9911796707
TMI Blog2010 (9) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... pany has paid any unaccounted amount. In view of these facts the addition made and confirmed is not at all justified, illegal and the same be deleted. 1.2 It is submitted that, the appellant company has denied of having making any cash payments for booking of offices/shops and has stated that the amount paid through Cheque based on MOU is only the correct and true price for purchase of the said Offices/Shops. It is submitted that on the basis of these evidences which are final and unchallengeable, no addition can be made by relying only on certain loose papers which are again not relevant to any unexplained payment or transaction. In view of these facts and evidences the addition made be deleted". 2. We have heard the rival submissions and considered the material available on record. 3. Briefly, the facts of the case as per assessment order are that the assessee, which is a Private Limited Company, filed its return of income on 31-07-2005 declaring total income at ₹ 38,51,940/-. The case was taken up for scrutiny. The A O noticed that consequent upon search u/s 132 of the IT Act in Dharmadev Builders Group, the residential house of Shri Deepak A. Thakkar, partner of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 The A O noticed that page Nos. 24 and 26 of Annexure A-10 recorded notings of the cash payments of ₹ 1,30,88,000/-. The same were recorded again at page No.25 of Annexure A-10. The A O also noticed that on page Nos. 24 to 26 of Annexure A-10, notings of primary transactions were made and from these papers, postings were made in ledger accounts of different purchasers maintained on different pages of Annexure A-11. The assessee's ledger account prepared at page No.30 of Annexure A-11. After correlating the entries at pages 24 to 26 of Annexure A-10 and page 30 of Annexure-11, the A O found that the assessee had made in all cash payment of ₹ 1,30,88,000/- on different dates as per the chart above. The A O, therefore, issued show cause notice to the assessee to explain the source of investment of this cash payment and the accounting treatment of these transactions in the books of account. In reply, the assessee company denied having made any cash payment and filed written submission on 18-12-2006, which has been reproduced by the A O in Para 2.1 of the assessment order on page 3 to 5. The A O, after considering the submission and seized material came to the conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et rate of such offices facility at ₹ 1500/- per sq. ft. in May 2006 (1293 per sq. ft. for Shop to ₹ 1,847/- per sq. ft. for shop on ground floor)'. As against this, as early as 5th May, 2004 i.e. two years before, the appellant purchased the shops @ 1450 per sq. ft. the shop is in the first floor, where the prices are lesser by 30% vis a vis the shops situated in the ground floor. (d) The MOU dated 5/5/04 clearly mentions that all these properties were purchased at ₹ 60.40 lakhs and therefore there is no question of cash payment. (e) One-sided confirmation of receipt of 'on' money cannot be the basis for making addition until and unless there is corroborating evidences. (f) Shri Jatin Parikh the Mng. Director of the Company, in his statement recorded u/s. 131 on 18/2/05 has stated that no cash payment has been made to M/s. Dev Enterprise or to any Thakkar Bros. whatsoever for booking of offices/shops. (g) The MOU was signed with Shri Sanjary Thakkar and not with Shri Dipak Thakkar, from whose premises the loose papers have been found. (h) Mr. Deepak Thakkar has not confirmed in any statement before any Income Tax Authority that he has received any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (n) It has been submitted that merely because out of so many, only a few of them have disclosed the cash payment as their undisclosed income, it does not automatically become the fact that the assessee also has paid cash as per the amount mentioned by the builder in his record". 4.1 The assessee has also explained the sequence of the events and developments in the case as under: "(a) Initially Trident (India) Ltd. entered into an Agreement with Dev Enterprise and that too with Mr. Sanjay Thakkar and not with Mr. Deepak Thakker, clearly agreeing in writing that the company has agreed to purchase Shop/Office No.1, 2 and 3, admeasuring 4902 sq. f. Super built up area (4167 sq. ft. carpet area) at total ₹ 60,40,302/- which comes to ₹ 1,450/- per Sq. ft. of Carpet area. This Agreement was entered as early as in 5th May, 2004. Even now the existing rate of Office on C. G. Road is in the vicinity of ₹ 1,500/- per Sq. ft., which can be verified from a Registered Valuer or from any other Developer. The Agreement mentions that this amount does not include ₹ 100/- per Sq. ft. to be paid to AEC/Maintenance additionally. The Agreement further mentions various other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se cheque payments have been made by Trident Creation Pvt. Ltd., as the appellant claims, then why the name of Trident (India) Ltd. appears in the loose papers. (d) The comments of the appellant on the comparable cases given by the A O and to work out the rate of purchase in those cases. (e) The submissions made by the appellant are the same as has put forth before the A O. It should, therefore, pinpoint specifically the objection it has with regard to the assessment order. (f) To inform about the family and business relation between Shri Sanjay Thakkar and Shri Deepak Thakkar. (g) To furnish the details about payment and refund back of the consideration between Trident (India) Ltd. And M/s. Dev Enterprise and thereafter the payment of amount by8 Trident Creations Pvt. Ltd. to Adarsh Industries & Enterprise Pvt. Ltd. as the appellant claims. In compliance of the said show cause notice, the assessee filed its reply on 21-08-2008 as under: "This is in connection with the last hearing before your honour on 29th July, 2008 wherein the assessee was asked to burnish following details and explanation. Based on that we have to respectfully submit as under: (1) Change of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses or in any other manner is also not known to us. Therefore, we are unable to comment thereof. However, those investors are of the Ground floor shops, which are in no way comparable to first and second floor of the office premises. We can only tell that 8075 Sq. ft. of Office premises was purchased by one Todi family for ₹ 1 Crore and he has not made any disclosure and seems to have not made any cash payment like us as no notings in his name was found and no actions by Income Tax Department are initiated against him for identical booking. The rate worked out at ₹ 1,238/- per Sq. ft. is fully accepted by Income Tax Department. Our rate for 4902 Sq. ft. of Office premises on first floor on the payment of ₹ 60,40,302/- comes to ₹ 1,232/- per Sq. ft. which must be accepted by the Income Tax Department to the same extent and in like manner. This is notwithstanding the fact, as stated above, we were the first party to book in this Project, where Todi and others were quite later and therefore, the rate of ours would be certainly less. (4) Coming to our next point with regard to the cash payment accepted by Ashish Zaveri of ₹ 23 lakhs, Takwani family of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the premises, where search took place, i.e. Aadarsh Industries and Investment Pvt. Ltd. To summarise, the Assessing Officer did not accept our submissions as under: (i) No loose papers or diary was found out from our/assessee's premises. Therefore, purely on outside party's evidence additions cannot be made as held in so many judgments was not accepted. (ii) Except the handwritten paper found out by the search party from the premises of Aadarsh Industries & Investment Pvt. Ltd., there was no noting or signature of ours or assessee was found out. (iii) No other promissory Note or record was found out when same Search party surveyed our premises and verified our books wherein no cash payment or any entry was noticed. The Assessing Officer also not accepted the fact that law is very clear that such additions can be made, only when some corroborative or supporting documents or evidences are found out from the person in whose case additions are being made. Various judgements filed and cited were also shown to the Assessing Officer, which have been brushed aside by him. (iv) As can be seen from the entire Order running in to 8 pages, the one and only point of Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The assessee claimed that the document found from another premise has not evidentiary value and the figure written by Shri Deepak Thakakar could be his planning/desire etc. However, the said document has evidentiary8 value as discussed by Assessing Officer in his order and the undersigned relies on the same. Further more the evidentiary value of the seized document A-10, A-11 which contains details of on money transactions of different units of t4he said property is clear as payment of on-money for purchase of different units in the said property has been accepted by various persons subsequent to evidences being detected in the course of search. This itself implies that the correctness of the contents of the seized document. 4. In this regard, assessee has named certain person to state that rate/square feet paid by him has been accepted by Income-tax department. The said claim of the assessee has not been verified by the undersigned. However, it is clarified that action has been taken in those cases where direct evidence of payment of on-money for purchase of property were found in seized documents and/or evidences were detected in course of search operation/post search en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer's contention that Declaration of income by other some parties implies the correctness of the contents of the seized documents is not at all correct. 3. With regard to Para-4, the rate per Sq. Ft. etc., the Assessing Officer has said that the claim has not been verified and has merely repeated what has been stated by the Assessing Officer. 4. In Para-5, the Assessing Officer has no comments to offer on the fact that some authorities have accepted the value as per cheque payment and has only stated that "On Money transaction in property" are the reality. Such presumptions cannot be made as there are so many such realties like conduct and behaviour of many Officers in many Departments of Government or other enterprises. Such allegations cannot be generalized and need be supported with strong rebuttable evidences, which, with respect, the learned Assessing Officer has not been able to do. 5. In Para-6, the Assessing Officer has merely relied on the additions made and the finding on the Assessment Order, which has been challenged by us heavily by putting number of arguments on facts and decisions on law. After receipt of the same, the assessee was given further opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se papers show payment of ₹ 1,30,88,000/- as cash and ₹ 51,00,000/-by cheques on different dates. However, after verification, the A.O. has noted that payment of ₹ 10 lakhs on 15/5/04 has been wrongly written, therefore the total cheques payment is 4,10,000/- till 26/10/04. With regard to the other cheque amounts and the date of payment thereof, as gi0veni in the loose paper, the appellant has no objection meaning thereby that they have correctly been recorded. The appellant's objection is with regard to the cash payment of ₹ 1,30,88,000/- reflected therein which, according to the appellant, is only a column and that its veracity should not be accepted as there is no mention of the amount having been paid. When the appellant accepts the veracity of the column reflecting the cheque payments about which also no reference of these payment having been made is there, his contention of brushing aside the recording about cash payments cannot be accepted. 