2016 (11) TMI 1162 - AT - Income Tax

Unexplained investment in Flat - joint ownership - Held that - In view of the fact that the plea of joint co-owner of having paid the on-money out of cash available with M/s. Ashoka Buildcon Ltd. out of disclosure made before the Settlement Commission having been accepted to the extent of ₹ 56,10,000/-, no addition is merited in the hands of assessee as the assessee s contribution is to the extent of 50% of ₹ 56,10,000/-. Further, the assessee claims that even the parking fees of ₹ 5 lakhs is funded out of cash available with M/s. Ashoka Buildcon Ltd. and in the totality of the above said facts and circumstances, we find merit in the claim of assessee as the Assessing Officer has failed to bring on record any evidence to the contrary. Accordingly, we direct the Assessing Officer to delete the addition of ₹ 30,55,000/- being half share of ₹ 61,10,000/-. The ground of appeal raised by the assessee are thus, allowed.

Summary

Issues:
- Alleged unexplained investment in co-owned Flat No.203 in RNA Azure at Bandra, Mumbai.

Analysis:
The appeal was filed against the order of CIT(A)-12, Pune, regarding the addition of ?30,55,000 on account of alleged unexplained investment in a flat. The search and seizure operations revealed discrepancies in the purchase of flats, leading to the Assessing Officer presuming that cash payments were made off the books. The assessee claimed no on-money was paid for the flat, attributing discrepancies to pressure during the search. However, the Assessing Officer held that the on-money component was paid in cash, adding ?30,55,000 to the income from undisclosed sources.

The CIT(A) upheld the addition, considering the prices charged and market value of the assets, and the admission of on-money payment by an employee. The appeal raised the issue of the addition based on the seized document, similar to a case before the Mumbai Tribunal where the addition was deleted. The Tribunal noted discrepancies in the seized document and accepted the plea that the on-money was funded by M/s. Ashoka Buildcon Ltd., leading to the deletion of the addition.

The Tribunal found that the cash consideration for the flat was shared between the assessee and the co-owner, and since the source of on-money was disclosed by M/s. Ashoka Buildcon Ltd., no addition was warranted in the assessee's hands. The Tribunal also considered the parking fees and lack of evidence contrary to the assessee's claims, directing the Assessing Officer to delete the addition of ?30,55,000. Consequently, the appeal of the assessee was allowed, emphasizing the lack of evidence against the claimed source of funds.

In conclusion, the Tribunal ruled in favor of the assessee, highlighting the lack of evidence against the source of funds for the alleged unexplained investment in the co-owned flat. The decision emphasized the importance of considering all aspects of the case, including the disclosure made by M/s. Ashoka Buildcon Ltd., in determining the legitimacy of the addition in the hands of the assessee.