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2016 (11) TMI 1366 - ITAT DELHI

2016 (11) TMI 1366 - ITAT DELHI - TMI - Addition under the provisions of section 292C - Unaccounted income - addition u/s 69/69B/69C - ingenuine transaction - Held that:- Here a paper is found during the course of search on 6.11.2008 and assessment of search made by the AO u/s. 143(3) of the Act. In fact AO should have proceeded to act u/s. 153A of the Act. AO should also have recorded his satisfaction in this case u/s. 153A of the Act. Even otherwise, the document shown before us does not have .....

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ate with other transaction. Even otherwise when the assessee had denied the transactions, AO should have examined the recipient of search stated in that document and then confronted the assessee with the same. All these exercise have not at all been carried out by the AO. Furthermore, the presumption stated u/s. 292C of the I.T. Act is a rebuttal presumption. Therefore, when the assessee herself denied any such transaction, it cannot be stated that the actual transaction has taken place between .....

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ntioning the date and further no corroborative evidence of any investment made by the assessee was found. Further the document is also unsigned and undated, the addition made in the hands of the assessee of ₹ 96 lacs cannot be sustained. Thus we reverse the finding of the Ld. CIT(A) by confirming the addition in the hands of the assessee under the provisions of section 292C - Decided in favour of assessee - Addition of unexplained jewellery u/s. 69B - Held that:- Both the authorities b .....

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₹ 5.67 lacs towards the unexplained jewellery u/s. 69B - Decided in favour of assessee - I.T.A. Nos. 336/DEL/2012 - Dated:- 29-11-2016 - The Assessee has filed 02 appeals against the separate impugned Orders of Ld. CIT(A)-III, New Delhi pertaining to assessment year 2009-10 one is relating to quantum proceedings and another is relating to penalty proceedings. Since the issues involved in these appeals are common and identical, hence, the appeals were heard together and are being disposed o .....

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at there is no corroborating evidence of the figure of ₹ 96 lacs mention d on the loose paper. 3) The Lea ed CIT (Appeals) has grossly erred in law and on the facts of the case in applying Sec. 292C of the Income Tax Act merely because some papers were found from the premises of the assessee while ignoring vital facts and contentions of the assessee. 4. The Ld. CIT (Appeals) has grossly erred in law and on the facts of the case in confirming the addition of ₹ 5.671acs (Five lacs Sixt .....

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,16,700/- (Rupees Ten Lacs Sixteen Thousand Seven Hundred) under section 271AAA of the Income Tax Act, 1961 without appreciating facts of the case. There was no undisclosed income of the assessee during the previous year and the addition had been made arbitrarily on the basis of a computer printout. 2) The appellant craves leave to add, alter, demand, supplement or raise fresh ground of appeal, if considered expedient and advisable at the time of hearing of appeal. It is prayed that the appellan .....

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1.2008 wherein certain documents were found and seized. In response to the notice issued under section 143(2) and 142(1) of the I.T. Act, 1961 alongwith detailed questionnaire issued on 12.8.2010 the assessee s AR attended the proceedings and filed the submissions from time to time as called for. Thereafter, the AO assessed the income of the assessee at ₹ 6,06,09,770/- u/s. 143(3) of the I.T. Act, 1961 by making the various additions vide his order dated 31.12.2010. 5. Aggrieved by the afo .....

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is in appeal before the Tribunal. 7. At the time of hearing Ld. Counsel of the assessee stated that Ld. CIT(A) was erred in confirming the addition of ₹ 96 lacs in the hands of the assessee of the assessee as Unaccounted income from sources in terms of Sec 69/698/69C of the Income Tax Act. He further stated that there is no corroborating evidence of the figure of ₹ 96 lacs mentioned on the loose paper. He further stated that Ld. CIT (Appeals) has also erred in applying Sec. 292C of t .....

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Delhi and the Coordinate Benches of the ITAT and accordingly he relied upon the following decisions:- Vatika Landbase Pvt. Ltd. - 383 IT 320 (ITA No. 670/2014 dated 26.2.2016)- Delhi High Court. - M/s Delco India Pvt. Ltd. (ITA No. 116/2016) dated 10.2.2016 - Delhi High Court. - P. Koteshwara Rao order dated 12.8.2016 of the ITAT, Visakhapatnam (ITA No. 251 & 252Vizag/2012 (Ayrs. 2007-08 & 2008-09) - K.V Lakshmi Savitri Devi vs. ACIT (2012) 148 TTJ 157, ITAT Hyderabad Benches. - Hon ble .....

