TaxTMI 
TaxTMI 
2017 (2) TMI 1542
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.... the AO on account of alleged unexplained investment in purchase of Plot No. 281,10-B, Gopal Pura Bye Pass, Jaipur 3. That the order of the ld. CIT(A) confirming the addition made by the AO is arbitrary, whimsical, capricious, perverse and against the law and facts of the case. The order of the ld. CIT(A) in this regard deserves to be set aside and addition made by the AO deserves to be deleted. 2.1 During the course of hearing, it is noted that the assessee filed the following additional ground under rule 11 of ITAT, Rules 1963. ''On the facts and in the circumstances of the case and in law the service of the assessment order was not complete within the time specified in the Act as the AO has treated the Annexures ABCDEF and G as part of the assessment order as mentioned in para 10 and 14 of assessment order and the copy of the said Annexures A,B,C,D,E,F and G was not annexed to the assessment order and served to assessee with assessment order. Therefore, and thus the assessment order deserves to be declared as time barred and void ab initio and the impugned assessment u 153B r/w 143(3) of the I.T. Act is liable to be annulled. However, at the outset of the....
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....ing statements in documents either executed or taken by a party and rely on those recitals. It all that an assessee who wants to evade tax is to have some recitals made in a documents executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents DR S.C. Gupta vs. CIT 248 ITR 782 (Alld.) In Pullangode Rubber Produce Co. Ltd. vs. State of Kerala 1973) 91 ITR 18 (SC) it was held that an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the bases of assessment. The mere fact that the assessee retracted the statement could not make the statement acceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden ....
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....aipur 10,00,000 111204 23-04-2008 3. C.B.I., Tonk Road, Jaipur 11,00,000 111817 08-03-2008 4. C.B.I., Tonk Road, Jaipur 17,00,000 111220 28-06-2008 5. C.B.I., Tonk Road, Jaipur 17,00,000 111219 01-07-2008 Total 65,00,000 It is to be noted that this Agreement was dated 25.06.2008 and the conveyance did was registered on 27.06.2008 just two days after this Agreement. It is clear from the Agreement that all the cheque payments had been made and the portion of the unaccounted money for this land transaction was to be given within a month of registration of the land. Furthermore, no mention was made here regarding any construction activity required to be undertaken by the seller for Rs. 75 lakhs or details of the same. Moreover, it is not clear as to why these details regarding construction activity were not incorporated in the agreement particularly when it is so detailed and specific about all the other facts of the transactions. iv) a). Just two years later, search and seizure operations were conducted at the residential and business premises of the assessee and these two agree....
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.... details of this construction work. vii) Reliance is being placed by the AR on the term "मय निर्माण" .. in the Agreement to Sale dated 15.5.2008 to show that the said plot was vacant and the term. "मय निर्माण" implied that construction activity was required to be undertaken by the seller before transfer of the plot. An inquiry was conducted from the office of the Subregistrar-1, Sanganer, Jaipur by the Investigation Wing. As per the report obtained, it was seen that in cases of sales where registered value exceeds Rs. 25 lakh the Sub-registrar is required to make a site inspection of that plot to evaluate its value for the purpose of stamp duty valuation before registration. As per the site inspection report prepared by the Sub-registrar the plot was not vacant and construction of 3700 sq. ft. was found existing on the date of inspection i.e. prior to the registry date. This construction was valued at Rs. 400 per sq. ft. and so an enhancement of evaluated value was made by Rs. 14.80 lakhs. This report of the Sub-registrar of Govt. Rajasthan is held to be su....
