Case Law Details
ACIT Vs Yerra Rajesh (ITAT Visakhapatnam)
ITAT Vishakhapatnam held that addition u/s. 69 r.w.s. 115BBE of the Income Tax Act merely on the basis of excel sheet seized from third party without any independent enquiry and independent corroborative evidences is unsustainable in law.
Facts- Assessee filed his return of income for the A.Y. 2022-23. Thereafter, a search and seizure operation u/s. 132 of the Act was conducted in the group cases of M/s. Meenakshi Agro Chemicals on21.12.2022. Based on search, it was observed that the assessee has involved in financial transactions with all the four brothers and key persons of M/s. Meenakshi Agro Chemicals. AO observed that the assessee has purchased land from four brothers for a consideration of Rs.1,62,80,000/-.
During the course of search proceedings, an excel calculation sheet found and seized. The said calculation sheet was confronted with the searched parties. Shri Mohammad Ismail stated that the cash of Rs.3,80,05,000/- is received in connection with the land situated in Andhra Pradesh, admeasuring 1480 square yards sold to Shri Yerra Rajesh (the assessee). AO brought Rs.3,80,05,000/- under tax u/s. 69 r.w.s. 115BBE of the Act.
CIT(A) partly allowed the appeal. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that except, the seized document in the form of Excel sheet, AO has not related the entries in the Excel sheet by way of independent corroborative evidences involving the nexus of the buyer and the property details, we are of the view that AO has erred in considering the amount of Rs.3,80,05,000/- as on-money payment by the assessee. Further, Excel Sheet was found in the premises of M/s. Meenakshi Agro Chemicals for which the assessee is not at all related. We also observe from the order of AO that no incriminating material has been seized from the premises of the assessee. We also find that AO has not conducted any independent enquiry on the contents of the Excel Sheet by linking it to the assessee and bringing any material on the record that the assessee has transferred cash to the sellers. Thus, CIT(A) has rightly concluded by deleting the addition made by the Assessing Officer, we find no reason to interfere with the order of the Ld. CIT(A) on this ground. Accordingly, grounds raised by the revenue are dismissed.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
1. This appeal is filed by the revenue against the order of Learned Commissioner of Income Tax (Appeals), Visakhapatnam-3, [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/APL/S/250/2024- 25/1067412011(1) dated 07.08.2024 for the A.Y.2022-23 arising out of order passed under section 143(3) of the Income Tax Act, 1961 (in short ‘Act’) dated 24.02.2024.
2. Brief facts of the case are that, assessee filed his return of income for the A.Y. 2022-23 on 26.07.2022 admitting a total income of Rs. 1,06,29,050/-. Thereafter, a search and seizure operation under section 132 of the Act was conducted in the group cases of M/s. Meenakshi Agro Chemicals on21.12.2022. Subsequent to the search operations, assessee’s case has been centralised vide order under section 127 in F.No 127/Pr.CIT/VJA/2022-23 dated 24.03.2023 of Pr.CIT, Vijayawada, as it was observed that the assessee has involved in financial transactions will all the four brothers and key persons of M/s. Meenakshi Agro Chemicals. Accordingly, notice under section 143(2) of the Act was issued on 27.06.2023. Thereafter, notices under section 142(1) of the Act were issued on 17.11.2023, 04.12.2023, 28.12.2023 & 24.01.2024 calling for various details. In response to the notices, assessee furnished information through online. Ld. Assessing Officer [hereinafter in short “Ld.AO”] after examining the submissions of the assessee observed that the assessee has purchased land at Autonagar, Guntur, Andhra Pradesh from four brothers namely Shri Mohammad Ahmad, Shri Mohammad Munaf, Shri Mohammad Arif and Shri Mohammad Younus for a consideration of Rs.1,62,80,000/-. During the course of search proceedings, a excel calculation sheet found and seized and marked as Page No. 55 of Annexure A/MAC/RES/GNT/01. The said calculation sheet was confronted with the searched parties. Shri Mohammad Ismail stated that the cash of Rs.3,80,05,000/- is received in connection with the land situated in Auto nagar, Guntur, Andhra Pradesh, admeasuring 1480 square yards sold