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TMI Blog2014 (7) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in application u/s. 46A, and two Judgment Produced, the learned CIT(appeals) has grossly erred in deciding that the assessee has not discharged burden u/s 132(4A) and consequently confirmed addition of Rs. 1,01,04,887. 3. The learned CIT(appeals) has erred in confirming Rs. 1,01,04,887/- only on the basis of seized diary and in absence of iota of evidences produced by the A.O. and without considering the Judgment of honorable Gujarat high court quoted before him in case of CIT v/s Maulikkumar K. Shah 307 ITR 137(Guj.). 4. The learned CIT(appeals) has erred in confirming addition of Rs. 1,01,04,887 without considering the chart prepared analysing the seized diary which consisted amount paid by cash, amount yet to be paid and amount payable for property to be purchased." 2. Before we adjudicate this ground, it is worth to mention that in the past for the block period 01.04.1995 to 31.03.2001 and 1.04.2001 to 13.012.2001 in the case of the assessee himself an order was passed by the Respected Co-ordinate Bench 'C' ITAT Ahd [IT(ss)A No.57/Ahd/2005] order dated 29.12.2010. This was an appeal filed by the Revenue. The assessee was in Cross-Objection bearing CO. No.90/Ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89216 A-2/7 26. Amraji Shankerji 380546 A-2/7 27. Manubhai Chhotabhai 31762 A-2/8 28. Manubhai Chhotabhai 141026 A-2/8 Total 10104887 3.1 As per the above list, the AO has demonstrated that certain documents were recovered, as identified in the above list, through which it was found that cash amount was paid to the persons alleged to be the land owners over which the project was to be constructed. Thereafter, the AO has also narrated the Annexure along with the seized material which were recovered from the residence of the assessee. As per AO, it was found that the names of the land owners were mentioned in the seized material along with details of the installments (Pratham Hapto) (Bijo Hapto) paid in cash. The annexures have revealed that in respect of the Khata number of the land the amounts were paid and that was acknowledged as per the noting "chukte karel che". The party-wise notings in the seized material was reproduced by the AO. The assessee was summoned to give his explanation in respect of the said seized material. The assessee was confronted with the evidences found during the search. The assessee's reply before the AO was as under: "Q.3. I am showing you A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mately. There were about 20 original land owners with whom Shreeji Narol Owners Association entered into purchase contract, subsequently such land was initially sold to Shreeji Co-op Housing Society Limited, Due to large complexity and formalities. Shreeji Narol Owners Association entered into the purchase of the land for Shreeji Narol Owners Association. Shreeji Narol Owners Association paid the amounts to the original land owners in installment as and when received from the subsequent purchasers. All the amounts shown in the Annexure II to the said notice have actually been paid by the Shreeji Narol Owners Association only. However, to keep the track of the payments and proper management of the contract, I have kept track of all such payments made by the Shreeji Narol Owners Association which were found in the seized documents. Therefore it is to be strongly noted that no payments have been made by me or my behalf. All the payments as shown were only made by the Shreeji Narol Owners Association. I was only entitled to commission from association, hence no question of undisclosed payments, as those points were never belong to me. " 3.3 The AO was not convinced because of the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption with the support of leading evidences and the said presumption is rebuttable but in spite of granting the opportunity assessee was unable to rebut the same presumption. So he has concluded that considering the nature and the clarity of the evidences the amount of Rs. 1,01,04,887/- was the undisclosed payment to the land owner by the assessee and the same was accordingly taxed in his hands. Being aggrieved the same was challenged before the First Appellate Authority. 4. In the first round of appeal, learned CIT(A) vide order dated 24.12.2004, as discussed above, he has rejected the request of admission of Additional Evidences. Some of the observation of learned CIT(A) is worth reproduction. "3.3 Now to consider the various explanations given on behalf of the appellant, it has been claimed that he was entitled to only some commission from Shreeji Narol Owners' Association but no evidence of any sort is given names and addresses of the members of the alleged association who actually paid the money being enquired into at Rs. 1,01,04,887/-, has not been given nor proof of source of funds with them has been given. It is seen that the appellant has never made any attempt to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho were selling land, the purchase was not made by the said association. Also the only person in me know of things would be Shree Ramesh M. Patel who is claimed to be the president of the association or the appellant Shri Bharat V. Patel who claims to be working as mediator right from the time the various banakhats were entered into for purchase of various lands. Now since the association itself was not in existence, so also its president had no legal existence on the day the banakhats were entered into or signed or registered. But the one person who did have some connection with the scheme from the date the banakhats were entered into, was the appellant who admits to noting of the various payments made to land owners in his diary. The alleged copy of resolution as mediator signed by Shri Ramesh M.Patel in favour of the appellant speaks of complete involvement of the appellant from the date that the different banakhats were drawn up and it is also mentioned therein that he has been giving advice in legal and construction matters. Therefore, the undisputed conclusion to be drawn is that the whole scheme of purchase of land in the name of non existent association was the brain child ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the Board of Directors were present, then the question arises as to why there was no mention of their names on the resolution and as to why they did not sign, ordinarily every resolution always bears, the names of persons present alongwith their designation. The same is conspicuously absent from the impugned resolution. Thus, the resolution relied upon by the appellant, is at best a self serving document and suffers from the vice of being a genuine document. Assuming without conceding that the resolution is genuine, then the question arises is as to where is the appointment letter of appellant issued by the SNOA. Naturally, since appellant was neither present during the board meeting nor is a signatory, he would not be aware of his appointment as mediator by SNOA, unless off course SNOA issues him a formal appointment letter. It has been pointed out by the AO in the first remand report dt 19-11-2004 that before him one Shri Gordhanbhai Nathubhai Patel, a member of SNOA had appeared. Said Shri G. N. Patel deposed that he did not knew the appellant well. Now if appellant was actually a mediator, then said Shri G N Patel ought to have know him as appellant had performed responsible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is