2019 (4) TMI 878 - AT - Income Tax

Search u/s 132 conducted in the premises of Siddhartha Academy - addition based on loose sheet found in search - on-money receipts - HELD THAT - The loose sheet seized from the premises of Siddhartha Academy is undated and without the signatures of the assessee. The sale deed was registered for a sum of ₹ 24,85,000/- by the assessee and the co-owner independently. No other evidence was found to establish that the consideration was passed on over and above the registered sale consideration. CIT(A) considered the issue in detail and allowed the appeal of the assessee placing reliance on the decision of this Tribunal in the case of Shri Venkatarama Sai Developers 2015 (11) TMI 1608 - ITAT VISAKHAPATNAM . Since the material was found in the premises of Siddhartha Academy, presumption is available to the department in the case of Siddhartha Academy, but not in the case of the assessee. It is not correct in coming to conclusion that on-money was exchanged between the parties on the basis of material found in the premises of third party and on the statement given by third parties. In the instant case, both the parties, searched party as well as the assessee have denied having exchanged the on money for sale of land. Even after the assessee s case is covered under search operations u/s 132, the department did not unearth any evidence regarding exchange of cash in sale transaction. Therefore, since the facts are identical and department could not place any other material to controvert the finding given by the CIT(A) and no other decision of any High Court or Apex Court was brought on record controvert the decisions relied up on by the assessee, we do not find any reason to interfere with the order of the CIT(A) and the same is upheld.

Summary

Issues Involved:
1. Validity of additions based on loose sheets found during a search.
2. Burden of proof regarding unaccounted cash transactions.
3. Applicability of judicial precedents in similar cases.
4. Tax effect threshold for appeals.

Detailed Analysis:

1. Validity of Additions Based on Loose Sheets Found During a Search:
The primary issue in these appeals revolves around the validity of additions made by the Assessing Officer (AO) based on loose sheets found during a search at Siddhartha Academy. The AO assessed a total sum of ?7,45,50,000/- as the sale consideration for the land sold by the assessee and her brother-in-law, despite the registered sale deed reflecting only ?49,70,000/-. The AO relied on the loose sheets to conclude that the remaining amount was paid in cash. However, both the buyer and seller denied any cash transactions over and above the registered amount. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, observing that the loose sheets alone, without corroborative evidence, were insufficient to substantiate the AO's claims.

2. Burden of Proof Regarding Unaccounted Cash Transactions:
The Tribunal emphasized that the burden of proof lies with the department to establish that unaccounted cash transactions took place. The evidence found in the premises of Siddhartha Academy could not be imposed on the assessee without any corroborative evidence. The Tribunal referred to several judicial precedents, including the case of Sri Venkatarama Sai Developers, where it was held that additions cannot be made based on loose sheets found in third-party premises without corroborative evidence. The Tribunal highlighted that mere denial by both the buyer and seller, coupled with the absence of any direct evidence of cash transactions, was sufficient to negate the AO's claims.

3. Applicability of Judicial Precedents in Similar Cases:
The Tribunal relied on various judicial precedents to support its decision. In the case of Smt. K.V. Lakshmi Savitri Devi Vs. ACIT, the Tribunal held that loose sheets found in third-party premises, without corroborative evidence, could not be used to make additions. Similarly, in the case of Jawaharbhai Atmaram Hathiwala Vs. ITO, the Tribunal emphasized that mere recording by a third party or their statements could not be treated as conclusive evidence against the assessee. The Tribunal also referred to the Hon'ble Supreme Court's decision in CIT Vs. P.V. Kalyana Sundaram, which underscored the need for primary evidence to support any addition based on alleged unaccounted transactions.

4. Tax Effect Threshold for Appeals:
In one of the appeals (I.T.(SS)A.06/Viz/2018 & CO No.65/Viz/2018, A.Y.2010-11), the Tribunal dismissed the revenue's appeal on the grounds that the tax effect involved was below ?20 lakhs, as per Circular No.03/2018 dated 11.07.2018 of the Central Board of Direct Taxes (CBDT). The Tribunal noted that the department did not make out a case of exception as provided in the circular, thereby rendering the appeal not maintainable.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to delete the additions made by the AO, emphasizing the lack of corroborative evidence to support the claims of unaccounted cash transactions. The Tribunal reiterated the importance of primary evidence and the burden of proof resting with the department. The appeals filed by the revenue were dismissed, and the cross objections filed by the assessee were rendered infructuous.