The Income Tax Appellate Tribunal (ITAT), Pune bench consisting of Shri S S Viswanethra Ravi, Judicial Member and Inturi Rama Rao has held that Section 131 of the Income Tax Act can invoke only with corroborative evidence and quashed the order of the Commissioner of Income Tax.
The appellant challenged the order of CIT(A) confirming the addition of Rs.21,00,000/- on account of alleged cash consideration. The appellant is a partnership firm engaged in the business of construction and development of plots. The appellant filed a return of income declaring a total income of Rs.10,35,325/ in response to the notice issued u/s. 153A(a). The AO determined the total income of the assessee at Rs.33,35,910/- by making an addition on account of alleged cash receipts under the cancellation of the agreement vide its order dated 31-12-2009. The CIT(A) confirmed the same and held that the appellant acquired rights on a piece of land belonging to the Parande family with an agreement on 25-05-2003. It was observed that the Parande family entered into a fresh agreement with Kamalraj Associates by cancelling the agreement with the appellant from which received Rs.20 lakh as consideration by the cancellation deed.
The appellant contended that no evidence was found during the search about cash payment and credence can’t be given to the statement of Shri Bapu Vithal Parande. It was stated that statement u/s. 131 of the Act lacks evidentiary value and the statement made by Shri Bapu Vithal Parande didn’t bring evidence showing that the assessee received a cash payment of Rs.21 lakh in addition to the consideration mentioned in the cancellation deed.
It was observed that the AO had allowed cross-examination of Shri Bapu Vithal Parande to the appellant and reaffirmed cash payment of Rs.21 lakh to the partners of the assessee.
The Tribunal observed that the alleged cash was withdrawn from the accounts of Shri Bapu Vithal Parande, Shri Sandeep Parande and two others and failed to bring them for examination. The evidence of cash payment by Shri Bapu Vithal Parande cannot be considered valid without witnesses and the addition in the hands of the appellant can’t be valid.
The Tribunal while allowing the appeal held that addition made u/s. 131 of the Act is not valid due to a lack of documentary evidence corroborating the statement of Shri Bapu Vithal Parande recorded and set aside the order of CIT(A). The appellant was represented by Smt. Deepa Khare and the respondent were represented by Shri M. Jasnani.
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