K Rajani Kumar, Hyd, Hyderabad V. ACIT., Cir-6(1), Hyd, Hyderabad

ITA 987/HYD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74562 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 20-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI SOLGY JOSE T KOTTARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure; Loose papers; Document seized; Cost of acquisition; Documents seized
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.987/HYD/11 : ASSTT. YEAR 2003 - 04 SMT. K.RAJANI KUMARI, HYDERABAD ( PAN - ADFPK 4881 M ) V/S. ASST. COMMISSIONER OF INCOME - TAX CIRCLE 1, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI SHRI SOLGY JOSE T.KOTTARAM DR DATE OF HEARING 17.12.2013 DATE OF PRONOUNCEMENT 13.2.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD DATED 28.2.2011 FOR THE ASSESSMENT YEAR 2003 - 04. 2. EFFECTIVE G R OUNDS O F THE ASSESSEE IN THIS APP E AL READ AS FOLLOWS - 1. THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) OUGHT NOT TO HAVE UPHELD THE ADDITION OF RS .25,00,000/ - MADE BY THE AO, ON ACCOUNT OF PROMOTE NOTING IN TH E D A IRY CEASED DURING SURVEY OPERATIONS WITHOUT ANY CORROBORATIVE EVIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER. 2. THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) ERRED IN HOLDING T H A T NO HABITABLE HOUSE CAN BE CON S TRUCTED WITH A MEAGER AMOUNT O F RS .1,74,795, NO INVESTMENT DISCLOSED TOWARDS CON S TRUC T ION OF ANY HOU S E AND THE MUNICIPAL TAX RECEIPT PRO D U C ED BY THE ASSESSEE IS A PROVISIONAL RECEIPT AND THEREBY UPHOL D IN G TH E ADDITION MADE BY THE ASSESSING OFFICER B Y REJECTING THE EXEMPTION CLAIMED BY T HE ASSESSEE U/S. 54 TO THE EXTENT OF R S .38,51,873/ - . 3. . I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 2 2. FACTS OF THE CASE IN BRIEF ARE THAT SEARCH AND SEIZURE OP E RATION S W E RE CARRIED OUT AT THE RESIDENTIAL P R EMI S ES OF SHRI C.R A DHA KRISHNA KUMAR, HUSBAND OF THE ASSESSEE, ON 25.10.2007. DURIN G TH E COU R S E OF S E ARCH OPERATION, INCRIMINATING MAT ER IAL, VIDE ANNEXURE ACRK/04 WAS SEIZED, AND IT C ONTAINED THE DETAILS OF ACTUAL CONSI DER ATION RECEIVED BY THE ASSESSEE ON SALE OF PROPERTY. THE ASSESSING OFFICER, BASED ON THE INFORMATION CONTAINED IN TH E SE IZED DIARY, ISSUED NOTICES UNDER S.153C/142 ( 1) OF THE ACT TO THE ASSESSEE . IN RESPONSE TO THE SAID NOTICE UN D ER S.153C OF TH E AC T, THE ASSESSEE FILED RETURNS OF INCOME FOR ASSESSMENT YEARS 2002 - 03 TO 2008 - 09 ON 19.8.2009, INTER ALIA DISCLOSING AN INCOME OF RS.5,33,634, BESIDES LONG TERM CAPITAL GAINS OF RS.72,98,977 FOR ASSESSMENT YEAR 2003 - 04. THE ASSESSING OFFICER NO T ICED THAT THE ASSESSEE IN HER ORIGINAL RETURN O F INCOME FOR THE ASSESSMENT YEAR 2003 - 04 FILED ON 29.9.2003 ADMITTED TAXABLE INCOME AT R S .2,90,690 ONLY, WHEREAS IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER S.153C, SHE DIS C LOS ED HIGHER FIGURES OF INCOME AND LONG TERM CAPITAL GAINS AS NOTED ABOVE, AND ACCORDINGLY PROCEEDED TO COMPLETE THE IMPUGNED ASSESSMENT, AFTER MAKING SE V ERAL ADDITIONS AND DISALLOWANCES ON AN INCOME OF RS.1,33,67,661, VIDE ORDER OF ASSESSMENT DATED 14.2.2009 PASSED UNDER S.143(3) READ WITH S.153C OF THE ACT. WHILE THUS COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER ALSO DISALLOWED THE CLAIM OF THE ASSESSEE FOR EXEMP TION OF CAPITAL GAINS FROM TAX UNDER S.54 OF THE ACT. THE CIT(A) ON APPEAL, CONFIRMED NOT ONLY THE ADDITIONS MADE BY THE ASSESSING OFFICER, BUT ALSO DENIAL OF EXEMPTION CLAIMED UNDER S.54 OF THE ACT. