2024 (7) TMI 1208 - AT - Income Tax

Unexplained investment in the immovable property - addition by just relying on the statement recorded during search without any corresponding incriminating evidence / documents - HELD THAT - There is no specific incriminating document to prove the payment over and above the cheque payment by the Assessee for the purchase of the immovable property. In fact, there are some note pads which indicate where from the Assessee has got money for the purchase of this property but they cannot be treated as incriminating document to prove the cash payment for the purchase of this property. Though it is true that the Assessee in his statement recorded during the search has stated to have paid Rs. 36,00,000/- as total consideration for the purchase of this property but other than his statement the Department could not bring any incriminating document on record to substantiate its claim of cash payment. As the Hon'ble Supreme Court in CIT Vs. Mantri Share Brokers (P.) Ltd. 2018 (7) TMI 200 - SC ORDER has held that mere statement recorded during the search cannot be treated as incriminating document for the addition in a search case, therefore, the CIT(A) finding on this issue cannot be sustained. Accordingly, Assessee s appeal on Ground Nos. 1 to 3 stand allowed. Addition on the basis of dumb document - HELD THAT - We find that the Assessing Officer has treated this dumb document as a noting for cash transaction without indicting whether it is receivable or payable. CIT(A) has not accepted the findings of the AO and he has treated it as a part which he had confirmed as cash paid for the purpose of immovable property. This issue has already been decided by us in the former part of this appeal in Ground Nos 1 to 3 above. Therefore, regarding appeal on this dumb document, as the ld. CIT(A) himself has treated it as part of Rs. 25,85,000/-, therefore, we are of the view that there is no need of any separate adjudication of this issue.

Summary

Issues involved:
1. Addition of Rs. 25,85,000 on account of alleged investment in immovable property based on a statement recorded during search.
2. Confirmation of addition of Rs. 10 lacs on the basis of a "dumb document."

Analysis:

Issue 1: Addition of Rs. 25,85,000 on account of alleged investment in immovable property based on a statement recorded during search:

The appeal challenges the addition of Rs. 25,85,000 due to alleged investment in immovable property, primarily relying on a statement made during the search operation. The Assessee argued that the statement did not explicitly mention cash payment and provided explanations indicating no additional cash payment beyond the registered amount. The Assessee emphasized the lack of corroborative evidence supporting the claim of cash payment. The CIT(A) upheld the addition based on the statement, considering it as having evidentiary value since it was not retracted post-search. However, the Assessee contended that the statement was misconstrued by the Assessing Officer. The Assessee cited relevant case laws, including a decision by the Chandigarh Bench of ITAT and a Supreme Court ruling, emphasizing that mere statements during search cannot be deemed incriminating evidence for additions. The Tribunal agreed with the Assessee, noting the absence of specific incriminating documents proving the alleged cash payment. Relying on legal precedents, the Tribunal allowed the Assessee's appeal on this ground.

Issue 2: Confirmation of addition of Rs. 10 lacs on the basis of a "dumb document":

The appeal challenged the addition of Rs. 10 lacs based on a document found during the search operation, which the Assessee argued was a "dumb document" lacking clarity on its significance or income implications. The Assessing Officer considered this document as indicative of a cash transaction and made the addition. However, the CIT(A) integrated this amount into the earlier confirmed addition of Rs. 25,85,000, stating no separate addition was necessary. The Tribunal reviewed the Assessing Officer's and CIT(A)'s positions, noting the ambiguity surrounding the document's nature and purpose. Given the CIT(A)'s consolidation of this amount with the primary addition, the Tribunal found no need for separate consideration, aligning with the CIT(A)'s decision. Consequently, the Assessee's appeal on this ground was allowed.

In conclusion, the Tribunal allowed the Assessee's appeal, overturning the additions made on both grounds. The decision was based on the lack of concrete evidence supporting the alleged cash transactions and the integration of the "dumb document" amount into the primary addition. The Tribunal's ruling emphasized the importance of substantiated evidence and adherence to legal principles in making such additions.