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TMI Blog2012 (10) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... s not considered the fact that photocopy of agreement to sell dated 151212007 ( in which piece of land was agreed to be sold for Rs. 18 crores) received from anonymous sources through fax does not constitute a valid evidence in the absence of original agreement on record. 4(b) That the Ld. CIT(A) has erred on facts and in law, in not appreciating that the aforesaid agreement was not reliable, more so since execution of the same was denied by the appellant and the seller and was contrary to the actual sale deed in respect of the same property executed between the parties and registered with appropriate authority of State Government. 5. That the Ld. CIT(A) has not considered the fact that statements of Sh. Harsh Singla &. Sh. Amit Goel recorded u/s 132(4) in which he has denied having made any payment over and above Rs. 5.50 crores to the sell of the land is of prime importance and cannot be brushed aside. 6. That the Ld. CIT(A) has not considered the fact that the so-called subsequent statement of Sh. Harsh Singla, the Ex-Director of the company confirming that the piece of land was sold for Rs. 18 crores had never been confronted to the appellant and nor any copy of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y conducted on the assessee. The search was conducted on Piyush Colonizer Ltd., Piyush Developers, Piyush Buildwell Ltd. and some of the directors of the Piyush Group on 16.1.2008. He submitted that assessment in the present case has been framed by the Assessing Officer u/s 143(3) read with Section 153 C of the Act as per column 10 of the first page of the assessment order. He submitted that bare perusal of the assessment order suggests that no satisfaction was recorded by the Assessing Officer before assumption of jurisdiction u/s 153 C of the Act against the assessee. The ld. AR submitted that before proceeding u/s 153 C a satisfaction is required to be recorded by the Assessing Officer (in short AO) in the case of a person other than the person subjected to search and in whose case proceedings u/s 153 A have been initiated. No such satisfaction has been recorded by the Assessing Officer. He referred page no. 63 of the paper book II, wherein a copy of order dated 28.8.2009 received by the assessee on 22.11.2011 has been made available. The ld. AR submitted that in his order at page no. 6 the ld. CIT (A) has claimed that a satisfaction note was recorded on 28.8.2009 by the AO for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nything about the same. He placed reliance on the decision of Hon'ble Supreme Court in the case of Manish Maheshwari 289 ITR 341 (SC). 2.3 The ld. AR submitted further that at page no. 7 of the first appellate order the ld. CIT (A) has stated that the assessment had been completed u/s 143(3) on the basis of the notice issued u/s 142 (1) and mentioning of Section 153 C does not vitiate the assessment. The ld. AR pointed out that though the ld. CIT (A) has held as above, but still it is submitted that the ld. CIT (A) cannot change the nature of assessment to Section 153 C and therefore, the fact that proceedings have been initiated u/s 153 C, since notices u/s 153 C for earlier assessment years have been issued and assessment have been framed therein after having assuming the jurisdiction u/s 153 C and reopening the assessments for earlier years and thus findings of ld. CIT (A) is not correct. He submitted that ld. CIT (A) cannot change the assessment framed under specific provisions related to search case to the procedure adopted in normal case. Thus the assessment framed u/s 143 (3) read with Section 153 C is void ab initio and deserves to be cancelled. He pointed out with the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can at best be stated as a piece of unreliable information, since original document has never been confronted to the assessee. He contended further that the fax message cannot be said to be a document within provisions of Section 132 because it has no authenticity in the eyes of law. Thus on this ground alone the assessment is bad in law. 2.5 The ld. DR on the other hand tried to justify the first appellate order on the issue. He referred the contents of the provisions laid down under Sections 153A and 153C of the Act. He also pointed out that the Assessment Year 2008- 2009 in question is related to the previous year in which search was conducted and thus as per the provisions of these Sections assessment for the A.Y. 2008- 09 was to be made under the regular provisions of Section 143 (3) and not under Section 153 C read with Section 153A of the Act. The ld. DR pointed out that such issue of non-recording of satisfaction was not raised before the AO and the assessee participated in the proceeding of the assessment. 