RIVERIA PROPERTIES P. LTD, MUMBAI V. ITO CIR 7(2)(1), MUMBAI

ITA 250/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8905 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 08-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Search and seizure; Loose papers; Document seized; Opportunity of cross examination; Tangible material; Fair market value; Corroborative evidences; Third party statement; Valuation report; Assessment record; Block assessment; Reason to believe; Documents seized
• Section: 50C; 142(1); 147; 131; 148; 132

Judgement Text

1 RIVERA PROPERTIES PVT LTD IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) I.T.A NO.250/MUM/2013 (ASSESSMENT YEAR 2006-07) M/S RIVERIA PROPERTIES PVT LTD 203, READY MONEY TERRACE, 167, DR. A.B. ROAD, MUMBAI- 18 PAN : AACCR7187A VS ITO, CIR.7(2)(1), MUMBAI APPELLANT RESPONDEDNT I.T.A NO.2748/MUM/2016 (ASSESSMENT YEAR 2006-07) M/S RIVERIA PROPERTIES PVT LTD 203, READY MONEY TERRACE, 167, DR. A.B. ROAD, MUMBAI- 18 PAN : AACCR7187A VS ITO, CIR.7(2)(1), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI HARI RAHEJA RESPONDENT BY SHRI PURUSHOTTAM KUMAR DATE OF HEARING 11-09-2017 DATE OF PRONOUNCEMENT 27-10-2017 O R D E R PER D.T. GARASIA, JM : THESE ARE APPEALS FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF CIT(A)-13, MUMBAI AND ORDER OF THE CIT(A)-14, MUMBA I DATED 28-01-2016 FOR 2 RIVERA PROPERTIES PVT LTD THE ASSESSMENT YEAR 2006-07. SINCE FACTS ARE IDENT ICAL AND ISSUES ARE COMMON, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY ENGAGED IN THE BUSINESS OF DEVELOPMENT OF PROPERTIES AND CONSTRUCT ION FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 30-11-200 6 DECLARING TOTAL INCOME OF RS.6,830/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE INCOME- TAX ACT, 1961. SUBSEQUENTLY, THE CASE WAS REOPENED U/S 147 OF THE ACT FOR THE REASONS RECORDED WHICH STATES THAT THE INFORMATION GATHERED DURING THE COURSE OF SEARCH IN THE CASE OF M/S HICONS GROUP OF COMPAN IES REVEALED THAT THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY FOR A CONSIDER ATION OF RS.170 LAKHS AS PER REGISTERED DEED OF CONVEYANCE WHEREAS THE ACTUA L CONSIDERATION RECEIVED FOR SALE OF PROPERTY IS RS.475 LAKHS WHICH INCLUDES RS.170 LAKHS PAID BY CHEQUE AND RS.305 LAKHS PAID BY CASH. BASED ON THE INFORM ATION RECEIVED FROM INVESTIGATION WING THE AO REOPENED THE ASSESSMENT F OR THE REASONS RECORDED BY HIM. IN RESPONSE TO NOTICE U/S 148 THE AUTHORIZ ED REPRESENTATIVE OF THE ASSESSEE, M/S DALAL & DALAL, CAS STATED THAT THE RE TURN ORIGINALLY FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 1 48 OF THE ACT. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHO RIZED REPRESENTATIVE OF THE 3 RIVERA PROPERTIES PVT LTD ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED T HE DETAILS, AS CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT INFORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT IN CONNECTION WITH SEARCH PROCEEDINGS IN THE CASE OF HICONS GROUP OF COMPANIE S REVEALED THAT THE ASSESSEE HAS RECEIVED RS.305 LAKHS IN CASH TOWARDS SALE OF PROPERTY WHICH HAD NOT BEEN DISCLOSED IN THE RETURN OF INCOME FILED FO R THE RELEVANT ASSESSMENT YEAR. THE AO FURTHER OBSERVED THAT THE SEIZED DOCU MENT IN THE FORM OF CASH BOOK CONTAINED CERTAIN FINANCIAL TRANSACTIONS IN TH E NAME OF ASSESSEE COMPANY WHICH STATES THAT M/S HICONS GROUP HAS PAID RS.3.05 CRORES IN CASH FOR PURCHASE OF PROPERTY FROM ASSESSEE COMPANY. THE DI RECTOR OF M/S HICONS CONSTRUCTIONS PVT LTD , MR. RAFIQUE MOHD NAZIR SHEI KH, IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT ADMITTED THAT THE TR ANSACTIONS RECORDED IN THE IMPUGNED SEIZED MATERIAL RELATED TO CASH RECEIPTS A ND CASH PAYMENTS IN RESPECT OF SALE / PURCHASE OF PROPERTIES. BASED ON THE INFORMATION GATHERED DURING THE COURSE OF SEARCH, THE ADIT (INV), UNIT 3 (2), MUMBAI ISSUED SUMMONS U/S 131 OF THE ACT TO M/S RIVERIA PROPERTIES PVT LT D FOR CAUSING NECESSARY EXAMINATION OF THE DIRECTORS THEREOF IN THE CONTEXT OF INFORMATION RELATING TO CASH EXPENDITURE INCURRED BY M/S HICONS CONSTRUCTIO NS. THE STATEMENT OF SHRI BHAGWAN D RATHOD, DIRECTOR OF M/S RIVERIA PROPERTIE S PVT LTD WAS RECORDED ON OATH U/S 131 OF THE INCOME-TAX ACT, 1961 TO ASCERTA IN WHETHER THE SAID CASH 4 RIVERA PROPERTIES PVT LTD RECEIPTS HAD BEEN ACCOUNTED FOR IN THE BOOKS OF THE ASSESSEE COMPANY. SHRI BHAGWAN D RATHOD, DIRECTOR OF THE ASSESSEE COMPANY IN THE STATEMENT RECORDED DURING THE COURSE OF INVESTIGATION CATEGOR ICALLY DENIED OF HAVING RECEIVED ANY CASH FROM M/S HICONS CONSTRUCTIONS PVT LTD FOR SALE OF PROPERTY. HE FURTHER STATED THAT THE PROPERTY HAS BEEN SOLD B Y AN INDENTURE DATED 06-05- 2005 FOR A CONSIDERATION OF RS.170 LAKHS AND THE SA ME HAS BEEN DISCLOSED IN THE RETURN OF INCOME FILED FOR THE RELEVANT ASSESSM ENT YEAR. THE ASSESSEE HAS REITERATED ITS STAND TAKEN AT THE TIME OF INVESTIGA TION BEFORE THE AO AND SUBMITTED THAT THE COMPANY DOES NOT RECEIVE ANY AMO UNT OVER AND ABOVE WHATEVER STATED IN THE SALE DEED FOR SALE OF PROPER TY. THE AO, AFTER CONSIDERING THE RELEVANT SUBMISSIONS OF THE ASSESSE E AND ALSO TAKING INTO ACCOUNT THE INFORMATION RECEIVED FROM THE INVESTIGA TION WING OBSERVED THAT THE ASSESSEE FAILED TO FURNISH ANY DETAILS WITH RES PECT TO ALLEGED CASH PAYMENT RECEIVED FOR SALE OF PROPERTY FROM M/S HICONS CONST RUCTIONS PVT LTD. THE AO FURTHER OBSERVED THAT THOUGH THE ASSESSEE SOUGHT FO R CROSS EXAMINATION OF THE DIRECTOR OF M/S HICONS CONSTRUCTIONS PVT LTD DID NO T ACCEPT AN OPPORTUNITY OF CROSS EXAMINATION. HE OPINED THAT AS PER THE CLEAR CUT PROOF OF PAYMENT MADE IN CASH OF RS.3.05 CRORES AND ALSO THE FACT THAT TH E DIRECTOR OF M/S HICONS CONSTRUCTION PVT LTD HAS ACCEPTED THAT THEY HAVE PA ID CASH FOR PURCHASE OF PROPERTY MADE ADDITIONS OF RS.3.05 CRORES U/S 69A O F THE INCOME-TAX ACT, 1961. 