TaxTMI 
TaxTMI 
1999 (5) TMI 79
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....ed the return of income for the block assessment years under consideration in response to the above notice on 5th Nov., 1997. The case was taken up for scrutiny vide notice under s. 143(2) dt. 5th Nov., 1997. The assessee filed the details. During the search and seizure operation, the gold weighing 2073.100 grams valued at Rs. 10,57,540 was found and seized as per the Annexure J-4 of the Panchanama dt. 30th Nov., 1996. On questioning, the assessee replied that the gold was purchased at different times and it was not possible for the assessee to explain with the help of books of account. In view of the above, the AO treated it as the assessee's undisclosed income. As per Panchanama dt. 30th Nov., 1996, the gold was valued at Rs. 10,57,540. The assessee's case was that the investment in these gold were made at different point of time and it was acquired with the amounts available with the different family members. A separate sheet explaining the year wise acquisition of gold was filed. The assessee claimed that he purchased 688.500 gms. of gold during the asst. yr. 1994-95 worth Rs. 3,16,710. Again in stated that he acquired the gold weighing 1385.110 during the asst. yr. 1995-96 wor....
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..... yr. Asst. yr. Asst. yr. 1994-95 1995-96 1996-97 Rs. Rs. Rs. --------------------------------------------------- Ramakant - 30,000 5,84,000 Ramakant HUF - 4,45,000 1,05,000 Sumitra (wife) 34,406 60,325 - Gopal (HUF) 1,21,332 - - Mamta Govind 75,193 1,09,949 -....
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....No. 3 is allowed. 13. The fourth ground of objection by the assessee is against the order of the AO in making the addition of Rs. 20,000 by holding that the amount was given by the assessee to one Shri Dalu Guruji on 11th Dec, 1993. 14. At the time of hearing, the learned counsel for the assessee submitted that he is under instruction not to press this ground. Hence, the appeal by the assessee on this ground is dismissed as not pressed. 15. The next grounds, that, is, ground Nos. 5, 6, 7, 8, 9 and 10 raised by the assessee are against the addition of Rs. 20,00,000 made by the AO as per communication received from the Dy. CIT, Special Range-I, Nagpur, being estimated on money which would have been received by the assessee. 16. The case of the assessee is that there is no discussion on the point in the assessment order. No communication was made to the assessee as to why this addition is being made except saying that the Dy. CIT, Special Range-I has directed to make this addition. The assessee states that he had not given an opportunity to make submission in respect of this addition. No documentary evidences were supplied to the assessee. The evidence said to be the basis for mak....
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.... in the instant case of the assessee, the assessment was made earlier. Therefore, there cannot be, an order which was not in existence, a basis for an order which was passed earlier in time. No papers in connection with Kolta/Patil group was supplied to the assessee, nor even the statement on the basis of which the assessment was said to be made. Not even the summons were issued to the land-owner and confirming parties. The counsel further added that to the best of his knowledge, there was no addition proposed even in the draft order and counsel further submitted that to the best of his knowledge, there was not even approval from the Commissioner. The addition made on the basis of some direction from CIT or Dy. CIT, the learned counsel submitted, is invalid. He relied on the following decisions: (1) Kirloskar Investment & Finance Ltd. vs. Asstt. CIT (1999) 67 ITD 504 (Bang); (2) Kirti Lal Kali Das & Co. vs. Dy. CIT (1999) 64 TTJ (Mad) 77 : (1999) 67 ITD 573 (Mad); (3) ITO vs. Ghanshyam Das Hassa Nand (1986) 24 TTJ (Bom) 68; (4) Kishan Chand Chella Ram vs. CIT (1980) 19 CTR (SC) 360 : (1980) 125 ITR 713 (SC); (5) K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597....
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....d, were not put to the assessee. The statement if any recorded was also not provided to the assessee. The order of the AO which was the basis for making the addition came into existence after the order in the case of the assessee. In view of the above matter, we are of the view that there was no basis to make the addition in the case of the assessee. There is no evidence to show that the assessee had received any on money. In the affidavit of Shri Babu Bala Chavhan, he specifically states that he has not received any money other than recorded in the agreement. His version was not discredited nor he was questioned. No evidence is brought on record nor any convincing reason is given in the assessment order for making the impugned addition. The impugned addition made is deleted. The appeal by the assessee on this ground stands allowed. 21. The ground Nos. 11 and 12 raised by the assessee are against the order of the AO in making the addition of Rs. 66,50,000 holding that the assessee has paid this sum for acquiring the tenancy rights of the flat situated at Matunga, Mumbai. The case of the assessee is that there was no evidence on record. 22. During the course of search operation, s....
