2000-VIL-294-ITAT-AHM
Equivalent Citation: TTJ 070, 131,
Income Tax Appellate Tribunal AHMEDABAD
Date: 30.08.2000
UNIQUE ORGANISERS & DEVELOPERS (P.) LTD.
Vs
DEPUTY COMMISSIONER OF INCOME-TAX.
BENCH
Member(s) : R. K. BALI., T. K. SHARMA.
JUDGMENT
R.K. BALI, A.M.:
This is an appeal by the assessee against the order dt. 26th Oct., 1998, passed by the Dy. CIT, Circle-1, Navsari, under s. 143(3) r/w s. 158BD of the IT Act. 1961.
2. Briefly the facts are that the assessee is a private limited company which was incorporated on 29th Sept., 1992, for carrying on the business as an organisers, developers and builders. It carried out the project of Sunbeam Apartment during the previous years relevant to asst. yrs. 1993-94 to 1996-97 incurring cost of Rs. 76,27,934.
3. There was a search and seizure operation at the residence of one Dr. Mukesh H. Parmar (Dr. Parmar) on 9th Aug., 1996, which was concluded on 23rd Aug., 1996, wherein certain incriminating documents were found and seized which included a loose paper marked Sr. No. B/26 of Annexure B-1 of the Panchnama. On the basis of that paper, the AO making block assessment 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 Dr. Parmar came to the conclusion that the purchase/sale price of ground floor premises of Sunbeam Apartment worked out to Rs. 850 per sq. ft. which include Rs. 400 booking price to be paid by cheque and Rs. 450 to be paid in cash (unaccounted). Likewise the price rate of first floor comes to Rs. 600 per sq. ft. which include Rs. 400 per sq. ft. booking price to be paid by cheque and Rs. 200 being unaccounted. On the above basis the AO worked out the "on money" which the assessee must have received in relation to the total area covered by the ground floor, first floor and second floor of Sunbeam Apartment at p. 5 of the assessment order as under:
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Description Total amount received in Total amount received
cheque (accounted cash (unaccounted
money) money)
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Total area covered 2,894 sq. ft. x 400 2,894 sq. ft. x 450
by shops/offices- sq. ft. Rs. 11,57,600 sq. ft. Rs. 12,88,800
Ground floor
Total area covered 3,064 sq. ft. x 400 3,064 sq. ft. x 200
by shops/flats sq. ft. Rs. 12,25,600 sq. ft. Rs. 6,12,800
Total area covered 15,600 sq, ft. x 300 15,600 sq. ft. x 300
flats-2nd floor sq. ft. Rs. 46,80,000 sq. ft. Rs. 46,80,000
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Total Rs. 70,63,200 Rs. 65,81,600
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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 is a dumb document without any narration and the AO has not brought on record any evidence to indicate the actual transaction; who were the parties to it, what was the date of transaction, what the figures on the paper actually indicate and how those figures were related to the assessee-company. Accordingly it was pleaded that unless there is a corroborative evidence to show that the jottings on the paper relate to the transaction between the assessee and Dr. Parmar, much less relating to "on money" in respect of premises allotted to him, no adverse inference could be drawn against the appellant-assessee. Reliance was placed on the decisions in the cases of S.K. Gupta vs. Dy. CIT (1999) 63 TTJ (Del) 532, Jaya S. Shetty vs. Asstt. CIT (1999) 64 TTJ (Mumbai) 551, : (1999) 69 ITD 336 (Mumbai) and Smt. Neena Syal vs. Asstt. CIT (2000) 69 TTJ (Chd) 516 : (1999) 70 ITD 62 (Chd).
5.1. It was submitted that the finding/contention of the AO that the loose paper B/26 of Annexure B-1 of the Panchnama in the case of Dr. Parmar shows the rate of purchase/sale price of ground floor of the premises of Sunbeam Apartment is not supported by any corroborative evidence and there is no material available on record to prove that the seized paper contains such thing as alleged by the AO.
