TaxTMI 
TaxTMI 
1983 (4) TMI 94
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....2. At the time of hearing, however, the assessee's counsel as well as the senior departmental representative raised preliminary objections as to the formulation of the points of difference. The assessee's counsel also contended that the order of the learned Judicial Member, if given effect to would result in enhancement of income in respect of certain grounds, particularly as regards the second point of difference and that the Tribunal being not empowered to do so under section 254(1) of the Act, the order of the learned Judicial Member in that regard requires to be ignored. Being of the view that the issues raised are important and are likely to have far reaching effect, the President considered it desirable to assign the case to three members for disposal within the meaning of section 255(4). This was done and that is how the matter has eventually come up before us. 3. According to Shri Sharma, the assessee's learned counsel, the points of difference should be formulated in such a manner as to bring out the material controversy, such as, whether a particular addition or disallowance is justified so that all possible aspects touching the ground can be considered by the Third Me....
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....difference, as stated by the learned Members and referred to in paragraph 1 hereinabove, we are not able to appreciate the grievance against the points of difference formulated by the differing Members. The points of difference, in our opinion, bring out the controversy between the Members substantially. This is quite apart from the fact that having regard to the decision of the Madras High Court in the case of CIT v. Sundaram & Co. (P.) Ltd. [1964] 52 ITR 763 and the decision of the Supreme Court in the case of Ram Kumar Agarwalla & Bros. v. CIT [1967] 63 ITR 622, we are inclined to hold that the point(s) of difference should be stated by the differing Members and/or understood in a manner that gives scope to both the parties to urge their viewpoints on all possible aspects on the point(s) of difference so that the Third Member's opinion thereon results in a majority view necessary for disposal of the appeal under section 255(4). 5. As regards Shri Sharma's further contention that the learned Judicial Member exceeded his jurisdiction and, therefore, his order regarding the second point of difference should be ignored, we find that section 254(1) places on the Tribunal powers of....
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....eads or even in respect of the different items under the same sub-heads or heads. In other words, the submission is that if an assessee has taken ten grounds of appeal, and the Tribunal has granted substantial relief on five grounds but has enhanced the addition or disallowance on the remaining five grounds, even if the net result is substantial relief, it would be a case of an order placing the appellant in a position worse than what he would have been had he not come up in appeal. According to Shri Sharma, this would be applicable even in a case where the grounds of appeal have different parts and the additions or disallowances are enhanced in respect of one part and substantially reduced in respect of the other part. What has happened in this case is that the assessee-firm started its business of constructing a multi-storeyed building in the year 1970. The construction was completed in the year 1977. Sales of the flats have been made during all these years. However, for all these years, the assessee has been showing its income on the basis of sale price of flats by adopting a certain gross profit rate. In fact, the assessments were completed originally on that basis for the asse....
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....udicial Member's order, the overall income for the project has been taken by him at a figure less than what was taken by the Commissioner (Appeals). 7. No doubt, the Bombay High Court has, in the case of Pokhraj Hirachand v. CIT [1963] 49 ITR 293, held that though the powers of the Tribunal in dealing with an appeal under section 33 of the 1922 Act, corresponding to section 254 of the 1961 Act, are very wide, they are not absolute and have further held in that case that the Tribunal was in error in dealing with the further question as to the quantum of expenditure allowable. On a careful examination, however, it appears to us that the decision does not support the assessee's proposition. It is pertinent to mention that the AAC in that case, found that the assessee had paid the entire amount of Rs. 3,00,000 to Milkhiram R. Goyal and had confirmed the disallowance only or, the ground that the payment was capital in nature. In appeal, at the instance of the assessee, the Tribunal accepted the assessee's submission that the expenditure was not capital in nature. However, without the department challenging the finding of the AAC that the assessee had paid the entire amount of Rs. 3,0....
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....td. [1980] 123 ITR 200. The relevant observations are : "The subject-matter of an appeal should be understood not in a narrow and unrealistic manner but should be comprehended as to encompass the entire controversy between the parties which is sought to be got adjudicated upon by the Tribunal. In a case where there are inter-connected grounds of appeal and they have impact on the same subject-matter, the scope of the appeal should be broadly considered in the correct perspective. While the appellant should not be made to suffer and be deprived of the benefit given to him by the lower authority where the other side has not appealed, equally and procedural rules should not be interpreted or applied so as to confer on an appeal ant a relief to which be cannot be entitled if the points decided in his favour on the same matter by the lower court are also considered as requested by the respondent." Emphasis, it may be stated, has been laid down on the fact that if a ground on which relief is sought by the respondent is so much inter-connected with the grounds of appeal by the assessee, the said ground should be considered forming a part of the subject-matter of appeal. Respectfully....
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....d pamphlet giving schedule of rates of different flats in the assessee's building. The ITO further noticed the rates at which the assessee sold the flats as per the entries in the books of account. The ITO further obtained letters from some original allottees as well as subsequent allottees regarding the rates at which they paid for the flats. He found that there is material difference in the rates recorded by the assessee in its books of account and the rates mentioned in the pamphlet as also in the earlier statements of some of the allottees. it may be mentioned here that there were altogether 64 flats. Out of 24 original allottees, 12 have surrendered and the flats were re-transferred. There are thus two categories : one of original allottees and the other of subsequent allottees on re-transfers. The ITO having considered the evidence as mentioned above, come to the conclusion that the assessee received on-money, i. e., over and above the recorded sale price. He estimated such extra money and added the same in the hands of the assessee as income from undisclosed sources. The Commissioner (Appeals) agreed with the assessee. When the matter came up before the Tribunal, there arose....
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....correct both in regard to the flat to be sold and the rates at which they were supposed to be sold, and lastly f. that absence of any incriminating evidence in the search, termination of lease by the President of India and the pendency of the writ petition, the fact that this is the earliest multi-storeyed building coming up in the capital and the people are not enthusiastic at the time and the further fact that the assessee had no brokers nor there was any advertisement should be taken into account in deciding a matter of this nature. 12. Having considered the matter fully and having gone through the evidence, which is placed before us, coupled with the submissions of both the parties, we are unable to subscribe to the view expressed by the learned Judicial Member. Essentially the question whether the assessee received on-money is a question of fact to be decided on the evidence on record. The evidence may be direct or indirect or circumstantial. It is not necessary in every case to record a finding only on direct evidence. It is enough if there is indirect or circumstantial evidence for supporting a finding of fact. But in relying on such evidence one must be very careful s....
