INCOME TAX ACT, 1961

Section 153C

Search and seizure - Assessment under section 153C - Allegation towards undisclosed sale of property based on loose paper seized during search action - Certain properties were actually sold during relevant year to parties named in loose paper

Pursuant to search action, loose paper was found showing land sale account wherein account was credited showing sales of particular lands to different persons, whose names were appearing in loose paper. Assessee contended that loose paper found during search, which was stated to be profit and loss account, was not a complete document and it is unauthentic. It further contended that no sale was effected during relevant year as alleged by AO.Held: Since assessee denied that sales were effected, AO should have gone further to find out as to whom these lands were sold as such details would have been easily available in the Government records. AO did not make any such enquiry. When the fact of sales of these lands was not established by AO, question of making any addition on account of profit on sale of such land did not arise. Assessee explained that during the year under consideration, only three properties were sold and such sales was already recorded in books. Assessee filed copy of account of the purchasers and of the registered sale deeds. Names of parties in respect of these three properties were completely different from the names of parties appearing on loose paper found during search. AO did not bring anything on record to show as to how the explanation of assessee was not acceptable. In absence of any contra reason, action of AO rejecting assessee's explanation could not be approved.