2021 (5) TMI 1005 - AT - Income Tax

Assessment u/s 153C - during the course of search unaccounted cash/jewellery and incriminating documents indicating suppression of sales etc. were found and seized as per panchnamas prepared - Whether Transactions recorded in the seized documents have not been explained by the assessee at the time of assessment proceedings? - HELD THAT - In the instant case on perusal of the impugned order indicates that excess amount was found at 112-122 Hira Bhavan Rajaram Mohan Roy Road Prarthana Samaj Mumbai but the assessee explained that the said amount was actually seized from the residential premises of late Shri Jitendra Mehta director and he had duly admitted said amount in his individual capacity. He observed that except this there is nothing on record for the impugned year to say that any money bullion jewellery or other valuable article or thing or books of account belonging to the assessee was seized or requisitioned as a result of search. Further he observed that with regard to the seized paper Annexure A-l on perusal of the same shows that there is no mention of the assessee company or the project undertaken by the assessee. During the year under consideration as observed by the AO in the impugned assessment order the assessee company has executed the project name Moksh Plaza and this name did not find mention on page 114 of Annexure A-l. Thus it is very clear from the above facts that seized paper found during the course of search cannot be considered belonging to the assessee. AO has not brought on record any material to link the document found during search to the projects handled by the assessee during the assessment year for that matter in any assessment year. Therefore the ground numbers raised by the revenue are dismissed.

Summary

Issues Involved:
1. Validity of addition based on alleged on-money transactions.
2. Legitimacy of disallowance of certain expenses such as depreciation, speed boat charges, and fuel charges.

Detailed Analysis:

1. Validity of Addition Based on Alleged On-Money Transactions:

The appellate tribunal addressed the issue of whether the addition made by the Assessing Officer (AO) on account of alleged on-money transactions was justified. The AO had made an addition of 30% of the sales based on statements recorded during a search operation, which suggested that the assessee company accepted cash payments over and above the registered value. However, the CIT(A) and the tribunal found that there was no incriminating material directly linking the assessee with the alleged on-money transactions.

The tribunal noted that the AO's reliance on the statements of employees and directors was insufficient without corroborative evidence. The tribunal referenced previous decisions, including the case of Goodwill Properties Pvt. Ltd., where it was held that statements made during search operations must be supported by concrete evidence to be used against the assessee. The tribunal emphasized that the seized documents did not mention the assessee or its projects, and the statements lacked specific references to the assessee's transactions. Consequently, the tribunal upheld the CIT(A)'s decision to delete the addition made by the AO.

2. Legitimacy of Disallowance of Certain Expenses:

The AO had also disallowed 25% of the conveyance charges and 30% of telephone charges, adding them back to the income of the assessee. The CIT(A) had deleted these disallowances, and the tribunal upheld this decision. The tribunal found that the AO had not provided sufficient justification for the disallowances and that the expenses were incurred for business purposes.

Conclusion:

The tribunal dismissed the revenue's appeal for both assessment years 2012-13 and 2013-14, finding that the AO had not provided adequate evidence to support the addition based on alleged on-money transactions and that the disallowances of expenses were unwarranted. The tribunal's decision was consistent with previous rulings in similar cases involving the same group of companies.