TaxTMI 
TaxTMI 
2018 (1) TMI 318
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....ion of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 10,63,66,700/- (b) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the addition of Rs. 10,63,66,700/- which is merely based on statement of Shri Nirmal Kumar Jain and Shri Bimal Kumar Jain, opportunity of whose cross examination was never provided. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 10,63,66,700/- (c) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO in not referring the matter to the Department Valuation Officer (DVO). The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the addition as being without any basis. 2.1 During the course of hearing, the ld.AR of the assessee has not pressed the Ground No. 1 and 2(c) of the appeal. Hence, the same are dismissed being not pressed. 3.1 Apropos Ground No....
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....gard to property at plot no. D-112 purchased from M/s. Rawat Construction Pvt. Ltd. has been found during the course of search operation conducted. Keeping in mind this fact, the AO observed that FMV ( Fair Market Value) of this plot should to be taken on the basis of two other plots purchased by the assessee, which are marked as plot no D-112A and D112B from Jain brothers namely Sh Nirmal Kr Jain & Sh Bimal Kr Jain. The area of those two plots is also 1000 sq. yds for which the purchase price has been adopted by the AO at Rs. 7 Crore, as against aggregate amount of Rs. 2 crores shown in the two sale deeds. The AO took the rate @ Rs. 70000/= per sq. yrds and on that basis, the AO has held that the land in this area should accordingly be computed at the same purchase price of adjacent plot measuring 1000 sq. yrds purchased from M/s Rawat Construction Pvt. Ltd. Finally, he estimated at Rs. 7,40,60,000/- and added the difference u/s 69B of the Act. For the sake of clarity, relevant extract of AO's finding in page 9 & 12 of the assessment order are reproduced inter alia here as under: "............................................................................................ ......
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....awat Construction Pvt. Ltd. were found from the search premise. Further, AO has also not examined M/s Rawat Construction Pvt. Ltd. to arrive at such conclusion. It is seen that all the three plots D-112, D-112A and D-112B are part of a common plot( Refer Asst Order Pg 7) . In respect of Plot no D-112 A & D-112B, purchased from Sh Nirmal Kr Jain and Sh Bimal Kr Jain, both the sellers have accepted fact of receipt of "on money" to the extent of Rs. 5 Crores and offered the same in their respective returns. This "on money" payment by Nirmal Kr Jain is also supported by the documents seized in search. Once, the seller has accepted the fact of giving on money, the same has to be considered as paid by the buyer. Similarly, plot no D-112 is part of the plot D-112A & D-112B and therefore, the on money payment in respect of plot no D-112 cannot be denied in view of circumstantial evidences. In view of facts and circumstances of the case and duly considering the facts of the evidences found from the sellers' premises, the addition made u/s Sec 69B of the Act is confirmed.'' 3.2 During the course of hearing the ld.AR of the assessee prayed for deletion of addition of Rs. 10,63,66,700/....
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....Dy. CIT (2001) 70 TTJ (Ahd) 131 PB 118 SUBMISSIONS 1. Written Submissions, made before the ld. CIT(A), appearing at Paper Book Pages 9-107, 108-119 and 120-125 may please be considered. 2. Ld. CIT(A) has passed a very skeptical and non speaking order in a most summary manner. His findings are contained in merely 3 pages at para 3.1.2 (CIT(A) Order pg 23-26), out of which page 25 is only reproduction of the ld. AO finding. 3. Ld. CIT(A) has not considered the pleadings madebefore him. The factual and legal issues raised are not even dealt with by the ld.CIT(A). 4. Ld. CIT(A) has rejected the appeal for the following reasons: Reason by ld. CIT(A) i. Incriminating documents suggesting on money payment with regard to property at Plot No. D-112-A and D-112-B were found and seized. Submissions Ld. CIT(A) has mentioned about the incriminating documents suggesting on money payment. Neither the ld. AO nor the ld. CIT(A) have pin pointed the specific documents which suggested payment of on money in respect of Plot No. D-112-A and D-112-B. The incriminating documents seized at the residential premises of ShriNirmal Kumar Jain and ShriBimal Kumar Jain may suggest theiron mone....
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....to be considered as paid by the buyer and in respect of Plot No. D-112 on money payment cannot be denied in view of circumstantial evidences. Submissions The final conclusion of the ld. CIT(A) is based on his misconception that once seller accepts the fact of on money receipt, the payment of the same by the buyer cannot be denied. Under the peculiar facts of the instant case, the buyers have admitted the on money receipt in their self interest and there is no corroborative evidence in this regard. Therefore, their acceptance has no evidentiary value against the appellant company. The request for cross examination was turned down which renders the statements of no evidentiary value. 5. Before the ld. CIT(A), following cases relied upon by the ld. AO were adequately distinguished: 6. Positive material needed to prove higher consideration: In the following judicial pronouncements, it is held that unless there is a positive material to show that real consideration paid by the buyer was more than what was stated in the registered sale deed, no higher price or value can be taken to be the basis for computation of taxable income in the hand of the buyer, simply because there is a wid....
