AI Drafter 
TaxTMI 
TaxTMI 
2018 (6) TMI 217
X X X X Extracts X X X X
X X X X Extracts X X X X
....am dated 27.12.2016 for the assessment year 2008.09. 2. Search & seizure operations u/s 132 of the Income Tax Act, 1961 (hereinafter called as 'the Act') were conducted in the case of Sai Lakshmi Township Private Limited (STPL in short), Visakhapatnam on 22.8.2008 and simultaneously, survey operations were also conducted in the office premises of the above company. During the course of search and seizure operations, the Income Tax Department found that, the assessee along with 11 others have invested in purchase of lands to the extent of 6.64 acres in Annavaram village through Mr. Y. Joji Reddy for the purpose of developing a lay out in association with Sri N. Suryanarayana Reddy, Managing Director of M/s. Sai Lakshmi Township Pvt. Ltd., Visakhapatnam during the F.Y.2007-08. The Assessing Officer(A.O.) has issued the notice u/s 148 of the Act and in response to which, the assessee filed the return of income admitting the total income of Rs. 1,04,200/-. As discussed earlier, the assessee along with 11 others have purchased the land admeasuring 6.64 acres located at Survey No.38/2 (4.64 acres) and 2 acres in Survey No.26/2 from Sri Y. Joji Reddy, being GPA holder of Shri K....
X X X X Extracts X X X X
X X X X Extracts X X X X
....advance of Rs. 30 lakhs to the vendors. Thereafter he had purchased the said 2.00 acres of land by sale cum General Power Attorney agreement (GPA) dated 22/08/2007 for consideration of Rs. 5.00 lacs which works out Rs. 2.50 lacs per acre. According to the AO, though Mr.Joji Reddy got registered the lands @Rs.2.50 lacs per acre, he had paid much more consideration as agreed by him with the land owners. Since the ultimate recorded sale consideration of Rs. 26.56 lacs was less than the consideration entered in to between the vendors and Joji Reddy the A.O. issued show cause notice to the assessee and directed him to explain as to why the cost of acquisition of the said land of 6.64 acres should not be treated at Rs. 32.50 lakhs per acre and assess the difference amount as unexplained investment in the hands of the assessee. In response to the show cause notice, the assessees filed reply stating that they were not aware of the seized document marked as Annexure A/SLT/3/39 and they do not have any knowledge of the agreement reached between Shri Kantimohanti Surya Prakasa Rao and 6 others and Mr. Y. Joji Reddy, and also the agreement of Smt.Annapurnamma. The assessees stated in their exp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee. 5. Aggrieved by the order of the CIT(A), the assessee is in appeal before this Tribunal. The assessee has filed 13 grounds both on validity of the assessment made u/s 147 of the Act as well as on merits along with appeal Memo. Subsequently, the assessee revised the grounds of appeal and filed concise grounds. In concise grounds also the assessee challenged the validity of issue of notice u/s 147 of the Act and the assessment made u/s 147 r.w.s. 143(3) as well as on merits. 6. During the appeal hearing, the Ld. A.R. argued that during the course of search u/s 132 of the Act, an agreement stated to have been entered into between Mr. Y. Joji Reddy and Shri Kantimohanti Surya Prakasa Rao and others was found and seized by the Income Tax Department. As per the agreement, Mr. Y. Joji Reddy, the vendee agreed to purchase the land of 21.43 acres in survey No.38/2, 43/8 and 5/2 from Shri Kantimohanti Surya Prakasa Rao, Kantimohanti Bala Krishna Patro, Kantimohanti Jaganmohana Rao, Kantimohanti A. Patro, Kantimohanti Ravindra and Baggam Venkata Appala Murali SanjeevaRao. There was no signature of Mr. Y. Joji Reddy who is supposed to be the vendee and the agreement was signed by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9 (SC) and the decision of Hon'ble Supreme Court in the case of CIT Vs. Daulat Ram Rawat Maulla 87 ITR 349 ad Laxmani Mewal Das 103 ITR 437. 