2015 (11) TMI 1435 - AT - Income Tax

Addition on disclosed additional income - Held that - For the total cash payment of ₹ 38 lac for first time, in reply to show cause notice, the assessee faintly urged that the statement by the director was not voluntary and sought to retract it. The tribunal refused to accept such retraction. Dismissing the assessee s appeal, the Hon ble High Court held that the tribunal was correct in adding back amount after adjusting expenditure. As the retraction in the extant case also came after a long time and further it is contrary to the evidence found at the time of survey, we, therefore, approve the view of the ld. CIT(A) in not accepting the retraction made by the assessee. As regards the advance of ₹ 13 lac, the assessee filed a letter before the ld. CIT(A) from one Shri Mohammed Jamil, stated to be the owner of the said property. The ld. CIT(A) noticed that the receipt showed the name of Shri Amit Chauhan as the recipient and not Shri Mohammed Jamil. When this discrepancy was pointed out by the ld. CIT(A), the assessee could not explain anything. However, on a later date, an affidavit from Shri Amit Chauhan was filed denying the above transaction. Similarly, for ₹ 25 lac, the assessee filed a letter along with an affidavit in the name of Shri Atul Jain stating that he had not received the said amount from the assessee. In our considered opinion, these affidavits filed by the assessee before the ld. CIT(A) are self serving documents having no evidentiary value, when seen in the backdrop of the facts that the two documents evidencing the assessee having made payments of ₹ 25 lac and ₹ 13 lac were found from his own briefcase at the time of survey and he admitted that these represented payments made by him in cash out of commission income which was not recorded in the books of account. Adverting to the facts of the instant case, we find that the assesee came out with some self serving affidavits for the first time at the stage of the first appeal. These affidavits in our considered opinion have been rightly jettisoned by the ld. CIT(A) as the averments in them run contrary to the evidence found at the time of survey, which evidence was accepted by the assessee as correct. No exception can be found from the impugned order sustaining the addition to the tune of ₹ 26,50,500/-. The same is, therefore, upheld. - Decided against assessee

Summary

Issues:
Sustenance of addition of Rs. 26,50,500 only.

Analysis:
The appeal before the Appellate Tribunal arose from an order passed by the CIT(A) related to the assessment year 2006-07. The only issue in the appeal was the sustenance of the addition of Rs. 26,50,500. The assessee, a property dealer in real estate business, had surrendered an additional income of Rs. 40 lakh during a survey action, based on impounded documents. However, in the return, the disclosed additional income was only Rs. 11,49,500. The Assessing Officer made an addition of Rs. 28,50,500, which was reduced to Rs. 26,50,500 by the CIT(A), leading to the appeal.

During the survey, documents were found indicating payments made by the assessee for property deals. The assessee explained the source of these payments, linking them to commissions earned on resale of plots. The CIT(A) restricted the total surrender to Rs. 38 lakh, as evidence was only for that amount. The Tribunal found this restriction justified and noted that the Revenue did not appeal against the deletion of the remaining Rs. 2 lakh addition.

Regarding the cash payments not recorded in the books, the assessee initially admitted to the surrenders but later tried to retract the admission. The Tribunal cited a High Court case where a similar retraction was not accepted due to delayed timing and contrary evidence. The Tribunal upheld the CIT(A)'s decision not to accept the retraction.

Affidavits filed by the assessee during the appeal process were deemed self-serving and lacking evidentiary value, as they contradicted the evidence found during the survey. Citing a High Court ruling, the Tribunal agreed with the CIT(A) in rejecting these affidavits. Ultimately, the Tribunal found no reason to overturn the order sustaining the addition of Rs. 26,50,500, and the appeal was dismissed.