2004 (6) TMI 271 - AT - Income Tax

Purchase and sale of properties - sustenance of addition account of the payments received from bookies - search action u/s 132(1) - sale consideration of properties was higher than shown in the sale deeds - addition made on the basis of statement - Addition on the basis of the paper No. 25 of Annex. A3 - commission to be charged by the broker - HELD THAT - In these sale deeds the sale price/purchase price has been mentioned and according to the assessee this is the actual price paid by him for purchasing the property or the price received by him on sale of plots at Gurgaon. The AO has not examined the purchasers of properties from the assessee or the sellers from whom the assessee had purchased the properties. Regarding the on money or the money given beyond the consideration mentioned in the sale deeds, there is no evidence on record. Shri Parvesh Kochhar is a third party who is neither buyer nor seller of the properties. The Department has also not made any reference to the valuation cell and has not even tried to find out the sale value of any adjoining plot or building in the adjoining area sold or purchased during the relevant period. Some of the properties also relate to builders, but no enquiry has been made from such builders even. We are of the considered opinion that the addition sustained by the learned CIT(A) on the basis above, cannot be maintained. We are further of the view that the matter has not been properly investigated by the AO inasmuch as the buyers and sellers are not called for examination and for verification of the actual price paid to them or received by the assessee. Thus, we deem it fit and proper to set aside the matter to the file of AO for fresh adjudication. Accordingly, orders of authorities below on the issue in question are set aside and the matter is restored to the file AO to decide the issue afresh after making proper investigation and enquiry. While doing so, the AO shall also take into consideration the valuation report mentioned above and shall deal with the same accordingly and as per law. Accordingly, ground Nos. 2 and 3 stand allowed for statistical purposes. Sustenance of addition account of the payments received from bookies - In the present case no incriminating document or other evidence was found during the course of search from the possession of the assessee to establish link between bookies and players. Further, the addition has been made on the basis of statement of Mr. Mukesh Gupta, but neither the copy of his statement was provided to the assessee nor he was confronted against the same and, therefore, the evidence against which the assessee was not confronted cannot be taken into consideration because such procedure is against the settled rules of natural justice. In our view, therefore, the addition made on the basis of statement of Mukesh Kumar Gupta or on estimate basis cannot be upheld. Accordingly, ground taken by the assessee is allowed and the addition sustained by the learned CIT(A) is deleted. In the result, assessee s appeal is partly allowed for statistical purposes.

Issues Involved:
1. Sustenance of addition of Rs. 24,03,000 and Rs. 7,00,000 on account of purchase and sale of properties.
2. Sustenance of addition of Rs. 9,65,000 on account of payments received from bookies.

Summary:

Issue 1: Sustenance of Addition of Rs. 24,03,000 and Rs. 7,00,000 on Account of Purchase and Sale of Properties

The assessee, a prominent cricketer, was subjected to a search action u/s 132(1) of the IT Act at his residence, leading to the discovery of a document marked as Annex. A3, which contained a commission account. The AO inferred that the sale consideration of properties purchased by the assessee was higher than shown in the sale deeds, based on statements from Shri Parvesh Kochhar, who admitted to preparing the commission account. The AO made additions of Rs. 24,03,000 and Rs. 7,00,000 for various assessment years based on this inference.

The assessee challenged these additions before the CIT(A), who upheld the AO's decision. The assessee's counsel argued that the document did not pertain to the assessee, Shri Kochhar was not a legitimate property dealer, and no actual payment was made based on the document. They also contended that the AO did not examine the purchasers/sellers or obtain a valuation report.

The Tribunal found that the addition was made solely on the basis of figures noted on a slip of paper and the statement of Shri Kochhar, without direct evidence of passing consideration beyond the sale deeds. The Tribunal set aside the matter to the AO for fresh adjudication, emphasizing the need for proper investigation, including examination of buyers and sellers and consideration of the valuation report.

Issue 2: Sustenance of Addition of Rs. 9,65,000 on Account of Payments Received from Bookies

The AO made an addition of Rs. 9,65,000 based on details in the assessment order and the statement of Mr. Mukesh Gupta, who alleged payments to the assessee for introducing international players. The CIT(A) upheld this addition, referencing the CBI report.

The assessee's counsel argued that the addition was not based on any evidence found during the search and that the assessee was not confronted with the statement of Mr. Gupta. The Tribunal agreed, noting that no incriminating documents were found during the search to establish a link between bookies and players. The addition was based on an unsubstantiated statement without providing the assessee an opportunity to rebut, violating natural justice principles. Consequently, the Tribunal deleted the addition of Rs. 9,65,000.

Conclusion:

The Tribunal allowed the assessee's appeal partly for statistical purposes, setting aside the matter regarding property transactions for fresh adjudication and deleting the addition related to payments from bookies.

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