Validity of addition solely on the basis of a statement that some payments were made
ITAT Pune has recently held that additions framed on account of alleged cash receipts not valid where no witnesses to such payments are available to testify & where based solely on a statement that some payments were made
The case detail is as under:
Kundan Builders Vs ACIT
ITA No. 157/Pun/2015
Let us have a Short Overview of the case:
Assessee is a partnership firm engaged in the business of construction and development of plots.
The assessee belongs to Netsurf group on which a search action was conducted on 07-05-2007.
In response to notice u/s. 153A(a) of the Act, the assessee filed its return of income declaring a total income of Rs. 10,35,325/-.
The AO determined the total income of the assessee at Rs. 33,35,910/- inter alia making addition on account of alleged cash receipts under the cancellation of agreement vide its order dated 31-12- 2009. The CIT (A) confirmed the same u/s. 143(3) r.w.s. 153A of the Act.
Aggrieved by the same, the assessee is before us by raising above mentioned grounds of appeal.
On appeal, the issue before tribunal was whether additions framed on account of alleged cash receipts are valid where no witnesses to such payments are available to testify & where based solely on a statement that some payments were made held it as No.
ITAT observed as under:
On perusal of remand report we note that the AO had given opportunity for cross-examination of Shri Bapu Vithal Parande to the assessee.
The said person reaffirmed cash payment of Rs. 21 lakh to the partners of the assessee and according to the AO that the assessee could prove nothing in favour of the assessee that no cash payment is made.
The assessee made rebuttal to the cross-examination of the said Shri Bapu Vithal Parande and that the said Shri Bapu Vithal Parande expressed his inability of those persons present during the alleged search. We note that the alleged cash was withdrawn from the accounts of Shri Bapu Vithal Parande, Shri Sandeep Parande and two others.
The said person expressed his inability bring Shri Sandeep Parande and two others from whose accounts amounts have been withdrawn as witnesses to the alleged cash payment who are none of them his own family members.
We note that the AO in its order at Para No. 5 clearly observed that certain documents were seized which are related to Dighi property which resulted in making addition in the hands of assessee. The CIT(A) also affirmed the said observation at Para No. 6.13 of the impugned order but no such documentary evidence brought on record before this Tribunal showing that the assessee received the alleged cash payment.
We find the case of ld. DR is that Shri Bapu Vithal Parande made statement that the cash payment to assessee withdrawing such amounts from the accounts of his family members but there was no statement recorded by the AO in this regard from such family members and also Shri Bapu Vithal Parande expressed inability such members for the examination.
Thus, the evidence of cash payment by Shri Bapu Vithal Parande cannot be believed for the reason that there was no witnesses to the said cash payments and a mere statement by the said person that some of the amounts received from the accounts of others is not sufficient to make the addition in the hands of the assessee. Therefore, it is established that there was no documentary evidence corroborating the statement of Shri Bapu Vithal Parande recorded u/s. 131 of the Act.
Thus, the order of CIT (A) is not justified and it is set aside and the grounds raised by the assessee are allowed.
- Additions framed on account of alleged cash receipts not valid where no witnesses to such payments are available.
- Validity of addition solely on the basis of a statement that some payments were made.