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ell reasoned order which does not need any interference and the same may be upheld. 8. We have heard both the parties and perused the records, especially the Orders of the revenue authorities and the case laws cited by the Ld. Counsel of the assessee. In this case search u/s. 132 of the Act was conducted at the premises of the assessee at 2, Golden Gate, Westend Greens, Rajokari, New Delhi- 110 038 on 6.11.1008. During the course of search a computer printout page 5 of Annexure I was found and s .....

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f the assessee. However, it is a computer print which has not been used / maintained / operated by the assessee. On perusing the said seized document, it is clear that certain nothings have been made which cannot be said to be the actual transaction. This is only an unsigned /undated loose paper with the Department to substantiate its stand. No cheque transaction has taken place between the Sudhiksha Singh and the Assessee during the financial year 2008-09. The addition has been made merely on t .....

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sel submissions that the issue in dispute is squarely covered by the following decisions:- 8.1 In the case of Vatika Landbase Pvt. Ltd. - 383 IT 320 (ITA No. 670/2014 dated 26.2.2016)- Delhi High Court has adjudicated as under:- In the present appeal, the Revenue urged the following questions: "1. Whether on the facts a d circumstances of the case, the Income Tax Appellate Tribunal was correct in Law in deleting the addition of ₹ 25,40,36,454 out of the total addition of ₹ 31,01 .....

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ase, the Income Tax Appellate Tribunal was correct in law in deleting the addition of ₹ 1,04,39,000 made by the AO on account of accommodation entries taken by the Assessee? 4. Whether on the facts and circumstances of the case, the order of the ITAT is not perverse as it has failed to consider that in this case, the AO made the addition on the basis of the relevant searched material gathered from the Assessee during the course of the search proceedings?" 29. However, by an order date .....

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rtaining to the sale of flats on the second and third floor of VT. 40. Turning to the case on hand, the document recovered from the file in the computer of Mr. Awasthi, forms the basis of the addition made by the AO, which was further reduced by the CIT (A). This was in the form of a computer print out of three sheets which were unsigned and undated. The first sheet was titled 'Cash- in-flow detail for the revenue', the next was titled 'Revenue details' and the third was titled & .....

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ITAT that mere fact that the print out states that the flats on second and third floor have been sold, does not necessarily mean that they were sold at the rates indicated therein is definitely a plausible view to take. 41. Considering that the document was recovered from the computer of Mr. Sunil Awasthi, he ought to have been summoned to explain the rates of sale shown therein for the flats on different floors. In fact, the Assessee did make a request for his cross-examination. The other possi .....

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be termed as a 'dumb' document which in the absence o{independent corroboration could not possibly have been relied upon as a substantive piece of evidence to determine the actual rates at which the flats were sold. Further as pointed out in Commissioner of Income Tax v. D.K. Gupta (supra) merely because there are notings of figures on slips of paper, it did not mean that those transactions actually took place. Likewise in Commissioner of Income Girish Chaudhary (supra), the Court termed .....

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rojection in the document, particularly when the Assessee offered a plausible explanation for the document. The burden shifted to the Revenue to show, on the basis of some reliable and tangible material, how rate at which the flats on the second and third floors of VT was higher than that dictated in the sales register or the sale deeds themselves. 47. In the circumstances, the Court is of the view that the ITAT was justified in coming to the conclusion that the addition of ₹ 5,60,73,380 m .....

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ction 132 or survey under Section 133A of the Act, it may be presumed that such books or documents belong to such person. Undisputedly, such presumption is rebuttable. It is not disputed that the Assessee had clearly denied having any dealing with M/s Smridhi Sponge Limited and had also filed an affidavit to that effect. The ITAT found, as a matter of fact, that the Assessee on its part had made the necessary enquiries and also provided final accounts of M/s Smridhi Sponge Limited; confirmation .....

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of the ITAT are essentially factual. Further, we find no infirmity with the findings returned by the ITAT and in any event the same cannot be held to be perverse by any stretch. 8.3 In the case of P. Koteshwara Rao order dated 12.8.2016 of the ITAT, Visakhapatnam (ITA No. 251 & 252Vizag/2012 (Ayrs. 2007-08 & 2008-09), the ITAT has observed as under:- 11. The only issue that came up for our consideration is whether on facts and circumstances of the case, the seized documents indicate exc .....

