D.C.I.T.-4(1), Agra V. M/s Nikhil Homes Ltd., Agra

ITA 385/AGR/2010

• Counselvise Citation: 38520314 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR RAJ KUMAR AGARWAL
• Keywords: Bogus purchase; Sale consideration of property below Jantri Value; Unexplained expenditure; Business income; Search and seizure; Document seized; Charitable institution; Principle of natural justice; Opportunity of cross examination; Retrospective amendment; Corroborative evidences; Assessment record; Revised return; Documents seized
• Section: 69C; 133A; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 385 & 386/AGRA/2010 ASSTT. YEAR : 2006-07 & 2007-08 D.C.I.T., 4(1), AGRA. VS. M/S. NIKHIL HOMES LTD ., SHRI VRINDAVAN, E-12/8, VI FLOOR, SANJAY PLACE, AGRA. (PAN:AABCN 7667 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : DR. RAJ KUMAR AGARWAL, ADVOCATE. DATE OF HEARING : 29.03.2012 DATE OF PRONOUNCEMENT OF ORDER : 27.04.2012 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE APPEALS BY THE REVENUE ARE DIRECTED AGAINS T DIFFERENT ORDERS OF LD. CIT(A)-II, AGRA DATED 22.06.2010 FOR THE ASSESSMENT YEAR 2006-07 AND DATED 28.06.2010 FOR THE ASSESSMENT YEAR 2007-08. SINCE C OMMON ISSUES ARE INVOLVED IN BOTH THE DEPARTMENTAL APPEALS, THEREFORE, THE SAME WERE HEARD TOGETHER AND ARE DISPOSED OF BY THE COMMON AND CONSOLIDATED ORDER. ITA NO. 385 & 386/AGRA/2010 2 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. BOTH THE DEPARTMENTAL APPEALS ARE DECIDED ISSUE-WIS E AS UNDER : ISSUE NO. 1 : 3. IN ASSESSMENT YEAR 2006-07, THE REVENUE ON GROUND N O. 1 CHALLENGED THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.1,43,00,000/- MADE BY THE AO FOR THE MONEY GIVEN BY ASSESSEE IN CASH OUT OF H IS UNDISCLOSED INCOME FOR THE PURCHASE OF LAND AND ACCEPTING THE SURRENDER OF RS. 1,00,00,000/- BEING PEAK AMOUNT. THE BRIEF FACTS OF THIS CASE ARE THAT THE AO RE-OPENED THIS CASE ON THE BASIS OF FOLLOWING REASONS: ' ON THE BASIS OF INFORMATION IN POSSESSION AND ENQ UIRIES MADE, A SURVEY OPERATION U/S 133A OF I. T. ACT 1961 WERE CA RRIED OUT ON 12.08.2008 ON THE ABOVE NAMED ASSESSEES AT SRI VRIN DAVAN, E-12/8 SANJAY PLACE AGRA. AS A RESULT OF OPERATION VARIOUS INCRIMINATING DOCUMENTS WERE IMPOUNDED. ON THE BASIS OF THESE INC RIMINATING PAPERS ASSESSEES MADE A VOLUNTARILY DECLARATION OF RS 10.00 CRORE IN HIS GROUP. ' UPON CAREFUL PERUSAL OF ANNEXURE- A-07, WHICH IS HA ND WRITTEN LEDGER, WHERE AMOUNT PAID IN CHEQUE AND IN CASH ARE SEPARATELY MA INTAINED. THE CONTENTS OF THIS ANNEXURE WERE RECONCILED FROM THE REGULAR BOOKS OF ACCOUNT AND IT WAS LEARNT THAT THE AMOUNT PAID IN CASH WAS NOT RECORDED IN THE REG ULAR BOOKS OF ACCOUNT. DURING THE SURVEY OPERATION, THIS DOCUMENT WAS CONFRONTED TO THE ASSESSES AND VIDE QUESTION NO 14 OF THE STATEMENT OF SRI SHAILENDRA G ARG, DIRECTOR OF THE ASSESSES ITA NO. 385 & 386/AGRA/2010 3 COMPANY, IT WAS CONCEDED THAT SOME OF THE TRANSACTI ON RECORDED IN THIS ANNEXURE ARE NOT ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOU NT. PAGE NO 01 AND 02 OF ANNEXURE -07A RELATE TO THE PU RCHASE OF LAND IN THE PROJECT OF NIKHIL FORT WHERE DETAILS OF AMOUNT PAID TO FARMERS THROUGH ONE SHRI NARAIN SINGH WERE RECORDED, THE TOTAL AMOUNT PAID I N CHEQUE WAS RS 81,99,993/= AND IN CASH WAS RS 1,02,00,000/= AND. PAGE NO 73, 7 4, 75, AND 76 OF ANNEXURE A- 7 RELATE TO THE PURCHASE OF LAND IN THE PROJECT NIK HIL PARADISE WHERE DETAILS OF AMOUNT PAID TO FARMERS THROUGH ONE SHRI NARAIN SING H WERE RECORDED. THE TOTAL AMOUNT PAID IN CHEQUE IS RS 66,25,000/= AND IN CASH IS RS 1,41,00,000/-. ON THE BASIS OF THESE IMPOUNDED PAPERS, THE AO REJ ECTED THE BOOKS OF ACCOUNT BY INVOKING PROVISION OF SECTION 145(3) STA TING THAT THESE CASH PAYMENTS HAVE NOT BEEN ENTERED IN THE REGULAR BOOKS OF ACCOU NTS AND ADDED THE SUM OF RS 2,43,00,000/= STATING THAT ASSESSEE HAS MADE PAYMEN TS IN CASH FOR THE PURCHASE OF PROPERTY OVER AND ABOVE THE PAYMENT MADE IN CHEQUE BECAUSE IT IS THE COMMON KNOWLEDGE THERE IS ALWAYS AN ELEMENT OF CASH IN THE PURCHASE OF LAND WHICH IS OVER AND ABOVE THE REGISTERED AMOUNT. THEREAFTER A STATE MENT OF SHRI SHAILENDRA AGARWAL, MANAGING DIRECTOR OF COMPANY WAS RECORDED ON 01.12.2009 BY AO WHEREBY HE WAS ASKED TO EXPLAIN THE DOCUMENTS ANNEX URE A-7. THE RELEVANT CONTENTS OF HIS STATEMENT ARE AS UNDER : ITA NO. 385 & 386/AGRA/2010 4 Q.2. MAI AAPKO YANHA HUI SURVEY KI KARVAHAI MAIN IM POUND KIYE GAYE ANNEXURE - 7 KI PRASHTHA SANKHYA 1 VA 2 DIKHA RAHA HUN KRIPYA ISHKE SAMASTA KALAM KE BARE MAIN BYORA DE. ? ANS 2.: PRASHTHA SANKHYA 1 VA 2 MAIN KRAM SANKHYA 1 -9 EVEN 25-30 MAIN JO PAISA RECORDED HAIN VA COMPANY NE SHRI NARAIN SINGH KO CA SH MAIN DIYA HAIN UNKE SAMANE LIKHI HUI DINANKO SA DIN PAISA DIVA GAYA HEI N. KRAM SANKHYA 10 TO 24 TAK IIKHA GAYA VYAKATIYO KO PAISA CHEQUE SE DIYA GAYA H AIN, JISMAI BHUGATAN KI TITHI VA RASHI IIKHA HUWA HAIN. IN THIS CONNECTION, THE ASSESSEE REPLIED ON 04.12 .2009 TO AO AS UNDER: - MR NARAIN SINGH IS A POLITICAL PERSON. AT PRESENT, HE IS A MINISTER IN UP GOVERNMENT. TO THE BEST OF OUR KNOWLEDGE, HE LIV ES AT DELHI GATE AGRA. HOUSE NO. IS NOT KNOWN. AS A SURETY AND MIDDL E MAN HE WAS INVOLVED IN SOME TRANSACTION RELATED TO THE PURCHAS E OF LANDS. WE HAVE APPROACHED HIM NUMBER OF TIMES, BUT DUE TO BEI NG BUSY IN HIS OWN WORKS, COULD NOT BE PRODUCED. MOST OF THE TRANS ACTIONS OF LANDS OF NLKHIL FORT AND NIKHIL PARADISE WERE MADE WITH T HE FARMERS THROUGH HIM AND APPELLANT FILED DETAILED WORKING AL ONG WITH COPY OF ACCOUNT OF SHRL NARAIN SINGH, DETAILS OF PAYMENTS M ADE TO FARMERS BY WAY OF ACCOUNT PAYEE CHEQUES, COPY OF BANK STATEMEN T REFLECTING DETAILS OF CLEARANCE OF CHEQUES AND PEAK AMOUNT OF PAYMENT GIVEN TO MR NARAIN SINGH. 3.1 THE AFORESAID REPLY OF THE ASSESSES DID NOT F IND FAVOUR WITH THE ASSESSING OFFICER, WHO AFTER DISCARDING THE SAME MADE THE ADD ITIONS ON THE BASIS OF FOLLOWING GROUNDS :- ITA NO. 385 & 386/AGRA/2010 5 (A). IN SPITE OF REPEATED OPPORTUNITIES, ASSESSEES DID NOT DIVULGE THE CORRECT IDENTITY OF SRI NARAIN SINGH AND NEVER PRODUCED HIM IN THIS OFFICE. AFTER GETTING ADDRESS SUMMON U/S 131 WERE ISSUED ON SHRI NARAIN SINGH ON 03.12.2009 FIXING THE CASE ON 11.12.2009 BUT NO COM PLIANCE WAS MADE. THEREAFTER, A SUMMON WAS ALSO SENT ON 11.12.2009,FI XING THE CASE ON 14.12.2009. SHRI NARAIN SINGH FILED AN AFFIDAVIT TH AT HE HAS NO CONCERN WITH M/S. NIKHIL HOMES LTD. DURING THE A.Y. 2006-07 AND 2007-08 HE HAS NOT INDULGED IN ANY TRANSACTION WITH THE ASSESSES COMPA NY. (B) AS PER THE PREVALENT TRADE PRACTICE IN REAL EST ATE BUSINESS, IT IS OBSERVED THERE IS SIZEABLE AMOUNT OF CASH COMPONENTS IN THE PURCHASES OF LAND AND THE SAME WAS GIVEN BY THE ASSESSES FOR THE PURCHASE OF LAND. (C) IT IS VERY UNUSUAL AND UNCOMMON THAT THE MONEY WAS GIVEN AS SURETY TO SOMEBODY WHO HAS ALSO NOT ACCEPTED THAT HE IS RECEI VED THE MONEY AS SURETY. (D) THE ASSESSEE DOES NOT HAVE ANY PROOF THAT IT WA S GIVEN A SURETY AND SAME WAS RECEIVED BACK. 4. IN THIS CONNECTION THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE ASSESSEE HAS DIVULGED THE IDENTITY OF SHRI NARAIN SINGH ON 0 1.12.2009 AT THE TIME OF STATEMENT OF SHAILENDRA AGARWAL, MANAGING DIRECTOR OF THE ASSESSES COMPANY, RECORDED ON 01.12.09 AND ON THE BASIS THAT, THE AO ISSUED SUMMON U/S. 131 ON 03.12.2009 TO MR NARAIN SINGH. THEREAFTER THE ASSES SEE FURTHER DIVULGED THE IDENTITY OF MR NARAIN SINGH VIDED ITS REPLY DT 04.1 2.2009. THEREAFTER A SUMMON ITA NO. 385 & 386/AGRA/2010 6 WAS ALSO SENT BY AO ON 11.12.2009 FIXING THE DATE O F HEARING ON 14.12.2009. MR NARAIN SINGH FILED HIS AFFIDAVIT ON 14.12.2009. THE REAFTER ON 17.12.2009, SHRI NARAIH SINGH APPEARED BEFORE AO ALONG WITH HIS ADVO CATE AND THE STATEMENT OF MR NARAIN SINGH WAS TAKEN AS WOULD BE EVIDENT FROM THE PERUSAL OF THE ORDER SHEET DATED 17.12.2009 FOR THE A.Y 2006-07 AND 2007-08. I T WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE IDENTITY OF MR NARAIN SINGH C AN NOT BE DOUBTED ONCE HIS STATEMENT WAS RECORDED BY THE AO HIMSELF AND STATEM ENT OF NARAIN SINGH WAS RECORDED AT THE BACK OF THE ASSESSES, HE BECAME WIT NESS OF AO AND IT IS ALSO APPRECIATE TO NOTE THAT AO DID NOT PROVIDE ANY OPPO RTUNITY TO THE ASSESSES FOR CROSS-EXAMINATION TO MR NARAIN SINGH IN SPITE OF VE HEMENTLY REQUEST MADE BY THE ASSESSEE ON 14.12.2009 AND THE RELEVANT PARA IS REP RODUCED AS UNDER : 'THAT THE ASSESSEE HAS COME TO KNOW THAT SUMMON HAS BEEN ISSUE TO MR. NARAIN SINGH TO PRESENT ON 12.12.2009. IT IS KI NDLY REQUESTED TO ALLOW THE ASSESSEE AT THE TIME OF INVESTIGATION FOR CROSS EXAMINATION IF REQUIRED. THAT THE ASSESSEE IS ALSO MAKING HIS BEST EFFORTS T O CONTACT AND PRESENT NARAIN SINGH FOR VERIFICATION BUT DUE TO BEING MINI STER OF U.P GOVT. AND POWERFUL PERSON, PROPER RESPONSE IS NOT BEING G IVEN BY HIM TO THE ASSESSEE. HENCE IT FURTHER REQUESTED TO SUMMON HIM. ' 4.1 IT WAS FURTHER CONTENDED BY THE LD COUNSEL FOR THE ASSESSEE THAT UNDER THESE CIRCUMSTANCES IT WAS DUTY OF THE AO TO PUT THIS GEN TLEMAN FOR CROSS EXAMINATION BEFORE DRAWING ADVERSE INFERENCES AND BEFORE JUMPIN G TO THE .CONCLUSION. THE ASSESSEE ALSO SUBMITTED THE CLIPPING OF SOME OF THE NEWS PAPERS WHICH CLEARLY ITA NO. 385 & 386/AGRA/2010 7 REFLECTS THE NAME OF SHRI NARAIN SINGH WITH THE ASS ESSEE IN WHICH HE WAS FULLY INDULGED IN TRANSACTION OF THE PURCHASE OF LANDS ME NTIONED IN ANNEXURE A-7. 4.2 IT WAS FURTHER CONTENDED BY THE LD. COUNSEL FO R THE ASSESSEE THAT AO HAS FAILED TO BRING ANY CORROBORATIVE EVIDENCES ON RECO RD IN SUPPORT OF ANNEXURE A-7. THE APPELLANT PLACED RELIANCE ON THE DECISION OF HO N,BLE DELHI HIGH COURT IN [2010]322 ITR 191 [DELHI] IN WHICH IT WAS HELD THAT ADDITION CAN NOT BE MADE IN ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCES AND AO HAS NOT BROUGHT ANY OTHER EVIDENCES. 