9911796707
TMI Blog1999 (5) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... greement of sale. One of the flats was sold to Mr. H.S. Grewal vide agreement dated 10-6-1989. The document marked as page No. 34 of the bunch of loose sheets marked as HS-8 seized from the possession of Mr. H.S Grewal (save the complete details of the payment made by Mr. H.S. Grewal and his wife Mrs. D. Grewal against the purchase of said flat to M/s. D.N. Kamani (HUF). According to the Assessing Officer Mr. H.S. Grewal and his wife paid Rs. 5,25,000 by cheque and additional amount of Rs. 3,35,000 in cash, but the records of M/s. D.N. Kamani (HUF) did not disclose that part of sale proceeds received in cash. The Assessing Officer, therefore, required the assessee to furnish return of income for the block period tinder section 158BD and various other information relating to construction and sale of those flats. The assessee M/s. D.N. Kamani (HUF) filed the return of income for the block period covering 1-4-1985 to 8-12-1995 on 30-11-1996 and also information and details of construction and sale of those flats, such as area of construction, cost of construction, period of construction names and addresses of the buyers, sale price, date of transfer, date of giving possession to buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned loose sheet marked page '34' of HS-8 was actually for purchase of flats by Mr. H.S. Grewal in Dharamchand Mansion at 4-IC Road, Bistupur, Jamshedpur. About the words mentioned 'Cash paid in full amount' and various transactions during the some of months the Assessing Officer found that actual figure shown as 3.35 lakhs was meant for 3.35 lakhs and the words 'paid full' projected that the entire consideration amount of the flat was paid in full. The Assessing Officer observed that during the course of hearing in the case of Mr. H.S. Grewal he admitted that '3.35' stood for Rs. 3.35 lakhs. So according to the Assessing Officer on the basis of seized document page 34 of HS-8 it was evident that Mr. and Mrs. Grewal actually paid Rs. 3.35 lakhs and Rs. 5,25,750, but against that disclosed sale proceeds was only Rs. 5,20,750. He noted that in fact the consideration amount for flat received by cheque and received by cash payment consisted of in the ratio of 60%: 40%. The Assessing Officer noted that in the business of real estate there was practice of referring the properties after taking on money and since both the sellers and buyers were benefited through such transactions the real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the possession of the assessee. Admittedly, therefore, the authenticity of the document for the purpose of assessment under section 143(3)/158BD in the case of the assessee could not be fully relied upon. He said that the document in question did not disclose for which flats the payments were made. The ld. AR of the assessee particularly referring to the latter part of the impugned document which spoke of certain transactions of payment in cash, he said that those transactions did not specifically speak as to for what purpose they were being paid. In course of his argument, the ld. AR of the assessee drew our attention to page 34 of HS-8 placed as Annexure I of the assessment order. He said that no doubt there was mention of 'Cash-paid full amount' but for what purpose there was no mention. Some figures were shown against some of the months, but those figures did not have prefix as 'Rupees' or that the figures '1', '75', '60' and '50' did not reflect any clear thing. The payment might have been made for other purposes and not towards the purchase of flat. That could be to the intermediary or for extra work and so on. The ld. AR of the assessee said that the same document contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound during the course of search and seizure operation on the basis of which the cost of construction of project Dharamchand Mansion at 4-IC Road, Bistupur, Jamshedpur could be doubted. The Assessing Officer further observed that the cost of project as disclosed in the account was found reasonable. The ld. AR of the assessee said that before the Assessing Officer the assessee through letter dated 9-10-1996 and brought to the knowledge of the Assessing Officer that the assessee got the valuation done by the Registered Valuer and obtained his report on 8-3-1993. According to this report of the Registered Valuer the value of the building was Rs. 68,75,000. Even the TISCO vide its letter No. nil dated Jan., 1993 arrived the value of this building at Rs. 60,29,716. When there was no dispute of cost of construction, there did not seen any reason why the sale price was to be doubted or marked with question particularly when there was no evidence that if the additional amount was received by the Assessing Officer. The ld. AR of the assessee, having referred to the assessment order of 1992-93 of the assessee particularly