Smt. K.V.Lakshmi Savitri Devi, Hyderabad V. ACIT, Hyderabad

ITA 1504/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9700 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 02-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: E S NAGENDRA PRASAD
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Gift; Search and seizure; Salary income; Opportunity of cross examination; Third party statement; Block assessment
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT & SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A. NO. 1504/HYD/2010 (ASSESSMENT YEAR 2003-04) SMT. K.V. LAKSHMI SAVITRI DEVI, HYDERABAD PAN: AHGPK2331R VS. ASST. CIT CIRCLE 6(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI P. MURALI MOHAN RAO RESPONDENT BY: SHRI E.S. NAGENDRA PRASAD O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-IV, HYDERABAD DATED 15.10.2010 AND PERTAINS TO ASSESSMENT YEAR 2003-04. 2. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD TO ADDITION OF RS. 1 CRORE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN PURCHASE OF PROPERTY. 3. BRIEF FACTS OF THE ISSUE ARE THAT THERE WAS A SEARC H ACTION AT THE PLACE OF SHRI C. RADHA KRISHNA KUMAR ON 25.10.2007. DURING THE SAID SEARCH A DIARY WAS FOU ND AND SEIZED AS ANNEXURE A/CRK/04. IN VIEW OF THE ENTR IES IN THE SAID DIARY, AS ALSO THE STATEMENT RECORDED DURI NG THE COURSE OF SEARCH ACTION, NOTICES UNDER SEC. 153C/14 2(1) WERE ISSUED TO THE ASSESSEE, CALLING FOR RETURNS OF INCOME I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 2 FOR THE A.YS. 2002-03 TO 2008-09. IN RESPONSE, THE ASSESSEE FILED RETURNS ADMITTING THE INCOME AS UNDE R; ASSESSMENT YEAR RETURN FILED ON INCOME ADMITTED (RS.) 2002-03 23.09.2009 1,81,925 2003-04 23.09.2009 4,52,752 2004-05 23.09.2009 8,01,127 2005-06 23.09.2009 8,22,294 2006-07 23.09.2009 28,70,595 2007-08 23.09.2009 1,15,171 2008-09 21.10.2009 2,70,950 4. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE IS AN INDIVIDUAL, DERIVING INCOME FROM SALARY AND HOUSE PROPERTY. SHE HAD NOT FILED HER RETURN FOR A.Y. 20 02-04 ORIGINALLY. HOWEVER, IN THE RETURN FILED IN RESPON SE TO THE NOTICE UNDER SEC. 153C, AN INCOME OF RS. 4,52,752 W AS ADMITTED FOR THAT ASSESSMENT YEAR. THE ASSESSING O FFICER FOUND THAT IN THE COURSE OF SEARCH AT THE RESIDENCE OF SRI C. RADHA KRISHNA KUMAR, IT WAS NOTICED THAT THE ASSESS EE HAD PURCHASED A PROPERTY, BEARING PLOT NO. 304-O, R OAD NO. 78, JUBILEE HILLS, FROM SMT. K. RAJANI KUMARI, W/O. SRI RADHA KRISHNA KUMAR, FOR A RECORDED CONSIDERATION O F RS. 65 LAKHS. HOWEVER, AS PER THE SEIZED DIARY (ANNEXU RE A/CRK/04), THE ACTUAL CONSIDERATION RECEIVED BY SMT . K. RAJANI KUMARI WAS RECORDED AT RS. 165 LAKHS AS AGAI NST THE CONSIDERATION OF RS. 65 LAKHS IN THE REGISTERED SALE DEED. THUS, THERE WAS ON MONEY PAYMENT OF RS. 1 CRORE INVOLVED IN THE ABOVE TRANSACTION. THE ENTRIES APP EARING IN I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 3 THE SEIZED