TaxTMI 
TaxTMI 
2009 (8) TMI 125
X X X X Extracts X X X X
X X X X Extracts X X X X
.... broker, the persons, who were interested in sale or purchase of agricultural lands in the area of Faridabad used to come to assessee, their requirements in respect of area, locality, rate, preferences, etc. were noted. According to assessee some of these transactions materialized and many of them could not be effected. According to AO, these registers/entries were the actual transactions carried out by assessee in respect of purchase or sale. Further, the AO was of the view that these documents have been registered at a lesser value. According to AO, these entries were sent to Tehsildar, Faridabad to give correct valuation of their market value. On the basis of report, AO estimated the sale or purchase value of these alleged transactions and further estimated assessee's brokerage commission on the basis of these estimated valuations. Assessee's contention is to the effect that this valuation was neither given to assessee nor does it make any basis for estimation as being material extraneous to search and on the basis of a presumption that all these entries noted in the register were actual transactions. The incriminating material has been inventorized into various pages of Annexur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inter alia, contain various case laws. 4. Learned Departmental Representative in his contentions also has relied on various pages of paper book, the important ones are referred in our observations and references to CIT(A) and AO's paras, therefore, for the sake of brevity, we do not wish to repeat it again and again as their reference will be found in the relevant paras. With this general description of facts, we proceed to decide these appeals. ITA Nos. 552 and 555.Del/2003 (Shri Subhash Verma): 5. Assessee's appeal raises various grounds out of which ground Nos. 1 (i) to (xii) are not pressed and hence, dismissed. Remaining grounds are as under: "2. The learned CIT(A) erred on facts as well as in law (i) in sustaining addition of Rs. 40,000 on account of unexplained investment in construction of shop. (ii) in sustaining addition of Rs. 1,25,000 on account of investment in property at Katra. (iii) in sustaining addition of Rs. 50,000 on account of expenses on marriage of the assessee's son. (iv) in sustaining addition of Rs. 40,000 on account of the assessee's alleged visit to Nepal. (v) in sustaining addition of Rs. 15,000 on account of expenditure on r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... documents were seized. After issuing notice under s. 158BD, assessment was completed. On appeal of the assessee, some relief was given, against which the Revenue filed further appeal before the Tribunal. The assessee filed appeal to the extent that he was not given relief by the CIT(A). During the course of hearing before the Tribunal, there was a difference of opinion, which led to reference to Special Bench vide order dt. 11th Sept., 2006, on the question whether in absence of 115 days' notice to the assessee, assessment under s. 158BC will be rendered void. Special Bench answered the reference against the assessee. Special Bench held that defect in complying with the procedure of giving 15 days' clear notice was curable. The AO was directed to issue fresh notice under s. 158BC and thereafter proceed in accordance with law. The assessment proceedings were quashed. 3. Learned counsel for the Revenue submits that view taken by the Tribunal was erroneous as even in the absence of notice of 15 days, the proceedings could be sustained, as there was no prejudice to the assessee. 4. Learned counsel for the assessee supports the stand of the Revenue and submits that quashing of al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, the appeals are before this Special Bench for deciding on merits because assessee has not pressed the grounds about jurisdiction and validity of proceedings as raised in ground Nos. 1(i) to (xii) in original appeal memo. 8. Coming to the merits, we proceed to decide the appeal of Revenue with corresponding assessee's grounds first and proceed to decide each ground separately in following order. Ground No. (i): Undisclosed commission income-Rs. 23,25,800 9. As the facts emerge Shri Subhash Verma was originally a deed writer and thereafter became a leading property dealer of Faridabad, activities comprised of purchase and sale of agricultural lands on his own account and on commission basis. Assessee was filing regular returns of income showing estimated commission income for real estate dealings enclosed with statement of accounts including balance sheet, capital account, etc. Assessee contended to have earned this estimated commission only from Faridabad agricultural lands. Seized material included a register and other documents which was confronted to him. Seized documents inventorized as A-1, A-3 and A-4 of 16th April, 1999 pertained to period 1990-91 onwards and aske....