TaxTMI 
TaxTMI 
2000 (8) TMI 239
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....ssment of Dr. Parmar concluded that said Dr. Parmar had paid "on money" in relation to the office Nos. 1 to 7 at ground floor of Sunbeam Apartment over and above the payment made by Dr. Parmar by cheque. Accordingly, a notice under s. 158BC r/w s. 158BD was issued to the assessee-company on 21st Aug., 1997, by the Dy. CIT, Special Range-2, Surat, where Dr. Parmar was being assessed and the same was served on the assessee on 3rd Oct., 1997. Thereafter the proceedings were transferred to the Asstt. CIT, Circle-1, Navsari, on 18th March, 1998, who issued a letter dt. 19th March, 1998, to the assessee-company to file return of income for the block period of 1st April, 1986, to 23rd Aug., 1996. Ultimately the assessee-company filed the return of income on 9th June, 1998, declaring total undisclosed income at Rs. Nil. 4. During the course of assessment proceedings the AO required the assessee to explain the seized paper found from the residence of Dr. Parmar and the assessee furnished replies dt. 11th Sept., 1998, as well as 5th Oct., 1998, objecting to the proposed additions made by the AO relying on the seized paper. The AO on his analysis of the seized paper from the residence of D....
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.... Rs. 65,81,600 -------------------------------------------------------------------- The AO on the basis of the seized paper from the residence of Dr. Parmar came to the conclusion that the assessee-company had received an unaccounted income of Rs. 8,78,000 from Dr. Parmar which fact was admitted by Dr. Parmar at the time of recording his statement by the search party and applying the same ratio of unaccounted receipts vis-a-vis accounted receipts to the entire Sunbeam Project the AO concluded that the assessee must have received a sum of Rs. 65,81,600 as unaccounted money as against Rs. 70,63,200 accounted money shown by the assessee-company in its books of accounts. The AO accordingly assessed the total undisclosed income of the assessee-company for the block period at Rs. 65,81,600. 5. Aggrieved with the order of the AO the assessee has filed this appeal to the Tribunal. It was submitted by the learned authorised representative of the assessee that the entire addition on account of undisclosed income made by the AO is based on the seized paper found from the residence of Dr. Parmar. It was pleaded that the seized paper ....
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....50 prior to 23rd Aug., 1998, and Rs. 70,000 after the date of search, totalling Rs. 5,51,250 for the premises at ground floor of Sunbeam Apartment. In the said confirmation the area in sq. ft. acquired by Dr. Parmar from the assessee is mentioned at 2,480 and the rate per sq. ft. is indicated as Rs. 400 only. Accordingly, it was pleaded that Dr. Parmar has been changing his stand to suit his own purposes and no reliance could be placed on his statement. It was further submitted that the AO in the assessment order has held that the alleged "on money" was paid by Dr. Parmar to the assessee at the time of taking possession and the same has been taxed in the hands of the assessee as undisclosed income for asst. yr. 1994-95 included in the block period but the same is not possible because Dr. Parmar's father who used to manage the financial and taxation matters of Dr. Parmar had stated before the AO assessing Dr. Parmar that the suppression of receipts in the case of Dr. Parmar were made only when Dr. Parmar started his own professional practice w.e.f. 1st April, 1994. It was pleaded that even Dr. Parmar in his statement has stated that the so-called unaccounted income earned by him was....
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....of Rs. 57,03,600 over and above the sum of Rs. 8,78,000 in relation to the premises purchased by Dr. Parmar which addition is clearly beyond the powers of the AO under Chapter XIV-B. Reliance was placed on the decision of the Tribunal in the case of D.N. Kamani (HUF) vs. Dy. CIT (1999) 65 TTJ (Pat) (TM) 504 : (1999) 70 ITD 77 (Pat)(TM). It was accordingly pleaded that since the whole order is based upon a dumb document seized from the residence of Dr. Parmar who has contradicted himself time and again to suit his own purpose, no reliance should be placed on that statement and the entire addition made by the AO as undisclosed income of the assessee should be deleted particularly when no incriminating evidence in respect of Sunbeam Project was found even in searches carried out at the residence of the directors of the assessee-company although these directors viz. Shri A.J. Shah and Shri T.R. Shah have declared a sum of Rs. 16 lacs and Rs. 24 lacs respectively in their individual capacity on the basis of search under s. 132 on 23rd Nov., 1995. 6. The learned Departmental Representative strongly relied on the order of the AO and pleaded that there is a general practice of payment o....
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.... 62 of the paper book in which the following notations and figures are given: Ground Floor: 2200 3-30 1870 II --------------- 1st Floor 2800=00 2-14 Copy of seized diary 16,80 page No. B/26 of Ann. B-I ----------------- --------------- White upto 500 2-21 Rs/Sq. ft. Sd/- A....