DIARY BEEN REPRODUCED BY THE ASSESSING O FFICER AS UNDER: AMOUNTS RECEIVED FROM OUR TENANT TOWARDS PART SALE CONSIDERATION IST TIME RS. 5,00,000 CHEQUE IIND TIME (3 X RS. 4 LACS) RS. 12,00,000 CHEQUE III (HANDED OVER TO CRK) RS. 10,00,000 CASH IV ( KRK) RS. 10,00,000 CASH V (HANDED OVER TO CRK) RS. 5,00,000 CASH VI (AT BANK) (HANDED TO KRK) RS. 2,00,000 CASH 5/6/02 VII (HANDED OVER TO CRK) RS. 30,00,000 CASH VIII CRK & KRK RS. 18,00,000 CASH CRK RS. 7,00,000 CASH CRK RS. 3,00,000 CASH 16.8.02 CHQ RS. 5,00,000 DD RS. 30,00,000 PRONOTE RS. 25,00,000 DEPOSIT ADJ RS. 3,00,000 CRK DENOTES C. RADHA KRISHNA KUMAR KRK DENOTES K. RAJANI KUMARI 5. THE ASSESSEE HAD BEEN CONFRONTED WITH THE ABOVE MENTIONED ENTRIES IN THE SEIZED DIARY DURING THE CO URSE OF SEARCH ITSELF AND A STATEMENT WAS RECORDED FROM HER ON 15.11.2007. IT WAS STATED BY HER THAT SHE WAS NOT AWARE OF THE ACTUAL CONSIDERATION PAID FOR THE PURCHASE OF T HE ABOVE PROPERTY, AS THE TRANSACTION HAD BEEN NEGOTIATED BY HER BROTHERS, SRI K.V. SREERAMA MURTHY AND SRI K.V. DAK SHINA MURTHY. IT WAS STATED THAT M/S. GLOBARENA WEB TECHNOLOGIES P. LTD., WERE A TENANT AT THE SAID PRO PERTY INITIALLY AND HER BROTHERS WERE DIRECTORS OF THE SA ID COMPANY. IT WAS ALSO CLARIFIED BY HER THAT THE AMO UNTS FOR THE PURCHASE OF THE PROPERTY HAD BEEN PAID BY HER B ROTHERS AND HER FATHER SRI K.V. MALLIKARJUNA RAO ON HER BEH ALF AND I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 4 THAT SHE DID NOT KNOW THE ACTUAL CONSIDERATION PAID FOR THE PURCHASE. THE ASSESSEE ALSO SHOWED IGNORANCE ABOUT THE CASH PAYMENTS / PRONOTE TO THE TUNE OF RS. 1 CRORE MENTIONED IN THE SEIZED DIARY. HOWEVER, THE ASSESS EE ADMITTED THAT LOANS FROM FRIENDS AND RELATIVES HAD ALSO BEEN OBTAINED AND ADJUSTMENT OF RENTAL ADVANCE OF R S. 3 LAKHS PAID BY M/S. GLOBARENA WEB TECHNOLOGIES P. LT D., HAD BEEN MADE. SHE ALSO PROMISED TO FURNISH COMPLE TE DETAILS ALONG WITH LETTERS OF CONFIRMATION AND SUBS EQUENT REPAYMENT OF LOANS BY 20.11.2007. THE ASSESSING OF FICER HAS REPRODUCED THE RELEVANT PORTION OF HER STATEMEN T IN THE ASSESSMENT ORDER. 6. WITH REGARD TO THE ENTRIES IN THE SEIZED DIARY MENTIONED ABOVE, THE ASSESSEE CONFIRMED THE ENTRIES RELATING TO CHEQUE PAYMENTS STATING THAT THE SAME M ATCHED WITH THE REGISTERED SALE DEED. HOWEVER, IN RESPECT OF THE CASH PAYMENTS MENTIONED THEREIN, THE ASSESSEE STATE D THAT SHE DID NOT KNOW THE DETAILS THEREOF AND THAT SHE D ID NOT HAVE COMPLETE KNOWLEDGE OF THE CASH PAYMENTS ANNOUNCING TO RS. 1 CRORE, WHICH WAS NOT MENTIONED IN THE REGISTERED SALE DEED, SINCE THE TRANSACTION HAD BEE N NEGOTIATED THAT THE AMOUNTS HAD BEEN ARRANGED BY HE R BROTHERS. SHE FINALLY STATED THAT HER BROTHERS WOU LD BE ABLE TO EXPLAIN THE TOTAL CONSIDERATION PAID, AS SH E WAS NOT I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 5 INVOLVED IN ARRANGING THE PURCHASE TRANSACTION AND EVEN THE FINANCE HAD BEEN ARRANGED BY HER BROTHERS. SHE EVEN SAID THAT SHE WAS NOT AWARE WHETHER ANY AGREEMENT O F SALE HAD BEEN ENTERED INTO WITH SMT. K. RAJANI KUMARI, T HE SELLER, OR NOT. 7. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER ISSUED SUMMONS TO THE ASSESSEES BROTHER SRI K.V. SREERAMA MURTHY AND RECORDED A STATEMENT FROM HIM DURING THE COURSE OF SEARCH ON 20.11.2007. IN HIS STATEMENT, SRI MURTHY STATED THAT THE PURCHASE CONSIDERATION FOR T HE ABOVE PROPERTY WAS RS. 65 LAKHS ONLY. WHEN CONFRON TED WITH THE SEIZED DIARY, HE ADMITTED THAT SOME OF THE ENTRIES APPEARING THEREIN MATCHED WITH THE PAYMENTS MENTION ED IN THE REGISTERED SALE DEED. HOWEVER, HE DENIED TH AT THE TOTAL CONSIDERATION PAID WAS RS. 1,65,00,000. HE MAINTAINED THAT THE COMPANY M/S. GLOBARENA WEB TECHNOLOGIES LTD., WHEREIN HE AND HIS BROTHER SRI K .V. DAKSHINA MURTHY WERE DIRECTORS, WAS A TENANT OF THE PROPERTY AT PLOT NO. 304-O, ROAD NO. 78, JUBILEE HI LLS, HYDERABAD. THE PROPERTY WAS OWNED BY SMT. RAJANI KUMARI. SHE WANTED TO DISPOSE OF THE PROPERTY AND, THEREFORE, A PROPOSAL HAD COME TO THEM. SINCE THEI R COMPANY HAD INVESTED HUGE AMOUNTS IN THE INTERIOR DECORATION AND WAS ALSO GROWING AT THAT TIME, THEY I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 6 PURCHASED THE SAID PROPERTY IN THE YEAR 2002 FOR RS . 65 LAKHS PLUS STAMP DUTY. THE PROPERTY WAS REGISTERED IN THE NAME OF THEIR SISTER, SMT. SAVITRI DEVI, THE ASSESS EE. HE, HOWEVER, MAINTAINED THAT HE AND HIS FATHER HAD PAID PURCHASE CONSIDERATION OF RS. 65 LAKHS ONLY AND NOT MORE THAN THAT. THE RELEVANT PORTION OF THE STATEMENT O F SRI K. SREERAMA MURTHY HAS ALSO BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 8. WITH REGARD TO THE ENTRIES IN THE SEIZED DIARY MENTIONED ABOVE SRI MURTHY ALSO CONFIRMED THE CHEQU E ENTRIES, STATING THAT THE SAME MATCHED WITH THE AMO UNTS MENTIONED IN THE REGISTERED SALE DEED. HE ALSO CON FIRMED THE AMOUNT OF RS. 3 LAKHS RELATING TO THE ADJUSTMEN T OF RENTAL DEPOSIT GIVEN BY M/S. GLOBARENA WEB TECHNOLO GIES LTD. HOWEVER, IN RESPECT OF THE ENTRIES RELATING T O THE CASH PAYMENT AT ITEM NOS. 4, 5, 6, 7, 8, 9 & 10, HE HAD STATED THAT HE DID NOT KNOW WHY AND WHO HAD MADE THOSE ENT RIES IN THE DIARY SHOWN TO HIM. 9. AS DISCUSSED IN THE ASSESSMENT ORDER, DURING THE COURSE OF SEARCH ACTION, SMT. K. RAJANI KUMARI, HAD ALSO BEEN CONFRONTED WITH THE ENTRIES IN THE SEIZED DIAR Y (ANNEXURE A/CRK/04). WHILE SHE INITIALLY STATED TH AT THE SALE CONSIDERATION RECEIVED BY HER WAS RS. 65 LAKHS ONLY, SHE TOOK DIFFERENT STANDS ON DIFFERENT OCCASIONS TO EXPLAIN I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 7 THE ENTRIES AT PAGE NO. 5 OF THE DIARY. HOWEVER, W HILE FILING THE RETURN OF INCOME FOR NOTICE U/S. 153C, SHE ADMI TTED THAT THE SALE CONSIDERATION RECEIVED AGAINST THE SA LE OF THE IMPUGNED PROPERTY WAS RS. 1,40,00,000 AS AGAINST TH E ENTRIES SHOWING RS. 1,65,00,000 IN THE DIARY. THE ASSESSING OFFICER NOTED THAT IN HER CASE, THE ASSES SMENT WAS COMPLETED ADOPTING THE SALE CONSIDERATION AT RS . 