at page 7 said that the assessee disclosed net income on average rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay Bench in the case of ITO v. W.D. Estate (P.) Ltd. [1993] 45 ITD 473 wherein also the assessments have been made on the basis of certain impugned documents, but in the absence of any evidence to show that the assessee, in fact received on money the Tribunal deleted the addition. The AR of the assessee said that manifestly no books of account or impugned document was recovered and seized from the possession of the assessee on the basis of which any undisclosed income could be said to have been found. The ld. AR of the assessee said that the addition on presumption or addition or estimate were not within the realm of provisions of Chapter XIV of the Act and in support thereto reliance was placed in the cases of Smt. Gita Rani Mondal v. Asstt. CIT[IT Appeal No. (99)M/7 (Cal.) of 1989] Calcutta 'E' Bench of Tribunal, Sunder Agencies v. Dy. CIT [1997] 63 ITD 245 (Mum.), Bench of Tribunal and Rishabh Marketing (P) Ltd. v. Dy. CIT [IT Appeal No. (SS) 11 (Pat.) of 1997] Patna Bench of the Tribunal. The ld. AR of the assessee concluded that the assessment completed for the block assessment years of 1987-88 to 1992-93 under section 143(3)/158BD was unjustified and bad in law for the obv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the preponderance of probabilities and circumstantial evidences. Seller and buyer were mutually benefited and as such they did not come out with true facts and consider that circumstances the entire attending factors required consideration. She said that it was the matter of common knowledge and experience that for purchase of the flat purchaser as to pay money. She further added that the Assessing Officer rightly observed and came to conclusion that the flat situated at 4-IC Road, Jamshedpur was in the heart of the city with best commercial and residential prospects and as such the sale price as disclosed by the assessee could not be said to be the correct and true. She said that no doubt the building in question was on lease land of TISCO, but there were provisions in the lease deed for renewal as was evident from the findings given at page 3 of the assessment order for 1992-93 in regular assessment. So it was wrong to say that the prospective buyers would be reluctant to pay a good price. She said that in fact at Jamshedpur rest 15 purchasers also must have paid on money Co) 40% of the total cost. She further said that the assessment under section 143(3)/158BC/158BD was rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aturally the payment relates to flat of Dharamchand Mansion situated at 4-IC Road, Bistupur, Jamshedpur. The said document contains two parts. Top portion speaks of the payment by cheque either by Mr. Grewal himself and by his wife Mrs. Grewal. The first two payments by cheque for Rs. 1 lac and Rs. 75,000 have been made by Mrs. Grewal and other 4 payments by cheques have been made by Mr. Grewal i.e., Rs. 1.25 lakhs, Rs. 75,000, Rs. 50,000 and Rs. 47,000. it is to be seen that a remark 'balance left by cheque is Rs. 52,500' has been made which was paid later on. The assessee has admitted to have received these payments by his letter dated 29-10-1996. Mr. and Mrs. Grewal have paid in total Rs. 5,20,750 by cheque. The other part of the document shows transactions by cash which, when reproduced, reads as follows:- "Cash-paid full amount April'88 1 Nov.' 88 75 Feb.' 89 60 Jan.' 89 50 Jan.' 90 50 paid full" ------ 3.35 ------ There is no mention in between payments shown to have made by cheque and payments said to have been received by cash any purpose for which those cash payments have been made. So naturally the entire payments are for payment for flats. Against the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... real estate business this practice of taking on on money is prevalent. He has also said that the flats of Dharamchand Mansion are situated in the heart of the City near Regal Ground of Jamshedpur and in the best commercial and residential area and, as such, the price of which the assessee showed to have sold the flats could not be accepted. According to the assessing Officer in that area Rs. 400 per sq. ft. would have been the reasonable price and in fact during that period that was the prevailing marketrate of flats of that area. The Assessing Officer on the basis of those observations worked out the undisclosed income of the assessee as detailed above. The Assessing Officer, however, in his assessment order at page 9 has observed that it is a case of strong presumption and circumstances and even then has proceeded to make out a heavy addition to the tune of Rs. 42,18,134. If in the real estate business the practice is that of making payment of on money it is not sufficient for making the addition from undisclosed source, and, in particular, in view of the provisions of Chapter XIV