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TMI Blog2014 (4) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... r sq.ft., as reflected in seized paper no.56, and applied it to sales of all the units and computed the impugned addition. We do not find that the assessee has admitted to a modus operandi of receiving sale consideration outside the books of account. It is also emerging from record that the Revenue has also not led any credible and cogent material or evidence to demonstrate that any modus operandi of receiving sale consideration outside the account books was being carried out by the assessee regularly, except in relation to one instance of sale to Mrs. Fatima Moiz Fakruddin. Therefore, under these circumstances it would not be justified for the Revenue to extrapolate receipt of on-money for the sale of other units in the project and accordingly there is no justification for the addition made on this count. - Decided in favour of assessee. - ITA No.741/PN/2012 - - - Dated:- 30-4-2014 - Shri Shailendra Kumar Yadav, Judicial Member And Shri G.S. Pannu, Accountant Member Assessee by: Mr. Sunil Pathak And Mr. Suhas P. Bora Department by: Mr. A. K. Modi ORDER G. S. Pannu, The captioned appeal by the assessee is directed against an order of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contain the name of the purchaser, unit number sold, date of agreement, area of the unit sold and total consideration. On that basis the Assessing Officer observed that the average selling price shown by the assessee for various units ranged between ₹ 2,000/- to ₹ 2,500/- per sq.ft. except in respect of a Unit No. G-2 which was @ of ₹ 5,333/- per sq.ft.. In the course of search, certain loose papers were found and seized and one of such seized paper, referred to as page 56 of Bundle No.2, indicated that assessee had charged on-money on sale of unit to a customer, Mrs. Fatima Moiz Fakruddin others. On the basis of such seized paper, notings of which have been reproduced in para 7.1 of the assessment order, it has been inferred that the total selling price to the said customer works out to ₹ 4,076/- per sq.ft.. The Assessing Officer compared this rate with the sale consideration recorded in the account books, and noticed that the sale price indicated in the seized material showed receipt of on-money from the customer, which was not declared in the account books. Apart from the aforesaid, the Assessing Officer has referred to another seized loose paper at pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that assessee had charged on-money on sale of unit to Mrs. Fatima Moiz Fakruddin others. Secondly, he has upheld the action of the Assessing Officer in inferring that the assessee must have charged on-money on sale of all the units, though the seized paper no. 56 of Bundle No.2 related to a solitary sale instance to Mrs. Fatima Moiz Fakruddin others, and accordingly the impugned addition was upheld. The CIT(A) has relied the judgement of the Hon ble Supreme Court in the case of Commissioner of Sales Tax vs. H.M. Esufali H. M. Abdulali, (1973) 90 ITR 271 (SC) and held that the Assessing Officer was justified in extrapolating the sale price in respect of all the units sold on the basis of the evidence found in relation to one of the units. Against the aforesaid decision of the CIT(A), assessee is in further appeal before us. 6. Before us, the learned counsel for the assessee has vehemently argued that the entire addition has been made by the Assessing Officer on mere conjectures and surmises. According to the learned counsel, the seized paper no. 56 of Bundle No.2 has been wrongly interpreted by the Assessing Officer and the CIT(A) to infer that assessee had received any on- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... q.ft. found noted in the seized document no. 56 cannot be taken to mean that the sale was made @ 4,000/- per sq.ft.. For the proposition that the seized material has to be considered in its entirety, including those which favour the assessee, reliance was placed on the decision of the Hon ble Delhi High court in the case of CIT vs. Indeo Airways Pvt. Ltd., 349 ITR 85 (Del). 7. Apart therefrom the learned counsel submitted that at no stage assessee admitted receiving of on-money from the customer, Mrs. Fatima Moiz Fakruddin others and in this context, our attention has been drawn to the statement of Shri Arvind Jain, partner of the assessee firm recorded at the time of search u/s 132(4) of the Act, a copy of which has been placed at pages 22 to 37 of the Paper Book. In response to question no.8 put to the said partner, it was categorically denied that any on-money was received. The learned counsel explained that the said question was put to the partner in the context of the seized paper no.56 of Bundle No.2 which has been relied upon by the Assessing Officer to infer receipt of on-money. Going further it has been contended that only with a view to avoid litigation and to buy pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no justification to infer receipt of on-money on sales made. 9. The learned counsel also made an alternative argument which is to the effect that even if it has to be held that assessee had charged any on-money on sale of unit to Mrs. Fatima Moiz Fakruddin, the said on-money amounts to ₹ 2.96 crores and coupled with the other discrepancy of ₹ 40,00,000/- on the basis of loose paper no.20, the total additional income declared by the assessee of ₹ 3.40 crores was enough to cover-up the said discrepancies. On this aspect, it is contested that no further addition was required to be made by