2024 (12) TMI 1659 - AT - Income Tax

Tax tribunal rejects on-money allegation, upholds deletion of unexplained investment addition under Section 69 for lack evidence

ITAT Chennai dismissed the revenue's appeals and upheld the CIT(A)'s deletion of additions made as unexplained investment u/s 69. The AO had relied solely ... Unexplained investment u/s. 69 - Onus to prove - difference between the value as per registered sale deed and the purchase consideration as mentioned in the loose sheet extracted from assessee's mobile phone during the course of search - Whether Reliance on loose sheet (extract of image from mobile phone) relied upon by the assessee is only secondary evidence? - CIT(A) deleted addition - HELD THAT:- CIT(A), in our considered opinion, rightly appreciated the facts that the image revealed only a part of the transactions and not the entire transaction. The same would require more corroboration to sustain additions in the hands of the assessee. The sole document as relied upon by AO lacked essential element such as actual consideration paid and extra consideration paid by way of on-money. The nature of documents was such that it could not be relied upon to support the addition. Reference was made to the decision of ACIT vs Satyapal Wassan [2007 (2) TMI 658 - ITAT JABALPUR] to arrive at such a conclusion. It has further been held by Ld. CIT(A) that the loose sheet nowhere indicated that the value of the property as mentioned therein was the actual sale consideration paid by the assessee. There was no information/material as to how the assessee had paid the extra consideration and what was the source for it. Reference was made to the decision of Riveria Properties Pvt. Ltd. [2017 (11) TMI 377 - ITAT MUMBAI] holding that AO was required to bring on record further evidence to show that the money had actually exchanged between the parties in case where there was no other evidence on record to prove that on-money was paid except the loose sheet found in the premises. As further observed by Ld. CIT(A) that Ld. AO did not bring on record any corroborative evidence in the shape of agreement of sale, admission of extra consideration from the sellers, cash receipts etc. The addition was made by AO by assuming that the assessee had paid extra consideration to purchase the property based upon the image extracted from the mobile phone only and the same was merely on the basis of presumption and therefore, such an addition could not be sustained in law. In our considered opinion, the issue has been clinched in correct perspective by CIT(A) and the same has been adjudicated in accordance with settled legal principles. Once initial onus was discharged by the assessee by furnishing plausible explanation coupled with the confirmations from respective sellers, the onus had shifted on Ld. AO to dislodge the same. However, we find that the there is no concrete material to dislodge the claim of the assessee. Therefore, we find no reason to interfere in the impugned order. The additions, for all the years, have rightly been deleted by Ld. CIT(A). Decided against revenue. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether additions as unexplained investment under section 69 could be sustained solely on the basis of a loose sheet/image extracted from the assessee's mobile phone, recording higher figures than the consideration disclosed in registered sale deeds. 1.2 Whether the loose sheet/image extracted from the assessee's mobile phone constituted reliable and primary evidence of 'on-money' payment, in light of its nature, contents, and the surrounding circumstances. 1.3 Whether the initial statement of the assessee recorded during search, admitting that the figures in the loose sheet represented 'invested amounts', could by itself justify the addition, despite subsequent clarification/retraction and absence of corroborative evidence. 1.4 Whether the statutory presumptions under sections 132(4A) and 292C regarding ownership and truth of seized material were sufficient, without corroboration, to justify additions under section 69 for alleged unexplained investments. 1.5 Whether the burden of proof shifted back to the Revenue after the assessee furnished a plausible explanation and confirmations from vendors that only the consideration recorded in the sale deeds was received. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Additions under section 69 based solely on loose sheet / mobile image as evidence of on-money Interpretation and reasoning 2.1 The incriminating material comprised an image, captured on the assessee's iPhone from an earlier Samsung phone, showing a list of properties with certain amounts noted against them, including four properties where the noted amounts exceeded the registered purchase consideration. 2.2 The image was non-editable and represented only a part of the overall property transactions; it did not specify that the amounts reflected actual consideration paid, nor did it distinguish between agreed price, offer price, or final paid price. Notations such as '..' appeared, indicating lack of finality or certainty. 2.3 The Tribunal, concurring with the appellate authority, noted that the document lacked essential elements: there was no indication of mode of payment, no reference to 'on-money', no narration that extra consideration was actually paid, and no indication of source of such alleged extra payments. 