9911796707
TMI Blog2017 (11) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of search in the case of M/s Hicons group of companies revealed that the assessee has sold immovable property for a consideration of Rs. 170 lakhs as per registered deed of conveyance whereas the actual consideration received for sale of property is Rs. 475 lakhs which includes Rs. 170 lakhs paid by cheque and Rs. 305 lakhs paid by cash. Based on the information received from Investigation Wing the AO reopened the assessment for the reasons recorded by him. In response to notice u/s 148 the authorized representative of the assessee, M/s Dalal & Dalal, CAs stated that the return originally filed may be treated as return filed in response to notice u/s 148 of the Act. The case has been selected for scrutiny and accordingly notices u/s 143(2) and 142(1) of the Act were issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished the details, as called for. During the course of assessment proceedings, the AO noticed that information received from Investigation Wing of the department in connection with search proceedings in the case of Hicons group of companies revealed that the assessee has received Rs. 305 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He opined that as per the clear cut proof of payment made in cash of Rs. 3.05 crores and also the fact that the director of M/s Hicons Construction Pvt Ltd has accepted that they have paid cash for purchase of property made additions of Rs. 3.05 crores u/s 69A of the Income-tax Act, 1961. The AO also initiated penalty proceedings u/s 271(1)(c) for concealment of particulars of income. 3. Aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee challenged reopening of assessment on the ground that the AO has reopened assessment only on the basis of third party statement without there being any tangible material in his possession. Therefore, the reopening of assessment is bad in law and consequent assessment order should be quashed. As regards additions made by the AO towards on-money received for sale property, the assessee has denied of having received any money over and above whatever stated in the sale deed and also requested for copies of statement of director of M/s Hicons Constructions Pvt Ltd and documents seized in the premises of Hicons group of companies. 4. The CIT(A), after considering relevant submissions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration received over and above what is stated in the sale deed is not disclosed in the return of income and hence, the addition made by the AO u/s 69A of the Act is in accordance with law and should be upheld. 6. 1. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. In this case, the assessing officer has reopened the assessment on the basis of information received from the Investigation wing of the Income tax department in pursuance of search conducted in the case of M/s Hicons group of companies on 24-2-2009. The reasons recorded for reopening assessment states that the department has found and seized incriminating materials which reveals consideration paid over and above amount shown in sale deed for purchase of property from Assessee Company which has not been disclosed in the return of income filed for the relevant assessment year. Therefore, the A.O. reopened assessment on the ground that income chargeable to tax had been escaped assessment within the meaning of section 147 of the Act. The assessee contention is that reopening is bad in law as the reasons recorded for reopening assessment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . has rightly formed his opinion based on the information received from the investigation wing of the department which constitutes a sufficient material for reopening of assessment and hence, the A.O. is right in reopening assessment. Therefore, we are inclined to uphold reopening of assessment and reject ground raised by the assessee. 3. The next issue that came up for consideration, is whether the on the facts and in the circumstances of the case, the A.O. is right in making additions towards alleged on money received by the assessee for sale of property based on third party statement. The factual matrix of the case which leads to the impugned additions is that there was a search in the case of M/s. Hicons group of companies on 24-2-2009. During the course of search proceedings, certain incriminating documents were found. The incriminating documents found during search reveals certain financial transactions recorded in the name of Assessee Company. During the course of search statement of Sri. Rafique Mohammed Nazir Sheikh, the director of M/s Hicon construction private limited was recorded. In the statement recorded u/s 132(4), the director of M/s Hicon constructions private li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be used as evidence against for framing assessment. Besides the seized loose sheet, no other document is in the possession of the A.O. to show that the assessee has received on money from the purchaser. The A.O. has not made any attempt to find out some reliable and cogent material evidence on record to support his findings or to corroborate the statements of the vendee Company. The assessee Company denied having received money over and above what is stated in the sale deed. 5. The A.R. of the assessee rightly pointed out that sale deed registered in the Office of the Sub-Registrar clearly shows consideration of Rs. 85 lakhs fixed for the property and which was exchanged through proper banking channel. The value shown in the sale deed is further supported by valuation report issued by registered valuer S.K. Godbole & Associates, which has been valued property for Rs. 75,00,000/-. The tenancy rights in the property has been transferred for a consideration of Rs. 85,00,000/- which is supported by agreements. Therefore, total sale consideration received for sale of property is Rs. 1,70,00,000/- which was received by cheques and admitted by both parties. It was not a case of reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also failed to prove the deployment of unaccounted money by the seller by any form of evidence. Under these circumstances, based on paper jottings as conclusive evidence on money cannot be brought to tax as income from undisclosed sources. 