TaxTMI 
TaxTMI 
2012 (12) TMI 721
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....to initiation of proceedings u/s 158BD cannot be raised by the appellant at the present stage. The learned CIT (A) ought to have seen that this is a legal issue and can be raised at any point of time including before the Hon'ble CIT(A) during the course of appeal proceedings. The CIT (A) ought to have seen that notice u/s 158BD is not valid and the consequential assessment is bad in law. 4. The learned CIT (A) erred in confirming the action of the Assessing Officer in arriving at the consideration paid for acquisition of the property at Rs. 10,11,50,000/- and further erred in confirming the computation of undisclosed income at Rs. 7,23,86,915/-. 5. The learned CIT (A) ought to have considered the fact that appellant paid a consideration of only Rs. 2,87,63,085/- besides incurring an expenditure of Rs. 1,14,11,200/- on behalf of the land owners but did not make payment of Rs. 10,11,50,000/- as presumed by the Assessing Officer. 6. 6) The learned CIT (A) erred in confirming the cost as per the books of account at Rs. 2,87,63,085/- against the amount of Rs. 4,01,74,285 recorded in the books of account. 7. The learned CIT (A) erred in confirming the action of the Assessing ....
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....ed income. 6. The assessee filed an appeal before the CIT(Appeal)-I Hyderabad. The CIT(A) after discussing the issues in detail dismissed the appeal filed by the assessee in ITA No. 0434/CC-6, Hyd./CIT(A)-I/05-06 dated 14th August, 2006. The assessee filed an appeal before the ITAT. During the proceeding before the ITAT, apparently the assessee filed certain additional evidence and requested the Hon'ble ITAT to admit the same. The Hon'ble ITAT 'A' Bench, Hyderabad admitted the assessee's petition for admission of additional evidence and sent back the matter to the file of the Assessing Officer with the direction to decide the issue afresh in accordance with law considering the additional evidence as well as other materials and after providing opportunity of hearing to the assessee. In pursuance of the direction of ITAT contained in IT(SS)A No. 98/Hyd/06 the Assessing Officer recomputed the income of the assessee in the assessment order dated 31.12.2008 wherein the total undisclosed income was arrived at Rs. 7,23,86,915/-. It is against this assessment order that the assessee has filed the appeal before the CIT(A). 7. The CIT(A) observed that the ITAT, Hyderabad 'A' Bench has ....
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....the presumption of the Assessing Officer is not correct. 10. The AR submitted that the area originally thought of being transferred by Sri Thimmaiah to the assessee trust was 86 acres and not Ac. 91.15 Guntas. He submitted that the said Ac. 5.15 Guntas was registered by third parties in favour of others and neither the assessee herein nor Sri Thimmaiah, the GPA holder are parties to it. The Assessing Officer is of the view that Ac. 5.23 Guntas of land was transferred to middle men in lieu of commission and, therefore, the Assessing Officer mentioned that the total area is Ac. 91.15 Guntas. He submitted that the assessee did not transfer Ac. 5.23 Guntas to anyone. Even Sri Thimmaiah was not the party to the said sale. Therefore, the land of Ac. 5.23 guntas cannot be considered as acquired by the assessee herein. Therefore, the land to be considered for the purpose of the present assessment is only Ac. 85.32 Guntas. 11. The AR further submitted that when physical measurements were taken, the land was only 70 Acres and the balance Ac. 15.32 guntas could not be located in the area. Even considering the sale consideration to be Rs. 10.0 lakhs per acre for Ac. 85.32 guntas, the tot....
