Case Law Details
Rajesh Prabhudas Parekh vs. CIT(A), ITO National Faceless Appeals Centre, Delhi (ITAT Mumbai)
In the case of Rajesh Prabhudas Parekh Vs CIT(A), ITO at ITAT Mumbai, the court handled the contentious issue of “on-money” payments made by the assessee to a real estate developer. The primary question raised was the authenticity of a statement from a developer claiming the receipt of an ‘on-money’ payment, which was not corroborated by any other evidence or testimony.
The key bone of contention in this case was the alleged payment of Rs.7,72,000 in cash, over and above the sale consideration, for the purchase of a flat from M/s. Shakti Developers of Ekta Group. The only evidence of this transaction was a statement by Shri Vivek Mohanani, the promoter of M/s. Ekta Group. The assessee denied making this payment and requested the AO to provide proof of this transaction, which the AO failed to do.
The crux of the issue was whether the statement of the developer alone was sufficient to impose tax liability on the assessee. The tribunal held that the veracity of the developer’s statement could not be tested without cross-examination, and therefore, it would be unsafe to rely solely on this statement for the purpose of taxation.
The decision of the ITAT Mumbai in the case of Rajesh Prabhudas Parekh Vs CIT(A), ITO illustrates the importance of corroborative evidence in cases of alleged ‘on-money’ payments. It underlines the crucial principle that allegations of extra-legal transactions cannot be proved solely on the basis of a single, unverified statement. This case serves as a precedent in situations where an individual’s tax liability is in question due to uncorroborated claims of additional payments in property transactions.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
