2020 (3) TMI 1196 - AT - Income Tax

Assessment u/s 153C - Unexplained cash receipt u/s 69A - HELD THAT - The only basis of making impugned addition was loose paper found at the premises of the third party. However, no corresponding incriminating material was found from assessee s premises which would corroborate the same. In fact, each and every document impounded from assessee s premises was explained during the course of assessment proceedings and no infirmity could be found in the same. It was incumbent upon Ld. AO to make further inquiries in the matter to substantiate the veracity of the loose paper and bring on record cogent material / evidences to establish that cash was received by the assessee. In the absence of any such incriminating material/ evidences, no such addition could be made in the hands of the assessee. It is also evident that booking of flats against which the cash was alleged to be received by the assessee was already cancelled much before the date of search and cheque amount was already refunded by assessee to other party which would further weaken the stand of Ld.AO. Therefore, no fault could be found with the approach of Ld. first appellate authority. Our view find support from the decision rendered in CIT V/s Maulikkumar K.Shah 2007 (7) TMI 267 - GUJARAT HIGH COURT wherein Hon ble Court refused to admit revenue s appeal, inter-alia by noting that Ld. AO had not brought any corroborative material on record to prove that on-money was received. The onus was on revenue to prove with corroborative evidence that the entries in the seized dairy actually represented the sales made by the assessee. Mere entries in the seized material was not sufficient to prove that the assessee has indulged in such a transaction - additions based on mere presumptions and assumptions and without any corroborative evidence could not be sustained. - Decided against revenue.

Summary

Issues:
Appeal against deletion of addition of ?1,96,25,000 made in hands of assessee for AY 2011-12.

Analysis:
1. The appeal contested the deletion of the addition of ?1,96,25,000 made in the hands of the assessee without appreciating the matching entries of cheque on seized digital document with the assessee's books and the contents of the MOU. The issue revolved around the authenticity of the seized documents.

2. The assessee, engaged in building construction, was assessed under section 143(3) r.w.s. 153C and faced an addition of ?196.25 Lacs for unexplained cash receipt. The search action on alleged accommodation entry providers revealed cash payments made to the assessee, leading to a notice under section 153C for AYs 2011-12 to 2014-15. The seized material included loose papers, voucher book, and digital data, with discrepancies in the cash transactions found.

3. The Ld. AO added the alleged cash component of ?196.25 Lacs to the assessee's income as unaccounted money under section 69A. The assessee contended that the loose paper was not found at its premises, was not signed by anyone related to the firm, and was a "dumb document" without evidentiary value. The Ld. CIT(A) deleted the additions, citing various judicial pronouncements and lack of corroboration.

4. The Ld. CIT(A) found that the loose papers were not found at the assessee's premises, were not signed by anyone related to the firm, and lacked evidentiary value. The additions based on these papers were considered unjustified, and the MOU was deemed inadmissible as it was not signed by relevant parties. The Ld. CIT(A) concluded that the additions made by the AO were not sustainable factually and legally.

5. The Tribunal concurred with the Ld. CIT(A)'s decision, emphasizing the lack of incriminating material from the assessee's premises to support the addition. The cancellation of flat bookings before the search date and the refund of cheque amounts weakened the AO's stance. The Tribunal referred to a similar case where the revenue failed to prove on-money receipts, highlighting the necessity of corroborative evidence for such additions.

6. Citing the decision of the Hon'ble Gujarat High Court, the Tribunal dismissed the appeal, stating that the revenue failed to provide corroborative evidence to support the addition. Mere entries in seized material were insufficient to prove the alleged transactions, and the additions based on assumptions without concrete evidence could not be upheld.

This detailed analysis of the judgment highlights the key legal and factual aspects considered by the authorities and the Tribunal in reaching their decision to dismiss the appeal.