2021 (12) TMI 60 - HC - Income Tax

Addition u/s 69A - disallowance on account of undisclosed money - HELD THAT - We do not see any reason to interfere with the order impugned. The crux is that there was no evidence found against respondent and no enquiry was carried out by the AO to find out more details and the entire addition has been made on hypothetical basis. ITAT has also accepted the explanation of respondent that initially the said flat of which the letter was found was negotiated and sold for a sum of Rs. 59, 34, 000/- to one Mr. Milind Bhingare and the party had made a token payment of Rs. 1 lakh. The booking was cancelled on the ground that the agreed price was much higher than prevailing market price and Rs. 1 lakh was returned to Mr. Milind Bhingare. Thereafter Mr. Devendra Singh Tomar approached respondent and negotiated to purchase the flat at Rs. 49, 18, 000/- which amount the said Devendra Singh Tomar paid in three installments. The said Devendra Singh Tomar has also filed an affidavit giving details as well as proofs of payment. In our view the conclusions of the Assessing Officer and supported by CIT (A) are all conjectures. Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand then we do not think that question as pressed raises any substantial question of law.

Summary

Issues:
1. Addition made under section 69A of the IT Act based on impounded documents during a survey.
2. Deletion of addition by ITAT without appreciating impounded documents as admissible evidence under the Indian Evidence Act.

Analysis:
1. The case involved the addition made under section 69A of the Income Tax Act based on documents and CDs impounded during a survey, indicating undisclosed income from cash transactions in sale of flats. The Assessing Officer found discrepancies in sale prices and added a substantial amount to the respondent's income. The CIT (A) upheld the addition but reduced the undisclosed income. However, the ITAT set aside the CIT (A) order, leading to the present appeal before the High Court.

2. The High Court, after considering the arguments and evidence, found that the Assessing Officer did not conduct a thorough enquiry or provide concrete evidence against the respondent. The entire addition was deemed hypothetical as no substantial proof was found. The ITAT accepted the respondent's explanation that the flat in question was initially sold to another party at a higher price, which was later renegotiated with the eventual buyer. The buyer provided proofs of payment, further discrediting the Assessing Officer's assumptions.

3. The High Court concluded that the ITAT did not err in its decision and did not find any perversity or incorrect application of principles. The Tribunal's analysis of the facts and correct application of the law led to the dismissal of the appeal. The High Court held that no substantial question of law was raised, and the appeal lacked merit. Consequently, the appeal was dismissed with no order as to costs.