4.3 THE LD. CIT(A) FOUND CONSIDERABLE SUBSTANCE IN THE CONTENTI ON OF THE ASSESSEE THAT IDENTITY OF MR. NARAIN SINGH WAS WELL DIVULGED BY THE ASSESSEE AND THE AO COULD NOT BRING ANY CONCRETE EVIDENCE ON REC ORD IN SUPPORT OF HIS ASSUMPTIONS. THE ASSESSEE FURTHER CONTENDED THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THE STATEMENT OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY NAMELY SH. SHAILENDER KUMAR AGARWAL WAS RECORDED ON 1-12-2009 AND IT WAS STATED BY THE SAID DIRECTOR VIDE REPLY NO. 03 THAT THE CASH PAYMENTS SHOWN IN THE ANNEXURE A7 WERE PAID TO SH. NARAIN SINGH AS AMOUNT OF SECURITY/EARNEST MONEY AGAINST THE CHEQUES ISSUED TO VARIOUS FARMERS ON AC COUNT OF PURCHASE OF LAND FROM THESE FARMERS. IT WAS ALSO STATED THAT WHEN THE CHE QUES WERE REALIZED THE AMOUNT WAS RECEIVED BACK. HOWEVER AO MADE THE ADDITION OF RS. 2,43;00,000/- BY ITA NO. 385 & 386/AGRA/2010 8 AGGREGATING ALL THE PAYMENTS SHOWN IN THE COLUMN OF CASH PAYMENT BY RELYING ONLY ON BASIS OF REPLY OF QUESTION NO 02 OF THE STATEMEN T RECORDED. 4.4 IT WAS FURTHER CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE PERUSAL OF THE STATEMENT REVEALED THAT IT WAS CLARIFIED BY MR. AGGARWAL THAT THE AMOUNT MENTIONED UNDER THE CASH COLUMN OF PAGE 1, 2 OF ANN EXURE A7 WAS GIVEN TO SH. NARAIN SINGH. IT HAS ALSO BEEN STATED IN THE EARLIE R PART OF STATEMENT THAT MR. NARALN SINGH WAS ACTING AS A MEDIATOR FOR A DEAL OF ASSESS EE WITH THE FARMERS WITH REGARD TO PURCHASE OF THE LAND BY THE ASSESSEE, WITH A VIE W TO FACILITATE THE PROCESS OF DEALING WITH THESE FARMERS., IN THE ASSESSMENT ORDE R AO HAS ACCEPTED THE FACT THAT AMOUNT WAS GIVEN TO SH. NARAIN SINGH BUT HAS DISBEL IEVED THE LATER PART THAT SAID MONEY IS RETURNED BACK TIME TO TIME FROM HIM, AS AN D WHEN THE PURPOSE OF GIVING THE SECURITY WAS ACCOMPLISHED. 4.5 IT WAS FURTHER CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT FROM THE VERY BEGINNING, THE ASSESSEE HAS STATED THAT NO LAN D WAS PURCHASED FROM MR NARAIN SINGH. HE ACTED AS SURETY AND ON CLEARANCE OF CHEQU ES FROM BANK IN THE NAME OF FARMERS, HE USED TO REFUND THE MONEY TO THE SAID CO MPANY. IN THIS CONNECTION, THE ASSESSEE HAS ENCLOSED THE DETAILED WORKING OF COPY OF ACCOUNT OF MR NARAIN SINGH, DETAILS OF CHEQUES ISSUED TO THE FARMERS FRO M WHOM LAND WAS PURCHASED, ITA NO. 385 & 386/AGRA/2010 9 COPY OF BANK STATEMENT REFLECTING DETAILS OF CHEQUE S HONORED BY THE BANK, AND WORKING SHEET OF PEAK AMOUNT WORKED OUT. THE RELEVA NT DETAILS ARE AS UNDER :- DETAILS OF CASH PAYMNET MADE TO MR. NARAIN SINGH ================================================== DATE AMOUNT NAME OF PROJECTS ====== ======== ================== 12.10.05 500000 NIKHIL FORT PHASE I 20.10.05 450000 DO 21.10.05 1550000 DO 27.10.05 2400000 DO 29.10.05 2100000 DO 18.11.05 1000000 DO 25.11.05 1000000 DO 29.11.05 1000000 DO 14.12.05 200000 DO --------------- 1,02,00,000 =========== AND DETAILS PAYMENT MADE TO FARMERS FOR NIKHIL FORT PH I DATE OF AMOUNT CH NO NAME OF DA TE OF CHEQUE PAYMENT RECEIVED FARMERS PAYMENT AMOUNT BACK BY BANK ======== ======== ======= ============== ========== ========== 11.01.06 600000 249894 POORAN SINGH 11.01.06 614461 PNB 13.01.06 1800000 249891 NAWAB SINHG 13. 01.06 1843385 17.01.06 1200000 249895 MOHA N SINGH 17.01.06 614461 17.01.06 100000 249896 HOR I LAL 17.01.06 614461 18.01.06 150000 249803 PRA DEEP DIXIT 17.01.06 100000 18.01.06 900000 249898 SUB HASH 18.01.06 45468 19.01.06 300000 249899 VIR ISHINGH 18.01.06 45468 20.01.06 100000 249900 SATISH 18.01. 06 45468 24.01.06 900000 249892 NEK RAM 24.0 1.06 921692 31.01.06 400000 249897 JEVAN LAL 19.01 .06 333437 18.03.03 500000 249804 MANISH DIXIT 20.01.06 100000 249893 CHNADRA PRAKASH 24 .01.06 921692 249890 BAHABUDDIN 18.03.06 500000 ----------------- 1,02,00,000 ----------------- DETAILS OF CASH PAYMNET MADE TO MR NARAIN SINGH =================================================== DATE AMOUNT NAME OF PROJECTS ====== ======== ================== 02.12.05 500000 NIKHIL PARADISE 05.12.05 450000 DO ITA NO. 385 & 386/AGRA/2010 10 08.12.05 1000000 DO 09.12.05 500000 DO 17.12.05 700000 DO 21.12.05 800000 DO 23.12.05 1200000 DO 07.01.06 500000 DO 13.01.06 1800000 DO 18.01.06 500000 DO 25.01.06 1600000 DO 04.02.06 500000 DO 07.02.06 500000 DO 23.02.06 2000000 DO 17.03.06 1000000 DO 23.03.06 500000 DO ----------------- 1,41,00,000 ------------------ AND DETAILS PAYMENT MADE TO FARMERS FOR NIKHIL PARA DISE =================================================== ================= DATE OF AMOUNT CH NO NAME OF DATE OF CHEQUE PAYMENT RECEIVED FARMERS PAYMENT AMOUNT BACK BY BANK ======== ======== ======= ============== ========== ========== 09.01.06 1200000 233746 SURENDRA SINGH 09.01.06 1200000 PNB 06.02.06 525000 598096 NANAK CHAND 06.02.06 525000 18.02.06 500000 154201 KAMAL SINGH 18.02.06 500000 21.02.06 500000 154202 PHOOL SINGH 21.02.06 500000 01.03.06 2100000 154228 KARAN SINGH 01.03.06 700000 11.03.06 2000000 154229 BACCHU SINGH 01.03 .06 700000 17.03.06 1000000 154230 KAILASH I 01.03.06 700000 154232 BACCHU SINGH 11.03.06 100000 0 154233 KAILASHI 11.03.06 1000000 154231 KARAN SINGH 17.03.06 1000000 ----------------- 10025000 AND REST AMOUNT RS. 4075000/= WAS RETURNED BACK IN NEXT YEAR -------------- 4.6 THE ASSESSEE HAS FURTHER CONTENDED THAT FROM TH E VERY BEGINNING, THE ASSESSEE HAS STATED THAT NO LAND WAS PURCHASED FROM MR. NARAIN SINGH. HE ACTED AS SURETY AND ON CLEARANCE OF CHEQUES FROM BANK IN THE NAME OF FARMERS, HE USED TO REFUND THE MONEY TO THE SAID COMPANY. MR. NARAIN SI NGH IS A POLITICAL PERSON. AT PRESENT, HE IS MINISTER IN U.P. GOVT. TO THE BEST O F OUR KNOWLEDGE, HE LIVES AT DELHI ITA NO. 385 & 386/AGRA/2010 11 GATE. HOUSE NO. IS NOT KNOWN. AS A SURETY AND MIDDL E MAN HE WAS INVOLVED IN SOME TRANSACTIONS RELATED TO THE PURCHASE OF LAND, THE APPELLANTS HAD APPROACHED NUMBER OF TIME, BUT DUE TO BEING BUSY IN HIS OWN WO RKS, COULD NOT BE PRODUCED. IT WAS CONTENDED BY THE ASSESSEE THAT IN THESE DOCUMEN TS COMPLETE NAME AND ADDRESS HAVE BEEN GIVEN. IT MAY BE SEEN THAT AO HAS NOT BRO UGHT ANY MATERIAL ON RECORD TO CONTRADICT THESE DOCUMENTS AND DETAILS AND HAS SIMP LY IGNORED THE ARGUMENT AND THE PLEADINGS OF THE ASSESSEE WITH THE OBJECTIVE OF JUSTIFYING THE ADDITION. 4.7 IN THIS CONNECTION, THE ASSESSEE HAS CONTENDED THAT STATEMENT OF MR NARAIN SINGH WAS RECORDED BY AO ON I7.12.2009,THEREFORE ID ENTITY OF MR. NARAIN SINGH CAN NOT BE DOUBTED ONCE HIS STATEMENT WAS RECORDED BY THE AO HIMSELF. 4.8 THE ASSESSEES ISSUE IS THAT ONCE NARAIN SINGH HAD COME INTO THE CONTROL OF AO AND HIS STATEMENT WAS RECORDED AT THE BACK OF TH E ASSESSES, HE BECAME WITNESS OF AO. THEREFORE, IT WAS THE DUTY OF AO TO PUT HIM FOR CROSS EXAMINATION OF THE ASSESSEE IN THE INTEREST OF JUSTICE. THEREFORE, PRI NCIPLE OF NATURAL JUSTICE WAS VIOLATED AND IT WAS ENSURED THAT THE STATEMENT OF M R. NARAIN SINGH WAS RECORDED IN ABSENCE OF ASSESSEE AND NO OPPORTUNITY OF CROSS EXA MINATION WAS GIVEN. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS WORTH -WHILE TO NOTE THAT THE ASSESSEE VEHEMENTLY REQUESTED THE AO TO ALLOW THE PRESENCE O F THE ASSESSEE AT THE TIME OF ITA NO. 385 & 386/AGRA/2010 12 EXAMINATION OF THE STATEMENT AND ALSO REQUESTED HIS CROSS EXAMINATION AND ALSO EXPLAINED THAT ASSESSEE WAS HELPLESS AS THE WITNESS INVOLVED WAS POWERFUL PERSON BEING MINISTER WITH THE GOVT. OF THE STATE. THIS RE QUEST IS MADE BY THE ASSESSEE VIDE HIS LETTER DATED 14.12.2009. THEREFORE UNDER T HESE CIRCUMSTANCES IT WAS DUTY OF AO TO PUT THIS GENTLEMAN FOR CROSS EXAMINATION B EFORE DRAWING ADVERSE INFERENCES AND BEFORE JUMPING TO THE CONCLUSION. 4.9 IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT S OME OF THE FARMERS HAVE FILED F.I.R AGAINST MR. NARAIN SINGH THUS, IT IS ABSOLUTE LY UNJUSTIFIED ON THE PART OF NARAIN SINGH TO COMPLETELY WASH OFF HIS HANDS FROM THE SAID TRANSACTION AND AO CANNOT SUPPORT HIM IN HIS ACT WITHOUT CORROBORATING THIS FACT WITH THE CONCERNED FARMERS FROM WHOM THE IMPUGNED LAND WAS PURCHASED. THE COMPLETE DETAILS WITH REGARD TO THE FARMERS WERE GIVEN TO AO IN THE FORM OF PURCHASE DEED OF THIS LAND VIDE LETTER DATED 22.09.08 AND AO HAS RELIED UPON T HE AFFIDAVIT OF MR. NARAIN SINGH WITHOUT MAKING ANY EFFORTS FOR CORROBORATING THE ST AND TAKEN BY THE ASSESSEE. IT MAY BE SEEN THAT ADDITION HAS BEEN MADE SOLELY ON T HE BASIS OF STATEMENT OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES THE STATEMENT H AS TO BE RELIED AS WHOLE. IT IS NOT JUSTIFIED ON THE PART OF AO TO PICK AND CHOOSE THE PORTION OF THE STATEMENT AS PER HIS CONVENIENCE. THE THEORY OF APPROBATE AND RE PROBATE DOES NOT APPLY ON THE INCOME TAX PROCEEDINGS. RELIANCE IS PLACED ON THE F OLLOWING JUDGMENTS: - ITA NO. 385 & 386/AGRA/2010 13 KALANDEE RAIL NIRMAN (ENGINEERS) LTD. VS. JCIT 78 T TJ 653(TM) KANTILAL & BROS. V. ACIT 51 TTJ 513 (PUNE) MANOJ LAMBA VS. ITO ITA NO. 4379/D/04 (DELHI) BANSAL STRIPS 99 ITD 177 (DEL.) S.K. JAIN VS. JCIT 108 TTJ 575 (NAG.) IT WAS CONTENDED BY THE ASSESSEE THAT REQUEST IS MA DE BY THE ASSESSEE VIDE HIS LETTER DATED 14.12.2009 AND THE RELEVANT PARA 03 IS REPROD UCED BELOW :- 'THAT THE ASSESSEE HAS COME TO KNOW THAT SUMMON HAS BEEN ISSUE TO MR. NARAIN SINGH TO PRESENT ON 12.12.2009. IT IS KI NDLY REQUESTED TO ALLOW THE ASSESSEE AT THE TIME OF INVESTIGATION FOR CROSS EXAMINATION IF REQUIRED. THAT THE ASSESSEE IS ALSO MAKING HIS BEST EFFORTS T O CONTRACT AND PRESENT NARAIN SING FOR VERIFICATION BUT DUE TO BEI NG MINISTER OF U.P GOVT. AND POWERFUL PERSON, PROPER RESPONSE IS NOT B EING BY HIM TO THE ASSESSEE. HENCE IT FURTHER REQUESTED TO SUMMON HIM. ' 4.10 IT WAS FURTHER CONTENDED BY THE LD. COUNSEL FO R THE ASSESSEE THAT ONE OF THE REASONS FOR MAKING AN ADDITION BY THE AO IN THE ASS ESSMENT ORDER IS THAT THE AMOUNT SHOWN AS PAID IN CASH WAS ON A/C OF CASH COM PONENT IN THE PURCHASE OF LAND, WHERE THE LAND WAS PURCHASED AT CIRCLE RATE { MARKET PRICE) AND ALSO THE CONTENTION OF THE ASSESSEE COMPANY RIGHT FROM THE B EGINNING IS THAT THE CASH WAS PAID ON ACCOUNT OF SURETY TO THE MIDDLE MAN/FACILIT ATOR. THIS WAS CONSISTENT STATEMENT OF THE ASSESSEE RIGHT FROM THE BEGINNING AND NO CONTRADICTION HAS BEEN EVER MADE IN THIS REGARD BY THE ASSESSEE AND THERE WAS NO EVIDENCE WITH THE AO TO HOLD THAT ANY CASH WAS PAID OVER AND ABOVE THE AMOU NT OF CHEQUE FOR PURCHASING ITA NO. 385 & 386/AGRA/2010 14 LAND. UNDER THESE CIRCUMSTANCES IT IS THE AO WHO AL LEGED THAT THE CASH PAID WAS ON ACCOUNT OF PURCHASE OF LAND PURCHASED FROM THE FARM ERS. UNDER THESE CIRCUMSTANCES THE BURDEN WAS UPON THE AO TO LEAD TH E EVIDENCES BY MAKING! R REQUISITE VERIFICATION FROM THESE FARMERS TO SUPPOR T HIS ALLEGATION. HOWEVER HE CHOSE TO MAKE ADDITION MERELY BASED ON HIS BALD ALL EGATION. 