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TMI Blog2014 (2) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... ool building, acquired land admeasuring 12 Acres and 36 Guntas at Madhur Village, Shabad Mandal , R.R. District from one Shri Narasimha Reddy and three others, represented by GPA Holder, Shri P.Mahender and two others, for a consideration of Rs.19,35,000 through registered sale deed dated 22.12.2007. Entire purchase consideration was paid to the GPA holder, Shri P.Mahender, by way of uncrossed cheques in his name. The Assessing Officer noted that there was survey action under S.133A of the Act, in the case of one Shri P.Krishna on 21.2.2008. During the said survey it came to the light through a paper, containing certain scribbling with regard to various real estate transactions that the land purchased by the assessee has been actually sold to the assessee society for a total consideration of Rs.99,23,520, and not Rs.19,35,000. Statement of Shri P.Krishna was also recorded during the survey on 21.2.2008. The Assessing Officer proceeding on the basis of the said paper found at the time of survey, observed that there was excess money paid by the society to the seller of the land over and above the sale consideration mentioned in the sale deed. The Assessing Officer provided the copies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her required the assessee to furnish the sources of amounts advanced by Shri S.S.Prasad and Smt.S.Vijaya Kumari for the payment of sale consideration to the extent of Rs.25,45,000. It was mentioned that the real beneficiary, P.Krishna had admitted his share of 60% out of total consideration of Rs.99,23,520 in his return of income and paid taxes thereon. It was pointed out that even though the cost had been mentioned at Rs.19,35,000 only in the sale deed, bearer cheqeus for Rs.25,45,000, were given to P.Mahender. 5. Vide its reply dated 27.12.2010, the assessee contended before the Assessing Officer that there was no sale agreement with the vendor and that there were no brokers in the deal, and it was reiterated that the sale consideration was paid through bearer cheques. The assessee had also argued before the Assessing Officer that the statements have no evidentiary value and no cognizance can be given to same as the entire income of the trust is exempt. With regard to payment of Rs.10 lakhs for which a receipt had been given by Mahender, the assessee contended that the said vendor had never given any receipt either at the time of receiving the amount as recorded in the sale deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale deed dated 22.10.2007. Therefore, there was an excess payment. He noted that Mahinder had paid Rs.10 lakhs in lieu of post dated cheques dated 31.12.2007 as recorded in the sale deed and issued a cash receipt on revenue stamp for the same on 26.12.2007, returning back the cheques. This also had resulted in excess payment of cash against the land purchases, with the total amount working out to Rs.44,80,000 (Rs.9,35,000 + Rs.25,45,000 + Rs.10,00,000) through banks, besides a "due' receipt for Rs.9,65,000 given to Shri P.Mahender towards the land transaction. 8. The Assessing Officer further noticed that in his statement recorded during the course of survey, P.Mahender had stated that he had only cooperated with his brother in law, P.Krishna, in carrying on the business in his name, whereas the real owner was P.Krishna only. Further, Krishna had declared that the real consideration for the land said sold to the assessee society was Rs.99,23,520 as against the recorded consideration of Rs.19,35,000. He noted that the denial of the said statements of P.Krishna was not based on any material evidence. Further, K.Bikshapathi, a middleman/real estate dealer had also confirmed, by his l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that as per the sale deed dtd. 22.10.2007, Rs. 9,35,0001- had already been paid in cash on 22.10.2007 itself. This fact has not been disputed by the appellant. As per the said agreement, the appellant had also given two post dated cheques for Rs. 3 lakhs and Rs. 7 lakhs. It is contended that these two cheques were given only as a security, even though sufficient funds for honouring these cheques were not available in the appellant's bank account. However, it is seen that in lieu of these cheques, dtd. 31.12.2007, Rs. 10 lakhs were paid in cash and a cash receipt on revenue stamp towards this on 26.12.2007 was also issued. Besides, these payments, bearer cheques of Rs. 24,45,000/- were also paid, which were got encashed on 24.12.2007 itself. Accordingly, no infirmity can be found in the conclusion of the Assessing Officer that the appellant made payment of Rs. 44,80,000/- (Rs. 9,35,000 + Rs. 10,00,000 + Rs. 25,45,000) towards the purchase of land under consideration. Besides, a 'due' receipt of Rs.9,65,000/- was also given to Sri P.Mahinder towards the impugned land transaction. 