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ound during the course of search clearly establishes that the assessee was indulging in unrecorded property transactions at Faridabad and HUDA plots. The seized material was confronted to the assessee, it was incumbent upon him to explain the same. Since proper reply was not furnished, AO made these additions. Annexs. A1, A3, A4 were referred and it was argued that these are agricultural land transactions of Faridabad and HUDA plots. They contain details and rates of property transactions. CIT(A) has not given reasons as to why seized documents A-1, A-3 and A-4 did not contain such details, therefore, the finding of CIT(A) is not based on proper reasons or evidence, the same should be reversed. 12. The learned counsel for the assessee, in reply, vehemently argues that the AO has failed to consider the assessee's explanation and facts of the case. The assessee was in real estate business from asst. yr. 1991-92 onwards and was a deed writer prior to that. Therefore, there cannot be any question of earning undisclosed commission from this business for asst. yrs. 1989-90 and 1990-91. In real estate brokerage business, it is a regular practice to maintain a register and note down the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e properties mentioned in the seized documents A-1, A-3 and A-4 enclosed as Annexs. A1 to A6; there is no mention of any HUDA plot or any dealings in HUDA plot. Document No. A-4 does not belong to the assessee. The same is also not in assessee's handwriting. (vii) In the absence of any seized document indicating any undisclosed income over and above already declared in the returns, registered sale deeds and even the receipts available with the assessee in support of the investments made are conclusive evidences as held by the Hon'ble Punjab & Haryana High Court in case of CIT vs. Satinder Kumar (2001) 169 CTR (P&H) 325 : (2001) 250 ITR 484 (P&H). (viii) In any case, no addition is possible on account of commission income from HUDA land in asst. yrs. 1989-90 and 1990-91 because assessee was not in the business of property dealing till asst. yr. 1990-91. This is also evident from the returns of the assessee for asst. yrs. 1989-90 and 1990-91 and also from the fact that the seized documents A-1, A-3 and A-4 of 16th April, 1999 relied upon by the AO pertain to period 1991 onwards as admitted by the AO in his assessment order. (ix) Assessee's return for asst. yr. 1996-97 was th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n entry-S.K. Garg, 7E/1619 for housing board-at page (faint print 72, dt. 14th Dec., 1991) refers to purchase enquiry-Vijay Arora No. (phone) 280282 wants plot in Sector 8 or 9. Assessee contends that the same is only enquiry register and only few of them could materialize as the sale or purchase of immovable property requires various negotiations, enquiry, title verification, price parity, etc. Therefore, all the entries in the register cannot be held as sale transactions. Assessee further explains that he was dealing only in agricultural lands and not HUDA plots. The assessee has filed regular return of income disclosing his commission income, therefore, the aspect of commission income or brokerage assumes the nature of disclosed income. Be that as it may, the assessee contends for asst. yrs. 1989-90 and 1990-91, he was not in real estate business at all and was a deed writer whereas such estimates have been made for those years also. We have reproduced CIT(A)'s findings above, same deserves to be upheld. 14. In block assessment the AO cannot summarily hold that the market prices of all entities were high and the assessee must have arranged these sales at double the price ment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Collector which are binding even on the Tehsildar were never Rs. 1.5 lacs per acre as claimed by the AO. (iii) Tehsildar's report neither was confronted to assessee nor was the assessee given a chance to give its objections to Tehsildar's report. (iv) In the absence of any seized material indicating any undisclosed income or investment, sale deeds and even receipts available with the assessee as evidence of payment are conclusive evidence of the amount invested as held by the Hon'ble jurisdictional High Court of Punjab & Haryana in CIT vs. Satinder Kumar. 17. We have heard the rival contentions and perused the material placed on record. The CIT(A) deleted the addition by following observations: "8.6 It has been stated by the learned counsel that such an addition could not at all be made. The price stated was as per the registered deed and when there was no incriminating material in the possession of the AO he was not correct in law to make any such addition. It has been stated that the AO could not under any circumstances by simply relying upon the rate given by the Tehsildar make an addition by estimating the undisclosed investment. 