2014 (10) TMI 326 - AT - Income Tax

Tribunal dismisses Revenue's appeal on 'on-money' addition due to lack of evidence.

ACIT, Central Circle 37, Mumbai Versus Shri Rakeshkumar Wadhwan

The Tribunal affirmed the CIT(A)'s decision, dismissing the Revenue's appeal regarding the addition of 'on-money' due to lack of corroborative evidence ... Addition of on money received outside books of accounts – Assessment u/s 153A - Opportunity to cross examine not provided - Assessee contended that he has not received any extra consideration other than those specified in the agreement for sale – Held that:- The search and seizure operation were conducted at MIs. Rochem Separation System and Shri K.K. Goel - the payment of 'on money' was accepted by Shri K.K. Goel in his statement recorded u/s 132(4) of the Act - no opportunity was given to the assessee to cross examine the statement of Shri K.K. Goel - The assessment was made on 13.06.2008 whereas Shri K.K. Goel expired in May, 2008 and thus the assessee could not get opportunity to cross examine the concerned person - Representative of Shri K.K. Goel, i.e. M/s. Vinodkumar Bindal & Co., Chartered Accountants, in response to the summons issued by AO, appeared and stated that the purchaser never paid any on-money to the assessee and it was spent towards interior work in the flat as per the resolution of the Board of Directors of the company – Following the decision in ACIT Versus Rochem Separation Systems India (P) Ltd. & others [2011 (5) TMI 370 - ITAT, Mumbai] - an addition made on mere statement of the purchaser, i.e. K.K. Goel, HUF, cannot stand - the order passed by the CIT(A) is upheld – Decided against revenue. Issues Involved:1. Deletion of addition of 'on-money' received outside the books of accounts.2. Consideration of statement on oath under section 132(4) of the IT Act.3. Corroborative material supporting the 'on-money' receipt.4. Treatment of sums paid recorded in seized documents.5. Reliance on the Tribunal's judgment in the case of Shri Jag Mohan Singh Arora.6. Opportunity to cross-examine and retraction of statements.Detailed Analysis:1. Deletion of Addition of 'On-Money' Received Outside the Books of Accounts:The Revenue contended that the CIT(A) was not justified in deleting the addition of 'on-money' received by the assessee outside the books of accounts. The assessee argued that the statement made by the purchaser during the course of search proceedings was not supplied to them and no corroborative material was found to conclusively prove the receipt of 'on-money'. The CIT(A) found that the addition was based on loose papers and statements that were not corroborated by other evidence.2. Consideration of Statement on Oath under Section 132(4) of the IT Act:The Revenue relied on the statement of Shri K.K. Goel recorded under section 132(4) of the IT Act, which indicated that 'on-money' was paid. However, the assessee argued that the statement was not corroborated by any other documentary evidence or third-party confirmation. The CIT(A) observed that the statement alone, without corroborative evidence, was insufficient to justify the addition.3. Corroborative Material Supporting the 'On-Money' Receipt:The CIT(A) noted that the addition was primarily based on pages 61 to 63 of the seized documents, which did not conclusively prove the receipt of 'on-money'. The assessee submitted that the payment receipts by cheques did not match the seized documents and that the alleged 'on-money' was not corroborated by other evidence. The CIT(A) found that the burden of proof was not met by the Revenue.4. Treatment of Sums Paid Recorded in Seized Documents:The Revenue argued that the sums paid and recorded in the seized documents were payments made to contractors. The assessee countered that the payments were for interior work and not 'on-money' for the flat purchase. The CIT(A) observed that the purchaser and its associate company denied paying 'on-money' and stated that the amount was spent on interior work. The CIT(A) concluded that the payment of 'on-money' was not established.5. Reliance on the Tribunal's Judgment in the Case of Shri Jag Mohan Singh Arora:The Revenue contended that the CIT(A) erred in relying on the Tribunal's judgment in the case of Shri Jag Mohan Singh Arora, where the addition was deleted based on the retraction of statements. The CIT(A) found that the facts of the present case were similar and that the addition could not be upheld based on uncorroborated statements and seized documents.6. Opportunity to Cross-Examine and Retraction of Statements:The assessee argued that they were not given an opportunity to cross-examine the statement of Shri K.K. Goel, who had expired before they could do so. The CIT(A) noted that the representative of Shri K.K. Goel appeared and denied the payment of 'on-money'. The Tribunal in similar cases had set aside additions made in violation of the principles of natural justice. The CIT(A) found that the addition was not justified without allowing the assessee to cross-examine the concerned person.Conclusion:The Tribunal affirmed the order of the CIT(A), concluding that the addition of 'on-money' was not justified based on uncorroborated statements and seized documents. The appeal filed by the Revenue was dismissed, and the order was pronounced in the open court on 8th October 2014.