2018 (10) TMI 1220 - AT - Income Tax

Unaccounted income of the assessee - proof of loan advanced to the assessee - proof of withdrawal of money - Held that - In the unregistered agreement dated 23/09/2006, there is no reference to Mr. M. Viswa Mohan. It is only entered by Mrs. K. Bhanumathi. That apart, CIT(A) gave a categorical finding that there were no withdrawals from his bank account; that apart neither Mrs. K. Bhanumathi nor Mr. M. Viswa Mohan has made a mention about the details of the payment i. e. when money has withdrawn, how much money was withdrawn, how much was paid etc. Therefore, when huge money is advanced to the assessee on the guise of unregistered sale agreement in 2006 in so far, the assessee either executed the sale deed or repaid the amount. There is no correspondence available on record to show that subsequent to the payment of the advance, neither by Mrs. K. Bhanumathi nor by M. Viswa Mohan made any efforts to receive the amount or to register the sale deed in their favour. Under these facts and circumstances of the case, these confirmation letters issued by both the parties Mrs. K. Bhanumathi and Mr. M. Viswa Mohan cannot be considered as evidence that the assessee has received amount from the above parties. In view of the above, we are of the opinion that the Assessing Officer has rightly made the addition as unaccounted income of the assessee and the same is confirmed by the ld. CIT(A). - decided against assessee.

Summary

Issues Involved:
1. Legitimacy of the unexplained investment of ?1,45,00,000.
2. Admissibility and credibility of additional evidence.
3. Validity of the assessee's retraction of the initial statement.
4. Compliance with procedural requirements during the assessment and appellate proceedings.

Detailed Analysis:

1. Legitimacy of the unexplained investment of ?1,45,00,000:

The case revolves around the unexplained investment of ?1,45,00,000 by the assessee. During a search operation under section 132 of the Income Tax Act, 1961, incriminating materials indicated that the firm M/s. Classique Farms & Estates had paid an extra amount of ?4,43,00,000 in cash for acquiring land. The assessee, being a partner, admitted to an unaccounted investment of ?2,21,50,000 but later retracted ?1,45,00,000, claiming it was an advance received from Smt. K. Bhanumathi and Mr. N. Ravi Kumar. The Assessing Officer (AO) made an addition of ?1,45,00,000 towards unexplained investment as the assessee failed to provide any evidence to substantiate the claim. The AO also added ?5,21,500 towards income from long-term capital gain, determining a total income of ?3,01,12,990.

2. Admissibility and credibility of additional evidence:

During the appellate proceedings, the assessee filed additional evidence under Rule 46A, including an unregistered agreement of sale, passport copy, and confirmation letters. The Commissioner of Income Tax (Appeals) [CIT(A)] admitted the additional evidence and called for a remand report from the AO. The AO reported that despite multiple opportunities, the assessee failed to produce the parties or provide substantial evidence. The CIT(A) found the additional evidence unconvincing, noting discrepancies and the lack of credible documentation to support the claim of receiving ?1,45,00,000 as an advance.

3. Validity of the assessee's retraction of the initial statement:

The assessee initially admitted to an unaccounted investment of ?2,21,50,000 during the search but later retracted, claiming an advance of ?1,45,00,000. The CIT(A) and the Tribunal found the retraction unconvincing, noting that the assessee failed to mention the advance during the search or in the immediate aftermath. The Tribunal highlighted that the assessee's claim of receiving the advance nearly two years after the search lacked credibility, especially given the absence of supporting documentary evidence and the failure to produce the concerned parties.

4. Compliance with procedural requirements during the assessment and appellate proceedings:

The Tribunal examined the procedural aspects, noting that the AO provided multiple opportunities for the assessee to substantiate the claim. Despite this, the assessee failed to produce the parties or provide credible evidence. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee's failure to disclose the advance during the search or shortly thereafter, and the lack of supporting documentation, rendered the claim untenable. The Tribunal also dismissed the relevance of the case-law cited by the assessee, affirming the addition of ?1,45,00,000 as unaccounted income.

Conclusion:

The appeal was dismissed, and the addition of ?1,45,00,000 towards unexplained investment was upheld. The Tribunal found no infirmity in the CIT(A)'s order, concluding that the assessee's claim of receiving an advance was an afterthought and lacked credible evidence. The procedural requirements were duly followed, and the assessee's failure to substantiate the claim led to the confirmation of the addition.