TaxTMI 
TaxTMI 
2011 (12) TMI 551
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....ences so drawn are baseless, without evidence, without material and contrary to the material on record and are whimsical. 1.2. That the learned Assessing Officer grossly erred in relying upon the vague, unrelated statement of one Shri Ravindra Singh Thakkar which is unsupported by any other material or corroborative evidence, which was at the back of the appellant, the learned Commissioner of Income-tax (Appeals) also grossly erred in following the same without any application of mind and without providing a right to cross-examine the person who so stated adversely at the back of the appellant. 1.3. That it is categorically stated before the learned Assessing Officer as well as the learned Commissioner of Income-tax (Appeals) that user of material behind the back of the assessee is unjustified, is illegal, is bad in law, is in violation of principles of natural justice and such statement deserves to be excluded for nonconsideration but both the learned authorities grossly erred in placing mechanical reliance on the statement, its user is in utter violation of principles of natural justice. 1.4. That specific challenge was before the learned Commissioner o....
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....the learned lower authorities grossly erred in illegally observing that in such type of dealings the transaction invariably has cash/on money component, which is based on assumptions, presumptions, conjectures and surmises and contrary to the findings of the registering statutory authority and the material on record. 1.11. That the learned lower authorities grossly erred in placing reliance on the so called alleged surrender, if any, by Shri Ravindra Singh Thakkar or/and group companies without providing any contrary material and without providing the basis as to on what basis surrender was made and tax if any was paid by Shri Ravindra Singh Thakkar and group companies. Even otherwise, using the said material behind the back of the assessee, in not providing the material, in mechanically following the same, is in utter violation of principles of natural justice. 1.12. That the appellant having not earned the said amount of 4.07 crores and same having not been received by the appellant, the addition is unauthorized, illegal, invalid, bad in law and misuse of provisions of law and deserves deletion. 2. That on the facts and in the circumstances of the case, the l....
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....uld further raise the final sale consideration of land. This contention of the Assessee has no bearing on the fact of the case because the undersigned is in possession of seized document which clearly states otherwise that on-money was received in connection with the said land. Needless to mention that in this type of business, the transaction invariably has cash/on-money component which is out of books and the vehement reliance on the DLC rate by the Assessee does not actually serve her purpose. (iii) The Assessee's reliance on the provisions of section 50C whereby it has been alleged that the Assessing Officer cannot adopt a value higher than the prevalent DLC rate for purpose of section 48 of the Act is misplaced because section 50C only deals with those payments which have been shown in the books of account only. However, in the instant case the whole issue is about the payments being made, and being received in cash as on-money which have not been reflected in the books. Thus, section 50C is irrelevant in the facts and circumstances of the case. (iv) The issue basically as discussed elaborately is in respect of Rs. 4.07 crore which was given in cash by Sh....
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....above leave no room for the suspicion of the statement of Sh. Ravindra Singh Thakkar of Unique Group taken on oath and there is no reason for the A.O. to have disbelieved the said statement anyway. (vii) The Assessee in her reply para 3.3. has vehemently argued that the statement as well as the paper is baseless because it does not spell anywhere that the alleged payment of Rs. 4.07 crores was made to her. The argument of the assessee is ridiculous and devoid of any logic because very obviously, the assessee was the sole seller of the said land and when Rs. 7.6 crore is accepted to have been received by her through cheque, there is no reason as to why the payment of Rs. 4.07 crore in cash would not have been received by her and same has to be accepted because both the figures form part of the same annexure. (viii) That various courts have held, from time to time, that the test of human probabilities and circumstantial evidence should be applied before arriving at any conclusion in any matter. Reliance is placed on the ratio of the decision in the case of Sumati Dayal 214 ITR 801 (SC) wherein it was held that "after considering the surrounding circumstances and app....
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....ment and expenditure. In respect of source of expenditure, it was stated that sale consideration is out of books received by cash in respect of different projects. It was submitted before the ld. CIT(A) that DDIT did not call for further material or details to verify about credence and correctness of the statement. 5. The assessee filed the details of different sale deeds of land situated in village Mahapura and none of the land was sold below Rs. 1.00 crore per bigha. The assessee has sold 1.18 hectare of land for Rs. 7.60 crores 6. The AO without providing the supporting material, inspection record and cross examination made the addition of Rs. 4.07 crores and such action of the AO was in haste and was in violation of principle of natural justice. 7. There is no evidence of receipt of on money. The Sub-Registrar is the competent authority to value the property for the purpose of assessment of stamp duty and the value as shown by the assessee was accepted. 8. The value as shown in the registered sale deed should be accepted as sale consideration and for this proposition, the ld. AR relied upon Section 50C of the Act and also relied upon the deci....
