THE DY. COMMISSIONER INCOME-TAX, JAMMU vs. M/S. HORIZON BUILDCON PVT. LTD,, JAMMU

Per Bench:

All these appeals have been filed by the Revenue against the order of

the Ld. Commissioner of Income Tax (Appeals)-1, Ludhiana even dated 12.08.2014 in respect of Assessment Years 2009-10 to 2011-12.

671/Asr/2014:

2 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

“1. Whether the Ld.CIT(A) is right in deleting the addition of Rs.3,12,44,640/- made by the assessing officer u/s 69 /69B of the IT Act,1961 by holding that the Documents i.e. MOU dated 22.01.2008 and supplement MOU dated 18.03.2008 which were found and seized during the time of search, though not signed by either of the parties, m this case; could not be taken as evidence of the payment of unaccounted money over and above the registration price of impugned land purchase, ignoring the detailed discussion of the same in the assessment order. 2. Whether the Ld.CIT(A) is right to hold that various ikrarnamas, photocopies of which were found and seized during search viz. A-9 DNB-1 are collusive in nature, as claimed by the assessee, when these documents have actually been seized from the premises of the assessee itself. 3. Whether the Ld. CIT(A) is right to conclude that various documents found and seized at the time of search have no evidentiary value when the assessing officer has discussed in detail in para 05(a) to (h) of his assessment order dated 21.03.2014 that the same reflect the actual state of affairs of business transactions carried out by the assessee as compared to what is reflected in its books of accounts. 4. The Appellant craves leave to add or amend the grounds of appeal on or before is heard and disposed off. 5. It is prayed that the order of the Commissioner of Income Tax (Appeals), be set-aside and that of the AO be restored on merits.”

“1. Whether the Ld.CIT(A) is right in deleting the addition of Rs. 2,81,20,180/- made by the assessing officer u/s 69 /69B of the IT Act,1961 by holding that the Documents i.e. MOU dated 22.01.2008 and supplement MOU dated 18.03.2008 which were found and seized during the time of search, though not signed by either of the parties, in this case; could not be taken as evidence of the payment of unaccounted money over and above the registration price of impugned land purchase, ignoring the detailed discussion of the same in the assessment order. 2. Whether the Ld.CIT(A) is right to hold that various ikramamas, photocopies of which were found and seized during search viz. A-9 DNB-1

3 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

are collusive in nature, as claimed by the assessee, when these documents have actually been seized from the premises of the assessee itself. 3. Whether the Ld. CIT(A) is right to conclude that various documents found and seized at the time of search have no evidentiary value when the assessing officer has discussed in detail in para 05(a) to (h) of his assessment order dated 21.03.2014 that the same reflect the actual state of affairs of business transactions carried out by the assessee as compared to what is reflected in its books of accounts. 4. The Appellant craves leave to add or amend the grounds of appeal on or before is heard and disposed off. 5. It is prayed that the order of the Commissioner of Income Tax (Appeals), be set-aside and that of the AO be restored on merits.”

“1. Whether the Ld.CIT(A) is right in deleting the addition of Rs.3,43,69,110/- made by the assessing officer u/s 69 /69B of the IT Act,1961 by holding that the Documents i.e. MOU dated 22.01.2008 and supplement MOU dated 18.03.2008 which were found and seized during the time of search, though not signed by either of the parties, in this case; could not be taken as evidence of the payment of unaccounted money over and above the registration price of impugned land purchase, ignoring the detailed discussion of the same in the assessment order. 2. Whether the Ld.CIT(A) is right to hold that various ikrarnamas, photocopies of which were found and seized during search viz. A-9 DNB-1 are collusive in nature, as claimed by the assessee, when these documents have actually been seized from the premises of the assessee itself. 3. Whether the Ld. CIT(A) is right to conclude that various documents found and seized at the time of search have no evidentiary value when the assessing officer has discussed in detail in para 05(a) to (h) of his assessment order dated 21.03.2014 that the same reflect the actual state of affairs of business transactions carried out by the assessee as compared to what is reflected in its books of accounts.

4 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. 4. The Appellant craves leave to add or amend the grounds of appeal on or before is heard and disposed off. 5. It is prayed that the order of the Commissioner of Income Tax (Appeals), be set-aside and that of the AO be restored on merits.”

except variation of figures in these three appeals challenging the impugned

orders of the Ld CIT (A) in deleting the addition by holding that the

additions being made on account of the Documents i.e. MOU dated

22.01.2008 and supplement MOU dated 18.03.2008 although found and

seized during the time of search, but they were neither signed by either of

the parties to MOU or corroborated with supporting material evidence by

the AO in the assessment proceedings.

assessment year 2009-10 as a lead case for discussion. The search u/s

132 of the I.T. Act 1961 was conducted on 07.04.2011 in the case of the

appellant during which documents had been found and seized as per

Annexure DNB-1, A-2, Pages 26-30. This set documents are a

Memorandum of understanding (MOU) dated 22.01.2008 between Sh.

