SMT. ASHA M. AGRAWAL, Nagpur V. ACIT-CENTRAL-CIRCLE-1(2), Nagpur

ITA 228/NAG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3118 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 17-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: HIMESH DEMBLE
• Keywords: Unexplained investment; Loose papers

Judgement Text

1 ITA NO. 228/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. ITA NO. 228/NAG/2014 ASSESSMENT YEAR : 2007 - 08. S MT. ASHA M. AGRAWAL, ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CENTRAL CIRCLE - 1(2), NAGPUR. PAN A BEPA4491Q APPELLANT. RESPONDENT. APPELLANT BY : SHRI HIMESH DEMBLE. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 05 - 01 - 2016 DATE OF PRONOUNCEMENT : 25 - 02 - 2016. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - III, NAGPUR DATED 05 - 03 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2007 - 08. THE GROUND OF APPEAL READS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) - III, WAS TOTALLY ARBITRARY AND UNJUSTIFIED IN UPHOLDING THE ACTION OF THE A.O. AND IN CONFIRMING THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS.3,92,500/ - IN CASH OVER AND ABOVE THE AMOUNT OF HIS SHARE IN THE EXECUTED SALE. 2. THE FACTS RELATING TO THIS CASE ARE SIMILAR TO THE ONE DEALT WITH BY US IN ITA NO. 224/NAG/2014 VIDE ORDER OF EVEN DATE. AS A MATTER OF FACT THE ASSESSEE WAS CO - OWNER OF THE PROPERTY ON THE SALE OF WHICH ADDI TION HAS BEEN MADE IN 2 ITA NO. 228/NAG/2014 THE HANDS OF ALL THE THREE CO - OWNERS. HENCE WE MAY GAINFULLY REFER TO OUR ADJUDICATION IN THE SAID CASE WHICH READS AS UNDER : 2. BRIEF FACTS OF THE CASE ARE THAT THE AO REFERRED TO SOME LOOSE PAPERS FOUND DURING THE COURSE OF SEARC H IN WHICH DETAILS WERE MENTIONED REGARDING THE PURCHASE OF AGRICULTURAL LAND BY THE ASSESSEE JOINTLY ALONG WITH SMT. AASHADEVI AGRAWAL AND ROHIT M. AGRAWAL. A DRAFT AGREEMENT WAS FOUND WHICH SHOWS THE PRICE AT RS.51,62,300/ - . ANOTHER DRAFT SALE AGREEMENT WAS FOUND WHICH SHOWED THIS CONSIDERATION AT RS.35,32,100/ - . THE FINAL SALE DEED WAS EXECUTED FOR RS.36,32,100/ - . FROM THIS, REVENUE AUTHORITIES INFERRED THAT THE ASSESSEE HAS PAID BALANCE OF RS.15,30,000/ - IN CASH OVER AND ABOVE THE AMOUNT OF EXECUTED SA LE DEED. IN THE LOOSE SHEET THERE ARE ALSO MENTION OF CASH OF RS.17 LAKHS. IN THESE CIRCUMSTANCES THE AO HELD THAT THE ASSESSEE HAD PAID BALANCE OF RS.15,30,000/ - IN CASH ALONG WITH HIS BROTHER AND MOTHER TOWARDS PURCHASE OF THE SAID LAND. THE AO ADDED THE ASSESSEES SHARE AT RS.7,85,000/ - AS UNEXPLAINED INVESTMENT. 3. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT WHATEVER FOUND IN SEARC H WAS A DRAFT AGREEMENT WHICH DID NOT CARRY SIGNATURE OF ANY OF THE PARTIES. LEARNED COUNSEL SUBMITTED THAT THIS AGREEMENT HAS NO LEGAL SANCTITY. IT WAS MERELY AT DISCUSSION STAGE. HE FURTHER SAID THAT AS A MATTER OF FACT THERE WAS ONE MORE DRAFT AGREEME NT WHICH WAS FOUND AT THE TIME OF SEARCH WHICH WAS EQUAL TO THE AMOUNT ON WHICH THE TRANSACTION WAS ACTUALLY REGISTERED. LEARNED COUNSEL FURTHER SUBMITTED THAT THE LOOSE SHEET WHICH THE REVENUE HAS RELIED UPON IS A JOTTING WITHOUT ANY SIGNATURE. LEARNED CO UNSEL SAID THAT THESE ARE DUMB DOCUMENTS AND CANNOT BE A BASIS OF ADDITION ON ACCOUNT OF ON - MONEY PAYMENT. LEARNED COUNSEL SUBMITTED THAT THE STAMP VALUATION AUTHORITY HAS VALUED THE PLOT AT A MUCH LOWER FIGURE AND THE ASSESSEE HAS PURCHASED THE SAME AT A VERY HIGHER FIGURE. SO THERE CANNOT BE ANY CASE OF UNDERVALUATION. LEARNED COUNSEL FURTHER REFERRED THE FOLLOWING CASE LAWS: 1. CIT VS. D.K. GUPTA 308 ITR 230 (DEL.). 2. CIT VS. VED PRAKASH CHOUDHARY 305 ITR 245 (DEL.). 3. K.P. VERGHESE VS. ITO 131 ITR 597 (SC). 4. CIT VS. SHIVAKAMI CO. (P) LTD. 159 ITR 71 (SC). 3 ITA NO. 228/NAG/2014 5. DCIT VS. M/S RAJ SRI CONSTRUCTION, ITA NO. 281/NAG/2014 (ITAT) 6. CIT VS. P.V. KALYANSUNDARAM (CIVIL APPEAL NO. 4262/2007) (SC). 5. PER CONTRA LEARNED D.R. SUBMITTED THAT THE REVENUE CA NNOT BE EXPECTED TO SUBMIT ABSOLUTE AND FULL PROOF EVIDENCE OF ON - MONEY PAYMENT. LEARNED D.R. SUBMITTED THAT THE LOOSE SHEET FOUND DURING THE SEARCH CLEARLY MENTIONED THE PAYMENT OF CASH AMOUNT OVER AND ABOVE THE AMOUNT PAID REFLECTED IN THE REGISTRATION DOCUMENT. HENCE HE SUBMITTED THAT THE ADDITION SHOULD BE CONFIRMED. 6. UPON CAREFUL CONSIDERATION, WE FIND THAT IN THE SEARCH TWO DRAFT SALE AGREEMENT WERE FOUND. ONE DRAFT AGREEMENT REFLECTED A HIGHER AMOUNT AND ONE DRAFT AGREEMENT REFLECTED THE AMOUNT EQ UAL TO THE ONE WHICH WAS REGISTERED. HENCE REVENUES RELIANCE ON ONE OF THE DRAFT AGREEMENT WHICH IS NOT SIGNED BY ANY OF THE PARTIES FOR MAKING AN ADDITION AS UNDISCLOSED INCOME IS NOT SUSTAINABLE DEHORSE ANY OTHER CORROBORATIVE MATERIAL. THE LOOSE SHEET WHICH HAS BEEN REFERRED BY THE REVENUE IS ALSO AN UNSIGNED DOCUMENT. NO CASE HAS BEEN MADE BEFORE US THAT IT WAS IN THE SIGNATURE AND HANDWRITING OF THE ASSESSEE. WE ALSO NOTE THAT THE VALUE AT WHICH THE AGREEMENT WAS EXECUTED WAS MUCH HIGHER THAN THE VA LUE ADOPTED BY THE STAMP VALUATION AUTHORITY FOR REGISTRATION PURPOSES. IN THESE CIRCUMSTANCES, WE AGREE WITH THE LEARNED COUNSEL OF THE ASSESSEE THAT THE DOCUMENTS BEING REFERRED BY THE REVENUE ARE DUMB DOCUMENTS AND CANNOT BE A BASIS FOR ADDITION FOR ON - MONEY PAYMENT. 