5 RIVERA PROPERTIES PVT LTD THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1 )(C) FOR CONCEALMENT OF PARTICULARS OF INCOME. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PRE FERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE CHALLE NGED REOPENING OF ASSESSMENT ON THE GROUND THAT THE AO HAS REOPENED A SSESSMENT ONLY ON THE BASIS OF THIRD PARTY STATEMENT WITHOUT THERE BEING ANY TANGIBLE MATERIAL IN HIS POSSESSION. THEREFORE, THE REOPENING OF ASSESSMENT IS BAD IN LAW AND CONSEQUENT ASSESSMENT ORDER SHOULD BE QUASHED. AS REGARDS ADDITIONS MADE BY THE AO TOWARDS ON-MONEY RECEIVED FOR SALE PROPER TY, THE ASSESSEE HAS DENIED OF HAVING RECEIVED ANY MONEY OVER AND ABOVE WHATEVER STATED IN THE SALE DEED AND ALSO REQUESTED FOR COPIES OF STATEMEN T OF DIRECTOR OF M/S HICONS CONSTRUCTIONS PVT LTD AND DOCUMENTS SEIZED IN THE P REMISES OF HICONS GROUP OF COMPANIES. 4. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAS DELIBERATELY FAILED TO FURNISH ANY EXPLANATION / ARGUMENTS AND ALSO TO UPHOLD THE APPELLATE PROCEEDI NGS ON THE PRETEXT OF REQUESTING COPIES OF DOCUMENTS. THE CIT(A) FURTHER OBSERVED THAT WHEN THE AO AGREED FOR PROVIDING COPIES OF DOCUMENTS, THE AS SESSEE REFUSED TO AVAIL SUCH OPPORTUNITY. IN FACTS AND CIRCUMSTANCES IT WA S HELD THAT THE ASSESSEE HAD NO SUBMISSIONS / ARGUMENTS TO DEFEND ITS CASE. THE CIT(A) FURTHER OBSERVED 6 RIVERA PROPERTIES PVT LTD THAT UNDER THESE FACTUAL CIRCUMSTANCES, THE AO WAS JUSTIFIED IN MAKING ADDITIONS OF RS.3.05 CRORES U/S 69A OF THE ACT. AG GRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD.CI T(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN REOPENING THE ASS ESSMENT BASED ON SOLITARY STATEMENT OF THIRD PARTY RECORDED U/S 132(4) OF THE ACT WITHOUT ANY EVIDENCE TO PROVE THE TRUTH EXCEPT ENTRY IN THE BOOKS OF DOC UMENTS AND TRANSACTIONS. THE LD.AR FURTHER SUBMITTED THAT REOPENING OF ASSES SMENT IS BAD IN LAW AND LIABLE TO BE QUASHED AS THE AO HAS NOT APPLIED HIS MIND TO THE FACTS OR ANY MATERIAL WHICH SUGGESTS ESCAPEMENT OF INCOME, BUT R ELIED UPON THE THIRD PARTY STATEMENT BASED ON SOME LOOSE PAPERS FOUND IN THE P REMISES OF THIRD PARTY WHICH IS NOT RELEVANT TO THE ASSESSMENT IN ASSESSEE S CASE. AS REGARDS ADDITION MADE BY THE AO TOWARDS ON-MONEY, THE LD.AR SUBMITTE D THAT THE ASSESSEE HAS CATEGORICALLY DENIED OF HAVING RECEIVED ANY MONEY O VER AND ABOVE WHATEVER STATED IN SALE DEED RIGHT FROM THE BEGINNING. THE ASSESSEE HAS DENIED RECEIPT OF MONEY AT THE STAGE OF INVESTIGATION WHICH IS EVI DENT FROM THE FACT THAT IN THE STATEMENT RECORDED U/S 131, DISOWNED THE FACTUM OF RECEIPT OF ON-MONEY. THE AO WITHOUT BRINGING ON RECORD ANY MATERIAL EVID ENCE TO SUGGEST THAT ON- MONEY IS EXCHANGED BETWEEN THE ASSESSEE AND THE PUR CHASER OF PROPERTY MERELY RELIED UPON THIRD PARTY STATEMENT TO MAKE AD DITION, WHICH IS INCORRECT. 7 RIVERA PROPERTIES PVT LTD 6. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTED TH E ORDER OF THE CIT(A). THE LD.DR FURTHER SUBMITTED THAT THE FACTS GATHERED DURING THE COURSE OF SEARCH COUPLED WITH STATEMENT OF DIRECTOR OF M/S HC PL CLEARLY ESTABLISHES THE FACT OF PAYMENT OF RA.3.05 CRORES CONSIDERATION IN CASH FOR PURCHASE OF PROPERTY WHICH HAS NOT BEEN RECORDED IN THE BOOKS O F ACCOUNT OF THE PURCHASER AS WELL AS THE SELLER. THE AO HAS BROUGH T OUT CLEAR FACTS TO THE EFFECT THAT CONSIDERATION RECEIVED OVER AND ABOVE WHAT IS STATED IN THE SALE DEED IS NOT DISCLOSED IN THE RETURN OF INCOME AND HENCE, TH E ADDITION MADE BY THE AO U/S 69A OF THE ACT IS IN ACCORDANCE WITH LAW AND SH OULD BE UPHELD. 6. 1. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IN THIS CASE, THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON TH E BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT IN PURSUANCE OF SEARCH CONDUCTED IN THE CASE OF M/S HI CONS GROUP OF COMPANIES ON 24-2-2009. THE REASONS RECORDED FOR REOPENING AS SESSMENT STATES THAT THE DEPARTMENT HAS FOUND AND SEIZED INCRIMINATING MATER IALS WHICH REVEALS CONSIDERATION PAID OVER AND ABOVE AMOUNT SHOWN IN S ALE DEED FOR PURCHASE OF PROPERTY FROM ASSESSEE COMPANY WHICH HAS NOT BEEN D ISCLOSED IN THE RETURN OF INCOME FILED FOR THE RELEVANT ASSESSMENT YEAR. T HEREFORE, THE A.O. REOPENED ASSESSMENT ON THE GROUND THAT INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED 8 RIVERA PROPERTIES PVT LTD ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. THE ASSESSEE CONTENTION IS THAT REOPENING IS BAD IN LAW AS THE R EASONS RECORDED FOR REOPENING ASSESSMENT IS BASED ON THIRD PARTY INFORM ATION WITHOUT ANY MATERIAL IN THE POSSESSION OF THE A.O. WHICH SUGGEST ESCAPEM ENT OF INCOME. THE ASSESSEE FURTHER CONTENDED THAT REASON TO BELIEF EN TERTAINED BY THE A.O. IS NOT BASED ON COGENT MATERIAL EVIDENCE AND WHICH IS PURE LY ON THIRD PARTY STATEMENT WHICH CANNOT BE THE BASIS FOR REOPENING A SSESSMENT. THE ASSESSEE QUESTIONED MATERIALS RELIED UPON BY THE A.O. TO FOR M A BELIEF OF ESCAPEMENT OF INCOME. 2. HAVING HEARD BOTH SIDES, WE FIND THAT THE A.O. H AD REOPENED ASSESSMENT FOR THE REASONS RECORDED WHICH IS SUPPORTED BY INFO RMATION RECEIVED FROM INVESTIGATION WING OF DEPARTMENT. THE INFORMATION R ECEIVED FROM THE INVESTIGATION WING REVEALS CERTAIN FINANCIAL TRANSA CTION BETWEEN THE ASSESSEE COMPANY AND M/S HICONS CONSTRUCTION PRIVATE LIMITED . BASED ON SUCH INFORMATION, THE A.O. HAS FORMED A REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT. THE QUESTION IS WHETHER SUCH INFORMATION CONSTITUTES SUFFICIENT MATERIAL FOR REO PENING ASSESSMENT OR NOT. THE PROVISIONS OF SECTION 147 OF THE ACT, AUTHORIZE THE ASSESSING OFFICER TO ASSESS OR RE-ASSESS INCOME CHARGEABLE TO TAX, IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSME NT. THE PRIMARY 9 RIVERA PROPERTIES PVT LTD REQUIREMENT OF SECTION 147 OF THE ACT, IS THAT THER E SHOULD BE FORMATION OF BELIEF BY THE ASSESSING OFFICER COUPLED WITH MATERI AL EVIDENCE. IF THE A.O. HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCO ME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEV E THAT INCOME HAD ESCAPED ASSESSMENT. THE A.O. AT THE TIME OF ISSUING NOTICE U/S 148 OF THE ACT, IS NOT NECESSARILY TO ESTABLISH THE FACT THAT THERE IS AN ESCAPEMENT OF INCOME. BUT, WHAT IS NECESSARY IS THAT THERE MUST BE SOME RELEVA NT MATERIAL ON WHICH THE FORMATION OF OPINION IS ARRIVED AT BY THE ASSESSING OFFICER. IN THE INSTANT CASE, THE A.O. FORMED HIS OPINION BASED ON THE INFORMATIO N RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AND WHICH IS T HE VALID BASIS FOR ISSUING NOTICE U/S 148 OF THE ACT. IT IS NOT NECESSARY FOR THE A.O. TO CONDUCT INDEPENDENT ENQUIRY AND GATHER MATERIAL TO FORM HIS OPINION. MATERIAL MAY COME FROM WITHIN THE ASSESSMENT RECORDS OR FROM OUT SIDE THE ASSESSMENT RECORD. BUT WHAT IS IMPORTANT IS THAT THERE SHOULD BE SOME COGENT MATERIAL, WHICH SUGGESTS PRIMA FACIA ESCAPEMENT OF INCOME CHA RGEABLE TO TAX. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. HAS RIG HTLY FORMED HIS OPINION BASED ON THE INFORMATION RECEIVED FROM THE INVESTIG ATION WING OF THE DEPARTMENT WHICH CONSTITUTES A SUFFICIENT MATERIAL FOR REOPENING OF ASSESSMENT AND HENCE, THE A.O. IS RIGHT IN REOPENIN G ASSESSMENT. THEREFORE, 10 RIVERA PROPERTIES PVT LTD WE ARE INCLINED TO UPHOLD REOPENING OF ASSESSMENT A ND REJECT GROUND RAISED BY THE ASSESSEE. 3. THE NEXT ISSUE THAT CAME UP FOR CONSIDERATION, I S WHETHER THE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE A.O . IS RIGHT IN MAKING ADDITIONS TOWARDS ALLEGED ON MONEY RECEIVED BY THE ASSESSEE F OR SALE OF PROPERTY BASED ON THIRD PARTY STATEMENT. THE FACTUAL MATRIX OF TH E CASE WHICH LEADS TO THE IMPUGNED ADDITIONS IS THAT THERE WAS A SEARCH IN TH E CASE OF M/S. HICONS GROUP OF COMPANIES ON 24-2-2009. DURING THE COURSE OF SE ARCH PROCEEDINGS, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND. THE INCRIMINATI NG DOCUMENTS FOUND DURING SEARCH REVEALS CERTAIN FINANCIAL TRANSACTION S RECORDED IN THE NAME OF ASSESSEE COMPANY. DURING THE COURSE OF SEARCH STATE MENT OF SRI. RAFIQUE MOHAMMED NAZIR SHEIKH, THE DIRECTOR OF M/S HICON CO NSTRUCTION PRIVATE LIMITED WAS RECORDED. IN THE STATEMENT RECORDED U/S 132(4), THE DIRECTOR OF M/S HICON CONSTRUCTIONS PRIVATE LIMITED HAS ADMITTE D THAT AMOUNTS MENTIONED IN THE SEIZED MATERIALS IS CASH RECEIPTS AND CASH P AYMENTS FOR SALE/PURCHASE OF PROPERTY. THE SEIZED DOCUMENTS REVEAL THE NAME OF A SSESSEE COMPANY AGAINST WHICH CASH PAYMENT OF RS. 3.05 CRORES HAS BEEN RECO RDED. THE RELEVANT DOCUMENTS WHICH REVEALS CASH TRANSACTIONS INCURRED BY M/S HICON CONSTRUCTIONS PRIVATE LIMITED IS AT PAGE NO. 79 OF ANNEXURE, A-1, PAGE NO. 43 OF ANNEXURE A-7 AND PAGE NO. 51 OF ANNEXURE A-15 WHICH WERE SEIZED FROM THE 11 RIVERA PROPERTIES PVT LTD RESIDENCE OF SHRI. NADEEM LAKDAWALA. DURING SEARCH, IN THE STATEMENT RECORDED U/S 132(4), THE DIRECTOR OF HICON GROUP AD MITTED THAT FINANCIAL TRANSACTIONS RECORDED IN SEIZED MATERIALS IS CASH R ECEIPTS AND PAYMENTS IN ITS BUSINESS. DURING POST SEARCH INVESTIGATIONS, THE DI RECTOR OF ASSESSEE COMPANY HAS BEEN SUMMONED AND HIS STATEMENT WAS RECORDED TO CROSS VERIFY SEIZED DOCUMENTS. DURING POST SEARCH INVESTIGATION, THE DI RECTOR OF ASSESSEE COMPANY SRI. BHAGAVAN D RATHOD HAS ADMITTED HAVING SOLD IMM OVABLE PROPERTY TO M/S HICON CONSTRUCTIONS PRIVATE LIMITED FOR A CONSIDERA TION OF RS. 1,70,00,000/-, HOWEVER DENIED HAVING RECEIVED ANY AMOUNT IN CASH O VER AND ABOVE WHAT IS STATED IN THE SALE DEED. 4. THE ASSESSEE COMPANY HAS SOLD IMMOVABLE PROPERTY CALLED FATIMA MANZIL ADMEASURING 1075 SQ, YDS. TO M/S HICON CONS TRUCTION PRIVATE LIMITED BY AN INDENTURE DATED 6-7-2005 FOR A CONSIDERATION OF RS. 1,70,00,000/-. THE ASSESSEE HAS DISCLOSED SAID SALE OF PROPERTY IN ITS RETURN OF INCOME FILED FOR RELEVANT ASSESSMENT YEAR. ADMITTEDLY, IN THE ASSESS EE CASE, THERE WAS NO SEARCH. THE SEIZED DOCUMENT FOUND DURING SEARCH AT THE PREMISES OF M/S. HICONS GROUP IS A LOOSE SHEET, WHEREIN CERTAIN FINA NCIAL TRANSACTIONS WERE RECORDED IN THE NAME OF THE ASSESSEE COMPANY WHICH STATES RS. 3.05 CRORES HAS BEEN PAID IN CASH FOR PURCHASE OF PROPERTY M/S RIVERA PROPERTIES PRIVATE LIMITED. BASED ON SAID DOCUMENT AND ALSO ADMISSION MADE BY THE DIRECTOR OF 12 RIVERA