TaxTMI 
TaxTMI 
2025 (12) TMI 916
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....ing the appeal is due to scrutiny time barring workload. After considering the affidavit filed by the revenue and also hearing both the parties, we find that there is a reasonable cause for the revenue in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit the appeal filed by the revenue for adjudication. 2. The facts, as emanating from the record, are that the assessee is an individual engaged in the business of real estate development and property letting, and has also derived income from salary during the year under consideration. For the A.Y.2020-21, the assessee filed his return of income u/s. 139(1) of the Act on 04.12.2020, declaring a total income of Rs. 1,08,29,030/-. 3. A search and seizure operation u/s. 132 of the Act was conducted in the case of the Kallal Group on 11.03.2021. In the course of the said action, the office premises of M/s.Sarnith Enterprises Private Limited were also subjected to search, resulting in the seizure of certain books of account, loose sheets and documents. The statement of Shri Ganesan Saravanakumar, Director of the said company, was r....
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....that pages 01 to 22 comprised a registered sale deed executed between the assessee, Shri V.P.Jaya Pradeep (purchaser), and Shri M.V.Gnanaguru and Smt.M.V.Lavanya Gnanaguru (sellers) for a stated consideration of Rs. 1,11,44,800/-. Pages 23 to 26, however, contained handwritten notings purporting to represent computation of payments relating to the purchase of "T-land," admeasuring 15 acres. 7. In his statement recorded u/s.132(4) of the Act on 11.03.2021, Shri Ganesan Saravanakumar deposed that pages 01 to 22 represented the registered sale deed pertaining to land measuring 13.851/2 acres (Document No. 17330/2019) situated in Survey Nos. 201/1B, 210/1, 201/1, 212/4A, 212/5A, 212/5B, 212/2, 201/1A2 and 201/1A2 of Rackiyapalam Village, Tirupur, purchased by the assessee from the aforesaid vendors. 8. With respect to pages 23 to 26, he further stated that the handwriting on the loose sheets was that of one Shri G.Gnanasekhar, a retired PWD Executive Engineer who assisted them in registration related matters. He stated that the entries recorded under the caption "cash" represented cash payments made over and above the registered sale consideration of Rs. 1,11,44,800/-. As per his....
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....ation contained in the seized documents pertained to him and was material for determining his total income. The AO further noted that two statements of Shri Ganesan Saravanakumar were recorded u/s. 132(4) of the Act, wherein he had, in both statements, admitted the receipt and payment of on money in relation to the transaction. Thus, according to the AO, the Revenue was in possession of multiple evidence indicating the payment of on- money by the assessee to the vendors. 13. The AO disregarded the retraction statement subsequently made by Shri Ganesan Saravanakumar, holding that the addition was founded on seized documentary material and was not based solely on the statements. The AO opined that the retraction dated 01.11.2021 was influenced by the involvement of other parties including the assessee, who, according to the AO, had a political background, and that political pressure and coercion could have prompted the retraction. The AO further observed that the retraction was furnished after an inordinate delay of seven months without any satisfactory explanation, whereas any denial or retraction of a statement recorded u/s. 132(4) of the Act ought to be made within a reasonable....
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....ersed with other brokers and landowners regarding negotiations, and that he habitually recorded the details of deals, sale prices, and purchase prices in his notebook. He further stated that he recorded month- wise receipts and payments for reference and to compute his commission. He clarified that high-value entries pertained to land transactions of his clients communicated to him telephonically. Thus, according to the AO, the authorship of the notebook and its connection to the land dealings stood established. 17. The AO concluded that Shri G.Saravanakumar is known to the assessee for several years and was involved not only in the purchase transaction but also in subsequent activities relating to layout approval and development of the property. Hence, the AO held that the noting in the notebook were genuine and contemporaneous records relating to the assessee's land transaction and could not be treated as imaginary or fabricated. The seized notebook, maintained by a real estate broker in the ordinary course of his profession, was considered by the AO to contain authentic details relating to the assessee's property transaction. 18. Finally, the AO referred to the pre....