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....it by bringing on record the report of the Sub-registrar regarding the construction measuring 3700 sq. ft. already existing on the plot prior to the date of registry of conveyance deed on 27.06.2008. The words '."मय निर्माण" in the agreement to sale dated 15.05.2008 cannot be construed to imply that the seller was required to undertake any construction activity for the appellant prior to the registration of the Sale Deed. The word '"मय निर्माण" support the Sub-Registrar's finding in his report that there was existing construction on the plot of land. It has been submitted that the statement of the appellant's husband cannot be used against her. However, this is not an acceptable submission because it is seen that all the financial affairs of Smt. Renu Agarwal were being managed by her husband in fact even his son Ashish Agarwal did not have much knowledge about the complete financial transactions of the group. In his statement, he has admitted that his father Sh. Ashok Agarwal was managing all the financial affairs of the family. Considering that the....
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....onsideration was revised to Rs. 1,41,00,000/- as against original consideration of Rs. 65,00,000/- As per this agreement (Page 2 of agreement) the sale consideration included value of land and construction as agreed. iii) Later on the seller expressed his inability to make construction as agreed over the land, therefore, this agreement was also cancelled by executing a separate cancellation agreement. This cancellation agreement is also under seizure of the department vide Exhibit 4 of Annexure AS (seized from 1, Dayal Nagar, Gopalpura Bye Pass Road, Jaipur on 12.10.2010) (Copy at PB Page 81). iv) Thereafter, this plot was finally purchased by wife of the assessee Smt. Renu Agarwal in the form of vacant land only for Rs. 65,00,000/- (as originally agreed) as per sales deed registered on 27.06.2008. The registered sale deed is also under seizure of the department vide Annexure AS-7 Page 13- 19 (seized from 281-282, 10-B Scheme, Gopal Pura Bye Pass, Jaipur) in which the sub-registrar has also assessed the value of this plot at same value of Rs. 65,00,000/- (Copy at PB Page 82-88). Thus, the agreement to sales for Rs. 1,41,00,000/- was inclusive of agr....
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....s, conjectures possibilities and probabilities which cannot be sustained. 2) Ld. CIT (A) perversely held that cancellation agreement was found in post search operations and is fabricated document. Factually, this document was seized by the income tax department vide Exhibit 4 of Annexure AS from 1, Dayal Nagar, Gopalpura Bye Pass Jaipur during the course of search which started from 22-09-2010 and continued upto 12-10-2010. The search started on 22-09-2010 at office of the assessee which is situated at 1, Dayal Nagar, Jaipur, which continued upto 23-09-2010 (PB pg 211). However, the office premise was sealed under PO order u/s 132(3) of Income Tax Act in the presence of witnesses (PB pg 212). The search resumed on 12-10-2010 and sealed office of the assessee was opened in presence of witnesses (PB 213) and this document was found and seized as Annexure AS-4 (PB 214). The search party has also recorded statement of Shri Ashok Agarwal on this document u/s 132(4) of Income Tax Act which is at PB pg 62 (Answer to question no 11). Further in answer to question no 12, (PB pg 63) final tally was made against the amount surrendered, which does not include Rs. 76.00 lac originally ....
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.... Department cannot by merely rejecting unreasonably a good explanation, convert good "proof into no proof" Hon'ble Supreme Court in the case of Uma Charan Shaw & Bros Co Vs CIT 37 ITR 271 has held that the surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof. Hon'ble Punjab & Haryana High Court in the case of CIT Vs Anupam Kapoor (2008) 299 ITR 179 (P & H) also held that suspicion, howsoever strong cannot take the place of legal proof. If the department considers on payment by the assessee for the land, it is burden on the department to prove the undisclosed investment of the Assessee. This burden is not discharged and therefore, no addition can be made. Reliance is placed on the following decisions:- (i) Hon'ble Delhi High Court in the case of Commissioner of Income Tax Vs Dinesh Jain HUF (2013) 352 ITR 629 (Del) has held as under:- "11. Section 69B does not permit an inference to be drawn from the circumstances surrounding the transaction that the purchaser of the property must have paid more than what was actually recorded in his books of account for the simple reason that such an inference could be very s....