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. ONE OF THE CONCLUSIONS OF THE ASSESSING OFFICER, GIVING RISE TO THE PRESENT APPEAL BEFORE US, IS THAT THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE , AS PER THE SEIZED MATERIAL, FOR THE PROPERTY BEARING PLOT NO.304 O, ROAD NO.78, JUBILEE HILLS SOLD DU RING THE YEAR WAS RS.1,65,00,000, WHEREAS IT WAS CLAIMED BY THE ASSESSEE THAT THE SAID PROPERTY WAS SOLD IN SEPTEMBER, 2002 BY SMT. K.V.L.SAVITRI DEVI FOR A CONSIDERATION OF RS.65,00,000 . IT WAS NOTICED BY THE ASSESSING OFFICER FROM THE SEIZED MATERIAL BE IN G ANNEXURE A/CRK/04 DATED 25.10.2007 THAT PAGE NO.5 OF THE SAID DIARY CONTAINED THE DETAILS OF I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 3 RECEIPT OF CONSI DE RA T ION IN RESPECT OF SALE OF THE PROPERTY AND THE TOTAL CONSIDERATION WAS RS.1,65,00,000, AS AGAINST THE CON T ENTION S OF BOTH THE ASSESSEE AND HER HUSBAND BEFORE THE ASSESSING OFFICER THAT THE CONSIDERATION WAS ONLY RS.65,00,000. THEY HAVE ALSO MADE AN ATTEMPT BEFORE THE ASSESSING OFFICER TO RECONCILE THE ENTRIES IN THE SEIZED DIARY WITH THE ENTRIES RECORDED IN THE REGISTERED SALE DEED. THE ASSESSEE WAS ABLE TO MATCH THE ENTRIES IN THE DIARY WITH THE CONSIDERATION OF RS.65 LAKHS, WHEREAS THE OTHER ENTRIES TO THE TUNE OF RS.1 - CRORE WERE NOT MATCHING. HOWEVER, I T WAS CONCLUDED BY THE ASSESSING OFFICER THAT PAYMENTS WERE MADE OVER AND ABOVE THE CONSIDERATION OF RS.65 LAKHS APPEARING IN THE SALE DEED. 4. IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER S.153C, THE ASSESSEE ACCEPTED THE ENTRIES CONTAINED IN THE SEIZED DIARY EXCEPT FOR AN AMOUNT OF RS.25 LAKHS REPRESENTING THE ENTRY REFLECTED IN THE DIARY AS PRO - NOTE AND FILED THE RETURN FOR THE ASSESSMENT YEAR 2003 - 04, ADMITTING SALE CONSIDERATION OF RS.1,40,00,000, BESIDES CLAIMING EXEMPTION UNDER S.54 AT RS.28,49,150 ON ACCOUNT OF PURCHASE OF PLOT NO.539, ROAD NO.86, JUBILEE HILLS , HYDERABAD. BEFORE THE ASSESSING OFFICER, WITH REGARD TO THE ENTRY OF RS.25,00,000 MENTIONED AGAINST THE ENTRY OF PRO - NOTE, IT WAS CONTENDED THAT THE SAID AMOUNT WAS NOT ACTUALLY RECEIVED BY HER. THE ASSESSING OFFICER DID NO T ACCEPT THE SAID CLAIM OF T HE ASSESSEE, OPINING THAT SIN C E THE SAID PRO - NOTE AMOUNT E D TO A PROMISE TO PAY, THE ASSESSEE MU S T HAVE RECEIVED THE SAID AMOUN T AT A LATER DATE. HE FELT THAT PRO - NOTE IS NOTHING BUT AN INSTRUMENT, I SS U E D IN LIEU OF CASH OR VALUE, AND IS GENERALLY USED AS SECURITY. ACCORDINGLY, H E CONCLU D ED THAT THE ASSESSEE WOULD H A VE REGISTERED THE PROPERTY IN THE NAME OF THE VENDEE ONLY AF T ER CONSID E RIN G THE TOTAL VALUE OF THE PROPERTY AT R S .1,65,0,00 AND AFTER SATISFYING HERSELF THAT SUCH CONSI D ERATION WAS RECEIVED I N FULL THE ASSESSING OFFICER OBSERVED THAT NO PERSON WOULD R EGISTER OR ALIENATE HI S/ HER PROP E RTY IN THE A BSENCE O F RE CE IP T OF FULL VALUE O F CONSI D ERATION, EITHER IN CASH OR OTHERWISE. BESI D E S , HE NOTED, NO SUCH PRO - NOTE WAS FOUND AT THE RESIDENCE OF TH E ASSESSEE DURING THE COU R SE OF SEARCH, WHICH IN D I C AT ES THAT THE ASSESSEE HAD REC E IVED THE AMOUN T CONTAIN E D IN TH E PRO - NOTE AT A LATER DATE AND I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 4 ONLY ON RECEIPT OF T H E SAID AMOUNT, THE PRO - NOTE WOULD HAVE BEEN DESTROYED. THE ASSESSING OFFICER ALSO OB S ERV ED THAT THE ASSESSEE H A D NO T ACCEPTED THE SALE