2023 (10) TMI 366 - AT - Income Tax

Unaccounted/ undisclosed income - certain material was seized during the search and seizure operation conducted in the assessee s case - assessee had reiterated its claim that the plot owners had paid cash directly to Shri P. Damodar as part of sale consideration, and the assessee had acted as mediator without funds being routed through him - assessee further contended that the amount paid to P. Damodhar and others did not belong to him and therefore, the question of taxing it as undisclosed income should not arise - HELD THAT - It is worth noting that the assessee has been a regular filer of income tax returns for the past three years and has declared income exceeding Rs. 10 lakhs for the relevant assessment years prior to the current one, which supports the assessee's claim that the undisclosed income of Rs. 10 lakhs can be explained from past accumulations or savings and we do not find assessee s contention as an after thought. Since the assessee failed to provide sufficient evidence before the Assessing Officer and he had only raised the plea before the ld. CIT(A), hence to balance the interest of parties and end the litigation, we allow the relief of Rs. 6 lakhs to assessee and confirm the remaining amount of Rs. 4 lakhs. Considering the submissions made by the assessee, the absence of evidence indicating that Rs. 10 lakhs belonged to the assessee, and the assessee's contention that he is a regular tax filer for the preceding years, we are of the opinion that an amount of Rs. 6,00,000/- on estimate basis is available to the assessee to explain out of the addition of Rs. 10,00,000/- and the amount of Rs. 4,00,000/- remained unexplained. Hence, the addition of Rs. 4,00,000/- is upheld. Thus, the ground of the assessee is partly allowed.

Summary

Issues Involved:
The judgment involves the addition of Rs. 10.00 lakhs under section 153A of the I.T. Act for the assessment year 2016-17 based on unaccounted/undisclosed income.

Facts and Decision:
The assessee, an individual deriving income from various sources, filed the return of income for the A.Y. 2016-17 after a search & seizure action was conducted. The Assessing Officer treated Rs. 10.00 lakh as unaccounted income as the assessee failed to provide documentary evidence regarding a transaction related to a land dispute settlement. The learned CIT (A) upheld the addition. The assessee contended that the plot owners directly paid Rs. 10 lakhs to another party as part of the sale consideration, and the assessee acted as a mediator without handling any funds. The Tribunal noted that the seized material indicated payments made by the assessee towards the settlement of the land dispute. Considering the assessee's regular tax filing history and explanations, the Tribunal allowed relief of Rs. 6 lakhs and confirmed the remaining Rs. 4 lakhs as undisclosed income, as the assessee failed to provide sufficient evidence. The Tribunal found Rs. 6,00,000/- could be explained from past accumulations or savings, while Rs. 4,00,000/- remained unexplained. The appeal was partly allowed, upholding the addition of Rs. 4,00,000/-.

Conclusion:
The Tribunal partially allowed the appeal, balancing the interests of both parties by allowing relief of Rs. 6 lakhs to the assessee and confirming the addition of Rs. 4 lakhs as undisclosed income, considering the explanations provided, lack of evidence, and the assessee's tax filing history.