2010 (9) TMI 1112 - AT - Income Tax

Deleting the addition - payment made outside of books for purchase of plot - undisclosed sources of income - HELD THAT - Under the circumstances, these additions have been made on the basis of documents found during search at the place of a third party which at best only showed the tentative /projected purchase consideration. It is not the case that the Circle Rate or the value as per stamp registration authorities of the impugned property is more than what has been disclosed. It is also not the case that unaccounted cash has been found to be paid by the assessee or received by the seller. There is also no statement of the seller on record that he has obtained on money. Under the circumstances, the additions made in this regard is not sustainable. deleting the addition - paid in cash as the source of investment - HELD THAT - In our opinion, this ground itself is misconceived, in as much as the question of proving the source of investment will arise only when the investment is conclusively proved. We have already found above that the claim of on money transactions has not at all proved in this case. As held in the decision of P.V. Kalyanasundaram 2007 (9) TMI 25 - SUPREME COURT the onus is that of revenue to prove the same and as clearly found by us above the revenue has failed to do so the same. Accordingly, we uphold the order of the Ld. CIT (A) and decided the issue in favour of the assessee. In the cross objection the assessee has objected the validity of reopening, confirmed by the Ld. CIT (A). Ld. counsel of the assessee submitted that he shall not be pressing this ground. Accordingly, the cross objection filed by the assessee is dismissed as not pressed.

Issues Involved:
1. Deletion of addition of Rs. 46,72,800/- on account of payment made outside of books for purchase of plot.
2. Deletion of addition of Rs. 12,77,200/- and Rs. 10,00,000/- on account of payment made out of undisclosed sources of income.
3. Validity of reopening of assessment.

Issue-wise Detailed Analysis:

1. Deletion of addition of Rs. 46,72,800/- on account of payment made outside of books for purchase of plot:
The Assessing Officer (AO) added Rs. 46,72,800/- as undisclosed income based on seized documents indicating cash payments. However, the Ld. Commissioner of Income Tax (Appeals) (CIT(A)) found that:
- No document indicating any payment outside the books was found from the possession of the assessee or the seller.
- The document was found from Mr. Navneet Jhamb, who denied any cash payment was made by the purchaser to the seller.
- There was no corroborative material to support the AO's allegations.
- The document was a "dumb document" and no addition could be made based on it, especially in the absence of any corroborative material.
- The primary burden of proof was on the AO, which was not discharged with cogent material.
Consequently, the CIT(A) directed the deletion of the addition of Rs. 46,72,800/-.

2. Deletion of addition of Rs. 12,77,200/- and Rs. 10,00,000/- on account of payment made out of undisclosed sources of income:
The AO added Rs. 12,77,200/- and Rs. 10,00,000/- based on notings on loose sheets, alleging excess payment and interest received. The CIT(A) held that:
- The scribbling did not mention the name of the assessee.
- It was not clear that the assessee gave any loan to the writer of the document.
- The document was not in the handwriting of the assessee.
- No link was established between the documents and the assessee company.
- The additions were without support of any corroborative material.
Thus, the CIT(A) directed the deletion of these additions as well.

3. Validity of reopening of assessment:
The assessee raised an objection to the validity of the reopening of the assessment. However, the assessee's counsel did not press this ground, and thus the cross-objection was dismissed as not pressed.

Tribunal's Decision:
The tribunal upheld the CIT(A)'s order, noting that the facts and documents in the present case were the same as those in a previous tribunal decision (ITA no. 4802/Del/2009). In that case, the tribunal found that:
- The AO did not provide details on the nature of the document or how it concluded that the documents belonged to the assessee.
- There was no statement from the seller accepting receipt of on-money.
- The seized documents were not in the handwriting of the assessee or the seller.
- The documents showed tentative/projected purchase consideration, not conclusive proof of on-money transactions.
- The revenue did not prove the understatement or concealment of consideration.
Following the doctrine of stare decisis, the tribunal upheld the CIT(A)'s order and dismissed the revenue's appeal. The cross-objection by the assessee was dismissed as not pressed.

Conclusion:
The appeal filed by the revenue was dismissed, and the cross-objection filed by the assessee was dismissed as not pressed. The tribunal's decision was pronounced in the open court on 28/09/2010.

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