Belated retraction falls in afterthought category & has less efficacy in law

M. D. Infra Developers Vs DCIT (ITAT Surat)

Facts- The assessee firm is in the real estate business. A search action under section 132 of the Income-tax Act, 1961, was carried out on 17-07-2012 in the group cases of Dalia (Badshah) Babariya Group of Surat.

The AO observed the modus operandi for purchase of said land that the Builder has paid full amount of consideration in cash and SATAKHAT at Jantri price has been executed. After payment of Document price by cheque, the same amount to the tune of cheque payment has been returned in cash to the Builder and additional amount (on-money) is being kept by the Land Seller. On the same line the payment of Rs.13,00,00,000/- was made to Shri Gulabkaka (Land Owner). The same is confirmed by Shri Naresh Talavia in his statement. The assessee was afforded necessary facility of inspection of seized material and also was requested to explain the contents of the said papers. However, the assessee did not prefer to avail the opportunities of submitting explanations, even though inspection of the documents was undertaken. Therefore, summons were served on the partners/ key persons of the group to explain the contents of the said pages. However, none of the partners did neither appear personally nor undertook any correspondence to present their case regarding these documents.

Post issuance of show cause notice and reply furnished by the assessee, AO noted that explanation merely disowns the sanctity of the documents as established by the statement u/s 132(4) of the Act and it is the claim of the assessee that the documents seized which indicate the evidence of the actual amount paid in the lands acquired for the project, are mere rough working for future projections. The same has also been submitted by way of an affidavit. AO however rejected the contention raised by the assessee in retracted affidavit.

Finally, the AO observed that the assessee-firm has made unaccounted investment of Rs. 6,50,00,000/- in AY 2011-12 and INR 9,35,91,500 during AY 2012-13 and accordingly made addition u/s 69B of the Act. further, the amount pertains to the AY 2011-12 to the tune of Rs.3,24,060/- and AY 2012-13 to the tune of Rs.26,19,720/- is held as paid by way of cash, so the provisions of section 40A(3) are attracted to these payments.

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