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TMI Blog2015 (5) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid order of ld. CIT(A), Revenue is now in appeal before us and has raised the following grounds;- 1. On the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition made by the A.O. of Rs. 7,40,00,000/-, by relying on the decision of the Hon'ble Tribunal in the assessee's case which in turn had erroneously relied upon the decision of Hon'ble Supreme Court in the case of K.P. Varghese (1981) 131 ITR 597 (SC) which is inapplicable to the unique facts and circumstances of the case. 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition made by the AO of on-money receipt of Rs. 7.40 crores by rejecting the vital evidence of the seized diary and the statements recorded u/s 132(4) during the course of search proceedings confirming the entries of the said diary only because the same was retracted during their assessment and cross examination. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition made by the AO at Rs. 7.40 crores of the on-money accepted by the assessee by rejecting the vital evidence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was recorded in the diary. A.O has noted that statement of Shri Ajay Arora was also recorded on 22.03.2007 u/s. 132 (4) of the Act wherein he admitted and confirmed the statement given by Shri Ramesh Arora. Shri Axay Sheth the director of Avichal Weaves Pvt. Ltd. was also confronted on 16.03.2007 regarding the contents of the transaction from the seized document. A.O has noted that Shri Axay Sheth had denied making of any payment apart from the one that was mentioned in the registration deed. A.O has noted that assessment of Arora Brothers were completed by making addition of the unaccounted investments made in the property and addition was also made in the case of Axay Sheth by the A.O and the addition was confirmed by LD CIT(A). A.O has also noted that Assessee had requested opportunity for cross-examination of all the 3 purchasers which was granted to the Assessee and during the cross-examination Shri Ajay Kr. Arora had retracted from several of the statements made during search u/s. 132 of the Act and the same was rejected by A.O. Similarly, Ramesh Arora had also retracted several of the statements made during search u/s. 132(4) of the Act. The retraction was rejected in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Rs. 7.40 cr. in cash (divided equally among the 2 directors of Avichal Weaves P. Ltd., their share being Rs. 3.70 crores which was mentioned as to be paid and on right side of the page, some dates have been mentioned with some payments and last date mentioned as 10/3/07 and total amount stated at Rs. 3.35 crores). Simultaneous search action was also carried out in the case of Shri Axay Seth at Surat and the seized page 10 of the diary was faxed at Surat to be shown to Shri Axay Seth and his statement was also recorded u/s. 132(4) of the Act wherein Shri Axay Seth categorically denied of having paid any amount in cash in respect of the purchase of the said property at Surat and that the purchase price was as per the registered deed found in the course of search action in his premises, which was Rs. 5 cr. The statements so given by the Arora brothers were thereafter retracted by them in their assessment proceedings stating that the signature on the statement was taken forcibly and that they have not paid any on money for the purchase of the property and that the purchase price of the property was Rs. 5 cr. only. However, the Arora brothers had filed return disclosing huge amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recisely the reason that the AO has thereafter tried to independently support the case by referring the property to DVO u/s.!42A of the Act for valuing the same as on 1/2/2007, which the DVO has valued by 2 different methods and arrived at somewhat the same figure as mentioned in the seized diary i.e. at about Rs. 12 crores and hence, the AO has concluded that the purchase price of the property is Rs. 12.40 crores thereby making addition of on money in the hands of the appellant at Rs. 7.40 crores. Here again the AO is not correct in relying upon the report of the DVO for the reason that the AO had no authority to call for such report in the case of the seller since section 142A of the Act refers to determine the investment in the property and not for determining the selling price of the property. Even otherwise, the appellant has brought on record various objections to the DVO report which are valid objections and the AO has tried to rebut the same however the basis of the DVO could not justified by the AO on the plea that the assessment is getting time barred. It is also pertinent to note that the DVO was called for valuation of the property only on 18/12/09 and the assessment wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led that even the page 10 of the seized pocket diary found from Shri Rainesh Arora and on which heavy reliance is placed by the AO for making the impugned addition, it is mentioned on the said page that '3.70 to be paid' meaning thereby that it is not paid and even if the right side of the paper is seen, the last figure reflects the date as 10/3/2007 and the aggregate amount shown is at Rs. 3.35 crores whereas the registration took place on 1/2/2007 thereby supporting the case of the appellant that no on money was involved in the transaction. It is also pertinent to note that the Arora brothers have said that as on the date of search action, outstanding balance cash payment of Rs. 35 lacs is still payable, which is in direct contrast to the general practice followed that the on money is paid up front and atleast before the registration of the property. Going further, it is mentioned in the statement of the Arora brothers that they met the appellant for the first time only on the date of registration of the property and not before that and that the entire deal was finalized by Shri Axay Seth. If that be the case, then it is Shri Axay Seth who is the right person to say the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . supported the order of A.O and further