2019 (12) TMI 753 - AT - Income Tax

Addition u/s 69 - addition based on a single loose sheet found from third party - HELD THAT - In the case under consideration, the document in the form of receipt dated 2/5/2012 for ₹ 10 lakhs was seized from a third party and the party from whom the receipt has been seized, categorically stated, vide letter dated 12/2/2016, that the receipt dated 2/5/2016 was cancelled, as no payment has been made by the assessee. No corroborative evidence has been brought on record by the Department to indicate that the assessee had made cash payment of ₹ 10 lakhs for booking of the flat. Merely relying on the receipt, which was seized from a third party, and despite the unrebutted fact that the said receipt had been cancelled by the Company, as affirmed by the Director, in his letter dated 12/2/2016, it cannot be concluded that the assessee had made payment of ₹ 10 lakhs for booking of the flat. Therefore, the addition so made by the AO and confirmed by the CIT(A), purely on guesswork and conjectures and surmises, cannot be sustained. We reverse the order under appeal and delete the addition of ₹ 10 lakhs made u/s 69. - Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Addition of ?10,00,000 under section 69 of the IT Act based on a single loose sheet.
2. Denial of receipt of payment and lack of evidence.
3. Failure to consider correct facts and case laws by the Commissioner of Income Tax (Appeal).
4. Unjustified observations and findings by lower authorities.
5. Unjustified and illegal interest charged under different sections of the IT Act.

Analysis:

Issue 1: Addition of ?10,00,000 under section 69 of the IT Act based on a single loose sheet:
The case involved the assessee appealing against the addition of ?10,00,000 made by the assessing officer under section 69 of the IT Act based on a single loose sheet found from a third party. The assessee contended that no such transaction took place and that the actions of the Commissioner of Income Tax (Appeal) were unjustified. The Tribunal observed that the alleged amount was not paid by the assessee to the company, as confirmed by the director of the company. The Tribunal concluded that the addition made on guesswork and conjectures could not be sustained, leading to the deletion of the ?10,00,000 addition.

Issue 2: Denial of receipt of payment and lack of evidence:
The assessee denied the receipt of payment of ?10,00,000, and the director of the company confirmed that the amount was not paid due to the cancellation of the receipt. The Department failed to provide corroborative evidence indicating cash payment by the assessee. The Tribunal emphasized that relying solely on the seized receipt without evidence of actual payment was unjustified, leading to the deletion of the addition.

Issue 3: Failure to consider correct facts and case laws by the Commissioner of Income Tax (Appeal):
The Commissioner of Income Tax (Appeal) confirmed the addition without considering the correct facts and cited case laws. The Tribunal found this confirmation to be unjustified and arbitrary, leading to the deletion of the addition based on presumption, surmises, and conjectures in the interest of justice.

Issue 4: Unjustified observations and findings by lower authorities:
The observations and findings of the lower authorities were deemed highly unjustified, incorrect, and contrary to the actual facts of the case. The Tribunal concluded that the addition made and confirmed based on presumption, surmises, and conjectures should be deleted in the interest of justice.

Issue 5: Unjustified and illegal interest charged under different sections of the IT Act:
The Tribunal found the interest charged under different sections of the IT Act to be highly unjustified and illegal in the given facts and circumstances.

In conclusion, the Tribunal allowed the appeal of the assessee, reversing the order under appeal and deleting the addition of ?10,00,000 made under section 69 of the IT Act.