TMI Blog2023 (5) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in search assessment framed u/s.153A there cannot be any extrapolation based on documents found during the course of search for one assessment year and estimating income for other assessment years - We find that although, the AO was in possession of one sale agreement which pertains to assessment year 2011-12, but fact remains that said document pertains to business activity of the assessee of developing real estate residential layout and also in one particular project. Further, the said document clearly envisages higher selling price of plots in the same layout, whereas, the assessee has accounted very less sale consideration on the basis of registered document. Therefore, in our considered view, there is no error in the method followed by the AO and extrapolating information gathered during the course of search for estimating income for other two years, and thus, we reject arguments of the assessee on this aspect for all three assessment years Estimation of selling price of various plots sold in three assessment years based on sale agreement found and impounded during the course of search - Only possible way to settle the dispute between the assessee and the AO is to estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded for computing limitation in view of judgment of the Hon ble Supreme Court in Miscellaneous Petition No.21 of 2022 in Suo Motu Writ Petition (C) No.3 of 2020, and if the period of delay is covered within the period specified in the order of the Apex Court, then, same needs to be condoned in view of specific problem faced by the public on account of Covid-19 pandemic. 2.1 The learned DR, on the other hand, fairly agreed that delay may be condoned in the interest of justice. 2.2 Having heard both sides and considered reasons given by the learned AR, we find that the Hon ble Supreme Court in Miscellaneous Petition No.21 of 2022 in Suo Motu Writ Petition (C) No.3 of 2020, has extended limitation applicable to all proceedings in respect of Courts and Tribunals across the country on account of spread of Covid-19 infections w.e.f.15.03.2020, till 28.02.2022 and said limitation has been extended from time to time. We further noted that delay noticed by the Registry pertains to the period of general exemption provided by the Hon'ble Supreme Court extending limitation period applicable for all proceedings before Courts and Tribunals and thus, considering facts and circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directing the AO to conduct enquiries in 2021, has erred to ignore the results of enquiry by citing that verification, which he directed, was carried out after a long gap of decade. f) The Commissioner of Income tax (Appeals) has failed to note that this assessment is based on materials seized in the hands of Sanjay Chawla [PAN: ASXPS3092F] and has been used without recording of a satisfaction note. inconsistencies and contradictions of Assessing officer. To illustrate, The Assessing officer in the assessment order passed u/s 143(3) dated 31.12.2012 of the appellant for the same property for AY-2013-14 has estimated the selling rate at Rs.750 per square feet whereas the case of the other two co-seller's were not selected for scrutiny and the income returned were not disturbed h) The Commissioner of Income tax (Appeals) has erred in adjudicating the appeal without providing a copy of the report alleged to be submitted by the Inspector of Income tax which is referred in the assessment order passed u/s 143(3) rws 263. i) The Commissioner of Income tax (Appeals) has failed to note the legislative intent behind introduction of section 50C/43CA of Income tax Act, without which the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt (ITI report), comparable data etc. 4. The CIT(A) erred to conclude in Paragraph 5 of the order that the appellate order was passed without any reference to the report of the ITI and hence no prejudice is caused to the appellant for want of ITI's report . The order of CIT(A) u/s 250, upheld the order passed by the Assessing officer u/s 143(3) rws 263 in which the Assessing officer has relied on the Income Tax Inspector's Report (ITI report), to make additions. 5. The CIT(A) failed to note that the issue raised by the appellant in the Rectification petition goes to the root of the matter as non-consideration of the submissions relating to the assumption of jurisdiction, amounts to mistake apparent on the face of record. 6. The order passed by the Assessing officer which was the subject matter of the main appeal before the CIT(A) was clearly barred by limitation in as much as the AO did not carry out the directions given by PCIT/ITAT viz vide paragraph 6 of the order of the PCIT passed u/s 263 dated 29.03.2016 to ascertain and determine the sale consideration received by the assessee, by passing a fresh order and the failure to do so is in violation of the statutory provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee for relevant assessment years. The assessee challenged the order of the PCIT passed u/s.263 of the Act, before the Tribunal, and ITAT Chennai Benches vide order dated 20.01.2017 dismissed the appeal filed by the assessee, and upheld revision order passed by the PCIT. 5. Pursuant to revision order passed by the PCIT u/s.263 of the Act, the AO has taken up the case for assessment proceedings and called upon the assessee to explain as to why sale price of Rs.800/- per sq.ft shall not be adopted for various plots sold during the FY relevant to AYs 2011-12 to 2012-13. The AO had also worked out difference between sale consideration admitted by the assessee and sale value as per Rs.800/- per sq.ft and arrived at a difference of Rs.63,45,935/-. The assessee vide their reply dated 20.01.2016 contended that there is no provision under the Act for extrapolation of sale consideration on the basis of one sale agreement, making additions towards on-money received for sale of plots. The assessee had also explained the difference between rate agreed to be sold to Smt.Rathinammal and sale price received from other buyers and argued that when the assessee has developed the land into residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering relevant submissions of the assessee and also taken note of Remand Report issued by the AO, opined that on perusal of the agreement with Smt.Rathinammal clearly indicate that the sale price per sq.ft. is Rs.800/-. The assessee has not been able to explain as to why that particular sale was much higher when compared to sale price of other plots. Although, the assessee claims that she was forced to sell for lower price due to various litigations, including approach road to layout, but said claim was unsubstantiated. Therefore, rejected arguments of the assessee and sustained the additions made by the AO towards differential sale consideration for sale of plots. The relevant findings of the Ld.CIT(A) are as under: 9. I have bestowed my personal thoughts to the issue. Admittedly, the appellant, her son had 50% share together and Ms.L.AmmaniAmmal had the other 50% share in the impugned adventure/ project where they had developed sites and sold to various buyers; that the impugned evidence [ANN/PS/SS/B D/S-3/S.No.82 to 86] that clearly indicated the sale price at Rs.800/- sq. ft in respect of sale to Ms.Rathinammal; the said sale share was captured and reported only in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of that particular site] was recovered and pleading that the buyers have confirmed only the recorded consideration. 