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....terial on record to demonstrate that the said entries relate to any real transaction giving rise to income assessable in the hands of the assessee, which remained undisclosed in the regular books of account. It was submitted that such documents, which do not, by themselves, indicate any nexus with undisclosed income or investment, are treated in search jurisprudence as "dumb documents", and no addition can be made thereon in the absence of supporting evidence. The assessee emphasized that none of the seized documents were authored by him, nor do they bear his signature, and no logical or reasonable inference can be drawn to connect the assessee thereto. It was, therefore, asserted that the seized papers lack evidentiary value and cannot be the foundation for the addition made by the Assessing Officer. 24. It was further submitted that the AO has not brought on record any corroborative evidence to establish that the actual consideration for the property transaction was higher than the registered value. The AO has merely placed reliance on data available on certain real estate websites to suggest that the fair market value was higher than the declared consideration. It was contend....
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....ither the Authorised Officer or the AO to conduct any cross- verification with the alleged author of the document. 28. The Ld.CIT(A) further recorded that the AO omitted to bring on record the statement recorded u/s. 131(1) of the Act during the post-search proceedings on 19.07.2021 from Shri G.Saravanakumar, wherein he clarified that the entries in the loose sheets did not represent cash receipts and that the land transaction was not routed through him. The Ld.CIT(A) observed that no findings were made by the AO on such statement, and no enquiry was undertaken to substantiate the narrations contained in the loose sheets. It was also noted that Shri G.Saravanakumar had retracted the statement recorded u/s. 132(4) of the Act on 11.03.2021 and 12.03.2021, vide letter dated 01.11.2021 filed on 09.11.2021, alleging various irregularities during the search proceedings. 29. The Ld.CIT(A) further observed that no statement was recorded from the sellers of the property in relation to the alleged transaction. It was held that the AO has placed exclusive reliance on the loose sheet seized during the search, being pages 23 to 26 of Annexure ANN/KP/GS/LS/S, despite the fact that the sign....
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.... and purchasers transferred money among them and informed me over telephone about the completion of payment. I noted down these payments in this diary for my follow-up action. 6.3.7 The AO in the Assessment Order has not made any findings upon this answer, and no enquiry was conducted to substantiate the narrations contained in the loose sheet. Further, Shri G. Saravanakumar has retracted the statement u/s 132(4) of the Act on 11.03.2021 and 12.03.2021 as per the letter dated 01.11.2021 filed on 09.11.2021 by citing various irregularities during the course of search. 6.3.8 It is significant to note that neither the Authorised Officer nor the AO has made any attempt to record any statement from the seller(s) of the land property. Further, a statement u/s 131 of the Act was recorded from the appellant being the buyer of the property on 29.07.2021 wherein he has categorically denied the payment of on money paid to the vendors of the property. The relevant extract of the statement recorded from the appellant is reproduced here as under. "Q. 12. During the course of search proceeding U/s.132 of Income-tax Act, 1961 at No.17/73, Karpagam Complex, NSR Road, Saib....
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....f search proceedings U/s.132 of Income-tax Act, 1961 at No.17/73, Karpagam Complex, NSR Road, Saibaba Colony, Coimbatore - 641011 on 12.03.2021, books and documents seized vide ID mark the ANN/SJ/GS/B&D/S-2 & S-3. I am showing you the above seized books and documents and please go through the same. The above books of document, in page No 30, 32, 37 etc., having details of the names of the person specifically, "Guru" and "Lavanya", to whom cash has been paid. Please go through the pages and offer your comment? Ans; Sir, I have gone through the pages and I really don't know about the entries. I have no reason why he has written all these names. Further here I would like to say that Shri G. Saravana Kumar not involved in any manner at any stage of the purchase of Tirruppur land. Q. 20. During the course of search proceedings U/s.132 of Income-tax Act, 1961 at No.17/73, Karpagam Compex, NSR Road, Saibaba Colony, Coimbatore - 641011 on 12.03.2021, a bunch of loose was found and seized vide Annexure ANN/KP/GS/LS/S. Please go through the page number 23 of the loose sheets. In the serial number 4 of the page 23, there are entries of Rs. 55,23,012/- and Rs. 55,21,788/-....
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....bsp; 9.00 PM - Cash - 2,00,00,000 4) 29.11.19 DD DD - - 56,23,012 55,21,788 Demand draft issued by Shri V P Jayapradeep to the sellers. 5) 30.11.19 1.30 PM - Cash - 4,00,00,000 Dates falling after the date of registration of the impugned property 6) 8.12.19 7.30 PM - Cash - 10,00,00,000 7) 15.12.19 8.00 PM - Cash - 5,00,00,000 8) - 50,00,000 Date and mode not mentioned 9) 14.03.2020 10.30 AM Cash - 2,00,00,000 Dates falling after the date of registration of the impugned property 27,31,27,290 Compound wall - 25,00,000 Date and mode not mentioned. 27,56,27,290 * The Appellant has contended that the SI. No. 5 to 9 aggregating Rs. 21,50,00,000/- are the payment made after the date of registration of the sale deed i.e. on 29.11.2019. This sum works out to more than 80% of the alleged cash payment. The AR strongly contende....