6.1 In the light of the above facts, therefore, it is clear that the appellant has not been able t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n though he retracted from the said admission in his affidavit dtd.29.12.2010, it is seen that he was evaSive m the affidavit about the agreement letter impounded during the coursc of survey. The statements of the above said persons and the findings during the survey, therefore, amply establish the fact of payment of 'on-money' of Rs. 79,88,520/- over and above the recorded consideration. 6.4. So far as the explanation of the appellant regarding payment of bearer cheques of Rs. 25,45,000/- is concerned, it is clear that the same is merely an afterthought. In fact, no prudent business man would pay any amount in excess to the vendor for a commodity which is not in his possession / ownership at the time of payment. 6.5 Even o0thrrwise, as has been argued by the appellant, if the above investment of Rs. 79,88,520/- was made in acquisition of land by the appellant trust. The very making of such investment demonstrates that the appellant does not exist solely for educational purposes nor it can be said that it has non-profit motives. In fact, no investment of this nature can be made by any entity unless commensurate returns / profits are expected from the investment. Therefore, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer during the course of assessment proceedings. 7. The Hon'ble CIT(A) ought to have observed that the principle of natural justice was not followed by the assessing officer in not allowing an opportunity to the assessee as requested by them to cross examine Sri P.t'1ahender before utilizing the contents of the statement of Sri P.Mahender to arrive at a conclusion. 8. The Hon'ble CIT(A) erred in upholding the addition of Rs.79,88,520/- as suppressed sale consideration without any basis or supporting evidence ignoring the fact of existence of a registered document showing the sale consideration at Rs.19,35,000/-. 10. The Hon'ble CIT(A) ought to have appreciated the fact that the entire sale consideration was paid to the seller Sri P.Mahender by way of bearer cheques in his name and no cash was paid other than the amount mentioned in the document and hence the addition should not have been upheld. 11. The Hon'ble CIT(A) ought to have observed that in the given facts and circumstances of the case section 69B of the IT Act does not have any application and therefore there was no scope to make the addition of Rs.79,88,520/-. 12. The Hon'ble CIT(A) ought to have obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in he categorically deposed that he was not aware of the contents of the letter dated 18.12.2010 obtained from him and also clearly stated that the sale price per acre was Rs.1.50 to Rs.1.60 lakhs and the sale consideration was paid only through cheques. The learned counsel relied on various judicial pronouncements and submitted that when admission made by a deponent is not conclusive, no inference against the assessee could be drawn based on such admission. 13. The Learned Departmental Representative on the other hand, strongly relied on the orders of the Revenue authorities and submitted that the present appeal of the assessee is liable to be rejected, as the same is devoid of merit. 14. We heard both sides an perused the orders of the Revenue authorities and other material available on record. It is the addition made on account of undisclosed sale consideration paid by the assessee for the purchase of a land, which is the subject matter of dispute in this appeal. Apparent consideration paid as per the registered sale deed is only Rs.19,35,000, whereas during the course of survey action on the premises of one P.Krishna, who is stated to be brother-in-law of one Mahender, who is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und in your business premises. Please go through the workings on the back side of page no.30 and explain the working. Ans: This paper relates to the payments received by me on sale of 13 acres of land at Maddur. 