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TMI Blog2017 (2) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... pal Pura Bye Pass, Jaipur 3. That the order of the ld. CIT(A) confirming the addition made by the AO is arbitrary, whimsical, capricious, perverse and against the law and facts of the case. The order of the ld. CIT(A) in this regard deserves to be set aside and addition made by the AO deserves to be deleted. 2.1 During the course of hearing, it is noted that the assessee filed the following additional ground under rule 11 of ITAT, Rules 1963. ''On the facts and in the circumstances of the case and in law the service of the assessment order was not complete within the time specified in the Act as the AO has treated the Annexures ABCDEF and G as part of the assessment order as mentioned in para 10 and 14 of assessment order and the copy of the said Annexures A,B,C,D,E,F and G was not annexed to the assessment order and served to assessee with assessment order. Therefore, and thus the assessment order deserves to be declared as time barred and void ab initio and the impugned assessment u 153B r/w 143(3) of the I.T. Act is liable to be annulled. However, at the outset of the hearing, the ld. AR of the assessee prayed for withdrawal of this ground for which the ld. DR has no ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax is to have some recitals made in a documents executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents DR S.C. Gupta vs. CIT 248 ITR 782 (Alld.) In Pullangode Rubber Produce Co. Ltd. vs. State of Kerala 1973) 91 ITR 18 (SC) it was held that an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the bases of assessment. The mere fact that the assessee retracted the statement could not make the statement acceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden does not even seem to have been discharged. 29. Accordingly, it is held that the assessee has made unexplained investment by paying ON ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 Total 65,00,000 It is to be noted that this Agreement was dated 25.06.2008 and the conveyance did was registered on 27.06.2008 just two days after this Agreement. It is clear from the Agreement that all the cheque payments had been made and the portion of the unaccounted money for this land transaction was to be given within a month of registration of the land. Furthermore, no mention was made here regarding any construction activity required to be undertaken by the seller for Rs. 75 lakhs or details of the same. Moreover, it is not clear as to why these details regarding construction activity were not incorporated in the agreement particularly when it is so detailed and specific about all the other facts of the transactions. iv) a). Just two years later, search and seizure operations were conducted at the residential and business premises of the assessee and these two agreements along with the registered sale deed were found and confronted with the assessee's husband Sh. Ashok Agarwal on 22.09.2010 who was managing all the financial affairs of the appellant. He admitted to a payment of Rs. 1.41 Cr. having been made for the purchase of this plots in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ाण" implied that construction activity was required to be undertaken by the seller before transfer of the plot. An inquiry was conducted from the office of the Subregistrar-1, Sanganer, Jaipur by the Investigation Wing. As per the report obtained, it was seen that in cases of sales where registered value exceeds Rs. 25 lakh the Sub-registrar is required to make a site inspection of that plot to evaluate its value for the purpose of stamp duty valuation before registration. As per the site inspection report prepared by the Sub-registrar the plot was not vacant and construction of 3700 sq. ft. was found existing on the date of inspection i.e. prior to the registry date. This construction was valued at Rs. 400 per sq. ft. and so an enhancement of evaluated value was made by Rs. 14.80 lakhs. This report of the Sub-registrar of Govt. Rajasthan is held to be sufficient evidence to rebut the evidence filed by way of the affidavit of Ashok Agarwal and the fabricated evidence of the cancellation agreement. The term "मय निर्माण" meant the plot of land along with the building and did not imply any construction activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be construed to imply that the seller was required to undertake any construction activity for the appellant prior to the registration of the Sale Deed. The word '"मय निर्माण" support the Sub-Registrar's finding in his report that there was existing construction on the plot of land. It has been submitted that the statement of the appellant's husband cannot be used against her. However, this is not an acceptable submission because it is seen that all the financial affairs of Smt. Renu Agarwal were being managed by her husband in fact even his son Ashish Agarwal did not have much knowledge about the complete financial transactions of the group. In his statement, he has admitted that his father Sh. Ashok Agarwal was managing all the financial affairs of the family. Considering that the financial affairs of the appellant were being managed by her husband his admission on her behalf has valid evidentiary value. x) Finally, during the course of assessment proceedings, the seller Sh. Subhash Chand Bansal resident of Bharatpur was