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2020 (5) TMI 486 - AT - Income TaxAssessment u/s 153A - Documents recovered from the laptop - presumption - Addition of commission - HELD THAT - If there is income element in the documents seized form the possession of the assessee, then there was no requirement of bringing any corroborative material on record. However, there has to be existence of income in the documents seized. If the documents seized does not show any income earned by the assessee, then ld AO cannot rest on provision of section 292C without bringing any corroborative material on record. AO did not examine buyers of the property with respect to the commission paid by them to the assessee. Even assessee was also not questioned during the course of search with respect to these three letters. As we have already held that there is no income accrues to the assessee based on these three documents, without bringing any corroborative material, it could not have been taxed in the hands of the assessee. While confirming the addition, ld CIT (A) was of the view that TIDCO has won bid for the property in 2006 for ₹ 117 crores, TIDCO sold that property in 2010, therefore, market value of the property would have gone up to ₹ 200 -300 crores and assessee therefore would have received the commission. Sale deed of the property shows consideration of ₹ 122 Crores only. There was no corroboration of the valuation presumed by the dl CIT (A). He did not bring on record even the circle rate of the property to show that market value of the property has increased so much. Alleged commission was only ₹ 17.50 Crores. Had the property price would have gone up by (assuming at the lowest estimate of ld CIT (A) of ₹ 200 crores then the property is appreciated by ₹ 83 Crores ( ₹ 200 -117 ) Crores. Had the appreciation been so much, nobody would have forgone the profit of ₹ 83 Crores for ₹ 17.50 Crors. Therefore, such reason given by the CIT (A) cannot be the basis for confirming the addition. We reverse the orders of the lower authorities and direct the ld AO to delete the addition of commission income in the hands of Mr. Madhur Mittal and Mr. Sumit Mittal - Decided in favour of assessee.
Issues Involved:
1. Validity of rejection of grounds of approval for making the assessment. 2. Confirmation of the addition of ?8.75 crores based on unsigned draft documents found during a search operation. 3. Consideration of independent grounds of appeal. Detailed Analysis: 1. Validity of Rejection of Grounds of Approval for Making the Assessment: The assessee challenged the rejection of the grounds of approval taken for making the assessment. The Commissioner of Income Tax (Appeals) [CIT (A)] upheld the assessment, stating that the grounds were not provided before the completion of the assessment. The Tribunal did not find any specific discussion on this issue in the judgment, indicating that the primary focus was on the addition of ?8.75 crores. 2. Confirmation of the Addition of ?8.75 Crores Based on Unsigned Draft Documents: The main contention was the addition of ?8.75 crores in the hands of the assessee based on unsigned draft documents found during a search operation. The facts reveal that during the search on the "Triveni Group" of companies, documents (Annexure A-23) were seized from the laptop of the assessee, indicating a commission of ?8.75 crores for the sale of a property at 7, Sikandra Road, New Delhi. The assessee argued that these documents were hypothetical and never acted upon, as evidenced by an email dated 24 February 2010, where the assessee declined the commission offer due to pending court cases. The Tribunal noted that the documents were unsigned and merely indicated an agreement to pay the commission, which was subsequently refused by the assessee. The Tribunal emphasized that the assessee had provided a rebuttal to the presumption under section 292C of the Income Tax Act by showing that the offer was not accepted. The Tribunal held that the addition was made solely based on the offer letters without considering the refusal email, which was part of the same set of documents. The Tribunal further highlighted that no corroborative evidence was found to support the receipt of the commission, and the assessee's bank accounts and books of accounts did not reflect any such payment. The Tribunal concluded that the assessing officer's reliance on the unsigned documents without considering the refusal email was incorrect, and there was no income accruing to the assessee from the alleged commission. 3. Consideration of Independent Grounds of Appeal: The assessee's argument that each ground of appeal is independent was noted but not specifically addressed in detail, as the primary focus remained on the addition of ?8.75 crores. Conclusion: The Tribunal reversed the orders of the lower authorities, directing the deletion of the addition of ?8.75 crores in the hands of the assessee. The Tribunal found that the documents seized did not conclusively prove the receipt of the commission, and the assessee had successfully rebutted the presumption under section 292C of the Income Tax Act. Both appeals of the assessee were allowed, and the addition was deleted.
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