9911796707
TMI Blog2004 (6) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the AO that he has wrongly treated an amount of Rs. 1.00,000 received from Shri Fateh Chand as advance booking of flat, as unexplained cash credit. Facts borne out from the record on this ground are that a loose paper was seized during the course of search and on perusal it was found to be a receipt dt.18th Jan., 1995, issued by Shri Fateh Chand, acknowledging the receipt of Rs. 75,000 on18th Jan., 1995. The assessee was asked to explain the document and in response thereto, the assessee has stated that the payment of Rs. 75,000 to Shri Fateh Chand had been made against advance of Rs. 1,00,000 for booking one residential flat at Khirkee Extn.,New Delhi. However, due to difference the deal got cancelled and as a result thereof Shri Fateh Chand was refunded Rs. 75,000 as full and final settlement against the amount of Rs. 1.00,000 paid by him in cash. It was further contended that the transactions are recorded in the cash book. But when he was asked to produce Shri Fateh Chand for verification, it was stated that the whereabouts of Shri Fateh Chand are not known. As such, it was not possible either to produce him or to file an affidavit from him. The AO examined the reply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income, if the assessee has not disclosed the same in its regular books of account. But from the explanations of the assessee, the AO cannot draw an inference that he has received a sum of Rs. 1,00,000, which was not refunded to Shri Fateh Chand as the explanation of the assessee should either be rejected or accepted in toto and not in part. If the AO has doubted the explanation of the assessee, he can only make an addition of Rs. 75,000 as unexplained investment, but he cannot make an addition of Rs. 1,00,000 on the basis of the statement/explanation of the assessee. Once the AO has partly accepted the explanation of the assessee regarding the receipt of Rs. 1,00,000 as advance from Shri Fateh Chand, he cannot reject the remaining explanation of refund of Rs. 75,000 out of that to Shri Fateh Chand. In these circumstances, we do not find any justification in the addition of Rs. 1,00,000 made by the AO. We, therefore, delete the same. 8. Ground NO.2 relates to the addition of Rs. 95,691 as unexplained expenses out of the undisclosed income of the assessee for the asst. yr. 1995-96 by estimating the expenditure incurred on the marriage of Shri Pradeep Nagpal, younger br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, on the basis of some documentary evidence and not on the basis of the estimate. Since the AO has estimated the total expenditure of marriage at Rs. 3,00,000 without bringing any cogent material on record and made the addition of the difference, we find no merit in this addition. We, therefore, set aside the order of the AO on this account and delete the addition. 11. Ground NO.3 relates to an addition of Rs. 35,00,000 allegedly received by the assessee in cash against sale consideration of the first floor of Sidharth Haveli from Shri P.K. Dang as undisclosed income of the assessee for the asst. yr. 1995-96 on the basis of the draft agreement dt.29th Nov., 1994, between Shri N.K. Nagpal and Shri P.K. Dang, seized during the course of the search from the business premises of M/s Blue Chip Construction Co. (P) Ltd. (hereinafter called BCC Ltd.). 12. We have heard the rival submissions and carefully perused the orders of the authorities below and the documents placed on record. 13. Facts, in brief, on this issue borne out from the record are that during the course of search carried out at BCC Ltd. simultaneously on15th Sept., 1995, and agreement to sell on stamp paper dt.29th Nov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s agreement to sell is on stamp paper; (c) The physical possession of the property was handed over to Sh. Dang as admitted by Shri Nagpal and the same was verified at the time of search under s. 132(1) that Shri Dang was occupying the respective portion of the building on 15th Sept., 1995; (d) There is no mention in the agreement that it was a tentative draft; (e) Shri Nagpal has not refunded the amount mentioned in the agreement to sell as stated by him on oath on9th Sept., 1996, and Shri Dang continues to be occupying the portion of the building as on date; (f) The assessee has admitted in his statement dt.9th Sept., 1996, that he received two cheques for Rs. 10 lakhs and Rs. 5 lakhs, respectively, mentioned in the agreement to sell; (g) The assessee's statement that he was not entitled to sell this property is also not tenable on the ground that the ownership of the plot was in the name of Shri S.K. Nagpal, as the plot was purchased in his name for Rs. 1.97 lakhs. The entire cost of construction of about Rs. 30 lakhs was incurred by Shri N.K. Nagpal out of his own funds as stated by him in his statement in response to Q. NO.3 (para 3). Further, there is an agreement to sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact in the notice of third person, that is why, even signatures of any witness were not taken on the agreement to sell dt.29th Nov., 1994. Further, both of them never visualised the situation that this document would be seized in action under s. 132(1). Therefore, this plea of the assessee has no force; (d) The payment of Rs. 35 lakhs in cash by Shri P.K. Dang and receipt of the same by the assessee have been vouched by signing the document under reference, therefore, denial on the part of the vendor and the vendee is nothing but a self-serving statement, which has no force in the eyes of law unless proved otherwise which the assessee has failed to do; (e) Saying that the property in question is an unauthorised construction does not go to strengthen the plea of the assessee that he did not receive the cash of Rs. 35 lakhs. It rather goes to prove that the assessee is engaged in defying all the laws of the land including the provisions of IT Act, 1961; (f) The contention that he entered into another agreement for leasing out the same building on 30th Nov., 1994, against which he received on his own behalf and on behalf of Shri S.K. Nagpal, the lease amount of Rs. 5 lakhs by cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refunded by the assessee. 18. The learned Departmental Representative, on the other hand, has placed heavy reliance upon the order of the AO with the submissions that the AO has given sufficient opportunity to the assessee to explain the receipt of cash, but the assessee could not satisfactorily explain the same. The AO has also dealt with each and every explanation of the assessee by giving a categorical finding thereon. It was further contended on behalf of the Revenue that the execution of the sale agreement was not disputed by the assessee. He simply raised a dispute with regard to the receipt of cash whereas the receipt of cheque was admitted. A document cannot be read in part and the assessee should not be allowed to take a different plea. Once the possession is admittedly handed over to Shri P.K. Dang in-response to the sale agreement, how the assessee can deny the other portion of the agreement according to which he received a cash of Rs. 35,00,000 from the vendee on account of sale of the property, which was not declared in its books of account. 19. Having considered the rival submissions and from a careful perusal of the record, we find that agreement to sell executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndor shall, however, execute the necessary sale deed as and when it is legally possible to do and as and when written request is made by the vendee. If this clause is read carefully only one inference can be drawn that at the relevant point of time when this agreement to sell was executed, there may not be possibility of execution of the sale deed for certain reasons and the property was sold through this agreement to sell. It is also clear from a hand written note on the sale agreement that the seller shall be at liberty to refund the total amount along with the interest by31st March, 1995, and in no circumstances the interest payable per month shall be deferred. If deferred, then the purchaser shall have the right to reject this clause in toto. From a careful reading of this agreement to sell, one cannot come to a conclusion from any point of view that this document is a mere draft agreement to sell and is not a proper agreement to sell because through this agreement, the assessee has acknowledged the receipt of the entire sale consideration of Rs. 50,00,000 and handing over the vacant physical possession of the property to the vendee. Once it is made clear through a documentary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the individual books of account. The books of account were produced before the AO. Since these books of account were not seized during the course of the search, the genuineness was doubted by the AO. He, however, examined and verified the books of account vis-a-vis the loose papers and noticed that these entries were not verifiable in toto. Some accounts mentioned in these papers do not find place in the books of accounts and there are also differences in some of the entries. These discrepancies have been noted down by the AO in his order. For the sake of reference, we prefer to reproduce the same as under: "(a) No accounts have been maintained in ledger/cash book in respect of 199394 and 1994-95 for the following heads mentioned in this paper: -------------------------------------------------- S. Name of account Asst. yr. Asst. yr. No. 1993-94 1994-95 -------------------------------------------------- 1. M/s Delhi Mercantile Nil Nil -------------------------------------------------- 2. M/s Shakti Agencies -- 17,400 -------------------------------------------------- 3. M/s Kuchal Timber Traders 26,980 -- -------------------------------------------------- 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treating this amount as unaccounted and unexplained receipt from Shri R.K. Anand against the sale of residential plot and the basis of the loose sheets of the papers seized from the premises of the assessee. 