summoned and examined u/s 131. For obvious reasons he admitted to having received on Rs. 65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arate cancellation agreement. This cancellation agreement is also under seizure of the department vide Exhibit 4 of Annexure AS (seized from 1, Dayal Nagar, Gopalpura Bye Pass Road, Jaipur on 12.10.2010) (Copy at PB Page 81). iv) Thereafter, this plot was finally purchased by wife of the assessee Smt. Renu Agarwal in the form of vacant land only for Rs. 65,00,000/- (as originally agreed) as per sales deed registered on 27.06.2008. The registered sale deed is also under seizure of the department vide Annexure AS-7 Page 13- 19 (seized from 281-282, 10-B Scheme, Gopal Pura Bye Pass, Jaipur) in which the sub-registrar has also assessed the value of this plot at same value of Rs. 65,00,000/- (Copy at PB Page 82-88). Thus, the agreement to sales for Rs. 1,41,00,000/- was inclusive of agreed construction but since the seller expressed his inability to make the construction, the assessee purchased the vacant plot as originally agreed upon for a consideration of Rs. 65,00,000/- . Further, the ld AO has made inquiries from the seller of the plot. The seller of the plot on oath has confirmed that he has not received Rs. 1,41,00,000/- against the sale of the plot but he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 22-09-2010 at office of the assessee which is situated at 1, Dayal Nagar, Jaipur, which continued upto 23-09-2010 (PB pg 211). However, the office premise was sealed under PO order u/s 132(3) of Income Tax Act in the presence of witnesses (PB pg 212). The search resumed on 12-10-2010 and sealed office of the assessee was opened in presence of witnesses (PB 213) and this document was found and seized as Annexure AS-4 (PB 214). The search party has also recorded statement of Shri Ashok Agarwal on this document u/s 132(4) of Income Tax Act which is at PB pg 62 (Answer to question no 11). Further in answer to question no 12, (PB pg 63) final tally was made against the amount surrendered, which does not include Rs. 76.00 lac originally surrendered by Shri Ashok Agarwal in his statement dated 22/09/2010 (PB 41) The ld CIT(A) perversely held that this document is fabricated without bringing any positive material on record. As per the provisions of section 132(4A) the seized document are presumed to be correct. Further, the ld AO made specific inquiries from the seller of the plot and recorded the statements of seller of the plot. The seller of the plot has stated on oath that he has exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the place of legal proof. If the department considers on payment by the assessee for the land, it is burden on the department to prove the undisclosed investment of the Assessee. This burden is not discharged and therefore, no addition can be made. Reliance is placed on the following decisions:- (i) Hon'ble Delhi High Court in the case of Commissioner of Income Tax Vs Dinesh Jain HUF (2013) 352 ITR 629 (Del) has held as under:- "11. Section 69B does not permit an inference to be drawn from the circumstances surrounding the transaction that the purchaser of the property must have paid more than what was actually recorded in his books of account for the simple reason that such an inference could be very subjective and could involve the dangerous consequence of a notional or fictional income being brought to tax contrary to the strict provisions of Article 265 of the Constitution of India and Entry 82 in List I of the seventh schedule thereto which deals with "Taxes on income other than agricultural income". This was one of the major considerations that weighed with the Supreme Court in K.P. Varghese (supra) in which case the provisions of sub-section (2) of section 52 fell for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in accordance with the Wealth Tax Act. We however clarify that this Court is not concluding that such yardstick is determinative; in view of the findings arrived at by us that the Assessing Officer did not gather foundational facts to point to undervaluation the adoption of the norms under the Wealth Tax Act is not commented upon by us. 13. The error committed by the income-tax authorities in the present case is to jump the first step in the process of applying section 69B - that of proving understatement of the investment - and apply the measure of understatement. If anything, the language employed in section 69B is in stricter terms than the erstwhile section 52(2). It does not even authorise the adoption of any yardstick to measure the precise extent of understatement. There can therefore be no compromise in the application of the section. It would seem to require the Assessing Officer even to show the exact extent of understatement of the investment; it does not even give the Assessing Officer the option of applying any reasonable yardstick to measure the precise extent of understatement of the investment once the fact of understatement is proved. It appears to us that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities. Section 69B was wrongly invoked. The order of the Tribunal is approved; the substantial question of law is answered in the negative, in favour of the assessee and against the CIT." (ii) Hon'ble Rajasthan High Court in the case of CIT Vs. Bhanwarlal Murwatiya reported in 215 CTR (Raj) 489 (2008) (2008)/ 3 DTR (Raj) 115 (copy at PB 228-230) has held as