Addition Based on Statements Without Concrete Evidence Not Sustainable

By POONAM GANDHI Income Tax Judiciary March 7, 2025

TaxGuru Citation: 2025 taxguru.in 1720
Case Name: ACIT Vs Pavani Structurals Pvt. Ltd. (ITAT Hyderabad)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2016-17
Courts: All ITAT, ITAT Hyderabad

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ACIT Vs Pavani Structurals Pvt. Ltd. (ITAT Hyderabad)

ITAT Hyderabad held that determination of sale consideration on the basis of some statements without bringing any concrete material in support of his claim, is not correct. Accordingly, addition is liable to be deleted and appeal filed by revenue dismissed.

Facts- Search and seizure operation u/s. 132 of the Income Tax Act, 1961 was carried out in the group of M/s. Western Constructions, Hyderabad along with M/s. Pavani Structurals Pvt. Ltd. (“the assessee”) on 02.11.2016. Accordingly, AO completed the assessment u/s.143(3) r.w.s. 153A of the Act on 28.12.2018 by making addition of Rs.7.43 Crores on account of commercial space sold and making substantive addition of Rs.2.50 Crores on account of reimbursement of expenses. The protective addition of Rs.2.50 Crores was made in A.Y. 2012-13.

CIT(A) deleted all the additions. Being aggrieved, revenue has preferred the present appeal.

Conclusion- Held that sale consideration of the assessee is based on the registered sale deed, which is in line with the value as per stamp duty authority. However, the AO relying on the statement of Sri T.S. Harischandra Prasad, M.D. of M/s. YKH and Ms. S. Sunitha, Accountant of the assessee, calculated the sale consideration @ Rs.3,000/- per sq. ft., instead of sale consideration accounted for by the assessee on the basis of registered sale deed. The Ld. AO could not bring any material on record to show that the assessee received any consideration over and above what has been shown in the registered sale deed. Thus, held that we are of the considered opinion that the sale price of Rs.3,000/- per sq. ft. taken by the Ld. AO, merely on the basis of some statements without bringing any concrete material in support of his claim, is not correct.