4.11 IT WAS BROUGHT TO THE NOTICE OF THE AO THAT TH E LAND WAS PURCHASED AS PER THE CIRCLE RATE WHICH IS EVIDENT FROM THE COPY OF REGIS TRY FILED REFLECTING THAT ON 15.012007, 1.8437 HECTARE LAND WAS PURCHASED FOR RS 2,85,50,460/- WHICH CIRCLE RATE WAS RS 2,85,00,000/-. HENCE NO EXCESS PAYMENT WAS MADE AGAINST THE LAND, IT WAS CONTENDED BY THE APPELLANT THAT HON,BLE DELHI H IGH COURT VIDE [2010]322 ITR 191 [DELHI] HELD THAT ADDITION CAN NOT BE MADE IN A BSENCE OF ANY OTHER CORROBORATIVE EVIDENCES, AND AO HAS NOT BROUGHT ANY OTHER EVIDENCES. 5. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF THE A SSESSEE AND THE MATERIAL ON RECORD ACCEPTED THE SURRENDER OF THE PEAK AMOUNT OF RS.1,00,00,000/- AND DELETED THE ADDITION OF RS.1,43,00,000/-. HIS FINDI NGS IN PARA 20 & 21 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 20. I HAVE PERUSED THE ASSESSMENT ORDER, WRITTEN A RGUMENTS, AND ALSO CONSIDERED THE ORAL PLEADING OF THE AR FOR THE APPELLANT. IN MY OPINION, THE ONLY ISSUE INVOLVED IN THIS GROUND OF APPEAL IS WHETHER OR NOT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ITA NO. 385 & 386/AGRA/2010 15 AMOUNT SUM OF RS 2,43,00,000/- IN CASH WAS GIVEN TO SHRI NARAIN SINGH AND RECEIVED BACK AS A MIDDLEMAN AND SURETY ? UPON CAREFUL PERUSAL OF AVAILABLE FACTS, IN MY OPIN ION, THE IDENTITY OF MR NARAIN SINGH WAS WELL DIVULGED BY THE APPELLANT, AO HAS NOT BROUGHT ANY CORROBORATIVE EVIDENCE ON RECORDS IN SU PPORT OF HIS ASSUMPTIONS WHILE DISCARDING THE STAND TAKEN BY THE APPELLANT ON 04.12.2009 . THE STATEMENT OF MR. NARAIN SINGH WAS RECORDED BY AO HIMSELF ON 7.12.2009 AND THIS FACT HAS NOT BEEN MEN TIONED BY AO ANY WHERE IN HIS ASSESSMENT ORDER. AO HAS MADE ENTIRE A DDITION ON THE BASIS OF Q.NO 02 OF THE STATEMENT OF SHRI SHAILENDR A KUMAR RECORDED ON OL12.09 WHILE NO CONSIDERATION WAS GIVEN BY THE AO ON THE REPLY NO 03 IN WHICH THE APPELLANT HAS STATED THAT CASH W AS GIVEN TO MR NARAIN SINGH AS A MIDDLE MAN AND SURETY AND SAME AM OUNT WAS RETURNED BACK TO THE COMPANY ON CLEARANCE OF THE CH EQUES. IN THIS SUPPORT, THE APPELLANT HAS FILED CLIPPING OF SOME R ECENT NEWS PAPERS IN WHICH THE ISSUE HAS BEEN REPORTED BY THE MEDIA C ONCERNING TRANSACTION OF LANDS REFLECTED IN ANNEXURE A-7. THE APPELLANT WAS NOT GIVEN ANY OPPORTUNITY OF CROSS EXAMINATION OF MR. N ARAIN SINGH. NO LAND WAS DIRECTLY PURCHASED FROM MR. NARAIN SINGH. IT WAS NOTICED THAT ALL THE TRANSACTIONS OF PURCHASES OF LAND WERE MADE DIRECTLY FROM FARMERS TO WHOM PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. AO HAS MADE NO EFFORTS TO SUMMON ANY FARMER FROM WHOM THE LAND WAS PURCHASED AND ALSO DID NOT CORROBORATE THE FACTS WI TH THE CONCERNED FARMERS. THE LAND WAS PURCHASED AT CIRCLE RATES WHI CH WAS OF RS 2,85,00,000/= WHILE ACTUAL PAYMENT MADE THE APPELLA NT WAS RS 2,85,50,460/-. THE AO HAS RELIED ONLY ON ONE PART O F THE STATEMENT OF MR SHAILENDRA AGARWAL THAT PAYMENT HAS BEEN MADE TO MR NARAIN SINGH BUT DID NOT RELY ON THE REST OF THE STATEMENT THAT THE SAID MONEY WAS REFUNDED BACK TO THE ASSESSEE COMPANY FOR WHICH THE APPELLANT HAS FILLED DETAILED WORKING OF COPY OF ACCOUNT OF M R NARAIN SINGH, DETAILS OF PAYMENTS MADE TO FARMERS, DETAILSOF CHEQ UES NO,, DETAILS OF AMOUNT REFUNDED BACK TO THE ASSESSEE COMPANY AND DE TAILS OF PEAK AMOUNT OF PAYMENTS MADE TO MR NARAIN SINGH. AGAINST WHICH THE AO HAS NOT BROUGHT ANY CONTRADICTORY EVIDENCES. IN MY OPINION, ADDITION CAN NOT BE MADE ON THE BASIS OF A PORTION OF STATEM ENT OF APPELLANT. 21. I HAVE CONSIDERED THE WRITTEN SUBMISSION FILED BY THE APPELLANT AND ALSO EVIDENCES AVAILABLE ON RECORDS, AND NOTICE D THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON 18.12.2009, FI RST TIME, THE AO ASKED FOR PROOF & EVIDENCES TO SUBSTANTIATE THE CLA IM THAT MONEY HAS ITA NO. 385 & 386/AGRA/2010 16 BEEN GIVEN TO MR NARAIN SINGH & OTHERS AND TO PRODU CE S/SHRI DHURUB VASHISTHA, GIRRAJ SINGH, PANDIT SRI KRISHNA, V.K TYAGI AND ARJUN SINGH AND ADJOURNED THE DATE OF HEARING TO 21 .12.2009. THE AR OF THE ASSESSEE APPLIED FOR ADJOURNMENT BECAUSE OF HE WAS OUT OF STATION. ON 24.12.2009, THE APPELLANT FILED THE WRI TTEN SUBMISSION DATED 24.12.2009 WHICH WAS NOT ENTERTAINED BY THE A O AND THE ASSESSMENT ORDER DT 23.12.2009 WAS SERVED TO THE AS SESSES ON 25.12.2009.1 HAVE EXAMINED THE DETAILS FILED BY THE APPELLANT REFLECTING DETAILS OF PAYMENTS MADE IN CASH AND DET AILS OF PAYMENT MADE THROUGH CHEQUES AND ALSO BANK STATEMENTS AND C OME TO THE CONCLUSION THAT THE APPELLANT HAD MADE PAYMENT IN C ASH AND CHEQUES BOTH. ON THE DATE OF CLEARANCE OF CHEQUES FROM BANK , THE SAID AMOUNT WAS REVERTED BACK TO THE ASSESSEE COMPANY. UP TO 18 .12.2009. NO INVESTIGATION WAS MADE BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HENCE IN MY OPINION, REASONABLE OPPORT UNITY WAS NOT GIVEN TO THE APPELLANT AND ALSO AO DID NOT BRING AN Y CONTRADICTORY EVIDENCE AGAINST THE DETAILED WORKING FILED BY THE ASSESSES AND ALSO AO HAS NOT BROUGHT ANY CORROBORATIVE EVIDENCES AND ALSO DID NOT MAKE ANY POSITIVE EFFORTS TO INVESTIGATE THEM AND A LSO DID NOT SUMMON THEM FOR INVESTIGATION AND CROSS-EXAMINATION; UNDER THE FACTS AND CIRCUMSTANCES OF CASE, THE APPELLANT DESERVES TO SU CCEED PARTLY. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF CASE & CONSIDERING A LENIENT VIEW OF REVISED RETURN FILED BY THE APPELLA NT ON 14.12.09 OFFERING RS.1,00,00,000/- AS SURRENDERED INCOME, I AM ON VIEW THAT THE APPELLANT SHOULD BE ASSESSED ON PEAK AMOUNT OF RS.99,50,000/-. THUS, THE ADDITION OF RS.1,00,00,000/- IS HEREBY SU STAINED AND AMOUNT OF RS.1,43,00,000/- IS HEREBY DELETED. 6. SIMILARLY, IN ASSESSMENT YEAR 2007-08, THE REVEN UE ON GROUND NO. 1 CHALLENGED THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.3,00,27,664/- BY ACCEPTING THE PEAK ADDITION OF RS.24,41,677/-. T HE FACTS ON THIS ISSUE ARE IDENTICAL AS HAVE BEEN NOTED IN ASSESSMENT YEAR 200 6-07. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE WAS RE-OPENED ON THE BASIS OF DOC UMENTS FOUND DURING A SURVEY OPERATION CONDUCTED U/S 133A OF THE I.T. ACT 1961 O N 12.08.2008 ON THE ASSESSESS ITA NO. 385 & 386/AGRA/2010 17 PREMISES AT SRI VRINDAVAN E-12/8, SANJAY PLACE AGRA . AO RE-OPENED THIS CASE ON THE BASIS OF FOLLOWING REASONS : UPON CAREFUL PERUSAL OF ANNEXURE- A-07, WHICH IS HA ND WRITTEN LEDGER, WHERE AMOUNT PAID IN CHEQUES AND IN CASH ARE SEPARATELY MAINTAINED. THE CONTENTS OF THIS ANNEXUR E WERE RECONCILED WITH THE REGULAR BOOKS OF ACCOUNT AND IT WAS LEARNT THAT THE AMOUNT PAID IN CASH WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. DURING THE SURVEY OPERATION, THIS DOCUMENT WAS CONFRONTED TO THE ASSESSES AND VIDE QUESTION NO 14 OF THE STATEMENT OF SRI SHA ILENDRA GARG, DIRECTOR OF THE ASSESSES COMPANY, IT WAS CONCEDED T HAT SOME OF THE TRANSACTION RECORDED IN THIS ANNEXURE ARE NOT ACCOU NTED FOR IN THE REGULAR BOOKS OF ACCOUNT. ANNEXURE A-7, RELATES TO THE PURCHASE OF LAND IN TH E PROJECT OF NIKHIL FORT / EXTENTION, NIKHIL PARADISE, NIKHIL GARDEN AN D NIKHIL UDYAN WHERE DETAILS OF AMOUNT PAID TO FARMERS ARE RECORDE D. THE TOTAL AMOUNT PAID IN CHEQUE IS RS 4,26,69,986/= AND PAID IN CASH IS RS 2,86,23,854/= RELEVANT TO A.Y 2007-08. ON THE BASIS OF THESE IMPUGNED PAPERS, THE AO R EJECTED THE BOOKS OF ACCOUNT BY INVOKING PROVISION OF SECTION 145(3) STATING THA T THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ARE INCOMPLETE AS SUBSTA NTIAL TRANSACTIONS HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS AND IN ABSENCE O F COMPLETE BOOKS, THE BOOKS OF ACCOUNT CAN NOT BE SAID TO BE CORRECT AND ACCORD INGLY ADDED THE SUM OF RS.3,24,69,311/- AS THE INCOME OF THE ASSESSES, STA TING THAT THAT ASSESSES HAS PAID IN CASH OVER AND ABOVE THE REGISTERED AMOUNT FOR TH E PURCHASES OF PROPERTY BECAUSE IT IS COMMON KNOWLEDGE THAT THERE IS ALWAYS AN ELEM ENT OF CASH IN THE PURCHASE OF LAND WHICH IS OVER AND ABOVE THE REGISTERED AMOUNT AND IT IS THE SAME MONEY PAID ITA NO. 385 & 386/AGRA/2010 18 BY THE ASSESSEE FOR THE ABOVE TRANSACTIONS. THEREAF TER, A STATEMENT OF SHRI SHAILENDRA AGARWAL, MANAGING DIRECTOR OF COMPANY W AS RECORDED ON 01.12.2009 BY AO WHEREBY HE WAS ASKED TO EXPLAIN THE DOCUMENT BEING ANNEXURE A-7. THE RELEVANT CONTENTS OF HIS STATEMENT ARE AS UNDER : Q.2. MAI AAPKO YANHA HUI SURVEY KI KARVAHAI MAIN IM POUND KIYE GAYE ANNEXURE-A-7 KI PRASHTHA SANKHYA 1 VA 2 DIKHA RAHA HUN KRIPYA ISHKE SAMASTA KALAM KE BARE MAIN BYORA DE. ? ANS 2.: PRASHTHA SANKHYA 1 VA 2 MAIN KRAM SANKHYA 1 -9 AND 25-30 MAIN JO PAISA RECORDED HAIN VA COMPANY NE SHRI NARA IN SINGH KO CASH MAIN