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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri S.S.Godara & Dr. A.L. Saini
O R D E R
PER S.S.Godara, Judicial Member:
- This Revenue’s appeal for assessment year 2011-12 challenges correctness of the Commissioner of Income Tax (Appeals)-Siliguri’s order dated 07.12.2016 in case No.133/CIT(A)/SLG/2015-16, reversing the Assessing Officer’s action making undisclosed on-money addition of ₹1,10,00,000/-, involving proceedings u/s 143(3) r.w 153C of the Income Tax Act, 1961; in short ‘the Act’.
We come to the relevant facts pertaining to the above sole issue. This assessee is admittedly the legal heir of late Shri Bhanwarlal Agarwal. The said predecessor in interest co-owned capital asset in question along with S/Sh R.K. Agarwal, Hanumnmal, Mahendra and Pawan Bansal(s). All the said joint owners sold the relevant asset on 21.01.2011 to M/s Patron Vinimay Pvt. Ltd. for ₹3,58,25,000/- received through banking channel. The assessee’s DCIT Cir-1 Slg. Vs. Anand Kr. Agarwal Page 2 deceased predecessor’s share therein was ₹1,14,00,000/-. This followed the impugned search action on 30.11.2011 and subsequent dates in case of M/s Anandlok Group at multiple locations. The department came across many incriminating documents marked and seized. Dr. R.K. Agarwal (supra) got recorded his search statement u/s. 132(4) of the Act on 21.01.2012 deposing that the above relevant sale transaction involved on-money component of ₹1,27,50,000/- each in former three and ₹10.25 lakh in case of latter two co- owner’s cases; respectively. He then explained the actual figures to be ₹1.10 crores and not ₹1,27,50,000/- as well. All these culminated in initiation of section 153C proceedings vide notice dated 06.08.2014.
The assessee filed his return in response thereto on 01.09.2014 stating total income of ₹1,32,39,760/-. He computed his long term capital gains as per said sale considerations received through banking channel of ₹1,14,00,000/- (supra). The Assessing Officer framed his regular assessment on 29.01.2016 adding cash component of ₹1,10,00,000/- by placing strong reliance of Shri R.K. Agarwal search statement (supra) supported by corresponding incrementing material seized. He concluded that same formed sufficient evidence to make the impugned addition of ₹1,10,00,000/- in assessee’s hands.
The CIT(A) reverses the Assessing Officer’s action making on-money addition of ₹1,10,00,000/- with the following discussion:- “3.1.2. Findings of CIT(Appeal) – I have perused the assessment order, appellant’s submission and relevant extract of seized material. It is noted that (i) No books of account or documents belonging to the assessee were seized from the premises of Dr. R.K. Agarwal, (ii) the name of thee Assessee “Anand Kumar Agarwal” has not been mentioned anywhere in the documents seized (wr.t. cash received or receivable) (iii) in reply to Question No. 28 (reproduced in para 3.1.1.1) Shri R K Agrawal has admitted that cash is being handled by Shri Anil Agrawal and not by Anand Agrawal. (iv) The statement of Dr. R.K. Agarwal was a statement of third party and it has not yet been put up for cross examination before the assessee.
DCIT Cir-1 Slg. Vs. Anand Kr. Agarwal Page 3 (v) the impugned document RKA/8A found during search of Dr. R.K.Agaral was a third party document found in the possessions of the third party and also very much belonging to the third party. Hon'ble Mumbai H.C. in the case of Additional Commissioner of Income-tax, Bombay City-IV, Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom) has held that third party statements and documents were not proof enough that amounts in question were undisclosed income of the assessee. In the instant case not only the notings are a third party noting, but the fact remains that the name of Shri Anand Kumar Agarwal is not mentioned in the diary as recipient of cash nor has it been mentioned in the statement of Shri R K Agrawal as a recipient, in view of the above the addition is deleted and the appeal of the assessee is allowed.”
