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TMI Blog1993 (7) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ajanta Co-op. Housing Society. The persons whose statements were recorded are (1) Girdhar Prasad, (2) Kamal Agrawal, (3) Smt. Chetna Sultania, (4) Manju Pasari and (5) Raghevendra Hiralal. The first three persons stated that each of them had purchased a flat in said society for Rs. 4,50,000 out of which Rs. 3,75,000 had been paid by cheque while balance amount of Rs. 75,000 had been paid as "on money" in cash. According to them, the payments had been made to Shri Mahesh G. Vakil who was described by them as builder of the apartments. The fourth person was sister of the owner of flat and her statement was that her brother had informed her that cash of Rs. 81,250 had been paid to Shri Mahesh G. Vakil for booking the flat. The fifth person had stated that he paid Rs. 1,11,000 in cash as "on money". As regards payments of "on money" statements of the witnesses were that the same had been paid at the time of booking. As regards booking two of these persons had stated that it had taken place in 1987. 3. In the return for asst. yr. 1989-90 the assessee had shown Rs. 1,86,027 as income from proprietory concern M/s Krupa Corporation. He had shown income of Rs. 18,337 and Rs. 16,835 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of having earned any extra income during these years". The ITO also mentioned that the assessee had further stated that in asst. yr. 1991-92 he had declared income under s. 132(4) r/w Expln. 5 to s. 271(1)(c) of the IT Act, 1961. He did not accept the explanation of the assessee. According to him in this line of business, "on money" was taken first at the time of booking of the flats and since the year under consideration was shown by the assessee as the first year of the business of Krupa Corporation and since Krupa Corporation alone had done the construction work, the conclusion would be that the assessee had received on money during the year under consideration. He also observed that as per list supplied by the assessee there were 20 flats in said society and, hence, the assessee should be regarded to have received on money of Rs. 20 lakhs. He, therefore, made addition of Rs. 20 lakhs in the income of the assessee. 6. The assessee filed appeal before the CIT(A) and objected to the observations of the Assessing Officer. It was submitted that the Assessing Officer should not have relied on the statements of purchasers of the flats and should not have made addition of Rs. 20 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration. It was also submitted that these statements could not be made the basis for addition particularly when the assessee has not been given an opportunity to cross examine these persons. He referred to the fact that in the application made by the assessee on 22nd Nov., 1990 addressed to the Asstt. Director (Investigation) the assessee had declared Rs. 23 lacs as undisclosed income and that in addition, income of Rs. 37 lacs was declared by the three members of the group viz. Shri Mahesh G. Vakil, Mrs. R.M. Vakil and Shri S.A. Manjrekar for asst. yr. 1991-92 and that the same income could not be taxed twice in two assessment years. 9. The learned Departmental Representative submitted that the fact that ITO has not been able to express himself in proper language would not vitiate the entire assessment order. He referred to the observations of the ITO to the effect that since the assessee himself had shown the income of Krupa Corporation, the income pertaining to 'on money' was assessable in the hands of the assessee. He also referred to that part of the assessment order where the Assessing Officer has observed that the assessee had received on money while booking the flats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect that the assessee was not in fact owner of the Krupa Corporation but on books he was shown as owner. However, this observation is only a reaction of certain answers given by the assessee to ADI in which the assessee had not in the earlier part stated that he was owner of Krupa Corporation and was deriving income as proprietor of Krupa Corporation. The assessee has filed return as owner of Krupa Corporation. The assessee has admitted at all stages of assessment proceedings including the stage in the appeal that he was the owner of Krupa Corporation. Consequently, the income of Krupa Corporation was liable to be assessed in the assessee's hands. In another part of the assessment order the ITO has mentioned that the income of Krupa Corporation should be taxed in the hands of Shri Mahesh G. Vakil. However, he has also mentioned that since the assessee himself had shown the income of Krupa Corporation as his income, the same should be taxed in his hands. In substance the Assessing Officer has assessed the income of Krupa Corporation in the hands of the assessee inspite of the above observations. It is to be noted that the Assessing Officer has not taxed the income on prot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n money had been given. Consequently, the assessee would not have thought it necessary to cross examine those persons. However, the Assessing Officer has used the statements against the assessee on the assumption that although these flat owners stated that the on money had been paid to Mahesh G. Vakil, the same should be regarded to have paid to assessee who was the builder. Such an inference should have been drawn only after examining those persons afresh and after giving opportunity to cross examine, to the assessee. Consequently, the grievance of the learned counsel for the assessee to the effect that the right of cross examination had been wrongly denied to the assessee, was justified. 13. Besides all relevant facts in the present case do not appear to have been brought on record of this assessment. Search proceedings had been conducted against Shri Mahesh G. Vakil. It is true that Shri Mahesh G. Vakil is business associate of assessee and is member of the group of which the assessee is also a member. However, whatever is on the record of the assessment of Shri Mahesh G. Vakil, cannot be said to be part of the assessment of the assessee. It was the duty of the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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