9911796707
TMI Blog2012 (6) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... hed on 06.08.08 as its share holders. During the period relevant to the assessment year 2007-08 there was no Trading Activity. The return of income for AY 2007-2008 declaring NIL income was filed 04-03-2009. During this year, the assessee company purchased a land admeasuring 6.06 hectare. The land in question is situated at village Bhavgarh Bhanda, Teh. Sanganer, Distt. Jaipur. The assessee purchased this land through "Agreement to Sale" for ₹ 1,25,00,000/- Further the assessee company also got executed "Will" and Power of Attorney from the owner of the land in favour of Shri Arun Lashkary. Shri Arun Lashkary, having power of attorney of the legal owner of the land (Shri Deen Dayal & others) transferred legal title/legal ownership of this land to the assessee company by executing the "Registered Sale Deed" on 20.10.2007. The assessee company applied to JDA for approval of residential scheme and finally got the scheme approved from JDA. The assessee company deposited ₹ 1,00,74,005.00 in Oct 2007 (AY 2008-2009) with JDA against approval/conversion charges. The JDA issued three 'pattas' in favor of the assessee company on 05.11.2007 one for plot no. 1 measuring 23217.53 sq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property at Murlipura whose purchase rate/market rate is not 22.5 (omitting three zeroes). The purchase prices have been verified from the deeds lying under seizure with the department. The AO mentioned that the market value of the land as per the documents seized from the assessee at Ann A 40 is ₹ 6000/sq yard. As for column three, there aren't any expenses that correspond to these figures in such land accounts on jambandi/conversion either before or after purchase and in none of the properties, these expenses match. As for column four, these are not the area of land owned by the assessee group as Bhavgarh Banda is a 72,000 sq yard; Pushp Garden is 21000 sq yard and so and so forth. The total of column 4 (18.3) is not the area owned by the assessee group in either bigha/sq yards/sq feet/ hectare. In view of these facts, A.O. observed that the statement given by Sh. Pawan Lashkary during post search inquiry was not correct on this issue. The department has seized another paper Ann A 40, page 77. In this paper, land expenses have been taken to be ₹ 37,06,98,000/- @ ₹ 6000/sq yards. Alongside was another page in which ₹ 7.41 crores was written as land cost. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this sufficiently. A mere statement does not rebut the presumption of s. 132 (4A) and as has been seen, the assessee is quite capable of changing his statements to suit his convenience. The AO mentioned that thus piecing together these important papers seized during search and the contradictory explanation of the assessee at various instances, one can safely arrive at the conclusion that the coding that the assessee had written as 330 in page 37 of Exhibit 57 is indeed 3.3 crores. But as stated by him it is not the market value but the actual expenses of the land which he has incurred because the market value as he himself has made is ₹ 37 crores. The AO mentioned that the above said seized paper 37 of Exhibit 57 is not dumb paper as the assessee has tried to impress because the scribbling in the seized papers are corroborated with the books maintained by the assessee. The scribbling at Ann A 37 are on the land banks owned by the assessee. The document of email amply proves that the market rate of this property is ₹ 6000 per sq yard and for 62000 sq yards; it works out to ₹ 37 crores. The AO mentioned that the assessee has been given ample opportunities to explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 36. 4 Omitted by writing three zeros- indicates purchase rate/market rate. The assessee stated in search statement that market rate of the land is mentioned in the column before the name of the land. (The ld AO inserted the words purchase rate at her own without appreciating the search statement in this regard). 2.2 In para 3 of the Assessment Order the Ld. AO mentioned that Shri Pawan Lashkary the key person of the group has scribbled names of the properties owned by the companies in Lashkary group. Whereas the fact is that the Lashkary group owned about 40 properties in the group (List PB page 442 to 451) whereas names of only nine properties were listed in the impugned seized annexure page 37 of Annexure A-57. This shows that this paper was not prepared to jotting down the cost of the properties. If it was so, than all the properties under the group would have been listed - not few of them. Shri Pawan Lashkary listed only nine properties out of total 40 properties. This shows the intention of Shri Pawan Lashkary was not to jotting down the cost of the properties but this paper was written for some another reason. In fact the nine properties were those properties for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence should be drawn on the basis of rejected statement. 