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.... to point any other comparable case of sale. 2.10 It was further submitted that M/s. Milestone Dwellers (P) Ltd. has not taken the benefit of any such payment in computing the cost in books of accounts. The so called 'fund flow statements' of the said project is after the material date and therefore, cannot be believed.. 2.11 Shri Ravinder Singh Thakkar in his statement has nowhere categorically stated that the amount has been paid in cash to the assessee as 'on money' in lieu of buying the said land of the assessee at Mahapura 2.12 Shri Ravinder Singh Thakkar received the cash payment from the sales made in different projects in order to siphon such amount. Shri Ravinder Singh Thakkar concocted the storey of its payment and expenditure on conversion and construction. 2.13 From this statement, it appears that the amount has been surrendered as undisclosed income of Shri Ravinder Singh Thakkar in individual capacity. It is not known who has disclosed the impugned amount as his income whether Shri Ravinder Singh Thakkar in his individual capacity or the purchaser money. If the source was out of the sale consideration outside the books from various projects then it ....
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.... 50.19 0.00 Sales & Mktg. Exp. 18.81 18.81 Salary to Staff 13.85 13.85 Indirect Expenses 16.08 16.08 Fixed Assets 22.34 22.34 Less: Outstanding Liabilities - 1.35 - 1.35 269.92 219.92 Deposits & aDvance 22.82 22.82 Total Expenses Incurred So Far 1610.09 1045.09 565.00 From perusal of the aforesaid document, it is seen that it shows details of expenditure about some project and more particularly the expenditure/investment made in the project till 22.12.08. The cost of land under the bank column is mentioned as '760.00' and considering that such details are prepared by writing the amount in the units of 'lakh', obviously the cost of land is Rs. 760 lakhs under the bank column. The fact that figures have been written in units of 'lakh' is evident from amount of registration expenses incurred which is Rs. 32,94,660/- + Rs. 25,000/- (which can be rounded off to Rs. 33.20 lakhs) and is written as "33.20". Simultaneously, it is seen that the appellan....
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....Appellant has undisputedly admitted to have received Rs. 7.60 crore through cheque which has also been shown in the sale deed and expectedly denied to have received Rs. 4.07 crore in cash. 7.3 Coming to the arguments of the natural justice and the opportunity taken by the appellant, as per the appellant, the copy of full statement of Sh. Ravindra Singh Thakkar was not given. Copy of fund flow statement on page 52 to 54 of Ann. A-24 not provided. It is seen by the undersigned and A.R. was also fair enough to accept that the copy of the relevant portion of the statement of Sh.Ravindra Singh Thakkar dated 29.1.09 particularly the question no. 23 and his answer to the question, which has been used as supporting evidence in the case of appellant, was supplied to this appellant during the assessment proceeding. Similarly, copy of page 78 of exhibit A-24, which has been used against the appellant for making aforesaid addition was also supplied. Thus it is quite evident that reasonable opportunity has been given to the appellant wherein the copies of the evidence used against her were given. It may be mentioned that the complete statement of Sh. Ravindra Singh Thakkar will ....
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....ding provision of section 50C being not applicable as the DLC rate was found lower than the apparent consideration shown in the registered sale deed is of no relevance because the A.O. has not made addition by invoking the provision of section 50C but has made addition of unaccounted on-money consideration received on sale of impugned land. The other argument of the appellant that A.O. has squarely failed to give details of subsequent investment by the appellant of the claimed receipt of on-money, is also rejected as A.O. has made addition of uncounted receipt on sale of impugned land on the basis of written as well as oral evidences and A.O. is not required to substantiated his finding by unearthing subsequent investment, if any, so made by the appellant. 7.6 The other argument is that purchaser of the land is M/s MDPL not Shri Ravindra Singh or Unique group. The A.O. has not spelt out as to what is Unique group. On being asked by the undersigned, the A.O. has informed that Sh. Ajit Pal Singh and Ravindra Singh are the directors in M/s Milestone Dwellers Pvt. Ltd. Moreover it is a known fact in the common parlance, the various concerns of Sh. Ravindra Singh and Sh. Ajit P....