made the written submissions which reads as under:- 2. In the instant case, the CIT(A) has deleted the addition of Rs. 7.4 crores made by the Assessing Officer on account of on-money payments received by the appellant. Such payment was well evidenced from the seized documents so found from the premises of the buyer namely Shri Ramesh Arora and Shri Akshay Sheth who are the Directors of the buyer company. Such on-money payments was evidenced on page no. 10 of Annexure A-l during the course of such proceedings the statement of Shri Ramesh was recorded on 16.3.2007 u/s. 132(4) and also on 22.3.2007 wherein he has confirmed the transactions in the said diary including the payment of on-money to the seller i.e. Mahan Corporation. This fact has also been confirmed by the CIT(A) vide para 6 wherein the CIT(A) has observed that such transactions are in the handwriting of Shri Ramesh. Subsequently, the overriding importance was given by the CIT(A) on the submission of Shri Ramesh in which he retracted the payment of on-money to the assessee. At the very outset, it may be submitted that the statement is a valuable piece of evidence recorded on 2 occa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to turn around later and deny truth of said declaration or representations made therein. The CBDT's Circular F.No. 286 '2/2003-IT (Inv.) dated 10-3-2003, has also been considered while delivering this judgment. In the case of CIT vs Hukum Chand Jam, 337 ITR 238; 236 CTR 92 (do): 10.08.2009), the Hon'ble Chattisgarh HC has held as follows: "27". from the principles of law laid down in the aforesaid judgments, it may be deducted that, admission is one important piece of evidence but it cannot be said that it is conclusive. It is rebuttable. It is open to the assessee who made admission to establish that confession was involuntary and the same was extracted under duress and coercion. The burden of proving that the statement was obtained by coercion or intimidation lies upon the assessee. Where the claims that he made the statement under the mistaken belief of fact or law, be should have for rectification to the authority who passed the order based upon his statement. The retraction should be made at the earliest opportunity and the same should be established by producing any contemporaneous record or evidence, oral or documentary, to substantiate the allegation that he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s children. For the assessment year 1966-67, relevant to the calendar year 1965, the assessee included no amount by way of capital gains in respect of the transfer of the said house. In reassessment proceedings, the JTO fixed the fair market value of the said house at Rs. 65.000 and assessed the difference of Rs. 48,500 as capital gains in the asses see's hands. Though the sale of the house by the assessee was in favour of his daughter-in-law and of his children, the ITO could not invoke the aid of section 52(1) for bringing the impugned sum to tax, because there was admittedly no understatement of consideration in respect of the transfer of the house and it was not possible to say that the transfer was effected by the assessee with the object of avoidance or reduction of his liability under section 45. The ITO, however, rested his decision on the view that, sub-section (2) of section 52 did not require as a condition precedent that there should be understatement of consideration in respect of the transfer and it was enough to attract the applicability of the sub-section if the fair market value of the property as on the date of the transfer exceeded the full value of the consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were carried out at the place of director (Shri Axay Sheth and Ajay Arora), the purchasers of the property. It is also a fact that Shri Axay Sheth had denied the payment of "on money" and though Ajay Arora had admitted to the payment of on money but had later retracted about the payment of on money to the assessee. It is also a fact that the addition on account of payment of "on money" to the assessee, in the case of Axay Sheth (one of the director who had purchased the property from Assessee) was deleted by the Tribunal by holding that there was no concrete material available with the AO to prove that Shri Axay Seth has made any on money payment in cash to the Assessee for the purchase of property at Surat. Before us, Revenue has not placed any material on record to demonstrate that the decision of the coordinate Bench of deleting the addition of on money in the case of Axay Sheth has been reversed by the H'ble High Court meaning thereby that the decision of H'ble Tribunal has attained finality. With respect to the A.O relying on the report of DVO u/s. 142A of the Act for the purpose of valuation, we find that while deleting the addition, ld CIT(A) has given a finding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the appellant as a builder. Even otherwise, if the society has demolished the structure, it is not stated in the agreement that the scrap and wastages were removed and that the appellant was given vacant land by removing all the debris upon demolishing of the building. The income is shown by the appellant from sale of scrap and unwanted material and this is received by cheque and not in cash and the same is duly reduced from the project cost since relates to the project undertaken by the appellant. In view of the same, the AO is directed to assess the same as business income and allow the set off from the project cost since in final analysis, there is no loss to the revenue as the project cost is reduced to that extent. This ground of appeal is allowed. 11. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us. 12. Before us, ld. D.R. supported the order of A.O. On the other hand, ld. A.R. reiterated the submissions made before A.O and Ld. CIT(A) and the supported the order of Ld. CIT(A). 13. We have heard the rival submissions and perused the material on record. We find that while deleting the addition, Ld. CIT(A) has given a finding that the demolition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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