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....tion could be made based on the said entries since the diary was neither found from premises of assessee nor was it in handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary. The ratio of the said decision is squarely applicable to the case of the Appellant as the AO has not referred to any cogent evidence applicable to the case of the Appellant. As the AO has not referred to any cogent material to corroborate that the entries made in the loose sheet seized from a third party which are purportedly the transactions made by the Appellant. There is absolutely no mention in the seized material regarding the nature of the said transactions of cash payments, the purpose of such payments and the precise identity of such transaction. 6.3.15 A narration made in a loose sheet by a third person with scant details cannot be used to fasten tax liability upon the person whose name does not appear at all. In the absence of any corroborative evidence to attribute the entries to such a person. Such seized material is liable to be treated as a ineffective document, which does not have any evidentiary value in respect of the entries ....
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.... a third party without bringing on record independent evidence to corroborate such entries has been reiterated in several decisions. Some of the decisions to this effect are MM Financiers (P) Ltd Vs. DCIT (2007) 107 TTJ (Chennai) 200, Regency Mahavir Properties Vs ACIT [2018] 169 ITD 35 (ITAT-Mumbai), ACIT Vs. Katrina Rosemary Turcotte [2017] 190 TTJ 681 (ITAT-Mumbai), DCIT Vs. Vipin Aggarwal [2017] 83 taxmann.com 6 (ITAT Chandigarh), S.P Goyal Vs DCIT [2002] 82 ITD 85 (TM) INAT, T.S Venkatesan Vs ACIT [2000] 74 ITD 298 (Cal) and Monga Metals (P) Ltd Vs ACTT [2000] 67 TTJ 247 (All). 6.3.18 In particular, it is of critical importance that the evidence to corroborate the entries indicating payments in the seized material found with a third party is available with specific reference to the fact regarding actual transfer of money from the said third party to the recipient named in the said entries in the seized material. The Hon'ble ITAT, Mumbai held in the case of Riveria Properties Private Limited Vs ITO in ITA No.250/MUM/2013 that the AO is required to bring further evidence on record to show that the money was actually exchanged between the parties in a case where ther....
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....n'ble Apex Court in the cases of CBI Vs. VC Shukla & Others (1998) 3 SCC 410, Common Cause (A Registered Society) Vs. Union of India (2017) 77 taxmann.com 254 (SC) and Dhakeshwari Cotton Mills Lids. CIT (1954) 26 ITR 775 (SC) corroborative evidence is essential to support the evidence found in third party premise. In order to properly appreciate the issue, it is useful to refer to the following extract from the decision of Hon'ble Apex Court in the case of Dakeswari Cotton Mills Ltd Vs. CIT (1954) 26 ITR 775 (SC): "As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income- tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence, a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of Section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under sectio....
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....of Rs. 72.39 Crores as visualized by the AO in the Assessment Order. The Registering Authority has not questioned the value of property while registering the property for a sum of Rs. 1,11,44,800/- to each seller, there is no record to indicate the Registering Authority has demanded additional stamp duty upon the property registered in the name of the appellant. Further, the AO has not chosen to made a reference to the valuation cell of the department to determine the correct value of the property sold. In the absence of the any such exercise(s) on the part of the AO, considering the value of the property to be at Rs. 28,38,00,000/- can only be illusionary. At this juncture it is appropriate to bring it on record, the decision of the Jurisdictional ITAT in the case of Shri Rajagopal Saravanan v. ACIT in ITA No. 119 / Chny / 2024 dated 10.07.2024, wherein the Hon'ble ITAT has held as under :- "7. We find that on given facts, the ratio of case law of Hon'ble High Court of Madras in the case of P.V.Kalyanasundaram (155 Taxman 454) would apply. In this decision, Hon'ble Court held that where Ld. AO did not conduct any independent enquiry relating to the value of th....
