TaxTMI 
TaxTMI 
2016 (8) TMI 1282
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.... the AO on account of unaccounted and undisclosed investment u/s 69B of the Act by not considering photocopy of agreement to sell as an evidence when subsequently some of the cheques mentioned in the said agreement were found debited in the bank statement of Sh. Mohinder Singh Bajwa (Purchaser). a. Whether the ld. CIT(A) is right to hold that the fair market value of asset as on date of transaction exceeds full value of consideration declared by the assessee then it is for the AO to prove that the value declared by the assessee is understated. Whereas three cheques dated 10.05.2007 No.148467 Rs. 15 lacs No.148468 Rs. 15 lacs, No.148469 Rs. 10 lacs as mentioned in the page 2 of the said photocopy of agreement have been found debited in bank account of Sh.Mohinder Singh Bajwa, bank statement of which were obtained u/s 133(6) of the I.T. Act, 1961 from the Citizen Urban Cooperative Bank Limited, Mithapur Road, Jalandhar. This copy of agreement is very valid evidence to prove that the value declared by the assessee is understated. b. Whether the ld. CIT(A) is right to hold that the AO is entirely dependent upon the documents found and seized not in the case of the app....
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....f Rs. 10,04,250/- on 28.02.2013. The assessee filed reply to the questionnaire along with the required detail and documents. Assessment u/s 153A r.w.s. 143(3) of the Act was framed on 24.03.2014, at Rs. 2,51,52,675/-, as against the returned income of Rs. 10,04,250/- . Thus, the AO made addition of Rs. 2,41,48,425/- on different accounts. 4. The ld. CIT(A), partly allowed the appeal of the assessee. 5. Aggrieved, now the department is in appeal before this Bench against the order of the ld. CIT(A). 5. The ld. DR relied on the order of the Assessing Officer. However, as regards the first issue relating to deletion of addition of Rs. 2,27,00,000/-, he submitted that the addition was made by the AO on account of unaccounted and undisclosed investment u/s 69B of the I.T. Act, by considering the photocopy of agreement to sell as an evidence, when some of the cheques mentioned in the said agreement were found debited in the bank statement of Sh. Mohinder Singh Bajwa (Purchaser). He further submitted that the ld. CIT(A) is not justified in deleting the addition. 6. The ld. counsel for the assessee, on the other hand, strongly supported the impugned order. He contended that the....
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....Act, 1872. 10. However the same test regarding admissibility of evidence could not be extended in the case of every other buyer of land in the same village or similarly located land. The presumption u/s 132 (4A) is to be invoked in the case of M/s PISCO Ltd. from whom the document or valuables are found and seized and even in the said case such a presumption is rebuttable. However, it is clear that no evidence whatsoever has been found from the appellant during the course of search operation which could even suggest that there has been unaccounted investment in the purchase of land to the tune of Rs. 2.27 Crore. The presumption made by the Assessing Officer on the basis of the seized documents in the case of M/s PISCO Ltd. in respect of the impugned deal recorded in the said document could definitely be made but same presumption can not be extended to in the case of every other consequentiaI sale of land by "M/s PISCO Ltd. The Assessing Officer has clearly observed in the assessment year that the sale consideration as recorded in the seized copy of agreement of sale has been taken for the purposes of comparative rate at village Birring only and the land purchased by the ap....
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....on could be made." 12. Further the decision of Flon'ble Jurisdictional Bench of ITAT in the case of Neena Syal vs Assistant Commissioner of Income Tax 69 (Chd-Trib) 516 is also on similar issue as is clear from following head note: - "Search and seizure-Block assessment-Computation of undisclosed income-Addition of premium allegedly paid over and above the cost of plot mentioned in the registered deed- Seized documents on the basis of which the impugned addition were made not found at the residence of the assessee but at the residence of a third party- Same have not been specifically confronted to the assessee before making the addition-Explanation given by assessee not controverted by AO-AO has not given any reason for either not accepting the explanation of the assessee or for finding the explanation as unsatisfactory-Thus, AO did not comply with the conditions stipulated in s. 69-Addition deleted-Remand of the case not called for-Power of remand under s. 254 is required to be exercised in a disciplined and responsible manner-Same cannot be invoked in a case where AO has not cared to follow the basic provisions of s. 69/69B." 13. The decision of the jur....
