TaxTMI 
TaxTMI 
2015 (1) TMI 1215
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.... Developers on various dates in respect of lands/plots purchased/taken for development by Rishiraj Builders and Developers from M/s. Vasumati Marketing Pvt. Ltd. and M/s. Manoj Marketing Pvt. Ltd. 7, Thakker, Near Nehru Garden, Nashik. The ACIT, Central Circle -3 Nashik intimated the discrepancies found during the block assessment proceedings completed by him in the case of Rishiraj Builders and Developers to ACIT, Central Circle -1, Nashik having jurisdiction over the assessee. The AO observed from page 17 (overleaf) of seized Annexure -A8 that Rishiraj Builders and Developers had paid further cash consideration of Rs. 57,75,370/ - in respect of Plot No. 23 and Plot No. 43. Out of the total cash payment of Rs. 57,75,370/ - the date -wise details of Rs. 33 lakhs was found in Annexure -A2 which are as under: 2.1 The AO therefore issued notice u/s. 158BD dated 07 -04 -2005 to the assessee which was served on him on 12 -04 -2005. The assessee filed block return on 24 -05 -2005 declaring NIL undisclosed income for the block period. During the course of assessment proceedings, the AO observed that Shri Y.P. Trivedi and Shri Jhala Jairaj Manhar Singh, partners of the firm M/s. Rishira....
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....admitted by Shri Y.P. Trivedi in his cross -examination that he never cross confirmed from the other party, the price as well as the payment of on -money. It was also admitted that the entries in the seized diary were made only on the basis of information supplied by Shri Shastri, an employee of M/s. Rishiraj Builders and Developers. In the re -examination of Shri Y.P. Trivedi by the AO it was admitted by Shri Y.P. Trivedi that he is not sure as to the actual payment of on -money to Shri Narendra M. Thakker. On the basis of cross -examination of Shri Y.P. Trivedi the assessee pointed out to the AO that the foul play was by Shri Shastri and there was no reason of any on -money in the transaction since the price claimed including the on -money was very much excessive of the prevailing market rate. However, the AO was not satisfied with the explanation given by the assessee and completed the assessment and added an amount of Rs. 16,50,000/ - as undisclosed income of the assessee for the block period being 50% share of the assessee for the following reasons: "i) Denial of having received any further cash consideration is only self serving, there are evidences in the form of seize....
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.... in the hands of the assessee company. It was argued that the allegation made in the affidavit of Shri Y.P. Trivedi and notings on the seized papers are inconsistent. It was submitted that according to the affidavit total payment made in cash beyond the documented consideration aggregated to Rs. 57,75,400/ - whereas as per seized paper page Nos. 78, 89, 91, 94, 95, 97, 98 and 99 of Annexure -A2 aggregate cash payments beyond documented price is amounting to Rs. 33 lakhs only. Further, the inconsistency on noting on seized paper 17 (overleaf) is found acceptable by the AO. Thus, in any case notings on seized paper 17 (overleaf) and the contents of the affidavit are not found reliably by the AO himself. It was accordingly argued that the AO should not have relied on this evidence for making addition of Rs. 16,50,000/ - as undisclosed income in the hands of the assessee. 4.1 From the statement of Mr. Y.P. Trivedi, recorded on 23.04.2007 (Enclosure No. 7), it is evident that, neither Mr. Y.P. Trivedi nor Mr. J.M. Jhala, the only partners of M/s. Rishiraj Builders and Developers, was directly involved in the negotiations or the payment of cash against the transitions of plots. It is ....
