AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 1105
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....Ashish Singla for the purpose of disposal of all the appeals. ITA 129/2014 ( Ashish Singla ) 4. This departmental appeal has been directed against the order of ld. CIT(Appeals)-I Ludhiana dated 07.11.2013 for assessment year 2006-07 challenging the deletion of addition of Rs. 50,46,200/-. 5. Briefly the facts of the case are that original return was filed declaring an income of Rs. 1,08,880/-. Thereafter the search under section 132 of the Income Tax Act was conducted at the residential premises of Shri Ashish Singla (assessee) and his family members on 30.06.2010. Notice under section 153A was issued and assessee filed the return of income declaring the same income as was declared in the original return of income. The Assessing Officer issued statutory notice to the assessee and also supplied copies of the seized material. The assessee is an individual and is having income under the head 'income from other sources' and 'long term capital gain'. It is stated that assessee is not maintaining any personal books of account, hence, are not produced. 6. During the course of assessment proceedings, it was noticed that assessee purchased shares of M/s Pragati Nirman P. Lt....
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....rly admitted that he sold the shares of M/s PNPL at Rs. 3900/- per share and no extra consideration was received. Since document is recovered from the third party, therefore, it could not be adverse in nature against the assessee. Further, during the course of search operation, no adverse document was found against the assessee or from the possession of the assessee to prove payment of any amount in excess of Rs. 3900/- per share. Therefore, in the absence of recovery of any adverse material against assessee, no addition can be made. The Assessing Officer, however, did not accept contention of the assessee and applied the rate of Rs. 6554/- per share instead of Rs. 3900/- and made addition of Rs. 50,46,200/-. 8. The addition was challenged before ld. CIT(Appeals). The assessee filed written submission which is quoted in the impugned order in which the assessee briefly reiterated the same facts as were pleaded before Assessing Officer. It was briefly explained that Assessing Officer adopted the rate of Rs. 6554/- without basis. The assessee did not purchase any share from Shri Surinder Kumar Gulati from whose possession the seized documents were recovered. No corroborative evidenc....
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.... appellate order on which assessee also filed rejoinder. 8(i) The ld. CIT(Appeals), considering submissions of both the parties and material on record, deleted the entire addition. His findings in para 9 to 18 of the appellate order are reproduced as under : "9. I have considered the basis of addition made by the Assessing Officer, the arguments of the AR on the issue during assessment as well as appellate proceedings, the comments of the Assessing Officer in-the remand report and the rejoinder of the AR on the same. It is seen that the Assessing Officer has based his conclusion entirely on the conclusion of the Assessing Officer of Sh. Surinder Kumar Gulati assessing the sale consideration at Rs. 6554/- per share. The assessee on being confronted with the proposed addition in his own case filed detailed explanation as to how the same could not be done in his case. The Assessing Officer while making addition under section 69B has not recorded as to how the assessee's explanation was not acceptable. The Assessing Officer has just proceeded to conclude adversely without rejecting the explanation of the assessee on the basis of some logical reasoning. The decision of Hon'b....
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....ti Family" and rate has also been mentioned alongwith the total number of shares and value of each share received by them @ Rs. 3900/- per share. This also proves that no extra consideration was received by them and at the end of that rate the total amount of shares at Rs. 1,34,30,825/- has been mentioned. This page again records the detail of amount received by cheques and which are not disputed at all and, there is no mention of any extra consideration." Further page no.3 and 4 of Annexure A-5 contains the following:- "From PNP MRG- 1,15,24,240 BRG- 90,30,041(incl. 724,625 of BRG personal) 2,13,54,281 To Land 19822420 GSC 1500000 Back side 31861 21354281" 10. The Authorised Officer at the residence of Sh. Surinder Kumar Gulati confronted the said documents to him and recorded his statement with reference to the same. It is seen that the Authorised Officer posed a specific leading question to Sh. Surinder Kumar Gulati in the following manner:- "During the search proceedings at your residence a diary blue diary marked as the Raymond shape seized as annexure A5 was examined in detail. This diary....
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....ent detailed above that the total sale consideration had been worked out at Rs. 32 crores which has been taken as the basis by the Assessing Officer of the appellant to make the impugned addition by treating the sale consideration at Rs, 6554/- per share rather than Rs. 3900 per share. This means that the interpretation of part of the seized record referred to above in the case of Sh. Surinder Kumar Gulati by his Assessing Officer has been taken to make a further presumption that the other co-owners especially Sh. Harmohinder Singh Chadha would have also sold his share to the appellant at the said rate of Rs. 6554/-. This is against the background that the appellant as well as the seller of shares i.e Sh. Harmohinder Singh Chadha were subjected to search proceedings and nothing to evidence such transfer of unaccounted sale consideration had been found in their cases. The issue therefore is as to whether the evidence relied upon by the Assessing Officer of Sh. Surinder Kumar Gulati could be sufficient to base a further presumption in the case of the rest of the sellers and buyers warranting additions thereof. I am of the view that the evidence found from the premises of Sh. Surinder....
