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2013 (8) TMI 329 - AT - Income TaxDifference between amount shown in agreement to sale and sale deed - Block assessment - 158BC - Addition u/s 69 - Addition made on account of purchase of property - CIT upheld addition - Held that - When the document shows a fixed price, there will be a presumption that it is the correct price agreed upon by the parties. It is true that on the basis of the agreement the sale deed was executed. But it is not necessary that the price stated in the agreement will be the price shown in the sale deed. Sometimes, it may 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 the sale one cannot come to the conclusion that the price mentioned in the sale deed is not correct -There is no rule that the amount shown in the receipt was the actual amount paid - Following decision of CIT vs. Smt. K.C. Agnes 1996 (4) TMI 76 - KERALA High Court - Decided in favour of assessee.
Issues Involved:
1. Legitimacy of the addition of Rs. 37 lacs as income from undisclosed sources under Section 69 of the Income Tax Act, 1961. 2. Validity of the CIT (A)'s observations and decisions regarding the sale consideration of the property. 3. Adequacy and relevance of the evidence and documents presented by the assessee. 4. Compliance with the directions of the ITAT in the remand proceedings. 5. Presumption and burden of proof concerning the seized documents under Section 132(4A) of the Income Tax Act. Issue-wise Detailed Analysis: 1. Legitimacy of the Addition of Rs. 37 lacs: The primary issue revolves around the addition of Rs. 37 lacs to the assessee's income, which was claimed to have been paid over the stated amount in the sale deed for a property purchase. The addition was based on two receipts found during a search, indicating a total sale consideration of Rs. 54 lacs, while the assessee declared Rs. 17 lacs. The ITAT initially remanded the case back to the Assessing Officer (AO) for further inquiry, emphasizing the need to summon and examine relevant parties and verify the actual transaction amount. 2. Validity of the CIT (A)'s Observations: The CIT (A) upheld the addition, reasoning that the seized documents clearly indicated a sale consideration of Rs. 54 lacs, and the assessee failed to rebut the presumption under Section 132(4A). The CIT (A) noted that the receipts were signed by the seller and witnesses, and the assessee did not provide a satisfactory explanation for the discrepancy between the declared and documented amounts. 3. Adequacy and Relevance of Evidence: The assessee argued that the receipts only indicated amounts to be paid in the future, not actual payments made. The assessee provided details of payments amounting to Rs. 16.50 lacs and contended that no evidence was found during the search or subsequent inquiries to prove the payment of the balance amount. The assessee also highlighted that the property was ultimately sold to a third party, Ajay Dhawan, and not purchased by the assessee. 4. Compliance with ITAT Directions: In the remand proceedings, the AO failed to carry out a thorough investigation as directed by the ITAT. The AO did not summon and examine all relevant parties, including the seller, witnesses, and the ultimate purchaser. The ITAT had directed the AO to ascertain the property's value at the relevant time, which was not adequately addressed. The AO's assessment in the remand proceedings was based on the same facts as the initial assessment, without new evidence to justify the addition. 5. Presumption and Burden of Proof: The ITAT emphasized that the presumption under Section 132(4A) places the onus on the assessee to explain the seized documents. However, the assessee argued that the presumption could not be used to assume the payment of the balance amount without concrete evidence. The ITAT agreed that no presumption of payment could be made in the absence of documentary evidence, especially since the sale transaction was completed after the search date. Conclusion: The ITAT concluded that the AO failed to bring positive material on record to justify the addition. The seized documents indicated amounts to be paid, but there was no evidence of actual payment of the balance amount. The ITAT found that the assessee acted as a mediator in the transaction and had received a commission, which was duly disclosed. The addition of Rs. 37 lacs was based on presumptions without supporting evidence, leading to the deletion of the addition and allowing the assessee's appeal. Order: The appeal of the assessee is allowed, and the addition of Rs. 37 lacs is deleted. The order was pronounced in open court on July 31, 2013.
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