Income Tax Appellate Tribunal - Chennai
S.Suresh, Salem vs Acit Central Circle, Salem on 5 February, 2021
आयकर अपील य अ धकरण,'बी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL , 'B' BENCH, CHENNAI
ी धु वु आर.एल रे डी, या यक सद!य एवं ी जी.मंजुनाथ, लेखा सद!य के सम'
BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER
AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER
आयकरअपीलसं./I.T. A.No.942/Chny/2019
( नधारणवष / Assessm ent Year: 2009-10)
Mr. S.Suresh, Vs The Assistant Commissioner of
7/16, Nallarayanpatty, Ariyanoor, Income Tax,
Veerapandy, Central Circle,
Salem-636 308. Salem.
PAN:AZZPS 9875M
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओरसे/ Appellant by : Mr. G.Baskar, Advocate
यथ क ओरसे/Respondentby : Mr.M.Srinivasa Rao, CIT
सुनवाईक तार ख/Da t e of h ear in g : 17.12.2020
घोषणाक तार ख /D at e of Pr on o unc e m en t : 05.02.2021
आदे श / O R D E R
PER G.MANJUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-16, Chennai dated 01.03.2019 and pertains to the assessment year 2009-10.
2. The assessee has raised the following grounds of appeal:-
"1. Commissioner of Income-tax (Appeals) is not justified in holding that cost paid for purchase of a residential house on 16.04.2008 was ` 90 lakhs against `42 laths according to Sale document, and consequently deciding that `49.5 lakshs was incurred out of unexplained sources.
2. As a noting in Diary seized during search on 22.05.2014 does not narrate that a larger amount was actually paid to the transferor, it ought not to have led the officials to conclude that an on-money 2 ITA No.942/Chny/2019 was paid.
3. As the assessee had confessed to offer the additional amount as income, only 'tentatively" during a statement recorded at about 2 am, and had retracted it in a return of income furnished on 07- 05-2015 as required by a notice dated 09-04-2015, the addition made on its basis is not justified.
4. Such a statement recorded at odd hours should not have been considered as a voluntary one (328 ITR 4II (Guj).
5. Similar confession retracted only by a return of income, was accepted by the Madras High Court in 303 ITR 235 and deletion of amount treated as on-money held valid, observing that it is harsh and unequitable to tax a notional income.
6 While Madras High Court in 282 ITR 259 (affirmed by Supreme Court in 294 ITR 49) accepted a retraction of confession made on the basis ofa slip seized during search, in spite of transferor's filing a revised return including 'on-money, the Assistant Commissioner ought not to have rejected the retraction, on an incorrect view that it was made only on 20-12-2016.
7. The Department ought to have made independent enquiries on the market value of the property, as required by the above decisions of Madras High Court and Supreme Court and considered the fact that the sale consideration amount was not disturbed in transferors assessment (163 Taxman 482 Del HC); the Statutory authority namely 5p1, Deputy Collector (Stamp) fixed its market value at Rs. 44,80,700/- being 6.6% more than Rs, 42 lakhs mentioned in the document; reliance on such stamp authority's value is recognized in 313 ITR 178 Amsr and 57 DTR 449 Ahd.
8. Even the tentative confession ought not to have extracted at all, as it was prohibited by Boards Circular dated 10-03-2013 referred to in 300 IER 157 at 65 (Mds HC) and task Force's recommendation published in 179 CTR St 5 at 235 at Para 3.27.
9. CIT (Appeals) is not justified, relying on decisions in cases ofdissimilar facts, in requiring evidence that an on-money was not paid, while the seller had confirmed in the sale document the actual amount received; requiring to prove a non existing matter is 3 ITA No.942/Chny/2019 not lawful. Commissioner (Appeals) ought to have discussed the decisions ofjurisdictional and Apex Court relied on by Grounds of Appeal, and repeated at Pages 3 and I8 of the appellate order, which are applicable to the facts of this case.
10. Alternately, as assesse is only a co-owner of the property with 50% share along with wife Mrs.P.Sumathi, entire excess amount ought not to have been assessed as his income, as contended by Grounds of appeal repeated in order of CIT(Appeals), at Pages 4 and 19, but ignored to be dealt with by 1st appellate order.
11. For these and other reasons, which may be stated at the time of hearing of the appeal, it is prayed that the addition made to income may please be deleted."
