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2019 (4) TMI 1908 - AT - Income TaxAddition on-money receipts - Whether addition are on the basis of evidence of reliable nature - in the course of search proceedings initiated u/s 132 assessee group made a voluntary and suo moto disclosure made in statement of key persons recorded u/s 132(4) wherein inter alia the disclosure of ₹ 2 Crores was made attributable to assessee firm - HELD THAT:- In the absence of any corroborating evidence and in the absence of cross examination offered, the statement of third party cannot be taken cognizance of, as it will apparently lead to miscarriage of justice. Total justification in the action of the CIT(A) in directing the AO to delete the estimated additions towards unaccounted receipt in respect of flats sold on the basis of some unverified and bald statement. Once such statements of the purchasers are taken out of reckoning, the edifice of estimated additions towards sale of residential flats would crumble down. Estimated cash receipts on-money of sale of all flats merely on the basis of statement of two purchasers without any tangible corroboration clearly falls in the realm of conjunctures and surmises. It is obvious that driven by misplaced suspicion, the AO has presumed the presence of on-money in respect of each of the residential flat sold. The action of the AO is a mere ipse dixit which is not objectively justifiable by some inculpatory evidence. It is only elementary to say that estimation of unaccounted money cannot be made only on the basis of contemplation. The order of the AO in making additions of ₹ 3.28 Crores is thus clearly arbitrary and unsustainable in law. Revenue could not demonstrate any material except unsupported statements of two persons. Such unverified statements without any proof towards its assertions are not a good evidence and do not raise any estoppel against the assessee. Therefore, the addition made by the AO is in the realm of speculation without any basis whatsoever. Hence, we decline to interfere with the order of the CIT(A) in so far as appeal of the Revenue is concerned. Maintainability of addition confirmed by the CIT(A) on the basis of statement of two purchasers - Statement of two persons cannot be recognized to the prejudice of assessee in the absence of corroboration and/or cross examination thereof. The addition sustained on the basis of a bald admission of third party against the assessee has no probative value and thus unsustainable in law. We find potency in the plea of the assessee that despite search, no reference to any incriminating material recovered from assessee is found in the assessment order and the basis of addition is some post search enquiry from purchasers alone subsequent to search. Assessee has repeatedly pointed out the absence of contemporaneous material before the lower authorities. Such assertions on behalf of the assessee remain unrebutted. The onus was always on the Revenue to support the statement recorded behind the back of the assessee in some realistic manner particularly when the cross examination was deprived despite having been specifically demanded. The onus is clearly not discharged by Revenue. The additions towards unaccounted cash receipt cannot be hypothetically attributed. Hence the addition sustained by the CIT(A) solely on the basis of oral evidence of third party without its vindication is clearly without any legal foundation. Therefore, the action of the CIT(A) in sustaining part addition requires to struck down. Penalty u/s.271AAA - Assessee had failed to substantiate the manner in which undisclosed income - HELD THAT:- In the absence of any reference to tangible material, mere act of acquiescence of ad hoc income under section 132(4) of the Act cannot automatically be covered within the sweep of ‘undisclosed income’ for the purposes of imposition of penalty under section 271AAA of the Act. Therefore, the plea of the assessee that in the absence of reference to any incriminating material imposition of penalty under s. 271AAB of the Act to be without any legal foundation gets categorical support. In the absence of any reference made in the penalty order or the assessment order towards presence of any incriminating document or any income found by way of money, bullion, jewellery etc. to cover the declaration within the sphere of ‘undisclosed income’, the imposition of penalty under s. 271AAA of the Act does not meet the requirement of law. We thus find force in the plea of the assessee for affirming the conclusion of the CIT(A) towards deletion of penalty on this score. Considerable force in the second plea raised on behalf of the assessee that once the taxes have been paid on the amount disclosed, the penalty cannot be imposed under s.271AAA of the Act in the absence of any specific query raised to probe manner/substantiation thereof with respect to disclosure towards undisclosed income. The CIT(A) has rightly appreciated the facts and the circumstances of the case in perspective and deleted the penalty on the disclosure so in the absence of such query made having regard to the plethora of judicial precedent available on this premise. The conclusion drawn by the CIT(A) on this score thus resonates with the judicial view available in this regard and cannot be faulted. Grievance of the Revenue for deletion of penalty by CIT(A) on income offered by way of oral evidence under s.132(4) of the Act is bereft of any merit on variety of reasons noted above Purchasers have given statement on oath in the proceedings under s.131 against the assessee and confessed that they have given on-money - The quantum addition so made was not discovered or found per se in course of search under s.132 of the Act. The additions were made on the basis of post search inquiry. Such addition cannot be subject matter of Section 271AAA of the Act having regard to the narrower scope of definition of undisclosed income as provided therein. Therefore, we find merit in the plea of the assessee for deletion of penalty under s.271AAA of the Act. - Decided in favour of assessee.
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