8.7 The issue has been examine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....----------------------------- (iv) Dhatir Rs. 1,73,562 ----------------------------- (v) Dhatir Rs. 3,82,500 ----------------------------- (vi) Dhatir Rs. 82,500 ----------------------------- (i) Rs. 5,49,375: 19. Learned Departmental Representative relied on the order of AO on behalf of all these additions contending that the market value was properly applied by AO on the basis of valuation report of Tehsildar. 20. Learned counsel for the assessee, on the other hand, contends that this addition has been made by AO on following summary observations: "7.1 During the previous year 1991-92, the assessee purchased the following agricultural lands: 1. Dhatir 11 Kanals 15 Marlas from Shri Om Aggarwal on 99 years lease basis for Rs. 2,400 per annum on 21st Dec., 1991. 2. 8 Kanals 19 Marlas at village Dhatir on 99 years lease basis on 2nd Nov., 1991 @ 1,000 per annum. 3. 8 Kanals 12 Marlas for Rs. 1,000 per annum on 2nd Dec., 1991. It is common knowledge that 99 years lease is almost equal to the purchase of property. Hence, after adopting the m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rlas was mortgaged to Dharampal S/o Shri Lakhi Ram for Rs. 3,500 is contrary to facts because it was not mortgaged to Dharampal by the assessee but was redeemed from Dharampal by the assessee for Rs. 3,500. The deed of redemption is placed at p. 301 of the paper book and the receipt for Rs. 3,500 is placed on p. 305 of the paper book. Affidavit of the legal heir of the original mortgagee Sri Lakhi Ram confirming that they have received Rs. 3,500 from Subhash Verma being the redemption money and that the possession had been given to the owner, who then is not Subhash Verma, is placed at p. 304 of the paper book. The said land was purchased from Rita Jowal by the original owner/mortgager Shri Mithari Singh S/o Shri Lakhi Ram. This property was purchased by assessee from one Smt. Rita Jowal Raj, therefore, this is a disclosed property. In view of these facts, the property being disclosed the AO's finding is erroneous and the addition being purely on the basis of estimation of Tehsildar, which is neither part of seized record nor any evidence found during the course of search, deserves to be deleted. Further, AO has made double addition in respect of this item in as much as in para 6.1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... making addition on account of investment in respect of this very agricultural land in para 6.1 of the assessment order has taken the cost at Rs. 1,50,000 per acre. Though assessee has not conceded to this imaginary figure adopted by AO but for the sake of arguments, it is submitted alternatively that if its cost is taken @ Rs. 1,50,000 per acre, it comes to Rs. 4,70,625 and when it is reduced from the alleged imaginary sale price of Rs. 4,70,625, there is no question of any profit which could be added in the hands of the assessee, AO cannot assume prices in selective manner, addition may be deleted. (iv) Rs. 1,73,562: 26. AO made the addition by following observations: "12.1 During the year under consideration, the assessee sold 11 Kanals 11 Marlas land at village Dhatir of Dr. Satbir Gupta on 9th Sept., 1996 available at pp. 14-15 of document A-9 for Rs. 1,40,000. But since the market rate of agricultural land in village Dhatir was not less than Rs. 1.50 lacs per acre, as stated by the Tehsildar, Faridabad, the sale value at the market rate of this land comes to Rs. 2,16,562 and after deducting the cost price at Rs. 43,000. The undisclosed profit on this sale transaction....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lue was Rs. 1,50,000 as intimated by the Tehsildar, Faridabad, the market value of this purchase transactions comes to Rs. 3,82,500 which is undisclosed investment of the assessee and added under s. 69 of the IT Act, 1961." 31. Learned Departmental Representative relied on the order of AO. 32. Learned counsel for the assessee contends that in the present case the land under dispute was not purchased by the assessee nor the investment was made by him. The said agricultural land was purchased by Naveen from Sumit (owner and minor) through Smt. Kishni mother of Sumit on 16th June, 1996 for Rs. 1 lac and Rs. 25,000 was paid as advance. Permission for sale of land was obtained by the Court in favour of Naveen on 25th Sept., 1997 as Sunil was minor (Annex. A13). This is further evident from the statement of mother of Sunil (Annex. A14). Balance Rs. 75,000 was paid when lease deed was got done in favour of Naveen. Rates given by the Tehsildar, if there are any, and relied on by the AO are extraneous to seized material and therefore, cannot be made the basis for addition in the block assessment. On the contrary, the rates given by the Collector which are binding even on the Tehsildar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by