PRINCIPAL C.I.T, -I, JODHPUR vs. RAMLAL CHOUDHARY

This appeal is directed against order dated 28.8.14 of Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur, whereby an appeal preferred by the Revenue against the order of Commissioner of Income Tax (Appeals) [CIT(A)], Jodhpur, dated 10.1.14, deleting the addition of Rs.74,54,720/- made by the Assessing Officer (AO) on account of difference in sale consideration, has been dismissed.

The relevant facts are that the assessee filed Return of income for the assessment year 2003-04 declaring an income of Rs.35,73,280/-. The assessment was completed by the AO assessing the income at Rs.1,12,89,660/- vide assessment order dated 23.3. 06. The addition was made on account of difference in sale consideration as disclosed by the assessee and actually received from the purchasers of the plots. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT (A), which deleted the additions made on account of capital gain on the ground that the statements of the purchasers of the plots did not conclusively prove that the amount, over and above, disclosed in the sale agreement/sale deed was actually received by the assessee. That apart, the CIT (A) observed that the assessee was not extended an opportunity to cross examine the purchasers, though specifically requested for. The legality of the order passed by the CIT (A) was questioned by the Revenue by way of an appeal before the ITAT, which was allowed vide order dated 31.8.09 and the matter was restored to the file of AO with regard to addition of Rs.74,54,720/- made on account of difference between the sale consideration shown by the assessee and estimated by the AO. In compliance of the directions issued by the ITAT, the AO framed fresh assessment on 29.11.10 computing the income as originally assessed i.e. at Rs.1,11,88,663/-. The AO recorded that the assessee failed to avail the opportunity of cross examination as directed by the ITAT. The order passed by the AO as aforesaid was appealed against by the assessee before the CIT (A). The CIT (A) taking into consideration the facts of the case that no opportunity was given to the assessee for cross examination, directed the AO to give fresh opportunity of cross examination and in compliance thereof, the AO issued summons under Section 131 of the Act to ten witnesses, out of which six witnesses appeared, who were cross examined by the authorised representative of the assessee. The Joint Commissioner, Income Tax forwarded the report alongwith the copies of the statements of cross examination of six persons to the office of the CIT (A) on 22.8.13. 3. After due examination of the evidence on record, the CIT (A) arrived at the finding that the oral evidence which form basis of addition, did not survive the legal test of cross examination and beyond that there was no other reliable documentary or oral evidence to show that the assessee received more amount than consideration shown in the agreements for transfer of plots. Accordingly, the addition of Rs.74,44,720/- made by the AO to the sale consideration, was ordered to be deleted by the CIT (A) and the AO was directed to accept the sale proceeds arising on sale of plots as declared by the assessee. The appeal preferred by the Revenue against the order passed by the CIT (A) stands dismissed by the ITAT. Hence, this appeal.

Learned counsel appearing for the appellant contended that the order impugned passed by the ITAT in mechanical manner without applying the mind, is not sustainable in the eyes of law. Learned counsel would submit that the statements of the witnesses during the cross examination by the authorised representative of the assessee cannot be said to be reliable. Learned counsel would submit that the ITAT should have allowed the AO to re-examine the witnesses. Learned counsel would submit that the addition made by the AO on the basis of the statements of the 9 persons was absolutely justified. On being pointedly asked by the court as to whether there was any evidence other than the oral evidence of 9 witnesses out of which 3 did not appear for cross examination, learned counsel for the Revenue fairly submitted that there was no other evidence on record to substantiate the addition made.

We have considered the submissions of the learned counsel for the Revenue and perused the material on record.

Indisputably, the addition was made by the AO on the basis of the statement of the 9 persons recorded in the back of the assessee. It is not disputed that pursuant to the directions of the CIT (A), the assessee was extended an opportunity to cross examine the witnesses and accordingly, the summons were issued by the AO to all the witnesses, however, out of 9 witnesses, only 6 witnesses appeared for the cross examination. It is not disputed before this court that in the cross examination, the said witnesses have categorically stated that nothing over and above than disclosed in the sale agreement was paid by them. It was sought to be contended on behalf of the Revenue before the ITAT that the witnesses who appeared for cross examination was tutored by someone, but there was no evidence to substantiate the allegation. It is pertinent to note that the witnesses have categorically admitted that they have been assessed to tax and had disclosed the investment in their income tax returns as per the sale agreement and no amount was paid by them over and above the amount as disclosed in the return of income. Admittedly,there was no evidence brought on record to contradict the position emerging on record as a result of cross examination of the witnesses on the basis of whose statements, the addition was made by the AO. In this view of the matter, we are of the opinion that the finding arrived at by the CIT (A), after due consideration of the evidence on record, affirmed by the ITAT remains finding of facts, which cannot be said to be capricious or perverse.

Thus, no substantial question of law arises for consideration of this court in the present appeal and therefore, the same is hereby dismissed. (KAILASH CHANDRA SHARMA),J. (SANGEET LODHA),J. Aditya/