of the Act. Provisions of Chapter XIV do not Contemplate assessments on account of presumption or e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company. The Tribunal also noted that there was absolutely no evidence to show that the assessee, in fact, had received on money payments. Here in the case under consideration also, the Assessing Officer has not been able to bring any evidence to prove that if the assessee has received on money and that also in cash from each and every buyer. It is to be noted that he examined the buyers, but from them also he could not gather any supporting material or evidence. The whole exercise of the Assessing Officer to determine the on money received from the purchaser at Rs. 42,18,134 is mere on presumption and as such the aforesaid amount of Rs. 42,18,134 cannot be said to be the undisclosed income of the assessee as contemplated in Chapter XIV of the Act. The Assessing Officer has tried to substantiate his presumption of receipt of on money by the assessee for flat of Dharamchand Mansion situated at 4-IC Road, Bistupur, Jamshedpur the sale price as disclosed by the assessee could not be the correct price. Rupees 400 per sq. ft. would have been the reasonable rate and that was the prevailing market rate during that period. However, it is to be noted that he has not shown any comparab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed under section 143(3)/158BC/158BD of the Act, and not the whole amount of Rs. 45,53,134. 6. In the result, the appeal is allowed in part. Per Shri Sikander Khan, Accountant Member-I have gone through the proposed order of the ld. Brother. In the proposed order the ld. Brother has given two findings. Firstly, he held that from the seized documents it was established manifestly that the assessee had received on money of Rs. 3.35 lakhs from Mr. Grewal which was undisclosed income of the assessee as contemplated under section 158(1)(b) of the Income-tax Act. Secondly, he held that the addition of the remaining amount of Rs 42,18,134 for similar on money on the sale of other flats could not be approved. While I agree with my ld. Brother in respect of his first finding regarding the addition of Rs. 3.35 lakhs I respectfully differ with him in respect of the finding to delete the remaining addition of Rs. 42,18,134. 2. I extensively discussed with my ld. Brother so as to reach an agreement but unfortunately, it could not be possible. I am, therefore, writing my separate order. 3. The facts of the case and the submissions of the ld. ARs. of the rival parties have been elaborately d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ats. He added that H.S. Grewal was business partner of Kamani. Kamani and Grewal were the major shareholders of M/s. Arc Horn Global Systems Pvt. Ltd. They were also the partners in M/s. Arc Horn Leasing Company. Their business connection had been very old. Despite this close relationship the assessee had taken cash of Rs. 3.35 lakhs from Mr. Grewal against the sale of the flat to him, over and above, the payments by cheques. He further added that the quality of construction of the flats was similar. He, therefore, held that the assessee must have received similar on money on sale of other 15 flats. He added that after the addition of the on money the average sale price would come to Rs. 400 per sq. foot which was fair and reasonable considering the fact that Dharamchand Mansion is situated in the heart of the city of Jamshedpur and in the best commercial and residential area. It is situated besides the famous Regal Ground and it is within 200 metres of the main post office and the main branch of the S.B.I. 10. The Assessing Officer worked out the ratios of payments by cheques and the payment of on money in cash at 60:40 in case of H.S. Grewal. On the same basis he worked out on m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. The ld. D.R., on the other hand, supported the order of the Assessing Officer. She contended that the seized document was a clinching document of the payments of on money of Rs. 3.35 lakhs by H.S. Grewal for the purchase of the flat from the assessee. She added that the Assessing Officer was justified in adding similar on money from the sale of the other flats. She relied on section 114 of the Evidence Act, Supreme Court's decision reported in 62 STC 381. 15. My ld. Brother in the proposed order after considering the facts and circumstances of the case and the submissions of the ld. ARs of both the parties in dispute field that the seized documents manifestly established that the assessee received on money of Rs. 3.35 lakhs from Mr. Grewal which was undisclosed income under section 158(1)(b) of the Income-tax Act. He, however, did not approve of the addition of the remaining amount of Rs. 42,18,134 on account of receipt of on money from sale of other flats. My ld. Brother has given mainly 3 grounds for deleting the addition of Rs. 42,18,134. 