Revenue by and large revolves around the AO's presumption that the assessee was filing original returns on estimate basis and the purchases/sales were understated. No incriminating documents suggesting payment or receipt of any on money was found during the course of search in as much as nothing in this behalf has been referred to by AO. In all the cases, the purchase price or sale price has been estimated by AO solely relying on the valuation given by the Tehsildar on fair market value of these agricultural lands, the contents of such report are not clear. In our considered view, if the assets are declared in the original returns on which assessments are framed, they do not become undisclosed assets or investments or sale proceeds, Further, in the absence of any incriminating material found during search, the estimates of valuation made by Tehsildar cannot be upheld as evidence to hold undisclosed income. What has been found during the course of search are registered sale deeds or the receipts which are shown in regular returns. In view of these facts, we find merit in the contentions of learned counsel for assessee and the additions in question, being neither in respect of und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich was disclosed in the return of income. During the course of search document Nos. A-1, A-3 and A-4 were seized which are details of assessee's record/register of prospective sellers and buyers (enquiry register). In respect of one recording is in respect of Dr. Ashok Bhan, the recording has been made as-"purchase of plot No. 285 at Sector-7, Faridabad, dt. 31st July, 1991 for purchase of plot of 250 sq. yds., who demanded Rs. 2,200 per sq. yard for his plot". AO was of the view that the assessee's plot is situated in same block/locality and has better commercial position being in the comer of main market dividing Sectors-7 and 10, Faridabad. The AO correctly held that assessee had not disclosed the correct value of the plot purchased by him, therefore, the undisclosed income was determined at Rs. 10,20,000 and added to taxable income. 44. Apropos the investment in construction of house, AO rightly held that assessee had constructed residential house in the area 1,420 sq. ft. on this plot along with five shops of each 10" X 8". AO held the construction of this at Rs. 400 per sq. ft. per house and Rs. 30,000 for each shop and the addition of Rs. 6,18,000 was made. Cost of inves....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ounsel that the AO has made this addition on an imaginary market value and had relied on such a fragile argument that one of the prospective sellers had demanded a rate of Rs. 2,200 for his plot in Sector-7 Faridabad. No addition can be made on such flimsy and porous grounds. The decision of the jurisdictional High Court in the case of CIT vs. Satinder Kumar (supra) is squarely applicable. The addition of Rs. 10,20,000 is accordingly deleted." It was contended that this addition has been made by AO without any basis, relying on one of the prospective sellers desire that he will sell the plot at Rs. 2,200 per sq. yd. It does not lie with AO to hold somebody's claim of future sale of his plot as a determinative factor to estimate the assessee's purchase price. There is no incriminating material whatsoever found during the course of search in respect to the assessee's purchase of this plot. The AO has relied on a proposed sale of some other party to hold the assessee's cost disclosed in the return of income as understated. No evidence has been brought on record by AO to suggest that whether Dr. Ashok Bhan has sold his property at this higher rate or not. A person can demand anythin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....res. In our view, the assessee's reply is not substantiated; a copy of contractor Bhim Singh is found during the course of search along with various other bills etc. suggesting purchase of building material. The plea that six rooms were bought along with plot is not worthy of acceptance as the sale deed clearly indicates that these rooms were in "dilapidated conditions". Similarly, Civil Judge record indicates Pucca construction whereas assessee on oral argument contends it to be temporary structures because of HUDA policy, which cannot be accepted. In our view, as this construction of Pucca house and shops was not disclosed, CIT(A) was not correct in deleting addition of Rs. 5,68,000 in respect of construction. The order of CIT(A) is reversed on this issue. Ground No. 5 of Revenue in respect of plot is dismissed and ground No. 6 in respect of cost of construction is upheld; assessee's ground No. 2(i) is dismissed. Revenue's ground. No. (vii): Investment in purchase of Badhkal Land-Rs. 9,54,000 Assessee's ground. No. 2(vi)-Rs. 2,24,891 50. Brief facts in respect of additions in question in respect of 7.5 acres of agricultural land at village Badhkal are a receipt of part paym....