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.... be linked to the assessee conclusively in the impugned assessment year. A mere 'Presumption that sale deed is registered in the impugned assessment year and therefore, cash payment is also made in the same year is not enough in the absence of any link in the list of payment. We concur with the view of the Ld. CIT(A) and the cases relied upon by him that presumption is available against the person from whose possession a seizure is made but the same cannot be extended to others. Accordingly, the Ld. CIT(A) has rightly deleted the addition made by the Assessing Officer and we find no infirmity in his order. Thus all the grounds of the revenue are dismissed." 14. The issue of alleged understatement of sale consideration in the registration deed has to be proved by the revenue and the same can be done by leading positive evidence either in the form of some documents found during the course of search or otherwise which could prove that consideration over and above the registration deed had been passed on from buyer to seller. The evidence relied upon by the Assessing Officer in the instant case represents a photocopy of an agreement to sell with regard to a deed between tw....
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....ce it is establishing by the Revenue that the consideration for the transfer has been understated or, to put it differently the consideration actually received by the assessee is more than what is declared or disclosed by him, section 52(2) is immediately attracted, subject of course to the fulfillment of the condition of 15% or more difference, and the Revenue is then not required to show what is the precise extent of the understatement or in other words, what is the consideration actually received by the assessee. That would in most cases be difficult, if not impossible, to show and hence sub-section (2) relieves the Revenue of all burden of proof regarding the extent of understatement or concealment and provides a statutory measure of the consideration received in respect of the transfer. It does not create any fictional receipt. It does not deem as receipt something which is not in fact received. It merely provides a statutory best judgment assessment of the consideration actually received by the assessee and brings to tax capital gains on the footing that the fair market value of the capital asset represents the actual consideration received by the assessee as against the cons....
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....nts shown in the sale deed. The said judgment has been given in the context of admission of oral evidence as against the terms and condition recorded in the registered sale deed. The Hon'ble Court held as under:- "There is well-known principle that no oral evidence is admissible once the document contains all the terms and conditions. Secs. 91 and 92 of the Indian Evidence Act, 1872 (for brevity 'the 1872 Act') incorporate the aforesaid principle. According to section 91 when terms of a contract, grants or other disposition of property have been reduced to the form of a document then no evidence is permissible to be given in proof of any such terms of such grant or disposition of the property except the document itself or the secondary evidence thereof. According to section 92 of the 1872 Act once the document is tendered in evidence and proved as per the requirements of section 91 then no evidence of any oral agreement or statement would be admissible as between the parties to any such instrument for the purposes of contradicting, varying, adding to or subtracting from its terms. According to illustration 'b' to section 92 if there is an absolute agree....
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....O. vs. Shri Mohinder Singh reported in (2008)ITR 118 (ITAT, Chd), held:- "Addition made under capital gain on the ground that income by way of sale received by the assessee was more than what it was shown in the deed of registration on the basis of report of investigation wing of the department based on a photocopy of an agreement disowned by the assessee. No evidence on record to show that assessee had received more than what was disclosed on the registered instrument, the burden for which is on revenue. No addition can be made on the basis of the photocopy of a document when the transaction is separately evidenced by a registered sale deed." 20. The Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh in the case of I.T.O. v. Shri Manjit Singh reported in (2010) 128 TTJ (Chd)(UO) 82, held:- "In the absence of any evidence to show that the assessee had received any consideration over and above what is stated in the sale deed, addition could not be made by disregarding the 'full value of the consideration' declared by the assessee simply because another portion of land has been sold by the assessee along with his brother at a higher....