CONSIDERATION AT RS.1,65,00,000 ON HER OWN AND THAT IT WAS ONLY WHEN THE DEPARTMENT BROUGHT CORROBORATIVE EVIDENCE IN TH E FORM OF UNACCOUN T ED INVESTMENTS IN PROP E RTIES MADE BY THE ASSESSEE AND HER HUSBAND, ON RECORD THAT THE ASSESSEE FILED HER RETURN, ADMITTING SALE CONSID E RATION AT RS.1,40,00,000. ACCOR D INGLY CONCLUDING THAT T HE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF HER INCOME FOR TH E ASSESSMENT YEAR 2003 - 04, THE ASSESSING OFFICER ADOPTED THE TOTAL SALE CONSI D ERATION FOR THE PROPERTY UNDER CONSIDERATION AT RS.1,65,00,L000, AS AGAINST RS.1,40,00,000 ADMITTED BY THE ASSESSEE. 5. AGGRI E VED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND CONTENDED THAT THE NO T IN G IN THE DIARY PRO - NOTE IS A TOTALLY DIFFERENT NOMENCLATURE AS COMPARED TO THE OTHER NOTINGS THE R EIN. HE AVERRED THAT THE SAME CANNO T B E CONSIDERED AS CASH, UNTIL LAND UNLESS PROVED AS REALIZED BY THE ASSESSEE IN CASH OR KIND. IT W A S AVERRED THAT THE ASSESSING OFFICER DID NOT KNOW THE CONTENTS OF SUCH PRO - NOTE, THE TERMS OF PAYM E N T , THE MATURITY DATE TH E R E OF, BESIDES THE FACT WHETHER THE SAME WAS A DRAFT ONE OR A FINAL PRO - NOTE AND WH E TH E R THE SAME HAD BEEN EXECUTED BY THE DRAW E R, BIN D IN G HIM FOR SUCH PAYMENT. IT WAS SUBMI TTED THAT IN VIEW OF CERTAIN UNCERTAINTIES, THE ASSESSING OFFICER ASSUMED THAT THE ASSESSEE MU S T HAVE RECEIVED AMOUNT CONTAINED IN THE PRONOTE AT A LATER DATE. IT W A S ALSO ARGUED THAT THE ASSESSING OFFICER DID NO T B R IN G ON RECORD ANY CORROBORATIVE EVIDENCE TO PROVE THAT THE R E WAS ANY VALID PROMISSORY NO T E DULY EXECUTED BY TH E PAYEE, WHICH WAS IN EXISTENCE. HE COULD NO T EVEN OBTAIN ANY CONFIRMATION FOR THE SAME FROM THE PAYER, SMT.K.V.L.SATITRI DEVI. RELIANCE WAS ALSO PLACED BY THE ASSESSEE BEFORE THE CIT(A) ON THE DECISION OF THE DELHI HIGH COU R T IN THE CA S E OF CITV/S. G.K.GUPTA ( 308ITR 2 38 ) TO CONTEND THAT THE ADDITION COULD NO T HAVE BEEN MADE ON THE BASIS OF NO T IN G S AND JOTTINGS IN THE DIARY, WITHOUT THERE BEING ANY CORROBORATIVE OR DIRECT EVIDENCE TO PRESUME THAT SUCH NOTIN G S AND JOTTINGS HAD MATERIALISED INTO TRANSACTIONS, GIVING RI S E TO INCOME NOT DISCLOSED IN THE BOOKS. THE CIT(A) WAS I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 5 NOT CONVINCED WITH ANY OF THE CONTENTIONS O F THE ASSESSEE BEFORE HIM, AND ACC ORDINGLY UPHOLDING THE ORDER OF THE ASSESSING OFFICER , REJECT ED THE GROUND OF THE ASSESSEE ON THAT ASPECT , IN THE FOLLOWING MANNER - I HAVE GONE THROUGH THE FACTS OF TH E CA S E AND THE SUBMI S SION S O F THE APPELLANT. IT IS CLEAR THAT THE PAGE NO.5 OF THE ANNEXURE A/CRK/04 DATED 25.10.2007, CONTAINS THE HEAD NOTE, AMOUNT RECEIVED FROM OUR TENANT TOW A RDS PART SALE CONSID E RATION. IT IS ALSO SEEN THAT THE PAYMENTS NOTED THEREIN HAVE BEEN GIVEN A SERIAL NUMBER, SUCH AS I ST TIME, IIND TIME, III, IV, V, VI, VII, ETC. BESIDES MENTIONING THE AMOUNTS RECEIVED BY CHEQUE/CASH, THE SAID SEIZED PAPER ALSO SHOWS AN AMOUNT OF RS .25 LAKHS AS PRONOTE, BESIDES A SUM OFR S .3 LAKH S AS DEPOSIT ADJUSTED. O N A COMPARI SON OF THE PAYMEN T S SO RECORDED WITH THE PAYMENT RECORDED WITH THE REGISTERED SALE DEED, I T IS FOUND THAT THE PAYM E N T S TO THE TUNE OF RS.65 LAKHS WERE MATCHING. IT IS FURTHER SEEN THAT THE APPELLANT AND HER HUSBAND INITIALLY D ENIED HAVING RECEIVED ANY AM OUNT OVER AND ABOVE RS.65 LAKH S RECORDED IN THE AGRE E MENT AND A L SO ATTEMPTED TO EXPLAIN A DD