to Shri Yerra Rajesh (the assessee). Further, in another statement recorded from Shri Mohammad Munaf under section 132(4) of the Act on 23.12.2022 wherein he also confirmed that on-money of Rs.3,80,05,000/- was received in connection with the sale of land situated at Autonagar, Guntur, Andhra Pradesh. Thereafter, notice under section 142(1) of the Act dated 04.12.2023 was issued to the assessee, calling for his objections to bring to tax the on-money payment of Rs.3,80,05,000/-. In response to the notice, assessee vide letter dated 09.12.2023 denied he paid on-money except the consideration of Rs.1,62,80,000/- as recorded in the sale deed and made through banking channels. Thereafter, Ld. AO forwarded the Annexure A/MAC/RES/GNT/01 to the assessee stating that the four brothers have filed return of income admitting capital gains on account of sale of land to the assessee considering the entire sale consideration including the on-money payment received from the assessee. Assessee finally vide his letter dated 30.01.2024 objected to the proposed addition stating that he has not paid any additional amount as on-money. Ld. AO by not relying on the assessee’s reply concluded that, as per the sworn statement recorded under section 132(4) of the Act, two of the key persons has accepted on-money received as additional consideration for the sale of land, therefore, the Ld. AO brought Rs.3,80,05,000/- under tax under section69 r.w.s. 115BBE of the Act.
3. Being aggrieved by the order of the Ld. AO, assessee filed an appeal before Ld. CIT(A). Similar submissions were made before the Ld. CIT(A). CIT(A) by relying on the decision of the Hon’ble Jurisdictional High Court of Andhra Pradesh in the case of K.V. Lakshmi Savitri Devi in ITA No. 563 of 2011 and decision of the ITAT Visakhapatnam Bench in the case of P. Koteswara Rao v. DCIT in ITA No. 251 & 252/Vizag/2012, partly allowed the appeal of the assessee.
4. On being aggrieved by the order of the Ld. CIT(A), revenue is in appeal before us by raising following grounds of appeal: –
“1 The order of learned CIT(A) is erroneous both on the facts and in Law.
2. The learned CIT(A) has erred in not considering that there exists Seized material in the form of Excel sheet marked as Page no. 55 of Annexure no. A/MA C/Res/GNT/01, evidencing payment of cash of by the assessee Sri Yerra Rajesh towards purchase of Land and it was an extraction from the laptop of Sri Mohd Ismail S/o Sri Mohd Younus (one of the sellers). which was created on the date of registration, i.e. 06.2021@ In his sworn statement dated 2312.2022, recorded u/s 132(4), Sri Mohd ‘Ismail has confirmed the said fact.
3. The learned CIT(A) has erred in not considering the sworn statement of One of the sellers and key person, Sri Mohd Munaf recorded u/s 132(4) on 23.12.2022, wherein he had confirmed receipt of cash of Rs. 3,80,05,000/- from the assessee, Sri Yerra Rajesh. The CIT(A) ought to have considered the decision of Hon’ble Apex Court in the case of B Kishore Kumar Vs DCIT 62 com 215 (SC) (2015), wherein the Hon’ble Apex Court dismissed the SLP filed by the assessee thus retying on 132(4) statement wholly as relying on this strong piece of evidence.
4. The leamed CIT(A) has erred in not considering the admission of receipt of cash of Rs.3,80,05,000/-.by the sellers of the Land as income in their respective returns and paid relevant taxes. ‘Thus, the sworn statement u/s 132(4) of one of the sellers, Sri Mohd Munaf was supported by acceptance of the transaction in the form of filing of returns and payment of taxes by the sellers.
5. The leamed CIT(A) has erred in not considering the returns filed by the sellers by including the cash component as Government documents of acceptance of such transactions between the sellers and buyer, i.e. between two parties to transaction.
6. The CIT(A) has erred in accepting the submissions of the assessee that the decision of Hon’ble Supreme Court in the case of CIT Vs Kalyanasundaram 294 ITR 49 applicable to the facts of the case. In the decision referred, the sellers retracted from the statements given by them, but in the present case none of the sellers retracted from their sworn statements, but filed returns of income, by admitting additional income and paid relevant taxes pertaining to the issue. Thus, the leamed CIT(A) has wrongly applied the Legal position to the facts of the present case.