PROPERTIES PVT LTD PURCHASER COMPANY, THE A.O. ACTED UPON AND CAME TO THE CONCLUSION THAT ON MONEY WAS PAID TO THE ASSESSEE TOWARDS SALE OF PROP ERTY. THE DIRECTOR OF ASSESSEE COMPANY CATEGORICALLY DENIED HAVING RECEIV ED ON MONEY RIGHT FROM THE BEGINNING. THE ASSESSEE CONTENDED THAT THE SEI ZED DOCUMENT FOUND AT THE PREMISES OF M/S. HICON GROUP OF COMPANIES IS NEITHE R IN THE HAND WRITING OF ANY OF THE DIRECTORS OF THE COMPANY NOR IS FOUND IN THE PREMISES OF THE ASSESSEE, THEREFORE IT CANNOT BE USED AS EVIDENCE A GAINST FOR FRAMING ASSESSMENT. BESIDES THE SEIZED LOOSE SHEET, NO OTH ER DOCUMENT IS IN THE POSSESSION OF THE A.O. TO SHOW THAT THE ASSESSEE HA S RECEIVED ON MONEY FROM THE PURCHASER. THE A.O. HAS NOT MADE ANY ATTEMPT T O FIND OUT SOME RELIABLE AND COGENT MATERIAL EVIDENCE ON RECORD TO SUPPORT H IS FINDINGS OR TO CORROBORATE THE STATEMENTS OF THE VENDEE COMPANY. T HE ASSESSEE COMPANY DENIED HAVING RECEIVED MONEY OVER AND ABOVE WHAT IS STATED IN THE SALE DEED. 5. THE A.R. OF THE ASSESSEE RIGHTLY POINTED OUT THA T SALE DEED REGISTERED IN THE OFFICE OF THE SUB-REGISTRAR CLEARLY SHOWS CONSI DERATION OF RS.85 LAKHS FIXED FOR THE PROPERTY AND WHICH WAS EXCHANGED THROUGH PR OPER BANKING CHANNEL. THE VALUE SHOWN IN THE SALE DEED IS FURTHER SUPPORT ED BY VALUATION REPORT ISSUED BY REGISTERED VALUER S.K. GODBOLE & ASSOCIAT ES, WHICH HAS BEEN VALUED PROPERTY FOR RS. 75,00,000/-. THE TENANCY RIGHTS IN THE PROPERTY HAS BEEN TRANSFERRED FOR A CONSIDERATION OF RS. 85,00,000/- WHICH IS SUPPORTED BY 13 RIVERA PROPERTIES PVT LTD AGREEMENTS. THEREFORE, TOTAL SALE CONSIDERATION REC EIVED FOR SALE OF PROPERTY IS RS. 1,70,00,000/- WHICH WAS RECEIVED BY CHEQUES AND ADMITTED BY BOTH PARTIES. IT WAS NOT A CASE OF REVENUE THAT VALUE SHOWN IN TH E SALE DEED IS NOT REAL VALUE OF THE PROPERTY, BECAUSE VALUE DECLARED IN THE SALE DEED IS ACTUAL MARKET VALUE OF THE PROPERTY FIXED BY THE STATE GOVERNMENT AUTHO RITIES FOR DETERMINING STAMP DUTY PAYABLE TO THE GOVERNMENT FOR REGISTERIN G THE PROPERTIES AND ALSO WHICH WAS ACCEPTED BY THE REGISTERING AUTHORITY. F URTHER, THERE IS NO EVIDENCE TO SHOW THAT THERE IS UNDER VALUATION OF PROPERTY A ND SECTION 50C OF THE ACT IS INVOKED WHILE COMPLETING THE ASSESSMENT. THE A.O. M ERELY ACTED UPON ON THE STATEMENT GIVEN BY THE THIRD PARTY, WHICH WAS TOTAL LY DENIED BY THE DIRECTORS OF THE ASSESSEE COMPANY IT WAS A SETTLED POSITION OF LAW THAT UNLESS THE STATEMENT IS TESTED UNDER THE CROSS EXAMINATION, TH E SAME CANNOT BE CONSIDERED AS EVIDENCE AGAINST THE ASSESSEE. THE A. O. USED THE ADMISSION OF DIRECTORS OF VENDEE COMPANY MADE IN THE STATEMENT R ECORDED U/S 132(4) OF THE ACT, IN THEIR CASE, AGAINST THE ASSESSEE, EVEN THOUGH THE DIRECTOR OF HICON GROUP SPECIFICALLY NOT TAKEN ASSESSEE COMPANY NAME ANYWHERE IN THE STATEMENT. BUT, THE A.O. FAILED TO NOTE THAT ADMISS ION OF OTHER PARTIES CANNOT BE CONSIDERED AS CONCLUSIVE EVIDENCE AGAINST THE AS SESSEE, UNLESS THERE IS CORROBORATIVE EVIDENCE ON RECORD, BECAUSE THE MAKER OF STATEMENT CAN BIND 14 RIVERA PROPERTIES PVT LTD HIMSELF, BUT HOW HE BINDS OTHERS FROM HIS STATEMENT WITHOUT THERE BEING ANY FURTHER EVIDENCE ON RECORD. 6 . IN THE PRESENT CASE ON HAND, EXCEPT LOOSE SHEET F OUND IN THE PREMISES OF THIRD PARTY AND ADMISSION MADE BY THE THIRD PARTY I N THEIR ASSESSMENT PROCEEDINGS, THERE IS NO OTHER EVIDENCE ON RECORD T O PROVE THAT ON MONEY IS PAID. THE ASSESSING OFFICER, WITHOUT BROUGHT ON RE CORD ANY EVIDENCE TO PROVE THAT ON MONEY IS EXCHANGED BETWEEN THE PARTIES, MER ELY HARPING UPON THE LOOSE SHEET AND THE THIRD PARTY ADMISSION, WHICH CA NNOT BE CONSIDERED AS CONCLUSIVE EVIDENCE AGAINST THE ASSESSEE TO BRING O N MONEY TO TAX AS UNDISCLOSED INCOME. THE A.O. IS REQUIRED TO BRING FURTHER EVIDENCE ON RECORD TO SHOW THAT ACTUAL ON MONEY IS EXCHANGED BETWEEN T HE PARTIES, BUT LITERALLY FAILED TO DO SO. THE A.O. DID NOT CONDUCT ANY INDE PENDENT ENQUIRY RELATING TO THE VALUE OF THE PROPERTY INSTEAD, MERELY RELIED UP ON THE STATEMENT GIVEN BY THE PURCHASERS OF THE PROPERTY, WHICH IS NOT CORREC T. FURTHER, THERE IS NO PROOF OF ORIGIN AND DESTINATION OF ON MONEY. THE A.O. FAI LED TO PROVE THE SOURCE OF THE PURCHASERS AS TO HOW THE MONEY WAS ARRANGED AND ALSO FAILED TO PROVE THE DEPLOYMENT OF UNACCOUNTED MONEY BY THE SELLER BY AN Y FORM OF EVIDENCE. UNDER THESE CIRCUMSTANCES, BASED ON PAPER JOTTINGS AS CONCLUSIVE EVIDENCE ON MONEY CANNOT BE BROUGHT TO TAX AS INCOME FROM UNDIS CLOSED SOURCES. 15 RIVERA PROPERTIES PVT LTD 7. NOW COMING TO THE OBSERVATIONS OF THE CIT(A). THE CIT(A) WHILE CONFIRMING THE ASSESSMENT ORDER, OBSERVED THAT THE ASSESSEE FAILED TO AVAIL CROSS EXAMINATION PROVIDED BY THE A.O. TO JUSTIFY N ON RECEIPT OF ON MONEY. THE ASSESSEE WITHOUT ANY REASON NEITHER UTILIZED THE OP PORTUNITY OF CROSS EXAMINATION NOR FURNISHED ANY DETAILS TO JUSTIFY IT S STAND. WITHOUT FURNISHING ANY DETAILS, SIMPLY DELAYED APPELLATE PROCEEDINGS O N THE PRETEXT OF REQUESTING COPIES OF DOCUMENTS. WE DO NOT AGREE WITH THE FINDI NGS OF THE CIT(A) FOR THE REASON THAT THE A.O. HIMSELF RECORDED REASONS FOR F AILURE OF CROSS EXAMINATION OF PARTIES. AS PER THE FACTS RECORDED BY THE A.O., FAILURE OF CROSS EXAMINATION IS ATTRIBUTABLE TO BOTH THE PARTIES. THEREFORE, FOR TH E SIMPLE REASON OF FAILURE OF CROSS EXAMINATION, ASSESSMENTS CANNOT BE MADE OR TA XES CANNOT BE