7. IN THIS REGARD WE MAY REFER TO THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. P.V. KALYANSUNDERAM IN CIVIL APPEAL NO. 4262 OF 2007 VIDE ORDER DATED 14 - 09 - 2007. IN THIS CASE REVENUE CASE OF ON - MONEY PAYMENT WAS SET ASIDE BY THE L EARNED CIT(APPEALS) WHICH WAS AFFIRMED BY THE TRIBUNAL AND THE HONBLE HIGH COURT AND HONBLE APEX COURT. THE FACTS OF THE CASE AND THE TRIBUNALS DISMISSAL AS NOTED BY THE APEX COURT IS AS UNDER : THE RESPONDENT - ASSESSEE VIDE A REGISTERED SALE DEED D ATED 26.10.19913 PURCHASED CRTAIN LAND AT BRINDAVAN ROAD, EAIRLANDS, SALEM [OR A SUM OF RSA.L0 LAKHS. DURING A SEARCH OF THE OFFICE AND RESIDENTIAL PREMISES OF POLIMER NET WORK, CERTAIN NOTES ON LOOSE SHEETS ALLEGEDLY IN THE HANDS OF THE RESPONDENL WERE FOUND AND SEIZED BY THE DEPARTMENT. IN HIS STATEMENT RECORDED ON 8.12.1998, THE ASSESSEE SUBMITTED THAT HE COULD NOT REMEMBER AS TO WHY THE NOTINGS HAD BEEN MADE. THE STATEMENT WAS FURTHER CONFIRMED BY ANOTHER STATEL1LENT ON 11.12.1998.. THE DEPARTMENT ALSO RECORDED THE STATEMENT OF THE VENDOR RAJARAT HINARN OIL 8 - 12 - 98 WHICH LOO WAS CONFIRMED ON 11.12.19 98 IN WHICH HE ADMITTED THAT HE HAD IN FACT RECEIVED A LOTAL CONSIDERATION OF RS.34.35 LAKHS AND THAT THE SUM OF RS. 4.10 LAKHS REFLEC TED IN THE SALE DEED HAD BEEN RECEIVED BY HIM BY WAY OF A DEMAND DRAFT AND THE BALANCE IN CASH. RAJARATHINAM HOWEVER RETRACTED FRORN HIS STATEMENT ON 8.1.1999 AND FILED AN AFFIDAVIT DEPOSING THAT THE SALE PRICE WAS RS 4.10 LAKHS ONLY AND THAT HIS STATEME NTS EARLIER GIVEN 4 ITA NO. 228/NAG/2014 TO THE AUTHORITIES WERE INCORRECT. IN A SUBSEQUENT STATEMENT RECORDED ON 20.11.:200L) RAJARATHINAM AGAIN REVERTED TO HIS EARLIER PORTION AND DEPOSED THAT THE SALE PRICE WAS RS.34.85 LAKHS.THE ASSESSING OFFICER CONCLUDED THAT THE SALE C ONSIDERATION WAS ACTUALLY 34.85 LAKHS AND NOT RS. 4.10 LAKHS AS HAD BEEN RECITED IN THE SALE DEED. HE ACCORDINGLY ADOPTED THE AFORESAID ENHANCED FIGURE FOR THE PURPOSE OF ASSESSMENT AND MADE AN ADDITION OF RS.3.75.005/ - AS UNDISCLOSED INCOME FOR THE BROKEN PERIOD 1.4.1998 TO 8.L2.1998. THE MATTER \ VAS THEREAFTER TAKEN TO THE COMMISSIONER OF INCOME - TAX (APPEALS), WHO AFTER EXAMINING THE CUT IRE MATTER. OBSERVED THAT THE STATEMENTS GIVEN BY RAJARATHINAM COULD NOT BE RELIED UPON MORE PARTICULARLY AS TH E FLOOR PRICE FIXED BY THE AUTHORITIES FOR SUCH PROPERTY WAS MUCH LOWER THAN THE VALUE WHICH WOULD RESULT IF THE SALE DEED HAD BEEN REGISTERED AT RS.34.85 LAKHS. THE COMMISSIONER ACCORDINGLY DELE LED THE ADDITION MADE. AN APPEAL WAS THEREAFTER PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER BEFORE THE INCOME - TAX APPELLATE TRIBUNAL. THE TRIBUNAL IN ITS ORDER DATED 6TH JULY 2005 HELD THAT THE NOTINGS ON THE LOOSE PIECES OF PAPER ON THE BASIS OF WHICH THE INITIAL SUSPICION WITH REGARD TO TH E UNDER VALUATION HAD BEEN RAISED WERE VAGUE AND COULD NOT BE RELIED UPON AS IT APPEARED THAT THE TOTAL AREA WITH RESPECT T O THE SALE DEEDS AND THAT REFLECTED IN THE LOOSE SHEET WAS DISCREPANT. LL WAS ALSO OBSERVED THAT AS PER THE GUIDELINES F OR REGISTR ATION THE FAIR VALUE F OR REGISTRATION ON THE RELEVANT DATE WAS RS.244/ - TO R S.4 OO/ - PER S.FT. AND THE SALE CONSIDERATION F OR RS.850/ - PER