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.... Initially, therefore, we have to find out whether this pamphlet was really got up by the assessee and that the assessee offered the flats at the particular rates mentioned therein. There is no evidence brought on record that the pamphlet was got up by the assessee. How the pamphlet has come into the record is also not very clear. Admittedly, it has not been found during the search of the assessee's premises nor was it found in any of the residences of the partners of the assessee-firm. Secondly, this pamphlet itself does not give the correct information. 3rd floor, and 15th to 18th floors were not meant for sale and it appears that they were never offered for sale. Therefore, it is difficult to place so much reliance on the pamphlet as has been done by the revenue authorities as also the learned Judicial Member. We will also presently show that the schedule of rates given in the pamphlet may not represent the actual sale price for more than one reason. 14. If we take the pamphlet as such and assume that it has emanated from the assessee, it only shows that these flats were offered at the particular rates. They may not represent the actual sale price which ultimately the assesse....
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....ction 131 of the Act that it was given by the assessee. His reply was : 'When you asked me who that means the person and I do not remember who exactly gave the schedule to us. It was evidently somebody from Hansalaya Properties.' This part of the statement is only relevant for the purpose of proving the authenticity of the pamphlet especially with reference to its connection with the assessee. It is evident from the above that it was not possible to hold that the assessee received over and above the amount paid by Shri Jitendra Nath for flat No. 4G. In the face of his statement that he received back the entire amount in full, then where is the question of any on-money that has passed ? 16. The next witness is Wg. Cdr. J. R. Kapoor. He booked a flat No. 13C. He paid in all Rs. 75,000 on different dates as follows : Rs. 16-4-197110,000 20-11-197110,000 10-2-197210,000 13-12-197220,000 26-12-197220,000 December, 1972 5,000 At page 1028 of paper book No. 2, at item No. 7, Shri Kapoor mentioned that flat No. 13C was booked at the rate of Rs. 125 per sq. ft. Later on1-2-1978it was mistakenly mentioned as1-1-1978. Shri Kapoor wrote to the ITO saying that he book....
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..... 137.50 per sq. ft. He mentioned that he had only receipts. The receipts, however, do not indicate the rate. From a careful analysis of the above evidence, it is not possible to rely on the evidence of Mr. Om Prakash Gupta so far as the rate is concerned. He has been prevaricating in his statements. At one stage he mentioned the rate as the rate given by him. Later on, he mentioned that it was only quoted rate, subject to negotiation. The very statement that he thought the rate was Rs. 137.50 per sq. ft. and the absence of any other evidence about the rate, it is difficult to accept that the rate was higher than what was mentioned in the documents. Most important factor to be considered is that he denied to have paid any on-money over and above the sum paid by cheque to the assessee. Then we have the agreement for sale of flat No. 7H after the surrender of the same flat by Shri Om Prakash Gupta, the original allottee. This agreement shows the rate at Rs. 103 per sq. ft. It was recovered in the search operations. Shri Kanwal Krishan Duggal does not appear to have been examined. 18. Mr. M. K. Bhatia who was subsequent allottee of flat No. 4F was examined and he stated that he pai....
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..... There appeared to be small deductions out of the total payments of Rs. 1,21,674. The instalments paid by him do not correspond to the schedule of payments at all mentioned in the pamphlet. With regard to the rate this gentleman stick to his entire statement that the deal was at the rate of Rs. 135 per sq. ft. through Malik Estate Agents as far as he remembered. Obviously, the assessee has not been named. It is also undisputed that the assessee did not appoint any brokers. Therefore, it is evident that the assessee did not quote the rate nor charged the same. It is, therefore, difficult to accept his statement with regard to any on-money said to have been received by the assessee. The position with regard to flat No. 13B is also more or less the same as in the case of flat No. 9G since both the flats were originally taken by Shri Satish Chandra, except that we may mention that when the money was paid back to Shri Satish Chandra the receipt was given for the same amount which was paid by him. Flat No. 9G was taken by Wg. Cdr. B. S. Rao at the rate of Rs. 110 per sq. ft. and this is supported by the agreement and the receipt. Flat No. 13C was taken by Shri Satish Galhota. 21. Shr....
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.... The statement of this witness clearly shows that the property was transferred at Rs. 117 per sq. ft. and that the entire money was paid by her at the rate and the same is recorded in the assessee's books. 22. One Shri Parminder Sachdeva, partner of Sachdevson & Co., has also purchased the property at Rs. 125 per sq. ft. It relates to flat No. 13F and he has categorically stated that there was no on-money paid by him. They were not the first allottees. Malik Estate Agents arranged for the transfer of the flat from the previous owner. The first instalment of Rs. 15,000 was paid. The first allottee of flat No. 13F is one Shri Gurdev Singh and his evidence does not throw any light except that he paid Rs. 10,000 and he got back Rs. 10,000 at the time of the transfer of the flat. He, however, stated that he surrendered the flat directly to the Builder and he denied any knowledge of the existence of Sachdevson & Co. to whom the flat was subsequently transferred. As already mentioned this is one of the points taken up in deciding the issue. 23. Then we have the statement of Mr. Gurnam Singh, the original allottee of flat No. 6E. He also did not say anything about the rate at which t....
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....gal as already stated is the subsequent allottee of flat No. 7G and she has not been examined. 25. Flat No. 6G was taken by Miss Meeta Sawhney and she being a minor, her guardian Mr. Baldev Raj Sawhney had deposed. His statement was first of all recorded by the ITO on13-2-1978. He mentioned that the flat was booked at Rs. 125 per sq. ft. The ITO put a question to him as to why he was charged at Rs. 125 per sq. ft. whereas in the month of January, 1974 flat No. 6D was booked at Rs. 160 per sq. ft. His answer was that the market rate on the date of purchase of the flat by him was only Rs. 125 per sq. ft. He has also given the statement showing the payments which are not in dispute. Shri Baldev Raj Sawhney was cross-examined by the assessee. It transpires from the statement that flat No. 6G was booked for Miss Meeta Sawhney at Rs. 105 per sq. ft. but it was subsequently booked in the name of Kashyap Metal Allied Industries (P.) Ltd. at Rs. 125 per sq. ft. He has specifically denied to have paid any on-money either at the time of the original booking or at the time of subsequent allotment. He has also testified to the exact amount paid in the first instance by Miss Meeta Sawhney and....