2.6 After considering the above submissions and having gone through the material available on record as well as the decisions relied upon we do not find substance in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration is irrelevant to the previous year in which search was taken place. The AO issued notice u/s 142 (1) to the assessee. In response thereto assessee filed return declaring an income of Rs. 4,97,500/-. The assessment has been framed determining total income at Rs. 12,54,77,500/- by making addition of Rs. 12.5 crores on account of cash paid over and above sale consideration of Rs. 5.50 crores for purchase of land at village Mewla, Mahrajpur, Faridabad. The ld. CIT (A) has upheld the same against which assessee is in appeal before us. 3.1 The ld. AR submitted that no document or any agreement or receipt was found during the course of search from the possession of the assessee and the addition have been made on the basis of certain information sent to the department through fax message by some anonymous sources. It was contended that reliance cannot be placed on such unconfirmed and unreliable fax message which has not been even confronted to the assessee, such copies shall not constitute a valid evidence and they can the admitted as a piece of evidence only when its original copy is made available on record. He submitted that the assessee company had purchased land at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad faxed it. He submitted that on every fax message there is telephone no./name but it has not been investigated despite specific request made in this regard by the assessee during the course of the assessment proceedings. The assessee had also raised this issue in its reply dated 19.11.2009 which has been reproduced by the AO at page nos. 7 to 9 of the assessment order. He submitted that the original copy of the faxed document was never made available for confrontation of the assessee, hence in absence of corroboration by the person who had sent the fax it cannot be relied upon. In support he placed reliance on the following decisions: * Daulat Ram Rawatmal 87 ITR 349 Supreme Court * K. P. Varghese Vs. ITO 131 ITR 597 (SC) * Motor and General Store (P) Ltd. (1967) 66 ITR 692 (SC) * CIT Vs. Rajpal Singh Ram Avtar (2005) 149 Taxman 32 (Alld) * CIT Vs. Chandan Bucher (2010) 323 ITR 510 (P & H) * CIT Vs. P.R. Metrani (2002) 120 Taxman 612 (Kar) * 1994 AIR SC 591 govt. of A.P. Vs. Karm C.V. Reddy & ors. * P.V. Jewellery Vs. ITO (1993) 45 TTJ (JP) 514 * Ram Swaroop Saini (HUF) Vs. ACIT (2007) 15 SO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 132 (4). In this regard he placed reliance on the following decisions: - T. S. Kumara Swamy Vs. ACIT (1998) 65 ITD 188 (Mad) - Surjit Singh Chhabra Vs. UOI (1997) 1 SCC 508 - Bachittar Singh Vs. CIT (2010) 328 ITR 400 (P & H) - ACIT Vs. Hukum Chand Jain (2010) 191 Taxman 319 (Chhattishgarh) - Kanti Lal Vs. ACIT (2011) 14 Taxman 108 Ahmedabad 3.4 The ld. AR submitted further that the statements of the sellers of the property recorded during the course of search u/s 132 (4) of the Act under the oath affirming the consideration of Rs. 5.50 crores for the property cannot be brushed aside. Regarding certain receipts found from the premises of Smt. Parminder Chadha, copies whereof have been made available at page nos. 76 and 77 of the paper book volume-II, the ld. AR submitted that these receipts are incomplete as there are no signature of all the Co-owners and witnesses. He submitted that these are not even copies of the original receipts. The receipt at page no. 75 is a fax copy and cannot be relied upon. Smt. Parminder Chadha in her statements recorded again on 24.11.2009, a copy whereof has been made available at page nos. 60 to 63 of the paper book Volume 1 had denied to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mt. Parminder Chadha towards the part payment of the sale consideration for the property. He submitted that this receipt has also been acknowledged by the Co-owner Ms. Kavita. Thus by these receipts total payment of Rs. 3,70,000,00/- toward the sale consideration has been made by the assessee. The ld. DR submitted that the third set of evidence is the acknowledgement of payment of Rs. 2 crores to Smt. Parminder Chadha acknowledged by the assessee vide its letter dated 4.12.2009 made available at page no. 41 of the PB filed by the department ( in short PB (d)). The ld. DR also referred page no. 42 of PB (d) supporting the payment of Rs. 2 crores in the ledger account of Smt. Parminder Chadha with the assessee during the F.Y. 2007-08. He submitted that period of this transaction shown on page no. 41 and 42 of the PB (d) is the same and there is no evidence of other deal. 3.7 The ld. DR submitted further that page no. 43 to 64 are of PB (d) are the 4th set of evidence against the assessee. These are copies of 3 agreements dated 14.5.2007 between the assessee on one hand and Smt. Parminder Chadha, Ms. Kavita Chadha and Sh. Tej pal Singh on the other hand. These documents were seized f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Durga Prasad More (1971) 82 ITR 540 (SC) - ACIT Vs. Jay Engineering Works Ltd. (1978) 113 ITR 389 (Del) - CIT Vs. Krishna Veni Ammal (1986) 158 ITR 826 (Mad) 3.8 The ld. DR submitted further that the decisions relied upon by the ld. AR having distinguishable facts are not helpful to the assessee. 