2020 (9) TMI 1127 - AT - Income Tax

Unaccounted cash receipt for sale of property - during the course of examination by the Investigation Wing, the assessee was confronted with a receipt and the assessee was never asked for any further amount received by him - cancelled receipt which the Investigation Wing considered proper not to confront with the assessee - HELD THAT - A perusal of the receipt which is placed shows that it is a cancelled one. AO has not confronted the contents of the said receipts from Shri Shashi Kant Aggarwal, although his complete address was mentioned in the said sheet of paper. Since the Investigation Wing after considering this cancelled cheque has never confronted the assessee regarding the receipt of ₹ 50 lacs, therefore, in absence of any other corroborative material before the AO, he is not justified in making the addition. A perusal of the assessment order shows that the AO has simply made the addition merely on the basis of presumption. Although the assessee has surrendered an amount of ₹ 11 lakhs, at no point of time the assessee has agreed for addition of ₹ 50 lacs. As mentioned earlier, although complete address of the payer was available in the cancelled money receipt, the AO has never bothered to summon Shri Shashi Kant Aggarwal to find out the authenticity of the said receipt. CIT(A) is not justified in sustaining the addition of ₹ 50 lacs made by the AO on the basis of a cancelled money receipt found during the course of search conducted in the case of Micromax Group of Companies on 10th February, 2011. Accordingly, the same is directed to be deleted. The grounds raised by the assessee are accordingly allowed.

Summary

Issues Involved:
1. Validity of the addition of ?50 lakhs as part of the sale consideration.
2. Evidentiary value of the photocopy of the sheet of paper.
3. Relevance and impact of statements recorded on 18.04.2011 and 26.02.2013.
4. Legal basis for reopening the assessment.

Issue-wise Detailed Analysis:

1. Validity of the Addition of ?50 Lakhs as Part of the Sale Consideration:
The core issue was whether the addition of ?50 lakhs to the sale consideration was justified. The Assessing Officer (AO) substituted the sale consideration at ?69,42,000/- against the declared ?19,42,000/-, based on a seized document indicating a total sale consideration of ?61,00,000/-. The assessee acknowledged receiving ?11 lakhs in cash but denied the receipt of the remaining ?50 lakhs. The CIT(A) upheld the AO's action, stating that the assessee admitted to receiving ?11 lakhs and the seized document was genuine, indicating the total sale consideration was ?61,00,000/-. However, the Tribunal found that the AO made the addition merely on presumption without corroborative material and thus directed the deletion of the ?50 lakhs addition.

2. Evidentiary Value of the Photocopy of the Sheet of Paper:
The assessee argued that the addition was based on a photocopy of a dumb sheet of paper, which lacked authenticity and evidentiary value. The Tribunal noted that the AO did not verify the contents of the sheet from the buyer, whose address was available. The Tribunal emphasized that the Investigation Wing did not confront the assessee with the ?50 lakhs receipt, and the AO made the addition without corroborative evidence. Thus, the Tribunal found the addition unjustified.

3. Relevance and Impact of Statements Recorded on 18.04.2011 and 26.02.2013:
The assessee's statements were pivotal in the case. On 18.04.2011, the assessee admitted to receiving ?11 lakhs in cash but did not mention the ?50 lakhs. Later, on 26.02.2013, the assessee reiterated not receiving any amount beyond ?8,42,000/- as per the sale agreement. The Tribunal noted that the assessee's initial surrender of ?11 lakhs was to buy peace of mind due to ill health, and there was no evidence of the ?50 lakhs receipt. The Tribunal found that the AO's reliance on these statements without further verification was insufficient for the addition.

4. Legal Basis for Reopening the Assessment:
The case was reopened under section 148 based on the belief that the assessee received unaccounted cash of ?11 lakhs plus ?50 lakhs. The Tribunal observed that the AO did not conduct further inquiries to substantiate the receipt of ?50 lakhs. The Tribunal concluded that the reopening was not justified as it was based on unverified presumptions.

Conclusion:
The Tribunal allowed the appeal, directing the deletion of the ?50 lakhs addition. The decision emphasized the need for corroborative evidence and proper verification before making such additions. The Tribunal found the AO's actions based on presumptions and insufficient evidence, thus ruling in favor of the assessee.