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.... All in all, there is no independent or direct evidence to support the allegations of Mr. Y.P. Trivedi. This is also admitted by the A.O. at Para 9.1(c)(iv) of the Assessment Order, on page No. 8, where the A.O. himself has observed that, the evidence available is 'circumstantial'. 4.2 The decision of Hon'ble Supreme Court in the case of Manish Maheshwari was brought to the notice of the Ld. CIT(A). It was argued that the A.O. has conveniently overlooked the evidences brought to his notice, in support of the prevailing market rates (Enclosure Nos. 14 & 15). Thus, in absence of any evidence in support of the allegation of cash payments & since the assessee has brought on record the evidences in support of prevailing market prices (which evidence is not controverted by the A.O.), A.O. clearly erred in treating the alleged cash payments of Rs. 16,50,000/ - as UDI of assessee. This is further compounded by the fact that, A.O. himself has found the notings on seized papers inconsistent. 4.3 It was argued that the falsity of allegation of Shri. Trivedi is very much evident. It is the claim of Shri Trivedi that, cash payments to the extent of Rs. 27,75,400/ - were made a....
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....had no relevance in the Income -tax proceedings as it mainly dealt with admissibility of evidence under the Evidence Act. These issues are discussed below. 5.4 The evidential value of a document found and seized during the course of search action u/s. 132 of the Act was elaborately discussed after analyzing various decisions by the Hon'ble I.T.A.T., Jabalpur Bench, Jabalpur, in the case of Satyapal Wassan [295 ITR (AT) 352] and observed as under: "The crux of these decisions is that a document found during the course of search must be a speaking one and without any second interpretation, must reflect all the details about the transactions of the assessee in the relevant assessment year. Any gap in the various components as mentioned in section 4 of the Income -tax Act must be filled up by the Assessing Officer through investigations and correlations with the other material found either during the course of the search or on investigation.." Thus, in the absence of any corroborative evidence, no value to the seized document can be attached. The A.O. has not brought any new material or corroborative evidence except relying on the same seized document and affidavits of ....
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.... actual facts and consultations in respect of the property transactions with Shri Narendra Thakker, who is the shareholder of the appellant. The A.O. also stated that the other names appearing in the said seized if documents were nothing but the representatives of Shri Narendra Thakker/appellant. The A.O's stand in this regard is not acceptable because the seized document was maintained by Shri Y.P. Trivedi based on the information supplied by one Shri Shastri. But no evidence was brought on record by way of a statement or any other material confirming the transactions from Shri Shastri. Therefore, the entries made based on the unconfirmed transactions cannot be used as evidence against the appellant. 5.8 The A.O. overlooked the evidences furnished by the appellant in support of the prevailing market rates in respect of the said property to prove that there was no element of on -money. Thus even if it is assumed that the contents of the seized document are correct, unless it is proved that the amounts stated in the seized document were actually paid, one cannot come to the conclusion that the transactions mentioned in the seized document are correct -Reliance placed on the d....
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....vidence selectively without any corroborative material in determining the undisclosed income of the appellant. In view of the above discussion, I am of the considered opinion that the assessment of undisclosed income in the case of the appellant is not justifiable. Hence, I hereby delete the addition of Rs. 16,50,000/ - made by the A.O. in the block assessment for the period A.Ys 1997 -1998 to 2003 -2004." 6. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds: "1. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs. 16,50,000/ - as the income from undisclosed sources for the block period. 2. On the facts and in the circumstances of the case, the learned CIT(A) has erred in not appreciating the fact that the A.O. has brought on record sufficient material/evidence to corroborate allegation regarding payment of on -money and also to show that the affidavit filed by Shri Narendra Thakker was only an after -thought and self -serving. 3. On the facts and in the circumstances of the case, the learned CIT(A) has erred in not appreciating the fact that if section 132(4A) ....
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....dence to corroborate allegation of payment of on -money. Further, the AO has also brought enough corroborative evidence on record to show that the affidavit filed by Shri Narendra M. Thakker stating that he has not received any cash payment was only an afterthought and self serving. 7.1 Referring to the provisions of section 132(4A) he submitted that as per the said provision the contents of books of books or other documents may be presumed to be true. Nowhere it mentions that the contents of such books of account and the other documents are true can be drawn only against person from whom books and other documents are seized and not against any third person. It is a presumption that would hold good even in the cases of other persons who are concerned with the entries in those books or documents. Otherwise the result would be anamolous. Such interpretation would create a situation where one fact would be taken as true in case of one person while the same fact would be taken as false in case of other person mentioned in the same document. Such interpretation would not only be bad in law but also bad on common principles of logic. He submitted that in this particular case it is cle....
