2024 (11) TMI 314 - AT - Income Tax

Addition of on-money payment deleted due to lack of evidence establishing assessee's involvement in cash transactions

ACIT – Central Circle – 1, Andhra Pradesh Versus Yerra Rajesh

ACIT – Central Circle – 1, Andhra Pradesh Versus Yerra Rajesh - TMI Issues Involved:1. Whether the addition of Rs. 3,80,05,000/- as on-money payment made by the assessee for the purchase of property is justified.2. The evidentiary value of the Excel sheet seized during the search operations.3. The applicability of sworn statements under section 132(4) of the Income Tax Act.4. The relevance of sellers admitting the cash component in their returns.5. The applicability of legal precedents to the facts of the case.Issue-Wise Detailed Analysis:1. Addition of Rs. 3,80,05,000/- as On-Money Payment:The central issue in this appeal was whether the assessee paid an on-money amount of Rs. 3,80,05,000/- for the purchase of property, which the Assessing Officer (AO) sought to tax under section 69 read with section 115BBE of the Income Tax Act. The AO relied on an Excel sheet seized during a search operation, which allegedly recorded the cash transactions. The assessee denied making any on-money payment, asserting that the transaction was conducted at the recorded consideration of Rs. 1,62,80,000/-. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, and the tribunal upheld this decision, finding no corroborative evidence linking the seized document to the assessee.2. Evidentiary Value of the Excel Sheet:The Excel sheet, marked as Page No. 55 of Annexure A/MAC/RES/GNT/01, was a crucial piece of evidence for the AO. However, the tribunal noted that the sheet did not mention the assessee's name, the property details, or any direct reference to the transaction in question. The tribunal emphasized that without independent corroborative evidence, the sheet alone could not substantiate the alleged on-money payment. The tribunal referenced the Andhra Pradesh High Court's decision in K.V. Lakshmi Savitri Devi, which underscored the need for clear nexus between seized material and the assessee.3. Applicability of Sworn Statements under Section 132(4):The AO relied on sworn statements from the sellers under section 132(4), where they allegedly admitted receiving on-money. The tribunal, however, highlighted that the assessee had denied such payments in his sworn statement. The tribunal found that the AO failed to provide independent evidence corroborating the sellers' statements with the assessee's actions. The tribunal distinguished this case from B. Kishore Kumar v. DCIT, where the assessee himself admitted undisclosed income.4. Relevance of Sellers Admitting Cash Component in Returns:The AO argued that the sellers' admission of the cash component in their returns and payment of taxes supported the existence of on-money. However, the tribunal found that this admission by the sellers did not necessarily implicate the assessee without further evidence. The tribunal noted that the AO did not conduct any independent inquiry to link the returns of the sellers with the alleged on-money payment by the assessee.5. Applicability of Legal Precedents:The tribunal analyzed the applicability of various legal precedents cited by both parties. The CIT(A) had relied on the decision in K.V. Lakshmi Savitri Devi, which was affirmed by the Andhra Pradesh High Court, to support the deletion of the addition. The tribunal agreed with this reliance, finding the facts of the present case aligned with the principles established in that decision. The tribunal also considered the Supreme Court's observations in Ambalal Sarabhai Enterprise Ltd regarding electronic evidence, but found no substantial basis to alter the CIT(A)'s conclusions.In conclusion, the tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete the addition of Rs. 3,80,05,000/- as on-money payment. The tribunal emphasized the lack of corroborative evidence directly linking the assessee to the alleged cash transaction, thereby upholding the principles of natural justice and evidentiary requirements.