5.2. It was submitted that the observation of the AO in the order under appeal itself indicates that initially Dr. Parmar had stated that the purchase price was 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 by him. However, as per the seized paper the AO came to the conclusion that the assessee had purchased the flat from the organiser of the project for Rs. 18.70 lacs (2,200 sq. ft. x 850). The AO has further observed in the reasons recorded for issuance of notice under s. 158BD that during the course of post-search proceedings Dr. Parwar had admitted that he had made unaccounted investment of Rs. 8,70,000 for acquisition of flat at Sunbeam Apartment which was paid out of his unaccounted receipts. It was submitted that no reliance can be placed on the statement of Dr. Parmar because he has contradicted himself from his preliminary statement and again giving a confirmation dt. 16th June, 1998, after the date of search wherein he has specifically stated that he has made the payment of Rs. 4,81,250 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 in the last four and five years and he has declared Nil income for asst. yrs. 1992-93 and 1993-94 in the return of undisclosed income filed by him. The undisclosed income computed in the order under s. 158BC passed by the AO for asst. yr. 1994-95 is only Rs. 2,66,552 and as such. Dr. Parmar could not have made the alleged "on money" payment of Rs. 8,78,000 to the assessee as Dr. Parmar was not having adequate funds at the relevant time. It was further submitted that Dr. Parmar has also purchased apartment in nearby complex know as Siddhi Apartment at a later date wherein he purchased the premises at the rate of Rs. 250 per sq. ft. and he has categorically stated that he has not paid any "on money" in respect of that premises. Then how the price of Rs. 400 per sq. ft. at which the assessee sold the premises to Dr. Parmar can be considered low as to infer the receipt of "on money" by the assessee from Dr. Parmar.
5.3. It was further submitted that the remaining addition on account of alleged receipt of "on money" in relation to the remaining area of Sunbeam Apartment which was sold by the assessee to different parties is not at all based on any evidence but only on presumptions and surmises which cannot be the basis for making any addition on account of undisclosed income under Chapter XIV-B unless there is evidence to support the addition collected as a result of search. It was submitted that the AO at p. 4 of the assessment order has observed that all date-wise payments entered into the books of account are received by cheques only from the respective shop/flat-holders and the confirmations of the shop/flat-owners have been filed on record after verification. The sources stand explained. Accordingly, it was submitted that when the investments made by the other shop/flat-holders are found as duly recorded in the books and it is not found that they have paid any "on money", how any addition can be made in respect of those parties. It was submitted that the purchasers also include Valsad Jilla Sahakari Bank Ltd which has also confirmed the payments made by them by cheques only and no such "on money" can be alleged in the deal. It was submitted that the seized paper did not relate to the price concerning other portion of Sunbeam Apartment but the AO by implication worked out the alleged "on money" in respect of entire project and has made a further addition 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 of "on money" in respect of booking of shops/flats and Dr. Parmar who is one of the purchasers of the ground floor at Sunbeam Apartment constructed by the assessee-company, has admitted having paid "on money" to the assessee and as such the AO was perfectly justified in making an equivalent amount of addition on account of non-disclosure of "on money" receipts by the assessee from Dr. Parmar. It was further submitted that since the payment of "on money" in respect of premises sold by the assessee-company to Dr. Parmer is proved by the seized paper from the residence of Dr. Parmar as well as the statement of Dr. Parmar, the AO was perfectly justified in assuming that similar "on money" was received by the assessee in relation to balance area of Sunbeam Apartment sold by the assessee-company. Accordingly, it was pleaded that the AO was perfectly justified in making the addition of Rs. 65,81,600. It was further submitted that the fact that the directors of the company have also made disclosure of Rs. 40 lacs also indirectly supports the action of the AO because the disclosure made by the directors was earned as unaccounted income out of construction activities.
7. In the rejoinder, the learned authorised representative of the assessee submitted that assuming though not conceding that there was some receipt of "on money" by the directors, the same has been offered by the directors in their individual hands and any further addition in the hands of the assessee-company is not justified. Alternatively, it was pleaded that the entire receipts of "on money" cannot be taxed as the income of the assessee-company but only the profit element embedded in the "on money" receipt can be taxed as undisclosed income. However, it was reiterated that the assessee-company has not received any "on money" in respect of its Sunbeam Apartment Project and the disclosure by the directors of the assessee-company may be on account of various other projects which were also under their control.
8. We have considered the rival submissions and have also gone through the order passed by the AO. The entire case of the Department in making the impugned addition is based upon the paper in the seized diary found from the residence of Dr. Parmar during the course of search on 9th Aug., 1996. The assessee has furnished a photocopy of the relevant page of the seized diary bearing No. B/26 at p. 62 of the paper book in which the following notations and figures are given:
Ground Floor:
2200
3-30
1870
II
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1st Floor 2800=00 2-14 Copy of seized diary
16,80 page No. B/26 of Ann. B-I
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White upto 500 2-21 Rs/Sq. ft. Sd/-
Asstt. CIT, Navsari
8.1. A perusal of the above page does not indicate any direct or indirect relation with the assessee-company because neither the name of the assessee-company nor any of the directors is written on the paper and it is not in the handwriting of any person connected with the assessee-company. There is no direct evidence in the notings on the paper to indicate as to how these are connected with the assessee-company and the only basis by which the Department has tried to connect this seized paper with the assessee is the statement of Dr. Parmar which was recorded by the authorised officer under s. 132(4) on the date of search and thereafter subsequently in the course of assessment proceedings of Dr. Parmar under s. 131 by the AO and his cross-examination by one of the directors of the assessee-company Shri Amit Shah. The relevant questions and their answers in the statement of Dr. Parmar recorded on 9th Aug., 1996, copy of which has been given to us at pp. 63 to 78 of the paper book are as under:
Q. 6.: Is the space occupied by the hospital belongs to you or has it been obtained on lease?
Ans: The space occupied by my hospital belongs to me. It is approx. 2200 sq. ft. which I purchased from Shri Tusharbhai Desai at Rs. 10,00,000 (Rupees ten lacs only) in token of the commercial bargain I was credited approx. two lacs The residual is still to be paid.
Q. 13: Who is the owner of the aforesaid Siddhi Complex wherein nine beds are accommodated.?
Ans: The space which is occupied in "Siddhi Complex" is about 1,800 sq. ft. and it belongs to me. It was purchased at a cost of Rupees (4,50,000) four and a half lacs from Shri Shantilal Sethia a year ago. I have already paid an amount of Rs. 1,50,000.
The relevant questions and their answers in the statement of Dr. Parmar recorded on 20th Aug., 1996, are as under:
Q. 4: Have you purchased the space on the ground floor for your hospital, "Sunbeam" from Unic Organiser? Please report what price had been settled for the purchase of the said property, moreover for what amount has it been purchased and for that what payment has been made.
Ans: I had purchased space measuring 2,400 sq. ft. on the ground floor of the Sunbeam Apartment from the Unic Organiser at Rs. 18,70,000 (Eighteen lacs, seventy thousand). Having decided to make payment through cheque, it was decided to pay an amount of 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
Sunbeam Society Rs. 8,98,000
2. Siddhi Apartment renovation charges Rs. 1,50,000
3. Investments in the names of family
members in Guj. Industrial Co-op. Bank Rs. 1,65,800
4. The unused amount out of the cash of
Rs. 19,000-4,000 Rs. 1,50,000
5. Paid to Shri Girishbhai for purchase
of instruments Rs. 25,000
6. Cash credited Rs. 4,30,000
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(Rupees Eighteen lacs only) Rs. 18,00,000
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The relevant questions and their answers during cross-examination of Dr. Parmar by Shri Amit Shah, director of the assessee-company are as under:
Q. 1: When did you take possession of ground floor at Sunbeam Apartment? Please specify the exact date.
Ans: I took possession of ground floor at Sunbeam Apartment approximately two months prior to 16th Jan., 1994, i.e., the date of inauguration function of my hospital.
Q. 3: Will you please narrate the location of Siddhi Apartment where your hospital is situated?
Ans: It is about 600 feet away from 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 Organisers & Developers (P) Ltd.
