SANJAY CHAWLA, SALEM V. THE ACIT, CENTRAL CIRLCE, SALEM

ITA 372/CHNY/2022

AI Insights

This case involves a series of appeals by Ms. Rekha Chawla and Mr. Sanjay Chawla against the orders of the Commissioner of Income Tax (Appeals) and the Assessing Officer concerning the assessment years 2010-11 to 2012-13. The primary issue revolved around the estimation of income from the sale of plots, where the Assessing Officer adopted a selling price of Rs.800 per sq.ft based on a seized sale agreement, which the assessees contested. The Tribunal found that the Assessing Officer's method of extrapolating the selling price from one sale agreement to other plots was justified due to the lack of credible explanation from the assessees regarding the discrepancies in the selling prices.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127990 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-05-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 18-05-2022
• Other Referred Cases: PCIT v. Abhisar Buildwell Pvt. Ltd., Harsh W Chadha vs DDIT, CIT vs Durga Prasad More, CIT vs Raji Sanal Kumar
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Revision of order; Income from undisclosed sources; Document seized; Principle of natural justice; Period of limitation; Prejudicial to interest; Onus to prove; Time period of passing order; Documents seized
• Section: 263; 154; 143(3); 153A; 250; 13

Judgement Text

आयकर अपील सं./ITA Nos.392 & 393/Chny/2021 & ITA Nos.374 & 375/Chny/2022 िनधा रण वष /Assessment Years: 2011-12 & 2012-13 Ms.Rekha Chawla, No.15, “Gurukripa”, Vidhyalaya Road, Opp. Ramakrishna Park, Salem-636 007. v. The Asst. Commissioner- of Income Tax, Central Circle, Salem. [PAN: ACHPR 4894 A] (अपीलाथ /Appellant) ( यथ /Respondent) आयकर अपील सं./ITA Nos.394 to 396/Chny/2021 & ITA Nos.371 to 373/Chny/2022 िनधा रण वष /Assessment Years: 2010-11 to 2012-13 Mr.Sanjay Chawla, No.15, “Gurukripa”, Vidhyalaya Road, Opp. Ramakrishna Park, Salem-636 007. v. The Asst. Commissioner- of Income Tax, Central Circle, Salem. [PAN: ASXPS 3092 F] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr.S.R.Srikrishna, CA यथ क ओर से /Respondent by : Mr.S.R.Karuppusamy, CIT सुनवाई क तारीख/Date of Hearing : 30.05.2023 घोषणा क तारीख /Date of Pronouncement : 31.05.2023 आदेश / O R D E R PER BENCH: This bunch of ‘ten’ appeals filed by two different assessees are directed against separate orders of the Commissioner of Income Tax आयकर अपीलीय अिधकरण, ‘बी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI ी महावीर िसंह, माननीय उपा , एवं ी मंजूनाथा.जी, माननीय लेखा सद के सम BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI MANJUNATHA.G, HON’BLE ACCOUNTANT MEMBER ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 2 :: (Appeals)-18, Chennai, dated 30.07.2021, and pertains to assessment year 2010-11 to 2012-13. Since, the facts are identical and issues are inter- connected, for the sake of convenience, these appeals were heard together and are being disposed off, by this consolidated order. 2. At the outset, we find that there is a delay of 20 days in appeals filed by the assessees. During the course of hearing, when defect was brought to the notice of the learned AR present, he has submitted that delay in filing of appeals is mainly due to lockdown imposed by the Govt. on account of spread of Covid-19 infections and which needs to be excluded for computing limitation in view of judgment of the Hon’ble Supreme Court in Miscellaneous Petition No.21 of 2022 in Suo Motu Writ Petition (C) No.3 of 2020, and if the period of delay is covered within the period specified in the order of the Apex Court, then, same needs to be condoned in view of specific problem faced by the public on account of Covid-19 pandemic. 2.1 The learned DR, on the other hand, fairly agreed that delay may be condoned in the interest of justice. 2.2 Having heard both sides and considered reasons given by the learned AR, we find that the Hon’ble Supreme Court in Miscellaneous Petition No.21 of 2022 in Suo Motu Writ Petition (C) No.3 of 2020, has extended limitation applicable to all proceedings in respect of Courts and Tribunals across the country on account of spread of Covid-19 infections w.e.f.15.03.2020, till ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 3 :: 28.02.2022 and said limitation has been extended from time to time. We further noted that delay noticed by the Registry pertains to the period of general exemption provided by the Hon'ble Supreme Court extending limitation period applicable for all proceedings before Courts and Tribunals and thus, considering facts and circumstances of the case and also in the interest of natural justice, we condone delay in filing appeals filed by the assessees. 3. Both assessees have raised common grounds of appeal for all three assessment years. Therefore, for the sake of brevity, grounds of appeal filed by the assessee in ITA No.392/Chny/2021 & in ITA No.374/Chny/2022, are re-produced as under: ITA No.392/Chny/2021 for AY 2011-12: 1. The impugned order of the Commissioner of Income-Tax (Appeals) is wrong, illegal, opposed to law, facts, judicial interpretation, principles, conventions and is hence liable to be cancelled. 