2012 (12) TMI 1111 - HC - Income Tax

Unaccounted investment u/s 69 - Held that - There was no basis for the Revenue to presume that the respondent had made the cash payment of ₹ 1.00 crore even though the registered sale deed dt.21- 08-2006 in respect of the above sale transaction disclosed only a cheque payment of ₹ 65.00 lakhs by the respondent. Even if the vendor K.Rajani Kumari admitted receipt of sale consideration of ₹ 1.40 crores, the respondent had not admitted payment of ₹ 1.65 crores and in the sworn statement only stated that she was not aware of actual consideration paid for the purchase of the property as the transaction was negotiated by her brothers. It held that there was no document or material to show that the respondent actually paid ₹ 1.65 crores for the purchase of the property and the Revenue had drawn inferences based on suspicion, conjectures and surmises. - Decided in favour of assessee

Summary

Issues:
Challenge to the order of the Income Tax Appellate Tribunal regarding unaccounted investment in the purchase of property for the assessment year 2003-04.

Analysis:
The respondent, an individual deriving income from salary and house property, did not file the original return for the assessment year 2003-04 but later filed a return admitting a taxable income. A search and seizure action revealed discrepancies in the property purchase transaction, where a diary indicated additional cash payments beyond the recorded sale consideration. The assessing officer treated the unaccounted cash payment as an investment under Section 69 of the Income Tax Act, holding the respondent liable for tax. The Commissioner of Income Tax (Appeals) upheld this decision, emphasizing the acceptance of part of the diary entries by the respondent and her brothers.

The Income Tax Appellate Tribunal, however, allowed the respondent's appeal, highlighting that the seized material was not found in her premises and lacked crucial details like the payer's name or payment date. The Tribunal reasoned that the Revenue's presumption of the cash payment lacked substantial evidence, relying on suspicion rather than concrete proof. It emphasized the lack of nexus between the seized material and the respondent, criticizing the Revenue for drawing inferences based on conjectures.

In the High Court's judgment, it concurred with the Tribunal's findings, noting that the registered document only showed a cheque payment by the respondent to the vendor, not the alleged cash amount. The Court dismissed the Revenue's appeal, agreeing that the assessing officer failed to conduct a thorough investigation into the property's actual value and did not establish the respondent's cash payment conclusively. It emphasized that suspicion and conjectures cannot substitute for concrete proof in tax assessments, ultimately finding no substantial legal question for consideration and dismissing the appeal at the admission stage without costs.