DUIYA HAIN UNKE SAMANE LIKHI HUI DINANKO SA DIN PAISA DIYA GAYA HEIN. KRAM SANKHYA 10 TO 24 TAK LIKHA GAYA VYA KATIYO KO PAISA CHEQUE SE DIYA GAYA HAIN, JISAMAI BHUGATAN KI TITHI VA RASHI LIKHA HUWA HAIN. IN THIS CONNECTION, THE ASSESSEE REPLIED ON 04.12 .2009 TO AO THAT- MR NARAIN SINGH IS A POLITICAL PERSON. AT PRESENT , HE IS A MINISTER IN UP GOVERNMENT. TO THE BEST OUR KNOWLEDG E, HE LIVES AT DELHI GATE AGRA. HOUSE NO IS NOT KNOWN. AS A SURETY AND MIDDLE MAN HE WAS INVOLVED IN SOME TRANSACTION RELATED TO THE PURCHASE OF LANDS. WE HAVE APPROACHED HIM NUMBER OF TIMES, BUT DUE TO BEING BUSY IN HIS OWN WORKS, COULD NOT BE PRODUCED. MOST OF THE T RANSACTIONS OF LANDS OF NIKHIL FORT AND NIKHIL PARADISE WERE MADE WITH THE FARMERS THROUGH HIM AND APPELLANT FILED DETAILED WORKING AL ONG WITH COPY OF ACCOUNT OF SHRI NARAIN SINGH, DETAILS OF PAYMENTS MADE TO FARMERS BY WAY OF ACCOUNT PAYEE CHEQUES, COPY OF BANK STATE MENT REFLECTING DETAILS OF CLEARANCE OF CHEQUES AND PEAK AMOUNT OF PAYMENT GIVEN TO MR NARAIN SINGH. ITA NO. 385 & 386/AGRA/2010 19 6.1 THE AFORESAID REPLY OF THE ASSESSES DID NOT FIND AN Y FAVOUR WITH THE ASSESSING OFFICER, WHO AFTER DISCARDING THE SAME MADE THE ADDITIONS ON THE BASIS OF FOLLOWING ASSUMPTIONS :- (A). IN SPITE OF REPEATED OPPORTUNITIES, ASSESSES D ID NOT DIVULGE THE CORRECT IDENTITY OF SRI NARAIN SINGH AND NEVER PRODUCED HIM IN OFFICE. AFTER GETTING THE ADDRESS, SUMMON U/S 131 WERE ISSUED TO SHRI NAR AIN SINGH ON 03.12.2009 FIXING THE CASE ON 11.12.2009 BUT NO COM PLIANCE WAS MADE. THEREAFTER, A SUMMON WAS ALSO SENT ON 11.12.2009,FI XING THE CASE ON 14.12.2009. SHRI NARAIN SINGH FILED AN AFFIDAVIT ST ATING THAT HE HAS NO CONCERN WITH M/S NIKHIL HOMES LTD DURING THE A.Y 2 006-07 AND 2007-08, HE HAS NOT INDULGED IN ANY TRANSACTION WITH THE ASS ESSES COMPANY. (B) AS PER THE PREVALENT TRADE PRACTICE IN REAL EST ATE BUSINESS, IT IS OBSERVED THAT THERE IS SIZEABLE AMOUNT OF CASH COMPONENTS IN THE PURCHASES OF LAND AND THE SAME WAS GIVEN BY THE ASSESSES FOR THE PURC HASE OF LAND. (C ) IT IS VERY UNUSUAL AND UNCOMMON THAT THE MONEY WAS GIVEN AS SURETY TO SOMEBODY WHO HAS ALSO NOT ACCEPTED THAT HE HAS RECE IVED THE MONEY AS SURETY. (D) THE ASSESSES DOES NOT HAVE ANY PROOF THAT THE A MOUNTS WERE GIVEN AS SURETY AND SAME WERE RECEIVED BACK. ITA NO. 385 & 386/AGRA/2010 20 7. IN THIS CONNECTION THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS DIVULGED THE IDENTITY OF SHRI NARAIN SINGH ON 01.12.2009 AT THE TIME OF STATEMENT OF SHAILENDRA AGARWAL, MANAGING DIRECTOR OF THE ASSESSES COMPANY, RECORDED ON 01.12.09 AND ON THE BASIS OF THAT, THE AO ISSUED SUMMON U/S 131 ON 03.12.2009 TO MR NARAIN SINGH. THEREAFTER THE ASSES SEE FURTHER DIVULGED THE IDENTITY OF MR NARAIN SINGH VIDE ITS REPLY DT 04.12 .2009. THEREAFTER, A SUMMON WAS ALSO SENT BY AO ON 11.12.2009 FIXING THE DATE O F HEARING ON 14.12.2009. MR NARAIN SINGH FILED HIS AFFIDAVIT ON 14.12.2009. THE REAFTER ON 17.12.2009, SHRI NARAIN SINGH APPEARED BEFORE AO ALONG WITH HIS ADVO CATE AND THE STATEMENT OF MR NARAIN SINGH WAS RECORDED AS WOULD BE EVIDENT FROM THE PERUSAL OF THE ORDER SHEET ENTRY DATED 17.12.2009 FOR THE A.Y 2006-07 AND 2007 -08. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE IDENTITY OF MR NARA IN SINGH CAN NOT BE DOUBTED ONCE HIS STATEMENT WAS RECORDED BY THE AO HIMSELF. THE S TATEMENT OF SRI NARAIN SINGH WAS RECORDED AT THE BACK OF THE ASSESSES AND THEREF ORE, HE BECAME WITNESS OF AO. IT IS ALSO TO BE APPRECIATED THAT AO DID NOT PROV IDE ANY OPPORTUNITY TO THE ASSESSEE FOR CROSS-EXAMINATION TO MR NARAIN SINGH I N SPITE OF REQUEST MADE BY THE ASSESSES ON 14.12.2009 AND THE RELEVANT PARA IS REP RODUCED HEREUNDER: THAT THE ASSESSES HAS COME TO KNOW THAT SUMMON HAS BEEN ISSUED TO MR. NARAIN SINGH TO PRESENT ON 12.12.2009.IIT IS KI NDLY REQUESTED TO ALLOW THE ASSESSES AT THE TIME OF INVESTIGATION FOR CROSS EXAMINATION IF REQUIRED ITA NO. 385 & 386/AGRA/2010 21 THAT THE ASSESSES IS ALSO MAKING HIS BEST EFFORTS T O CONTACT AND PRESENT SRI NARAIN SINGH FOR VERIFICATION BUT DUE TO BEING MINISTER OF U.P GOVT. AND POWERFUL PERSON, PROPER RESPONSE IS NOT B EING GIVEN BY HIM TO THE ASSESSES. HENCE IT IS FURTHER REQUESTED TO S UMMON HIM. 7.1 IT WAS FURTHER CONTENDED ON BEHALF OF THE ASSE SSEE THAT UNDER THESE CIRCUMSTANCES IT WAS DUTY OF THE AO TO PUT THIS WIT NESS FOR CROSS EXAMINATION BEFORE DRAWING ADVERSE INFERENCES AND BEFORE JUMPIN G TO ANY CONCLUSION. THE ASSESSEE HAS ALSO SUBMITTED THE CLIPPING OF SOME OF THE NEWS PAPERS WHICH CLEARLY REFLECT THE NAME OF SHRI NARAIN SINGH WITH THE APPE LLANT IN WHICH HE WAS FULLY INDULGED IN TRANSACTION OF THE PURCHASE OF LANDS M ENTIONED IN ANNEXURE A-7. 7.2 IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT B ESIDES MR. NARAIN SINGH, NEITHER ANY PERSONS REFLECTED ON PAGE NO 05 OF THE ASSESSMENT TO WHOM PAYMENTS WERE MADE NOR ANY FARMERS FROM WHOM LAND WAS PURCHA SED WERE SUMMONED BY THE AO, AND ALSO NOR ANY INVESTIGATION WAS MADE BY AO AND NO OPPORTUNITY WAS GIVEN TO THE ASSESSES TO PRODUCE THEM. 7 .3 IT WAS FURTHER CONTENDED BY THE LD COUNSEL FOR THE ASSESSEE THAT AO HAS FAILED TO BRING ANY CORROBORATIVE EVIDENCES ON RECORD IN SUPPORT OF ANNEXURE A-7. THE APPELLANT HAS PLACED RELIANCE ON THE DECISION OF HO NBLE DELHI HIGH COURT IN [2010]322 ITR 191 [DELHI] IN WHICH IT WAS HELD THAT ADDITION CAN NOT BE MADE IN ITA NO. 385 & 386/AGRA/2010 22 ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCES. BECAU SE AO HAS NOT BROUGHT ANY OTHER EVIDENCES. 7.4 THE LD. CIT(A) FOUND THAT THERE IS CONSIDERABLE SUBSTANCE IN THE CONTENTION OF THE ASSESSEE BECAUSE THE IDENTITY OF MR. NARAIN SINGH WAS FURNISHED BY THE ASSESSEE AND THE AO HAS NOT BROUGHT ANY CONCRETE EV IDENCE ON RECORD IN SUPPORT OF HIS ASSUMPTIONS. THE ASSESSEE FURTHER CONTENDED THA T DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE STATEMENT OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY NAMELY, SHRI SHAILENDER KUMAR AGARWAL WAS R ECORDED ON 1-12-2009 AND IT WAS STATED BY THE SAID DIRECTOR VIDE REPLY NO. 3 THAT THE CASH PAYMENTS SHOWN IN THE ANNEXURE A-7 WERE PAID TO SH. NARAIN SINGH AS A MOUNT OF SECURITY/EARNEST MONEY AGAINST THE CHEQUES ISSUED TO VARIOUS FARMERS ON ACCOUNT OF PURCHASE OF LANDS FROM THESE FARMERS. IT WAS ALSO STATED THAT W HEN THE CHEQUES WERE REALIZED THE AMOUNT WAS RECEIVED BACK. HOWEVER AO MADE THE A DDITION OF RS.3,24,69,311/- BY AGGREGATING ALL THE PAYMENTS SHOWN IN THE COLUMN OF CASH PAYMENT BY RELYING ONLY ON BASIS OF REPLY OF QUESTION NO 02 OF THE STA TEMENT RECORDED ON PICK AND CHOOSE BASIS TO THE EXTENT FOUND SUITED. IT WAS CON TENDED BY THE ASSESSEE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS NO QUES TION WAS ASKED BY THE AO WITH REGARD TO IMPUGNED ADDITION BEFORE 01.12.2009. ITA NO. 385 & 386/AGRA/2010 23 7.5 IT WAS FURTHER CONTENDED BY THE LD COUNSEL FOR THE ASSESSEE THAT THE PERUSAL OF THE STATEMENT REVEALED THAT IT WAS CLARIFIED BY MR. AGGARWAL THAT THE AMOUNT MENTIONED IN THE CASH COLUMN OF PAGE 1, 2 OF ANNEXU RE A-7 WAS GIVEN TO SH. NARAIN SINGH. IT WAS ALSO STATED IN THE EARLIER PA RT OF STATEMENT THAT MR. NARAIN SINGH WAS ACTING AS A MEDIATOR FOR A DEAL OF THE A SSESSES WITH THE FARMERS WITH REGARD TO PURCHASE OF THE LANDS BY THE ASSESSEE, WI TH A VIEW TO FACILITATE THE PROCESS OF DEALING WITH THESE FARMERS., IN THE ASSESSMENT O RDER, AO HAS ACCEPTED THE FACT THAT AMOUNT WAS GIVEN TO SH. NARAIN SINGH BUT HAS D ISBELIEVED THE LATER PART THAT SAID MONEY WAS RETURNED BACK TIME TO TIME FROM THEM , AS AND WHEN, THE PURPOSE OF GIVING THE SECURITY WAS ACCOMPLISHED. 7. 6 IT WAS FURTHER CONTENDED BY THE LD COUNSEL FOR THE ASSESSEE THAT FROM THE PERUSAL OF THIS VERY STATEMENT THAT QUESTION WAS AS KED BY AO WITH REGARD TO PAYMENTS IN CASH TO SOME OF THE PARTIES WHOSE NAME S ARE GIVEN AT PAGE 5 OF THE ASSESSMENT ORDER AND ASSESSES HAS EXPLAINED THAT TH ESE PERSONS HAVE ALSO FACILITATED THE PROCESS OF PURCHASE OF LANDS BY THE ASSESSES CO MPANY FROM VARIOUS FARMERS THEREFORE IT WAS GIVEN AS SECURITY MONEY TO THEM A ND THE SAME WAS REFUNDED BY THEM TO THE COMPANY AS AND WHEN THE PURPOSE OF SECU RITY WAS ACHIEVED . ITA NO. 385 & 386/AGRA/2010 24 7.7 THE ASSESSEE HAS FURTHER CONTENDED THAT FROM TH E VERY BEGINNING, THE ASSESSEE HAS STATED THAT NO LAND WAS PURCHASED FROM MR NARAIN SINGH AND FROM THE PERSONS REFLECTED ON PAGE NO 05 OF THE ASSESSMENT O RDER. THEY ACTED AS SURETY AND MIDDLE MEN AND FACILITATORS IN THE PROCESS OF PURCH ASES OF LAND AND ON CLEARANCE OF CHEQUES FROM BANK, THEY USED TO REFUND THE MONEY BA CK TO THE ASSESSEE COMPANY. IT WAS CONTENDED BY THE ASSESSEE THAT ANNEXURE-7 RE FLECTS THE MODE AND BASIS OF PAYMENTS MADE TO DIFFERENT PERSONS EITHER AS ADVANC E AGAINST THE LAND OR TO PURCHASE THE LAND. THEREFORE ADVANCES RETURNED BACK OR MONEY IN CASH AT THE TIME OF CLEARANCE OF CHEQUES BUT IT IS SURPRISING TO NOT E THAT NEITHER ANY FACILITATOR NOR ANY FARMERS WERE GIVEN ANY SUMMON U/S 131 NOR ANY E NQUIRY OR INVESTIGATION WAS MADE BY AO FROM THEM AND ALSO NO OPPORTUNITY WAS GI VEN TO ASSESSEE TO CROSS- EXAMINE THEM. FROM THE VERY BEGINNING, THE ASSESSEE HAS STATED THAT NO LAND WAS PURCHASED EITHER FROM MR NARAIN SINGH OR FROM ANY PERSONS REFLECTED AT PAGE 05 OF THE ASSESSMENT ORDER. THEY SIMPLY ACTED AS SURET Y AND MIDDLE MEN AND ON CLEARANCE OF CHEQUES FROM BANK IN THE NAME OF FARME RS, THEY USED TO REFUND THE MONEY PAID IN CASH TO THE COMPANY. IN THIS CONNECTI ON, THE ASSESSEE HAS ENCLOSED THE DETAILED WORKING OF COPY OF ACCOUNT OF MR NARA IN SINGH, AND OTHER PERSONS TO WHOM PAYMENT WERE MADE, DETAILS OF CHEQUES ISSUED T O THE FARMERS FROM WHOM LAND WAS PURCHASED, COPY OF BANK STATEMENT