16. Firstly, he observed that the addition was made on guess work and presumption without showing comparable cases. Secondly, he is of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'X' as on 31-3-1997 must be taken at Rs. 100. Similarly, all the other flats were in the same building of the same project of the assessee having similar quality of construction. If the sale price of flat sold to Grewal was Rs. 400 per sq. ft., the sale price of other flats should be taken similarly subject to the adjustment for variables like extra works, etc. 20. The proof of payments of on money in one flat sold to Grewal had already established the fact that the books of account of the assessee were not reliable and correct. Under the circumstances, the application of section 145 and estimate of sale price of other flats on the basis of the sale price of flat to Grewal was proper and justified. It is wen known that the ITAT, High Courts and Supreme Court upheld the addition on reasonable estimate in the cases where the books of account were not reliable and correct. In the instant case, the books of account had been proved to be not reliable and correct. Since the document of payment of on money was seized after the original assessment the findings regarding sale price of the flats in the original assessment were of no consequence. 21. The total sale consideration paid by H.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed income' includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would have been disclosed for the purposes of this Act." 24. From the above it is evident that the undisclosed income includes any income based on any document representing income which had not been or would not have been disclosed for the purposes of the Act. Clearly the seized documents in question represented the income which had not been or would not have been disclosed for the purposes of the Act. It will be wrong to give a restrictive meaning to the provisions of section 158B(b) and to say that it will cover only the undisclosed sale price in respect of the flat sold to H.S. Grewal and that it will not cover undisclosed sale price of other flats for which no separate similar documents had been discovered in the search. The meaning of undisclosed income given in section 158B(b) is inclusive and wide. We may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewal. No such document was found in the cases relied upon. 26. I would, therefore, hold that the undisclosed sale price of other 15 flats was covered under section 158B and addition for the same in the block assessment would be proper and justified under Chapter XIV-B of. the Income-tax Act. 27. The last ground mentioned for deleting the addition of Rs. 42,18,134 in the proposed order is that there would be fantastic profit after this addition. In my view, this is not a strong reason to delete the addition. The profit margin would differ from case to case and transaction to transaction depending upon various factors. It is worthmentioning here that the price of the land where the building was located, must be very high. The land was acquired at low price but its market value at the time of sale of the flats was very high. Thus, the profit of the land was also embedded in the profit on the sale of the flats. If the assessee had sold only the land, he would have made fantastic profit but the land was utilised for developing and constructing the building called Dharamchand Mansion in which all the flats in question were located. Thus, the profit of the land had merged with the profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and an addition of undisclosed income of Rs. 42,18,134 be made on estimate under section 158BC/158BD of the Act?" Per Nathu Ram, Third Member-On account of difference of opinion between the Members of the Bench, the following questions posed by them have been referred to me by the Hon'ble President as per the provisions of section 255(4) of the Income-tax Act for decision as Third Member: Question posed by J.M.: "Whether, on the facts and circumstances of the case and in law, on the basis of seized documents page 34 of HS-8 which is the details of the price paid for purchase of flat can presumption be made that the assessee-HUF must have received on money from all the remaining 15 purchasers of the flats and an addition of undisclosed income of Rs. 42,18,134 be made on estimate under section 158BD of the Act Question posed by the Accountant Member: "Whether, on the facts and in the circumstances of the case, the addition of Rs. 42,18,134 on account of on money for the sale of other 15 flats should be deleted or it should be set aside to the Assessing Officer for redetermination on the basis of per square foot sale price of the flat sold to H.S. Grewal after adjustment for ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tocopy of the said document is marked as Annexure I to the assessment order and