2.4 In para 6 of the assessment order the ld. AO mentioned that the market value of these lands as per the documents seized from the assessee at Annexure A-24 is ₹ 13000/- per Sq Yard. In this regard at the outset we object the observation of the ld AO that this document was seized from assessee. Factually, this paper was not seized from the possession of the assessee company. The registered address of the assessee company is B-304, Janta Colony, Jaipur whereas these papers (Annexure A-24 & A-57) were seized from 73-74, Talkatora, Jaipur which is premises of M/s Pawan Enterprises. Secondly this paper does not show the market value of the property but it was an asking price from a particular prospective person who offered for joint venture. The person was totally unknown to the assessee. Further the person was from outside Jaipur and his past history, creditworthiness, past experience; goodwill etc. were not known to the assessee. Due to these factors the assessee quoted ₹ 6000/- per SY for its land at "Bhavharh", which was far above from the real market price. It is relevant to mention here that in joint ven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was only 125.00 lacs whereon the expenses for JDA charges were ₹ 128.90 lacs. The question for matching the figure in column 3 does not arise because this represents an estimated figure of expenses to be incurred. 2.5 The ld. AO failed to appreciate the figures mentioned on seized annexure A-24 page 159 and 161 (Copy at PB Page 32 to 34) and Annexure A-40 page 73-76 (copy at PB page 27-31). Ld. AO wrongly interpreted/concluded that market value of the land at "Bhavgarh" ₹ 37,06,98,000. The assessee advertised in News paper for sale of the land (PB page 37). In response to this advertisement, several persons approached to the assessee by Email or on phone. The copy of some of the Emails is at PB Page 39 to 44. One of the Emails was from G.K.Sharma. The assessee quoted him the market rate of ₹ 6000/- per SQ for outright sale (the value comes to ₹ 37.06 crores for the land of the assessee). The assessee quoted a very high rate far above from the market rate for the reasons explained above in Para 2.4 above. This perspective buyer approached to the assessee for alternative proposal of joint venture and proposal was prepared on the basis of payment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmises, conjectures presumptions and assumptions purely on the basis of deaf and dumb documents. a) The ld AO wrongly concluded that the column 4 of the seized annexure A-57 page 37 represents to cost of land. Copy of said page is PB Page 36. The entire finding is based on presumption, assumption, probabilities and possibilities. No any positive material was brought on record to show that column 4 of the seized paper represents the cost of land. Figures mentioned on the seized paper have no nexus with the entries in the books of accounts or documents seized by the department. The seized paper is not a speaking document. No date is mentioned. Nothing has been mentioned to visualize whether it is cost or sale or asking price. One may interpret the figures of this column as he wish. One can also say at another extreme that this column shows the unaccounted payments against the land made by the assessee as against the cost presumed by the AO and addition for the entire amount mentioned in this column by adding 5 zeros could be made on the basis of such presumption. The entries in the relevant seized document were without any narration and the same being un-dated and unsigned; it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The advertisement cutting of the news paper is also under seizure vide page 102 to 106 of Exhibit A-24 seized from 7375 Talkatora, Jaipur. Alternatively, we were thinking to develop schemes/group housing projects on various lands of our group on joint venture/ collaboration agreement/Partnership basis. We were approached by several parties for joint venture agreement. The print outs of several Emails are under seizure vide said Exhibit A-24. During the course of the discussion in respect of Joint Venture/Collaboration Agreement/Partnership with one of the prospective party, I prepared this paper for negotiation with the party. The contents of this seized page 37 of Exhibit A-57 are explained as under:- a) The offer against our share in profit/loss of joint venture was mentioned in Column 1 of the said seized paper. For example we offered our share of 26.66% in profit or loss; if joint venture in respect of Land at Bhavgarh Bandha is finalized. b) The particulars of the land proposed for joint venture/collaboration are mentioned in Column 2 of the said seized paper. c) At the time of said negotiation for the joint venture/collaboration, there was several pending work, in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of all this is to submit that the figures given for proposed addition are in respect of M/s Rising Buildestates Pvt Ltd and not in the case of the assessee and in the case of the assessee these figures are different. b) In the show cause query your honour is also admitting that the Page No. 76 of Annexure A-40 is estimation of joint venture and the rate of ₹ 6000/- per SY mentioned at email printout seized vide page 142 of seized Annexure A-24 is asking price of the land if sold outright basis. The Page 73-74 of Ann A-40 is neither a separate estimate nor separate projection but connected working in connection with Page 76 of Ann A-40. These projections were prepared by the same person who offered the proposal of joint venture to the assessee. In the page 73-74 the projection is made monthly basis while in Page 76 is summary of page 73-74 which is explained as under: - Particulars Total Amount as per Page 73-74 Total Amount as per Page 76 Land Cost 7,41,39,600/-- (This figure is 20% of total land value of ₹ 37,06,98,000/- estimated for joint venture and 20% of land cost paid up front to owner as mentioned in page 76 of Ann A-40) 37,06,98,000.00 