9911796707
TMI Blog1998 (9) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... that among the documents found and seized there was a document No. 7 of Annexure A/17 which contained figures of certain receipts and expenses as per details below: 80 Pusa Road 1050 marriage 395 Pitam Pura 550 flat 4000 IOC rent 1000 Anil 250 interest 36.60 house expenses 5000 Advance rent IOC The figures given in the seized document were deciphered by AO as under: Receipt Expenditure 8,00,000 10,50,000 39,50,000 5,50,000 4,00,000 10,00,000 2,50,000 35,60,000 5,00,000 59,00,000 61,60,000 2.2. When required it was explained that it was a very old document and the same also did not prove any business transactions. The document was also not claimed to have been written by the assessee. According to the AO the assessee received an amount of Rs. 59 lakhs and made payments of Rs. 61,60,000. This document also related to more than one assessee of the group and the assessee gave a common reply. As regards the receipt amount of Rs. 39,50,000 relating to Pitampura, the AO noted that Rs. 39,50 lakhs represented the sale proceeds of Pitampura property owned by the assessee and Shri Avinash Jain. The amount was deciphered from the figure of "395" found recorded in the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who acquired membership in the society in 1988. The assessee in fact purchased the membership from Satish Kumar Jain after a gap of six years in 1994. Value of the membership had gone up substantially by that time as this became sought after location. The AO, therefore, treated the said amount of Rs. 5.50 lakhs as per the document paid as premium to Satish Kumar Jain for acquisition of membership of the society for a flat. The premium so paid was not accounted for in the books of account. Local enquiries made according to the AO, revealed that there was huge premium going on for membership of the societies in that locality including Samant Bhadra Cooperative Group Housing Society. On these facts the AO treated the said amount of Rs. 5,50,000 as assessee's undisclosed income for the block period. 2.5. The AO noted that during the course of search certain documents were found pertaining to the construction of a house property atN.S.Park, Panipat. One of the documents seized No. 7 of Annexure A-17 contained entries of Rs. 35.60 lakhs against house expenses. These documents run into pages from 51 to 83 of Annexure I and total of entries in these documents given is at Rs. 35,34,456. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y material which aspect was not considered by the DVO. It was also claimed that the construction was supervised by the assessee and his family members and, therefore, the DVO should have allowed 10 per cent deduction for personal supervision instead of 5 per cent given by him. It was also claimed that the assessee saved substantial amount in cartage and cement purchase, etc. as also in respect of labour expenses. The AO was not satisfied with the explanation so offered. According to the AO the assessee has not furnished any evidence in support of his submissions either before the DVO or before him and in the absence of any evidence the submission made cannot be accepted. The AO had also noted that the bank withdrawals made by the co-owners during the relevant period and found that the construction expenses recorded in the seized documents are not fully explainable from the withdrawals made from the bank. The AO also noted that the bank withdrawals shown by S/Shri Anil Jain, Arvind Jain and N.C. Jain amounted to Rs. 6,40,000 but they were involved in construction of the house atModelTownand the same had since been completed. They had also not given any money for construction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he name of Sakshi 2,000 x 100 d/o Sh. Atul Jain 20,000 67,800 2.10A. When required it was explained that debentures of Rs. 12,800 were taken from unaccounted income and investment in units of UTI in the names of daughters were out of gifts received by them on their birthdays. Daughters received gifts from maternal grandfather; maternal grandmother; material uncle, aunty and other relatives. The assessee was required to give the details of the amount received in gifts from relatives with their complete names and addresses. Learned counsel of the assessee Shri S.K. Gupta, who appeared before the AO, expressed his inability to give name and addresses of the donors. The AO, therefore, treated the total amount of Rs. 67,800 investment in debentures and units of UTI as representing the undisclosed income of the assessee for the block period. 