AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1973
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.... K. Ramesh Babu by the Assessing Officer wherein he stated that the sale consideration received only of Rs. 2.75 crores. When the Assessing Officer confronted with the notings of Sri V. Sampath, who purchased the property "C-2.85" and "D-2.75", he replied that he was not aware of the contents and figures mentioned in the diary of Sri V. Sampath, but actual sale consideration received by M/s. Bommidala Realty Ltd. was only Rs. 2.75 crores. A copy of assessment order dated 22/12/2009 passed under section 153A r.w.s. 143(3) of the I.T. Act in the case of purchaser of the property Sri V. Sampath, Vellore was obtained and placed on record. On perusal of the assessment order dated 22/12/2009, it is noticed that Sri V. Sampath filed a return of income for the Assessment Year 2007-08 admitting that the total income of Rs. 3,90,83,900/- which includes income under the head "other sources" of Rs. 2.85 crores. In the assessment order, the Assessing Officer has extracted the diary notings of Sri V. Sampath, who offered as income under section 132(4), as under:- "At the time of search under section 132 on 06/06/2007, a diary in which dates and amounts under the heading "T.N." was shown....
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.... The Assessing Officer by misconstruing the statement of Sri V. Sampath, who purchased the property, never admitted during the course of search that he had paid on money to the assessee. He only offered whatever amount is noted in the diary as an additional expenditure, therefore, the amount which is offered an additional expenditure cannot be considered an unexplained income in the hands of the assessee. The Commissioner of Income Tax (Appeals) after considering the explanation of the assessee, deleted the addition by observing that the addition cannot be made on the basis of third party statement without any corroborative evidence. He also further observed that no evidence was found in the premises of the assessee that the assessee has received excess amount i.e. over and above the sale price mentioned in the sale deed. The relevant portion of the order of the Commissioner of Income Tax (Appeals) is extracted as under:- "4.3. Based on the above, it can be seen that no evidence is available in the premises of the appellant other than the seized material at the premises of third party and there is no corroborative evidence to suggest that the appellant has actually receive....
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.... payment over and above the sale price to the assessee, in fact, as per the notings in his diary, he offered additional amount as an expenditure and filed a return of income disclosed it as an income from other sources. It was further submitted that the addition made by the Assessing Officer in the hands of the assessee, without there being any basis and without making any independent enquiry, may be deleted. He relied on the order of the Coordinate Bench of this Tribunal in the case of P. Koteswara Rao v. DCIT in ITA Nos. 251 & 252/VIZ/2012 order dated 12/08/2016. 7. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. The assessee - M/s. Bommidala Realty Ltd. had sold the property to Sri V. Sampath through a registered sale deed on 19/02/2007 for a sale consideration of Rs. 2.75 crores. Subsequently, a survey was conducted in the business premises of Sri V. Sampath under section 132 on 06/06/2007, where a diary of Sri V. Sampath was found, wherein it has been noted as under:- C-2.85 D-2.75 dated 15/12/ - Rs. 1 (c)(Adv.) 20/12 Rs. 10 lakhs (D) and 20/12 Rs.2,84,00,000 (c) 16/2 Rs. 2,6....
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....Koteswara Rao (supra) and held that addition cannot be made based on the loose sheets found in the premises of the third party, unless there is a supportive evidence to show that on money is made. The relevant portion of the order is extracted hereunder:- "11. The only issue that came up for our consideration is whether on facts and circumstances of the case, the seized documents indicate exchange of on money between the parties. Admittedly, in the assessee's case there was no search. The seized document found during the course of search in the premises of M/s. M.V.V. Builders, is a loose sheet wherein certain financial transactions were recorded in the name of the assessee. Though, Sri M.V.V. Satyanarayana stated that he had paid a sum of Rs. 50 lakhs and Rs. 25 lakhs in the financial year relevant to assessment year 2007-08 & 2008-09, to Sri P. Koteswara Rao towards land dispute settlement, nowhere it is stated that he had paid on money to the assessee towards purchase of site. The assessee right from the beginning stated that he had not received any on money from M/s. M.V.V. Builders towards sale of site. Besides, loose sheets found in the premises of M/s. M.V.V. Builde....
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....towards purchase of site. We further noticed that Sri M.V.V. Satyanarayana, while deposing before the investigating officer has stated that he has paid money to Sri P. Koteswara Rao towards settlement of land disputes, but nowhere, stated that he had paid on money to the assessee towards purchase of Venkojipalem site. The assessing officer without bringing on record any evidence to prove that on money is exchanged between the parties, merely harping upon loose sheet and third party statement, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The A.O. is required to bring further evidence on record to show that actual money is exchanged between the parties, but literally failed to do so. The A.O. did not conduct any independent enquiry relating to value of the property, instead merely relied upon statement given by the purchase of the property which is not correct. Further, there is no evidence with the A.O. that money has been exchanged between purchaser and seller. Therefore, we are of the view that the A.O. is not correct in making additions towards on money without there being any evidence to show that the asse....
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....pleting the assessment in the case of the seller. There is no evidence other than the seized material marked as 'A/CRK104' where relevant entries are made at Rs. 1,65,00,000. The seized material was not found at the premises o the assessee and there is no corroborative material to suggest that the assessee has actually paid Rs. 1.65 çrores towards purchase consideration of the property. The assessee and her brother categorically denied the payment of any money over and above Rs. 65 lakhs. The AO placed hi reliance on the statement of 5, who is a third party. The evidence brought on record by the Department is not enough to fasten additional tax liability on the assessee. As seen from the above document this is just a handwritten loose document and the handwriting is also not of the assessee and the loose document was found at the premises of a third party. The burden is on the Department to prove conclusively that the loose document belongs to the assessee. There is no presumption in law that the assessee has actually paid Rs. 165 lakhs towards purchase of the property. The undisclosed income in this case is to be computed by the AO on the basis of the available mate....
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....ly. The assessment made should have enough material and it should stand on its own legs. The basis for addition cannot be only the loose sheet or a third party statement. In the absence of corroborative material, and/or circumstantial evidence, the addition cannot be sustained. Thus, no addition can be made on a dumb document and noting on loose sheet. It should be supported by the evidence on record and the evidence on record is not sufficient to support the Revenue's action. In a block assessment undisclosed income has to be determined or the .basis of the material and evidence detected in the course of the search action. The circumstances surrounding the case are not strong enough to justify the addition made by the Department. The burden of proving the actual consideration in the purchase of property is on the Revenue. Considering the entire facts of the case, the Revenue has failed to discharge its duty, instead made up a case on surmises and conjectures which cannot be allowed. Under these circumstances, there is no reason to confirm the addition of Rs. 100 lakhs towards on-money payment. Accordingly, the addition of Rs. 100 lakhs is deleted.-CIT vs. P.V. Kalyanasundaram ....