REFLECTI NG DETAILS OF CHEQUES HONORED BY THE BANK, AND WORKING SHEET FOR WORKING OUT THE PEAK AMOUNT. THE ITA NO. 385 & 386/AGRA/2010 25 ASSESSEE HAS SUBMITTED THE COPY OF ACCOUNT OF MR. N ARAIN SINGH REFLECTING INFLOW AND OUT FLOW OF CASH OF RS 1,87,70,000/= (WHICH INC LUDES THE SUM OF RS.40,75,000/= AS OPENING BALANCE RESULTING IN RS 1 ,46,95,000/= FOR THE F.Y 2006- 07 ) ALONG WITH THE DETAILS OF CHEQUES ISSUED TO TH E DIFFERENT FARMERS AND COPY OF BANK ACCOUNT REFLECTING THE AMOUNT OF CLEARANCE OF CHEQUES. THE ASSESSEE HAS ALSO SUBMITTED THE COPIES OF ACCOUNT OF FOLLOWING PERSON S TO WHOM THE PAYMENTS WERE MADE REFLECTING IN-FLOW AND OUT-FLOW OF CASH ALONG WITH THE DETAILS OF PAYMENTS MADE THROUGH ACCOUNT PAYEE CHEQUES AND ALSO COPY OF BANK STATEMENT REFLECTING THE CLEARANCE OF CHEQUES. NAME OF PERSONS CASH IN FLOW AND OUT FLOW ================= ============================ ARJUN SINGH 900000 BHIM SEN 1590000 SMT GULAB DEVI 1600000 BACCHU SINGH 200000 SMT DEVI 200000 SMT GURU PYARI 180000 LALTESH 357654 RAM DAYAL 200000 PANDIT NIYYA NAND 300000 PANDIT SHRI KRISHANA 2210457 RAJENDRA SINGH 25000 RAVINDRA GUPTA 200000 KISHAN KUMAR 200000 MANI RAM 311000 DHRUB VASHISTHA 2000000 GIRRAJ SINGH 1500000 V.K.TYAGI 5900000 ----------------- RS. 1,78,74,111 THE ASSESSEE CONTENDED THAT PAYMENTS OF RS.2,00,0 00/= MADE TO SMT DEVI, RS.1,80,000/= TO SMT GURU PYARI, RS3,57,654/= TO S RI LATESH , RS 2,00,000/= TO ITA NO. 385 & 386/AGRA/2010 26 SRI RAM DAYAL HAVE ALREADY BEEN RECORDED IN THE REG ULAR BOOKS OF ACCOUNT MAINTAINED AND THE SUM OF RS.20,00,000/= TO SHI DHR UB VASHISTHA, RS 15,00,000/= TO SRI GIRRAJ SINGH AND RS.59,00,000/= TO SRI V.N.T YAGI,( BEING TOTAL RS 94.00 LACKS) PAID TO THEM , HAVE BEEN MADE ON BEHALF OF COL A.K.TYAGI. THE ASSESSEE HAS ALSO SUBMITTED THE AGREEMENT DT 27.12.2006 EXEC UTED BETWEEN COL A.K.TYAGI AND ASSESSEE IN WHICH ASSESSEE HAS AGREED TO PURCHA SE HIS LAND FOR RS 1,00,00,000/= AND ALSO ASSESSEE HAS SUBMITTED THE CONFIRMATION LETTER OF COL A.K.TYAGI ACCEPTING THE SUM OF RS 94,00,000/= FRO M 27.12.06 TO 12.02.07 FROM MR DHRUB VASHISTHA, SRI GIRRAJ SINGH AND SRI V.K.T YAGI. AND THE ASSESSEE HAS CONTENDED THAT THE SUM OF RS.10,457/= IN THE NAME O F PANDIT SHRI KRISHAN, RS.25,000/= IN THE NAME OF SRI RAJENDRA SINGH, RS.2 ,00,000/= IN THE NAME OF KISHAN KUMAR, RS 311000/= IN THE NAME SRI MANI RAM AND THE SUM OF RS 9400000/- IN THE NAME OF COL A.K.TAGI WERE OUTSTA NDING AS ON 31 ST MARCH 2007. 7.8 THE ASSESSEE HAS FURTHER CONTENDED THAT ON 14.1 2.2009 IT HAS FILED ITS RETURN IN RESPONSE TO THE NOTICE DT 06.03.2009 ISSUED U/S 148 REFLECTING THE ADDITIONAL AMOUNT OF RS.24,41,657/= ON THE BASIS OF PEAK AMOUN T FOR TAX PURPOSE. 7.9 IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT I N THESE DOCUMENTS COMPLETE NAMES AND ADDRESSES HAVE BEEN GIVEN, ALONG WITH THE COPY OF ACCOUNT, DETAILS OF ITA NO. 385 & 386/AGRA/2010 27 PAYMENTS, BANK STATEMENTS, WORKING OF PEAK AMOUNT A ND IT MAY BE SEEN THAT AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTRADIC T THESE DOCUMENTS AND DETAILS AND HAS SIMPLY IGNORED THE RIGHTFUL ARGUMENT AND TH E PLEADINGS OF THE ASSESSES WITH THE SOLE OBJECTIVE OF JUSTIFYING THE ADDITION. 7 .10 IN THIS CONNECTION, THE ASSESSEE HAS CONTENDED THAT STATEMENT OF MR NARAIN SINGH WAS RECORDED BY AO ON 17.12.2009, THEREFORE I DENTITY OF MR NARAIN SINGH CAN NOT BE DOUBTED ONCE HIS STATEMENT WAS RECORDED BY THE AO HIMSELF. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MOST SU RPRISING FACT HERE IS THAT ONCE NARAIN SINGH HAD COME INTO THE CONTROL OF AO AND HI S STATEMENT WAS RECORDED AT THE BACK OF THE ASSESSES, HE BECAME WITNESS OF AO. THEREFORE, IT WAS THE DUTY OF AO TO PUT HIM FOR CROSS EXAMINATION BY THE ASSESSEE IN THE INTEREST OF THE JUSTICE. THEREFORE, PRINCIPLE OF NATURAL JUSTICE WAS VIOLATE D AND IT WAS ENSURED THAT THE STATEMENT OF MR. NARAIN SINGH WAS RECORDED IN ABSEN CE OF ASSESSEE AND NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN. ACCORDI NG TO THE AR, IT IS TO AVOID THE RIGOROUS OF THE DEPARTMENT AND UNDER THE FEAR OF UN WANTED ACTION FROM THE INCOME TAX DEPARTMENT, WITNESS MAY HAVE BECOME SCARED AND COULD NOT NARRATE THE FACTS TRULY, ESPECIALLY DUE TO THE REASONS THAT THE ASSES SES WAS NOT PRESENT. IT IS WORTH WHILE TO NOTE THAT THE ASSESSEE REQUESTED THE AO TO ALLOW THE PRESENCE OF THE ASSESSES AT THE TIME OF EXAMINATION OF THE STATEMEN T AND ALSO REQUESTED HIS CROSS ITA NO. 385 & 386/AGRA/2010 28 EXAMINATION. THIS REQUEST IS MADE BY THE ASSESSEE V IDE HIS LETTER DATED 14.12.2009. THEREFORE UNDER THESE CIRCUMSTANCES IT WAS DUTY OF AO TO PUT THIS WITNESS FOR CROSS EXAMINATION BEFORE DRAWING ADVERSE INFERENCES AND M AKING UNWARRANTED ADDITIONS TO THE INCOME OF THE ASSESSEE. IT WAS FURTHER CONTE NDED BY THE APPELLANT THAT SOME OF THE FARMERS HAVE FILED F.I.R AGAINST MR. NARAIN SINGH THUS, IT IS ABSOLUTELY UNJUSTIFIED ON THE PART OF NARAIN SINGH TO COMPLETE LY WASH OFF HIS HANDS FROM THE SAID TRANSACTIONS AND AO CANNOT SUPPORT HIM IN HIS ACT WITHOUT CORROBORATING THIS FACT WITH THE CONCERNED FARMERS FROM WHOM THE IMPUG NED LAND WAS PURCHASED. THE COMPLETE DETAILS WITH REGARD TO THE FARMERS WER E GIVEN TO AO IN THE FORM OF PURCHASE DEEDS OF THE LAND VIDE LETTER DATED 22/09/ 08 BUT AO HAS RELIED UPON THE AFFIDAVIT OF MR. NARAIN SINGH WITHOUT MAKING ANY EF FORTS FOR CORROBORATING THE STAND TAKEN BY THE ASSESSEE. IT MAY BE SEEN THAT AD DITIONS HAVE BEEN MADE SOLELY ON THE BASIS OF STATEMENT OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES THE STATEMENT HAS TO BE RELIED AS A WHOLE. IT IS NOT JUSTIFIED ON THE PART OF AO TO PICK AND CHOOSE THE PORTION OF THE STATEMENT AS PER HIS CONVENIENCE. TH E THEORY OF APPROBATE AND REPROBATE DOESNT APPLY ON THE INCOME TAX PROCEEDIN GS. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS:- KALANDEE RAIL NIRMAN (ENGINEERS) LTD. VS. JCIT 78 T TJ 653(TM). KANTILAL & BROS. V. ACIT 51 TTJ 513 (PUNE). MANOJ LAMBA VS. ITO ITA NO. 4379/D/04 (DELHI). BANSAL STRIPS 99 ITD 177 (DEL.). S.K. JAIN VS. JCIT 108 TTJ 575 (NAG.). ITA NO. 385 & 386/AGRA/2010 29 7.11 IT WAS CONTENDED BY THE ASSESSEE THAT REQUEST IS MADE BY THE ASSESSEE VIDE HIS LETTER DATED 14.12.2009 AND THE RELEVANT PARA 0 3 IS REPRODUCED BELOW :- THAT THE ASSESSEE HAS COME TO KNOW THAT SUMMON HAS BEEN ISSUED TO MR. NARAIN SINGH TO PRESENT HIMSELF ON 12.12.2009. IT IS KINDLY REQUESTED TO ALLOW THE ASSESSEE AT THE TIME OF INVE STIGATION FOR CROSS EXAMINATION, IF REQUIRED THAT THE ASSESSEE IS ALSO MAKING HIS BEST EFFORTS T O CONTACT AND PRESENT SRI NARAIN SINGH FOR VERIFICATION BUT DUE TO BEING MINISTER OF U.P GOVT. AND POWERFUL PERSON, PROPER RESPONSE IS NOT B EING GIVEN BY HIM TO THE ASSESSEE. HENCE IT IS FURTHER REQUESTED TO S UMMON HIM. THEREFORE UNDER THESE CIRCUMSTANCES IT WAS DUTY OF AO TO PUT THIS WITNESS FOR CROSS EXAMINATION BEFORE DRAWING ADVERSE INFERENCES AND B EFORE MAKING UNJUSTIFIED ADDITION IN THE INCOME OF THE ASSESSES. IT WAS FURTHER CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT ONE OF THE REASONS FOR MAKING AN ADDITION BY THE AO IN THE ASSESSMENT ORDER IS THAT THE AMOUNT SHOWN AS PAID IN CASH WAS ON A/C OF CASH COMPONENT IN THE PURCHASE OF LAND, WHERE THE LAND WAS PURCHASED AT CIRCLE RATE {MARKET PRICE) AN D ALSO THE CONTENTION OF THE ASSESSEE COMPANY RIGHT FROM THE BEGINNING IS THAT T HE CASH WAS PAID ON ACCOUNT OF SURETY TO THE MIDDLE MAN/FACILITATOR. THIS WAS CONS ISTENT STATEMENT OF THE ASSESSEE RIGHT FROM THE BEGINNING AND NO CONTRADICTION HAS B EEN EVER MADE IN THIS REGARD BY THE ASSESSEE AND THERE WAS NO EVIDENCE WITH THE AO TO HOLD THAT ANY CASH WAS PAID OVER AND ABOVE THE AMOUNT OF CHEQUE FOR PURCHASING LAND. UNDER THESE CIRCUMSTANCES IT IS THE AO WHO ALLEGED THAT THE CAS H PAID WAS ON ACCOUNT OF ITA NO. 385 & 386/AGRA/2010 30 PURCHASE OF LAND FROM THE FARMER. UNDER THESE CIRC UMSTANCES THE BURDEN WAS UPON THE AO TO LEAD THE EVIDENCES BY MAKING REQUISITE VE RIFICATION FROM THESE FARMERS TO SUPPORT HIS ALLEGATION. HOWEVER HE CHOSE TO MAKE AD DITION MERELY BASED ON HIS ALLEGATIONS. IT HAS BEEN BROUGHT TO THE NOTICE OF T HE AO THAT THE LAND WAS PURCHASED AS PER THE CIRCLE RATE WHICH IS EVIDENT FROM THE CO PY OF REGISTRY FILED REFLECTING THAT ON 15.01.2007, 1.8437 HECTARE LAND WAS PURCHASED FO R RS 2,85,50,460/-, WHEN CIRCLE RATE WAS RS 2,85,00,000/= HENCE NO EXCESS PA YMENT WAS MADE AGAINST THE LAND . IT WAS CONTENDED BY THE APPELLANT THAT HON, BLE DELHI HIGH COURT VIDE [2010]322 ITR 191 [DELHI] HELD THAT ADDITION CAN NO T BE MADE IN ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCES. AND AO HAS NOT BROUG HT ANY OTHER EVIDENCES ON ASSESSMENT RECORD. 8. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE AND MATERIAL ON RECORD ACCEPTED THE EXPLANATION OF THE ASSESSEE REGARDING SURRENDER OF PEAK AMOUNT OF RS.24,61,747/- AND DELE TED THE ADDITION OF RS.3,00,27,667/-. THE FINDINGS OF THE LD. CIT(A) IN PARA 20 TO 23 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 20. I HAVE CONSIDERED THE SUBMISSION ADVANCED BY THE AR OF THE ASSESSES, EXAMINED THE ASSESSMENT ORDER, AND THE O THER RELEVANT EVIDENCES ON RECORDS AND ALSO CONSIDERED THE ORAL P LEADINGS OF THE AR OF THE APPELLANT, IN MY OPINION, THE ONLY ISSUE IN VOLVED IN THIS GROUND OF APPEAL IS WHETHER UNDER THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE AMOUNT OF SUM OF RS 3,24,69,311/- IN CASH GIVEN TO DIFFERENT ITA NO. 385 & 386/AGRA/2010 31 PERSONS WERE RECEIVED BACK OR NOT? UPON THE CAREFUL PERUSAL OF EVIDENCES AND RECORDS, IT IS NOT DISPUTED THAT THE SUM OF RS. 3,24,69,311/= REFLECTED IN ANNEXURE A-7 HAS BEEN PA ID IN CASH TO THE DIFFERENT PERSONS. AFTER GOING THROUGH THE ENTIRE RECORDS, IT WAS NOTICED THAT NO ENQUIRY WAS MADE BY AO DURING THE C OURSE OF ASSESSMENT PROCEEDINGS UP TO 01.12.2009. THE STATEM ENT OF SRI SHAILENDRA AGARWAL , MANAGING DIRECTOR OF THE COMPA NY WAS RECORDED ON 01.12.2009 AND ON THE BASIS OF SAID STA TEMENT OF SRI SHAILENDRA AGARWAL, ENTIRE ADDITION WAS MADE BY THE AO. I HAVE ALSO CONSIDERED THE STATEMENT OF SRI SHAILENDRA AGARWAL AND NOTICED THAT ON THE BASIS OF REPLY NO.2 OF THE SAID STATEMENT, T HE AO HAS ACCEPTED THAT THE SAID PAYMENTS HAVE BEEN MADE IN CASH TO TH E DIFFERENT PERSONS AND ALSO ON THE BASIS OF REPLY NO.3 OF THE SAID STA TEMENT, APPELLANT HAS ACCEPTED THAT SAID PAYMENTS HAVE BEEN MADE IN C ASH TO DIFFERENT PERSON WHO ACTED AS MIDDLEMEN, SURETY AND FACILITAT OR IN THE PROCESS OF TRANSACTION OF PURCHASES OF LAND AND SAID MONEY WAS RETURNED BACK BY THEM AS SOON AS THE PURPOSE WAS ACHIEVED. NOW T HE QUESTION ARISES WHETHER THE SAID PAYMENTS WERE REFUNDED BY T HEM TO THE ASSESSES COMPANY OR NOT.? NOW IT BECOMES NECESSARY TO KNOW WHY THE APPELLANT HAS MADE SAID PAYMENT IN CASH TO THE DIFFERENT PERSONS.? AS THE APPELLANT IS ENGAGED IN THE BUSINESS OF REAL ESTATE, IN MY OPINION, THE CASH PAYMENTS MAY BE MADE BY THE APPEL LANT IN THE FOLLOWING CIRCUMSTANCES :- (A) PAYMENT AGAINST THE PURCHASES OF LAND. (B) ADVANCES AGAINST THE PURCHASE OF LAND. (C) LOANS AND ADVANCES FOR ANY OTHER PURPOSE (D) BROKERAGE AGAINST THE PURCHASE OF LAND (E) PAYMENT AS SURETY AGAINST THE PURCHASE OF LAND (F) PAYMENTS MADE TO PERSONS AS MIDDLEMAN AGAINST THE PURCHASES OF LAND A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT AO HAS COVERED THE PRESENT CASE AS THE SAID CASH PAYMENT HAVE BEEN MAD E TO DIFFERENT PERSONS AS OVER AND ABOVE THE PAYMENT MADE IN CHEQU E FOR THE PURCHASE OF LAND WHICH IS OVER AND ABOVE THE REGIST ERED AMOUNT BUT DID NOT BRING ANY EVIDENCES TO SUBSTANTIATE HIS CON CLUSION. I HAVE ALSO CONSIDERED THE DETAILED WORKING, COPY O F ACCOUNT OF DIFFERENT PERSONS, BANK STATEMENT ETC SUBMITTED BY THE APPELLANT AND NOTICED THAT OUT OF THESE DIFFERENT PERSONS, LAND W AS PURCHASED ONLY ITA NO. 385 & 386/AGRA/2010 32 FROM FOUR PERSONS NAMELY SMT DEVI RS 2.00 LACKS, SM T GURU PYARI RS 1.80 LACKS, SRI LATESH RS.3,57,654/= AND SRI RAM DA YAL RS 2.00 LACS. WHICH WERE DULY RECORDED BY THE APPELLANT IN ITS RE GULAR BOOKS OF ACCOUNT MAINTAINED. BESIDES THESE, NO LAND WAS PURC HASED FROM ANY PERSON REFLECTED IN THE ANNEXURE A7 TO WHOM PAYMENT WERE MADE IN CASH. THEREFORE IN MY OPINION, THE SAID AMOUNT PAID TO DIFFERENT PERSONS CAN NOT BE TREATED AS PAYMENTS MADE AGAINST THE PURCHASES OF LAND AS ALSO NO BOGUS PURCHASE DEEDS WERE BROUGHT B Y AO ON RECORD. 21. THE APPELLANT HAS ALSO SUBMITTED THE COPY OF AC COUNT OF MR. DHRUB VASHIT, SRI GIRRAJ SINGH AND SRI V.N.TYAGI RE FLECTING PAYMENTS MADE TO THEM RS 20.00 LACKS,15.00 LACKS AND 59.00 L ACKS RESPECTIVELY. IT WAS CONTENDED BY THE APPELLANT THAT SAID PAYMENT S WERE MADE TO THEM TO GIVE AS ADVANCE MONEY TO COL A.K.TYAGI ON B EHALF OF THE APPELLANT AGAINST THE PURCHASE OF LAND. THE APPELLA NT ALSO FILED THE COPY OF AGREEMENT EXECUTED BETWEEN THE APPELLANT AN D COL A.K.TYAGI TO PURCHASE HIS LAND FOR RS 100 LACKS AND ALSO FILE D THE CONFIRMATION LETTER FROM COL A.K.TYAGI ACCEPTING THE PAYMENT OF RS 94 LACS FROM MR DHRUB VASHISTHA, MR GIRRAJ SINGH AND MR V.N.TYAG I.. THE APPELLANT HAS FILED THE COPIES OF ACCOUNT OF SRI RA JENDRA SINGH, KISHAN KUMAR AND SRI MANI RAM REFLECTING THE SUM OF RS 25,000/=, 2,00,000/= AND 3,11,000/= RESPECTIVELY AS ADVANCES AGAINST THE LAND WHICH REMAINED OUTSTANDING AS ON 31 ST MARCH 2008. AFTER CONSIDERING THE RELEVANT EVIDENCES AVAILABLE ON RECORDS, I AM O F THE OPINION THAT SAID PAYMENT HAS BEEN MADE AS ADVANCE AGAINST THE L AND AND APPELLANT HAS ALSO DULY REFLECTED THE SAID PAYMENT OF RS 94.00 LACS AS ADVANCE IN THE NAME COL A.K.TYAGI AND RS.5,36,000/= IN THE NAME OF OTHER PERSONS. 22. I HAVE ALSO CONSIDERED THE DETAILED COPIES OF A CCOUNT OF OTHER PERSONS NAMELY SRI ARJUN SINGH, BHIM SEN, SMT GULAB DEVI, BACCHU SINGH, PANDIT NITYA NAND, PANDIT SHRI KRISHAN, SHRI RAJENDRA SINGH, SHRI RAVINDRA GUPTA, SHRI KISHAN KUMAR, SHRI MANI R AM AND SHRI NARAIN SINGH AND NOTICED THAT CASH PAYMENTS MADE TO THEN DO NOT COME UNDER THE PURVIEW OF BROKERAGE DUE TO THE FACT THAT NEITHER ANY LAND WAS PURCHASED FROM THEM NOR ANY EVIDENCE IS AV AILABLE ON RECORD REFLECTING ANY PAYMENT OF BROKERAGE HENCE I N MY OPINION, THE SAID PAYMENTS CAN NOT BE TREATED AS BROKERAGE. THE APPELLANT HAS ALSO FILED THE COPY OF ACCOUNT OF MR NARAIN SINGH, COPY OF BANK STATEMENT, DETAILS OF PAYMENTS MADE TO FARMERS THROUGH ITA NO. 385 & 386/AGRA/2010 33 ACCOUNT PAYEE CHEQUES. THE COPY OF ACCOUNT REFLECTS THE SUM OF RS.40,75,000/= AS OPENING BALANCE AND THE SUM OF RS 1,46,95,000 WAS PAID DURING THE YEAR TO MR. NARAIN SINGH AND IT ALSO REFLECTS THAT THE SUM OF RS 1,87,77,000/= RECEIVED BY THE ASSESSE S COMPANY DURING THE YEAR. COPY OF ACCOUNTS ALSO REFLECT THE DETAILS OF CHEQUES REFLECTING DATES, CHEQUE NOS, NAME OF FARMERS AND A LSO DATE OF CLEARANCE OF CHEQUES FROM THE BANK, AND NAME OF FAR MERS TO WHOM CHEQUES WERE ISSUED AND THE DETAILS OF AMOUNT RECEI VED BACK ON THE CLEARANCE OF CHEQUES ALONG WITH THE WORKING OF PEAK AMOUNT RS 1,24,41,647 OUT OF WHICH THE SUM OF RS 1,00,00,000/ = RELATED TO A.Y 2006-07 HAS BEEN DISCLOSED BY THE APPELLANT IN RELE VANT A.Y AND THE SUM OF RS 24,41,647/= IS RELATED TO A,Y 2007-08 AND ACCORDINGLY THE APPELLANT FILED ITS REVISED RETURN ON 14.12.2009 IN RESPONSE TO NOTICE ISSUED U/S 148 DT 06.03.2009 REFLECTING THE ADDITIO NAL INCOME OF RS 24,41,647/= 23. UPON CAREFUL PERUSAL OF AVAILABLE FACTS, AVAILA BLE RECORDS AND ASSESSMENT ORDER, IN MY OPINION, THE IDENTITY OF MR NARAIN SINGH WAS DULY FURNISHED BY THE APPELLANT. AO HAS NOT BROUGHT CORROBORATIVE EVIDENCES ON RECORDS IN SUPPORT OF HIS ASSUMPTIONS WHILE DISCARDING THE STAND TAKEN BY THE APPELLANT ON 04.12.2009 . TH E STATEMENT OF MR. NARAIN SINGH WAS RECORDED BY AO HIMSELF ON 17.12.20 09 AND THIS FACT HAS NOT BEEN MENTIONED BY AO ANY WHERE IN HIS ASSES SMENT ORDER. AO HAS MADE ENTIRE ADDITION ON THE BASIS OF Q.NO.2 OF THE STATEMENT OF SHRI SHAILENDRA KUMAR RECORDED ON 01.12.09 WHILE NO CONSIDERATION WAS GIVEN BY THE AO TO REPLY NO.3 IN WHICH THE APP ELLANT HAS STATED THAT CASH WAS GIVEN TO MR NARAIN SINGH AS A MIDDLE MAN AND SURETY AND SAME AMOUNT WAS RETURNED BACK TO THE COMPANY ON CLEARANCE OF THE CHEQUES. IN SUPPORT OF THIS, THE APPELLANT HAS FILED CLIPPING OF SOME RECENT NEWS PAPERS IN WHICH MR. NARAIN SINGH W AS REPORTED TO HAVE INDULGED IN THE TRANSACTION OF LANDS REFLECTED IN ANNEXURE A-7. ALTHOUGH MR. NARAIN SINGH HAS STATED IN HIS STATEME NT RECORDED ON 17.12.2009 AND IN HIS AFFIDAVIT FILED ON 14.12.2009 THAT HE HAS NO CONCERN WITH THE APPELLANT AND HE HAS NOT INDULGED IN ANY TRANSACTION WITH THE ASSESSES DURING THE A.Y 2006-07 & 2007-08, YET IT CAN NOT BE ASSUMED THAT THE FACTS MENTIONED IN THE AFFIDAVIT A ND IN THE STATEMENT ARE CORRECT. HE WOULD HAVE GIVEN THIS STATEMENT IN HIS OWN INTEREST AND TO SAFE GUARD HIMSELF FROM THE PROBABLE PROCEE DINGS OF INCOME TAX AGAINST HIM. IT IS ALSO NOTICED THAT THE APPELL ANT WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE MR. NARAIN SINGH . NO LAND WAS ITA NO. 385 & 386/AGRA/2010 34 DIRECTLY PURCHASED FROM MR. NARAIN SINGH. IT IS NOT ICED THAT ALL THE TRANSACTIONS OF PURCHASES OF LAND WERE MADE DIRECTL Y FROM FARMERS TO WHOM PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQU ES. AO HAS MADE NO EFFORTS TO SUMMON ANY FARMER FROM WHOM THE LAND WAS PURCHASED AND ALSO DID NOT CORROBORATE THE FACTS WI TH THE CONCERNED FARMERS. THE LAND WAS PURCHASED AT CIRCLE RATES WHI CH WAS OF RS 2,85,00,000/= AND ACTUAL PAYMENT MADE BY THE APPELL ANT WAS ALSO RS 2,85,50,460/=. THE AO HAS RELIED ONLY ON A PORTION OF THE STATEMENT OF MR SHAILENDRA AGARWAL THAT PAYMENT HAS BEEN MADE TO MR NARAIN SINGH BUT DID NOT RELY ON THE REST OF THE STATEMEN T THAT THE SAID MONEY WAS REFUNDED BACK TO THE ASSESSEE COMPANY FOR WHICH THE APPELLANT HAS FILED DETAILED WORKING OF COPY OF ACCOUNT OF MR NARAIN SINGH, DETAILS OF PAYMENTS MADE TO FARMERS, DETAILS OF CHE QUES NO, DETAILS OF AMOUNT REFUNDED BACK TO THE ASSESSEE COMPANY AND DE TAILS OF PEAK AMOUNT OF PAYMENTS MADE TO MR NARAIN SINGH. AGAINST WHICH THE AO HAS NOT BROUGHT ANY CONTRADICTING EVIDENCES. THE AP PELLANT HAS ALSO FILED THE COPY OF ORDER SHEET FILLED UP TO 18.12.20 09. ON 18.12.2009 THE AO MADE ENQUIRY AS PER PARA (2) WITH THE APPEL LANT ASKING DO YOU HAVE ANY PROOF OR EVIDENCE TO SUBSTANTIATE YOUR CLAIM THAT YOU HAVE GIVEN MONEY TO SRI NARAIN SINGH.? IN RESPONSE TO THE SAID ENQUIRY THE APPELLANT STATED AS ON 24.12.2009 THAT YOUR HONOR HAS QUESTIONED THE AUTHENTICITY OF THE PAYMENT REFLECTE D IN ANNEXURE 7-A IMPOUNDED DURING THE COURSE OF SURVEY.YOUR HONOR HA S MADE THIS ANNEXURE A7 AND INFORMATION FORMING PART OF THE REA SONS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. THIS QUESTI ON IN TRUE CLEARLY INDICATES THAT YOUR GOODSLEG DO NOT RELY ON THESE I NFORMATION AND THE ACTION HAS BEEN TAKEN ON MERE SUSPICISION WHICH ITS ELF RENDER THE ENTIRE PROCEEDING AB INITIO VOID. AFTER GOING THOUGH ALL THESE RELEVANT FACTS AND EXA MINATION OF ASSESSMENT ORDER AND AVAILABLE ASSESSMENT RECORDS A ND ALSO ON THE BASIS OF DELETION OF ADDITION ON SAME GROUNDS IN TH E ORDER OF A.Y 2006-07, THE ADDITION WAS ORDERED TO BE MADE ON THE BASIS OF PEAK BASIS, IN MY OPINION, ADDITION CAN NOT BE MADE ON T HE BASIS OF PART PORTION OF REPLY OF STATEMENT OF APPELLANT WHILE AO HIMSELF IS NOT CONFIDENT ABOUT THE AUTHENTICITY OF PAYMENTS MADE T O MR NARAIN SINGH ASKING THE ASSESSES TO PRODUCE PROOF OF