2.11. The AO noted that during the course of search movable assets like TV, VCR, furniture, etc. were found at the residence of the assessee and inventory thereof was prepared. The assessee was required to explain the source of acquisition of these items. In response it was explained that the assessee is an old taxpayer and these items were acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.13. The assessee has raised as many as nine grounds in this appeal and the same are reproduced hereunder: "1. That, on the facts and circumstances of the case, the assessment made under s. 158BC on 29th Nov., 1996, determining the undisclosed income at Rs. 11,24,500 is illegal, unjust and unfair and is vitiated being contrary to the facts on record and the provisions of the Act. 2. That, on the facts and in the circumstances of the case, the learned AO erred in making an addition of Rs. 10,69,500 as income from undisclosed sources. 3. That, on the facts and in the circumstances of the case, the learned AO erred in holding that the property at pitampura was sold for a consideration of Rs. 39,500. 4. That, on the facts and in the circumstances of the case, and without prejudice to the preceding grounds of appeal, the learned AO earned in not giving the full benefit of set off of the alleged surplus receipt on sale of the Pitampura house against the alleged unexplained expenditure/investment made by the assessee, his associates and family members. 5. That, on the facts and in the circumstances of the case, the learned AO erred in making an addition of Rs. 55,000 on account of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000 and 39,50,000 respectively. The total of left hand side is thus worked out by the AO at 59,00,000, as against meagre total amount of 9,725 as appearing in the original paper. The figures on the right side are presumed to be of expenditure. The said figures have been decoded by adding "000" and the total is worked out at Rs. 61,60,000 as against 2,635.60 (or 6,160 if 30.60 is read as 3,560) in the original paper. the learned counsel has contended that there was absolutely no material to support the finding of the AO and that his conclusion and inferences are based on surmises and conjectures. The AO has assumed certain transactions to have taken place of certain amounts imaginary without any corroborating evidence in his possession either oral or documentary. No papers in fact were found during the course of search and seizure operation to support his conclusion that there was a receipt of Rs. 59,00,000 on different counts as presumed by him. Similarly, there was no evidence that expenditure of Rs. 61,60,000 was incurred. In other words there was no justification for substituting of petty figure of 9,225 by Rs. 59 lakhs as receipts and 2,635.60 by Rs. 61,60,000 as expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also made a reference to the definition of the term "document" as given in Black Law Dictionary, Evidence Act and General Clauses Act along with the meaning of the words "describe" and "express" used in the definitions under the Indian Evidence Act and General Clauses Act to support the contention that the document should have graphic presentation and distinct manifestation leaving no room for guess, surmise and conjecture and it should be capable of being evidentiary use. It has also been contended that if a chit of paper is to be considered as document for the propose of s. 158B(b) of the IT Act, it would create rather a dangerous situation as any person having a little knowledge of the affairs of any person would create such a document and thereby create all kinds of problems as apparently seem to have been done in the present case. 3.5. The learned counsel has, therefore, concluded with the submission that the said chit of paper is not the document and the figures given therein as "395.00" cannot be read and adopted as "39,50,000" as representing the sale consideration of Pitampura property to assess the difference amount of Rs. 21,39,000 equally in the hands of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of ss. 68 and 69. He also reiterated that before any paper can constitute a document it should be capable of being evidentiary use and should contain clear expression and description leaving no room for presumption, assumption and substitution as done in the present case. He also clarified that there was no question of any confession or admission on the part of the assessee. The assessee in fact without conceding to the interpretation of the document as proposed by the AO raised only a question of law alternatively seeking set off of receipts against the expenditure in case the assessee's submission did not find favour with the AO so that the assessee was protected from double taxation of the same amount. 6. We have carefully considered the stated facts, material evidence on record and the rival submissions made before us. We have also gone through the order of the AO and various documents placed in the paper book to which our attention was invited during the course of hearing. We have also perused the various decisions cited before us for and against. It is evident from the facts given that the Revenue carried out search operations on16th Nov., 1995, at the residential and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Rs. 9,11,000 and the first floor for Rs. 9 lakhs and the property as a whole was thus agreed to be sold for a total consideration of Rs. 18,11,000 to Harish Chand Jain on 5th/31st May, 1994. The amount received has been recorded in the relevant books of account. 