2022 (9) TMI 471 - AT - Income Tax

Unexplained cash payments - additions made after the date of search - HELD THAT - The return deed subsequent to the date of search on 24-06-2013 seems to be an afterthought since no mention thereof was made at time of post search proceedings on 10-01-2013, however at the same time, it cannot be ignored that the original registered sale deed entered into between the assessee and the buyer contained a specific schedule of payment both by way of cheque and cash, and the Department has not been able to bring anything concrete to prove that the entire payment in cash as mentioned in the registered sale deed was made at the time of registration of sale deed itself i.e. entire cash payment was made prior to the scheduled date of cash payments as per the registered sale deed. We are in agreement with the view of the CIT(Appeals) that reasonably, unaccounted cash component should be restricted to scheduled cash payments (as per registered sale deed) which were supposed to be made up to such date when search was conducted at the premises of the assessee on 09-01-2013. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) in restricting the addition on account of unexplained cash payments to the extent of schedule of payments till the date of search conducted at the premises of the assessee on 09-01-2013. Appeal of the Department is dismissed.

Issues Involved:
1. Deletion of addition on account of unexplained investment based on seized Banakhat.
2. Whether the CIT(A) ought to have upheld the Assessing Officer's order.
3. Request to set aside the CIT(A) order and restore the Assessing Officer's order.

Detailed Analysis:

1. Deletion of Addition on Account of Unexplained Investment Based on Seized Banakhat:

The Department's primary contention was that the CIT(A) erred in deleting a significant portion of the additions made by the Assessing Officer (AO) based on a seized Banakhat, which detailed payments to be made through cheque and cash. The Banakhat, a notarized document, was made after the T.P. Scheme announcement, which increased the land's price. The AO argued that since the Banakhat was not canceled, it retained legal force, implying that the cash payments detailed within it were valid and should not have been deleted by the CIT(A).

The CIT(A) acknowledged that the Banakhat dated 05-08-2012 was a registered document acted upon by both parties. However, the CIT(A) found no categorical evidence of actual cash payments beyond those scheduled up to the search date on 09-01-2013. The CIT(A) thus limited the addition to the cash payments scheduled up to the search date, totaling Rs. 140.23 lakhs, rather than the entire Rs. 5,52,23,515/- alleged by the AO. The CIT(A) noted that the cancellation deed dated 28-06-2013 seemed an afterthought to avoid taxation on the unaccounted cash but maintained that the evidence did not support cash payments beyond Rs. 140.23 lakhs.

2. Whether the CIT(A) Ought to Have Upheld the Assessing Officer's Order:

The Department argued that the CIT(A) should have upheld the AO's order, which included the entire Rs. 5,52,23,515/- as unaccounted investment. The AO's stance was based on the fact that the sale deed was not disputed, and the possession of the land was transferred at the time of registration, implying full payment had been made, including the cash component.

The CIT(A) disagreed, stating that while the Banakhat indicated a schedule of payments, there was no evidence that all cash payments were made by the search date. The CIT(A) emphasized that the Banakhat's schedule and the lack of evidence for payments beyond the search date justified restricting the addition to Rs. 140.23 lakhs.

3. Request to Set Aside the CIT(A) Order and Restore the Assessing Officer's Order:

The Department requested that the CIT(A)'s order be set aside and the AO's order restored. The Department's representative reiterated the AO's findings, emphasizing the circumstances suggesting that the assessee had made the full cash payment as detailed in the Banakhat.

The Tribunal, after hearing both sides, agreed with the CIT(A)'s observations. It found no tangible evidence that the entire cash payment was made at the time of the sale deed's registration. The Tribunal noted that the return deed seemed an afterthought but maintained that the original sale deed's schedule of payments should guide the additions. Thus, the Tribunal upheld the CIT(A)'s decision to restrict the addition to the scheduled payments up to the search date.

Conclusion:

The Tribunal dismissed the Department's appeals for both assessees, Bankim Pandya and Ketan Pandya, affirming the CIT(A)'s decision to limit the additions to the unexplained cash payments scheduled up to the search date. The Tribunal found no infirmity in the CIT(A)'s order and concluded that any further additions would be presumptuous without concrete evidence.

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