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TMI Blog2010 (2) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... left side of the above page, it was noted that details like total 12.40, bank 5.00, 7,40 (i.e. difference of 12.4 and 5.00) divided by 2 and 3.70 to be paid were recorded. The content of this paper is reproduced as under: HF a/c 12.4 Total 65.00 28.12 5.00 Bank 80.00 3.01 7.4 + 2 80.00 25.01 60.00 31.01 3.70 to be paid 2.85 Total 15.00 35.00 10.03.2001 3.35 Total On the same date, search at premises of Shri Aksay Sheth, director of M/s Avichal Weaves (P) Ltd. at Surat, was also covered under s. 132 of the IT Act. 1961. At that premises, certain documents reflecting purchase of commercial space by M/s Avichal Weaves (P) Ltd. from M/s Mahan Corporation were found. Those papers reflected that M/s Avichal Weaves (P) Ltd. has purchased a commercial tower known as "Ricon Plaza Complex" at Surat. This tower is also known as "Houseful Complex". Further, from the registration deed which was found at Surat with Shri Aksay Sheth, it was found that this commercial space at Ricon Plaza was purchased for Rs.5 crores, vide sale deed dt. 1st Feb., 2007. On the date of search on 16th March, 2007, the statement of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x liability, which are not acceptable and the submission made by the assessee is hereby rejected. (ii) In the above reply, vide para No.5, the assessee has submitted that the statement of both the persons i.e. Shri Ramesh Arora and Shri Ajay Arora was recorded and both of them confirmed that their total investment in alleged property is Rs 12.4 crores, out of which Rs.5 crores have been financed from the bank and balance amount of Rs 7.40 crores has been made out of books of account of Shri Ajay Arora and Shri Akshay Sheth, the assessee in equal shares. In the said statement, Shri Ajay Arora himself has accepted the total consideration of Rs 12.4 crores for purchase of the said property and Rs 7.40 crores has been paid from out of books. This proves beyond doubt that both the persons have made the payment of on money for the purchase of the said property. (iii) The assessee further clarified that the alleged diary was recovered from the possession of Arora Brothers and the same was not recovered from any of his premises. In this regard, it is confirmed fact that the property was purchased jointly by Shri Ajay Arora and the assessee. Both are also doing business in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had made the entire amount along with on-money to the seller before 31st March, 2007. Therefore, the argument of the assessee "that on-money of Rs 3.70 crores to be paid" is totally vague and cannot be acceptable. (vii) The case law cited by the assessee in his submission is not comparable with the case of the assessee, as the facts and circumstances of the case law quoted by him are different than the instant case. Therefore, the same is also not acceptable. In view of the facts and circumstances of the case discussed above, AO noted that the assessee has made the on-money for purchase of the said property. The assessee either during the search proceedings or during the assessment proceedings has not agreed for the said on-money payment, but the undersigned has brought on record some material evidence such as sale agreement, details of rent accepted by the assessee, business relation with Shri Ramesh Arora and Shri Ajay Arora, which is revealed and beyond any doubt that he has made the on-money of Rs 3.70 crores. Accordingly, the AO made the addition of Rs 3.70 crores on account of unexplained investment in the said property under s. 69 of the IT Act to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between two brothers in equal shares. (i) The agreement to sale and registered sale deed are of same amount of Rs.5 crores. Although the agreement to sale is signed by the assessee only, registered sale deed is signed by both partners - Shri Ajay Arora and the assessee. (j) In fact, no money was required to be paid by the assessee as the assessee introduced M/s Mahan Corporation to Arora Brothers and it was tacit agreement that whatever is real deal price is ultimately finalized, the excess over Rs.5 crores was to be paid by Arora Brothers. The amount of Rs.5 crores was to be paid by M/s Avichal Weaves (P) Ltd. after obtaining the 100 per cent finance. The amount of investment might have been inflated by M/s Mahan Corporation and finally offered to have been settled at Rs 8.7 crores. So the money of Rs.3.7 crores might have been paid by Arora Brothers, but not a single paisa of on money has been paid by the assessee as it was agreed with M/s Mahan Corporation that the assessee will not pay any on money. Whatever on money that was ultimately decided, was required to be paid by only Arora Brothers. (k) As stated above, no on money was required to be paid by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res. In the said statement on 22nd March, 2007, Shri Ajay Arora himself has accepted in reply to question No.4 that the total consideration of Rs.12.4 crores for purchase of the said property and Rs 7.40 crores has been paid from out of books. Further, Shri Ramesh Arora, in his statement on 22nd March, 2007, has said in reply to question Nos. 34 and 365 that the total amount paid for purchase of the property is Rs 12.4 crores. The seized paper found at the residence of Shri Ramesh Arora and Ajay Arora also supports the same fact. Hence, it is established that the property is purchased for Rs.12.4 crores-Rs.5 crores was paid through bank and Rs.7.4 crores was paid as on money in cash. Half of this was paid by Shri Ramesh Arora and Shri Ajay Arora which they have accepted and also offered as their income. Hence, the obvious conclusion is that half of the on money is paid by the appellant Shri Akshay Sheth. (c) Regarding the appellant's submission that the legal presumption is raised only against the person from whom the documents are recovered hence, same cannot be evidence against the appellant, is not acceptable. The appellant is having half share in the property through M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on money and