2. JURISDICTION - PROPER ORDER NOT PASSED BY AO - NON CONSIDERATION BY CIT(A): a) The Commissioner of Income tax (Appeals) has grossly and fundamentally erred in deciding appeals on an assessment order which is Non-Est. The Assessing officer completed the assessment u/s 143(3), before the ITAT upheld the directions of PCIT u/s 263 and then failed to pass a consequential order for the same, till date. The Appellant has filed a rectification petition on 24.09.2021 bringing out this point and the same is pending as on date. b) The Commissioner of Income tax (Appeals) has erred in passing the appellate order by just "bestowing his thoughts" and by rehashing the order of assessing officer without even adjudicating the grounds raised in appeal. The Appellant has filed a rectification petition on 24.09.2021 drawing the attention of the CIT (Appeals) to deal with the matter afresh. ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 4 :: c) The Commissioner of Income tax (Appeals) has failed to note that, an assessment order passed u/s 143(3) rws 263 by the Assessing officer without following the binding directions of PCIT u/s 263 is void. The PCIT had given clear binding directions u/s 263 that "The AO is directed to redo the assessment, with regard to the said issue, for AY_2010-11, in the case of the assessee, after conducting necessary enquiries and verification on that matter, keeping in view my observations made and directions given in preceding paras, in accordance with law, and after giving due opportunity the assessee". d) The Commissioner of Income tax (Appeals) has erred in deciding the appeals mechanically, on mere suspicions, assumptions, surmises and conjectures, even after all these have been disproved in the Enquiry conducted by the Assessing officer, as per the directions of CIT (Appeals). e) The Commissioner of Income tax (Appeals), after directing the AO to conduct enquiries in 2021, has erred to ignore the results of enquiry by citing that verification, which he directed, was carried out after a long gap of decade. f) The Commissioner of Income tax (Appeals) has failed to note that this assessment is based on materials seized in the hands of Sanjay Chawla [PAN: ASXPS3092F] and has been used without recording of a satisfaction note. inconsistencies and contradictions of Assessing officer. To illustrate, The Assessing officer in the assessment order passed u/s 143(3) dated 31.12.2012 of the appellant for the same property for AY-2013-14 has estimated the selling rate at Rs.750 per square feet whereas the case of the other two co-seller's were not selected for scrutiny and the income returned were not disturbed h) The Commissioner of Income tax (Appeals) has erred in adjudicating the appeal without providing a copy of the report alleged to be submitted by the Inspector of Income tax which is referred in the assessment order passed u/s 143(3) rws 263. i) The Commissioner of Income tax (Appeals) has failed to note the legislative intent behind introduction of section 50C/43CA of Income tax Act, without which the difference in value for the same property cannot be brought to tax. 3. NO MATERIALS FOUND FOR ON-MONEY: a) The Commissioner of Income tax (Appeals) has failed to appreciate that there has been no materials seized evidencing on-money, beyond the value recorded in registered document. b) The CIT (Appeals) has not applied his mind to make proper enquiry into the entire matter but sidelined the earlier proceedings due to the delay on the part of the department as a whole to make proper enquiries, puts the blame on the assessee. and makes an ad-hoc addition which is unsustainable. 4. CO-SELLER PROCEEDINGS / BUYERS IGNORED: a) The CIT (Appeals) has erred in upholding the assessment without considering the tax treatment in hands of another co-seller or buyers of plots. Refer Madras High Court decision in COMMISSIONER OF INCOME TAX vs. KUMARARANI SMT. ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 5 :: MEENAKSHI ACHI 292 ITR 0624 and COMMISSIONER OF INCOME TAX vs. S. MUTHUKARUPAN 290 ITR 0154 b) The Commissioner of Income tax (Appeals) ought to have followed the real income theory and cannot sustain an addition on hypothetical basis. 5. RECTIFICATION PETITION PENDING BEFORE CIT(APPEALS). a) The appellant has filed a rectification petition u/s 154 on 24.09.2021, before the CIT Appeals for non-consideration of certain grounds raised before him and also for the issue relating to the in fructuous nature of proceedings before the AO. 6. PRAYER: The appellant craves leave to file additional grounds of appeal at the time of hearing and it is prayed that the returned income be restored and demand may be cancelled. ITA No.374/Chny/2022 for AY 2011-12: 1. The CIT(A) erred in dismissing the rectification petition filed by the appellant under Sec 154 of the Income tax Act, 1961. 2. The CIT(A) dismissed the same without any valid reason, excepting to state to the effect that, the order passed by AO accords with directions given by the CIT u/s 263 and AO need not pass another order to give effect to the directions of the ITAT in which the ITAT had only dismissed the appeal filed by the Assessee / Appellant and that the order of the CIT was confirmed by ITAT. 3. The CIT(A) failed to appreciate that the rejection of the rectification petition without any basis, violates the principles of natural justice and that the materials relied on by the department was not put to the assessee at all, such as the Income Tax Inspector's Report (ITI report), comparable data etc. 4. The CIT(A) erred to conclude in Paragraph 5 of the order that "the appellate order was passed without any reference to the report of the ITI and hence no prejudice is caused to the appellant for want of ITI's report". The order of CIT(A) u/s 250, upheld the order passed by the Assessing officer u/s 143(3) rws 263 in which the Assessing officer has relied on the Income Tax Inspector's Report (ITI report), to make additions. 5. The CIT(A) failed to note that the issue raised by the appellant in the Rectification petition goes to the root of the matter as non-consideration of the submissions relating to the assumption of jurisdiction, amounts to mistake apparent on the face of record. 6. The order passed by the Assessing officer which was the subject matter of the main appeal before the CIT(A) was clearly barred by limitation in as much as the AO did not carry out the directions given by PCIT/ITAT viz vide paragraph 6 of the order of the PCIT passed u/s 263 dated 29.03.2016 to ascertain and determine the sale consideration received by the assessee, by passing a fresh order and the failure to do so is in violation of the statutory provisions contained in Sec 150, Sec. 250 and read with Sec 143(3)of the Income tax Act, 1961. ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 6 :: 7. The Appellant humbly submits and specifically draws the attention of this Honourable Tribunal to the RTl proceedings received, when the petition u/s 154 was pending before the CIT (Appeals), the copy of the RTl proceedings have been brought on record before the CIT(A) and the CIT(A) chose to ignore them for the reasons best known to him. This vitiates the entire proceedings. 8. The appellant craves leave to adduce additional grounds of appeal at the time of hearing and it is prayed that justice be rendered. 4. The brief facts extracted from ITA No.392/Chny/2021 for AY 2011- 12 in the case of Smt.Rekha Chawla are that the assessee, Smt.Rekha Chawla is the proprietriex of M/s.DMC Textiles. A search was conducted on 10.01.2012 at the residential premise of Mr.Madanlal D Chawla, Gurukripa, 15, Vidyalaya Road, Salem. The assessee and her son Mr.Sanjay Chawla along with Smt.L.Ammaniammal, purchased 4 acres 5 cents land at Tharamangalam during the Financial Year 2008-09 for a consideration of Rs.80 lakhs. It was further noted that Mr.Sanjay Chawla and Smt.Rekha Chawla, by her power agent Mr.Sanjay Chawla had together invested the amount for purchase of land, including stamp duty and registration charges. During the course of search, a copy of agreement was found and seized in Annexure ANN/PS/SS/B&D/S-3/S.No.82 to 86. As per said document, Smt.L.Ammaniammal along with Mr.Sanjay Chawla had entered into an agreement with Smt.Rathinammal for sale of 13,136 sq.ft. of land at their site at Tharamangalam for total consideration of Rs.1,05,09,000/- , for which advance of Rs.75 lakhs in cash was received. This sale has been concluded in December, 2013, and registered the document for a consideration of Rs.1,05,09,000/-. It was further noted that as per the said agreement dated 18.03.2011, the assessee had agreed to sell 13,136 sq. ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 7 :: ft. of land @ Rs.800/- per sq.ft. Consequent to search, the assessment has been completed u/s.143(3) r.w.s.153A of the Act. Thereafter, the cases have been taken up for revision proceedings, and the PCIT has passed order u/s.263 of the Act, and direct the AO to re-examine the cases of the assessee in light of difference in sale price noticed as per sale agreement found and seized during the course of search with reference to sale price admitted by the assessee for relevant assessment years. The assessee challenged the order of the PCIT passed u/s.263 of the Act, before the Tribunal, and ITAT Chennai Benches vide order dated 20.01.2017 dismissed the appeal filed by the assessee, and upheld revision order passed by the PCIT. 5. Pursuant to revision order passed by the PCIT u/s.263 of the Act, the AO has taken up the case for assessment proceedings and called upon the assessee to explain ‘as to why’ sale price of Rs.800/- per sq.ft shall not be adopted for various plots sold during the FY relevant to AYs 2011-12 to 2012-13. The AO had also worked out difference between sale consideration admitted by the assessee and sale value as per Rs.800/- per sq.ft and arrived at a difference of Rs.63,45,935/-. The assessee vide their reply dated 20.01.2016 contended that there is no provision under the Act for extrapolation of sale consideration on the basis of one sale agreement, making additions towards on-money received for sale of plots. The assessee had also explained the difference between rate agreed to be sold ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 8 :: to Smt.Rathinammal and sale price received from other buyers and argued that when the assessee has developed the land into residential layout, there was no buyer, because of various disputes including non-availability of approach road to the layout. The assessee has settled the dispute with regard to land & road, and only after proper approach road, the price has been increased. Therefore, it is highly incorrect to compare one single instance of selling price received from one particular buyer and applying said rate to all plots sold during the relevant assessment years, ignoring the fact that there is no evidence with the AO to suggest that the assessee has received such price for all plots sold during that period. The AO, however, was not convinced with the explanation offered by the assessee and according to the AO, the assessee could not justify huge difference in selling price of residential plots in one year or next Financial Year, even though, there is a huge gap of Rs.700/- per sq.ft. when compared to plots sold to Smt.Rathinammal. The AO has discussed the issue in light of certain judicial precedents and also negated the arguments of the assessee that initially the assessee has sold plots for lower price due to various legal issues and observed that claim of assessee is unsubstantiated, because, even after registration of Sale Deed in favour of Smt.Rathinammal, the assessee is continued to sell the plots at very less rate. Therefore, rejected the arguments of the assessee and adopted selling price of Rs.800/- per sq.ft on total number of plots sold during the year and difference between ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 9 :: the consideration offered by the assessee and consideration worked out as per the rate of Rs.800/- per sq.ft and difference amount of Rs.63,45,935/- has been treated as income of the assessee. 