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....bounced. c) Sri Thimmaiah, at that stage, on 04-06-1999 approached the mediators headed by Sri K.E. Pratap of Kurnool. The assessee refused to pay the balance of consideration to Sri Thimmaiah. It was settled by the mediators that the assessee would retain Ac. 43.20 guntas and that the assessee would execute an Agreement of Sale in favour of Sri K.E. Pratap of Kurnool for the balance of Ac. 42.12 guntas. According to the said agreement, Sri Thimmaiah and Sri K.E. Pratap would clear all the permissions necessary from Government and would not ask for any balance from out of the sale consideration. According to the said agreement, the assessee should get clear title over Ac. 43.20 guntas of land with all clearances and without any liability against the said land for the amount which was already paid. After the said agreement was entered into, the original five cheques and the mortgage deed executed in favour of Sri Thimmaiah were returned to the assessee herein. There was no activity or action by either party till the year 2005. d) On 28-08-2005, Sri Thimmaiah unilaterally filed a complaint against Sri T. Rama Rao, Managing Trustee and the Trust in the Police Station, Kurnool....
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.... AR submitted that all the later developments are the consequence of such complaint made by Sri Thimmaiah. Therefore, there is ample evidence to show that the assessee did not pay the amount, as presumed by the Assessing Officer, to Sri Thimmaiah. In View of the above, the assessee requested the Assessing Officer to summon all the concerned persons i.e. Sri Thimmaiah, Sri K.E. Pratap, M/s Eswari Projects Ltd., and all others concerned so as to enable him to come to a conclusion that the amounts were not paid. When he summoned only Sri Thimmaiah, he categorically stated that he did not receive any amount beyond Rs. 3.0 crores. A copy of the statement is also not provided to the assessee herein. 14. The AR submitted that in view of the above, it is amply clear that the assessee paid only Rs. 3.0 crores in all and did not pay any amount in addition to the same to Sri Thimmaiah or to anyone. Therefore, it is not correct for the Assessing Officer to presume that an amount of Rs. 9,11,50,000 was paid by the assessee herein. 15. The AR further submitted that the Tribunal may hold that only Rs. 3 crores was paid to Sri Thimmaiah. The Assessing Officer mentioned that an amount of Rs. ....
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....n the original passed u/s. 158BD, the Assessing Officer has considered 85 acres 32 guntas of land @ Rs. 12.25 lakhs per acre which included commission to be paid to the mediators @ Rs. 2.25 lakhs per acre. However the record reveals that in lieu of the commission to be paid in cash, the mediators Shri G. Siva Rama Krishna and Shaik Hamid Patel preferred to get 5 acres 23 guntas of land in their name / their nominees. The record also shows that that as per the sale document 85 acres 32 guntas of land was actually registered in the name of the assessee trust. This means that if the entire commission would have been paid in cash, the land conveyed to the mediators would have been registered in the name of the trust and the total land would have gone up by 5 acres 23 guntas. In any case, what was invested by the assessee was the land cost for 85 acres 32 guntas as also the commission to be paid to be mediators which was paid in the form of land. Thus, in the assessment order passed in pursuance of the direction of ITAT, the Assessing Officer has rightly considered the investment in land for 91 acre 15 guntas out of which 85 acres 32 guntas were registered in the name of the Trust, and ....
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....omplaint lodged by Sri Thimmaiah before the police authorities which cannot be considered as the basis for determining the sale consideration and accordingly erred in arriving at the cost of acquisition of the property at Rs. 10,11,50,000 the learned DR submitted that the FIR filed by Sri Thimmaiah was one of the many documents referred to by the Assessing Officer while computing the undisclosed income of the appellant and it is not the only document that the Assessing Officer has relied upon to compute the undisclosed income. It is also pertinent to note that the appellant is also relying on the same complaint filed by Shri Thimmaiah to defend his stand. Therefore, it cannot be said that the complaint lodged by Shri Thimmaiah is irrelevant and not to be relied upon. The DR submitted that reliance placed by the Assessing Officer on the FIR lodged by Shri Thimmaiah before the Police Authorities is not without basis. However, while computing the undisclosed income the Assessing Officer, apart from the complaint by Thimmaiah, has also referred to various other documents to arrive at the undisclosed income. While arriving at the cost of acquisition of the property at Rs. 10,11,50,00....
