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TMI Blog2019 (4) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - I.T(SS)A.No.05/Viz/2018, CO No.64/Viz/2018, I.T(SS)A.No. 06/Viz/2018 & 07/Viz/2018, CO No.65/Viz/2018 & 66/Viz/2018 - - - Dated:- 10-4-2019 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Assessee : Shri G.V.N.Hari, AR For the Revenue : Shri D.K.Sonowal, DR ORDER PER D.S. SUNDER SINGH, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of ₹ 6,17,500/- each to her two daughters namely B.Janaki Reddy and B. Bala Saraswathi by way of DDs and the balance amount was paid in cash. Search proceedings were also conducted covering the assessee. As per the material found during the course of search in the premises of Siddhartha Academy, the AO had issued notice u/s 153C r.w.s. 153A on 25.08.2015 calling for the return of income for the A.Y. 2014-15. In response to the notice u/s 153C, the assessee filed her return of income on 21.03.2016 and admitted the income from business of ₹ 3,09,196/- and capital gains on sale of land of ₹ 24,85,000/. During the proceedings, the assessee had denied having received any payment over and above the sale consideration of ₹ 24,85,000/- as per the registered document and claimed the deduction of ₹ 24,80,000/- u/s 54EC for purchase of Rural Electrification Bonds(REC). The AO confronted the assessee with the material found during the course of search in the premises of Siddhartha Academy for the sale consideration of ₹ 7,45,50,000/- for acres 1.42 @ ₹ 5,25,00,000/- per acre and aggregate cash payment of ₹ 6,95,80,000/- to both the coowne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-owners of the land i.e. Shri Narasimha Reddy and the assessee and the payments to her daughters. In page No.41, cash balance payable was arrived at. In page No.42, the details of cash payment made to the assessees as well as the daughters by way of DDs and cheques were also noted. Similarly, in page No.43, payments made to Shri B. Narasimha Reddy and his daughters by cheque and cash was also recorded. Scrutiny of the seized material very clearly shows that the total consideration paid by Siddhartha Academy to the assessee and Shri B.Narasimha Reddy was ₹ 7,45,50,000/- @Rs.5,25,00,000/- per acre. Out of which the payment by cheque was at ₹ 49,70,000/- and the balance amount of ₹ 6,95,80,000/- was paid in cash. In view of the complete details available, it is established that the assessees have received the cash payment of ₹ 6,95,80,000/- @ ₹ 3,47,90,000/- each, but not offered to tax. Since the material was found during the course of search, the same cannot be brushed aside and it has evidentiary value which needs to be believed as correct. Mere denial of both the buyer and seller does not make any difference. Therefore, argued that the AO has rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reads as under : 6.5. In the light of the aforesaid similarity of facts, I am constrained to follow the decision rendered by the jurisdictional Tribunal adhering to the principle of judicial discipline. The relevant extracts of the decision rendered by the Hon ble ITAT in their order dt.6.11.2014 are as under : 13. Admittedly, in the assessee case, there was no search. The seized document found during search at the premises of M/s. Classique Farms Estates is a loose sheet, wherein certain financial transactions were recorded in the name of one of the partner of the assessee firm. Admittedly, the loose sheet found at the vendee firm was written by one Mr. Ramu, an employee of the firm. Based on the said document and also admission made by the partners of the vendee firm, the A.O. acted upon and came to the conclusion that the on money was paid to the assessee firm towards sale of property. At the time of assessment proceedings, the partners of the assessee firm categorically denied having received the on money right from the beginning. The assessee contended that the seized document found in the premises of M/s. Classique Farms Estates is neither in the hand writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer, without brought on record any evidence to prove that on money is exchanged between the parties, merely harping upon the loose sheet and the third party admission, which cannot be considered as conclusive evidence against the assessee to bring the on money to tax as undisclosed income. The A.O. is required to bring further evidence on record to show that actual on money is exchanged between the parties, but literally failed to do so. The A.O. did not conduct any independent enquiry relating to the value of the property instead, merely relied upon the statement given by the purchasers of the property, which is not correct. Further, there is no proof of origin and destination of on money. The A.O. failed to prove the source of the purchasers as to how the money was arranged and also failed to prove the deployment of unaccounted money by the vendee firm 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. 