Itta/563/2011 Of Commissioner Of Income Tax-Iii v. Smt K. V.lakshmi Savitri Devi

THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE M.S. RAMACHANDRARAO ITTA No.563 of 2011 JUDGMENT (Per Hon’ble Sri Justice M.S.Ramachandra Rao) This appeal is filed under Section 260-A ofthe Income Tax Act, 1961 (for short “the Act”)challenging the order dt. 31-03-2011 inI.T.A.No.1504/Hyd/2010 of the Income TaxAppellate Tribunal, Hyderabad Bench-A, Hyderabadrelating to the assessment year 2003-04. 2.The respondent is an individual derivingincome from salary in house property. She did notfile her original return for the assessment year2003-04 but in response to a notice issued underSection 153-C of the Act, she filed a return on 23-09-2009 admitting a taxable income ofRs.4,52,752/-. A notice under Section 143 (2) of theAct was issued to her along with a questionnaireand her authorized representative appeared andfurnished information. 3.It appears that the respondent hadpurchased a property bearing plot No.304-O, plotNo,78, Jubilee Hills from Smt. K.Rajani Kumari, wifeof C.Radha Krishna Kumar under a registered saledeed dt.21.8.2006 which disclosed a considerationof only Rs.65.00 lakhs. 4.A search and seizure action wasconducted on the premises of Sri C.Radha KrishnaKumar on 25-10-2007 and in the said search, adiary was found and entries in the said diarydisclosed that certain cash amounts totalingRs.1.00 crore were also received from theassessee/respondent in addition to Rs.65.00 lakhs,the recorded sale consideration. 5.The respondent was confronted with theabove entries in the seized diary. In her statementsrecorded on 15-11-2007, she stated that a company by nameM/s.Globareena Web Technologies Private Limitedrun by her brothers K.V.Srirama Murthy andK.V.Dakshina Murthy was previously a tenant ofthe above property, that they had negotiated thepurchase of the above property in her name, that she did not know the actual consideration paid forthe purchase, that the cheque amounts of Rs.65.00lakhs are paid her but she has no knowledge of thecash amount of Rs.1.00 crore. Her brotherK.V.Srirama Murthy also gave a statement dt.20-11-2007 stating that the above property was purchasedin 2002 and only Rs.65.00 lakhs was paid and therewas no cash payment at all. 6.However, Smt. K.Rajani Kumari, in herreturn of income filed in response to the noticeissued under Section 153-C admitted the saleconsideration to be Rs.1.40 crores as against theentries recorded in the seized diary of Rs.1.65crores. 7.The assessing officer in his order 23-12-2009 held that the entries in the diary show apayment of Rs.1.00 crore in cash by the respondenteven though this was not mentioned in theregistered sale deed executed in favour of therespondent; that the vendor by filing a return hadaccepted Rs.1.40 crores as the consideration forthe transaction; that in real estate transaction, cashpayments are normally made over and above theconsideration mentioned in the registered sale deed ; therefore the sum of Rs.1.00 crore is treated asunaccounted investment in the purchase of propertyand the same is liable to tax under Section 69 of theAct in the hands of the respondent. 8.Challenging the same, the respondentfiled an appeal to the Commissioner of Income Tax(Appeals)-IV, Hyderabad. The said appeal wasdismissed by order dated 15-10-2010 following thesame reasoning given by the assessing officer. Healso held that since part of the entries mentioned inthe diary (the cheque payments) were admitted tobe correct by the respondent and her brothers, theother entries (the cash payments of Rs.1.00 crore)should also be accepted as correct. 9.Challenging the same, the respondentfiled an appeal I.T.A.No.1504/Hyd/2010 to theIncome Tax Appellate Tribunal, Hyderabad. Byorder dated 31-03-2011, the said appeal wasallowed by the Tribunal. 10.The Tribunal held that there was nosearch action in the case of the respondent; that theseized material was found not in the premises of therespondent but in the premises of C.Radha Krishna 9.Challenging the same, the respondentfiled an appeal I.T.A.No.1504/Hyd/2010 to theIncome Tax Appellate Tribunal, Hyderabad. Byorder dated 31-03-2011, the said appeal wasallowed by the Tribunal. 10.The Tribunal held that there was nosearch action in the case of the respondent; that theseized material was found not in the premises of therespondent but in the premises of C.Radha Krishna Kumar; that it was a loose slip containing certainentries which was not in the handwriting of therespondent; that it does not contain either date ofpayment or the name of the person who made thepayment; that the name of the respondent was notfound in the loose sheet and only the names ofC.Radha Krishna Kumar and his wife K.RadhaKumari were found therein. It opined that there wasno basis for the Revenue to presume that therespondent had made the cash payment of Rs.1.00crore even though the registered sale deed dt.21-08-2006 in respect of the above sale transactiondisclosed only a cheque payment of Rs.65.00 lakhsby the respondent. Even if the vendor K.RajaniKumari admitted receipt of sale consideration ofRs.1.40 crores, the respondent had not admittedpayment of Rs.1.65 crores and in the swornstatement only stated that she was not aware ofactual consideration paid for the purchase of theproperty as the transaction was negotiated by herbrothers. It held that there was no document ormaterial to show that the respondent actually paidRs.1.65 crores for the purchase of the property andthe Revenue had drawn inferences based on suspicion, conjectures and surmises. 11.Challenging the same, the Revenue has filed the present appeal. 12.Heard Sri B.Narasimha Sarma, learnedStanding Counsel for the Revenue. 13.Sri Sarma contended that the Tribunalerred in passing the impugned order; that theassessing officer had rightly come to the conclusionthat the sum of Rs.1.00 crore was paid in cash bythe respondent in addition to Rs.65.00 lakhs paid bycheque in the above transaction and rightly addedthe sum of Rs.1.00 crore as unaccountedinvestment under Section 69 of the Act. 14.We are not inclined to agree with thecontention of the learned counsel for the appellant. We are not inclined to agree with the 15.We are of the view that the Tribunal hasrightly held that the registered document dt.21-08-2006 under which the respondent purchased theabove property showed that only Rs.65.00 lakhswas paid to the vendor by the respondent; that therewas no evidence to show that the respondent hadpaid Rs.1.00 crore in cash also to the vendor; thatno presumption of such payment of Rs.1.00 crore in cash can be drawn on the basis of an entry found ina diary/loose sheet in the premises of C.RadhaKrishna Kumar which is not in the respondent’shandwriting and which did not contain the name ofthe respondent or any date of payment or the nameof the person who made the payment. It rightly heldthat the Revenue failed to establish the nexus of theseized material to the respondent and had drawninferences based on suspicion, conjectures andsurmises which cannot take the place of proof. Wealso agree with the Tribunal that the assessingofficer did not conduct any independent enquiryrelating to the value of the property purchased andthe burden of proving the actual consideration in thepurchase of the property is on the Revenue and ithad failed to discharge the said burden. 16.There is no substantial question of lawarising for consideration in this appeal. Therefore itis dismissed at the admission stage. No costs. ____________________________ JUSTICE GODARAGHURAM ___________________________________ JUSTICE M.S. RAMACHANDRARAO DT: 10-12-2012 kvr