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.... on 5.9.2002, the assessee was also covered and during the search action seized material marked ASSS/RO/04 containing a document at page Nos. 88-90 was found which is an agreement of sale dated 6.2.1998 between Shri Sri Bhagwan Balasai Baba Central Trust, Kurnool as one party and Shaik Hamid Patel and Shri G. Sivarama Krishna on the other side. As per this seized material the assessee entered into an agreement of sale with respective owners represented by their GPA holder Shri M. Thimmaiah for purchase of land of 104 acres in Sy. Nos. 104, 105, 106,107, 108, 109/1 and 109/2 situated at Kondapur village, Serilingampally Mandal, R.R. District for which consideration was Rs. 12.25 lakhs per acre. During the first assessment proceedings on 28.2.2006 the Assessing Officer found that the total land is only 91 acres 15 guntas. Out of this 5 acres 23 guntas was registered by outsider in favour of Shri Hamid Patel and balance 85 acres 32 guntas was registered by the assessee. As per the books of account recorded consideration is Rs. 2,87,63,085. However, the Assessing Officer considered the information about two instances of sale of land at the relevant period in the year under considera....
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....e FIR filed by Shri Thimmaiah who happened to be the GPA holder of the land sold to the assessee. In our humble opinion, the FIR itself cannot be considered as conclusive evidence to come to a conclusion that the consideration has passed between the parties. It is a fact that the land was subjected to litigation and the assessee agreed to pay Rs. 5 crores for obtaining clearance from ULC authorities and settle the dispute. Also it is a fact that posted dated cheques were given to him. 26. A Mortgage deed also was executed wherein the details of post dated cheques given by the assessee are clearly mentioned. Copy of the mortgage deed is placed on record. If the amount of Rs. 5 crores were to be sale consideration it would have been mentioned so in the mortgage deed. It only states that Sri M. Thimmaiah has advanced Rs. 5 crores to the assessee trust. No such amount is received from him and he is not capable also. Later, Sri M. Thimmaiah returned the cheques which were in his possession and executed a declaration on 4-6-1999. A copy of the declaration is on record. As per this declaration since the assessee trust entered into an agreement of sale with Sri K.E. Pratap on 4-6-1999 f....
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....at it has no activity which can generate income and that its only source is contributions from devotees and it enjoys exemption and has no necessity to have undisclosed income. The Assessing Officer in his order stated that it is not for his consideration. When the Assessing Officer proposes to hold that the assessee has undisclosed income it is also required to state as to how the income could have been generated. When undisclosed income is to be assessed either it should be based on the assets acquired or based on the sources of income. In the assessee's case as per the documents the land of nearly 86 acres is acquired for the consideration recorded in the books of account. There is no evidence which can be relied upon to prove that it has paid more than that. Whatever being relied upon by the Assessing Officer are unproved documents and unauthenticated, more on presumptions and without any evidence. With regard to the submission that when the cheques of Rs. 5 crores is returned the question of the assessee having paid the amount does not arise the Assessing Officer states that the assessee would have made good the said payment to the land owners against the dishonoured cheques. ....
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....k period can only be done on the basis of evidence found as a result of search or requisition of books of accounts or documents and such other materials or information as are available with the assessing officer. Evidence found as a result of search is clearly relatable to Section 132 and 132A of the I.T. Act. The clause (a) of the explanation to Section 158BFA(2) postulates that assessment made under Chapter XIV-B shall be in addition to the regular assessment of each previous year included in the block period. Clause (b) of the explanation further clarified the position that the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment as income of the related block period. Clause (c) puts a ban on treating any income assessed under the "Block Assessment" so as to form part of regular assessment of any previous year included in the "Block Period". The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. It cannot be a substitute for regular assessment. CIT v. N.R. Papers and Boards Ltd., 248 ITR 526 (Gauhati) "If prior ....
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....ssessment-tribunal finding transactions disclosed in return which were subject-matter of regular assessments-transactions in question not to be considered in block assessment - income;-tax act, 1961, ss. 143, 158b." CIT Vs. Shamlal Balram Gurbani, 249 ITR 501 (Bom) "A search was conducted at the residential premises of the assessee on March 25,1996, and a notice under section 158BC of the Income-tax Act, 1961, was issued; The assessee did not file the returns for the years 1993-94, 1994-95 and 1995-96. The Assessing Officer treated the income of the three years as the income of the block period. On appeal, the Tribunal found that the assessee's income from interest, salary and rent was reflected in the audited balance-sheet of the respective assessment years of the firm and, therefore, the Tribunal deleted the addition." On appeal the Hon'ble Bombay High Court did not find any reason to interfere with the findings of facts recorded by the Tribunal. It was held: "Held dismissing the appeal, that the conclusion of the Tribunal that there was no reason for treating the said income as undisclosed income for the purposes of block assessment was based on facts. No substantial....
