ABDUL LATHIEF MAHAMMED ARIF,COIMBATORE V. ITO, NCW-5(2), COIMBATORE

ITA 1853/CHNY/2025

AI Insights

The case revolves around the reassessment of capital gains tax on a property sale by Abdul Lathief Mohammed Arif for the Assessment Year 2012-13. Originally, Arif declared a capital gain from the sale of an ancestral property, claiming an exemption under section 54F of the Income Tax Act. However, following a search operation at the premises of the property purchaser, loose sheets indicating a higher market value of the property were seized, leading to a reassessment notice. The Assessing Officer alleged that Arif received additional 'on-money' not recorded in the sale deed. The CIT(A) upheld this addition, but the Tribunal found the evidence insufficient and ruled in favor of Arif, emphasizing the lack of direct evidence linking Arif to the alleged unrecorded payments and the absence of an opportunity for cross-examination.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 834031 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-06-2025
• Other Referred Cases: Kishanchand Chellaram v. CIT, CIT v. P.V. Kalyanasundaram, CIT v. Bhanwarlal Murwatiya, Paramjit Singh v. ITO, ITO v. W.D. Estate (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: P.N. RAJAN
• Keywords: Reassessment proceedings; Sale consideration of property below Jantri Value; Onus to prove; Capital Gains; Principle of natural justice
• Section: 148; 143(3); 50C; 5(2)

