2012 (9) TMI 252 - AT - Income Tax

Search & Seizure addition made u/s 69B Revenue contended from seized documents that amount mentioned therein is nothing but the cost price paid by assessee to the seller of this land. The five figures have been omitted by the assessee while preparing this paper and if five figures are added in the figure of 400 then it will become 4,00,00,000/-. After reducing the amount recorded in books of account, the remaining amount of Rs. 2,61,66,611/- has been added u/s 69B AO presumed that assessee had paid cash over and above the amount recorded in its books of account deletion of addition by CIT(A) - Held that - CIT (A) has taken into consideration the aspect that firstly the AO s view was that the cost of land was Rs. 4.55 crore or odd. Three show cause notices were given to the assessee for explaining that why the cost of the land be not taken at Rs. 4.50 crore or odd. All the three times, the explanation was filed and the AO was satisfied with the explanation. Therefore, the A.O. has not taken the cost of investment at Rs. 4.50 crore or odd. However, as per certain seized documents, where figure of 400 was mentioned, the AO took this value as cost of investment in the property. Neither the AO could co-relate the figure of 22.5 mentioned in the column no. 1 nor the figure mentioned in column no. 3 as per books of account. Therefore, there cannot be a presumption that figure of 400 mentioned in column no. 4 is figure of cost of land purchased by assessee. There must be some corroborative evidence to hold that this figure is related to cost of the land purchased by the assessee. Neither these findings could be controverted nor any other material were brought on record which can be said that findings of Ld. CIT (A) are not correct. Therefore, no infirmity exists in order of CIT (A) deleting addition made u/s 69B Decided in favor of assessee

Issues Involved:
1. Deletion of addition made under Section 69B of the Income Tax Act.
2. Validity of the explanation provided by the assessee regarding the seized documents.
3. Interpretation of the figures mentioned in the seized documents.
4. Burden of proof on the Revenue to establish unexplained investment.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made Under Section 69B of the Income Tax Act:
The primary issue in the appeal was the deletion of an addition of Rs. 2,61,66,611/- made by the Assessing Officer (AO) under Section 69B of the Income Tax Act. The AO had based this addition on a seized document (page 37 of Exhibit A-57) which allegedly indicated an undisclosed investment in land. The AO interpreted the figure "400" mentioned in column 4 of the seized document as Rs. 4,00,00,000/-, representing the cost of land. However, the Commissioner of Income Tax (Appeals) [CIT (A)] found that there was no corroborative evidence to support this interpretation and that the AO had not successfully proven that the figure represented the actual cost of the land. The CIT (A) concluded that the addition was made without a proper basis and deleted it.

2. Validity of the Explanation Provided by the Assessee Regarding the Seized Documents:
The assessee provided an explanation that the figures in the seized documents were related to the market value of the land for joint venture purposes, not the actual cost. The assessee argued that the figure "400" in column 4 represented an estimated upfront amount to be received in a joint venture, not the purchase price. The CIT (A) found this explanation plausible, especially when read in conjunction with other seized documents (pages 159-161 of Annexure A-24), which also indicated joint venture projections. The CIT (A) accepted the explanation that the figures were related to joint venture negotiations and not the actual cost of the land.

3. Interpretation of the Figures Mentioned in the Seized Documents:
The AO's interpretation of the figures in the seized documents was found to be inconsistent and unsupported by evidence. The AO initially proposed that the cost of the land was Rs. 4.55 crores based on another seized document but later changed the stance to Rs. 4.00 crores based on the figure "400" in column 4 of page 37 of Exhibit A-57. The CIT (A) noted that the AO failed to correlate the figures in columns 1 and 3 with the alleged cost in column 4. The CIT (A) also observed that the figures in the seized documents were projections for joint ventures and not indicative of actual costs.

4. Burden of Proof on the Revenue to Establish Unexplained Investment:
The CIT (A) emphasized that the burden of proof lies on the Revenue to establish that the assessee made an unaccounted investment. The AO must bring positive material evidence to support such a claim. In this case, the AO relied on presumptions and failed to provide corroborative evidence to prove that the figure "400" represented the actual cost of the land. The CIT (A) held that the AO's addition under Section 69B was based on assumptions and conjectures without concrete evidence.

Conclusion:
The CIT (A) concluded that the AO had not provided sufficient evidence to support the addition under Section 69B. The explanation provided by the assessee regarding the figures in the seized documents was found to be plausible and consistent with the nature of joint venture negotiations. The CIT (A) deleted the addition, and the Tribunal upheld this decision, finding no infirmity in the CIT (A)'s reasoning. The appeal by the department was dismissed, and the cross-objection by the assessee was deemed infructuous.

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