the same is reproduced hereunder: Annexure I "Payment for flat Mrs. S. Grewal Chq. 113113 Dt. 08-08-88 Rs. 1,00,000 Chq. 113914 Dt. 14-11-88 Rs. 15,000 Mr. H.S. Grewal Chq. 118585 Dt. 16-02-88 Rs. 1,25,000 Chq. 118591 Dt. 09-05-88 Rs. 75,000 Chq. 136413 Dt. 24-04-89 Rs. 50,000 Chq. 149410 Dt. 27-07-90 Rs. 47,500 ------------ Rs. 2,97,500 ------------ Balance left by chq. is 52,500.00 Cash-Paid full amount April 88 = 1 Nov. 88 = .75 19/11/88 Feb. 89 = 60 10/02/89 June 89 = 50 Jan 90 = 50 ------------------- 3.35-Paid full ------------------- Paid for generator Rs. 22,000-Chq. No. (illegible) Dt. illegible" 2.3 The Assessing Officer noted on perusal of the above document that Shri Grewal and his wife paid Rs. 5,25,000 by cheque to the assessee HUF and an additional amount of Rs. 3,35,000 was paid in cash. The Assessing Officer noted that the amount received in cash was not disclosed by the assessee HUF in the return filed. Based on the said document, the Assessing Officer initiated proceedings under section 158BD in the case of the assessee HUF for the blo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts made against the said flat or the seized document, Rs. 52,500 was still payable to the assessee HUF. Subsequently Shri Grewal paid Rs. 28,250 and Mrs. Grewal paid Rs. 20,000 totalling to Rs. 48,250 on 30th March, 1992 as against the amount payable by cheque at Rs. 52,500 as mentioned in the seized document. Thus the total payment through cheque made was at Rs. 5,20,750 by Grewal to the assessee HUF. 2.6 The Assessing Officer further noted that after the payments recorded in cash in the seized document Rs. 22,000 was paid by cheque for generator installed in the building. Besides this, there are no other transactions recorded in the seized document. The Assessing Officer noted that along with the said cash payments, the words "paid full amount" are written twice once against the word "cash" and another against the total payment of cash of Rs. 3.35. The entries made therefore leave no scope for any doubt that the same have been written in relation to any transactions other than the purchase of flat by Shri Grewal from the assessee HUF. This document is thus a clinching evidence of payment of cash of Rs. 3,35,000 against the purchase of flat by Shri Grewal to the assessee HUF over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of money received from other buyers of Rs. 42,18,134 being a guess work without any material evidence in support. He, therefore, sustained the undisclosed income computed at Rs. 3,35,000 thereby granting relief of Rs. 42,18,134. 4. The learned Accountant Member has concurred with the view taken by the learned J.M. in sustaining the undisclosed income computed at Rs. 3.35 lacs. He has however dissented from the finding given by the learned J.M. on deletion of the remaining addition of Rs. 42,18,134 made on account of undisclosed sale price of other fifteen flats on the basis of the seized document and the reasoning given in support is as under: (a) That the learned J.M. has already held in the proposed order that the seized document manifestly established the receipt of "on" money of Rs. 3.35 lacs from Shri Grewal and the same was undisclosed income of the assessee as contemplated under section 158B(b) of the Income-tax Act. The other fifteen flats were part of the same building and the same project. They were a so similar in quality and construction. It is also admitted that Shri H.S. Grewal was close business associate of the assessee HUF. The assessee had taken "on" money from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all other relevant provisions of the Act as is clear from the provisions of sections 158BB, 158BH and 158BC. Thus the addition which should have been made in the assessment under section 143(3)/147 could be made in the block assessment as well. Thus the entire Chapter XIV-B has to be given a logical just and fair interpretation and not in a manner which denies the Revenue what it could have got under other provisions of the Act. It is thus clearly a case of concealment of income detected as a result of search and seizure under section 132 of the Income-tax Act. (g) That one of the grounds taken for deleting the addition of Rs. 42,18,134 in the proposed order is that there would be fantastic profit after making such addition. According to the learned A.M. the profit margin differ from case to case and transaction to transaction depending upon various factors. Moreover, the price of land where the building was located must be very high. The land was acquired at low price but its market value of the time of sale of flat was high. Thus the profit of land was also embodied in the profit of sale of flats. If the assessee had sold land only it would have made fantastic profit. Since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel, there is no such corroborative evidence found to suggest that Shri Grewal made payment