Surjit Singh S/o Harjinder Singh and Baljinder Singh S/o Natha Singh as 1st party and M/s Horizon Buildcon Pvt. Ltd. as 2nd party. Memorandum of

5 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. understanding (MOU) has been found not in original but as a photo copy

and has not been signed by either of the parties mentioned in the MOU.

The perusal of the terms and conditions of the MOU reveals that the

appellant had agreed to buy land measuring 50,000 sq. yards at

Sultanwind near Amritsar @ 2310/- per sq. yard for which an advance of

Rs.1.75 Crore had been agreed to be paid. Another copy of a

supplementary MOU has also been found and seized marked DNB-1, A-9,

P-4-7. This supplementary MOU was also unsigned and a photocopy. The

Assessing Officer came to preliminary view that the appellant had

purchased land from Sh. Surjit Singh & Others at price recorded in the

MOU i.e. 2310/- per sq. yard leading to total consideration at Rs. 11.55

crores but the registration deed was done at highly undervalued rate of

approximately @ Rs. 450/- per sq. yard. The Assessing Officer confronted

the above detailed facts in respect of terms and conditions of the MOU

found and seized to seek assessee's explanation on the proposed addition.

The appellant submitted before the Assessing Officer that the unsigned

photocopy of MOU relied upon by the Assessing Officer was merely a

proposal from a broker, which was not accepted finally and therefore it did

not bear the signatures of alleged seller or buyer. It was also submitted that

the rates quoted for the impugned land were extremely higher which was

6 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. one of the main reasons for not executing the said MOU. It was under

these circumstances that the land was purchased directly from the owners

at the market price. The appellant also filed an affidavit from Sh. Surjit

Singh S/o Sh. Harjinder Singh to support his claim that the impugned MOU

had never been signed or executed at all. The Assessing Officer however

mentioned the documents found from the office of the appellant at Delhi to support his view that the MOU was not an irrelevant document. Thus, the

Assessing Officer has presumed the purchase consideration at Rs.

11,94,37,570/- as against Rs.2,57,03,640/- recorded in the registered sale

deeds and also recorded in the books of account in terms of the registration

deeds executed between the buyer and seller. He therefore trifurcated the

alleged unaccounted purchase consideration amounting to

Rs.9,37,33,930/- in three financial years under consideration in which the

registration had actually taken place. Accordingly, the addition for the year

consideration was computed at Rs. 3,12,44,640/- in the assessment order.

went in appeal before the Ld. CIT(A) who has granted relief to the assesse

by observing as under:

“12. I have considered the facts of the case, the basis of addition made by the Assessing Officer, the arguments of the AR on the issue during assessment as

7 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

well as appellate proceedings, remand report of the Assessing Officer and the rejoinder of the AR on the same. Here it is important to appreciate the facts in the right perspective as starting point for Assessing Officer to have preliminary view that purchase consideration was Rs. 11.05 crore was based upon seizure of MOU wherein purchase consideration had been recorded as 11.05 Crore. The said MOU is unsigned by either of the parties to the agreement and therefore cannot be said to be of any evidentiary value to hold the either of the parties to stated consideration of 11.05 acre. However it does give a starting point to the Assessing Officer to proceed further either through the documents found during search operation or carrying out independent field enquiry to ascertain the truth in the matter. The Assessing Officer in this pursuit has relied upon another supplementary agreement MOU dated 18.3.2008 which is again not signed by either of the parties therefore it cannot lend any credence to the first MOU as both are unsigned and therefore could be in the nature of proposals for the consideration of the appellant for purchase of land. The Assessing Officer further has relied upon document at 168 of A-9/DNB-1 which record details of payment of Rs. 11,94,37,570/- and the same have been held by the Assessing Officer to be corroborating with the sale consideration recorded in the MOU at 11.55 Crore. This document has been shown by the appellant to be accounted for in its books of accounts as substantial payments out of the same have been made to specific parties through cheque and the same had been verified by the Assessing Officer as well during remand proceeding. Therefore, this document as highlighted in the assessment order does not give any support to Assessing Officer's preliminary view of purchase consideration being at Rs. 11.55 Crore. Similarly the Assessing Officer has relied upon the documents seized as page 1 & 2 of A-2 DNR which records various payment made to Sh. Surjit Singh and all of these payments have been found recorded in the books of account of the appellant and verified accordingly during remand proceedings by the Assessing Officer. 13. The Assessing Officer has further relied upon documents A-9 DNB-1 which reproduced various ikrarnamas, photo copies of which had been found and seized. Ikrarnams are between the intermediaries' i.e Sh. Surjit Singh & others and the original owners of the land. The Assessing Officer in his assessment order has erroneously recorded as sale deed where these are photo copies of ikrarnamas/agreement to sale. The remand report has highlighted various reasons to show that these ikrarnamas were collusive in nature to hold the appellant to agree to unusually high price for purchase of land and had been submitted by the same intermediaries' alongwith undersigned MOU.

