Commissioner of Income Tax vs Supreme Industries Ltd.

In this appeal by the revenue for the block period 1-4-1999 to 29-5-2001, the following question of law has been proposed for consideration by this Court.

Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in holding that the evidence found in the form of a noting during a search and seizure operation was not enough to conclude that assessee had paid Rs. 33 lakhs in cash for purchasing land at Vasai?

On 29-5-2001, a search and seizure action was conducted on the respondent assessee and its Directors. During the course of the search the officers of the department seized a document which reads as under:

On the basis of the seized documents, the assessing officer in his assessment order dt. 26-9-2008 concluded that the cash of Rs. 33 lacs paid for the purchase of property at Vasai was an unexplained investment and thus undisclosed income u/s 69 of the Income Tax Act, 1961 (''the Act''). In appeal, the CIT(A) by his order dt. 14-11-2008 upheld the finding of the assessing officer. The CIT(A) held that the seized document is found to be correct for one part then another part of the same document namely cash payment of Rs. 33 lacs should also be presumed to be correct. A document according to him cannot be relied upon selectively. Thus, addition made by the assessing officer was upheld.

In second appeal by order dt. 29-4-2010 the Tribunal allowed the appeal of respondent assessee. The Tribunal allowed the appeal on consideration of the evidence produced before it, namely, conveyance deed, valuation by stamp authorities, stamp duty paid, entries recorded in the books of accounts and the sale deed of the said plot sold on 7-8-2003 for Rs. 55 lacs to Ajara Enterprises. All the above evidence supported the case of the respondent-assessee. The Tribunal held that the assessing officer and the CIT(A) considered only part of the seized documents ignoring the fact that in the very document the rate offered was 1500 per sq. mtrs. i.e. 61.50 lacs. The entries found in the seized document according to the Tribunal cannot be relied upon in the absence of supporting documents. The revenue has not brought on record any evidence to show that the transaction for the purchase of plot was for Rs. 98 lacs including cash payment of Rs. 33 lacs. Thus, the appeal of the respondent assessee was allowed.

We note that the Tribunal has allowed the appeal on a finding a fact. This finding by the Tribunal is reached taking into account the various evidences produced by the assessee to conclude that an amount of Rs. 33 lacs had in fact never changed hands. Consequently, section 69 of the Act would be inapplicable. One more fact which must be borne in mind is that the assessing officer in his order dt. 26-3-2008 records the fact that so far as seller of the plot is concerned, the department has made no addition of Rs. 33 lacs being the cash received from the assessee while assessing him. This also supports the finding of fact arrived at by the Tribunal while assessing the respondent-assessee. In view of the above, we do not find any reason to entertain the proposed question of law. Accordingly, the appeal is dismissed with no order as to costs.