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....tion meant only the actual value received by the assessee. However the market value may also be taken in place of full value of the consideration only in the event of the consideration as per registered document being less than the value fixed by revenue authorities for purpose of collection of stamp duty. It means that the full value of consideration as evidenced by the registered document can be constituted for the value meant for the purposes of stamp duty as per section 50c. This section has been introduced by Finance Act 2002 , w.e.f. 1.4.2003 and has been titled "special provision for full value of consideration in certain cases" which means that the full value of consideration can be substituted only if the conditions as stipulated in the provisions of section 50C are fulfilled. Apart from the provisions of section 50C, the sale consideration as reflected in the registered document can be substituted by a higher figure if there is evidence on record to suggest that amount over and above the one recorded in the registered documents had passed on from the buyer to the seller." 23. The Hon'ble High Court of Delhi in the case of Commissioner of Income Tax Vs. Dinesh....
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....but computation of the value of the asset on the basis of certain rules prescribed by the statute. Sec. 69B does not permit an inference to be drawn from the circumstances surrounding the transaction that the purchaser of the property must have paid more than what was actually recorded in his books of account for the simple reason that such an inference could be very subjective and could involve the dangerous consequence of a al or fictional income being brought to tax contrary to the strict visions of Article 265 of the Constitution of India and Entry 82 in List 1 of the seventh schedule thereto which deals with "Taxes on income other than agricultural income." For the purposes of Section 69B it is the burden of the Assessing Officer to first prove that there was understatement of the consideration (investment) in the books of account. Once that undervaluation is established as a matter of fact, the Assessing Officer, in the absence of any satisfactory explanation from the assessee as to the source of the undisclosed portion of the investment, can proceed to adopt some dependable or reliable yardstick with which to measure the extent of understatement of the inve....
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.... the negative, in favour of the assessee and against the CIT. Conclusion:- Section 69B cannot be invoked on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account." vii) The Hon'ble High Court of Punjab & Haryana in the case of Commissioner of Income Tax Vs. Harpal Singh reported in (2008) 3 DTR 254, held:- "Tribunal has recorded a pure finding of fact after taking into consideration the evidence/material available on the record to the effect that before the Assessing Officer there was no material or evidence to conclude that the assessee had paid a consideration and above the amount mentioned in the registered sale deed, i.e. @ Rs. 2.30 lacs per acre and the addition made by him was without any basis. The only evidence/material available before the Assessing Officer was the so called statement of 'S', which was recorded by the Asstt. Director of IT (Inv.), on 18th Sept., 2001 in which he had deposed that he had sold the land in question @ Rs. 4 lacs per acre, and apart from the amount mentioned in the registered sale deed, he had received....
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....ed a total consideration of Rs. 34.35 lakhs and that the sum 4.10 lakhs reflected in the sale deed had been received by him way of a demand draft and the balance in cash. Rajarathinam however retracted from his statement on 8th Jan., 1999 and filed an affidavit deposing that the sale price was Rs. 4.10 lakhs only and that his statements earlier given to the authorities were incorrect. In a subsequent statement recorded on 20th Nov., 2000 Rajarathinam again reverted to his earlier portion and deposed that the sale price was Rs. 34.85 lakhs. The AO concluded that the sale consideration was actually Rs. 34.85 lakhs and not Rs. 4.10 lakhs as had been recited in the sale deed. He accordingly adopted the aforesaid enhanced figure for the purpose of assessment and made an addition of Rs. 3,75,005 as undisclosed income for the broken period Ist April, 1998 to 8th Dec., 1998. The matter was thereafter taken to the CIT(A), who after examining the entire matter, observed that the statements given by Rajarathinam could not be relied upon more particularly as the floor price fixed by the authorities for such property was much lower than the value which would result if the sale deed had been reg....
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....Division Bench had merely plagiarized substantial portions from the order of the CIT and Tribunal in arriving at its conclusion and no independent assessment on the questions of law that arose for consideration, had been made. He also pointed out that several questions of law pertaining to the implications of the statements and the counter statements made by Rajarathinam did arise in the case and the matter had not been dealt with by the High Court in that perspective and it was therefore appropriate that the matter be remitted for fresh decision. The learned counsel representing the assessee respondent has however pointed out that the CIT in particular, had after a very elaborate discussion of the matter, concluded on a finding of fact with regard to the nature of the transaction and this view had been accepted by the Tribunal as well, has accordingly submitted that no substantial questions of law have been raised in this matter and the issues raised were purely questions of fact. We have heard the learned counsel for the parties and have gone through the record. It is true that the Division Bench of the High Court has borrowed extensively from the orders of the Tribunal ....