6. Being aggrieved by the assessment order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee challenged additions made by the AO towards estimated on-money received towards sale of property on the basis of one sale agreement entered into with Smt.Rathinammal and found during the course of search, and extrapolating such sale price to plots sold during three assessment years. The assessee also challenged addition made in the assessment framed u/s.143(3) r.w.s.153A of the Act, in the absence of incriminating material, because, the so called agreement claimed to have been recovered during the course of search, is not found in the position of the assessee. 7. The Ld.CIT(A) after considering relevant submissions of the assessee and also taken note of Remand Report issued by the AO, opined that on perusal of the agreement with Smt.Rathinammal clearly indicate that the sale price per sq.ft. is Rs.800/-. The assessee has not been able to explain ‘as to why’ that particular sale was much higher when compared to sale price of other plots. Although, the assessee claims that she was forced to sell for lower price due to various litigations, including approach road to layout, but said claim was unsubstantiated. Therefore, rejected arguments ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 10 :: of the assessee and sustained the additions made by the AO towards differential sale consideration for sale of plots. The relevant findings of the Ld.CIT(A) are as under: 9. I have bestowed my personal thoughts to the issue. Admittedly, the appellant, her son had 50% share together and Ms.L.AmmaniAmmal had the other 50% share in the impugned adventure/ project where they had developed sites and sold to various buyers; that the impugned evidence [ANN/PS/SS/B&D/S-3/S.No.82 to 86] that clearly indicated the sale price at Rs.800/- sq. ft in respect of sale to Ms.Rathinammal; the said sale share was captured and reported only in respect of that particular sale at the indicated rate of Rs.800/- sq.ft.; and that the appellant and other two persons had however chosen to adopt and report much lower rate in the range of Rs.50/- to 270/- sq ft.. It is in this background, the PCIT held that the original assessment made u/s.143(3) r,w,s 153A of the Act was both erroneous and prejudicial interest to the Revenue and that the Hon'ble Tribunal [ITA Nos. 1594, 1595 and 1596/Mds/2016 dated 20.01.2017] has upheld the order passed by the PCIT directing the AO to carry out enquiries and to adopt the rate. 9.1. It is vital and relevant to reckon the timelines as to the whole income earning activity and the assessment thereof. The site was purchased in FY 2008-09; the sale of plots took place during the FYs relevant to the AYs 2010-11 to 2013-14. The appellant was subjected to search action on 10.01.2012 during which the credible/incriminating evidence in the form of sale agreement with the said Smt. Rathinammal was seized. The assessment u/s 143(3) r.w.s.153A was completed on 15.3.2014. Revision proceedings u/s 263 of the Act was passed on 30.3.2016. Assessment u/s 143(3) r.w.s.263 was passed on 22.12.2016. Appeals were filed on 21.01.2017. Remand report requiring the AO to carry out verification with the buyers took place in February, 2021. 9.2. Perusal of the agreement with Ms. Rathinammal clearly indicates that the sale price per sq. ft was Rs.800. The appellant has not been able to explain as to why that particular sale was much higher as compared to the sale price of other plots. The appellant might argue that the sale to Ms. Rathinammal was due to "excited purchase" [antithesis to distress sale] but that defies logic and is bereft of merit inasmuch as the difference between the amount evidenced in the afore-said seized document and the other sale consideration apparently on the basis of registered consideration is too high to be explained by any logic more so in the field of real estate and the usual explanations that are offered with reference to location of the site, inter-se situs of different plots, preference by the buyers, compulsions of the seller, preferences of buyers, future growth etc. The appellant has clearly failed to substantiate her stance by offering any credible explanation except saying that no evidence other than the impugned document [that indicated the actual and correct price of that particular site] was recovered and pleading that the buyers have confirmed only the recorded consideration. 