2000 (5) TMI 157 - AT - Income Tax

Summary

Issues Involved:
1. Whether the Revenue has established that the assessee paid "on-money" of Rs. 5,22,500 while acquiring a bungalow.
2. Whether the addition of Rs. 5,22,500 u/s 69 of the IT Act is justified.

Summary:

Issue 1: Establishment of Payment of "On-Money"
The main question in the appeal was whether the Revenue could establish that the assessee paid "on-money" of Rs. 5,22,500 while acquiring a bungalow in Tulip Scheme-II. The Revenue's case was based on a search conducted u/s 132 at the premises of the builders, who admitted to receiving "on-money" and disclosed Rs. 1.50 crores as unrecorded income. The AO inferred that the assessee also paid "on-money" based on this admission and added Rs. 5,22,500 to the assessee's income u/s 69.

The assessee denied paying any amount over the agreed Rs. 6,12,000. During the cross-examination of the builders, they confirmed that no additional amount was paid by the assessee. The AO's re-examination did not extract any admission of "on-money" payment from the assessee. The Tribunal noted that the Revenue did not produce any direct evidence against the assessee and relied on general admissions by the builders, which did not specifically implicate the assessee.

Issue 2: Justification of Addition u/s 69
The Tribunal emphasized that any material used against the assessee must be put to the assessee for rebuttal, following principles of natural justice. The AO's reliance on the builders' general admission and the absence of specific evidence against the assessee did not satisfy this requirement. The Tribunal found that the assessee's payment of Rs. 6,12,000 was corroborated by documentary evidence, and no material was produced to show that the assessee paid "on-money."

The Tribunal also considered the argument that the disclosed amount by the builders, when divided by the number of bungalows, did not justify the addition of Rs. 5,22,500 in the assessee's case. The Tribunal concluded that the Revenue failed to establish that the assessee made any unexplained investment u/s 69.

Conclusion:
The Tribunal held that the addition of Rs. 5,22,500 as "on-money" in the hands of the assessee was unjustified and directed its deletion. The appeal by the assessee was allowed.