Sheth Akshay Pushpavadan, Surat V. The Dy.CIT., Circle-3, Surat

ITA 3178/AHD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9034 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-01-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 27-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV AGARWAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment; Search and seizure; Loose papers; Opportunity of cross examination; Block assessment; Set aside
• Section: 143(3); 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD A BENCH, BEFORE SHRI BHAVNESH SAINI, J.M. AND SHRI D.C.AGRAWAL A.M. ITA NO.3178 /AHD/2009 ASSESSMENT YEARS: 2007-2008 SHETH AKSHAY PUSHPAVADAN 24, TRINIDHI APARTMENT, GHOD DOD ROAD, SURAT. V/S DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, SURAT. PAN NO. AFSPS2980J (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI RASESH SHAH FOR DEPARTMENT: SHRI RAJEEV AGARWAL, SR.DR O R D E R PER SHRI BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LEARNED CIT(APPEALS)-II, AHMEDABAD DATED 16.10.2009 FOR AY 2007-2008 CHALLENGING THE CONFIRMATION OF ADDITION OF RS.3,70 ,00,000/- FOR ALLEGED UNEXPLAINED INVESTMENT IN PROPERTY. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSI DERED THE MATERIAL AVAILABLE ON RECORD. IT IS STAY GRANTED MATTER. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E COURSE OF SEARCH AND SEIZURE ACTION U/S.132 OF THE I.T.ACT.19 61 AT THE RESIDENCE OF THE DIRECTORS OF M/S,AVICHAL GROUP I.E SHRI RAME SH ARORA AND SHRI AJAY ARORA, AT 1A, GARDEN COLONY, AMRITSAR, A POCKE T DIARY MARKED AS 2 ANNEXURE A-1 WAS FOUND AND SEIZED. ON PAGE NO.10 OF THIS DIARY, CERTAIN FINANCIAL TRANSACTIONS WERE RECORDED UNDER THE HEAD HF A/C'. ON GOING THROUGH THE LEFT SIDE OF THE ABOVE PAGE, I T WAS NOTED THAT DETAILS LIKE TOTAL 12.40, BANK 5.0 0, 7,40 (I.E. DIFFERENCE OF 12.4 AND 5.00) DIVIDED BY 2 AND 3.70 TO BE PAID WERE RECORDE D. THE CONTENT OF THIS PAPER IS REPRODUCED AS UNDER: H.F. A/C. 12.4 TOTAL 65.00 28.12 5.00 BANK 80.00 3.01 7.4 + 2 80.00 25.01 60.00 31.01 3.70 TO BE PAID 2.85 TOTAL 15.00 35.00 10.03.01 3.35 TOTAL ON THE SAME DATE, PREMISES OF SHRI AXAY SHETH, DIRE CTOR OF M/S.AVICHAL WEAVES PVT. LTD AT SURAT, WAS ALSO COVE RED U/S.132 OF THE I.T.ACT.1961. AT THAT PREMISE, CERTAIN DOCUMENTS RE FLECTING PURCHASE OF COMMERCIAL SPACE BY M/S.AVICHAL WEAVES P. LTD. FROM M/S.MAHAN CORPORATION WERE FOUND. THOSE PAPERS REFLECTED THAT M/S.AVICHAL WEAVES PVT. LTD. HAS PURCHASED A COMMERCIAL TOWER K NOWN AS 'RICON PLAZA COMPLEX' AT SURAT. THIS TOWER IS ALSO KNOWN A S 'HOUSEFUL COMPLEX'. FURTHER, FROM THE REGISTRATION DEED WHICH WAS FOUND AT SURAT WITH SHRI AXAY SHETH, IT WAS FOUND THAT THIS COMMERCIAL SPACE AT RICON PLAZA WAS PURCHASED FOR RA.5 CRORES, VIDE SAL E DEED DATED 01/02/2007. ON THE DATE OF SEARCH ON 16/03/2007, TH E STATEMENT OF BOTH THE PERSONS SHRI RAMESH ARORA AND SHRI AJAY AR ORA WAS RECORDED. BOTH OF THEM HAVE CONFIRMED THEIR TOTAL I NVESTMENT IN ALLEGED PROPERTY AT RS.12.4 CRORES; OUT OF WHICH RS.5 CRORE S HAVE BEEN FINANCED BY WAY OF BANK LOAN. SHRI AJAY ARORA FURTH ER STATED THAT BALANCE PAYMENT OF RS.7.40 CRORES HAS BEEN MADE OUT OF BOOKS OF ACCOUNTS WHICH BELONGS TO BOTH OF THE DIRECTORS SHR I AJAY ARORA AND THE ASSESSEE IN EQUAL SHARES. FURTHER STATEMENT OF BOTH OF THE ARORA BROTHERS WAS RECORDED ON 22/03/2007 AND THEY HAVE P AID RS. 3.35 3 CRORES AS REFLECTED IN THE RIGHT HAND SIDE OF THE P APER. THEY STATED THAT THE SHARE OF THE ASSESSEE AT RS.3.7 CRORES WAS TO B E PAID BY SHRI AXAY SHETH. EVEN ON THE LEFT HAND SIDE OF THE ALLEGED PA PER, IT WAS NOTED THAT 3.7 TO BE PAID. THE ASSESSING OFFICER ASKED TH E ASSESSEE TO EXPLAIN WHY THE ASSESSEE'S SHARE OF 3.7 CRORES FOR ON MONEY PAYMENT BE NOT CONSIDERED AS PAYMENT OUT OF UNACCOUNTED INC OME. THE ASSESSEE EXPLAINED THAT NO PAPER WAS FOUND IN THE P REMISES OF THE ASSESSEE AND THE PAPERS FOUND IN THE SEARCH IN ANOT HER PARTY HAVE NO EVIDENTIARY VALUE FOR ASSESSEE'S CASE. THE LEGAL PR ESUMPTION U/S,132(4A) IS ONLY AGAINST THE PERSON IN WHOSE POS SESSION DOCUMENTS ARE FOUND. FURTHER, IN THE SEIZED PAPER, IT WRITTEN THAT 3.7 CRORES WAS TO BE PAID HENCE, IT WAS OUTSTANDING AND NEVER PAID. HENCE, THE ADDITION IS NOT TO BE MADE. 4. THE ASSESSING OFFICER HOWEVER, REJECTED THE EXPL ANATION OF THE ASSESSEE BY OBSERVING AS UNDER: I) THE UNEXPLAINED INVESTMENT IN THE PROPERTIES ( 50% OWNED BY SHRI RAMESH ARORA), WHICH ARE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF SHRI RAMESH ARORA, WAS ACCEPTED AND DIS CLOSED BY HIM IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH. REST OF 50% OF THE INVESTMENT OF THE PROPERTY PERTAINS TO THE ASSESSEE . HOWEVER, THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION IN RESPECT O F ON MONEY PAID BY HIM FOR PURCHASE OF THE SAID PROPERTY. MERELY SA YING THAT THE ON MONEY WAS NOT PAID BY HIM AND THE ON MONEY PAID BY SHRI RAMESH ARORA ONLY CANNOT BE BELIEVABLE AT THIS STAGE, AS I N THE CUSTOM OF SOCIETY ONCE THE PROPERTY IS REGISTERED THE ON MONE Y HAS TO BE PAID IN ADVANCE. HERE, THE ASSESSEE SAID THAT HE HAS NOT GI VEN THE ON MONEY AND THE REGISTER HAS BEEN EXECUTED WITHOUT MAKING T HE PAYMENT OF ON MONEY. THERE ARE AFTER THOUGHT OF THE ASSESSEE AND UNBELIEVABLE STORY PUT FORTH BY HIM FOR AVOIDING THE TAX LIABILITY, WH ICH ARE NOT ACCEPTABLE AND THE SUBMISSION MADE BY THE ASSESSEE IS HEREBY R EJECTED. 4 II) IN THE ABOVE REPLY, VIDE PARA NO.5, THE ASSESSE E HAS SUBMITTED THAT THE STATEMENT OF BOTH THE PERSONS I.E. SHRI RAMESH ARORA AND SHRI AJAY ARORA WAS RECORDED AND BOTH OF THEM CONFIRMED THAT THEIR TOTAL INVESTMENT IN ALLEGED PROPERTY IS RS.12.4 CRORES, OUT OF WHICH RS.5 CRORES HAVE BEEN FINANCED FROM THE BANK AND BALANCE AMOUNT OF RS.7.40 CRORES HAS BEEN MADE OUT OF BOOKS OF ACCOUN T OF SHRI AJAY ARORA AND SHRI AKSHAY SHETH, THE ASSESSEE IN EQUAL SHARES. IN THE SAID STATEMENT, SHRI AJAY ARORA HIMSELF HAS ACCEPTE D THE TOTAL CONSIDERATION OF RS.12.4 CRORES FOR PURCHASE OF THE SAID PROPERTY AND RS.7.40 CRORES HAS BEEN PAID FROM OUT OF BOOKS. THI S PROVES BEYOND DOUBT THAT BOTH THE PERSONS HAVE MADE THE PAYMENT O F ON MONEY FOR THE PURCHASE OF THE SAID PROPERTY. III) THE ASSESSEE FURTHER CLARIFIED THAT THE ALLEGE D DIARY WAS RECOVERED FROM THE POSSESSION OF ARORA BROTHERS AND THE SAME WAS NOT RECOVERED FROM ANY OF HIS PREMISES. IN THIS REGARD, IT IS CONFIRMED FACT THAT THE PROPERTY WAS PURCHASED JOINTLY BY SHRI AJA Y ARORA AND THE ASSESSEE. BOTH ARE ALSO DOING BUSINESS IN THE NAME OF M/S. AVICHAL WEAVES PVT. LTD. THEY HAVE ALSO BUSINESS RELATION W ITH EACH OTHER SINCE LONG. SHRI AJAY ARORA HAS MADE THE ON-MONEY O F RS,3.70 CRORES WHICH WAS ADMITTED BY HIM IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH. THE ASSESSEE OWNED 50% OF SHARES OF THE SAID PROPERTY AND BALANCE ON-MONEY PAYMENT OF RS.3.70 CR ORES HAS BEEN MADE BY THE ASSESSEE. THEREFORE, THE ARGUMENT MADE BY THE ASSESSEE HAS NO RELEVANCE AND CANNOT BE ACCEPTABLE. IV) WITH RESPECT TO THE LEGAL PRESUMPTION IS RAISED AGAINST THE PERSON FROM WHOM THE DOCUMENTS ARE RECOVERED THAT R ECOVERED DOCUMENTS BELONG TO THAT PERSON AND IT IS IN HIS HANDWRITING, IT IS ESTABLISHED THAT THE PROPERTY WAS PURCHASED JOINTLY BY SHRI AJAY ARORA AND THE ASSESSEE. BOTH ARE ALSO DIRECTORS OF M/S .AVICHAL WEAVES PVT. LTD. THEY HAVE ALSO BUSINESS RELATION WITH EAC H OTHER SINCE LONG. 5 IN VIEW OF THIS, THE ARGUMENT OF THE ASSESSEE IS NOT TENABLE AND HENCE NOT ACCEPTABLE. V) THE SAID PROPERTY WAS PURCHASED JOINTLY BY SHRI AJAY ARORA AND THE ASSESSEE, WHICH IS CONFIRMED FROM THE AGREEMENT TO SALE. BEING A LOCAL PERSON, OVER ALL DEALING IN RESPECT OF SAID P ROPERTY WAS HANDLED BY SHRI AKSHAY P. SHETH HIMSELF. IT IS VERY PERTINENT AND RELEVANT TO MENTION HERE THAT THE DOCUMENT WAS SIGNED BY SHRI A KSHAY P. SHETH. IN THE STATEMENT RECORDED, SHRI RAMESH ARORA AND SH RI AJAY ARORA HAVE CLEARLY STATED THAT THE DEAL WAS ARRANGED BY T HE ASSESSES, REGARDING RATE AND OTHER DETAILS. THEY HAVE ALSO AD MITTED THAT PAYMENT ON THEIR BEHALF HAVE BEEN MADE BY THE ASSESSEE TO T HE SELLER. IN VIEW OF THESE FACTS, THE ASSESSEE'S ARGUMENT THAT THE ON -MONEY WAS NOT PAID BY HIM IS NOT ACCEPTABLE AND THE EXPLANATION O F THE SAME IS HEREBY REJECTED. VI) THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE AND THE PAYMENT OF RS.5 CRORES HAS BEEN REFLECTED IN THE BOOKS OF M /S. AVICHAL WEAVES PVT. LTD. ON VERIFICATION OF THE DEED OF CONVEYANCE , IT IS NOTICED THAT THE VENDOR HAS SOLD AND CONVEYED THE SAID PROPERTY WITH LEASEHOLD RIGHT TO THE PURCHASER ON 01/01/2007 AND BY THIS CO NVEYANCE DEED, THE PURCHASER IS ENTITLED TO RECEIVE THE RENT FROM THE LESSEE OF THE SAID PROPERTY FROM 01/01/2007. THE SAID PROPERTY WAS REN TED TO RICON PLAZA COMPLEX (HOUSEFULL) AND THE RENTAL AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE AND ACCOUNTED IN M/S. AVICHAL WEAVE S PVT. LTD. IN THE SAID DEED OF CONVEYANCE, IT IS EVIDENT THAT THE ASS ESSEE HAD MADE THE ENTIRE AMOUNT ALONGWITH ON-MONEY TO THE SELLER BEFORE 31/03/2007. THEREFORE, THE ARGUMENT OF THE ASSESSEE 'THAT ON-MO NEY OF RS.3.70 TO BE PAID' IS TOTALLY VAGUE AND CANNOT BE ACCEPTABLE. VII) THE CASE LAW CITED BY THE ASSESSEE IN HIS SUBM ISSION IS NOT COMPARABLE WITH THE CASE OF THE ASSESSEE, AS THE FA CTS AND 6 CIRCUMSTANCES OF THE CASE LAW QUOTED BY HIM ARE DIF FERENT THAN THE INSTANT CASE. THEREFORE, THE SAME IS ALSO NOT ACCEP TABLE. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE DISCUSSED ABOVE, ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE THE ON-MONEY FOR PURCHASE OF THE SAID PROPERTY. THE ASSESSEE EITHER DURING THE SEARCH PROCEEDINGS OR DURING THE ASSESSMENT PROCEEDINGS HA S NOT AGREED FOR THE SAID ON-MONEY PAYMENT, BUT THE UNDERSIGNED HAS BROUGHT ON RECORD SOME MATERIAL EVIDENCE SUCH AS SALE AGREEMEN T, DETAILS OF RENT ACCEPTED BY THE ASSESSEE, BUSINESS RELATION WITH SH RI RAMESH ARORA AND SHRI AJAY ARORA, WHICH IS REVEALED AND BEYOND A NY DOUBT THAT HE HAS MADE THE ON-MONEY OF RS.3.70 CRORES. ACCORDINGL Y, THE ASSESSING OFFICER MADE THE ADDITION OF RS.3.70 CRORES ON ACCO UNT OF UNEXPLAINED INVESTMENT IN THE SAID PROPERLY U/S.69 OF THE I.T.A CT TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE ADDITION WAS CHALLENGED BEFORE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) AND THE SUBMISSIONS ARE SUMMAR IZED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AS UND ER:- A) BOTH ARORA BROTHERS NEVER ADMITTED THAT T HE ASSESSEE PAID ANY ON MONEY FOR THE INVESTMENT IN TH E ALLEGED PROPERTY. B) THE ALLEGED DIARY WAS RECOVERED FROM THE POSSESSION OF ARORA BROTHERS AND IT WAS NOT RECOVERED FROM ANY OF THE PREMISES OF THE ASSESSEE. NO SUCH DUPLICATE OR PARA LLEL NOTHING WAS FOUND IN THE COURSE OF SEARCH IN THE CA SE OF THE ASSESSEE OR ANY OF HIS FAMILY MEMBERS. C) AS PER SECTION 132(4A) OF THE I.T.ACT, THE LEGAL PRESUMPTION IS RAISED AGAINST THE PERSON, FROM WHOM THE DOCUMENTS ARE RECOVERED THAT RECOVERED DOCUMENTS BE LONG TO THAT PERSON AND IT IS IN HIS HANDWRITING. NO SUC H PRESUMPTION CAN BE RAISED AGAINST THE ASSESSEE AND SO THE ASSESSEE IS NOT REQUIRED TO EXPLAIN THE NATURE OF N OTING MADE IN THE DOCUMENT. D) THE HANDWRITING OF THE DIARY WAS NEITHER OF THE ASSESSEE NOR ANY OF HIS FAMILY MEMBERS. THE HANDWRI TING WAS OWNED UP BY SHRI RAMESH ARORA. E) WITHOUT PREJUDICE THE ASSESSEE GIVES EXPLANATIO N AS UNDER. IN THE SAID WRITING, IT WAS CLEARLY MENTIONE D THAT 3.7 TO BE PAID, WHICH SUGGESTS THAT NOTHING WAS PAID, TILL THE DATE OF 7 NOTING. DIARY DOESN'T BEAR ANY DATE AND THE LAST DA TE MENTIONED IN THE NOTING AGAINST THE AMOUNT IS 10/03 /2007. THE SEARCH WAS CONDUCTED ON 16/03/2007 AND SO NOTHI NG WAS PAID OUT OF THE AMOUNT OF RS,3.7 CRORES TILL TH E DATE OF SEARCH. THE AMOUNTS THAT WERE NOTED. IN THE RIGHT H AND SIDE OF THE PAPER BELONGS TO ARORA BROTHERS, WHICH HAVE BEEN DECLARED BY THEM AS THEIR INCOME FROM UNDISCLOSED S OURCES. F) THE PROPERTY WAS REGISTERED FOR RS.5 CRORES VIDE SALE DEED DATED 01/02/2007. IN THE CASE OF REAL ESTATE TRANSACTION; THE ON MONEY PAYMENTS ALWAYS PRECEDES THE DATE OF REGISTERED SALE DEED. IF ANY AMOUNT IS REQU IRED TO BE PAID AFTER THE DATE OF SALE DEED, IT DOESN'T HAVE A NY LEGAL FORCE IN ABSENCE OF ANY AGREEMENT IN WRITING. G) NO EVIDENCE WAS FOUND IN THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAS PAID ON MONEY BEFORE THE DATE OF SEARCH OR THE ASSESSEE IS REQUIRED TO PAID ANY ON M ONEY AFTER THE DATE OF SEARCH. H) THE NOTING DOES NOT REFLECT THAT RS.3.7 CR ORES WAS TO BE PAID BY THE ASSESSEE. THE PAGE WAS WRITTEN BY SH RI RAMESH ARORA AND THE SHARE OF THE TRANSACTED ON MON EY MIGHT BE DIVIDED BETWEEN TWO BROTHERS IN EQUAL SHAR ES. I) THE AGREEMENT TO SALE AND REGISTERED SAL E DEED ARE OF SAME AMOUNT OF RS.5 CRORES. ALTHOUGH THE AGREEME NT TO SALE IS SIGNED BY THE ASSESSEE ONLY, REGISTERED SAL E DEED IS SIGNED BY BOTH PARTNERS SHRI AJAY ARORA AND THE ASSESSEE, J) IN FACT, NO MONEY WAS REQUIRED TO BE PAI D BY THE ASSESSEE AS THE ASSESSEE INTRODUCED M/S.MAHAN CORPORATION TO ARORA BROTHERS AND IT WAS TACIT AGRE EMENT THAT WHATEVER IS REAL DEAL PRICE IS ULTIMATELY FINA LIZED, THE EXCESS OVER RS.5 CRORES WAS TO BE PAID BY ARORA BRO THERS. THE AMOUNT OF RS.5 CRORES WAS TO BE PAID BY M/S.AVI CHAL WEAVES P. LTD. AFTER OBTAINING THE 100% FINANCE. TH E AMOUNT OF INVESTMENT MIGHT HAVE BEEN INFLATED BY M/S.MAHAN CORPORATION AND FINALLY OFFERED TO HAVE B EEN SETTLED AT RS.8.7 CRORES. SO THE MONEY OF RS.3.7 CR ORES MIGHT HAVE BEEN PAID BY ARORA BROTHERS, BUT NO A SI NGLE PAISA OF ON MONEY HAS BEEN PAID BY THE ASSESSEE AS IT WAS AGREED WITH M/S.MAHAN CORPORATION THAT THE ASSESSEE WILL NOT PAY ANY ON MONEY. WHATEVER ON MONEY THAT WAS ULTIMATELY DECIDED, WAS REQUIRED TO BE PAID BY ONLY ARORA BROTHERS. K) AS STATED ABOVE, NO ON MONEY WAS REQUIRED TO BE PAID BY THE ASSESSEE. EVEN IF IT IS ASSUMED THAT THE ASS ESSEE WAS REQUIRED TO PAY RS.3,7 CRORES AS ON MONEY, THE CONTENTS OF THE ALLEGED PAGE SHOULD BE CONSTRUED WHOLLY AND NOT IN PART. AND IT WAS CLEARLY MENTIONED IN THE ALLEGED P AGE THAT 3.7 TO BE PAID MEANING THEREBY THAT BALANCE AMOUNT OF RS.3.7 CRORES WAS NOT PAID BY ANYBODY INCLUDING ASS ESSEE. AFTER THE DATE OF SEARCH, NATURALLY THERE IS NO QUE STION OF PAYMENT OF ON MONEY AS EVEN THE SELLER OF THE PROPE RTY WOULD NOT ACCEPT THE ON MONEY AND EVEN THE ASSESSEE 8 WOULD NOT PAY ANY ON MONEY AS THE SALE DEED IS ALRE ADY REGISTERED AND SO SELLER COULD NOT LEGALLY ENFORCE THE BALANCE CONSIDERATION AND THERE WAS NO SEPARATE AGREEMENT T O SALE OR MOU BETWEEN M/S.MAHAN CORPORATION AND ANY OF THE DIRECTOR OF M/S. AVICHAL WEAVES PVT. LTD. I) SHRI JAYESHBHAI OF M/S.MAHAN CORPORATION WAS SUMMONED AFTER THE DATE OF SEARCH AND HE CATEGORICA LLY DENIED TO HAVE RECEIVED ANY ON MONEY PAYMENTS. M) IN THE COURSE OF SEARCH, THE ASSESSEE NEVER ADMITTED TO HAVE PAID ANY AMOUNT AS ON MONEY. THE DECLARATIO N MADE BY THE ASSESSEE DID NOT INCLUDE THE PAYMENT FO R ON MONEY. N) THERE IS NO EVIDENCE ON RECORD THAT THE AS SESSEE MADE UNACCOUNTED INVEST. AS A RESULT, DEEMING PROVI SION OF SECTION 69/69B OF THE ACT IN REGARD TO UNEXPLAINED INVESTMENT IS NOT APPLICABLE. IN SUPPORT, THE ASSES SEE RELIES ON THE DECISION OF GUJARAT HIGH COURT IN THE CASE O F USHAKANT N.PATEL VS. CIT (282 ITR 553) 6. THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) CONSIDERING SUBMISSIONS OF THE ASSESSEE AND MATERIA LS ON RECORD HAS DISMISSED THE APPEAL OF THE ASSESSEE. THE FINDINGS OF ARE REPRODUCED AS UNDER:- 5. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS, I DO NOT AGREE WITH THE APPELLANTS VIE W FOR THE FOLLOWING REASONS. A). THE SAID PROPERTY IS PURCHASED IN THE NAM E OF M/S.AVICHAL WEAVES P. LTD, JOINTLY BY SHRI RAMESH A RORA AND AJAY ARORA WITH HALF THE SHARE AND SHRI AKSHAY SHETH WITH HALF THE SHARE. B) THE STATEMENT OF BOTH THE PERSONS I.E. SHR I RAMESH ARORA AND SHRI AJAY ARORA WAS RECORDED ON 22/03/200 7 AND BOTH OF THEM CONFIRMED THAT THEIR TOTAL INVESTM ENT IN ALLEGED PROPERTY IS RS.12.4 CRORES, OUT OF WHICH RS .5 CRORES HAVE BEEN FINANCED FROM THE BANK AND BALANCE AMOUNT OF RS.7.40 CRORES HAS BEEN MADE OUT OF BOOKS OF ACCOUNT OF SHRI AJAY ARORA AND SHRI AKSHAY SHETH, THE ASSESSES IN EQUAL SHARES. IN THE SAID STATEMENT ON 22/03/2007, SHRI AJAY ARORA HIMSELF HAS ACCEPTED IN REPLY TO Q.NO.4 THAT THE TOTAL CONSIDERATION OF RS.12.4 C RORES FOR PURCHASE OF THE SAID PROPERTY AND RS.7.40 CRORES HA S BEEN PAID FROM OUT OF BOOKS. FURTHER. SHRI RAMESH A RORA, IN HIS STATEMENT ON 22/03/2007, HAS SAID IN REPLY T O Q.NOS,34 & 36 THAT THE TOTAL AMOUNT PAID FOR PURCHA SE OF THE PROPERTY IS RS.12.4 CRORES. THE SEIZED PAPER FO UND AT 9 THE RESIDENCE OF SHRI RAMESH ARORA AND AJAY ARORA A LSO SUPPORTS THE SAME FACT. HENCE, IT IS ESTABLISHED TH AT THE PROPERTY IS PURCHASED FOR RS.12.4 CRORES. 5 CRORES WAS PAID THROUGH BANK AND 7.4 CRORES WAS PAID AS ON MON EY IN CASH. HALF OF THIS WAS PAID BY SHRI RAMESH ARORA AND SHRI AJAY ARORA WHICH THEY HAVE ACCEPTED AND ALSO OFFERED AS THEIR INCOME. HENCE, THE OBVIOUS CONCLUS ION IS THAT HALF OF THE ON MONEY IS PAID BY THE APPELLANT SHRI AKSHAY SHETH. C) REGARDING THE APPELLANT'S SUBMISSION THAT TH E LEGAL PRESUMPTION IS RAISED ONLY AGAINST THE PERSON FROM WHOM THE DOCUMENTS ARE RECOVERED HENCE, SAME CANNOT BE EVIDENCE AGAINST THE APPELLANT, IS NOT ACCEPTABLE. THE APPELLANT IS HAVING HALF SHARE IN THE PROPERTY THRO UGH M/S.AVICHAL WEAVES PVT.LTD. AND HALF OF IT BELONGS TO SHRI RAMESH ARORA AND SHRI AJAY ARORA. HENCE, EVIDENCE FOUND IN SEARCH REGARDING THE COST OF PROPERTY IS A LSO APPLICABLE TO THE APPELLANT. D) THE SAID PROPERTY WAS PURCHASED BY THE ASS ESSEE AND THE PAYMENT OF RS.5 CRORES HAS BEEN REFLECTED I N THE BOOKS OF M/S.AVICHAL WEAVES PVT. LTD, ON VERIFICATI ON OF THE DEED OF CONVEYANCE, IT IS NOTICED THAT THE VEND OR HAS SOLD AND CONVEYED THE SAID PROPERTY WITH LEASEHOLD RIGHT TO THE PURCHASER ON 01/01/2007 AND BY THIS CONVEYAN CE DEED, THE PURCHASER IS ENTITLED TO RECEIVE THE RENT FROM THE LESSEE OF THE SAID PROPERTY FROM 01/01/2007. THE SA ID PROPERTY WAS RENTED TO RICON PLAZA COMPLEX(HOUSEFUL L) AND THE RENTAL AMOUNT HAS BEEN RECEIVED BY THE ASSE SSEE AND ACCOUNTED IN M/S AVICHAL WEAVES PVT. LTD. IN TH E SAID DEED OF CONVEYANCE, IT IS EVIDENT THAT THE ASSESSEE HAD MADE THE ENTIRE AMOUNT ALONGWITH ON-MONEY TO THE SE LLER BEFORE 31/03/2007. THEREFORE, THE ARGUMENT OF THE ASSESSES 'THAT EN-MONEY OF RS.3.70 TO BE PAID' IS T OTALLY VAGUE AND CANNOT BE ACCEPTABLE, E) THE CASE LAW CITED BY THE APPELLANT IN HIS SUBMISSION IS NOT COMPARABLE WITH THE CASE OF THE APPELLANT, AS THE FACTS AND CIRCUMSTANCES OF THE CA SE LAW QUOTED BY HIM ARE DIFFERENT THAN THE INSTANT CASE. THEREFORE, THE SAME IS ALSO NOT ACCEPTABLE. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER IS UPHELD AND THE APPELLANT'S GROUND IS REJECTED. 6. IN THE RESULT, THE APPEAL IS DISMISSED. 7. LEARNED COUNSEL FOR ASSESSEE, REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE HAS REFERRED THE SEIZED PAPER A1/10(PB.45) AND SUBMITTED THAT THERE IS NOTHING IN THIS SEIZED PAPER 10 TO INDICATE THAT ASSESSEE PAID ANY ON MONEY. HE HAS SUBMITTED THAT IF THESE DOCUMENTS ARE CONSIDERED AS A WHOLE, IT WOULD PROVE THE CASE OF ASSESSEE BECAUSE THE NARRATION IS 3.70 TO BE PAID . THIS NARRATION PROVED THAT NOTHING HAS BEEN PAID BY THE ASSESSEE. HE HAS REFERRED TO THE STATEMENT OF S/SHRI RAMESH ARORA AND AJAY ARORA NOTED IN THE ASSESSMENT ORDER AND SUBMITTED THAT THEIR STATEMENT S WERE RECORDED FROM THE DATE OF THE SEARCH ON 16.03.2007 TO 22.03. 2007 IN WHICH THEY HAVE EXPLAINED THE SEIZED PAPER RECOVERED FROM RAME SH ARORA. HE HAS REFERRED TO QUESTION NO.26 PUT TO SHRI AJAY ARO RA NOTED AT PAGE 9 OF THE ASSESSMENT ORDER IN WHICH SHRI AJAY ARORA SP ECIFICALLY ANSWERED ABOUT ON MONEY AND STATED THAT HE CANNOT SAY ANYTH ING ABOUT THE ASSESSEE WHETHER HE HAS PAID ANY ON MONEY OR NOT AN D THE SAME QUESTION COULD BE PUT TO THE ASSESSEE. LEARNED COU NSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFIC ER ADMITTED THAT THE SALE DEED DATED 01/02/2007(COPY FILED) WAS EXECUTED ONLY FOR RS.5 CRORES AND THAT THE WHOLE MONEY WAS FINANCED BY THE BANK. HE HAS SUBMITTED THAT ASSESSEE HAS DENIED ALLEGATION OF B OTH THE ARORAS AND NO MATERIAL IS BROUGHT ON RECORD TO PROVE THAT ANY ON MONEY WAS PAID BY THE ASSESSEE. HE HAS RELIED UPON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF USHAKHANT N. PATEL VS. CIT 282 ITR 553 IN WHICH IT WAS HELD, THAT THE AUTHORITIES AND THE TRIBUNAL COULD HAVE RAISED A PRESUMPTION THAT THE BOOKS HAD BEEN RECOVERED FROM THE POSSESSION OF THE ASSESSEE (THOUGH DISPUTED BY THE ASSESSEE), AND BELONGED TO THE ASSESSEE AND THE CONTENTS THEREOF WERE TRUE; BU T FROM THAT, IT DID NOT NECESSARILY FOLLOWED THAT A PRESUMPTION WOULD A RISE AS TO THE BOOKS OR THE DOCUMENTS BEING IN THE HANDWRITING OF THE ASSESSEE. THE TRIBUNAL HAD NOT RECORDED ANY FINDINGS. EVEN IF THE PRESUMPTION AVAILABLE UNDER SECTION 132(4A) OF THE ACT COULD BE RAISED AGAINST THE ASSESSEE THE INGREDIENTS, BY WAY OF PREREQUISITE CO NDITIONS OF SECTION 69 OF THE ACT, HAD TO BE SATISFIED AND COULD NOT BE PRESUMED TO HAVE BEEN ESTABLISHED ON THE BASIS OF SECTION 132(4A) OF THE ACT SIMPLICITER. THE TRIBUNAL WAS NOT JUSTIFIED IN REMANDING THE MAT TER TO THE 11 COMMISSIONER (APPEALS). IT WAS NECESSARY FOR THE TR IBUNAL TO HAVE DEALT WITH THE APPLICABILITY OF THE PROVISIONS OF S ECTION 69 TOGETHER WITH THE PROVISIONS OF SECTION 132(4A). HE HAS FURTHER SUBMITTED THAT THE PRESUMPTION UNDER SECTION 132(4A) OF THE INCOME TAX ACT, 1961 WOULD NOT APPLY IN THE CASE OF THE ASSESSEE BECAUSE NO SE IZED MATERIAL IS RECOVERED FROM THE POSSESSION OF THE ASSESSEE. HE H AS SUBMITTED THAT THERE IS NO CORROBORATIVE EVIDENCE WAS FOUND TO SUP PORT THE ANNEXURE- A1/10 OR THE STATEMENTS OF ARORA BROTHERS. HE HAS S UBMITTED THAT ASSESSEE WAS NOT ALLOWED TO CROSS EXAMINE THE STATE MENTS OF S/SHRI RAMESH ARORA AND AJAY ARORA THEREFORE, THE SAME CAN NOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. HE HAS RELIED UPON T HE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF PRARTHANA CONSTRUCTI ON PVT. LTD. VS. DCIT 70 TTJ 122 (COPY FILED) IN WHICH IT WAS HELD NO ADDITION COULD BE MADE BY INVOKING SECTION 158BC ON THE BASIS OF T HE STATEMENTS OF THIRD PARTIES WHEN NO SEARCH OPERATION WERE CARRIED OUT IN THE CASE OF THE SAID PARTIES AND NO DOCUMENTS WERE SEIZED EVIDE NCING PAYMENT OF ALLEGED ON MONEY, ADDITION WAS ALSO NOT JUSTIFIED A S THE STATEMENT WERE RECORDED AT THE BACK OF THE ASSESSEE AND IT WA S NOT ALLOWED ANY OPPORTUNITY OF CROSS EXAMINATION. LEARNED COUNSEL FOR ASSESSEE ALSO RELIED UPON THE ASSESSMENT ORDER IN THE CASE OF SHR I AJAYKUMAR DATED 28.02.2008 UNDER SECTION 143(3) OF THE INCOME TAX A CT, 1961 (COPY FILED PB-8) AND REFERRED TO PAGE 18 OF THE SAID ORD ER TO SHOW THAT SHRI AJAY ARORA RETRACTED FROM HIS EARLIER STATEMENT BEF ORE THE ASSESSING OFFICER IN HIS CASE. HE HAS THEREFORE, SUBMITTED TH AT THERE IS NO BASIS FOR MAKING ANY ADDITION AGAINST THE ASSESSEE. 8. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUB MITTED THAT THE ASSESSEE IS ONE OF THE DIRECTOR OF THE PRIVATE LIMI TED COMPANY ALONGWITH SHRI AJAY ARORA. ASSESSEE HAS THEREFORE, CLOSE RELATION WITH THE ARORA BROTHERS AND HE IS CONNECTED WITH THE BUS INESS ACTIVITIES ALSO. HE HAS SUBMITTED THAT THE ISSUE IS CONNECTED WITH THE BUSINESS 12 ACTIVITY OF THE ASSESSEE THEREFORE, STATEMENTS OF B OTH ARORAS ARE RELEVANT AND ADMISSIBLE AGAINST THE ASSESSEE. HE HA S SUBMITTED THAT BOTH S/SHRI RAMESH ARORA AND AJAY ARORA ADMITTED IN THEIR STATEMENTS DURING THE COURSE OF SEARCH THAT THE SEIZED PAPER A 1/10 BELONG TO THEM AND THAT REGISTRY OF THE BUILDING FOR M/S. AVI CHAL WEAVES PVT. LTD. BELONGING TO THE ASSESSEE ALSO CONNECTED WITH THE B USINESS. BOTH OF THEM ALSO ADMITTED TO HAVE PAID ON MONEY AND ALSO STATED THAT FURTHER ON MONEY BELONG TO THE ASSESSEE. LEARNED DEPARTMEN TAL REPRESENTATIVE REFERRED TO PB.30 WHICH IS THE COPY OF ASSESSMENT ORDER IN THE CASE OF RAMESHKUMAR DATED 28.02.2008 I N WHICH REFERENCE IS MADE ABOUT HIS ADMISSION TO HAVE SHARE D THE PAYMENT OF ON MONEY. HE HAS ALSO EXPLAINED THE DEAL IN HIS STA TEMENT. HE HAS ALSO REFERRED TO PB.31 OF THE SAME ORDER IN WHICH A RORA HAS ADMITTED TO HAVE SURRENDERED AND DISCLOSED THE AMOUNT OF HIS SHARE FOR THE FINANCIAL YEAR 2006-2007. LEARNED DEPARTMENTAL REP RESENTATIVE THEREFORE, SUBMITTED THAT WHEN ONE OF THE DIRECTOR OF THE ASSESSEES COMPANY HAS ADMITTED PAYMENT OF ON MONEY, THERE IS A STRONG EVIDENCE AGAINST THE ASSESSEE FOR PAYMENT OF ON MON EY. HE HAS SUBMITTED THAT THERE WERE NO DEMAND TO THE CROSS EX AMINATION OF THE STATEMENTS OF ARORAS. LEARNED DEPARTMENTAL REPRESEN TATIVE RELIED UPON ORDER OF ITAT VISHAKHAPATANAM BENCH IN THE CAS E OF DASARI SHRI SHAILENDRAKUMAR VS. DCIT 111 TTJ 101 IN WHICH IT WA S HELD BILLS DRAWN IN ASSESSEES NAME FOUND DURING SEARCH OF ASS ESSEES ASSOCIATE CONCERN SHOWING PURCHASES MADE BY ASSESSE E HAVING NOT BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT, ASSESSE ES MERE ORAL STATEMENT THAT THE BILLS DID NOT BELONG TO HIM WOUL D NOT RENDER ADDITION OF UNEXPLAINED INVESTMENT BY AO IN BLOCK ASSESSMENT INVALID. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THA T THE ASSESSEE RELIED UPON THE CASE OF THIRD PARTY BUT IN THE CASE OF THE ASSESSEE, ASSESSEE IS NOT THIRD PARTY BECAUSE HE IS ONE OF TH E DIRECTOR OF THE COMPANY IN WHICH ARORA WAS ALSO ONE OF THE DIRECTOR WHO HAS 13 ADMITTED PAYMENT OF ON MONEY. LEARNED DEPARTMENTAL REPRESENTATIVE THEREFORE, SUBMITTED THAT APPEAL OF THE ASSESSEE MA Y BE DISMISSED. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. SECTION 132 (4A) OF THE INCOM E TAX ACT, 1961 PROVIDES : WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY , BULLION, JEWELLERY, OR OTHER VALUABLE ARTICLE OR THING ARE O R IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE O F A SEARCH, IT MAY BE PRESUMED- (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MO NEY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG BELONG OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SU CH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSONS HANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPO RTS TO HAVE BEEN SO EXECUTED OR ATTESTED. 9.1 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . SMC SHARE BROKERS LTD. 288 ITR 345 HELD THERE IS NO DOUBT TH AT THE STATEMENT OF MANOJ AGARWAL HAD EVIDENTIARY VALUE BUT WEIGHT C OULD NOT BE GIVEN TO IT IN PROCEEDINGS AGAINST THE ASSESSEE WITHOUT I T BEING TESTED UNDER CROSS EXAMINATION. IN THE ABSENCE OF THE STAT EMENT BEING TESTED, IT CANNOT BE SAID THAT IT SHOULD BE BELIEVE D COMPLETELY TO THE PREJUDICE OF THE ASSESSEE. 14 9.2 HONBLE DELHI HIGH COURT IN THE CASE OF GIRISH CHAUDHARY 163 TAXMAN 608 HELD THERE IS NO BASIS AS TO HOW, AO CA ME TO CONCLUSION THAT 48 WAS RS.48 LACS. THERE IS NO MATE RIAL TO SUPPORT SUCH FINDING OF AO. DUMB DOCUMENT. ADDITION DELETED . 9.3 HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. MAULIKKUMAR K. SHAH 307 ITR 137 HELD THAT HELD, DISMISSING THE APPEAL, THAT FROM THE BEGINNING THE ASSESSEE WAS STATING THAT TH E NOTINGS APPEARING IN THE DIARY WERE ROUGH ESTIMATES AND EST IMATION WAS MADE FOR SUBMISSION TO THE BANK FOR OBTAINING A LOA N FROM THE BANK. THE INFERENCE OF THE ASSESSING OFFICER THAT THE ASS ESSEE HAD RECEIVED ON MONEY, I.E., THE DIFFERENTIAL AMOUNT AS SHOWN IN THE SEIZED DIARY AND THE BOOKS OF ACCOUNT, WAS MERELY B ASED ON SUSPICION AND SURMISES AND THERE WAS NO MATERIAL TO SUPPORT THE CONCLUSION OF THE ASSESSING OFFICER THAT THE ASSESS EE HAD IN FACT RECEIVED ANY ON MONEY. THE ASSESSING OFFICER HAD NO EVIDENCE WITH HIM TO SUPPORT HIS CONCLUSION. THE ASSESSEE HAD WOR KED OUT THE FLOOR-WISE RATE OF THE SHOP ON THE SEIZED PAPER BUT IT WAS NOT POSSIBLE THAT EVERY SHOP COULD BE SOLD AT THAT PRICE AND WHI LE SELLING THE SHOPS, MANY PURCHASERS MAY PAY ADVANCE MONEY. THERE FORE, THE RATES OF ALL THE SHOPS AT THE TIME OF ACTUAL SALES COULD NOT BE THE SAME AS ESTIMATED IN THE SEIZED PAPER. THE AMOUNT M ENTIONED ALONGWITH RATES PER SQUARE FOOT OF DIFFERENT FLOORS ON THE LOOSE PAPER WAS IN RESPECT OF AN ESTIMATE FOR THE LOAN FROM THE BANK. NO OTHER EVIDENCE HAD BEEN SHOWN TO JUSTIFY THAT THESE AMOUN TS WERE RECEIVED FROM PURCHASERS. THE CONCURRENT FINDING WA S THAT ON THE BASIS OF THESE LOOSE PAPERS, NO ADDITION WAS JUSTIF IED. THUS, THERE WAS NO INTERFERENCE CALLED FOR IN THE ORDER OF THE TRIBUNAL. 9.4 HONBLE SUPREME COURT IN THE CASE OF KISHANCHAN D CHELARAM 125 ITR 713 HELD THAT EVIDENCE COLLECTED AT THE BA CK OF THE 15 ASSESSEE HAS TO BE CONFRONTED TO THE ASSESSEE TO GI VE HIM OPPORTUNITY TO REBUT THE EVIDENCE, OTHERWISE, SAME IS NOT ADMISSIBLE. 9.5. IT IS NOT IN DISPUTE THAT THE SALE DEED DATED 1.02.2007 WAS EXECUTED FOR A SUM OF RS.5 CRORES. ON BEHALF OF M/S . AVICHAL WEAVES P. LTD. THE ASSESSEE AND SHRI AJAYKUMAR AROR A SIGNED THE SALE DEED. THE SALE DEED WAS EXECUTED FOR A SUM OF RS.5 CRORES WHICH ACCORDING TO SUBMISSION OF THE ASSESSEE WAS F ULLY FINANCED BY THE BANK. THE ASSESSING OFFICER DID NOT DISPUTE THE ABOVE FACT. THE ASSESSING OFFICER CONSIDERING THE BUSINESS RELATION OF THE ASSESSEE WITH THE ARORA BROTHERS PRESUMED THAT THE ASSESSEE PAID ON MONEY TO THE SELLERS I.E., M/S. MAHAN CORPORATIONS. THE ASSESSING OFFICER IN THAT CONNECTION RELIED UPON STATEMENTS OF S/SHRI RA MESH ARORA AND AJAY ARORA RECORDED ON 16.03.2007 TO 22.03.2007 UND ER SECTION 132(4) OF THE INCOME TAX ACT, 1961 DURING THE COURS E OF SEARCH OPERATION IN THEIR CASES. IT IS ALSO UNDISPUTED FA CT THAT ANNEXURE- A1/10 WAS SEIZED FROM THE POSSESSION OF SHRI RAMESH ARORA. SINCE, THE SEIZED PAPER IS NOT RECOVERED DURING THE COURSE OF SEARCH FROM THE POSSESSION OF THE ASSESSEE THEREFORE, THE PRESU MPTION UNDER SECTION 132(4A) OF INCOME TAX ACT, 1961 CANNOT BE I NVOKED AGAINST THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) RECORDED THE NARRATION OF SEIZED PAPER IN THE ORDER WHICH IS ALSO REPRODUCED IN THIS ORDER AND THE RELEVANT PORTION R EADS 3.70 TO BE PAID. THE ASSESSING OFFICER TREATED THE ABOVE FIGU RE AS ON MONEY PAID BY THE ASSESSEE. HOWEVER, THE CONCLUSION OF T HE ASSESSING OFFICER IS COMPLETELY CONTRADICTED BY THE NARRATION GIVEN IN THE SEIZED PAPER ITSELF. THE NARRATION IN THE SEIZED PAPER DID NOT INDICATE IF ASSESSEE HAS PAID ANY ON MONEY TO THE SELLER. THE A SSESSING OFFICER CANNOT PRESUME CERTAIN THINGS WHICH ARE NOT EVEN PA RT OF THE SEIZED RECORD. THE DETAILS GIVEN THE SEIZED PAPER ITSELF D O NOT PUT ANY LIABILITY UPON THE ASSESSEE TO EXPLAIN THE SEIZED P APER BECAUSE IT WAS NOT RECOVERED FROM THE POSSESSION OF THE ASSESS EE AND IT DID NOT 16 LEAD TO ANY CONCLUSION THAT THE ASSESSEE PAID ANY O N MONEY. THE DETAILS GIVEN IN THE SEIZED PAPER AS NOTED ABOVE CA NNOT FASTEN ANY LEGAL LIABILITY UPON THE ASSESSEE TO EXPLAIN AS TO WHEN THE AMOUNT WAS TO BE PAID. EVERYTHING IS PRESUMED BY THE ASSES SING OFFICER AGAINST THE ASSESSEE WITHOUT ANY BASIS. THE ARORA BROTHERS IN THEIR STATEMENTS, NEVER ADMITTED THAT THE ASSESSEE PAID A NY ON MONEY FOR THE INVESTMENT IN THE PROPERTY. THE ASSESSING OFFIC ER RECORDED PART OF THE STATEMENT OF SHRI AJAY ARORA IN THE ASSESSME NT ORDER AND AT PAGE.9 QUESTION NO.26 AND ANSWER ARE REPRODUCED WHI CH READS AS UNDER:- QUESTION.26: WHEN THE SHARE OF RS.3.7 CRORE PAYABLE BY MR. AXAY SHETH WAS PAID BY HIM? ANSWER : WE CANNOT SAY ANYTHING ABOUT THIS AS WE ARE CONCERNED WITH OUR AFFAIRS ONLY. SHRI AXAY SHETH CAN TELL YOU BETTER. HIS SHARE OF RS.3.7 CRORE AS PER AGREED AMO UNT WHETHER PAID OR NOT WE DO NOT KNOW. THE ABOVE QUESTION AND ANSWER PUT IN THE CASE OF AJ AY ARORA CLEARLY REVEALED THAT EVEN THEY HAVE NOT ADMITTED ABOUT PAY MENT OF ANY ON MONEY BY THE ASSESSEE TO ANY PERSON. THERE IS THUS, NO EVIDENCE OR MATERIAL AVAILABLE ON RECORD TO PROVE PAYMENT OF AN Y ON MONEY BY THE ASSESSEE. THE INFERENCE OF THE ASSESSING OFFICE R THAT ASSESSEE HAD PAID ON MONEY WAS MERELY BASED ON SUSPICION AND SURMISES AND THERE WAS NO MATERIAL TO SUPPORT THE CONCLUSION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD IN FACT PAID ANY ON M ONEY. THE ASSESSING OFFICER HAD NO EVIDENCE WITH HIM TO SUPPO RT HIS CONCLUSION. NO OTHER EVIDENCE HAD BEEN SHOWN TO JUS TIFY THAT AMOUNT OF RS.3.7 CRORES WERE RECEIVED BY THE SELLER. THE ASSESSEE IN THE EXPLANATION BEFORE THE AUTHORITIES BELOW, SPECIFICA LLY SUBMITTED THAT SHRI JAYESHBHAI OF M/S. MAHAN CORPORATION (SELLER) WAS SUMMONED AFTER THE SEARCH AND HE CATEGORICALLY DENIED TO HAV E RECEIVED ANY ON MONEY PAYMENT. THE SUBMISSION OF THE ASSESSEE HAD N OT BEEN REBUTTED BY THE ASSESSING OFFICER. IT THEREFORE, ST ANDS PROVED THAT 17 THERE WAS NO EVIDENCE ON RECORD THAT ASSESSEE PAID ANY ON MONEY TO ANY PERSON INCLUDING THE SELLER. THE PRESUMPTION UNDER SECTION 132(4A) WOULD NOT APPLY IN THE CASE OF THE ASSESSEE THEREFORE, IT WAS NECESSARY FOR THE ASSESSING OFFICER TO HAVE BROUGHT SOME RELIABLE AND COGENT MATERIAL AND EVIDENCE ON RECORD TO SUPPO RT HIS FINDINGS OR TO CORROBORATE THE STATEMENT OF ARORA BROTHERS. IT MAY ALSO BE NOTED THAT SHRI AJAY ARORA IN HIS STATEMENT LATER ON RETR ACTED FROM HIS EARLIER STATEMENT AS THE SAME FACT IS MENTIONED BY THE ASSE SSING OFFICER IN HIS ASSESSMENT ORDER DATED 28.02.2008 (PB.8-PB.18) THEREFORE, NO RELIANCE COULD BE PLACED ON THE STATEMENTS OF THE A RORA BROTHERS. MOREOVER, THE ASSESSING OFFICER HAS NOT MENTIONED ANY FACT IN THE ASSESSMENT ORDER IF THE STATEMENT OF ARORA BROTHERS WERE EVER PUT TO THE ASSESSEE FOR THE PURPOSES OF CROSS EXAMINATION ON BEHALF OF THE ASSESSEE. IT IS SETTLED LAW THAT UNLESS THE STATEME NT IS TESTED UNDER THE CROSS EXAMINATION, THE SAME CANNOT BE READ IN E VIDENCE AGAINST THE ASSESSEE. SINCE, IN THIS CASE, ASSESSING OFFICE R DID NOT ALLOW ANY CROSS EXAMINATION TO THE STATEMENTS OF ARORA BROTHE RS ON BEHALF OF THE ASSESSEE THEREFORE, THEIR STATEMENTS CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. THE ASSESSING OFFICER TRIED T O USE THE ADMISSION OF ARORA BROTHERS MADE IN THEIR STATEMENT S UNDER SECTION 132(4) IN THEIR CASES AGAINST THE ASSESSEE BUT HE H AS FAILED TO NOTE THAT ADMISSION OF OTHERS CANNOT BE READ IN EVIDENCE AGAINST THIRD PARTY UNLESS THERE IS CORROBORATIVE EVIDENCE ON REC ORD. THE MAKER OF THE ADMISSION CAN BIND HIMSELF BUT HOW HE CAN BIND OTHER FROM HIS STATEMENT WITHOUT THERE BEING ANY CORROBORATIVE EVI DENCE ON RECORD IS NOT KNOWN IN THE LAW. AS NOTED ABOVE, EVEN SHRI AJAY ARORA IN HIS STATEMENT, DENIED ANY ON MONEY PAID BY THE ASSESSEE . NO EVIDENCE WAS FOUND IN THE CASE OF THE ASSESSEE THAT ASSESSEE HAS PAID ANY ON MONEY BEFORE THE DATE OF THE SEARCH OR THAT THE ASSESSEE WAS REQUIRED TO PAY ANY ON MONEY AFTER THE DATE OF THE SEARCH. THE ASSESSING OFFICER MERELY CONSIDERING THE BUSINESS R ELATION BETWEEN ASSESSEE AND ARORA BROTHER PRESUMED THAT SINCE THEY HAVE ADMITTED 18 PAYMENT OF ON MONEY THEREFORE, ASSESSEE MIGHT HAVE ALSO PAID THE ON MONEY. IF ARORA BROTHERS HAVE NOT RECORDED ANY E NTRY IN THEIR BOOKS ACCOUNT AS NOTED BY THE ASSESSING OFFICER, HO W ASSESSEE COULD BE BLAMED. THE ABOVE CONCLUSION OF THE ASSESS ING OFFICER IS NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE. THE CONC LUSION OF THE ASSESSING OFFICER IS PURELY BASED UPON SUSPICION AN D SURMISES. IT IS SETTLED LAW THAT SUSPICION HOWSOEVER MAY BE STRONG COULD NOT TAKE PLACE OF LEGAL PROOF. 9.6 THERE IS NO INCRIMINATING EVIDENCE AVAILABLE AG AINST THE ASSESSEE ON RECORD. IN THE ABSENCE OF ANY RELIABLE OR COGENT EVIDENCE ON RECORD, WE DO NOT FIND ANY JUSTIFICATIO N TO UPHOLD THE FINDINGS OF AUTHORITIES BELOW. 9.7 CONSIDERING FACTS OF THE CASE AND THE ABOVE DIS CUSSION, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE TH E ENTIRE ADDITION OF RS.3.70 CRORES. 10. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2010. SD/- SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 05/02/2010 PARAS* COPY OF THE ORDER FORWARDED TO : 1. THE RESPONDENT 2. THE DCIT, (APPELLANT). 3. THE CIT CONCERNED 4. THE CIT(A)-II, SURAT 5. THE DR, ITAT, 6. GUARD FILE BY ORDER //TRUE COPY// DY.R/AR, ITAT , AHMEDABAD