2010 (8) TMI 767 - HC - Income Tax

Undisclosed investments - Assessment year 2005-06 - Assessee purchased a piece of land for certain consideration - During survey carried out at seller s premises, actual sale price of said land was found to be much higher than that shown in sale deed and seller confirmed that sale price - Assessee was allowed to cross-examine seller and seller s stand about valuation could not be shown to be wrong.

Issues:
1. Misdirection by Tribunal in affirming orders passed by CIT(A) and Assessing Officer.
2. Legality of notice issued under section 153C of the Income-tax Act.
3. Scope of jurisdiction of the Tribunal in sustaining addition based on higher sale price.
4. Validity of order passed by Tribunal in violation of section 153C of the Income-tax Act.
5. Legality of confirming addition based on seller's statement without corroborative evidence.

Issue 1: The appellant challenged the Tribunal's decision to affirm the orders passed by the CIT(A) and Assessing Officer, contending them to be illegal and without jurisdiction. The Tribunal upheld the addition of Rs. 5,34,333 in the hands of the assessee due to the variance in the declared and actual sale consideration. The Tribunal emphasized the revenue's burden to establish the actual consideration, which was deemed to be discharged based on the seller's return of income and subsequent investigations. The seller's affidavit stating the sale for Rs. 5 lakh was disowned during cross-examination, supporting the higher consideration of Rs. 11,90,000. The Tribunal found no inconsistency in the seller's stand and upheld the addition, concluding that the consideration was correctly determined by the Assessing Officer based on the seller's admission.

Issue 2: The legality of the notice issued under section 153C was questioned due to the absence of the satisfaction note of the Assessing Officer of the seller and the non-confrontation of incriminating material to the assessee. The appellant argued that this rendered the notice illegal and without jurisdiction, citing a judgment by the Supreme Court. However, the Tribunal upheld the notice's validity, considering the seller's admission of the higher sale price and the subsequent investigations as sufficient grounds for the notice.

Issue 3: The Tribunal's jurisdiction in sustaining the addition based on the returned higher sale price compared to the registered sale deed was scrutinized. The appellant contended that the sale deed's consideration should be conclusive in the absence of contrary evidence. However, the Tribunal held that the burden of proving the higher consideration could shift to the assessee based on presumptions of law and facts, which were deemed satisfied in this case. The seller's declaration and confirmation of the higher consideration, coupled with the lack of contradictory evidence from the assessee, supported the Tribunal's decision.

Issue 4: The appellant challenged the Tribunal's order as being in violation of the mandatory provisions of section 153C of the Income-tax Act, deeming it illegal and void ab initio. The Tribunal, however, found that the revenue had discharged its burden regarding the sale consideration, and the addition was upheld based on the seller's admission and subsequent verifications.

Issue 5: The legality of confirming the addition based on the seller's statement without corroborative material was raised. The appellant argued that the Tribunal erred in relying solely on the seller's self-serving statement without supporting evidence. However, the Tribunal found no error in the consecutive decisions of the authorities, as the revenue had successfully discharged the burden of proof regarding the actual sale consideration, leading to the affirmation of the addition.

In conclusion, the High Court dismissed the appeal, stating that no substantial question of law arose from the issues raised by the appellant. The Court upheld the Tribunal's decision, emphasizing the revenue's burden to establish the actual consideration and the sufficiency of evidence provided to support the addition in the hands of the assessee.

← Previous Next →