2022 (10) TMI 250 - AT - Income Tax

Addition on account of alleged cash consideration - HELD THAT - We note that the alleged cash was withdrawn from the accounts of Shri Bapu Vithal Parande, Shri Sandeep Parande and two others. The said person expressed his inability bring Shri Sandeep Parande and two others from whose accounts amounts have been withdrawn as witnesses to the alleged cash payment who are none of them his own family members. We note that the AO in its order clearly observed that certain documents were seized which are related to Dighi property which resulted in making addition in the hands of assessee. CIT(A) also affirmed the said observation of the impugned order but no such documentary evidence brought on record before this Tribunal showing that the assessee received the alleged cash payment. We find the case of DR is that Shri Bapu Vithal Parande made statement that the cash payment to assessee withdrawing such amounts from the accounts of his family members but there was no statement recorded by the AO in this regard from such family members and also Shri Bapu Vithal Parande expressed inability such members for the examination. Thus, the evidence of cash payment by Shri Bapu Vithal Parande cannot be believed for the reason that there was no witnesses to the said cash payments and a mere statement by the said person that some of the amounts received from the accounts of others is not sufficient to make the addition in the hands of the assessee. It is established that there was no documentary evidence corroborating the statement of Shri Bapu Vithal Parande recorded u/s. 131 - Thus, the order of CIT(A) is not justified and it is set aside and the grounds raised by the assessee are allowed.

Summary

Issues:
Challenging addition of alleged cash consideration in assessment.

Analysis:
The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-Central, Pune for the assessment year 2007-08. The appeal was filed with a delay of 124 days, which was condoned by the Tribunal after finding the reasons for delay to be bonafide. The main issue raised by the assessee was challenging the addition of Rs.21,00,000/- on account of alleged cash consideration. The assessee, a partnership firm engaged in construction and development of plots, was part of the Netsurf group, which underwent a search action. The Assessing Officer (AO) made the addition based on alleged cash receipts under the cancellation of an agreement. The CIT(A) confirmed the addition under section 143(3) read with section 153A of the Income Tax Act. The Tribunal, after hearing both parties, delved into the facts of the case.

The Tribunal noted that the assessee entered into an agreement in 2003 and acquired rights on a piece of land, which was later canceled with a fresh agreement with Kamalraj Associates. The AO contended that the consideration was Rs.41 lakh, whereas the assessee received Rs.20 lakh as per the cancellation deed. The AO relied on a statement of Shri Bapu Vithal Parande, claiming the remaining amount was paid in cash by withdrawing from family members' accounts. The assessee argued that there was no evidence of receiving Rs.41 lakh and that the statement lacked evidentiary value. The Tribunal observed that no incriminating material was found during the search, and the addition was made solely based on the statement of Shri Bapu Vithal Parande under section 131 of the Act.

The Tribunal further analyzed the remand report sought by the CIT(A) from the AO, which allowed cross-examination of Shri Bapu Vithal Parande. The AO stated that the assessee failed to prove no cash payment was made, as reaffirmed by Shri Bapu Vithal Parande. However, the Tribunal found that no documentary evidence was presented to prove the alleged cash payment. The Tribunal concluded that the statement of Shri Bapu Vithal Parande lacked corroboration and evidentiary support, setting aside the order of the CIT(A) and allowing the grounds raised by the assessee. Consequently, the appeal of the assessee was allowed by the Tribunal.

In summary, the Tribunal overturned the addition of alleged cash consideration made by the AO and confirmed by the CIT(A) due to lack of documentary evidence supporting the claim, emphasizing the necessity of corroborative evidence to substantiate such additions under the Income Tax Act.