AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 721
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....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 Officer in determining the undisclosed income at Rs. 7,23....
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....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 set aside the case to the Assessing Officer in view of the additional e....
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....iginally 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 total sale consideration would be Rs. 8,58,00,000. Out of the said amount, the assessee paid Rs. 2,87,....
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.... 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 II Town. An FIR dated 28.08.2005 was lodged in the District Court Kurnool by the Inspector Police, Kurnool II To....
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....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. 1.0 crore was paid to Smt. Savitramma. According to the Assessing Officer, the seized documents also reveals such making of such pa....
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....mission 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 the balance land was paid in kind to the mediators Shaik Hamid Patel and G. Sivarama Krishna. It is for this reason that in the second order pa....
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....ccordingly 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. 10,11,50,000/-, the Assessing Officer has considered the total quantum of land at 91 acres and 15 guntas @ Rs. 10 lakhs per acre which gives the acquisition pri....
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.... 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 consideration in the near vicinity, as per which one document dated 25.6.1996 shows the consideration at Rs. 10.65 lakhs per acre and another document dated 21.10.1998 ....
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....e 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 for sale of agricultural lands to an extent of Ac. 43 in Sy. No. 104/1, 104/2, 105(part) and 108, situated at Kondapur village, Serilingampally Mandal, R.R. District, in which he al....
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....essing 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. This is only a presumption and not supported with any evidence. It is settled law that determination of undisclosed income could be determined only on the basis of' evidence and not o....
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....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 to the date of search, the assessee had disclosed the particulars of income or expenditure either in the return or in the books of account or in the course of proceedings to the Assessing Officer or....
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....58b." 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 question of law arose." CIT v. Vinod Danchand Ghodawat, 247 ITR 448 (Bom) "Where the value of the gold and silver articles. and jewellery had been disclosed in the assessee's wealthtax return which was accepted by t....
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....ansactions, 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, it must show not only that the FMV of the assets as on the date of transfer exceeds the full value of consideration declared by the assessee but also that consideration has been understated and the assessee has actually paid more than....
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....e 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 overlooked if there are surrounding circumstances to show that the claim of the assessee is opposed to the normal course of human thinking and conduct or human probabilities. Even applying this principle to the instant case, there was some difficul....
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....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 assessee was placed and the Tribunal had found that the investments could not be treated as income of the assessee. The High Court had agreed with the said view of the Tribunal. There was no error in the findings recorded by the Tribunal. Section 69 could ....
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....d 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 the same into taxation in the block assessment. In our opinion, the unsigned document is a dumb document and cannot be relied upon for making addition in this case. The department cannot draw inference on the basis of suspicion conjecture and surmise. Suspicion,....