ITIONAL RS.50 LAKHS MENTION E D IN THE SEIZED PAPER AS LOAN TR A N S A CT ION WITH M/S. GLOBARENA WEB TECHNOLOGIES P. L TD. HOW E VER, ONCE THEIR CONTENTION WAS FOUND INCORREC T, THE APPELLANT ADMITTED CONSI D ERATION OF TH E LAND SOLD AT R S .1,40,00,000/ - IN HER RETURN OF INCOME. THE ONLY AMOUNT NOT ACCEPTED BY HER WAS THE AMOUNT OF RS.25 LAKH S MENTIONED AGAINST PRONOTE. IN THE LIGHT OF THE ABOVE, IT IS CLEAR THAT THE PAGE NO.5 MENTION E D ABOVE IS NO T A SHEET OF PAPER, CONTAINING CERTAIN ABSTRACT ENTRIES. IN FACT, IT IS DULY CORROBORATED BY THE ENTRIES IN THE REGISTERED SALE DEED PARTY AND FUR T H E R BY THE APPELLANTS OWN ADMISSION IN THE RETURN OF INCOME REGARDING SALE CONSID E RA T ION BEIN G RS.1,40,00,000. IN VIEW OF THE SAME, IT I S CL E AR THAT THE CASE LAWS RELIED UPON BY THE APPELLANTS REPRESENTATIVE ARE NO T APPLICABLE. 6.1. ONCE THE COR R ECTNESS O F THE OTHER ENTRIES IN THE P A GE NO.5 OF THE ABOVE ANNEXURE HAS BEEN ESTABLISHED AN D AC C EPTE D , THE CORRECTNESS OF THE ENTRY REGARDING PRONOTE OF R S .25 LAKHS ALSO CANNO T BE CHALLENGED. IN FACT, THE APPELLANT ALSO HAS NO T CHALLENGED THAT HE SAID PRONOTE IS IN RESPECT OF ADDITIONAL SUM OF RS.25 LAKHS. IT IS ONLY CONTENDED THAT THE S AID AMOUN T WAS NOT RECEIVED BY HER. 6.2 O N GOING THROUGH THE FACTS OF T H E CA S E HO W EVER, I AM OF THE VIEW THAT THE CONTENTION OF THE APPELLANT ON THIS ISSUE IS NO T ACCEPTABLE. THERE IS NO DOUBT W ITH R EGARD TO THE FACT THAT THE PRONOTE UNDER REFERENCE WAS N O T FOUND DURIN G TH E CORUSE OF SEARCH EITHER IN THE POSSESSION OF THE APPELLANT OR EVEN DURING THE COU R SE OF SEARCH IN TH E CA S E THE BUYER, I.E. SMT.K.V.R.SAVITRI DEV I . A PRONOTE IS INDEED A VALUABL E DOCUMENT. IT IS CLEAR THAT THE SAME W A S M E N T ION E D AS A PART OF THE AMOUNTS RECEIVED TOWARDS SALE CONSIDERATION ONLY AFTER THE SAME WAS HANDED OVER TO THE APPELLANT. AC C OR D INGLY, IT IS TO B E CONCLUDED THAT AS ON THE DATE OF WRITING OF THE SAID SEIZED PAPER, THE PRONOTE UNDER CONSIDERATION WAS VERY MUCH IN EXISTEN C E. THE NON EXISTENCE THEREOF ON THE DATE OF SEARCH ONLY SIGNIFIES THAT THE AMOUNT OF R S .25 LAKHS, RECEIVABLE AS PER THE SAME, HAD ACTUALLY BEEN RECEIVED BY THE APPELLANT, LEADING TO THE RETURN OF THE SAID PRONOTE OR DESTRUCTION TH E R E OF. UNDER THE CIRCUMSTANCES, FIND NO INFIRMITY IN THE ACTION OF TH E ASSESSING OFFICER , IT IS HELD THAT THE SALE CONSID E RATION OF THE PROPERTY SOLD BY THE APPELLANT DURING THE Y E AR HAS RIGHTLY BEEN ADOPTED AT R S .1,65,00,000/ - IN VIEW OF I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 6 THE SEIZED DOCUM E N T S, WHICH ARE D ULY CORROBORATED BY THE ENTRIES IN THE AGREEMENT OF SALE, AS ALSO THE RETURN OF INCOME FIELD BY THE APPELLANT HERSELF. 6. AGGRIEVED, ASSESSEE PREFERRED THIS SECOND APPEAL BEFORE US. 7. WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE QUESTION FOR CONSIDERATION IS WHETHER THE AMOUNT OF RS.25,00,000 REPRESENTED, AS PER THE ENTRY IN THE SEIZED DIARY, BY A PRONOTE, FORMS PART OF THE CONSIDERATION FOR THE SALE OF THE PROPERTY. IT IS AN UNDISPUTED FACT THAT THE SAID PRONO TE ITSELF WAS NOT FOUND OR SEIZED BY THE SEARCH PARTY. IT IS ALSO A MATTER OF FACT THAT THE ENTRY WITH REGARD TO THE AMOUNT OF RS.25,00,000, REPRESENTED BY THE PRONOTE IN QUESTION, FINDS PLACE AMONG OTHER ENTRIES MADE WITH REGARD TO THE AMOUNTS OF PAYMENTS, FORMING PART OF THE CONSIDERATION, AND THE SAME WHICH HAVE BEEN MADE DULY ASSIGNING