X X X X Extracts X X X X
X X X X Extracts X X X X
....explained from the cash flow statement, there was no question of treating Rs. 9,54,000 paid by the assessee and that too making the addition of entire amount of Rs. 9,54,000. AO did not bring any evidence on record to prove that assessee paid Rs. 9,54,000 so much so AO made addition of Rs. 9,54,000 whereas the source of Rs. 6 lacs was very well explained with the help of cash flow statement. (iii) There was big litigation in respect of this very land between the owners and the then buyer Mr. Madan Mohan Lal Malhotra, which litigation ended only in July, 1997 by the order of Punjab & Haryana High Court. Evidences of these facts were filed, it is only after the title became clear in the hands of the owners, the advance payment for the land could be started and assessee made payment of Rs. 6 lacs towards his share during the financial year 1998-99. Nothing more was paid by the appellant as in the meantime, search took place. There was no basis or evidence with AO to make addition of Rs. 9,54,000 when the cash flow statement is not disputed. (iv) It was explained to AO vide para 11 of letter dt. 25th April, 2001 that no expenditure was incurred by the assessee in respect of the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cent value Rs. 9,54,000-Rs. 6,00,000). We modify the order of CIT(A) accordingly. Apropos construction, learned counsel has demonstrated that the transaction entered into severe disputes, therefore, the assessee was not given the ownership. The documents on the basis of which it has been held that unauthorized construction was carried out on this Badhkal land pertain to year 1995-96. According to learned counsel when the agreement to sell and possession itself was dt. 28th Aug., 1998, the assessee would not incur expenses in 1995-96 more so when the title in the property itself was in dispute. Without possession, assessee cannot be inferred to have incurred expenditure about 3 years in advance. We find merit in the argument of learned counsel, as far as the seized material is concerned, the same pertains to year 1995-96. AO has drawn an inference on the basis of a notice issued by HUDA authorities and further linking it to the purchase of plot by seized material in the form of receipt as part payment of Rs. 8,75,000 which indicates the delivery of possession. The clear facts, which emerge, are the title of this Badhkal property was in dispute and assessee had given only advance pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of M/s Tools India Ltd. and they do not have been sold. Since the land in question was not sold, the question of estimating the commission income does not arise. Before AO, an explanation was furnished that the transaction reflected in seized papers was in respect of M/s Tools India Ltd. to one Mr. Satpal, who had paid through account payee cheques, which were deposited in the account of M/s Tools India Ltd. Assessee requested to verify this fact from the ends of these two parties, whose complete address was given. AO however made the addition. 58. Learned Departmental Representative supported the order of AO. 59. Learned counsel for the assessee drew our attention to paper book pp. 446 and 447 and contends that this transaction is relatable to one Mr. Satpal, who purchased the land from M/s Tools India Ltd. Mr. Shubh Karan Jain is director of M/s Tools India Ltd. On question by AO, assessee filed a detailed reply in this behalf vide letter dt. 20th April, 2001 stating that nowhere the seized papers indicate village Manger, documents at page Nos. 444 and 445 pertain to the said M/s Tools India Ltd. and the inaccuracy in the area was also pointed out. Assessee explained detai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(A)'s finding is correct. Attention was invited to p. 72 of Annex. A1. According to learned counsel, it is copy of purchase and sale record maintained by the assessee and does not reflect only the purchase transactions, which is evident from the preceding entry on this p. 72 where it is clearly written that "Vijay Arora wants plot in Sector 8 or 9 of 2,160 sq. yds.", therefore, the page is a copy of enquiry register. Further, in the relevant entry, in the left hand corner is written Mohan Singh Bhatia's land and some illegible scribbling with 25 per cent, 20 per cent. 20 per cent and 35 per cent. Nowhere comes the land of Rs. 17,59,000 besides against the Entry 20275 VE 35 per cent, AO has presumed that VE means Verma 35 per cent, the share of land purchased whereas the assessee's reply is that it is an enquiry register for customers and not of assessee's holding. Neither there is description of land nor assessee's name. The earlier entries on the same page clearly indicate it to be enquiry register. Before CIT(A) assessee categorically reiterated his stand, who deleted addition by following observations: "18.1 Page 61 of document A-1 and p. 72 of document A-1 has been carefully....