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.... understatement of the consideration (investment) in the books of account. Once that undervaluation is established as a matter of fact, the Assessing Officer, in the absence of any satisfactory explanation from the assessee as to the source of the undisclosed portion of the investment, can proceed to adopt some dependable or reliable yardstick with which to measure the extent of understatement of the investment. One such yardstick can be the fair market value of the property determined in accordance with the Wealth Tax Act. We however clarify that this Court is not concluding that such yardstick is determinative; in view of the findings arrived at by us that the Assessing Officer did not gather foundational facts to point to undervaluation the adoption of the norms under the Wealth Tax Act is not commented upon by us. 13. The error committed by the income-tax authorities in the present case is to jump the first step in the process of applying section 69B - that of proving understatement of the investment - and apply the measure of understatement. If anything, the language employed in section 69B is in stricter terms than the erstwhile section 52(2). It does not even author....
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....a of evidence in that behalf. " This takes care of the argument of Mr. Sabharwal that judicial notice can be taken of the practice prevailing in the property market of not disclosing the full consideration for transfer of properties. 15. Since the entire case has proceeded on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account, we are unable to approve of the decision of the income-tax authorities. Section 69B was wrongly invoked. The order of the Tribunal is approved; the substantial question of law is answered in the negative, in favour of the assessee and against the CIT." (ii) Hon'ble Rajasthan High Court in the case of CIT Vs. Bhanwarlal Murwatiya reported in 215 CTR (Raj) 489 (2008) (2008)/ 3 DTR (Raj) 115 (copy at PB 228-230) has held as under :- "The question as to what was the price of the land at the relevant time, is a pure question of fact. Apart from the fact, that even if it were to be assumed, that the price of the land was different that the one, recited in the sale deed, unless it is established on record by the Department....
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....b Registrar, Jaipur as well as before the ld AO that he sold the plot to the assessee for Rs. 65,00,000/- and he has received only Rs. 65.00 lacs against the sale of the plot. The statements of the seller before the ld AO are corroborated with the seized cancellation agreement dt 26- 06-2008 coupled with the seized first agreement dt 15-05-2008 and seized registered sale deed dated 27-06-2008. However, to rebut the contention of the ld AO that there was construction over the plot at the time of sale of the plot by the seller and to prove the claim of the assessee that the plot was vacate land at the time of purchase, the following documents/explanation were produced before the AO which were not rebutted by the AO: - a) The copy of Google earth Map of 16.12.2007 wherein the plot is showing as vacant in the map (Copy at PB Page 105). b) Photograph of land submitted at the time of registry of sale deed of plot (Copy at PB Page 110) and assessee has submitted before the AO that the photograph can be verified from records of registrar. Further on the photo the user code and user name which mentioned on report of stamps and registration department is also mentioned. ....
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....ssume that the assessee paid Rs. 76,00,000/- from construction of Rs. 14,80,000/-." Thus in view of the above submission made before the AO the inspection report issued by the registrar authority cannot be used against the assessee for making an opinion that as on the date of purchases there was some construction over the plot. 7) During the course of assessment proceedings the assessee requested to ld. AO to issue commission u/s 131(d) of Income Tax Act, 1961 for making spot inquiry from neighbors etc. and also requested that the assessee is ready to pay cost of evidence in this regard in advance. But no such exercise was carried out by the AO. No any inquiries were carried out by the AO to disprove the claim of the assessee and she simply reply over the irrelevant evidence. 8) In para 15 to 16 of the assessment order the ld. AO mentioned that the word "with construction" appearing in the agreement for Rs. 1,41,00,000/- can be construed to be referring to the physical structure existing at the time of agreement. Further in the same para the ld. AO opined that other agreements, except to agreement of Rs. 1,41,00,000/-, is infect a colourable device to giv....
