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2014 (10) TMI 466
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..../2005 work was completed upto 62.40%. The assessee firm is adopting work completion method for taxation and for A.Y.2006-07, the firm has shown Rs. 61,08,803/- as total income. M/s. Unimark Remedies Ltd., is a pharma company assessed with the ACIT CC 45 Mumbai has purchased two floors at 10th & 11th in Kamelshwar- II from assessee firm M/s. Orbit Enterprises. M/s Unimark has total purchase 7520 sq. ft. area for their office. There was a search & seizure action u/s.132 at the premises of M/s. Unimark Remedies Ltd., by the DIT (Inv.), Mumbai and search party got some loose papers in the premises of the M/s. Unimark Remedies Ltd. Mr. Mehul Parekh, the director of the company admitted in his statement given on oath that the company has purchased 7520 sq. ft. area in Kamleshwar-II. Accordingly, M/s Unimark has given the following amount to partner of assessee firm Mr. Rajushri V. Dhruv in cash :- Date M/s. Orbit Enterprises Amount 09/03/2005 Builder Rajubhai Rs.9,50,000/- DOO/- 19/03/2005 Builder Rajubhai Rs.10,00,000/- 22/03/2005 Builder Rajubhai Rs.16,00,000/- 000/- 28/03/2005 Builder Rajubhai Rs.13,70,000/- 30/03/2005 Builder Rajubha....
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....dditional income of these payments made to M/s. Orbit Enterprises. The AO further stated that in metro city like Mumbai where the flats are purchased through the builders, there is open secret that 80% are paid by cheque and 20% by cash as on money. After verifying the statements and copies of loose papers received from the ACIT CC 45, Mumbai, the AO held that the assessee M/s. Orbit Enterprises has received Rs. 68,20,000/- from M/s. Unimark Remedies Ltd., as on money at the time of purchase of flats and these sums M/s. Orbit Enterprise had not offered for taxation. Accordingly, addition was made under the provisions of section 69A of the IT Act, 1961 as unexplained money. With these remarks, the total income was computed by the AO as under:- 1. Income from other sources, as per last scrutiny order dt. 26/ 12/2007. Rs. 1,33,360/- Add: Amount received from M/s. Unimark Remedies Ltd .. , as on money in cash as discussed above. Rs. 68,20,000/- Total income Rs. 69,53,360/- 5. By the impugned order CIT(A) confirmed the addition after having the following observations. 4.2 I have given careful consideration to this issue and find that Ld. Assessing Officer has very righ....
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....sment and also considering the various judicial proposition over such issue, the reopening of completed assessment by the Assessing Officer is approved as same is legally tenable." 6. With respect to the merit of addition, the CIT(A) confirmed the addition so made, after having the following observation: "5.2 I have circumspected the entire spectrum of facts and circumstances of the case vis-a-vis perused carefully the evidence on record, rival submission of the appellant, assessment order and various case laws relied upon by the Ld. AR. After reviewing and considering all these evidences and counter arguments as well as the finding the AO, I reached to the conclusion that Ld. AO has made the addition of Rs. 68,20,0001- on proper foundation of the material facts, evidence on record and further after extracting independent corroborative evidences. duly emerged from the statement of Mr. Mehul Parekh and Mr. Yogesh Parikh, Directors of M/s. Unimark Remedies Ltd. and cross examination by the Ld. AR of the appellant. 5.2.1 Appellant is a partnership firm engaged in the business of builders and developers. It has started development of project known as Kamleshwar-Il at Tagore Road,....
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....ector on behalf of URL, has again been confirmed by another director Mr. Yogesh N. Parikh, who is also a Chartered Accountant. The relevant paragraphs of his statement dated 19.12.2008 are as under :- Q.2 Please state your educational qualification and your designation in Mrs. Unimark Remedies Ltd., your length of service in this organization and details of duties assigned to you and your monthly emoluments with perquisite. A.2 I am Chartered Accountant and I am Director - Finance of Mrs. Unimark Remedies Ltd. since 1990 and my duties are to look after accounts and administration and finance and I am drawing monthly salary of Rs. 2,00,0001- p.m. Q.3 Your company has purchased two floors at 10th and 11th floor in Kamleshwar Tower, Santacruz (Wj, from M/s. Orbit Enterprises, as per the diary seized at the time of search action Shri Mehul Parekh Director of the company has paid Rs. 75,20,000/- in cash on different dates of the year 2005 to Mr. Rajubhai Dhiru, partner offirm Mls. Orbit Enterprises) for the purchase of two floors as on money you are requested to confirm the same. A.4 I confirm that company has purchased above mentioned flat at Kamleshwar Tower from M/s. Orbi....
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....and purchase of flat No. 11201 and 11202 on 01.6.2004 and flat No. 1001 & 1002 on 24.8.2004. Even reply to query No.ll reveals a very important clue that appellant used to give no receipt of such on money due to that no such receipt was there in formal way but, there is circumstantial evidence in addition to documentary evidence that on money transaction was done by the appellant and the fact unearthed by the department (during the course of search and seizure proceedings had stood to the test of further inquiry as well as proceedings and even during cross examination. 5.2.4 The various case laws relied upon by the Ld. AR are not relevant to the specific facts of this case. The case of SMC Share Broker Ltd. vs. DCIT (2007) 109 TTJ 700 ITA T Delhi Bench is not of any avail to the appellant because, as held by the Hon'ble IT AT in para 27.3 of the judgement that in that case, the statement of Mr. Manoj Agarwal was recorded behind back of the assessee and the assessee was not afforded any opportunity to cross-examine him, Here, in this case, that is not the fact. The Ld. Assessing officer has given full and proper opportunity to the appellant for cross-examination of the concer....
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....Antulay AIR (1986) (SC) 2045, 2062 are also not applicable. Further, the ratio of K.P. Verghese vs. CIT 131 ITR 597 (SC) is not applicable to this case as that cse in respect of transfer of house property at the same price at which property was purchased earlier and there was no evidence of any under statement of consideration hence, it was held that section 52(2) was not applicable. Here is not the case alike. There is documentary evidence on record duly admitted by concerned person that he had given on money and latent fact of the case reveals that appellant has suppressed the receipt of such on money in its books of account. Similarly, the ratio of case of Unique Organizers & Developers (P) Ltd. vs. DCIT (2001) 70 TTJ (Ahd) 131 is not applicable to the facts of the case because as has been found out in para 5 of the order that seized documents in that case was a dump document without any narration and the Assessing Officer had not brought on record any evidence to indicate the actual transaction and who were the parties to do it, what was the date of transaction, what are the figures on the paper actually indicated and how those figures were related to the assessee company. Here....
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.... Engineering Works Ltd (1978) 113 ITR 389, 391 (Del). Under section 142 and 143 there is a concept of "the material gathered" by the Assessing Officer shows that he is not fettered by the technical rule of the evidence and the like, and AO may act on material which may not strictly speaking, be accepted as evidence in a court of law vide - Vimal Chandra Golecha vs. ITO (1982) 134 ITR 119, 130 (Raj) The material or evidence is not confined to direct testimony in the shape of statements made by witnesses but, all relevant circumstances which have bearing to the issue, reveal in the course of assessment can be regarded as evidence, which would cover the expression "Material or evidence" on which the ITO could rely-, Mangalchand Gobardhandas vs. CIT (1954).26 ITR 706, 710 (Assam). There may be evidences 'secondary in nature' or 'heresy evidence' which can be utilized after giving opportunity to the assessee for explanation and representation and if proper explanation or counter evidence is not adduced by the assessee, the use of such evidences cannot be presumed to be against the natural justice :- i) Seth Gurmukgh Singh vs. CIT (1944 12 ITR 393,425 (Lah)....
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....ment of cash over and above agreement value which is also made in consultation with Shri Yogesh Parikh. Further, his answer to question no 5 of his deposition dated 11.01.2006 pertaining to loose pages comprising A-2 unequivocally demonstrates that notings on those pages are really all proposed transactions, but not actual that have taken place and hence notings must also, based on theory that a thing is known by the company it keeps, be deemed to have not taken place, but only a future proposed event not at all connected with Appellant. The deposition is tutored and self serving because questions posed are leading more particularly, averment that Shri Mehul Parikh may consult Shri Yogesh Parikh before answering questions. Moreover, Appellant's Chartered Accountant cross examined Shri Mehul' Parikh but copy of cross-examination has not been furnished notwithstanding specific request vide letter dated 20.12.2008 and subsequent reminders dated 28.06.2012, 0l.08.2012 and 20.08.2012. 5) The seized papers have no evidentiary value/are unreliable because none of URL deponents throw light on following:- a) according to AD, payments of on-money are allegedly made from 09.03.2....
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....o what is nature of transaction, that is, whether is a loan, income, expense, quantitative figure, payment or receipt etc; date of alleged payments is not stated; it is neither signed by nor contains the name or in the handwriting of the Appellant; whether the alleged amount is payable, paid, received, receivable and that too by or to whom and any payment of on-money in relation to the purchase offlats [ACIT v. SHAILESH S. SHAH 63 ITD 153 (MUM}-pgs 7, 9 of the Precedent Paper Book (PPB)). (6) The decisions in UNIQUE v. DCIT 70 TTJ 131 (AHD) [pg 14,15 (not in handwriting of any person connected with company), 17 [buyer offered income in block period, buyer's statement unreliable due to conflicting statements], 19 [loose papers not evidence, presumption under Section 132(4A) not applicable to third party] of PPS] and SHETH AKSHAY v. DCIT 130 TT J 42 (AHM}(URO) [pg 70- presumption under Section 132(4A) not applicable to third party, 71- when admission cannot bind maker of statement how can it bind third party without corroborative evidence], SUNITA v. DCIT 71 DTR 33 (JP)-presumption under Section 132(4A) not applicable to third party and secondary evidences cannot be relied upo....