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.... crore per acre = 2.50 lakhs per marla, as against that of Rs. 11.05 crore per acre, as mentioned in the agreement seized. xv) Action on the basis of the agreement seized was warranted in the cases of the parties thereto, due to the presumption u/s 132(4A) of the Act, which presumption, noticeably, is rebuttable. xvi) No such action can be taken in the case of a party whose transaction was with regard to land contiguous or similarly situated to the land mentioned in the agreement seized. xvii) No action is called for in a case of transaction consequential to the transaction mentioned in the agreement seized. xviii) There is no evidence of unaccounted investment by the assessee. xix) The AO himself clarified to the assessee that the sale consideration in the agreement seized was taken for the purpose of comparative rate only. xx) The land purchased by the assessee was different from that mentioned in the agreement seized. xxi) It is the burden of the department to prove under-statement of sale consideration. xxii) This burden has not been discharged. xxiii) There is no positive evidence against the asse....
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....he same time had debited bank interest to the tune of Rs. 22.19 lacs. The Assessing Officer required the assessee to explain as to how the interest bearing funds could be said to be used for the purposes of business especially in face of interest free loans to friends/sister concerns highlighted above. No explanation on the said issue before the Assessing Officer as recorded in the assessment year at para 5.2. The Assessing Officer therefore proceeded to disallow 12% on the entire amount of advances leading to disallowance of Rs. 14,00,000/-. 26. During the course of appellate proceedings the AR of the appellant submitted his arguments on the issue as under:- "Sir, it is submitted that during the year under consideration assessee has made certain advances to the relative persons as sundry debtors, sister concerns of the assesee and also to the outsider to the tune of Rs. 1,16,59,000/- listed in para 5 at page no. 12 of the assessment order and on this outstanding amount of Rs. 1,16,59,000/- as on 31.03.2009 interest @ 12% to the tune of Rs. 14,00,000/- has been disallowed. Sir, it is submitted that while framing assessment the Ld. Assessing Officer stated....
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.... Total 2,84,34,305 Total 1,16,59,000 Sir, it is submitted that it has been held by the various Hon'ble courts that if the assessee have sufficient interest free funds available with him to meet its interest free investment and at the same time it ad raised a loan then it can be presumed that investment were made on the interest free funds. In support of our contention reliance is being placed upon the following decisions: CIT Vs. Reliance Utilities & Power Ltd. (2009) 221 CTR 435 wherein the hon'ble high Court of Bombay has held that "both in the order of the CIT(A) as also the tribunal, a clear finding is recorded that assessee had interest free funds of its own which has been generated in the course of the year commencing on 1.4.1999. apart from that in the terms of the balance sheet there was a further availability of Rs. 398.19 crores including Rs. 180 crores of share capital. In this context, the finding of facts recorded by CIT(A) and tribunal as to availability of interest free funds really cannot be faulted. If there be interest free funds available with assessee which is sufficient to meet its investment and a....
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....given are enclosed herewith. This shows that the assessee has used more interest free funds then funds being used by the family members. Hence, disallowance of Rs. 14,0,000/- is totally unjustified. Hence, we pray your goodself to give us relief." 28. The perusal of the calculation chart given by the appellant shows that even the amounts of capital of Sh. Kulwinder Singh in the business has been taken to be part of the calculation, meaning thereby the same had also been treated as funds available free of interest. I don't agree with the view of the appellant on the issues as the fund deployed by the assessee as capital which are meant to earn profits and separate interest on the same to decide the issue of disallowance could not be done. Therefore, no interest is payable to the appellant for deploying its capital in its own business which means the claim interest payable at Rs. 24,97,899/- goes out of calculation. 29. I have considered the facts of the case, the basis of addition made by the Assessing Officer and the arguments of the AR on the issue. It is seen that the entire set of circumstances show that the appellant has avoided to give data from ....