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....on-money. In most of the cases the rates quoted are only from memory without any corroborating evidence. In many of the cases, it was in a most uncertain manner that the rates were mentioned. In one or two cases no doubt the rate was mentioned and in the case of Shri Jitender Nath he seems to have supported the rates with reference to the schedule of rates. It is also relevant at this stage to mention that the quoted rates are mostly available from the pamphlet. The assessee denied the knowledge of the pamphlet, as already mentioned earlier. It may be, as suggested by the assessee, that somebody wanted to make profit by quoting the rates for the flats. That does not show that the assessee booked the flats at those rates. It is just possible that some middlemen might have got the benefit and the so-called quotation by various persons may be the rates quoted by the middlemen and not the assessee. In all cases, however, one fact which is running common is that all of them denied to have paid any on-money either at the time of original booking or in cases of transfers or at the time of re-transfer. All of them uniformly have admitted to have paid the moneys through cheques and received....
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.... that there was some litigation in regard to the land itself, as pointed out by the assessee, we do not think that that had a very serious impact. People came forward for purchasing the flats and in fact most of the flats have been sold. Nevertheless, one important thing to be noticed here is that it took considerable time for disposing of all the flats. This phenomenon does not exist now-a-days. It is common knowledge that it is very difficult to get a flat even in a multi-storeyed building inDelhi. The moment an advertisement comes most of the flats are booked. This was not the position in the earlier days. 30. The following further circumstances which according to the learned departmental representative are material have also taken into account : a. Blank agreement forms signed by the original allottees were found. We do not think anything turns on it. In fact we have already mentioned that it makes no difference as to whether the assessee itself booked the flats or they were re-booked at the instance of the original allottee. The relevant aspect has already been discussed by us. b. Only in respect of some flats there are agreements and receipts. This also is not very r....
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....at black money is passing in transactions relating to immovable properties in the country. We cannot go further. That fact certainly is of some relevance but in the absence of any other evidence, that fact loses its importance. The other decision referred to us is the well-known decision of the Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597. This decision really does not throw much light on the question of taking judicial note of the notorious facts. 32. We have also to view the other circumstances which are in favour of the assessee in this case. Admittedly, no cash, no investments, no jewellery were found during the search conducted by the department. All the agreements and all other papers relevant to the transactions have been seized by the department and on them only the assessee relied. In no other case of a flat owner, any assessment seems to have been made on the basis that he either paid on-money or received the same. At least nothing has been brought on record. It is also noticeable from the record that in respect of many other flats the rate at which the assessee booked or re-booked the flats was higher than what the original rate was. In other ....
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....concerned. It is very simple in its language. It was understood by Shri Vadhera that the value should be taken as is to be taken in the wealth-tax return. There is no ambiguity at all. In fact the value taken was Rs. 2,01,000 in the wealth-tax return and that is the value taken as the capital of Mr. Vadhera in the books of the assessee-firm. In fact the wealth-tax assessment was also done for the assessment year 1970-71 during his lifetime. He never thought of changing that value and increase his capital contribution accordingly. The same position continued till the year 1978. Our attention was invited to some of the observations in the GT Appeal No. 19 (Delhi) of 1978-79 decided by the Delhi Bench 'E' in its order dated 21-2-1980 (to which the President is a party). The question was whether there was a deemed gift by the late Shri H. R. Vadhera. The question sought to be canvassed on the basis of some observations in the aforesaid appellate order was that what was understood by clause 3 is the value determined in the wealth-tax proceedings. Since in the wealth-tax proceedings, the revenue determined the value at a much higher figure, which correspond to the figure now given by the....
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....text the debate appears to us to be of academic nature inasmuch as the expression 'capital asset' has been defined in section 2(14) of the Act. This definition is a negative definition in the sense that property of any kind held by an assessee has been defined to mean 'capital asset' except those which are specifically excluded. Some of the exclusions are, which are pertinent for the purpose of these appeals, 'any stock-in-trade, consumable stores or raw materials held for the purpose of his business or profession'. In the circumstances, the question to be answered is not as to what was the character of the property in the hands of the partner who brought in the property into the partnership firm but whether the partnership-firm held or could be said to have held the said property as its stock-in-trade, consumable stores or raw material for the purpose of its business. 35. In order to appreciate this aspect of the matter, it is desirable to refer to the relevant facts, in brief, once again. The deed of partnership was drawn on 8-8-1970 specifically with a view to carry on business in real estate, i. e., by constructing a multi-storeyed building on the premises, 15, Barakhamba Ro....
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....ently and not otherwise. In view of what has been stated above, we are in agreement with the learned Judicial Member that so far as the value of the property is concerned, it has to be taken at Rs. 2,01,000 for the purpose of computing the profits of the venture. 36. It may be observed before concluding that there is really no hardship caused to the assessee if the value of the property is taken at Rs. 2,01,000 for the purpose of computing its business profits. As already stated, the late Vadhera as the assessee and the partnership firm as an assessee are two different assessable entities. There is no suggestion that the partnership-firm has incurred any liability more than Rs. 2,01,000 in respect of the premises, 15,Barakhamba Road,New Delhi. Therefore, when that amount is taken as the cost of the property in the hands of the partnership firm for the purpose of computing its profits, there is no equity involved. What happened in the hands of the legal heirs of the late Vadhera is wholly an extraneous matter. 37. In view of the above, other contentions do not survive. ANNEXURE There has been a difference of opinion between the two members constituting the Bench on two p....
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....loss account as on 31-5-1977 should be submitted and the assessments should be made for all the years income on that basis. The assessee accordingly filed a consolidated profit and loss account as on31-5-1977which is as follows : "Expenditure Amount Receipts Amount Rs. Rs. To cost of land 2,01,000.00 By amount received To amount spent on from flat owners 1,79,29,486.20 constructed and debited to constructi- By other receipts and on a/c Hansalaya 1,07,57,806.67 profits as per Annexure 'D' attached 2,70,566.67 To expenses already incurred and debited to parties account By balance receipts but yet not debited from flat owners as to construction a/c per Annexure 'E' as per Annexure 'A' attached 11,50,248.80 attached. 36,97,943.11 By closing stock of To profit and loss unsold area at cost a/c expenses as 59,811 sq. ft. @ 80.10 per Annexure 'B' sq. ft. 47,90,861.10 attached. 10,97,176.63 To estimated expenses for the completion of the project as per Annexure 'C' attached. 50,00,000.00 To net profit 33,87,236.36 ------------------------ ------------------------- 2,41,41,162.77 2,41,41,162.77" ------------------------ ------------------------- Subsequent....
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....n in the wealth-tax return and it could not be the subject-matter of variation in any subsequent proceedings. The value shown at Rs. 2,01,000 being the cost of land is fixed once for all and it cannot be changed time and again. Assessee's own conduct in crediting the same amount to the credit of Sh. Hans Raj Vadhera goes to prove that it was the correct amount. It will not be out of place to mention here that Sh. Hans Raj Vadhera had shown the value of the plot in his W. T. return for the assessment year 1970-71 at figure of Rs. 2,01,000 and the same was adopted by the WTO at a figure of Rs. 2,75,000. This order was passed by the WTO as back as 1971. For all these years, assessee has not objected to the valuation of the cost of land and has never tried to vary this figure. Even in the consolidated profit and loss account submitted in September, 1977 which was prepared as on31-5-77the assessee valued the cost of land at Rs. 2,01,000 and not Rs. 36,61,625. It amply shows that for all practical purposes the assessee has taken the value at Rs. 2,01,000 as final and permanent and that is why he was given credit for Rs. 2,01,000 for all these years." 11. The IAC to whom this question ....
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.... was re-booked in the name of Mrs. Bimble Swani Sinha at the same rate. In this connection, Nath Bros. was summoned under section 131 of the I. T. Act. He was examined on oath. He has deposed that flat No. 4-G was booked by them on25-8-1970@ Rs. 147.50 on an affidavit. In support of the rate of Rs. 147.50 Mr. Jatinder Nath, partner of Nath Bros. have produced a schedule showing the rate per sq. ft. for various floors and the mode of payments, etc. As per the schedule booking at 4th floor was offered to be done @ Rs. 147.50. Nath Bros. made a payment of Rs. 16,077 an initial payment at the time of booking, @ Rs. 147.50 per sq. ft. This figure according to him was calculated by the builder and they were asked to pay for that amount and accordingly the payment was made. Hansalaya Properties have issued a receipt for Rs. 16,077 but no rate was mentioned by them in the receipt issued by the builder to Nath Bros. Subsequently, Nath Bros. made more payment of Rs. 16,000 each on11-1-1971and19-10-1971respectively. No agreement was concluded by them with the builder. Since during the time August, 1970 the booking was done @ Rs. 147.50, it is not understandable as to how after a lapse of 3 ye....
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....s which were originally allotted but subsequently surrendered and re-allotted. 18. The IAC to whom the matter was referred under section 144B held that there could be no direct evidence of taking of 'on-money' by the assessee-firm and this could only be gathered by the overwhelming circumstantial evidence which had actually been done by the ITO. Looking to the totality of the facts mentioned by the ITO, the preponderance of probability was in favour of taking of 'on-money' by the assessee-firm. The ITO, accordingly, computed the total income of each year firstly on the basis of the consolidated profit and loss account in the proportion of receipts in each of the years and then made the additions. The disallowance is made and discussed earlier were adjusted in the consolidated profit and loss account for working out the income in each year. 19. The assessee came in appeal before the Commissioner (Appeals) and challenged the order of the ITO for each of the years. The Commissioner (Appeals) held that the manner in which the accounts had been maintained by the assessee did not enable the ITO to arrive at the true profit in each year and, therefore, the ITO was entitled to make t....
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....0. Gift-tax proceedings were also initiated against Hans Raj Vadhera for having gifted the land to the partnership concern by adopting the value of the land at Rs. 50 lakhs but the Tribunal held on appeal that there was no gift. It was understood that no capital gains tax proceeding were initiated on the capital gains arising out of the transfer of this property to the partnership concern. The wealth-tax assessments and the estate duty assessments which had been made on the basis of the market value were being contested by the legal heirs of Hans Raj Vadhera. It was urged on behalf of the assessee before the Commissioner (Appeals) that irrespective of the fact that Hans Raj Vadhera had declared the value of this plot of land in his wealth-tax return at Rs. 2,01,000 and that amount had been initially credited to his account during his lifetime, while determining the income of the firm, the market value of the land as on 8-8-1970 should be adopted. Reliance was placed on the decision of the Supreme Court in the case of CIT v. Bai Shirinbai K. Kooka [1962] 46 ITR 86 in which it was held that it is the market price of the shares prevailing on the date when the shares were converted int....
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....volve minor issues. ADDITION AS 'ON-MONEY' 26. The Commissioner (Appeals) noticed that one of the buyers Jatinder Nath of Nath Bros. during the examination by the ITO handed the ITO a schedule of the rates at which the flats were booked by the assessee-firm as under : 'HANSALAYA PROPERTIES' 15-Barakbamba Read, New Delhi-1 Phone : 42929 Hansalaya' (Proposed multi-storeyed office flats on ownership basis atBarakhamba Road) Rs. Per sq. ft. 3rd Floor Offices 150.00 4th Floor ,, 147.50 5th Floor ,, 145.00 6th Floor ,, 142.50 7th Floor ,, 140.00 8th Floor ,, 137.50 9th Floor ,, 135.00 10th Floor ,, 132.50 11th Floor ,, 130.00 12th Floor ,, 127.50 13th Floor ,, 125.00 14th Floor ,, 122.50 15th Floor ,, 120.00 16th Floor ,, 117.50 17th Floor ,, 115.00 18th Floor ,, 112.50 Mode of payments 1. 10% on application for booking. 2. 10% on sanction of plan. 3. 10% on completion of piling. 4. 10% after roof slab of 1st floor. 5. 10% of 3rd floor. 6. 10% of 6th floor. 7. 10% of 9th floor. 8. 10% of 12th floor. 9. 10% of 14th floor. 10. 5% of 16th floor. 11. 5% on completion. The ITO had fo....
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....ats and without any exception the prices of the individual flats had been going up after the original booking. 28. The Commissioner (Appeals) further observed that in the face of this market situation, if the ITO had been able to find several cases which established that on-money had been charged by the assessee, he was perfectly entitled to assume that the other sales were also not shown in the books of account at the correct rates but there has been suppression in the sale price of other flats also. The Commissioner (Appeals) rejected the contention that the ITO had proceeded to make the addition on the basis of conjecture and surmises. The Commissioner (Appeals), therefore, upheld the addition on account of on-money charged by the assessee-firm. These findings are to be found in the order of the Commissioner (Appeals) for the assessment year 1975-76. 29 to 64. These paras are not reproduced here as they involve minor issues. 'ON-MONEY' 65. The learned counsel for the assessee argued this particular ground very vehemently and the arguments went en for a number of days. Number of charts, statements, explanations, etc., were filed. It was pointed out that every purchase....