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dispute settlement, nowhere it is stated that he had paid on money to the assessee towards purchase of site. The assessee right from the beginning stated that he had not received any on money from M/s. M.V.V. Builders towards sale of site. Besides, loose sheets found in the premises of M/s. M.V.V. Builders, the A.O. does not have any other document to show that the assessee has received on money from the purchaser. The A.O. has not made out any attempt to find out some reliable cogent material .....

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the buyers. The allegation of the A.O. is that the purchaser has paid on money to the assessee in the financial years relevant to assessment year 2007-08 and 2008-09 which is almost one year after sale is completed. We further noticed that total consideration has been paid through proper banking channel. It was not a case of A.O. that the value shown in the sale deed is not real value of the property, because the value declared in the sale deed is the market value of the property, fixed by the .....

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essee. The A.O. used the admission of partners of purchaser firm made u/s 13 (4) of the Act in their case against the assessee, but failed to note that admission of other parties cannot be considered as conclusive evidence against the assessee, unless there is a corroborative evidence on record, because the maker of statement can bind himself, but how he bind others from his statement without there being any further evidence on record. 12. In the present case on hand. except loose sheet found in .....

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lem site. The AO without bringing on record an evidence to prove that on money is exchanged between the parties. 13 …….. merely harping upon loose sheet and third party statement, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The A.O. is required to bring further evidence on record to show that actual money is exchanged between the parties, but literally failed to do so. The AO did not conduct any independent .....

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Considering the facts and circumstances of this case and also applying the ratios of the judgements cited above, we are of the view that the A.O. is not correct in coming to the conclusion that on money exchanged between the parties based on a loose sheet found in the premises of a third party and also statement given by a third person. To sustain the addition, the A.O. should have taken an independent enquiry about the value of the property and ascertain whether any under valuation is done, if .....

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ards alleged on money for the assessment years 2007-08 & 2008-09. 18. In the result, the appeal filed by the assessee in ITA Nos. 251 &252IVizag/2012 are allowed. 8.4 In the case of K.V Lakshmi Savitri Devi vs. ACIT (2012) 148 TTJ 157, ITAT Hyderabad Benches has held as under:- "Admittedly there was no search action in the case of the assessee. It is a loose slip containing certain entries recording the payment which was found at the premises of CRK. It does not contain either date .....

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ation authorities. Further nothing was brought on record to show that there was any invoking of s. 50C while completing the assessment in the case of the seller. There is no evidence other than the seized material marked as 'A/CRK104' where relevant entries are made at ₹ 1,65,00,000. The seized material was not found at the premises of the assessee and there is no corroborative material to suggest that the assessee has actually paid ₹ 1.65 crores towards purchase consideratio .....

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he burden on the Department to prove conclusively that the loose document belongs to the assessee. There is no presumption in law that the assessee has actually paid ₹ 1651akhs towards purchase of the property. The undisclosed income in this case is to be computed by the AO on the basis of the available material on record. It should not be based on conjectures and surmises. As of now, the material considered by the AO for making the addition of ₹ 1 crore is seized material marked a & .....

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g upon the rule of evidence. There is no conclusive presumption to say that actual consideration passed on between the parties is actually ₹ 165lakhs. The assessee as well as her brother stated in their respective statements that the consideration passed between the parties is only ₹ 65lakhs. In spite of this the AO proceeded to conclude that the seized material is conclusively reflecting the payment of consideration at ₹ 165lakhs. The Department herein is required to establish .....

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or purchase of the property. The Department has not brought on record the date on which the payment was made and the source from which ii is paid and/or any details of bank account from where the cash was withdrawn. Without any of these details, the Department has taken a view that the assessee has paid Ps. 1651akhs for purchase of the property. The Department cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong cannot take place of material in sup .....

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tained Thus, no addition can be made on a dumb document and noting on loose sheet. It should be supported by the evidence on record and the evidence on record is not sufficient to support the Revenue's action. In a block assessment undisclosed income has to be determined or the .basis of the material and evidence detected in the course of the search action. The circumstances surrounding the case are not strong enough to justify the addition made by the Department. The burden of proving the a .....

