2016 (11) TMI 954 - AT - Income Tax

Unexplained sales - sale of shops on account of cash receipts which was not disclosed in the books of accounts - Held that - Specific documents have been found during the course of survey which established factum of cash component involved in the sale of a shop. If the other shops which are identical in all respects are sold, then these are expected to fetch a similar price. There cannot be a variation of more than four times. The Revenue is not expected to put linkers on its eyes in such cases and if it is so done then it will give rise to un-restricted tax evasion in our country. Under these circumstances, in the peculiar facts of this case, where specific documentary evidences were found, we find that the burden was clearly on the shoulders of the assessee to disprove or negate the effect of these documentary evidences upon other identical transactions. Therefore, the assessee cannot take the benefit of these judgments on the facts of the case before us. Our view also finds support from the judgment of Hon ble Supreme Court in the case of CST vs. H.M. Esufali H. M. Abdulali 1973 (4) TMI 49 - SUPREME Court . Thus, with the aforesaid directions, this issue is sent back to the file of the AO.

Issues Involved:
1. Deletion of additions on account of unexplained sales.
2. Acceptance of unaccounted sales pertaining to specific assessment years.
3. Evidence of receipt of 'on money' for sales transactions.
4. Double addition of income for the same transactions in different assessment years.

Issue-wise Detailed Analysis:

1. Deletion of Additions on Account of Unexplained Sales:
The primary issue raised by the Revenue was the deletion of additions amounting to ?1,05,62,500/- by the CIT(A) on account of unexplained sales. The Revenue contended that the CIT(A) was not justified in deleting these additions, which were based on cash receipts not disclosed in the books of accounts. The Tribunal noted that during a survey on the assessee firm, documents indicating undisclosed income from cash components in property sales were found. The AO made additions based on these documents, but the CIT(A) deleted the additions for A.Y. 2008-09, citing a lack of evidence for the receipt of 'on money'.

2. Acceptance of Unaccounted Sales Pertaining to Specific Assessment Years:
The Revenue argued that unaccounted sales were established during the assessment proceedings for A.Y. 2008-09. The Tribunal observed that during a survey, a document related to the sale of shop No.03 showed a cash component of ?21,12,500/-. The AO used this document to make additions for A.Y. 2006-07 and A.Y. 2007-08, which were partly upheld by the CIT(A). However, for A.Y. 2008-09, the CIT(A) deleted the addition, stating no evidence was found for that year. The Tribunal highlighted that the assessment orders for the earlier years were quashed on legal grounds, and the issues on merits were not addressed.

3. Evidence of Receipt of 'On Money' for Sales Transactions:
The Tribunal noted that the AO made additions based on a document found during the survey, which indicated a cash component in the sale of shop No.03. The AO extrapolated this to other shops sold in A.Y. 2008-09, resulting in an addition of ?1,05,62,500/-. The CIT(A) deleted this addition, relying on his order for earlier years, which stated no evidence of 'on money' receipt. The Tribunal emphasized the presumption under Section 292C of the Income Tax Act, 1961, that documents found during a survey are presumed to be true unless rebutted by the assessee. The Tribunal found that the assessee failed to rebut this presumption with adequate evidence and remanded the issue back to the AO for fresh examination.

4. Double Addition of Income for the Same Transactions in Different Assessment Years:
For A.Y. 2010-11, the Tribunal addressed the issue of double addition. The assessee contended that shop Nos. S-31 and S-32 were sold in an earlier year, and additions for these shops were already made in A.Y. 2008-09. The CIT(A) deleted the addition for these shops in A.Y. 2010-11 to avoid double addition. The Tribunal upheld this deletion, noting that double addition is not permitted under the law. For shop Nos. S-1 and S-23, the Tribunal found the facts to be identical to A.Y. 2008-09 and remanded the issue back to the AO for fresh examination, following the directions given for A.Y. 2008-09.

Conclusion:
The Tribunal partly allowed the appeals of the Revenue for statistical purposes. It remanded the issue of unexplained sales and 'on money' receipt back to the AO for fresh examination, directing the AO to give the assessee an opportunity to provide evidence that the market value of the shops was equivalent to the transaction amount. The Tribunal upheld the deletion of double addition for shop Nos. S-31 and S-32 in A.Y. 2010-11. The order was pronounced in the open court on 27th July 2016.

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