7. On the other hand, the Ld. D.R. relied on the orders of the lower authorities and argued that Mr. Y. Joji Reddy has entered into an agreement for purchase of land with the original owners Shri Kantimohanti Surya Prakasa Rao and 6 others for an agreed consideration of Rs. 32,50,000./- and got it registered for 4.64 acres out of 21.43 acres by sale-cum-GPA agreement dated 17.7.2007 for a consideration of Rs. 11,60,000/-. Similarly, he had entered into an agreement with Smt. P. Annapurnamma for purchase of land for an agreed price of Rs. 30 lakhs per acre in survey No.26/2 and paid advance of Rs. 30 lakhs and got it registered by Sale-cum-General Power of Attorney for a consideration of Rs. 5 lakhs on 22.8.2007. Since Mr. Y. Joji Reddy had entered into an agreement for purchase of land at Rs. 32,50,000/-, and Rs. 30.00 lacs per acre with original owners and has paid a consideration over and above the registered sale cum GPA dated 22.8.2007 and 17.7.2007, there was no case for selling the land below the agreed price in agreement with the ori....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r acre. Perusal of the seized document bearing No.A/SLT/3/39 (Page Nos.85 to 87) shows that there was no mention or whisper with regard to the assessees and there was no direct connection or nexus with the agreement. Agreement was written and signed by the vendors Shri Kantimohanti Surya Prakasa Rao and 6 others but not by the vendee or by the assessees. Therefore, the agreement dated 21.6.2007 marked as A/SLT/3/39 (Page Nos.87 to 85) cannot be held to be a valid agreement. As argued by the Ld. A.R., since the document does not bear the signature of Mr. Y. Joji Reddy, who sold the land to the assessee cannot be held to be valid document in the absence of acceptance from the vendee. Similarly, in the statement recorded u/s 132(4) of the Act Mr. Y. Joji Reddy though stated that he had purchased the land for a consideration of Rs. 25 lakhs per acre on average, but there was no mention of the assessees with regard to the sale consideration received from the purchasers. There is no other evidence or material available in the seized document, as per the assessment order or the Ld.CIT(A)'s order to show that the assessees have paid the consideration over and above the sale consideration r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case of the assessees found during the course of search in the premises of M/s. Sai Lakshmi Township Pvt. Ltd. Hon'ble High Court of Andhra Pradesh in the case of CIT Vs. Naresh Kumar Agarwal 369 ITR 171 (A.P.) held that in the absence of any incriminating material etc..found from the premises of the assessee during the course of search, statement of assessee recorded u/s 132(4) of the Act may not have any evidentiary value. As evidenced from the record, the impugned document dated 21.6.2007 seized by the Income Tax Department does not bear the signature of the assessees and their names were also not recorded in the document. Hence, in the absence of mention of the assesses in the said document, the agreement dated 21.6.2007 has no relevance in the assessees case. There must be material/information available to the A.O. to hold that income has escaped assessment. Mere suspicion, presumption, surmises are not sufficient reasons to reopen the assessment. In the instant case, neither there was any information nor there was a material available to the A.O. to form a belief to hold that there was an escapement of income in the hands of the assesses. Therefore, we do not see any valid re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 147 of the Act of 1961, would not lead to the conclusion that action can now be taken for reopening assessment even if the information is wholly vague, indefinite, far-fetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence." Hon'ble Supreme court in the case of Income Tax officer.v.Chintan Jadavbhai Patel, [2018] 91 taxmann.com 426 (SC), dismissed the SLP filed by the revenue against High Court ruling that in absence of any tangible material available to prima facie show that assessee had received any money in cash on account of sale consideration of land, re-opening notice merely on basis of one Sauda Chitthi seized from third party but not acted upon, was unjustified. The A.O. has recorded the statement from the assessee on 17.9.2008 and confronted the evidence found by the department i.e. Annexure A/SLT/3/39 agreement for purchase of land at Rs. 32.50 lakhs. The assessee has denied having the knowledge of the above document. The assessee also stated that they have purchased the land for a consideration of Rs. 4 lakhs per acre but not paid any excess amount over and above the registered sale deed. The ....