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....DR therefore prayed that the order of the Ld.CIT(A) be set aside and the addition made by the AO be restored by allowing the grounds raised by the Revenue. 33. Per contra, the Ld.AR, Shri R.Venkata Raman, Chartered Accountant, appearing on behalf of the assessee, supported the order passed by the Ld.CIT(A) and submitted that there is no perversity or infirmity in the said order warranting interference by this Tribunal. The Ld.AR submitted that the loose sheets were seized from the premises of one Shri G.Saravanakumar, who was neither the author of the impugned documents nor was he acting as a broker or intermediary in the land transaction between the assessee and the vendors of the property. In such circumstances, the statements made by Shri G.Saravanakumar cannot be accorded any evidentiary value for the purpose of alleging that the assessee had paid any on money over and above the stated consideration. 34. It was further contended that, even otherwise, the said statements stand vitiated in view of the subsequent retraction made by Shri G.Saravanakumar, thereby rendering the earlier deposition unreliable and devoid of evidentiary relevance. The Ld.AR submitted that the Reven....
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....material, along with the respective annexure references, is tabulated hereunder for ready reference: S. No Description of the material Annexure Reference 1 Loose Sheets - Pages 23 to 26 ANN / KP / GS / LS / S 2 Note Pad - Pages 28, 30, 32, 37 ANN / SJ / GS / B & D / S - 2 3 Note Pad - Pages 28, 30, 32, 37, 39 ANN / SJ / GS / B & D / S - 3 39. It is an undisputed fact on record that the assessee had purchased 13.851/2 acres of land situated at Rackiyapalayam Village, Tirupur District, from the vendors namely Shri M.V.Gnanaguru and Smt.Lavanya Gnanaguru, under a registered sale deed dated 29.11.2019, for a sale consideration of Rs. 1,11,44,800/-. The consideration as per the instrument was duly paid by the assessee to the vendors by way of banking channels. 40. A sworn statement u/s.132(4) of the Act was recorded from Shri G.Saravanakumar on 11.03.2021 with specific reference to the loose sheets marked as ANN/KP/GS/LS/S. In reply to the queries posed, he identified the handwriting found on the loose sheets as that of one Shri G. Gnanasekhar, who, according to him, assisted in land registration matters. He further stated that the noting appear....
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....money payments received for acquiring the lands at Tirupur, and that the said receipts were part of the cash payments already admitted by him on 11.03.2021. The relevant portion of the sworn statement is reproduced hereunder for ease of reference: "Q. No.8 Similarly, please see again the ANN/SJ/GS/B&D/S-2 dt. 12/03/2021. Certain amounts were mentioned against some person as detailed below in the month of October and November, 2020. 29.10.2020 - Ramesh Rec from Nithya from apart - 2 Cr. 19.10.2020 - Dhanalaskhmi tex (Nataraj) - 2 Cr. 27.11.2020 - Jp (PKM thangavelu to GSK) - 1 Cr 28.11.2020 - Trippur (Surander to GSK) - 1 Cr Please go through the same and explain who are they? Ans. Sir, these are the cash received towards on-money payments for acquiring 13.851/2 acres land at Tirpur. The on-money payments were already been accepted in my sworn statement recorded u/s. 132(4) on 11.03.2021. Q. No.9 Similarly, please see again the ANN/SJ/GS/B&D/S-3 dt. 12/03/2021. Certain amounts were mentioned against some person as income as detailed below in the month of March 2020. Chn - Inno (11.03.20) - 5 Cr....
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.... in the expense pages contain the details of cash payment made t various person and expenses. In this regard why the cash receipts should not be treated as actual receipts of you? Ans: Sir, I am not accepting your assumption. In this connection I draw your attention that all the high value entries in both sides are only noting, which are not forming part of final totaling for each month. Again I am telling these high value entries are related to land dealing of my clients who informed me over telephone for completion of dealing. I had noted down these entries for my commission purpose. Q. 22. On analysis of note book seized vide Annexure ANN/SJ/GS/B&D/S- 2, it shows that money has been received by you every month on specific date from various persons and the same money has been given to various persons in different dates of same month. Please go through the seized material and offer your explanation. Ans: Sir, it is only noting for reference as I already stated I had not received any money from anyone and paid to anyone." 43. Further, the assessee's statement u/s. 131 of the Act was recorded on 29.07.2021. The assessee categorically denied any know....