S.FT. CLAIMED BY THE REVENUE WAS UNREALISTIC AND IGNORED THE GROUND SITUATION. IT WAS FURTHER HELD THAT THE TAX O F APPROXIMATELY RS. 1,84 4,000/ - DETERMINED ON THE BASIS OF THE ADDITION WOULD NOT SHOW THAT THE ASSESSEE HAD ACQUIESCED IN THE ADDITION MADE BY THE DEPARTMENT OR THAT IT WAS CONCLUSIVE EVIDENCE OF THE SALE PRICE AS THE DEPOSIT HAD BEEN MADE IN AN OBVIOU S EFFORT TO SAVE HIMSELF FROM FURTHER HARASSMENT FROM THE REVENUE AND T O ESCAPE A MUCH HIGHER LIABIL ITY TO THE PAYMENT OF LAX ON UNDISCLOSED INCOME SHOULD PROCEEDINGS U1FLER SECTION 158 BD OF THE ACT BE INITIATED. ON THESE FINDINGS, THE TRIBUNAL DISMISSED THE APPEAL. REVENUES APPEAL AGAINST THE ABOVE ORDER WAS DISMISSED BY THE HONBLE MADRAS HIGH COURT. REVENUE APPEALED AGAINST THE ABOVE BEFORE THE HONBLE APEX COURT WHICH WAS ALSO DISMISSED. WE FIND THAT THE FACTS MENTIONED IN THE ABOVE CASE ARE SIMILAR TO THE PRESENT CASE. HERE ALSO LOOSE SHEETS WERE FOUND WHICH DID NOT CARRY ANY SIGNATURE. FURTHER MORE THE VALUE AT WHICH THE PROPERTY HAS BEEN REGISTERED IN THE PRESENT CASE IS MUCH HIGHER THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORIT Y FOR STAMP VALUATION PURPOSES. HENCE THE ABOVE PRECEDENT SQUARELY APPLIES TO THE PRESENT CASE. 8. FURTHER MORE WE ALSO NOTE THAT IN SIMILAR CASE OF REVENUES CLAIM OF ON - MONEY TRANSACTION BASED ON A DRAFT SALE AGREEMENT FOUND DURING THE SEARCH, THIS TR IBUNAL IN ITA NO. 281/NAG/2014 IN THE CASE OF M/S RAJ SRI CONSTRUCTION VIDE ORDER DATED 6 TH NOV., 2015 HAD DELETED A SIMILAR ADDITION. THE TRIBUNAL HAD HELD THAT THERE ARE SEVERAL DECISIONS WHERE IT WAS HELD THAT UNLESS THERE WAS EVIDENCE TO DEMONSTRATE TH AT A HIGHER PRICE WAS ACTUALLY TRANSACTED THAN THE PRICE STATED IN THE DOCUMENT, NO ADDITION SHOULD BE MADE MERELY ON APPREHENSION OR SURMISES. 9. WE FURTHER PLACE RELIANCE UPON THE HONBLE APEX COURT DECISION IN THE CASE OF K.P. VARGHESE 131 ITR 597. IN T HIS CASE IT WAS EXPOUNDED THAT ONUS 5 ITA NO. 228/NAG/2014 WAS UPON THE REVENUE TO PROVE THAT THERE IS AN UNDERSTATEMENT TO THE CONSIDERATION AT WHICH THE TRANSACTION WAS ENTERED INTO. IN THIS CASE WE FIND THAT THE REVENUE HAS FAILED TO DISCHARGE THIS ONUS. ACCORDINGLY RESPECTF ULLY FOLLOWING THE PRECEDENTS AS ABOVE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITIONS MADE. 3. SINCE THE FACTS ARE IDENTICAL, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION IN THIS CASE. 4. IN THE RE SULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEB. , 2016. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 25 TH FEB. , 2016. COPY FORWARDED TO : 1. S MT. ASHA M. AGRAWAL, PLOT NO.2, GHATATE LAYOUT, CIVIL LINES, NAGPUR. 2. A.C.I.T., CENTRAL CIRCLE - 1(2), NAGPUR. 3. COMMISSIONER OF INCOME - TAX - , NAGPUR. 4. CIT(A PPEALS) - III, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.