under :- "The question as to what was the price of the land at the relevant time, is a pure question of fact. Apart from the fact, that even if it were to be assumed, that the price of the land was different that the one, recited in the sale deed, unless it is established on record by the Department, that as a matter of fact, the consideration, as alleged by the Department, did pass to the seller from the purchase, it can not be said, that the Department had any right to make any additions." iii) Commissioner of Income Tax Vs. Naresh Khattar (HUF) High Court Of Delhi (2003) 261 ITR 664 (Del) To invoke the provisions of s. 69B, the burden is on the Revenue to prove that the real investment exceeds the investment shown in the books of account iv) Lal Chand Agarwal Vs ACIT 21 Taxworld 213;231 ITAT Jaipur Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the plot was vacate land at the time of purchase, the following documents/explanation were produced before the AO which were not rebutted by the AO: - a) The copy of Google earth Map of 16.12.2007 wherein the plot is showing as vacant in the map (Copy at PB Page 105). b) Photograph of land submitted at the time of registry of sale deed of plot (Copy at PB Page 110) and assessee has submitted before the AO that the photograph can be verified from records of registrar. Further on the photo the user code and user name which mentioned on report of stamps and registration department is also mentioned. c) The photographs of "Bhoomi Poojan" did by the assessee and his family members while starting the construction (Copy at PB Page 106-109). d) Further as on the date of purchase there was no water and electricity connection on the plot, without which no one could live in the house. e) Copy of Municipal Tax Deposited against the plot (Copy at PB Page 112), wherein the status of the plot is mentioned as vacant land. f) In the statement of seller of the plot Shri Subhash chand Bansal recorded by assessing officer (Copy at PB Page 113-116) he also admitted that he sold the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise was carried out by the AO. No any inquiries were carried out by the AO to disprove the claim of the assessee and she simply reply over the irrelevant evidence. 8) In para 15 to 16 of the assessment order the ld. AO mentioned that the word "with construction" appearing in the agreement for Rs. 1,41,00,000/- can be construed to be referring to the physical structure existing at the time of agreement. Further in the same para the ld. AO opined that other agreements, except to agreement of Rs. 1,41,00,000/-, is infect a colourable device to give an impression that the said plot was vacant at the time of agreement and also at the time of registration of sales. Similarly the cancellation deed made is on plain paper to save them and also not authentic and again a colourable device and made to show that only Rs. 65 lacs was paid for the plot. In this regard, the assessee has explained that the agreement of Rs. 1,41,00,000/- was not original agreement and the original agreement to sale was executed for Rs. 65,00,000/- on 15.05.2008 and the agreement of Rs. 1,41,00,000/- was executed on 25.06.2008. Further in both the agreement no where it is admitted that there was some existing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se on plot. 10) In the para 18 to 21 the ld. AO discussed over the statement of seller Shri Subhash Chand Bansal which was recorded by the AO at the time of assessment proceedings and rejected by the ld AO by holding that Shri Subhash Chand Bansal was not having any experience in the work of construction and there was no specification given to him with regard to the construction of house and the agreement dated 25.06.2008 is the actual authentic document which refer the sales consideration as Rs. 1,41,00,000/-. The principal of preponderance of probabilities precludes the possibility of a scenario where this prominent builder would ask any other person to do construction work prior to selling who does not have any experience of construction. In this regard the assessee has explained as under: - a) In the reply of Q. No. 11 of the statement it was stated by the seller that at the time of sales only boundary wall was constructed over the plot and earth filing of plot was carried out. Except to this no construction work was carried out over the plot. It is relevant to mention here that on both these activities no major amount is required. b) In reply to Q. No. 13 of the statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the statement of the seller of the plot cannot be rejected on surmises, conjectures, probabilities and possibilities without having any concrete material against the contents of the statements. 