2017 (5) TMI 1318 - HC - Income Tax

Addition on account of the undisclosed income - Held that - There is nothing on record to contradict the findings of the ld. CIT(A) and ITAT that no cash for ₹ 7,33,50,000/- or a lesser amount found at any of the premises of Sh. Vineet Beriwala or Sh. SS Beriwala, nor any details of any investment/ expenditure having been made out of this supposed amount of ₹ 7,33,50,000/- were found in search on Sh.Vineet Beriwala or Sh. SS Beriwala. Thus there being no corroborative evidence found in search or post search investigation to substantiate the fact that the appellant has made unaccounted cash payment for ₹ 7,33,50,000/- to Sh. Vineet Beriwala or Sh. SS Beriwala during the year, the assumption of payment of cash derived from alleged paper seized cannot be supported. Therefore, ld. CIT(A) has rightly deleted the addition. The ld. CIT(A) has also recorded the findings on legal aspect of the case also, inasmuch as the alleged paper was not found from the possession of assessee and there was no corroborating evidence to show that the said papers seized from third party belong to the assessee. He has also relied on several decisions of Hon ble Higher courts. The Revenue has not brought any material on record contrary to the findings reached by the ld. CIT(A) - Decided against revenue

Summary

Issues:
- Appeal against deletion of addition of undisclosed income by ITAT
- Interpretation of seized document for addition of income by AO
- CIT(A) and ITAT's findings on lack of corroborative evidence for cash payment
- Dismissal of appeal by High Court based on factual findings

Analysis:

1. The appeal was filed by the Revenue against the deletion of an addition of undisclosed income by the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2006-07. The main question raised was whether the ITAT was correct in upholding the deletion of the addition made by the Assessing Officer (AO) amounting to ?7,33,50,000.

2. The AO primarily relied on a seized document, Annexure-A-1, which indicated cash payments to family members. The AO concluded that the document showed a payment of ?7.33 crores for equal distribution of assets among family groups. However, the CIT (A) noted that the document was unsigned, hand-written, and contained corrections, indicating it was a proposal never acted upon.

3. The CIT (A) found that there was no evidence to support the cash payment mentioned in the seized document. The Revenue appealed to the ITAT, which concurred with the CIT (A)'s findings. The ITAT emphasized the lack of corroborative evidence to justify the alleged payment. It was noted that no cash or investment corresponding to the amount was found during searches on the family members.

4. After careful examination of the orders and arguments presented, the High Court dismissed the appeal. The Court agreed with the factual findings of both the CIT (A) and ITAT, stating that no substantial question of law arose from the concurrent findings. Therefore, the appeal was rejected based on the lack of evidence supporting the addition of undisclosed income.

This detailed analysis highlights the progression of the case from the AO's reliance on a seized document to the final dismissal of the appeal by the High Court due to the absence of corroborative evidence for the alleged cash payment.