TaxTMI 
TaxTMI 
2017 (1) TMI 1719
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....e at page2 of the assessment order and reply of the assessee at page-3. It was asserted that there was no co-relation made in the prices and reminder was send at the rate which was cancelled. The ld. counsel invited our attention to the affidavit of the buyer (page17 of the paper book) and affidavit of director (page-12 of the paper book) along with page-4 (letter of cancelation) and pages 23 & 24 (bank statement showing the amount returned to earlier buyerMilind Bhingare). It was explained that the letter is merely a reminder and not a formal document like agreement. It was contended that there was no other material found for justifying the addition. The ld. counsel further contended that the explanation of the assessee is supported by bank account, books of accounts, registered sale deed, etc. It was explained that the price, which was quoted by the assessee to the new buyer is supported by valuation report of Subregistrar (page-63 of the paper book). The crux of the argument is that there was no evidence found against the assessee and no enquiry was carried out by the Assessing Officer, so the addition made on hypothetical basis is not justified. So far as, reliance made upon th....
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....tion called for by the Assessing Officer. A search action u/s 132 of the Act was carried out in the case of 'Gala Sharma Siddhi' group on 28/08/2008. Along with the search, one of the premises of the assessee was covered u/s 133A of the Act. As per the Revenue, one CD, comprising various correspondences, books of accounts and documents, was impounded and later on during the course of assessment, its contents were viewed. On perusal of the CD, as per the Revenue, amongst others, one letter in respect of sale transaction with Mr. Devendra Singh Tomar (Flat Purchaser) was found. According to the Assessing Officer, the letter dated 08/08/2008, return to Mr. Devendra Singh Tomar, by the assessee, showed that the sale price, payable by Mr. Devendra Singh Tomar is Rs. 57,73,000/- towards the purchase of flat, whereas, the agreement value with reference to the same was Rs. 49,18,000/- and thus the assessee was called to explain as to why:- (i) why the difference of Rs. 8,55,000/- in the sale price as project herein before in the case of Shri Devendra Singh Tomar should not be added to the total income of the assessee and (ii) further the same proportion should not be adopted for the ot....
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....s asked to clarify/explain the differential amount mentioned in the said letter vis-a-vis mentioned in the agreement. The assessee explained the difference and also filed an affidavit of Shri Gautam Kabra. An affidavit was also filed from Shri Devendra Singh Tomar explaining the factual matrix. The relevant extract of the contents of the letter of Shri Gautam Kabra are reproduced hereunder:- "6. I had negotiated flat no. 101 in wing D-2 with one Mr. Milind Bhingare for a sum of Rs. 59,34,000/-. The said party paid token money of Rs. 1,00,000/- on or around 16.05.2008. However, he cancelled the booking on the ground that the price agreed was much higher than the rate prevailing in the surroundings. We repaid the sum of Rs. 1,00,000/- on or around 30.05.2008. 7. Mr. Devendra Singh Tomar approached us somewhere in July 2008 and inquired for three bed room hall kitchen (3 BHK) flat in our project at a reasonable value. He was not too inclined for higher floor and probably 1st floor suited his requirement. 8. He negotiated with us for some time and after several meetings the price for the flat was agreed at Rs. 4 9,18,000/- with terms and conditions as applicable in general to all....
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....company about our agreed price and was informed to ignore the letter as the figures appearing in the letter pertained to their erstwhile deal. 7. The agreement was signed and registered with Sub Registrar, Thane, I further state that, I have not paid any amount towards purchase consideration of my above mentioned flat over and above Rs. 49, 18, 0001- as agreed mutually by me with the company. 8. As agreed I paid the total consideration of the balance amount in three instalments vis-a-vis Rs. 1,18,000/- on or around 06.05.2009, Rs. 20,00,000/- on or around 07.05.2009 and Rs. 27,00,000/- on or around 10.05.2009 aggregating to Rs. 48,18,000/-." 2.8. The ld. Commissioner of Income Tax (Appeals) A) was of the view that mere filing of an affidavit is not enough; therefore, he sustained the addition. Shri Kabra explained the factual matrix by saying that he negotiated flat no.101 with Mr. Milind Bhingare for a sum of Rs. 59,34,000/- and the party paid token money of Rs. 1 lakh on or around 16/05/2008. The booking was cancelled on the ground that the agreed price was much higher than prevailing in the market. The amount of Rs. 1 lakh was repaid on or around 30/05/2008. Shri Devendra S....
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....pted in the case of one single buyer i.e. Mr. Devendra Singh Tomar, who negotiated with the assessee at the price, which was mentioned in the registered sale deed. The remaining buyers also made the payments as mentioned in the registered sale deeds. The earlier person, Mr. Milind Bhingare, who found the rate at the higher side, therefore, he cancelled the agreement. Thus, the onus cast upon the assessee was duly discharged. Rather, the onus cast upon the Assessing Officer was never discharged and he picked up one letter from 219 buyers and made proportionate addition in the hands of the assessee for the remaining buyers also. This type of approach cannot be said to be justified unless and until the same is substantiated with evidence. Our view finds support from the decision from Hon'ble Apex Court in COMMISSIONER OF INCOME TAX vs. DAULAT RAM RAWATMULL 87 ITR 349 (SC), wherein, it was held as under:- "Held : Findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it appears that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have c....