13 acres of land located at Maddur was purchased by us in the name of Sri P.Mahender and it was sold to a society @ Rs.523/- per gunta which works out to Rs.99,00,000/-. The amounts received on the sale of this land were decided on this paper. In this deed, we have to 40% sale consideration to the land lords i.e. Rs.39,69,408/- and 60% comes to our share i.e. Rs.59,54,112/-. But, the land was registered to the party as per sub-registrar value (SRO Value) i.e. Rs.20,00,000/-." As can be seen from the above statement, the property was sold to society at the rate of Rs.523 per gunta, and it is not explained by the Assessing Officer, how the value comes to Rs.99 lakhs as stated in the statement. Assessee purchased 516 guntas, i.e. Acres 12 and 36 guntas, which multiplied by 523 will work out only to Rs.2,69,868. When this was pointed out to the Learned Departmental Representative in the course of arguments, it was submitted that wrongly area of 523 guntas was stated as rate in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on credible evidence are later retreated by the concerned assessees while filing returns of income. In these circumstances, such confessions during the course of search & seizure and survey operation do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Department. Similarly, while recording statement during the course of search & seizure and survey operations. No attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders". In the light of the above Instruction of the CBDT, even if the survey action has taken on the premises of the assessee, emphasis of the Assessing Officer should be on the material gathered at the time of survey. In the present case, as already noted above, survey actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of survey does not carry any evidentiary value whatsoever. Further it was held that the IT Act, whenever it thought fit and necessary to confirm such power to examine a person on oath has expressly provided for it; whereas Sec.133A does not empower any ITO examine any person on oath. Thus, in contradistinction to the power u/s 133A, Sec.132(4) of the IT Act enables the authorized officer to examine a person on oath and any statement made by such person during such examination can also be used as evidence under the IT Act. 8.3. Further, it was held in the case of Pullangode Rubber Products Company Ltd. Vs. State of Kerala (91 ITR 18) (SC) that an admission is extremely important piece of evidence but it cannot be said that it is conclusive and it is open to person who made the admission to show that it is incorrect. 8.3. Further, in the case of CIT Vs. S. Khader Khan & Sons (300 ITR 157), Hon'ble Madras High Court held that in view of the scope and ambit of the S.133 of the Act, materials collected during the course of survey action u/s 133A of the IT Act shall not have any evidentiary value. It could not be said solely on the basis of the statement given by assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able content depending on the nature of the enquiry, the frame work of the law under which it is held the authority holding the enquiry, the nature and character of the rights affected and the consequences flowing from the decision. It is, therefore, not possible to say that in every case the rule of 'audi alterem partem' requires that a particular specified procedure to be followed. It may be that in a given case, the rule of 'audi alterem partem' may import a requirement that witnesses whose statement are sought to be relied upon by the authority holding an enquiry should be permitted to be cross examined by the party affected while in some other case it may not. The procedure required to be adopted for giving an opportunity to a person to be heard or cross examined must necessarily depend on the facts and circumstances of each case. Now in the present case, we are concerned with the relying on the books of accounts of Ms/ Bharati Estates and the statement recorded from them. In our opinion, the authorities concerned required to give an opportunity of cross examining the parties concerned and also comments on the statements and books of accounts to be relied upon by the Revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3C)(iiiad) in respect of 'any income' means the same is exempt provided the educational institution solely exists for educational purpose and not for the purpose of profit. The is no dispute in the present case that the assessee society is exiting solely for purpose of carrying on educational activities, through its institutions. When such educational institution is approved by the prescribed authority and when the assessee also applies its income for the income or accumulates the same for subsequent application, wholly and exclusively for its objects, the institution is entitled for exemption in respect of any income. In this behalf, we are supported by the decision of the Cochin Bench of the Tribunal in the case of ACIT V/s. Muslim Educational Society (1 ITR's Tribunal Tax Reports 527). In this view of the matter, we do not find any justification for the additions made by the Assessing Officer, on this count as well. 20. Further, it was the case of the Revenue that the amount of Rs.79,88,520, representing difference in the sale consideration sought to be added, was paid by the assessee from out of the anonymous donations collected by the assessee. Apart from the fact that no cor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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