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TMI Blog2014 (2) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... of unaccounted receipts to the tune of Rs. 1,23,61,951/- in respect of flats sold in RNA Azzure, Bandra. The said assessment was reopened u/s. 148 of the Act by issue of notice dt. 22.9.2010. The reason for reopening the assessment was based on the information received from ADIT (Inv) Unit II(2), Nasik. As per the information received, it was alleged that the assessee has received consideration of Rs. 4,27,35,000/- against sale of three flats at RNA Azzure as against Rs. 2,56,41,000/- shown by the assessee. According to the AO, this difference of income of Rs. 1,70,94,000/- has escaped assessment ,therefore, he has reason to believe to reopen the assessment. 3.1. The AO observed that during the search and seizure operation conducted in the premises of M/s. Ashoka Buildcom Ltd., Nasik, one document was found from Mr. Satish M. Kulkarni, Asstt. Manager of M/s. Ashoka Buildcom Ltd. The said document referred to as Annexure AB-1 contained some working relating to Mumbai flats. The statement of Shri Satish M. Kulkarni was recorded on 20.4.2010 in which he admitted that the difference between the total cost and agreement value is paid in cash and is out of books. Taking a leaf out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sers recorded u/s. 131(1) of the Act. The Ld. Counsel for the assessee further stated that the AO himself has observed the main reason for the addition in the original assessment was on the basis of material collected at the time of search action and statements recorded then. The Ld. Counsel continued to submit that the AO has considered the statement of Shri Satish Kulkarni but failed to consider the reply given by him to question No. 8 wherein he has clearly stated that he does not know the details of source of the cash paid and the same can be explained by Chairman Shri Ashok Kataria. The Ld. Counsel further pointed out that in the statement of Shri Ashok Kataria, he has very categorically stated that the said document (Annexure AB-1) appears to be an estimate. It is the say of the Ld. Counsel that while recording the reason for reopening of the assessment, the AO has considered a part statement of Asstt. Manager of M/s. Ashoka Buildcom Ltd., who is not even a flat purchaser. The AO has also ignored the answers given by Shri Ashok Kataria. The Ld. Counsel continued to state that even after receiving the information from the DDIT (Inv), Nasik, the AO did not apply his mind. When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment is very much valid and order of the Ld. CIT(A) does not contain any error so far as reopening is concerned. On the merits, the Ld. DR relied upon the orders of the lower authorities. 7. Having heard the rival contentions, we have carefully perused the orders of the lower authorities and the relevant material placed on record. We have also perused the original order passed u/s. 143(3) r.w. section 153A. The relevant part of the reasons recorded for reopening of the assessment read as under: "The assessee had shown profit from RNA Azzure project for the A.Y. 2008-09 specifying the sale proceeds of Rs. 31,47,62,391/-. This included the following sums, which were shown at the agreement value increased by some other charges: Asha Ashok Katariya Rs.89,44,030 Satish D Parakh Rs.89,39,030 Satish D Parakh HUF Rs.87,38,650 However, the information received from DDIT (Inv)-II Nasik establishes that M/s. A.A. Estate Pvt. Ltd. has received Rs. 4,27,35,000/- in aggregate from above mentioned persons. The difference, i.e. Rs. 1,61,13,290/- was paid in cash and is, therefore, prima facie unaccounted in the books of account. Therefore, there is suppression of income to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at "for determining whether initiation of reassessment proceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. The ld DR also relied on the decision of the Hon'ble SC in the case of Central Provinces 191 ITR 662 where in it has been held that the final out come of the proceedings is not relevant . Reliance was also placed on the decision of the Honb'le Madras H.C in ASSP & Co., 172 ITR 274 wherein it was held that the AO can issue number of notices to reassess escaped income. On fresh facts and fresh information the Ld. DR relied upon the decision of the Hon'ble S.C in the case of Phoolchand Bajranglal 203 ITR 456. 10. In our understanding of the Law the facts of the cases relied upon by the DR are clearly distinguishable in as much as in the present case what the AO is relying upon is only a work sheet that too of a third party, most of the workings on which are not even remotely connected with the assessee. A document has to be considered as a whole and not in parts. As mentioned earlier, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tish Kulkarni which has been retracted later on. The details given in the seized paper from a third party's premises 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 has received any on-money. Everything has been presumed by the AO against the assessee only on the statement of Shri Satish Kulkarni whereas the AO completely ignored the statements recorded by himself of the purchasers during the course of the original assessment proceedings. 11. Considering all the facts in totality, in the light of the aforestated annexure AB-1, we failed to persuade ourselves to find any relevancy on the said document which could lead to a reasonable conclusion that the assessee has received some on-money which could be made basis for the reopening of the assessment. Accordingly, we set aside the notice u/s. 148 and hold the reassessment proceedings as invalid. Ground No. 1 is accordingly allowed. 12. For complete adjudication of appeal, now we proceed to decide on merit, we find that the entire addition has been made solely on the basis of the docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lats by executing two agreements. Flats which were sold as shell with two agreements, the unaccounted profit has already been considered in the original assessment. In the proceedings under consideration, except for the retracted statement, the AO has not brought any material evidence on record which could suggest that the assessee has received on-money on sale of every flat. The AO has believed on the circumstantial evidences like the retracted statement of Shri Satish Kulkarni and Annexure AB-1 and in the process, the AO has completely ignored the direct evidences being the statements under oath of the buyers of the flats and their affidavits in this matter. 14. Apart from what we have stated hereinabove, we also failed to understand what prevented the AO to apply the test of human probabilities during the original assessment proceedings itself when it came to notice of the AO that assessee is taking some money outside the books of account. The only reason why the AO has not applied this test is that after thorough examination and verification, he found that only certain flats were sold where on-money was involved and the respective buyers of those flats have also confirmed this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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