TMI Blog2014 (9) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... ked up to the sale transaction, only with regard to the pronote, correctness of the entry cannot be challenged - 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 diary indicates the factum of the same forming part of the consideration - The fact that the 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 realization of money, a pronote is either returned to the promissor or destroyed – relying upon CIT V/s. Sonal Constructions and Anr. [2012 (11) TMI 11 - DELHI HIGH COURT] - the action of the Revenue authorities in treating the amount represented by the pronote as well, as part of the consideration on the sale of the property is upheld – Decided against assessee. Claim of exemption u/s 54 denied – assessee purchased only plot of land and not residential property – No evidence for making evidence on construction of residential house - Held that:- Revenue authorities have denied the claim for exemption, going by the schedule of propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought on record by the Assessing Officer. 2. The learned Commissioner of Income-tax (Appeals) erred in holding that no habitable house can be constructed with a meager amount of ₹ 1,74,795, no investment disclosed towards construction of any house and the municipal tax receipt produced by the assessee is a provisional receipt and thereby upholding the addition made by the Assessing Officer by rejecting the exemption claimed by the assessee U/s. 54 to the extent of ₹ 38,51,873/-. 3. . 2. Facts of the case in brief are that search and seizure operations were carried out at the residential premises of Shri C. Radha Krishna Kumar, husband of the assessee, on 25.10.2007. During the course of search operation, incriminating material, vide annexure ACRK/04 was seized, and it contained the details of actual consideration received by the assessee on sale of property. The Assessing Officer, based on the information contained in the seized diary, issued notices under S.153C/142(1) of the Act to the assessee. In response to the said notice under S.153C of the Act, the assessee filed returns of income for assessment years 2002-03 to 2008-09 on 19.8.2009, inter al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 ₹ 1,40,00,000, besides claiming exemption under S.54 at ₹ 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 ₹ 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 not accept the said claim of the assessee, opining that since the said pro-note amounted to a 'promise to pay', the assessee must have received the said amount at a later date. He felt that pro-note is nothing but an instrument, issued in lieu of cash or value, and is generally used as security. Accordingly, he concluded that the assessee would have registered the property in the name of the vendee only after considering the total value of the property at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Delhi High Court in the case of CIT V/s. G.K. Gupta (308 ITR 238) to contend that the addition could not have been made on the basis of notings and jottings in the diary, without there being any corroborative or direct evidence to presume that such notings and jottings had materialised into transactions, giving rise to income not disclosed in the books. The CIT(A) was not convinced with any of the contentions of the assessee before him, and accordingly upholding the order of the Assessing Officer, rejected the ground of the assessee on that aspect, in the following manner- I have gone through the facts of the case and the submissions of 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 towards part sale consideration . 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 ₹ 25 lakhs as pronote, besides a sum ofRs.3 lakhs as deposit adjusted . On a comparison of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h only signifies that the amount of ₹ 25 lakhs, receivable as per the same, had actually been received by the appellant, leading to the return of the said pronote or destruction thereof. Under the circumstances, find no infirmity in the action of the Assessing Officer, it is held that the sale consideration of the property sold by the appellant during the year has rightly been adopted at ₹ 1,65,00,000/- in view of the seized documents, which are duly 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 ₹ 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 pronote 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 ₹ 25,00,000, represented by the pronote in question, finds place among other entries made with reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supported in this behalf by the decision of the Delhi High Court in the case of CIT V/s. Sonal Constructions and Anr. (359 ITR 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 every seized document should be corroborated before any addition can be made based on it. If calculations and computations have been made in the seized document in such a manner that its probative value and genuineness cannot be doubted, nothing prevents the Assessing Officer from making additions on the basis of such document despite the absence of any corroboration. It must be remembered that in some cases it is difficult to obtain corroboration, particularly of the type contemplated by the Tribunal. It is not necessary that the seized documents should be in the form of proper books of account so that they can be relied upon for the purpose of making additions. They could be in any form, including 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidenced by the registered sale deed, schedule forming part thereof and the map enclosed thereto. Consequently, the Assessing Officer concluded that the assessee had purchased only a plot and no construction existed thereon as on the date of its purchase. During the assessment proceedings, the assessee produced a copy of the receipt issued by the Municipal Corporation of Hyderabad, dated 2.12.2003 towards payment of property tax of ₹ 12,550, claiming that the property purchased was a house property and not a plot of land. Commenting on the said receipt, the Assessing Officer observed that the assessee had paid the said property tax on 2.12.2003, whereas the plot of land had been purchased on 2.9.2002 itself. It was further pointed out that the assessee had not made any claim regarding construction of house on the said plot. Even the returns filed by the assessee for the assessment years 2003-04 and 2004-05 did not reveal any investments towards 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. The Assessing Officer therefore, concluded that the assessee had purchased only a plot of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search, it was clarified that the assessee's husband was constructing a house on the very same plot in front of the assessee's structure of the assessee, wherein the in-laws of the assessee were staying. Accordingly, 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 of the financial year 2002-03 and the other belonging to her husband, which was completed in the financial year 2009-10. Reliance was placed on the property tax receipt furnished, 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 the view taken by the Revenue authorities in rejecting the assessee's 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 assessee purchased the property in question. A reading of the said schedule, which has been extracted by the Revenue authorities in their impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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