2017 (1) TMI 1719 - AT - Income Tax

Undisclosed income - alleged suppression of receipts from Mr. Devendra Singh Tomar - HELD THAT - When the assessee explained the factual matrix supported by evidences like registered sale deed supported by the affidavits then it was the duty of the Assessing Officer either to contradict the same or to bring any evidence in support of the presumptive addition made by him. We are of the view that presumption cannot take the shape of the evidence however strong it may be. Even otherwise a single case cannot be the basis for making the addition in the cases of remaining buyers. Rather the situation is in favour of the assessee because in the cases of remaining buyers the value/price mentioned in the registered documents has to be accepted in the case of one single buyer i.e. Mr. Devendra Singh Tomar who negotiated with the assessee at the price which was mentioned in the registered sale deed. The remaining buyers also made the payments as mentioned in the registered sale deeds. The earlier person Mr. Milind Bhingare who found the rate at the higher side therefore he cancelled the agreement. Thus the onus cast upon the assessee was duly discharged. Rather the onus cast upon the Assessing Officer was never discharged and he picked up one letter from 219 buyers and made proportionate addition in the hands of the assessee for the remaining buyers also. This type of approach cannot be said to be justified unless and until the same is substantiated with evidence. - Decided in favour of assessee.

Summary

Issues Involved:
1. Treatment of Rs. 8,55,000/- as undisclosed income due to alleged suppression of receipts.
2. Proportionate addition for other flats sold during the year 2008-09 based on the same premise.

Detailed Analysis:

Issue 1: Treatment of Rs. 8,55,000/- as Undisclosed Income
The assessee contested the addition of Rs. 8,55,000/- as undisclosed income due to alleged suppression of receipts from a flat sale to Mr. Devendra Singh Tomar. The Revenue's basis was a letter found during a search, which indicated a higher sale price than the registered agreement. The assessee argued that the letter was a reminder and not a formal agreement, supported by affidavits from the buyer and the director, and bank statements showing the amount returned to a previous buyer. The assessee maintained that no other material justified the addition and that the price quoted to the new buyer was supported by a valuation report from the Sub-registrar.

The Tribunal observed that the Assessing Officer did not conduct a thorough enquiry or record statements from relevant parties. The affidavits and other documents provided by the assessee were not effectively countered by the Revenue. The Tribunal noted that the apparent state of facts should be accepted unless rebutted by material evidence.

Issue 2: Proportionate Addition for Other Flats
The Assessing Officer extended the addition of Rs. 8,55,000/- proportionately to other flats sold during the year 2008-09, resulting in a total addition of Rs. 2,97,34,980/-. The assessee challenged this approach, arguing that it was based on a single instance without substantial evidence. The Tribunal agreed, stating that the Assessing Officer failed to provide evidence of higher market rates or record statements from other buyers. The Tribunal emphasized that presumption cannot replace evidence and that the onus was on the Assessing Officer to substantiate the addition with concrete evidence.

The Tribunal cited several judicial precedents, including the Supreme Court's rulings in "CIT vs. Daulat Ram Rawatmull" and "CIT vs. Bedi & Co. Pvt. Ltd.," which reinforced the principle that findings of fact by the Tribunal should not be disturbed unless there is no evidence to support them or they are perverse. The Tribunal also referred to the Bombay High Court's decision in "CIT vs. Dr. M.K.E. Menon," which distinguished the case of "CST vs. H.M. Esufali H.M. Abdulali," emphasizing that arbitrary estimation without evidence is not justified.

Conclusion:
The Tribunal concluded that the assessee had discharged its onus by providing affidavits, registered sale deeds, and other supporting documents. The Assessing Officer failed to provide counter-evidence or conduct necessary enquiries. The Tribunal found the addition of Rs. 8,55,000/- and the proportionate addition for other flats to be arbitrary and without substantial evidence. Consequently, the Tribunal deleted the additions and allowed the assessee's appeal.