1,65,00,000 AND THE CAPITAL GAINS HAD BEEN COMPUTED ACCORDINGLY. HE CONCLUDED THAT THE ADMISSION MADE BY SMT. K. RAJANI KUMARI, THE SELLER OF THE PROPERTY, IN HER RETURN OF INCOME FOR A.Y. 2002-04 PROVED THAT ON M ONEY PAYMENT WAS INVOLVED IN THE SAME OF THE PROPERTY UN DER REFERENCE. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEES REPRESENTATIVE WAS ASKED TO FURNISH THE DETAILS OF PAYMENTS MADE BY THE ASSESSEE FOR THE PURCHASE O F THE PROPERTY. IN RESPONSE, IT WAS STILL SUBMITTED BY H IM THAT THE ASSESSEE WAS NOT AWARE OF THE AMOUNTS INVOLVED, AS THE TRANSACTION HAD BEEN NEGOTIATED BY HER BROTHERS. H E ALSO MAINTAINED THAT THE PURCHASE CONSIDERATION OF RS. 6 5 LAKHS HAD BEEN ARRANGED BY THE ASSESSEES BROTHER BUT DEN IED ANY ON MONEY PAYMENT. IT WAS PLEADED THAT THE AS SESSEE OR HER BROTHERS DO NOT HAVE ANY SOURCES FOR THE PAY MENT OF ON MONEY TO THE TUNE OF RS. 1 CRORE. HE ALSO ARG UED THAT I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 8 NO PROOF OR EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH EVIDENCING PAYMENT OF SUCH MONEY BY THE ASSESSEE OR HER FAMILY MEMBERS. ACCORDINGLY, IT WAS CLAIMED THAT T HE ASSESSEE OR HER FAMILY MEMBERS HAD NOTHING TO DO WI TH THE ENTRIES MADE BY SMT. K. RAJANI KUMAR IN HER DIARY A ND THE SAME COULD NOT BE TREATED AS AN EVIDENCE TO CONCLUD E THAT THEY HAD PAID ON MONEY OF RS. 1 CRORE. HOWEVER, THE ASSESSING OFFICER TREATED THE ON-MONEY PAYMENT AT R S. 100 LAKHS AND TREATED IT AS INCOME OF THE ASSESSEE. 11. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN A PPEAL ON THIS ISSUE BEFORE US. 12. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE AS SESSEE RELIED ON THE FOLLOWING JUDGEMENTS: I. CIT VS. P.V. KALYANASUNDARAM, 294 ITR 49 (SC) II. ITO VS. SANTHOSHKUMAR DALMIA, 208 ITR 337 (CAL.) III. BHOLANATH MAZUMDAR VS. ITO, 221 ITR 608 (GAU.) IV. H.E.H. NIZAM JEWELLERY TRUST. VS. ACWT, 226 ITR 311 (AP). V. CIT VS. JAWHAR MILLS LTD., 226 ITR 330 (ALL.) VI. CHANDRAMOHAN MEHTA VS. ACIT, 65 TTJ 327 (PUNE) VII. ASWINIKUMAR VS. ITO, 39 ITD 183 (DEL) 13. THE CRUX OF THE ARGUMENT OF THE ASSESSEES COUNSEL IS THAT THIRD PARTY STATEMENT CANNOT BE RELIED UPON WI THOUT CORROBORATIVE EVIDENCE AND LOOSE PAPER CANNOT BE A BASIS I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 9 FOR ADDITION. WE HAVE CAREFULLY GONE THROUGH THE S EIZED MATERIAL MARKED AS A/CRK/04 FOUND IN THE COURSE O F THE SEARCH ACTION AT THE PREMISES OF SRI RADHA KRISHNA KUMAR. ADMITTEDLY THERE WAS NO SEARCH ACTION THE CASE OF T HE ASSESSEE. IT IS A LOOSE SLIP CONTAINING CERTAIN EN TRIES RECORDING THE PAYMENT WAS FOUND AT THE PREMISES OF SRI C. RADHA KRISHNA KUMAR. IT DOES NOT CONTAIN EITHER DA TE OF PAYMENT OR NAME OF THE PERSON WHO HAS MADE THE PAYMENT. ACCORDING TO THE DEPARTMENT CRK DENOTES C . RADHA KRISHNA KUMAR, K.R.K. DENOTES K. RAJANI KUMAR I. HOWEVER, NO NAME OF THE ASSESSEE WAS FOUND IN THE L OOSE SHEET. IN SPITE OF THIS THE DEPARTMENT PRESUMED TH AT THE ASSESSEE HAS MADE THE PAYMENT TOWARDS ON-MONEY FOR PURCHASE OF THE PROPERTY BEARING NO. 304-O, ROAD NO . 