2011 (3) TMI 1676 - AT - Income Tax

Tribunal rules in favor of Revenue on Flat No. A/204 transaction, upholds architect payments, stresses corroborative evidence

Assistant Commissioner of Income Tax Versus M/s. Amar Corporation

Assistant Commissioner of Income Tax Versus M/s. Amar Corporation - TMI Issues Involved:1. Deletion of addition on account of 'on-money' receipt on sale of flats.2. Validity of retraction of statements made by the partners.3. Addition of unaccounted payments made to an architect.Detailed Analysis:1. Deletion of Addition on Account of 'On-Money' Receipt on Sale of Flats:The Revenue filed six appeals for different assessment years challenging the deletion of addition made by the Assessing Officer (AO) on account of 'on-money' received on the sale of flats. The AO's addition was based on three seized papers during a search conducted on 18/06/2003. These papers indicated undisclosed income from the sale of flats. The AO concluded that the assessee received 'on-money' on the sale of flats, which was not recorded in the books of accounts. The CIT(A) deleted the additions, stating that the AO's reliance on the loose papers was unfounded as they were not corroborated by any concrete evidence. The Tribunal upheld the CIT(A)'s decision, directing the AO to reinvestigate only the specific transaction related to Flat No. A/204 and affirmed the deletion of the addition for other flats.2. Validity of Retraction of Statements Made by the Partners:The AO relied on the statements of Shri Chimanbhai M. Shah and Shri Bimal C. Shah, which were later retracted through affidavits. The CIT(A) observed that the retraction was valid as it was made within a reasonable time and supported by evidence. The Tribunal agreed with the CIT(A), noting that the retraction was admissible and the AO could not solely rely on the initial statements without corroborative evidence. The Tribunal emphasized that an admission is not conclusive and can be retracted if shown to be incorrect.3. Addition of Unaccounted Payments Made to an Architect:The AO added amounts paid to an architect, Shri Rajesh Anklesharia, based on seized material and statements recorded during the search. The CIT(A) confirmed the addition as the assessee failed to provide any cogent evidence to refute the AO's findings. The Tribunal upheld the CIT(A)'s decision, affirming the addition of unaccounted payments made to the architect.Conclusion:The Tribunal partly allowed the Revenue's appeal for the specific transaction related to Flat No. A/204 and dismissed the appeals for other years. The cross objections filed by the assessee were partly allowed, and the addition of unaccounted payments to the architect was upheld. The Tribunal's order emphasized the importance of corroborative evidence in making additions based on seized documents and the validity of retraction of statements within a reasonable time.