2.4 The Tribunal treated the loose sheet/image as only a piece of secondary evidence which, by its nature and incompleteness, required corroboration through independent material such as agreements, receipts, statements of vendors, or other evidence of actual cash flow. 2.5 The Tribunal approved the appellate reliance on precedents holding that loose sheets, by themselves, are insufficient to sustain additions where no independent evidence exists to show that money has actually exchanged hands as on-money. 2.6 It was found that the Assessing Officer had not brought on record any corroborative evidence: there was no enquiry from vendors, no admission of extra consideration by them, no cash receipts, and no other material to demonstrate payment of consideration beyond what was recorded in the registered deeds. Conclusions 2.7 The loose sheet / mobile image, being incomplete and not self-explanatory, could not be treated as reliable primary evidence of unaccounted investment or on-money payment. 2.8 In the absence of corroborative material, additions under section 69 based solely on such loose sheet/image were held to be unsustainable and were rightly deleted. Issue 3: Effect of initial statement under section 132(4) and subsequent clarification/retraction Interpretation and reasoning 3.1 In the first statement recorded during search, the assessee stated that the loose sheet contained details of extent of land and invested amounts in certain properties; later, in a subsequent sworn statement, the assessee clarified that the amounts represented offer/negotiation prices noted during bargaining and not the final purchase price. 3.2 The Tribunal noted that the subsequent explanation was supported by a consistent narrative: the assessee habitually noted offer prices in his mobile during negotiation stages, and such notings were not always updated after conclusion of the deal. 3.3 It was also noted that the key image was non-editable, having been taken as a photograph of earlier notings on another device; this supported the explanation that, after purchase and negotiation, the figures could not have been altered to reflect final consideration. 3.4 The Tribunal endorsed the appellate view that the statements recorded, read with the nature of the loose sheet, only raised suspicion but did not conclusively establish that extra consideration was actually paid. 3.5 The Tribunal emphasized that additions cannot rest merely on an initial admission in the absence of supporting evidence, especially when a plausible, consistent clarification is subsequently given and not disproved by independent enquiry. Conclusions 3.6 The initial statement, without corroboration and in light of the later plausible explanation, was held insufficient to sustain the additions. 3.7 The subsequent clarification/retraction, supported by surrounding facts, could not be brushed aside, and the Assessing Officer's reliance on the earlier statement alone was unjustified. Issue 4: Scope of presumptions under sections 132(4A) and 292C in sustaining additions Legal framework (as discussed) 4.1 The Revenue invoked the presumptions under sections 132(4A) and 292C that documents found in possession of the assessee belong to him and that their contents are true. Interpretation and reasoning 4.2 The Tribunal proceeded on the basis that such presumptions could establish ownership and authorship of the material but do not, by themselves, establish the factual occurrence of unrecorded payments without supporting evidence. 4.3 The Tribunal agreed with the appellate authority that, even assuming the loose sheet belonged to the assessee and was authored by him, its nature, incompleteness, and lack of clarity meant that it could not automatically be taken as proof of actual payment of on-money. 4.4 The Tribunal found that the Assessing Officer had used the presumptions as a substitute for substantive enquiry and corroborative proof, which is impermissible when the document is only indicative or raises suspicion but does not conclusively record actual undisclosed transactions. Conclusions 4.5 Presumptions under sections 132(4A) and 292C, though applicable to ownership and authenticity, were held insufficient, in the absence of corroboration, to justify additions under section 69 for alleged unexplained investments. Issue 5: Burden of proof and effect of vendor confirmations Interpretation and reasoning 5.1 The assessee filed confirmations from vendors for relevant assessment years, affirming that they had received only the consideration recorded in the registered sale deeds and no extra amount. 5.2 The appellate authority recorded that the Assessing Officer neither conducted enquiries with the vendors nor examined the confirmations on merits; in one year, the confirmation submitted during appellate proceedings was summarily doubted for delay but without factual verification. 5.3 The Tribunal concurred that once the assessee furnished a plausible explanation supported by vendor confirmations, the initial onus on the assessee stood discharged. 5.4 It was then incumbent on the Revenue to disprove the explanation and confirmations by independent enquiry or contrary material; this was not done, and the assessment order itself was silent on the confirmations filed during assessment. Conclusions 5.5 The burden of proof, having shifted to the Revenue, was not discharged; the additions therefore remained based only on suspicion and presumptions. 5.6 The deletions of the additions for all assessment years were upheld, and the appeals were dismissed.