Ans: The on money was paid in cash to the Unique Organisers out of my income in instalments during the period of late 1993 to mid 1996. Exact dates and the amount of instalments transactions, I do not remember. The exact break up of amount-wise, date-wise and financial year-wise is not possible.
8.2. It is pertinent to note that initially the AO, Special Range-2, Surat having jurisdiction over the case of Dr. Parmar has recorded the following reasons on 20th Aug., 1997, before issuing notice under s. 158BD to the assessee-company:
"A search was carried out under s. 132 of the IT Act at the residential and business premises of Dr. Mukesh H. Parmar. During the course of search, it was found that Dr. Mukesh Parmar had made investment in the hospital building consisting of flat of Sunbeam Apartment, ground floor, Navsari and a flat for the use of hospital at Siddhi Flat, Navsari.
2. In his statement recorded during the course of search, it was stated by Shri Mukesh Parmar that the flat of Sunbeam Apartment was purchased from M/s Unique Organisers for Rs. 10 lacs for which a part payment was made and accounted for in the books of accounts and the possession of the flat had also been taken over, but the purchase deed had not been executed. On verification of the seized diary, Sr. No. B-26 to Annexure B-I of the Panchnama dt. 8th Aug., 1996, it was found that the assessee had purchased the flat from the organisers of the project for Rs. 18.70 lacs (2,200 sq. ft. x 850 per sq. ft.). During the course of post-search proceedings, it was admitted by Dr. Parmar that he had made unaccounted investment of Rs. 8.70 lacs for the acquisition of the flat at Sunbeam Apartment which was paid out of his unaccounted receipts. The assessee had also declared this amount as undisclosed in his return of income filed for the block period 1st April, 1986 to 23rd Aug., 1996.
3. As M/s Unique Organisers & Developers (P) Ltd. had received an amount of Rs. 8.70 lacs outside the books of account, which was admitted by Dr. Parmar in his statement as also from the part of the declaration of the undisclosed income, a notice under s. 158BD is required to be issued in the case of M/s Unique Organisers & Developers (P) Ltd.
4. Issue notice under s. 158BD of the Act."
These very reasons were again recorded by the AO who framed the assessment in the case 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 proceedings under s. 158BD against the assessee by the AO which is very much apparent from the reasons recorded by the AO which have been reproduced by us above. However, subsequently it was found as a fact that the assessee has acquired not 2,200 sq. ft. but in fact 2,480 sq. ft. in relation to the ground floor of Sunbeam Apartment and Dr. Parmar subsequently filed confirmation letter during the course of assessment proceedings of the assessee that he has paid only Rs. 4,81,250 by cheque in respect of the flat/office Nos. 1 to 7 of ground floor measuring 2,480 sq. ft. and the rate was agreed to be Rs. 400 per sq. ft. so as to make the price of the premises of Rs. 9,92,000 only, During the course of cross-examination of Dr. Parmar it transpired that he has also purchased 1,900 sq ft. area at 3rd floor in the Commercial Wing of Siddhi Apartment which is about 600 ft. away from Sunbeam Apartment. The area in Siddhi Apartment was purchased by Dr. Parmar in the months of April-May, 1995 at the rate of Rs. 250 per sq. ft. only. In the cross-examination Dr. Parmar had categorically stated that he has not paid any "on money" in relation to the purchase of hospital space in the Commercial Wing of Siddhi Apartment where lift facility is also provided. In this view of the matter it is difficult to believe the statement of Dr. Parmar that he has paid "on money" in respect of ground floor of Sunbeam Apartment from the assessee-company which was purchased in November, 1993 at the rate of Rs. 400 per sq. ft. because the time gap between the taking of possession of Siddhi Apartment as well as Sunbeam Apartment is one and a half year and the cost inflation index works upward and not downward. In this view of the matter in all probabilities the transaction indicated at p. B-26 could very well have related to the office space acquired by Dr. Parmar in Siddhi Apartment rather than ground floor purchased by Dr. Parmar from the assessee-company. In this connection it is very much relevant to note that Dr. Parmar in his statement on 20th Aug., 1996, in answer to question No. 4 reproduced above has stated that even though my cheque payment was remaining to be paid, I was handed over possession by the company keeping in view of my humanitarian medical profession services, two months prior to the date 16th Jan., 1994 (the date of inauguration). Thus, as per Dr. Parmar's statement "on 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 64,796
1993-94 75,827
1994-95 28,256
1995-96 1,41,871
1996-97 2,01,501
Asst. yr. Assessed/Returned Income
Rs.
