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Issues Involved:
1. Addition of Rs. 3,81,414/- on account of alleged "on money" paid by the assessee for investment in a flat. Issue-wise Detailed Analysis: 1. Addition of Rs. 3,81,414/- on account of alleged "on money" paid by the assessee for investment in a flat: The core issue in the appeal is whether the addition of Rs. 3,81,414/- as "on money" paid by the assessee for purchasing a flat is justified. The facts reveal that the assessee purchased a flat from M/s. Ohm Developers. During a search at the business premises of M/s. Ohm Developers, a paper was seized indicating that the assessee had made a total payment of Rs. 6,69,725/-, with Rs. 4,83,101/- relating to the year under consideration. The assessee's records showed a payment of only Rs. 1,01,687/-, leading to a difference of Rs. 3,81,414/-, which the Assessing Officer (AO) treated as unexplained payment and added to the assessee's income as undisclosed income. Upon receiving a show cause notice, the assessee requested a copy of the statement from Shri Ketan O. Der, a partner at M/s. Ohm Developers, who confirmed receiving "on money" for the flat. Despite cross-examining Shri Ketan O. Der, where he reiterated receiving "on money," the assessee denied making any such payment. The AO, relying on the seized paper and Shri Ketan O. Der's statement, added the amount to the assessee's total income. In appeal, the assessee contended that the seized paper was not written by the assessee or its representatives but by an employee of M/s. Ohm Developers. The assessee argued that there was no corroborative evidence apart from the seized paper and the partner's statement to prove the payment of "on money." The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's addition, citing the partner's admission and the prevalent custom of part payment in cash in property transactions. The assessee's representative argued that the addition could not be sustained solely based on the partner's statement without corroborative evidence. They cited the Bombay High Court's decision in Additional Commissioner Of Income Tax vs. Miss Mangeshkar (1974) 97 ITR 696 (BOM), which emphasized the need for corroborative evidence beyond ledger entries and statements. Similarly, the Ahmedabad Tribunal in Assistant Commissioner Of Income Tax vs. Prabhat Oil Mills (1995) 52 TTJ (Ahd) 533, held that mere entries in a third party's accounts without corroborative evidence are insufficient to prove unrecorded transactions. The Tribunal noted that the Revenue failed to provide evidence that the assessee paid the disputed amount. The seized document was not in the assessee's handwriting, and no corroborative evidence was found during the search. The Tribunal referenced the Supreme Court's decision in K.P. Varghese V. ITO [1981] ITR 597, which held that mere seizure of documents at an employee's residence does not conclusively prove that the employer received "on money." The Tribunal concluded that the CIT(A) was not justified in confirming the addition based solely on the partner's statement and the seized document without positive evidence. In conclusion, the Tribunal deleted the addition of Rs. 3,81,414/- and allowed the assessee's appeal, emphasizing the need for corroborative evidence to substantiate claims of undisclosed income. The judgment underscores the principle that statements and documents from third parties require corroboration to be considered reliable evidence in tax assessments.
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