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TMI Blog2019 (8) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-11 relevant to the A.Y. 2011-12, a sworn statement was recorded on 11/07/2011. In his statement, he stated that he sold out a vacant site to the extent of 384 sq.yds. in July, 2010 for a consideration of Rs. 8,850/- per sq.yrd., totalling to Rs. 32,91,750/- and filed his return of income by admitting the same for capital gains. 3. The Assessing Officer asked the assessee to explain the source of investment in the fixed asset. The assessee explained the source in detail and submitted that out of agricultural income earned by her during the last couple of years is the source of investment of Rs. 5,75,000/-. The Assessing Officer after considering the explanation of the assessee noted that the assessee has purchased the property from Sri Ganta Punna Rao for a sale consideration of Rs. 32,83,200/-, the same has been admitted by the seller-Sri Ganta Punna Rao and he offered the same for capital gains. Accordingly, the Assessing Officer has completed the assessment by making the addition of Rs. 28,60,240/- as unexplained source of investment and assessment is completed. 4. On appeal, ld. CIT(A) confirmed the order of the Assessing Officer by observing as under:- "The main contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Ganta Punna Rao, who sold the property to the assessee. He further submitted that the Assessing Officer, based on the statement given by Sri Ganta Punna Rao and found some cash deposits in the bank account of Sri Ganta Punna Rao, has come to a conclusion that the cash available in the bank is the sale consideration paid by the assessee, without there being any basis. He further submitted that when there is a registered document which is clearly mentioned the sale price, addition cannot be made based on the statement given by the third party without allowing the assessee to cross-examine the concerned third party. He further submitted that so far as purchase is concerned, the value mentioned in the sale document is final. The amendment made by the Legislature brought to the statute book u/sec. 56(vii)(b) applies only for the A.Y.2014-15 and not for the assessment year under consideration. He relied on the decision of the coordinate bench of this tribunal in the case of Sri Venkata Rama Sai Developers Vs. DCIT in ITA No.453/VIZ/2012, dated 06/11/2015. 7. On the other hand, ld.DR strongly supported the orders of the authorities below. 8. We have heard both the sides, perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and opined that the amount paid is more than the sale consideration mentioned in the document, it is the duty of the Assessing Officer to prove that the amount paid by the assessee is more than what he stated in the sale deed with relevant evidence. In the present case, except statement of Sri Ganta Punna Rao, no other evidence is available on record that the assessee has paid the amount more than the sale consideration. That apart, when the statement of the seller is solely relied on by the Assessing Officer, it is the duty of the Assessing Officer to ask the assessee that the seller has stated that he received sale consideration more than the documented price and ask the assessee if he wanted to cross examine, to provide an opportunity to cross examine the seller. In the present case, no such opportunity has been given by the Assessing Officer to the assessee. In spite of that, the assessee has submitted before the Assessing Officer that she has purchased the property for Rs. 4,80,000/-. In this context, the Hon'ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. CCE in Civil Appeal No. 4228/2006, by order dated 02/09/2015 has observed that "not allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents and on the basis of statement given by him, came to a conclusion that the assessee has paid on money. We find that the observation made by the ld. CIT(A) is baseless and it cannot survive in judicial scrutiny for the reason that there is no agreement in respect of the assessee, however, he further mentioned that the seller is a habit of taking on money, therefore he came to a conclusion that assessee also paid on money. The above observation given by the ld. CIT(A) is without any basis and cannot be accepted. From the observations of the ld. CIT(A), it is very clear that the seller of the property-Sri Ganta Punna Rao is accepting on money from other persons, therefore, the deposits made in his bank account, cannot be concluded that the amount paid by the assessee. It can be also said that the amount deposited in the bank account is anybody's amount because no details are available with regard to what is the amount received and what is the amount deposit. Under these facts and circumstances of the case, we are of the opinion that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) cannot survive. Under similar circumstances, the coordinate bench of the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent cannot collect the tax on the admission of the tax payer alone. The CIT, at one stage held that there is no need of direct or primary evidence, even if there is a circumstantial evidence, based on circumstantial evidence, the A.O. come to the conclusion and decide the issue accordingly. We do not agree with the stand taken by the CIT(A), for the simple reason that to tax any particular receipt, primary evidence is very much necessary and unless there is a primary evidence, circumstantial evidence cannot be considered as a conclusive evidence against any person to tax any particular receipt. Circumstantial evidence plays an important role in income tax proceedings, where the A.O. needs to estimate the income based on some evidence available for part of the year, then remaining period estimation can be made based on evidence available. But, payment/receipt of on money is purely a factual issue which cannot be decided based on circumstantial evidence. 