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that two sons and Smt. Rajni Verma being related persons, they were benamis of the assessee was totally erroneous, no evidence in this regard was found. AO made the addition holding that the assessee was benami owner of 1/2 share of this building, which was sold to one Mr. Gautam, proprietor of M/s Jagdamba Properties for Rs. 52 lacs and 50 per cent thereof i.e. Rs. 26 lacs was held as consolidated undisclosed income and investment on this alleged benami transaction. Aggrieved assessee preferred first appeal where CIT(A) deleted the addition as under: "19.2 The issue has been carefully examined. It is apparent from the contents of the assessment order as well as from the reply of the present AO that there is no evidence of any sort which can indicate: (a) That the appellant was the real owner. (b) That the appellant had acquired this property 'benami' (c) That the fictitious owners were one Smt. Rajni and his two sons Shri Sanjay Verma and Shri Naveen Verma. (d) That a sum of Rs. 52 lacs had been received on account of sale of the property to M/s Gautam of Jagdamba properties, Ballabgarh. 19.3 The AO has relied on some local enquires to state that the sale to M/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Arora authorizing assessee to collect rent on their behalf and to settle certain disputes with PNB. Taking adverse inference from this old power of attorney AO on his surmise and without any material held that the assessee was one of the benami owners of the property and the same was sold to Mr. Gautam. The burden to prove benami is squarely on Revenue besides the shares held by sons have been respectively added in their hands. Since the assessee was neither the benami owner as alleged nor the property was sold the addition is purely hypothetical. Smt. Rajni Verma has filed an affidavit before AO, which is as under: "I, Smt. Rajni Verma D/o Shri Ram Kishore Verma, resident of House No. 2022-A, Sector 3, H.B. Colony, Faridabad do hereby solemnly affirm and declare as under: (i) That I am a regular income-tax assessee with AO Ward-I(2), Faridabad. (ii) That my PAN is AAKPV6423 E. (iii) That I was the absolute owner of 1 14th share in old PNB building, Ballabgarh. (iv) That the said share i.e. 1/4th was purchased by me on dt. 25th April, 1995 vide registered sale deed dt. 25th April, 1995 registered in the office of sub-Registrar, Ballabgarh." 67. We have heard the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial year 1998-99 at Rs. 4,32,122 and thereafter has estimated the expenditure backwards for each year upto financial year 1988-89: 20.4 The issues raised by the AO and by the learned counsel has been carefully examined and it is held that the appellant had indeed not shown full and correct withdrawal especially keeping in view two factors i.e., the education of son, Shri Sanjay Verma studying at Bhartiya Vidya Peeth, Maharashtra and expenses on electricity. However, the addition of Rs. 32,43,657 on account of unexplained household expenditure appears to be extremely high. More so, when there was no material found during the search to substantiate the allegations made by the AO. After carefully considering the various factors, the addition of Rs. 32,43,657 is reduced to a sum of Rs. 6 lacs for the entire block period. The AO is directed to recompute the addition and the income accordingly." Aggrieved both the parties are in appeal. 69. Learned Departmental Representative relied on the order of AO. 70. Learned counsel for the assessee argues that no incriminating material whatsoever was found from the premises of the assessee suggesting any household expenses clandestinel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect of Revenue and assessee's appeals, therefore, we do not repeat the facts, we have heard both the parties and perused the material available on record. Ground No. 2(i)-Addition in construction of shops 74. Apropos ground No. 2(1) since we have confirmed the addition of construction of house and shops on plot No. 174, Sector 7, Faridabad allowing ground No. 6 of Revenue's appeal, ground No. 2 (i) of the assessee's appeal is dismissed, being part related to Revenue's ground. Ground No. 2(ii): Investment in property at Katra-Rs. 1,25,000 75. CIT(A) upheld the addition by following observations: "An addition has been made of a sum of Rs. 1,25,000 on account of undisclosed purchase of property at Katra. The AO in his order has stated that as per seized document A-11 pp. 17 and 18, the assessee had purchased one property at Katra in the name of his mother for a sum of Rs. 1,25,000. The AO rejected the plea of the appellant that this amount had been paid out of accumulated personal savings. The present AO in his comments has also taken the same stand and has also relied upon the seized document in question. In his written submissions the learned counsel has stated