DCIT, CENTRAL CIRCLE 2(3), CHENNAI, CHENNAI vs. AMUTHA THENNARASU, NAMAKKAL

2. The Ld. CIT-DR advanced arguments and submitted that the impugned addition is based on certain documents as found from the locker of a third-party. The same contained details of on-money payment by the assessee and Ld. AO was quite right in adding the same to the income of the assessee. The Ld. CIT-DR extensively referred to the said seized document to support the order of Ld. AO. The Ld. AR, on the other hand, controverted the arguments of Ld. CIT-DR and supported the findings rendered in the impugned order. The case was put up for clarification which was duly responded to by both the sides. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 3.1 The assessee being residential individual purchased 18.98 Acres of agricultural land situated in Periyapatti and Vallipuram Villages of Namakkal District for a consideration of Rs.113.89 Lacs from 10 vendors. However, pursuant to search action u/s 132 in the case of Shri S. Senthil (Advocate) and on his associates on 09-11-2017, notice was issued to the assessee u/s 153C. The same stem from the fact that during search operations, it was identified that one Shri C. Pandian maintained one bank locker No.129 with Laxmi Vilas Bank, Namakkal. During search on locker, certain loose sheets were found which were seized on 03-01-2018 as Annexure ANN/VG/CP/LS/S. The same allegedly contained information related to the present assessee. Accordingly, the return of income was subjected to scrutiny u/s 153C. 3.2 Shri C. Pandian, in sworn statement, stated that the loose sheets contained details about the settlement of various civil suits of their clients being dealt with by Senior Advocate Shri S. Senthil and the said sheets were given to him by Shri S. Senthil for safe-keeping. Shri S. Senthil filed submissions on 09-11-2018 and stated that the notings in the loose sheets were with regard to his clients and related to some partition deed. As per the details furnished by Shri C. Senthil, summons was issued to various persons as mentioned in the loose sheets and their statements were also recorded. The loose sheets numbered 01 to 16 were shown to these persons who stated that the same pertained to their land transactions. The said loose sheets contained both purchase payments including advance payment made in respect of the said property. In their sworn statements, they admitted that amount of banking transactions as reflected therein was received by them. They further stated that the loose sheets numbered 3,4,5,6,8,9 was related to the payment received by them from assessee and his wife for sale of property situated at Namakkal. 3.3 The Ld. AO deduced that since the seller of the property accepted to have received the Cheque Payment from the assessee and his wife and the same were matching with the amounts mentioned in the loose sheets, the other payments as mentioned therein also pertained to the same transactions. The statement of the assessee and his wife was recorded on 20-12-2008 wherein that admitted that they purchased 27.37 acre (8.39 acres in the name of Mrs. T. Amutha and 18.98 acres in the name of the Shri Tehnarasu) from various sellers (Shri S. Kannan, Shri T. Ravichandran Shri V.K. Rajendran, Smt. Valarmathi, Smt. P. Thillaikarasi, Shri N. Abhishek, Smt. K. Shanthi, Shri Muthammal and Shri Muniappan) for sale consideration of Rs.179.08 Lacs (Rs.65.18 Lacs for the property purchased by Smt. T. Amutha and Rs.113.89 Lacs for the property purchased by Shri Thennarasu). 3.4 Accordingly, Ld. AO observed that the information contained in the loose sheets was related to the assessee and his wife in respect of payments made by them to the vendors for land transaction. Both the buyers and sellers admitted cheques portion payment of Rs.179.08 Lacs but denied cash portion payment of Rs.16.34 Crores as mentioned in Sheet No.9. It was to be concluded that the cash as well as cheques payments mentioned in the loose sheets were the actual payments made by buyers to the sellers for the above said land transactions. The same was supported by the fact that the loose sheets were kept in the bank locker of Shri C Pandian on the instruction of senior advocate Shri S Senthil. The same clearly showed the importance and genuineness of the documents. The buyers and the sellers accepted that the entries in the loose sheets were related to land transactions which would prove the authenticity of the entries in loose sheets. The buyers and sellers have admitted the cheques payments to be true and correct. The same would imply that the cash receipts / transaction mentioned in the same sheet would also be true and correct as both the transactions / entries appear on the same paper. The Cheques payments were tallying with the amounts mentioned in the sale deed. The notings were made with conscious application of mind. 3.5 Considering the same, the amount allegedly paid in cash for Rs.16.34 Crores was brought to tax in the proportion of Cheque payments by the assessee and his wife. The assessee’ proportionate share worked out to be Rs.10.39 Crores which was added as unexplained investments in the hands of the assessee. The proportionate share of wife was also added in similar manner while framing assessment for her. Aggrieved, the assessee assailed the assessment before first appellate authority. Appellate Proceedings 4.1 The assessee assailed the impugned addition so made by Ld. AO by way of elaborate written submissions which has been extracted in the impugned order. The