9.3. The appellant sought shelter under the argument that the buyers, during the remand proceedings, have confirmed the transaction. I hasten to add that the verification was carried out in February, 2021 after a long gap of a decade. In view of the specific facts and circumstances of the case and in light of the hiatus between the transaction and the verification, I am not inclined to accept her contention as the depositions given by the buyers rather mechanical and in a stereotyped manner is a self-serving proposition both for the appellant and the buyers. Yes, the cross-verification and confirmation by counter-parties is an important requirement to be discharged by the Revenue. At the same time, it is relevant to keep in view that crucial evidence recovered contemporaneously indicate in a crystal clear manner about the exact and actual price collected by the appellant in respect of particular sales and the appellant, as mentioned earlier has not furnished credible explanation as to why the said sale was made at such a rate while systematically suppressed price in respect of other sites for which the Revenue unfortunately or incidentally could not lay hands on the ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 11 :: original agreements. It is necessary to observe that taxpayers who organize their affairs in such a manner as to suppress their sale proceeds would not be expected to keep all such documents that are prejudicial to them and Revenue could not be expected to show each and every document to support its reasoning. It is in this context only various Courts, in the field of taxation, have recognized and validated the concepts/principles of Common Knowledge Theory, Theories; of Human probabilities and a Different set of Rules of Evidence that govern assessment of income. 9.4. The courts have held that theory of human probability could be applied considering various circumstances that obtained in a particular case, taken cumulatively whereby the chain of events leading to an inference that the transference or the transaction is the made believe one and therefore does not fall within the under realm of human probability. In such circumstances, legally acceptable evidence such as confirmation letters, routing of amounts through bank accounts, disclosure of transaction in the books of account of the transaction parties, filing of returns, affidavits etc. may not be of help to the tax payer in cases where the pieces of such evidence or not in accord with human probability. In such cases, documentary evidences can be ignored. 9.4.1. In the case Harsh W Chadha vs DDIT [2011] 9 taxmann.com 1, Delhi the scope of circumstantial evidence was examined and delineated as under: 1. The circumstances alleged must be established by such evidence as in the case of other evidence. The circumstances proved must be of a conclusive nature and is not totally inconsistent with the circumstances or contradictory to other evidence. Although there should be no missing links in the case, yet it is not essential that every one of the links must appear on the surface. Some of the links may have to be inferred from the proved facts. 2. In drawing those inferences or presumptions, the authorities must have regard to the common course of natural events to human conduct and their relation to the facts of the particular case. 3. The circumstantial evidence can, with equal felicity, be resorted to in proof of the fact in issue which arises in proceedings for the assessment of taxes. 4. In the case of collector of Customs vs Boremal 1974 SCC 2 544, the use of circumstantial evidence and burden of proof were the subject matter of adjudication. It was held that merely because there is no direct evidence, the burden of proof cannot be shifted to the department to prove a fact with absolute precision. 5. The Court observed as under; 'but in appreciating its scope and the nature of onus cast by it, we may pay give regard to other kindred principles, no less fundamental of universal application. One of them is that the prosecution are the department is not required to prove its case with mathematical precision to a demonstrable degree for in all human affairs absolute certainty is a myth and as Professor Brett felicitously puts it 'all exactness is a fake'. Eldaradoof absolute proof being unattainable the law accepts for it probability as a working substitute in this work a day world. The law does not require the prosecution to prove the impossible. All that is required is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of fact and issue. Thus legal proof is not necessarily perfect proof; Often it is nothing more than a prudent man's estimate as to the probabilities of the case. ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 12 :: 9.4.2. It is pertinent to mention here the findings of the Hon'ble ITAT, Delhi in the case of Harsh Win Chaddha vs DCIT ITA 3088 to 3098 and 3107/Del/2005. The Hon'ble ITAT held that- 'the admissibility of documents, evidence or material differs greatly in income-tax proceedings and criminal proceedings respectively. In criminal proceedings the charge is to be proved by the State against the accused establishing it beyond doubt. Whereas as per the settled proposition of law, the Income-tax liability is ascertained on the basis of the material available on record and the surrounding circumstances, human conduct and preponderance of probabilities. The Hon'ble ITAT went on to pronounce that 'rules of evidence do not govern the income-tax proceedings as the proceedings under the Income-tax Act are not judicial proceedings, in the sense, in which the phrase 'judicial proceedings' is ordinarily used. The AO is not fettered or bound by technical rules of evidence contained in the Indian Evidence act and is entitled to act on material which may not be accepted as a evidence in a Court of law. 9.5. It is not enough to say that the entire other transactions of sale were