2018 (5) TMI 1930 - AT - Income Tax

Unexplained cash amount paid for purchase of office/ flat based on material found during the search on Hiranandani group of cases - Genesis of the conclusion of AO was that the assessee has paid on money for purchase of property under consideration was based on contents of pen drive which was seized from the residence of an ex e-employee of the Hiranandani group of cases - HELD THAT - As decided in SHRI. ANIL JAGGI case 2018 (2) TMI 51 - ITAT MUMBAI material relied upon by the lower authorities does not corroborate the adverse inferences drawn as regards the investment made by the assessee, therefore, the same cannot conclusively form a basis for concluding that the assessee had made payment of on money for purchase of the property under consideration. We thus in the backdrop of our aforesaid observations are of the considered view that the adverse inferences drawn by the A.O as regards payment of on money by the assessee for purchase of Flat are based on of premature observations of the A.O, which in the absence of any clinching evidence cannot be sustained. We thus are unable to subscribe to the view of the lower authorities and set aside the order of the CIT (A) sustaining the addition in the hands of the assessee - Decided in favour of assessee.

Summary

Issues Involved:
1. Additional ground raised and withdrawn by the assessee.
2. Addition of unexplained cash amount paid for the purchase of office/flat based on material found during a search on Hiranandani group of cases.

Issue 1: Additional Ground Withdrawn
The first issue in this appeal pertains to an additional ground raised by the assessee, which was subsequently withdrawn by the counsel for the assessee under the instruction of the assessee. The Tribunal dismissed this additional ground as withdrawn.

Issue 2: Addition of Unexplained Cash Amount
The primary issue in this case concerns the addition of an unexplained cash amount paid for the purchase of an office/flat, based on material discovered during a search on the Hiranandani group of cases. The Assessing Officer (AO) made an addition of ?2,42,500 as unexplained cash payment for the purchase of an office, which the assessee contested. The assessee explained that no such payment was made, but the AO disregarded this explanation and added the amount to the assessee's income. The Commissioner of Income Tax (Appeals) upheld the AO's decision, leading to the assessee appealing to the Tribunal.

Upon review, the Tribunal noted that the genesis of the AO's conclusion was based on contents of a pen drive seized during the search. Drawing parallels with a similar case, the Tribunal observed that the evidence presented did not conclusively prove the alleged payment of "on money" by the assessee. The Tribunal highlighted the lack of crucial details in the evidence, such as the source of information and corroborative evidence. It was also noted that the market value of the property further supported the assessee's claim. Consequently, the Tribunal found that the material relied upon by the lower authorities did not substantiate the allegations, leading to the deletion of the addition and allowing the appeal of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, deleting the addition of the unexplained cash amount and allowing the appeal.

This comprehensive analysis addresses the issues raised in the legal judgment, providing a detailed explanation of the facts, contentions, and the Tribunal's decision.