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....on'ble Supreme Court has held that in cases where receipt is sought to be taxed as income, the burden lies on the department to prove that it is within taxing provision. Facts of this case were different. Even otherwise, it is clear from the aforesaid discussion, that the A.O. has discharged its burden of proving that the aforesaid unaccounted payment so received are taxable. 7.10 Another case referred was of Umacharan Shaw and Bros. vs CIT (1959) 37 ITR 271 wherein Hon'ble Supreme Court has held that suspicion however strong cannot take the place of the material or evidence. I also rely on the same judgment referred by ld. A.R. In the instant case of the appellant, it is seen that addition has not been made by the A.O. merely on the suspicion. The additions have been made on the basis of written as well as oral evidences. 7.11 The facts in the case of CIT vs. Anupam Kappor (2008) 299 ITR 179 (P&H) are different wherein there was no material before that A.O. to prove that the cash equivalent to the cheque amount was given. However in the instant case of the appellant, there is clear evidence. The facts of reported case of Mangilal Agarwal vs. ACIT (2008) 3....
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....fficer without providing the supporting material, inspection of records and cross-examination, in haste and in violation of principles of natural justice arbitrarily, capriciously, mechanically made an addition of Rs. 4.07 Crores, after discussion in Para 5. The replies filed before the ld. lower authorities is based on true and correct facts and not on conjectures and surmises. The moot issue as to the alleged payment has been thoroughly dealt and discussed with convincing reasoning. DLC rate (being the fair market value) has been given statutory recognition and is based on real facts and the day-to-day dealings. It is suitably revised from time to time based on cogent material. Value evaluated by the District Level Committee formed by the Government is considered as real, actual and proper index of the prevalent rates. 5.1 The story of the "on money" payment has been concocted by Shri Ravinder Singh Thakkar in order to blackmail and pressurize the appellant. Relations became constrained immediately after execution of the Sale Deed and handing over of possession. He wanted the balance of the land be also sold and on the old terms, to which the appellant wa....
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....of additional payment of Rs. 4.07 Crores by cash does not arise. If the land would have been sold below the fair market rate, any inference could have been drawn. In-spite of the continual challenge given to the ld. Assessing Officer, he has utterly failed to find any transaction above Rs. 1 Crore per hectare. He could not find even any transaction at Rs. 1 Crore per bigha around that time or even later. 5.6 The ld. lower authorities have summarily and mechanically believed the statements of Shri Ravinder Singh Thakkar, which is in violation of principles of natural justice. As commented herein above page 78 of Exhibit-24 of annexure A, remains un-proved and the questions posed remain unattended, unsolved and unanswered. Copies of page 52-54 reflecting funds flow statement was not provided to the assessee. The ld. Assessing Officer utterly failed in providing the supporting material, as also not permitting inspection of the relevant record and cross examination. It has been established beyond doubt that no credence was given by the purchaser company; M/s. Milestone Dwellers Pvt. Ltd. while computing cost in its books of account, which too have been audited and sub....
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....heir return of income is of no consequence. There may be 101 hidden reasons for the so called surrender and its honouring by the Unique Group. It is also not known and not clearly stated by the ld. Assessing Officer as to what is the status of the so called 'Unique Group'. The queries raised in the objections completely remain unsolved and unanswered in the impugned order. We submit the ld. Assessing Officer has avoided solving the real objections raised before him and has tried to by-pass the same by repeating his own version, unworthy of credence by a reasonable and un-interested person well versed in law. 5.12 On posing of question No. 24 Shri Ravindra Singh Thakkar has stated that the source is on-money and profit earned in cash. It is thus crystal clear that he has taken the advantage of set-off/telescoping and in turn no real tax has indeed been paid by Shri Ravindra Singh Thakkar. Tax; if any, has been paid by Mr. Ravindra Singh Thakkar and not by M/s. Milestone Dwellers Pvt. Ltd. as alleged by the ld. Assessing Officer. 5.13 The ld. Assessing Officer has mentioned that statement of Shri Ravindra Singh Thakkar should not be subjected to question ma....
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.... before the appellant was not provided relevant record as well as its inspection to verify and make further comment. The ld. Assessing Officer utterly failed in providing true and full copy of the alleged statement, the relevant record and to permit the cross examination so called for. 5.16 Furthermore the alleged Position of Funds has also been partly relied by the ld. lower authorities. Copy extracted by the ld. Assessing Officer and by the ld. CIT (A) in their orders is as follows: Whereas the actual sheet is as follows PB 54: i) It is abundantly clear that Share of Milestone Group is shown @ 60% and Ajit Group is shown @ 40%. ii) Ajit Group in order to extract more money from Milestone Group and justify its share of investment has inflated the alleged amount spent by it and shown it entirely under 'Cash'. Out of 642.39 shown under the head of Ajit Group it claims to have spent 565.00 in cash which is approx 88% and is highly doubtful. The figures appended in the abovementioned sheet needs to be confirmed by M/s. Milestone Group which has not been done so - by the ld. lower authorities. It fortifies the a....
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....ceipt of Rs. 4.07 Crores allegedly received by the assessee was provided. There is no acceptable evidence that any amount over and above the recorded value was paid in actuality. 6.1 Section 54 of the Transfer of Property Act 1882 defines "sale" as a transfer of ownership in exchange for a price paid or promised or part paid and part promised. Such a transfer in the case of tangible immovable property of the value of 100 rupees and upwards, can be made only by a registered instrument. The word 'price' is used in its ordinary sense as meaning money only. It is used in the same sense as in sec. 77 of the Contract Act. The Supreme Court in CIT vs. Motor & General Stores (P) Ltd. reported in 66 ITR (1967) page 692 held that though 'price is not defined in the act, it is used in the same sense as in the Sale of Goods Act,1930 and means the money consideration for the sale of goods. 6.2 Sec.17 of the Indian Registration Act, 1908 lists the documents which are compulsorily registerable. Sale deed is compulsorily registerable u/s. 17(1)(b) of the Act. The Sale Deed was registered on 15.03.2008. Sec.34 of the said Act is in respect of enquiry be....
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....t the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions herein-before contained. 92. Exclusion of evidence of oral agreement - When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying adding to or subtracting from, its terms. 7.1 In view of the said sections, it is well settled proposition of law that sale consideration as recorded in the registered sale deed is conclusive and no other evidence can be adduced against such documentary evidence. The ld. Assessing Officer totally/utterly failed to adduce any evidence as to additional payment to the seller. In spite of the consistent claim of the appellant as to non-payment of any additional amount, the learned Assessing Officer failed to provide reliable supporting material and meet with the objections made an....
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....tives in interest for the purpose of contradicting varying adding to or subtracting from its terms." 7.6 The Punjab & Haryana High Court in Paramjit Singh v. Income Tax Officer (2010) 323-ITR-588 at 591 observed: "There is well known principle that no oral evidence is admissible once the document contains all the terms and conditions. Sections 91 and 92 of the Indian Evidence Act, 1872 (for brevity "the 1872 Act") incorporate the aforesaid principle. According to section 91 of the Act when terms of contracts, grants or other dispositions of property have been reduced to the form of documents then no evidence is permissible to be given in proof of any such terms of such grant or disposition of the property except the document itself or the secondary evidence thereof. According to section 92 of the 1872 Act once the document is tendered in evidence and proved as per the requirements of section 91 then no evidence of any oral agreement or statement would be admissible as between the parties to any such instrument for the purposes of contradicting varying, adding to or subtracting from its terms. According to illustration 'b' to section 92 if there is absolute agreeme....
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....existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. "DISPROVED": A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non-existence so probable that prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist. "NOT PROVED": A fact is said not to be proved when it is neither proved nor disproved. On the question of the standard of proof, there is but one rule of evidence which in India applies to both civil and criminal trials and what is contained in the definition of "proved" and "disproved" in Sec.3 of the Evidence Act. The test in each case is, would a prudent man after considering the matters before him deemed the fact in issue "proved" or "disproved". 8.1 It is well settled proposition of law that the court should safeguard itself against the danger of basing its conclusions on suspicions, howsoever strong they may be. It is equally well settled that the courts decision must rest not upon suspicion bu....
