Facts
The assessee, a real estate firm, was subjected to search proceedings under Section 132 and Section 153C. Incriminating material (Page 38 of Annexure A/JRFM/05) was recovered from a part-time accountant's laptop at a third party's premises, indicating undisclosed cash receipts ('on-money') from the sale of commercial shops. The AO made an addition of Rs. 21.20 crores (Rs. 9.45 crores for AY 2016-17 and Rs. 11.75 crores for AY 2017-18) for these alleged unaccounted sales. The CIT(A) sustained the addition but restricted it to 12% of the cash portion of sales.
Held
The Tribunal held that the AO failed to provide corroborative evidence to substantiate the additions, relying solely on an unsubstantiated document seized from a third party's premises. The presumption under Section 292C does not extend to third parties without independent verification. As the AO did not examine purchasers or the document's author, the additions made cannot be sustained. The assessee's cross-objections were allowed, and the revenue's appeals were dismissed as academic.
Key Issues
1. Whether additions based on an unsubstantiated document (loose sheet) seized from a third party's premises without corroborative evidence are sustainable. 2. Whether the presumption under Section 292C of the Income Tax Act applies to a third party.
Sections Cited
153C, 132, 292C, 133A, 4, 34, 26A, 68, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
आदेशकी �ितिलिप अ�ेिषत/ Copy of the order forwarded to:- 1. िनधा�रती/The : United Developer, 4-6-73/2 & 3, Pillar No. 143, Attapur X Road, Assessee Mahadipatnam, Hyderabad. 2. राज�/ : Deputy Commissioner of Income-tax, The Central Circle-3(1), Aaykar Bhawan, Revenue Opp. LB Stadium, Bhasheerbagh. 3. The Principal Commissioner of Income Tax, Hyderabad 4. िवभागीय�ितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद /CIT- DR, ITAT, Hyderabad 5. गाड�फ़ाईल / Guard file
आदेशानुसार / BY ORDER
Sr. Private Secretary ITAT, Hyderabad