Deletion of s.69 addition for alleged "on money" payments upheld; no proof of investments beyond returns, no s.260A question

The HC upheld the ITAT's deletion of an addition under s.69 relating to alleged payment of "on money" to builders, finding the Tribunal gave cogent factual reasons and there was no material to show investments beyond the return. The court held no substantial question of law or perversity arose to justify interference under s.260A, and no ground was shown to disturb the Tribunal's factual findings. Appeal dismissed; decision in favour of the assessee.

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Issues Involved:
1. Legality of the addition of Rs. 5,22,500/- under Section 69 of the Income Tax Act for payment of "on money" to builders for the acquisition of a bungalow.
2. Assessment of evidence and statements recorded during the search and survey operations.
3. The Tribunal's decision to delete the addition made by the Assessing Officer.
4. The scope of interference by the High Court under Section 260A of the Income Tax Act.

Detailed Analysis:

Issue 1: Legality of the Addition under Section 69
The primary issue in the appeals was whether the Income Tax Appellate Tribunal (ITAT) was right in law and on facts in deleting the addition of Rs. 5,22,500/- made under Section 69 of the Income Tax Act for payment of "on money" to the builders for the acquisition of a bungalow. The Revenue contended that the addition was justified based on the statements and evidence collected during the search and survey operations.

Issue 2: Assessment of Evidence and Statements
During the search on 27.03.1992 at the premises of certain individuals and their firm, it was admitted that 60% of the consideration for the bungalows was received by cheque and 40% in cash as "on money." The Assessing Officer inferred that the respective respondents paid specific sums as "on money." However, the Assessee denied paying anything over Rs. 6,12,500/- and contested the notice issued under Section 148 of the Act. The Tribunal found that the addition of "on money" was unjustified as there was no substantial evidence to support the claim that the Assessee had paid any amount over the recorded Rs. 6,12,500/-.

Issue 3: Tribunal's Decision to Delete the Addition
The ITAT allowed the appeal of the Assessee, stating that the addition of "on money" was not justified. The Tribunal emphasized the principle of natural justice, noting that any material used against the Assessee must be put to the Assessee, allowing an opportunity to rebut the same. The Tribunal found that the Assessing Officer did not have concrete evidence to prove that the Assessee paid "on money" and that the statements of the builders during cross-examination did not support the Revenue's claim.

Issue 4: Scope of Interference by the High Court
The High Court examined whether there was any substantial question of law that warranted interference under Section 260A of the Income Tax Act. The Court noted that the Tribunal's findings were based on factual appreciation and cogent reasons. The Revenue's contention that the findings were perverse was not upheld, as the Tribunal had adequately addressed the evidence and statements. The Court emphasized that it could not re-evaluate the evidence or factual findings of the Tribunal under Section 260A, which only allows for interference on substantial questions of law.

Conclusion
The High Court dismissed the appeals, concluding that no substantial question of law arose from the Tribunal's order. The Tribunal's decision to delete the addition of Rs. 5,22,500/- under Section 69 was based on a thorough examination of the evidence and adherence to principles of natural justice. The Court found no perversity in the Tribunal's findings and upheld the deletion of the addition. The appeals were dismissed, affirming that the Assessee did not make any undisclosed investment in the bungalows of the 'Tulip' Scheme.

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