TaxTMI 
TaxTMI 
2004 (6) TMI 272
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....assessee has challenged the order of the AO that he has wrongly treated an amount of Rs. 1.00,000 received from Shri Fateh Chand as advance booking of flat, as unexplained cash credit. Facts borne out from the record on this ground are that a loose paper was seized during the course of search and on perusal it was found to be a receipt dt.18th Jan., 1995, issued by Shri Fateh Chand, acknowledging the receipt of Rs. 75,000 on18th Jan., 1995. The assessee was asked to explain the document and in response thereto, the assessee has stated that the payment of Rs. 75,000 to Shri Fateh Chand had been made against advance of Rs. 1,00,000 for booking one residential flat at Khirkee Extn.,New Delhi. However, due to difference the deal got cancelled and as a result thereof Shri Fateh Chand was refunded Rs. 75,000 as full and final settlement against the amount of Rs. 1.00,000 paid by him in cash. It was further contended that the transactions are recorded in the cash book. But when he was asked to produce Shri Fateh Chand for verification, it was stated that the whereabouts of Shri Fateh Chand are not known. As such, it was not possible either to produce him or to file an affidavit from him. ....
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....nly be called to be a part of the undisclosed income, if the assessee has not disclosed the same in its regular books of account. But from the explanations of the assessee, the AO cannot draw an inference that he has received a sum of Rs. 1,00,000, which was not refunded to Shri Fateh Chand as the explanation of the assessee should either be rejected or accepted in toto and not in part. If the AO has doubted the explanation of the assessee, he can only make an addition of Rs. 75,000 as unexplained investment, but he cannot make an addition of Rs. 1,00,000 on the basis of the statement/explanation of the assessee. Once the AO has partly accepted the explanation of the assessee regarding the receipt of Rs. 1,00,000 as advance from Shri Fateh Chand, he cannot reject the remaining explanation of refund of Rs. 75,000 out of that to Shri Fateh Chand. In these circumstances, we do not find any justification in the addition of Rs. 1,00,000 made by the AO. We, therefore, delete the same. 8. Ground NO.2 relates to the addition of Rs. 95,691 as unexplained expenses out of the undisclosed income of the assessee for the asst. yr. 1995-96 by estimating the expenditure incurred on the marriage....
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.... assessee for the block period, that too, on the basis of some documentary evidence and not on the basis of the estimate. Since the AO has estimated the total expenditure of marriage at Rs. 3,00,000 without bringing any cogent material on record and made the addition of the difference, we find no merit in this addition. We, therefore, set aside the order of the AO on this account and delete the addition. 11. Ground NO.3 relates to an addition of Rs. 35,00,000 allegedly received by the assessee in cash against sale consideration of the first floor of Sidharth Haveli from Shri P.K. Dang as undisclosed income of the assessee for the asst. yr. 1995-96 on the basis of the draft agreement dt.29th Nov., 1994, between Shri N.K. Nagpal and Shri P.K. Dang, seized during the course of the search from the business premises of M/s Blue Chip Construction Co. (P) Ltd. (hereinafter called BCC Ltd.). 12. We have heard the rival submissions and carefully perused the orders of the authorities below and the documents placed on record. 13. Facts, in brief, on this issue borne out from the record are that during the course of search carried out at BCC Ltd. simultaneously on15th Sept., 1995, and....
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....cuted the sale agreement without receiving a cash of Rs. 35,00,000 the assessee has deposed that he executed the sale deed in good faith and handed over the property to the vendee. The assessee has also taken a plea before the AO that the agreement to sell was only a tentative draft and he was not competent to enter into an agreement to sell as the property belongs to Shri S.K, Nagpal, brother of the assessee, and he was the only authorised person, who can sell this building. The statement at Shri S.K. Nagpal was carefully examined by the AO, but the AO was not convinced with it, on the following grounds: "(a) The agreement to sell dt.29th Nov., 1994, is signed by Shri N.K. Nagpal and Shri P.K. Dang both, as vender and vendee; (b) This agreement to sell is on stamp paper; (c) The physical possession of the property was handed over to Sh. Dang as admitted by Shri Nagpal and the same was verified at the time of search under s. 132(1) that Shri Dang was occupying the respective portion of the building on 15th Sept., 1995; (d) There is no mention in the agreement that it was a tentative draft; (e) Shri Nagpal has not refunded the amount mentioned in the agreement to sell....
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....h has been stated by Shri N.K. Nagpal to the tune of Rs. 30 lakhs approximately out of his own sources. Thus, the plea that the assessee had no right to sell the property is self-defeated by his own statement. Assessee having spent Rs. 30 lakhs on construction out of his own funds had every right to sell it. No evidence has been brought on record by the assessee that the cost of construction of Rs. 30 lakhs was given a loan by him to Shri S.K. Nagpal; (c) The cheques were entered in the books because they cannot be concealed. The cash of Rs. 35 lakhs was not entered in the books by the assessee and the vendee under the belief that nobody has seen, it being transferred from vendor to vendee and Shri N.K. Nagpal and Sh. P.K. Dang did not want to bring this fact in the notice of third person, that is why, even signatures of any witness were not taken on the agreement to sell dt.29th Nov., 1994. Further, both of them never visualised the situation that this document would be seized in action under s. 132(1). Therefore, this plea of the assessee has no force; (d) The payment of Rs. 35 lakhs in cash by Shri P.K. Dang and receipt of the same by the assessee have been vouched by sign....
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....0 paid by the vendee to vendor for transfer of this property. The learned counsel for the assessee further contended that the assessee on behalf of himself and his brother entered into an agreement with one M/s Anichem Ltd. on 30th Nov., 1994, i.e., on the very next day of the draft agreement under reference to the effect that the entire building known as Sidharth Haveli with a covered area of 8,000 sq. ft. will be leased out to the said company initially for a period of three years and a cheque dt.30th Nov., 1994, for Rs. 5,00,000 was drawn by the company in favour of Shri S.K. Nagpal. These facts clearly show that the draft agreement dt.29th Nov., 1994, was not intended to be executed at all as the amount of Rs. 5,00,000 received from M/s Anichem Ltd. has not been refunded by the assessee. 18. The learned Departmental Representative, on the other hand, has placed heavy reliance upon the order of the AO with the submissions that the AO has given sufficient opportunity to the assessee to explain the receipt of cash, but the assessee could not satisfactorily explain the same. The AO has also dealt with each and every explanation of the assessee by giving a categorical finding the....
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....pees thirty five lakhs only) by cash, which has already been received by the vendor from the vendee, receipts of which the vendor hereby admits and acknowledges, vendor doth hereby sell, convey and transfer the said property in favour of the vendee, who shall hereinafter become absolute owner/Bhumidar of the said property and shall enjoy all rights of the ownership, possession, privileges, easements and appurtenances, whatsoever, of the said property." 20. Through this agreement it was also made clear that the actual physical possession of the property agreed to be sold has been given to the vendee at the spot and on the date of the execution of this agreement it was also made clear that the vendee is in the physical possession of the impugned property at site and the vendor shall, however, execute the necessary sale deed as and when it is legally possible to do and as and when written request is made by the vendee. If this clause is read carefully only one inference can be drawn that at the relevant point of time when this agreement to sell was executed, there may not be possibility of execution of the sale deed for certain reasons and the property was sold through this agreeme....
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....sessee for asst. yrs. 1993-94 and 1994-95 by treating this amount as unexplained investment in property No. 555, Lado Sarai, Mehrauli,New Delhi, on the basis of the loose sheet papers containing summary of construction expenses of the building. 23. We have heard the rival submissions and carefully perused the orders of the AO and we find that during the course of the search, the loose papers containing summary of construction expenses of the building 555, Lado Sarai, Mehrauli, New Delhi, as on 31st Oct., 1993, and 31st March, 1993, for Rs. 18,34,437 and Rs. 7,82,431, respectively, were found and when these loose papers were confronted to the assessee, he stated that these expenses pertained to the construction work of 555, Lado Sarai, Mehrauli, New Delhi, and the same are entered in the individual books of account. The books of account were produced before the AO. Since these books of account were not seized during the course of the search, the genuineness was doubted by the AO. He, however, examined and verified the books of account vis-a-vis the loose papers and noticed that these entries were not verifiable in toto. Some accounts mentioned in these papers do not find place in....