7. The CIT(A) has erred in not considering existence of incriminating material in the form of seized material (print out of excel sheet from laptop) and sworn statement of the person u/s132(4) who has prepared the said excel sheet, which proves the cash transaction between the assessee Sri Yerra Rajesh and sellers.
8. The CIT(A) has erred in not considering the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities in this case, the laptop. Reference is invited to the decision of Hon’ble Supreme Court in the case of Ambalal Sarabhai Enterprise Ltd Vs, KS Infraspace LLP Limited and Another in Civil Appeal No(s). 9346 of 2019 dated 6th January, 2020, wherein pertaining to watsapp evidence, the Hon’ble Supreme Court observed that “The WhatsApp messages, which are virtual verbal communications, are matters of evidence with regard to their meaning and its contents to be proved during trial by evidence in chief and cross-examination. The e mails and WhatsApp messages will have to be read and understood cumulatively to decipher whether there Was a concluded contract or not”. In this case, there is a virtual verbal communication and the same ‘is matter of evidence, as in case of evidence derived from laptop, and by completion of transaction, a concluded contract and electronic evidences derived from laptop subsumes the same with conviction.
9. The CIT(A) has erred in allowing the ground of the assessee, based on the decision of Hon’ble ITAL Hyderabad in the case of K. V. Lakshmi Savitri Devi Vs. ACIT [2012] 148 TTJ 157 which was affirmed by the Hon’ble Jurisdiction High Court of A.P in ITA No. 563 of 2011, as the facts of the present case are distinguishable. In the present case, there exists sworn statements of the sellers u/s 132(4) with corroborative evidence in the form of seized material and the sellers had admitted the said cash component in their respective returns and paid relevant taxes.
10. The CIT(A) has erred in not considering the fact that sellers of the transaction had accepted and paid taxes thereof and being the transaction is mirror image, it is unrealistic how the buyer (assessee) did not admit the transaction and pay resultant taxes. Thus, there is absurdity in the Appeal order.
11. The CIT(A) has erred in not considering the evidence that was found and seized from the Laptop of the Sellers and the same has evidentiary value as per the provisions of sec 65A and sec 65B of Indian Evidence Act 1872.
12. The CIT(A) has erred in holding that there was a variation in the statement of Sri Mohd. Munaf recorded u/s 132(4) on 12.2022/23.12.2022, wherein he had stated the rate per Square Yard at Rs.39,500/- to Q no.29 and Rs.38,500/- to Q.no. 36, in spite of the fact that Sri Mohd Munaf had admitted rate per Square Yard at Rs 38,500/- in his return, which is in agreement with the statement given u/s 132(4) dated 23.12.2022 by Mohd Ismail, in whose laptop the said evidence was found and seized. The CIT(A) ought to have considered the fact that the rate admitted by Sri Mohd Munaf in his returns at per Square Yard was only considered in the case of the assessee, Sri Yerra Rajesh, based on the seized material evidence.
13. The CIT(A) has erred in considering the assessee’s submissions, which were not presented before Assessing Officer in unconsidered and imbalanced way. The CIT(A) ought to have remanded the matter to Assessing Officer for his comments, before considering the new submissions filed by the assessee for the first time, by following the principles of natural justice.
14. Any other ground that may be urged at the time of hearing.”
5. The only issue emanating from the above grounds of appeal is with respect to deletion of addition of Rs.3,80,05,000/- by the Ld. CIT(A). On this issue, Ld. Departmental Repress native [hereinafter in short “Ld. DR”] submitted that based on the seized material found in the form of Excel Sheet which was created on the date of Registration of the sale deed certain cash transactions were recorded by the sellers of the property. Further, sellers have also admitted through their sworn statement that they have received on-money payment of Rs.3,80,05,000/- from the assessee. Ld. DR also referred to question No. 36 & 29 as extracted in the assessment order stating that bag wise and denomination wise details were entered in the Excel Sheet. Further Ld. DR also stated the sellers have agreed for Rs. 38,500/- per square yard which matches the total consideration including the on-money payment. Ld. DR placed reliance on the We Hon’ble Supreme Court in the case of B. Kishore Kumar v. DCIT [2015] 62 taxmann.com 215 (SC)]. He therefore pleaded that the order of the Ld.AO be upheld.