assessee, inter-alia, submitted that the loose sheets contained the names of vendors (from whom the land was purchased by the assessee) along with some other names and some scribbled numbers with no narration. Some of the numbers tallied with the amounts paid by way of cheques. The loose sheets contained some unconnected persons’ name also with huge amount written against those names. None of the loose sheets carried any date or name of the assessee or description / attributes of land so purchased to establish the nexus of the assessee with these transactions. In terms of statement of Shri Pandian, the loose sheets contained details of various civil suits of their clients being dealt with by his senior Shri Senthil. Therefore, the notings must necessarily be pertaining to those persons / cases only and names and numbers mentioned therein pertain to some civil suits and recovery suits pending amongst themselves which were handled by Shri Pandian and his senior Shri S. Senthil. The assessee submitted that there were no legal disputes nor were there any pending recovery suits or other suits pertaining to the land so purchased by the assessee. The assessee also pointed out that there was no confirmation / statement from any person nor any corroborative evidence to support the impugned additions. The assessee also pointed out various discrepancies in the loose sheets to support its submissions. The assessee also assailed the jurisdiction of Ld. AO on various legal grounds. 4.2 The Ld. CIT(A) noted the complete background in which the additions were made and observed that the impugned addition stem from loose sheets which contained names of vendors, some scribbled numbers and the name of certain unrelated individuals with significant amounts written against their names. The loose sheets lacked dates, assessee’s name or land details making it unclear. Shri Pandian claimed the noting were related to civil suits handled by Shri. Senthil who corroborated the same by stating that the notings related to partition suits and recovery suits details. The assessee argued that no legal disputes existed post-purchase suggesting that the notings were about pending suits amongst the vendors only. The Ld. CIT(A) further observed that the loose sheets had no signatures, dates or clear context making it ambiguous. The AO presumed on-money payments based on vendors’ names and cheque amounts. However, vendors as well as the assessee denied exchange of any on-money in the purchase transaction. Reliance was placed by the assessee on various judicial decisions to support the submissions. The same include the decision of Jabalpur Tribunal in the case of ACIT vs. Satyapal Wassan (295 ITR 352) and the decision of Hon’ble High Court of Madras in the case of CIT vs. P.V. Kalayanasundaram (282 ITR 259). 4.3 The Ld. CIT(A) further noted that Ld. AO has considered the narrations in the loose sheet to be true and genuine on the fact that the loose sheets contained both cheque and cash payments and the cheque payments were exactly matching with the sale deed. It was finally concluded that the noting mentioned in the loose sheet were genuine in nature because other than the cash payments as mentioned in the loose sheets, all other noting were accepted by both the sellers and buyers. 4.4 The Ld. CIT(A) considered the contents of loose sheets and after going through the same, rendered a finding that other than the property transactions, there were narration about other names against whom certain amounts were noted. The Ld. AO merely filtered some amounts and correlated it with the property transaction made by the assessee and her spouse. Since the cheque payments matched with the payments made by the assessee and her spouse with the property purchased by them, Ld. AO arrived at a conclusion that the amount narrated is the excess amount paid over and above the sale consideration paid by way of cheque. However, as against this, the stand of the assessee was that the loose sheet did not contain any signatures, dates, or clear context, more particularly the name of the assessee and her spouse. In the absence of such critical details, the loose sheets could not be taken as a conclusive proof that the assessee had paid on-money over and above the payment made by way of cheque. The Ld. AO did not bring on record any finding that the land so purchased by the assessee could fetch that much of value. No finding was rendered whether the land was agricultural land or a commercial land. It was also not known as to what was the stamp duty value adopted by the authorities. It was another stand of the assessee that the land was still being used as agricultural land and agricultural activities were being carried out by them. None of these aspects were considered by Ld. AO and Ld. AO merely relied on notings in the loose sheet seized at third-party premises to make the impugned additions. 4.5 The Ld. CIT(A) noted that the aforesaid loose sheets were neither seized from the premises of the assessee nor was the same found to be in the handwriting of the assessee. Therefore, such a material would not constitute adequate evidence to draw any adverse inference against the assessee in the absence of any other corroborative evidence. The case law of Hon’ble Delhi High Court in the case of CIT Vs. Sant Lal (118 Taxmann.com 432) support the case of the assessee wherein it was held that no addition could be made based on the basis of diary entries since the diary was neither found from premises of assessee nor was it in handwriting of the assessee and revenue failed to produce any other cogent material to link the assessee to the diary. The ratio of the said decision was squarely applicable to the case of the assessee since Ld. AO did not refer to any cogent evidence to corroborate these notings. There was absolutely no mention in the seized material regarding the nature of the said transactions of cash payments, the purpose of such payments and the precise identity of such transaction. A narration made in a loose sheet by a third-person with scant details could not be used to fasten tax liability upon the person whose name does not appear at all in the sheets. In the absence of any corroborative evidence to attribute the entries to such a person, such a material would be nothing but a dumb document which do not have any evidentiary value in respect of the entries found therein unless corroborative evidence was available which could provide necessary reliable basis for deciphering the nature and character of the said entries. This was as per the decision of Hon’ble Jabalpur Tribunal in the case of ACIT Vs Satyapal Wassan (supra). Similar was the ratio of various other decisions as narrated in para 6.3.26 of the impugned order. 4.6 The Mumbai Tribunal in the case of Riveria Properties Private Limited Vs ITO (ITA No.250/Mum/2013) held that Ld. AO was required to bring further evidence to show that the money had actually exchanged between the parties in a case where there was no other evidence on record to prove that on-money was paid except the loose sheet found in the premise of a third-party and admission made by the third-party. 4.7 The Hon’ble Supreme Court in the case of K.P Varghese Vs. ITO (131 ITR 597) held that the onus of establishing that the conditions of taxability were fulfilled would always be on the revenue and throwing the burden of showing that there was no under-statement of consideration on the assessee would be to cast an almost impossible burden upon him to establish the negative, namely, that he did not receive any consideration beyond what has been declared by him. Thus, the burden would be on revenue to adduce proper evidence to corroborate the contents of the seized material for the purpose of establishing that the assessee was, in fact, in receipt of the payments as noted in the seized material. In the present case, this burden was not discharged by the revenue. 4.8 Similarly, as per the decisions of the Hon'ble Apex Court in the cases of CBI Vs. VC Shukla & Others (1998) 3 SCC 410, Common Cause (A Registered Society) Vs. Union of India (2017) 77 Taxmann.com 254 (SC) and Dhakeshwari Cotton MiIIs (26 ITR 775), corroborative evidence would be essential to support the evidence found in third-party premises. 4.9 In the light of all these facts, it was held by Ld. CIT(A) that the loose sheets were merely dumb document. The AO could not arrive at any conclusion based solely on the said material that the assessee and her spouse had actually paid on-money for purchase of the land. There was no corroborative evidence to prove that the payments noted in the seized material had actually materialized and transfer of money had actually taken place between the concerned parties. Further, no reference was made to actual sale deeds. It could be well said that Ld. AO had completed the assessment in a mechanical way without appreciation of facts. The Ld. AO did not discharge the onus casted on the revenue to prove the payment of on-money by the assessee. Accordingly, the impugned additions were deleted against which the revenue is in further appeal before us. Our findings and Adjudication 5. The basic factual matrix is not in dispute. From the facts, it emerges that the assessee has purchased certain land from various vendors for a consideration of Rs.113.89 Lacs. Pursuant to search on the locker of a third-party, certain loose sheets were found which allegedly contain details of these transactions. The loose sheets mentioned cheques payments which have duly been admitted / confirmed. However, these sheets also contain various other payments written against names of unconnected persons without any significant details. Shri Pandian stated that the loose sheets contained details about the settlement of various civil suits of their clients being dealt with by Senior Advocate Shri S. Senthil and the said sheets were given to him by Shri S. Senthil for safe-keeping. Shri S. Senthil stated that the notings in the loose sheets were with regard to his clients and related to some partition deeds. Apparently, there is no legal dispute on the land purchased by the assessee. Thus, statements of these persons negate the allegations made by Ld. AO. It could also be seen that as per the details furnished by Shri Senthil, summons was issued to various persons as mentioned in the loose sheets and their statements were also recorded. The loose sheets numbered 01 to 16 were shown to these persons who confirmed having received the cheque amounts which has also been confirmed by the assessee and his wife. However, none of the person has made any admission of exchange of on-money on the land transactions. The impugned additions are merely on deduction by Ld. AO that since cheque payments were tallying, the other payments as mentioned therein must also have exchanged between the parties to the transaction. However, except for this deduction, there is no corroborative material with Ld. AO to support the aforesaid allegations. None of the party has made any admission of exchange of on-money.