2021 (6) TMI 203 - AT - Income Tax

Unexplained advance Payments - as argued assessee had not made any payment as it was the other person i.e., Sri Vellampalli Chenchu Venkata Rama Rao having incurred the entire expenditure in favour of Sri Gorantla Radha Krishna towards sale agreement - HELD THAT - The un-disputed fact that emerges herein is that both the learned lower authorities have assessed the assessee qua the sum in issue of ₹ 1.25 lakhs going by agreement entered along with Sri Vellampalli Chenchu Venkata Rama Rao (co-vendee) and paid to Sri Gorantla Radha Krishna for purchase of immoveable property in the relevant previous year. The assessee s stand has denied to have made any payment all along. He has also sought to shift the entire payments burden on the co-vendee as well. We find during the course of hearing that the corresponding agreement nowhere formed part of record as well which could suggest anything to this effect. Learned counsel has also not pleaded that the said agreement had further specified share of the immoveable property between assessee and the other covendee to the extent of less than half each. The only inference that could be drawn in absence of any such evidences or a clause having earmarked payment; vendee-wise, leads to the conclusion that both of them have incurred equal amount of expenditure of ₹ 1,25,00,000/- each forming subject matter of the impugned addition. The assessee tried to further place reliance on the covendee s affidavit dt.07-01-2019 i.e., much after the CIT(A) s lower appellate order and that too, in absence of any such material evident from the agreement. We thus confirm both the lower authorities action making the impugned addition in assessee s hands. Assessee s appeal is dismissed.

Summary

Issues:
1. Confirmation of addition of ?1,25,00,000 in the assessment for AY.2011-12.
2. Admissibility of new evidence during appellate proceedings.
3. Burden of proof regarding payment for property purchase.
4. Interpretation of agreement between co-vendees.
5. Reliance on covendee's affidavit without supporting agreement.

Analysis:

Issue 1:
The assessee appealed against the CIT(A)'s order confirming the addition of ?1,25,00,000. The appellant argued that the entire amount was paid by the other partner, as confirmed by affidavits and letters. However, the lower authorities upheld the addition, stating that the appellant failed to establish a reasonable cause for not submitting the information earlier. The new evidence presented during appellate proceedings was deemed inadmissible as it was submitted after the assessment order. The tribunal dismissed the appeal, affirming the addition.

Issue 2:
During the appeal, the admissibility of new evidence under Rule 46A of the Income Tax Rules was questioned. The appellant's representative failed to establish a reasonable cause for not submitting the evidence earlier. The tribunal noted that the documents were submitted after the assessment order, indicating a lack of merit in the appellant's argument. The tribunal emphasized the importance of timely submission of relevant information during assessment proceedings.

Issue 3:
The crux of the dispute revolved around the payment for the property purchase, with the appellant denying any contribution and attributing the entire payment to the co-vendee. The tribunal observed that the agreement did not specify the share of the property between the co-vendees. In the absence of concrete evidence or clauses indicating unequal payments, both co-vendees were deemed to have equally incurred the expenditure, leading to the addition in the appellant's assessment.

Issue 4:
The interpretation of the agreement between the co-vendees was crucial in determining the liability for the payment. Without clear evidence indicating unequal contributions, the tribunal concluded that both parties shared the expenditure equally. The absence of specific clauses or documented evidence supporting the appellant's claim led to the confirmation of the addition in the assessment.

Issue 5:
The reliance on the covendee's affidavit without substantial supporting documentation or agreement detailing the payment arrangement was deemed insufficient to overturn the lower authorities' decision. The tribunal upheld the addition based on the lack of concrete evidence supporting the appellant's claim of non-payment and the equal sharing of expenses between the co-vendees.

This detailed analysis highlights the key legal and factual aspects of the judgment, addressing each issue comprehensively based on the arguments presented and the tribunal's decision.