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TMI Blog2004 (6) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account. The figures mentioned on this document were as under: Rs. Gurgaon 2 plots (sold) 20,000 Sarvpriya Vihar flat 66,000 Oasis (Suraj Kund road) 30,000 GK-I basement 56,000 1,72,000 4.2 In relation to this document, which was marked as Annex. A3, the statement of the assessee, namely, Shri Manoj Prabhakar, was recorded on 18th Sept., 2000. The relevant question and answer in this regard is as under: "Q. 22. Page No. 25 of Annex. A3 mentions commission account which mentions a commission of Rs. 1.72 lakhs for four properties. Please explain the paper? A. 22. This is an account given by Mr. Parvesh Kochhar of G-12, Bajaj House, 97, Nehru Place, New Delhi, which according to him was the commission due to him for the various properties sold and purchased by me through him. No such amount was due to him nor I have paid any such amount to him." 4.3 As a follow up enquiry after the statement of assessee, survey action under s. 133A was conducted by the DDIT (Investigation) Unit-I, New Delhi, on 21st Sept., 2000, at G-12, Bajaj House, 97, Nehru Place, New Delhi, which is the business premises of M/s Good Luck Estate. At this premises, Shri Parvesh Kochhar was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , GK-I,N. Delhi, from Mr. Mishore Taklu of M/s Matang Builders for a total consideration of Rs. 28,00,000. This amount has been paid by Sh. Manoj Prabhakar. Q. 13. Please give details of the two plots (sold) at Gurgaon. A. 13. There were two plots of 200 sq. yards each in Sector 15, Gurgaon, owned by Mr. Manoj Prabhakar and Mrs. Simmi Prabhakar. These were sold in 1993-94 to some buyers the names, I don't remember, for consideration of Rs. 5,00,000 each." 4.4 On the basis of the statement of Shri Parvesh Kochhar, the AO inferred that the sale consideration of properties purchased by the assessee was much more than shown in the sale deeds. He, therefore, furnished a copy of the statement of Shri Kochhar to the assessee and sought his reply. The reply of the assessee dt. 12th July, 2002, as reproduced in the assessment order is as under: "1.6. Assessee's reply as per vide letter dt. 12th July, 2002, is summarised as under: (a) Assessee has denied that the property has been purchased over and above the consideration as per the sale deed/agreement to sell; it was submitted that sale deed/agreement to sell is a legal document and the purchase consideration has to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as under: "Proprietor of estate agency M/s Good Luck Estate was present when the IT authority conducted survey on the premises of M/s Good Luck Estate. Therefore, the rightful person to address the seized papers was the proprietor and not Sh. Kochhar who was helper of the estate agency. As per the cross-examination Mr. Kochhar has no clue of the negotiated amount of the above properties. It was submitted that Sh. Kochhar claims that assessee had paid Rs. 33 lakhs for purchase of property at Sarvpriya Vihar and during cross-examination he denies having knowledge about the quantum of physical payment to the deal of Sarvpriya Vihar and other properties. It was submitted that in the original statement Sh. Kochhar has categorically mentioned that he charges 2 per cent commission for any property from vendor and vendee both. However, during his statement on cross-examination he says that he gets paid on different rates as per the discretion of the payer which at time is 2 per cent, 1 1/2 per cent, 1 per cent, etc., which is very vague." 4.6 After the cross-examination and additional written submissions, the AO re-examined Shri Parvesh Kochhar on 18th July, 2002, in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (b) Assessee has stressed upon the consideration recorded in the sale-purchase deed and has also requested to cross-verify its correctness from other party involved in the deal. Assessee's reliance on the sale deed, though beneficial from his own point of view is out of context. It is common knowledge that property deals are done actually at a higher value than the consideration recorded in sale deed to avoid stamp duty as well as income-tax. Obviously, the sale deed would show the value shown to the Department and not the amount exchanged underhand. Similarly, the other party will also confirm the sale deed consideration only as it has also evaded tax in its own case. When evidence has been found which proves that transaction has taken place at a higher value the sale deed is no longer reliable. Sarvpriya Vihar and Greater Kailash properties are in prime posh location and the consideration shown is quite low, proving further that there is understatement of consideration. (c) Assessee has also contended on the basis of cross-examination that Shri Parvesh Kochhar does not have clue about negotiated value of the properties and has in fact denied knowledge about quantum of