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.... a receipt is of the nature of income, the burden of proving that it is not taxable, because it falls within an exemption provided by the Act, lies upon the assessee'. 9.1.2 Similar view as to the burden of proof that the assessee has received extra payments rests on the Revenue has been reiterated in Dr K. George Thomas v/c. CIT (1985) 156 ITR 412 (S.C.) at 420. 9.1.3 Similar view has also been expressed in CBI vs. VC Shukla & Ors AIR 1998 SC 1406 wherein it was held: The rationale behind admissibility of parties' books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in sufficient degree of trustworthiness. Since, however, an element of self interest and partisanship of the entrant to make a person - behind whose back and without whose knowledge the entry is made - liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in section 44 by incorporating the words 'such statements shall not alone be sufficient to charge any person with liability'." (Para 34) 9.....
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....name of the appellant or payment for purchase of land of the appellant. 9.6 The Hon'ble Rajasthan High Court in the case of Mangilal Agarwal v. Asstt. CIT (2008) 300 ITR 372 after analyzing the provision contained u/s. 69A observed: 'Apparently the condition precedent for invoking section 69A is the finding that the assessee is found to be the owner of any bullion, jewellery or other valuable articles. No presumption of ownership has been raised statutorily in favour of the Revenue and against the assessee, nor is there any warrant to invoke section 69A merely on the basis of the assessee's possession. On his disclaimer that such articles found in his possession do not belong to him, the burden lies on the Revenue to establish the ownership of the assessee before raising any presumption against him'. The Hon'ble Court referred to the decision of the Supreme Court in CIT v/s. Daulat Ram Rawatmaull (1973) 87 ITR 349 thus: "It was a case in which a sum of Rs. 5 lakhs standing in the name of B was sought to be assessed in the hands of the assessee-firm as belonging to it. The Assessing Officer has found that the said Rs. 5 lakhs stood deposited in the name of B, did n....
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....ch huge payment of Rs. 4.07 Crores will certainly obtain a receipt but no receipt has been produced/placed/found in the possession of Shri Ravindra Singh Thakkar/ Unique Group/Milestone Group in the search proceedings - if found - has not been produced/placed for perusal of anyone. 9.7.2 Even the alleged page 78 does not mention at all the name of appellant or even the payment for purchase of land from the appellant. How any adverse inference can be drawn when neither the alleged "statements" of Shri Ravindra Singh Thakkar prove anything or the noting "on page 78". Can reliance on the alleged statement be placed when name of the appellant does not figure anywhere? So far Right to cross-examination has not been allowed or denied - can a huge addition of Rs. 4.07 Crores be made on such a dumb document which even otherwise doesn't mentioned the name of the appellant or even payment of "on money" on the land purchased from the appellant. Who says that the payment of Rs. 4.07 Crores has been made to the appellant? In whose presence? When, Where & How? One who makes huge payment of Rs. 4.07 Crores will certainly remember as to whom paid, when paid & how paid. I....
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....itled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under Section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab." (It is by bench of 5 judges and is being repeated in all the subsequent binding precedents). 9.10 The Hon'ble Supreme Court in Lalchand Bhagat Ambica Ram v. C.I.T. (1959) 37-ITR-288 did not approve of the addition when the circumstances relied on by the Income-tax Officer were matters of pure conjecture, suspicion and surmises: the notoriety for smuggling foodgrains was merely a background of suspicion and the appellant could not be held to have indulged in smuggling without any evidence; the cancellation of the foodgrain license and the prosecution of the appellant were of no consequence inasmuch as the license was restored and the appellant was acquitted of the offence with which it was charged; the mere possibility of the appellant earning considerable amounts in the account year was a matt....
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....e omnipresent in Nature, Man's conscience has been able to discover them. These principles are not part of the codified law, but they permeate the codified laws like ether. Two main principles of natural justice are firstly "nemo judix in causa sua" or "nemo debet esse judex in propria causa sua" that is "no man shall be a judge in his own cause". The second rule is "audi alteram partem", that is, "hear the other side". A corollary has been deduced from the above two rules and particularly the audi alteram partem rule, namely "qui aliquid statuerit, parte inaudita altera acquum licet dixerit, haud acquum fecerit" that is, "he who shall decide anything without the other side having been heard, although he may have said what is right, will not have done what is right" or in other words, as it is now expressed, "justice should not only be done but should manifestly be seen to be done". Till the beginning of 20th Century, the applicability of these principles was restricted to the judicial and quasi-judicial authorities. However, with the obscuring of the demarcation between the quasi-judicial and administrative functions, these principles were equally applied to the administr....
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....ents and papers. It was true that proceedings under the income-tax law were not governed by the strict rules of evidence, and, therefore, it might be said that even without calling the manager of the bank in evidence to prove the letter dated February 18, 1955, it could be taken into account as evidence. But before the income tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him". 10.5 The Hon'ble Supreme Court in Kalra Glue Factory vs. Sales Tax Tribunal (1987) 167 ITR 498 set aside the order of the Tribunal as well as order in revision of High Court on the ground that the statements of a partner of another firm upon which the Sales Tax Tribunal relied, had not been tested by cross examinations. 10.6 The Hon'ble Rajasthan High Court in CTO Vs. Haryana Dal Mill (1993) 90 STC 519 dismissed the departmental revision petitions on the ground that the respondent not having been given opportunity to discredit the entries or cross examine the agent and the en....
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....ity was given to the assessee to cross-examine these witnesses". 10.10 The Hon'ble ITAT, Delhi Bench in Sunil Agarwal vs. ACIT (2002) 82 ITD 1 held that additions to income could not have been made by the AO without confronting the assessee with the statements of witness which were adverse to assessee. 10.11 In Mahesh Gulab Raj Joshi vs. CIT (A) (2205) 95 ITR 300 (Mum) on the basis of statement recorded of one V during Survey conducted of his proprietary concern. The AO treated sale of diamonds by assessee to 'D' as fictitious and made addition u/s. 68 in hands of assessee. No opportunity of cross examining V having been allowed to the assessee, statement of V could not be relied upon or made basis of addition. We submit and it is well settled that: on no account whatever should the learned Assessing Officer base its findings on suspicions, conjectures or surmises, nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures and surmises. We request to ignore the findings solely based on the unproved documents. 11. The reliance placed by the l....
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....e Hon'ble Court commented on the approach of the Chairman of the Settlement Commission and approved of the majority opinion after considering surrounding circumstances and applying the test of human probabilities and rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence. We submit the ratio of the said decision does not support the Revenue but supports the appellant. The surrounding circumstances which were created in the course of the search with Shri Ravindra Singh Thakkar and applying the test of human probabilities the rightful conclusion which should have been drawn would be that the explanation of payment and the other expenditure stated by Mr. Thakkar is not genuine. We submit the finding of the ld. Assessing Officer that the impugned amount of Rs. 4.07 Crores is income of the appellant is not based on evidence but is contrary to the material on record and human probabiliti....
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....t permitted by the Rules and Regulations. What we were considering is as per document of incurring expenses and the party who has incurred the expenses admitted it. At the time of search in the case of M/s. Unique Group, the statement of Shri Ravinder Singh Thakkar and his father were recorded on 29-01-2009 and were confronted with pages 75 to 78 of Annexure A-24 as well as pages 50 to 54 of Annexure A-24 having details of assets and liabilities of M/s. Milestone Dwellers Pvt. Ltd. as on 31-12-2008. Shri Ravinder Singh Thakkar admitted that group has incurred 'on money' expenditure. In the case of 'on money' payment, one has to rely on the circumstantial evidence. Since project was being managed by M/s. Milestone Dwellers Pvt. Ltd. of Shri Ajit Singh in the ratio of 60:40 and therefore, the payment, if any, made outside the books of accounts was kept recorded in the loose papers. The ld. DR drew our attention that the company M/s. Milestone Dwellers Pvt. Ltd. is a concern belonging to M/s. Unique Group. The ld. DR stated that evidence should be evaluated on the basis of the human probability. For this purpose, the ld. DR relied on the decisions of Hon'ble Apex Court in the case....
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....and without investing his share in M/s. Milestone Dwellers Pvt. Ltd.. He fabricated the document to show that he has put the cash from his side towards land purchase and towards liaison with the Govt. officials for giving land conversion and permission. The assessee required the AO to ascertain from the officials M/s. Milestone Dwellers Pvt. Ltd. as to whether any cash was paid. Vide this letter, the assessee made request that the copy of the entire statements should be given and an opportunity of cross examination of Shri Ravinder Singh Thakkar be given. M/s. Milestone Dwellers Pvt. Ltd. is a joint venture of Milestone Real Estate Fund and M/s. Unique Dream Builders Contribution in M/s. Milestone Real Estate Fund has been contributed by promimant people of India/ Mumbai for real estate investments. According to the assessee, Shri Ravinder Singh Thakkar in order to justify his share of investment from his side cooke a story of spending the cash so that he can get the maximum benefit without bringing his share of funds. Thus the assessee requested to cross examine Shri Ravinder Singh Thakkar, Shri Ajit Singh and employees of Milestone Real Estate Fund. The AO has passed the assessme....
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....ifferent dates from 28-01-2009. The revenue authorities provided only page 4 of his statement recorded on 28-01-2009. The relevant portion of statement of Shri Ravinder Singh Thakkar is available at pages 40 to 42 o the paper book. In respect of the document found in the locker, Shri Ravinder Singh Thakkar explained the transactions with the assessee and her husband. Shri Ravinder Singh Thakkar has clearly mentioned that he negotiated the deal with the assessee and her husband but the deal could not mature and therefore, he received back the cheques which were issued. Thus Shri Ravinder Singh Thakkar has not admitted of making the payment in cash. The contention of the revenue that Shri Ajit Singh Thakkar has admitted these unaccounted payments and included in the calculation while working out the additional unaccounted income offered for taxation in the return of income so filed. It is the contention of the assessee that he has not been provided the copy of the documents on which revenue is placing reliance including the admission of Shri Ajit Singh Thakkar in the return of income. The Hon'ble Apex Court in the case of Kanwar Natwar Singh v. Directorate of Enforcement....
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....gh Thakkar. After getting the copies, the assessee should have asked for cross examination of Shri Ajit Singh Thakkar . The Hon'ble Gujarat High Court in the case of Heirs and Legal Representatives of Late Laxmanbhai S. Patel vs. CIT, 327 ITR 290 had occasion to consider the addition in the hands of a person who has signed the promissory note which was found during the course of search at the premises of the firm in which third party was partner and the firm disclosed such unaccounted income. The Hon'ble High Court held that the amount covered of promissory note could not be assessed as income of the assessee from undisclosed sources as the assessee was not given an opportunity of cross examination the third party in whose search promissory note was found. It will be useful to reproduce the held portion from this decision. ''(ii) That except the statements of K and R there was no other evidence available with the Department. A copy of the statement of R was not given nor was an opportunity of cross-examining R given to the assessee. K had subsequently retracted his statement. Even after retraction, he along with two other partners had filed disclosure petition disc....
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....not materialize. The revenue is relying on the disclosure of income by Shri Ajit Singh Thakkar father of Shri Ravinder Singh Thakkar. Thus the primary facts are not confronted to hold that the assessee can be charged with undisclosed income. The Hon'ble Apex Court in the case of Parimisetti Seetharamamma Vs. CIT 57 ITR 532 held that the case in which the receipt is sought to be taxed as income then burden is upon the Department to prove that it is within the taxing provisions. The AO in his order has not mentioned any section under which he has taxed the receipt. The Hon'ble Jurisdictional High Court in the case of CIT Vs. S.C. Sethi, 295 ITR 351 had an occasion to consider the case in which the addition was made on the basis of entries of loose papers found during the course of search. No opportunity was given to the assessee of cross examination of the person from whose possession loose papers were recovered. The Hon'ble Jurisdictional High Court therefore, upheld the findings of the Tribunal in deleting the addition. The Hon'ble Jurisdictional High Court also noticed that revenue in this case did not file any appeal against the order of the Tribunal for the subse....
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....tested by the person by whom it purports to have been so executed or attested.]'' 2.8 Section uses the word 'may'. The word 'may' leave it to the Court to make or not to make presumption according to the circumstances of the case. Such presumption is optional and the Court is not bound to make it. Section has not contained the word 'shall presume'. Similar wording of 'may presume' is contained in Section 132(4A) of the Act. The Jurisdictional High Court in the case of CIT Vs. SMS Investment Corporation (P) Ltd, 207 ITR 364 has held that presumption is rebuttable. In that case, seized paper showed the calculation of compounding interest while agreement was in respect of receiving the simple interest. The Hon'ble High Court held that presumption in Section 132(4A) is rebuttable. In view of the factual position, the reopening of the assessment was invalid on the ground that the assessee has received compound interest. The presumption mentioned in Section 132(4A) is similar to presumption u/s 292C of the Act. The ITAT Ahemdabad Bench in the case of Unique Organiors and Developers (P) Ltd Vs. DCIT , 70 TTJ 131 held that presumption cannot be applicable to a third p....