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Facts
The assessee's case for AY 2010-11 was reopened based on information about cash on-money payment for a flat. A search on Sheth Developers P. Ltd. revealed that the director admitted to receiving substantial on-money. The AO estimated the assessee's on-money payment at Rs. 23,59,500/-, treating it as deemed income under section 69B.
Held
The Tribunal held that the Assessing Officer failed to demonstrate with relevant material that the assessee paid any on-money for the flat. The Director's statement and loose papers from the search did not link the assessee to any such payment, and no corroborative evidence was found.
Key Issues
Whether the addition made by the AO on account of alleged on-money payment, based on the statement of a builder's director and loose papers, is justified without corroborative evidence linking it to the assessee?
Sections Cited
69B, 143(3), 147, 148, 132(4)
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI AMARJIT SINGH,
आदेश / O R D E R
PER AMARJIT SINGH, AM:
This appeal filed by the assessee is directed against the order passed by the CIT(A)-55, Mumbai, which in turn arises from the assessment order passed by the A.O u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (the Act), dated 29.12.2017 for A.Y. 2010-11. The assessee has assailed the impugned order on the following grounds before us:
Ground No. 1: Addition u/s 69B as deemed income of an amount of Rs 23,59,599/- on the basis of loose papers found during search on the premises of builder The learned CIT Appeals has erred in law and in facts in confirming the addition u/s 69B of the Income Tax Act, 1961 made
Girish Narayan Bherwani v. ITO by the assessing officer of Rs 23,59,000/-by treating the same as deemed income of the assessee. The learned AO had passed the order without appreciating the fact that assessee had proved the genuineness of the transaction of investment in flat which had been routed through banking channels. Assessee has not paid any cash for the purchase of the property and hence no addition is warranted. The assessee therefore preferred an appeal before the Hon'ble Income Tax Appellate Tribunal, Ground No.2 General (a). The CIT Appeals order being contrary to evidence and facts of the case should be amended/modified or deleted in the light of the ground deduced above. (b). The Appellants crave leave to reserve to themselves the right to add, delete, alter, amend, and substitute any or all the grounds at or before the time of hearing.”
The facts in brief is that in this case the original return of income for Assessment Year (AY) 2010-11 was not filed by the assessee and the case of the assessee was reopened by issuing notice u/s. 148 of the Act by the Assessing Officer (AO) as per the information received from DGIT (Inv.) Unit-IX(2), Mumbai. The information received mentioned about the payment of Rs.23,59,500/- in cash as on-money for purchase of flat No. 2904 in La Citadel project in Mumbai. A search action was taken place on 4th October, 2012 in the case of M/s. Sheth Developers P. Ltd. During the course of search proceedings statement of Shri Ashwin Natwarlal Sheth, Director of the said company was recorded u/s. 132(4) of the Act. In his statement on 1st December, 2012 Shri Ashwin Natwarlal Sheth has admitted that the company had taken on-money totaling to Rs.49,63,70,870/- on account of sale of flats of its 4 projects over and above the agreement value. During the course of search action in the case
Girish Narayan Bherwani v. ITO of Sheth Developers P. Ltd., loose paper folder was also found which contained project-wise on-money received by the company over and above the agreement value of flats. The Assessing Officer (AO) further stated that the assessee had booked a flat in the project of Sheth Developers P. Ltd., namely, La Citadel project and had paid an advance sum of Rs.45,37,500/- during the Financial Year under consideration. On the basis of statement of Shri Aswhin Natwarlal Sheth for offering 8% on- money on various projects, the AO has determined an amount of Rs.23,59,500/- as on-money received from the assessee. Accordingly, an amount of Rs.23,59,500/- was treated as deemed to be the income of the assessee u/s. 69B of the Act.
The assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
During the course of appellate proceedings before us, the ld. Counsel for the assessee vehemently contended that the entire transactions for purchasing of the flat has been routed through normal banking channels and no consideration has been paid in cash. He further submitted that there was no supportive and corroborative material found during the search action which discloses the name of the assessee for providing on-money in purchasing the flat. He also submitted that the AO, on the general statement of the Director of Sheth Developers P. Ltd. has estimated the on-money paid by the assessee, which is not correct and the addition is made merely on assumption basis.
On the other hand, the ld. D.R. for the Revenue supported the orders of the lower authorities.
Girish Narayan Bherwani v. ITO
Heard both parties and perused the material of record. A search action was carried out in the case of M/s Sheth Developers Pvt. Ltd. During the search proceedings, in the statement recorded u/s. 132(4) of the Act Shri Ashwin Natwarlal Sheth, Director of the said builder company had admitted that the company had taken on-money amounting to Rs.49,63,70,870/- on sale of flats of 4 projects over and above the agreement value. On the basis of information received the case of the assessee was reopened by issue of notice u/s. 148 of the Act. Since the assessee had also booked a flat in one of the projects of Sheth Developers P. Ltd., therefore, the AO has determined an amount of Rs.23,59,500/- as on-money paid by the assessee on the basis of the statement of the Director of the builder company as referred above. It is undisputed fact that even in the statement the Director of the Sheth Developers P. Ltd. had not mentioned the name of the assessee and there was no any incriminating material to demonstrate that the assessee was connected with the transactions reflected in loose paper. During the course of assessment the assessee had also brought these facts before the notice of the AO that there was no evidence that the assessee had paid any on- money. It was also explained that being a non-resident Indian the question of making any cash payment does not find any support in the case of the assessee. Further, the AO has also not conducted any enquiry or brought any evidence on record to corroborate the seized evidence with the assessee. Neither in the statement of the Director nor in the loose paper it was mentioned that the assessee had paid any on-money of Rs.23,59,500/- for purchasing the flat from the said builder.
During the course of appellate proceedings before us, the ld. Counsel has also referred to judicial pronouncements, i.e., ACIT v. Sharad Chaudhary, [2015] 55 taxmann.com 324 (Delhi – Trib.), Pradeep Kumar
Girish Narayan Bherwani v. ITO Sharma v. DCIT [2021] 132 taxmann.com 41 (Delhi-Trib.) and DCIT v. Gordhanbhai L. Talavia, [2023] 146 taxmann.com 528 (Surat-Trib.) on the proposition that there is no basis for making addition in the absence of any supportive or corroborative material and evidence to connect seized material with the assessee. Looking to the above facts and findings we consider that the AO has not demonstrated from any relevant material that the assessee has paid any on-money on purchasing flat from Sheth Developers P. Ltd. Therefore, we consider that making the impugned addition in the case of the assessee is not justified.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 06.05.2024.
Sd/- Sd/- (VIKAS AWASTHY) (AMARJIT SINGH) Judicial Member Accountant Member Place: Mumbai Date: 06.05.2024 n.p आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. आयकर आयु�(अपील) / The CIT(A)- 3. आयकर आयु� / CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण DR, 5. ITAT, Mumbai गाड� फाईल / Guard file. 6. स�ािपत �ित //True Copy// आदेशानुसार/ BY ORDER,