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Facts
The assessee, an individual salaried employee, initially filed a return for AY 2012-13 declaring a total income including Long Term Capital Gain from the sale of an ancestral property. During a search at the purchaser's premises, loose sheets were seized indicating a higher market value than the registered sale consideration. The assessment was reopened based on these documents and statements.
Held
The Tribunal held that the addition was based on uncorroborated third-party loose sheets and statements recorded without cross-examination. No evidence of actual cash receipt by the assessee was brought on record, and crucial documents lacked essential details like signature and date. Therefore, the addition made by the Assessing Officer and sustained by the CIT(A) was deleted.
Key Issues
Whether the addition of alleged 'on-money' is sustainable on the basis of uncorroborated loose sheets and statements without providing an opportunity for cross-examination to the assessee.
Sections Cited
143(3), 147, 54F, 132, 54F, 148, 50C, 132(4A), 292C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
This captioned Appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), [CIT(A)] dated 30.04.2025 confirming the assessment framed u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 for Assessment Year 2012-13.
Brief facts of the case are that the assessee is an individual salaried employee. He filed his original return of income for the Assessment Year 2012-13 on 26.07.2012 declaring a total income of Rs.9,30,550/- wherein Long Term Capital Gain arising from sale of immovable property situated at Oppanakara Street, Coimbatore was disclosed by adopting his 40% share in the registered sale consideration of Rs.1,09,00,000/- and claiming exemption u/s. 54F. 2.1 A search u/s.132 was conducted on 18.08.2011 in the case of M/s. Saravana Selvarathinam Retail Pvt. Ltd., Chennai, the purchaser of the said property. During the course of search, certain loose sheets were seized which allegedly reflected a market value of Rs.3,37,15,596/- as against the registered consideration of Rs.1,09,00,000/-. The property sold was an ancestral property jointly owned as under:
• Shri Abdul Lathief Mohammed Arif – 40% • Smt. Jameela Lathief (Mother) – 20% • Smt. N. Shahnaz (Sister) – 20% • Smt. A. Tasneem (Sister) – 20% Based solely on the seized loose sheets and statements recorded from Shri S. Saravana Arul, Managing Director of the purchaser company, the assessment was reopened by issue of notice u/s. 148 of the Act dated 10.09.2015. In response, the assessee filed return of income on 22.12.2015 declaring total income of Rs.17,38,810/- wherein capital gains were recomputed by adopting guideline value u/s. 50C of the Act.
2.2 During reassessment proceedings, statements were recorded from the assessee, his mother and sisters. The sisters categorically stated that they had received only their respective shares through demand drafts and that no cash was received by them. The Assessing Officer held that the entire alleged on-money of Rs.2,28,15,596/- was received by the assessee alone and brought the same to tax as additional sale consideration under the head “Capital Gains” in the hands of the assessee.
The ld. CIT(A) upheld the addition, holding that the seized loose sheets and statements of the purchaser established receipt of on- money by the assessee.
Aggrieved, the assessee is in appeal before the Tribunal.
The learned Authorised Representative (‘Ld.AR’) submitted that the entire addition is based solely on loose sheets seized from a third party and statements recorded behind the back of the assessee, without any corroborative evidence. He submitted that:
• No incriminating document, cash or asset was found from the possession of the assessee. • The loose sheet neither bears the assessee’s full name nor his signature, nor any date of alleged payment. The document does not establish actual receipt of cash by the • assessee during the relevant assessment year. • The assessee was denied the opportunity to cross-examine Shri S. Saravana Arul, whose statement formed the sole basis of the addition, thereby violating principles of natural justice.
The ld.AR further contended that even assuming, without admitting, that excess consideration was paid, the entire amount could not be assessed in the hands of the assessee, as the property was jointly owned and the assessee’s share was only 40%. Reliance was placed on several judicial precedents including:
• Kishanchand Chellaram v. CIT (125 ITR 713) (SC) • CIT v. P.V. Kalyanasundaram (282 ITR 259) (Mad) • CIT v. Bhanwarlal Murwatiya (215 CTR 489) (Raj) • Paramjit Singh v. ITO (P&H HC) • ITO v. W.D. Estate (P) Ltd. (45 ITD 473) (Bom)
The Ld.DR supported the orders of the lower authorities. It was contended that:
• The seized loose sheet clearly reflected the actual sale consideration. • The purchaser had admitted payment of cash during search proceedings. • The assessee himself admitted that he alone handled the transaction. • The conduct of the assessee in adopting section 50C value in the return filed u/s. 148 showed that the transaction was not genuine.
We have carefully considered the rival submissions and perused the material available on record. It is undisputed that the impugned loose sheet was seized from the premises of the purchaser company and not from the assessee. The document does not bear the (AY 2012-13) Abdul Lathief Mohammed Arif (Vs.) ITO Ward 5(2) assessee’s signature, does not mention date of payment, mode of payment, or even clearly identify the recipient of the alleged cash. It is well-settled law that loose sheets by themselves do not constitute evidence unless corroborated by independent material. The presumption u/s.132(4A) or section 292C operates only against the person from whose possession the document is seized and cannot be extended to a third party. Further, the Revenue has not brought on record any material to establish actual flow of cash from the purchaser to the assessee. The entire addition is founded on the sworn statement of Shri S. Saravana Arul. It is an admitted fact that no opportunity of cross-examination was provided to the assessee, despite specific reliance placed on the said statement. The Hon’ble Supreme Court in the case of Andaman Timber (1998) 1 SCC 248 and Kishanchand Chellaram (supra) has clearly held that any material collected at the back of the assessee cannot be used against him without affording opportunity of rebuttal and cross- examination. Moreover, even the purchaser’s statements are self- contradictory, wherein he himself denied payment of Rs.75,00,000/- and expressed uncertainty regarding cash components. Such statements, without corroboration, cannot form the sole basis for addition. More so, the sale transaction is evidenced by a registered sale deed, wherein the consideration is clearly recorded. In the absence of clinching evidence to prove receipt of consideration over and above what is stated in the registered document, the amount mentioned therein has to be accepted. The burden to prove understatement of consideration squarely lies on the Revenue. Suspicion, however strong, cannot take the place of proof.
(AY 2012-13) Abdul Lathief Mohammed Arif (Vs.) ITO Ward 5(2) 7. In view of the totality of facts and circumstances, we hold that the addition is based on uncorroborated third-party loose sheets documents and statements relied upon were recorded without granting cross-examination. No evidence of actual receipt of cash by the assessee has been brought on record. Accordingly, the addition of Rs.2,28,15,596/- made by the Assessing Officer and sustained by the ld.CIT(A) is deleted.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on the 06th day of February, 2026, in Chennai.