considering the sale rate of ₹ 4,000/- per sq.ft. to all the office premises sold and the reliance placed by the CIT(A) on the judgement of the Hon ble Supreme Court in the case of H.M. Esufali H. M. Abdulali (supra) was sought to be assailed. According to the learned counsel, the ratio of the said decision is not applicable to the facts of the present case. Apart therefrom, the reliance placed by the CIT(A) on the judgement of the Hon ble Andhra Pradesh High Court in the case of Rajnik and Co. vs. ACIT, (2001) 251 ITR 561 (AP) was also sought to be assailed. Alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Accord at Baner, Pune. No doubt, the addition is an estimate, but the claim of the Revenue is that the factum of assessee having received on-money on sale of units is founded on a document styled no.56 of Bundle No.2, which was seized in the course of search. As per the Revenue, the said document evidenced charging of on-money by the assessee on sale of a unit to Mrs. Fatima Moiz Fakruddin others. As per the Revenue, the said seized document showed that the sale consideration received by the assessee was more that the amount stated in the sale agreement. In the course of search, the said document was put to the partner of the assessee and in the statement recorded u/s 132(4) of the Act, the partner deposed as under :- Q. 8 I am showing you item no.2 of Ann.-A. Please go through the same and explain. Please keep in mind that the page no.56 suggests onmoney of ₹ 2.96 crores in the transaction appearing in the papers in file received by you while replying to this question? A. 8 I do not agree with the contents of the paper of Sr.No.56. I do not recognize the handwriting of the person. No such on-money has been received on the sale of the particular property. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding further we may briefly refer to the facts of the case 1 before the Hon ble Supreme Court. The Hon ble Supreme Court was dealing with a best judgment assessment made by the Sales Tax Officer wherein in the face of sale of 19 days not entered in account books, the S.T.O. estimated the escaped turnover for the entire year. In the case of the Hon ble Supreme Court, evidence was found which showed that sale of 19 days was not recorded in the regular account books. The evidence in question was a bill book containing undisclosed sales for 19 days. The Hon ble Supreme Court upheld the action of the Sales Tax Officer that the factum of suppressed sales for 19 days could form the basis for estimating escaped turnover for the entire year. Pertinently, it is to be appreciated that in the case before the Hon ble Supreme Court, assessee initially disputed that bill book containing undisclosed sales did not pertain to him and it was only subsequently he accepted that the bill book reflected undisclosed sales pertaining to him. The Hon ble Supreme Court has noted the aspect that assessee conceded subsequently that the bill book was his and the entries therein related to his dealings. Under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nover he had suppressed. That fact must be within his personal knowledge. Hence, the burden of proving that fact is on him. No circumstance has been placed before the assessing authority to show that the assessee's dealings during September 1, 1960, to September 19, 1960, outside his accounts were due to some exceptional circumstance or that they were proportionately more than his dealings outside his accounts during the remaining periods. The assessing authority could not have been in possession of any correct measure to find out the escaped turnover during the periods November 1, 1959, to August 31, 1960, and September 20, 1960, to October 20, 1960. 15. Therefore, the proposition upheld by the Hon ble Supreme Court can only be applied in circumstance where it is proved as well as admitted by the assessee that there are dealings outside his accounts. The moot point is as to whether the facts and circumstances in the present case justify an inference of such a circumstance. We will address this with reference to the facts of the instant case a little later in the order. 16. Now, with respect to the judgement of the Hon ble Andhra Pradesh High Court in the case of Rajnik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry sale of a unit made to Mrs. Fatima Moiz Fakruddin. It is also clear that when said document was put to the assessee s partner, he denied the contents but in the same breath offered the amount of on-money reflected there as additional income. So however, the point to be noted is that at that stage the partner of the assessee did not admit to any modus operandi of receiving on-money on sale of units. It is also noteworthy that the Revenue did not put any such question to the partner during his deposition. There is also no evidence of any other sale having been made by the assessee of an amount in excess of what was found recorded in the account books. Therefore, considering the entire facts and circumstances, we do not find that the assessee has admitted to a modus operandi of receiving sale consideration outside the books of account. It is also emerging from record that the Revenue has also not led any credible and cogent material or evidence to demonstrate that any modus operandi of receiving sale consideration outside the account books was being carried out by the assessee regularly, except in relation to one instance of sale to Mrs. Fatima Moiz Fakruddin. Therefore, under thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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