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....Raj.) 66 15 Shree Chand Soni v/s DCIT (2006) 101 TTJ 1028 (Jd) 67 16 Ajay Sharma v/s ACIT (2006) 101 TTJ (Del) 1065 67-69 17 Smt. Sujata Graover v/s ACIT (2006) 99 TTJ (Del) 837 69 18 CIT v/s naveen gera (2010) 328 ITR 516 (Delhi) 69-70 19 CIT V/s Bajrang Lal Bansal (2011) 335 ITR 572 (Delhi) 70-71 20 ITO V/s Dua Auto Components (P) Ltd. (2011) 135 TTJ (Del) 621 71 8. Heavy burden is on the Department where unexplained investment u/s 69 is alleged. Following case laws were relied upon which have been totally ignored by the ld. CIT(A):- S. No. Case law Gist at PB Page 1 CIT v. Daulat Ram rawatmull (1973) 87 ITR 349 (SC) 72 2 Kishanchand Chellaram v. CIT (1980) 125 ITR 713 (SC) 72 3 CIT v. P.K. Noorjahan (1999) 237 ITR 570 (SC) 73 4 Anil Kumar Roy Chowdhury & Ors. V. CIT (1976) 102 ITR 12 (SC) 73 5 Distict Superintendent of Police, Chennai v. K. Inbasagaran (2006) 282 ITR 435 (SC) 73-74 6 J.S. Parkar v. V.B. Palekar & Ors. (1974) 94 ITR 616 (Bom) 74-75 7 CIT v. Haji jan Mohd. Gaur (2004) 267 ITR 765 (Raj.) 75 8 Add. CIT v. karnail Singh V. Kaleran (1974) 94 ITR 505 (P&H) 75-76 9 V. Ramaswami Naidu v. CIT (1974) 93 ITR 341 (Mad) 76 1....
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....an Dass Singhi v/s Income Tax Officer (2004) 87 TTJ (JD) 615 91-92 16 Dr. Chetan Prakash Ranka v/s ITO (2005) 33 Tax World 72 (Jp.) 92-93 17 Unique Organisers & Developers (P) Ltd. v/s DCIT (2001) 70 TTJ (Ahd) 131 93 18 Kishanchand Sobhrajmal v/s Assistant Commissioner of Income Tax (1992) 41 ITD 97 (Jp) 94 19 Smt. Purnima Beri v/s Dy. CIT (2003) 264 ITR 54 (Amritsar) 94-95 20 Ramakant Umashankar Khetan v/s ACIT (1999) 107 Taxmann (Magzine) 44 (Nagpur) 95 21 CIT v/s R.Y. Durlabhji (1995) 211 ITR 179 (Raj.) 95-96 22 Jagdamba Rice mills v/s Assistant Commissioner of Income Tax (2000) 67 TTJ Chd) 838 96 23 Ashwani Kumar V/s Income Tax Officer (1991) 39 ITD 183 (Delhi) 96-97 24 A. Sadasivam v. ACIT (2002) 255 ITR 1 (cal) (AT) 97 25 T.S. Venkatesan v. ACIT 74 TTJ 298 (Cal) 97-102 26 M/s Peeyush Construction Pvt. Ltd. v. DCIT 28 Tax World 57 (Jp) 102 27 ITO v. M.A. Chidambaram (mad) 63 ITD p. 203 102-103 28 Associated Stone Industries (Kotah) Ltd. v. DCIT (JP) (1999) 68 ITD 312 (Jp) 103 29 Kishan Chand chela Ram v. CIT 125 ITR 713 (SC) 103-104 30 Gargidin Jawala Prasad v. CIT 96 ITR 97 (All) 104-105 31 Parimisetti Seetharamamma v. CIT 57 IT....
