TMI Blog2016 (8) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... vour of assessee - ITA No. 251 and 252/Vizag/2012 - - - Dated:- 12-8-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER. Appellant by : Shri G.V.N. Hari, AR Respondent by : Shri T.S.N. Murthy, DR. ORDER PER G. MANJUNATHA, Accountant Member: These two appeals filed by the assessee are directed against common order passed by the CIT(A), Visakhapatnam dated 24.2.2012 for the assessment year 2007-08 and 2008-09. Since, the facts are identical and issues are common, they are heard together and disposed off, by this common order for the sake of convenience. 2. The brief facts of the case are that the assessee is an individual deriving income from commission from real estate business and other sources filed his return of income for the assessment year 2007-08 2008-09 declaring total income of ₹ 1,48,012/- ₹ 2,90,940/- respectively. During the course of search seizure operation conducted in the group of M/s. M.V.V. Builders, it was found that M/s. M.V.V. Builders purchased a site admeasuring 4430 sq.yds. on 27.5.2006 for a consideration of ₹ 1,99,35,000/- from Sri Peela Apparao and Others. It was furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reasons that Sri M.V.V. Satyanarayana clearly admitted during the search operation that an amount of ₹ 75 lakhs was paid to Sri P. Koteswara Rao and also the relevant entries were found in the seized materials. The A.O. further observed that the assessee has failed to offer any explanation why said amount has not been considered in the return filed for the respective years, accordingly, completed assessment u/s 143(3), r.w.s. 147 and made addition of ₹ 50 lakhs for the assessment year 2007-08 ₹ 25 lakhs for the year 2008-09. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has challenged validity of reopening of assessment, in addition to issues on merit. The assessee further submitted that the A.O. was erred in law in issuing notice u/s 148 of the Act, when assessment proceedings in respect of the return filed for the assessment year is pending. As regards the issues on merit, the assessee submitted that he had not received any on money from M/s. M.V.V. Builders. It was further submitted that it is not known to him as to why Sri M.V.V. Satyanarayana has admitted that he had paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of ₹ 75 lakhs in cash to Shri P. Koteswara Rao towards purchase of Venkojipalem site. Sri M.V.V. Satyanarayana, Managing Partner of M/s. M.V.V. Builders, while deposing statement before the investigating officer admitted that he had paid an amount of ₹ 50 lakhs and ₹ 25 lakhs during the financial years relevant to assessment year 2007-08 2008-09 respectively. Based on such information, the A.O. come to the conclusion that the assessee has received on money towards sale of site, therefore, opined that the income chargeable to tax has been escaped assessment for the assessment year 2007-08 and 2008-09 respectively and accordingly made additions of ₹ 50 lakhs and ₹ 25 lakhs for the assessment year 2007-08 2008-09 respectively. 8. The Ld. A.R. for the assessee submitted that the CIT(A) ought to have held that the assessing officer has not justified in making additions of ₹ 50 lakhs and ₹ 25 lakhs for assessment years 2007-08 2008- 09, towards alleged on money payment in respect of sale of Venkojipalem site. The A.R. further submitted that the A.O. was not correct in making additions based on certain loose slips found in the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively, for the assessment year 2007-08 2008-09 towards alleged on money received by the assessee. The A.O. was of the opinion that the assessee has received on money from M/s. M.V.V. Builders, however failed to disclose the same in the return filed for the respective assessment years. The A.O. further was of the opinion that seized documents from the premises of M/s. M.V.V. Builders clearly exhibits that M/s. M.V.V. Builders has paid on money of ₹ 75 lakhs in 2 financial years relevant to assessment year 2007-08 2008-09 to the assessee towards purchase of Venkojipalem site. The A.O., further, observed that Sri M.V.V. Satyanarayana, Managing Partner of the firm has admitted that he had paid on money of ₹ 75 lakhs to the assessee. It is the contention of the assessee that he had not received any on money towards sale of Venkojipalem site. The assessee further contended that he along with other co-owners sold a site to M/s. M.V.V. Builders for a consideration of ₹ 1,99,37,000/- and received sale consideration by way of account payee cheque. The assessee further contended that the transaction has been completed on 7.6.2006 and alleged on money payment was issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 state government authorities for determining stamp duty purpose. Further, there is no evidence with the A.O. to show that there is a under valuation of property and provisions of section 50C of the Act is invoked while completing the assessment. The A.O. merely acted upon the statement given by the third party which was totally denied by the assessee. It is a settled position of law that unless statement is tested under cross examination, the same cannot be considered as evidence against the assessee. The A.O. used the admission of partners of purchaser firm made u/s 132(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 prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, the A.O. did not brought on record any evidence to support his contention to say that there is on money exchanged between the parties. In the absence of proper enquiry and sufficient evidences, we find no reason to confirm the addition made by the A.O. Therefore, we reverse the CIT(A) order and direct the Assessing Officer to delete the addition. 14. The assessee relied upon the decision of ITAT Hyderabad A Bench, in the case of K.V. Lakshmi Savitri Devi Vs. ACIT (2012) 148 TTJ 157. The coordinate bench of this Tribunal, under similar circumstances 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 of payment or name of the person who has made the payment. According to the Department, CRK denotes C. Radha Krishna Kumar and KRK denotes K. Rajani Kumari. However, no name of the assessee was found in the louse sheet. The property was purchased from P w/c CRK for a disclosed consideration of Ps. 65 lakhs by the assessee. The property has been registered and the sale deed was executed for a considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs. In spite of this the AO proceeded to conclude that the seized material is conclusively reflecting the payment of consideration at ₹ 165 lakhs. The Department herein i required to establish the nexus of the seized material to the assessee. As stated earlier there is no date and name of the assessee. The allegation of the Department is that the seized material denotes the payment made by the assessee to the purchaser for purchase of the property. However, no such narration or name of the assessee was found in the seized material. The Department is not able to unearth any document or material or any corroborative material to show that the assessee herein actually paid Ps. 165 lakhs for 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. 165 lakhs 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of payment or the name of the person who made the payment. It rightly held that the Revenue failed to establish the nexus of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises 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. 16. The Hon ble Supreme Court, in the case of CIT Vs. P.V. Kalyana Sundaram (2007) 294 ITR 49, under similar circumstances held in favour of the assessee. The Hon ble Supreme Court, while deciding the issue in favour of the assessee held as under: We have heard learned counsel for the parties and have gone through the record. It is true that the Division Bench of the High Court has borrowed extensively from the orders of the Tribunal and the Commissioner and passed them off as if they were themselves the author(s). We feel that quoting from an order of some authority particularly a specialized one cannot per se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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