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....Rs. 8,78,000 (Rupees eight lacs, seventy eight thousand only) in cash from the amount to be given by cheque. I have paid an amount of Rs. 4,81,000 from the amount of Rs. 9,92,000 has been paid by cheque which amount has been shown in my business book. Whereas the remaining amount of Rs. 5,11,000 (Rupees five lacs, eleven thousand only) still remains to be paid (9,92,000-4,81,000). The Unic Organisers, taking into account my practice in inception and the service to the mankind, have given charge of the above mentioned space, even though one payment was still to be paid. I present the certificate to that effect, before you. Out of the purchase value of Rs. 18,70,000 an amount of Rs. 9,92,000 was paid in cash taking into account the residual amount for payment, I have paid up all amount of Rs. 8,78,000. These I have acquired from my business income during the last four five years. I confess that this amount has not being noted. Q. 13: Please point out where the abovesaid unnoted income of Rs. 18,00,000 (eighteen lacs only) which you have confessed, have been invested. Ans: I have invested the unnoted income of Rs. 18,00,000 as under: 1. Unic Organisers for hospital building &n....
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....m Sunbeam Apartment crossing the two main roads at 3rd floor of Siddhi Apartment. It is about 1,900 sq. ft. in area. Q. 4: When did you take possession of premises at Siddhi Apartment? Ans: It was in the month of April/May, 1995. Q. 5: Do you confirm of the rate and amount paid to Siddhi Apartment as stated in your statement recorded during the search proceedings in your case? Ans: On the date of search on 9th Aug., 1996, I have given the statement to the best of my memory which was verified and confirmed later on 20th Aug., 1996, in my statement stating the facts. Q. 6: That means you confirm of not having paid any on money to Siddhi Apartment. Ans: I have stated the amount which I have paid to the owner of Siddhi Apartment. I have not paid any on-money for this. Q. 8: To which "Wing" your hospital premises at Siddhi Apartment belongs? Comment or Ans: It belongs to Commercial Wing at 3rd floor of Siddhi Apartment. Q. 9: Does the Siddhi Apartment have lift facility in the Commercial Wing? Ans: Lift facility is available at Commercial Wing. Q. 10: Will you please furnish the mode and date of alleged/impugned payments of on moneys to the Unique Organi....
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....ase of the assessee-company, viz, the Asstt. CIT, Circle 1, Navsari on 13th May, 1998, at the time of issuing second notice under s 158BD. 8.3. From the relevant portion of the statements of Dr. Parmar and the reasons recorded by the AO holding jurisdiction over the case of Dr. Parmar as well as the AO who finally completed the assessment in the case of the assessee-company, it s clear that initially Shri Mukesh H. Parmar stated before the search party that he has purchased the flats of Sunbeam Apartment from M/s Unique Organisers for Rs. 10 lacs for which a part-payment was made and accounted for in the books of account and the possession of the flat had also been taken over. However, on a reference to the seized diary and in particular p B-26 to Annexure B-1 of the Panchnama was shown to him and then Mr. Parmar changed his earlier statement and accepted that he has purchased the flat from the organisers of the project for Rs. 18.70 lacs (2,200 sq. ft. x 850 per sq. ft.) and during the course of post-search proceedings Dr. Parmar admitted to have made unaccounted investment of Rs. 8.70 lacs for the acquisition of the flat at Sunbeam Apartment which was the basis for initiating ....
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....n money" were paid to the assessee-company in full prior to 16th Jan., 1994. However, prior to this date Dr. Parmar had no funds to the extent of Rs. 8,70,000 to pay td anybody including the assessee which is quite apparent from the statement of Dr. Parmar's father who was also his accountant who has stated in the block assessment proceedings of Dr. Parmar that the suppression of receipts were made only when Dr. Parmar started his own profession w.e.f. 17th Jan., 1994, and there was no suppression of receipts for the period 23rd May, 1993 to 12th Jan., 1994, when Dr. Parmar was sharing his practice with Dr. Bhamqara. In this connection it will be useful to refer to the assessed and returned income of Dr. Parmar for the asst. yrs. 1992-93 to 1996-97 and also computation of undisclosed income by the AO for the block period: Asst. yr. Assessed/Returned income Rs. 1992-93 &nbs....
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....ar during the course of cross-examination in answer to question No. 10 for the first time since search stated that he had made payment of "on money" to the assessee-company during late 1993 to mid-1996 which is contrary to the statement of Dr. Parmar recorded by the AO under s. 131 on 20th Aug., 1996. Thus, it is clear that no reliance can be placed on the statement of Dr. Parmar which appears to be only a self-serving statement to save his own skin. 8.5. As regards the addition of Rs. 57,03,600 on account of alleged "on money" receipts in respect of remaining portion of Sunbeam Apartment which were allotted by the assessee-company to various other persons including Valsad Jilla Sahakari Bank Ltd., the entire addition is based on suspicion and surmises and there is no material whatsoever to support the conclusion of the AO that the assessee has in fact received any "on money" in respect of shops/flats allotted by it to various purchasers/members. In this connection it is pertinent to note that the reasons recorded by the AO for issuing notice under s. 158BD clearly indicate that the proceedings were initiated in relation to the alleged receipts of "on money" by the assessee from....