6.3. We find that the AO has neither made any valid enquiry from purchaser of the property so as to prove that the assessee along with his brother Shri Avinash Jain did receive sale consideration of the property at Rs. 39.50 lakhs against the apparent consideration shown in the agreement to sell and that recorded in the books of account at Rs. 18.11 lakhs, nor the AO has cited any comparable sale instance so as to establish that Pitampura property commanded at the relevant time market value of Rs. 39.50 lakhs. We also find that in the said paper on left hand side the entries made are also of rent and advance of the rent received from Indian Oil Corporation at 4,000 and 5,000, respectively. Indian Oil Corporation (IOC) is a Central Government undertaking and the transactions relating to the rent and advance of rent must have been recorded in the books of Indian Oil Corporation The AO has not made any enquiries from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the word "express" used in the definition as per the New Shorter English Dictionary is "A graphic representation as image; an act of expressing or representing by words, signs or actions, expressions, a mode of speech, of phrase; an utterance. According to the Hon'ble Supreme Court in the case of Ramji Dayawala & Sons (P) Ltd. vs. Invert Import AIR 1981 SC 2085, mere proof of the handwriting of a document would not tantamount to a proof of all the contents or the facts stated in the documents, it the truth of the facts stated in a document is in issue, mere proof of the handwriting and execution of the document is in issue, mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the fact or contents of the document. The truth or otherwise of the fact or contents so stated would have to be proved by admissible evidence i.e., by the evidence of those persons who can vouchsafe for the truth of the facts in issue. 6.5. Further, the Hon'ble Supreme Court in the case of Mohd. Yusuf & Anr. vs. D. & Anr. AIR 1968 Bom. 112 has observed that the evidence of the contents contained in document is hearsay evidence unless the writer thereof is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g credibility of its acceptance without support of corroborative evidence which is admittedly missing. This view is supported by the ratio of decisions of the Hon'ble Supreme Court in the case of V.C. Shukla JT (1998) 2 SC 172; and L.K. Adwani in Crl. Revision petition No. 265 of 1996. 6.9 In the case of Rajpal Singh Ramautar vs. ITO, the papers seized from the premises contained certain figures, rate and consequent calculation but they did not bear any name. The assessee categorically denied its ownership and also explained that it was not in the handwriting of any of the partners or employees or any connected person. The Tribunal held that the initial onus laying upon the assessee was thus discharged. Further during the search or even after that nothing was asked by the Revenue regarding the seized papers. The Department thus completely failed to establish that the assessee made any unexplained investment during the relevant year and held that on the basis of the entries made in the paper no addition could be made. 6.10. In Dy. CIT vs. Krorilal Aggarwal. A diary seized during search contained certain jottings. The Tribunal held that the jottings in diary neither represented boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have received more than what is declared or disclosed by him as consideration. Only that income which is accrued or received is to be considered in computation and the burden of proof lies on the Department. 6.15. The said paper seized, therefore, cannot be treated as a document and it also does not prove that the sale consideration for the Pitampura property as received by the assessee and the co-owner Avinash Jain was at Rs. 39,50,000 from the vendee. 6.16. Looking to the nature of the paper seized and ratio of various decisions cited and discussed we finally come to the conclusion that the receipt of Rs. 39.50 lakhs as sale consideration of Pitampura property against the apparent consideration of Rs. 18.11 lakhs has not been proved by the Revenue and accordingly 50 per cent of the difference treated as undisclosed income of the assessee at Rs. 10,69,500 is not considered justified and the same is directed to be deleted. 7. The next ground relates to the addition of Rs. 5,50,000. The AO found that the assessee acquired membership of Samantbhadra Group Housing Society Sector 13, Rohini for a flat. The assessee made initial payment of Rs. 2,65,110 on6th April, 1994, and furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accounted for in the books of account. No such addition thus could be made merely on the basis of presumption and conjectures. The addition made in this respect is equally unjustified and the same is also directed to be deleted. 