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....nt dated 25.06.2008 and significance of this word became clear from the cancellation agreement dated 26.06.2008 wherein it has been clarified that word "inclusive construction" in agreement dated 25.06.2008 was used for construction to be carried out by the seller over the plot. Further, the seller of the plot has also explained the term "मय निर्माण" mentioned in agreement dated 25-06-2008 in his statement u/s 131 of Income Tax Act dated 07-02-2013. He stated in answer to question no 14 (PB pg 116), term "मय निर्माण" means to construct the house on plot. 10) In the para 18 to 21 the ld. AO discussed over the statement of seller Shri Subhash Chand Bansal which was recorded by the AO at the time of assessment proceedings and rejected by the ld AO by holding that Shri Subhash Chand Bansal was not having any experience in the work of construction and there was no specification given to him with regard to the construction of house and the agreement dated 25.06.2008 is the actual authentic document which refer the sales consideration as Rs. 1,41,00,000/-. The principal of ....
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.... line. The assessee was willing to get construction of residential house over the plot, therefore the seller of the plot gave a proposal to assessee that his friend is good contractor and he will get done the construction of the house for the assessee over the plot, therefore the assessee group agreed to purchases the plot with construction from the seller and for that purpose the agreement dated 25.06.2008 was executed but later on the seller refused to do construction of house as demanded by the assessee, therefore the agreement dated 25.06.2008 was cancelled and the assessee purchased the vacant land on the terms and condition of original agreement dated 15.05.2009. Therefore the statement of the seller of the plot cannot be rejected on surmises, conjectures, probabilities and possibilities without having any concrete material against the contents of the statements. 11) The ratio laid down in the case relied upon by the AO in para 28 of the assessment order either not applicable to the facts of the case or supports the assessee's contentions. The assessee's has cited several decisions in this regard in forgoing paras. Thus from the above discussion it ....
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....e wrong and false. The contents of affidavits, which are not vague, should be accepted correct. Reliance is placed on the following decisions:- (i) Mehta Parikh & Co v CIT [1958] 30 ITR 181 (SC) (ii) Dilip Kumar Rao Vs CIT (1974) 94 ITR 1 (Bom); (iii) Malwa Knitting Works Vs CIT (1977) 107 ITR 379, 381 MP and (iv) Sri Krishna Vs CIT (1983) 142 ITR 618 (All). 13) The Board of direct taxes issued instruction to the All Chief Commissioners of Income Tax, (Cadre Contra) & All Directors General of Income Tax Inv. vide letter F. No. 286/2/2003-IT (Inv) dated 10.03.2003 in regard of confiscatory statement in the course of search and seizer as under: "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefo....
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.... ITR 97 (All) Held, that the additions merely based on statement of witnesses cannot be made. c) Chitra Devi v/s ACIT (2002) 28 Tax-world 454 (ITAT JP) No addition can be made in block assessment on the basis of statement recorded during the search unless it is relatable and connected with the material found during the search. d) Jagdish Narain Ratan Kumar V/s ACIT 22 TW 209 (JP) Statement recorded during search are generally influenced by extraneous circumstances & cannot be termed as free from all ambiguity. e) CIT vs. Bhanwar Lal Murwatiya (Rajasthan High Court, Jodhpur) 39 TW 214 whether department has to bring on record sufficient evidence before making an addition u/s 69 of the Act? - Held yes. Whether a retracted statement can be made the sole basis for addition? - Held no, since it cannot be said to be conclusive. f) The Jodhpur ITAT Bench in Maheshwari Industries v. Asstt. CIT [2005] 148 Taxman 74 (Jodh) (Mag.) has held that additions should be considered on merits rather than on the basis of the fact that the amount was surrendered by the assessee. It is settled legal position that unless the provision of statute warrant or there ....
