Deepak Shankarlal Patel Vs ITO (ITAT Ahmedabad)
Ahmedabad ITAT Restricts Alleged On-Money Addition to Actual Investment Share of Co-owner
The Ahmedabad ITAT partly allowed the assessee’s appeal for Assessment Year 2014-15 concerning an addition of ₹26,57,000 made by the Assessing Officer towards alleged unaccounted cash payment for purchase of an industrial shed jointly acquired by the assessee, his father and his brother under a registered sale deed dated 06.05.2013. The CIT(A) had restricted the addition to one-third, i.e., ₹8,85,667, considering the property to be jointly owned. The Tribunal examined the registered sale deed, bank statements and payment details, which showed that the assessee contributed ₹2,34,000 (17%), his father ₹8,00,000 (58%), and his brother ₹3,41,000 (25%) towards the recorded purchase consideration. It held that where documentary evidence establishes the actual contribution of each co-owner, any addition relating to the investment, if otherwise sustainable, must be apportioned in the same ratio. As the Revenue produced no material showing equal contribution towards the alleged cash payment or contribution beyond the assessee’s documented share, the Tribunal restricted the addition to ₹4,51,690, being 17% of ₹26,57,000, and directed the Assessing Officer to grant consequential relief of ₹4,33,977.
The Ahmedabad ITAT partly allowed the assessee’s appeal arising from an addition made on account of alleged unaccounted cash payment (on-money) for the purchase of an industrial shed. The addition was based on material allegedly found during a search on a third party (Kushal Group). The Assessing Officer made an addition of ₹26.57 lakh, while the CIT(A), considering the property was jointly owned by three persons, restricted the addition to one-third, i.e., ₹8.86 lakh, in the hands of the assessee.
Before the Tribunal, the assessee contended that even if the addition was to be sustained, it should be restricted to his actual contribution towards the purchase and not merely divided equally among the co-owners. The registered sale deed and bank records established that the assessee had contributed only ₹2.34 lakh, representing 17% of the recorded purchase consideration, while the remaining investment was made by his father (58%) and brother (25%).
Accepting this contention, the Tribunal held that where documentary evidence clearly establishes the actual investment ratio of each co-owner, any addition relating to the property must be apportioned in the same ratio. In the absence of evidence showing that the alleged cash payment was made equally by all co-owners or that the assessee contributed more than his documented share, there was no justification for adopting an arbitrary one-third allocation. Accordingly, the Tribunal restricted the addition in the assessee’s hands to 17% of ₹26.57 lakh, i.e., ₹4,51,690, and directed the AO to grant consequential relief of ₹4,33,977.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