THE SERIAL NUMBERS LIKE IST, IIND, ETC. THE ENTRIES IN QUESTION HAVE BEEN MADE ON PAGE 5 OF THE DIARY, MARKED AS ANNEXURE A/C RK/04 DATED 25.10.2007, AND THEY HAVE BEEN MADE UNDER THE HEADING AMOUNT RECEIVED FROM OUR TENANT TOWARDS PART SALE CONSIDERATION. ONE OF THE ENTRIES RELATE TO A SUM OF RS.3 LAKHS AGAINST THE ENTRY DEPOSIT ADJUSTED. IT IS ALSO EVIDENT FROM THE IMPU GNED ORDERS THAT ON A COMPARISON OF THE PAYMENTS SO RECORDED WITH THE PAYMENT RECORDED WITH THE REGISTERED SALE DEED, IT IS FOUND THAT THE PAYMENTS TO THE TUNE OFRS.65 LAKHS WERE MATCHING, AND THE ONLY AMOUNT NOT ACCEPTED IS THE AMOUNT OF RS.25 LAKHS REPRE SENTED BY THE ENTRY PRONOTE. CONSIDERING ALL THESE ASPECTS OF THE MATTER, WE AGREE WITH THE CIT(A) THAT THE PAGE 5 OF THE DIARY IN QUESTION CANNOT BE TERMED AS A SHEET OF PAPER AND THE ENTRIES IN QUESTION CANNOT BE SAID TO BE ABSTRACT ONES WITHOUT ANY S IGNIFICANCE. THIS IS MORE SO, BECAUSE ALL THE ENTRIES EXCEPT THE AMOUNT OF RS.25 LAKHS REPRESENTED BY THE PRONOTE, ARE CORROBORATED PARTLY BY THE REGISTERED SALE DEED AND PARTLY BY THE ASSESSEES OWN ADMISSION IN THE RETURN OF INCOME, REGARDING SALE CONSI D ERATION BEING RS.1,40,000. ONCE ALL THE ENTRIES IN THE RELEVANT PAGE OF THE DIARY COULD BE LINKED UP TO THE SALE TRANSACTION, ONLY WITH REGARD TO THE PRONOTE IN QUESTION, CORRECTNESS OF THE ENTRY CANNOT BE CHALLENGED. EVEN THE ASSESSEES CONTENTION IS ALSO THAT THE AMOUNT I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 7 REPRESENTED BY THE PRONOTE HAS NOT BEEN RECEIVED BY HER. THERE IS NO MERIT IN THIS CONTENTION OF THE ASSESSEE, INASMUCH AS THE PRONOTE IN QUESTION WAS NOT FOUND EITHER INT EH POSSESSION OF THE ASSESSEE OR EVEN DURING THE COURSE OF SEA RCH IN THE CASE OF THE BUYER, SMT. K.V.R.SAVITRI DEVI. A PRONOTE, BEING A VALUABLE DOCUMENT, MUST HAVE BEEN PRESERVED TILL THE REALIZATION OF MONEY IN RESPECT THEREOF. MENTION OF THE AMOUNT REPRESENTED BY THE PRONOTE IN THE RELEVANT PAGE OF THE SEIZED D IARY INDICATES THE FACTUM OF THE SAME FORMING PART OF THE CONSIDERATION. THE FACT THAT THE SAID PRONOTE WAS NOT FOUND AT THE TIME OF SEARCH MAKES IT CLEAR THAT THE AMOUNT REPRESENTED BY IT MUST HAVE BEEN RECEIVED BY THE ASSESSEE, BECAUSE ONLY UPON REALIZA TION OF MONEY, A PRONOTE IS EITHER RETURNED TO THE PROMISSOR OR DESTROYED. WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT V/S. SONAL CONSTRUCTIONS AND ANR. (359 ITGR 532), WHEREIN IT HAS BEEN HELD , VIDE HEAD NOTE ON PAGE 532 - 533, AS FOLLOWS - IT IS NOT AN INVIOLABLE RULE APPLICABLE TO ALL SITUATIONS AND TO ALL CASES THAT E V ERY SEIZED DOCUM E N T SHOULD BE CORROBO R ATED BEFORE ANY ADDITION CAN BE MADE BASED ON IT. IF CALCUL A TION S AND COMPU T ATIONS HAVE BEEN MADE IN TH E SEIZED DOCUM E N T IN SUCH A MANNER THAT ITS PROBATIVE VALUE AND GENUINENESS CANNOT B E DOUBTED, NOTHING PREVENTS THE ASSESSING OFFICER F R OM MA KING ADDITIONS ON THE B A SIS O F SUCH D OC U M E N T DESPITE THE ABSENCE OF ANY CORROBORATION. IT MUST BE REMEMBERED THAT IN SOME CASES IT IS DIFFICULT TO OBTAIN CORROBORATION, PARTICULARLY O F THE TYPE CONTEMPLATED BY THE T RIBUNAL. IT IS NO T NEC E SSARY THAT THE SEIZED DOCUMENTS SHOULD B E IN TH E FORM OF PROPER BOOK S OF ACCOUNT SO TH A T THEY CAN BE RELIED UPON FOR THE PU R POSE OF MAKING ADDITIONS. THEY COU L D BE IN ANY FORM, IN C L U D I NG LOOSE PAPERS ON WHICH NOTINGS OR SCRIBBLINGS HAVE BEEN MADE. 8. IN THE LIGHT OF THE FOREGOING DISCUSSION, AND FOR