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.... . In above statement Shri G Saravana Kumar stated that the books and documents seized vide ID mark the ANN/SJ/GS/B&D/S-2 & S-3 are having details about cash receipts towards on-money payment for acquiring 13.85 1/2 acres land at Tirupur. Please go through above statement and state how much on-money was paid for purchase of the Tiruppur land? Ans: Sir, as stated earlier I am not at all aware of the contents of the diary. And also, as stated earlier I have not made any on-money for the purchase of Tiruppur land. Whatever statement given by Shri. G Saravana Kumar not related to me and also I am clueless why he stated that on-money payment was made. Q. 15. During the course of search proceedings U/s. 132 of Income-tax Act, 1961 at No.17/73, Karpagam Complex, NSR Road, Saibaba Colony, Coimbatore - 641011 on 12.03.2021, books and documents seized vide ID mark the ANN/SJ/GS/B&D/S-2 & S-3. I am showing you the above seized books and documents and please go through the same. The above books of document, in page No 30, 32, 37 etc., having details of the names of the person specifically, "Guru" and "Lavanya", to whom cash has been paid. Please go through the page....
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....ges bear the signature or authentication of either the assessee or the vendors. The pages do not contain the name of the assessee or the vendors, nor do they mention any identifiable particulars connecting the noting to the parties to the impugned transaction. It is not the case of the Revenue that the handwriting appearing on the seized loose sheets belongs either to the assessee or to any of the vendors. The seized pages do not contain any particulars identifying the immovable property alleged to have been transacted, such as address, survey numbers, details of vendor and vendee, nor do they specify the nature of the entries whether they represent receipts or payments. The mode of transaction, payer, payee, and the purpose of entry are wholly absent correlating to the sale transaction of the property. Thus, the nature of the alleged transactions is entirely ambiguous. 46. We observe that the AO has placed reliance upon the noting at Page 23 of ANN/KP/GS/LS/S to infer alleged payment of on-money by the assessee. The relevant entries are reproduced below along with our observations: - Our remarks 1) 24.11.19 ....
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.... clearly admitted in response to Question No. 5 that the loose sheets at pages 23 to 26 in ANN/KP/GS/LS/S were authored by one Shri G.Gnanasekhar. Despite this admission, neither the authorized officer at the time of search nor the AO has conducted any enquiry or verification with the said author. In the absence of such enquiry, the allegations sought to be drawn from the loose sheets, which are admittedly prepared by a third party unconnected with the assessee's transaction, lack any evidentiary foundation. No adverse inference can, therefore, lawfully be drawn against the assessee. 49. We further observe from the seized note pads in ANN/SJ/GS/B&D/S-2 & 3, that the impugned sheets do not bear any signature or acknowledgment of the assessee or the vendors. On perusal of the said note pad and sworn statement of Shri G.Saravankumar, the entries are not authored by either the assessee or the vendors. The nature of the entries whether representing receipts or payments is not ascertainable. The entries do not indicate payment of any on-money by the assessee. The page-wise totals do not reconcile with the individual noting, demonstrating incompleteness. Thus, the seized note pads ....
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....d decision, the Hon'ble Supreme Court has, inter alia, observed as under: "14. Placing implicit reliance of the decision of this Court in V.C. Shukla (supra), it was submitted that it is open to any unscrupulous person to make any entry any time against anybody's name unilaterally on any sheet of paper or computer excel sheet. There being no further corroborative material with respect to the payment, no case is made out so as to direct an investigation, and that too against large number of persons named in the documents. Such entries have been held to be prima facie not even admissible in V.C. Shukla's case (supra). He urged that in case investigation is ordered on the basis of such documents, it would be very dangerous and no constitutional functionary/officer can function independently, as per the constitutional imperatives. No case is made out on the basis of material which is not cognizable in law, to direct investigation. ... 21. We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizab....
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....erty transaction held by the assessee. 54. A similar view has been expressed by the Hon'ble Karnataka High Court in the case of Sunil Kumar Sharma v. DCIT [2022] 448 ITR 485 (Karnataka), which pertains to an income-tax matter. In the said decision, the Hon'ble High Court, placing reliance upon the judgment of the Hon'ble Supreme Court in Common Cause (A Registered Society) v. Union of India (supra), held that loose sheets of paper or diaries found during the course of search, which are not established to form part of the books of account regularly maintained by the assessee, do not constitute material evidence and, therefore, cannot be relied upon or used against the assessee. The relevant extract of the judgment is reproduced hereinbelow: "26. It is established in law by the Hon'ble Apex Court that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. Following the law declared by the Hon'ble Apex Court, we are of the view that the action taken by the respondent/Revenue against the Assessee based ....