8. The next ground raised is against addition of Rs. 3,61,166 made on account of unaccounted investment in construction of house atNarainSinghPark, Panipat. This house is owned by three co-owners i.e., assessee, his brother Avinash Jain and mother Urmila Jain. The house was constructed during the period from April, 1993 to March, 1995. The AO estimated the cost of construction at Rs. 31,53,500 against the investment disclosed in the property at Rs. 20,70,000. The AO thus treated the balance amount of Rs. 10,83,500 as undisclosed investment. The assessee having 1/3rd share in the property, the AO made an addition of Rs. 3,61,166 as unexplained investment representing the undisclosed income for the block period. The unaccounted investment in the property as worked out is based on certain material seized during the course of search and report of the DVO obtained about cost of construction. 8.1. The learned counsel for the assessee has made a submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost of construction at Rs. 15,28,930 shown by the co-owners. The difference is primarily because the document at page No. 15 of paper book No. 2 showed the estimate while the other amount represents the actual expenditure. The aforesaid document was seized from theModelTownhouse and the same has not been disputed by the AO either. 8.3. The learned counsel has placed reliance on the report of the approved valuer placed at p. 88 of the paper book, according to which, the cost of construction ofN.S.Parkhouse was at Rs. 20,80,000. Referring to circular issued by the Chief Engineer CPWD showing the plinth area rates as on 1st Jan., 1992, it has been pointed out that the plinth area rates adopted by the DVO were incorrect as he applied the rate of 1976 and adjusted the same with misc indexation. The learned counsel has pointed out that the DVO applied the plinth area rate for the ground floor at Rs. 3,487 per sq. mt. and for first floor at Rs. 3,321 per sq. mt. whereas as per the CPWD manual the consolidated rates for a double storeyed house Type-IV is Rs. 2,145 per sq. mt. 8.4. The learned counsel has further contended that merely on the basis of the DVO's report no addition could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .S. Park house at Rs. 28,61,452 excluding cost of furniture, fittings and fixtures which almost tally with the investment found recorded in the seized papers. The AO made certain adjustments and adopted the total investment in N.S. Park house and unaccounted investment in the said house was adopted at Rs. 10,83,500 and the assessee having 1.3rd share in the house addition of Rs. 3,62,166 as undisclosed income has rightly been made. 8.7. We have carefully considered the facts, relevant material on record and the rival submissions. We find that the assessee Shri Atul Jain and his brother Arvind Jain and mother Urmila Jain jointly constructed house atN.S.Parkduring the period from 1993 to 1995 and they have shown total investment in construction of house at 20,70,000. The investment made by each co-owner is as under: Rs. Atul Jain (assessee) 7,90,000 Arvind Jain (brother) 7,90,000 Urmila Jain 4,90,000 20,70,000 The investment so made has been accounted for in the regular books of account and they have also shown such investment in their returns for the asst. yr. 1995-96 filed on 31st Aug., 1995/31st Oct., 1995, prior to the date of search on 16th Nov., 1995. 8.8. Another ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We note that photo copies of these papers have not been placed by the assessee in the paper book. The Bench requires the learned Departmental Representative to produce the said papers claimed to be in possession of the Department for perusal but he also expressed his inability to produce them. The position being so we are not in a position to appreciate the nature of the entries made therein, actual period to which these papers relate and how the total has been drawn and shown as bifurcated between the two houses constructed. 