THE DETAILED REASONS GIVEN BY THE BY THE CIT(A) IN PARAS 6.1 AND 6.2 OF THE IMPUG NED ORDER, WHICH WE HAVE EXTRACTED ABOVE, WITH WHICH WE AGREE, WE UPHOLD THE ACTION OF THE REVENUE AUTHORITIES IN TREATING THE AMOUNT OF RS.25,00,000 REPRSENTED BY THE PRONOTE AS WELL, AS PART OF THE CONSIDERATION ON THE SALE OF THE PROPERTY, AND CONSEQUEN TLY TAKING THE TOTAL SALE CONSIDERATION AS RS.1,65, 00, 000 AND NOT RS.1,40,00,000. WE ACCORDINGLY UPHOLD THE ORDERS OF THE REVENUE AUTHORITIES AND REJECT THE GROUND OF THE ASSESSEE ON THIS ISSUE. I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 8 9. THE NEXT GROUND OF THE ASSESSEE IN THIS APPEAL RELATES TO DENIAL OF CLAIM FOR EXEMPTION UNDER S.54 OF THE AC T. 10. THE ASSESSING OFFICER NOTICED THAT I N THE ORIGINAL RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2003 - 04 ON 29.3.2003, THE ASSESSEE CLAIMED EXEMPTION UN D ER S.54 F AS UNDER - SALE CONSIDERATION OF PROPERTY BEARING NO.304 O ROAD NO.78 JUBILEE HILLS, HYDERABAD RS.65,00,000 LESS: INDEXED VALUE OF ACQUISITION OF PROPERTY RS.38,51,873 CAPI T AL GAIN RS.26,48,127 LESS : PURCHASE OF NEW HOUSE RS. 28,49,150 TAXABLE CAPITAL GAIN ( - ) RS.2,01,023 IN THE RETURN FILED IN R E SPON S E TO THE NOTICE U/S. 153C, HOWEVER, THE ASSESSEE WORKED OUT THE CAPITAL GAINS AT RS.75,46,777/ - AS UNDER - SALE CONSIDERATION OF ABOVE SAID PROPERTY RS. 1,40 ,00,000 LESS: COST OF ACQUISITION RS. 38,51,873 LONG TERM C API T AL G AIN S RS 1,01,48,12 7 LESS: EXEMPTION CLAIMED U/S. 54 OR PURCHASE OF NEW RS. 28,49,150 TAXABLE CAPITAL GAIN RS. 75 , 46 , 777 THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD PURCHASED A PROPERTY BEING PLOT NO.539 - III IN SURVEY NO.403/1 (ODLD), 120 NEW OF SEHEIKPET VILALGE AND 102/1 OF HAKIMPET VILLAGE, ADMEASURING 717 SQ. YARDS, WITHIN THE LAY - OUT OF JUBILEE H I LLS COOPERATIVE HOUSE B UILDING SOCIETY LTD., ROAD NO.86, JUBILEE HILLS, HYDERABAD FOR A CONSI D ERATI ON OF R S .25,10,000 ON 2.9.2002. HOW E VER, ON EXAMINATION OF THE REGISTERED SALE DEED IT WAS FOUND THAT THE PROPERTY SO PURCHASED WAS ONLY A VACANT LAND AND NO T A HOU S E PROPERTY, AS EVI D ENCE D BY THE REGISTERED SALE DEED , SCHEDULE FORMING PART THEREOF AND TH E MAP ENCLOSED TH E RE T O. CON S EQU E N T LY, THE ASSESSING OFFICER C ONCLUDED THAT TH E ASSESSEE HAD I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 9 PURCHASED ONLY A P LOT AND NO CON S TRUCTION EXISTED THEREON AS ON THE DATE OF ITS PURCHASE. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED A COPY OF THE RECEIPT ISSUED BY THE MUNICIP A L CORPORATION OF HYDERABAD , DATED 2.12.2003 TO WA RDS PAYMENT OF PROPERTY TAX OF R S .12,550, CLAIMING THAT THE PROPERTY PURCHASED WAS A HOU S E PROPERTY AND NO T A PLOT OF LAND. COMMENTING ON THE SAID RECEIPT, THE ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE HAD PAID THE SAID PROP E RTY TAX ON 2.12.2003, WHEREAS THE PLOT OF LAND HAD BEEN PURCHASED ON 2.9.2002 ITSELF. IT WAS FURTHER POI NTE D OUT THAT THE ASSESSEE HAD NOT MADE ANY CLAIM REGARDING CON S TRUC T ION OF HOU S E ON TH E SAID PLOT. EVEN THE RETURNS FILED BY TH E ASSESSEE FOR THE ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 DID NOT REVEAL ANY IN VE STMENTS TOW A R D S CONSTRUCTION OF ANY HOUSE ON THE SAID PLOTS. EVEN DURING THE COURSE OF SEARCH, THE CONSTRUCTION OF HOUSE WAS NOTICED TO BE ONLY IN PROGRESS. TH E ASSESSING OFFICER THEREFORE, CON C LU D ED THAT THE ASSESSEE HAD PURCHASED ONLY A PLOT