TaxTMI 
TaxTMI 
2016 (12) TMI 800
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....ese facts, we proceed to decide the cross appeals as under. ITA 565/2015 (Assessee's Appeal) 3. Ground Nos. 1 and 8 are general and need no adjudication. 4. The ld. counsel for the assessee did not press ground No. 7 with regard to addition of Rs. 1,76,670/-. This ground is dismissed as not pressed. 5. Ground Nos. 2, 4 and 5 are connected matters and read as under:- "2. That the Learned CIT(A) has erred in confirming the addition of Rs. 1,12,04,166/- on account of unexplained investment in purchase of 25 kanal 10 Marla land at Lohgarh on the basis of photocopies of forged documents found from the third party premises and without making any inquiry. The ld. CIT(A) has also erred in ignoring the registered sale deed." "4 That the Learned CIT (A) has wrongly upheld the addition of Rs. 1,44,50,000/- on account of profit earned on sale of land of 25 Kanal 10 marlas at Lohgarh to M/s. Parshav Colonisers and Consultants Pvt. Ltd. without appreciating the fact that the appellant has not sold any land to M/s. Parshav Colonisers and Consultants Pvt. Ltd. and also erred by making addition on the basis of photocopies of forged documents found from the third pa....
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.... The facts and findings in the case of Shri Bimal Suri (supra) in paras 3 to 32 of the order read as under:- ITA No. 664/CHD/2011 (Bimal Suri) "3. The Revenue has filed the present appeal on the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,12,04,166/- on account of investment in purchase of land of 25K 10M at Lohagarh made by the A.O. in the hands of the assessee (being 1/3rd share) on the basis of said agreement on account of unexplained sources of investment in the said property. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,44,50,000/- on account of profit on sale of land of 25K 10M at Lohagarh to M/s. Parsav Colonizers and Consultants (P) Ltd. in the hands of the assessee on account of profit on sale of land, the assessee having I/3rd share in such profit. 4. On the facts and in the circumst....
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....ived an amount of Rs. 2,62,50,000/- upto 15.06.2005. The Assessing Officer further, noticed from the registered sale deed that the sellers have sold 1/3rd share of 25 kanal 10 marla i.e. 8 kanal 10 marlas to S/Shri Jagpal Singh, Gulshan Rai, Shekhar Chawla and Bimal Suri (Assessee) for Rs. 42.50 lacs only. The deed was registered in the name of buyer in two parts, one half in the name of S/Shri Gulshan Rai Satija, Jagpal Singh and Bimal Suri and remaining one half in the name of Shri Shekhar Chawla on 17.06.2005. The Assessing Officer observed that there is a huge difference in value shown in the registered sale deed and agreement to sell and made addition of Rs. 1,12,04,166/-. The Assessing Officer reproduced the assessee's explanation in para 4 of the assessment order but did not accept the explanation of assessee that the property was purchased by them at throw away price in view of cash receipts of Rs. 2,62,50,000/- mentioned in impounded documents and cash receipts of Rs. 2.10 crores mentioned on the back side of page 2 of the agreement to sell. 9. During the course of appellate proceedings, the Assessing Officer produced document Nos. 18 and 19 of Annexure B2, Pa....
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....r the purchase of 25 kanals 18 marlas for the total consideration of Rs. 1.20 crores with Mrs. Pushpinder Kaur, S/Shri Gurtej Singh and Pritpal Singh. Under the said agreement to sell, i.e. for total consideration of Rs. 1.20 crores, the assessee along with other persons, namely, S/Shri Jagpal Singh and Gulshan Rai Satija. The assessee and other two persons has paid total sum of Rs. 40 lacs in equal proportion as on 29.01.2005. The Assessing Officer has made addition of Rs. 1,12,04,166/- on the basis of forged photocopy of agreement of total consideration of Rs. 3,76,00,000/-, which the assessee and two other persons has never executed. It was further submitted that the photocopies of the documents were not found at the premises of assessee and it was found during the course of survey conducted at the premises of third party, i.e., not party to the agreement. Further, the Assessing Officer collected the evidence at the back of assessee and no opportunity was given to the assessee to cross examine the persons with whom the alleged agreement was entered into. The assessee had already denied the contents of agreement on the basis of which the addition was made. The Assessing Officer h....