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.... book he submitted that in the affidavit filed by Shri Y.P. Trivedi the cash component of Rs. 57,75,400/ - has been paid to Shri Narendera M. Thakker. Referring to pages 44 to 49 of the paper book he submitted that in the cross examination, Shri Y.P. Trivedi, in his reply to Question No. 3, has stated that he has not made any of above payments personally. It was made by his office Manager on his behalf and at the relevant time the office manager was Amulya Shastri. He submitted that Shri Y.P. Trivedi is placing pure reliance on Shri Shastri who is a trusted employee. However, he says Rs. 57 lakhs and not Rs. 33 lakhs has been paid as on -money. He submitted that even the cheque payment does not tally which is noted on the seized paper. Similarly, cash payments from the seized papers show Rs. 57,75,370/ - whereas as per the statement of Shri Y.P. Trivedi it is Rs. 57,75,000/ -. However, the AO does not believe all these things and he makes addition of Rs. 16,50,000/ - being share of the assessee out of total payment of Rs. 33 lakhs to assessee and M/s. Vasumati Marketing Pvt. Ltd. He submitted that no addition has been made in the hands of M/s. Vasumati Marketing Pvt. Ltd. He submit....
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....made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. In this case the assessee M/s. Manoj Marketing Pvt. Ltd. and M/s. Vasumati Marketing Pvt. Ltd. who are the owners of Plot No. 23 and 43 having equal share in these plots have sold these plots to M/s. Rishiraj Builders and Developers. During the course of search action in the premises of Rishiraj Builders and Developers and its partners certain documents were seized which according to the Revenue contained payment of some on -money to the assessee and M/s. Vasumati Marketing Pvt. Ltd. On the basis of the findings in the case of Rishiraj Builders and Developers the Assessing Officer of the above concern intimated to the Assessing Officer having jurisdiction over the assessee regarding the receipt of on -money. In response to notice issued u/s. 158BD the assessee filed NIL undisclosed income. During the course of assessment proceedings on being confronted by the Assessing Officer the assessee strongly denied to have received any on -money. However, the Assessing Officer relying on the entri....
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.... plots, however, no addition has been made in the hands of M/s. Vasumati Marketing Pvt. Ltd. on account of such on -money. 9.2 We find an identical issue had come up before the Pune Bench of the Tribunal in the case of Shri Jitendra M. Thakkar (Supra). In that case also the AO during the course of block assessment proceedings in the case of Rishiraj Builders and Developers found certain entries regarding cash payments made on various dates against the development agreement of Plot Nos. 42 and 33 to Shri Narendra M. Thakker by Rishiraj Builders and Developers. The assessee was a general Power of Attorney holder in respect of the said property. During the assessment proceedings in the case of Mr. J.M. Thakkar, the AO provided material found during the proceedings u/s. 132(4) in the premises of Shri Y.P. Trivedi, partner of M/s. Rishiraj Builders and Developers. Rejecting the explanation given by the assessee, addition was made in the hands of the assessee on account of on -money payment. In appeal the Ld. CIT(A) deleted the addition on the ground that the seized document was maintained by Shri Y.P. Trivedi based on the information supplied by Shri Shastri and there was no evidence....