physi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing with him when no payment was forthcoming. A commission agent may keep dealing with the agent getting commission from the vendor and the hope that vendee will pay the commission at a later date, etc. In fact, it has been categorically stated by Sh. Kochhar in his cross-examination that he had received commission of Rs. 10,000 on account of sale of two Gurgaon plots from other party involved and as Sh. Prabhakar was a sports personality, therefore, Sh. Kochhar helped him as he was sure that Sh. Prabhakar will definitely pay commission to him. (g) As to the submissions that the commission entry was not shown as a receivable, it is a common practice that commission on the actual consideration will not find mention in the books as part of the purchased consideration in itself is paid outside the books. It is quite likely that the commission was intended to be not disclosed for tax purposes by the property dealer also." 4.8 On the basis of the above, the AO worked out the difference between the sale consideration shown by the assessee and the actual sale consideration on account of purchase of three properties and made the following additions: Sl. No. Property Apparent con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected. Otherwise also, Shri Parvesh Kochhar has stated that he did not know the finally settled or negotiated price. Thus, Shri Kochhar denied to have any knowledge of payment of Rs. 33 lakhs so far as Sarvpriya property is concerned. It is strange that an amount of Rs. 1,72,000 was left for recovery by Shri Kochhar. This also shows that the amount was not really demanded and at the most it was only a calculation or rough work. (v) The persons from whom these properties were purchased were not examined. (vi) The properties were not put for valuation by the Departmental valuer or any other valuer. (vii) The document found and seized was not in the nature of bill and although Shri Kochhar was assessed to tax, but he was not required to produce the books of account to show that this amount was also entered in his books or in the books of M/s Good Luck Estate. (viii) During his cross-examination Shri Kochhar had admitted that he was not party to the actual transaction. The document, i.e., Annex. A3 is totally irrelevant for making any addition because on the basis of this document, no commission was received from the assessee or from other parties who sold the property or who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the valuation report which has been filed in the paper book. The assessee has obtained this report for showing the value of the properties purchased by the assessee. On the basis of the certificate given on the paper book it is found that the valuation report was not before the AO nor before the learned CIT(A). Hence, the evidence in the form of valuation report has been filed for the first time before the Tribunal. It is, therefore, obvious that the Department did not have any opportunity to controvert this evidence. In the interest of justice, such evidence cannot be considered unless the other side is provided an opportunity to rebut the same. 9.1 The AO has made the addition of Rs. 24,03,000 and Rs. 7,00,000 on the basis of the paper No. 25 of Annex. A3. On this document, only figures of the commission to be charged by the alleged broker, namely, Parvesh Kochhar has been mentioned. The actual amount of sale consideration has nowhere been mentioned on this document. The version of the assessee is that he did not pay any amount relating to this document on account of any commission to Shri Kochhar. Shri Parvesh Kochhar has also stated that he did not receive any amount as c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ground No. 4 : This ground has been taken to challenge the sustenance of addition of Rs. 9,65,000 on account of the payments received from bookies. The AO has worked out the addition on the basis of details given on pp. 15 and 16 of the assessment order which are as under: S. No F. Y. Persons from whom payments received Amount Place Reason Payment 1. 1990-91 Mukesh Gupta 40,000 England Advance information regarding England tour 2. 1990-91 -do- Gypsy (wide tyres) worth Rs. 1,50,000 India (Ghaziabad) Information 3. 1990-91 -do- 50,000 India Introduction Arvinda De Silva, Sri Lanka 4. 1991-92 -do- 50,000 India Introduction Salim Malik, Pakistan 5. 1991-92 -do- 2,00,000 India Introduction Dean Johns, Introduction Brian Lara, West Indies; Arjuna Ranatunga of Sri Lanka 6. 1991-92 -do- 1,00,000 India -do- 7. 1991-92 -do- 1,75,000 India Lossing Ranji Match 8. 1992-93 -do- 50,000 Hong Kong Introduction Mark Waugh 9. 1993-94 -do- 50,000 India Introduction Alec Stewart 10. 1993-94 Sanjeev Kohli 1,00,000 India For providing information The payments mentioned in the above list at serial numbered 3, 4, 6, 8, 9 have been estima ..... X X X X Extracts X X X X X X X X Extracts X X X X
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