OF LAND AND NO T A HOU S E PROPERTY AND THE CON S TRUCTION OF HOUSE WAS STARTED AND THE SAME WAS IN P R OGRESS ON THE DATE OF SEARCH I.E. 25.10.2007. I N THIS VIEW O F THE MATTER, OBSERVING THAT THE ASSESSEE HAD NOT CON S TRU C T E D A HOU S E W ITHIN THREE YEARS FROM TH E DATE OF THE TRANSFER OF THE LAND, THE ASSESSING OFFICER CON C LU D ED THAT THE ASSESSEE H A D NO T FULFILLED TH E CONDITIONS LAID DOWN UNDER S.54, AND ACCO RDINGLY REJECTED TH E CLAIM O F TH E ASSESSEE FOR EXEMPTION UNDER S.54 OF THE ACT. THE CIT(A), ON APPEAL , CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN DENYING THE ASSESSEES CLAIM FOR EXEMPTION OF THE CAPITAL GAINS FROM TAX UNDER S.54 OF THE ACT. 11. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL ON THIS ISSUE. 12. WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE PURCHASE OF A PROPERTY BY THE ASSESSEE, AFTER THE RECEIPT OF CONSIDERATION ON THE PROPERTY SOLD. THE MAIN REASON FOR DENIAL OF EXEMPTION UNDER S.54F CLAIMED BY THE ASSESSEE IN RESPECT OF CAPITAL GAINS RECEIVED, IS THAT WHAT THE ASSESSEE PURCHASED IS ONLY A PLOT OF LAND AND NOT A RESIDENTIAL PROPERTY, AND THERE IS NO EVIDENCE OF THE ASSESSEE HAVING MADE ANY INVESTMENT I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 10 ON THE CONSTRUCTION OF A RESIDENTIAL HOUSE THEREON, WITHIN THE STIPULATED TIME, SO AS TO QUALIFY FOR EXEMPTION UNDER S.54F OF THE ACT. IT WAS THE CONT ENTION OF THE ASSESSEE THAT VIDE SALE DEED NO.3056/20902 DATED 2.9.2002, WHAT THE ASSESSEE PURCHASED FOR RS.26,74,355 WAS NOT ME R ELY A PLOT OF LAND, WITH A SEMI FINISHED BUILDING THEREON . IT WAS SUBMITTED THAT THE PROPERTY REMAINED SEMI - FINISHED WITH SOM E CIVIL WORKS LIKE PLASTERING, FLOORING AND PLUMBING WORKS REMAINING PENDING AT THAT TIME TO MAKE IT A COMPLETE RESIDENTIAL BUILDING. IT WAS ALSO CONTENDED THAT AFTER THE PURCHASE OF THE PROPERTY AS ABOVE, ASSESSEE MADE AN ADDITIONAL INVESTMENT OF RS.1,74 ,795 TO BRING THE SEMI FINISHED STRUCTURE INTO A COMPLETE RESIDENTIAL BUILDING AND THEREFORE, THE TOTAL AMOUNT SPENT ON THE PROPERTY WORKED OUT TO RS.28,49,150. IT WAS PLEADED THAT THE COST OF LAND AND SEMI - FINISHED BUILDING HAD BEEN SHOWN BY THE ASSESSE E IN THE COMPUTATION WHILE CLAIMING EXEMPTION UNDER S.54, BOTH IN THE ORIGINAL RETURN AND ALSO IN THE CASH FLOW STATEMENTS, AND THE RETURN FURNISHED UNDER S.153A OF THE ACT. AS FOR THE HOUSE, NOTICED TO BE UNDER CONSTRUCTION AT THE TIME OF SEARCH, IT WAS CLARIFIED THAT THE ASSESSEES HUSBAND WAS CONSTRUCTING A HOUSE ON THE VERY SAME PLOT IN FRONT OF THE ASSESSEES STRUCTURE OF TH E ASSESSEE, WHEREIN THE IN - LAWS OF THE ASSESSEE WERE STAYING. ACCOR D INGLY, IT WAS CLAIMED THAT THERE WERE TWO HOUSES EXISTING ON PLOT NO.539, ONE BELONGING TO THE ASSESSEE, WHICH HAD BEEN COMPLETED BY THE END O F THE FINANCIAL YEAR 2002 - 03 AND THE OTHER BELONGING TO HER HUSBAND, WHICH WAS COMPLETED IN THE FINANCIAL YEAR 2009 - 10. RELIANCE WAS PL A CED ON THE PROPERTY TAX RECEIPT FURNIS HED, AND IT WAS CLAIMED THAT THE MUNICIPAL AUTHORITIES WOULD NOT HAVE IMPOSED PROPERTY TAX, UNLESS THERE IS RESIDENTIAL STRUCTURE ON THE LAND. 13. ON CONSIDERATION OF THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE NOT IN AGREEMENT WITH TH E VIEW TAKEN BY THE REVENUE AUTHORITIES IN REJECTING THE ASSESSEES CLAIM FOR EXEMPTION UNDER S.54F OF THE ACT. THE REVENUE AUTHORITIES HAVE DENIED THE CLAIM FOR EXEMPTION, GOING BY THE SCHEDULE OF PROPERTY AND MAP APPENDED