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....ion of Directors of Rawat Constructions Pvt. Ltd. (In this case even the oral admission of any of the Directors not available to the Department.) iv. Examination and cross examination of the Broker Shri Sandeep whose Mobile No. 9828788807 was also informed by ShriNirmal Kumar Jain while answering Question No. 12 (AO Order Page 7). The AO has purposely ignored the requests of the assessee company because he was clear that truth will surface if proper procedure of law was followed and facts were examined from all related persons. 15. The moot questions requiring answers are: i. How no document was found from the possession of the sellers and/or buyer when the premises of both the parties were searched to indicate the sale consideration which the Department is alleging or ShriBimal Kumar Jain or Nirmal Kumar Jain are accepting? ii. Why the DalalShriSandeep was not examined by the Department to know the correct fact when his mobile number was made available instantaneously? iii. Why the sellers of the different properties purchased by ShriBimal Kumar Jain and ShriNirmal Kumar Jain were not examined to find out the truth? iv. Why no opportunity of cross examination, inspite o....
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....r of Income Tax, Central- I & Ano. ([2008] 14 SCC 151] (SC) 23-25 State of Kerala s. K.T. Shaduli Yusuff [1977] 39 STC 478 (SC) Kishan Chand Chela Ram v. CIT [1980] 125 ITR 713 (SC) Kalra Glue Factory v. Sales Tax Tribunal [1987] 167 ITR 498 (SC) CTO v. Haryana Dal Mill [1993] 90 STC 519 (SC) P.S. Abdul Majeed v. Agricultural Income tax & Sales Tax Officer [1994] 209 ITR 821 (Ker - HC) CIT v. Eastern Commercial Enterprises[1994] 210 ITR 103 (Cal - HC) Mahaveer Transport Co. v. ITO reported at [1987] Vol. 23 ITD 206 (Hyd-ITAT) Sunil Agarwal v. ACIT[2002] 82 ITD 1 (Delhi- ITAT) Mahesh Gulab Raj Joshi v. CIT (A) [2205] 95 ITR 300 (Mum.) 18. Hon'ble ITAT Jaipur Bench, accepting the above mentioned contentions of the assessee, in the case of Smt. SunitaDhadda(Supra), held thatorder passed by the ld. AO, and upheld by the ld. CIT(A), was passed in gross violation of principles of 19. Hon'ble Supreme Court in its order, in the case of Andaman Timber Industries, CIVIL APPEAL NO. 4228 OF 2006, dated 2nd Sept 2015, held "..that - not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of t....
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....is no certificate in the said Paper Book. There has to be certification from the Department whether these were confronted to the assessee at assessment stage. 2.3 If these papers have not been confronted to the assessee during assessment, we strongly object their admission at this stage. Otherwise also, since assessment is not based on these documents, they are not relevant for deciding the appeal. 3. Ld. DR has referred to certain pages of the paper book filed by the Department. In this regard following submissions are made:- 3.1 These pages were never confronted to the assessee by the ld. AO during assessment proceedings nor these have ever been referred to by the ld. AO in his show cause notice. 3.2 During the course of appellate proceedings, before ld. CIT(A), it was submitted that no copies of so-called incriminating documents were provided to the assessee nor opportunity of cross examination was allowed (CIT(A) page 6, para 4.ii & CIT(A) page 16, para 6.vi). Even ld. CIT(A) did not provide any such documents nor allowed any opportunity of cross examination. 3.3 Thus, not only the assessment is completed without reference to any pin-pointed document but even app....
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....itten by him to ADIT [DPB I - 49]. Relevant portion of his letter is reproduced below:- "2. That I purchased a residential flat no. 624 in Unique Sanghi Apartment vide sale deed dated 13- 42009.The registry of flat took place for Rs. 30,87,432/- though actual cost was 41,16,576/- (1715.24 sq. ft. @2400/-) as evident from Page 25 of A-3. The expenses incurred on registration was Rs. 2,31,530/- and Rs. 3.75 lacs was paid for car parking, generator charges and society charges as evident from page 1 of A-1. Further to this Rs. 6 lacs was spent on furnishing of the flat as stated in the statements recorded during search. Thus, the total cost of the flat comes to 53,23,106/-. 3. The long term capital gain on sale of property at D112 and tax thereon works out as under:- Particulars Amount (in Rs.) Sale consideration of property 3,50,00,000 Less: Brokerage Paid 3,50,000 3,46,50,000 Less: Purchase cost of the property 4,52,062 Assessee's share 1/2 of the same 2,26,031 Indexed cost (2,26,031 * 632 /133) 10,74,072 Long term Capital Gain 3,35,75,928 Less: Deduction u/s 54F for purchase of residential flat Purchase cost ....
