TaxTMI 
TaxTMI 
2012 (9) TMI 1268
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....n facts of the case in deleting the additions amounting to Rs. 30,40,000/- by holding that the documents of mortgage cannot be taken to be sufficient evidence so as to substitute the sale consideration as per books of account, thus completely ignoring the facts regarding rate of land mentioned in such documents impounded from the business premises of the company. 3. The Appellant craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed off. 4. It is prayed that the order of the Commissioner of Income Tax (Appeals) be set-aside and that of the A.O. be restored." 3. The assessee is in the business of developing Real Estate Projects, like residential colonies etc. In the course of assessment proceedings, the AO observed that the assessee sold 8 SCF, measuring 100 sq.yds. each, @ 1200 per sq.yd. The AO, confronted the assessee in respect of contents, as recorded at pages 28 to 31 of Annexure-I, found and seized in the course of search operations, from the business premises of the assessee company, namely M/s Singla Enclave Developers P.Ltd. The assessee company had mortgaged to PUDA 4 SCF, measuring 100 sq.yd. each (total 400....
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....he guarantee requirements of PUDA. The SCFs were projected to be having a market value of Rs. 5000/- per square yard and on the basis of this the AO came to the conclusion that the value of all other SCFs would also be @ Rs. 5000/- per square yard and therefore the assessee had under stated the sale consideration by selling the same @ Rs. 1200/- per square yard. The appellant has claimed that the company got approval of colony from PUDA and it was one of their conditions that the appellant will mortgage in favour of the State Govt. immovable property equivalent to Rs. 2 Lac gross acre as a security for execution of internal development works. It had been claimed by the appellant that the valuation of SCFs mortgaged with PUDA was only intended to meet the security amount requirements of PUDA and had no relationship with the actual saleable price of the SCFs. It was thus claimed that the higher valuation would not mean that the actual sale had taken place @ Rs. 5,000/- per square yard. The AR of the appellant relied upon the following judicial pronouncements to support his case :- 1. "ASSISTANT COMMISSIONER OF INCOME TAX vs. JYOTI WOOLLEN MILLS decided by Hon'ble Income ....
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....was income from undisclosed sources. The Appellate Assistant Commissioner to whom the assessee appealed, reduced the amount of the addition from Rs.34,070 to Rs.26,000. On appeal to the Tribunal, the Tribunal deleted the addition. On a reference : HELD, that the Tribunal had accepted the explanation of the assessee. The Tribunal had exercised its jurisdiction and the question decided by it was a question of fact. Therefore, there was no scope for interference with the order of the Tribunal. 3. Parimisetti Seetharamamma v. C.I.T. decided by Hon'ble Supreme Court of India reported in (1965) 57 ITR 532 (SC). 4. ASHOK KUMAR vs. INCOME TAX OFFICER decided by Hon'ble High Court of Jammu & Kashmir reported in (2006) 201 CTR (J&K) 178, held :- Addition could not be made on the basis of difference between closing stock declared in the trading account and the stock shown in the statement submitted by the assessee to the bank as stock position shown to the bank was on estimate basis and inflated value was shown to avail more credit from bank. 5. COMMISSIONER OF INCOME TAX v. M/S SANTOSH BOX FACTORY PVT.LTD. decided by Hon'ble Punjab & Haryana High Court ....
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....ing stock furnished in statement to the bank for availing of credit facility and that shown in the books of account furnished before the Income Tax Authorities. The Tribunal deleted the addition on the ground that the statement submitted by the assessee to the bank was on estimate basis and the value of the stock was inflated to avail of greater credit from the bank and that there was no justification for making any addition on the allegation of inflated stock shown to the bank. On appeal: held, dismissing the appeal that the Tribunal had considered whether the value of stock shown in the books of account was genuine or not and there was no reason to hold that the finding of the Tribunal was perverse. (The Supreme Court has dismissed the special leave petition filed by the Department against this judgement; see (2008) 307 ITR (st.). 9. COMMISSIONER OF INCOME TAX vs. KHAN & SIROHI STEEL ROLLING MILLS decided by Hon'ble High Court of Allahabad reported in (2006) 200 CTR (All)595, held :- Tribunal was justified in accepting the explanation of the assessee that in view of the prevailing practice, the value of stock hypothecated to bank was inflated to avail of more overdra....