8 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

On realization by the appellant of the clever MOU of the intermediaries that no MOU was actually signed and entered into between the two parties which remains a fact. The AR also highlighted as to how the ikrarnamas have been entered into unusual haste as for 34 kanals out of about 88 kanals piece of land for which per sq yard rate is hovering around Rs. 3900 per sq. yard, even though said piece of land for which price as per ikrarnamas is only 1400 per sq. yard in the same khasra. The detailed analysis with reference to the AR's contention on the issue and the comments of the Assessing Officer in the remand report have already been highlighted in the appellate order to show that the contention regarding ikrarnams being collusive to be correct.

When such addition was challenged before CIT(Appeals), it also concurred with the findings of Assessing Officer by holding that the entire evidence was to show that Satakhat or the agreement to sell proved the market rate of the land at Rs.2.80 per bighas, and therefore the Assessing Officer was justified in making the addition under section 69B of the Act.

9 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

When the assessee further challenged the same before the Tribunal, it quashed and set aside the order of the Assessing Officer and that of CIT(Appeals) and held the entire addition to have been made on the basis of presumptions and surmises by holding thus: -

10 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

of the company at the rate of Rs. 70,000/- to Rs. 80,000/- per bighas was much lower in rate, and therefore, only inevitable conclusion was the exchange of on monfey in the entire deal. It can be noted from the detailed discussion of both the authorities that except these agreements, there was no other evidence on the record. Admittedly, the land had been originally agreed to be purchased through middleman. The statement given by Shri Natwarsingh is eloquently making it clear that such agreement had not been acted upon. In his statement in an answer to the question raised by the authority, he had admitted that he had expected the purchase price to Rs. 70,000/- to Rs. 80,000/- per bigha, when he entered into the agreement to sell with the respondent assessee. He also had expected to purchase the land he agreed to sell from other agriculturists. Being sure of striking such deals at the rate he had contemplated, he had entered into an agreement to sell for selling the land at Rs. 2.80 lakhs per bigha to the company expecting huge profit in the process. However, when some of the owners denied to sell him the land at the price that he expected, the amount of Rs.90,000/- that was received by him from the company by way of token towards sale consideration was asked to be returned. He had been emphatic that such deal did not get through and therefore the amount had been returned to the company. It could be thus noticed from the statement recorded of the Director and others that the middleman had ensured the company to get the land at the rate of Rs. 2.80 lakhs per bigha. However, on realizing that he needed to surreptitiously pocket the huge amount of money in the said deal, the purchase was made directly from the owners by the company, and therefore, the price at which it purchased in fact had come on the record. The Tribunal therefore, rightly noted the essential fact that purchase of land was directly from the farmers. In absence of any other evidence of on-money payment, as also in absence of any suggestion of the market value of the land purchased by the respondents being far more than what had been reflected in the sale deed, the Tribunal did not endorse the views of both the Assessing Officer and that of CIT(Appeals). Another aspect that had weighed with the Tribunal was the fact that the registered documents had been executed at 'Jantri' value. There was no reference to the Valuation Officer to point out that the value of the land was below the market price." 15. The facts of the case under consideration are on similar plane as collusive nature of ikrarnamas has been highlighted during appellate proceedings. It is also important to appreciate that no evidence regarding alleged unaccounted payment of cash consideration has been found during search operation and various registration deeds have been executed at circle rate approved by the

11 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

State Govt. indicating the correctness of market price vis-a-vis sale consideration recorded in the registered documents. The Hon'ble Court held as under:-

e) The Hon'ble High Court of Rajasthan in the case of Commissioner of Income Tax vs. BHANWARLALMURWATIYA reported in (2008) 215 CTR (Raj) 489, held:-