that a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng material in this behalf was found at Rs. 1,24,898 whereas the assessee has shown cash flow of Rs. 1,75,000 looking at the peculiar and unfortunate circumstances, the facts are on record that the celebrations were on low key basis. In view thereof, we are inclined to delete the addition of Rs. 50,000 retained by CIT(A), which is an ad hoc estimate. This ground of assessee is allowed. Ground No. (iv): Nepal visit-Rs. 40,000 79. Apropos ground No. 4 i.e., assessee's Nepal visit, a boarding pass was found during the course of search in the name of S. Verma. AO asked queries in this behalf. It shall be pertinent to refer to assessee's reply before CIT(A), which is as under: "Facts of the case is that son of the assessee Mr. Sanjay Verma went to Nepal and the boarding referred in the questionarie was in his name which mentioned it as 'S. Verma'. This was confused by AO as if relating to the appellant. Appellant never visited Nepal in his lifetime. Therefore, addition made in the hands of the assessee cannot be justified under any circumstances. Moreover, without prejudice to above, it is submitted that air fare from Delhi to Kathmandu to and fro is Rs. 12,000 which has been e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e sole ground therefore, to be adjudicated is ground No. 2, which is as under: "The learned CIT(A) erred on facts as well as law in sustaining addition of Rs. 3,05,000 on account of repayment of loan to LIC of India towards undisclosed income." Revenue's appeal ground No. (i): Deletion of addition of Rs. 2,22,500 on account of unexplained investment in plot 86. Apropos ground No. 1 of Revenue, the observations of CIT(A) highlights all the facts, action of AO and assessee's explanation as under: "Addition of a sum of Rs. 2,22,500 has been made by the AO on account of unexplained investment in the purchase of plot No. 1-16, Sector 10, Faridabad. The AO while making this addition has stated that the market value of the land at Faridabad at the point of time when the plot was purchased in asst. yr. 1989-90 was 'very high' and the list of prospective buyers and sellers as per document A-1 which also included the market rate of plot demanded by the sellers would show that the rates were as high as Rs. 1,000 per sq. yd. The AO accordingly estimated the purchase price at Rs. 800 per sq. yd. and estimated the cost price of Rs. 4,00,000 and made an addition of Rs. 2,22,500. 8.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fference as undisclosed income. Following judgments were relied for the proposition that in block assessment, such additions cannot be made: (1) CIT vs. Ram Gopal Agarwal (2008) 9 DTR (Del) 175; (2) CIT vs. Kishan Kumar& Ors. (2008) 215 CTR (Raj) 181; (3) CIT vs. Manoj Jain (2006) 200 CTR (Del) 327 : (2006) 287 ITR 285 (Del); (4) CIT vs. Satinder Kumar 88. We have heard the rival contentions and perused the material on record, it has not been disputed that assessee has filed her regular returns, advance for plot and purchase price were duly shown therein. There is no incriminating material suggesting payment of any on-money, therefore, the addition made by AO has been rightly deleted by CIT(A), observing that addition cannot be made on the basis of presumption that the market rates were high and thereby calling valuer's report. This ground of Revenue is dismissed. Ground No. (ii): Loan of Shri Mehar Singh-Rs. 2,25,000 89. The relevant finding of CIT(A) is as under: "12.1 The issue has been examined. The AO in his comments has relied upon the order of the AO. It is held that the AO was not justified in making this addition. It is an undisputed fact that Shri ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nue is dismissed. 93. Apropos ground No. (iii), addition of Rs. 68,000 on account of bogus loan. CIT(A) deleted this addition as under: "The AO has made an addition of Rs. 68,000 on account of loan of different persons namely, Murari Lal, Jawahar Singh, Manu, Sadi Lal, Satpal by stating that these persons did not have financial position to advance the loans and that in such 'costly and commercial times no sensible reasonable person would advance a loan to a stranger free of interest'. In appeal it has been stated that all these loans had been duly shown in the balance sheet and that it is an undisputed fact that there was no material with the AO to come to a conclusion that these loans were bogus. It has been stated that the computation of undisclosed income was an ipse dixit, surmises and conjectures. 13.1 The issue has been examined and it is held that the AO did not have any material to come to a conclusion that the loans were bogus. It is a fact that the AO did not even record the statement of a person from whom loans have been raised to come to a finding 1tlat these persons did not have capacity to give loans. From the records it is indeed a fact that this addition ha....