17. Now coming to the case laws relied upon by the assessee counsel, the assessee's counsel at the time of hearing relied upon plethora of case laws in support of his contentions. 18. The A.R. relied upon ITAT Hyderabad `A' Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This loose sheet found at the premises of CRK is not enough material to sustain this addition. The seized material found during the course of search and the statement recorded are some piece of evidence to make the addition. The AO has to establish the link between the seized material and other books of account to the assessee. The seized material and statement of CRK cannot be conclusive evidence to make this addition. The entire case herein is depending upon the rule of evidence. There is no conclusive presumption to say that actual consideration passed on between the parties is actually Rs. 165 lakhs. The assessee as well as her brother stated in their respective statements that the consideration passed between the parties is only Rs. 65 lakhs. In spite of this the AO proceeded to conclude that the seized material is conclusively reflecting the payment of consideration at Rs. 165 lakhs. The Department herein i required to establish the nexus of the seized material to the assessee. As stated earlier 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble High Court while, deciding the issue in favour of the assessee held as under: "We are of the view that the Tribunal has rightly held that the registered document dt. 21.8.2006 unde4r which the respondent purchased the above property showed that only Rs. 65.00 lakhs was paid to the vendor by the respondent; that there was no evidence to show that the respondent had paid Rs. 1.00 crore in cash also to the vendor; that no presumption of such payment of Rs. 1.00 crore in cash can be drawn on the basis of an entry found in a diary/loose sheet in the premises of C. Radha Krishna Kumar which is not in the respondent's handwriting and which did not contain the name of the respondent or any date of payment or the name of the person who made the payment. It rightly held that the Revenue failed to establish the nexus of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises which cannot take the place of proof. We also agree with the Tribunal that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is only photocopy and has not been signed by the assessee. The assessee has also raised serious allegation regarding the seizure of the impugned document and filed affidavit before DDIT (Inv.) asserting that the said document was planted by an officer of the department also named by the assessee in the affidavit. However, such allegation of the assessee has not at all been enquired into and has been met with complete silence by the department. From the materials on record, it is very clear that the AO has failed to lay his hands on any credible evidence to establish the fact that the assessee has purchased the property for a consideration of Rs. 1,68,00,000/- as mentioned in the photo copy of sale agreement seized in course of search and seizure operation. The assessee has produced before the AO registered sale deeds in support of its claim that they had purchased the property for a consideration of Rs. 23.50 lakhs. When the AO alleges that the assessee has paid more than what has been declared in the registered 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal right over the property which also had an effect on the fair market value of the property. It is also pertinent to mention here that the assessee had filed his return f income for the assessment years under dispute much prior to the date of search declaring the purchase of land in question at the consideration mentioned in the registered sale deeds. 155) far as the AO's observations on the loose sheets recovered from the residence of Smt. Nalini Devi are concerned, the CIT (A) after duly examining them has given a conclusive finding that the assessee's name has no where been mentioned in those documents nor the amount of Rs. 109.48 lakhs represents the expenditure incurred by Smt Nalini Devi. However, the amount was found to be the summary of the balance of various accounts operated by the family members of Smt. Nalini Devi. We find that the CIT (A) in his elaborate and well reasoned order has dealt with all these aspects and came to a finding on fact that the AO has made the addition purely 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d passed them off as if they were themselves the author(s). We feel that quoting from an order of some authority particularly a specialized one cannot per se be faulted as this procedure can often help in making for brevity and precision, but we agree with Mr. Vahanvati to the extent that any "borrowed words" used in a judgement must be acknowledged as such in any appropriate manner as a courtesy to the true author(s). Be that as it may, we are of the opinion that the three questions reproduced above can, in no way, be called substantial questions of law. The fact as to the actual sale price of the property, the implication of the contradictory statements made by Rajarathinam or whether reliance could be placed on the loose sheets recovered in the course of the raid are all question of fact. We therefore find no infirmity in the order of the High Court. Accordingly, we dismiss the appeal." 24. Considering the total facts and circumstances of the case and also applying the ratios of the judgements cited above, we are of the opinion that the A.O. is not correct in coming to the conclusion that the on money is exchanged between the parties based on a loose sheet found in the premise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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