3.9 The ld. AR rejoined with the submission that first set of evidence are the copies of fax message received by the department from unknown sourceduring the course of search. It is neither the photo copy of the original document nor the source from where it was received is identified. He submitted that original of these documents were never furnished by the department for verification to the assessee hence, these fax messages in the shape of agreement to sell and receipt cannot be relied upon nor these can be used adversely against the assessee. He submitted further that no document/evidence was found during the course of search from the possession of the assessee. He submitted further that the second set of evidence i.e. receipts made available at page no. 76 and 77 of the PB - II (A) have not been signed by all the Co-owners of the property. The receipt placed at page no. 76 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith his earlier statements recorded u/s 132 (4) which has got evidentiary value nor any reason has been shown for making a different statements on 20.10.2009. It is also not the case of Sh. Singla that he had made earlier statements u/s 132 (4) of the Act under duress, influence coercion, threat etc. The assessee was also not afforded with opportunity to cross-examination Sh. Singla, hence his statement recorded on 20.10.2009 cannot be relied upon. Besides Sh. Singla of director of the company during the transaction of the property was later on removed from the directorship of the company and an FIR was also lodged by the assessee against him hence, he was adamant to ruin the assessee. In furtherance to achieve this motive Sh. Singla had made contrary statements. It is also an established proposition of law that a statement cannot be used adversely to a person without affording him an opportunity to cross-examine that person. He submitted further that though it is not admitted but even if the amount alleged to have been paid towards the undisclosed sale consideration as per the receipts found and adjusted balance amount to be paid by Smt. Chadha and others to the assessee against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined that both the alleged agreement dated 15.2.2007 and receipt dated 15.2.2007 have been sent to the department on fax from the unknown person and hence in absence of identity of the source and original copies of these documents, the same cannot be relied upon. He contended further that even the telephone no./ name appearing on fax message was not investigated despite specific request of the assessee during the course of assessment proceedings. In support he referred page nos. 31 to 33 of the paper book and also the reply dated 19.11.2009 in this regard reproduced at page no. 7 of the assessment order. The ld. AR contended further that since the fax message has not been found from the premises of the assessee, the onus to establish its genuineness does not lie upon the assessee. He has placed reliance on several decisions in support. Having gone through these decisions we find that in the case of District Magistrate Vs. R. Kumaravel (Supra) the Hon'ble Supreme Court has been pleased to hold that a telegramme by itself is not an authentic document, it is like and unsigned and anonymous communication, unless a telephone is confirmed by a subsequent signed application, representatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee as in lieu of a part payment towards agreement of sale dated nil. Thus Rs. 3.70 crore has been shown paid in cash as a part payment towards agreement to sell by the assessee to the owners of the property. The ld. DR submitted that the amount shown in these receipts paid in a cash corroborates this fact that these payments were made above the amount shown in the sale deed at Rs. 5.50 crore through cheque. The contention of the ld. AR remained that these receipts have not been shown signed by the remaining Co-owners of the property i.e. Sh. Tej Pal Singh and Ms. Kavita nor these receipts have been signed by the assessee. His further contention remained that these receipts should have been found from the possession of the assessee since assessee was the purchaser of the property from Smt. Parminder Chadha, Sh. Tej Pal Singh and Ms. Kavita however, these have been recovered from the possession of Smt. Parminder Chadha. He submitted further that Smt. Parminder Chadha in her statement recorded on 24.11.2009 has stated that the copies of the said receipts found from her possession during the course of search are draft copies of the receipts which were to be issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was made towards the sale consideration of the present property in question. 3.13 The ld. AR submitted that there was no question of taking extra payment through cheque and during the search proceedings no specific question was asked to the assessee regarding the payment of Rs. 2 crore shown in the ledger account of Smt. Parminder Chadha with the assessee, made available at page no. 42 of the Pb (d). We are not fully convinced with the contention of the ld. AR in this regard, but at the same time on the basis of the stated payment of Rs. 2 crores through cheque an inference beyond doubt cannot be drawn that the amount was paid towards the sale consideration of the property in question. 