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....ncome" for which the assessment is to be made is defined in section 158B(b) which include money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable articles, things, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purpose of this Act and after the amendment by Finance Act, 2002 w.e.f. 1-7-1995 it includes also any expenses, deduction or allowance claimed under this Act which is to be found to be false. 31. Further, it is not enough to say that the assessee paid over and above the declared consideration because the fair market value (FMV) of the impugned asset as on date of transaction exceeds the full value of consideration declared by the assessee. It is further more necessary that the actual value of consideration in respect of assets involved is understated or in other words, shown at a lesser figure than that actually paid by the assessee. If the Revenue seeks to bring into tax any understated value of the assets, ....
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....0,11,50,000 instead of Rs. 2,87,63,085. The entire evidence has to be appreciated in a wholesome manner and even where there is documentary evidence, the same can be overlooked if there are surrounding circumstances to show that the claim of the assessee is opposed to the normal course of human thinking and even applying this principle to the instant case there are some difficulties in rejecting the assessee's plea as opposed to the normal course of human thinking, conduct and human probabilities. For this purpose, we rely on various decision as follows: 1. Order of ITAT, Delhi Special Bench in the case of Manoj Agarwal v. DCIT wherein the Tribunal held as follows: "Held, The evidence collected by the revenue authorities was not sufficient to establish their stand that the jewellery transactions carried on by Bemco were only paper transactions or bogus, and that assessee, who was one of the director of the company at the relevant time, controlled and put through these transactions different accommodation entries and earned commission income therefrom. The entire evidence has to be appreciated in a wholesome manner and even where there is documentary evidence, the same can be ....
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....nce in the instant case did not contain anything which belied the claim of assessee that though his share transaction business was only an accommodation entry business for commission, the jewellery business carried on by Bemco had not been proved to be so. Therefore, no addition could be made on account of 'commission income in the hands of the assessee by treating entire purchase of Bemco as pertaining to accommodation entry business. 2. CIT Vs. Atam Valves (P) Ltd. (332 ITR 468 (P&H) wherein held that even though the explanation of the assessee that the loose paper did not relate to payment of wages during the year in question may not be accepted, in the absence of any other material, the loose sheets by themselves were not enough to make addition as per the estimate of the assessing office and to that extent assessed by the assessing officer, was not called for and it was partly liable to set aside. 3. CIT Vs. Smt. P.K. Noorjahan (237 ITR 570) wherein held that in the instant case, the Tribunal had held that the discretion had not been properly exercised by the Income tax Officer and the Appellate Assistant Commissioner taking into account the circumstances in which the as....
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....s an evasive reply the assessing officer has to make certain estimation of the income. But the assumption should be reasonable corresponding to the material available on record. It should not be based on conjectures and surmises. In the present case, the impugned document is not duly signed document. The circumstances surrounding the case were also not strong enough to justify the rejection of assessee's plea as outrageous. On consideration of the assessee's arguments, we are not in a position to reject the same on the reason that the sale agreement dated 6.2.98 is only a Xerox copy signed by the assessee alone and not by the vendees. In our opinion, as held by the Supreme Court in the case of Moosa Madha & Azam S. Madha vs. CIT (89 ITR 65) that Photostat copies have very little evidentiary value. Being so, Xerox copies of any document cannot be itself considered as evidence for the purpose of making addition in this assessment. Further the consideration at Rs. 12.25 lakhs per acre cannot be said to have been paid as the transfer has not materialised and litigation is going on. Further the payment of Rs. 1 crore to Smt. Savitramma is also not supported by proper evidence to bring t....