3. Brief facts of the case are that the assessee is an individual, derives income from house property and income from other sources, besides agricultural income. A search and seizure action u/s. 132 of the Income Tax Act, 1961 was conducted in the business premises of the assessee on 22.05.2014. Consequent to search, notice u/s. 153A of the Act was issued on 09.04.2015 for which assessee has filed return of income declaring total income of ` 8,88,420/-. During the course of search on 22.05.2014, an executive diary maintained by the assessee for the year 2008 was found and seized. When seized documents were confronted to the assessee, assessee admitted that he purchased a property for which requirement of funds has been estimated. However, property has been subsequently purchased for a consideration which is 4 ITA No.942/Chny/2019 different from the consideration recorded in executive diary. During the course of search, statement u/s. 132(4) of the Act was also recorded wherein assessee admitted maintenance of diary and also confirmed entries recorded therein and accordingly, admitted undisclosed income on account of on-money payment for purchase of property at `94,28,000/-. The Assessing Officer, on the basis of incriminating materials found during the course of search coupled with statement recorded from assessee has arrived at undisclosed income towards on-money payment for purchase of property on the basis of cash flow statement filed by assessee at `49,50,000/- and made additions u/s.69 of the Act. The assessee carried the matter in appeal before first appellate authority, but could not succeed. The learned CIT(A), for the reasons recorded in his appellate order dated 01.03.2019, confirmed additions made towards on-money payment for purchase of property on the ground that additions made by Assessing Officer is not only based on statement recorded during the course of search u/s. 132(4) of the Act, but it was also supported by incriminating material in the form of executive diary maintained by assessee and hence, arguments of assessee that no addition could be made on the basis of confession statement alone does not hold good. The learned CIT(A) has also distinguished 5 ITA No.942/Chny/2019 various case laws relied upon by assessee and further relied upon the decision of Hon'ble Madras High Court in the case of S.ShyamKumar Vs. ACIT (2018) 99 Taxman.com 39. The assessee carried the matter in further appeal before Tribunal.
4. The Tribunal vide its order dated 08.11.2019 in ITA No. 942/Chny/2019 has confirmed the additions made by Assessing Officer towards on-money payment for purchase of property by holding as under:-
"6. We heard the rival submissions and perused the material on record. The only issue involved in the present appeal relates to addition of Rs.49,50,000/- on account of unexplained investment in the purchase of property. Assessee had admitted undisclosed income in the form of on-money payment for purchase of property but it appears that statement was retracted subsequently. It is a matter ofthat seized documents in the form of diary clearly indicate payment of consideration over and above the apparent consideration mentioned in the sale deed. Therefore dehorse the statement given by the assessee, the material on record clearly indicate payment of on-money, the source for which remains unexplained. The ratio of the decision of Jurisdictional High Court in the case of S. Shyam Kumar (supra) is squarely applicable to the facts of the present case, wherein it was held as follows:-
"11. Wefind that the case on hand is not a simple case of relying upon somescribbling and notings but a case where the entries, which were clear and legible, were taken into consideration by the Assessing Officer . The correctness of 6 ITA No.942/Chny/2019 which was examined by the Commissioner of Income (Appeals) and further examined by the Tribunal Thus, we find the assesseehas not made out any good ground to interfere with the order of the Tribunal''.
In the light of the above decision, we do not find any reason to interfere with the orders of the lower authorities."
5. The assesse has challenged order of the Tribunal before the Hon'ble Madras High Court in Tax Appeal No.139 & 150 of 2020. The Hon'ble High Court, vide its order dated 05.03.2020 has set aside the appeal to the file of the ITAT 'B' Bench for fresh consideration with a direction to consider orders of Chief Revenue Officer / Inspector General of Registration, Chennai-28 dated 11.02.2013 on the ground that although assessee has specifically taken a ground challenging additions made by Assessing Officer towards on-money payment for purchase of property, ignoring value of property assessed by revenue authorities for payment of stamp duty and such valuation is almost equal to value of property declared in the sale deed, the Tribunal failed to adjudicate specific ground taken by the assessee . The relevant findings of the Hon'ble High Court are as under:-
"9. This Court has carefully considered the rival submissions and also perused the materials placed before it.7 ITA No.942/Chny/2019
10. A perusal of the order passed by the CIT (Appeals) dated 01.03.2019 as well as the original order dated 08.11.2019 passed by the Income Tax Appellate Tribunal did not deal with the aspect as to the adjudication done under Section 47 (A) (1) of the Indian Stamp Act. It also appears from the materials placed in the form of additional typed set of documents dated 04.03.2020 filed by the appellant /assessee that challenging the adjudication done by the Special Deputy Collector, Salem, dated 19.08.2011, further appeal, was filed under Section 47 (A) (5) of the Indian Stamp Act before the Chief Commissioner Stamp), Salem and the value of the site fixed at ` 545 per sq.ft has been increased to Rs.600 per sq.ft and it was also complied with.