The Revenue vehemently contends during the course of hearing before us that CIT(A) has erred in law as well as on facts in deleting the impugned on-money addition of ₹1,10,00,000/- in the form of cash component. It reiterates that Assessing Officer had rightly added the same in assessee’s hands based on seized documents as well as Dr. R.K. Agarwal’s search statement. Mr. Usman places on record the search statement dated 21.01.2012. He highlights the fact that the said co-owner had admitted to have received entire cash payment of ₹3,50,50,000/- as distributed to the respective joint-vendors in their respective shares as evident from page 58. We are taken to the relevant portion of the search statement. The CIT-DR submits that page 92 of the incriminating materials seized, if considered with the above statement, makes it clear that the on-money as well as the seized paper belonged to this taxpayers only. We are repeatedly reminded that assessee had declared the cheque component of ₹1,14,00,000/- himself. The necessary corollary stated to be allowing therefrom is that he has also received the impugned cash component of ₹ 1.10 crores as well.
The Revenue’s continues its averments against the CIT(A)’s findings deleting the on-money addition in issue. It cites section 292C of the statute that the above incriminating documents clearly indicate on-money payment. They are to be presumed as correct in view of the above provision. Mr. Usman lastly quotes u/s. 250(60 of the Act that the CIT(A)’s findings under challenge DCIT Cir-1 Slg. Vs. Anand Kr. Agarwal Page 4 are very much cryptic once not framing either any point of determination or detailed adjudication.
Learned Authorized Representative supports the CIT(A)’s above extracted findings deleting the impugned on-money addition. He submits that there is no incriminating document or seized during the course of search which could be held to be belonging the instant taxpayer. There is not even a single assertion in the above search statement suggesting this assessee to have received the impugned on-money payment thereby triggering u/s 153C process into motion. He contends that Section 292C(1) is very clear that this presumption stipulated applies to searched assessee only as the legislature has very carefully inserted the crucial expression “such” therein. He strongly rebuts Revenue’s emphasis seeking to draw the said presumption that the assessee must have received impugned on-money without any evidence to this effect. Learned counsel pleads that section 292C adds more teeth to the department’s exercise in case of a search in a fiscal statute which has to be strictly interpreted without leaving scope for any intendment.
We have given our thoughtful consideration to above narrated rival submissions. The relevant facts are recapitulated once again. This assessee’s predecessor in interest had sold the land (capital asset) along with other co- owners. There is further no issue that assessee had declared the cheque component of ₹1.14 crorers in his return. The Revenue’s endeavour in the instant case is to add the alleged cash payment of ₹1.10 crores by placing reliance on one of the co-owner’s search statement as well as incriminating evidence seized therein. Its case is that the said on-money can be safely presumed to have come to the assessee only. We find no merit in the instant arguments. We have ourselves perused the relevant incriminating documents pages 58, 62, 68, 71, 74, 76, 77, 79-81, 83, 92 & 93 as well as Dr. R.K. Agarwal’s search statement. We find that there is not an iota of evidence against the instant taxpayer which could suggest that he had received the impugned cash component. Mr. Usman suggests that his brother Anil Kumar DCIT Cir-1 Slg. Vs. Anand Kr. Agarwal Page 5 Agarwal has collected the same on his behalf which amounts to appropriation of the on-money forming part of the sale price u/s. 48 of the Act. We observe that the mere fact of the assessee having admitted the registered sale price would not be stretched to the extent so as to conclude that the relevant on- money received by Shri Anil Kumar Agarwal belongs to the instant taxpayer. We are of the view that the above search statement is in assessee’s favour only since his name has nowhere been mentioned therein. We make it clear that Section 153C at the relevant time envisaged any such material to be “belonging” on any person other than the seized assessee only and not otherwise. We are in total disagreement with Revenue’s averment since in absence of any document which does not mention assessee’s name or search statement cannot form basis of the impugned on-money as the same cannot be taken to be belonging to him. We further observe that the Revenue’s thrust upon section 292C is totally unfounded as the assessee does not fall in the category of such person therein as rightly pointed out by the learned counsel. 10. Mr. Usman’s last technical argument that the CIT(A)’s findings do not take into account u/s 250(6) of the Act (supra) is also without any merit as he has very precisely concluded that the assessee’s name is nowhere found mentioned either in search statement or in the incriminating evidence qua the impugned cash payment. The instant technical plea raised at the Revenue’s behest also fails. Its sole substantive grievance is declined accordingly.