3.14 The 4th set of evidence relied upon by the ld. DR are copies of the documents made available at page nos. 43 to 90 of the Pb (d). These are copies of the 3 agreements dated 14.5.2007 between the assessee at one hand and Smt. Parminder Chadha, Ms. Kavita Chadha and Sh. Tej Pal Singh on the other hand. These documents were seized from the residence of Smt. Parminder Chadha. Referring these documents, the ld. DR submitted that total consideration has not been shown in the agreement. These ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the sale consideration of the property at Rs. 5.50 crores as per registered deed of the property has already been paid by the assessee. Considering these submissions we are of the view that there is no evidence beyond doubt to establish the allegation of the department that the amount payable by the above 3 persons towards their booking of the space in the business premises to be developed by the assessee, was actually paid to the assessee by way of adjustment of the sale consideration towards the property in question above the amount shown in the sale deed or towards Rs. 18 crores shown in the alleged agreement to sell dated 15.2.2007 received by the department on fax. 3.16 The 5th set of evidence relied upon by the AO and ld. DR are the set of statements of Sh. Harish Singla recorded by the AO on 20.10.2010, wherein he has specifically stated that the property in question was purchased for Rs. 18 crores however, in the sale deed amount of Rs. 5.50 crores paid through cheque only was shown. The ld. DR submitted that Sh. Singla during the period when the transaction was entered into was director of the assessee company and he also remained signatory of the agreement as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esence of family members was an important material which could be acted upon. In that case the AO made addition on the basis of statements recorded during the course of survey. The addition was in respect of investment not recorded in the books of accounts. The assessee later on retracted from his earlier statements by taking stand that he had agriculture income to that effect investment was from that source. In the case of ACIT Vs. Hukum Chand Jain (Supra) before the Hon'ble High Court of Chhattisgarh relied upon by the ld. AR, the assessee could not explain recovery of cash and jewellery during the course of search proceedings and in his statement recorded u/s 132 (4) he had surrendered certain amount as his undisclosed income for block period and had also expressed his willingness to pay taxes worked out on the surrendered income. However, in his return of income filed in response to the notice issued u/s 158 BC, he declared lower return contending that statement u/s 132 (4) was obtained under duress. The AO made assessment on the basis of surrendered income. The matter traveled before the High Court and the Hon'ble High Court was pleased to hold that when assessee did not retra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid in cash was on money. So far other claimed evidences are concerned these are also not sufficient to establish the above allegation of involvement of on money. It is only an inference which has been presumed by the department that the advance of Rs. 2 crore (Rs.1 crore in cash and Rs. 1 crore by cheque) was given out of which the amount of Rs. 1 crore paid by cheque dated 15.2.2007 has been adjusted against the payments shown as per sale deed; Rs. 1 crore vide cheque dated 23.4.2007 and another Rs. 1 crore vide cheque dated 8.5.2007 were received by the assessee apart from payment shown in the sale deed of Rs. 5.50 crores; Rs. 1 crore shown in the receipt dated 11.4.2007 and Rs. 2.70 crore shown in the receipt dated 14.5.2007 were apart from the payment shown in the sale deed and that Smt. Parminder Chadha, Sh. Tej Pal Singh and Ms. Kavita Chadha had booked the office premises in the commercial complex of the assessee and the due amount shown as closing balance in their accounts with the assessee had already been adjusted out of the cash payable to Smt. Parminder Chadha Sh. Tej Pal Singh and Ms. Kavita against sale consideration of the property in question at Mewla Maharajpur, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke an assessment without reference to any evidence or any material at all. In the present case before us the issue raised was as to whether there were on sufficient material with the Assessing Officer to justify the addition made at Rs. 12.50 crores with this finding that the property was sold for Rs. 18 crores but in the sale deed it was shown at Rs. 5.50 crores and remaining amount was paid in cash. In the case of C. Vasanti Lal & Co. Vs. CIT (Supra) it was held that ITO is not bound by any technical law of evidence and it is open to him to collect materials to facilitate assessment even by providing inquiry. In the case of ACIT Vs. Jay Engineering Works Ltd. (Supra) the Hon'ble Delhi High Court has been pleased to hold that ITO not being a Court can rely upon material which may not be strictly evidence admissible under Indian Evidence Act for purpose of making an order of assessment. In that case before the Hon'ble Delhi High Court the relevant books of accounts of assessee were destroyed in fire and the Tribunal while allowing deductions claimed by assessee had taken into account as proof of material auditor's report from which it could be inferred that deductions were properly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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