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TMI Blog2015 (1) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... by the vendors - AY 2007-08 - Held that:- The statutes generally provide three types of legal presumptions viz., “may be presumed”, “shall be presumed” and “conclusive proof”. It is a well settled proposition of law that a party can still rebut the first two presumptions by bringing materials contrary to the legal presumptions. Only in respect of the third type of presumption, all the parties do not have any option. When the law is settled in this manner even in respect of legal presumptions, we are of the view that it would be well within his right for an assessee to rebut the admissions made in the sworn statement, when the provisions of sec. 132(4) specifies that the said admission “may be” used as evidence. The admission made by the assessee is no doubt, best evidence, but there is nothing in law to prevent the assessee to show that the said admission was wrong. In the instant case, as noticed the assessee has narrated the events and also the circumstances which compelled the vendors to reduce the sale consideration at the time of registration of the flat though the parties had initially agreed for a consideration of ₹ 44.00 lakhs, yet the conveyance deed was not exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they relate to the assessment years 2003- 04, 2007-08 and 2009-10. All these appeals were heard together and hence they are being disposed of by this common order, for the sake of convenience. 2. The facts relating to these appeals are stated in brief. The department carried out search and seizure operations u/s 132 of the Act on 17.01.2008 in the hands of Edit II Group of cases and the assessee was also subjected to search operations. Consequent thereto these the assessments under consideration were completed by the assessing officer u/s 143(3) r.w.s. 153A of the Act. The additions made by the assessing officer in these three years, having been confirmed by Ld CIT(A), the assessee has preferred these three appeals before us. 3. We shall first take up the appeal filed for AY 2003-04. For this year, the assessee had originally filed return of income on 25.10.2002 and the assessment was completed u/s 143(3) on 30-01-2006. Hence, as on the date of search, the AY 2003-04 falls in the category of concluded assessment and hence it would not be abated u/s 153A of the Act. In the financial year relevant to this assessment year, the assessee had received a sum of ₹ 50.00 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the proceedings initiated u/s 153A was valid and the AO was justified in making the addition relating to the gift. 6. The ld A.R, however, placed reliance on the following decisions to support his legal proposition that the concluded assessments should not be disturbed in the absence of any incriminating material:- (a) CIT Vs. M/s Murli Agro Products Ltd (ITA No.36 of 2009 dated 29-10- 2010) (b) Smt Lakshmi Singh Vs. DCIT (ITA No.113/PNJ/2014 dated 09-12- 2014) 7. We have heard the rival contentions and perused the record. The admitted facts are that the assessee had duly disclosed the receipt of gift of ₹ 50.00 lakhs in the original return of income filed for this year well before the date of search. It is also an undisputed fact that the assessing officer, during the course of original assessment proceedings, has made enquiries about the gift not only with the assessee, but also with the donor directly. Both the assessee as well as the donor has duly replied to the queries raised by the AO. Having satisfied with the genuineness of the gift, the assessing officer did not make any addition. 8. During the course of search proceeding, the department has foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... response to the notices issued u/s 153A, the assessee did not offer the same. The explanations given by the assessee for not offering the above said amounts in the returns of income were not convincing to the assessing officer and hence he assessed the amounts as disclosed by the assessee in the sworn statement. The Ld CIT(A) also confirmed the additions. 12. The Ld A.R submitted that both the assessing officer as well as the Ld CIT(A) has made the addition of ₹ 21 lakhs only on the basis of the admission made by the assessee in the sworn statement without corroborating the same with the materials available on record. He submitted that the materials available on record and the surrounding circumstances clearly show that the admission made by the assessee was not only under confused mind but also totally contrary to the facts. Accordingly he submitted that the tax authorities are not justified in placing reliance solely on the sworn statement given by the assessee. He submitted that the assessee has retracted from the statement while filing return of income by not disclosing the amount admitted by him. Later, before the AO, the assessee has furnished detailed reasons and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undergone change due to changed circumstances. However, the assessing officer has failed to conduct enquiries with the vendors of the property and instead, chose to place sole reliance on the receipt and the statement of the assessee, which was retracted at the time of filing return of income. On merits, the Ld D.R relied upon the order of Ld CIT(A). 15. We have heard the rival contentions and perused the record. Before us, the assessee has filed a detailed written submission narrating the chronological events that took place from the date of agreement to the date of final registration of the conveyance deed. For the sake of convenience, we extract the same below:- 1. The assessee, as a joint owner along with his wife, acquired, vide Deed of Transfer dated 08.12.2006, a residential property, being flat no. 5, at the Anand Vihar CHS Ltd., 20th Road, Khar (W), Mumbai - 400052, for a sum of ₹ 24 lakhs. 