upon the appellant. Coming to the issue of matching of figures appearing in the diary with the amounts indicated in banakhat and books of SNOA, it is seen that the same is also plagued with deficiencies and shortcomings. The appellant has attempted to explain the same but has not been able to explain the same as in the case of Jayantiial, Rasiklal Keshavlal, etc with any cogent evidence. The argument of the appellant that all the entries in the diary match with those in banakhat and books of SNOA therefore cannot be accepted. Another argument taken by the appellant is that the search in his case has not yielded any asset and hence this addition cannot be made. The possible argument of the appellant is that the undisclosed income ought to have been supported by some unaccounted assets which should have been found at the time of search. The argument taken by the appellant is unacceptable since the mere fact that no worthwhile asset was discovered at the time of search does not means that income noted from the seized documents cannot be taxed as undisclosed income. The appellant has taken an argument that the A O has not made any respect of cheque entries indicated in the diary a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The entries in the seized document had therefore matched with the entries in the books of accounts of SNOA. However, later on SNOA decided not to develop the residential scheme, therefore, the land which was acquired by way of "Banakhats" was sold by the association. Since, the SNOA decided not to develop the residential scheme, therefore, the Banakhats which were executed were not converted into registered sale deed and the land in question was further transferred also through "Banakhats" by the association. Learned AR has placed before us few charts describing the nature of the payment. In one chart, learned AR has tried to demonstrate that the amount appeared in the seized diary had matched with the amounts appeared in the books of SNOA. His attempt is to prove that the cheques were issued in favour of the land owners, were in fact the cheques issued by SNOA and not by the assessee. He has vehemently argued that although some cheque amounts were noted in the diary but that was not added by the AO which were amounting to Rs. 24,73,161/-, as per the statement on pages 24 and 25 of the paper book. If the AO was of the opinion that the cheque amounts were the explained amount; hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the assessee had tried to conceal the particulars of the transaction. But it was unearthed consequence upon the search. The assessee was not a mediator but fully involved in the land deal. The admitted factual position was that no commission was paid to the assessee although the transaction was completed through registered sale deed and the association got the land in question. So, it was proved beyond doubt that he was not a mediator; therefore, he has not received the agreed 0.50% commission. According to learned DR, SNOA did not come into the picture at all. The component of the cash as per the diary was not disclosed by the assessee, hence rightly taxed. Moreover the cash component has not matched with the figures noted in the books of SNOA. He has also drawn our attention on two statements, namely, Ms. Lalitaben and Ms. Santiben having discrepancy in their respective accounts. The Bench has put few questions that what has happened in the case of SNOA and whether in remand proceedings the AO has given a conclusion that the bank accounts were directly handled by the manager/secretary of SNOA? To this question, learned DR has suggested that the said aspect of the involvement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Banakhats, it is mentioned that the party of the second part is the President as well as Secretary of the association, but there was no signature of those persons. In this regard, the examination of the witnesses in the Banakhats shall also prove beneficial to arrive at the right conclusion. If the Banakhats are the registered documents then whether the registration expenditure was duly debited in the books of SNOA. Whether it was shown as purchased by the association? We have also found that the original Banakhats were not produced before the AO. We therefore deem it proper to direct the assessee to produce the original banakhats to the AO so that he can examine the nature of the document and the correctness of the claim that those were duly registered documents. (c) The appellant has placed before us few exhaustive charts but at the stage of second appeal it is not possible to match the figures of the chart with the contents of the diary along with the accounts of SNOA. In this connection, we are of the view that the AO is the best person to verify and match the cheque amount as well as the cash amount as noted in the diary with the books of accounts of SNOA, as allegedly explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -A by learned CIT(A). Only on that ground the matter was restored back. But now the situation is that even after the perusal of the Remand Report the questions/doubts as raised hereinabove could not be removed. Therefore in the interest of justice as also considering the rival submissions it is not only necessary but also justifiable to restore the matter back to the stage of investigation, i.e., the assessment stage so that the assessee as well as the Revenue both can go upto the hilt of the facts and thereupon can arrive at the correct conclusion. In view of the above discussion the grounds of the assessee may be treated as allowed but for statistical purpose. 8. Ground No.5 is reproduced below: "5. Though honorable ITAT remanded impugned appeal to the file of CIT(Appeals). The learned CIT(Appeals) is not justified for not adjudicating the following grounds of appeal: a. The learned Commissioner of Income tax (Appeals)- 1, Ahmedabad is not justified in confirming addition of Rs. 17,05,000/- cash deposited in the bank account without appreciating source of Income i.e. agriculture Income and without considering the accounts of appellant form 'Shivan Farm' in which the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we are of the view that the assessee has not explained the exact details of the agriculture holding and the income earned there from. It was necessary on the part of the assessee to place on record the area/measurement of the agriculture holding duly supported by the evidence. Assessee was also required to show agriculture crop produced. Be that as it was. In any case, to settle the issue we have noted that the assessee had produced bills of Rs. 3,92,060/- during the course of assessment proceedings as mentioned in the first paragraph (unnumbered) on page 12 of the assessment order. To this extent only a relief can be granted. Since, the assessee had produced evidence to this extent confirming the agriculture income, therefore, we hereby direct to reduce the impugned addition by this amount and rest of the amount is hereby confirmed. This part of the ground is partly allowed. 11.1 The next ground is in respect of addition of Rs. 76,000/- which was shown as investment for the purpose of Visa. The AO has held that it was an undisclosed investment; hence, taxed Rs. 76,000/- in the hand of the assessee. 11.2 Heard both the sides. A deposit made for the purpose of obtaining Visa can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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