9.3. The appellant sought shelter under the argument that the buyers, during the remand proceedings, have confirmed the transaction. I hasten to add that the verification was carried out in February, 2021 after a long gap of a decade. In view of the specific facts and circumstances of the case and in light of the hiatus between the transaction and the verification, I am not inclined to accept her contention as the depositions given by the buyers rather mechanical and in a stereotyped manner is a self-serving proposition both for the appellant and the buyers. Yes, the cross-verification and confirmation by counter-parties is an important requirement to be discharged by the Revenue. At the same time, it is relevant to keep in view that crucial evidence recovered contemporaneously indicate in a crystal clear manner about the exact and actual price collected by the appellant in respect of particular sales and the appellant, as mentioned earlier has not furnished credible explanation as to why the said sale was made at such a rate while systematically suppressed price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of collector of Customs vs Boremal 1974 SCC 2 544, the use of circumstantial evidence and burden of proof were the subject matter of adjudication. It was held that merely because there is no direct evidence, the burden of proof cannot be shifted to the department to prove a fact with absolute precision. 5. The Court observed as under; 'but in appreciating its scope and the nature of onus cast by it, we may pay give regard to other kindred principles, no less fundamental of universal application. One of them is that the prosecution are the department is not required to prove its case with mathematical precision to a demonstrable degree for in all human affairs absolute certainty is a myth and as Professor Brett felicitously puts it 'all exactness is a fake'. Eldaradoof absolute proof being unattainable the law accepts for it probability as a working substitute in this work a day world. The law does not require the prosecution to prove the impossible. All that is required is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of fact and issue. Thus legal proof is not necessarily perfect proof; Often it is nothin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts to evade tax is to have some recitals made in a document either executed by him or executed in his favour, then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers -while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents'. 9.5.2. The Hon'ble Apex Court in the case Sumathy Dayal [214 ITR 801(SC)] came across a similar improbable result that was shown by the assessee. These entire edifices through which the assessee claimed to have earned huge tax exempt gains within a very short span of time fails the test of both genuineness and human probabilities. In the case cited supra, the Hon'ble SC propounded their principles of human probabilities on applying it in that case and held that whether apparent is real is to be decided on the basis of incriminating circumstances. 9.6. As mentioned earlier, the appellant has failed to adduce any credible explanation/evidence to counter the conclusions of the AO. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first appellate authority went wrong in cancelling the assessment merely because the assessing officer did not take a confirmation from the purchaser. The approach of the appellate authority and the Tribunal in our view is unrealistic because no purchaser will disclose to the Department that there was unaccounted payment in the purchase of property. If receipt of more than the declared amount as consideration is proved by documents, necessarily, the assessment is sustainable. We do not find the first appellate authority or the Tribunal has considered the case with reference to the seized documents. We, therefore, allow the appeals by setting aside the orders of the Tribunal and that of the first appellate authority and remand the matter to the CIT (Appeals) for reconsideration by giving one more opportunity to the assessee to prove that her property is of lesser importance and lesser value than neighbouring properties simultaneously sold to justify its sale at a lesser price which, of course, arises only if the materials gathered from her computer is proved by her to be false which burden shall also be on the assessee. 9.8. The appellant, in effect, is a trader/dealer in plots a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y shows that sale consideration accounted in the books of accounts is supported by Sale Deed, the AO cannot estimate selling price of plots based on one document. 9. The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that the judgment of the Hon ble Supreme Court in the case of PCIT v. Abhisar Buildwell Pvt. Ltd., is not applicable, because, in the present case, incriminating material was found and seized in the form of sale agreement, which is clearly shows selling price of Rs.800/- per sq.ft on few plots, whereas, the assessee has accounted less selling price on the basis of registered document. The assessee could not explain as to how such huge difference between selling price of plots in one layout. Although, the assessee claims that there was a litigation, but could not substantiate its claim with evidences. Therefore, the AO and the Ld.CIT(A) has rightly estimated selling price on the basis of documents found during the course of search and their orders should be upheld. 10. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. In so far as first legal arguments of the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athinammal and selling price of other plots and considered difference amount being on-money received towards sale of plots. Although, the AO has estimated purported on-money claimed to have been received by the assessee for selling plots in three assessment years, except solitary instance of sale agreement with Smt.Rathinammal, there is no other evidence with the AO to justify adoption of Rs.800/- per sq.ft uniformly to all other sites/plots sold during the three assessment years. We further noted that the AO has estimated unaccounted income for sale of plots by extrapolating selling price of one plot to other plots sold during three assessment years by giving vague reasons including the principles of human probability. On the other hand, although, the assessee claims that the reasons for receiving less selling price for few plots is various litigations pending in respect of said land and also non-availability of approach road, because of blocking road by certain persons, but such claim was unsubstantiated. Form the above, it is clear that neither the AO proved his case for adopting Rs.800/- per sq.ft uniformly for all plots sold during the three assessment years, nor the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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