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....ged to the respondent-firm. The fact that B has not been able to give a satisfactory explanation regarding the source of Rs. 5,00,000 would not be decisive even of the matter as to whether B was or was not the owner of that amount. A person can still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money is found to be not correct. From the simple fact that the explanation regarding the source of money furnished by A, in whose name the money is lying in deposit, has been found to be false, it would be a remote and far-fetched conclusion to hold that the money belongs to B. There would be in such a case no direct nexus between the facts found and the conclusion drawn therefrom. There is also no cogent ground to take a view different from that of the High Court that the other circumstances, namely, the transfer of the amount of Rs. 5,00,000 from Calcutta to Jamnagar for fixed deposit in the name of B and the use soon thereafter to the said fixed deposit receipt as security for the overdraft facility to the respondentfirm did not justify the inference that the amount belonged to the respondent. The material on record i....
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....the office of the Central Bank, is in the same building in which there are the business premises of the respondent-firm. This was, a wholly extraneous and irrelevant circumstances for determining the ownership of Rs. 5,00,000 which had been deposited in fixed deposit in the name of B. There should, be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which that conclusion is based. Conclusion : Merely because the surety's explanation regarding source of deposit held by him was found false, it cannot be held that the principal debtor (firm) which operated an overdraft account against the security of such deposit owned the money. 2.9. In another case, in COMMISSIONER OF INCOME TAX vs. U.M. SHAH, PROPRIETOR, SHRENIK TRADING CO. 90 ITR 396 (Bom.), the Hon'ble jurisdictional High Court held as under:- "Held : The Tribunal took the view that upon the material or evidence which had been produced by the assessee before the ITO, and it was over-whelming and clinching material, the only conclusion which the ITO could come to was that the loans were genuine loans. The Tribunal set forth these circumstances which can ....
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....ub-s. (1) or sub-s. (2) of s. 256, relates to the perversity of the findings arrived at by the Tribunal. That sort of question has to be distinguished from a mixed question of facts and law, which also requires consideration and discussion of facts but does not warrant returning findings of facts inconsistent with the findings recorded by the Tribunal while giving its opinion on the question referred to the High Court. In answering the question, in this case, the High Court had to deal with various facts on record to determine whether the amount in question was loan or income. If such discussion of facts has led to arriving at the conclusion that the amount was loan but not income, it cannot be urged that the High Court disturbed the finding of fact recorded by the Tribunal. Here the Tribunal did not find any material to record specific finding that the amount in question is in the nature of commission paid by P to the assessee; it took note of the fact that the loan was advanced by agreement dt. 15th Nov., 1958 and that the Reserve Bank of India had accorded permission for obtaining the loan. The High Court in regard to the loan agreement observed that the agreement provided that ....
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....come. Reference-Finding of facts-Interference by Court-High Court will not address itself to recording findings of facts unless the subject-matter of the question referred to it by the Tribunal relates to the perversity of the findings arrived at by the Tribunal-That sort of question has to be distinguished from a mixed question of facts and law, which also requires consideration and discussion of facts but does not warrant returning findings of facts inconsistent with the findings recorded by the Tribunal while giving its opinion on the question referred to the High Court-In the present case, High Court rightly held that the circumstances taken singly or cumulative did not justify the conclusion that the amount was not received as loan as it purported to be but was anything in the nature of commission or any receipt of business- High Court could not be said to have recorded its own findings Conclusion : High Court rightly held that the circumstances taken singly or cumulative did not justify the conclusion that the amount was not received as loan as it purported to be but was anything in the nature of commission or any receipt of business; and it could not be said to have recor....
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.... 1996. We agree with the finding of the fact recorded by the Tribunal. While estimating the undisclosed income under Chapter XIV-B, the AO cannot apply a rule of thumb. The AO cannot estimate the undisclosed income on an arbitrary basis. We cannot loose sight of the fact that the assessee is a professional. It is highly improbable that his professional income remained constant from 1983-84 (when he was put on the panel) right upto 1996. It is highly improbable that the fees which he was charging in 1993 were the same also during the period 1984 upto November, 1993. We agree with the contention advanced on behalf of the Department that in matters under Chapter XIV-B the AO is required to estimate the undisclosed income. We agree with the contention of the Department that this estimation involves guess work. However, the AO under Chapter XIV-B cannot act arbitrarily, while estimating the undisclosed income. In the present case, the AO has not considered the adverse impact of the Gulf war. In the present matter the AO has not considered the fact that the fees of the professional in ordinary course could not have remained static for the entire period commencing from 1st April, 1986 to ....
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....e of post-1993 period to the entire block period commencing from 1st April, 1986 up to 11th Dec., 1996. Hence, the Tribunal was right in coming to the conclusion that an arbitrary method has been adopted by the AO in estimating the income of the assessee under Chapter XIV-B." 2.12. It is noticed that while coming to a particular conclusion, the Hon'ble jurisdictional High Court distinguished the decision from Hon'ble Apex Court in CST vs H.M. Esufali H.M. Abdulali (1973) 90 ITR 271 (SC) and the Tribunal was held to be right in coming to conclusion that an arbitrary method has been adopted by the Assessing Officer in estimating the income of the assessee. Identical is the situation in the present appeal before us, as mentioned earlier, the ld. Assessing Officer made addition arbitrarily on presumptive basis that too without bringing any evidence on record. Likewise, in the case of Mehta Parikh & Company vs CIT (1956) 30 ITR 181(SC). The relevant portion from the aforesaid order is reproduced hereunder for ready reference and analysis:- "8. Both the ITO and the AAC discounted this suggestion of the appellants by holding that it was impossible that the appellants had on han....