Samir Kumar Datt Vs ACIT (ITAT Delhi)
Delhi ITAT: Section 153C Assessment Quashed; Alleged ‘On-Money’ Addition Based on Assumption of Higher Assured Returns Deleted
The Delhi ITAT quashed assessments made under section 153C and deleted additions towards alleged cash (“on-money”) payments for purchase of commercial units in the Elan Mercado project, holding that the Revenue had no incriminating material against the assessees and that the additions were based merely on assumptions drawn from the rate of assured returns.
The Revenue had initiated proceedings under section 153C following a search on the Elan Group, relying on Excel sheets seized during the search which recorded different rates of assured returns offered to investors. The Assessing Officer inferred that investors receiving 33% assured returns must have paid substantial cash over and above the cheque payments, assuming that the genuine market return should have been only 11%. On this basis, additions of ₹52.85 lakh were made in each assessee’s hands under section 69 as unexplained investment.
The assessees consistently maintained that the entire purchase consideration had been paid through banking channels, that the actual cost of the units was much higher than what was assumed by the Assessing Officer, and that the assured return worked out to around 11% of the total investment, leaving no basis to infer any cash payment.
The Tribunal held that no incriminating material relating to the assessees was found during the search which could justify invocation of section 153C. Consequently, the decision of the Supreme Court in Abhisar Buildwell Pvt. Ltd. squarely applied, rendering the assumption of jurisdiction under section 153C invalid. The assessments were therefore held to be bad in law and liable to be quashed.
Even on merits, the Tribunal found that the Revenue had failed to produce any cogent evidence of cash payments. The entire addition was founded on the presumption that a prudent businessman would not offer 33% assured returns and, therefore, there must have been an undisclosed cash component. The Tribunal held that such assumptions and mathematical inferences, unsupported by substantive evidence, cannot sustain an addition under section 69.
Accordingly, the ITAT quashed the assessments under section 153C, deleted the additions of alleged unexplained investment, and allowed both the assessees’ appeals.
Cases Discussed
- Abhisar Buildwell Pvt. Ltd. (SC), Civil Appeal No. 6580 of 2021 dt. 24.04.2023
- ACIT Vs Pepsi Foods Private Limited (SC), [2018]
- Pepsi Foods Private Limited (Delhi High Court), [2014]
FULL TEXT OF THE ORDER OF ITAT DELHI