done at the recorded consideration and it is equally imperative to look at the transaction from the angle of logic, preponderance of probability, rationality and from the point of view of a man of normal prudence. In this regard, there are several vintage decisions of the Hon'ble SC of India which underscored the importance and relevance of analysing transactions in its entirety to discover the real intent of the transaction. Some of the leading cases which laid the foundation for the theory and decisions where the theory found application are briefly discussed as under: 9.5.1. In Durga Prasad More's case i.e. CIT vs Durga Prasad More [1971] 82 ITR 540 (SC) the Hon’ble Supreme Court held as under: 'It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. Party who relies on the recital in a deed established on the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour, then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers -while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents'. 9.5.2. The Hon'ble Apex Court in the case Sumathy Dayal [214 ITR 801(SC)] came across a similar improbable result that was shown by the assessee. These entire edifices through which the assessee claimed to have earned huge tax exempt gains within a very short span of time fails the test of both genuineness and human probabilities. In the case cited supra, the Hon'ble SC propounded their principles of human probabilities on applying it in that case and held that whether apparent is real is to be decided on the basis of incriminating circumstances. 9.6. As mentioned earlier, the appellant has failed to adduce any credible explanation/evidence to counter the conclusions of the AO. The appellant could have countered the AO's inference by adducing certain evidence to show that the market value of the sites in the locality confirms to the recorded consideration whereas the AO has correctly relied on the recovered document in order to prove the existence of a fact that underreporting of sale was effected by the appellant. The Hon'ble High Court of Kerala in the case of CIT Vs - x>backer [2014] 363 ITR 447(Ker.) more or less in a similar circumstances of Tree's failure has confirmed the addition by taking judicial notice of the ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 13 :: prevalence of widespread practice of undervaluing property with a view to avoiding stamp duty. 9.7. The Hon'ble High Court of Kerala in the case of CIT Vs Raji Sanal Kumar [2011] 15 raxmann.com 22(Ker.) too took a similar position. The Hon'ble Court has held as under: "3. We have heard the Senior Counsel appearing for the Revenue and counsel appearing far the assessees. After hearing both sides, we feel that the orders of the Mo appellate authorities are not sustainable for more than one reason. In the first place, the first appellate authority and the Tribunal have not considered the significance of the documents seized particularly, information collected from the computer from the assessees' house. All the three items of properties sold are adjoining properties and the neighbouring owners, who are none other than the father and uncle of the lady, have conceded that more than the documented value was received as sale consideration. In the normal course, unless the assessee proves that her property is of lower value than the adjoining property, her property would have fetched the same or almost the same price as that of the property of the uncle and father, which was simultaneously sold. In the circumstances, we see no reason why the particulars including the sale value at which the property is sold, collected from the computer found in the house of the assessees, cannot be believed. This Court has in several decisions taken note of the notorious practice of underestimation of value in documents to reduce the high incidence of stamp duty. The property in this case is also valuable land located in prime area of the city and we see no reason why adjoining three items of property should be sold at substantive different price. 4. The senior counsel appealing for the Revenue rightly contended that the first appellate authority went wrong in cancelling the assessment merely because the assessing officer did not take a confirmation from the purchaser. The approach of the appellate authority and the Tribunal in our view is unrealistic because no purchaser will disclose to the Department that there was unaccounted payment in the purchase of property. If receipt of more than the declared amount as consideration is proved by documents, necessarily, the assessment is sustainable. We do not find the first appellate authority or the Tribunal has considered the case with reference to the seized documents. We, therefore, allow the appeals by setting aside the orders of the Tribunal and that of the first appellate authority and remand the matter to the CIT (Appeals) for reconsideration by giving one more opportunity to the assessee to prove that her property is of lesser importance and lesser value than neighbouring properties simultaneously sold to justify its sale at a lesser price which, of course, arises only if the materials gathered from her computer is proved by her to be false which burden shall also be on the assessee. " 9.8. The appellant, in effect, is a trader/dealer in plots after development and has shown a higher value in respect of particular plot as she had no other option especially in view of the recovery of the impugned seized document and has conveniently failed to show the real price due to the absence of similar discovery, But, the appellant has not proffered any credible explanation in the context of rationale adopted by it that requires to be tested in the touch stone of common knowledge theory and human probabilities theory. In view of this dichotomy adopted by the appellant and in light of the unique facts and circumstances of the case of the appellant, I hold that no interference is called for in the decision of the AO. Accordingly, the appellant's grounds are dismissed. 