2017 (10) TMI 420 - AT - Income Tax

Addition on seized documents - unexplained cash receipts - addition under house property - survey u/s 133A - Held that - The burden was on the assessee to disprove the documents which, in our opinion, he has failed to do. The cash receipt dated 24.10.2007 for ₹ 8,75,000/- is duly signed by the executant as well a witness. CIT(A) has also mentioned that while filing rejoinder to the remand report, the assessee had submitted that he had filed a rectification application u/s 154 to the Assessing Officer wherein the assessee had claimed to be only 75% owner of the premises and had also stated that if at all an addition had to be made in his hands on the basis of impounded documents, it should only be to the extent of 75% of ₹ 2,25,000/- i.e. a sum of ₹ 1,68,750/- only. Ld. CIT(A) has given proportionate relief to the assessee on this account by restricting the addition to ₹ 1,68,750/- only. As far as the assessment order for the succeeding assessment year 2009-10 is concerned, it is seen that the income under the head house property has been accepted without any discussion by the Assessing Officer and it is not discernible from the assessment order as to how the income from house property was accepted without any inquiry. - Decided against assessee.

Summary

Issues:
- Addition of cash component of rent not declared by the assessee
- Validity of impounded documents as evidence
- Assessment for the succeeding year

Analysis:

Issue 1: Addition of cash component of rent not declared by the assessee
The case involved an appeal by the assessee against the addition made by the Assessing Officer regarding a cash component of rent not declared. The impounded documents during a survey indicated that the assessee received cash rent, leading to the addition of undisclosed rental income. The assessee argued that both the tenant and co-owner confirmed no cash component in the rent. However, the CIT(A) upheld the addition, considering the impounded documents and the appellant's failure to disprove them. The CIT(A) restricted the addition to 75% of the amount, in line with the ownership share of the premises. The Tribunal upheld the CIT(A)'s decision, emphasizing the burden on the assessee to refute the impounded documents, which was not done satisfactorily.

Issue 2: Validity of impounded documents as evidence
The impounded documents, including a cash receipt and rental agreement, were crucial in determining the undisclosed rental income. The CIT(A) and the Tribunal found these documents to be significant evidence, especially since the appellant failed to provide convincing counter-evidence. The Tribunal highlighted the importance of these documents, signed by relevant parties, in establishing the cash component of rent received by the assessee.

Issue 3: Assessment for the succeeding year
The Tribunal noted discrepancies in the assessment for the succeeding year, where the rental income was accepted without inquiry. This raised questions about the consistency and thoroughness of assessments by the Assessing Officer. However, the Tribunal decided not to deviate from the CIT(A)'s findings and conclusions, ultimately upholding the order and dismissing the appeal of the assessee.

In conclusion, the Tribunal affirmed the CIT(A)'s decision to uphold the addition of undisclosed rental income based on impounded documents, emphasizing the importance of evidence and the burden of proof on the assessee. The assessment for the succeeding year raised concerns about consistency in assessments but did not impact the outcome of the current appeal.