TaxTMI 
TaxTMI 
2010 (9) TMI 1275
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....evidence to show that the appellant company has paid any unaccounted amount. In view of these facts the addition made and confirmed is not at all justified, illegal and the same be deleted. 1.2 It is submitted that, the appellant company has denied of having making any cash payments for booking of offices/shops and has stated that the amount paid through Cheque based on MOU is only the correct and true price for purchase of the said Offices/Shops. It is submitted that on the basis of these evidences which are final and unchallengeable, no addition can be made by relying only on certain loose papers which are again not relevant to any unexplained payment or transaction. In view of these facts and evidences the addition made be deleted". 2. We have heard the rival submissions and considered the material available on record. 3. Briefly, the facts of the case as per assessment order are that the assessee, which is a Private Limited Company, filed its return of income on 31-07-2005 declaring total income at Rs. 38,51,940/-. The case was taken up for scrutiny. The A O noticed that consequent upon search u/s 132 of the IT Act in Dharmadev Builders Group, the residential hou....
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....tin Parekh/Trident India 14-6-04 100000 0 20 A-10 26 FF-1,2,3 Jatin Parekh/Trident India 30-6-04 500000 0 21 A-10 26 FF-1,2,3 Jatin Parekh/Trident India 21-7-04 3388000 0 22 A-10 26 FF-1,2,3 Jatin Parekh/Trident India 26-7-04 200000 0 23 A-11 30 FF-1,2,3 Jatin Parekh/Trident India 26-10-04 0 500000 Total 13088000 5100000 The A O noticed that page Nos. 24 and 26 of Annexure A-10 recorded notings of the cash payments of Rs. 1,30,88,000/-. The same were recorded again at page No.25 of Annexure A-10. The A O also noticed that on page Nos. 24 to 26 of Annexure A-10, notings of primary transactions were made and from these papers, postings were made in ledger accounts of different purchasers maintained on different pages of Annexure A-11. The assessee's ledger account prepared at page No.30 of Annexure A-11. After correlating the entries at pages 24 to 26 of Annexure A-10 and page 30 of Annexure-11, the A O found that the assessee had made in all cash payment of Rs. 1,30,88,000/- on different dates as per the chart above. T....
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....de any cash payments for booking of Offices/Shops and that amount paid through cheque based on Agreement is only the correct and true price for purchases of the said Offices/Shops. (b) The loose papers, on the basis of which the addition has been made, do not mention 'on - money' having been paid by Trident Creation Pvt. Ltd, the appellant company. (c) The copy of 'Jantri' (copy of Index) from the Registrar of Stamp Authority as filed by the appellant shows prevailing market rate of such offices facility at Rs. 1500/- per sq. ft. in May 2006 (1293 per sq. ft. for Shop to Rs. 1,847/- per sq. ft. for shop on ground floor)'. As against this, as early as 5th May, 2004 i.e. two years before, the appellant purchased the shops @ 1450 per sq. ft. the shop is in the first floor, where the prices are lesser by 30% vis a vis the shops situated in the ground floor. (d) The MOU dated 5/5/04 clearly mentions that all these properties were purchased at Rs. 60.40 lakhs and therefore there is no question of cash payment. (e) One-sided confirmation of receipt of 'on' money cannot be the basis for making addition until and unless there is corroborating evidences. ....
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....ings or some builders but this is not always true as a universal fact. There are buildings, who are publishing the rate in newspapers and in their broachers. As for the appellant company, it was the first buyer when the Scheme was launched and obviously, as the initial sale, the Seller would charge lesser price than the others. This aspect and factor should also be kept in mind while comparing the cases of others, who have disclosed the income which could be for various other reasons also, best known to each such individual assessee. (n) It has been submitted that merely because out of so many, only a few of them have disclosed the cash payment as their undisclosed income, it does not automatically become the fact that the assessee also has paid cash as per the amount mentioned by the builder in his record". 4.1 The assessee has also explained the sequence of the events and developments in the case as under: "(a) Initially Trident (India) Ltd. entered into an Agreement with Dev Enterprise and that too with Mr. Sanjay Thakkar and not with Mr. Deepak Thakker, clearly agreeing in writing that the company has agreed to purchase Shop/Office No.1, 2 and 3, admeasurin....
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.... has been held in all these cases that the A O must bring on record some corroborative material to prove that the assessee had actually made such unexplained investment. 4.2 Further, vide order sheet entry dated 29-07-2008, the assessee was asked to file its clarification on the following points viz: "(a) Details about the change of parties for sale and purchase. (b) The connection between Trident (India) Ltd. and Trident Creation Pvt. Ltd. (c) The loose papers mention the name of Trident (India) Ltd. against the payments, including the cheque payments. In case these cheque payments have been made by Trident Creation Pvt. Ltd., as the appellant claims, then why the name of Trident (India) Ltd. appears in the loose papers. (d) The comments of the appellant on the comparable cases given by the A O and to work out the rate of purchase in those cases. (e) The submissions made by the appellant are the same as has put forth before the A O. It should, therefore, pinpoint specifically the objection it has with regard to the assessment order. (f) To inform about the family and business relation between Shri Sanjay Thakkar and Shri Dee....
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....ch are as per page-2. As we decided to change our name, we paid the cheques from Trident Creations Pvt. Ltd. to Aadarsh Industries and Investment Pvt. Ltd. as per page (3) enclosed. (3) Coming to your next point with regard to the rate of Office per sq. ft. worked out by the Assessing Officer, we have to submit that the Assessing Officer did not provide us with any of the details as mentioned in his Order, nor we were informed about three persons, who had agreed/surrendered cash payments in their Return of Income. We do not know for what purpose or reasons and under what circumstance they have disclosed such payments. Whether they have disclosed towards cost of acquiring such premises or in any other manner is also not known to us. Therefore, we are unable to comment thereof. However, those investors are of the Ground floor shops, which are in no way comparable to first and second floor of the office premises. We can only tell that 8075 Sq. ft. of Office premises was purchased by one Todi family for Rs. 1 Crore and he has not made any disclosure and seems to have not made any cash payment like us as no notings in his name was found and no actions by Income Tax Department a....
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....s made and received back and fresh cheques issued as asked by you are already explained and given in Pages 1, 2 and 3 as per Para-2 above. (8) With regard to the copy of Stamp documents filed by us during last hearing (including English translation) we have to repeat that document is at the same price of Rs. 60.40 lakhs, i.e. cheque payments only and no cash payment whatsoever. (9) Coming to the last point with regard to your query as to what is that we have stated before the Assessing Officer and, which has not been accepted by him is that the main and fundamental point of our submission is not being accepted and was brushed aside. The A. O. has relied on what is found out from the premises, where search took place, i.e. Aadarsh Industries and Investment Pvt. Ltd. To summarise, the Assessing Officer did not accept our submissions as under: (i) No loose papers or diary was found out from our/assessee's premises. Therefore, purely on outside party's evidence additions cannot be made as held in so many judgments was not accepted. (ii) Except the handwritten paper found out by the search party from the premises of Aadarsh Industries & Investment Pvt....
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....ssions filed by the assessee before your kindself on 21/8/2008 has been gone through. It is humbly submitted that, from the assessee's own submission, it is clear that Mr. Dipak Thakakr (from whose premises documents marked A-10, A-11 were found) was a partner in earlier M/s. Dev Enterprise as well as a Director in Adarsh Industries & Investments (P) Ltd. These two concerns were involved in the booking/sale of property under reference. Being one of the main persons, he was supposed to be in knowledge of relevant details and thus it is quite logical that details of transactions related to sale of relevant property to Trident India Ltd./Trident Creation (P) Ltd. as well as sale transactions related to other persons were found from his premises. 3. The assessee claimed that the document found from another premise has not evidentiary value and the figure written by Shri Deepak Thakakar could be his planning/desire etc. However, the said document has evidentiary8 value as discussed by Assessing Officer in his order and the undersigned relies on the same. Further more the evidentiary value of the seized document A-10, A-11 which contains details of on money transactions of diffe....
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....ppellant. Moreover, he has emphasized on the evidentiary value of the seized documents containing details of On Money transaction of different Units of the said property stating that various other persons have accept4ed the On Money. This is not correct and far from truth. We are aware that none of them has disclosed Additional Income on the ground that they have paid On Money to said Builder. In one of the cases the person has disclosed additional income just to buy peace clearly8 mentioning in the Return of Income that no On Money payment has been made. Copy of the same is enclosed and we request your honour to call file of all such persons, who have disclosed Additional Income, not as an On Money paid to the Builder but "Income from other sources" to buy peace. Therefore, the Assessing Officer's contention that Declaration of income by other some parties implies the correctness of the contents of the seized documents is not at all correct. 3. With regard to Para-4, the rate per Sq. Ft. etc., the Assessing Officer has said that the claim has not been verified and has merely repeated what has been stated by the Assessing Officer. 4. In Para-5, the Assessing Offic....
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.... gone through the case laws relied upon by the appellant. The moot point that is to be decided in the case is whether cash payment of the total amount mentioned in the loose papers found out at the premises of the builder Dev Enterprise and now M/s. Adarsh Industries & Investments Pvt. Ltd. should be considered as actual amount paid by the appellant or not, and consequently whether a presumption can be made against the assessee that such kind of On-money payment is a prevalent practice in real estate transaction, and, therefore, an adverse presumption be made against the assessee. 9.2 The perusal of the assessment order shows that the addition of Rs. 1,30,88,000/- has been made by the AO on the basis of the loose papers found and seized during the course of search proceedings on Shri Deepak Thakkar. The loose papers show payment of Rs. 1,30,88,000/- as cash and Rs. 51,00,000/-by cheques on different dates. However, after verification, the A.O. has noted that payment of Rs. 10 lakhs on 15/5/04 has been wrongly written, therefore the total cheques payment is 4,10,000/- till 26/10/04. With regard to the other cheque amounts and the date of payment thereof, as gi0veni in the l....
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....k Thakakr and Sanjay S. Thakkar are cousins having common business. Both the seller parties i.e. M/s. Dev Enterprise and then M/s. Aadarsh Industries & Investment Pvt. Ltd. also pertain to these two persons. 9.5 The AO has given a number of comparable cases where those parties have purchased the shops/offices in the same complex and have admitted to have paid cash payments as on-money. The parties referred to by the AO are Shri Ashish Zavery and Jayshri Zaveri, Tekwani and Manshani Family, Rakesh Shah HUF, and Shri Kirti Shah, all of whom have admitted cash payment over and above the declared consideration as on money for the purchase of respective shops by them in Dev Complex. The AO has relied on the case of Rohini Ramnath Lele 117 CTR 208 (Mum/TM) wherein it is held that prevailing practise of paying on-money should be considered even if the purchaser denies. He has also relied on the case of Green Valley Builders 149 Taxman 671 (Ker.), wherein it is held that if higher price was paid for purchase of land, addition can be made. He has also quoted the case of Sumati Dayal 214 ITR 801 (SC) wherein it is held that test of human probabilities and preponderance of probabilit....
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.... the practice which has been followed in the case of other sales in this very building, which have also been accepted by these other purchasers. 9.6 I have gone through the case laws relied upon by the appellant vide which is has been pleaded that addition on the basis of loose papers found from third party should not be made without corroborative evidence. But, I am of the considered view that as per the discussions above, ample corroborative evidence has been brought on record by the A. O. in the form of the comparative cases as also the appellant not being able to explain with evidence as to why his purchase consideration was so low vis-à-vis those of the other purchasers. It is an established preposition that the principles of Evidence Act can not be rigorously followed in the case of Income Tax proceedings. The principle of preponderance of probability is very much applicable for deciding Income Tax matters. When other properties in the same premises were sold at a higher cost and these other purchasers admitted to have given on-money for such purchase, it can safely be concluded that the same applied to the case of the appellant too. 9.7.1 The appella....
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....Assessing Officer proposes to make an assessment in disregard to the assessee's account books and the evidence produced by him, natural justice demands that he should draw the assessee's attention to it and give the assessee an opportunity to produce evidence in rebuttal of the material on which he proposes to base his judgment. At the same time, the decision of the Hon'ble Supreme Court in the case of Shaduli (39 STC 478) cannot be understood as recognizing a right of cross examination as an invariable attribute of the requirement of reasonable opportunity. The Supreme Court has stated the rule with sufficient elasticity and amplitude as to make the right depend on the terms of the statute, the nature of the proceedings or of the function exercised, the conduct of the party and the circumstances of the case. It was further held in this case that the rule of audit alteram partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the enquiry should be permitted to be cross examined by the party affected while in other case it may not. It was held by Hon'ble Calcutta High Court in the case of Manindra Nath Chatterjee v/s Col....
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....t establish that the amount expended on making such investments or in acquiring any such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income; (c) The assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory. When the above three conditions are satisfied, then the excess amount may be added to the income of the assessee for such financial year u/s 69B. 9.8.2. In this case, the investment has been found to be more than what is recorded in the books of account which has not been explained by the appellant. The appellant has not explained satisfactorily as to how the cost of the shops/offices purchased by it is less than the cost of similar properties in the same building. It has been held in the case of Amarkumari Surana v. CIT [1997 226 ITR 344 (Raj)] that the addition u/s. 69B, in the circumstances of the case, could not be interfere with where no evidences has been adduced by the assessee before the Assessing Officer as to why the plot of land has been....
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....ly document found in search but no evidence of actual cash payment was found. No hand-writing of any director was found on the seized papers. The A O relied upon comparable cases who have allegedly made cash payment over and above the sale consideration were never confronted to the assessee. Even if, these persons accepted cash payment, no addition could be made against the assessee because no corroborating evidence was found against the assessee. He has submitted that since no search is conducted in the case of the assessee and survey was conducted only on 18-02-2005 in which also no evidence, loose paper and incriminating evidence of making cash payment was found against the assessee, therefore, there is no incriminating evidence found against the assessee for the purpose of making the above addition. The statement of the seller/builder has not been recorded in respect of the seized loose papers. The assessee sought cross examination of the builder as was explained before the learned CIT (A) as well as other persons but it was not granted. In the seized papers only cash is mentioned but it is not mentioned if cash is actually paid to the builder. PB - 71 is the copy of the note f....
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....ibunal considering the entire evidences i.e. statement of the developers and other relevant material on record held that case of unexplained investment by the assessee was not established. 3) Decision of Bombay High Court in the case of Ms. Latamangeshkar 97 ITR 696 in which it was held "Tribunal's finding or appreciation of evidence on record, that entries in the ledger of a firm will not represent assessee's income from undisclosed sources, are finding of fact not giving rise to any referable question". 4) Decision of Gujarat High Court in the case of CIT Vs M. K. Brothers 163 ITR 249 in which it was held "amounts representing purchases could not be added as income, as there was no evidence to conclude that transaction was bogus". 5) Order of ITAT Ahmedabad Bench in the case of ACIT Vs Prabhat Oil Mills 52 TTJ 533 in which it was held "dairy seized from a third party H indicated the alleged unrecorded sales to that party. Mere entry in the account of H was not sufficient to prove that assessee indulged in such transactions without bringing any corroborative material against the assessee". 6) Order of ITAT Ahmedabad Bench in the case of Shankarl....
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.... cost of the shops/offices purchased was less as compared to the other similar cases in the same property in question. Therefore, the detailed contained in the loose paper is clearly against the assessee to prove that assessee paid "on money" in cash to the builder over and above the amount mentioned in the sale deeds. Learned D R filed copy of the letter dated 16-08-2010 issued by ACIT, CC-1 (1), Ahmedabad wherein 4 comparable parties accepted payment in cash over and above the amount of cheque to the same builder (A-11). Learned D R submitted that the above facts sufficiently prove the case against the assessee that assessee paid cash as well. Learned D R however, admitted that A O has not relied upon statement of the builders against the assessee and that no such copies have been received by him. Learned D R submitted that the loose papers are in systematic manner and that the name of Trident (India) mentioned in the loose paper is of the sister concern of the assessee. 8. We have considered the rival submission and materials available on record. During the course of hearing of the appeal, assessee was directed to file copies of the sale deeds in question which have been file....
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....e total consideration of Rs. 60,40,297/- have been settled and paid by the assessee company and not by Trident (India) whose name is mentioned in the seized papers. It contradicts and creates doubt in the authenticity of the seized papers. It is undisputed fact that the MOU was signed by the seller on 05-05-2004 which clearly mentions the sale of all the properties at Rs. 60.40 lacs, therefore, on the same day there is no question of making cash payment of Rs. 20 lacs as per the writings mentioned in the seized papers in cash column. Further, when the assessee company have duly signed enforceable MOU, stating therein that the seller shall have to sell the property at Rs. 60.40 lacs, there is no question of making subsequent payments in cash on various dates as mentioned in the loose papers. The above details contained in loose - seized papers are against human probability. It may also be noted here that since no search was conducted in the case of the assessee and no evidence was found during the course of survey against the assessee, therefore, the presumptions u/s 132 (4A) and section 292 C could not be drawn against the assessee. The findings of the A O would show that A O has a....
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....tries reported in 4 ITR (Tribunal) 602 (Ahmedabad). It may also be noted here that in the seized papers the names of "Shri Jatin Parikh/ Trident (India)" is mentioned but the name of the assessee is M/s. Trident Creations Pvt. Ltd., which is not mentioned in the seized papers would prove that the seized papers do not belong to the assessee. There is also no mention in the loose papers if any cash payment is made by the assessee company to the builders. The builders/sellers from whose possession seized papers have been recovered have not made any statement against the assessee, therefore, the entries or notings contained in the loose papers found from the possession of the builders are not sufficient to make the addition against the assessee. There is no other corroborative material or independent evidence available on record against the assessee. The submissions of the learned D R are based upon assumption only that since 4 parties made payment of "on money" to the builder, therefore, there is a presumption against the assessee that assessee also paid "on money" in cash. But, equally other buyers have not paid any "on money" to the builders. Since the seized papers are not in the n....