2015 (12) TMI 1287 - HC - Income Tax

Unexplained investments u/s. 69 - ITAT deleted the addition - Held that - Upon appreciation of the evidence on record and finds no reason to take a different view. 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 the assessee and the sellers, which shows 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 incometax returns, the circumstances do raise a suspicion. However, as held by the Supreme Court in Commissioner of Incometax v. Daulatram Rawatmull, (1964 (3) TMI 14 - SUPREME Court ), even if circumstances raise a suspicion, suspicion cannot take the place of evidence. In the light of the above discussion, it is evident that 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. Under the circumstances, in the absence of any material to the contrary being brought to the notice of the court so as to dislodge the findings of fact recorded by the Tribunal, the impugned order of the Tribunal being based upon concurrent findings of fact recorded after appreciating the evidence on record, does not give rise to any question of law - Decided in favour of assessee.

Issues Involved:
1. Deletion of addition made on account of unexplained investments under Section 69 of the Income Tax Act.
2. Validity and appreciation of the agreement to sell dated 18.01.2005.
3. Opportunity for cross-examination and its impact on the case.
4. Statements made under Section 132(4) of the Income Tax Act.
5. Transfer of plots to ultimate purchasers at the insistence of the assessee.
6. Documentary evidence found during the search corroborating the agreement to sell.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made on Account of Unexplained Investments Under Section 69 of the Income Tax Act:
The revenue questioned the Tribunal's decision to delete the addition of Rs. 3,14,51,000 out of Rs. 3,25,50,000 made on account of unexplained investments under Section 69. The Tribunal found that the revenue failed to provide reliable material evidence to prove that the assessee had made the actual investment. It confirmed the addition to the extent of Rs. 11,00,000 for the assessment year 2005-06, based on the agreement to sell, but allowed the appeals for the assessment years 2006-07 and 2007-08.

2. Validity and Appreciation of the Agreement to Sell Dated 18.01.2005:
The Tribunal noted that while the agreement to sell indicated a higher price for the plots, no sale deed was executed in favor of the assessee, and the plots were ultimately sold to another party, Ajay Patel, for a lower consideration. The Tribunal found no evidence linking the assessee to the ultimate purchaser or proving the payment of on-money.

3. Opportunity for Cross-examination and Its Impact on the Case:
The revenue argued that the assessee failed to utilize the opportunity for cross-examination to disprove the seller's statements. The Tribunal, however, found that the revenue did not provide sufficient details or evidence to substantiate the seller's claims. The Tribunal concluded that the burden of proof was not discharged by the revenue.

4. Statements Made Under Section 132(4) of the Income Tax Act:
The seller, Somabhai Prajapati, admitted in his statement under Section 132(4) that he received the sale consideration from the assessee. However, the Tribunal found contradictions in the statements and noted that no material evidence was provided to corroborate the seller's claims. The Tribunal held that the statements alone, without supporting evidence, were insufficient to justify the additions.

5. Transfer of Plots to Ultimate Purchasers at the Insistence of the Assessee:
The Tribunal found no material evidence to support the claim that the plots were transferred to the ultimate purchasers at the insistence of the assessee. The power-of-attorney executed by one of the sellers in favor of the assessee was found in the possession of the seller and not acted upon by the assessee.

6. Documentary Evidence Found During the Search Corroborating the Agreement to Sell:
The Tribunal concluded that the documentary evidence found during the search did not establish the payment of on-money by the assessee. The Tribunal noted that while the agreement to sell raised suspicion, suspicion could not take the place of evidence.

Conclusion:
The Tribunal's decision was based on the appreciation of the evidence on record, and the revenue failed to provide sufficient material to substantiate its claims. The High Court agreed with the Tribunal's findings, noting that the conclusions were based on concurrent findings of fact and did not give rise to any substantial question of law. The appeals were dismissed, upholding the Tribunal's order.

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