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....learned counsel further urged that there was no admissible evidence to show that the assessee charged any on-money, i. e., the money over and above what is recorded in the receipt and in the assessee's books. He contended that while the Courts can take judicial notice of notorious fact or trade practice the tribunal cannot. In any event there was no evidence of any trade practice of charging on-money or to understate the consideration in the books. It was pointed out that the department had made no additions in the hands of purchasers for the on money invested by them in the purchase of flats. The cost of construction of the building had been accepted by the ITO. The conclusion regarding charging of on-money was, therefore, based on conjectures and surmises only and there was no legal evidence of it. The ITO had not cited any comparable case of prevailing market rates of the flats in multi-storeyed building in that area justifying the conclusion that the assessee had charged on-money. There was a mere presumption on which the ITO had proceeded and there was no evidence. In any event the assessee had succeeded in rebutting the presumption raised by the ITO. Reliance was placed on be....
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....justified in importing its local knowledge with regard to the question of rise in prices of land between 1954 and 1962. The Court can also take judicial notice of the fact that there was a steady rise in prices during those years. The learned departmental representative also relied on the observation of the Supreme Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 for the proposition that the taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look to the surrounding circumstances to find out the reality in these documents. Further reliance was placed on CWT v. Rohtas Industries Ltd. [1968] 67 ITR 283, wherein the Patna High Court held that in the absence of any direct evidence a judicial or quasi-judicial, the Tribunal can base its conclusion on the basis of what are known as notorious facts bearing in mind the principles of section 114 of the Evidence Act. The learned departmental representative strongly urged that we should take judicial notice of notorious facts of the on-money in property transactions and also of the fact that prices have been rising continuously from 1971 onwards. ....
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....act he had stated that he had kept some receipts and destroyed the others which was difficult to believe. 69 It was contended by the learned departmental representative that since the assessee claimed to have been able to sell all the flats without any publicity or issuing a pamphlet or brochure, it showed that there was no difficulty in selling them because of the dispute with the daughters and the President of India exercising the right of re-entry. It was further argued that failure to take any action against the buyers for unexplained investment in the flats was immaterial. 70. In reply the learned counsel for the assessee again reiterated his original arguments and took us through the evidence. He made a complaint that the ITO did not supply copies of all the statements and offered to give copies of only those statements which he was going to use against the assessee. As against this the learned departmental representative pointed out that the assessee was asked if he wanted the copies of all statements but he replied in negative. The learned counsel for the assessee stressed the point that this was the first multi-storey building inDelhibut the publicity was only oral b....
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....on of on-money having been charged. 71. We have considered the rival contentions. Two aspects of all the sale transactions merit separate treatment. The first is regarding the original booking. The department contends that the rate settled was much more than that shown on the receipts or agreements or in assessee's account books. The assessee denies this. The second pertains to transfers from the original allottees. Those transfers bare almost invariably been registered at the same rates at which the original booking was done though the transfer/surrender was after a lapse of 1, 2 or 3 years. The allottees contend that they took their money back from the assessee, signed blank transfer deeds, etc., and gave them along with the original receipts to the assessee. They have almost invariably contended that they do not know the subsequent transferee and never requested for transfer of the flat to the transferee. The assessee's stock contention is that the original allottees brought the transferee alone and requested for the transfer and that is why the old price was charged since the transfer was at the instance of the allottees. 72. We have to find out on the facts and in the ci....
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....tes for booking flats but did not charge uniform rates. He further stated that they got the best price for each deal. In the pamphlet he says, some rates were the same as fixed by the assessee but some were more or less. Jatinder Nath says he dealt with assessee directly and not with any broker and this schedule was given to him when he booked the flat with the assessee. D. R. Vadhera states on page 1002 that the mode of payment for the flats booked with them was as per this pamphlet but floors Nos. 3, 15 to 18 were not offered for sale. Brokers cannot, however, publish pamphlets on their own and would publish them only at the instance of and with the consent of the builder. 76. In this pamphlet (P. B. 1015) the rate for booking 4th floor flats is Rs. 147.50 per sq. ft. This finds support from the booking of 4-A @ Rs. 147.50 per sq. ft. as per assessee's own records. Jatinder Nath paid Rs. 16,077 when he booked 1080 sq. ft. flat @ Rs. 147.50 per sq. ft. He says that the assessee worked out the sum of Rs. 16,077 as 10 per cent of the booking price and he paid it. The assessee contends that this amount is not 10 per cent @ Rs. 147.50 per sq. ft. He further says that he did not ask....
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....er Nath the veracity of which could not be successfully challenged by assessee despite lengthy cross examination supported by the instalments paid and the pamphlet and the rate at which it was booked, i. e., Rs. 147.50, it is obvious that the rates shown for booking 4-C @ Rs. 120, 4-D @ Rs. 117 and 4-E @ Rs. 105 are definitely understated. It is all the more understated in the case of 4-H which was booked on8-5-1973, i. e., nearly one-half year later and the price shown is Rs. 110 per sq. ft. We may point out that flat No. 6-D was transferred on 30-1-1974 @ Rs. 160 per sq. ft. which shows that prices had considerably risen by then. It is also a fact of common knowledge that prices were steadily rising in 1971 and 1972 due to normal inflationary pressures and they rose steeply in 1973 and 1974 due to run away inflation. Would any prudent seller who sold 4 on19-10-1970@ Rs. 147.50 sell 4-B @ Rs. 110 sq. ft. on8-5-1973? The answer can only be in the negative. The rate for 4-H is heavily understated. The position is the same regarding 4-B and 4-F which are shown as booked @ Rs. 120 and @ Rs. 111 per sq. ft. after the flat 4-G was booked first of all on 25-8-1970 @ Rs. 147.50. The price....
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....is nothing to show that there was any understatement in it. 7TH FLOOR 83. Rate as per pamphlet on page 1015 of F-5 is Rs. 140 and 8th floor Rs. 137.50. As per paper book pages 1323-24, Flat 7-A was booked on 19-10-1970 @ Rs. 113 per sq. ft. and Rs. 17,000 was received as first instalment at the time of booking. Next instalments were Rs. 17,000 on5-11-1971and Rs. 17,055 on31-7-1972, Rs. 17,000 on 7 and18-9-1972. The area of the flat is 1,265 sq. ft. @ Rs. 113 per sq. ft. the total price comes to Rs. 1,42,945 and the instalments showed be Rs. 14,295 each but they were Rs. 17,000 each. At Rs. 135 per sq. ft. The price of 1,265 sq. ft. works out to Rs. 1,70,775 and the instalments would be Rs. 17,077 each. The rate Rs. 113 is, therefore, clearly bogus and unconnected with the actual price charged and settled. Flat 7-B was booked @ Rs. 140 per sq. ft. and we see no reason to hold that this price is also understated. 84. As regards 7-C the area is 1,400 sq. ft. and the first instalment is Rs. 19,600. This works out to Rs. 140 per sq. ft. The next instalment is Rs. 20,000 which is also almost equal to the first the difference being only Rs. 400. It is, thus, clear that the rate a....
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....5,000 on22-11-1971= Rs. 15,000. Rs. 5,000 on13-1-1972plus Rs. 3,000 and Rs. 2,000 on24-1-1972plus Rs. 5,000 on14-3-1972. Rs. 15,000=Rs. 5,000 on6-3-1973plus Rs. 10,000 on7-3-1973=Rs. 15,000, Rs. 10,000 on7-4-1973and Rs. 5,000 on30-4-1973=Rs. 15,000. The instalments of 10 per cent each were thus obviously worked out at Rs. 15,000 each. For 1100 sq. ft. @ Rs. 136 per sq. ft. approx. The instalment works out to about Rs. 15,000 each. The rate as per pamphlet was also Rs. 137.50 in 1970. These flats were booked in 1971 and 1972 and the price shown at Rs. 98 to Rs. 115 per sq. ft. appears to be totally fictitious and is understated. The prices for 8th floor appear clearly understated for another reason also. Comparing the prices at which 9th floor flats were booked vide paper book pages 1327 and 1328, i. e., Rs. 135 on 23-1-1971 for 9-B and Rs. 135 on 12-2-1971 for 9-F, it is impossible that assessee, a prudent businessman, naturally interested in getting the best price would book 8th floor in later part of 1971 and 1972 at less than Rs. 135 per sq. ft. We held that the flats 8-B, 8-C, 8-D, 8-E, 8-G and 8-H were all sold @ Rs. 136 per sq. ft. and the prices shown by assessee are underst....
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....rice could not be as shown though it may be slightly lower than Rs. 135 per sq. ft. Thus, there is understatement of consideration even in respect of flat Nos. 9-A, 9-D, 9-E and 9-G. We held that flats 9-A, 9-D, 9-E and 9-G were sold @ Rs. 130 per sq. ft. 10TH, 11TH & 12TH FLOORS 91. The rate quoted as per pamphlet on page 1015 of the paper book was Rs. 132.50, Rs. 130 and Rs. 127.50 per sq. ft. respectively. Vide chart on page 1329 they were sold to two limited companies of Dalmia Group on3-10-1970@ Rs. 123.50 per sq. ft. these flats. 13TH FLOOR 92. The quoted price as per pamphlet was Rs. 125 per sq. ft. flat Nos. 13-A, 13-F, 13-G and 13-E were booked @ Rs. 125 per sq. ft. on 8-12-1970, 6-10-1970, 12-11-1970 and 12-1-1971 respectively. Flat No. 13-B is shown to have been booked @ Rs. 115 on28-12-1970, 13-C @ Rs. 100 on16-4-1971, 13-D @ Rs. 115 on7-11-1970and 13-H @ Rs. 94 on2-2-1971. Mg. Com. J. R. Kapur who had booked flat No. 13-C has stated that he had booked it Rs. 125 per sq. ft. (P. B. P. 1028-29). He says it was the prevailing competitive rate. Looked at in the light of the rate quoted in the pamphlet and the rate at which 4 flats were sold, i. e., Rs. 125 per ....
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....sfer forms and gave them to assessee who paid them the refund and then filled in the blanks and transferred the flats to others. 95. Besides the statements of these persons who surrendered the flats, there is inherent evidence in the transactions themselves like the prevailing market rates of which incontrovertible evidence is available in the assessee's account books itself to show that the prices at which the assessee transferred the flats to repurchasers were much below the market prices. The assessee does not claim that it is a charitable organisation and did not want to charge the maximum price available. On the other hand, his case is that he is a prudent businessman who negotiated the highest price available. In such circumstances, if instances come to light that assessee had transferred the flats to repurchasers at less than the prevailing market price, the invitable inference would be that the assessee received part of the consideration in 'unaccounted money' and showed lower sum in the books to evade taxation. COMING NOW TO THE CONCRETE CASES 96. Flat No. 4G was booked by Nath Bros. @ Rs. 147.50 per sq. ft. in August 1970 as held by us already though the consider....
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....was at the instance of the person who had originally booked it having failed, the only conclusion possible is that the assessee to whom the flat was surrendered transferred it at a higher price and showed lesser price in the books of account. 100. 9-C, 9G, 4-D, 13-F and 6-E were all surrendered to the assessee and not transferred at the instance of the original purchasers. Their prices shown on transfer by the assessee are clearly understated as they are much below the current market prices. 101. 7-G, 6-G and 13-E were indeed transferred at the instance of the original purchasers and, therefore, there is no evidence of charging 'on-money' by the assessee. 102. The ITO has estimated on money on a general basis on the entire booking @ 15 per cent. He has also added separately the specific instances of understatement of consideration. In our opinion, the ITO was wrong in doing so, since in case of original booking it has been possible on the evidence on record to find out at what rates the flats were booked. In that regard we have already given findings in paras 74 to 93 above, as to at what rate the assessee had booked the flats originally and to what extent the price has be....
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.... account was also filed. The ITO held that the assessee's claim in this regard was untenable since entries passed in the books of the assessee-firm were on the basis of valuation of the plot as shown by them. Even in the wealth-tax return filed by the deceased the value was shown at Rs. 2,01,000 and the said amount was credited in his personal capital account. As per clause 3 of the partnership deed the value of the plot had to be taken as shown in the wealth-tax return and it could not be the subject-matter of variation in any subsequent proceedings. The assessee's own conduct in crediting amount of Rs. 2,01,000 to the account of the deceased goes to prove that it was the correct amount. The deceased had shown the value in his wealth-tax return for the assessment year 1970-71 at Rs. 2,01,000 and the WTO had valued it at Rs. 2,75,000 vide assessment order passed in 1971. For all these years, the assessee had not objected to the valuation of the cost of land and had never tried to vary this figure, Even in the consolidated profit and loss account prepared as on 31-5-1977 and submitted in September 1977 the assessee had valued the cost of land at Rs. 2,01,000 only. As per the agreeme....
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....gth and found that it was totally distinguishable. Other rulings were also relied on before him but since the learned counsel for the assessee has not placed any reliance on them before us we need not advert to them in detail. The learned Commissioner (Appeals) held that the contract between Hansraj Vadhera and the assessee-firm was binding on both the parties and, therefore, Hansraj Vadhera had agreed to transfer the land to the firm for Rs. 2,01,000 only. This amounted to sale by a partner to the firm. The firm had always understood that it would have to pay a sum of Rs. 2,01,000 for acquisition of the land. The value of the land taken for transfer to the assessee-firm was not dependent on any action by the Income-tax Department later on for its valuation in 1978. Hans Raj Vadhera has never during his lifetime claimed that he was entitled to any thing more than Rs. 2,01,000 for the price of the land. It was well established that in a business it is actual cost which has been paid for is to be taken into account and not the market value for determining the value of the property. In fact the assessee-firm had purchased this land for Rs. 2,01,000. The Commissioner (Appeals), therefo....
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....ause 3 of the partnership deed which only meant the value of the land as declared by the deceased in his wealth-tax return. The fact that the deceased who was the governing partner of the firm had during his own lifetime credited his own account with the firm with the sum of Rs. 2,01,000 was conclusive evidence of the intention of the parties as to the value put up on the land. The learned departmental representative pointed out that the observations of the Tribunal in the gift-tax case were only passing reference and were not on the point of interpretation of clause 3 of the partnership deed. 118. The learned departmental representative further pointed out that the assessee never claimed before the ITO/IAC the right to revalue the land and, therefore, we should not allow the assessee to raise this argument which was for the first time raised before the Commissioner (Appeals). It was further contended that the firm acquired the land as its stock-in-trade and not as capital. The enhancement of liability regarding the value of land as claimed by the assessee-firm would be valid as from the date of valuation on10-3-1978. The profit and loss account and balance sheets of earlier yea....
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....of the land at Rs. 2,01,000 only. The conduct of the parties including D. R. Vadhera who took the place of Hansraj Vadhera after his death in 1971 was that they interpreted this clause as stated by us above till the year 1978. 121. The reason why this clause was introduced in the partnership deed by the deceased is not far to seek. The deceased was an old man and he alone owned the property. His intention obviously was to pass on the benefit to his daughter-in-law and his grandsons by entering into a partnership with her and contributed this property as his capital at a nominal price. The property was admittedly worth much more than Rs. 2,01,000. The benefit in fact passed on after his death but in 1978, the assessee was obviously advised that it may be more beneficial to rake up this issue than to pay tax on a sum of Rs. 40 lakhs or so which was the difference between the market price of the land and the value credited to the account of the assessee. It was then that the whole controversy was raked up. On a plain reading of the terms of the clause and the conduct of the parties till the death of Hansraj Vadhera, we have no doubt whatsoever that the parties intended that the pro....
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....that has been raised on behalf of the assessee is that even if that was the intention of the parties, what came to the firm by contribution by Hansraj Vadhera was the capital of the firm and that capital was later on converted into stock-in-trade of the firm and the assessee has a right to value the stock-in-trade at the market value. Strong reliance is placed on the decision of the Supreme Court in the case of Bai Shirinbai, for this proposition. That was the case where the assessee held by way of investment several shares in companies. Later on, she commenced a business in shares converting the shares into her stock-in-trade of the business and subsequently sold them at a profit. The Supreme Court held that the assessee's assessable profits on the sale of the shares was the difference between the sale price of the shares and the market price of the shares prevailing on the date when the shares were converted into stock-in-trade of the business in shares, and not the difference between the sale price and the price at which the shares were originally purchased by the assessee. The question for consideration is whether this ruling has any application on the facts of the case. In Kan....
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....nce must be taxed as its revenue income and that is what has happened in the instant case. The firm obtained the land for Rs. 2,01,000 when it was worth Rs. 40 to 50 lakhs. Therefore, when it sold the flats, the difference between the selling price and the cost of construction including the land, etc., would be its revenue profit. It is not a case in which the firm came into existence with the object and for the purpose of holding the land as its capital asset and later on converted the same into stock-in-trade. Here the firm came into existence specifically for the purpose of constructing the multi-storey building on this piece of land which was contributed by Hansraj Vadhera. It thus came into the firm as its stock-in-trade and question of conversion and its valuation at market price does not arise. The assessee's case, therefore, must fail even on this ground. 124. There is another aspect of the case which we may touch upon briefly, though it was not argued by either party. The assessee is entitled really to value its closing stock-in-trade either at cost or at the market value whichever is less or it can value the stock-in-trade at cost or market price. The method of account....
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.... of account maintained for the respective years. 3. I shall first deal with the question discussed in paras 110 to 124. The facts which have a bearing on the decision on this complicated question may be briefly set out as under : One Shri Hans Raj Vadhera was the lessee of a land situated at 15,Barakhamba Road,New Delhi. The original lease of this land was granted on31-5-1932to Narain Das Hans Raj, a firm of contractors ofNew Delhiby the President of India (sic), the lessor in terms of the lease deed, dated31-5-1932. It appears that subsequently, the firm was dissolved and a leasehold interest in the said land was allotted to the share of one of the partners namely Shri Hans Raj Vadhera. The lessee enjoyed the said piece of land and the residential house constructed thereon until8-8-1970. However, it appears that the lessee Shri H. R. Vadhera, decided in August 1970 to bring in the said property in the common stock of the property belonging to a partnership concern to be formed for carrying on a business as dealers of property for commercial use. Accordingly, a partnership deed was executed on8-8-1970between Shri H. R. Vadhera and his daughter-in-law Mrs. Pushpa Vadhera w/o S....
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.... of Shri Vadhera in the books of the firm. 5. After the firm was constituted on8-8-1970, plans were submitted for constructing a multi-storeyed building to N. D. M. C. and they were approved in October 1970, although the Land & Development Officer had already terminated the lease in favour of Shri Vadhera. In or about October 1970, the residential house began to be demolished and at that moment certain adverse factors were brought out to the proposed scheme of the building project by the two daughters of late Shri H. R. Vadhera who claimed to be the co-owners of the said leasehold interest in the said plot of land and filed a suit in the Court for injunction. The Court stayed the demolition. However, later they withdrew the suit on compromise of being paid a sum of Rs. 1,50,000 each. Thereafter only the building project could go through and could be almost completed in 1977. 6. In the assessments of the firm for the various years under appeal, the firm claimed, through a revised consolidated profit and loss account that in working out its profits and gains from business arising out of the sale of constructed flats to the buyers, deduction should be made for a sum of Rs. 36,61....