8. The Ld.Counsel for the assessee submitted that in search assessment framed u/s.153A of the Act, additions cannot be made based on extrapolation of sale price of one plot from one document and using it as ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 14 :: basis and estimating the selling rate for other plots. The Ld.Counsel for the assessee referring to directions of the PCIT u/s.263 of the Act, submitted that the sole basis for revision of assessment order is to enquire about actual sale consideration received, but not to estimate selling price of other plots by extrapolating rate charged for one plot. The AO ignoring the mandatory directions of the PCIT estimated selling price on the basis of one document, which is not correct. The Ld.Counsel for the assessee further submitted that so-called incriminating material considered and used by the AO to make additions towards estimated on-money received for sale of plots, cannot be considered as incriminating material, because, said document pertains to AY 2011-12, and thus, the same cannot be used for other assessment years. In the regard, he relied upon the decision of the Hon’ble Supreme Court in the case of PCIT v. Abhisar Buildwell Pvt. Ltd., in Civil Appeal No.6580 of 2021 dated 24.04.2023. He further submitted that the AO has wrongly estimated selling price on other plots based on sale agreement entered into with one person ignoring the fact that the assessee was having various litigations including non-availability of proper road connectivity to layout. In order to clear those litigations and also get road connectivity to layout, the assessee was forced to sell few plots at lower rate due to land mafias. Therefore, when the document clearly shows that sale consideration accounted in the books of accounts is supported by Sale Deed, the AO cannot estimate selling price of plots based on one document. ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 15 :: 9. The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that the judgment of the Hon’ble Supreme Court in the case of PCIT v. Abhisar Buildwell Pvt. Ltd., is not applicable, because, in the present case, incriminating material was found and seized in the form of sale agreement, which is clearly shows selling price of Rs.800/- per sq.ft on few plots, whereas, the assessee has accounted less selling price on the basis of registered document. The assessee could not explain ‘as to how’ such huge difference between selling price of plots in one layout. Although, the assessee claims that there was a litigation, but could not substantiate its claim with evidences. Therefore, the AO and the Ld.CIT(A) has rightly estimated selling price on the basis of documents found during the course of search and their orders should be upheld. 10. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. In so far as first legal arguments of the assessee in light of decision of the Hon’ble Supreme Court in the case of PCIT v. Abhisar Buildwell Pvt. Ltd. (supra), we find that the ratio laid down by the Hon’ble Supreme Court in the said case does not apply to this case, because, in the present case, there was an incriminating material found and seized during the course of search in the form of sale agreement which clearly establishs difference in selling price considered by the assessee for various plots sold during three assessment years. Therefore, we are of the considered view that there is no merit in the legal ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 16 :: arguments taken by the assessee, and thus, the same is rejected for all AYs 2011-12 & 2012-13. 11. In so far as the second arguments of the assessee that in search assessment framed u/s.153A of the Act, there cannot be any extrapolation based on documents found during the course of search for one assessment year and estimating income for other assessment years, we find that although, the AO was in possession of one sale agreement which pertains to assessment year 2011-12, but fact remains that said document pertains to business activity of the assessee of developing real estate residential layout and also in one particular project. Further, the said document clearly envisages higher selling price of plots in the same layout, whereas, the assessee has accounted very less sale consideration on the basis of registered document. Therefore, in our considered view, there is no error in the method followed by the AO and extrapolating information gathered during the course of search for estimating income for other two years, and thus, we reject arguments of the assessee on this aspect for all three assessment years 12. In so far as estimation of selling price of various plots sold in three assessment years based on sale agreement found and impounded during the course of search, we find that the assessee had entered into a sale agreement with Smt.Rathinammal w/o. Mr.K.Madesan, Ex-Councilor 61-65 ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 17 :: for 13,136 sq.ft. @ Rs.800/- per sq.ft. and also registered the deed in favour of buyer in the