16. Now coming to the observations of the CIT(A). The CIT(A) while confirming the assessment order, observed that it is uncommon that on money p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found in the louse sheet. The property was purchased from P w/o CRK for a disclosed consideration of ₹ 65 lakhs by the assessee. The property has been registered and the sale deed was executed for a consideration of ₹ 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 case of the seller. There is no evidence other than the seized material marked as A/CRK/104' where relevant entries are made at ₹ 1,65,00,000. The seized material was not found at the premises of the assessee and there is no corroborative material to suggest that the assessee has actually paid ₹ 1.65 crores towards purchase consideration of the property. The assessee and her brother categorically denied the payment of any money over and above ₹ 65 lakhs. The AO placed his reliance on the statement of S, who is a third party. The evidence brought on record by the Department is not enough to fasten additional tax liability on the assessee. As seen from the above document this is just a handwritten loose doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that the assessee has paid ₹ 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 A0. The A0 should act in a judicial manner, proceed with judicial spirit and come to a judicial conclusion. The A0 is required to act fairly as a reasonable person and not arbitrarily and capriciously. The assessment made should have enough material and it should stand on its own legs. The basis for addition cannot be only the loose sheet or a third party statement. In the absence of corroborative material, and/or circumstantial evidence, the addition cannot be sustained. Thus, no addition can be made on a dumb document and noting on loose sheet. It should be supported by the evidence on record and the evidence on record is not sufficient to support the Revenue's action. In a block assessment undisclosed income has to be determined on the basis of the material and evidence detected in the course of the search action. The circumstances surrounding the case are not strong enough to justify the addition made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken the stand that it has not paid balance amount of ₹ 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 ₹ 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 was in fact received from the assessee. As the assessee has categorically denied to have made any payment in excess of ₹ 1,01,687/- upto 31st March, 1999 in respect of purchase of flat the said denial cannot be brushed aside without bringing any positive material on record. Merely recording made by a third party or statement of a third party cannot be treated as so sacrosanct so as to read as a positive material against the assessee. In view of the above the CIT(A) was not justified in confirming addition to the extent of ₹ 3,81,414/- in the hands of the assessee. Therefore the addition of ₹ 3,81,414/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. P. Nalini Devi also in her statement further clearly stated that the property was sold at ₹ 23.50 lakhs and not at the rate of ₹ 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 of the property and has paid more than what is mentioned in the registered sale deed. The Hon'ble Supreme Court in the case of Moosa S. Madha and Azam S. Madha vs. CIT( 89 ITR 65) has held that photo copies have little evidentiary value. Therefore, photocopies of any document cannot by itself be considered as evidence for purpose of making addition in assessment proceedings. The AO is required to bring further evidence on record to show that the sale agreement was actually acted upon by the parties. This is because of the fact when the AO is going to make an addition, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 ₹ 1,68,00,000/-. Therefore, this amount was not disclosed. The learned Tribunal has correctly concluded that unsigned photocopy of the agreement for purchase of the property cannot be a material to rely on, when the registered sale deed has been produced and the same shows that the property was purchased at a price of ₹ 23,50,000/-. This registered sale deed was disclosed at the time of original assessment. According to us, the agreement of sale loses its force, the moment registered sale deed is executed. If the property has been purchased at a higher price than that of mentioned in the purchase deed, then the onus is on the Assessing Officer to establish that as has been rightly concluded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to say that there is on money exchanged between the parties. In the absence of proper enquiry and sufficient evidences, we find no reason to confirm the addition made by the A.O. Therefore, we reverse the CIT(A) order and direct the Assessing Officer to delete the addition. 6.6. The Hon ble ITAT considered the legal position in great detail and has drawn support from the decisions rendered by the jurisdictional High Court. Respectfully following the above decision of the jurisdictional tribunal, I hold that the Assessing Officer is not justified in making addition of ₹ 3,47,90,000/- while computing the long term capital gains. The Assessing Officer is directed to delete this addition and compute the long term capital gains by adopting consideration of ₹ 24,85,000/- as per registered sale deed. These two grounds of the appellant are allowed. 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 ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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