2011 (8) TMI 1171 - AT - Income Tax

Summary

Issues Involved:
1. Re-opening of assessments.
2. Addition on account of unexplained investment in plots.

Summary:

Re-opening of Assessments:
At the time of hearing, the assessee's representative did not press the grounds relating to the re-opening of assessments for the assessment years 2002-03 and 2003-04. Consequently, these grounds were dismissed as not pressed.

Addition on Account of Unexplained Investment:
The primary issue in both appeals was the confirmation of additions of Rs. 7,42,000/- for AY 2002-03 and Rs. 49,28,000/- for AY 2003-04, based on material seized from the premises of Shri Navneet Jhamb. The assessee had invested in plots B-5 and B-7 at Village Jharsently, Distt. Faridabad. The assessing officer, relying on documents found during a search u/s 132 at the premises of Shri Navneet Jhamb, concluded that the assessee had paid cash premiums for these plots. The CIT (Appeals) confirmed these additions, emphasizing the evidentiary value of the seized documents and the business relationship between the parties involved.

Tribunal's Decision:
The Tribunal noted that the issue was covered by the decision of ITAT, Delhi Bench in the case of DCIT Vs. M/s. Indication Instruments Ltd., where it was held that additions cannot be made merely on the basis of entries recorded on papers found during a search at a third party's premises. The Tribunal observed that the assessing officer did not bring any material on record to substantiate the addition and relied solely on the seized documents. The Tribunal upheld the CIT (Appeals)'s decision in favor of the assessee, emphasizing that the burden of proving the understatement or concealment of consideration lies with the Revenue, as established in the case of K. P. Varghese Vs. Income Tax Officer and C.I.T. vs. P.V. Kalyanasundaram.

Conclusion:
The Tribunal allowed both appeals filed by the assessee, concluding that the addition based on third-party documents without corroborative evidence was not sustainable. The order was pronounced in the open court on 05th August, 2011.