2016 (5) TMI 1263 - HC - Income Tax

Addition of unaccounted income based on the seized document - ITAT deleted the addition - Held that - Addition was made by the Assessing Officer only relying upon the draft MOU which is an unsigned one. There is no other corroborative evidence brought on record either as a result of search or enquiry made by the Assessing Officer, which could establish the fact that the contents of the draft MOU were true and the MOU was in fact acted upon. Therefore, in the absence of any such evidence, the MOU is merely a dumb document having no evidentiary value and hence cannot be made the basis for making an addition. That apart, as has been elaborately discussed by the CIT(A), even assuming the draft MOU to be correct, there is neither mention of the consideration paid nor mode of such payment. Moreover, when as per the draft MOU, the consideration has to be paid both to the assessee and M/s.Radha Realty Corporation Ltd., the entire payment being the differential amount could not have been assessed in the hands of the assessee alone. It is also a fact to take note of that the final sale deed dated 22.08.2007 in favour of DLF with regard to sale of land in dispute, does not mention about any payment being made to the assessee or his nominees. That being the case, it cannot be said that the assessee has received the amount of ₹ 13.81 crores in cash towards the sale of land merely on the basis of the draft MOU. Thus additions deleted confirmed - Decided against revenue

Summary

Issues:
1. Whether the Tribunal was correct in upholding the deletion of addition of unaccounted income based on a seized document?

Analysis:
The case involved an appeal by the Revenue under Section 260-A of the Income Tax Act, 1961, regarding the deletion of an addition of Rs. 13.81 crores as unaccounted income of the respondent-assessee. The respondent, an individual, had suppression of receipts on the sale of land, leading to the addition of unaccounted income based on a seized document, a Memorandum of Understanding. The Commissioner of Income Tax (Appeals) directed the Assessing Officer to delete a portion of the addition as the seized document had no evidentiary value. However, the Tribunal dismissed the appeal by the Department, upholding the deletion of the addition of unaccounted income.

The main contention raised by the Revenue was that the addition was based on the seized document, which was reflected in the final registration document, and the Tribunal erred in deleting the addition. The Tribunal, in its order, highlighted that the addition was made solely based on the draft MOU, which was unsigned and lacked corroborative evidence to establish its authenticity or execution. The draft MOU did not mention the consideration paid or the mode of payment, and it did not specify the recipients of the payment. Additionally, the final sale deed did not reference any payment made to the assessee or his nominees. Therefore, the Tribunal concluded that the MOU had no evidentiary value and could not be the basis for making the addition of unaccounted income.

The High Court, in its judgment, upheld the Tribunal's decision, emphasizing that there was no perversity in the Tribunal's order. The Court noted that the findings of fact were categorical, and there was no material to dispute those findings. The Court concluded that the matter was purely a question of fact, with no substantial question of law warranting interference. Consequently, the appeal was deemed devoid of merits and dismissed, with no order as to costs. Any pending Miscellaneous Petitions were also disposed of as infructuous in light of the appeal's dismissal.