2023 (12) TMI 495 - AT - Income Tax

On-money received towards sale of property and offered during the course of survey - AO based on the impounded MOU and sworn statement of the assessee completed the assessment by adding Rs. 1 Crore to the total income of the assessee - HELD THAT - We find from the financial statements filed by the assessee for the A.Y 2011-12 that additional income offered during the course of survey towards on-money received from sale of property amounting to Rs. 1,00,00,000/- has been offered to tax and credited to profit and loss account under the head other income business . Further, the appellant has filed an affidavit and confirmed income offered during the survey is subjected to tax. From the details filed by the assessee, we find that the appellant has declared amount of Rs. 1,00,00,000/- offered as additional income during the course of survey and paid necessary taxes. In fact, the A.O and Ld. CIT(A) are also not disputed the fact that the assessee has offered Rs. 1,00,00,000/- for tax which is evident from the findings of the Ld. CIT(A) in their order dated 23.03.2016. Since, the appellant has already offered and paid taxes additional income of Rs. 1,00,00,000/- declared during the course of survey, further addition on very same amount by the A.O amount should double additional which is not permissible under the law. Therefore, we are of the considered view that the A.O is erred in making separate addition of Rs. 1,00,00,000/-, even though the appellant has already credited said additional income in the profit and loss account and paid taxes. CIT(A) without appreciating the facts simply sustained the additions made by the A.O. Thus, we set aside the order of the CIT(A) and direct the A.O to delete additions of Rs. 1,00,00,000/- made towards on-money received towards sale of property and offered during the course of survey. Appeal of the assessee is allowed.

Summary

Issues Involved:
The judgment involves issues related to the acceptance of on-money by the assessee, retraction of statement, assessment based on impounded material, lower sale consideration, and the addition of income offered during the survey.

Acceptance of On-Money and Retraction of Statement:
The assessee initially admitted to receiving on-money in a sworn statement but later retracted the statement. The assessment was completed by adding the amount to the total income based on the impounded MOU and the initial statement. The lower authorities upheld the addition due to the delayed retraction of the statement after seven months, emphasizing the value of statements given on oath as important evidence. The sale consideration being lower than the purchase price raised doubts about the credibility of the transaction. The Tribunal observed that the retraction made after seven months held no value, and without supporting material, the retraction was deemed unacceptable.

Assessment Based on Impounded Material:
The impounded material found during the search operation was crucial in the assessment process. The Tribunal noted that similar incriminating material was discovered in the premises of another entity during a separate search operation, further strengthening the case against the assessee. The failure of the assessee to provide evidence against the statements made by others, coupled with the lack of cross-examination of relevant individuals, worked against the assessee's case.

Lower Sale Consideration and Addition of Income:
The Tribunal analyzed the financial statements and confirmed that the additional income offered during the survey had already been declared and taxed by the assessee. Despite this, the assessing officer made a separate addition to the income, which was deemed impermissible under the law. The Tribunal directed the assessing officer to delete the additional addition made towards on-money received during the sale of property, as the amount had already been declared, taxed, and credited to the profit and loss account by the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the orders of the lower authorities and directing the assessing officer to delete the additional addition made towards on-money received during the sale of property, as the amount had already been declared, taxed, and credited by the assessee during the survey process.