TaxTMI 
TaxTMI 
2019 (4) TMI 878
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....6/Viz/2018,A.Y.2014-15 2. In these appeals, facts are identical in both the appeals for the A.Y. 2014-15. Hence the facts are extracted from the appeal of Smt. Bhumala Uma Rani. The assessee Bhumala Uma Rani is wife of Shri B.Mallikarjuna Reddy. Shri Bhumala Venkata Narasimha Reddy and Shri Bhumala Mallikarjuna Reddy are brothers. Shri Bhumala Mallikarjuna Reddy and Shri Bhumala Venkata Narsimha Reddy were the owners of land admeasuring Ac.1.42 cents situated at Nunna village, Vijayawada which is adjoining land of Siddartha Academy of General & Technical Education (in short 'Siddartha Academy'). Shri Mallikarjuna Reddy has gifted his share of 0.71 cents to Smt. B.Uma Rani, his wife. 2.1. The assessee is an individual, engaged in the business of trading in electrical appliances and the proprietrix of M/s Sri Sai Harsha Agencies. For the A.Y.2014-15 she did not file the return of income. A search u/s 132 was carried out in the case of Siddhartha Academy on 07.05.2014 and during the course of search, certain incriminating material was found in the form of loose sheets pertaining to purchase of vacant land of Ac.1.42 cents situated at Nunna by Siddartha Academy in January 2014 for a....
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....-, 50% of the sale consideration as per the loose sheets as capital gains and allowed indexed cost of acquisition of Rs. 1,87,800/- and exemption u/s 54EC of Rs. 24,67,505/- and taxed the balance amount of Rs. 3,49,28,891/- in the hands of the assessee. 2.2. Similarly in the case of Shri B.V.Narasimha Reddy, the AO assessed 50% share of Rs. 7,49,05,500/- for an amount of Rs. 3,72,75,000/- in his hands after allowing deduction u/s 54F and indexed cost of acquisition assessed a sum of Rs. 3,49,90,588/- to tax in his hands. 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) deleted the addition made by the AO, observing that both the buyer and seller have denied exchange of cash in the sale transaction. Since there was no other evidence except the loose sheets, the Ld.CIT(A) viewed that there is no case for making the addition in the hands of the assessee. Accordingly, the Ld.CIT(A) followed the order of this Tribunal on similar facts in the case of Sri Venkatarama Sai Developers in I.T.A. No.453/Viz/2012 dated 06.11.2015 and deleted the addition made by the AO. 4. Against the order of the Ld.CIT(A), the revenue has filed appeal bef....
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....the premises of Siddhartha Academy. During the course of search, loose sheets were found indicating purchase of land of Ac 1.42 cents adjoining Siddhartha Academy from Smt. B.Uma Rani and Shri B.V.Narasimha Reddy for a consideration of Rs. 7,49,05,500/- @Rs.5,25,00,000/- per acre. As per the loose sheets found during the course of search, it is observed that the buyer has made the payment of Rs. 49,70,000/- by cheque and the balance amount by cash. The loose sheets were found in the premises of Siddhartha Academy, therefore the presumption u/s 292C is available to the department against Siddhartha Academy, where the material was found. In the instant case though search operations were conducted in the assessee's premises also no evidence was found regarding the cash payment to the assessee. Hence the evidence found in the premises of Siddhartha Academy cannot be imposed on assessee without any corroborative evidence. A statement was recorded from both the buyers and the sellers, both of them have accepted that the payment was only Rs. 49,70,000/- for purchase of 1.42 acres of land from Smt.B.Uma Rani and Shri B.Narasimha Reddy. Both Siddhartha Academy as well as the assessees have ....
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....istered in the Office of the Sub-Registrar clearly shows that the consideration of Rs. 48 lakhs was fixed for the property and which was exchanged through proper banking channel. It was not a case of revenue that the value shown in the sale deed is not the real value of the property because the value declared in the sale deed is the market value of the property fixed by the State Government authorities for determining the stamp duty payable to the Government for registering the properties and also which was accepted by the registering authority. Further, there is no evidence to show that there is under valuation of property and section 50C of the Act is invoked while completing the assessment. The A.O. merely acted upon the statement given by the third party, which was totally denied by the partners of the assessee firm. It was a settled position of law that unless the statement is tested under the cross examination, the same cannot be considered as evidence agains t the assessee. The A.O. used the admission of partners of vendee firm made in the statement u/s 132(4) of the Act in their case, against the assessee. But, the A.O. failed to note that admission of other parties cannot ....
