2024 (1) TMI 1002 - AT - Income Tax

Addition u/s. 69A - receipt of unaccounted money on sale of property based on the material seized in the search from third party - AO opined that the assessee itself agreed that the actual sale value is much more than the guideline value of the property, which indirectly confirms the possibility of receiving on-money payment - HELD THAT - As sworn statement recorded during the course of search also do not reveal receipt of on-money of the assessee and they do not facilitate drawing any adverse inference against the assessee. Despite, absence of any incriminating evidences in the seized materials or any admission of on-money in the sworn statement, the AO arrived at his findings regarding receipt of on-money for sale of property only on the basis of proximity of 9 days between the date of registration of property and date of sending cash to Bangalore, without any other material/evidences to show that the said cash was utilized for the purpose of payment of on-money. In our considered view, the findings of the AO regarding payment of on-money based on a dumb document is purely on suspicion, conjecture and surmise manner, but not based on any evidences. In this regard, it is pertinent to refer to the decision CIT v. Daulatram Rawatmull 1964 (3) TMI 14 - SUPREME COURT where it has been clearly held that suspicion however so strong, but suspicion cannot take the place of evidence. Therefore, we are of the considered view that the AO is erred in making additions towards on-money u/s. 69A of the Act, without reference to any material which suggest payment of on-money merely on the basis of suspicion and surmise. Legal presumption u/s. 132(4A) s.292C - whether cannot be given restrictive interpretation so as to consider applicable only to the searched person and not to other person? - As the impugned excel sheet representing cash book containing the entry regarding carrying of cash to Bangalore was found and seized during the course of search of a third party i.e. M/s.Polisetty Somasundaram. Further, said incriminating material was not seized during the course of search in the case of the assessee. Therefore, provisions of Sec.132(4A) s.292C of the Act, cannot be pressed into service in the case of the assessee with respect to the contents of the said seized material so as to draw a rebuttal presumption that the transaction of carrying of cash noted in the impugned documents is relating to the assessee and that the same is true and correct, since said provision operates only against the searched person in whose position the relevant materials were found . Even if it is considered for any reason that the provisions of Sec.132(4A) s.292C of the Act are applicable to the assessee, the same has no bearing on the issue under consideration, because, in the said document there is no reference to the name of the assessee or the concerned property at Bangalore in the relevant entry in the seized cash book. Therefore, we are of the considered view that provisions of Sec.132(4A) s.292C of the Act, at best lead to a rebuttal presumption that carrying of cash to the said extent by M/s.Polisetty Somasundaram is true and correct. But, the rebuttal presumption cannot extend to the receipt of such cash by the assessee in absence of any reference to the name of the assessee or the concerned property at Bangalore in the relevant document. Thus, we reject the ground taken by the Revenue. We are of the considered view that the AO is erred in making additions towards alleged on-money received by the assessee towards transfer of property as unexplained money u/s. 69A of the Act. The Ld.CIT(A) after considering relevant facts has rightly deleted the additions made by the AO - Decided against revenue.

Summary

Issues Involved:

1. Deletion of addition made under Section 69A of the Income Tax Act towards receipt of unaccounted money on sale of property.
2. Validity of the "dumb document" as evidence for making additions.
3. Applicability of legal presumptions under Sections 132(4A) and 292C of the Income Tax Act.

Summary:

Issue 1: Deletion of Addition under Section 69A

The Revenue challenged the deletion of Rs. 51,53,55,000/- added under Section 69A of the Income Tax Act, alleging it as unaccounted money received from the sale of property. The Assessing Officer (AO) inferred the receipt of on-money based on a seized cash book from M/s. Polisetty Somasundaram, which showed a cash payment of Rs. 51,53,55,000/- to Bangalore. The AO argued that the proximity between the date of property sale (23.12.2015) and the cash payment (31.12.2015) indicated receipt of on-money by the assessee.

The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, stating that the cash book was a "dumb document" without any reference to the assessee or the property transaction. The CIT(A) found no corroborative evidence to support the AO's claim and noted that both the buyer and the seller denied any on-money transaction.

Issue 2: Validity of the "Dumb Document"

The Tribunal upheld the CIT(A)'s view that the cash book was a "dumb document," lacking any details about the purpose or recipient of the cash. The Tribunal emphasized that additions based on such documents without corroborative evidence or admission by the involved parties are unsustainable. The Tribunal cited judicial precedents supporting the view that suspicion, however strong, cannot replace evidence.

Issue 3: Applicability of Legal Presumptions

The Revenue argued that the legal presumptions under Sections 132(4A) and 292C of the Income Tax Act should apply to the seized document. The Tribunal rejected this argument, noting that these provisions apply only to the person from whose possession the documents were seized. Since the document was seized from a third party (M/s. Polisetty Somasundaram) and not the assessee, the presumptions could not be extended to the assessee.

Conclusion:

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition made under Section 69A. The Tribunal found that the AO's conclusions were based on suspicion and lacked corroborative evidence. The Tribunal also dismissed the assessee's cross-objection as infructuous, given the dismissal of the Revenue's appeal.