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....onsideration or carry with a saleable interest possessing any intrinsic and inherent market value as held in SHAGWANDAS v. CIT 981TR 194 (GUJ). (14) Section 69A uses word "may" conferring discretionary power on AO which must be exercised in Appellant's favour because of overwhelming preponderance of probabilities as set out above [CIT v. NOORJAHAN 237 ITR 570 (SC);DCIT v. ROHINI 256 ITR 360 [SLP DISMISSED-254 ITR (ST) 275]. (15) Supreme Court propounded in CIT v. RAMAN 67 ITR 11, 17 that law does not oblige a trader to make maximum profits. Similarly, Apex Court in KIKASHAI v. CIT 24 ITR 506, 510, 511 advocated that revenue has no jurisdiction to tax potential, fictional and notional profits. In addition, in SHOORJI 46 ITR 144 (SC) held that hypothetical and notional income cannot be subjected to tax. (16) Without prejudice, onus is on revenue to prove that impugned items are undisclosed income PARIMISETTI v. CIT 57 ITR 532 (SC)." 11. Reliance was placed on the decision of the co-ordinate bench of the Tribunal in the case of Shailesh S. Shah 59 TTJ 574, wherein it was held that vague figures noted on loose papers cannot be treated as commission and undisclosed incom....
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....red as true and correct .In view of the above legal position the entries in the above seized material page No 21 to 24 of the PB relating to the cash component of the transaction written in the same hand writing should be true and correct. The entries are speaking about the cash component of Rs. 75.20 lakhs in respect of one flat at top floor consisting of area of 3760 sq ft .The on-money paid is Rs. 1000/ - in respect of one sq ft and for the entire area of 3760 sq ft the on-money component is Rs. 37.60 lakhs. The seized material mentions that Rs. 30.00 lakhs has been already paid and Rs. 7.00 lakhs is yet to be paid. This payment of Rs. 37 .60 lakhs cash has been further strengthened by the entries in the seized material which gives the payments made to the assessee as under: Page No. of paper book Date Description Amount Whether Shri Mehul Parekh has sized in the last column 21 9.3.05 Builder Raju 9,50,000 21 19.3.05 Builder Raju 10,00,000 22 22.3.05 Builder Raju 16,00,000 Yes 22 28.3.05 Builder Raju 13,70,000 Yes 22 30.3.05 Builder Raju 11,50,000 Yes 22 30.3.05 Builder Raju 7,50,000 Yes 23 11.04.05 Builder Rajubhai exchange 7,00,0....
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....price) or equal to the FMV or less than the FMV only by a small amount of the flats as determined by the Stamp duty Registration authorities of the state Govt and hence there can not be any on-money payment, has no effect. In So far as the value of FMV by the State Govt authorities is determined for the purposes of collection of Stamp Duty at the time of registration of the sale agreement and it is also taken into account for the purposes of calculating the market value U/S 50 C of Income Tax Act 1961 for calculation of capital gain. The stamp duty value is determined by the State Govt Authorities for a specific area and not for a specific flat or for a specific building. It is determined for the purposes of collection of Stamp Duty and to have a check on the undervaluation of properties for stamp duty purposes at the time of registration of properties. The market price and stamp duty value are operating on a different plane and has no connection. 19. Controverting the A.R. 's contention for not giving the copy of cross examination on 7.11.07, ld. A.R. contended that firstly this issue was not raised before the CIT(A) and therefore the assessee cannot raise the issue now bef....
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....erence to the factual matrix of the case. From the record we found that addition was made by the AO on the basis of documentary evidence found during the course of search at the premises of buyer of the flat M/s Unimark Remedies Ltd. As per the seized document found at the premises of M/s Unimark Remedies Ltd., there was on-money transaction for payment of 4 flats purchased at 10th & 11th floor at Kamaleshwar II, Tagore Road, Santacruz, Mumbai constructed by the assessee firm. During the course of search itself, statement of Shri Mehul Parekh (Director Finance, M/s Unimark Remedies Ltd.) were recorded. In respect of transaction appearing in the incriminating documents inventorised as Annexure-A-2, Mehul Parekh admitted on behalf of URL the payment of on-money to the assessee. Thus, the admission of Mehul Parekh was on the basis of documentary and corroboratory evidence. This admission of Director on behalf of URL has been confirmed by another director Mr. Yogesh Parekh, who is also a CA. In his statement, Shri Yogesh Parekh admitted that he was looking after accounts, administrative and financial affairs of M/s URL and that they have purchased two floors at 10th & 11th Floor in Kam....