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2015 (6) TMI 1068 - ITAT CHENNAI

2015 (6) TMI 1068 - ITAT CHENNAI - TMI - Addition on sale consideration received - computation of undisclosed income for the block period - Held that:- The Assessing Officer shall compute the undisclosed income for the block period in accordance with the provisions of the Act on the basis of the evidence found as a result of search or other documents, materials or information as are available with the Assessing Officer and relatable to such evidence found during the course of search operation. I .....

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sideration. This information furnished by Shri G. Babu does not relate to any material or evidence found during the course of search operation. The evidence of Shri G. Babu could be relied upon provided the Assessing Officer is in possession of any evidence which was found during the course of search operation. In the absence of any material found during the course of search operation, this Tribunal is of the considered opinion that the statement recorded from Shri G. Babu on 29.12.1999 cannot b .....

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377; 5 lakhs. This Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, the power of the CIT(A) which is co-terminus with that of the Assessing Officer cannot be extended to make any addition towards undisclosed income. Therefore, the CIT(A) is not justified in sustaining the addition of ₹ 5 lakhs. - Cost of improvement addition - Held that:- As rightly submitted by the ld. Counsel, no material was found during the cours .....

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le with regard to the construction of the building. In the absence of any material, this Tribunal is of the considered opinion that there cannot be any addition with regard to the so called improvement to the property. Accordingly, the order of the CIT(A) is set aside and the addition made to the extent of ₹ 5 lakhs towards investment in immovable property and another addition of ₹ 83,700/- towards improvement of the property are deleted. - Addition towards gold jewellery to the .....

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d the difference by filing the reconciliation statement, there is no need for making any further addition. Moreover, the addition deleted was only to the extent of ₹ 86,000/-. Therefore, this Tribunal do not find any infirmity in the order of the lower authority and the same is confirmed. - I.T.(SS)A.No. 146/Mds/2002 & I.T.(SS)A.No. 154/Mds/2002 - Dated:- 30-6-2015 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Appellant by: Shri V.D. Gopal, Advocate .....

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the Assessing Officer made an addition of ₹ 31 lakhs towards onmoney payment for purchase of immovable property. However, the CIT(A) deleted the addition made by the Assessing Officer on the ground that there was no material found during the course of search operation. The CIT(A) made another addition of ₹ 5 lakhs in the course of appellate proceedings. According to the ld. Counsel, even for making this addition of Rs. 5 lakhs, no material was available on record. According to the l .....

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el, even for improvement of the property, no material was available on record to suggest that the assessee has incurred any expenditure. According to the ld. Counsel, seized material alone can be a basis for making addition. The valuation report cannot be considered to be a seized material during the course of search operation. 4. On the contrary, Shri Pathlaveth Peerya, ld. Departmental Representative submitted that there was a search in the residential premises of the assessee on 29.12.1999. I .....

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was ₹ 31 lakhs. Referring to the statement said to be recorded from the assessee, the ld. DR submitted that the statement was in fact recorded on 3.1.2000. There was no reference about the payment of on-money for purchasing the immovable property. Referring to the statement said to be recorded from one Shri G. Babu on 29.12.1999 u/s 131 of the Act, the ld. DR pointed out that Shri Babu accepted that he has received a total consideration of ₹ 31 lakhs for sale of the property. In vie .....

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ored at all. Referring to the claim made by the assessee that the Assessing Officer has already considered 410 gms of jewellery which was said to be received for repair, therefore, the CIT(A) ought not to have deleted 215 gms of gold jewellery which was found to be excess during the course of search operation. 6. We have considered the rival submissions on either side and also perused the material available on record. The first ground in the assessee s appeal is with regard to addition of ₹ .....

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n made by the assessee, estimated the unexplained investment at ₹ 4,85,236/-. However, he rounded off the same to Rs. 5 lakhs for making the addition. The fact remains that there was no material found during the course of search operation. Even though the Assessing Officer claims that a statement was recorded from the assessee u/s 132(4) of the Act on 29.12.199 during the course of search operation, the Revenue could not file copy of the said statement recorded from the assessee. In fact, .....

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either party. The Annexure 1 of the assessment order shows that no material was seized other than 1102.468 gms of gold jewellery and 39 kg of silver from the assessee. It is obvious that no material was seized from the premises during the course of search operation. 7. We have also gone through the copy of statement said to be recorded from the assessee on 3.1.2000. There was no question asked with regard to payment of on-money for purchase of the property. The assessee was asked to explain the .....