"The question as to what was the price of the land at the relevant time is a pure question of fact. Apart from the fact, that even if it were to be assumed, that the price of the land was different than the one, recited in the sale deed, unless it is established on record by the Department, that as a matter of fact, the consideration, as alleged by the Department, did pass to the seller from the purchaser, it cannot be said, that the Department had any right to make any additions. It is a different story as to, to what extent and how, the statement of 5, as given before different authorities, at different times, can be used against the assessee. More so, when none of the witnesses was examined before the AO, and the assessee did not have any opportunity to cross examine them. In any case, the question as to whether the consideration of Rs. 61 lacs, or any other higher consideration than the one, mentioned in the sale deed, did pass from the assessee to the seller or not, does not the less remain a question of fact, and it is not shown by the Department, that any relevant material has been ignored, or misread by the CIT(A), or the Tribunal. In that view of the matter, the questions, as framed, cannot be even said to be arising, and in any case, are required to be answered against the revenue, and in favour of the assessee." ii) The Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh in the case of I.T.O. vs. Shri Mohinder Singh reported in (2008)ITR 118 (ITAT, Chd), held:-

"Addition made under capital gain on the ground that income by way of sale received by the assessee was more than what it was shown in the deed of registration on the basis of report of investigation wing of the department based on a photocopy of an agreement y the assessee. No evidence on record to show that assessee had received more than what was disclosed on the registered instrument, the burden for which is on revenue. No addition can be made on the basis of the photocopy of a document when the transaction is separately evidenced by a registered sale deed."

12 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

iii) The Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh in the case of I.T.O. v. Shri Manjit Singh reported in (2010)128 TTJ (Chd)(UO) 82, held:-

"In the absence of any evidence to show that the assessee had received any consideration over and above what is stated in the sale deed, addition could not be made by disregarding the 'full value of the consideration' declared by the assessee simply because another portion of land has been sold by the assessee along with his brother at a higher rate," iv) The Hon'ble Madras High Court in the case of Sivakami Co. Pvt. Ltd. v. CIT (1973) 88 ITR 311 (Mad) has held:-

"The burden of proving that certain sales were effected with the object of avoidance or reduction of tax on capital gains is on Revenue and it is not enough in the explanation offered by the assessee was not acceptable and there are strong suspicion as to the real motive, which prompted the assessee to sell the assets. There must be something positive to suggest that the sales were effected with the object of avoidance or reduction of tax liability for capital gains and this was affirmed by Hon'ble apex court in (1986) 159 ITR 71 (SC). We are of the view that unless there is evidence that more than what is stated in the documents or was received, no higher price can be taken to be the basis for computation of tax either in business transaction or capital gain transactions. The entire onus is on Revenue and the inferences might be drawn in certain cases but come to a conclusion that a particular higher amount was, in fact received must be based on such material from which such an irresistible conclusion follows. In our considered view, in the present case, the Revenue could not lay primary facts, from which inference can be drawn that the full considerations recorded by assessee-firm in its account and the sale deeds is not the full consideration or the actual price received by the assessee for the transfer of shops was the under-stated price.

v) The Hon'ble Apex Court in the case of CIT Vs. George Handerson & Company Limited 66 ITR 622 has observed that full value of consideration for which the sale, exchange or transfer of the capital asset is made appearing in section 12B of Indian Income Tax Act, 1922 (corresponding to the present section 48 of the Income Tax Act, 1961), does not mean the market value of the asset transferred but the price bargained for by the parties to the sale, etc. The consideration for the transfer of the capital asset is what the transferor receives

13 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

in lieu of the asset he parts with, viz., money or money's worth. The expression "full consideration" in the main part of section 12B(2) cannot be construed as having a reference to the market value of the asset transferred. The Hon'ble Madras High Court in the case of CIT Vs. P. Suryanaraina 88 ITR 321 held that the full value of consideration in the said section meant only the actual value received by the assessee. However the market value may also be taken in place of full value of consideration only in the event of the consideration as per registered document being less than the value fixed by revenue authorities for the purpose of collection of stamp duty. It means that the full value of consideration as evidenced by the registered document can be substituted for the value meant for the purposes of stamp duty as per section 50c. This section has been introduced by Finance Act 2002 w.e.f. 1.4.2003 and has been titled "special provision for full value of consideration in certain cases" which means that the full value of consideration can be substituted only if the conditions as stipulated in the provisions of section 50C are fulfilled. Apart from the provisions of section 50C, the sale consideration as reflected in the registered document can be substituted by a higher figure if there is evidence on record to suggest that amount over and above the one recorded in the registered documents had passed on from the buyer to the seller." vi) The Hon'ble High Court of Delhi in the case of Commissioner of Income Tax Vs. Dinesh Jain HUF reported in 254 CTR (Del) 534, held:-

"Section 69B in terms requires that the Assessing Officer has to fist "find" that the assessee has "expended" an amount which he has not fully recorded in his books of account. It is only then that the burden shifts to the assessee to furnish a satisfactory explanation. Till the initial burden is discharged by the Assessing Officer, the section remains dormant.