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....assessee in this flat is Rs. 82,33,780/-." 6. The appellant seeks the opportunity of cross examination and also the opportunity to make submissions in respect of alleged incriminating documents now referred before the Hon'ble ITAT. However, without prejudice to the above, it is submitted that no second innings can be allowed to AO for making up the deficiency in the completed assessment. Reliance is placed on following judicial pronouncement:- A. JURISDICTIONAL BENCH Abdul Latif [2011] 130 ITD 255 (JAIPUR) "5.... We do not feel to provide second inning to the revenue because the entire facts were before the Assessing Officer and the Assessing Officer made an addition on wrong grounds." Indian Shaving Products Ltd. [2007] 106 ITD 80 (JAIPUR) (TM) "In the case of CIT v. Harikishan Jethalal Patel [1987] 168 ITR 4721 , Hon'ble Gujarat High Court through Justice A.M. Ahmadi as his Lordship then was, observed as under : ". . . It is obvious from the demand made before the Appellate Tribunal that the Revenue desires to examine the genuineness of the firm and the transaction on fresh facts, not the existing facts, for the existing facts do not even remotely create any d....
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....cases stand covered by the aforesaid decision of the Supreme Court. It was only because the Income-tax Officer thought that the transaction in question was a genuine one and the agricultural land was transferred to the firm, the genuineness of which was not in doubt, that the Income-tax Officer, after deducting the cost of acquisition of the land, computed the capital gain at Rs. 1,32,172 and added the same to the net income of the assessee for the assessment year 1976-77. The genuineness of the firm as well as the transaction was, therefore, never in doubt. Therefore, the Appellate Tribunal was right in law in not remanding the matter to the Income-tax Officer for redeciding the issue." ...24. In this respect we further find support from the order of the Hon'ble apex court in case of Suresh Chand AIR 1988 SC 247 (sic) wherein it was observed that "in case where it is found that no useful purpose will be served by a remand and the issue can be decided on admitted facts, empty formality must be eschewed to advance the cause of justice." " B. OTHER HIGH COURTS Rajesh Babubhai Damania [2002] 122 taxman 614 (GUJ.) "Section 254, read with section 68, of the Income-tax....
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.... the genuineness of the firm and/or the transaction in question, a second innings should not be permitted to the revenue as it would cause considerable harassment, hardship and expenditure to the assessees." Saraladevi Sarabhai (P-1) D Trust [2002] 123 Taxman 1064 (Gujarat) "In the case of Harikishan Jethalal Patel (supra), this Court has already observed that in cases where foundational facts do not exist raising even a remote doubt regarding the genuineness of the firm and/or the transaction in question, a second innings should not be permitted to the revenue, as it would result in avoidable hardship and harassment to hundreds of assessees whose cases stand covered by the aforesaid decision of the Supreme Court. We are of the opinion that there are no foundational facts on the record of this reference raising doubt regarding genuineness of the partnership firm and/or the transaction in question and, therefore, a second innings should not be permitted to the revenue for reconsidering the entire matter, more particularly when the reference is with reference to the assessment year 1974-75. Permitting the revenue to have the second innings in the facts of the case, would result....
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....dently on the basis of the material on record. " Manish Build Well (P.) Ltd [2011] 16 taxmann.com 27 (Delhi) "In our view of these facts and circumstances it cannot be held that CIT(A) (sic) violated Rule 46A, he had acted in a judicious and proper manner and his order being based on proper appreciation of facts and record cannot be called violative of a procedural provision. CIT(A) is statutory first appellate authority and has independent power of calling for information and examination of evidences and poses conterminous power of assessment apart from appellate powers. In our view CIT(A)'s order is to be upheld. The matter should not be set aside on general ground as it amounts to causing the assessee injustice and giving the AO another innings. Besides it is not explicit that AO insisted for confirmations." Dell International Services India P. Ltd. [2016] 382 ITR 37 (KAR) "it was a settled law that remand was not a power to be exercised in a routine manner and should be used sparingly as an exception only when the facts warranted such course of action." C. OTHER BENCHES Lalitha Karan v. ACIT, Hyderabad ITA No. 1130/ Hyd /2015 "7.6 Litigation in the Bomb....
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.... peculiar fact that donor had denied giving gift and there was no relationship between donor and assessee. Attention is drawn towards the recent decision of Hon'ble Supreme Court in case of Andaman Timber Industries (Civil Appeal no. 4228 of 2006). Case 2 and 3:- B. Kishore Kumar vs. DCIT 273 CTR 468 (MAD) and B. Kishore Kumar vs. DCIT 62 taxmann.com215 (SC) In this case additions were based on sworn statement of assessee during search whereas in the present appeal additions are based on the basis of statement of third party. Case 4:- CIT vs. P.M. Aboobacker 45 taxmann.com 172 (KER) In this case opportunity of cross examination was granted which in the present appeal has not been granted inspite of specific request. Case 5: Amar Kumari Surana vs. CIT 226 ITR 344 In this case before the Hon'ble Rajasthan High Court assessee offered no explanation as to why land was sold to her at half the rate of market price whereas the present appellant had purchased the land above DLC rate Case 6: K.P. Varghese vs. ITO 131 ITR 597 The case is in favour of assessee as is evident from the following:- "Since literal interpretation of section 52(2) leads to manifestly un....