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....nt is bereft of necessary details about year of transaction, ownership of transaction, nature of transaction, necessary code for deciphering the figures. It may be possible that a document may not be complete in all respects as the businessmen or tax evaders may choose to record minimum details on a document and keep the rest in their memory. It is the duty of the AO to carry out necessary investigations by correlating the impugned document with other documents seized, with regular books of account, with record kept by outside agencies, such as banks or financial institutions or debtors/creditors and finally, by recording the statements of concerned parties so as to fill up the gaps in confirming the inference arising from the documents for a proper charge of tax. Such correlation is necessary unless the document is capable of speaking giving full details so as to enable any intelligent person to find out the nature of transaction, the year of transaction, the ownership of the transaction and quantum thereof. Even in that situation, it is necessary to give opportunity to the assessee to offer his explanation and investigation be carried out to strengthen the direct inference arisin....
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....#39;ble Court has held that it is incumbent upon the Revenue to adduce cogent evidence to corroborate the contents of any seized material before alleging that the assessee was in receipt of undisclosed consideration. 60. In the facts of the present case, we find that the AO has failed to discharge such burden. No independent enquiry or corroborative evidence has been brought on record to substantiate that the assessee indeed paid any on-money as purportedly reflected in the impugned seized documents. 61. We also agree with the Ld.CIT(A) that though the strict provisions of the Indian Evidence Act do not apply to income-tax proceedings, the settled legal position is that the AO cannot make a pure guess or an addition without any supporting material. The addition must be based on reliable and corroborative evidence, particularly when the material relied upon has been recovered from a third party. In the present case, the seized loose sheets and notepads were recovered from a third-party premises and are admittedly not in the handwriting of the assessee or any of the vendors. In the absence of any supporting evidence to demonstrate that the alleged payments actually materialised....
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....ce, brokerage agreement, financial records, or confirmations from any of the parties involved. It is pertinent to observe that the said individual has subsequently filed a detailed retraction letter clearly stating that the entries in his diary do not represent any receipt of cash pertaining to the assessee's land purchase and further clarifying that he had no role in negotiating, arranging, or executing the transfer of consideration. This direct contradiction completely erodes the evidentiary value of the earlier statement and undermines the credibility sought to be attached to it by the AO. 65. It is a settled legal proposition, as upheld in various judicial pronouncements, that a statement recorded during the course of investigation, especially when retracted at the earliest opportunity and not supported by any corroborative evidence, cannot form the sole basis for making an addition in the hands of the assessee. The Hon'ble Supreme Court and various High Courts have repeatedly held that a retracted statement must be corroborated by independent and cogent material to have any evidentiary value. In the absence of such corroboration, the statement is entirely unreliable....
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....ially retracted his statement, he subsequently filed an affidavit affirming that the total consideration was Rs. 34.85 lakhs, out of which Rs. 4.10 lakhs was received by demand draft and the balance in cash. The seller also revised his return of income and offered the entire amount of Rs. 34.85 lakhs to tax. Relying solely upon the statement of the seller, the Assessing Officer treated the difference of Rs. 30.75 lakhs as undisclosed income of the assessee-purchaser and made the corresponding addition. On appeal, the CIT(A) deleted the addition. The Tribunal upheld the order of the CIT(A) by observing that the seller had given conflicting statements at different stages, and his subsequent admission of the higher consideration along with payment of tax thereon was an apparent attempt to protect himself from further action by the Department. The Tribunal further held that, apart from the statement of the seller, the Assessing Officer had not conducted any independent inquiry, nor discharged the burden of establishing that the assessee had in fact paid consideration of Rs. 34.85 lakhs. It was observed that no material was brought on record to indicate that the assessee had understated....
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.... "We find that it is the uniform view of the courts and also held by the Apex Court as reported in K.P. Varghese v. ITO [1981] 131 ITR 597 the burden of proving actual consideration in such transaction is that of the Revenue. Considering the entire gamut of the case, we find that the Revenue has failed to discharge its duties and as held by the learned Commissioner of Income-tax (Appeals) instead made up a case on surmises and conjectures which cannot be allowed. Under the circumstances, we do not find any infirmity in the order of the learned Commissioner of Income-tax (Appeals) and we uphold the appellate order in this regard." 6. We also found that the Assessing Officer did not conduct any independent enquiry relating to the value of the property purchased. He merely relied on the statement given by the seller. If he would have taken independent enquiry by referring the matter with the Valuation Officer, the controversy could have been avoided. Failing to refer the matter was a fatal one. 7. In view of the foregoing conclusions, we find no error in the order of the Income-tax Appellate Tribunal and requires no interference. Hence no substantial question....