LEVIED ON THE BASIS OF LOOSE PAPERS OR THIRD PARTY STATEMENTS WITHOUT ANY FURTHER EVIDENCE TO JUSTIFY ON MONEY PAYMENTS. TO TAX ANY PARTICULAR INCOME, THERE MUST BE SOME MATERIAL EVIDENCE TO SHOW THAT THE INC OME IS ACCRUED OR ARISES TO THE PARTICULAR ASSESSE. UNLESS, THERE IS A PROOF , THE DEPARTMENT CANNOT COLLECT TAX ON THE ADMISSION/DEPOSITION OF THE TAX PAYER ALONE. TO TAX ANY PARTICULAR RECEIPT, PRIMARY EVIDENCE IS VERY MUCH N ECESSARY AND UNLESS THERE IS PRIMARY EVIDENCE, CIRCUMSTANTIAL EVIDENCE CANNOT BE CONSIDERED AS CONCLUSIVE EVIDENCE AGAINST ANY PERSON TO TAX ANY PARTICULAR R ECEIPT. CIRCUMSTANTIAL EVIDENCE PLAYS AN IMPORTANT ROLE IN INCOME TAX PROC EEDINGS, WHERE THE A.O. 16 RIVERA PROPERTIES PVT LTD NEEDS TO ESTIMATE THE INCOME BASED ON SOME EVIDENCE AVAILABLE FOR PART OF THE YEAR, THEN REMAINING PERIOD ESTIMATION CAN BE MADE BASED ON EVIDENCE AVAILABLE. BUT, PAYMENT/RECEIPT OF ON MONEY IS PURE LY A FACTUAL ISSUE WHICH CANNOT BE DECIDED BASED ON CIRCUMSTANTIAL EVIDENCE. 8 . NOW COMING TO THE CASE LAWS RELIED UPON BY THE AS SESSEE. THE ASSESSEE COUNSEL, AT THE TIME OF HEARING RELIED UPON PLETHOR A OF CASE LAWS IN SUPPORT OF HIS CONTENTIONS. THOUGH, MANY CASE LAWS ARE DEALT W ITH SIMILAR ISSUE, THE DECISION OF HONBLE SUPREME COURT IS DIRECTLY ON TH E ISSUE WHICH IS VERY MUCH RELEVANT IN THE CONTEXT OF TAXATION OF ON MONEY. T HE HONBLE SUPREME COURT IN THE CASE OF CIT VS. P.V. KALYANA SUNDARAM (2007) 294 ITR 49, UNDER SIMILAR CIRCUMSTANCES HELD IN FAVOUR OF THE ASSESSEE. THE R ELEVANT PORTION OF ORDER IS REPRODUCED HEREUNDER: WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES AND H AVE GONE THROUGH THE RECORD. IT IS TRUE THAT THE DIVIS ION BENCH OF THE HIGH COURT HAS BORROWED EXTENSIVELY FROM THE ORDERS OF THE TRIBUNAL AND THE COMMISSIONER AND PASSED THEM OFF AS IF THEY WERE THEMSELVES THE AUTHOR(S). WE FEEL THAT QUOTING FRO M AN ORDER OF SOME AUTHORITY PARTICULARLY A SPECIALIZED ONE CANNO T PER SE BE FAULTED AS THIS PROCEDURE CAN OFTEN HELP IN MAKING FOR BREVITY AND PRECISION, BUT WE AGREE WITH MR. VAHANVATI TO THE E XTENT THAT ANY BORROWED WORDS USED IN A JUDGEMENT MUST BE ACKNOW LEDGED AS SUCH IN ANY APPROPRIATE MANNER AS A COURTESY TO THE TRUE AUTHOR(S). BE THAT AS IT MAY, WE ARE OF THE OPINION THAT THE T HREE QUESTIONS REPRODUCED ABOVE CAN, IN NO WAY, BE CALLED SUBSTANT IAL QUESTIONS OF LAW. THE FACT AS TO THE ACTUAL SALE PRICE OF THE P ROPERTY, THE 17 RIVERA PROPERTIES PVT LTD IMPLICATION OF THE CONTRADICTORY STATEMENTS MADE BY RAJARATHINAM OR WHETHER RELIANCE COULD BE PLACED ON THE LOOSE SH EETS RECOVERED IN THE COURSE OF THE RAID ARE ALL QUESTION OF FACT. W E THEREFORE FIND NO INFIRMITY IN THE ORDER OF THE HIGH COURT. ACCORDIN GLY, WE DISMISS THE APPEAL. 9 . A SIMILAR ISSUE HAS CONSIDERED BY COORDINATE BENC H OF ITAT, HYDERABAD `A BENCH IN THE CASE OF SMT. K.V. LAKSHMI SAVITRI DEVI VS. ACIT (2012) 148 TTJ 517, WHEREIN THE TRIBUNAL UNDER SIMILAR CIRCUMSTANC ES HELD AS UNDER: ADMITTEDLY THERE WAS NO SEARCH ACTION IN THE CASE O F THE ASSESSEE. IT IS A LOOSE SLIP CONTAINING CERTAIN ENT RIES RECORDING THE PAYMENT WHICH WAS FOUND AT THE PREMISES OF CRK. IT DOES NOT CONTAIN EITHER DATE OF PAYMENT OR NAME OF THE PERSO N WHO HAS MADE THE PAYMENT. ACCORDING TO THE DEPARTMENT, CRK DENOTES C. RADHA KRISHNA KUMAR AND KRK DENOTES K. RAJANI KU MARI. HOWEVER, NO NAME OF THE ASSESSEE WAS FOUND IN THE L OUSE SHEET. THE PROPERTY WAS PURCHASED FROM P W/C CRK FOR A DIS CLOSED CONSIDERATION OF PS. 65 LAKHS BY THE ASSESSEE. THE PROPERTY HAS BEEN REGISTERED AND THE SALE DEED WAS EXECUTED FOR A CON SIDERATION OF PS. 65 LAKHS ON 21ST AUG., 2006 WHICH CONSIDERATION HAS BEEN ACCEPTED BY THE STATE REGISTRATION AUTHORITIES. FURTHER NOTH ING WAS BROUGHT ON RECORD TO SHOW THAT THERE WAS ANY INVOKING OF S. 50C WHILE COMPLETING 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 ASSESS EE AND THERE IS NO CORROBORATIVE MATERIAL TO SUGGEST THAT THE ASSES SEE HAS ACTUALLY PAID RS. 1.65 RORES TOWARDS PURCHASE CONSIDERATION OF THE PROPERTY. THE ASSESSEE AND HER BROTHER CATEGORICALL Y DENIED THE PAYMENT OF ANY MONEY OVER AND ABOVE RS. 65 LAKHS. T HE AO PLACED HI RELIANCE ON THE STATEMENT OF 5, WHO IS A THIRD P ARTY. 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 DOC UMENT AND THE HANDWRITING IS ALSO NOT OF THE ASSESSEE AND THE LOO SE DOCUMENT WAS FOUND AT THE PREMISES OF A THIRD PARTY. THE BUR DEN IS ON 18 RIVERA PROPERTIES PVT LTD 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 PU RCHASE OF THE PROPERTY. THE UNDISCLOSED INCOME IN THIS CASE IS TO BE COMPUTED BY THE AO ON THE BASIS OF THE AVAILABLE MATERIAL ON RECORD. IT SHOULD NOT BE BASED ON CONJECTURES AND SURMISES. AS OF NOW, THE MATERIAL CONSIDERED BY THE AO FOR MAKING THE ADDITI ON OF PS. 1 CRORE IS SEIZED MATERIAL MARKED A 'A/CRK104' AND THE STAT EMENT OF S. THIS LOOSE SHEET FOUND AT THE PREMISES OF CRK IS NOT ENO UGH MATERIAL TO SUSTAIN THIS ADDITION. THE SEIZED MATERIAL FOUND DU RING THE COURSE OF SEARCH AND THE STATEMENT RECORDED ARE SOME PIECE OF EVIDENCE TO MAKE THE ADDITION. THE AO HAS TO ESTABLISH THE LINK BETWEEN THE SEIZED MATERIAL AND OTHER BOOKS OF ACCOUNT TO THE A SSESSEE. THE SEIZED MATERIAL AND STATEMENT OF CRK CANNOT BE CONC LUSIVE EVIDENCE TO MAKE THIS ADDITION. THE ENTIRE CASE HER EIN IS DEPENDING UPON THE RULE OF EVIDENCE. THERE IS NO CONCLUSIVE P RESUMPTION TO SAY THAT ACTUAL CONSIDERATION PASSED ON BETWEEN THE PAR TIES IS ACTUALLY RS. 165 LAKHS. THE ASSESSEE AS WELL AS HER BROTHER STATED IN THEIR RESPECTIVE STATEMENTS THAT THE CONSIDERATION PASSED BETWEEN THE PARTIES IS ONLY RS. 65 LAKHS. IN SPITE OF THIS THE AO PROCEEDED TO CONCLUDE THAT THE SEIZED MATERIAL IS CONCLUSIVELY R EFLECTING THE PAYMENT OF CONSIDERATION AT RS. 165 LAKHS. THE DEPA RTMENT HEREIN I REQUIRED TO ESTABLISH THE NEXUS OF THE SEIZED MATER IAL TO THE ASSESSEE. AS STATED EARLIER THERE IS NO DATE AND NA ME OF THE ASSESSEE. THE ALLEGATION OF THE DEPARTMENT IS THAT THE SEIZED MATERIAL DENOTES THE PAYMENT MADE BY THE ASSESSEE T O THE PURCHASER FOR PURCHASE OF THE PROPERTY. HOWEVER, NO SUCH NARRATION OR NAME OF THE ASSESSEE WAS FOUND IN THE SEIZED MATERIAL. THE DEPARTMENT IS NOT ABLE TO UNEARTH ANY DOCUMENT OR MATERIAL OR ANY CORROBORATIVE MATERIAL TO SHOW THAT THE ASSESSEE HEREIN ACTUALLY PAID PS. 165 LAKHS FOR PURCHASE OF THE PROPERTY. THE DEPARTMENT HAS NOT BROUGHT ON RECORD THE DATE ON WH ICH THE PAYMENT WAS MADE AND THE SOURCE FROM WHICH II IS PA ID AND/OR ANY DETAILS OF BANK ACCOUNT FROM WHERE THE CASH WAS WITHDRAWN. WITHOUT ANY OF THESE DETAILS, THE DEPART MENT HAS TAKEN A VIEW THAT THE ASSESSEE HAS PAID PS. 165 LAK HS FOR PURCHASE OF THE PROPERTY. THE DEPARTMENT CANNOT DRA W INFERENCE ON THE BASIS OF SUSPICION, CONJECTURES AN D SURMISES. SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF MATE RIAL IN SUPPORT OF THE FINDING FROM THE AO. THE AO SHOULD ACT IN A JUDICIAL MANNER, 19 RIVERA PROPERTIES PVT LTD PROCEED WITH JUDICIAL SPIRIT AND COME TO A JUDICIAL CONCLUSION. THE AO IS REQUIRED TO ACT FAIRLY AS A REASONABLE PERSON AND NOT ARBITRARILY AND CAPRICIOUSLY. THE ASSESSMENT MADE S HOULD 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 SUS TAINED. THUS, NO ADDITION CAN BE MADE ON A DUMB DOCUMENT AN D NOTING ON LOOSE SHEET. IT SHOULD BE SUPPORTED BY THE EVIDENCE ON RECORD AND THE EVIDENCE ON RECORD IS NOT SUFFICIENT TO SUP PORT 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 E NOUGH TO JUSTIFY THE ADDITION MADE BY THE DEPARTMENT. THE BU RDEN 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 M ADE UP A CASE ON SURMISES AND CONJECTURES WHICH CANNOT BE AL LOWED. UNDER THESE CIRCUMSTANCES, THERE IS NO REASON TO CO NFIRM THE ADDITION OF RS. 100 LAKHS TOWARDS ON-MONEY PAYMENT. ACCORDINGLY, THE ADDITION OF RS. 100 LAKHS IS DELET ED.CIT VS. P.V. KALYANASUNDARAM (2006) 203 CTR (MAD) 449: (200 6) 282 ITR 259 (MAD) RELIED ON 10. THE HONBLE A.P. HIGH COURT IN THE CASE OF SMT. K. V. LAKSHMI SAVITRI DEVI VS. ACIT IN ITTA 563 OF 2011, UPHELD THE ORDER OF T HE ITAT HYDERABAD BENCH. THE HONBLE HIGH COURT WHILE, DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HELD AS UNDER: WE ARE OF THE VIEW THAT THE TRIBUNAL HAS RIGHTLY HE LD THAT THE REGISTERED DOCUMENT DT. 21.8.2006 UNDE4R WHICH THE RESPONDENT PURCHASED THE ABOVE PROPERTY SHOWED THAT ONLY RS.65 .00 LAKHS WAS PAID TO THE VENDOR BY THE RESPONDENT; THAT THERE WA S NO EVIDENCE TO SHOW THAT THE RESPONDENT HAD PAID RS.1.00 CRORE IN CASH ALSO TO THE 20 RIVERA PROPERTIES PVT LTD VENDOR; THAT NO PRESUMPTION OF SUCH PAYMENT OF RS.1 .00 CRORE IN CASH CAN BE DRAWN ON THE BASIS OF AN ENTRY FOUND IN A DIARY/LOOSE SHEET IN THE PREMISES OF C. RADHA KRISHNA KUMAR WHI CH IS NOT IN THE RESPONDENTS HANDWRITING AND WHICH DID NOT CONTAIN THE NAME OF THE RESPONDENT OR ANY DATE OF PAYMENT OR THE NAME O F THE PERSON WHO MADE THE PAYMENT. IT RIGHTLY HELD THAT THE REV ENUE FAILED TO ESTABLISH THE NEXUS OF THE SEIZED MATERIAL TO THE R ESPONDENT AND HAD DRAWN INFERENCES BASED ON SUSPICION, CONJECTURE S AND SURMISES WHICH CANNOT TAKE THE PLACE OF PROOF. WE ALSO AGRE E WITH THE TRIBUNAL THAT THE ASSESSING OFFICER DID NOT CONDUCT ANY INDEPENDENT ENQUIRY RELATING TO THE VALUE OF THE PROPERTY PURCH ASED AND THE BURDEN OF PROVING THE ACTUAL CONSIDERATION IN THE P URCHASE OF THE PROPERTY IS ON THE REVENUE AND IT HAD FAILED TO DIS CHARGE THE SAID BURDEN. 11 . THE ITAT, AHMEDABAD `C' BENCH IN THE CASE OF JAW AHARBHAI ATMARAM HATHIWALA VS. ITO REPORTED IN (2010) 128 TTJ 36, HA S CONSIDERED SIMILAR ISSUE. THE COORDINATE BENCH, UNDER SIMILAR SET OF FACTS, D ECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: THE ASSESSEE HAS CLAIMED TO HAVE MADE PAYMENT OF RS.1,01,687/- ONLY UPTO 31 ST MARCH, 1999 AND HAS CONSISTENTLY TAKEN THE STAND THAT IT HAS NOT PAID BALANCE AMOUNT OF RS .3,81,414/- AS STATED IN THE SEIZED DOCUMENT. NO EVIDENCE COULD B E BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT IN FACT THE ASSE SSEE HAD PAID THE AMOUNT OF RS.3,81,414/- TO OD. NO DOCUMENT CON TAINING SIGNATURE OF THE ASSESSEE OR HANDWRITING OF THE ASS ESSEE TO CORROBORATE THE ABOVE MAKING OF PAYMENT BY THE ASSE SSEE WAS FOUND DURING THE COURSE OF THE SEARCH. EVEN AT TIM E OF CROSS EXAMINATION BY THE ASSESSEE THE PARTNER OF OD COULD NOT PRODUCE ANY EVIDENCE THAT THE AMOUNT WRITTEN IN THE SEIZED DOCUMENT WAS 21 RIVERA PROPERTIES PVT LTD IN FACT RECEIVED FROM THE ASSESSEE. AS THE ASSESSE E HAS CATEGORICALLY DENIED TO HAVE MADE ANY PAYMENT IN EXCESS OF RS.1,0 1,687/- UPTO 31 ST MARCH, 1999 IN RESPECT OF PURCHASE OF FLAT THE SAI D DENIAL CANNOT BE BRUSHED ASIDE WITHOUT BRINGING ANY POSITI VE MATERIAL ON RECORD. MERELY RECORDING MADE BY A THIRD PARTY OR STATEMENT OF A THIRD PARTY CANNOT BE TREATED AS SO SACROSANCT SO A S TO READ AS A POSITIVE MATERIAL AGAINST THE ASSESSEE. IN VIEW OF THE ABOVE THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING ADDITION TO THE EXTENT OF RS.3,81,414/- IN THE HANDS OF THE ASSESSEE. THEREF ORE THE ADDITION OF RS.3,81,414/- IS DELETED. ASST. CIT VS. PRABHAT OIL MILLS (1995) 52 TTJ (AHD) 533 RELIED ON; K.P. VARGHESE VS. ITO (1981) 24 CTR (SC) 358: (1981) 131 ITR 597 (SC) APPLIED. 12 . IN YET ANOTHER CASE, THE ITAT HYDERABAD `B BENCH IN THE CASE OF DCIT (CENTRAL CIRCLE)-6 VS. B. VIJAY KUMAR IN ITA NO.930 & 931 OF 2009 HELD THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: 11. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE MA TERIAL SUBMITTED BEFORE US AND ALSO PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. ON A READING OF THE ASSESS MENT ORDER, IT IS ABSOLUTELY CLEAR THAT THE ADDITION HAS BEEN MADE ENTIRELY ON THE BASIS OF THE PHOTOCOPY OF THE SALE AGREEMENT SEIZED FROM THE RESIDENCE OF THE ASSESSEE IN COURSE OF SEARCH AND SEIZURE OPERATION. UNDISPUTEDL Y, THE SALE AGREEMENT IS ONLY PHOTOCOPY AND HAS NOT BEEN SIGNED BY THE ASSESSEE. THE ASSESSEE HAS ALSO RAISE D SERIOUS ALLEGATION REGARDING THE SEIZURE OF THE IMP UGNED DOCUMENT AND FILED AFFIDAVIT BEFORE DDIT (INV.) ASS ERTING THAT THE SAID DOCUMENT WAS PLANTED BY AN OFFICER OF THE DEPARTMENT ALSO NAMED BY THE ASSESSEE IN THE AFFIDA VIT. HOWEVER, SUCH ALLEGATION OF THE ASSESSEE HAS NOT AT ALL BEEN ENQUIRED INTO AND HAS BEEN MET WITH COMPLETE SILENCE BY THE DEPARTMENT. FROM THE MATERIALS ON RE CORD, IT IS VERY CLEAR THAT THE AO HAS FAILED TO LAY HIS HAN DS ON ANY 22 RIVERA PROPERTIES PVT LTD CREDIBLE EVIDENCE TO ESTABLISH THE FACT THAT THE ASSESSEE HAS PURCHASED THE PROPERTY FOR A CONSIDERA TION OF RS.1,68,00,000/- AS MENTIONED IN THE PHOTO COPY OF SALE AGREEMENT SEIZED IN COURSE OF SEARCH AND SEIZURE OP ERATION. THE ASSESSEE HAS PRODUCED BEFORE THE AO REGISTERED SALE DEEDS IN SUPPORT OF ITS CLAIM THAT THEY HAD PURCHAS ED THE PROPERTY FOR A CONSIDERATION OF RS.23.50 LAKHS. WHEN THE AO ALLEGES THAT THE ASSESSEE HAS PAID MORE THAN WHAT HAS BEEN DECLARED IN THE REGISTERED SALE DEED BECAU SE THE FAIR MARKET VALUE OF THE ASSET AS ON THE DATE OF TR ANSACTION EXCEEDS FULL VALUE OF CONSIDERATION DECLARED BY THE ASSESSEE THEN IT IS FOR THE AO TO PROVE THAT THE VALUE DECLA RED BY THE ASSESSEE IS UNDERSTATED. IN THE APPEAL BEFORE US, E XCEPTING THE PHOTO COPY OF SALE AGREEMENT, THERE IS NO OTHER EVIDENCE ON RECORD FOUND AS A RESULT OF SEARCH OR B ROUGHT ON RECORD ON THE BASIS OF ENQUIRY CONDUCTED BY THE AO WHICH COULD ESTABLISH THE FACT THAT THE ACTUAL CONSIDERAT ION PASSED BETWEEN THE PARTIES IS NOT AS MENTIONED IN T HE REGISTERED SALE DEED BUT AS PER THE SALE AGREEMENT FOUND DURING SEARCH OPERATION. IT IS ALSO AN INTERESTING FACT TO NOTE THAT IN THE STATEMENT RECORDED FROM THE ASSESSEE U/S 132 (4) THE REVENUE AUTHORITIES HAVE NOT PUT ANY QUESTION WITH REGARD TO THE SALE AGREEMENT SEIZED AT THE TIME OF SEARCH AND SEIZURE OPERATIONS. SMT. R. NALINI DEVI ALSO IN HER STATEME NT FURTHER CLEARLY STATED THAT THE PROPERTY WAS SOLD A T RS.23.50 LAKHS AND NOT AT THE RATE OF RS.1.68 CRORE S. THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VERGHESE REPORTED IN 131 ITR 597 HAS HELD THAT ONUS IS ON TH E DEPARTMENT TO PROVE THAT THE ASSESSEE HAS UNDERSTATED THE VALUE OF THE PROPERTY AND HAS PAID MORE THAN WHAT IS MENTIONED IN THE REGISTERED SALE DEED. THE HON'BLE SUPREME COURT IN THE CASE OF MOOS A S. MADHA AND AZAM S. MADHA VS. CIT ( 89 ITR 65) HAS HELD THAT PHOTOCOPIES HAVE LITTLE EVIDENTIARY VALUE . THEREFORE, PHOTOCOPIES OF ANY DOCUMENT CANNOT BY IT SELF BE CONSIDERED AS EVIDENCE FOR PURPOSE OF MAKING ADD ITION IN ASSESSMENT PROCEEDINGS. THE AO IS REQUIRED TO BR ING FURTHER EVIDENCE ON RECORD TO SHOW THAT THE SALE AGREEMENT WAS ACTUALLY ACTED UPON BY THE PARTIES. THIS IS BECAUSE OF THE FACT . WHEN THE AO IS GOING TO MAKE AN 23 RIVERA PROPERTIES PVT LTD ADDITION, THERE SHOULD BE SUFFICIENT EVIDENCE BROUG HT ON RECORD TO SUPPORT SUCH ADDITION. NO ADDITION CAN BE MADE ON CONJECTURES AND SURMISES. AS SEEN FROM THE ASSES SMENT ORDER, THE AO HAS ADOPTED VALUE OF THE PROPERTY AT THE RS.7000/- PER SQ. YARD ON THE DATE OF TRANSACTION. FOR ADOPTING SUCH A VALUATION, THE AO HAS NOT CONDUCTED ANY ENQUIRY OR BROUGHT ANY MATERIALS ON RECORD TO SHOW THAT THE VALUE OF THE PROPERTY ON THE DATE OF TRANSACTION WAS ACTUALLY RS.7000 PER SQ. YARD. ON T HE OTHER HAND, THE ASSESSEE HAS DEMONSTRATED WITH SUPPORTING EVIDENCE THAT THE VALUE OF THE LAND ON THE DATE OF TRANSACTION WAS THE RATE MENTIONED IN THE REGISTERE D SALE DEED AND FOR WHICH THE PROPERTY WAS SOLD. THE ASSES SEE HAS ALSO PRODUCED SUFFICIENT EVIDENCE TO SHOW THAT THE - RE WAS DISPUTE GOING ON REGARDING THE LEGAL RIGHT OVER THE PROPERT Y WHICH ALSO HAD AN EFFECT ON THE FAIR MARKET VALUE OF THE PROPE RTY. IT IS ALSO PERTINENT TO MENTION HERE THAT THE ASSESSEE HA D FILED HIS RETURN F INCOME FOR THE ASSESSMENT YEARS UNDER DISPUTE MUCH PRIOR TO THE DATE OF SEARCH DECLARING THE PURCHASE OF LAND IN QUESTION AT THE CONSIDERATION MENTIONED IN THE REGI STERED SALE DEEDS. 155) FAR AS THE AO'S OBSERVATIONS ON TH E LOOSE SHEETS RECOVERED FROM THE RESIDENCE OF SMT. NALINI DEVI ARE CONCERNED, THE CIT (A) AFTER DULY EXAMINING THEM HA S GIVEN A CONCLUSIVE FINDING THAT THE ASSESSEE'S NAME HAS NO WHERE BEEN MENTIONED IN THOSE DOCUMENTS NOR THE AMOUNT OF RS.109.48 LAKHS REPRESENTS THE EXPENDITURE INCURRED BY SMT NALINI DEVI. HOWEVER, THE AMOUNT WAS FOUND TO BE TH E SUMMARY OF THE BALANCE OF VARIOUS ACCOUNTS OPERATED BY THE FAMILY MEMBERS OF SMT. NALINI DEVI. WE FIND THAT TH E CIT (A) IN HIS ELABORATE AND WELL REASONED ORDER HAS DEALT WIT H ALL THESE ASPECTS AND CAME TO A FINDING ON FACT THAT TH E AO HAS MADE THE ADDITION PURELY ON CONJECTURES AND SURMISE S AND NOT ON THE BASIS OF ANY MATERIAL OR EVIDENCE BROUGH T ON RECORD. ON EXAMINING THE FACTS AND MATERIALS BEFORE US, WE ARE OF THE VIEW THAT THE FINDING ARRIVED BY THE CIT (A) IS JUST AND PROPER AND IN ACCORDANCE WITH THE PRINCIPLES OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT AND HON'BLE HIGH COURT S WHICH ARE CITED BEFORE HIM. WE THEREFORE FIND NO NECESSITY TO INTERFERE WITH THE FINDING OF THE CIT (A) ON THIS ISSUE. HENC E THE GROUNDS RAISED BY THE REVENUE FOR THE YEARS UNDER C ONSIDERATION ARE 24 RIVERA PROPERTIES PVT LTD DISMISSED. 13 . THE HONBLE A.P. HIGH COURT IN ITA NO.232 OF 2013 , IN THE CASE OF CIT VS. SMT. R. NALINI DEVI HAS UPHELD THE ORDER OF THE ITA T, HYDERABAD BENCH. THE HONBLE HIGH COURT, WHILE CONSIDERING THE ISSUE HEL D AS UNDER: WE HAVE HEARD THE LEARNED COUNSEL FOR THE APPELLANT AND GONE THROUGH THE IMPUGNED JUDGEMENT AND ORDER OF TH E LEARNED TRIBUNAL. IT APPEARS, THE ASSESSING OFFICER HAD RELIED ON A PHOTOCOPY OF AN UNSIGNED SALE AGREEMENT IN ORDER TO FIND THAT CO NSIDERATION AMOUNT HAS BEEN PAID AT RS.1,68,00,000/-. THEREFOR E, THIS AMOUNT WAS NOT DISCLOSED. THE LEARNED TRIBUNAL HAS CORREC TLY CONCLUDED THAT UNSIGNED PHOTOCOPY OF THE AGREEMENT FOR PURCHA SE OF THE PROPERTY CANNOT BE A MATERIAL TO RELY ON, WHEN THE REGISTERED SALE DEED HAS BEEN PRODUCED AND THE SAME SHOWS THAT THE PROPERTY WAS PURCHASED AT A PRICE OF RS.23,50,000/-. THIS REGIS TERED SALE DEED WAS DISCLOSED AT THE TIME OF ORIGINAL ASSESSMENT. ACCORDING TO US, THE AGREEMENT OF SALE LOSES ITS FORCE, THE MOMENT R EGISTERED SALE DEED IS EXECUTED. IF THE PROPERTY HAS BEEN PURCHAS ED AT A HIGHER PRICE THAN THAT OF MENTIONED IN THE PURCHASE DEED, THEN THE ONUS IS ON THE ASSESSING OFFICER TO ESTABLISH THAT, AS HAS BEEN RIGHTLY CONCLUDED BY THE TRIBUNAL ON THIS ISSUE. MOREOVER, PHOTOCOPY OF THE UNSIGNED AGREEMENT HAS GOT NO EVIDENTIARY VALUE. T HE ASSESSING OFFICER HAS DONE A GUESS WORK WHILE COMING TO THE C ONCLUSION THAT THE PRICE OF THE PROPERTY IS MORE THAN MENTIONED IN THE SALE DEED. THERE MUST BE SOME MATERIAL AND BASIS TO CONCLUDE T HAT THE PURCHASE HAS BEEN MADE AT AN UNDER VALUATION. 25 RIVERA PROPERTIES PVT LTD 14 . CONSIDERING THE TOTAL FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO APPLYING THE RATIOS OF THE JUDGEMENTS CITED ABOVE, WE ARE OF THE VIEW THAT THE A.O. IS NOT CORRECT IN COMING TO THE CONCLUSION THA T ON MONEY IS EXCHANGED BETWEEN THE PARTIES BASED ON A LOOSE SHEET FOUND IN THE PREMISES OF A THIRD PERSON. TO SUSTAIN THE ADDITION, THE A.O. SHOULD HA VE CONDUCTED AN INDEPENDENT ENQUIRY ABOUT THE VALUE OF THE PROPERTY AND ASCERTAIN WHETHER ANY UNDER VALUATION IS DONE, IF SO WHAT IS THE CORR ECT VALUE OF THE PROPERTY. FURTHER, THE A.O. DID NOT BROUGHT ON RECORD ANY EVI DENCE TO SUPPORT HIS CONTENTION TO SAY THAT THERE IS ON-MONEY EXCHANGED BETWEEN THE PARTIES. IN THE ABSENCE OF PROPER ENQUIRY AND SUFFICIENT EVIDEN CES, WE FIND NO REASON TO CONFIRM ADDITION MADE BY THE A.O TOWARDS ON MONEY. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELETE ADDITION OF RS. 3,05,00 ,000/- MADE TOWARDS ON MONEY. 15 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED . ITA.NO. 2748/M/2016 16 . THE ASSESSEE HAS FILED THIS APPEAL AGAINST ORDER OF THE CIT(A), -14, MUMBAI, DATED 28-1-2016, WHICH IS FILED BY THE ASSESSEE AGA INST ORDER OF ASSESSING OFFICER, IMPOSING PENALTY U/S 271(1)(C) FOR CONCEAL MENT OF PARTICULARS OF INCOME FOR A.Y. 2006-07. 26 RIVERA PROPERTIES PVT LTD 17 . THE BRIEF FACTS OF THE CASE WHICH LEADS TO IMPUGN ED PENALTY ORDER HAS BEEN NARRATED IN PARAGRAPH --- OF QUANTUM APPEAL ON THE SAME ISSUE IN ITA.NO. 250/M/2013. THE A.O. LEVIED PENALTY U/S 271(1)(C) F OR CONCEALMENT OF PARTICULARS OF INCOME IN RESPECT OF ON MONEY PAYMEN T FOR SALE OF PROPERTY. THE PENALTY ISSUE IS TRIGGERED OUT OF QUANTUM ADDITION OF RS. 3.05 CRORES MADE TOWARDS ALLEGED ON MONEY PAYMENT FOR SALE OF PROPER TY. THE DETAILED FACTS OF IMPUGNED ADDITION TOWARDS ON MONEY HAVE BEEN DISCUS SED IN ITA.NO. 250/M/2013. WE HAVE DELETED IMPUGNED ADDITION OF RS . 3.05 CRORES MADE TOWARDS ALLEGED ON MONEY PAYMENT FOR SALE OF PROPER TY FOR THE DETAILED REASONS RECORDED IN PARAGRAPH ----IN OUR ORDER IN I TA.NO. 250/M/2013. SINCE, QUANTUM ADDITION MADE BY THE A.O. HAS BEEN DELETED, PENALTY LEVIED U/S 271(1))(C) ON SUCH ADDITION FOR CONCEALMENT OF PART ICULARS OF INCOME CANNOT SURVIVE. THEREFORE, WE DIRECT THE A.O. TO DELETE PE NALTY LEVIED U/S 271(1)(C) FOR CONCEALMENT OF PARTICULARS OF INCOME. 18. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA .NO. 2748/M/2016 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2017. SD/- SD/- (RAJESH KUMAR) (D.T. GARASIA) JUDICIAL MEMBER ACCOUNTANT MEMBER 27 RIVERA PROPERTIES PVT LTD MUMBAI, DT : 27 TH OCTOBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI