The DCIT, Circle-9, Surat V. M/s. Mahan Corporation, Surat

ITA 2157/AHD/2010

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9631 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 24-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Business income; Document seized; Fair market value; Retraction; Documents seized; Reassessment proceedings
• Section: 143(3); 50C; 32; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENC H, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL CH ATURVEDI, A.M.) I.T. A. NO. 2157/AHD/2010 (ASSESSME NT YEAR: 2007-08) THE DEPUTY COMMISSIONER OF INCOME-TAX, CRICLE-9, SURAT V/S M/S. MAHAN CORPORATION, B- 210-211, YASH PLAZA, OPP. DHANMAL MILL, VARACHHA ROAD, SURAT (APPELLANT) (RESPONDENT) PAN: AALFM4944Q APPELLANT BY : SHRI SUBHAS BAINS, CIT/D.R . RESPONDENT BY : SHRI MEHUL R. SHAH, A.R. ( )/ ORDER DATE OF HEARING : 18-03-2015 DATE OF PRONOUNCEMENT : 17 -04-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF LD CIT(A)-V, SURAT DATED 31.03.2010 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF DEVELOPING, BUILDING SERVICES MAINTENANCE AND HAVIN G RENTAL INCOME. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2007-0 8 ON 31.10.2007 DECLARING TOTAL LOSS OF RS. 11,65,600/-. THE CASE W AS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECT ION 143(3) VIDE ORDER ITA NO2157/A HD/2010 . A.Y. 2007-08 2 DATED 31.12.2009 AND THE TOTAL INCOME WAS DETERMINE D AT RS. 7,65,15,600/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 31.03.2010 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GR OUNDS;- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE A.O. OF RS. 7,40,00,000/-, BY RELYING ON THE DECISION OF THE HON'BLE TRIBUNAL IN THE ASSESSEE'S CASE WHICH IN TURN HAD ERRONEOUSLY RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE (1981) 131 ITR 597 (SC) WHICH IS INAPPLICABLE TO THE UNIQUE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO OF ON-MONEY RECEIPT OF RS.7.40 CRORES BY REJECTING THE VITAL EVIDENCE OF THE SEIZED DIARY AN D THE STATEMENTS RECORDED U/S 132(4) DURING THE COURSE OF SEARCH PROCEEDINGS CONFIRMING THE ENTRIES OF THE SAID DIARY ONLY BECAUSE THE SAME WAS RETRACTED DURING THEIR ASSESSM ENT AND CROSS EXAMINATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO AT RS.7.40 CRORES OF THE ON-MONEY ACCEPTED BY THE ASSESSEE BY REJECTING THE VITAL EVIDENCE OF THE SEIZED DIARY ONLY ON THE FACT THAT IT SHOWED ON-MONEY PAID AFTER THE SALE DATE WHICH WAS ERRONEOUSLY HELD BY HIM TO BE AGAINST THE NORMAL PRACTICE OF THE PAYMENT OF ON-MONEY BEFORE THE SALE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 7.40 CRORES OF THE ON-MONEY ACCEPTED BY THE ASSESSEE DESPITE THE FACT THAT THE DISTRICT VALUATION OFFICE HAS VALUED THE SAID PROPERTY AT THE PRICE SIMILAR TO THAT ALLEGED BY TH E A.O. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE A.O OF RS. 13, 50,000/- BY ACCEPTING THE ASSESSEES CLAIM OF THE INCOME BEING OUT OF SALE OF SCRAP DESPITE THE FACT THAT AS EVIDENT FROM THE SALE DEED, THE ASSESSEE HAD RECEIV ED OPEN PLOT OF LAND WITHOUT THE OLD STRUCTURE. GROUND NO. 1 TO 4 ARE INTERCONNECTED AND THEREFORE CONSIDERED TOGETHER. 4. A.O HAS NOTED THAT A SEARCH U/S. 132 OF THE ACT WAS CARRIED OUT ON THE AVICHAL GROUP ON 16.03.2007 AT AMRITSAR AND SURAT S IMULTANEOUSLY. DURING THE SEARCH, EVIDENCE OF PAYMENT OF ON-MONEY FOR PURCHASING THE SHOPPING MALL PROPERTY CALLED RICKON PLAZA FROM THE ASSESS EE WAS FOUND. A.O HAS ITA NO2157/A HD/2010 . A.Y. 2007-08 3 NOTED THAT THE PROPERTY AT RICKON PLAZA WAS SOLD BY ASSESSEE TO AVICHAL WEAVES PVT. LTD. FOR A TOTAL SALES CONSIDERATION OF RS. 5 CRORES. DURING THE SEARCH PROCEEDINGS, A DIARY WAS FOUND IN THE POSSES SION OF ARORA BROTHERS WHEREIN THE FIGURES FOR PURCHASE OF THE AFORESAID P ROPERTY WAS MENTIONED IN CODES AND ON ITS DECODING IT WAS NOTED THAT THE PRO PERTY WAS PURCHASED FOR TOTAL CONSIDERATION OF RS. 12.40 CRORES OF WHICH R S. 7.4 CRORES WAS PAID IN CASH OUTSIDE THE BOOKS OF ACCOUNTS BY BOTH THE DIRE CTORS, NAMELY SHRI RAMESH ARORA AND AXAY SHETH. SHRI RAMESH ARORA IN T HE STATEMENT THAT WAS RECORDED ON 16.03.2007 U/S. 132 OF THE ACT SUBMITTE D THAT THE PROPERTY WAS PURCHASED FROM THE ASSESSEE BY AVICHAL WEAVES PVT. LTD. THROUGH ITS DIRECTOR SHRI AJAY KUMAR AND SHRI AXAY SHETH AND SH ARE OF BOTH THE DIRECTORS WAS 50% IN THE PROPERTY. IT WAS FURTHER S UBMITTED THAT OF THE TOTAL COST OF RS. 12.4 CRORES RS. 5 CRORES WAS MET THROU GH BANK FINANCE AND THE REMAINING AMOUNT OF RS. 7.4 CRORES WAS PAID OUTSID E THE BOOKS OF ACCOUNTS AND THE SHARE OF THE RESPECTIVE DIRECTORS WAS RS. 3 .7 CRORES AS RECORDED IN THE DIARY AND OF WHICH HE ADMITTED TO HAVE PAID RS. 3.3 CRORES WHICH WAS RECORDED IN THE DIARY. A.O HAS NOTED THAT STATEMENT OF SHRI AJAY ARORA WAS ALSO RECORDED ON 22.03.2007 U/S. 132 (4) OF THE ACT WHEREIN HE ADMITTED AND CONFIRMED THE STATEMENT GIVEN BY SHRI RAMESH ARORA. SHRI AXAY SHETH THE DIRECTOR OF AVICHAL WEAVES PVT. LTD. WAS ALSO CONF RONTED ON 16.03.2007 REGARDING THE CONTENTS OF THE TRANSACTION FROM THE SEIZED DOCUMENT. A.O HAS NOTED THAT SHRI AXAY SHETH HAD DENIED MAKING OF ANY PAYMENT APART FROM THE ONE THAT WAS MENTIONED IN THE REGISTRATION DEED . A.O HAS NOTED THAT ASSESSMENT OF ARORA BROTHERS WERE COMPLETED BY MAKI NG ADDITION OF THE UNACCOUNTED INVESTMENTS MADE IN THE PROPERTY AND AD DITION WAS ALSO MADE IN THE CASE OF AXAY SHETH BY THE A.O AND THE ADDITI ON WAS CONFIRMED BY LD CIT(A). A.O HAS ALSO NOTED THAT ASSESSEE HAD REQUES TED OPPORTUNITY FOR ITA NO2157/A HD/2010 . A.Y. 2007-08 4 CROSS-EXAMINATION OF ALL THE 3 PURCHASERS WHICH WAS GRANTED TO THE ASSESSEE AND DURING THE CROSS-EXAMINATION SHRI AJAY KR. AROR A HAD RETRACTED FROM SEVERAL OF THE STATEMENTS MADE DURING SEARCH U/S. 1 32 OF THE ACT AND THE SAME WAS REJECTED BY A.O. SIMILARLY, RAMESH ARORA H AD ALSO RETRACTED SEVERAL OF THE STATEMENTS MADE DURING SEARCH U/S. 1 32(4) OF THE ACT. THE RETRACTION WAS REJECTED IN VIEW OF THE FACT THAT IN THE STATEMENT RECORDED AND ON THE BASIS OF SEIZED DIARY SHRI RAMESH ARORA HAD ADMITTED TO HAVE MADE PAYMENT ON MONEY AND IN THE CROSS-EXAMINATION HE DID NOT GIVE ALTERNATE EXPLANATION. IN THE CROSS-EXAMINATION A.O HAS NOTED THAT SHRI AXAY SHETH HAD DENIED THE ON MONEY TRANSACTION. A.O THEREAFT ER NOTED THAT SINCE THE PURCHASERS AND SELLERS WERE ARGUING WITH RESPECT TO THE QUANTUM PAID FOR THE PROPERTY, THE CASE WAS REFERRED TO VALUATION OFFICE R TO FIND THE REAL VALUE OF THE PROPERTY U/S. 142A OF THE ACT. THE DVO VIDE HIS REPORT DATED 24.12.2009 HAD VALUED THE BUILDING AT RS. 12,25,28, 786/-. THE A.O THEREFORE ON THE BASIS OF THE REPORT OF THE DVO AND THE STATE MENTS GIVEN BY THE PURCHASERS CONCLUDED THAT ASSESSEE HAD RECEIVED ON MONEY PAYMENT OF RS. 7.4 CRORE OVER AND ABOVE, THE PRICE REFLECTED I N ITS BOOKS AT RS. 5 CRORE. HE ACCORDINGLY MADE AN ADDITION OF THE DIFFERENTIA L AMOUNT OF RS. 7.4 CRORE (RS 12.40 CRORE LESS RS 5 CRORE). AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE, THE REASON ING OF THE AO FOR MAKING ADDITION AS ALSO THE SUBMISSIONS OF THE APPELLANT AND THE DECIS ION OF THE ITAT, AHMEDABAD IN THE CASE OF SHRI AXAY SETH, ONE OF THE DIRECTORS OF AVI CHAL WEAVES P. LTD. I.E. THE COMPANY WHICH HAS PURCHASED THE PROPERTY. THE APPELLANT HAS SOLD PROPERTY AT SURAT NAMED 'RICON PLAZA COMPLEX' TO M/S. AVICHAL WEAVES P. LTD . HAVING 2 DIRECTORS NAMELY SHRI AJAY ARORA (BASED IN AMRITSAR) AND SHRI AXAY SETH ( BASED IN SURAT). A SEARCH ACTION WAS CARRIED OUT UNDER SECTION 132 OF THE ACT ON THE AVI CHAL GROUP INCLUDING THE DIRECTORS OF THE COMPANY M/S. AVICHAL WEAVES P. LTD. IN THE COUR SE OF SEARCH ACTION AT AMRITSAR, A POCKET DIARY WAS FOUND FROM THE POSSESSION OF SHRI RAMESH ARORA, BROTHER OF SHRI AJAY ARORA. IN THE SAID DIARY, PAGE 10 CONTAINED SOME NO TING. THE STATEMENT OF BOTH THE ITA NO2157/A HD/2010 . A.Y. 2007-08 5 BROTHERS WAS RECORDED U/S. 132(4) ESPECIALLY IN RES PECT OF PAGE 10 OF THE DIARY. SHRI RAMESH ARORA EXPLAINED THE NOTING ON PAGE 10 SINCE THE SAME WAS IN HIS HANDWRITING AND HE STATED THAT THE NOTINGS ARE IN RESPECT OF TH E TRANSACTION OF THE PURCHASE OF PROPERTY AT SURAT AND THAT THE AGGREGATE PRICE OF THE PROPER TY WAS RS. 12.40 CR. -WHICH WAS PAID PARTLY IN CHEQUE OF RS.5 CR. & BALANCE RS.7.40 CR. IN CASH (DIVIDED EQUALLY AMONG THE 2 DIRECTORS OF AVICHAL WEAVES P. LTD., THEIR SHARE BE ING RS 3.70 CRORES WHICH WAS MENTIONED AS TO BE PAID AND ON RIGHT SIDE OF THE PA GE, SOME DATES HAVE BEEN MENTIONED WITH SOME PAYMENTS AND LAST DATE MENTIONED AS 10/3/ 07 AND TOTAL AMOUNT STATED AT RS 3.35 CRORES). SIMULTANEOUS SEARCH ACTION WAS ALSO C ARRIED OUT IN THE CASE OF SHRI AXAY SETH AT SURAT AND THE SEIZED PAGE 10 OF THE DIARY W AS FAXED AT SURAT TO BE SHOWN TO SHRI AXAY SETH AND HIS STATEMENT WAS ALSO RECORDED U/S. 132(4) OF THE ACT WHEREIN SHRI AXAY SETH CATEGORICALLY DENIED OF HAVING PAID ANY AMOUNT IN CASH IN RESPECT OF THE PURCHASE OF THE SAID PROPERTY AT SURAT AND THAT THE PURCHASE PR ICE WAS AS PER THE REGISTERED DEED FOUND IN THE COURSE OF SEARCH ACTION IN HIS PREMISE S, WHICH WAS RS.5 CR. THE STATEMENTS SO GIVEN BY THE ARORA BROTHERS WERE THEREAFTER RETR ACTED BY THEM IN THEIR ASSESSMENT PROCEEDINGS STATING THAT THE SIGNATURE ON THE STATE MENT WAS TAKEN FORCIBLY AND THAT THEY HAVE NOT PAID ANY ON MONEY FOR THE PURCHASE OF THE PROPERTY AND THAT THE PURCHASE PRICE OF THE PROPERTY WAS RS.5 CR. ONLY. HOWEVER, THE ARO RA BROTHERS HAD FILED RETURN DISCLOSING HUGE AMOUNT AGGREGATING TO ABOUT RS.4.25 CR. TOGETH ER I.E. RS.2.10 CR. N THE CASE OF SHRI RAMESH ARORA AND RS.2.15 CRORES IN THE HANDS OF SHR I AJAY ARORA AND THIS INCOME WAS OFFERED DUE TO OUT OF BOOKS UNACCOUNTED SALE TRANSA CTIONS FOUND IN THEIR INDEPENDENT CASES RELATING TO THEIR OTHER BUSINESS INCOME. THUS , THE AO IN THE ASSESSMENT ORDER OF ARORA BROTHERS HAS ASSESSED AT THE INCOME DISCLOSED BY THEM AND SINCE THE CASH PAYMENT FOR PURCHASE OF PROPERTY WAS APPLICATION OF INCOME, NO SEPARATE ADDITIONS WERE MADE IN THE HANDS OF ARORA BROTHERS AND HENCE, THERE WAS NO APPEAL FILED BY ARORA BROTHERS AS THEIR DISCLOSURE WAS ACCEPTED. IN THE CASE OF SHRI AXAY SETH., THE AO MADE ADDITION TOWARDS PAYMENT OF ON MONEY FOR THE PURCHASE OF THE PROPERTY AT RS.3.70 CRORES, WHICH WAS CHALLENGED BY HIM BEFORE THE CIT(A) WHEREIN THE ORDER OF THE AO WAS CONFIRMED AND AGAINST THE ORDER OF THE CIT(A) SHRI AXAY SETH FILE D APPEAL TO THE AHMEDABAD TRIBUNAL, WHICH HAS PASSED ORDER ITA NO 3178/AHD/2009 DATED 5 /2/2010 DELETING THE ADDITION MADE OF RS.3.70 CRORES ON THE GROUND THAT THERE WAS NO CONCRETE MATERIAL AVAILABLE WITH THE AO TO PROVE THAT SHRI AXAY SETH HAS MADE ANY SU CH PAYMENT IN CASH TO MAHAN CORPORATION FOR THE PURCHASE OF THE PROPERTY AT SUR AT. 5.1 ON PERUSING THE FACTUAL MATRIX IN DETAIL, THE POSIT ION AS OF DATE IS THAT THE PROPERTY IS PURCHASED BY AVICHAL WEAVES P. LTD. HAVING DIRECTOR S SHRI AJAY ARORA AND SHRI AXAY SETH. THE ADDITION IN THE HANDS OF AXAY SETH I S DELETED BY THE ITAT THEREBY CONCLUDING THAT NO ON MONEY WAS PAID BY HIM TO THE APPELLANT IN RESPECT OF THE PROPERTY PURCHASED. AS REGARDS THE CASE OF SHRI AJA Y ARORA IS CONCERNED, HE HAS RETRACTED THE STATEMENT GIVEN BY HIM AND HAS STATED THAT HE HAS NOT PAID ANY ON MONEY TO THE APPELLANT FOR THE PURCHASE OF THE PROP ERTY AND HAS ALSO CONFIRMED THE RETRACTION IN THE CROSS-EXAMINATION STATEMENT TAKEN BY THE APPELLANT. THUS, BOTH THE DIRECTORS HAVE DENIED OF MAKING ANY ON MONEY PAYMEN T TO THE APPELLANT FOR THE PURCHASE OF THE PROPERTY AT SURAT, WHICH THE APPELL ANT HAS ALSO BEEN DENYING FROM THE BEGINNING. DUE TO THE DENIAL OF PAYMENT OF ON M ONEY BY THE PURCHASERS AND TAKING INTO CONSIDERATION THE FACT THAT IN THE CASE OF SHRI AXAY SETH THE AHMEDABAD ITAT AFTER CONSIDERING THE ISSUE IN DETAIL HAS HELD THAT HE HAS NOT MADE ANY PAYMENT ITA NO2157/A HD/2010 . A.Y. 2007-08 6 OF ON MONEY TO THE APPELLANT, NO CASE REMAINS IN TH E HANDS OF THE APPELLANT. THIS IS PRECISELY THE REASON THAT THE AO HAS THEREAFTER TRI ED TO INDEPENDENTLY SUPPORT THE CASE BY REFERRING THE PROPERTY TO DVO U/S.!42A OF T HE ACT FOR VALUING THE SAME AS ON 1/2/2007, WHICH THE DVO HAS VALUED BY 2 DIFFERENT M ETHODS AND ARRIVED AT SOMEWHAT THE SAME FIGURE AS MENTIONED IN THE SEIZED DIARY I. E. AT ABOUT RS.12 CRORES AND HENCE, THE AO HAS CONCLUDED THAT THE PURCHASE PRICE OF THE PROPERTY IS RS. 12.40 CRORES THEREBY MAKING ADDITION OF ON MONEY IN THE HANDS OF THE APPELLANT AT RS.7.40 CRORES. HERE AGAIN THE AO IS NOT CORRECT IN RELYING UPON TH E REPORT OF THE DVO FOR THE REASON THAT THE AO HAD NO AUTHORITY TO CALL FOR SUC H REPORT IN THE CASE OF THE SELLER SINCE SECTION 142A OF THE ACT REFERS TO DETERMINE T HE INVESTMENT IN THE PROPERTY AND NOT FOR DETERMINING THE SELLING PRICE OF THE PROPER TY. EVEN OTHERWISE, THE APPELLANT HAS BROUGHT ON RECORD VARIOUS OBJECTIONS TO THE DVO REPORT WHICH ARE VALID OBJECTIONS AND THE AO HAS TRIED TO REBUT THE SAME H OWEVER THE BASIS OF THE DVO COULD NOT JUSTIFIED BY THE AO ON THE PLEA THAT THE ASSESSMENT IS GETTING TIME BARRED. IT IS ALSO PERTINENT TO NOTE THAT THE DVO WAS CALLED F OR VALUATION OF THE PROPERTY ONLY ON 18/12/09 AND THE ASSESSMENT WAS GETTING TIME BAR RED ON 31/12/2009 AND THE DVO HAS GIVEN HIS REPORT ON 24/12/2009 WITHOUT DOING AN Y INSPECTION OF THE PROPERTY AND WITHOUT SUPPORTING HIS VALUATION BY ANY CONCRETE EV IDENCE AS TO THE ACTUAL MARKET PRICE IN THE SAME VICINITY OR SURROUNDING LOCALITY. AS AGAINST THIS, THE APPELLANT HAS GIVEN DETAILED REPLY TO THE DVO REPORT AS ALSO THE PRICE AT WHICH PROPERTIES IN THE SURROUNDING LOCALITY WAS SOLD DURING THE SAME PERIO D AND IT IS FOUND THAT THE APPELLANT HAS SOLD THE PROPERTY AT THE HIGHEST PRIC E DURING THE SAID PERIOD AS COMPARED TO SALE PRICE OF OTHER PROPERTIES AND THAT THE RATE OF THE APPELLANT WAS EVEN HIGHER THAN THE JANTRI RATES I.E. THE STAMP DUTY RA TES TO WHICH PROVISION OF SECTION 50C APPLY (IN CASE OF TRANSFER OF CAPITAL ASSET). H OWEVER PROVISION OF SECTION 50C DOES NOT APPLY IN THE CASE OF THE APPELLANT BEING A BUILDER SINCE THE INCOME IS OFFERED AS BUSINESS INCOME, BUT EVEN THEN, A COMPARISON CAN BE MADE AS TO WHETHER THE APPELLANT HAS SOLD AT LOW PRICE SO AS TO MADE ADDIT ION FOR UNDER-CONSIDERATION OF SALE PRICE. I FIND THAT ON THIS ASPECT OF THE MATTE R, THE AO HAS NOT BROUGHT ANYTHING ON RECORD TO CONCLUSIVELY PROVE THAT THE RATE OF WH ICH THE APPELLANT HAS SOLD THE PROPERTY IS LOWER THAN ANY OTHER PROPERTY SOLD IN T HE SAME PERIOD IN THE SAME LOCALITY OR THAT THE PRICE IS LOWER THAN THE STAMP DUTY RATES. THE ONLY REFUTING COMMENTS GIVEN BY AO ON THIS ASPECT IS VERY GENERAL STATEMENT THAT ALL THE OTHER PROPERTIES MUST ALSO NOT BE SHOWING THE FULL SALE C ONSIDERATION SINCE IT IS A GENERAL TREND THAT ON MONEY IS INVOLVED IN THE TRANSACTIONS OF PURCHASE AND SALE OF CAPITAL ASSET - HOWEVER, I AM NOT AT ALL CONVINCED THAT SUC H GENERAL STATEMENT CAN LEAD TO ADDITION OF CRORES OF RUPEES MORE PARTICULARLY IN T HE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE 131 ITR 597 (SC). 5.2 6.2 EVEN IF THE GENERAL STATEMENT OF THE AO IS CONS IDERED AND GOING BY HIS OWN ASSUMPTIONS, IN THAT CASE IT IS WELL KNOWN FACT THA T IF ANY ON MONEY IS INVOLVED IN THE TRANSACTION OF PURCHASE AND SALE OF PROPERTY, THE O N MONEY COMPONENT IS REQUIRED TO BE PAID BEFORE THE REGISTRATION OF THE PROPERTY SIN CE NO SELLER WOULD AGREE TO REGISTER THE PROPERTY WITHOUT FIRST TAKING THE ON MONEY COMP ONENT, WHICH IS ALSO A GENERAL PRACTICE IN TRANSACTIONS INVOLVING ON MONEY. IF THI S IS VIEWED IN THE PRESENT CASE OF THE APPELLANT, IT IS REVEALED THAT EVEN THE PAGE 10 OF THE SEIZED POCKET DIARY FOUND FROM SHRI RAINESH ARORA AND ON WHICH HEAVY RELIANCE IS PLACED BY THE AO FOR ITA NO2157/A HD/2010 . A.Y. 2007-08 7 MAKING THE IMPUGNED ADDITION, IT IS MENTIONED ON TH E SAID PAGE THAT '3.70 TO BE PAID' MEANING THEREBY THAT IT IS NOT PAID AND EVEN IF THE RIGHT SIDE OF THE PAPER IS SEEN, THE LAST FIGURE REFLECTS THE DATE AS 10/3/2007 AND THE AGGREGATE AMOUNT SHOWN IS AT RS.3.35 CRORES WHEREAS THE REGISTRATION TOOK PLACE ON 1/2/2007 THEREBY SUPPORTING THE CASE OF THE APPELLANT THAT NO ON MONEY WAS INVO LVED IN THE TRANSACTION. IT IS ALSO PERTINENT TO NOTE THAT THE ARORA BROTHERS HAVE SAID THAT AS ON THE DATE OF SEARCH ACTION, OUTSTANDING BALANCE CASH PAYMENT OF RS.35 L ACS IS STILL PAYABLE, WHICH IS IN DIRECT CONTRAST TO THE GENERAL PRACTICE FOLLOWED TH AT THE ON MONEY IS PAID UP FRONT AND ATLEAST BEFORE THE REGISTRATION OF THE PROPERTY . GOING FURTHER, IT IS MENTIONED IN THE STATEMENT OF THE ARORA BROTHERS THAT THEY MET T HE APPELLANT FOR THE FIRST TIME ONLY ON THE DATE OF REGISTRATION OF THE PROPERTY AND NOT BEFORE THAT AND THAT THE ENTIRE DEAL WAS FINALIZED BY SHRI AXAY SETH. IF THAT BE THE CAS E, THEN IT IS SHRI AXAY SETH WHO IS THE RIGHT PERSON TO SAY THE ACTUAL PRICE AT WHICH T HE TRANSACTION WAS FINALIZED AND AS PER HIS STATEMENT, THE TRANSACTION WAS FINALIZED AT TOTAL PRICE OF RS.5 CRORES PLUS STAMP DUTY. THUS, IF THE ARORA BROTHERS HAVE NOT EV EN DEALT WITH THE APPELLANT AND NEITHER MET THEM BEFORE THE DATE OF REGISTRATION, I T IS CERTAIN THAT THEY HAVE NOT MADE ANY PAYMENT OF ON MONEY TO THE APPELLANT DIRECTLY A ND IN THAT CASE, IT CANNOT BE CONCLUSIVELY SAID THAT THE ARORA BROTHERS HAVE PAID ANY ON MONEY TO THE APPELLANT. IT IS ALSO PERTINENT TO NOTE THAT IF THEY HAVE NOT PAI D ANY SUCH CASH TO THE APPELLANT THEN PAGE 10 OF THE SEIZED PAPER HAS NO MEANING SINCE TH ERE IS ALSO NO REFERENCE OF THE APPELLANT ON THAT PAGE. SHRI AXAY SETH HAS CATEGORI CALLY DENIED OF HAVING RECEIVED ANY MONEY FROM ARORA BROTHERS TO BE PAID TO THE APP ELLANT AND THAT HE HAS CLEARLY STATED THAT HE HAS NOT PAID ANY AMOUNT TO THE APPEL LANT EITHER ON HIS OWN OR ON BEHALF OF THE ARORA BROTHERS. THUS, THE CONCLUSION THAT EMERGES IS THAT AS FAR AS THE APPELLANT IS CONCERNED, IT HAS NOT RECEIVED ANY AMO UNT IN CASH EITHER FROM ARORA BROTHERS OR FROM AXAY SETH. THIS FINDING GETS FURTH ER STRENGTHENED IN VIEW OF THE FACT THAT THE ARORA BROTHERS HAVE RETRACTED THEIR STATEM ENT IN THE COURSE OF THEIR ASSESSMENT PROCEEDINGS AND IN THE COURSE OF CROSS E XAMINATION, THEY HAVE CATEGORICALLY DENIED OF HAVING PAID ANY ON MONEY TO THE APPELLANT AND THAT THERE WAS NO CASH PAYMENT INVOLVED IN THE TRANSACTION OF PURC HASE OF PROPERTY. SINCE THE ENTIRE ADDITION IN THE HANDS OF THE APPELLANT IS ON THE BA SIS OF THE STATEMENTS OF THE ARORA BROTHERS WHO ARE THE WITNESS OF THE DEPARTMENT AND THEY HAVING RETRACTED EVEN AT THE TIME OF CROSS EXAMINATION AFTER WHICH THE AO HAS NO T MADE ANY FURTHER INVESTIGATION OR FURTHER EXAMINED THEM, THE ADDITION MADE IN THE HANDS OF THE APPELLANT COULD NOT BE JUSTIFIED. THUS, IN THE LIGHT OF THE ABOVE AND T AKING INTO CONSIDERATION THE DECISION OF THE ITAT, AHMEDABAD IN THE CASE OF SHRI AXAY SET H WHERE THE TRIBUNAL HAS DELETED THE ADDITION OF ON MONEY PAYMENT TO THE APPELLANT, THE FACTS CONCLUSIVELY PROVE THAT NO ON MONEY WAS RECEIVED BY THE APPELLANT FROM THE SALE OF PROPERTY AND HENCE, THE AO IS DIRECTED TO DELETE THE ADDITION MADE OF RS.7. 40 CRORES. THIS GROUND IS ALLOWED AND THE APPELLANT GETS RELIED OF RS.7.40 CRORES. 6. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. ITA NO2157/A HD/2010 . A.Y. 2007-08 8 7. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O AND FURTHER MADE THE WRITTEN SUBMISSIONS WHICH READS AS UNDER:- 2. IN THE INSTANT CASE, THE CIT(A) HAS DELETED THE ADDITION OF RS.7.4 CRORES MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ON-MONEY PAYMENTS R ECEIVED BY THE APPELLANT. SUCH PAYMENT WAS WELL EVIDENCED FROM THE SEIZED DOCUMENT S SO FOUND FROM THE PREMISES OF THE BUYER NAMELY SHRI RAMESH ARORA AND SHRI AKSHAY SHET H WHO ARE THE DIRECTORS OF THE BUYER COMPANY. SUCH ON-MONEY PAYMENTS WAS EVIDENCED ON PAGE NO. 10 OF ANNEXURE A-L DURING THE COURSE OF SUCH PROCEEDINGS THE STATEMEN T OF SHRI RAMESH WAS RECORDED ON 16.3.2007 U/S. 132(4) AND ALSO ON 22.3.2007 WHEREIN HE HAS CONFIRMED THE TRANSACTIONS IN THE SAID DIARY INCLUDING THE PAYMENT OF ON-MONEY TO THE SELLER I.E. MAHAN CORPORATION. THIS FACT HAS ALSO BEEN CONFIRMED BY THE CIT(A) VID E PARA 6 WHEREIN THE CIT(A) HAS OBSERVED THAT SUCH TRANSACTIONS ARE IN THE HANDWRIT ING OF SHRI RAMESH. SUBSEQUENTLY, THE OVERRIDING IMPORTANCE WAS GIVEN BY THE CIT(A) O N THE SUBMISSION OF SHRI RAMESH IN WHICH HE RETRACTED THE PAYMENT OF ON-MONEY TO THE A SSESSEE. AT THE VERY OUTSET, IT MAY BE SUBMITTED THAT THE STATEMENT IS A VALUABLE PIECE OF EVIDENCE RECORDED ON 2 OCCASIONS, RETRACTION OF STATEMENT MAY NOT BE CONSIDERED BY TH IS HON'BLE BENCH IN VIEW OF THE FOLLOWING DECISIONS: RELIANCE IS PLACED ON THE DECISION OT HON'BLE APEX COURT IN THE CASE OF SURJEET SINGH CHHABRA AIR 1197 SC 2560 (DOJ: 25.10.1996). AS HELD IN T S KUMARASMY VS ACIT, 65 ITD 188, BY TH E HON'BLE MADRAS ITAT, 'IT IS WELL KNOWN THAT THE INCOME-TAX OFFICERS ARE NOT POLICE O FFICERS AND THEY DO NOT USE OR RESORT TO UNFAIR MEANS OR THIRD DEGREE METHODS IN RECORDIN G OATH STATEMENTS AND THEREFORE WHATEVER IS CONFESSED AND ADMITTED BEFORE THEM DURI NG THE COURSE OF SEARCH OPERATIONS OR DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM THEN WE THINK SUCH STATEMENTS, ADMISSIONS AND CONFESSIONS ARE BINDING AND CANNOT B E RETRACTED, UNLESS AND UNTIL, WE REPEAT, UNLESS AND UNTIL IT IS PROVED BY LEGALLY AC CEPTABLE EVIDENCE THAT SUCH ADMISSION, CONFESSION OR OATH STATEMENT WAS INVOLUNTARY OR TENDERED UNDER COERCION OR DURESS. NO SUCH CIRCUMSTANCES EXISTED OR PROVED TO HAVE EXISTE D.' NO SUCH EVIDENCE OF STATEMENT HAVING BEEN RECORDED UNDER DURESS HAS BEEN BROUGHT ON RECORD. IN THE CASE OF MANHARLAL KASTURCHAND CHOKSI, 61 ITD 55 (ITAT AHD), IT HAS BEEN HELD THAT '6.... IT IS WELL-SETTLED LAW THAT AN ADMISSIO N BY A PARTY IS THE BEST EVIDENCE OF THE POINT IN ISSUE AND, THOUGH NOT CONCLUSIVE IS DECISI VE OF THE MATTER UNLESS SUCCESSFULLY WITHDRAWN OR PROVED ERRONEOUS.. ..FURTHER, THERE IS NOTHING ON RECORD THAT THE SAID DISCLOSURE WAS MADE BY THE ASSESSEE UNDER DURESS, P RESSURE ARID/OR COERCION. THE RETRACTION AFTER A LAPSE OF OVER TWO MONTHS FROM TH E DATE OF DISCLOSURE BY THE ASSESSEE WAS AN AFTERTHOUGHT AND THE AFFIDAVIT FILED BY THE ASSESSEE ON WHICH MUCH RELIANCE HAS BEEN PLACED BY THE ASSESSEE'S COUNSEL, WAS A SELF-S ERVMG STATEMENT. WE CAN, THEREFORE, SAY THAT THE ASSESSEE HAS FAILED TO PROVE AND ESTAB LISH THAT HE WAS TORTURED BY SEARCHING PARTY BUT NONETHELESS IT CANNOT BE IGNORED THAT THE ASSESSEE RETRACTED FROM THE EARLIER STATEMENT MADE ON SEARCH DATE AND UPON RETRACTION H E RENDERED HIMSELF UNTRUSTWORTHY AND UNRELIABLE IN THE EYES OF LAW AND ACCORDINGLY T HE ADDITION OF RS. 7 LACS TO THE INCOME DECLARED IS FULLY JUSTIFIED.' IR. THE CASE OF HIRALAL MAGANLAL & CO, 96 ITD 113 ( ITAT MUMBAI), IT HAS BEEN HELD THAT ASSESSEE, HAVING MADE A VOLUNTARY DECLARATION ON OA TH AND INDUCED DEPARTMENTAL AUTHORITIES TO ACT UPON SAME AT TIME OF SEARCH, CAN NOT BE PERMITTED TO TURN AROUND LATER ITA NO2157/A HD/2010 . A.Y. 2007-08 9 AND DENY TRUTH OF SAID DECLARATION OR REPRESENTATIO NS MADE THEREIN. THE CBDT'S CIRCULAR F.NO. 286 '2/2003-IT (INV.) DATED 10-3-2003, HAS AL SO BEEN CONSIDERED WHILE DELIVERING THIS JUDGMENT. IN THE CASE OF CIT VS HUKUM CHAND JAM, 337 ITR 238; 236 CTR 92 (DO): 10.08.2009), THE HONBLE CHATTISGARH HC HAS HELD AS FOLLOWS: '27'. FROM THE PRINCIPLES OF LAW LAID DOWN IN THE A FORESAID JUDGMENTS, IT MAY BE DEDUCTED THAT, ADMISSION IS ONE IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS REBUTTABLE. IT IS OPEN TO THE ASS ESSEE WHO MADE ADMISSION TO ESTABLISH THAT CONFESSION WAS INVOLUNTARY AND THE SAME WAS EX TRACTED UNDER DURESS AND COERCION. THE BURDEN OF PROVING THAT THE STATEMENT WAS OBTAIN ED BY COERCION OR INTIMIDATION LIES UPON THE ASSESSEE. WHERE THE CLAIMS THAT HE MADE TH E STATEMENT UNDER THE MISTAKEN BELIEF OF FACT OR LAW, BE SHOULD HAVE FOR RECTIFICATION TO THE AUTHORITY WHO PASSED THE ORDER BASED UPON HIS STATEMENT. THE RETRACTION SHOULD BE MADE AT THE EARLIEST OPPORTUNITY AND THE SAME SHOULD BE ESTABLISHED BY PRODUCING ANY CON TEMPORANEOUS RECORD OR EVIDENCE, ORAL OR DOCUMENTARY, TO SUBSTANTIATE THE ALLEGATION THAT HE WAS FORCED TO MAKE THE STATEMENT IN QUESTION INVOLUNTARILY. .. 29. FROM PERUSAL OF THE ORDER OF THE CIT(A) AS ALSO THE TRIBUNAL, WE FIND THAT NONE OF THE FORUMS HAVE RECORDED A FINDING THAT THE STATEMENT U NDER SECTION 132(4) WAS OBTAINED UNDER DURESS. THE ASSESSEE HAS TOTALLY FAILED TO DI SCHARGE THE BURDEN OF PROVING THAT THE STATEMENT WAS OBTAINED UNDER COERCION OR INTIMIDATI ON. HE DID NOT MAKE ANY COMPLAINT TO THE HIGHER AUTHORITIES ALLEGING INTIMIDATION OR COERCION (OR RETRACTING THE STATEMENT UNDER SECTION 132(4). THE TRIBUNAL HAS CONFIRMED TH E ORDER OF THE CIT(A) BY OBSERVING THAT SURRENDER WAS MADE UNDER BONA FIDE MISTAKE THO UGH IT WAS NEVER THE CASE OF THE ASSESSED BEFORE ANY OF (BE FORUMS THAT THE SURRENDE R WAS ON ACCOUNT OF BONA FIDE MISTAKE. THE APPELLATE FORUMS WHILE REVERSING THE O RDERS OF THE ASSESSING OFFICER ARE LEGALLY BOUND TO DWELL UPON SPECIFIC REASONS ASSIGN ED BY THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE. ' 3. ALONG WITH THE EVIDENCE IN THE FORM OF CONFIRMAT ORY STATEMENT, THE A.O. HAS ALSO REFERRED PROPERTY FOR THE VALUATION TO THE DVO, SUR AT WHO HAVE GIVEN HIS FINDINGS BASED ON THE FACTS WHICH HAS VALUED THE PROPERTY AT ABOU T RS.12.25 CRORES (REFER PAGE 24 OF AO'S ORDER). IT IS SEEN THAT THE LD. CIT(A) HAS NOT BEEN FAIR BY REVERTING THE REASONING ADOPTED BY THE A.O. IN REFERRING TO THE DVO S REPORT. 4. IT IS ALSO OBSERVED THAT THE CIT(A) HAS RELIED O VERWHELMING IN THE CASE OF K.P. VERGHESE 131 ITR 197 SC WHEREIN GIVING RELIEF TO TH E ASSESSEE. AT THE VERY OUTSET, AS IN THE GROUNDS OF APPEAL, IT IS SUBMITTED THAT THE RE LIANCE MADE BY THE CIT(A) ON THIS JUDGMENT IS MISPLACED AND THE FACTS OF THIS JUDGMEN T ARE REPRODUCED BELOW FOR READY REFERENCE : HEAD NOTES SECTION 52(2) OF THE INCOME-TAX A-D, 1961 CAPITAL GAINS TRANSFER IN CASE OF UNDERSTATEMENT WHETHER UNDERSTATEMENT OF CONSIDER ATION IN A TRANSFER OF PROPERTY IS A NECESSARY CONDITION FOR ATTRACTING APPLICABILITY OF SECTION 52(2) AND IT IS NOT ENOUGH FOR REVENUE TO SHOW THAT FAIR MARKET VALUE OF PROPERTY AS ON DATE OF TRANSFER EXCEEDS FULL VALUE OF CONSIDERATION DECLARED BY ASSESSEE IN RESP ECT OF TRANSFER BY AN AMOUNT OF NOT LESS THAN 15 PER CENT OJ VALUE SO DECLARED HELD, Y ES FACTS ITA NO2157/A HD/2010 . A.Y. 2007-08 10 ON 25-12-1965, THE ASSESSEE SOLD HIS HOUSE, WHICH W AS PURCHASED BY HIM IN 1958 FOR RS. 16,500, FOR THE SAME PRICE OF RS. 16,500 TO HIS DAU GHTER-IN-LAW AND HIS CHILDREN. FOR THE ASSESSMENT YEAR 1966-67, RELEVANT TO THE CALENDAR Y EAR 1965, THE ASSESSEE INCLUDED NO AMOUNT BY WAY OF CAPITAL GAINS IN RESPECT OF THE TR ANSFER OF THE SAID HOUSE. IN REASSESSMENT PROCEEDINGS, THE JTO FIXED THE FAIR MA RKET VALUE OF THE SAID HOUSE AT RS. 65.000 AND ASSESSED THE DIFFERENCE OF RS. 48,500 AS CAPITAL GAINS IN THE ASSES SEE'S HANDS. THOUGH THE SALE OF THE HOUSE BY THE ASSESSEE WAS IN FAVOUR OF HIS DAUGHTER-IN-LAW AND OF HIS CHILDREN, THE ITO COULD NOT INVOKE THE AID OF S ECTION 52(1) FOR BRINGING THE IMPUGNED SUM TO TAX, BECAUSE THERE WAS ADMITTEDLY NO UNDERST ATEMENT OF CONSIDERATION IN RESPECT OF THE TRANSFER OF THE HOUSE AND IT WAS NOT POSSIBL E TO SAY THAT THE TRANSFER WAS EFFECTED BY THE ASSESSEE WITH THE OBJECT OF AVOIDANCE OR REDUCT ION OF HIS LIABILITY UNDER SECTION 45. THE ITO, HOWEVER, RESTED HIS DECISION ON THE VIEW T HAT, SUB-SECTION (2) OF SECTION 52 DID NOT REQUIRE AS A CONDITION PRECEDENT THAT THERE SHO ULD BE UNDERSTATEMENT OF CONSIDERATION IN RESPECT OF THE TRANSFER AND IT WAS ENOUGH TO ATT RACT THE APPLICABILITY OF THE SUB-SECTION IF THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER EXCEEDED THE FULL VALUE OF THE CONSIDERATION DECLARED BY THE ASSESSEE BY AN AMOUNT OF NOT LESS THAN 15 PER CENT OF THE VALUE SO DECLARED. ON WRIT, THE LEARNED SINGLE JUDGE SET ASIDE THE ITO'S ORDER. HOWEVER, BY VIRTUE OF THE IF/ILL BENCH'S JUDGMENT, THE DECISION OF THE SINGLE JUDGE WAS SET ASIDE AND THAT OF THE ITO WAS HELD. IT IS AMPLY EVIDENCED THAT THIS JUDGMENT WAS GIVEN IN DIFFERENT CONTEXT WITH RESPECT TO COMPUTATION OF CAPITAL GAIN U/S. 52(2) OF IT ACT 19 61 WHEREIN THE A.O. HAD OBSERVED UNDERSTATEMENT OF CONSIDERATION IN RESPECT OF TRANS FER OF PROPERTY. NEEDLESS TO SAY THAT THERE IS NO SUCH ISSUE IN HAND FOR COMPUTATION OF C APITAL GAIN U/S.165. THE ISSUE IN HAND IS THE PAYMENT OF ON-MONEY FROM THE BUYER TO THE AS SESSEE WHICH IS WELL EVIDENCED FROM THE TRANSACTIONS RECORDED IN THE SEIZED DOCUMENTS I NCORPORATED IN THE STATEMENT BY THE BUYER ON 2 OCCASIONS ARE SUBSEQUENT CONFIRMATION OF THE TOTAL VALUE OF THE PROPERTY THROUGH THE ESTIMATION OF THE DVO ON THIS CASE. IT IS FURTHER EMPHASIZED THAT THE CIT(A) HAS NOT GIVEN ANY SPEAKING FINDING IN JUDGMENT TO I NVOKE OR APPLY THE CASE OF K P VERGHESE 131 ITR 197 SC IN THE INSTANT CASE. CONSIDERING ALL THE ABOVE, IT IS PRAYED THAT THE OR DER OF THE HON'BLE A.O. BE RESTORED AND THE LD.CIT(A) BE SET ASIDE. 8. LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIO NS MADE BEFORE A.O AND LD CIT(A) AND FURTHER SUBMITTED THAT THE ADDITION I N THE CASE OF AXAY SHETH WAS DELETED BY THE TRIBUNAL VIDE ORDER DATED 5 TH FEBRUARY 2010 IN ITA NO. 3178/AHD/2009. HE ALSO PLACED ON RECORD, THE COPY O F THE AFORESAID ORDER AT PAGE 76 TO 93 OF THE ORDER. HE FURTHER SUBMITTED THAT SHRI AJAY ARORA HAD RETRACTED THE STATEMENT GIVEN BY HIM AND HAD ALSO C ONFIRMED THE RETRACTION IN THE CROSS-EXAMINATION STATEMENT. THE LD. A.R. FURTH ER SUBMITTED THAT ASSESSEE BEING A SELLER, A.O HAD NO AUTHORITY TO CA LL FOR REPORT U/S. 142A OF ITA NO2157/A HD/2010 . A.Y. 2007-08 11 THE ACT BECAUSE THE ACT REFERS TO DETERMINING THE I NVESTMENT IN PROPERTY AND IS NOT MEANT FOR DETERMINING THE SELLING PRICE OF T HE PROPERTY AND FOR THIS PROPOSITION HE RELIED ON THE DECISION OF AHMEDABAD TRIBUNAL IN THE CASE OF ITO VS. CHANDRAKANT PATEL 131 ITD 180 (AHD). HE THU S SUPPORTED THE ORDER OF LD. CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ADDITION IN THE CASE OF THE ASSESSEE WAS MAINLY MADE ON THE BASIS OF THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH WHICH WERE CARRIED OUT AT THE PLACE OF DIRECTOR (SH RI AXAY SHETH AND AJAY ARORA), THE PURCHASERS OF THE PROPERTY. IT IS ALSO A FACT THAT SHRI AXAY SHETH HAD DENIED THE PAYMENT OF ON MONEY AND THOUGH AJA Y ARORA HAD ADMITTED TO THE PAYMENT OF ON MONEY BUT HAD LATER RETRACTED ABOUT THE PAYMENT OF ON MONEY TO THE ASSESSEE. IT IS ALSO A FACT THAT THE A DDITION ON ACCOUNT OF PAYMENT OF ON MONEY TO THE ASSESSEE, IN THE CASE OF AXAY SHETH (ONE OF THE DIRECTOR WHO HAD PURCHASED THE PROPERTY FROM AS SESSEE) WAS DELETED BY THE TRIBUNAL BY HOLDING THAT THERE WAS NO CONCRETE MATERIAL AVAILABLE WITH THE AO TO PROVE THAT SHRI AXAY SETH HAS MADE ANY ON MONEY PAYMENT IN CASH TO THE ASSESSEE FOR THE PURCHASE OF PROPERTY A T SURAT. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO DE MONSTRATE THAT THE DECISION OF THE COORDINATE BENCH OF DELETING THE AD DITION OF ON MONEY IN THE CASE OF AXAY SHETH HAS BEEN REVERSED BY THE HBLE H IGH COURT MEANING THEREBY THAT THE DECISION OF HBLE TRIBUNAL HAS ATT AINED FINALITY. WITH RESPECT TO THE A.O RELYING ON THE REPORT OF DVO U/S. 142A O F THE ACT FOR THE PURPOSE OF VALUATION, WE FIND THAT WHILE DELETING THE ADDIT ION, LD CIT(A) HAS GIVEN A FINDING THAT THE DVO WAS CALLED FOR VALUATION OF TH E PROPERTY ON 18.12.2009 AND HE HAS GIVEN THE REPORT ON 24.12.2009 WITHOUT D OING ANY INSPECTION OF ITA NO2157/A HD/2010 . A.Y. 2007-08 12 THE PROPERTY AND WITHOUT SUPPORTING HIS VALUATION B Y ANY CONCRETE EVIDENCE AS TO THE ACTUAL MARKET PRICE IN THE SAME VICINITY OR SURROUNDING LOCALITY. LD CIT(A) HAS ALSO GIVEN A FINDING THAT THE ASSESSEE H AS SOLD THE PROPERTY AT THE HIGHEST PRICE DURING THE SAID PERIOD AS COMPARED TO THE SALE PRICE OF OTHER PROPERTIES AND HIS RATES WERE HIGHER THAN THE JANTR I RATES. WE THUS FIND THAT LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND THE FA CTUAL ASPECT OF THE CASE AND BY DETAILED AND WELL REASONED ORDER HAS DELETED THE ADDITION. WE ALSO FIND THAT THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF ITO VS. CHANDRAKANT PATEL (SUPRA) HAS NOTED THAT THAT THE A REA OF OPERATION AND SCOPE OF SECTION 142A IS LIMITED IN ITS SPAN ONLY TO DETE RMINE THE VALUE OF INVESTMENT IN RESPECT OF CERTAIN ASSETS AND THERE I S NO POWER VESTED WITH THE A.O TO SEEK THE HELP OF VALUATION OFFICER IN RESPEC T OF DETERMINATION OF CAPITAL GAIN PRESCRIBED U/S 48 OF THE ACT. BEFORE U S, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS O F LD. CIT(A). IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED . GROUND NO. 5 IS WITH RESPECT TO DELETION OF ADDITIO N OF RS. 13,50,000/- 10. A.O NOTED THAT ASSESSEE HAD CLAIMED INCOME FROM DEM OLITION OF RS. 13,50,000/- WHICH WAS SET OFF AGAINST THE OVERHEAD EXPENSES OF RS. 15,79,462/- AND THE NET EXPENSES OF RS. 2,29,462/- WAS CONSIDERED AS COST OF PROJECT. A.O HAS NOTED THAT IN THE SALE DEED ENTERE D BY THE ASSESSEE, IT HAS BEEN STATED THAT THE BUILDING WAS ALREADY DEMOLISHE D BEFORE HANDING OVER THE PROPERTY FOR CONSTRUCTION AND ASSESSEE HAD RECE IVED PROPERTY AS FREE HOLD LAND ONLY. HE WAS THEREFORE OF THE VIEW THAT S INCE THERE WAS NO STRUCTURE STANDING, THERE WAS NO QUESTION OF GENERA TING INCOME OUT OF ITA NO2157/A HD/2010 . A.Y. 2007-08 13 DEMOLITION. HE ACCORDINGLY CONSIDERED THE INCOME OF RS. 13,50,000/- AS INCOME FROM OTHER SOURCES. AGGRIEVED BY THE ORDER O F A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DELETED TH E ADDITION BY HOLDING AS UNDER:- 8. I HAVE GONE THROUGH THE ORDER AND THE SUBMISSION OF THE APPELLANT. FROM THE LEDGER ACCOUNT PRODUCED AND THE ENTRIES IN THE BOOKS OF AC COUNT, IT APPEARS THAT THE DEMOLISHING OF THE OLD STRUCTURE WAS DONE BY THE APPELLANT AS A BUILDER. EVEN OTHERWISE, IF THE SOCIETY HAS DEMOLISHED THE STRUCTURE, IT IS NOT STATED IN T HE AGREEMENT THAT THE SCRAP AND WASTAGES WERE REMOVED AND THAT THE APPELLANT WAS GI VEN VACANT LAND BY REMOVING ALL THE DEBRIS UPON DEMOLISHING OF THE BUILDING. THE INCOME IS SHOWN BY THE APPELLANT FROM SALE OF SCRAP AND UNWANTED MATERIAL AND THIS IS RECEIVED BY CHEQUE AND NOT IN CASH AND THE SAME IS DULY REDUCED FROM THE PROJECT COST SINCE RE LATES TO THE PROJECT UNDERTAKEN BY THE APPELLANT. IN VIEW OF THE SAME, THE AO IS DIRECTED TO ASSESS THE SAME AS BUSINESS INCOME AND ALLOW THE SET OFF FROM THE PROJECT COST SINCE I N FINAL ANALYSIS, THERE IS NO LOSS TO THE REVENUE AS THE PROJECT COST IS REDUCED TO THAT EXTE NT. THIS GROUND OF APPEAL IS ALLOWED. 11. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NO W IN APPEAL BEFORE US. 12. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND THE SUPPORTED THE ORDER OF LD. CIT(A). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT WHILE DELETING THE ADDITION, LD. CIT(A) H AS GIVEN A FINDING THAT THE DEMOLITION OF OLD STRUCTURE WAS DONE BY THE ASSESSE E AS A BUILDER AND IN THE AGREEMENT IT WAS NOT STATED THAT THE ASSESSEE WAS G IVEN VACANT LAND BY REMOVING ALL THE DEBRIS UPON DEMOLITION OF THE BUIL DING. HE HAS ALSO NOTED THAT THE INCOME FROM SALE OF SCRAP HAS BEEN ACCEPTE D BY ASSESSEE IN CHEQUE AND HAS BEEN REDUCED FROM THE PROJECT COST AND THER EFORE THERE IS NO LOSS TO THE REVENUE AS THE PROJECT COST HAS BEEN REDUCED. B EFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT TH E FINDINGS OF LD CIT(A). ITA NO2157/A HD/2010 . A.Y. 2007-08 14 WE THEREFORE FIND NO REASON TO INTERFERE WITH THE O RDER OF LD CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 14. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 17 - 04 - 2015. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD