2024 (5) TMI 1658 - AT - Income Tax

Unexplained investments in property purchase sustained where seller admitted cash component, assessment upheld against purchaser

Unexplained investments arising from alleged on-money paid over the stated consideration for a flat were analysed on the basis that the seller admitted ... Unexplained investments u/s 69 - on-money paid over and above the transactions valued for purchasing of flat - assessee was denied opportunity of cross-examination of the seller of property - HELD THAT:- The contention of the counsel that it is merely an estimation defies all commercial logic because an estimated figure is always a complete figure. But the figure mentioned hereinabove is so accurate that it cannot considered as an estimated figure. Most important fact is that the recipient i.e., seller has admitted of having received a cash component of the transaction. Therefore, it is reasonable to conclude that the payee must have made the said payment. The undisputed fact is that the assessee has in fact purchased the flat from Runwal Group. When the purchase is not in dispute, the payment is not dispute then in all probability the cash component is also correct. The seller has admitted of having received on-money which is the income of the seller and no prudent business man would offer income which it has never earned / received. The decision of the Coordinate Benches are misplaced in as much as each case has to be decided on the facts of its own and since in the case in hand the income has been assessed in the hands of the seller applying the principles of preponderance of probability on the facts of the case in hand, we do not find any reason to interfere with the findings of the Ld. CIT(A). Decided against assessee. Issues: (i) Whether the addition of Rs. 82,13,261 under Section 69 of the Income-tax Act, 1961 as unexplained investment is justified; (ii) Whether the assessee was denied opportunity of cross-examination of the seller (Shri Sandeep Runwal) during assessment proceedings.Issue (i): Whether the cash component of Rs. 82,13,261 shown in the seller's statement can be treated as unexplained investment of the assessee under Section 69 of the Income-tax Act, 1961.Analysis: The Tribunal considered the statement of the seller recording a detailed list of cash receipts with the assessee's name and specific amount for Flat No. 501 at Runwal Elegante. The Tribunal found the figure to be precise rather than an estimate, noted the undisputed fact of property purchase, and applied the standard of preponderance of probability to conclude that the seller's admission of receipt supports the existence of a cash component of the transaction.Conclusion: The addition of Rs. 82,13,261 under Section 69 is upheld in favour of the Revenue.Issue (ii): Whether the assessee was denied the opportunity to cross-examine the person whose statement formed the basis of the addition.Analysis: The Tribunal examined the assessment proceedings and record, noting that when confronted with the seller's statement the assessee did not request cross-examination; therefore the claim of denial of opportunity was without basis on the facts before the authorities.Conclusion: The claim of denial of opportunity for cross-examination is rejected; no procedural infirmity is found against the Revenue.Final Conclusion: The appeal is dismissed and the addition under Section 69 stands confirmed; the Tribunal finds no merit in the procedural grievance regarding cross-examination.Ratio Decidendi: Where a seller admits receipt of a specific cash component relating to a sale and the purchaser's acquisition is undisputed, the seller's admission, assessed on the preponderance of probabilities, supports treating the corresponding cash payment as unexplained investment under Section 69 of the Income-tax Act, 1961.