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....nt stated in the sale deed cannot be ignored on the basis of agreement of sale unless it is proved that the agreement of sale was acted upon and the amount stated in the agreement was actually paid. On the basis of agreement to sell, it cannot be concluded that the price mentioned in the sale deed is not correct. 13. The counsel of assessee also placed reliance on judgment given by Madras High Court in case of CIT vs. P.V. Kalyana Sundaram, 282 ITR 259 concluding that in absence of any independent enquiry, Assessing Officer was not justified in making addition towards purchase consideration of land merely on the basis of statement of seller, who gave conflicting statements. He also stated that that the Hon'ble Supreme Court affirmed the decision of Madras High Court quoted supra. 14. The counsel also placed reliance on following judgments:- - Ram Saroop Saini, HUF vs. Assistant Commissioner of income Tax reported at 15 SOT 470 (Del). In this case the Hon'ble Tribunal concluded as under. - Moosa S. Madha and Azam S. Madha vs. CIT reported in 89 ITR 65 (sc). - PRARTHANA CONSTRUCTION P. LTD vs. DCIT 70 TTJ 122. - CIT vs. RA....
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.... 21. Further the ITAT, I Delhi Bench judgment in case of Ram Saroop Saini, HUF vs. Assistant Commissioner of income Tax reported at 15 SOT 470 (Del) has dealt the case relating to agreement to sell, statement and understatement of sale consideration case. In this case the Hon'ble Tribunal concluded as under:- "In the absence of any material, understatement of sale consideration could not be implied in respect of certain transactions of sale of land merely on the basis of unverified statement of a property agent and copies of agreements to sell relating to some other transactions; understatement of sale consideration cannot be said to have been established even in respect of those transactions in relation to which AO was in possession of copies of agreement to sell which disclosed higher sale consideration as the purchasers have not signed on the first page of the documents, requisite Court fee stamp is not affixed, AO did not possess the originals and the assessee was not given any opportunity to cross-examine the property agent who had allegedly made an adverse statement and, therefore, no addition can be sustained." 22. In view of above discussion and judg....
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....n as mentioned in para A(-) 3,76,12,500/- Profit 4,33,50,000/- 1/3rd share of the assessee 1,44,50,000/- 19. The Assessing Officer mainly relied upon the impounded Document Nos. 15 and 16 of Annexure B2 found from the premises of third party. The counsel during the course of appellate proceedings submitted that the assessee had not entered into any agreement dated 19.4.2005 and that these documents were forged and bogus and were not found from the premises of assessee. Further the department did not make any enquiry from M/s. Parsav Colonisers and Consultant Limited to know the truth. 20. During the course of appellate proceedings, the counsel of assessee submitted that M/s. Parshav Colonisers and Consultants Pvt. Ltd. had not purchased any land at Lohgarh from the assessee and Other two persons till date and therefore, the question of profit on sale of land at Lohgarh to M/s. Parshav Colonisers and Consultants Pvt. Ltd. does not arise. The department relied upon the agreement and from the para-C of Assessing Officer's order, it is clear that the department has calculated the profit only on the basis of agreement without ascertaining t....