7. Now coming to the observations of the CIT(A). The CIT(A) while confirming the assessment order, observed that the assessee failed to avail cross examination provided by the A.O. to justify non receipt of on money. The assessee without any reason neither utilized the opportunity of cross examination nor furnished any details to justify its stand. Without furnishing any details, simply delayed appellate proceedings on the pretext of requesting copies of documents. We do not agree with the findings of the CIT(A) for the reason that the A.O. himself recorded reasons for failure of cross examination of parties. As per the facts recorded by the A.O., failure of cross examination is attributable to both the parties. Therefore, for the simple reason of failure of cross examination, assessments cannot be made or taxes cannot be levied on the basis of loose papers or third party statements without any further evidence to justify on money payments. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l question of fact. We therefore find no infirmity in the order of the High Court. Accordingly, we dismiss the appeal." 9. A similar issue has considered by coordinate bench of ITAT, Hyderabad 'A' Bench in the case of Smt. K.V. Lakshmi Savitri Devi Vs. ACIT (2012) 148 TTJ 517, wherein the Tribunal under similar circumstances held as under: Admittedly there was no search action in the case of the assessee. It is a loose slip containing certain entries recording the payment which was found at the premises of CRK. It does not contain either date of payment or name of the person who has made the payment. According to the Department, CRK denotes C. Radha Krishna Kumar and KRK denotes K. Rajani Kumari. However, no name of the assessee was found in the louse sheet. The property was purchased from P w/c CRK for a disclosed consideration of Ps. 65 lakhs by the assessee. The property has been registered and the sale deed was executed for a consideration of Ps. 65 lakhs on 21st Aug., 2006 which consideration has been accepted by the State registration authorities. Further nothing was brought on record to show that there was any invoking of s. 50C while completing the assessment in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier there is no date and name of the assessee. The allegation of the Department is that the seized material denotes the payment made by the assessee to the purchaser for purchase of the property. However, no such narration or name of the assessee was found in the seized material. The Department is not able to unearth any document or material or any corroborative material to show that the assessee herein actually paid Ps. 165 lakhs for purchase of the property. The Department has not brought on record the date on which the payment was made and the source from which ii is paid and/or any details of bank account from where the cash was withdrawn. Without any of these details, the Department has taken a view that the assessee has paid Ps. 165 lakhs for purchase of the property. The Department cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong cannot take place of material in support of the finding from the AO. The AO should act in a judicial manner, proceed with judicial spirit and come to a judicial conclusion. The AO is required to act fairly as a reasonable person and not arbitrarily and capriciously. The assessment made should ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessing officer did not conduct any independent enquiry relating to the value of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden." 11. The ITAT, Ahmedabad 'C' Bench in the case of Jawaharbhai Atmaram Hathiwala Vs. ITO reported in (2010) 128 TTJ 36, has considered similar issue. The coordinate bench, under similar set of facts, decided the issue in favour of the assessee as under: "The assessee has claimed to have made payment of Rs. 1,01,687/- only upto 31st March, 1999 and has consistently taken the stand that it has not paid balance amount of Rs. 3,81,414/- as stated in the seized document. No evidence could be brought on record by the Revenue to show that in fact the assessee had paid the amount of Rs. 3,81,414/- to OD. No document containing signature of the assessee or handwriting of the assessee to corroborate the above making of payment by the assessee was found during the course of the search. Even at time of cross examination by the assessee the partner of OD could not produce any evidence that the amount written in the seized document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered sale deed because the fair market value of the asset as on the date of transaction exceeds full value of consideration declared by the assessee then it is for the AO to prove that the value declared by the assessee is understated. In the appeal before us, excepting the photo copy of sale agreement, there is no other evidence on record found as a result of search or brought on record on the basis of enquiry conducted by the AO which could establish the fact that the actual consideration passed between the parties is not as mentioned in the registered sale deed but as per the sale agreement found during search operation. It is also an interesting fact to note that in the statement recorded from the assessee u/s 132(4) the revenue authorities have not put any question with regard to the sale agreement seized at the time of search and seizure operations. Smt. R. Nalini Devi also in her statement further clearly stated that the property was sold at Rs. 23.50 lakhs and not at the rate of Rs. 1.68 crores. The Hon'ble Supreme Court in the case of K.P. Verghese reported in 131 ITR 597 has held that onus is on the department to prove that the assessee has understated the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urely on conjectures and surmises and not on the basis of any material or evidence brought on record. On examining the facts and materials before us, we are of the view that the finding arrived by the CIT (A) is just and proper and in accordance with the principles of law laid down by the Hon'ble Supreme Court and Hon'ble High Courts which are cited before him. We therefore find no necessity to interfere with the finding of the CIT (A) on this issue. Hence the grounds raised by the revenue for the years under consideration are dismissed." 13. The Hon'ble A.P. High Court in ITA No.232 of 2013, in the case of CIT Vs. Smt. R. Nalini Devi has upheld the order of the ITAT, Hyderabad Bench. The Hon'ble High Court, while considering the issue held as under: "We have heard the learned counsel for the appellant and gone through the impugned judgement and order of the learned Tribunal. It appears, the Assessing Officer had relied on a photocopy of an unsigned sale agreement in order to find that consideration amount has been paid at Rs. 1,68,00,000/-. Therefore, this amount was not disclosed. The learned Tribunal has correctly concluded that unsigned photocopy of the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
