SHRI RITESH RAMESH JAIN SANGHVI,MUMBAI vs. ITO 26(2)(5), MUMBAI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the AO failed to substantiate the information received and wrongly placed the burden of proof on the assessee to prove a negative fact. Since both parties denied the transaction, the addition was not justified.
What were the facts?
The Assessing Officer (AO) made an addition of Rs. 10 lakhs to the assessee's income based on information from a survey on a builder, alleging cash payment for a flat. Both the assessee and the builder denied any such transaction.
What were the issues?
Whether the addition of Rs. 10 lakhs was justified when both the alleged buyer and seller denied the transaction, and the AO failed to provide evidence?
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: Shri B.R. Baskaran
Per B.R. Baskaran, Accountant Member
The appeal filed by assessee is directed against the order dated 09-02- 2018 passed by Ld CIT(A)-38, Mumbai and it relates to the assessment year 2009-10. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition of Rs.10.00 lakhs made by the Assessing Officer u/s. 69B of the Income Tax Act, 1961.
I heard the parties and perused the record. The Assessing Officer received information that the Revenue has carried out a survey action in the hands of a builder named M/s. Prime Developers on 22-02-2015. It was noticed from the documents seized from the said builder, that one of the flat purchasers named Shri Ritesh Ramesh Jain has paid a sum of Rs.10.00
[2] Ritesh Ramesh Jain Sanghvi lakhs in aggregate in cash to the builder. On the basis of above said information, the Assessing Officer re-opened the assessment of the A.Y under consideration. The assessee submitted that he has not purchased any flat from the above said builder and hence the question of paying any on- money does not arise. Hence, the Assessing Officer issued notice u/s. 133(6) of the Act to the builder, who also submitted that he did not enter into any transaction with the assessee. However, the Assessing Officer proceeded to make that the addition of Rs. 10,00,000/- in the hands of the assessee by observing that payment of on-money is quite common in property transactions. The Ld CIT(A) also confirmed the same and the assessee is in further appeal before this Tribunal.
The Ld. AR submitted that the question of making of any on-money payment could arise only if the assessee has purchased any flat from the said builder.
The Ld. AR submitted that the assessee has furnished his financial statement to prove that he has not purchased any flat. The assessee has also asked the Assessing Officer to furnish agreement on sale, if any, to prove the factum of purchase of flat by him.
The Ld. AR submitted that the Assessing Officer has not furnished any information and asked the assessee to prove the negative, which is not possible. Accordingly, he submitted that the impugned addition is liable to be deleted.
On the contrary, the Ld. Departmental Representative (ld. DR for short) supported the order passed by the Ld. CIT(A).
[3] Ritesh Ramesh Jain Sanghvi
Having heard the rival submissions, I am of the view there is merit in the contentions of the assessee. I noticed that the Assessing Officer has relied on certain information received from the Investigations Wing of the Department. However, said information was not provided to the assessee. It is also noticed that the assessee has claimed that he has not purchased any flat from the builder and the said fact was also confirmed by the said builder. Since both alleged seller and the alleged buyer (assessee herein) have denied transactions, it is the duty of the AO to substantiate the information so received by him. I notice that the AO and CIT(A) has thrown the burden on the assessee to prove a negative fact.
Accordingly, under these set of facts, I am of the view that no case arises for making the impugned addition of Rs. 10 lakhs in the hands of the assessee. Accordingly, I set aside the order passed by the ld. CIT(A) on this issue and direct the Assessing Officer to delete the impugned addition of Rs.10,00,000/- referred above.
In the result, the appeal of the assessee is allowed.
Order pronounced on 18-07-2019
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