2021 (9) TMI 70 - AT - Income Tax

Addition u/s 69 - unexplained investment - on money payment made by the assessee for purchase of shop - HELD THAT - On-money payments while selling its shop and flats. AO in the case of M/s. Runwal Homes Pt. Ltd., had applied the same rate for all the shops and flats sold and arrived at the addition figure to be added as undisclosed income in the hands of M/s. Runwal Homes Pvt. Ltd. Tribunal in the case of M/s. Runwal Homes Pvt. Ltd. 2017 (12) TMI 1216 - ITAT MUMBAI had restricted the said addition only to the extent of incriminating material available during the course of search and deleted the estimation made on account of extrapolation of rate per sq. ft. Entire addition in the assessee's case has been made on the basis of mere statement of Shri Subhodh Runwal and there is absolutely no material involved which is not linked with the on money payment made by the assessee for purchase of shop - even in the same statement of Shri Subhodh Runwal, he had categorically stated that he even disagreed with the department that he had received cash from all sale of shops and flats made by M/s. Runwal Homes Pvt. Ltd. With regard to the estimated addition on account of extrapolation of rate per square feet uniformly for all sale of flats/shops, we find that the same has been already deleted by this Tribunal in the case of M/s. Runwal Homes Pvt. Ltd., vide its order dated 20/12/2017 referred supra. There is absolutely no case for sustenance of the very same estimated addition in the hands of the assessee towards unexplained investment made for purchase of shop. It is for the Revenue to bring on record evidences that assessee had indeed made on-money payments over and above the agreement value. Reliance in this regard is placed on the celebrated decision in the case of K.P. Varghese 1981 (9) TMI 1 - SUPREME COURT - we have no hesitation in directing the ld. AO to delete the addition made in the sum u/s. 69 of the Act in the hands of the assessee.

Summary

Issues:
Confirmation of addition under section 69 of the Income Tax Act as unexplained investment.

Analysis:
The appeal in question arose from an order by the Commissioner of Income Tax (Appeals)-40 against the assessment order passed by the Deputy Director of Income Tax. The primary issue was whether the addition made under section 69 of the Income Tax Act as unexplained investment of ?1,10,71,250 was justified. The assessee, an individual, had filed her return of income for the relevant assessment year, declaring total income of ?26,56,810. The dispute arose from alleged on-money payment made by the assessee to a builder for purchasing a shop. The builder had accepted additional income in a separate case, but the assessee denied making any cash payment and provided detailed explanations supported by documentary evidence. Despite the assessee's contentions, the Deputy Director of Income Tax proceeded to make the addition, which was upheld by the Commissioner of Income Tax (Appeals).

During the assessment proceedings, the assessee denied making the alleged cash payment in her statement recorded under oath. The Deputy Director of Income Tax relied on the builder's statement regarding on-money payments but failed to consider crucial factors. The builder had clarified that not all sales involved on-money payments, and the specific shop purchased by the assessee was not mentioned in the list of such transactions. Additionally, the Tribunal had previously rejected a similar estimation method in a case involving the same builder. The Tribunal found no concrete evidence linking the alleged on-money payment to the assessee and emphasized the need for the Revenue to substantiate such claims. Citing relevant legal precedents, including the decision in K.P. Varghese vs ITO, the Tribunal directed the deletion of the addition made under section 69 of the Act in the assessee's case. Consequently, the Tribunal allowed the grounds raised by the assessee and partly allowed the appeal.

In conclusion, the Tribunal's detailed analysis highlighted the lack of evidence connecting the alleged on-money payment to the assessee, emphasizing the importance of concrete proof in such cases. The decision underscored the necessity for the Revenue to establish the veracity of claims regarding undisclosed investments, in line with established legal principles and precedents.