Revenue appeal dismissed, additions under Section 40A(2)(b) and on undisclosed income deleted. Lack of evidence cited.

The ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s decisions to delete additions under Section 40A(2)(b) of Rs. 1,31,00,000 and on undisclosed income from the sale of additional area of 2750 sq ft. The CIT(A) found lack of factual basis and corroborative evidence for the additions, citing commercial considerations and fair market value. The ITAT concurred, emphasizing the appellant's disclosures and the AO's presumption without concrete evidence.

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Issues:
1. Deletion of addition under Section 40A(2)(b) of Rs. 1,31,00,000.
2. Deletion of addition on undisclosed income from sale of additional area of 2750 sq ft.

Deletion of addition under Section 40A(2)(b) of Rs. 1,31,00,000:
The Revenue appealed against the CIT(A)'s order regarding the addition under Section 40A(2)(b) of Rs. 1,31,00,000. The CIT(A) deleted the addition based on the argument that the appellant had made payments to two directors/shareholders who were tenants holding tenancy rights and land possession, and the responsibility to settle with tenants lay with the developers. The CIT(A) found that the AO's conclusion lacked a factual basis as the payments were part of work in progress since 1992-93. The CIT(A) directed the AO to delete the addition, stating that the payments were not hit by Section 40(A)(2b) provisions. The ITAT upheld the CIT(A)'s decision, emphasizing that the payments were commercial considerations and not shown to be higher than fair market value.

Deletion of addition on undisclosed income from sale of additional area of 2750 sq ft:
The AO made an addition of Rs. 1,16,00,000 on the alleged undisclosed income from the sale of 2750 sq ft area, which the CIT(A) later deleted. The CIT(A) found that the transaction was disclosed in the books and return of income, and the AO's addition lacked corroborative material or evidence. The CIT(A) cited legal precedents and directed the AO to delete the addition, which the ITAT upheld. The ITAT noted that the appellant had disclosed the sum in the books, and the AO's addition was based on presumption without concrete evidence.

In conclusion, the ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s decisions to delete both additions. The judgments were based on detailed findings, legal precedents, and considerations of commercial reality and fair market value.

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