A "finding" obviously should rest on evidence. In the present case, it is common ground that no incriminating material was seized during the search which revealed any understatement of the purchase price. That is precisely the reason why the Assessing Officer had to resort to Rule 3 of Schedule III to the Wealth Tax Act. This Rule does not even claim to estimate the "fair market value" of an asset; it merely lays down a procedure for computing the value of an asset for the purposes of the Wealth Tax Act. The Schedule derives its authority from Section 7(1) of the Wealth Tax Act. The section, as it now stands, has dropped all pretensions to ascertaining the fair market value of an asset for the purposes of the Wealth Tax Act. Prior to the amendment made w.e.f. 1-4-1989 the section

14 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

provided for the estimation of the fair market value of an asset on the principle of what it would fetch if sold in the open market. This involved an assumption of an open market, be it fictional, a willing seller and a willing buyer, all fictional. This fiction facilitated a realistic estimation of the fair market value of the property, and it moved with the ups and downs of the market. Not anymore. From 1-4-1989, the value was frozen. For all times to come, an immovable property that fetches rent shall be valued at 12.5 times the net maintainable rent. There is a fundamental fallacy in invoking the provisions of the Wealth Tax Act to the application of Section 69B of the Income Tax Act, notwithstanding that both the Acts are cognate and have even been said to constitute and integrated scheme of taxation. Under the Income Tax Act, we are to find what was the real and actual consideration paid by the assessee and whether the full consideration has been recorded in the books. Under section 7(1) of the Wealth Tax Act as it stood before 1-4-1989, we are to estimate the fair market value of the asset; after this date, it is not even estimation of the fair market value, but computation of the value of the asset on the basis of certain rules prescribed by the statute.

Sec. 69B does not permit an inference to be drawn from the circumstances surrounding the transaction that the purchaser of the property must have paid more than what was actually recorded in his books of account for the simple reason that such an inference could be very subjective and could involve the dangerous consequence of a notional or fictional income being brought to tax contrary to the strict provisions of Article 265 of the Constitution of India and Entry 82 in List 1 of the seventh schedule thereto which deals with "Taxes on income other than agricultural income."

For the purposes of Section 69B it is the burden of the Assessing Officer to first prove that there was understatement of the consideration (investment) in the books of account. Once that undervaluation is established as a matter of fact, the Assessing Officer, in the absence of any satisfactory explanation from the assessee as to the source of the undisclosed portion of the investment, can proceed to adopt some dependable or reliable yardstick with which to measure the extent of understatement of the investment. One such yardstick can be the fair market value of the property determined in accordance with the Wealth Tax Act. The error committed by the Income Tax authorities in the present case is to jump the first step in the process of applying section 69B- that of proving understatement of the investment- and reply the measure of understatement. If

15 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

anything, the language employed in section 69B is in stricter terms than the erstwhile section 52(2). It does not even authorize the adoption of any yardstick to measure the precise extent of understatement. There can therefore be no compromise in the application of the section. It would seem to require the Assessing Officer even to show the exact extent of understatement of the investment; it does not even give the Assessing Officer the option of applying any reasonable yardstick to measure the precise extent of understatement of the investment once the fact of understatement is proved. It appears that the Assessing Officer is not only required to prove understatement of the purchase price, but also to show the precise extent of the understatement. There is no authority given by the section to adopt some reasonable yardstick to measure the extent of understatement. But since it may not be possible in all cases to prove the precise or exact amount of perhaps reasonable to permit the Assessing Officer to rely on some acceptable basis of ascertaining the market value of the property to assess the undisclosed investment. Whether the basis adopted by the Assessing Officer is an acceptable one or not may depend on the facts and circumstances of the particular case. That question may however arise only when actual understatement is first proved by the Assessing Officer. It is only to this extent that the rigour of the burden placed on the Assessing Officer may be relaxed in cases where there is evidence to show understatement of the investment, but evidence to show the precise extent thereof is lacking.

Since the entire case has proceeded on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account, the decision of the Income Tax Authorities cannot be approved. Section 69B was wrongly invoked. The order of the Tribunal is approved; the substantial question of law is answered in the negative, in favour of the assessee and against the CIT.