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....Case 15:- GTC industries Ltd. vs. ACIT 65 ITD 380 This case is with reference to secondary and subordinate material which is evident from the following:- "Section 143(3) of the Income-tax Act, 1961 - Assessment - Principles of natural justice - Assessment year 1985-86 - Whether, where material or evidence used for purposes of assessment is of collateral nature, rule that adverse evidence and material relied upon to reach finality should be disclosed to assessee is not applicable - Held, yes - Whether right to cross-examine witness who made adverse report is an invariable attribute of requirement of dictum audi alteram partem - Held, no - Whether where statements of witnesses were only secondary and of subordinate material used to buttress main matter connected with amount of additions, it had to be held that there was no denial of principles of natural justice if witnesses were not allowed to be cross-examined by assessee - Held, yes" In the appellant case addition is based on those material copies of which have not been provided.'' 3.3 On the other hand, the ld. DR supported the order of the ld. CIT(A) and filed following case laws. 1. CIT vs Durga Prasad More, 82 ITR....
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....ore vide registered sale agreement dated 17-04-2009. (iii) Plot No. D-112 at Power House Road, Bani Park, Jaipur measuring to 1000 sq. yards from M/s. Rawat Construction Pvt. Ltd for Rs. 1.14 crores vide registered agreement dated 28-052009. The AO noted that after including the registration cost of Rs. 22,33,300/- the value of above investment comes to Rs. 3,36,33,300/- (Rs. 1,00,00,000+Rs. 1,00,00,000+1,14,00,000+Rs. 22,33,300/-). Further the AO in this case also mentioned that a search u/s 132 of the Act was carried out on 23-07-2009 at the business and residential premises of Shri Bimal Kumar Jain and Shri Nirmal Kumar Jain wherein various incriminating documents were found and seized. But no incriminating documents were confronted with the assessee nor such documents are specified in his order. It was found that Shri Bimal Kumar Jain and Shri Nirmal Kumar Jain sold the following properties to M/s. Kamakshi Hospitality Pvt. Ltd. Jaipur. (i) Plot No. D-112-A, at Power House Road, Bani Park, Jaipur measuring to 500 sq. yards from Shri Nirmal Kumar Jain S/o late Shri Nathmal Jainfor Rs. 1.00 crore vide registered agreement dated 17-04-2009. (ii) Plot No. D-112-B at Power Ho....
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....cording to the AO, both the above plots D-112 and ( D-112A & D-112B) combined are exactly of same size i.e. 1000 sq. yards as well as adjacent to each, therefore, there seems to be no concrete reasons for having any major variation in the market of the above mentioned properties. According to the AO, it is evident that the market value of the above properties are higher side but the registries of the same are made at lower value. The AO adopted the market value of Plot No. D-112 exactly the same as of the above Plots Nos. D-112A & D-112B i.e. Rs. 7.00 crores (since the size of Plot No. D-112 and Plot No. D-112A + D-112B is exactly same i.e. 1000 sq. yard each) or to say Rs. 70,000/- per sq. yard and not Rs. 11,400/- per sq. yard as shown in the registered sale deed. The value of Plot No.D-112A & B is taken at Rs. 7.00 crores and the difference of value be added to the total income of the assessee treating the said amount as undisclosed investment. Similarly value of plot No. D-112, Power House Road, Bani Park admeasuring 1000 sq. yards have been taken at Rs. 7 crores and the difference of amount was treated as his undisclosed investment. The following properties were purchased. S....
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.... of the version given in examination in chief. In this case the persons who gave statements were interested persons as they were found in possession of unaccounted investment and by giving such statement they have explained such unaccounted investment and also claimed benefit u/s 54 of the Act on the amount so admitted. No incriminating document were found at the business premises of the assessee company or residence of the directors of the assessee. The assessee had not been provided any incriminating documents which could suggest that any on-money was paid. It is important to note that the Jain Brothers have explained their unaccounted investment by making such statement and also claimed benefit u/s 54 of the Act for such amount. In our considered view no addition can be sustained on the basis of such oral admission of interested party without providing opportunity of cross examination and not supported by independent evidence. The provisions of Transfer of Property Act also does not permit admission of oral evidence in contradiction to the written and registered documents. Hence, in these peculiar facts and circumstances of the case, the purchases consideration declared in respe....