The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted another opportunity to the assessee and held that the addition as unexplained purchase expenses shall be made on failure to establish any evidence for eviction of encroacher.
A search and survey operation under Section 133A of the Income Tax Act was conducted in the business premises of the Assessee, wherein a statement of Shri Rajaram Ganpat Vichare, partner of the Assessee-firm was recorded, in which a voluntary declaration of Rs. 1,10,06,000/- as per the discrepancies detected was made based on provisional income and expenditure account.
The Assessing Officer (AO) summoned Shri Ganesh Vithal Indore, however, inspite of the service of summons under Section 131 of the Income Tax Act, Shri Ganesh Vithal Indore neither appeared nor filed any details/reply, and therefore the AO by taking into consideration the facts “that the Assessee failed to establish/bring to have made any efforts for eviction of encroacher, installation of electricity and water connection on the said land, reporting of encroachment with the Government authorities, permission for construction, photographs of encroachment and activities of the encroachers and possession of encroachers in any form”, doubted the said transaction of Rs. 1,30,00,000/- allegedly paid to Shri Ganesh Vithal Indore for vacating the alleged encroached landand therefore, the addition has also been affirmed by the Commissioner.
The Two-member bench comprising of Prashant Maharishi (Accountant member) and N.K. Choudhry (Judicial member) held that Shri Ganesh Vithal Indore was also the appropriate person to establish his possession over the encroached property/land by submitting the relevant documents and/or other direct or indirect evidence.
Thus, for the just decision of the case and real adjudication of the issue and to unearth the real controversy, it would be appropriate to remand the instant issue to the file of the AO for decision afresh by summoning Shri Ganesh Vithal Indore and in case he will not appear then by taking appropriate measures as prescribed under the law and also by giving one more opportunity to the assessee to corroborate its stand qua encroached land and to establish the transaction as genuine, with direct-indirect or circumstantial evidence etc.. Hence, in the aforesaid directions, the issue was remanded to the file of the AO for a de-novo decision.
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