2016 (11) TMI 1365 - AT - Income Tax

Addition of undisclosed income - cash against the sale of property - Held that - We find that assessee has sold property no. ES95, Block R & T Nirvana Country, South City -II, Gurgaon during FY 2008-09 for ₹ 60 lacs. It has not made any sales during the FY 2007-08 and that all the payment against sale of this property has been received through cheques and that no other amount has been received by the assessee in cash against the sales consideration of this property. The details mentioned on the right side of page 4 of Annexure A-I of party G- 3 are seem to be some rough working and it is not clear from the details whether these are for purchase /sale/investment in the property ES -95. It also seems that these are some wrongly mentioned figures noted by somebody. In the details below Chq , figure of 15,700,000.00 is mentioned. As per record, there is no reference of any cash payment on these details and also there is no reference of any payment received or paid in cash on these details. Therefore, the allegation made by AO that a cash payment of ₹ 97 lacs has been made received against this property & out of which ₹ 15 lacs has been paid reed during the financial year 2007-08 is based on mere conjecture & surmises. That the chart does not reveal any such transaction dates/amount pertaining to any year. This is simply a dumb document. There is no other material on record other than this loose paper to corroborate the stand of the department. We find that since assessee has not received paid any amount in cash against the sale of the above property, no unexplained and unaccounted income from unaccounted sources can be attached to the assessee with respect to above transaction. Therefore, the presumption u/s. 292C of the Act is a rebuttal presumption. The presumption as envisaged in section 292C is limited to the correctness of the documents found at the time of search or survey, but that presumption has not been extended by the statute to be presumed to be the income of the assessee. - Decided in favour of assessee.

Summary

Issues Involved:
1. Confirmation of addition of ?15 lacs as unaccounted income for AY 2008-09.
2. Confirmation of addition of ?82 lacs as unaccounted income for AY 2009-10.
3. Application of Section 292C of the Income Tax Act based on loose papers found during the search.

Detailed Analysis:

1. Confirmation of Addition of ?15 Lacs as Unaccounted Income for AY 2008-09:

The Assessee challenged the confirmation of ?15 lacs as unaccounted income from the sale of property ES 095 Nirvana Country South City-II, Gurgaon. The Assessee argued that there was no corroborating evidence linking the figure of ?15 lacs mentioned on a loose paper to any actual transaction. The Assessee's counsel cited various judicial precedents to support the contention that mere notations on loose papers cannot be considered substantive evidence of unaccounted income. The Tribunal found that the Assessee sold the property for ?60 lacs, all payments were received through cheques, and no cash payments were made. The Tribunal concluded that the loose paper was a "dumb document" and did not provide sufficient evidence to substantiate the addition of ?15 lacs. The Tribunal held that the presumption under Section 292C is rebuttable and the Assessee successfully rebutted it. Consequently, the addition of ?15 lacs was deleted.

2. Confirmation of Addition of ?82 Lacs as Unaccounted Income for AY 2009-10:

Similar to the previous issue, the Assessee contested the addition of ?82 lacs as unaccounted income for AY 2009-10. The Tribunal followed the same reasoning and judicial precedents as in the case of AY 2008-09. The Tribunal found no corroborative evidence to support the addition of ?82 lacs based on the loose papers. The Tribunal reiterated that the document in question was a "dumb document" and could not be relied upon to substantiate the addition. Therefore, the addition of ?82 lacs was also deleted.

3. Application of Section 292C of the Income Tax Act Based on Loose Papers Found During the Search:

The Assessee argued that the application of Section 292C, which presumes the correctness of documents found during a search, was erroneous in this case. The Tribunal agreed with the Assessee, noting that the presumption under Section 292C is rebuttable. The Tribunal emphasized that the documents found were loose papers with no clear indication of any transaction involving unaccounted income. The Tribunal cited several judicial precedents where similar loose papers were deemed insufficient to substantiate additions without corroborative evidence. The Tribunal concluded that the Assessee successfully rebutted the presumption under Section 292C, and the additions based on these loose papers were not sustainable.

Conclusion:

The Tribunal allowed both appeals filed by the Assessee, deleting the additions of ?15 lacs for AY 2008-09 and ?82 lacs for AY 2009-10. The Tribunal found that the loose papers relied upon by the Revenue were "dumb documents" and lacked corroborative evidence to substantiate the additions. The Tribunal also held that the presumption under Section 292C was successfully rebutted by the Assessee. As a result, the Assessee's appeals were allowed, and the additions were deleted.