Conclusion:-

Section 69B cannot be invoked on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account."

vii) The Hon'ble High Court of Punjab & Haryana in the case of Commissioner of Income Tax Vs. Harpal Singh reported in (2008) 3 DTR 254, held:-

16 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

"Tribunal has recorded a pure finding of fact after taking into consideration the evidence/material available on the record to the effect that before the Assessing Officer there was no material or evidence to conclude that the assessee had paid a consideration and above the amount mentioned in the registered sale deed, i.e. @ Rs. 2.30 lacs per acre and the addition made by him was without any basis. The only evidence/material available before the Assessing Officer was the so called statement of 'S', which was recorded by the Asstt. Director of IT (Inv.), on 18th Sept., 2001 in which he had deposed that he had sold the land in question @ Rs. 4 lacs per acre, and apart from the amount mentioned in the registered sale deed, he had received Rs. 72 lacs cash from the assessee in five installments. Undisputedly, said 'S' subsequently retracted from his statement before the Asstt. Director of IT (Inv.) itself whereby he had confirmed that he had not received any amount over and above the consideration stated in the sale deed. Further, it is also undisputed position that before the Assessing Officer said 'S' did not appear and made any statement nor an opportunity was granted to the assessee to confront the sale deed and cross- examine 'S' on the statement which he had made before the Asstt. Director of IT (Inv.). In spite of all this evidence, the Assessing Officer made the addition under section 69B only on the basis of conjectures while observing that it is a well known practice that the sale deeds of immovable properties are being registered at the much lower rates than the prevailing in the markets. It is also disputed fact that after selling of the land, 'S' was assessed under the Act and at that time the sale value of the said land was taken as indicated in the registered sale deed and that assessment had become final. The Tribunal has duly appreciated the evidence/material available on the record and various contentions raised by the parties, and then came to the aforesaid conclusion, which is a pure finding of fact which does not require any interference by the Court. Therefore, in these appeals no substantial question of law is arising from the impugned order for consideration of the court."

viii) The Hon'ble Apex Court in the case of Commissioner of Income Tax vs. P.V. Kalyanasundaram reported in (2007) 212 CTR (SC) 97, held: -

"The respondent assessee vide a registered sale deed dt. 26th Oct., 1998 purchased certain land at Brindavan Road, Fairlands, Salem for a sum of Rs. 4.10 lakhs. During a search of the office and residential premises of Polimer Net Work, certain notes on loose sheets allegedly in the hands of the respondent were found and seized by the Department. In his statement recorded on 8th Dec., 1998, the assessee submitted that he could not remember as to why the

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notings had been made. The statement was further confirmed by another statement on 11th Dec., 1998. The Department also recorded the statement of the vendor Rajarathinam on 8th Dec., 1998 which too was confirmed on 11th Dec., 1998 in which he admitted that he had in fact received a total consideration of Rs. 34.35 lakhs and that the sum of Rs. 4.10 lakhs reflected in the sale deed had been received by him by way of a demand draft and the balance in cash. Rajarathinam however retracted from his statement on 8th Jan., 1999 and filed an affidavit deposing that the sale price was Rs. 4.10 lakhs only and that his statements earlier given to the authorities were incorrect. In a subsequent statement recorded on 20th Nov., 2000 Rajarathinam again reverted to his earlier portion and deposed that the sale price was Rs. 34.85 lakhs. The AO concluded that the sale consideration was actually Rs. 34.85 lakhs and not Rs. 4.10 lakhs as had been recited in the sale deed. He accordingly adopted the aforesaid enhanced figure for the purpose of assessment and made an addition of Rs. 3,75,005 as undisclosed income for the broken period 1st April, 1998 to 8th Dec., 1998. The matter was thereafter taken to the CIT(A), who after examining the entire matter, observed that the statements given by Rajarathinam could not be relied upon more particularly as the floor price fixed by the authorities for such property was much lower than the value which would result if the sale deed had been registered at Rs. 34.85 lakhs. The CIT accordingly deleted the addition made. An appeal was thereafter preferred by the Revenue against the order of the CIT before the Tribunal. The Tribunal in its order dt. 6th July, 2005 held that the notings on the loose pieces of paper on the basis of which the initial suspicion with regard to the undervaluation had been raised were vague and could not be relied upon as it appeared that the total area with respect to the sale deeds and that reflected in the loose sheet was discrepant. It was also observed that as per the guidelines for registration the fair value for registration on the relevant date was Rs. 244 to Rs. 400 per sq. ft. and the sale consideration for Rs. 850 per sq.ft. claimed by the Revenue was unrealistic and ignored the ground situation. It was further held that the tax of approximately Rs. 1,84,000 determined on the basis of the addition would not show that the assessee had acquiesced in the addition made by the Department or that it was conclusive evidence of the sale price as the deposit had been made in an obvious effort to save himself from further harassment from the Revenue and to escape a much higher liability to the payment of tax on undisclosed income should proceedings under s. 158BD of the Act be initiated. On these findings, the Tribunal dismissed the appeal. It is in these circumstances that an appeal under s. 260A was filed in the High Court. Before the High Court the following substantial questions of law were raised:

18 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd.