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....th law for the block assessment as noted above. i) In the case of Jyotichand Bhaichand Saraf & Sons (P) Ltd. Vs. Deputy Commissioner of Income-tax, Circle 11(1) in appeal No. 08(PN) of 2011 (Bock period 1996-97 to 2002-03) the I.T.A.T. Pune Bench 'A' vide order dated 27-07-2012 has held that the statement recorded under section 132(4) of the Income-tax Act, 1961 can be retracted. j) In the case of ACIT Vs Ravi Agricultural Industries the I.T.A.T., Agra Bench, Agra (3rd Member) in appeal Not. ITA No. 145/AGR/2006 judgment dated 26-12-2008 has held that when the assessee has retracted statement an addition should be supported by enough material in possession of the department. k) The Mumbai Tribunal in an unreported judgment (Shri Suresh Chandra Agarwal, ITA No. 7900/Bom./92, order dated 12-8- 1996), held that the statement recorded during the search by exercising powers rested with the authorised officer u/s.132(4) could not be said to be a voluntary statement, rather a statement as a result of assessee's examination on oath. l) The law relating to retraction is well-settled by Supreme Court in Sri Krihna V. Kurukshetra University, AIR 1976 SC 376....
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....f the Rajasthan Land Revenue Act and JDA Act is completed for conversion of land from agricultural to non agricultural use and further colony is planned and map is got approved from JDA. Subsequently, the plots of different size are sold to the customers and development work like construction of road, providing electric line water supply etc are done by the assessee as per the norms of JDA. The assessee filed regular return u/s 139(1) of Income Tax Act on 29-09-2009 in Circle-6, Jaipur declaring total income of Rs. 2,86,24,330/- (Copy at PB Page 1-3). The department carried out search & seizure operations on 22-09-2010 (Copy of Panchnama at PB Page 25-27). The case of assessee was centralized at Central Circle-3, Jaipur. In pursuance to notice issued u/s 153A of Income Tax Act, 1961 the assessee filed her return on 06-12-2011 (Copy ay PB Page 70-74) declaring the same income which she declared in original return. The assessment was completed by AO vide his order dated 31.03.2013 assessing the total income at Rs. 3,62,24,330/- as against returned income Rs. 2,86,24,330/- by making following addition in total income: - S.No Particulars Amount (Rs.) 1. Unexplained inves....
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....of Q. No. 24 of the statement he surrendered the amount of Rs. 76,00,000/- as income. It is also noted that the copy of statements was provided by the AO on 10-03- 2011. Shri Ashok Agarwal retracted from search statement in respect to surrender of Rs. 76,00,000/- by filing sworn affidavit dated 10.03.2011 before the AO on 11.03.2011 immediately after the receipt of copy of statement on 10-03-2011. (copy at PB page 65-69).During the course of assessment proceedings, the AO made inquiries from the seller of the plot shri Subhash Chand Bansal and recorded his statements on 07-02- 2013 (copy at PB page 113-117), wherein he stated on oath that he has received only Rs. 65.00 lacs against the sale of the plot. The inspection report issued by the Sub-Registrar-I, Sanganer, Jaipur wherein it has been reported that the construction measuring 3700 sq. ft. was found on the said plot and the same was valued at Rs. 14,80,000/- by registrar authorities. (Copy at PB Page 101-102). The assessee also filed evidence like Google map and photographs in support of his contention that the land was vacant land at the time of purchase. (copy at PB page 105 to 110. From the photographs it is observed that t....
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....की à¤à¥‚मि समà¥à¤ªà¥‚रà¥à¤£ सà¥à¤µà¤¤à¥à¤µà¥‹à¤‚ बाहरी à¤à¥€à¤¤à¤°à¥€ नीचे, ऊपर मय निरà¥à¤®à¤¾à¤£ सहित बिना रखे किसी अंश व à¤à¤¾à¤— के शà¥à¤°à¥€à¤®à¤¤à¥€ रेणॠअगà¥à¤°à¤µà¤¾à¤² पतà¥à¤¨à¤¿ शà¥à¤°à¥€ अशोक अगà¥à¤°à¤µà¤¾à¤² निवासी नारायण निवास, गोपालपà¥à¤°à¤¾ बाईपास, जयपà¥à¤° को रूपये 1,41,00,000/- अकà¥à¤·à¤°à¥‡ à¤à¤• करोड़ इकà¥à¤¤à¤¾à¤²à¥€à¤¸ लाख रूप....