78, JUBILEE HILLS. THE PROPERTY WAS PURCHASED FROM K. RAJANI KUMARI W/O. RADHA KRISHNA KUMAR FOR A DISCLOSED CONSIDERATION OF RS. 65 LAKHS BY THE ASSESSEE. THE PROPERTY HAS BEEN REGISTERED AND THE SALE DEED WAS EXECUTED FOR A CONSIDERATION OF RS. 65 LAKHS ON 21 ST AUGUST, 2006 WHICH CONSIDERATION HAS BEEN ACCEPTED BY THE STATE REGISTRATION AUTHORITIES. FURTHER NOTHIN G WAS BROUGHT ON RECORD TO SHOW THAT THERE WAS ANY INVOKI NG OF SECTION 50C WHILE COMPLETING THE ASSESSMENT IN THE CASE OF THE SELLER. HOWEVER, THE SELLER SMT. K. RAJANI KUM ARI ADMITTED THE SALE CONSIDERATION AT RS. 1,40,00,000 AS I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 10 AGAINST RS. 1,65,00,000 IN THE SEIZED DIARY. CONTR ARY TO THIS, WHEN THE SWORN STATEMENT WAS RECORDED FROM TH E ASSESSEE ON 15.11.2007, SHE STATED THAT SHE WAS NOT AWARE OF THE ACTUAL CONSIDERATION PAID FOR PURCHASE OF PR OPERTY. THE TRANSACTION WAS NEGOTIATED BY HER BROTHER SHRI K.V. SREERAMA MURTHY AND SHRI K.V. DAKSHINA MURTHY. SHE STATED THAT SHE HAS NO KNOWLEDGE ABOUT THE MATERIAL RECORDED IN THE SEIZED MATERIAL FOUND AT THE PREMIS ES OF C. RADHA KRISHNA KUMAR. FURTHER THE STATEMENT WAS RECORDED FROM SHRI K.V. SREERAMA MURTHY ON 20.11.20 07 WHO HAS STATED THAT THE CONSIDERATION WAS ONLY RS. 65 LAKHS AND HE DOES NOT KNOW WHY OR WHO MADE THESE ENTRIES IN THE DIARY SHOWN TO HIM. HE AND HIS FATH ER HAD PAID ONLY PURCHASE CONSIDERATION OF RS. 65 LAKHS AS RECORDED IN THE SALE DEED. IN SPITE OF THIS, THE A SSESSING OFFICER CONSIDERED THE TOTAL PAYMENT AT RS. 1,65,00 ,000 WHICH INCLUDES AN ENTRY RELATING TO PRONOTE OF RS. 25 LAKHS. IN OUR OPINION, THERE IS NO EVIDENCE OTHER THAN THE SEIZED MATERIAL MARKED AS A/CRK/04 WHERE RELEVANT ENTRIE S ARE MADE AT RS. 1,65,00,000. THE SEIZED MATERIAL WAS N OT FOUND AT THE PREMISES OF THE ASSESSEE AND THERE IS NO CORROBORATIVE MATERIAL TO SUGGEST THAT THE ASSESSEE HAS ACTUALLY PAID RS. 1.65 CRORES TOWARDS PURCHASE CONSIDERATION OF THE PROPERTY. THE ASSESSEE AND HE R BROTHERS CATEGORICALLY DENIED THE PAYMENT OF ANY MO NEY I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 11 OVER AND ABOVE RS. 65 LAKHS. THE ASSESSING OFFICER PLACED HIS RELIANCE ON THE STATEMENT OF SHRI SREERAMA MURT HY, WHO IS A THIRD PARTY. IN OUR OPINION, THE EVIDENCE BROUGHT ON RECORD BY THE DEPARTMENT IS NOT ENOUGH TO FASTEN ADDITIONAL TAX LIABILITY ON THE ASSESSEE. 14. THE LEARNED DR STRONGLY CONTENDED THAT THE PAYMENT OF RS. 65 LAKHS OUT OF RS. 165 LAKHS WAS TALLIED WI TH THE ASSESSEES BOOKS OF ACCOUNT AND THE BALANCE RS. 100 LAKHS WHICH IS EITHER CASH PAYMENT OR PRONOTE IS NOT FIND ING PLACE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. ACC ORDING TO HIM, THE ASSESSEE CONVENIENTLY AVOIDED THESE PAYMEN TS IN HER BOOKS OF ACCOUNT. IT IS NOTHING BUT UNDISCLOSE D INCOME OF THE ASSESSEE. THOUGH THE LEARNED DR ARGUED THAT THERE IS MATERIAL TO SUGGEST ACTUALLY PAYMENT OF ON-MONEY BY THE ASSESSEE, BUT WHAT REMAINS TO BE SEEN IS WHETHER TH E SEIZED MATERIAL A/CRK/04 CAN BE THE BASIS FOR ADDIT ION OF RS. 100 LAKHS. AS SEEN FROM THE ABOVE DOCUMENT THI S IS JUST A HANDWRITTEN LOOSE DOCUMENT AND THE HANDWRITI NG 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 DOC UMENT BELONGS TO THE ASSESSEE. THERE IS NO PRESUMPTION I N LAW THAT THE ASSESSEE HAS ACTUALLY PAID RS. 165 LAKHS T OWARDS PURCHASE OF THE PROPERTY. THE UNDISCLOSED INCOME I N THIS I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 12 CASE IS TO BE COMPUTED BY THE ASSESSING OFFICER ON THE BASIS OF THE AVAILABLE MATERIAL ON RECORD. IT SHOU LD NOT BE BASED ON CONJECTURES AND SURMISES. AS OF NOW, THE MATERIAL CONSIDERED BY THE ASSESSING OFFICER FOR MA KING THE ADDITION OF RS. 1 CRORE IS SEIZED MATERIAL MARKED A S A/CRK/04 AND THE STATEMENT OF SRI K.V. SREERAMA MURTHY. IN OUR OPINION, THIS LOOSE SHEET FOUND AT THE PREMISES OF C. RADHA KRISHNA KUMAR IS NOT ENOUGH MATERIAL TO SUSTAIN THIS ADDITION. THE SEIZED MAT ERIAL FOUND DURING THE COURSE OF SEARCH AND THE STATEMENT RECORDED IS SOME PIECE OF EVIDENCE TO MAKE THE ADDI TION. THE ASSESSING OFFICER HAS TO ESTABLISH THE LINK BET WEEN THE SEIZED MATERIAL AND OTHER BOOKS OF ACCOUNT TO THE A SSESSEE. THE SEIZED MATERIAL A/CRK/04 AND STATEMENT C. RADHA KRISHNA KUMAR CANNOT BE CONCLUSIVE EVIDENCE TO MAKE THIS ADDITION. THE ENTIRE CASE HEREIN IS DEPENDING UPON THE RULE OF EVIDENCE. THERE IS NO CONCLUSIVE PRESUMPTI ON TO SAY THAT ACTUAL CONSIDERATION PASSED ON BETWEEN THE PARTIES IS ACTUALLY RS. 165 LAKHS. IN THE PRESENT CASE THE ASSESSEE AS WELL AS HER BROTHER STATED IN THEIR RES PECTIVE STATEMENTS THAT THE CONSIDERATION PASSED BETWEEN TH E PARTIES IS ONLY RS. 65 LAKHS. IN SPITE OF THIS THE ASSESSING OFFICER PROCEEDED TO CONCLUDE THAT THE SEIZED MATER IAL IS CONCLUSIVELY REFLECTING THE PAYMENT OF CONSIDERATIO N AT RS. 165 LAKHS. THE DEPARTMENT HEREIN IS REQUIRED TO ES TABLISH I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 13 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 MAT ERIAL DENOTES THE PAYMENT MADE BY THE ASSESSEE TO THE PURCHASER FOR PURCHASE OF THE PROPERTY. HOWEVER, W E FIND NO SUCH NARRATION OR NAME OF THE ASSESSEE IN THE SE IZED MATERIAL. THE DEPARTMENT IS NOT ABLE TO UNEARTH AN Y DOCUMENT OR MATERIAL OR ANY CORROBORATIVE MATERIAL TO SHOW THAT THE ASSESSEE HEREIN ACTUALLY PAID RS. 165 LAK HS FOR PURCHASE OF THE PROPERTY. THE DEPARTMENT HAS NOT B ROUGHT ON RECORD THE DATE ON WHICH THE PAYMENT WAS MADE AN D THE SOURCE FROM WHICH IT IS PAID AND OR ANY DETAILS OF BANK ACCOUNT FROM WHERE THE CASH WAS WITHDRAWN. WITHOUT ANY OF THESE DETAILS, THE DEPARTMENT HAS TAKEN A VIEW T HAT THE ASSESSEE HAS PAID RS. 165 LAKHS FOR PURCHASE OF THE PROPERTY. THE DEPARTMENT CANNOT DRAW INFERENCE ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES. SUSP ICION, HOWEVER, STRONG CANNOT TAKE PLACE OF MATERIAL IN SU PPORT OF THE FINDING FROM THE ASSESSING OFFICER. THE ASSESS ING OFFICER SHOULD ACT IN A JUDICIAL MANNER, PROCEED WI TH JUDICIAL SPIRIT AND COME TO A JUDICIAL CONCLUSION. THE ASSESSING OFFICER IS REQUIRED TO ACT FAIRLY AS A RE ASONABLE PERSON AND NOT ARBITRARILY AND CAPRICIOUSLY. THE ASSESSMENT MADE SHOULD HAVE ENOUGH MATERIAL AND IT SHOULD STAND ON ITS OWN LEGS. THE BASIS FOR ADDITI ON I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 14 CANNOT BE ONLY THE LOOSE SHEET OR A THIRD PARTY STA TEMENT. IN THE ABSENCE OF CORROBORATIVE MATERIAL, CIRCUMSTA NTIAL EVIDENCE, WE ARE NOT IN A POSITION TO SUSTAIN THE A DDITION. IN OUR OPINION, 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 EVIDENC E ON RECORD IS NOT SUFFICIENT TO SUPPORT THE REVENUES A CTION. IN A BLOCK ASSESSMENT UNDISCLOSED INCOME HAS TO BE DETERMINED ON THE BASIS OF THE MATERIAL AND EVIDENC E DETECTED IN THE COURSE OF THE SEARCH ACTION. THE CIRCUMSTANCES SURROUNDING THE CASE ARE NOT STRONG E NOUGH TO JUSTIFY THE ADDITION MADE BY THE DEPARTMENT. 15. FURTHER IN THE CASE OF CIT VS. SRI KALYANASUNDARAM (SUPRA), THE HONBLE SUPREME COURT AFFIRMING THE DE CISION OF THE HIGH COURT HELD THAT THE THE IMPLICATION OF THE CONTRADICTORY STATEMENTS MADE BY VENDOR OR WHETHER RELIANCE COULD BE PLACED IN THE LOOSE SHEETS RECOVE RED IN THE COURSE OF THE RAID WERE ALL QUESTION OF FACT. WHILE HOLDING SO THE SUPREME COURT CONFIRMED THE JUDGEMEN T OF MADRAS HIGH COURT IN THE CASE OF CIT VS. C.V. KALYA NA SUNDARAM, 282 ITR 259 (MAD) WHEREIN IT WAS HELD THA T THE BURDEN OF PROVING ACTUAL CONSIDERATION IN SUCH A TRANSACTION IS ON THE REVENUE. THE ASSESSING OFFIC ER DID NOT CONDUCT ANY INDEPENDENT ENQUIRY RELATING TO THE VALUE I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 15 OF PROPERTY PURCHASED. HE MERELY RELIED ON THE STA TEMENT GIVEN BY THE SELLER. THE DELETION OF ADDITION WAS JUSTIFIED. IN THE PRESENT CASE ALSO, THE BURDEN OF PROVING THE ACTUAL CONSIDERATION IN THE PURCHASE OF PROPERTY IS ON THE REVENUE. CONSIDERING THE ENTIRE FACTS OF THE CASE, WE FIND THAT THE REVENUE HAS FAILED TO DISCHARGE ITS DUTY. INSTEAD MADE UP A CASE ON SURMISES AN CONJECTURES WHICH CAN NOT BE ALLOWED. UNDER THESE CIRCUMSTANCES, WE FIND NO REASON TO CONFIRM THE ADDITION OF RS. 100 LAKHS TOWARDS ON -MONEY PAYMENT. ACCORDINGLY, THE ADDITION OF RS. 100 LAKH S IS DELETED. 16. THE NEXT GROUND IS WITH REGARD TO ADDITION OF RS. 5 LAKHS WHICH WAS RECEIVED FROM THE ASSESSEES FATHER . THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE IS S AID TO HAVE RECEIVED A SUM OF RS. 5 LAKHS FROM HER FATHER LATE SRI K.V. MALLIKARJUN RAO WHICH WAS TREATED AS NOT GENUINE AN D THE ASSESSING OFFICER MADE THE ADDITION TOWARDS THIS AM OUNT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES FATHER WAS NO MORE AND AS SUCH THE ASSES SEE WAS UNABLE TO PRODUCE THE CONFIRMATION LETTER. HOW EVER, THE DEPARTMENT HAS NOT DOUBTED THE FACT THAT THE GI FT WAS RECEIVED FROM HER FATHER. ACCORDING TO THE ASSESSE ES COUNSEL THE GIFT HAS BEEN GIVEN ON ACCOUNT OF NATUR AL LOVE AND AFFECTION TO SETTLE THE LIFE OF THE ASSESSEE. WE HAVE I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 16 CAREFULLY EXAMINED THE FACTS OF THE CASE. IN OUR O PINION, OUT OF NATURAL LOVE AND AFFECTION TO SETTLE THE LIF E OF HIS DAUGHTER ASSESSEES FATHER HAS GIVEN THE GIFT OF RS . 5 LAKHS. WE FIND NO REASON TO SUSTAIN THIS ADDITION. ACCORD INGLY PLACING RELIANCE ON THE JUDGEMENT OF THE HONBLE SU PREME COURT IN THE CASE OF CIT VS. P. MOHAN KALA (291 ITR 278) WHEREIN IT WAS HELD THAT WHERE THERE IS A RELATION BETWEEN THE DONOR AND THE DONE AND THERE WAS AN OCCASION TO MAKE GIFT, THE SAME HAS TO BE CONSIDERED AS GENUINE. IN THE PRESENT CIRCUMSTANCES, THE DONOR WAS ASSESSEES FAT HER AND THE GIFT WAS GIVEN TO SETTLE THE LIFE OF HIS DA UGHTER, THE ASSESSEE, AND THE DONOR BEING A FATHER, IT IS NATUR AL IN THE INDIAN SOCIAL SYSTEM TO GIVE GIFT TO DAUGHTERS. AC CORDINGLY WE DELETE THE ADDITION. 17. THE LAST GROUND IS WITH REGARD TO ADDITION OF RS. 5 LAKHS LOAN OBTAINED FROM S. SUDHA RANI WIFE OF SHRI VEERAIAH CHOUDHURY. THIS LOAN WAS SAID TO HAVE BEE N RECEIVED FROM S. SUDHA RANI WHOSE HUSBAND SRI VEERA IAH CHOUDHURY WAS FRIEND OF ASSESSEES FATHER LATE SRI K.V. MALLIKARJUN RAO. HOWEVER, THE ASSESSEE COULD NOT F URNISH ANY CONFIRMATION LETTER EXCEPT FURNISHING OF A SELF DECLARATION. THE ASSESSEE ALSO STATED THAT SHE DOE S NOT KNOW SMT. S. SUDHA RANI PERSONALLY. BEING SO, THIS UNSUBSTANTIATED CREDIT CANNOT BE CONSIDERED AS GENU INE I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 17 AND THE SAME HAS TO CONSIDERED AS INCOME OF THE ASS ESSEE AND TO BE BROUGHT TO TAX. THE ASSESSEE HAS NOT PRO VED THE GENUINENESS OF THIS AMOUNT. THE ADDITION IS SUSTAI NED. ACCORDINGLY THIS GROUND IS DISMISSED. 18. IN THE COURSE OF HEARING THE ASSESSEE FILED AN ADDITIONAL GROUND STATING THAT NOTICE ISSUED U/S. 1 53A IS BAD IN LAW SINCE THERE WAS NO SEARCH ACTION U/S. 13 2 IN THE CASE OF THE ASSESSEE. AT THE BEST A NOTICE U/S. 15 3C OUGHT TO HAVE BEEN ISSUED. BEFORE US, THIS GROUND IS NOT PRESSED. MORE SO, THE PROVISIONS OF SECTION 292BB WHICH STAT ES THAT WHEN THE ASSESSEE COOPERATED IN THE COURSE OF THE ASSESSMENT AND EXPRESSED NO OBJECTION, ON THIS POIN T THE ASSESSEE CANNOT HAVE ANY GRIEVANCE. AS SUCH THIS G ROUND IS DISMISSED. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2011. SD/- (G.C. GUPTA) VICE PRESIDENT SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST MARCH, 2011 TPRAO I.T.A. NO. 1504/HYD/2010 SMT. K.V. LAKSHMI SAVITRI DEVI ======================= 18 COPY FORWARDED TO: 1. SMT. K.V. LAKSHMI SAVITRI DEVI, C/O. M/S. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD-82. 2. THE ASST. CIT, CIRCLE 6(1), HYDERABAD. 3. THE CIT(A)-IV, HYDERABAD 4 THE CIT-III, HYDERABAD 5. THE DR A BENCH, ITAT, HYDERABAD