(a) Whether or not when the returns and the statements of the seller admit higher sale consideration actually received, the Revenue is justified in fixing the sale consideration at the higher amount than what has been declared?

(b) When the assessee did not give any explanation to the notings o» found and at the same time the Revenue is able to corroborate the same with the statement of the seller for the purpose of determination of actual sale value, would the lower authority be justified in interfering with the same?

(c) When consistent sworn (statements) were taken into consideration along with evidences found at the time of search, would (they) all be liable to be rejected on the basis of one statement in between contradicting the earlier ones which was also explained away as a result of intimidation?

The High Court relying heavily on the order of the CIT and the Tribunal held that no substantial questions of law had been raised and accordingly dismissed the appeal. It is this situation that the present matter is here before us.

Mr. G.N. Vahanvati, the learned Solicitor General has at the very outset raised serious objection to the order of the High Court pointing out that Division Bench had merely plagiarized substantial portions from the order of the CIT and Tribunal in arriving at its conclusion and no independent assessment on the questions of law that arose for consideration, had been made. He also pointed out that several questions of law pertaining to the implications of the statements and the counter statements made by Rajarathinam did arise in the case and the matter had not been dealt with by the High Court in that perspective and it was therefore appropriate that the matter be remitted for fresh decision. The learned counsel representing the assessee respondent has however pointed out that the CIT in particular, had after a very elaborate discussion of the matter, concluded on a finding of fact with regard to the nature of the transaction and this view had been accepted by the Tribunal as well. He has accordingly submitted that no substantial questions of law have been raised in this matter and the issues raised were purely questions of fact.

We have heard the learned counsel for the parties and have gone through the record. It is true that the Division Bench of the High Court has borrowed extensively from the orders of the Tribunal and the CIT and passed them off as if they were themselves the authors. We feel that quoting from an order of some authority particularly a specialized one cannot per se be faulted as this procedure

19 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. can often help in making for brevity and precision, but we agree with Mr. Vahanavati to the extent that any 'borrowed words' used in a judgment must be acknowledged as such in any appropriate manner as a courtesy to the true author(s). Be that as it may, we are of the opinion that the three questions reproduced above can, in no way, be called substantial questions of law. The fact as to the actual sale price of the property, the implication of the contradictory statements made by Rajarathinam or whether reliance could be placed on the loose sheets recovered in the course of the raid is all questions of fact. We therefore find no infirmity in the order of the High Court. Accordingly, we dismiss the appeal." In view of the above detailed analysis of facts and circumstances of the case, evidence relied upon by the Assessing Officer to make the impugned addition and analysis of jurisdictional pronouncement on the issue. In the circumstances the addition made by the Assessing Officer by presuming the sale consideration at Rs. 11.55 crore is directed to be deleted.”

justified in deleting the addition of Rs.3,12,44,640/- made by the assessing

officer u/s 69 /69B of the IT Act,1961 by holding that the Documents i.e.

MOU dated 22.01.2008 and supplement MOU dated 18.03.2008 which

were found and seized during the time of search, though not signed by

either of the parties, could not be taken as evidence of the payment of

unaccounted money over and above the registration price of impugned

land purchase, ignoring the detailed discussion of the same in the

assessment order; that the Ld. CIT(A) is not right to hold that various

ikrarnamas, photocopies of which were found and seized during search viz.

A-9 DNB-1 are collusive in nature, as claimed by the assessee, when these

20 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. documents have actually been seized from the premises of the assessee

itself; and that the Ld. CIT(A) is wrong to conclude that various documents

found and seized at the time of search have no evidentiary value when the

assessing officer has discussed in detail in para 05(a) to (h) of his

assessment order dated 21.03.2014 that the same reflect the actual state

of affairs of business transactions carried out by the assessee as compared

to what is reflected in its books of accounts. He prayed that the order of the

Commissioner of Income Tax (Appeals), be set-aside and that of the AO be

restored on merits although he has failed to file any rebuttal to the

contention raised by the counsel in support of the impugned order that the

MOU and supplement MOU were not signed by either of the parties or

being not corroborated with supporting material evidence by the AO in the

assessment proceedings and hence has no evidentiary value.

impugned order, and contended that the unsigned MOU and Supplement

MOU by either of the parties and being not corroborated with supporting

material evidence by the AO in the assessment proceedings has no

evidentiary value (APB, Pgs. 27-32). The documents as highlighted in the

assessment order does not give any support to Assessing Officer's

21 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. preliminary view of purchase consideration being at Rs. 11.55 Crore.

Similarly, the Assessing Officer has relied upon the documents seized as

page 1 & 2 of A-2 DNR which records various payment made to Sh. Surjit

Singh and all of these payments have been found recorded in the books of

account of the appellant and verified accordingly during remand

proceedings by the Assessing Officer. He prayed that the impugned order

is passed by the Ld. CIT(A) discussing and analyzing the facts of all the

documents seized during search and passed a well-reasoned order duly

supported with the judgement of higher judicial forum and hence, he prayed

that it may be sustained.

order, written submissions and case law cited before us. It is admitted facts

on record that the disputed seized MOU are unsigned documents by either

of the parties to the agreement and therefore cannot be said to be of any

evidentiary value for the purpose of preliminary or final view of aforesaid

sale consideration of 11.05 acre. The Assessing Officer in this pursuit has

relied upon another supplementary agreement MOU dated 18.3.2008

which is again not signed by either of the parties therefore it cannot lend

any credence to the first MOU as both are unsigned and therefore could be

22 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. in the nature of evidence for the proposed consideration for purchase of

land by appellant. The Assessing Officer further has relied upon document

at 168 of A-9/DNB-1 which record details of part payment of Rs.

11,94,37,570/- and the same have been held by the Assessing Officer to

be corroborating with the sale consideration recorded in the MOU at 11.55

Crore. This document has been shown by the appellant to be accounted for

in its books of accounts as substantial payments out of the same have

been made to specific parties through cheque and the same had been

verified by the Assessing Officer as well during remand proceeding.

Therefore, this document as highlighted in the assessment order does not

give any support to Assessing Officer's preliminary view of purchase

consideration being at Rs. 11.55 Crore. Similarly, the Assessing Officer has

relied upon the documents seized as page 1 & 2 of A-2 DNR which records

various payment made to Sh. Surjit Singh and all of these payments have

been found recorded in the books of account of the appellant and

accordingly, verified during remand proceedings by the Assessing Officer.

relied upon documents A-9 DNB-1 which reproduced various ikrarnamas,

photo copies of which had been found and seized. Ikrarnams are between

23 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. the intermediaries' i.e Sh. Surjit Singh & others and the original owners of

the land. However, the Assessing Officer in his assessment order has

erroneously recorded as sale deed where these are photo copies of

ikrarnamas/agreement to sale. While arriving at the decision to delete the

addition made based on presumption by the AO, the Ld. CIT(A) has relied

on the various judgement of the Tribunals, Hon’ble High Courts and Apex

Court as above.

assumption that there was understatement of the investment based on

unsigned and uncorroborated MOUs and supplementary MOUs, without a

finding that the assessee invested more than what was recorded in the

books of account with supporting corroborative material evidence and such

decision of the AO cannot be approved. In our view, Section 69B was

wrongly invoked. The Section 69B cannot be invoked on the assumption

that there was understatement of the investment, without a finding that the

assessee invested more than what was recorded in the books of account.

“Commissioner of Income Tax Vs. Harpal Singh”, (2008) 3 DTR 254, held

as under:-

24 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. “………………….Further, it is also undisputed position that before the Assessing Officer said 'S' did not appear and made any statement nor an opportunity was granted to the assessee to confront the sale deed and cross- examine 'S' on the statement which he had made before the Asstt. Director of IT (Inv.). In spite of all this evidence, the Assessing Officer made the addition under section 69B only on the basis of conjectures while observing that it is a well known practice that the sale deeds of immovable properties are being registered at the much lower rates than the prevailing in the markets. It is also disputed fact that after selling of the land, 'S' was assessed under the Act and at that time the sale value of the said land was taken as indicated in the registered sale deed and that assessment had become final. The Tribunal has duly appreciated the evidence/material available on the record and various contentions raised by the parties, and then came to the aforesaid conclusion, which is a pure finding of fact which does not require any interference by the Court. Therefore, in these appeals no substantial question of law is arising from the impugned order for consideration of the court.".

we find no infirmity or perversity in the finding of the Ld. CIT(A) to the facts

on record in deleting the addition made by the Assessing Officer on

presuming the sale consideration. Accordingly, the impugned order of the

CIT (A) is sustained.

671 /Asr/2014 shall apply to I.T. A. Nos. 672 and 673/Asr/2014 in mutatus

mutandis.

25 ITA Nos. 671 to 673/Asr/2014 Dy. CIT v. Horizon Buildcon Pvt. Ltd. 16. In the result, the appeals of the Revenue in I.T. A. Nos. 671, 672 and

673/Asr/2014 are dismissed.

Order pronounced in the open court on 22.03.2023

Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order