Tribunal dismisses Revenue's appeal over addition of alleged on-money on flat sales.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition of Rs. 34,43,89,459 on account of alleged on-money received on the sale of flats by the real estate developer. The Tribunal found the AO's reliance on statements and seized material without corroborative evidence insufficient to justify the addition, emphasizing the lack of a direct nexus between the seized material and the assessee. The Tribunal concluded that the addition was made on an ad-hoc/estimate basis and upheld the deletion, leading to the dismissal of the Revenue's appeal.

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Issues Involved:
1. Addition of Rs. 34,43,89,459 on account of alleged on-money received on sale of flats.

Detailed Analysis:

Issue 1: Addition of Rs. 34,43,89,459 on Account of Alleged On-Money Received on Sale of Flats

Facts and Background:
The Revenue challenged the deletion of an addition of Rs. 34,43,89,459 by the Commissioner of Income Tax (Appeals) (CIT(A)). The assessee, a real estate developer, was subjected to a search and seizure operation under Section 132 of the Income Tax Act, 1961. During the search, unaccounted cash, jewellery, and incriminating documents indicating suppression of sales were found. Statements recorded under oath from one of the directors and employees indicated undisclosed income and receipt of on-money at 30% over the registered value.

Assessing Officer's (AO) Findings:
The AO issued a show-cause notice to the assessee and, despite the assessee's objections and retractions of statements, concluded that the assessee received on-money on the sale of flats. The AO relied on statements recorded under Section 132(4) and seized material (Page-114 of Annexure A-1). The AO computed the on-money at 30% of the sales amounting to Rs. 34,43,89,459 but made an addition of 100% of the sales.

CIT(A)'s Findings:
The CIT(A) found no corroborative evidence to support the receipt of on-money by the assessee. The seized material did not indicate the assessee's name or project. The statements from the director and employees were retracted, and the sale consideration in some instances was more than the stamp duty value. Thus, the CIT(A) deleted the addition made by the AO.

Tribunal's Analysis:
The Tribunal noted that the AO's addition was based on statements recorded under Section 132(4) and Page-114 of Annexure A-1. The Tribunal observed that the AO did not provide detailed content of the seized material, which did not refer to the assessee or its project. The Tribunal referred to its own decision in the assessee's case for the assessment year 2011-12, where it upheld the deletion of similar additions, noting that the seized material did not have any reference to the assessee.

Key Observations:
- The AO's reliance on statements and seized material without corroborative evidence was insufficient to justify the addition.
- The Tribunal emphasized that retracted statements alone could not form the basis for additions without supporting evidence.
- The Tribunal cited previous decisions where similar additions were deleted due to lack of direct nexus between seized material and the assessee.
- The Tribunal reiterated that the undisclosed income declared during the search was already offered in the assessment year 2011-12 and any addition in the impugned year required concrete evidence.

Conclusion:
The Tribunal concluded that the addition made by the AO was purely on an ad-hoc/estimate basis without any incriminating material. The reliance on retracted statements and absence of corroborative evidence led to the dismissal of the Revenue's appeal. The Tribunal upheld the CIT(A)'s order, finding no infirmity in the deletion of the addition.

Final Order:
The Revenue's appeal was dismissed, and the order was pronounced in the open Court on 06.12.2019.

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