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2006 (12) TMI 189 - ITAT MADRAS-BBlock Assessment - Third party statement and unsigned agreement - difference between undisclosed purchase consideration and disclosed consideration - search and seizure operations u/s 132 - sale of 22 acres of land - addition of short-term capital gain - interest income - HELD THAT:- In our opinion, there is no valid seized material representing addition of Rs. 1.49 lakhs towards undisclosed purchase consideration. It is only on surmise basis and statement recorded from third party, K. Madhava Reddy, and M/s Shilpa Homes (P) Ltd. This cannot be acted upon. The Circular No. F. No. clearly refrains the AO from recording confessional statement during the course of search and seizure and survey operations and also warns the AO not to attempt to obtain any confessional statement as to the undisclosed income, and any action contrary shall be viewed adversely. It also states that the AO should rely upon the evidence and material gathered during the course of search. Here, in the present case, the evidence is only agreement which reflects the purchase consideration at Rs. 2.40 crores and the recorded statement shows the sale consideration of 22 acres at Rs. 3,62,18,000. The third party statement and unsigned agreement cannot be acted upon. Further, the loose papers found during the course of search at the premises of K. Madhava Reddy are a dumb form having no evidential value. No addition can be made on the basis of noting on loose sheets in the absence of corroborative material. The Revenue has not found any circumstantial evidence in the form of any investments in cash, jewellery or others. They found only Rs. 6,73,610 in cash at the assessee's place. The assessee is not expected to explain the loose papers found at the premises of K. Madhava Reddy. Further, there is no evidence for the payment of money to the assessee by any party other than entered in the books of accounts. Similarly, there is no evidence for the payment of money towards purchase consideration by the assessee to M/s K.M.R. Estates & Builders (P) Ltd. other than Rs. 91 lakhs. The AO failed to establish the payment of Rs. 2.40 crores as purchase consideration for the acquisition of 22 acres of land and he has failed to prove the payment. Hence, we have no other alternative but to rely on the books of accounts maintained by the assessee according to which the purchase consideration was Rs. 91lakhs and this has properly tallied with the sworn statement of the assessee. The sale consideration for the sale of 22 acres of land for which the assessee is not a party and there is a valid agreement to which the assessee is a party and the payment in this agreement properly tallies with the books of accounts maintained by the assessee. Therefore, in our opinion, the sale consideration is properly disclosed by the assessee and the difference is interest for the delayed payment. This plea of the assessee, in our opinion, is having merit. The valid agreement cannot be said that it is an after though since it is the part of seized material. The assessee is justified in offering the difference between Rs. 1,15,52,148 and Rs. 91,00,000 as undisclosed income at Rs. 24,52,148, Since we have already held that there is no purchase consideration of Rs. 2,40,40,000 there is no question of computing the short-term capital gain on the difference of sale consideration of Rs. 3,62,18,000. Accordingly. we allow the grounds taken by the assessee. In the result, the appeal of the assessee is allowed.
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