PRINCIPAL COMMISSIONER OF INCOME TAX 4 vs. TEXRAJ REALTY P LTD

Revenue   has   filed   this   appeal   challenging   the judgment of the Income Tax Appellate Tribunal dated 16.11.2017   raising   following   question   for   our consideration: “Whether the Appellate Tribunal has erred in law  and   on  facts   in  deleting   the   addition made   u/s   68   of   the  the   Income   Tax   Act, 1961?”

Issue pertains to the assessment year 2011­12. Respondent­assessee is a private limited company. The business   premises   of   the   company   was   subjected   to survey operation under section 133 of the Income Tax Act, 1961 ('the Act' for short).  During the survey operation,   the   Revenue   claimed   to   have   seized   and C/TAXAP/612/2018 ORDER impounded a diary which allegedly reveal certain cash transactions   with   respect   to   sell  of   Vatva   land. Statement of the directors of the company were also recorded.     Based   on   such   materials,   the   Assessing Officer carried out the assessments making additions of undisclosed income under section 68 of the Act. Commissioner   of   Income   Tax   (Appeals)  confirmed   the additions,   upon   which,   the   assessee   approached   the Tribunal.

The   Tribunal   in  its  detailed   order   noted   that the   directors   during   the   course   of   survey,   had retracted the statements by filing affidavits.  They also claimed that the diaries were created under the pressure   of   the   survey   party.     The   Tribunal   noted decision   of   the   Supreme   Court   in   case   of  Paul Mathews & Sons v Commissioner Of Income Tax reported in [2003] 263 ITR 101 (Ker) and of Supreme Court in case   of  The   Commissioner   Of   Income   Tax   vs M/S.S.Khader   Khan   Son reported   in  (2012)   25 taxmann.com   413   (Supreme   Court),  in   which,   it   was highlighted that the statement under section 133A of the Act was not on oath and would  have at best a coroborative value.   The Tribunal also noticed that C/TAXAP/612/2018 ORDER on the date of survey, the property itself was under several   litigations. Though   the   assessee   had purchased   the   land   from   one   S.M.L.   Maneklal Industries,   the   said   seller   was   facing   litigation with   the   Bombay   High   Court   in   Company   Petitions. There   were   several   disputes   before   the   City   Civil Court, Ahmedabad, concerning the same subject matter land.  The Tribunal was therefore of the opinion that on the date of the survey i.e. 23.11.2010, the title to   the   property   of   the   assessee   was   itself   under serious   doubt.     Notably,   the   Bombay   High   Court's decision   in   Company   Petition   was   rendered   on 21.10.2011. It was also noticed that the City Civil Court, Ahmedabad, had granted status quo with respect to the same land on an application filed by GIDC. The   Tribunal   therefore   noticed   that   the   assessee itself   do   not   have   absolute   right   to   alienate   the property.  It was noticed that in the diary, the name of the purchaser was not mentioned.   There was no agreement to sell executed.   The Tribunal found it unlikely that an unknown person would give sizable cash to the extent of Rs.14.85 crores even before the agreement to sell is executed.   Inter alia, on such C/TAXAP/612/2018 ORDER grounds, the Tribunal deleted the additions.

From the above discussion, it can be clear that the   entire   issue   is   based   on   appreciation   of evidence.     The   Tribunal   having   considered   relevant aspects and having come to the conclusion that the Revenue   has   failed   to   bring   on   record   sufficient evidence of cash amounts have been received by the assessee, no question of law arises.  Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH