TaxTMI 
TaxTMI 
2021 (5) TMI 664
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....M/s. Dhananjay Marketing Pvt. Ltd. is a company incorporated under the provisions of the Companies Act, 1956, it is engaged in the business of builders and developers. The return of income for the assessment year 2014-15 was filed on 31.03.2015 declaring the total income of Rs.Nil. Consequent upon search and seizure action u/s 132, a notice u/s 153A of the Act was issued on 28.10.2015. In response to the notice u/s 153A of the Act, the return of income was filed on 01.12.2015 declaring Rs.Nil income. Against the said return of income, the assessment was completed by the Deputy Commissioner of Income Tax, Central Circle-1, Nashik ('the Assessing Officer') vide order dated 30.12.2016 passed u/s 153A r.w.s. 143(3) of the Act at a total income of Rs. 10,06,60,053/-. 3. The factual matrix of the case leading to the above addition is as under :- The appellant along with other 5 parties purchased land at Survey No.53/2 area admeasuring 20H.65R. (18H.46R.), Survey No.54 area admeasuring 09H.18R. (08H.97R.) & Survey No.55 area admeasuring 10H.41R. (09H.57R.) i.e. total area admeasuring 92 Acres 20 Gunthe of Savargaon, Tal. & Dist. Nashik for consideration of Rs. 65,21,25,992/- vide....
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....unt received over and above the stated consideration in the said Sale Deed from the Thakker group of companies. 6. The Assessing Officer then proceeded with analysis of the seized material found from the premises of the sellers, namely, (i) Mr. Fakruddin S. Kokani (Party No.R-1), (ii) Mr. Imran Iftekar Kokani (Party No.R-2), (iii) Mrs. Nizamoddin Kokani (Party No.R-4) and (iv) Mr. Tamizuddin Kokani (Party No.R-5). The Assessing Officer after analyzing the documents found and seized in the case of Mr. Imran Iftekar Kokani scanned images of which are extracted at Page No.11 of the assessment order, concluded that letter "T" finding place in the loose sheet represents "Thakker" and the amounts found therein represents the consideration received from the said Thakker group of company. Accordingly, he drew adverse inference that vendors i.e. Kokani group had received cash from the Thakker group of companies over and above the stated consideration in proportion to the share of land held by him in the subject land sold to Thakker group. 7. Similarly, the Assessing Officer also analyzed the seized documents found and seized from the premises of Mr. Tamizuddin Kokani marked as Annexur....
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....his group of persons comes to Rs. 8,58,19,700/-. Based on this, he concluded that all other sellers also received equal amount of cash over and above the amount stated in the sale deeds. 10. Similarly, the Assessing Officer also analyzed the documents found and seized from the premises of Mr. Rehana Tamizuddin Kokani who is Party No.R-5 containing total pages no.1 to 128 wherein notings of title as Savargaon Land Expenses were found. Copy of the papers is extracted at page no.19 of the assessment order. The aggregate expenditure incurred on account of sale of the Savargaon land Belgaon, Mhasrul & others totaling to Rs. 3,31,05,459/- leaving balance of Rs. 3,36,99,334/-. The Assessing Officer also rejected the explanation given by the appellant that the above expenditure was incurred out of the cash receipt of Rs. 3.36 crores received on behalf of all the sellers of Kokani family on the ground that entire amount of Rs. 3.31 crores received on behalf of all the sellers, as to how only Mr. Rehana Tamizuddin Kokani of such Kokani group alone incurred Rs. 3,31,05,459/- on his behalf. Based on the above analysis and findings, the Assessing Officer came to conclusion that all the selle....
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....lers of the land is purely based on assumption, presumption, and there is nothing on record suggesting that the figures finding place in the loose sheets are in relation to the sale of the subject land. II. The conclusion received by Assessing Officer based on the notings found in the loose sheets is based on investigation, suspicious etc. The findings of the Assessing Officer that the sellers of the party have incurred expenditure in cash is only out of the receipt of onmoney from the Thakker group of companies is merely based on suspicious, investigation. There is no material on record to suggesting that the sellers of the land have incurred expenses in cash. The documents found and seized does not reveal anything. They are simply a dumb documents and the sellers of the land i.e. Kokani group had flatly denied the allegation of receipt of any on-money over and above the stated consideration of Rs. 65,21,25,992/- on cross examination. III. The appellant also ruled out the probability of payment of onmoney consideration citing the fact that the stated consideration in a sale deed was Rs. 65,21,25,992/- as against the valuation as per Stamp Duty Ready Reckoner of R....
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.... wherein the Ld. CIT(A) summarized as under: a) The version of the Assessing Officer that Kokani group of companies have started receipt of on-money consideration in cash two and half years prior to the agreement of purchase i.e. 01.07.2013 is unbelievable. b) There is no incriminating material found in the premises of the appellant or its group of companies as a result of search and seizure action. c) The sale consideration paid by the assessee and his group of companies is ten times higher than the Ready Reckoner value and the appellant company itself has offered the same land to MIDC for Rs. 90 lakhs per acre vide offer dated 06.12.2014 and in view of this, the Assessing Officer's finding that the appellant group of companies bought the land at Rs. 141 lakhs per acre in 2013 does not hold water. 16. Based on this finding, the Ld. CIT(A) deleted the addition in the hands of Thakker group of companies of on-money consideration except Rs. 11,94,90,700/- which was admitted by Kokani group u/s 132(4) of the Act. The ld. CIT(A) also deleted the addition made for the assessment years 2011-12 and 2012-13, as the seized material does not indicate any payment....
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....kani group admitted additional income in the application filed before the Settlement Commission is neither conclusive nor has any impact on the assessment of income in the hands of buyers of the property as the disclosure should have been made by the vendors to suit their agenda i.e. minimizing the tax liability by offering the amount as long term capital gains. It is submitted that the family members of Kokani group have also indulged in several land transactions for the last six years. The Ld. AR also submitted that the vendors of properties i.e. Kokani group have denied receipt of any on-money on cross-examination. Thus, it is submitted that there was no conclusive evidence on record to establish the payment of on-money consideration, therefore, no addition can be made based on the presumptions, assumptions, conjunctures, etc. Finally, it is submitted that the findings of the Settlement Commission in the hands of vendors is not binding in the hands of buyers of the land, reliance in this regard was placed on the decisions of CIT Vs. Vineeta Gupta (2014) 46 taxmann.com 439 (Del) and P.G. Foils Ltd. Vs. Income-tax Settlement Commission (2008) 302 ITR 331 (Mad). 23. In rej....
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....by the appellant. The statements were recorded on 08.09.2015 u/s 132 of the Act during the course of search and seizure operation in the case of Kokani group. The statements were recorded from following persons. (i) Mr. Fakruddin Sallauddin Kokani (ii) Ms. Farzana Sallauddin Kokani (iii) Ms. Noorbano Sallauddin Kokani (iv) Mr. Aijaj Kutubuddin Kokani (v) Mr. Tamizoddin Faridoddin Kokani (vi) Mr. Imran Iftekhar Kokani (vii) Nooruddin S. Kokani (viii) Moinuddin Ziauddin Kokani (ix) Mr. Rehana Tamizuddin Kokani (x) Mr. Gulam Gaus Kokani 27. The abovementioned persons undoubtedly have stated that they received on-money receipt over and above the consideration stated in the sale consideration on sale of Savargaon land. However, it is significant to note that they never mentioned the name of the Thakker group nor find place anywhere in seized material. 28. We find from the record that the Thakker group of companies including the appellant were afforded an opportunity to cross-examine the vendors. During the course of such cross-examination, all of them categorically stated that they have no....
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....- as additional income in the application filed before the Settlement Commission stated to be on account of sale of lands. It is significant to note that on perusal of page no.14 order dated 17.07.2018 passed by Settlement Commission in the case of Kokani group, it is clear that though they offered additional income of Rs. 65,21,25,992/- an amount of Rs. 52,34,32,696/- was claimed as deduction u/s 54, this fact casts doubt and bona-fides on the part of Kokani group in offering additional income. 33. Therefore, the question is whether abovementioned facts can form the basis to form an opinion that the appellant made an undisclosed investment in the purchase of property in the form of payment of on-money consideration. The answer is "No". It is trite law that a finding in the assessment of one person is not conclusive in the assessment of another person in view of the settled position of law that material gathered in the assessment proceedings of one person is not legal evidence in the assessment of another person. Reference can be made to the decision of N. S. Choodamani vs. CIT, 35 ITR 676 (Kerala). The assessment of each person is separate and distinct and an addition is to be ....
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....d to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.-Letter [F.No. 286/98/2013-IT (INV.II)], dated 18-12-2014." 36. In the present case, the additions are made merely based on statement of third parties without bringing on record any corroborative evidence. No such addition can be made in the light of above discussed legal position. 37. The Hon'ble Supreme Court in the case of P.V. Kalyanasundaram, 294 ITR 49 (SC) in a case involving the identical facts wherein the vendors of the property admitted additional income in the original return of income and it was held that in the absence of any corroborative evidence in the hands of the buyers, no addition can be made. No doubt, the fact that the vendors had admitted additional income on-money on sale of land before the Settlement Commission though rises suspicious. Ipso facto, cannot form basis of addition in the hands of third person in the absence of any independent corroborative evidence. As held by the Hon'ble Supreme Court in the case of CIT vs. Daulatram Rawatmull, 53 ITR 574 even the circumstances raises suspicion, suspicion cannot take place of the evidence. That apart, the content....
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....up initially in the statement u/s 132(4) in the search action on the premises of Kokani Group. 3. Any other ground that may be urged at the time of hearing." 42. From the perusal of the assessment order, it is clear that based on the notings found in the loose sheets seized and found in the case of Kokani group of people, Mr. Asif Nizamoddin Kokani, Mr. Fakruddin S. Kokani, the Assessing Officer inferred that the respondent assessee had paid on-money consideration to the vendors of the property of subject land. Accordingly, the addition in proportion to the purchase of land made by the respondent assessee was made in the hands of the respondent assessee. As stated by us (supra), the ld. CIT(A) had confirmed the addition in the hands of the purchaser of the property i.e. respondent assessee only to the extent of amount declared under 132(4) of the Act by the vendors of the property i.e. Kokani group. The balance of addition was deleted by the ld. CIT(A) by holding that there is no material on record which could be linked to the respondent assessee showing the payment of on-money consideration. The notings found in the seized material in the case of some of the vendors on....
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....before the Assessing Officer in response to the summons issued u/s 131 of the Act, does not enable the Assessing Officer to draw the adverse inference against the respondent assessee. He further submitted that from the seized material found and seized from the premises one Mr. Nizamuddin Faridoddin Kokani it is clear that the vendors are also engaged in the land deals other than the subject land. Finally, he submitted that on the cross-examination, all the vendors had categorically denied having received any on-money on sale of subject land from the respondent assessee or group of companies. 46. He further submitted on the cross-examination, all the vendors had confirmed the reasons for declaring of additional income is out to buy peace with Department. He further submitted that none of the seized papers found and seized from the premises of the vendors can be called a document as there were not part of the account books and loose sheets cannot be treated as part of the regular books of account and not admissible u/s 37 of the Evidence Act as evidence placing reliance on the decision of the Hon'ble Supreme Court in the case of CIT vs. V. C. Shekhal 1993 SCC 410. Thus, he submitt....
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....page, an alphabet "T" was found. From the this it cannot be said that the document contains some transactions giving rise to the taxable income nor it indicate any date of any transaction nor does not indicate any names of the parties to the transaction. Therefore, this document cannot said to be a speaking one, can be termed as "dumb document". So is the case in respect of the document reproduced at page Nos.28, 29 and 30 of the impugned order. The Assessing Officer based on the seized material had concluded that the vendors had incurred expenditure in the form of development, purchase of lands out of on-money received over and above the consideration stated in the sale deed from the buyers of the land i.e. the respondent-assessee herein and its group companies and then proceeded to make addition in the hands of assessee as undisclosed investment on purchase of lands. 49. It is also important to significant note that even the vendors of the land in the statement u/s 132(4) of the Act had only confirmed the receipt of the on-money to the extent of Rs. 11,94,19,700/- altogether. They nowhere stated that they received on-money consideration from the respondent assessee or its grou....
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....spicion, guess work and conjuncture or on irrelevant inadmissible material. Reliance can be placed in this regard on the following decisions: i) Dhirajlal Girdharilal vs. CIT (1954) 26 ITR 736 (SC) ii) Dhakeswari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC) iii) CIT vs. Maharajadhiraja Kameshwar Singh of Darbhanga (1933) 1 ITR 94 (PC) iv) Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) v) Umacharan Shaw & Bros vs. CIT (1959) 37 ITR 271 (SC) vi) Omar Salay Mohamed Sait vs. CIT (1959) 37 ITR 151 (SC) 52. Recently, the Hon'ble Delhi High Court in the case of CIT vs. Dinesh Jain (HUF), 352 ITR 629 after referring to the decision of the Hon'ble Supreme Court in the case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) held that no addition can be made taking into account notorious practice prevalent in the similar trade. The relevant findings vide para 14 and 15 are as under: "........... 14. In Lalchand Bhagat Ambica Ram Vs. Commissioner of Income Tax, Bihar and Orissa (1959) 37 ITR 288, the Supreme Court disapproved the practice of making additions in the assessments on mere suspic....