2018 (3) TMI 1908 - AT - Income Tax

Addition u/s 69 - addition towards on money payment only on the basis of the investigation conducted by the CBI in the case of EHTPL and reference received from the DCIT, Circle 2(3), Hyderabad - HELD THAT - In this case, AO has not established on the basis of evidence gathered that the assessee has paid on money to the extent quantified by him. In fact, the Department has no piece of evidence against the assessee directly link the assessee towards payment of on money. Yet, merely on the basis of the fact that some other buyers have accepted payment of on-money, the Assessing Officer cannot made addition under section 69 of the Act. Mere acceptance of addition made in the assessment on undisclosed cash deposits in Standard Charted Bank and undisclosed payments on credit card bills issued by the Union Bank of India, cannot be a ground that the assessee has made huge on money warranting addition under section 69 of the Act. The concept of preponderance of probability cannot be applied in this case because, in ground reality, the Department failed to make any enquiry in terms of provisions of section 133 of the Act with Shri Konnaru Rajendra Prasad, Shri T. Ranga Rao, Directors of M/s. Stylish Homes Real Estate (P) Ltd. and recorded their statement of having collected excess amount from the assessee over and above the cost of plot at ₹.5000/-per sq. yard; there was no material evidence to show that the assessee had enough source to make huge undisclosed investments, where, in this case, the source of income of the assessee was only income from salary and no other source of income was detected; or there was any search or survey in the case of the assessee or the plot seller and acquired any piece of evidence of having paid on-money by the assessee. Each case has to be decided according to the facts and based on the material evidence contemplated against the assessee. Revenue has failed to discharge its duties; no piece of evidence against the assessee having paid on money was brought on record and instead, made up a case on surmise and conjectures which cannot be allowed - We set aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the addition made under section 69 of the Act.- Decided in favour of assessee.

Summary

Issues:
Addition made under section 69 of the Income Tax Act, 1961

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the addition made under section 69 of the Income Tax Act for the assessment year 2010-11. The assessee, an individual, initially filed a return of income admitting total income of &8377;5,85,000, which was accepted under section 143(1) of the Act. Subsequently, proceedings were initiated under section 147 of the Act based on an investigation by the Central Bureau of Investigation in connection with a real estate company. The Assessing Officer alleged that the assessee had paid unexplained on-money over and above the sale consideration, resulting in the addition under section 69 of the Act.

The assessee appealed to the CIT(A), who upheld the addition made under section 69 of the Act. The appellant then approached the Tribunal, arguing that the source of income was only from salary, and there was no concrete evidence to support the on-money payment claim. The Department, however, supported the lower authorities' decisions.

Upon review, the Tribunal noted that the assessee's income source was solely from salary, and there was no dispute regarding the source of funds for the property purchase. The addition was made based on the CBI investigation and reference received, without substantial corroborative evidence. Referring to legal precedents, the Tribunal emphasized that the burden of proof lies with the Revenue, and deeming provisions should be strictly construed. In this case, the Department failed to establish with certainty that the assessee had undisclosed income to justify the addition under section 69 of the Act.

The Tribunal highlighted the lack of direct evidence linking the assessee to the alleged on-money payment and criticized the Department's reliance on unrelated cash deposits and credit card transactions to support the addition. It was emphasized that the Department did not conduct a thorough investigation or gather sufficient evidence to substantiate the claim. The Tribunal concluded that the Department's case was based on assumptions and conjectures, lacking concrete proof against the assessee.

Ultimately, the Tribunal ruled in favor of the assessee, setting aside the CIT(A)'s order and directing the Assessing Officer to delete the addition under section 69 of the Act. The decision was based on the failure of the Revenue to fulfill its burden of proof and the lack of substantial evidence against the assessee.