TO SALE DEED THROUGH WHICH THE A SSESSEE PURCHASED THE PROPERTY IN QUESTION. A READING OF THE SAID SCHEDULE, WHICH HAS BEEN EXTRACTED BY THE REVENUE AUTHORITIES IN THEIR IMPUGNED ORDERS , OPENS WITH I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 11 ALL THAT THE PLOT NO.539 - III., AND DOES NOT CONCLUSIVELY RULE OUT EXISTENCE OF ANY STRU CTURE THEREON. ON THE OTHER HAND, THE PROPERTY RECEIPT, PRODUCED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES, CONTAINING DOOR NO. AND EVEN THE NAME OF THE ASSESSEE, EVIDENCES THE EXISTENCE OF A RESIDENTIAL STRUCTURE, CLINCHES THE MATTER IN FAVOUR OF THE ASSESSEE. MERELY BECAUSE IT IS TITLED AS PROVISIONAL RECEIPT, ITS EVIDENTIARY VALUE CANNOT BE MITIGATED, BECAUSE IT IS ISSUED BY A STATUTORY AUTHORITY, VIZ. A LOCAL BODY, AND CONTAINS DETAILS LIKE DOOR NO. AND ASSESSEES NAME , DATE AND AMOUNT OF TA X COLLECTED, ETC. ALL THESE DETAILS ARE CAPABLE OF BEING VERIFIED FROM THE RECORDS OF THE LOCAL CIVIC BODY, AND AS SUCH, ONE CANNOT CREATE SUCH A EVIDENCE JUST TO MAKE BELIEVE THE VERSION OF THE ASSESSEE. THE PROPERTY RECEIPT IN QUESTION BEING ONE ISSUED BY A STATUTORILY CONSTITUTED CIVIC BODY, IT PREVAILS OVER OTHER STATEMENTS AND EVIDENCES THAT HAVE BEEN RELIED UPON BY THE REVENUE FOR DENYING THE ASSESSEE, ITS CLAIM OF EXEMPTION UNDER S.54F OF THE ACT. ASSESSEE CLARIFIED OTHER OBSERVATIONS OF THE REVE NUE AUTHORITIES, SUCH AS, A CONSTRUCTION BEING IN PROGRESS AT THE TIME OF SEARCH, THROUGH HER EXPLANATIONS, WHICH HAVE NOT BEEN FOUND TO BE FALSE. IN THE CIRCUMSTANCES OF THE CASE, IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BROUGHT ON RECORD BY THE RE VENUE, WE ARE INCLINED TO ACCEPT THE VERSION OF THE ASSESSEE THAT THE PROPERTY IN QUESTION PURCHASED BY HER WAS NOT MERELY A PLOT OF LAND, BUT WITH SOME RESIDENTIAL STRUCTURE THEREON IN A SEMI - FINISHED CONDITION. THE VERSION OF THE ASSESSEE OF HAVING INVE STED AN AMOUNT OF RS.1,74, 795 FOR THE COMPLETION OF RESIDENTIAL STRUCTURE ON THE PLOT PURCHASED, WAS DISBELIEVED ON THE GROUND OF THE SMALLNESS OF THE INVESTMENT CLAIMED. CONSIDERING THE FACT THAT THE ASSESSEE PURCHASED THE PLOT OF LAND WITH A STRUCTURE EXISTING THEREON IN SEMI - FINISHED CONDITION, IT CANNOT BE SAID THAT THE AMOUNT CLAIMED TO HAVE BEEN SPENT BY THE ASSESSEE FOR COMPETING THE STRUCTURE, SO AS TO MAKE IT HABITABLE ONE, IS TOO SMALL. MORE SO, SINCE THE PLOT PURCHASED WAS CLAIMED TO BE CONTA INING TWO HOUSES, ONE CONSTRUCTED BY THE ASSESSEE IN 2002 AND THE OTHER BEING FOUND UNDER CONSTRUCTION AT THE TIME OF SEARCH, WHICH WAS CLAIMED BY THE ASSESSEE TO HAVE BEEN TAKEN UP BY HER HUSBAND. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF TH E CIT(A), ON THIS ASPECT, AND DIRECT THE ASSESSING OFFICER I TA NO. 987/ HYD/2011 SHRI K.RAJANI KUMARI HYDERABAD 12 TO ACCEPT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.54F OF THE A C T, SUBJECT TO FULFILLMENT OF OTHER CONDITIONS. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ORDER PRONOUNCED IN THE COURT ON 1 3 .2.2014 SD/ - SD/ - (CHANDRA POOJARI ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 1 3 TH FEBRUARY, 2014 COPY FORWARDED TO: 1. SMT. K.RAJINI KUMARI, PLOT NO.539, ROAD NO.86, III PHASE, JUBILEE HILLS, HYDERABAD 500 033. 2 . ASST. COMMISSIONER OF INCOME - TAX CIRCLE 6(3) HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) IV , HYDERABAD 4. COMMISSIONER OF INCOME - TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S