2014 (5) TMI 226 - HC - Income Tax

Deletion made Documentary evidences ignored - Addition made on the basis of seized documents u/s 132(4) of the Act Only statement of the broker taken into consideration and no other corroborating evidences Held that - It could be noticed from the statement recorded of the Director and others that the middleman had ensured the company to get the land at the rate of Rs.2.80 lakhs per bigha - on realizing that he needed to surreptitiously pocket the huge amount of money in the deal, the purchase was made directly from the owners by the company - the price at which it purchased in fact had come on the record - The Tribunal rightly noted the essential fact that purchase of land was directly from the farmers no other evidence of on-money payment, as also in absence of any suggestion of the market value of the land purchased by the assessee being far more than what had been reflected in the sale deed - the registered documents had been executed at Jantri value - There was no reference to the Valuation Officer to point out that the value of the land was below the market price the issue is based on the factual matrix, thus, no substantial question of law arises for consideration Decided against Revenue.

Summary

Issues:
1. Challenge to deletion of addition by the Appellate Tribunal based on seized documents and broker's statement.
2. Challenge to ignoring documentary evidence of fair market value of land by the Appellate Tribunal.

Analysis:
1. The High Court considered the challenge raised by the Revenue against the order of the Income Tax Appellate Tribunal (ITAT) regarding the deletion of an addition made by the Assessing Officer based on seized documents and the directors' statements. The Revenue contended that the Tribunal erred by not accepting the land price at Rs.2.80 lakhs per bigha, citing discrepancies in the transactions. The Court noted that the Assessing Officer and CIT(A) found the agreements between the parties as evidence of the land rate, but the Tribunal disagreed. The Tribunal observed that the Revenue's addition was based on presumptions and lacked concrete evidence of on-money transactions or market value verification by the authorities. The Court upheld the Tribunal's decision, emphasizing the lack of substantial evidence to support the Revenue's claims.

2. The Court further analyzed the documentary evidence, specifically the agreements (Satakhat) indicating the land's fair market value at Rs.2.80 lakhs per bigha. The Revenue argued that the subsequent sale deed at a lower rate implied on-money transactions. However, the Court noted that the middleman's statement revealed discrepancies in the expected purchase price and the actual deal execution. The Tribunal found that the land was directly purchased from farmers, contrary to the middleman's initial arrangement. Additionally, the registered documents were executed at a lower value, with no valuation officer's input on the market price. The Court concluded that the Tribunal's decision was based on factual evidence and did not exhibit any legal errors or perversity. Consequently, all Tax Appeals were dismissed, affirming the Tribunal's judgment.