6. Countering the arguments of Ld. DR, Ld. Authorised Representative[hereinafter “Ld.AR”] submitted that no material in the form of corroborative evidences has been brought on record by the Ld. AO to substantiate the on-money payment by the assessee. He also further reiterated that there is no mention of any name in the Excel Sheet seized during the search proceedings. Ld.AR vehemently objected to the addition made by the Ld. AO by stating that simply because the file was created on the same date of registration of the sale deed, it cannot be construed as on-money payment by the assessee. Further, Ld.AR also stated that in the sworn statement recorded under section 131 of the Act from the assessee (Shri Yerra Rajesh) on 22.12.2022 assessee has denied any on-money payment for the purchase of property. Further, Ld.AR also submitted that the sellers have bought a property in Hyderabad by paying on-money and in order to substantiate the source for purchase of property in Hyderabad as an afterthought has stated that on-money has been received from the sale of property at Autonagar, Guntur, Andhra Pradesh, from assessee. Ld.AR placed reliance on various case laws as mentioned in the paper book. He therefore pleaded that order of the Ld. CIT(A) be upheld.
7. We have heard both the sides and perused the material available on record. It is the case of the Ld. AO that the assessee has paid on-money for the purchase of property amounting to Rs.3,80,05,000/-, allegedly evidenced from the Excel Sheet seized during the search operations from the premises of the sellers. Ld. AO has made additions based on the entries in the Excel Sheet, even though no reference is made to the assessee, or the property or details of the sellers in the Excel Sheet. Further, Ld. AO also relied on the admission of capital gains by the sellers of the property while filing their individual returns which included the on-money transactions. However, we find that Ld. AO has not brought on record any corroborative evidences against the assessee apart from the Excel Sheet seized from the third party or by relying on the return of income filed by the sellers of the property. On perusal of the seized annexure in the form of Excel Sheet, we find that the contents does not have any nexus to the assessee such as name of the assessee or details of the property purchased by the assessee. We also find that the Hon’ble Jurisdictional High Court of Andhra Pradesh in the case of K.V. Lakshmi Savitri Devi (supra) held as follows: –
“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 Rs. 65.00 lakhs was paid to the vendor by the respondent; that there was no evidence to show that the respondent had paid Rs. 1.00 crores in cash also to the vendor; that no presumption of such payment of Rs. 1.00 crore in cash can be drawn on the basis of an entry found in a diary / loose sheet in the premises of C. Radha Krishna Kumar which is not in the respondent’s handwriting and which did not contain the name of the respondent or any date 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.”(emphasis supplied)”
8. Except, the seized document in the form of Excel sheet, the Ld. AO has not related the entries in the Excel sheet by way of independent corroborative evidences involving the nexus of the buyer and the property details, we are of the view that Ld. AO has erred in considering the amount of Rs.3,80,05,000/- as on-money payment by the assessee. Further, Excel Sheet was found in the premises of M/s. Meenakshi Agro Chemicals for which the assessee is not at all related. We also observe from the order of the Ld. AO that no incriminating material has been seized from the premises of the assessee. We also find that Ld. AO has not conducted any independent enquiry on the contents of the Excel Sheet by linking it to the assessee and bringing any material on the record that the assessee has transferred cash to the sellers. The case law relied by the Ld.DR in the case of B. Kishore Kumar v. DCIT (supra) is distinguishable on the facts that in that case assessee himself has stated in sworn statement about his undisclosed income and hence tax was to be levied on basis of admission without scrutinizing documents. However, in the instant case assessee has not admitted payment of on-money to the sellers while recording his sworn statement on 22.12.2022 and hence this case of is no help to the revenue. Inview of above observations and by considering the decision of the Hon’ble Jurisdictional High Court of Andhra Pradesh in the case of K.V. Lakshmi Savitri Devi (supra), we find that the Ld.CIT(A) has rightly concluded by deleting the addition made by the Assessing Officer, we find no reason to interfere with the order of the Ld. CIT(A) on this ground. Accordingly, grounds raised by the revenue are dismissed.
9. In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 05th November,2024.
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