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....¤¹ में विकà¥à¤°à¤¯ पतà¥à¤° कराते वकà¥à¤¤ अदा कर दी जायेगी। उकà¥à¤¤ पà¥à¤²à¥‰à¤Ÿ की à¤à¥‚मि का कबà¥à¤œà¤¾ मौके पर कà¥à¤°à¥‡à¤¤à¥€ को समà¥à¤à¤²à¤µà¤¾ दिया है। इस समà¥à¤ªà¤¤à¤¿ से संबंधित समसà¥à¤¤ मूल कागजात कà¥à¤°à¥‡à¤¤à¥€ को दे दिये है।" Document 3 पà¥à¤°à¤¶à¥à¤¨ 24. Exbit-7 दिखा रहा हूठजिसके बारे में आपका कà¥à¤¯à¤¾ कहना है ? ....
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....à¥à¤° का पà¥à¤²à¥‰à¤Ÿ रूपये 1,41,00,000/- में खरीदा गया था । तथा इस पà¥à¤²à¥‰à¤Ÿ की रजिसà¥à¤Ÿà¤°à¥€ रूपये 65,00,000/- में हà¥à¤ˆ है। जिसके बारे में पेज 10 से 19 है। इस पà¥à¤°à¤•à¤¾à¤° मैनें पà¥à¤²à¥‰à¤Ÿ सं.बी - 281, 10बी सà¥à¤•à¥€à¤®, गोपालपà¥à¤°à¤¾ बाईपास, जयपà¥à¤° की खरीद में रूपये 76,00,000 / 7 अकà¥à¤·à¤°à¥‡ छियनà¥à¤¤à¤° लाख रूपये Document 4 रजिसà¥....
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....¤¾à¤ˆ मीणा, दà¥à¤µà¤¾à¤°à¤¾ मà¥à¤–à¥à¤¤à¤¾à¤°à¤¨à¤¾à¤®à¤¾ आम जिसमें मà¥à¤à¥‡ अधिकृत किया गया है। पृशà¥à¤ 4,5,6 सà¥à¤à¤¾à¤· बनà¥à¤¸à¤² को दिठगठचैकों की फोटो पà¥à¤°à¤¤à¤¿ है। जो कि 281 282 के कà¥à¤°à¤¯ पेटे à¤à¤µà¤‚ निरà¥à¤®à¤¾à¤£ पेटे दिठगठचैकों की पà¥à¤°à¤¤à¤¿ है जो कि मेरी बही खातों में दरà¥à¤œ है। पृशà¥à¤ संखà¥à¤¯à¤¾ 7 से 19 सà....
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....¤²à¥€ à¤à¥‚खणà¥à¤¡ बेचान का अनà¥à¤¬à¤¨à¥à¤§ निषà¥à¤ªà¤¾à¤¦à¤¿à¤¤ किया गया था। ततà¥à¤ªà¤¶à¥à¤šà¤¾à¤¤à¥ दिनांक 25.06.2008 को निरà¥à¤®à¤¾à¤£ सहित à¤à¤• अनà¥à¤¬à¤¨à¥à¤§ और निषà¥à¤ªà¤¾à¤¦à¤¿à¤¤ किया गया था। इस दिनांक 25.06.2008 के अनà¥à¤¬à¤¨à¥à¤§ के तहत जो निरà¥à¤®à¤¾à¤£ कारà¥à¤¯ हमारे दà¥à¤µà¤¾à¤°à¤¾ करवाया जाना था, उसके गà¥à¤£à¤µà¤¤à¤¾ ( की माà¤à¤— को देखà¤....