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.... Pushpinder Kaur has been issued by debiting the account of Parsav Colonisers addition has been made. The assessing officer has not brought any material on record to prove sale of land to Parsav Colonisers and Consultant Private Limited and in view of my observation in respect of photocopies of document, impounded from third party premises, absence of enquiry in preceding paras there is no justification to sustain the addition on account of sale of land to Parsav Colonisers and Consultant Private Limited. The addition so made is deleted, allowing assessee's plea on this ground." 22. On ground No. 4, the Assessing Officer made addition of Rs. 19,65,625/-. The Assessing Officer also observed from the impounded documents 23-30 of Annexure B-2 that on the back side of document No. 30 an amount of Rs. 1,30,01,100/- has been received as advance money by S/Shri Gulshan Rai, Jagpal Singh, Bimal Suri (assessee) and Shekhar Chawla. 23. As per details available on back side of Document No. 30 of Annexure B:2, an amount of Rs. 22,00,000/- by cheque has been received by Shri Shekhar Chawla, an amount of Rs. 22,00,000/- by Cheque has been received by the seller, i.e. Party ....
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....a. In other words, the assessee Shri Bimal Suri was having 1/6th share in this land measuring 8 kanal 10 marlas, which was as per the agreement dated 29.06.2005, was sold to Gee City Consultants P. Ltd. The cost price of this land was @ Rs. 2,54,00,000/- per acre which comes to Rs. 2,69,00,000/- adopted as per the agreement dated 19.04.2005. The sale price of this land comes to Rs. 3,87,81,250/- calculated @ Rs. 3.65 crores per acre as per the agreement dated 29.06.2005. 24. In view of this, the profit on sale of this land measuring 8 kanal 10 marlas is calculated as under:- Sale consideration @ Rs. 3.65 Crores per acre 3,87,81,250/- Cost price @ Rs. 2.54 crores per acre 2,69,87,500/- Short term capital gain 1,17,93,750/- Assessee' s share (l/6th) 19,65,625/- 25. The learned counsel for the assessee submitted that the Assessing Officer has made addition on the basis of Tripartite agreement (as mentioned in order) among Gee City Builders Pvt. Ltd., Parshav Colonizers and Consultants Pvt. Ltd. and Shekhar Chawla and Gulshan Rai and Others, which was never executed by the assessee. Further, no such documents were procured from th....
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....ed all the above additions. 28. On the other hand, the learned counsel for the assessee reiterated the submissions made before the authorities below and submitted that no agreement to sell or any incriminating document was found from the possession of the assessee. These were found from the third party, i.e. M/s. Chandigarh Overseas Private Limited. No original document was found or recovered during the course of survey or later on. Therefore, photocopy of the original is not admissible as evidence and relied upon unreported decision of Delhi High Court in the case of CIT vs. Moorti Devi in ITA No. 979/2010 dated 20.9.2010, in which departmental appeal was dismissed observing that the original documents were never confronted to the assessee and nothing has been brought on record as to what happened to the original documents. There is no material even to indicate that photocopies are the copies of the original documents. The learned counsel for the assessee also submitted that no enquiry was conducted from any party, i.e. buyer or seller to the agreement to sell. In the case of one of the buyers, M/s. Gee City Builders Private Limited, the Assessing Officer passed order und....
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....eal referred to the findings of the Tribunal in which it was held that the photocopies of the documents have very little evidentiary value and in the absence of original documents, photocopies of the documents are not admissible and cannot be the basis for making addition. It is, therefore, a fact that no original agreements to sell were found from any person and original documents were never confronted to the assessee. Therefore, there is no question of preparing copies from the original agreement to sell. Therefore, photocopies of the agreement to sell cannot be compared with original documents. Reliance of the learned D.R. thus on sections 63, 64 and 65 of the Evidence Act is clearly misplaced. There was thus no basis to make any addition against the assessee on account of investment or earning any profits out of any sale transaction alleged to have been recorded in the agreement to sell. Since the documents were impounded from third party and no enquiry have been made from them or from any party related to the agreement to sell, therefore, there was no justification to make any addition against the assessee on the basis of such agreement to sell. Even in the case of M/s. Gee Ci....
