2012 (5) TMI 256 - AT - Income Tax

Unexplained income - Difference in amount between sale agreement and sale deed - Sections 91 and 92 of the Indian Evidence Act, 1872 - held that - In the present case, the AO as well as the CIT(A), proceeded to draw inferences against the assessee, on the basis of invalid statement of Shri Subhash Sharma, which was recorded on 3.9.2004, ignoring the retraction made by him in the cross-examination, conducted on 7.11.2006. It is, further consequent to highlight that both the AO and CIT(A), completely disregarded the sale deed, executed by the parties voluntarily, which contains Rs. 9 lacs as sale consideration. As discussed above, oral evidences cannot displace the direct documentary evidence, in the shape of sale deed containing specific sale consideration of Rs. 9 lacs. This view is duly supported by the decision of the Hon ble jurisdictional High Court in the case of Paramjit Singh 2010 (2) TMI 262 (HC) The question in the present appeal is squarely covered by the decision of the Hon ble Kerala High Court in the case of CIT v. Smt. K.C. Agnes & Others (2003 (1) TMI 48 (HC)), wherein the Hon ble High Court held that when a document shows fixed price, there will be a presumption that, that is correct price agreed upon by the parties. It is not necessary that the price stated in the agreement will be the price shown in the sale deed. Sometimes, it my be higher and sometimes it may be lower. Sometimes, intentionally a lesser value may be shown in the sale deed. Even if it is assumed to be so, unless it is proved that the agreement was acted upon and unless the amount stated in the agreement was paid for sale, the court cannot come to the conclusion that the price mentioned in the sale deed is not correct. - Decided in favor of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of addition based on retracted statement without corroborative evidence.
3. Burden of proof in establishing the genuineness of sale consideration.
4. Legal sanctity of sale deed versus oral evidence.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee filed an application for condonation of delay supported by an affidavit, citing the prolonged illness of a working partner suffering from cancer. The delay was not willful or intentional but due to compelling circumstances. The Tribunal, after perusing the documentary evidence and considering the compelling circumstances, condoned the delay, emphasizing that substantive justice should not be scuttled on technical grounds.

2. Validity of Addition Based on Retracted Statement Without Corroborative Evidence:
The core issue was whether the addition by the AO and its upholding by the CIT(A) could be justified solely on the basis of a retracted statement without corroborative evidence. The Tribunal noted that the statement of Shri Subhash Sharma, recorded during the survey, was retracted during cross-examination. The AO made the addition based on this statement, which was later retracted, and the CIT(A) confirmed this addition. The Tribunal emphasized that no addition could be made purely on the basis of a statement without corroboration by supporting evidence, as held in K.P. Varghese v. ITO 131 ITR 597 (SC).

3. Burden of Proof in Establishing the Genuineness of Sale Consideration:
The Tribunal discussed the burden of proof, stating that the burden lies on the revenue to justify the impugned addition. The AO cannot rewrite the validly executed sale deed and substitute his own recitals. The Tribunal highlighted that the AO failed to establish the physical receipt of money over and above the sale consideration specified in the sale deed. The Tribunal cited various judicial pronouncements, emphasizing that documentary evidence, such as a valid sale deed, should prevail over oral evidence.

4. Legal Sanctity of Sale Deed Versus Oral Evidence:
The Tribunal held that the sale consideration specified in the valid sale deed, duly executed voluntarily by the parties, cannot be varied at the convenience of the parties. The Tribunal cited several judicial decisions, including those of the Hon'ble Supreme Court and various High Courts, which upheld the sanctity of the sale deed over oral evidence. The Tribunal concluded that the AO and CIT(A) disregarded the sale deed and made the addition based on invalid oral evidence, which was not corroborated by any credible documentary evidence.

Conclusion:
The Tribunal allowed the appeal of the assessee, deleted the impugned addition upheld by the CIT(A), and emphasized that the sale consideration specified in the sale deed cannot be substituted based on mere oral evidence. The Tribunal's decision was based on a thorough analysis of legal principles, burden of proof, and the sanctity of documentary evidence over oral statements.