ITAT deletes on-money addition for property buyer as seller’s assessment on same issue quashed
Issue
Whether an addition for unexplained investment (alleged on-money) under Section 69B can be sustained against a property buyer when the corresponding addition for receipt of on-money has been deleted by the Tribunal in the case of the seller.
Facts
A search and seizure operation under Section 132 was conducted on the M/s Home Buildcon Pvt. Ltd. (HBPL) group.
The assessee purchased a commercial property (SCO No. 8) from HBPL for a registered consideration of Rs. 22 Lakhs.
Based on incriminating material found during the search on HBPL, the Assessing Officer (AO) estimated the fair market value of the property at Rs. 99.27 Lakhs (calculating at Rs. 33,000 per sq. yard).
The AO treated the difference of Rs. 77.27 Lakhs as “on-money” paid in cash and added it to the assessee’s income as unexplained investment under Section 69B.
The Commissioner (Appeals) [CIT(A)] deleted the addition, observing that similar additions made in the hands of the seller (HBPL) had already been deleted in appellate proceedings.
The Revenue appealed against this deletion.
Decision
The Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal and upheld the order of the CIT(A).
The Tribunal noted that in the case of the seller (HBPL), a coordinate bench of the Tribunal (in ITA No. 880/Chd/2024) had already deleted the additions regarding the receipt of on-money.
Applying the principle of consistency, the Tribunal held that since the charge of receiving on-money was quashed for the seller, the corresponding allegation of paying on-money cannot be sustained against the buyer.
The addition of Rs. 77.27 Lakhs was therefore rightfully deleted.
Key Takeaways
Interconnected Assessments: In search cases regarding property transactions, the assessments of the buyer and seller are often linked. If the evidence is insufficient to tax the seller for “on-money” receipts, it is generally insufficient to tax the buyer for “on-money” payments.
Judicial Consistency: The Tribunal adheres to the principle of consistency. A view taken by a coordinate bench on the same set of facts and search materials is binding on subsequent appeals.
Section 69B Evidence: To tax an amount as unexplained investment under Section 69B, the Revenue must prove actual expenditure beyond what is recorded in the books. Estimates based on third-party assessments that have been set aside do not constitute valid evidence.
THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH
Harkesh Singh
VPO Thol, P.O. Shahbad,
Kurukshetra-136136
Haryana
V/s
The ITO
Ambala
Source :- 1762938254-b9RN4p-1-TO