Addition not justified when no corroborative or tangible material found from premises of assessee: ITAT
The assessee is engaged in the business of real estate and in the assessment year 2006-07 subsequent to a search and seizure operation conducted under section 132(1) of the Income Tax Act, 1961 on the Motia Group of cases, Zirakpur. The assessee filed return of his income at Rs. 44,00,080 and revised the return declaring an income of Rs. 52,36,600. The AO completed the assessment for assessment year 2006-07 at an income of Rs. 13,04,57,100 after making the additions relating to unexplained advances received from Shri Shailender Singh and Shri Narender Singh Rs. 90,00,000, unexplained investment in various Projects Under section 69 of the Act. Rs. 8,77,00,000, undisclosed Profits of the assessee company Rs. 3,59,50,000 and a disallowance of business expenses Rs. 15,70,500.
Appeal before CIT(A): Aggrieved, the assessee carried the appeal before the learned First Appellate Authority but the appeal was dismissed.
Appeal before ITAT: Thus, the assessee approached the Tribunal challenging the dismissal of its appeal. The tribunal held that the whole basis of addition made and confirmed by lower authorities is not on a sound basis and also no corroborative or tangible material has been found from the premises of the assessee to justify the addition. It was found that the whole basis for making the addition is on the document bearing page no. 62 Annexure A-4 and the Assessing Officer has not made any inquiry either from the seller or from the purchasers of the land. The registered documents of purchase/sale have not been challenged by any of the authorities and the books of accounts of the assessee are duly audited and the Assessing Officer has not rejected the books of accounts under section 145(3) of the Act.
Therefore, the abovementioned document is merely a projection/estimation and does not depict the actual purchase and sale, therefore, the tribunal is of the view that no addition was liable to be made. Hence, the appeal of the assessee was allowed.
Relying on CIT vs. Leader Valves Pvt. Ltd. 295 ITR 273 (P&H), the Tribunal held that keeping in view of the principles of consistency, the revenue should not be permitted to raise an issue in isolation only for one year in the case of an assessee while accepting the findings on the same issue for other years. Since identical additions have been made on the same piece of seized document in three assessment years viz. 2006-07, 07-08, and 08-09, and in assessment year 2007-08 whereby the Bench had deleted the addition by holding that the seized document was only an estimate, it is only logical that following the principle of consistency as well As the judicial discipline of following the order of the Coordinate Bench, this addition should also be deleted in the assessment year 2006-07. Hence, the appeal of the assessee was allowed.