2011 (8) TMI 1231 - AT - Income Tax

Tribunal limits additions to specific instances, requires concrete evidence for on-money transactions

ACIT Central Cir-4 Surat Versus M/s. Dhara Associates and vice-versa

The Tribunal partly allowed both the Revenue's appeals and the assessee's cross objections. It directed the AO to confine the additions to specific ... - Issues Involved:1. Deletion of addition on account of on-money receipt on sale of plots.2. Direction to take on-money at a specific rate.3. Validity of retraction of statements.4. Levy of interest u/s 234B and 234C.5. Initiation of penalty u/s 271(1)(c).Summary:1. Deletion of Addition on Account of On-Money Receipt on Sale of Plots:The Revenue challenged the deletion of additions made by the AO on account of on-money receipt on the sale of plots. The AO had based the additions on a seized note-book detailing sales transactions, which indicated higher sale prices than those recorded in the books. The CIT(A) directed the AO to adopt an average on-money rate of Rs. 100 per sq. yard, based on a partner's statement, instead of the higher rates noted in the seized documents.2. Direction to Take On-Money at a Specific Rate:The CIT(A) directed the AO to apply a uniform rate of Rs. 100 per sq. yard for on-money receipts, based on the partner's admission. The Tribunal held that the AO should confine himself to the specific instances recorded in the seized note-book and not extrapolate the on-money rate to all transactions. The Tribunal emphasized that additions should be based on concrete evidence from the seized documents, not on estimations or presumptions.3. Validity of Retraction of Statements:The assessee argued that the retraction of the partner's statement was valid as it was made under pressure and retracted immediately through an affidavit. The Tribunal noted that while an admission is an important piece of evidence, it must be corroborated by other evidence. The Tribunal found that the retraction was supported by an affidavit and no incriminating material was found to substantiate the AO's extrapolation of on-money receipts.4. Levy of Interest u/s 234B and 234C:The assessee contended that the levy of interest u/s 234B and 234C was done without affording an opportunity of being heard, violating principles of natural justice. The Tribunal did not specifically adjudicate this issue, treating it as consequential.5. Initiation of Penalty u/s 271(1)(c):The assessee challenged the initiation of penalty u/s 271(1)(c) without recording mandatory satisfaction. The Tribunal did not specifically address this issue, treating it as infructuous.Conclusion:The Tribunal partly allowed both the Revenue's appeals and the assessee's cross objections. It directed the AO to confine the additions to the specific instances of on-money recorded in the seized documents and not to apply a uniform rate across all transactions. The Tribunal emphasized the need for concrete evidence to support any additions made.