2015 (12) TMI 632 - HC - Income Tax

Undisclosed sale of plot - Assessing Officer said that the assessee had paid an aggregate amount of ₹ 7,10,22,110/- during the assessment year 2006- 07 and had failed to explain the source of the same. Since the documented price of Block No.509, 500, 494, 504 and 510 was ₹ 58,11,901/-, the Assessing Officer treated the difference of amount of ₹ 6,52,10,209/- as the deemed income of the assessee under section 69 - ITAT deleted the addition - Held that - From the concurrent findings recorded by the Tribunal, it is evident that the appellants have not been able to establish the fact that any funds have actually been paid by Vivek Patel to the sellers. While the sellers have stated that they have received the funds by a representative of Vivek Patel, the name of such person has not been disclosed nor have the dates on which such funds have been received come on record. A perusal of the power-of-attorney on which strong reliance has been placed on behalf of the appellant to contend that it establishes a link between the assessee and Vivek Patel, shows that the same has been executed by one of the sellers in favour of Vivek Patel in relation to one of the plots purchased by the assessee, but, significantly, such power-ofattorney has been found to be from the possession of the seller and not from Vivek Patel. Therefore, there is no material on record that prior to the search, Vivek Patel acted upon such power of attorney so as to establish a link, howsoever tenuous, between the assessee and Vivek Patel. As noticed earlier, the assessee has denied having paid any more consideration than that reflected in the sale deed executed in his favour. Vivek Patel has denied having paid any consideration to the sellers pursuant to the agreement to sell. The revenue has failed to bring any reliable material to establish payment of consideration by Vivek Patel to the sellers or to establish any link between the assessee and Vivek Patel, who have both asserted that they did not know each other prior to the search. Under the circumstances, on the evidence which has come on record, the revenue has failed to establish that any higher consideration has been paid by the respondent assessee in connection with the sale deeds executed in his favour by the sellers in respect of the plots of land in question. The conclusion arrived at by the Tribunal is based upon findings of fact recorded by it upon appreciation of the evidence on record. The learned counsel for the appellant, despite strenuous efforts, is not in a position to point out any perversity in the findings recorded by the Tribunal. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between Vivek Patel and the sellers, which reflects the price of the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have stated that they have received higher amounts by way of on-money and have also shown receipt of such amount in their income-tax returns, the circumstances do raise a suspicion. However, as held by the Supreme Court in Commissioner of Income-tax v. Daulatram Rawatmull, (1964 (3) TMI 14 - SUPREME Court ), even if circumstances raise a suspicion, suspicion cannot take the place of evidence.- Decided against revenue

Summary

Issues Involved:

1. Legality of reopening the assessment under section 148 of the Income Tax Act.
2. Validity of additions made under section 69 of the Income Tax Act based on seized documents.
3. Establishment of a link between the assessee and the third party (Vivek Patel) regarding the payment of on-money.
4. Evaluation of evidence and findings of the Tribunal.

Issue-wise Detailed Analysis:

1. Legality of Reopening the Assessment under Section 148 of the Income Tax Act:

The respondent assessee filed cross-objections, arguing that the reopening of assessment under section 148 was bad in law because the Assessing Officer had not passed a separate order on the objections raised by the assessee. The Tribunal dismissed the appeals filed by the revenue and allowed the cross-objections filed by the assessee, thereby questioning the legality of the assessment reopening.

2. Validity of Additions Made under Section 69 of the Income Tax Act Based on Seized Documents:

The Assessing Officer made additions under section 69 based on a banachitthi (an agreement to sell) found during a search, which indicated higher consideration than documented in the sale deeds. The Commissioner (Appeals) and the Tribunal found that:

- The assessee was not a party to the banachitthi.
- There was no material evidence to show that the assessee paid cash over and above the documented price.
- The banachitthi was not found at the assessee's premises, and no corroborative material suggested that the assessee paid cash.
- The sellers stated they received money from Vivek Patel, not the assessee.

The Tribunal upheld the Commissioner (Appeals)'s decision to delete the additions, as the revenue could not establish that the assessee paid any amount beyond the documented price.

3. Establishment of a Link Between the Assessee and the Third Party (Vivek Patel) Regarding the Payment of On-Money:

The revenue argued that the sellers received the entire consideration as per the seized documents and that the sale deeds were executed in favor of the assessee at the instance of Vivek Patel. However, the Tribunal found no evidence linking the assessee to Vivek Patel regarding any additional payment. The Tribunal noted:

- The sellers claimed they received money from Vivek Patel, not the assessee.
- No agreement between Vivek Patel and the assessee was brought on record.
- The power of attorney given by one of the sellers to Vivek Patel did not establish a link between the assessee and Vivek Patel.

Therefore, the Tribunal concluded that the additions were based on assumptions and not supported by concrete evidence.

4. Evaluation of Evidence and Findings of the Tribunal:

The Tribunal's decision was based on concurrent findings of fact after appreciating the evidence on record. The Tribunal held that:

- The assessee was not a party to the seized agreement of sale.
- The sellers' statements did not indicate they received any money from the assessee beyond the documented price.
- The revenue failed to bring any material on record to show that the assessee paid more than the amount stated in the registered sale deeds.

The Tribunal's findings were not found to be perverse, and no substantial question of law arose from the impugned order. The appeals were dismissed as the Tribunal's conclusions were based on factual findings and proper appreciation of the evidence.

Conclusion:

The appeals were dismissed as the Tribunal's findings were based on concurrent factual determinations, and no substantial question of law was identified. The Tribunal's decision to delete the additions under section 69 was upheld, as the revenue failed to establish that the assessee paid any additional consideration beyond the documented price.