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....m was to take place the heirs would clearly be entitled at the time of settlement of accounts on the basis of the understanding reached to demand back only such capital as was agreed upon to be representing the real capital contribution and ultimately credited to the capital account before dissolution and the income-tax authorities could not rely upon the terms of clause 3 of the agreement and prefer their own interpretation which was not warranted on the facts and in the circumstances of the case, particularly, in the light of the integrated wealth-tax assessments and the estate duty assessments. 3. There was no question of regarding the capital contribution in the form of the leasehold interest in the land as the sale of the said interest in the property by the contributing partner in the firm. The learned counsel submitted that it was well settled that when an assessee hand over the property to become the property of a newly constituted firm to which becomes a partner representing his share in the capital contributed the transaction cannot be regarded as a 'sale' of the property so made over by the partner to the firm. He cited the decision of the Supreme Court in CIT v. Hind....
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....d counsel, it would make no difference at all if Shri Vadhera chose to carry on the same business in partnership. The method of computation of real profits of business could not vary merely on the individual deciding to carry it over through partnership. 7. The learned representative of the department vehemently supported the orders of the authorities below and his contentions have already been reproduced by my learned brother in his judgment and I need not repeat it again. 8. After considering the rival contentions of the parties, I find myself unable to hold that the firm purchased any stock-in-trade as such from one of its partners at the very point of time of its constitution. What one of the partners, Shri Hansraj Vadhera, contributed to the partnership was capital in the form of his interest in the plot of land. This capital became the property of the firm just as any cash equivalent that would have been contributed. Such property was neither stock-in-trade of Shri Vadhera before the contribution nor it became the stock-in-trade of the firm at the point of contribution to the firm. The subsequent act of the firm, or its partners, on dealing with the property or whatever....
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.... seems to us clear that a partnership firm under the Indian Partnership Act, 1932, is not a distinct legal entity apart from the partners constituting it and equally in law the firm as such has no separate rights of its own in the partnership assets and when one talks of the firm's property, or firm's assets all that is meant is property or assets in which all partners have a joint or common interest. . . ." 9. The above observations of the Supreme Court support the contention of the assessee. In this view of the matter, it was open to the firm as well as to Shri Vadhera that in arriving at the real and correct profit and gains of the business, the market value of what was once a capital asset should be adopted if the capital asset became stock-in-trade at any point of time for being dealt with as such in the business of construction to be carried on by the firm. The stand taken by the assessee is consistent with the pattern of assessments made in the case of Shri Vadhera under the allied Acts namely Wealth-tax Act, Estate Duty Act and the Gift-tax Act. In the estate duty assessment, it was clearly accepted that the capital contributed by Shri Vadhera to the partnership concern ....
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....orm of his interest in the immovable property was anything less than Rs. 36,61,625. On the other hand, it has been vehemently contended by the representative of the department that the authorities below were justified in taking the capital contribution at Rs. 2,01,000 only which was the stipulated amount as per terms of clause 3 of the partnership deed. According to the learned departmental representative a strict and legal construction of such clause supported by initial entries recorded in the account books cannot lead to any other conclusion. Again, I am unable to accept this contention. In the first instance even a strict and literal construction of this clause does not warrant such a conclusion. Clause 3 provides 'the land situated at 15, Barakhamba Road, shall be the property of the firm and as taken in the wealth-tax return and shall be credited to his capital account . . . '. Even the literal construction of the language used does not warrant the meaning that the amount to be credited to the capital account shall be what is declared in the first wealth-tax return submitted for the 1970-71 assessment year. Indeed no assessment year to which a particular return shall relate i....
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....n received as on-money. (b) It should be presumed that sale of all flats of the same floor in a given period must have been made at a uniform rate. (c) It should be presumed that re-sale of surrendered flats must have been made at prices higher than the prices at which they were booked or sold originally or at least at the rates indicated in the pamphlet. (d) It must be presumed that there was a general rise in the prices of flats in commercial buildings considering that about 70 of them out of 80 were booked in 1970 itself. According to the learned departmental representative, no prudent businessman could be willing not to take advantage of such rise in prices and still prefer to sell its flats at lower rates on the same floor in the same period and some even in later years at lower rates (as compared with pamphlet rates). (e) It has to be noted that there was a notorious practice in 1970 to 1972 of on-money transactions in the sale of multi-storeyed buildings for which the Tribunal was bound to take judicial cognizance of such a practice. (f) Although there was no direct evidence of a single transaction, supporting the receipt of 'on-money' yet there was enough cir....
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....d in a similar position would have or in fact received 'on-money'. Even if there was such a presumption it was wholly rebutted by the assessee by not only by an emphatic denial but also by adducing all relevant evidence, oral as well as documentary, in the form of statements of all persons who booked the flats at any time ; the statements of moneys paid by them ; the receipts issued by the assessee ; agreement with the buyers and the like. On the other hand, there was always the presumption against the concealment of income or evasion of tax, that is in favour of honesty and good faith of the assessee. A taxpayer is assumed to have returned his income correctly unless it is proved otherwise by the IT authorities, by adducing legal and relevant evidence. 6. The circumstances pointed out by the ITO for making the impugned additions are only two, the following viz : (i) that a few of the original buyers had deposed that the flats were booked at higher rates than what the assessee admitted ; and (ii) that a few of the flats were re-booked even after a lapse of some time in favour of subsequent allottees at the original rates. Even those who deposed at (i) above that the rates were h....
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....f such a presumption and points out circumstances which lean in his favour. I do subscribe to the broad and general statement that in black money transactions, when two parties are involved, both try to conceal their own black money. It would be very difficult to have any admission from either of them as respects on-money involved in the transaction. But the question is whether such a difficulty can be legally surmounted only by the presumption that on-money must have been received or whether such a presumption has to be supported by any direct evidence or even by circumstantial evidence of an unquestionable character. The circumstantial evidence may be admissible to prove a fact. Unimpeachable circumstantial evidence may be admissible in certain cases to support such a presumption but the question is what is that circumstantial evidence on which the department relies in this case. In my view, the only circumstantial evidence on which the department seeks to rely in this case are the presumptions that have already been stated above. Presumptions by themselves are not circumstantial evidence. Circumstantial evidence must be either oral or documentary which pointedly support the vali....