in cash of Rs. 3.35 lacs as "on money" to the assessee HUF for purchase of flat. He also pointed out that Shri Grewal has denied having made any such cash payment to the assessee HUF. Moreover, presumption under section 132(4A) is also not available in the case of the assessee about the contents of the said document as the same was not recovered from the premises of the assessee HUF and in support, he placed reliance on Rama Trading v. First ITO [1988] 25 ITD 599 (Pat.) (TM). The assessee has also not admitted having received the said cash amount of Rs. 3.35 lacs from Shri Grewal. Moreover, though the residence of karta of HUF was also searched along with others, but no incriminating material relating to the construction and sale of the said flats was found. The learned counsel, therefore, pleaded that the addition made of Rs. 3.35 lacs based on such document is neither justified nor valid. 5.1 As regards the addition made of Rs. 42,18,134 relating to the other fifteen flats sold, the learned counsel has submitted that for determination of undisclosed income, there is no scop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence found as a result of search or gathered during investigation. There being no material evidence found or seized during search, the undisclosed income computed by the Assessing Officer in respect of fifteen flats is without jurisdiction looking to the plain reading of Chapter XIV-B. 5.4 The learned counsel has further mentioned that regular assessment in respect of the flats constructed was made by the Assessing Officer and during the course of regular assessment proceedings the purchasers of flats were examined on oath under section 131 and assessment was completed after making detailed scrutiny. The said assessment order is still subsisting which has neither been reopened nor cancelled by the CIT. The Assessing Officer also found the profit shown from the flat sold as reasonable. Having done so addition could be made under Chapter XIV-B only on the basis of presumption. 5.5 The learned counsel has further contended that the Assessing Officer had not reexamined the flat owners under 131 in the block assessment proceedings nor any opportunity was given to the assessee to cross-examine them. The presumption of the Assessing Officer that fifteen flat owners must have paid "on mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer in his order for the assessment year 1992-93 and therein the average profit calculated at 29.76% was found better in comparison to other builders. If the addition made by the Assessing Officer is sustained then there would be fantastic profit which cannot be conceived off. Moreover, the building was constructed on lease-hold land. 5.9 The learned counsel has further placed reliance on ITO v. Smt. Harbans Kaur [1993] 45 ITD 470 (Delhi), Miss Lata Mangeshkar's case and submitted that the undisclosed income computed of Rs. 42,18,134 in respect of fifteen flats is neither valid nor justified in the absence of any material evidence found as a result of search or investigation and the learned J.M. for the detailed reasons given in his order was justified in deleting the same. 6. The learned D.R. Smt. Anita Sinha on the other hand placed heavy reliance on the order of the Assessing Officer as well as the order of the learned A.M. She has further submitted that the said document seized from the residence of Shri H.S. Grewal give complete details of payments made by him to the assessee HUF through cheque as well as in cash. He evidently paid to the assessee HUF Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement on construction of the property in the assessment year 1992-93. The Assessing Officer noted that the assessee maintained books of account relating to the construction and sale of flats. He also scrutinised the entries made in the books of account. Entries in the books of account were co-related with the entries in the bank pass book both on credit and debit side. The receipt was evidenced by the credit side entries in the pass book on account of the flats sold to various parties and such receipts were found to be through account payee cheques. The flats were sold as per the agreement reduced in writing on properly stamped papers. According to the Assessing Officer, majority of the purchasers were duly summoned under section 131 of the IT Act on different dates and solemn confirmation of the individual purchasers were duly recorded. Entries in the books of account were co-related with the entries on the credit side of the bank pass book and the same were further cross-checked for reference to the investigative process under section 131 of the IT Act. The Assessing Officer found no discrepancy relating to the receipts shown on account of sale of flats. The Assessing Officer al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been denied by the assessee HUF. In between the entries of payments through cheque