Vijay M Pai Vs DCIT (ITAT Chennai)
ITAT Chennai held that undisclosed income allegation unsustainable as during search no incriminating material was found in respect of on-money receipt and AO also failed to establish the receipt of the same.
Facts-
During the course of search, unaccounted cash of Rs. 10 Lakhs has been seized. Notice u/s 153A was issued to the assessee. The assessee filed the return of income in response to the notice issued under section 153A of the Act only on 25.10.2012 admitting income of Rs.1,64,49,440/-. Subsequently, the Assessing Officer has issued notice under section 143(2) of the Act and in response to the notice, the assessee has filed details.
Thereafter, AO has asked the assessee that as to why the cash received from Smt. Pramila for the sale of property at Arunachalam Road, Kotturpuram, Chennai to the extent of Rs.5,68,75,000/- should not be treated as his undisclosed income.
The assessee has not admitted the on-money payment of Rs.5,68,75,000/- as capital gain and accordingly, the assessment was completed.
CIT(A) also dismissed the appeal filed by the assessee. Being aggrieved, the assessee preferred the present appeal.
Conclusion-
The Assessing Officer was not able to establish that the assessee received the on-money payment except statement given by Mrs. Pramila and her son and moreover, there was no documentary evidence to prove that the assessee has received on-money.
Held that in this case, a search was conducted and no incriminating material has been found in respect of on-money receipt. Therefore, in our opinion, addition cannot be made in the hands of the assessee. In view of the above, we set aside the order of the ld. CIT(A) on this issue and the ground raised by the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-18, Chennai dated 22.08.2019 relevant to the assessment year 2010-11. In the grounds of appeal, the assessee has raised following grounds:
1) Your petitioner submits that the Assessing Officer and Commissioner of Income Tax(Appeals) erred in addition to capital gains of Rs.5,68,75,000/-and addition of expenses related to sale is Rs.4,00,00,000/-.
2) Your petitioner submits that at the time of cross examinations, there exists no such receipt at all as no monies were received by your petitioner. Your petitioner is being subjected to the assessment purely on the basis of Mrs. Pramila wealth tax and income tax returns which she has filed after a search in her premises earlier.
3) Your petitioner submits that the CIT Appeal’s erred, in not considering the cross examination points correctly, and has erred in presuming the cross examination queries raised by the assessing officer as that of your petitioner.
4) Your petitioner pleads that he did not receive any consideration in cash over and above the recorded consideration. Your petitioner strongly protests that the Assessing Officer’s intentional attitude of denying your petitioner his rights of seeking legal advice during the cross examination.
5) Your petitioner denies receiving any amount other than sum of Rs. 10, 56, 25,000/which was duly offered as income in the computation filed. No evidence to the contrary has been produced by the assessing officer till date. He has been stating that evidence is available, but till the date nothing has been produced.
6) Your petitioner had sought for cross examination vide his letter dated 04-022013, wherein he had sought the right to examine the Mrs.P.Pramila and to verify the original receipt of Rs. 2,00,00,000/- alleged to have been signed by the petitioner.
7) Your petitioner submits that Commissioner of Income Tax (Appeals) in para 7.5 of his order has inferred documents showing evidence of payments were produced before your petitioner during the cross examination proceedings. Your petitioner would categorically like to submits that this statement is erroneous and no such documentary evidence was produced either during the course of cross examination or till date.
8) Your petitioner submits that the sum of Rs.4,00,00,000- paid to M/s S.M Apparels Pvt Ltd., is a compromise amount paid as compensation for seeking them to release your petitioner from an existing contract and the said monies has been paid by account payee cheques.
9) Your petitioner submits that the purpose of concluding the sale was because he was undergoing severe financial crisis and which was the primary reason for initially trying to develop the property M/s S.M Apparel and when the assessee could not wait for commencement of development activity he sold the property and, only from the said sale consideration he could settle to M/s S.M Apparel Pvt Ltd.
10) Your petitioner submits that the additional grounds be raised at the time of hearing.
11) Your petitioner submits that justice be rendered by allowing the claim in entirety.”
2. Facts are, in brief, that a search under section 132 of the Income Tax Act, 1961 [“Act” in short] was conducted at the residential premises of the assessee at New No. 16 (Old No. 7), Vellaiyan Street, Kotturpuram, Chennai 600 085 on 14.12.2010. During the course of search, unaccounted cash of ₹.10 lakhs has been seized. Subsequent to the search, Shri Vijay M Pai file has been centralized to Central Circle I(4) vide Commissioner of Income Tax, Chennai IV, Chennai Notification No. 11/2010-11 dated 28.03.2011. Notice under section 153A of the Act dated 24.07.2012 was issued to the assessee to file the return of income for the assessment year 2010-11. The assessee filed the return of income in response to the notice issued under section 153A of the Act only on 25.10.2012 admitting income of ₹.1,64,49,440/-. Subsequently, the Assessing Officer has issued notice under section 143(2) of the Act and in response to the notice, the assessee has filed details. After examining the details and discussions with the assessee’s AR, the Assessing Officer has completed the assessment by recomputing the long term capital gains. The particulars given by the assessee are as under:
