Tribunal sets aside addition for unaccounted receipts in Ardee City plot allotments

The Tribunal allowed the assessee's appeal, setting aside the impugned order and directing the deletion of the addition of Rs. 12,44,06,000 on account of alleged unaccounted receipts from the allotment of plots in Ardee City, Gurgaon. The Tribunal found that the additions lacked substantial evidence and were based on presumption, emphasizing that selective acceptance of entries was impermissible. The Tribunal concluded that the assessing authority's order was legally infirm, as similar additions made during reassessment proceedings had been found unsustainable in previous cases.

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Issues Involved:

1. Addition of Rs. 12,44,06,000 on account of alleged unaccounted receipt on the allotment of plots in Ardee City, Gurgaon.
2. Legal infirmities in the order passed by the assessing authority.

Issue-Wise Detailed Analysis:

1. Addition of Rs. 12,44,06,000 on Account of Alleged Unaccounted Receipt:

The assessee contested the addition of Rs. 12,44,06,000 made by the AO and upheld by the CIT(A) on the grounds of alleged unaccounted receipts from the allotment of plots in Ardee City, Gurgaon. The ITAT Delhi Bench had previously addressed similar issues in the assessee's own cases for AY 1997-98, where the Tribunal had directed the AO to delete the additions made on account of unaccounted receipts. The Tribunal observed that the additions were based on a seized document (A-I page 5) which was not a proper cash book and the entries therein represented market values, not actual values. It was noted that the AO had presumed the entries to reflect actual costs without corroborative evidence. The Tribunal emphasized that documents should be read as a whole, and selective acceptance of entries was not permissible. The Tribunal found that the AO's addition was based on presumption and lacked substantial evidence. Consequently, the Tribunal dismissed the revenue's appeal and directed the deletion of the addition.

2. Legal Infirmities in the Order Passed by the Assessing Authority:

The assessee argued that the reassessment order passed u/s 143(3) r/w section 147 of the Act was legally infirm, as the additions made were not sustainable. The Tribunal noted that similar additions made during reassessment proceedings had been deleted by the ITAT in the assessee's own cases and in the case of the purchaser, Chavan Rishi International. The Tribunal observed that the CIT(A) had ignored the Tribunal's previous orders and the Settlement Commission's findings, which held that no adverse inference about undisclosed income could be drawn without corroborative evidence. The Tribunal emphasized that the CIT(A)'s approach was not justified and that the additions made by the AO were not sustainable.

Conclusion:

The Tribunal concluded that the CIT(A) had erred in confirming the addition of Rs. 12,44,06,000 on account of alleged unaccounted receipts. The Tribunal directed the AO to delete the impugned additions, as the same additions made during reassessment proceedings had been found unsustainable by the Tribunal and the Settlement Commission. The Tribunal allowed the assessee's appeal, setting aside the impugned order and directing the deletion of the additions.

Order Pronounced:

The appeal of the assessee was allowed, and the impugned order was set aside. The AO was directed to delete the impugned additions. The order was pronounced in the open court on 15.1.14.

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