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u with the present assessee, he explained that sale deed was executed in the name of two daughters-in-law of the present assessee, Smt. Shanthi, W/o Shri Yoganatham and Smt Vasanthi, W/o Shri Natarajan. The cost of the land as disclosed in the sale deed was ₹ 2,67,000/- to Smt Vasanthi. However, the cost of the land sold to Smt Shanthi was Rs. 21,01,000/-. The said Shri G. Babu has also admitted that he received Rs. 31 lakhs towards sale consideration in three installments. Apart from the .....

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2. The matter is pending before this Tribunal for the last 13 years, therefore, remanding the matter to the file of the Assessing Officer at this stage may not serve any purpose. Therefore, there is no option to this Tribunal except to decide the appeal on merits. 8. We have carefully gone through the provisions of section 158BB(1) of the Act. Sec. 158BB(1) of the Act provides for method of computation of undisclosed income for the block period. The Assessing Officer shall compute the undisclose .....

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ment said to be recorded u/s 132(4) of the Act from the assessee on 3.1.2000 does not throw any light with regard to payment of on-money for the purchase of property. Only Shri G. Babu admits during the course of his examination u/s 131 of the Act that he received Rs. 31 lakhs towards sale consideration. This information furnished by Shri G. Babu does not relate to any material or evidence found during the course of search operation. The evidence of Shri G. Babu could be relied upon provided the .....

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the power of the CIT(A) is co-terminus with that of the Assessing Officer for the purpose of computing undisclosed income for the block period, the CIT(A) cannot travel beyond the evidence found during the course of search operation. The CIT(A), by referring to payment of stamp duty, registration charges etc. estimated the undisclosed income at Rs. 5 lakhs. This Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, the power of the .....

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tent of ₹ 2,99,700/-. The assessee disclosed the cost of construction only at Rs. 2,16,000/- therefore, the difference of Rs. 83,700/- was treated as unexplained investment for the block period. The fact remains that no books of account was found during the course of search. The valuation report was obtained after the search. In fact, no material was available with regard to the construction of the building. In the absence of any material, this Tribunal is of the considered opinion that th .....

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is order, this Tribunal found that there was no material found during the course of search operation. The so called statement said to be recorded from the assessee u/s 132(4) of the Act does not disclose anything about payment of on-money. Therefore, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the addition. 13. We have gone through the decision of Ahmedabad Bench of this Tribunal in Kantilal C Shah vs ACIT [2011] 133 ITD 57 relied upon by the ld. DR. In the cas .....

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us the assessee was examined only on 3.1.2000 and there was no reference about the payment of on-money with regard to purchase of property. The assessee s son Shri S. Natarajan was examined on 29.12.1999 u/s 132 of the Act. Shri S. Natarajan in respect of Question No.11 explained before the Assessing Officer that Rs. 31 lakhs was paid to Shri G. Babu in three installments for purchase of property. Shri S. Natarajan claimed that this payment was made in the presence of his father. The Revenue cou .....

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the assessee, this Tribunal is of the considered opinion that the statement said to be recorded from Shri S. Natarajan cannot be of any assistance to the Revenue. Therefore, this Tribunal is of the considered opinion that the decision of the Ahmedabad Bench of this Tribunal in Kantilal C Shah (supra) may not be applicable to the facts of this case. 14. We have gone through the decision of the Hyderabad Bench of this Tribunal in the case of Prasanchand Surana vs ACIT,[2001] 76 ITD 423. In the ca .....

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0 lakhs was disclosed in books of the co-owner s name. The balance ₹ 3.50 lakhs was offered as undisclosed income of the assessee. The Revenue Authorities obtained the valuation report which indicated the cost of construction at ₹ 21,63,727/-. After giving 10% deduction for supervision, the cost was adopted at ₹ 19.48 lakhs. The difference between the cost disclosed by the assessee and cost determined after considering the valuation report was treated as undisclosed income of t .....

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of any assistance to the Revenue. 15. We have also gone through the judgment of the Hon'ble Himachal Pradesh High Court in the case of Hira Singh & Co. vs CIT [1998] 230 ITR 791. In the case before the Hon'ble HP High Court, the partner of the assessee firm admitted a katcha bill to the extent of ₹ 1,12,275/-. On the basis of the admission, the Tribunal upheld the addition made by the lower authorities. The High Court found that it is a question of fact and no question of law .....

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