stated that "he cannot say anything about the assessee whether he has paid any on money or not and the same question could be put to the assessee". Learned counsel for the assessee further submitted that the AO admitted that the sale deed dt. 1st Feb., 2007 (copy filed) was executed only for Rs.5 crores and that the whole money was financed by the bank. He has submitted that assessee has denied allegation of both the Arora's and no material is brought on record to prove that any on money was paid by the assessee. He has relied upon the decision of Gujarat High Court in the case of Ushakant N. Patel vs. CIT (2006) 201 CTR (Guj) 501 : (2006) 282 ITR 553 (Guj) in which it was "held, that the authorities and the Tribunal could have raised a presumption that the books had been recovered from the possession of the assessee (though disputed by the assessee), and belonged to the assessee and the contents thereof were true, but from that, it did not necessarily follow that a presumption would arise as to the books or the documents being in the handwriting of the assessee. The Tribunal had not recorded any findings. Even if the presumption available under s. 132(4A) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f both Arora's are relevant and admissible against the assessee. He has submitted that both S/Shri Ramesh Arora and Ajay Arora admitted in their statements during the course of search that the seized paper A1/10 belongs to them and that registry of the building for M/s Avichal Weaves (P) Ltd. belonging to the assessee also connected with the business. Both of them also admitted to have paid on money and also stated that further on money belongs to the assessee. Learned Departmental Representative referred to paper book 30 which is the copy of assessment order in the case of Rameshkumar dt. 28th Feb., 2008 in which reference is made about his admission to have shared the payment of on money. He has also explained the deal in his statement. He has also referred to paper book 31 of the same order in which Arora has admitted to have surrendered and disclosed the amount of his share for the financial year 2006-07. Learned Departmental Representative therefore, submitted that when one of the directors of the assessee's company has admitted payment of on money, there is a strong evidence against the assessee for payment of on money. He has submitted that there was no demand to the cross-e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believed completely to the prejudice of the assessee". 9.2 Hon'ble Delhi High Court in the case of CIT vs. Girish Chaudhary (2007) 163 Taxman 608 (Del) held "there is no basis as to how AO came to conclusion that 48 was Rs.48 lacs. There is no material to support such finding of AO. Dumb document. Addition deleted". 9.3 Hon'ble Gujarat High Court in the case of CIT vs. Maulikkumar K. Shah (2008) 307 ITR 137 (Guj) held that "Held, dismissing the appeal, that from the beginning the assessee was stating that the notings appearing in the diary were rough estimates and estimation was made for submission to the bank for obtaining a loan from the bank. The inference of the AO that the assessee had received on money, i.e., the differential amount as shown in the seized diary and the books of account, was merely based on suspicion and surmises and there was no material to support the conclusion of the AO that the assessee had in fact received any on money. The AO had no evidence with him to support his conclusion. The assessee had worked out the floor-wise rate of the shop on the seized paper but it was not possible that every shop could be sold at that price and while selling the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO cannot presume certain things which are not even part of the seized record. The details given in the seized paper itself do not put any liability upon the assessee to explain the seized paper because it was not recovered from the possession of the assessee and it did not lead to any conclusion that the assessee paid any on money. The details given in the seized paper as noted above cannot fasten any legal liability upon the assessee to explain as to when the amount was to be paid. Everything is presumed by the AO against the assessee without any basis. The Arora Brothers in their statements, never admitted that the assessee paid any on money for the investment in the property. The AO recorded part of the statement of Shri Ajay Arora in the Assessment order and at p. 9 question No.26 and answer are reproduced which read as under: "Question 26: When the share of Rs.3.7 crores payable by Mr. Aksay Sheth was paid by him ? Answer: We cannot say anything about this as we are concerned with our affairs only. Shri Aksay Sheth can tell you better. His share of Rs 3.7 crores as per agreed amount whether paid or not we do not know." The above question and answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corroborative evidence on record. The maker of the admission can bind himself but how he can bind others from his statement without there being any corroborative evidence on record is not known in the law. As noted above, even Shri Ajay Arora in his statement, denied any on money paid by the assessee. No evidence was found in the case of the assessee that assessee has paid any on money before the date of the search or that the assessee was required to pay any on money after the date of the search. The AO merely considering the business relation between assessee and Arora Brothers presumed that since they have admitted payment of on money therefore, assessee might have also paid the on money. If Arora Brothers have not recorded any entry in their books of account as noted by the AO, how assessee could be blamed. The above conclusion of the AO is not supported by any material or evidence. The conclusion of the AO is purely based upon suspicion and surmises. It is settled law that suspicion howsoever strong may be could not take place of legal proof. 9.6 There is no incriminating evidence available against the assessee on record. In the absence of any reliable or cogent eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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