26. We have heard the rival submissions and carefully perused the assessment order and find that during the course of search, the document appearing at page No. 83 of the compilation of the assessee was seized. This document was executed on12th Jan., 1995, between the assessee and Shri R.K. Anand and according to this document a schedule of payment is mentioned. As per this document a sum of Rs. 6,00,000 was to become due on 23rd Jan., 1995, and Rs. 4,00,000 on 1st Feb., 1995, but the AO has taken this receipt as booking of a residential flat for Rs. 10,00,000 and made the addition of the same. From a careful perusal of this document, we find that it was a mere proposal or a schedule of payment, but from this document it cannot be inferred that the assessee has received a sum of Rs. 10,00,000 from Shri R.K. Anand. The assessee has also filed an affidavit of Shri R.K. Anand in support of its contention that it was a mere proposal which was never executed. Through this affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 994and p. 47 shows payment of Rs. 3,00,000 on5th Oct., 1994to Shri Nagpal. These receipts showing payment to Shri Nagpal and a copy of ledger account of Shri Nagpal in the books of M/s BCC Ltd., pp. 14 and 15 have been seized in which the total amount was mentioned at Rs. 24.50 lakhs out of which Rs. 2.4 lakhs is shown as returned by Shri Nagpal. All these receipts, vouchers and the ledger account of Shri Nagpal in the books of M/s BCC Ltd. were shown to the assessee at the time of recording his statement on 9th Sept., 1996, and in his statement, Shri Nagpal has admitted the signatures on the receipt and stated that the advances were received from Shri Dang against the proposed sale of the property No. 35-A, Kalu Sarai.New Delhi, but the deal did not materalise and the amount was refunded. The statement of Shri P.K. Dang was recorded on this point and he was asked whether he had any dealings before or after signing of agreement of Sidharth Haveli with Shri Nagpal and in response thereto, Shri Dang replied that there were personal dealings occasionally with him when some amounts in cash/cheques were taken by him for a short period and later on returned. The AO finally issued a show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the rival submissions and from a careful perusal of the record, it is noticed that the assessee had admittedly issued certain receipts showing therein that he has received this cash from Shri P.K. Dang as advance payment for the property in Kalu Sarai. The last receipt dt.15th June, 1994, clearly speaks that the assessee has received a sum of Rs. 15,00,000 by15th June, 1994, as advance payment for the aforesaid property. Thereafter, different vouchers were also found during the course of search from M/s BCC Ltd., according to which a substantial amount was given to the assessee and in these vouchers also it was mentioned that the advances were given for property in Kalu Sarai. Copies of the vouchers and the receipts are placed at pp. 89 to 92 of the compilation of the assessee. Initially, the assessee has also taken a plea that he has received this cash as advance payment against property in Kalu Sarai, but later on the deal was not materialised and the amount was refunded. But in support of this contention, no proper receipt was shown by the assessee. At a later stage, following the statement of Shri P.K. Dang, the assessee has taken a stand that he has received a temporary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was turned down by the AO and he estimated the purchase value of the property at Rs. 2.75 lakhs and made an addition of Rs. 1.70,000 as undisclosed income. The assessee has preferred an appeal before the Tribunal with the submission that whatever value of the property was shown, it was on the basis of the documentary evidence and it should not outrightly be rejected by the AO without bringing any cogent material on record that the assessee has undervalued the property and some amount over and above was paid by the assessee to the seller. The AO has simply estimated the purchase cost of the property without bringing any documentary evidence in support of it. The learned counsel for the assessee has placed reliance upon the judgment in the case of K.P. Varghese vs. ITO & Anr. (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC). He has also invited our attention to the copy of the agreement to sell appearing at page No. 86 of the compilation and his written submissions filed before the AO through which he has categorically stated that the said property is under litigation in Courts for the ownership matter between the seller and some party. 34. The learned Departmental Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
