2015 (7) TMI 353 - AT - Income Tax

On-money payment for purchase of immovable property - CIT(A) deleted surcharge levied u/s 113 on assessee - Held that - During the course of search, a document was found and seized in which are recorded the transactions of the assessee with Smt.Venkatamma and Smt.Venkatnarasamma for purchase of immovable properties. In this document, the dates of agreement of sale, sale consideration as per the agreement, date of execution of sale deed, amounts paid and the amounts due to be paid are all recorded. The assessee neither appeared before the AO during the remand proceedings nor did he file any evidence in support of his contention that on-money, as recorded in the seized document, was never paid. Even before the CIT(A), the assessee had undertaken to produce one of the sellers as the other seller was already dead but failed to produce said person or her affidavit. The only affidavit filed before the CIT(A) is that of one Jayaram, whose statement was recorded by the AO u/s 131 during the assessment proceedings. During the recording of statement u/s 131, Jayaram had stated that there was on-money involved in the transaction. However, in the affidavit filed before the CIT(A), Jayaram has controverted the statement. However, we find that the CIT(A) has not admitted the additional evidence filed by the assessee on the ground that the signature of the deponent did not match. Thus observing, the CIT(A) has rejected the additional evidence. Though as rightly pointed out by the learned Departmental Representative, the assessee failed to discharge its onus by producing both the parties before the AO for examination and to establish that on-money was not paid, reliance by the AO as well as the CIT(A) on the statement of Jayaram for making the addition is also not sustainable because he was only an attesting witness to the document. The attesting witness to a document is a witness only to the execution of the document, but not to the contents of the document. Therefore, his statement or the subsequent affidavit have no relevance as regards the consideration by the assessee to his vendors. But the assessee has not produced his vendors, nor has he filed confirmations from them to rebut the findings of the AO that on-money has been paid by the assessee, even in the remand proceedings. Therefore, we see no reason to interfere with the order of the CIT(A).- Decided against assessee.

Summary

Issues:
Cross appeals by assessee and revenue against CIT(A) order for block period 1/4/1991 to 29/5/2001.

Analysis:
1. Background and Assessment Proceedings: The assessee, a real estate partnership firm, faced additions by the AO for on-money paid during property purchase post a search under section 132. The Tribunal remanded the issue to the AO to establish on-money payment.

2. Assessee's Appeal: The CIT(A) rejected additional evidence admission, citing discrepancies in Jayaram's affidavit. The CIT(A) deleted surcharge under section 113 but confirmed on-money addition. The assessee challenged the addition, claiming no on-money paid, supported by seized documents and Jayaram's affidavit.

3. Revenue's Appeal: Referring to Supreme Court judgment, the Tribunal dismissed the revenue's appeal against surcharge levy under section 113.

4. Arguments and Counter-arguments: The assessee contended no on-money paid, emphasizing seized documents and Jayaram's affidavit. The revenue argued non-cooperation by the assessee, supporting the addition based on the transaction timeline and Jayaram's statements.

5. Tribunal's Findings: The Tribunal noted seized documents recording transactions with vendors, concluding transactions were completed by the search date. The assessee failed to produce vendors or evidence against on-money payment. Jayaram's statement and affidavit discrepancies were highlighted, leading to the dismissal of the assessee's appeal.

6. Conclusion: The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of evidence from the assessee to refute on-money payment allegations. Failure to produce vendors or substantial evidence led to the dismissal of the assessee's appeal. The judgment was pronounced on 23rd March 2015.