2022 (11) TMI 205 - HC - Income Tax

Addition u/s 68 - search and seizure operation under Section 132 - ITAT deleted the addition - HELD THAT - ITAT on perusal of the documents on record held that the MOU recovered during the search pertains to Devender and not the Assessee. The presumption against the Assessee that the document belong to him have been rebutted by the aforesaid materials which were placed on record before the ITAT, including the seized material found during the course of search which is corroborated by the statement of Devender - terms of the MOU record that Devender is responsible to acquire land at Harchandpur from Saroj and hand over the same to Newage Infra. The MOU records that Newage Infra has paid consideration of Rs. 20 crores in cash to Devender for the purchase of the land at Harchandpur. Assessee is not named in MOU, either as a party or as a witness. No cash was found or seized during the search conducted on the premises owned by the Assessee. ITAT held that the second statement recorded on 11th March, 2016, is not corroborated by any evidence or material on record and therefore, the AO or CIT(A) could not have relied upon the second statement. There is no infirmity in the impugned order of the ITAT deleting the addition of Rs. 20 crores under Section 68 of the Act against the Assessee. Therefore, we are of the considered view that there is no substantial question of law raised in the present appeal. The Supreme Court in the case of Ram Kumar Aggarwal Anr. vs. Thawar Das (through LRs), 1999 (8) TMI 1008 - SUPREME COURT has reiterated that under Section 100 of CPC, the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. Thus, we see no merit in the appeal and it is accordingly dismissed.

Issues Involved:
1. Legitimacy of the addition of Rs. 20 crores to the Assessee's income under Section 68 of the Income Tax Act, 1961.
2. Validity of the second statement of Devender recorded on 11th March, 2016.
3. Consideration of corroborative evidence by the ITAT.
4. Separate addition of Rs. 10 crores based on a distinct MOU with Megatech.

Issue-Wise
Detailed Analysis:

Legitimacy of the Addition of Rs. 20 Crores:
The Revenue challenged the ITAT's deletion of the Rs. 20 crores addition to the Assessee's income under Section 68 of the Act. The ITAT found that the MOU between Devender and Newage Infra, which led to the addition, was not connected to the Assessee. The ITAT noted that the MOU was executed between Devender and Newage Infra for the purchase of land in Harchandpur and that the Assessee was neither a party nor a witness to it. The ITAT emphasized that no cash was found or seized during the search at the Assessee's premises, and the presumption against the Assessee was rebutted by the material on record, including the corroborative statement of Devender recorded on 18th October, 2013.

Validity of the Second Statement of Devender:
The ITAT questioned the necessity and validity of the second statement of Devender recorded on 11th March, 2016, which contradicted his earlier statement. The ITAT found that the second statement was not corroborated by any evidence or material on record and appeared to have been influenced by the AO. The ITAT noted that Devender retracted this second statement through an affidavit, affirming his original statement made on 18th October, 2013. The ITAT criticized the AO for relying on the second statement and disregarding the affidavit and other corroborative evidence.

Consideration of Corroborative Evidence:
The ITAT considered various documents to support the legitimacy of Devender's original statement, including:
1. The MOU dated 14th December, 2011, between Devender and Newage Infra.
2. The assessment order against Devender making an addition of Rs. 20 crores.
3. The agreement to sell dated 17th December, 2011, between Saroj and Devender.
4. Receipts and complaints filed by Devender against Saroj.
5. The suit for specific performance filed by Devender.
6. The affidavit retracting Devender's second statement.

The ITAT concluded that these documents corroborated Devender's original statement and demonstrated that the Assessee was not involved in the transaction.

Separate Addition of Rs. 10 Crores:
The AO had also made a separate addition of Rs. 10 crores based on a distinct MOU between the Assessee and Megatech. This addition was confirmed by the CIT(A) but was set aside by the ITAT, which restored the issue to the AO for fresh determination. This separate transaction was not part of the present appeal, and no substantial questions of law were raised regarding it. The remand proceedings will address this issue in accordance with the law.

Conclusion:
The ITAT's findings were upheld by the High Court, which found no substantial question of law warranting interference. The High Court dismissed the appeal, affirming that the addition of Rs. 20 crores under Section 68 of the Act was unjustified and that the facts and law had been correctly assessed by the ITAT. The separate issue of the Rs. 10 crores addition will be determined in the remand proceedings.

← Previous Next →