11. In the considered opinion of this Court, the said order passed by the statutory authority would definitely have a bearing on the adjudication done by the authorities below and despite the fact that specific ground has been raised before the CIT (Appeals) as well as before the ITAT, the said grounds have not been considered and adjudicated. Therefore, the following substantial question of law raises for consideration:
Whether the order of CIT (Appeals) dated 01.03.2019, as confirmed by the impugned order of ITAT dated 08.21.2019, as to the non-consideration of adjudication done under Section 47 (A) (1) of the Indian Stamp Act as well as adjudication done by the Chief Revenue Officer / Inspector General of Registration, Chennai 28 in the appeal filed under Section 47 (A) (5) of the Indian Stamp Act, is sustainable in law?
12. In the considered opinion of this Court, the Substantial Question of Law framed is answered in affirmative in favour of the appellant / assessee, in the light of the reasons assigned above.
8ITA No.942/Chny/2019
13. In the result, T.C.No.150/2O2O is partly allowed and the impugned order dated 08.11.2019 passed by the Income Tax Appellate Tribunal is set aside and the matter is remanded to the Income Tax Appellate Tribunal B Bench for fresh consideration as to the order of the Chief Revenue Officer / Inspector General of Registration, Chennai 28 dated 11.02.2013 in Pa.Mu.No.5907S/NZ/2010 and as a consequence of allowing T.C.A.No.150/2020, no orders are necessary in T.C.A.No.139/2020 and as a result, the said appeal is dismissed. No Costs."
6. The case has been taken up for hearing in pursuant to directions of Hon'ble High Court of Madras. At the time of hearing, learned AR for the assessee submitted that the Assessing Officer as well as learned CIT(A) has made additions towards on-money payment for purchase of property only on the basis of statement recorded during the course of search u/s.132(4) of the Act, even though assessee has retracted such statements before completion of assessment proceedings. Therefore, there is no value for the statement which was subsequently retracted and hence, the same cannot be a basis for making addition towards on-money payment for purchase of property. The AR further submitted that assessee has challenged additions made by Assessing Officer on the ground that entries recorded in executive diary is an estimate made for 9 ITA No.942/Chny/2019 purchase of property, because the property purchased was an old property, which requires reconstruction and hence, assessee has estimated funds required for purchase and construction of building. However, property was purchased at the stated consideration in the sale deed which was ultimately more or less equal to value determined by stamp duty authorities. Further, although there is a minor difference in value shown in sale deed as well as value determined by authorities for the purpose of stamp duty as such difference is less than 6% which is negligible. Therefore, additions made by Assessing Officer only on the basis of statement recorded during the course of search is incorrect. The AR further submitted that when the assessee specifically challenged additions in light of order of Chief Revenue Officer /Inspector General of Registration, Chennai, the authorities below have failed to consider report/order of Chief Revenue Officer, which is crucial document to decide the value of property. Therefore, he submitted that additions made by Assessing Officer towards on-money payment for purchase of property u/s.69 of the Act should be deleted.
7. The learned DR appearing for the Revenue, on the other hand, strongly supporting the order of learned CIT(A) submitted that 10 ITA No.942/Chny/2019 it is a matter of fact on record that during the course of search executive diary maintained by assessee was found and seized which indicates on-money payment for purchase of property and same has been confirmed by assessee in the statement recorded u/s.132(4) of the Act. Therefore, it is incorrect to say that additions made by Assessing Officer is only on the basis of statement, but not any corroborative evidence found during the course of search. The DR further submitted that when the evidences collected during the course of search clearly indicate on-money payment for purchase of property, which was further confirmed by statement, then there is no reason for the assessee to come with an argument that additions made by Assessing Officer towards on-money payment for purchase of property is on the basis of confession statement.
8. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. The facts borne out from records clearly indicate that Assessing Officer has made addition towards on-money payment for purchase of property on the basis of noting in one executive diary, which was found and seized during the course of search, as per which assessee has paid on-money for purchase of property over and 11 ITA No.942/Chny/2019 above stated consideration recorded in registered deed. The said finding was further strengthened by statement recorded from assessee u/s.132(4) of the Act during the course of search, where assessee has admitted maintaining executive diary and has also confirmed contents of such diary. Further, assessee has admitted on-money payment for purchase of property over and above the stated consideration recorded in the deed. But, admission made during the course of search has been subsequently retracted on the ground that contents found in executive diary is only an estimate for purchase and construction of property, but not amount paid for purchase of property. To strengthen his argument, assessee has taken support from the order of Chief Revenue Officer /Inspector General of Registration, Chennai dated 11.02.2013, where value of property has been arrived at Rs.44,84,700/-, as against recorded consideration of Rs. 42,00,000/-. We have carefully considered the arguments of assessee in light of facts brought out by the lower authorities including facts recorded by Tribunal. The Tribunal in earlier round of litigation on perusal of various details, recorded categorical finding that sole basis for addition towards on-money payment for purchase of property is an executive diary found during the course of search. It was further noted that when the document 12 ITA No.942/Chny/2019 found during the course of search was confronted to assesse, the assessee has admitted contents and also admitted undisclosed income towards on-money payment for purchase of property. Therefore, from the above it is very clear that the revenue authorities went on to decide the issue only on limited point of whether assessee has paid on-money for purchase of property and such payment is supported by evidences collected during the course of search or not. But, the contention of assessee before the authorities was that although, initially the assessee has admitted undisclosed income on account of purchase of property, but such admission was on tentative basis without any corroborating evidence. Further, assessee has filed retraction statement with necessary evidence and retracted from his earlier statement regarding on-money payment for purchase of property. No doubt, addition cannot be made only on the basis of statement recorded during the course of search. This legal position has been clarified by various High Courts including the Hon'ble Supreme Court in the case of Pullongode Rubber Produce Co. Ltd Vs. State of Kerala 91 ITR 18 and also in the case of P.V Kalyanasundaram vs. CIT 294 ITR 049. But, if admission in a statement recorded u/s.132(4) is corroborated with evidences collected during the course of search, 13 ITA No.942/Chny/2019 then authorities are empowered to make additions on the basis of such statements. However, in this case, before making any addition, the Assessing Officer should have examined the claim of assessee in light of report/order of Chief Revenue Officer /Inspector General of Registration, Chennai or determine value of the property by conducting further enquiry or referring valuation to Departmental Valuation Officer (DVO). In this case, although assessee has filed order of Chief Revenue Officer /Inspector General of Registration, Chennai, but the Assessing Officer as well as learned CIT(A) has not taken said order into cognizance, while adjudicating the issue. Even the Tribunal has not considered the plea of assessee in light of the said evidences. In our considered view, order of Chief Revenue Officer /Inspector General of Registration, Chennai is not a relevant criteria to decide whether assessee has paid on-money or not, but it may be one piece of evidence to ascertain correct facts with regard to value of property. Since, the assessee has taken a plea in light of said order/report of Chief Revenue Officer /Inspector General of Registration, the Assessing Officer ought to have considered the order before arriving at conclusion that assessee has paid on- money payment for purchase of property, even though the Assessing Officer is not bound to accept the order of Chief Revenue 14 ITA No.942/Chny/2019 Officer /Inspector General of Registration, Chennai. Therefore, we are of the considered view that appeal needs to be set aside to the file of Assessing Officer to reconsider the issue in light of the arguments of assessee that order of Chief Revenue Officer /Inspector General of Registration, Chennai was not considered while adjudicating the issue. Hence, we set aside the issue to the file of Assessing Officer and direct him to consider order of Chief Revenue Officer /Inspector General of Registration, Chennai, and decide the issue in accordance with law on the basis of evidences available on record.
9. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 5th February, 2021
Sd/- Sd/-
(धु वु आर.एल रे डी) (जी.मंजुनाथ)
(Duvvuru RL Reddy) (G.Manjunatha)
!या यक सद$य /Judicial Member लेखा सद$य / Accountant Member
चे!नई/Chennai,
'दनांक/Dated 5th February, 2021
DS
आदे श क त)ल*प अ+े*षत/Copy to:
1. Appellant 2. Respondent 3. आयकर आयु,त (अपील)/CIT(A)
4. आयकर आयु,त/CIT 5. *वभागीय त न1ध/DR 6. गाड फाईल/GF.