Cost of Buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titive show cause notices, she reiterated that the cost of the land was ₹ 4,55,88,400/- and seized paper 159 of Annexure A-24 shows the actual cost of the land (in case of Rising Buildestates Pvt Limited). In the case of show cause notice to the assessee she whispered about the figure of ₹ 7,41,39,600/- on the basis of page 74 of Annexure A-40, but at the end of the notice, she repeated the figures of notice issued for Rising Buildestates Pvt Ltd. After seeing the detailed explanation of the assessee, she felt that the addition against cost of the land cannot be sustained on the basis of seized annexure A-24 page 159/A-40 page 74. Then, she changed her stand and held that column 4 of seized page 37 of Annexure A-57 shows the actual cost of the land. The finding of the AO is without basis. In fact no any clear and positive conclusion on the basis of figure noted on seized page 37 of annexure A-57 can be drawn. This is a dumb paper. 2.11 The AO herself in her show cause notice dated 06.12.2010 (issued in the case of M/s Rising Buildestates Pvt Ltd ) mentioned as under: - "Had this paper been the only seized document that indicate this figure it would have been a dumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enture agreement. The print outs of several Emails are under seizure vide said Exhibit A-24. During the course of the discussion in respect of Joint Venture/Collaboration Agreement/Partnership with one of the prospective party, I prepared this paper for negotiation with the party. The contents of this seized page 37 of Exhibit A-57 are explained as under:- a) The offer against our share in profit/loss of joint venture was mentioned in Column 1 of the said seized paper. For example we offered our share of 26.66% in profit or loss; if joint venture in respect of Land at Bhavgarh Bandha is finalized. b) The particulars of the land proposed for joint venture/collaboration are mentioned in Column 2 of the said seized paper. c) At the time of said negotiation for the joint venture/collaboration, there was several pending work, in respect of conversion/approval of project and possession of land. The estimated expenses to be incurred further for conversion, approval and possession of the land for scheme/housing projects was mentioned in column no. 3 of the said seized paper. The figure is written in short at the time of negotiation by omitting five zero. For example 666 indicates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y upfront price); if the joint venture/collaboration is made on the sharing basis mentioned in column no. 1. The upfront price and sharing ratio depends on several factors such as reputation of developer, nature and quality of development work to be carried out by the developer, involvement of investment by developer, expected profit from the share received by the owner in the built up area, period of completion of project, size of project, expected FAR from JDA, expected availability of height etc. Thus, the upfront price and sharing ratio may vary person to person and project to project.." Therefore the figure "330" should not be read in context with 37.06 crore but it should be read in context with 7.41 crore. The seized paper 74 of annexure A-40 which is proposal of a joint venture shows the payment against the land to the assessee is 7.41 crore not 37.06 crore. 2.14 The ld. AO in para 12 mentioned that these papers are not dumb papers because the scribbling in the seized paper are corroborated with the books maintained by the assessee. In fact none of the jotting on the seized paper A-24, A-40 and A-57 was corroborated with entries of the books of accounts. The ld AO has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of land, approval of plan from JDA. ii) Similar conditions were for "Pushp Garden". The land in question was proceeded u/s 90B but the issue of Patta by JDA was pending. Under the proposal the assessee company would get 22.50% share in the built-up area and Shri Pawan Lashkary would get 15% in the built-up area against the working in JDA for issue of the Patta and day to day construction activities. iii) The sharing ratio of 50% 40% 60% 60% and 45% was offered for Mahal Road, Dabla Khurd, Chaksu, Gunsi and Vatsalya project respectively looking to the reputation of the builder and quantum of investment to be made by the builder/developer and built up area to be constructed by the prospective builder. iv) 18.75% mentioned against sports city may certainly create a suspicion. But the fact remains, that the land was under river and for no use for any viable project. It was a wrong decision of the company in purchasing of this land and it was not worthwhile at all. This land was purchased on 1.6.2005 by registered sale deed (Copy at PB page 364-382) and no person in market was ready to buy it even at cost price paid by the assessee company because no any commercial or residenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shkary before the DDIT and Affidavit of Pawan Lashkary filed before her, even than what is left behind is the dumb document bereft of any details without there being any enquiry by the AO to correlate the same with other documents seized, regular books of accounts, records kept by outside agencies or statements of concerned parties-The four essential components of s. 4 of Income Tax Act, viz., the taxable event, the person chargeable, the assessment year in which charge is leviable and the total income are absent in this case. 2.17 The assessee made specific request vide letter dated 08.12.2010 (copy PB Page 76) that in case of doubt, direct verification can be made from the seller or comparison should be made with the other sale transaction of the land made by the other parties in the same area and in same period and for this purpose necessary details can be obtained from the office of Registrar and the assessee is ready to pay cost of evidence in this regard. The assessee's request was turned down and without making any inquiry the undisclosed/unexplained investment in the land was concluded by the ld. AO merely on the basis of a non-speaking document. 