Indrajit Mahendra Khona Vs ITO (ITAT Mumbai)
The Assessing Officer added ₹5.75 lakh as alleged “on-money” paid by the assessee for purchase of a flat, solely on the basis of a statement of a key person of the builder group recorded during a search on the builder. In that statement, the builder had made only a general remark that in some cases cash components of about ₹10–15 lakh per flat were taken, without naming the assessee, identifying his specific flat, or referring to any concrete transaction.
The Tribunal found that there was no independent or corroborative evidence against the assessee. The AO neither relied on any seized document such as the alleged Excel sheet nor conducted any further enquiry to show that the assessee actually paid any cash over and above the registered agreement value of ₹44.28 lakh. Even the assessment order did not explain how the specific figure of ₹5.75 lakh was arrived at.
Relying on CBDT instructions that additions should be based on evidence and not mere statements, and on judicial precedents including decisions of the Bombay High Court and the Supreme Court, the Tribunal held that an addition cannot be sustained merely on an uncorroborated third-party statement or generalised allegations about a builder’s modus operandi.
Since there was no material linking the assessee to any actual cash payment and no corroborative investigation by the AO, the on-money addition under section 68 was held to be based on surmise and conjecture and was deleted in full.
The assessee’s appeal was accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