subsequent Financial Year for very same agreed amount. We further noted that the assessee claimed to have received selling price of Rs.50.48 per sq.ft to Rs.405.96 per sq.ft. for various sites sold in same layout for three different assessment years. The AO has worked out difference between selling price of plots sold to Smt.Rathinammal and selling price of other plots and considered difference amount being on-money received towards sale of plots. Although, the AO has estimated purported on-money claimed to have been received by the assessee for selling plots in three assessment years, except solitary instance of sale agreement with Smt.Rathinammal, there is no other evidence with the AO to justify adoption of Rs.800/- per sq.ft uniformly to all other sites/plots sold during the three assessment years. We further noted that the AO has estimated unaccounted income for sale of plots by extrapolating selling price of one plot to other plots sold during three assessment years by giving vague reasons including the principles of human probability. On the other hand, although, the assessee claims that the reasons for receiving less selling price for few plots is various litigations pending in respect of said land and also non-availability of approach road, because of blocking road by certain persons, but such claim was unsubstantiated. Form the above, it is clear that neither the AO proved his case for adopting Rs.800/- per sq.ft uniformly for all plots sold during the ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 18 :: three assessment years, nor the assessee explain why such a huge difference in selling price of plots in same layout, that too during same period. Had it been a case of the assessee that there is a time gap between lower selling price and upper selling price, we could have accepted explanation offered by the assessee. But, in the present case, there is no much time gap between lower price accounted by the assessee for selling plots and higher price received for selling plots. Therefore, we are of the considered view that the arguments of the assessee that in search assessment, addition cannot be based on extrapolation of selling price of a plot from one document and using it as basis and estimating selling rate of other plots. Since, both sides have failed to justify their case and also there is an enough material in the position of the AO to make estimation of unaccounted income from sale of plots, we are of the considered view that under given facts and circumstance, the only possible way to settle the dispute between the assessee and the AO is to estimate selling price of plots based on evidences available on record, including purported sale agreement found during the course of search. The assessee has started selling plots right from AY 2010-11 onwards. The lowest selling price claimed to have been received by the assessee for sale of one plot on 06.04.2010 was at Rs.50.48 per sq.ft. The highest selling price that was received by the assessee for AY 2013-14 for selling number of plots was at Rs.406.51 per sq.ft. From the above, it is very clear that there is a huge ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 19 :: difference between lowest selling price claimed to have been received by the assessee and higher selling price derived from selling of plots. Therefore, considering the fact that both the parties failed to justify their case, we deem it appropriate to adopt higher selling price received by the assessee during these three assessment years as basis for estimation of sale price for plots sold during AYs 2010-11, 2011-12 & 2012-13. Since, the assessee has received highest selling price of Rs.406.51/- per sq.ft., we direct the AO to adopt Rs.400/- per sq.ft. and extrapolate said rate to all plots sold during three assessment years and compute additions towards difference between selling price considered by the assessee in their books of accounts and actual selling price to be considered. Accordingly, we direct the AO to re-work additions towards income received on sale of plots for AYs 2010-11, 2011-12 & 2012-13. 13. In so far as appeals filed by the assessee against the order of Ld.CIT(A) u/s.154 of the Act, for AYs 2010-11, 2011-12 & 2012-13, we find that the assessee has challenged the order of the Ld.CIT(A) u/s.154 of the Act, on various technical grounds which revolves around the issue of estimation of unaccounted income received towards sale of plots for AYs 2010-11, 2011-12 & 2012-13. Since, we dealt with the issue of estimation of income for all three assessment years and direct the AO to re-work income on the basis of directions given by us, these appeals filed by the assessee for AYs 2010-11, 2011-12 & 2012-13 becomes infructuous and ITA Nos.392 & 393/Chny/2021 ITA Nos.374 & 375/Chny/2022 ITA Nos.394-396/Chny/2021 ITA Nos.371-373/Chny/2022 :: 20 :: thus, appeals filed by both assessees for AYs 2010-11, 2011-12 & 2012-13 against order of the Ld.CIT(A) u/s.154 of the Act, are dismissed as infructuous. 14. In the result, appeals filed by both assessees in ITA Nos.392- 396/Chny/2021 are partly allowed, and appeals filed by both assessees in ITA Nos.371-375/Chny/2022 are dismissed. Order pronounced on the 31 st day of May, 2023, in Chennai. Sd/- (महावीर िसंह) (MAHAVIR SINGH) उपा /VICE PRESIDENT Sd/- (मंजूनाथा.जी) (MANJUNATHA.G) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 31 st May, 2023. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ / Appellant 3. आयकर आयु" / CIT 5. गाड फाईल / GF 2. यथ / Respondent 4. िवभागीय ितिनिध / DR