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....ed by the co-owners in this case being a leasehold. .Further the location of Jagat Theatre in sector 17 is definitely much more attractive from commercial point of view in comparison to location of property owned by M/s Pragati Nirman Pvt Ltd. Therefore the claim of the appellant that the assumption of the property being transacted at a price of Rs. 32 crore being farfetched, is acceptable. This fact is in direct contradiction to the observation of the Authorised Officer at the time of the search operation that market price of the property of M/s Pragati Nirman Pvt. Ltd was about Rs. 32 crores and was not backed by any documentary evidence but only on the basis of hearsay. Here it is important to consider the facts of the case in the light of Judicial Pronouncements in similar cases wherein the documents relied upon by the Assessing Officer had been seized in the case of third parties. The documents to be relied upon have to be extremely clearly specific and descriptive enough to establish the factum of passing on of unaccounted sale consideration for transfer of property in question. As I have already observed that the documents relied upon in the case of Sh. Surinder Kumar Gulati....
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....ce of a third party-Same have not been specifically confronted to the assessee before making the addition-Explanation given by assessee not controverted by AO-AO has not given any reason for either not accepting the explanation of the assessee or for finding the explanation as unsatisfactory-Thus, AO did not comply with the conditions stipulated in s. 69-Addition deleted-Remand of the case not called for-Power of remand under s, 254 is required to be exercised in a disciplined and responsible manner- Same cannot be invoked in a case where AO has not cared to follow the basic provisions of s. 69/69B." 16. The Hon'ble Punjab and Haryana High Court in the case of CIT vs Ravi Kumar 294 ITR 78 has also laid down that after the assessee had explained the rough notings, it was incumbent upon the revenue to rebut the same by some material evidence. The Hon'ble Court has specifically held as under:- "Held, that the assessee was found to be in possession of loose slips and not of any valuable articles or things. Neither the possession nor the ownership of any jewellery mentioned in the slips was proved. Therefore, the Tribunal had rightly held that the provisions of Section 69A o....
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....y Shri Surinder Gulati was of Rs. 1.50 Cr which includes the entries of the Blue Diary. The assessee purchased shares from Chadha Family. Since it was a financial transaction, therefore, considering the rule of prepondance of probabilities, the rates per share were correctly applied by the Assessing Officer. All transactions would have been held at the same rate. Shri Surinder Gulati surrendered separately 80 lacs in respect of the seized diary, therefore, case of the co-owner should be considered together. The ld. DR relied upon judgement of Hon'ble Punjab & Haryana High Court in the case of Joginder Pal Vs CIT 56 Taxman.com 150, decision of Gujrat High Court in the case of Hiren Vasant Lal Shah 19 Taxman.Com 241 and decision of Hon'ble Punjab & Haryana High Court in the case of R.P. Vashisht Vs DCIT 301 ITR 37. 9 (i) On the other hand, ld. counsel for the assessee reiterated the submissions made before authorities below and submitted that the seized paper filed at page 12 of the Paper Book and submitted that the correct narration of back-side is bank balance. No document was seized from the possession of the assessee during the course of search. No incriminating materia....
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....he actual fact remained that he has received money @ Rs. 3900/- per share. Shri Surinder Gulati did not make any allegation against the assessee in respect of shares purchased by the assessee. The seized paper as referred in his assessment order have been reproduced in which, on certain shares the value have been shown @ 3900/- as well as in another paper, the same rate is mentioned against the total shares of 3258 and in the third seized paper, total sale proceeds of 3258 shares have been considered by Assessing Officer in a sum of Rs. 2.13 Crores. This sale consideration was divided by 3258 shares and Assessing Officer concluded the value of each share at Rs. 6554/-. However, all the above material on record i.e. statement of Shri Surinder Gulati and the seized paper did not make any allegation against the assessee of purchase of shares at Rs. 6554/-. It was a presumption of the Assessing Officer that when one of the transactions is conducted by Shri Surinder Gulati for a sum of Rs. 6554/- then presumption would be that other shares have also been transferred at the same value. However, it is well settled law that presumption, what-so-ever may be strong but same cannot take place....
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....ccount of dealing with the Varanasi party which has also no connection with the assessee. The assessee also filed Profit & Loss Account of the PNPL to show that there was very little profit in their case and that property was lease-hold held by them and that re-valuation of the shares shows the lesser amount as against the purchase consideration declared by assessee would clearly support the case of the assessee that addition was made against him without any basis. The assessee also cited a comparable case of Jagat Theater in which the value per share was lesser and the sale consideration was also lesser. These evidences and material on record also support the findings of the ld. CIT(Appeals) that addition was made merely on presumption and without any basis. Since no document or material was found during the search against the assessee to prove that assessee paid any amount over and above what is paid through the banking channel, would clearly indicate that Assessing Officer, without any justification made the addition against the assessee. The ld. DR, however, relied upon decision of the Hon'ble Punjab & Haryana High Court in the case of Joginder Lal (supra). In this case, th....