TaxTMI 
TaxTMI 
2011 (6) TMI 1039
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....n the diary A-12 were in the nature of on money receipts and payments which were not reflected in the regular books. As regards diary A-11, it was submitted that the transactions were fully recorded in the books. The receipts mentioned in the diary A-12 were declared as undisclosed income in the name of various concerns of "Earth Group". 3. During the assessment proceedings, the Assessing Officer noted that in seven cases the amount disclosed in the diary A-11 were more than the amount disclosed in the books of account. The difference was added by the Assessing Officer to the total income. Details regarding these seven transactions were as under :- S. No. Flat No. Sale value as per seized diary A-11 Sale value as per book of account Sale Value considered by Assessing Officer Addition 1. 1001 4000000 3475000 4000000 525000 2. 802 950000 - 950000 950000 3. 1203 4200000 3250000 4200000 950000 4. 1302 5451111 5411111 5451111 40000 5. 1401 4000000 3800000 4000000 200000 6. 1402 & 1403 8700000 8100000 8700000 600000 7. 1503 4788000 4011000 4788000 777000 Similarly the Assessing Officer also noted that there was discrepancy with resp....
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....t sales recorded in diary were Rs.21,15,100/- but in the regular books, the amount recorded was Rs.17,64,350/-. The assessee had also not objected to the addition made by the Assessing Officer as no appeal had been filed before the CIT(A). He therefore, rejected the explanation. In relation to flat 1501, the assessee submitted that the flat had been booked by the purchaser in June 2004 and he had paid a sum of Rs.54,50,000/- in cash up to February 2005 and Rs.1.00 lacs in cheque in January, 2005. Due to loss in business, he was unable to pay balance amount and cancelled the deal and the amounts were returned both in cash and in cheque and the flat was vacant till date. Similar explanation was given in relation to flat No.1801 and 1802 that the booking had been cancelled and the amounts had been cancelled and the amounts had been returned. It was also submitted that the assessee had offered income of Rs.1.00 lacs in the return of income to buy peace of mind. It was pointed out that flat No.1801 was still vacant and flat 1802 had been given to a re-habilitated tenant free of cost. In regard to shop No.19, it was submitted that the purchaser had requested the assessee for some interio....
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..... The ld. AR for the assessee further argued that the assessee has evidence to support the claim that the flat No.1501 and 1801 had been shown in the stock in the subsequent years and were sold later to other parties. It was requested that the additional evidence filed in the paper book-2 which contains the following documents should be admitted. i) Statement of flats held as on 31.3.2007 as given before Assessing Officer in Assessment Year 2007-08. ii) Copy of sale agreement dated 25.3.2009 regarding sale of flat No.1501 to Shri C. T. Bhansali and Smt. P.C. Bhansali for a consideration of Rs.1,08,00,000/- placed at page 12 to 14 of the paper book-2. iii) Copy of the agreement of sale dated 25.3.2009 in relation to flat No.1801 sold to Mrs. Savita Mahendra Jain and Shri Mahindra D. Jain for a consideration of Rs.1,34,40,000/- placed at pages 15 to 17 of the paper book-2. iv) Copy of assessment order dated 29.10.2010 for Assessment Year 2008-09. v) Details of plot sold submitted to Assessing Officer in Assessment Year 2008-09 placed at page 27 and 28 of the paper book. vi) Details of sundry debtors as on 31.3.2008 showing amount receivable in respect of flat Nos. 1501 an....
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....ch. During the search, a diary namely A-12 was seized which showed unaccounted cash transactions in relation to dealings in properties. The assessee at the time of search admitted that these cash transactions represented unaccounted income not disclosed in the books of account. Based on these transactions the undisclosed income had been declared in the name of different members of the group including the assessee. However, the Assessing Officer at the time of assessment found that income in respect of five properties as mentioned in the table in para-3 earlier, had not been fully disclosed. The assessee could not give any satisfactory explanation and Assessing Officer made an addition of Rs.2,00,92,546/- on this account and also initiated penalty proceedings and levied penalty for concealment of income under section 271(1)(c). 8.1. It has been argued on behalf of the assessee that a sum of Rs.3,50,750/- added by the Assessing Officer on account of flat -501 was the money refunded by the assessee as mentioned in the diary itself. Therefore, addition was not justified in relation to flat No.501. In relation to flats 1801/1802 it has been submitted that the bookings had been cancelle....
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....Arvind Goyal for booking of flat 1501 had been returned by cheque on 19.12.2005. This was filed at the time of penalty proceedings. Subsequently as mentioned earlier the assessee has also filed additional evidences before us to substantiate the claim that booking in respect of flat 1501 and 1801/1802 had been cancelled and flats remained with the assessee. We have now to evaluate the case of penalty considering the facts and circumstances of the case under the provisions of Explanation 271(1)(c) which provides that in relation to any addition in the assessment in case the assessee is not able to substantiate an explanation and is also not able to prove that the explanation is bonafide, it would amount to deemed concealment of income. 8.3. We now take up the individual items of additions. In relation to flat No.501, the explanation of the assessee is that a sum of Rs.3,50,060/- written on the left side of the diary was the amount which had been returned and therefore, it was wrongly added. We have perused the said page of the diary. We find that the total of the transactions worked out by the assessee is Rs.24,05,000/-. On the left side there is one noting of Rs.2,90,000/- against ....
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.... sale of flat No.1501 and 1801 has been shown in the list of sundry debtors as receivable on 31.3.2008 at pages 34- 35 of the paper book-II. In case, the flats were sold by agreement dated 25.3.2009, it is not clear as to how sale proceedings would appear in the balance sheet as on 31.3.2008. The assessee has also submitted copy of assessment orders for 2007-08 and 2008-09, but we find that there is no finding by the Assessing Officer regarding sale of these flats. Further even if it is accepted for the sake of argument that the flats remained with the assessee in subsequent years, such evidence can easily be created in collusion with the buyer because it suites both the parties as the assessee as well as buyer both are hit by the material found during the search. The assessee is liable for unaccounted income on account of cash received whereas the buyer has to explain the cash transactions. Therefore, both can easily collude and assessee can buy the flat subsequently from the same buyer at the same price and explain that the booking had been cancelled and the amount refunded and the flat remained with the assessee. Such evidences therefore do not disprove the fact that the flats h....