9.3 Further, these papers mention the name of M/s. Trident India as the party having made the payments and therefore, the appellant Co. i. e. Trident Creations Pvt. Ltd. has objected to the addition in its hand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney should be considered even if the purchaser denies. He has also relied on the case of Green Valley Builders 149 Taxman 671 (Ker.), wherein it is held that if higher price was paid for purchase of land, addition can be made. He has also quoted the case of Sumati Dayal 214 ITR 801 (SC) wherein it is held that test of human probabilities and preponderance of probabilities should be applied to decide the issue in t he absence of direct evidence. The appellant has pleaded that since it was the first purchaser, hence, consideration in its case was lesser than in other cases. However, this plea cannot justify the on-money amount to the extent of ₹ 1.30,88,000/- reflected in the lose papers vis a vis the cheque payment to the tune of ₹ 60.40 lacs only as admitted by the appellant. This gets proved in this case by the admission of the parties quoted by the A. O. in the assessment order that they have paid on money for the purchase of shops/offices in the same complex. Under the circumstances, the purchase rate worked out by the appellant and the support of 'jantri' (copy of Index) it has taken, cannot be given much credence because they are based on the recorded consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax proceedings. The principle of preponderance of probability is very much applicable for deciding Income Tax matters. When other properties in the same premises were sold at a higher cost and these other purchasers admitted to have given on-money for such purchase, it can safely be concluded that the same applied to the case of the appellant too. 9.7.1 The appellant has objected not having been given the opportunity of cross-examination. Natural justice entails that if any material is collected at the back of the assessee, he has to be given an opportunity of being heard before it is utilised against him. In other words, he must know what is being used against him and he should be given an opportunity to put forth his point in this regard. However, the provisions of Indian Evidence Act are not strictly applicable to the proceeding under the Income-tax Act, only the broad principles of law of evidence apply to such proceedings. How this is met, depends upon the facts and circumstances of the case. Therefore, the opportunity of cross examination may8 not necessarily be a personal examination, it can also be in the form of supplying the documents in writing and asking for the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held in this case that the rule of audit alteram partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the enquiry should be permitted to be cross examined by the party affected while in other case it may not. It was held by Hon'ble Calcutta High Court in the case of Manindra Nath Chatterjee v/s Collector of Central Excise (Tax LR 1754) that whether in a particular case a particular party should have the right to cross examine or not depends upon the facts and circumstances of a particular case. This is so because the right to cross examine is not necessarily a part of reasonable opportunity. It was held by the Hon'ble Supreme Court in case of State of J & K v/s Bakshi Gulam Mohammad (AIR 1967 122-SC) that right of hearing does not include a right to cross examine. The right to cross examine must depend upon the circumstances of each case and also on the state concerned. 9.7.3. In the present case, the facts narrated above show that the appellant was given due opportunity to rebut the documents relied upon. Thus, no material has been used against the appellant without confronting the same to it and adequate opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the same building. It has been held in the case of Amarkumari Surana v. CIT [1997 226 ITR 344 (Raj)] that the addition u/s. 69B, in the circumstances of the case, could not be interfere with where no evidences has been adduced by the assessee before the Assessing Officer as to why the plot of land has been sold to the assessee for roughly at half of the rate then the prevalent market rate. In view of the discussion above, I am of the considered view that the section has rightly been applied by the A. O. in the case of the appellant. 9.9 In view of discussion above, I am of the considered view that no interference is called for with regard to the addition of ₹ 1,30,88,000/- made by the A. O. in the income of the appellant as unexplained investment u/s. 69B of the I. T. Act. This ground of appeal, therefore, stands dismissed". 