11) The ratio laid down in the case relied upon by the AO in para 28 of the assessment order either not applicable to the facts of the case or supports the assessee's contentions. The assessee's has cited several decisions in this regard in forgoing paras. Thus from the above discussion it is clear that there is nothing with the department to show that the assessee has paid Rs. 76.00 lacs on account of on money against the plot. 12) However, the husband of the assessee Shri Ashok Agarwal in his statement recorded on 22.09.2010 (Copy at PB Page 25-27) admitted that the payment of Rs. 76,00,000/- was made out of books and he surrendered the same as additional income but the surrender was not willful surrender of Shri Ashok Agarwal. The same was recorded by the search party at their own without saying the same by the Shri Ashok Agarwal and under pressure of search party Shri Ashok Agarwal had to sign the statement. The pressure of the search team was apparent as they kept the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders". The Hon'ble Supreme Court in case of Tanna And Modi vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce it cannot be said to be conclusive. f) The Jodhpur ITAT Bench in Maheshwari Industries v. Asstt. CIT [2005] 148 Taxman 74 (Jodh) (Mag.) has held that additions should be considered on merits rather than on the basis of the fact that the amount was surrendered by the assessee. It is settled legal position that unless the provision of statute warrant or there is a necessary implication on reading of section that the principles of natural justice are excluded, the provision of section should be construed in manner incorporating principles of natural justice and quasi judicial bodies should generally read in the provision relevant section a requirement of giving a reasonable opportunity of being heard before an order is made which will have adverse civil consequences for parties effected. g) Rajesh Jain Vs. DCIT 100 TTJ 929 (ITAT, Delhi 'A' Bench) Search and seizure - Block assessment - Retraction of statement - Addition of Rs.25 lacs made solely on the basis of confessional statement of assessee that he earned the said amount in the last ten years was not justified - Confessional statement should be corroborated with some material to show that assessment made is just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the search by exercising powers rested with the authorised officer u/s.132(4) could not be said to be a voluntary statement, rather a statement as a result of assessee's examination on oath. l) The law relating to retraction is well-settled by Supreme Court in Sri Krihna V. Kurukshetra University, AIR 1976 SC 376, wherein it is held that if the original statement suffers from any defects, the person is entitled to go back on the statement already made by making correct statement. The Supreme Court have laid down the ratio, after considering S. 18 of the Evidence Act, 1872 that any admission made in the ignorance of the legal rights or under duress, cannot bind the maker of the admission. This right has been tested under Income-tax Act and the same has been upheld by Punjab & Haryana High Court in Kisan Lal Shivchand Rai v. CIT, (88 ITR 293). m) Hon'ble Rajasthan High Court in the case of CIT Vs. Bhanwarlal Murwatiya reported in 215 CTR (Raj) 489 (2008) (2008)/ 3 DTR (Raj) 115 has held as under :- "A retracted statement of any person cannot be made the sole basis for addition because an admission is an extremely important piece of evidence. But it cannot be stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared in original return. The assessment was completed by AO vide his order dated 31.03.2013 assessing the total income at Rs. 3,62,24,330/- as against returned income Rs. 2,86,24,330/- by making following addition in total income: - S.No Particulars Amount (Rs.) 1. Unexplained investment in purchases of plot 76,00,000/- Aggrieved by the aforesaid addition of Rs. 76,00,000/- made by the AO, the assessee filed appeal before ld CIT(A) who for the reasons given at page 15-20 of her order, upheld the findings of AO and confirmed the addition made by AO. After going through available records before us, the facts emerges that during the year under consideration the assessee purchased a plot No. B-281, 10B Scheme, Gopal Pura Bye Pass, Jaipur. This was a vacant plot which was purchased by the assessee for Rs. 65,00,000/- vide registered sales deed dated 27.06.2008. (Copy at PB Page 82-88). The department found and seized the following documents in respect to purchase of this plot: - (i) The first agreement to sale of this plot was made on 15.05.2008 for Rs. 65,00,000/-. Which was seized by department at Annexure AS-7 Page 10-12 (Copy at PB Page75-77). (ii) Later on another agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities. (Copy at PB Page 101-102). The assessee also filed evidence like Google map and photographs in support of his contention that the land was vacant land at the time of purchase. (copy at PB page 105 to 110. From the photographs it is observed that the land was vacant land at the time of purchase by the assessee. The AO made addition of Rs. 76,00,000/- in total income of the assessee which has been confirmed by the ld. CIT(A) in first appeal. The seller Shri Subhash Chand Bansal had given a statement on oath that he had received Rs. 65 lacs only. The agreement with construction was cancelled and the cancellation agreement was also seized during the search operation. The seller stated that there was no construction and no water and electric connection which is also established by Google earth Maps and photographs placed in the paper book. There is no evidence of payment of any on money on the purchase of the vacant plot. No statement of assessee was recorded during search operation while she was present at the time of search. The cancellation agreement was found and seized during search operation itself. Therefore, its authenticity cannot be doubted when the Revenue had not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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