2. The trail of events / documents leading to the said purchase was as under: [Ref: Pg. No. 192 of the Paper Book ( P.B. )] a) MOU dated 16.08.2005, for purchase of the said property. Not executed and copy not available] b) Letter of Society dated 08.11.2005, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 13,10,833/-, out of the sale consideration, till such time the vendor obtained all clearances from her family and society clearance for transferring the property in the name of the vendee, in the books of the society. (ii) Time was of essence and if the vendor was unable to render a clear, free and marketable title within a period of six months from the date of execution of the MOU, then the vendee would do so at their own cost and would not pay the balance amount of ₹ 13,10,833/- to the vendor. (iii) If the Vendor was able to render a clear, free and marketable title to the property to the Vendee, free from all dispute, encumbrances and government orders, then the parties would execute an additional conveyance deed for the sum of ₹ 13,10,833/- and would present the same for registration to the office of the Sub Registrar. (h) An affidavit dated 11.12.2006 was executed by the vendor stating that the Supplementary MOU (supra) was entered into, since she was not in a position to deliver a clear marketable title to the said property, free from all dispute encumbrances and government orders, including society clearances, to the assessee. She reaffirmed the said S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HDFC Bank A/c. No. 1551 08.12.2006 0278340 18,00,000/- Total Cost Rs. 32,16,207/- II. SUBMISSIONS OF THE ASSESSEE A. On jurisdiction The entire addition is made purely, simply and mechanically relying upon only one document, Sr. No. (e) above, bypassing host of evidences, including registered sale document. This too, without making any inquiry / verification worth a name. Even this paper does not per se and on its own or even prima facie, suggest any on-money payment. The payments referred in this receipt were duly accounted. As such, it was not a material, much less incriminating material, which could have given jurisdiction to make the assessment under section 153A of the Act. As regards the statement, it had no evidentiary value. It is a well settled legal position that no addition can be made merely on the basis of surrender during a statement; especially when -there is no other corroborative evidence to support the allegation of the A.O.; there is no admission of any wrong d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. It may not be out of place to point out that while the sale consideration recorded in the Deed of Transfer is ₹ 24 lacs, the valuation thereof by the registration authorities, for the payment of stamp duty was ₹ 21,72,967/-. This itself is an authentic and independent affirmation of the bonafides of the transaction. 6. The entire addition is made purely, simply and mechanically relying upon only one document, by passing host of evidences, including registered sale document. This too, without making any inquiry / verification worth a name. 16. A perusal of the above said written submissions would show that the assessee has demonstrated the reasons for reducing the agreed sale consideration along with documentary evidences to substantiate the same. We notice that the tax authorities have not rebutted the same by conducting necessary enquiries and instead, chose to place reliance on the sworn statement given by the assessee during the course of search operation. A careful perusal of the provisions of sec. 132(4) would show that the said provisions only provide that admissions made in the sworn statement may be used as evidence against the assessee. The statutes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors lead to the reduction of the sale consideration to ₹ 68 lakhs. The ld. Counsel submitted that the stamp duty consideration was ₹ 56.11 lakhs only and the same substantiates the sale consideration of ₹ 68 lakhs . Accordingly, he submitted that the addition of ₹ 28.09 lakhs has to be deleted. 20. On the contrary, the ld.DR placed strong reliance on the order of ld. CIT(A). 21 We heard the parties and perused the record. The Ld A.R has filed written submissions narrating the events that took place from the date of agreement to the date of registration including the encumbrances and problems which led to the reduction of sale consideration. For the sake of convenience, we extract the same below: 1. The assessee, as a joint owner along with his wife, vide Deed of Transfer dated 26.07.2007, acquired a residential property, being flat no. 6, at the Anand Vihar CHS, 20th Road, Khar (W), Mumbai - 400 052, for a sum of ₹ 60 lakhs. 2. The trail of events I documents leading to the said purchase was as under: a) MOU dated 16.09.2005, entered into for purchase of the said property alongwith open space of around 1550 sq. ft. [Not executed and cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a fair market price of ₹ 56,11,378/-, by the Sub Registrar, for payment of stamp duty, for the purpose of registration thereof. (h) The following payments were made by the assessee, to the transferor, towards the said property acquired: Standard Chartered Bank - A/c. No. 237-1-004540-3 Date Cheque No. Amount Sanjay Kohil 26.4.2007 24.7.2007 004011 15,00,000/- 24.7.2007 DD No.003512 2,82,000/- stamp duty 28.7.2007 DD No.018248 30,000/- (Registration charges) 600/- (cash) 058036 17,50,000/- Standard Chartered Bank - A/c. No. 237-0-004541-1 (Binnaiffer Kohli) 27.2.2007 4043 10,00,000 28.7.2007 136337 17,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) e) The issue of the Vendor's right to transfer open plot of land [around 1550 sq. ft.] [which ultimately was not allowed to be transferred]. 2. From the time of agreeing to purchase the said property, till its finalization / consummation, the assessee faced various claims to the title. A key defect in title emerged only subsequently i.e. upon receipt of the letter of the Collector MSD, wherein it was pointed out that the appurtenant land, which the Transferor claimed to own, did not belong to him, but was a common plot of allotted to the society and hence no individual member was its owner. The said plot of land, taking into account of which the original sale consideration was fixed, thus did not belong to the Transferor, as was pointed out and objected to by the Collected (supra). 3. Since the Transferor was required to give a clear, free and marketable title to the total property being sold to the Transferee, which he was unable to do so (since a part of the property was truly not owned by him), he obviously agreed to receive a lesser sale consideration. In other words, the Transferor was unable to sell the aggregate property which he contracted to sell, since he d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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