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....tment for registration of land. 13. During the appellate proceedings, assessee submitted that the Assessing Officer has ignored the fact that sum of Rs. 42,50,000/- has been paid through account payee cheques. Only stamp duty and registration fees have been paid in cash, therefore, whole addition is unjustified. Further, in the remand proceedings, it was submitted before Assessing Officer that cost of the land including registration expenses have been reflected in the books of account, therefore, no undisclosed investments have been shown. The ld. CIT (Appeals), however, did not accept contention of the assessee and dismissed this ground of appeal of the assessee. 14. After considering rival submissions, we are of the view matter requires re-consideration at the level of the Assessing Officer. The explanation of the assessee that Rs. 42,50,000/- have been paid through banking channel and other expenses are reflected in the books of account, have not been adjudicated by the ld. CIT (Appeals) through any speaking order. The ld. CIT (Appeals), has not given any finding of fact on the same. The ld. counsel for the assessee also submitted that assessee has shown investment on thes....
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....on 31.08.2005 and 03.09.2005 which sum comes to Rs. 27 lacs. The assessee has made withdrawals of Rs. 27 lacs from the bank on 11.08.2005 which was re-deposited with the bank. There is a deposit of Rs. 22 lacs as on 28.06.2005 and the said amount has been received from Shri Sumesh Chawla against advance of Rs. 22 lacs already made to him which is made through the same bank account. It was, therefore, submitted that whole addition is unjustified. 16 (i) The ld. CIT (Appeals) called for the remand report from the Assessing Officer in which it is stated that no explanation regarding these credits were filed at assessment stage. The assessee at the appellate stage attempted to bring additional evidence on this issue in violation of Rule 46A of IT Rules. The ld. CIT (Appeals) noted that the joint account is operated by the assessee alongwith two other persons which was used for purchase and sale transaction of the land and ultimately sold to M/s. Gee City Builders. No explanation is filed at the assessment stage. The explanation submitted by assessee is not supported by any documentary evidence and is after thought. The ld. CIT (Appeals), however, considering that Assessing Officer c....
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....trictly on merits by giving reasonable sufficient opportunity of being heard to the assessee. The Assessing Officer shall re-decide this ground considering the material produced on record by the assessee. This ground of appeal of the assessee and revenue are allowed for statistical purposes. 18. There is no other ground left in assessee's appeal. 18(i) Assessee's appeal is partly allowed. ITA 542/2015 (Departmental Appeal) 19. Ground No. 2 in departmental appeal for deleting addition of Rs. 24,83,333/- have already been adjudicated in assessee's appeal above. 20. The only ground left for consideration is ground No. 1 in departmental appeal, which reads as under:- "Whether on the facts and circumstances of me case the Ld. CIT(A) has erred by deleting the addition of Rs. 32,91,383/- as assessee's share on account of profit generated from the registration of 2500 sq. yards land belonging to various parties". 21. During the assessment proceedings, Assessing Officer noted that as per agreement to sell dated 29.06.2005 with M/s. Gee City Builders, Shri Gulshan Rai and others and Parashav Colonizers were under obligation to arrange additional lan....
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.... through the facts of the case, written submission filed by the appellant, remand report of the AO and the assessment record. It is noted that the AO on the basis of obligation to arrange additional land of 2500 sq. yds. for Gee City Builders as per tripartite agreement to sale dated 29.06.2005 applied the rate of Rs. 3.65 Crores per acre and computed the profit generated on account of arrangement of additional land through 6 registered sale deeds from various sellers in the name of Gee City Builders. In sale of 4 properties as per documents the A.O. noted the sellers have been through Shri Gulshan Rai Satija. In respect of two properties, the A.O. has mentioned the buyers as Gee City Builder through Sh. Gulshan Rai Satija. The AO has noted that Gulshan Rai Satija has acted as middle man. On the other hand, the appellant has submitted that the AO has made addition on account of notional profit on the basis of the registration of 2500 sq. yds. land belonging to various parties surrounded to 25 kanal 10 marla land. The properties were sold by the respective persons by entering into agreement directly with Gee city Builders and the appellant has never entered into any agreement with t....