8.13. The AO also got the cost of construction for both the houses estimated from the DVO by making a reference under s. 131(1)(d) of the IT Act. The DVO in his report dt.21st Nov., 1995, estimated the cost of construction ofN.S.Parkhouse at Rs. 29,61,500. The valuation report is placed at pp. 62 to 69 of the paper book. The cost of construction ofModelTownhouse was also simultaneously estimated by the DVO at Rs. 26,71,559. The DVO in his report has shown the period of construction as given by the assessee forN.S.Parkhouse from 1993-94 to October, 1995, and forModelTownhouse from F.Y. 1991-92 to 1992-93. We also hold that while so estimating the cost of cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., 1996, placed at pp. 78 to 79 of the paper book. Similarly the cost estimated ofModelTownhouse was also revised for similar reasons to Rs. 19,00,254 vide report of the DVO dt.27th Nov., 1996, placed at pp. 80 to 82 of the paper book. 8.15. We also find that in the report of the DVO cost of woodwork done in the houses has been included and, therefore, there is no justification for adding the cost of woodwork in the cost estimated by the DVO. Further, since the AO has not adopted the cost of construction based on the seized papers, there is no justification for making addition of Rs. 55,000 on account of construction cost of waterfall on the basis of said papers. The revised report of the DVO though placed in the paper book, the learned Departmental Representative has neither referred the same nor he could point out any serious defect or deficiency therein. The learned Departmental Representative has also not controverted the claim of the assessee that he procured building material as well as labour at rates cheaper than the market rate being building material purchased from source and labour taken fromBihar. The revised estimate of cost of construction ofN.S.Parkhouse as per DVO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f N.S. Park house at Rs. 20,07,220 which is less than the actual cost of construction shown by the co-owners at Rs. 20,70,000. Moreover, in view of the ratio of decisions cited in (1994) 121 CTR (Cal) 17 : (1994) 208 ITR 337 (Cal), (1997) 137 CTR (Guj) 98 : (1997) 221 ITR 608 (Gau), (1997) 226 ITR 111 (AP), (1997) 226 ITR 330 (All), no addition could be made on account of income from undisclosed sources merely on the basis of the report of the DVO. Further, the report of the DVO obtained under s. 131(1)(d) is only an expert opinion taken without affording an opportunity of being heard to the assessee and such export opinion would differ from valuer to valuer and it cannot be taken as a conclusive evidence for assessing undisclosed income. Moreover, there is not much difference in the cost of construction estimated by the DVO and the registered valuer so far as theN.S.Parkproperty is concerned. Also, there is no material evidence to prove and establish that the assessee made investment in construction of the house at N.S. Park over and above that disclosed in the books of account by Rs. 10,83,500 for adopting deemed income under s. 69 of the IT Act. 8.18. Having regard to all the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .S.Parkhouse.: (i) One colour T.V. (Vediocon Bazooka); (ii) On VCP (National); (iii) One Sterio (National); (iv) On washing machine (Videocon); (v) One sofaset (8 seater); (vi) One colour TV (Sony); (vii) Three a/cs (local made); fridge and (viii) Cooking range. 9.4. A copy of the inventory prepared at the time of search is placed at p. 37 of the paper book. As per footnote given by Shri N.C. Jain on the date of search on the inventory made, one A/c local made; one colour TV (Sony); and one VCP were purchased in the year 1982 at the rate of Rs. 10,000; Rs. 20,000 and Rs. 10,000, respectively. The fridge is also fifteen years old and was purchased at Rs. 5,000 approximately. These items are claimed by the assessee Shri Atul Jain and the remaining three by Shri Avinash Jain as per the details given at p. 36 of the paper book. Acquisition value given therein is as under: Atul Jain : One colour TV (Videocon Bazooka)--marriage gift; One VCP (National)--Old acquired before block period; One Sterio (National)-- Rs. 1,000; One washing machine (Videocon)-- Rs. 6,000; One sofaset (8 seater)--old acquired before block period; One colour TV (Sony)--Nil Rs. 7,000 Avinash Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to be made on this count in the hands of the assessee and the addition of Rs. 91,000 made is directed to be deleted. 10. The last ground raised relates to the addition of Rs. 67,800. The addition made comprised of one hundred debentures of Reliance Polythelene of Rs. 5,000; 300 debentures of Reliance Petroleum Ltd. of Rs. 7,800, and Rajlaxmi Units of UTI taken in the names of minor daughters of Rs. 55,000. As per the explanation offered, the source of investment in debentures of Rs. 12,800 was out of unaccounted income and investment in UTI of Rs. 55,000 was out of gift amounts received by minor daughters on their birth from close relations. 10.1. The assessee, however, failed to give the names and addresses of the relatives and the amounts given by them in gift to the minor daughters. 10.2. The learned counsel of the assessee reiterated the submissions made before the AO whereas the learned Departmental Representative relied upon the order of the AO. 10.3. We have considered the facts and the rival submissions. We note that the assessee purchased 100 debentures of Rs. 5,000 on25th April, 1994, and further 300 debentures of Rs. 7,800 on18th Feb., 1995. The assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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