2023 (3) TMI 600 - AT - Income Tax

Unaccounted/unexplained payments u/s 69C - unexplained expenditure mainly on the basis of documents seized and impounded from the premises of Mr. Madan Kolambekar - CIT-A deleted the addition - HELD THAT - The fact in the present case is similar to the case of Krupa Land Ltd. 2018 (10) TMI 1987 - ITAT MUMBAI as the present proceedings also arise from the same search. Instead of the statement of Mr. Dilip Dheria,one of the land aggregator, the Revenue is relying on the statement of Mr. Madan Kolambekar in the present proceedings. However, in the present case also, Mr. Madan Kolambekar has withdrawn his statement and other than loose papers, no further material has been brought on record by the Revenue to justify the addition in the hands of the assessee. The Revenue has not supported the allegation by any material showing cash passing hands. Further, the Revenue authorities have not enquired with the vendors or brought any statement on record of the vendors to substantiate the claim of the Revenue that extra cash has actually change hands. In view of the above facts, we are inclined to accept the findings of the Ld.CIT(A). No reason to interfere with the findings of the Ld.CIT(A) by deleting the additions proposed by the Assessing Officer u/s. 69C - Decided against revenue.

Issues Involved:
1. Deletion of addition made under Section 69C of the Income Tax Act.
2. Validity of the transactions and the role of land aggregators.
3. Credibility of statements recorded during search proceedings.
4. Use of seized documents as evidence.
5. Justification for unexplained/unaccounted payments.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made Under Section 69C:
The Revenue challenged the deletion of an addition of Rs. 17,67,72,393 made under Section 69C by the CIT(A), arguing that unaccounted receipts and cash expenditures were admitted during a search. The CIT(A) deleted the addition based on precedents set by the ITAT and the Jurisdictional High Court in similar cases involving the same group. The ITAT upheld the CIT(A)'s decision, noting that the facts were consistent with those in prior cases where additions were deleted due to lack of concrete evidence of cash transactions.

2. Validity of the Transactions and the Role of Land Aggregators:
The Assessing Officer (AO) argued that transactions with land aggregators were not on a principal-to-principal basis, asserting control by the Jai Corp Group over the aggregators. The AO cited the involvement of company employees in supervising transactions and the inclusion of brokerage/commission income in tax returns as evidence. However, the ITAT found that these arguments were insufficient to prove that the transactions were not independent, especially in the absence of corroborating evidence from vendors or other parties involved.

3. Credibility of Statements Recorded During Search Proceedings:
Statements made by Mr. Madan Kolambekar and others during the search were retracted later, with affidavits filed months after the initial statements. The AO rejected these retractions, citing the timing and lack of coercion during the search. However, the ITAT noted that retractions and the absence of corroborative evidence from vendors weakened the credibility of the initial statements, aligning with the findings in previous cases where similar retractions were accepted.

4. Use of Seized Documents as Evidence:
The AO relied heavily on seized documents to justify the addition under Section 69C. These documents included minutes of meetings and transaction records indicating unaccounted payments. The ITAT, however, emphasized that such documents alone, without corroborative evidence of actual cash transactions, were insufficient to sustain the addition. This position was consistent with earlier rulings where loose papers and uncorroborated documents were deemed inadequate for making additions.

5. Justification for Unexplained/Unaccounted Payments:
The AO argued that the unexplained payments totaling Rs. 17,67,72,393 were evident from the seized documents and the statements of involved parties. The ITAT, however, found that the Revenue failed to provide concrete evidence of cash passing hands or statements from vendors confirming extra cash payments. The ITAT upheld the CIT(A)'s decision to delete the addition, citing the lack of substantial evidence and the consistency with prior rulings in similar cases.

Conclusion:
The ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s deletion of the addition under Section 69C. The ITAT emphasized the need for concrete evidence beyond seized documents and retracted statements, aligning with precedents set in similar cases involving the same group. The cross objection filed by the assessee was also dismissed, as the main appeal was decided against the Revenue.

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