of Rs. 5,20,750 and payment for generator of Rs. 22,000 through cheque there are entrie in the said document as per details given of cash payment of 3.35. Shri Grewal in the statement recorded confirmed that 3.35 figure is in lacs. When first set and last set of entries through cheques are verifiable from the books of the assessee HUF, the cash payment entries have to be taken as correct, the same being part of the same document. This document has thus been considered and found to be genuine. Though Shri Grewal has not admitted having made cash payment of Rs. 3.35 lacs to the assessee HUF and the assessee HUF has also denied having received such cash payment but based on the aforecited document, the addition made to the extent of Rs. 3.35 lacs on account of undisclosed income in the hands of the assessee HUF has been sustained by the learned J.M. with which the learned A.M. has also concurred. 7.8 Thus the controversy before me for consideration relates to the undisclosed income computed of Rs. 42,18,134 on account of "on money" alleged to have been received from the remaining fifteen flat buye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly factum of undisclosed income. In the present case the only evidence found as a result of search was with regard to cash payment of Rs. 3.35 lacs made by Shri H.S. Grewal to the assessee HUF over and above the apparent consideration paid at Rs. 5,20,750 through cheque and the undisclosed income computed based on this evidence has been sustained but so far as other fifteen flats are concerned there is no material evidence found during search proving receipt of "on money" from the buyers. Moreover, in the assessment completed u/s 143(3) for the assessment year 1992-93 the Assessing Officer has already accepted the accounts relating to the said fifteen flats and there being no material evidence found during the course of search it is beyond the power of the Assessing Officer to review the position already accepted. 7.10 The Assessing Officer has computed the undisclosed income relating to the said fifteen flats at Rs. 42.18.134 only on presumption that the assessee HUF might have received "on money" from fifteen flat buyers also when he has taken Rs. 3.35 lacs as "on money" from Shri H.S. Grewal looking to the location and there being prevalent practice of receiving "on money" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le completing the regular assessment. Admittedly the present proceedings involved are block assessment proceedings under Chapter XIV-B of the IT Act and not the regular assessment proceedings. It is also mentioned here that Chapter XIV-B is a code in itself providing for special procedure for assessment of search cases and as per sub-section (2) of section 158BB, in computing undisclosed income for the block period provisions of sections 68, 69, 69A, 69B and 69C may be applied but nowhere it is provided in this Chapter that provisions of section 145 would be applicable in computing the undisclosed income in the block assessment and there being no such provision made no undisclosed income could be computed on estimate basis invoking the provisions of section 145 based on the said document relating to the flat sold to Shri H.S. Grewal in respect of the remaining fifteen flats sold to others. Further, when specific addition is made based on the said document, there could be no addition made on estimate basis based on the same document. 7.12 As regards the question whether such addition could be made in the normal course as per provisions of section 147, read with section 148, of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the other fifteen flat buyers has not produced any result in the direction of proving that the assessee HUF received any "on money" from other flat buyers also. In this view of the matter no action could be taken under section 147 to make any addition to the income declared on account of the fifteen flats sold. 7.13 According to the Assessing Officer, the assessee HUF sold flat to Shri Grewal for a total consideration of Rs. 8.60 lacs as per the seized document and the per square feet sale rate on this basis comes to Rs. 400 whereas the sale rate charged from other flat buyers is Rs. 225 per sq. ft. The flats are claimed to be situated in a very good locality and the quality of construction of flats sold to other buyers was not different from that sold to Shri H.S. Grewal. It is also noted that the assessee has shown the cost of construction approximately at Rs. 175 per sq. ft. Though the profit rate varied from year to year as per details given above, the average profit rate comes to about 29%. The sale rate as worked out at Rs. 400 per sq. ft. in the case of Shri H.S. Grewal claimed to include element of land cost and looking to that the value worked out at Rs. 400 per sq. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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