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2015 (1) TMI 658 - AT - Income TaxAssessment u/s 143(3) r.w.s. 153A - Bogus gift - Search and seizure operations u/s 132 - concluded - Held that - The admitted facts are that the assessee had duly disclosed the receipt of gift of ₹ 50.00 lakhs in the original return of income filed for this year well before the date of search. It is also an undisputed fact that the assessing officer, during the course of original assessment proceedings, has made enquiries about the gift not only with the assessee, but also with the donor directly. Both the assessee as well as the donor has duly replied to the queries raised by the AO. Having satisfied with the genuineness of the gift, the assessing officer did not make any addition. Thus the assessing officer is not entitled to disturb the concluded assessments in the absence of any incriminating material. Accordingly, we are of the view that the Ld CIT(A) was not justified in confirming the assessment of gift amount of ₹ 50.00 lakhs in this year. - Decided in favour of assessee. Undisclosed investment in purchasing flats - Sale consideration reduced by the vendors - AY 2007-08 - Held that - The statutes generally provide three types of legal presumptions viz., may be presumed , shall be presumed and conclusive proof . It is a well settled proposition of law that a party can still rebut the first two presumptions by bringing materials contrary to the legal presumptions. Only in respect of the third type of presumption, all the parties do not have any option. When the law is settled in this manner even in respect of legal presumptions, we are of the view that it would be well within his right for an assessee to rebut the admissions made in the sworn statement, when the provisions of sec. 132(4) specifies that the said admission may be used as evidence. The admission made by the assessee is no doubt, best evidence, but there is nothing in law to prevent the assessee to show that the said admission was wrong. In the instant case, as noticed the assessee has narrated the events and also the circumstances which compelled the vendors to reduce the sale consideration at the time of registration of the flat though the parties had initially agreed for a consideration of ₹ 44.00 lakhs, yet the conveyance deed was not executed on the same rate due to existence of several encumbrances in the form of competitive claims over ownership, unauthorized constructions; objections from the Society and also from the Collector MSD. Ultimately, the flat was agreed to be sold for a lesser amount. Though the registration value was shown as ₹ 24.00 lakhs, yet it was more than the stamp duty value of ₹ 21.73 lakhs. Further, the assessee has incurred a sum of ₹ 32.16 lakhs in aggregate connection with the purchase of this flat and all the payments except the Registration fee and some small expenses were incurred by way of cheque through the bank accounts. He submitted that the tax authorities have placed reliance on a receipt given by the vendor, wherein he had acknowledged the receipt of advance amount of ₹ 2.00 lakhs. In that receipt the original consideration did find place. On the contrary, the assessee has brought on record adequate evidences to show that the originally agreed consideration has undergone change due to changed circumstances. Since the said evidences have not been shown to be wrong by the tax authorities, we are unable to sustain the addition of ₹ 21.00 lakhs made by the assessing officer in AY 2007-08. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to delete the addition. - Decided in favour of assessee. Addition of ₹ 28.09 lakhs towards undisclosed investment made in purchase of Flat No.6. - AY 2008-09 - Held that - The facts and circumstances relating to Flat No.6 are identical to that relating to Flat No.5, which we have considered while dealing with the appeal filed by the assessee for AY 2007-08. Hence, for identical reasons discussed in AY 2007-08, we hold that the addition of ₹ 28.09 lakhs made in AY 2008-09 was not justified. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the said addition. - Decided in favour of assessee.
Issues Involved:
1. Validity of additions made under Section 153A for Assessment Year (AY) 2003-04. 2. Validity of additions made for undisclosed investment in flats for AY 2007-08. 3. Validity of additions made for undisclosed investment in flats for AY 2008-09. Detailed Analysis: 1. Validity of Additions Made Under Section 153A for AY 2003-04: The assessee had originally filed the return of income on 25.10.2002, and the assessment was completed under Section 143(3) on 30.01.2006. As the assessment year 2003-04 was a concluded assessment as of the date of search, it would not be abated under Section 153A of the Act. The assessee received a sum of Rs. 50.00 lakhs as a gift from a Dubai National, which was already declared in the original return. The assessing officer assessed the gift as income during the Section 153A proceedings, which was confirmed by the CIT(A). The assessee argued that no incriminating material was found during the search to suggest the gift was bogus. The assessing officer had previously accepted the gift as genuine during the original assessment, supported by letters from the donor and the assessing officer. The assessee contended that the AO was not justified in re-examining the concluded matter in the absence of incriminating material. The department had accepted the deletion of a similar addition for AY 2004-05 by the CIT(A). The Tribunal agreed with the assessee, stating that the gift confirmation letter found during the search was not incriminating material. The AO revisited a concluded matter without new grounds emanating from the search. The Tribunal cited the decision of the Bombay High Court in the case of Murali Agro Products Ltd., supporting the view that concluded assessments should not be disturbed without incriminating material. The Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition of Rs. 50.00 lakhs. 2. Validity of Additions Made for Undisclosed Investment in Flats for AY 2007-08: During the search, it was found that the assessee had purchased two flats with unaccounted consideration of Rs. 49.09 lakhs. The assessee agreed to offer Rs. 21.00 lakhs in AY 2007-08 and Rs. 28.09 lakhs in AY 2008-09 but did not include these amounts in the returns filed under Section 153A. The AO and CIT(A) made additions based on the assessee's sworn statement. The assessee argued that the addition was made solely on the basis of the sworn statement without corroborating evidence. The assessee retracted the statement and provided detailed reasons and evidence to show the admission was incorrect. The Tribunal noted that the assessee demonstrated reasons for reducing the agreed sale consideration with documentary evidence. The tax authorities did not rebut these evidences. The Tribunal held that the sworn statement could be rebutted with cogent evidence and set aside the CIT(A)'s order, directing the AO to delete the addition of Rs. 21.00 lakhs. 3. Validity of Additions Made for Undisclosed Investment in Flats for AY 2008-09: For AY 2008-09, the AO made an addition of Rs. 28.09 lakhs towards undisclosed investment in Flat No.6, based on the assessee's admission during the search. The CIT(A) confirmed the addition. The assessee argued that the agreed consideration was reduced due to encumbrances and issues with the property, supported by documentary evidence. The Tribunal found the facts and circumstances relating to Flat No.6 identical to those of Flat No.5 for AY 2007-08. The Tribunal reiterated that the sworn statement could be rebutted with evidence and noted that the tax authorities did not conduct necessary enquiries to rebut the assessee's evidence. The Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition of Rs. 28.09 lakhs. Conclusion: In conclusion, the Tribunal allowed the appeals filed by the assessee for all three assessment years, directing the deletion of additions made under Section 153A and for undisclosed investments in flats. The Tribunal emphasized the importance of incriminating material for revisiting concluded assessments and the need for corroborating evidence when relying on sworn statements.
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