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.4.1 The Hon ble A.P. High Court in the case of K Lakshmi Savitri Devi (Supra) in ITA No. 563 of 2011 has upheld the order of the Tribunal. "We are of the view that the Tribunal has rightly held that the registered document dt. 21.8.2006 under which the respondent purchased the above property showed that only ₹ 65. 00 lakhs was paid to the vendor by the respondent: that there was no evidence to show that the respondent had paid Rs.l. 00 crore in cash also to the vendor; that no presum .....

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es which cannot take the place of proof. We also agree with the Tribunal that the assessing officer did not conduct any independent enquiry relating to the value of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden. 8.5 In the case of CBI vs. VC Shukla (1998) 3 SCC 410) it has been held that the loose sheets of paper cannot be considered to be books. 8.6 In the case of CIT vs. .....

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377; 400 per Sq. ft. and the sale consideration for ₹ 850/- per sq. ft. claimed by the Revenue was unrealistic and ignored the ground situation. 8.7 In the case of CIT vs. Girish Chaudhary (2008) 296 ITR 619 (Delhi) - Delhi High Court has held as under:- That the revenue has to prove the undisclosed income beyond doubt. Further it was held that the document should be a speaking one and it should contain narration in respect of various figures noted therein. Otherwise the same should be con .....

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transaction where amount of ₹ 96 lakhs is alleged to have been transferred by appellant to other person. Further the AO has also stated that the transaction is also corroborated by the date of cheque transaction. We do not found any cheque transaction where assessee is involved in the present transaction which is allegedly taxed in the hands of the assessee. Much to say that there was no date of cash transaction as alleged then it is surprised how AO has correlated the date with other tra .....

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he person concerned whose name mentioned therein. Further the Circular No. 24 of 2015 dated 31.12.2015 also supports the case of the assessee that satisfaction should have been recorded in the case of the appellant u/s. 153A of the I.T. Act. As the Ld. Counsel for the assessee has also argued that no satisfaction has been recorded. The CBDT Circular which is based on the decision of the Hon ble Supreme Court of India in the case of CIT vs. Calcutta Knitwears (2014) 43 taxmann.com 446 (SC) provid .....

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n Civil Appeal No. 3958 of 2014 dated 12-3-2014 [2014] 43 taxmann.com 446 (SC) (available in NJRS at 2014-LL-0312- 51) has laid down that for the purpose of section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person uls 158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any of the following stages: ( .....

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nd therefore, the above guidelines of the Hon'ble SC, apply to proceedings U/S 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT. 4. The guidelines of the Hon'ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the "other person&q .....

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e Circular states that even if the AO of the search person is one and the same then he should also record the satisfaction. Leaving aside the matter on satisfaction in this case the assessment has also been made disregarding the provisions of the search as provided under Chapter XIV-B of the Act. Once again at the cost of repetition the date of search is 6.11.2008 and the assessment year involves before us is assessment year 2009-10 and further addition has been made on the basis of the document .....

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ument is also unsigned and undated, the addition made in the hands of the assessee of ₹ 96 lacs cannot be sustained. In view of this, we reverse the finding of the Ld. CIT(A) by confirming the addition of ₹ 96 crores in the hands of the assessee under the provisions of section 292C of the I.T. Act, 1961. It is also surprising to note that in the present case the penalty has been initiated under the provisions of section 271AAA of the Act, this relates to the search assessment, but th .....

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₹ 29,18,395 found from the residential locker of the assessee out of which ₹ 17,62,445/- was seized and it was seen from the assessment order that keeping in view the social status of the assessee the AO has held that jewellery worth ₹ 11,55,950/- was treated as jewellery received by the assessee at the time of her marriage from relatives and friends and the balance jewellery worth ₹ 17,62,445/- has been treated as unexplained jewellery and taxed as income within the mea .....

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has observed that it can reasonably be estimated that jewellery worth ₹ 8 lacs would have been given at the time of marriage to the assessee from parents and relatives which would translate to jewellery of the value of ₹ 23.50 lacs as on the date of search. Accordingly, instead of the addition of ₹ 17,62,445/- made by the AO on account of unexplained investment in jewellery (which is directed to be deleted) an addition to jewellery ₹ 5.67 lacs was confirmed as made out o .....

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