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....remit about 4-5 initial deposit immediately and then pay 10-15 in future days. Full payment was to be made to 45 days or maximum 50 days or so. 23. Again the Revenue has taken note of another letter vide Serial No. 49 of Annexure A-2. This letter mentions about the previous letter dt. 1st Jan., 1996 calling for the payment of 2-4 as early as possible as the seller's wife is likely to be in Bombay till 15th Jan., 1996 and it was further mentioned in this letter that the seller will be in Bombay between 13th, 14th and 15th Jan., 1996 and to make total advance payment of 7-10 before 14th Jan., 1996" including pay now". It concludes as follows: "You will do the needful at earliest and oblige. Please ring the position from where to call the amount." 24. So as to ascertain the genuineness of these facts mentioned in the letters, the AO asked the assessee to produce Shri P.R. Agrawal. Shri Agrawal was produced on 20th Oct., 1997 and his statement was recorded. All the letters written by him were shown to Shri Agrawal. Writing of the letters was admitted. He also admitted that he had communicated the information to the assessee. He further stated that the letter at serial No. 48 of Anne....
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....otment of flat in Agrawal Nagar. The assessee do not remember as to in respect of which flat Mr. P.R. Agrawal was suggesting. However, on going through all the letters of Mr. P.R. Agrawal the assessee submits that he has not confirmed, settled negotiable or purchased any flat through Mr. P.R. Agrawal for a sum of Rs. 66.5 lacs nor assessee has paid anything to him or through him." From the above facts, the AO was not satisfied with the explanation of all the parties that there were no transaction amounting to Rs. 66.50 lakhs regarding the transfer of tenancy rights to the assessee in respect of flat No. 2/5. From the above letters, the AO came to the following conclusion: All the correspondence made by Shri P.R. Agrawal was pertained to flat No. 2/5 which was given on rent to the assessee by the trust. Mr. Chokhani was occupying the flat previously. Mr. Chokhani signed the agreement only after the receipt of deposit/Pagadi as suggested by Shri Agrawal, broker in his letter dt. 1st Jan., 1996. He came to the above conclusion especially in view of the letter dt. 2nd Jan., 1996, which clearly mentioned "that seller, Sanjay Chokhani will be in Bombay between 13th, 14th and 15th Jan.,....
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.... Even assuming that this a rough estimate, the learned counsel for the assessee submitted that it leads to the conclusion that Shri PR. Agrawal had nothing to do with this flat. The AO refers this letter on p 8 in para. 2 of his order being Annexure-2 loose paper No. 44. Inviting our attention to paper book-III, p. 73 which is the letter dt. 18th Dec, 1995, the learned counsel for the assessee submitted that a perusal of this letter will make it clear that the broker was referring more than one flat and he was not specifically referring that he is in touch with regard to Agrawal Nagar, Matunga flat's owners and brokers and it states that they have received the offers. This letter does not specify any flat. Again inviting our attention to paper book p. 72 of PB-III, which is a letter reproduced by the AO in his order, the learned counsel for the assessee submitted that the AO conveniently omitted certain relevant portion which he perceived that it may not improve the case of the Department. The letter specifically states that the broker tried to contact the assessee on the previous day and on next day, i.e. on 1st Jan., 1996 the day on which the assessee was out of Akola and, theref....
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....ion. The learned counsel for the assessee strongly relied upon the statement of the broker Mr. P.R. Agrawal recorded on 20th Oct., 1997 wherein he specifically states that there was no transaction of Agrawal Nagar, Matunga flat through him. Therefore, the learned counsel for the assessee concluded that there was no basis for making the addition. Even according to the AO, the learned counsel for the assessee submitted that the addition is made only on the basis of suspicion and this suspicion is based on the fact that in Mumbai, no transfer of tenancy right takes place without payment of deposit or Pagadi or by whatever name it is called. This suspicion alone was not sufficient to make the addition, contended the counsel. 27. Replying to the above submissions, the learned Departmental Representative submitted that it is an established fact that in Mumbai no transfer of tenancy right of flat takes place without making certain payment. He specifically stressed the letter No. 49 of Annexure-II where it is mentioned that the seller will be in Bombay between 13th, 14th and 15th Jan., 1996 and make total advance payment of 7-10 before 14th Jan., 1996 including pay now". It further mentio....
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....he same flat is referred to in all these letters. As the learned counsel for the assessee rightly contended that if the letters at serial No. 48 of Annexure A-2 and 49 of Annexure A-2 read together, the conclusion reached by the AO that the assessee has made certain payment on 1st Jan., 1996 appears to be incorrect. The letter dt. 2nd Jan., 1996, starts by mentioning that "the assessee must have received our letter dt. 1st Jan., 1996, and broker wants to make some initial deposit immediately", and in second letter on the next day, he mentions that he was not aware of whether the assessee received letter or not, 'including pay now'. The letter filed at paper book p. 71 of P.B. III indicates that on that date and on the previous day, the assessee was out of station. From all these, the conclusion that the some payment has been made either on 1st Jan., 1996, or even on 31st Dec, 1995, or on the next date is highly impossible. The letter produced by the assessee vide paper book p. 70 P.B. III, which was with the Department also leads to the same conclusion that no payment was made by the assessee. This letter specifically states: "You have not made any payment nor confirmed offer of 6....