2021 (8) TMI 121 - AT - Income Tax

Addition on account of unexplained advance - HELD THAT - Advance is a debit entry in the books of accounts and the same goes with balance sheet of the assessee and not charged to the profit and loss account. Since nothing has been charged to the profit and loss account, we do not find any logic in the impugned addition and the CIT(A) has rightly deleted it, which calls for no interference. Ground 1 is, accordingly, dismissed. Addition of unaccounted cash receipts on sale of properties - HELD THAT - None of the buyers confirmed that they have paid anything to the assessee over and above the amount stated in the Builder Buyer Agreement. Field enquiry made by the AO is conclusive evidence that no cash was exchanged between the buyer and the seller. The entire addition has been made on the basis of arithmetical calculation found in the loose sheet of paper. Onus is always on the revenue to bring demonstrative evidences on record to show that cash has changed hands from the buyer to the seller because the sale consideration of the seller is coming from payments made by the buyer and if the buyer categorically stated that they have not paid anything in cash, which enquiry was made by the Assessing Officer himself, the findings of the ld. CIT(A) cannot be faulted with. We, therefore, decline to interfere with the findings of the ld. CIT(A). This ground is also dismissed.

Summary

Issues:
1. Deletion of addition of ?1,25,00,000 made by AO on account of unexplained advance.
2. Deletion of addition of ?7,60,17,148 made by AO on account of unaccounted cash receipts on sale of properties.

Analysis:

Issue 1: Deletion of addition of ?1,25,00,000 on account of unexplained advance:
The Assessing Officer (AO) added ?1.25 crores to the income of the assessee as unexplained advance given to Shri Anil Hoble. The assessee claimed that the advance was for a project at Goa, later refunded in FY 2009-10. The CIT(A) deleted the addition, stating that since no deduction was claimed by the assessee, disallowance does not arise. The ITAT upheld the CIT(A)'s decision, emphasizing that as the advance was not charged to the profit and loss account, the addition lacked logic and was rightly deleted. The ground was dismissed.

Issue 2: Deletion of addition of ?7,60,17,148 on account of unaccounted cash receipts:
During a survey, it was found that Shri Jaspal Singh and Shri Kamaljit Singh received ?20.30 crores from a company as part of their revenue share. The AO added ?7,60,17,156 based on an analysis of impounded documents. The CIT(A) found the addition unjustified, highlighting discrepancies in the evidence used by the AO. The CIT(A) noted that the AO relied on statements without concrete evidence and that loose sheets used for the addition were factually incorrect and unreliable. The ITAT agreed with the CIT(A), stating that the revenue failed to provide demonstrative evidence of cash transactions, and the addition was solely based on arithmetical calculations from unreliable sources. The appeal of the Revenue was dismissed.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete both additions, emphasizing the lack of concrete evidence and reliance on unreliable sources by the Assessing Officer. The judgment highlights the importance of substantiated evidence in tax assessments and the burden of proof on the revenue to establish transactions conclusively.