the Tribunal found that there was no basis for levying interest under sections 234B and 234D.

Conclusion:
- The Tribunal ruled in favor of the assessee, deleting the interest levied under sections 234B and 234D.

Summary:
The Tribunal allowed the appeal of the assessee, deleting the addition of Rs. 4.07 crores as undisclosed income due to the violation of principles of natural justice and lack of concrete evidence. Consequently, the interest levied under sections 234B and 234D was also deleted. The appeal of the Revenue was dismissed.