Estates Vs DCIT (ITAT Hyderabad)
Summary: The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) deleted additions made under Sections 69 and 69B towards alleged on-money payments for purchase of commercial property, holding that additions based solely on third-party seized documents without corroborative evidence are unsustainable. The Assessing Officer relied on diaries, pen drives, and loose sheets seized from the premises of a third party, namely the Vamsiram Group, along with statements of employees claiming that entries were recorded after truncating two zeros. The Tribunal observed that no incriminating material was found from the assessee’s premises and the seized documents neither bore the assessee’s signature nor handwriting. It further held that presumptions under Sections 132(4A) and 292C cannot be applied against a person from whose premises documents were not seized. Since the Revenue failed to produce independent corroborative evidence such as receipts, cash trail, or direct proof of payment, and the statements relied upon were later retracted, the Tribunal deleted the additions and allowed the assessee’s appeals.
Core Issue: Whether addition for alleged “on-money payment” can be sustained solely on the basis of third-party seized material without corroborative evidence.
Facts: The assessee, a partnership firm engaged in real estate, purchased commercial space in Jyothi Tech Park through recorded and registered transactions. During a search in the case of M/s Vamsiram Group (third party), certain loose sheets, diary and digital data (pen drive) were found indicating alleged cash transactions, including entries in the name of the assessee. The Assessing Officer inferred suppression of two digits and, based on statements of third-party employees, computed alleged cash payments of ₹3 crore. The assessee categorically denied any on-money payment, contending that the documents were neither found from its premises nor bore its signature/handwriting, and that all payments were duly recorded in books of account.