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....nance 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. The issue under consideration is therefore whether the *document relied upon by the AO can be taken to be evidence enough to reject the book results of the assessee and substitute the sales price on estimate basis. It has been held in catena of judgements as highlighted by the AR that the valuation of stocks can not be a reliable basis to make an addition by holding that the assessee was actually in possession of stocks as per valuation submitted to the bank. The view of jurisdictional high court on the issue is clearly detailed in the judgement in the case of COMMISSIONER OF INCOME TAX v. SIDHU RICE AND GENERAL MILLS ....
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....of the case and the relevant record. The appellant has filed Paper Book in both these appeals, whereby, at pages 80 to 135, Registered Sale Deeds, as approved by the Tehsildar, have been annexed. The appellant also placed reliance on a number of decisions of the Hon'ble Supreme Court, High Courts and Tribunal, including the decision of the jurisdictional High Court, to support his contentions. 9. Ld. CIT(A), had discussed the decision of the Hon'ble jurisdictional High Court in the case of CIT V Sidhu Rice & General Mills (2006) 281 ITR 426 (P&H) wherein, it has been held that; "concurrent findings showed that except for the photo copy of the stock statement, furnished to the bank, the AO, had not brought any material on record to show that the assessee possessed stocks, as reflected in the said statement, as against the stocks depicted in the Balance Sheet. It was also found that the books of account were regularly maintained by the assessee and had been accepted by the Department. On the basis of the material on record, CIT(A) and the Tribunal, took a possible view, which has not been shown to be perverse. Thus, there was no interference with the concurrent finding." H....
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....elevant part of the assessment order is reproduced hereunder : "He has also mentioned judgments of various Courts including the judgment of Hon'ble Supreme Court of India in the case of Dhakeshwari Cotton Mills Ltd. vs CIT(1954) 26 ITR 775 that ITO is no entitled to make a pure guess and make an assessment without reference to any material or evidence. There must be something more than bare suspicion to support the assessment. The reply of the assessee has been considered and I come to the conclusion that there is strong documentary evidence i.e. pages 28 to 31 of Annexure A-I, found & impounded for the business premises of the assessee Company, in which the assessee itself had mentioned the fair market value of the property i.e. SCFs @ Rs. 5,000/- per sq. yd. and the same rate is applied to all the sales of SCFs made during the year by the assessee at Village Dolon. The assessee had sold eight SCFs during the year measuring 100 sq.yds. each (total 800 sq. yds) @ Rs. 1,200/- per sq. yd. i.e.Rs. 9,60,000/- as per registration deed filed during assessment proceedings. However the total sales @ Rs. 5,000/- per sq.yd. come to Rs. 40,00,000/-. As such the balance amount of ....
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.... Act in proceedings before them, which were prevented from doing so. The CIT(A) has placed reliance on the decision of the Hon'ble jurisdictional High Court in the case of Paramjit Singh V ITO 323 ITR 588 (P&H), which is reproduced hereunder : "We have thoughtfully considered the submissions made by the learned counsel and are of the view that they do not warrant acceptance. There is well known principle that no oral evidence is admissible once the document contains all the terms and conditions. Sections 91 and 92 of the Indian Evidence Act, 1872 (for brevity 'the 1872 Act') incorporate the aforesaid principle. According to Section 91 of the Act when terms of a contracts, grants or other dispositions of property has been reduced to the form of a documents then no evidence is permissible to be given in proof of any such terms of such grant or disposition of the property except the 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 subt....