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....ge held that there is no need of direct or primary evidence, even if there is a circumstantial evidence, based on circumstantial evidence, the A.O. come to the conclusion and decide the issue accordingly. We do not agree with the stand taken by the CIT(A), for the simple reason that to tax any particular receipt, primary evidence is very much necessary and unless there is a primary evidence, circumstantial evidence cannot be considered as a conclusive evidence against any person to tax any particular receipt. Circumstantial evidence plays an important role in income tax proceedings, where the A.O. needs to estimate the income based on some evidence available for part of the year, then remaining period estimation can be made based on evidence available. But, payment/receipt of on money is purely a factual issue which cannot be decided based on circumstantial evidence. 17. Now coming to the case laws relied upon by the assessee counsel, the assessee's counsel at the time of hearing relied upon plethora of case laws in support of his contentions. 18. The A.R. relied upon ITAT Hyderabad 'A' Bench decision in the case of Smt. K.V. Lakshmi Savitri Devi Vs. ACIT (2012) 148....
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....he seized material found during the course of search and the statement recorded is some piece of evidence to make the addition. The A0 has to establish the link between the seized material and other books of account to the assessee. The seized material and statement of CRK cannot be conclusive evidence to make this addition. The entire case herein is depending upon the rule of evidence. There is no conclusive presumption to say that actual consideration passed on between the parties is actually Rs. 165 lakhs. The assessee as well as her brother stated in their respective statements that the consideration passed between the parties is only Rs. 65 lakhs. In spite of this the AO proceeded to conclude that the seized material is conclusively reflecting the payment of consideration at Rs. 165 lakhs. The Department herein is required to establish the nexus of the seized material to the assessee. As stated earlier there is no date and name of the assessee. The allegation of the Department is that the seized material denotes the payment made by the assessee to the purchaser for purchase of the property. However, no such narration or name of the assessee was found in the seized material. Th....
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....er: "We are of the view that the Tribunal has rightly held that the registered document dt. 21.8.2006 under which the respondent purchased the above property showed that only Rs. 65.00 lakhs was paid to the vendor by the respondent; that there was no evidence to show that the respondent had paid Rs. 1.00 crore in cash also to the vendor; that no presumption of such payment of R..1.00 crore in cash can be drawn on the basis of an entry found in a diary/loose sheet in the premises of C. Radha Krishna Kumar which is not in the respondent's handwriting and which did not contain the name of the respondent or any date of payment or the name of the person who made the payment. It rightly held that the Revenue failed to establish the nexus of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises which cannot take the place of proof We also agree with the Tribunal that the assessing officer did not conduct any independent enquiry relating to the value of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden." 20. T....
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....ssee has also raised serious allegation regarding the seizure of the impugned document and filed affidavit before DDIT (Inv.) asserting that the said document was planted by an officer of the department also named by the assessee in the affidavit. However, such allegation of the assessee has not at all been enquired into and has been met with complete silence by the department. From the materials on record, it is very clear that the AO has failed to lay his hands on any credible evidence to establish the fact that the assessee has purchased the property for a consideration of Rs. 1,68,00,000/- as mentioned in the photo copy of sale agreement seized in course of search and seizure operation. The assessee has produced before the AO registered sale deeds in support of its claim that they had purchased the property for a consideration of Rs. 23.50 lakhs. When the AO alleges that the assessee has paid more than what has been declared in the registered sale deed because the fair market value of the asset as on the 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. In t....
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....rket value of the property. It is also pertinent to mention here that the assessee had filed his return f income for the assessment years under dispute much prior to the date of search declaring the purchase of land in question at the consideration mentioned in the registered sale deeds, so far as the AO's observations on the loose sheets recovered from the residence of Smt. Nailni Devi are concerned, the CIT (A) after duly examining them has given a conclusive finding that the assessee's name has no where been mentioned in those documents nor the amount of Rs. 109.48 lakhs represents the expenditure incurred by Smt Nalini Devi. However, the amount was found to be the summary of the balance of various accounts operated by the family members of Smt. Nalini Devi. We find that the CIT (A) in his elaborate and well reasoned order has dealt with all these aspects and came to a finding on fact that the AO has made the addition purely on conjectures and surmises and not on the basis of any material or evidence brought on record. On examining the facts and materials before us, we are of the view that the finding arrived by the CIT (A) is just and proper and in accordance with the p....
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....r(s). We feel that quoting from an order of some authority particularly a specialized one cannot per se be faulted as this procedure can often help in making for brevity and precision, but we agree with Mr. Vahanvati to the extent that any "borrowed words" used in a judgement must be acknowledged as such in any appropriate manner as a courtesy to the true author(s). Be that as it may, we are of the opinion that the three questions reproduced above can, in no way, be called substantial questions of law. The fact as to the actual sale price of the property, the implication of the contradictory statements made by Rajarathinam or whether reliance could be placed on the loose sheets recovered in the course of the raid are all question of fact. We therefore find no infirmity in the order of the High Court. Accordingly, we dismiss the appeal." 24. Considering the total facts and circumstances of the case and also applying the ratios of the judgements cited above, we are of the opinion that the A.O. is not correct in coming to the conclusion that the on money is exchanged between the parties based on a loose sheet found in the premises of a third person and also admission by a third pers....