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.... -------------------------------------------------- 3. M/s Raj Trading Company 440 -- -------------------------------------------------- 4. M/s Gupta Sanitary Works 1,986 5,665 -------------------------------------------------- 5. M/s Prem Nath Bros. 7,571 -- -------------------------------------------------- The total amounts mentioned in paras (a) and (b) above come to Rs. 2,09,843 for asst. yr. 1993-94 and Rs. 23,065 for asst. yr. 1994-95." 24. These discrepancies were confronted to the assessee, but he could not furnish the satisfactory explanations and the AO made the addition of Rs. 2,09,843 and Rs. 23,065 as undisclosed income of the assessee for the asst. yrs. 1993-94 and 1994-95, respectively. The assessee preferred an appeal before the Tribunal and filed the details of these expenses and the loose papers The assessee has invited our attention to his letter dt.23rd Sept., 1996, written to the AO furnishing the details of all these entr....
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.... no merit in this addition. Accordingly, the same is deleted. 27. Ground NO.6 relates to an addition of Rs. 22,10,000 by treating this amount as unaccounted receipt against sale consideration of property in cash on the basis of some receipts signed by Shri N.K. Nagpal, the assessee, and its ledger account in the books of M/s BCC Ltd. 28. We have heard the rival submissions and carefully perused the assessment order and find that during the course of search a receipt dt.5th June, 1994, signed by Shri Nagpal on revenue stamp was seized from the business premises of M/s BCC Ltd. As per this receipt, Shri Nagpal has received a sum of Rs. 3,00,000 in cash from Shri P.K. Dang towards advance for the property situated at Kalu Sarai,New Delhi. Shri Nagpal has mentioned in this document that he has received Rs. 5,00,000 till5th June, 1994. A similar receipt of Rs. 3,00,000 dt.9th June, 1994, signed by Shri Nagpal certifying to have received a sum of Rs. 3,00,000 from Shri Dang towards Dasti/advance for property situated in Kalu Sarai. In this receipt it has also been mentioned by Shri Nagpal that by5th June, 1994, he has received a total sum of Rs. 5,00,000 and by9th June, 1994, he ha....
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....e assessee in which the assessee had admitted a fact that the receipts and copy of the ledger account were shown to him. The assessee has also maintained the account of Shri P.K. Dang in its books of account and according to it whatever received by the assessee from Shri P.K. Dang was refunded to him. The AO has examined the ledger account of Shri P.K. Nagpal in the books of M/s BCC Ltd. and the ledger folio in the name of M/s BCC Ltd. in the books of the assessee and noticed that the entries made therein are not matching. The assessee later on took a plea that he has taken a loan from Shri P.K. Dang on short-term basis, which was later on refunded. Similar was the statement of Shri P.K. Dang. From these statements, the AO has noticed that the assessee has taken a contradictory plea at different points of time. When the receipts were confronted it was admitted by the assessee that he has received the advance against the sale of the property, but later on he took a different stand following the stand taken by Shri P.K. Dang that he received a temporary loan, which was later on refunded. He accordingly treated the receipt of Rs. 22.10 lakhs as undisclosed income and added it to the u....
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....K. Dang was not seized during the course of search. Once the Revenue has brought some material against the assessee to prove that he has received a substantial amount in cash against the property, the onus is upon the assessee to prove that the deal was not materialised and the received amount was refunded to Shri P.K. Dang, but no evidence was filed during the course of assessment proceedings. Even before us, except the oral submissions the assessee did not file any documentary evidence to prove this fact Since the assessee failed to prove the refund of this amount, the same is required to be added in the hands of the assessee as undisclosed income. We, therefore, find no infirmity in the order of the AO and we confirm the addition on this count. 32. Ground NO.7 relates to an addition of Rs. 1,70,000 in the asst. yr. 1993-94 on account of unexplained investment in property Nos. 25 and 25/2, Lado Sarai,New Delhi, by estimating the purchase price of this property at Rs. 2,75,000 as against Rs. 1,05,000 declared by the assessee. 33. Having considered the rival submissions and on perusal of the record, we find that the assessee has shown the undisclosed income of Rs. 1.5 lakhs i....