2.18 The ld. AO presume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) J.S. Parkar v V.B.Parkar 94 ITR 616,644 (Bom). Kindly see observations in the dissenting judgment of Mukhi, J. in It is to be noticed that section 69 and section 69A do statutorily place a burden on the assessee to explain the source of investment or the source of the acquisition of the gold, but that burden can only arise after the initial burden on the taxing authorities of proving the factum of investment or the factum of ownership has been discharged. Sections 69 and 69A can be said to be in the nature of penal or at least onerous provisions and the burden lies on the revenue to prove that the condition precedent laid down, therefore, is satisfied before any order including the value thereof in the assessment can be made. iii) Lal Chand Agarwal Vs ACIT 21 Taxworld 213;231 ITAT Jaipur Bench The initial burden u/s 69 of Income Tax Act is on department to prove the investment has been made by the assessee. 2.21 The ld AO concluded on presumption, probabilities and possibilities that column 4 of the seized paper page 37 of Ann. A-57 shows the investment in land. But she failed to explain and correlate the figure mentioned in column 1 and 3. If the figure of 400 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Vs Smt. P. K. Noorjahan 237 ITR 570 (SC) and CIT Vs Bharat Engineering and Construction Co. (1972) 83 ITR 187 (SC). 2.24 The Ld AO has relied upon the decision of Mahavir Wollen Mills Vs CIT (Del) 245 ITR 297 (2000). The ld AO misplaced the reliance on this decision as the facts of this case are totally different. In this case during the course of search and seizure proceedings certain slips were found, which, the AO concluded, contained details of payment beyond those which were made by cheques and drafts and were duly reflected in the books of accounts. The assessee's stand before the Tribunal was that the documents were "dumb documents" which did not contain full details about the dates of payment and its contents were not corroborated by any material and could not be relied upon and made basis of an addition. Tribunal considered this aspect and observed that on comparison of the seized documents and ledger accounts of the parties, seized documents could not be regarded as 'dumb document'. Basis for coming to such a conclusion was that some of the entries reflected in the seized document tallied with the entries in the ledger accounts maintained by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot prove the contents of the document. These are the findings of fact recorded by both the authorities i.e. CIT(A) and the Tribunal." "15. Similarly, in the present case, as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of CIT(A) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration". 2) Commissioner of Income Tax Vs. Girish Chaudhary (2008) 296 ITR 619 (Del) Premises of M/s I.G. Builders & Promoters (P) Ltd. in which the assessee is a Director and of the assessee were searched on 18th Jan., 2000 and a document marked as Annex. A-37 was found and seized. The said document contained the following entries : Annexure A-37 (Page 13) "Cash RB- 31.50 Ch. 9.50 41.00 16.50 57.50 31.50 16.50 48.00" The Tribunal hold this document as dumb document. The relevant findings of the Tribunal as mentioned in the above order is as under:- "In the present case, the Revenue has used its longest arm of search available to the Revenue to unearth unaccounted money or evidence thereof. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 22,12,500 on the basis of figures on a small piece of paper in respect of purchase of Plot No. B-4, Govind Marg, Jaipur was made by the AO. This plot B-4, Govind Marg, Jaipur, has been purchased jointly by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF. Held that no addition on account of entries on a piece of paper which is claimed to have been found at the time of search, can be made, treating the figures as investment for purchase of plot No. B-4, Govind Marg, Jaipur in the hands of Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF. 4) MAHAAN FOODS LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX (2010) 123 lTD 590 (Delhi C Bench) Held that although the contents of the relevant seized documents show that the amounts mentioned therein relate to some expenditure, in the absence of any other evidence found during the course of search or brought on record by the AO to show that the said expenditure was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee by invoking the provisions of s. 69C-Assessee explained that the said entries represented estimates made by its employees in respect of proposed expenditure-There is no evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced at assessee's paper book-I pp. 48 and 50. The document does not state of any date or the year against the entries written therein. It does not show whether the assessee has made or received any payment. It also cannot be deciphered from the said documents that the entries therein pertain to the block period. The AO also did not bring on record any material to show that any investment has been made by the assessee in any chit fund company or otherwise. The document found and seized might raise strong suspicion, but it could not be held as a conclusive evidence without bringing some corroborative material on record. The document contained only the rough calculations and was silent about any investment. On the basis of such a dumb document, it cannot be said that there were investments made in fact by the assessee. Heavy onus lay upon the Revenue to prove that the document gives rise to undisclosed investment by the assessee. This onus has not been discharged. Accordingly no addition of undisclosed income could be made on the basis of such a document. Such a view has also been entertained by the Hon'ble Allahabad High Court in CIT vs. Dayachand Jain Vaidya (1975) 98 ITR 280 (All). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llected should be such that any reasonable man would accept the hypothesis advanced by the Revenue that the figures written on the right side of the slip represent incomes earned by the assessee. It was conceded that no such evidence has been brought on record. Further, the Revenue has given no adjustment to the entries on the left side of the slip. Therefore, the slip in question did not indicate that the figures represents receipt of income to that extent by the assessee and it was not permissible to the Revenue without procuring any evidence to support such a hypothesis that the entries record the income of the assessee and to presume such assumed narration of the entries to be true. Therefore, the additions cannot be sustained and they are hereby deleted. 10) ASSISTANT COMMISSIONER OF INCOME TAX vs. ASHOK KUMAR VIG (2007) 106 TTJ (Ranchi) 422 Held : The AO has made the additions of ₹ 67,01,380 and ₹ 77,02,747 for the asst. yr. 2001-02 and 2002-03 on the basis of a diary marked 'PKC-60', seized from the office of the assessee in the premises of MDSS, a propriety concern of the assessee's sister-in-law. The assessee has explained to AO that the diary belonged to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an exercise was favourable to the assessee. Coming to the applicability of provisions of s. 132(4A), the assessee has explained the circumstances under which his employee maintained these documents in the premises of MDSS. Thus, the ownership is not disputed. However, there is no presumption about the earning of income. The assessment is made under Chapter XIV-B. The AO cannot make addition on the basis of incomplete entries. The onus rests on the Revenue to establish that the assessee was in receipt of money then the onus would automatically be shifted to the assessee to prove that the money has been disclosed in the account or the same is not liable to tax. In the present case in hand, the AO has not been able to demonstrate with adequate evidence that the assessee received the amounts in two years as alleged. These entries as recorded in 'PKC-60" do not clearly reveal that the assessee has earned income. The assessment of undisclosed income is under Chapter XIV-B and there is no scope of assumption or presumption while making assessment under this chapter. They are dumb documents on which reliance cannot be placed, unless they are corroborated with other evidences. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded on a seized paper without making any inquiry and investigation and without examining the assessee. 17) Moonga Metals Pvt. Ltd., Vs. ACIT (All.) 67 TTJ 247 Burden is on the revenue to establish that figures appearing on loose papers found represent undisclosed investment of the Assessee." 10. The written submissions filed on behalf of the assessee were sent to the Assessing Officer for his remand report and after receiving the remand report, the assessee was allowed opportunity to file its re-joinder. The contents of the remand report and of rejoinder are tabulated in the order of Ld. CIT (A) at pages 32 to 38 which are as under :- "1. Para 1 contain brief narration of facts and as such does not require any comment 2. Para 2.1: As regard the allegation of mentioning wrong facts is concerned, it is submitted that mentioning of figure '95' as against the correct figure of '45' is a typographical error and as should be treated as such. In respect of the allegation that the Ld. AO has inserted the words purchase rate at her own, it is submitted that it is a blatantly untrue since the AO has only said what has been written in the statement and the AO has not added any wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned document. It is a matter of record that the statements of persons searched are taken in presence of witness/panchas who amongst other things ensure that no force or compulsion is brought on the person making the statement. Further, Sh. Pawan Lashkery has himself stated, at the end of the statement, that only that has been written which has been stated by him and that he has made the statement in full consciousness without any pressure and that the God is witness to such a statement. In addition, no pancha/witness has stated that the statement was taken under coercion or that the person making statement was not in a state of mind which could render this statement as invalid in the eyes of law. 5. Para 2.5: In respect of the fact that the place of seizure of document containing entry of ₹ 13000/- per square yard as market value of the concerned land, it is submitted that merely because the place of seizure of land has been quoted as different from where it was found does not in any way change the meaning and import of what the entries contained thereon mean. In any case the Assessee-company is an important member of Sh. Pawan Lashkery Group and finding of cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement is reproduced as under:- From the plain reading of answer as whole one can easily conclude that the assessee has stated the market rate of the land not his cost or purchase rate of the land. 4.3. In the para 3 of submission, the AO is completely silent on the issue that if this paper shows the cost of properties why only 9 properties mentioned on this paper as against 40 properties owned by assessee group. The AO mentioned in this para that: - a) The persons who wrote the same can better explain this. Admittedly Shri Pawan Lashkary can better explain this paper because this paper was written by him and he explained the same. But the Ld AO rejected the explanation without having any positive evidence against the explanation. She rejected the explanation merely on surmises and conjectures. No any evidence was brought on record to show that the explanation of the assessee is wrong. b) Further, the ld AO has presumed that the 4th column of this papers shows the cost of properties as on 31.03.2007 but if the last column of seized papers is cost of land than what implies figures mentioned in column 1 and 3-this has not been explained by the ld AO. In this regard we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee group was also interested in joint venture. All these materials prove that the assessee group was interested in joint venture also on the same land and the same supports the explanation given by assessee regarding the seized paper under question. 4.4. In para 4 the AO commented regarding statement recorded at the time of search. In this regard this is to submit that the statement in question was recorded on 17.11.2006 by DDIT-III, Jaipur during post search investigation where no panches/witness were available. Further Shri Pawan Lashkary never claimed that the statement was given under pressure. He simply said that at the time he was confused over the contents of the seized papers because the seized paper is not a speaking paper and he was not given the photocopy of all the seized documents and due to this he could not recollect his memory and corrects facts could not be stated before the DDIT. Further most, the assessing office as well as the assessee both are admitting that the statement before the DDIT over this seized paper was not correct and no conclusion can be drawn from the statement. Therefore, no adverse inference can be drawn merely rejecting a statement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized page 74 (PB page 30) and figure 330 mentioned on seized page 37 (PB page 36) in respect of Bhavgarh, we submit that upfront price of ₹ 7,41,39,600/- was calculated for the whole land i.e. 61783 SY Yards (which includes the land under internal roads) as clear from the calculation given on seized paper 77 (PB page 27), whereas this scheme consists three plots Viz plot No 1 measuring 23217.53 SY plot No 2 measuring 32436.84 SY and Plot No 3 measuring 2987.41 SY. The offer from the buyer (under email) was for the whole land whereas the offer from the another buyer (figure written in seized paper page 37) was only for one plot measuring 23217.53. This was the reason of big difference in between 74139600 and 330 4.6. In the para 6 the ld AO mentioned that the case law cited in written submission of Assessee are mounted on different facts and circumstances which are wholly different from those of the instant case of the assessee company and such ratio not apply in the instant case. In this regard we submit that the ld AO has not differentiated the assessee's case by comparing the facts but general remarks was made. In fact, the ratio laid down in the cases cited by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written note dated 18.4.2012 was also filed by Ld. CIT D/R, copy of which is placed on record. 13. On the other hand, the Ld. A/R of the assessee firstly placed reliance on the order of Ld. CIT (A). Findings of Ld. CIT (A) were also explained. Attention of the Bench was drawn on copy of detailed written submissions which are placed on record. 13.1. In respect to admitting the additional evidences, it was submitted that they should not be admitted as those very evidences were available with the Assessing Officer at the time of assessment proceedings as these evidences are nothing but copies of statement recorded at the back of the assessee without confronting to the assessee. It was submitted that as per these papers, the addition comes to a lower figure whereas Assessing Officer has made the addition more than comprised. Therefore, for this reason statement of certain persons were not taken into consideration by the Assessing Officer knowingly. Now the department cannot make a fresh case by filing these additional evidences. A written note was also filed in respect to these additional evidences objecting that they should not be admitted. Reliance has been placed on various cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the wide variation in share of assessee group in the joint venture shows that the assessee explanation as regard figure mentioned in column 1 of seized Paper 37 of Ann A-57 is also not correct. 5.2 I have carefully examined the above referred seized paper. No narration is mentioned over the seized page 37 of A-57 to ascertain whether cost is mentioned or market value is mentioned or some other value is mentioned. Any date or even the month or even the year is not at all mentioned so as to arrive at definite conclusion whether it is cost or market value or some other value on particular date/month/time. The AO have tried to negate the argument of A.R. by observing that the market value is not mentioned in the column 4 of the impugned seized paper, therefore, as per the A.O, cost must have been mentioned in column no. 4. But she failed to prove by positive evidence that the cost is mentioned in column 4 of the seized paper. Further, the AO failed to explain the nexus of the figures mentioned in column 1 and 3 with reference to figure of the alleged cost mentioned in column 4 of the impugned seized paper. In column 1, the figure 26.66 is mentioned and figure 166 is mentioned in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int venture, which have been prepared by some third party developers. Therefore, the cost of the land in the hands of the land owner cannot be visualized from these seized papers. Statements of Shri Pawan Lashkary recorded during the post search inquiry have been rightly rejected by the AO and are of no help for the assessing officer. During the course of the assessment, the assessee filed sworn affidavit of Shri Pawan Lashkary and relevant para of the affidavit is as under:- "e) We purchased the agricultural land and made further exercised for 90B proceedings, conversion and approval of the projects. This and time-span resulted substantial increase in the market rate of the land. We estimated the market rate of each developed land (offered for negotiation for joint venture/ collaboration) at the time of negotiation and such estimated market value of the land was mentioned in column no 4 of the said seized paper. We offered the prospective party that our capital account should be credited by this amount against the capital contribution of land for the joint venture/collaboration, if the joint venture/collaboration is materialized. The figure is written in short at the time of neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23,423/-) has been proposed, which is actually proposed in the case of M/s Rising Buildestate, but in substance, the A.O. obviously wanted to propose addition considering total cost at ₹ 7,41,39,600/- in the case of appellant namely M/s Countrywide Buildestate Pvt. Ltd. However, after considering the various replies of these notices, the A.O. was satisfied that amount of. ₹ 7,41,39,600/- is not the cost of the land to the appellant but it is 20% upfront charges of the estimated proposed value of land required to be paid to land owner ,as estimated by some developer for the proposed project of joint venture on this land of appellant. A.O. has mentioned this fact of contention of the appellant on this issue being correct at para 8 of the assessment order. (However, simultaneously, the A.O. has stated that it shatters the explanation of the assessee regarding page 37 of Ann. A-57 given during the course of search that in column no. 4 coding was done in two zeros and figure represented the land area in sq. yds. This observation of the A.O. is correct). 5.6 Regarding variation in the figure of 330 mentioned in column no. 4 to be treated as upfront amount receivable as part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plots separately, was found verifiable and correct from the records. Accordingly, the argument of offer from the developer mentioned on seized page 37 of page 57 being for one plot, out of the three, leading to difference, cannot be discarded. 5.7 The above explanation is also corroborated with the figure of 400 mentioned in column 4 of the seized paper 37 of Annexure A-57 against the Pushp Garden and the figure of 4,55,88,400 mentioned in seized paper 159 of Annexure A-24 which is fund flow projection for Pushp Garden Land wherein figure 4,55,88,400 represents the cash outflow for land owner against the cost of land for the joint venture developer. The difference was explained that noting on page 37 of Annexure A-57 was made with reference to the proposal of joint venture received from a different party, therefore, there is bound to be difference in the proposal given by two different parties, leading to difference in the amount. 5.8 In the case of M/s Rising Buildestate Pvt. Ltd, similarly the addition relatable to ₹ 4,55,88,400/- referred in joint venture project was proposed in the three different show cause notices and it was only at the last i.e at the time of fourt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of page 37 of A-57 during the course of assessment proceedings that the same is the percentage sharing in the proposed joint venture. The A.O. has disbelieved the explanation of the appellant on the ground that the joint venture sharing is found to be highly varying. However, the A.R. has even given explanation of these varying % also particularly regarding joint sharing being only 18.75% in Sports City, which is on account of the fact that the said land was quite uneconomical having low value as the same was under river bed which is clear from the 'Jambandi', wherein the land was shown as 'Khatali' which means the land near river bed as is clear from the definition of the 'khatali' furnished by the A.R. in the written submission. Similarly, for high sharing ratio of 80% in R.R. Farm, the A.R. has explained that this was the joint venture of the farmhouse wherein not much of investment is required by the developer and it is mainly the value of the land and accordingly land owner would have the main and major share. These explanations so given by the A.R. cannot be just rejected and are rather plausible. Thus it is clear that explanation of the figure in column no. 1 given by A.R. i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous ITAT cited by the assessee support the case of the assessee. In view of the above facts and circumstances, it is held that A.O. has not been successful in proving that column no. 4 of seized page 37 of Ann. A-57 reflects the cost/purchase price of the land and on the other hand explanation of appellant on this issue can not be considered to be incorrect and is rather same is found to be plausible and accordingly addition of ₹ 2,61,66,611/- so made by A.O., holding ₹ 4.00 crore to be purchase price of land, is hereby deleted. Thus, the ground No 1, 2 and 3 are decided in favour of the assessee." 5.9. As A.O. has finally made addition, on the basis of page 37 of Ann. A-57, in the case of present appellant M/s Countrywide Buildestate Pvt. Ltd. also, considering the facts and circumstances and legal position of the present case being broadly same as that of M/s Rising Buildestate Pvt. Ltd., it is held that addition so made by the A.O. u/s 69 without bringing positive material on record and without successfully proving that column no.4 of the seized page 37 of Ann. A-57 reflects cost/purchase price of the land and only by rejecting the explanation of the appellant give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and ₹ 1.25 crore was paid to the JDA on behalf of the sellers for the conversion of this land. It was further explained that amount of consideration deposited in the name of Shri Suresh Kalarwal, Shri Lavish Raman, Shri Deen Dayal and Shri Nanag Ram was immediately withdrawn. It was further explained that statements of these persons were recorded during the course of post search proceedings by which they have stated that they had not purchased this land but only signed the agreements and sale deed in exchange of some commission amount. Accordingly it was submitted that in fact land has been purchased by the assessee from the original owners Shri Mohan Lal and Shri Badrinarain. It was further explained that statements of original owners i.e. Shri Mohan Lal and Shri Badrinarain were recorded under section 131 on 10.9.2008. Shri Badrinarain stated that his brother Shri Mohan Lal knew about the sale of the land. In replies to Question no. 5 & 6 of his statement, Shri Mohan Lal stated that he and his brother sold their 12 bigha land for total ₹ 1.68 crore. He stated that the land was sold through some brokers. However, he reiterated that the land was sold by them for ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable with the AO before making assessment and if he wanted to consider these evidences i.e. statements of original owners, then he should have taken into consideration. However, he has not taken into consideration for the simple reason that as per seized document page 37 of Annexure A57, the amount was more than the amount accepted by the original owners over and above the amount recorded in the Sale Deed. Even before ld. CIT (A) these supporting evidences were not filed on behalf of the department. Now the department wants to make a new case that supporting evidences should be accepted. In our view, these supporting evidences cannot be accepted for the reason that department itself is not sure that which amount is to be added. Whether the amount of ₹ 3.3 crore mentioned in the column no. 4 of the seized page 37 of Annexure A-57 is to be taken into consideration or the figure stated by the original owner i.e ₹ 1.68 crore is to be taken into consideration. The assessee had already shown an amount of ₹ 1.25 crore on account of purchase of land through its power of attorney holder Shri Pawan Laskary. All these facts have been discussed in detail by the ld. CIT (A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court has held that when the assessee was permitted to cross examine the witnesses but names of witnesses and substance of the statement made by them were not given, whether the assessment would be valid, the assessment was vitiated by violation of the principles of natural justice as the permission given for cross examination was only illusory. 15.4. In the present case, neither statements recorded whichnow they wanted to rely upon was confronted to the assessee nor the cross examination was allowed to the assessee. 15.5. In the case of CIT vs. Chandravilas Hotel, 164 ITR 102 (Guj.), the court has held that the Assessing Officer was duty bound to allow opportunity to the assessee to examine the evidences gathered by private enquiries. 15.6. In case of Alok Agarwal vs. DCIT, 67 TTJ 109 (ITAT Delhi), the Delhi Bench of the Tribunal held that statement of third party cannot be used without cross examination. 15.7. In case of CIT vs. G. Krishnan, 210 ITR 707 (Mad.), the Hon'ble Madras High Court has held that no addition can be made merely on the basis of statement of third party. 15.8. In case of Straptex India (P) Ltd. vs. DCIT, 84 ITD 320 (Mum.), the Mumbai Bench of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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