2021 (6) TMI 727 - AT - Income Tax

Addition on account of alleged on-money cash receipt - HELD THAT - From the above details of stamp duty value and actual sale amount it is evident that no flat has been sold by the assessee on less than the stamp duty value so as to raise any suspicion about receipt of on-money of sale of flats. All the flats are sold at above stamp duty/market value which itself shows that is it not conclusively proved that the assessee has received any on-money. In view of the fact that original statement of director on the basis of which the AO made addition has been retracted and original statement does not hold good and in view of the fact that flats have been sold at the price much above stamp duty value we hold that the seized material and the statement of Shri Pradeep Gupta do not conclusively prove that on-money has been received by the assessee on sale of flats. In the circumstances the appeal of the assessee is allowed in terms of our aforesaid observations and the Assessing Officer is directed to delete the addition made on account of alleged on-money cash receipt. Unaccounted income received from sale of flats over and above registered value - HELD THAT - As observed that the flats have been sold by the assessee at a price much higher than the stamp duty value and thus the order passed by us while disposing off the appeal of the assessee for A.Y. 2013-14 shall apply mutatis mutandis for disposing the present appeal for A.Y. 2014-15. Accordingly the addition made in the present appeal is also deleted. Ground No. 3 is allowed. Unexplained portion of cash investment in immovable property u/s. 69B - HELD THAT - Addition was also made on the basis of original statement of director of company Shri Pradeep Gupta which does not hold good after the same has been retracted by the director for the reasons given by us in our earlier paragraphs while disposing off the appeal for A.Y. 2013-14. Hence the addition is deleted. Ground No. 4 is allowed.

Issues Involved:
1. Legality of the order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961.
2. Violation of principles of natural justice.
3. Addition of ?1,05,57,000/- as alleged unaccounted income from the sale of flats.
4. Addition of ?32,64,625/- as alleged unaccounted income from the sale of flats.
5. Addition of ?25,50,575/- as alleged unexplained portion of cash investment in immovable property under section 69B of the Act.

Detailed Analysis:

1. Legality of the Order Passed by the Assessing Officer:
The assessee challenged the legality of the Assessing Officer's order under section 143(3) of the Income Tax Act, 1961. The Tribunal considered the rival submissions and facts on record, noting the search and seizure action carried out on the Anand Rathi group, including the office of the director of the assessee company. The Tribunal found that the incriminating material found during the search did not contain any signature or ownership and could be personal documents maintained by the director for his own benefit. The Tribunal concluded that the transactions noted in the seized documents could not be presumed to belong to the assessee company without concrete evidence.

2. Violation of Principles of Natural Justice:
The assessee argued that the CIT(A) passed the order in violation of the principles of natural justice. The Tribunal observed that the Assessing Officer did not make efforts to issue notices or summons to the buyers of the flats to corroborate the cash transactions. The Tribunal emphasized that the Assessing Officer should have made cross-verifications with the buyers, which was not done in this case, leading to a violation of the principles of natural justice.

3. Addition of ?1,05,57,000/- as Alleged Unaccounted Income:
The Tribunal examined the addition made by the Assessing Officer based on the statement of the director, Shri Pradeep Gupta, who later retracted his statement, claiming it was obtained under undue stress and coercion. The Tribunal noted that the retraction made the original statement unreliable. The Tribunal also observed that the flats were sold at prices higher than the stamp duty value, indicating no receipt of on-money. Consequently, the Tribunal directed the deletion of the addition of ?1,05,57,000/- made on account of alleged on-money cash receipts.

4. Addition of ?32,64,625/- as Alleged Unaccounted Income:
For the assessment year 2014-15, the Tribunal found that the issue of receipt of on-money on the sale of flats was similar to the previous year. The Tribunal reiterated that the original statement of the director, which was retracted, could not be relied upon. The Tribunal noted that the flats were sold at prices higher than the stamp duty value, and thus, the addition of ?32,64,625/- was not warranted. The Tribunal directed the deletion of this addition as well.

5. Addition of ?25,50,575/- as Alleged Unexplained Cash Investment:
The Tribunal addressed the addition made under section 69B of the Act, based on the seized material and the statement of the director. The Tribunal noted that the statement of the director was retracted, making the original statement unreliable. The Tribunal held that the addition of ?25,50,575/- as unexplained investment in immovable property was not justified and directed its deletion.

Conclusion:
The Tribunal allowed the appeals of the assessee for both assessment years 2013-14 and 2014-15, directing the deletion of the additions made by the Assessing Officer based on unreliable statements and lack of corroborative evidence. The Tribunal emphasized the need for proper verification and adherence to the principles of natural justice in the assessment proceedings.

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