2016 (6) TMI 960 - HC - Income Tax

Unaccounted moneys paid to the builder for the purchase of a shop - Held that - The Department has failed to discharge its obligation to prove the income or any payment is made on behalf of the appellant. In view of the well settled law no additions can be made on the basis of probabilities and therefore the appeals are required to be allowed in favour of assessee

Summary

Issues:
Appeals against common order passed by ITAT - Addition of unexplained investment in purchase of shop - Failure to consider cross-examination - Questions of law framed - Contention regarding error in not considering cross-examination - Reliance on previous court decisions - Department's submission on tribunal's order - Analysis of evidence and findings - Discharge of burden of proof by the Department - Decision in favor of the assessee.

Detailed Analysis:

1. Common Order by ITAT:
- Appeals were filed against the ITAT's common order dated 21/04/2016 where the appeals of the assessee were dismissed. The appellant had purchased a shop in Ashoka Tower, Surat, and the addition of unexplained investment was made based on floor-wise receipts recorded in a seized diary during a raid at the builder's residence.

2. Cross-Examination and Tribunal's Decision:
- The Tribunal sent the matter back to the AO for fresh adjudication but upheld the addition in the hands of the assessee. The crossexamination of the builder was crucial, as it was argued that any order passed before the crossexamination would not be reliable. Despite the crossexamination and builder's statements, the Tribunal held that the Department had discharged the onus to prove unexplained investment.

3. Questions of Law and Contention:
- The Court framed questions regarding the evidence of payment by the assessee and the alleged perversity in the findings. The appellant contended that the Tribunal erred in not considering the crossexamination done on 08/09/2005, emphasizing specific questions raised during the examination.

4. Reliance on Previous Court Decisions:
- The appellant relied on previous court decisions to support the argument that no addition can be made solely on assumptions without concrete evidence. The decisions highlighted the importance of establishing a link between parties and the need for reliable material to prove higher consideration or unexplained payments.

5. Department's Submission and Court's Decision:
- The Department argued in favor of the tribunal's order, but the Court, considering the law and previous decisions, found that the Department failed to discharge its obligation to prove the unexplained income or payments made by the appellant. The Court held that no additions can be made based on probabilities alone, leading to a decision in favor of the assessee.

6. Conclusion:
- In conclusion, the Court allowed the appeals, answering the questions of law in favor of the assessee and against the Department. The decision emphasized the importance of discharging the burden of proof and the need for concrete evidence to support any additions or claims made by the Department.