2015 (6) TMI 282 - AT - Income Tax

Suppression of unaccounted on-money income - CIT(A) deleted the addition - Held that - The assessee sold the flats in various projects at the same rate in A.Ys. 2005-06, 2006-07 and 2007-08. The Revenue has accepted the sale rates of flats in all the years, except sale of 30 flats sold through Shri Atul P. Malde in the year under consideration. It cannot be believed that the assessee sold 30 flats at double the rate then the sale rate of same flats to others in the preceding year, current year and subsequent year. In view of the totality of the above facts, in our opinion, the CIT(A) was fully justified in deleting the above addition made by the Assessing Officer on the basis of the statement of Shri Atul P. Malde which was recorded behind the back of the assessee and moreover, which was retracted by himself within 4 days from the date of giving of his statement. We, therefore, uphold the order of the CIT(A) and dismiss the appeal filed by the Revenue - Decided in favour of assessee.

Issues Involved:
1. Addition on account of determined suppression of unaccounted on-money income.
2. Dismissal of relevant facts regarding unaccounted income.
3. Reliance on irrelevant materials and conjectures regarding on-money receipts and commission payments.
4. Erroneous interpretation of relevant facts and rejection of admissible evidence.
5. Disallowance of commission of Rs. 2,42,305/-.

Detailed Analysis:

1. Addition on Account of Determined Suppression of Unaccounted On-Money Income:
The Revenue contested that the CIT(A) erroneously held that the addition on account of suppression of unaccounted on-money income was incorrect. The case involved a search and seizure operation under section 132 of the Income-tax Act, 1961, at the premises of the Malde group, where the assessee is a part. The Assessing Officer (AO) inferred that the correct value of flats sold was Rs. 4,84,49,400/- based on the commission paid to Shri Atul Premji Malde, resulting in an addition of Rs. 2,42,24,700/-. The CIT(A) deleted this addition, stating that it was based on reverse working of sale value without any corroborative evidence from purchasers or any findings from search proceedings or post-search inquiries.

2. Dismissal of Relevant Facts Regarding Unaccounted Income:
The CIT(A) dismissed the AO's findings, emphasizing that the addition was made without any evidence of 'on money' receipts during search proceedings or post-search inquiries. The CIT(A) highlighted that no defects were found in the books of accounts, and the AO did not reject the books for applying comparative G.P. The CIT(A) concluded that the AO's addition of Rs. 2,42,24,700/- was unjustified and without basis, thus deleting the same.

3. Reliance on Irrelevant Materials and Conjectures Regarding On-Money Receipts and Commission Payments:
The Revenue argued that the CIT(A) relied on irrelevant materials and conjectures. However, the CIT(A) and subsequent tribunal findings indicated that the AO's addition was based solely on the statement of Shri Atul P. Malde, which was retracted within four days. The tribunal upheld the CIT(A)'s decision, noting that the statement was recorded behind the back of the assessee and retracted promptly, and the Revenue did not allow cross-examination of Shri Atul P. Malde.

4. Erroneous Interpretation of Relevant Facts and Rejection of Admissible Evidence:
The tribunal found no justification to interfere with the CIT(A)'s order. The tribunal noted that the Revenue did not re-examine Shri Atul P. Malde after his retraction and did not examine the buyers of the flats regarding the sale rates. The tribunal upheld the CIT(A)'s findings that the assessee sold flats at consistent rates in preceding and subsequent years, and the addition based on an isolated statement was unjustified.

5. Disallowance of Commission of Rs. 2,42,305/-:
The assessee's cross-objection involved a disallowance of Rs. 2,42,305/- commission. The CIT(A) noted that the assessee agreed to the disallowance during appellate proceedings. The tribunal dismissed the cross-objection, affirming the CIT(A)'s decision to disallow the inflated commission payment of 2% as against 1% on the sale of flats.

Conclusion:
The tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal and the assessee's cross-objection. The tribunal found that the addition of Rs. 2,42,24,700/- was unjustified, based on a retracted statement without corroborative evidence, and the disallowance of Rs. 2,42,305/- commission was agreed upon by the assessee. The order was pronounced on 22nd May 2015 at Ahmedabad.

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