Judgement Text

"आयकर अपील य अ धकरण, ’बी’ \u000eयायपीठ, चे\u000eनई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI \u0001ी मनु क ुमार िग र, ाियक सद\u0010 एवं \u0001ी एस. आर. रघुनाथा लेखा सद\u0010 BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No 1853/Chny/2025 \u0018नधा\u0019रण वष\u0019/Assessment Year: 2012-13 ABDUL LATHIEF MOHAMMED ARIF C-1, KTVR Balaji Shelter, Dr. Ambedkar Road, Velandipalayam, Coimbatore Tamil Nadu-641025 v. ITO, NON-CORPORATE WARD 5(2), Coimbatore- 641018 [PAN: ANNPM 5379 G] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Assessee by : Mr. P.N.Rajan, Advocate यथ क ओर से /Respondent by : Mr. Shiva Srinivas CIT सुनवाई क तार ख/Date of Hearing : 26.11.2025 घोषणा क तार ख /Date of Pronouncement : 06.02.2026 आदेश / O R D E R PER MANU KUMAR GIRI, JM: This captioned Appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), [CIT(A)] dated 30.04.2025 confirming the assessment framed u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 for Assessment Year 2012-13. Printed from counselvise.com ITA No 1853/Chny/2025 (AY 2012-13) Abdul Lathief Mohammed Arif (Vs.) ITO Ward 5(2) :: 2 :: 2. Brief facts of the case are that the assessee is an individual salaried employee. He filed his original return of income for the Assessment Year 2012-13 on 26.07.2012 declaring a total income of Rs.9,30,550/- wherein Long Term Capital Gain arising from sale of immovable property situated at Oppanakara Street, Coimbatore was disclosed by adopting his 40% share in the registered sale consideration of Rs.1,09,00,000/- and claiming exemption u/s. 54F. 2.1 A search u/s.132 was conducted on 18.08.2011 in the case of M/s. Saravana Selvarathinam Retail Pvt. Ltd., Chennai, the purchaser of the said property. During the course of search, certain loose sheets were seized which allegedly reflected a market value of Rs.3,37,15,596/- as against the registered consideration of Rs.1,09,00,000/-. The property sold was an ancestral property jointly owned as under: • Shri Abdul Lathief Mohammed Arif – 40% • Smt. Jameela Lathief (Mother) – 20% • Smt. N. Shahnaz (Sister) – 20% • Smt. A. Tasneem (Sister) – 20% Based solely on the seized loose sheets and statements recorded from Shri S. Saravana Arul, Managing Director of the purchaser company, the assessment was reopened by issue of notice u/s. 148 of the Act dated 10.09.2015. In response, the assessee filed return of income on 22.12.2015 declaring total income of Rs.17,38,810/- wherein capital gains were recomputed by adopting guideline value u/s. 50C of the Act. Printed from counselvise.com ITA No 1853/Chny/2025 (AY 2012-13) Abdul Lathief Mohammed Arif (Vs.) ITO Ward 5(2) :: 3 :: 2.2 During reassessment proceedings, statements were recorded from the assessee, his mother and sisters. The sisters categorically stated that they had received only their respective shares through demand drafts and that no cash was received by them. The Assessing Officer held that the entire alleged on-money of Rs.2,28,15,596/- was received by the assessee alone and brought the same to tax as additional sale consideration under the head “Capital Gains” in the hands of the assessee. 3. The ld. CIT(A) upheld the addition, holding that the seized loose sheets and statements of the purchaser established receipt of on- money by the assessee. Aggrieved, the assessee is in appeal before the Tribunal. 4. The learned Authorised Representative (‘Ld.AR’) submitted that the entire addition is based solely on loose sheets seized from a third party and statements recorded behind the back of the assessee, without any corroborative evidence. He submitted that: • No incriminating document, cash or asset was found from the possession of the assessee. • The loose sheet neither bears the assessee’s full name nor his signature, nor any date of alleged payment. • The document does not establish actual receipt of cash by the assessee during the relevant assessment year. • The assessee was denied the opportunity to cross-examine Shri S. Saravana Arul, whose statement formed the sole basis of the addition, thereby violating principles of natural justice. Printed from counselvise.com ITA No 1853/Chny/2025 (AY 2012-13) Abdul Lathief Mohammed Arif (Vs.) ITO Ward 5(2) :: 4 :: The ld.AR further contended that even assuming, without admitting, that excess consideration was paid, the entire amount could not be assessed in the hands of the assessee, as the property was jointly owned and the assessee’s share was only 40%. Reliance was placed on several judicial precedents including: • Kishanchand Chellaram v. CIT (125 ITR 713) (SC) • CIT v. P.V. Kalyanasundaram (282 ITR 259) (Mad) • CIT v. Bhanwarlal Murwatiya (215 CTR 489) (Raj) • Paramjit Singh v. ITO (P&H HC) • ITO v. W.D. Estate (P) Ltd. (45 ITD 473) (Bom) 5. The Ld.DR supported the orders of the lower authorities. It was contended that: • The seized loose sheet clearly reflected the actual sale consideration. • The purchaser had admitted payment of cash during search proceedings. • The assessee himself admitted that he alone handled the transaction. • The conduct of the assessee in adopting section 50C value in the return filed u/s. 148 showed that the transaction was not genuine. 6. We have carefully considered the rival submissions and perused the material available on record. It is undisputed that the impugned loose sheet was seized from the premises of the purchaser company and not from the assessee. The document does not bear the Printed from counselvise.com ITA No 1853/Chny/2025 (AY 2012-13) Abdul Lathief Mohammed Arif (Vs.) ITO Ward 5(2) :: 5 :: assessee’s signature, does not mention date of payment, mode of payment, or even clearly identify the recipient of the alleged cash. It is well-settled law that loose sheets by themselves do not constitute evidence unless corroborated by independent material. The presumption u/s.132(4A) or section 292C operates only against the person from whose possession the document is seized and cannot be extended to a third party. Further, the Revenue has not brought on record any material to establish actual flow of cash from the purchaser to the assessee. The entire addition is founded on the sworn statement of Shri S. Saravana Arul. It is an admitted fact that no opportunity of cross-examination was provided to the assessee, despite specific reliance placed on the said statement. The Hon’ble Supreme Court in the case of Andaman Timber (1998) 1 SCC 248 and Kishanchand Chellaram (supra) has clearly held that any material collected at the back of the assessee cannot be used against him without affording opportunity of rebuttal and cross- examination. Moreover, even the purchaser’s statements are self- contradictory, wherein he himself denied payment of Rs.75,00,000/- and expressed uncertainty regarding cash components. Such statements, without corroboration, cannot form the sole basis for addition. More so, the sale transaction is evidenced by a registered sale deed, wherein the consideration is clearly recorded. In the absence of clinching evidence to prove receipt of consideration over and above what is stated in the registered document, the amount mentioned therein has to be accepted. The burden to prove understatement of consideration squarely lies on the Revenue. Suspicion, however strong, cannot take the place of proof. Printed from counselvise.com ITA No 1853/Chny/2025 (AY 2012-13) Abdul Lathief Mohammed Arif (Vs.) ITO Ward 5(2) :: 6 :: 7. In view of the totality of facts and circumstances, we hold that the addition is based on uncorroborated third-party loose sheets documents and statements relied upon were recorded without granting cross-examination. No evidence of actual receipt of cash by the assessee has been brought on record. Accordingly, the addition of Rs.2,28,15,596/- made by the Assessing Officer and sustained by the ld.CIT(A) is deleted. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced on the 06th day of February, 2026, in Chennai. Sd/- एस. आर. रघुनाथा) (S.R.RAGHUNATHA) लेखा सद*य/ACCOUNTANT MEMBER Sd/- (मनु क ुमार िग र) (MANU KUMAR GIRI) \u000eया\u0018यक सद*य/JUDICIAL MEMBER चे\u000eनई/Chennai, +दनांक/Dated: 06th February, 2026. SNDP, Sr. PS आदेश क \u0018त,ल-प अ.े-षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकरआयु\u000f/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\bितिनिध/DR 5. गाड\u0018फाईल/GF Printed from counselvise.com "