1989-90 23,564
1990-91 30,683
1991-92 64,460
1992-93 NIL
1993-94 NIL
1994-95 (1,40,950 + 4,21,515) = 5,62,465
1995-96 9,85,518
1996-97 10,87,604
1997-98 1,96,031
8.4. From the assessment order as well as return of income of Dr. Parmar it is quite clear that he had no funds to pay "on money" prior to two months of dt. 16th Jan., 1994, when he took possession of ground floor of Sunbeam Apartment from the assessee-company. It is only on account of this contradiction in his statement that Dr. Parmar 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 Dr. Parmar in the transaction relating to the premises taken into possession by Dr. Parmar in the ground floor of Sunbeam Apartment. Thus, the entire addition of Rs. 57,03,600 is based on presumptions and assumptions which cannot be sustained at all. In this connection it will be relevant to note that at p. 4 of the assessment order the AO has observed as under:
"........The assessee has furnished details of names and addresses of the
office/flat-holders, area covered by each premises, floorwise booking rate per sq. ft. for office and flats, total documentary price and the datewise collection received from the office and flats-holders. It is stated that all the datewise payments are received by cheque only from the respective shop/flat-holders. Confirmations of the shops/flat-owners have been filed on records after verification. Sources stand explained."
And yet the AO has chosen to make the addition on account of alleged receipts of unaccounted money in respect of the entire building of Sunbeam Apartment as per the working given at p. 5 of the assessment order which we have extracted in para 4 above which is not at all justified.
8.6. Thus, it is abundantly clear that the mainstay of the Department's case for making the total addition of Rs. 65,81,600 is the document appearing at Sr. No. B/26 of Annexure B-l to the Panchnama, the contents of which we have extracted in para 8 above and which was found from the residence of Dr. Parmar. Now, if we consider the evidentiary value of this document in accordance with s. 34 of the Evidence Act, it is amply clear that the seized diary containing this paper cannot possibly be construed as books of account regularly kept in the course of his business/profession by Dr. Parmar and as such it would be outside the purview of s. 34 of the Evidence Act. The ratio of the decision of the Hon'ble Supreme Court in the case of CBI vs. V.C. Shukla & Co. (1998) 3 SCC 410 will be applicable to the facts of the case because the assessee-company has totally denied the receipt of any "on money" from Dr Parmar and no conclusion can be drawn against the assessee on the basis of the statement of Dr. Parmar which as we have noted in para 8.5 above, is full of contradiction and appears to be only a self-serving statement. There is no material brought on record to prove that the alleged loose paper relates only to the transaction of acquisition of premises by Dr. Parmar in Sunbeam Apartment and not to the premises in Siddhi Apartment. As noted earlier in para 8.3 above the premises purchased by Dr. Parmar in Siddhi Apartment at 3rd Floor in Commercial Wing having lift facility, in 1995 at the rate of Rs. 250 per sq. ft whereas the documented price accepted by the assessee in relation to the premises sold by the assessee to Dr. Parmar whose possession was given in November, 1993, was at the rate of Rs. 400 per sq. ft. Thus, if there was any "on money" actually paid by Dr. Parmar, it may possibly be in relation to the premises acquired by him in Siddhi Apartment although Dr. Parmar has denied having paid any "on money" in relation to the transaction for acquiring the premises in Siddhi Apartment. At this stage we may refer to the provisions of s. 132(4A). The presumptions under s. 132(4A) would in any case not be applicable to a third party from whose possession such paper/document have not been found by the Revenue. Therefore, taking into consideration the totality of the fact and circumstances of the case we are of the considered opinion that there was no justification for making the addition of Rs. 65,81,600 as undisclosed income of the assessee-company which is directed to be deleted.
9. In the result, the appeal filed by the assessee is allowed.
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