2011 (6) TMI 1030 - AT - Income Tax

Summary

Issues Involved:
1. Unexplained investment in the purchase of office property.
2. Reliance on seized documents and comparable cases.
3. Application of legal principles and precedents.

Summary:

Unexplained Investment in Purchase of Office Property:
The appeal by the assessee challenges the order of the CIT(A) confirming the addition of alleged unexplained investment in the purchase of an office at Dev-Shops & Offices. The AO added Rs. 25,00,000/- as unexplained investment u/s 69B of the IT Act based on seized documents during a search u/s 132 at the residence of Shri Dipak Thakkar. The AO concluded that the assessee made a cash payment of Rs. 25,00,000/- in addition to a cheque payment of Rs. 5,00,000/- for the office purchase.

Reliance on Seized Documents and Comparable Cases:
The AO referred to similar transactions involving other parties who admitted to making cash payments over and above the recorded amounts. The AO cited various legal precedents to support the addition, including cases where the prevailing practice of paying "on money" was considered even if denied by the purchaser. The CIT(A) upheld the AO's decision, relying on the loose papers found during the search.

Application of Legal Principles and Precedents:
The assessee argued that only Rs. 8,89,700/- was paid through cheques and no additional cash payment was made. The assessee cited an ITAT Ahmedabad order in a similar case (M/s. Trident Creation Pvt. Ltd.) where an identical addition was deleted. The Tribunal found that the seized papers did not conclusively prove the payment of "on money" by the assessee. The Tribunal noted that no statements from the builder or comparable cases were relied upon by the AO. The Tribunal emphasized that the burden of proof was on the AO to establish the payment of "on money," which was not discharged.

Conclusion:
The Tribunal concluded that the addition was made merely on suspicion and assumptions without sufficient evidence. The Tribunal set aside the orders of the authorities below and deleted the entire addition of Rs. 25,00,000/-. The appeal of the assessee was allowed.

Order Pronounced on 30-06-2011.