Seized document alone cannot prove share-sale consideration for capital gains without corroborative evidence.

A seized letter, without corroborative material, was insufficient to treat Rs. 2 crores as the sale consideration for shares or to sustain long-term capital gains. The tax authorities failed to prove valuation of the shares, payment of the alleged consideration, or that the related memorandum of understanding was acted upon. The surrounding facts, including continued service by the assessee, transfer of only 71,000 shares instead of 75,000, and the possibility of a composite arrangement covering share transfer and non-compete obligations, undermined the revenue's inference. The capital-gain addition was deleted.

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Issues: Whether the amount of Rs. 2 crores referred to in the seized letter constituted the sale consideration for the shares transferred by the assessees and was therefore taxable as long-term capital gains.

Analysis: The addition rested primarily on a letter found during search and an inference that the figure of Rs. 2 crores represented the value of 7.5% shareholding. The tax authorities did not bring on record any material to show valuation of the shares, nor any corroborative evidence that the letter and the related memorandum of understanding had actually been acted upon. The surrounding circumstances, including the continuation of services by the assessee, the absence of evidence of payment of Rs. 2 crores, the transfer of only 71,000 shares instead of 75,000, and the possibility that the amount mentioned in the letter related to a consolidated arrangement covering both share transfer and non-compete obligations, weakened the revenue's case.

Conclusion: The amount of Rs. 2 crores could not be treated as the sale consideration for the shares, and the impugned capital-gain addition was not sustainable.

Final Conclusion: The additions made in the hands of both assessees were deleted and the appeals were allowed.

Ratio Decidendi: A seized document or statement, without corroborative material and in the face of contrary surrounding circumstances, cannot by itself justify treating an alleged figure as share-sale consideration for capital-gain taxation.

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