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.... of probability by any other evidence or material on record. It was contended by the assessee that no relation nor the cash payments were established by the A.O. to him in connection with the said property transactions. It was submitted that even at remand stage, the A.O. did not bring on record any evidence to disprove the contents of affidavit dated 26.3.2007 by Shri Narendra M. Thakker denying the receipt of any cash payment as mentioned in the above stated seized document. It was pointed out that in the case of Shri Paraji Abaji Karanjkar, the ACIT Central Circle III, Nasik has examined Shri Narendra M. Thakker u/s. 131 of the Act wherein also Shri Narendra M. Thakker has flatly denied any knowledge about the transactions. We find from the first appellate order that the Ld. CIT(A) while accepting the contention of the assessee that opportunity to cross -examine Shri Y.P. Trivedi was not granted to the assessee, had directed the A.O. to grant the opportunity of cross -examination of Shri Y.P. Trivedi to the assessee. The same was complied with. On the basis of that cross -examination granted on 3rd March 2008, the assessee made following submissions reproduced at page No. 20 & 2....
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....efer answers to Q. No. 7). 2.2. In answer to Q. No. 9 it is stated by Shri Y.P. Trivedi, that a building was constructed on Plot No. 33, which, as per answer to Q. No. 11, was sold to Pratiksha Co. Op. Housing Society by a sale deed executed in 1998. In this sale deed also the executing parties are - 1. Mr. Karanjkar and Mr. Navani (owners of land as vendors) 2. M/s. Rushiraj Builders and Developers (developer of property as confirming party) and 3. Pratiksha Co.Op. Housing Society (Society of holders of residential units as purchaser). It is conceded by Shri. Y.P. Trivedi in the concluding part of answer to Q. No. ll that, none of the Thakkers were either party to any of the documents in relation to Plot No. 33 or were paid any consideration against the transaction of Plot No. 33 under any of the said documents. 2.3 It is also conceded by Shri. Y.P. Trivedi (second para of answer to Q. No. 13 on page No. 7) that, along with the name of Narendra Thakker names of Pate/and Bhanubhai also appeared in the notings in the seized diary. However, he failed to properly explain, why the payments should be treated as made to Narendra Thakker and not to Pate/or to Bhanubhai. He also fail....
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....tances, there is no basis for A.O. to treat that, the on -money was received by appellant in the transactions of Plot No. 33 and 42. Therefore, in view of the earlier submissions made and the submissions made herein above, it is earnestly requested to delete the addition of Rs. 29,04,350/ - made to the returned 'Nil' undisclosed income declared by appellant." 7. It was also submitted that there was no valid reason for M/s. Rishiraj Builders and Developers to make any payment to the assessee against the property transaction of plot No. 33 or 42 in the absence of any right by the assessee in the said properties. It was contended further that the name of the assessee was absent in any of the seized documents and there was no reason for receipt of 'on -money' by him. In his remand report dated 17.3.2008, the A.O. submitted before the Ld. CIT(A) that Shri Shastri was a trusted man of Shri Y.P. Trivedi. Therefore, Shri Y.P. Trivedi was fully aware of the actual facts and consultation in respect of the property transactions with Shri Narendra Thakker, who is a brother of the assessee. The A.O. reported further that the other name appearing in the said seized documents w....
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....on'ble Courts relied before the Jabalpur Bench of the Tribunal in the case of Satyapal Wassan (Supra), the Jabalpur Bench has observed as under: "The crux of these decisions is that a document found during the course of search must be a speaking one and without any second interpretation, must reflect all the details about the transactions of the assessee in the relevant assessment year. Any gap in the various components as mentioned in section 4 of the Income -tax Act must be filled up by the Assessing Officer through investigations and correlations with the other material found either during the course of the search or on investigation." The Pune Bench of the Tribunal in the case of ACIT v. Thakker Developers Ltd. (supra) has also followed the decision of Mumbai Bench of the Tribunal in the case of Satraptax (India) Pvt. Ltd.,, 84 ITD 320 (Mum) holding that the presumption u/s. 132(4A) is applicable only against the person from whose possession the books of accounts or other documents were found and not against any other person. In the present case before us, such presumption has not been successfully rebutted by the Revenue to make the addition in question in the hands ....