6. The learned Counsel for the assessee reiterated the submissions made before the authorities below. He has submitted that shops and office complex were originally booked in the name of M/s. Trident (India) Pvt. Ltd. but later on it was decided that the said property be purchased by the assessee M/s. Trident Creation Pvt. Ltd. Therefore, the bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the seized loose papers. The assessee sought cross examination of the builder as was explained before the learned CIT (A) as well as other persons but it was not granted. In the seized papers only cash is mentioned but it is not mentioned if cash is actually paid to the builder. PB - 71 is the copy of the note filed in the return in the case of one of the comparable case of Shri T. K. Tekwani who surrendered the amount to buy peace and avoid litigation. Such a statement would not prove any admission of payment of "on money" to the builder. PB - 19 and 20 are translated copy of the jantri and would also show actual market rate for purchase of similar property which tally with the sale consideration in the case of the assessee. The loose papers are not in a systematic manner, therefore, are the Dumb document. Since the statements of the persons of the builder have not been recorded, therefore, no case is made out for payment of any "on money" to them. The learned Counsel for the assessee further submitted that there were 17 buyers of the flats but except 4 persons none other have made any surrender, so the rule of probability would turn in favour of the assessee that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H indicated the alleged unrecorded sales to that party. Mere entry in the account of H was not sufficient to prove that assessee indulged in such transactions without bringing any corroborative material against the assessee". 6) Order of ITAT Ahmedabad Bench in the case of Shankarlal Nebhumal HUF Vs DCIT 2 SOT 671 in which it was held "in the absence of any material on record to indicate that the assessee who belong to one family which is having 50% share in the Vendor Firm have in fact paid any "on money" to it in respect of the shops purchased by them, addition made on account of alleged unexplained investments in the purchase of shops cannot be sustained, notwithstanding the admission by the said firm that it did charged on money from the customers while selling the shops. 7) Order of ITAT Jodhpur Bench in the case of J. R. C. Bhandari Vs ACIT 79 TTJ 1 in which it was held "a mere entry in a loose sheet found in the possession of another third person, by itself, without any supportive evidence or the sworn statement of the said person has hardly any evidentiary value. Addition in the hands of the assessee on the basis of loose sheet not legally sustainable". 7. On the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e loose paper is of the sister concern of the assessee. 8. We have considered the rival submission and materials available on record. During the course of hearing of the appeal, assessee was directed to file copies of the sale deeds in question which have been filed on record which show the date of documents 10-04-2008 and the total sale consideration paid for purchase of property by the assessee is mentioned at ₹ 60,40,297/-. Similarly, the learned D R was directed to intimate about proceedings against the person in whose case search was conducted and if any statements of comparable cases have been recorded. Learned D R filed copy of the assessment order in the case of firm M/s. Dev Enterprises u/s 143 (3) of the IT Act dated 29-12-2006 in which Shri Deepak Thakkar was the partner in whose case search was conducted. Learned D R submitted that no addition is made on account of loose annexure A-10 and A-11, but the said firm made disclosure of ₹ 74,44,290/- in the return filed on 30-06-2006. In the case of the firm further addition of ₹ 5,51,000/- is made. The learned D R admitted that no statement of the builder has been relied upon by the A O and that he has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noted here that since no search was conducted in the case of the assessee and no evidence was found during the course of survey against the assessee, therefore, the presumptions u/s 132 (4A) and section 292 C could not be drawn against the assessee. The findings of the A O would show that A O has assumed certain facts which are not on record of the A O or that the same are not supported by any material on record. A O has not brought sufficient and cogent material/evidence against the assessee to prove that assessee made payment of "on money" in cash over and above the consideration shown in the MOU and sale deeds. No statement of any person has been recorded in whose case loose papers were recovered to explain the entries contained therein. Learned D R admitted that A O has not relied upon any statement of the builder against the assessee and that no such copy has been received by him. Similarly, no statement in the comparable cases has been produced before us. It would prove that even in the comparable cases no statement is recorded against the interest of the assessee. The surrender made in 4 comparable cases has not been confronted to the assessee. Learned Counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based upon assumption only that since 4 parties made payment of "on money" to the builder, therefore, there is a presumption against the assessee that assessee also paid "on money" in cash. But, equally other buyers have not paid any "on money" to the builders. Since the seized papers are not in the name of the assessee and is also having different amount of cheque as against the sale consideration shown in the MOU and the sale deeds, therefore, the principle of preponderance of probability would also not apply against the assessee. Since, the A O wanted to tax the alleged payment of "on money" in the case of the assessee; therefore, burden was upon the A O to prove that assessee made payment of "on money" from undisclosed sources, which has not been discharged in this case. Considering the facts and circumstances of the case, we are of the view that the A O has not brought sufficient material against the assessee to make the above addition. The A O made addition merely on suspicion and assumption of facts, which cannot take place of legal proof. It is thus a case of no evidence for making the addition. We are, therefore, of the view that the authorities below were not justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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