Reopening assessments based on impounded documents and purchaser admission sustains reassessment and additions on preponderance of evidence.

Reopening of assessment is justified where prima facie material exists: impounded third party documents seized during survey and an un retracted purchaser admission that link directly to registered sale transactions constituted sufficient material to form belief under section 147/148 and did not amount to a mere change of opinion; therefore reassessment was valid. Where those impounded documents corroborate cheque components in registered deeds and the purchaser admits a cash component, the totality of evidence permits treating documents as self speaking and sustaining additions on the preponderance of probabilities even without a specific cross examination request, upholding the reassessment outcome.

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Issues: (i) Whether reopening of assessment under section 147 read with section 148 of the Income-tax Act, 1961 was valid in the presence of impounded loose papers and admission of the purchaser; (ii) Whether the addition of unaccounted sale consideration as short-term capital gains can be sustained based on impounded third-party documents and the purchaser's admission, without cross-examination and notwithstanding registered sale deeds.

Issue (i): Validity of reopening under section 147/148 of the Income-tax Act, 1961 in view of the impounded loose papers and purchaser's admission.

Analysis: The reopening was founded on tangible material comprising impounded documents seized during a survey and an admission by the purchaser. At the stage of reopening, the requirement is formation of a belief based on prima facie material, not conclusive proof of escapement of income. The material showed a direct nexus between the impounded papers and the registered transactions and demonstrated that the registered consideration did not reflect the full consideration. Findings in proceedings against a different assessee do not operate as res judicata. The assessee did not establish that the sanction under section 151 was invalid or that reopening amounted to mere change of opinion.

Conclusion: The reopening under section 147 read with section 148 of the Income-tax Act, 1961 is valid and in favour of the Revenue.

Issue (ii): Sustenance of addition of unaccounted cash consideration as short-term capital gains based on impounded third-party documents and purchaser's admission, and the claim of denial of cross-examination.

Analysis: The impounded documents, when read with surrounding circumstances, matched the cheque components in registered sale deeds and included a cash component admitted by the purchaser, establishing corroboration. Documents were therefore treated as well-speaking and not dumb. The purchaser's un-retracted admission, corroborated by documentary evidence, constitutes strong evidence. The right to cross-examination is not automatic and must be specifically requested; no specific request was made during reassessment proceedings. On application of the test of human probabilities and preponderance of evidence, the inference of on-money was supported by the totality of evidence.

Conclusion: The addition of Rs. 3,31,63,138/- as unaccounted sale consideration is sustained and is in favour of the Revenue.

Final Conclusion: The appeals are dismissed and the additions confirmed, with the legal effect that the reassessment and consequent tax consequences stand upheld against the assessee.

Ratio Decidendi: Where impounded documents directly relate to the transaction and are corroborated by matching entries in registered instruments and an un-retracted admission by a purchaser, such prima facie material justifies reopening under section 147 read with section 148 and may sustain additions on the preponderance of probabilities even in the absence of a specific cross-examination request by the assessee.

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