2022 (4) TMI 235 - AT - Income Tax

Addition on money receipts - During the course of search in the office premises of the assessee books and documents were seized - whether the amount being 50% share of Shri S. Asokan, the assessee, is explained or unexplained? - HELD THAT - Admittedly, these are found during the course of search from the documents seized. It is revealed that the plots are sold at the rate of ₹ 175 per sq.ft., and selling area is 23909 sq.ft., sold to Shri K.P. Palani Brothers in the financial year 2009-10 relevant to this assessment year 2010-11. We noted that the AO has rightly made addition in the hands of the assessee based on evidences gathered during the course of search which are not rebutted by the assessee. Hence, we confirm the orders of lower authorities on this issue and this issue of assessee s appeal is dismissed. Addition of rate difference of sale value between the developer and the land owners - HELD THAT - This extent of land of 29744 sq.ft., was sold by assessee to Shri M.N. Palani in assessment year 2008-09 i.e., Plot Nos. 1 to 13 Shop No.1. The fact regarding sale by assessee to Shri M.N. Palani is recorded in the seized documents but there is no mention of repurchase by assessee of the same land. The AO has just made inference and nothing else. As the AO has drawn inference only and there is no iota of evidence having assessee repurchased the land from Shri M.N. Palani, no addition on the basis of conjecture and surmises be made. Hence, we delete the addition and reverse the orders of lower authorities on this issue and allow this issue of assessee s appeal

Summary

Issues:
1. Restriction of addition made by AO regarding on money receipts.
2. Addition of rate difference of sale value between developer and landowners.

Issue 1: The first issue in this appeal concerns the restriction of the addition made by the AO in relation to on money receipts. The appellant contested the order of the CIT(A) which limited the addition to ?16,13,857 out of the total addition of ?32,27,715. The search and seizure action revealed discrepancies in the sale of land, prompting the AO to issue a show cause notice for the unaccounted income. The CIT(A) noted that the amount should be equally divided between the two partners, leading to the restriction of the addition. The Tribunal upheld the lower authorities' decision, dismissing the appeal due to the unchallenged evidence gathered during the search.

Issue 2: The second issue revolves around the addition of the rate difference of sale value between the developer and landowners. The AO estimated undisclosed income of ?38,55,200 based on the sale of land to a developer and subsequent repurchase inference by the assessee. The CIT(A) upheld the AO's decision, prompting the appellant to appeal before the Tribunal. The Tribunal noted the lack of concrete evidence supporting the repurchase inference made by the AO. As there was no substantial proof of the alleged repurchase, the Tribunal reversed the lower authorities' decision, deleting the addition and partially allowing the appeal.

In conclusion, the Tribunal's judgment addressed the issues of restriction on addition related to on money receipts and the addition of rate difference between the developer and landowners. The decision upheld the restriction of the addition in the first issue but reversed the addition in the second issue due to the lack of evidence supporting the AO's inference. The appeal was partly allowed, providing relief to the appellant on the second issue.