EVIDENCES F OR THE PAYMENTS MADE TO MR NARAIN SINGH AND IT WAS ALSO NOTICED THA T ANNEURE-A-7 WAS NEITHER SIGNED BY THE APPELLANT NOR BY THE PERS ONS TO WHOM PAYMENTS HAVE BEEN MADE AND SUCH TYPE OF EVIDENCES CAN NOT BE ASSUMED AS CONCRETE EVIDENCES IN THE EYES OF LAW. ITA NO. 385 & 386/AGRA/2010 35 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ASSESSEE DESERVES TO BE ASSESSED ON PEAK B ASIS. AND FOR THE REST AMOUNT RS.65,00,457/= THE APPELLANT HAS FILED THE COPIES OF ACCOUNT OF OTHER BANK STATEMENTS OF PERSONS NAMELY SRI ARJUN SINGH, BHIM SEN, SMT GULAB DEVI, BACCHU SINGH, PANDIT NITY A NAND, PANDIT SHRI KRISHAN, SHRI RAJENDRA SINGH, SHRI RAVINDRA GU PTA, SHRI KISHAN KUMAR, SHRI MANI RAM AND REFLECTING THE SUM OF RS. 9,00,000/=, 15,90,000/=, 16,00,000/=, 2,00,000/=, 3,00,000/=, 2 2,10,457/=, I HAVE CONSIDERED THE WRITTEN SUBMISSION FILED BY THE APPELLANT AND ALSO EVIDENCES AVAILABLE ON RECORDS, AND NOTICED THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, ON 18.12.2009, FIRST TIME, THE AO ASKED THE ASSESSEE TO PRODUCE SHRI DHRUB VASHISTHA, GIRRAJ SI NGH, PANDIT SRI KRISHNA, V.K TYAGI AND ARJUN SINGH AND ADJOURN THE DATE FOR HEARING FOR 21.12.2009. THE AR OF THE ASSESSES APPLIED FOR ADJOURNMENT BECAUSE HE WAS OUT OF STATION. TICKET OF FLIGHT FOR PUNE FOR 21.12.2009 WAS ALSO FILED AND ON 24.12.2009, THE APPELLANT FIL ED THE WRITTEN SUBMISSION ON 24.12.2009 WHICH WAS NOT ENTERTAINED BY THE AO AND THE ASSESSMENT ORDER DT 23.12.2009 WAS SERVED TO TH E ASSESSES ON 25.12.2009. I HAVE EXAMINED THE DETAILS FILED BY TH E APPELLANT REFLECTING DETAILS OF PAYMENTS MADE IN CASH AND DET AILS OF PAYMENT MADE THROUGH CHEQUES AND ALSO BANK STATEMENTS AND C OME TO THE CONCLUSION THAT THE APPELLANT HADE MADE PAYMENT IN CASH AND CHEQUES BOTH. ON THE DATE OF CLEARANCE OF CHEQUES FROM BAN K, THE SAID AMOUNT WAS RETURNED BACK TO THE ASSESSES COMPANY. UP TO 18 .12.2009, NO INVESTIGATION WAS MADE BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HENCE IN MY OPINION, REASONABLE OPPORTU NITY WAS NOT GIVEN TO THE APPELLANT. AO DID NOT BRING ANY CONTRA DICTORY EVIDENCES AGAINST THE DETAILED WORKING FILED BY THE ASSESSEE AND ALSO AO HAS NOT BROUGHT ANY CORROBORATIVE EVIDENCES. AO DID NOT MAK E ANY POSITIVE EFFORTS TO INVESTIGATE THEM AND ALSO DID NOT SUMMON THEM FOR INVESTIGATION AND CROSS-EXAMINATION. UNDER THE FACT S AND CIRCUMSTANCES OF CASES, THE ASSESSEE DESERVES TO SU CCEED PARTLY. IN MY OPINION, THE ASSESSMENT SHOULD BE MADE ON THE BA SIS OF PEAK AMOUNT WHICH IS RS.24,41,647/=. HENCE THE ADDITION OF RS 3,24,69,311/= MADE BY THE AO IS HEREBY DELETED AND AO IS DIRECTED TO REVISE APPELLATE ORDER ON THE BASIS OF PEAK AMOUNT OF RS 24,41,647/-, RESULTING NET RELIEF OF RS.3,00,27,664/-. ITA NO. 385 & 386/AGRA/2010 36 9. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT CASH WAS NOT ENTERED INTO THE BOOKS OF ACCOUNT AND DETAILS OF TH E FARMERS ARE NOT KNOWN. SHRI SHAILENDER KUMAR AGARWAL IN STATEMENT RECORDED ON 1 2.08.08 ADMITTED CASH PAYMENT OUTSIDE THE BOOKS OF ACCOUNT AND ALSO MADE SURRENDER OF THE SAME AMOUNT FOR NOT RECORDING THE CASH PAYMENT IN THE BOOKS OF ACCOUNT. THE SEIZED PAPER CONTAINED PAYMENT MADE TO MR. NARAIN SINGH BUT HOW NARAIN SINGH, IN TURN, PAID THE AMOUNTS TO THE FARMERS IS NOT EXPLAINED. THE CH EQUE PAYMENTS ARE MADE TO THE FARMERS. THEREFORE, NO LINK IS ESTABLISHED BETWEEN NARAIN SINGH AND THE FARMERS WHO HAVE DENIED HAVING ANY CONNECTION WITH THE BUSI NESS ACTIVITIES OF THE ASSESSEE IN STATEMENT. THERE IS NO EVIDENCE OF CASH RETURN A S SURETY. IT WAS ALSO NOT CLARIFIED WHETHER THE AMOUNT WAS GIVEN TO MR. NARAIN SINGH IS RETURNED OR NOT OR WHETHER IT WAS GIVEN TO THE FARMERS. THE LD. DR SUBMITTED THAT SINCE THERE IS NO RECEIPT AND PAYMENT EXPLANATION, THEREFORE, THEORY OF PEAK WILL NOT APPLY IN THIS CASE. 10. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T NO CORROBORATIVE EVIDENCE HAS BEEN BROUGHT ON RECORD IN SUPPORT OF THE SEIZED DOCUMENT A-7. THE STATEMENT OF SHRI SHAILENDRA KUMAR AGARWAL WAS ALSO RECORDED ON 01.12.2009, IN WHICH IN QUESTION NO. 3 HE HAS EXPLAINED THAT THE TRANSACTIO NS WERE CARRIED THROUGH SHRI NARAIN SINGH AND BECAUSE THE REGISTERED SALE DEED W ERE NOT RECORDED, THEREFORE, ITA NO. 385 & 386/AGRA/2010 37 POST DATED CHEQUES WERE GIVEN AND TIME TO TIME SECU RITY AMOUNT IN CASH WAS GIVEN TO SHRI NARAIN SINGH, WHICH WAS RETURNED LATER ON. HE HAS SUBMITTED THAT NARAIN SINGH IN STATEMENT DENIED BOTH THE RECEIPTS AND PAY MENT OF MONEY, THEREFORE, NO ADDITION COULD BE MADE IN THE CASE OF THE ASSESSEE ON THE BASIS OF THE SEIZED DOCUMENTS. FURTHER, THE STATEMENT OF NARAIN SINGH W AS NOT SUBJECTED TO CROSS EXAMINATION DESPITE REQUEST OF THE ASSESSEE. THEREF ORE, SUCH STATEMENT CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. HE HAS SUBM ITTED THAT THE ASSESSEE IN ORDER TO AVOID LITIGATION HAS SURRENDERED THE SUBSTANTIAL AMOUNT BY WAY OF PEAK WHICH WAS RIGHTLY ACCEPTED BY THE LD. CIT(A). IT IS FURTH ER SUBMITTED THAT ALL LANDS PURCHASED WERE SUBJECTED TO REGISTERED SALE DEED, W HICH WAS REGISTERED ON THE BASIS OF CIRCLE RATE. THEREFORE, IN THE ABSENCE OF ANY EV IDENCE OF CASH PAYMENT MADE TO THE FARMERS THROUGH NARAIN SINGH, THE ADDITION HAS BEEN RIGHTLY DELETED BY THE LD. CIT(A). HE HAS SUBMITTED THAT IT IS A FACT THAT NO LAND WAS PURCHASED FROM NARAIN SINGH. THEREFORE, THERE IS NO QUESTION OF GIVING AN Y SALE CONSIDERATION TO SHRI NARAIN SINGH. THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT SINCE THE CHEQUE AND THE CASH AMOUNT TALLY AS NOTED BY THE LD. CIT(A), T HEREFORE, NO INTERFERENCE IS REQUIRED IN THE MATTER. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT ALL THE CHEQUE PAYMENTS MADE TO THE FARMERS HAVE BEEN RECORDED ITA NO. 385 & 386/AGRA/2010 38 IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, WHICH ARE NOTED IN THE SEIZED PAPERS. NO EVIDENCE HAS BEEN BROUGHT ON RECORD THAT ANY CASH P AYMENT WAS MADE TO THE FARMERS FOR THE PURCHASE OF LAND. IT IS ALSO NOT IN DISPUTE THAT NO LAND WAS PURCHASED FROM SHRI NARAIN SINGH AND OTHERS, AS MEN TIONED IN ANNEXURE A-7. SO THERE IS NO QUESTION OF GIVING ANY PAYMENT TO THEM AS IS ALLEGED IN THE SEIZED PAPER. THE ASSESSEE FILED RECONCILIATION STATEMENT OF CASH AND CHEQUES TO SUPPORT HIS CONTENTION THAT THE AMOUNTS WERE GIVEN TO SHRI NARAIN SINGH AS MIDDLE MAN AS SURETY AND THE SAME AMOUNT WAS RETURNED TO THE ASSE SSEE-COMPANY ON CLEARANCE OF CHEQUES. RECONCILIATION STATEMENT HAS NOT BEEN DISP UTED BY THE REVENUE BEFORE US. THE IDENTITY OF MR. NARAIN SINGH WAS DIVULGED BY TH E ASSESSEE, WHICH IS ALSO CLEAR FROM THE FACT THAT HIS NAME IS MENTIONED IN THE SEI ZED PAPER. THEREFORE, THE ROLE OF MR. NARAIN SINGH CANNOT BE DISPUTED WHICH IS ALSO A PPARENT FROM HIS NAME MENTIONED IN THE SEIZED PAPER AS WELL AS IN HIS STA TEMENT. THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD IN SUPPORT OF HIS FINDING WH ILE DISCARDING THE STATEMENT OF THE ASSESSEE. THE AO RECORDED STATEMENT OF MR. NARA IN SINGH AT THE BACK OF THE ASSESSEE IN WHICH HE IS STATED TO HAVE DENIED ANY R ECEIPT AND PAYMENT. FIRST OF ALL, HIS STATEMENT WAS NOT SUBJECTED TO CROSS-EXAMINATIO N ON BEHALF OF THE ASSESSEE. THEREFORE, THE SAME CANNOT BE READ AGAINST THE ASSE SSEE IN EVIDENCE. NO OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE TO CROSS EXAMINE MR. NARAIN SINGH. WE ARE FORTIFIED IN OUR VIEW BY THE JUDGMENT OF HONBL E SUPREME COURT IN THE CASE OF ITA NO. 385 & 386/AGRA/2010 39 KISHAN CHAND CHELARAM, 125 ITR 713(SC). IT WAS NOTI CED BY THE LD. CIT(A) THAT ALL THE TRANSACTIONS OF PURCHASE OF LAND WERE MADE DIRECTLY FROM THE FARMERS TO WHOM PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQU ES AND THE AO HAS NOT MADE ANY EFFORTS TO SUMMON ANY OF THE FARMERS FROM WHOM LAND WAS PURCHASED AND ALSO DID NOT CONFRONT THE FACTS WITH THE FARMER S. THE ASSESSEE HAS PURCHASED THE LAND AT CIRCLE RATE WHILE THE ACTUAL PAYMENT MADE B Y THE ASSESSEE WAS SLIGHTLY MORE AND NO EVIDENCE OF ANY CASH PAYMENT OVER AND ABOVE RECORDED IN THE SALE DEED HAVE BEEN BROUGHT ON RECORD BY THE AO. THE DETAILS OF PAYMENTS TO THE FARMERS, THE DETAILS OF CHEQUES AND REFUND AMOUNT AND DETAIL S OF CHEQUE AMOUNTS OF PAYMENT MADE TO NARAIN SINGH HAVE BEEN NOTED, BUT N OTHING ADVERSE WAS FOUND AGAINST THE ASSESSEE. SINCE THE AO DID NOT MAKE ANY FURTHER INVESTIGATION INTO THE MATTER AND MERELY RELIED UPON THE DIARY IN QUESTION WHICH DID NOT REVEAL ANYTHING AGAINST THE ASSESSEE, THEREFORE, THE AO SHOULD HAVE BROUGHT SOME CORROBORATIVE EVIDENCE ON RECORD IN ORDER TO MAKE ADDITION AGAINS T THE ASSESSEE. HOWEVER, THE AO DID NOT MAKE ANY EFFORTS TO INVESTIGATE THE DETA ILS MENTIONED IN THE SEIZED PAPERS. THEREFORE, THE LD. CIT(A) ON PROPER APPRECI ATION OF FACTS AND MATERIAL ON RECORD CORRECTLY CAME TO THE CONCLUSION THAT THE AD DITION WOULD NOT BE JUSTIFIED. THE AO HAS NOT MADE OUT ANY CASE OF ANY BROKERAGE O R OTHER CONSIDERATION PAID TO ANY OF THE FARMERS APART FROM WHAT IS RECORDED IN T HE BOOKS OF ACCOUNT. THEREFORE, THE EXPLANATION OF THE ASSESSEE THAT CASH WAS RETUR NED BACK WHEN CHEQUES WERE ITA NO. 385 & 386/AGRA/2010 40 REALIZED SHALL BE ACCEPTABLE PARTICULARLY WHEN NO C ORROBORATIVE EVIDENCE HAVE BEEN BROUGHT ON RECORD IN SUPPORT OF ANNEXURE-7. THE ASS ESSEE DESPITE NO CASE MADE AGAINST HIM HAS OTHERWISE CALCULATED THE PEAK WITH REGARD TO AMOUNTS GIVEN TO MR. NARAIN SINGH AND SURRENDERED THE AMOUNT FOR THE PUR POSE OF TAXATION. THE CALCULATION OF THE SAME IS NOT DISPUTED. THE DETAIL S OF PAYMENTS MADE TO THE FARMERS WAS FILED BUT THE AO DID NOT EXAMINE ANY FA RMER TO PROVE IF OVER AND ABOVE THE AMOUNT MENTIONED IN THE SALE DEED WAS PAI D TO ANY PERSON AND NO PROPER INVESTIGATION HAS BEEN MADE. FURTHER, WHEN MR. NARA IN SINGH IN STATEMENT DENIED HIS ROLE IN THE PROJECT OF THE ASSESSEE, WHICH WAS ALSO NOT SUBJECTED TO CROSS- EXAMINATION, WOULD AT LEAST PROVE THAT NO AMOUNT WA S RECEIVED BY SHRI NARAIN SINGH. THEREFORE, THERE IS NO QUESTION OF GIVING AN Y AMOUNT IN CASH TO ANYBODY. THE AO ON ONE SIDE BELIEVED ROLE OF SHRI NARAIN SIN GH THAT THE AMOUNT WAS GIVEN THROUGH HIM, BUT ON THE OTHER SIDE DISBELIEVED HIS STATEMENT THAT HE DENIED HIS ROLE IN THE ENTIRE TRANSACTION AND FURTHER HIS STATEMENT WAS NOT SUBJECTED TO CROSS EXAMINATION. THEREFORE, THERE WAS NO REASON TO BELI EVE THAT ASSESSEE PAID ANY CASH AS PER THE SEIZED DOCUMENTS. IN SUCH A CIRCUMSTANCE , IT WOULD HAVE BEEN PROPER FOR THE AO TO BRING CORROBORATIVE EVIDENCE ON RECORD TO SUPPORT HIS ASSUMPTION OF FACTS, BUT THE AO FAILED TO DO SO. HONBLE DELHI HI GH COURT IN THE CASE OF CIT VS. ANIL BHALLA, 322 ITR 191 (DELHI) HELD - SEARCH AND SEIZURE WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE AND THE PREMISES OF A COMPANY OF WHICH THE ASSESSEE WAS A ITA NO. 385 & 386/AGRA/2010 41 DIRECTOR. THE ASSESSING OFFICER MADE ADDITIONS UNDE R THE HEAD OF UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE IN COME-TAX ACT, 1961. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL E XAMINED THE ENTIRE EVIDENCE ON RECORD INCLUDING THE STATEMENTS MADE BY THE ASSESSEE IN THE PROCEEDINGS AS WELL AS BEFORE THE A SSESSING OFFICER AND THEN CAME TO THE CONCLUSION THAT THE ADDITIONS COULD NOT BE SUSTAINED IN THE ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCE. THE COMMISSIONER (APPEALS) DELETED THE ADDITIONS AND TH IS WAS CONFIRMED BY THE TRIBUNAL. ON APPEAL : HELD, DISMISSING THE APPEAL, THAT THE FINDINGS ARR IVED AT BY THE TRIBUNAL WERE PURE FINDINGS OF FACT THAT DID NOT WA RRANT ANY INTERFERENCE BY THE COURT. 11.1 IN ASSESSMENT YEAR 2007-08, THE ASSESSEE ALSO FILED SOME CONFIRMATION IN RESPECT OF THE DEALING WITH MR. A.K. TYAGI AND PART OF THE PAYMENTS HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT, WHICH SUPPORT THE FINDINGS OF THE LD. CIT(A). THE ASSESSEE ALSO FILED COPY OF THE AGREEMENT WITH SHRI A.K. TYAGI FOR PURCHASE OF LAND AND ACCEPTING THE PAYMENTS OF RS.94,00,000/- T HROUGH THE PERSONS RELATED TO HIM, IN WHICH NO INFIRMITY HAS BEEN BROUGHT ON RECO RD. THE LD. CIT(A) ALSO CONSIDERED THE DETAILED COPIES OF ACCOUNTS OF OTHER PERSONS MENTIONED IN THE SEIZED PAPERS AND FOUND THAT NONE OF THE PARTIES MENTIONED IN THE SEIZED PAPER COME UNDER THE PURVIEW OF BROKERAGE AND NO LAND HAS BEEN PURCHASED FROM THEM. THE LD. CIT(A) ON EXAMINATION OF THE DETAILS FILED BY THE A SSESSEE REFLECTING THE DETAILS OF PAYMENTS MADE IN CASH AND THE DETAILS OF PAYMENT MA DE THROUGH CHEQUE FOUND THAT ASSESSEES EXPLANATION IS JUSTIFIED THAT ON THE DAT E OF CLEARANCE OF THE CHEQUES FROM THE BANK, THE AMOUNT WAS RETURNED BACK TO THE ASSES SEE. SINCE NO EVIDENCE OF ITA NO. 385 & 386/AGRA/2010 42 ACTUAL PAYMENT MADE BY THE ASSESSEE WERE FOUND DURI NG THE COURSE OF SURVEY OR OTHERWISE AND NO LAND WAS PURCHASED FROM ANY OF SUC H PERSON MENTIONED IN THE SEIZED PAPER, THEREFORE, THE LD. CIT(A) AFTER EXAMI NING THE DETAILS PROPERLY, RIGHTLY CAME TO THE CONCLUSION THAT THE ADDITION HAS BEEN M ADE BY THE AO WITHOUT BRINGING ANY CORROBORATIVE EVIDENCE AGAINST THE ASS ESSEE. SINCE, THESE ARE THE DEPARTMENTAL APPEALS AND NO MATERIAL IS PRODUCED BE FORE US TO REBUT THE FINDINGS OF THE LD. CIT(A), THEREFORE, WE ARE NOT INCLINED TO I NTERFERE WITH THE ORDER OF THE LD. CIT(A). CONSIDERING THE TOTALITY OF FACTS AND CIRCU MSTANCES IN THE LIGHT OF THE FINDINGS OF THE LD. CIT(A) AND MATERIAL ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE PART OF THE ADDITIONS. WE ACCORDINGLY DISMISS BOTH THE GROUNDS OF APPEALS OF REVENUE IN B OTH THE ASSESSMENT YEARS. IN THE RESULT, GROUND NO. 1 OF BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ISSUE NO.2 : 12. IN ASSESSMENT YEAR 2006-07, THE REVENUE ON GROU ND NO. 2 CHALLENGED THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.9,20,670/- MADE BY THE AO BY DISALLOWING THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE IT ACT IN RESPECT OF THE PROJECT, NAMELY, NIKHIL ESTATE. THE RELEVANT FACTS IN BRIEF ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE HAD CLAIMED DEDUCTION U/S 80 IB(10) ON ITS PROJECT NIKHIL ESTATE. IT WAS STATED BY THE AO THAT ASSESSEE HAS ITA NO. 385 & 386/AGRA/2010 43 WORKED AS A CONTRACTOR ON THE SAID PROJECT AND NOT AS BUILDER FOR THE SIMPLE REASON THAT THE ASSESSEE WAS NOT OWNER OF THE LAND BUT ENT ERED INTO THE AGREEMENT WITH THE SOCIETY TO CONSTRUCT THE FLATS. HOWEVER, AS PER THE UNION BUDGET 2009-10, THE DEDUCTION COULD NOT BE GIVEN TO THE PERSON EXECUTIN G THE PROJECT AS A WORK CONTRACT. THE REFERENCE WAS MADE TO SECTION 80 IB(1 0) WHICH SAYS FOR THE REMOVAL OF DOUBT, IT IS HEREBY DECLARED THAT NOTHING CONTAI NED IN THIS SUB-SECTION SHALL APPLY TO ANY UNDERTAKING WHICH EXECUTED THE HOUSING PROJECT AS A WORKS CONTRACT AWARDED BY ANY PERSON. IT WAS THE OBJECTION OF THE AO THAT THE LAND DOES NOT BELONG TO THE ASSESSEE AND THE TRI-PARTITE AGREEMEN T MADE AMONG THE BUYER, THE LAND OWNER AND CONTRACTOR EXISTED. THEREFORE, THE W ORK DONE BY THE ASSESSES IS SQUARELY COVERED WITH IN THE MEANING OF WORK CONTRA CT. IT WAS ALSO STATED BY THE AO THAT RISK AND REWARD DO NOT GET TRANSFERRED EVEN IF THE CONSTRUCTION IS COMPLETED UNLESS THE OWNER OF THE LAND TRANSFERS IT S RIGHTS OVER THE LAND. 13. IT WAS CONTENDED BY THE LD. COUNSEL FOR THE ASS ESSEE THAT THE ASSESSEE WAS NOT DOING THE BUSINESS OF CONTRACT WORK. HE WAS NOT CON TRACTOR. NO WORK WAS AWARDED TO THE ASSESSEE. ASSESSES COMPLETED AND EXECUTED IT S PROJECT NIKHIL ESTATE ON THE BASIS OF HIS OWN TERMS AND CONDITIONS AND ALSO ON T HE BASIS OF HIS OWN DESIGN AND SPECIFICATION DULY APPROVED BY ADA. COPY OF SPECIFI CATION AND DESIGN OF THIS PROJECT HAS ALREADY BEEN FILED ON 04.12.2009. ALL THE CONSTRUCTION WORKS AND ITA NO. 385 & 386/AGRA/2010 44 MATERIAL, LABOUR CONSUMED DEPENDS UPON THE DECISION OF THE ASSESSEE WHICH WERE EXPLAINED TO THE BUYER AT THE TIME OF EXECUTION OF PURCHASE DEED. HENCE NO WORK CONTRACT WAS AWARDED TO THE ASSESSEE. THEREFORE, AS SESSEE DOES NOT COME UNDER THE PURVIEW OF CONTRACTOR. IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT IN ORDER TO FACILITATE ITS MEMBERS, IN GENERAL PRACTICE SOCIETY MAKES TRI-PARTITE UNDERSTANDING AMONGST THE DEVELOPERS AND BUYERS. PLOTS ARE SOLD O NLY TO THOSE PERSONS WHO AGREE TO BUILD THEIR HOUSES BY THE DEVELOPERS. NO PLOT IS SOLD TO ANY OUTSIDERS IN THE REAL ESTATE BUSINESS. IT IS GENERAL PRACTICE THAT TRI-PA RTITE UNDERSTANDING AMONGST THE LAND OWNER, DEVELOPERS AND BUYERS COME INTO EXISTENCE IN WHICH SOCIETY MAKES THE REGISTRY IN THE NAME OF BUYER WHO PURCHASED THE BUI LT HOUSE FROM THE DEVELOPERS. DEVELOPER INCURRED ALL THE EXPENDITURES REGARDING D EVELOPMENT OF LAND AND CONSTRUCTION OF HOUSING PROJECT. PROJECT IS ALSO AP PROVED IN THE NAME OF DEVELOPERS. IN THE SAME WAY, THE ASSESSEE WITH THE UNDERSTANDIN G OF NEEL KAMAL SOCIETY DEVELOPED THE LAND AND COMPLETED THE HOUSING PROJEC T HENCE REBATE U/S 80IB(10) COULD NOT BE DISALLOWED ON THE BASIS OF AMENDMENT I N BUDGET 2009-10. 14. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF T HE ASSESSEE IN THE LIGHT OF THE PROVISIONS OF LAW, DELETED THE ADDITION AND GRANTED DEDUCTION U/S. 80IB(10) OF THE IT ACT. HIS FINDINGS IN APPELLATE ORDER IN PARA 24 ARE REPRODUCED AS UNDER : 24. I HAVE CONSIDERED THE SUBMISSION ADVANCED BY THE AR OF THE APPELLANT IN LIGHT OF THE ASSESSMENT ORDER AND THE RELEVANT ITA NO. 385 & 386/AGRA/2010 45 EVIDENCES ON RECORDS. NOW BEFORE WE COME TO THE CON CLUSION, IT WOULD BE IN ORDER TO EXTRACT THE PROVISIONS OF SECTION 80 IB(10) IN THE INCOME TAX ACT, 961 READ AS UNDER : SEC 80IB(10) :- THE AMOUNT OF DEDUCTION IN THE CASE OF AN U NDERTAKING DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED B EFORE THE 31 ST DAY OF MARCH 2008 BY A LOCAL AUTHORITY SHALL BE HUN DRED PERCENT OF THE PROFIT DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR FROM SUCH HOUSING PROJECT IF CONDITION MENTION IN CLAUSE (A) AND (B) OF THIS SECTION FULFILLED. UPON CAREFUL PERUSAL OF FACTS MENTIONED ABOVE, IT IS CLEAR THAT AO HAS NO OBJECTION IN RESPECT OF THE FULFILLMENT O F THE CONDITION PRESCRIBED UNDER CLAUSE (A) AND (B) OF SEC 80 IB(10 ) AT THE END OF THE APPELLANT. THE ONLY ISSUE INVOLVED IN THIS APPEAL I S THAT WHETHER APPELLANT WORKED IN THE CAPACITY OF WORK CONTRACTOR OR IN THE CAPACITY OF DEVELOPER AND BUILDER. IN MY OPINION, A S PER SEC 80IB(10), OWNERSHIP OF LAND TO BE A DEVELOPER OR BU ILDER HAS NOT BEEN MADE COMPULSORY. THE ONLY CONDITION IS THAT AP PROVED PLAN, SPECIFICATION AND DESIGNS ACCORDING TO TRI-PARTITE UNDERSTANDING. BUYER HAS NO RIGHT TO GIVE ANY AWARD OR WORK CONTRA CT TO APPELLANT. IT IS ALSO PERTINENT TO NOTE THAT AO HAS ACCEPTED THAT RISK AND REWARD DO NOT GET TRANSFERRED EVEN IF THE CONSTRUCTION IS COM PLETED UNLESS THE OWNER OF THE LAND TRANSFERRED ITS RIGHT OVER THE LA ND. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE OWNERSHIP OF LAN D IS TRANSFERRED TO THE BUYER BEFORE EXECUTING THE CONSTRUCTION OF HOUS E THEREAFTER ALL THE RISK AND REWARD OF CONSTRUCTION OF HOUSE REMAINS WI TH THE APPELLANT TILL THE CONSTRUCTED COMPLETE HOUSE IS NOT HANDED O VER TO THE BUYER. HENCE IN MY OPINION, THE APPELLANT EXECUTED HIS HOU SING PROJECT IN THE CAPACITY OF BUILDER/DEVELOPER. THE ASSESSING OFFICE R WAS THEREFORE, NOT JUSTIFIED IN TREATING THE APPELLANT AS IN THE CAPAC ITY OF WORK CONTRACTOR, THUS, ADDITION SO MADE IS HEREBY DELETE D AND DEDUCTION U/S 80IB(10) TO BE ALLOWED AS PER LAW. ITA NO. 385 & 386/AGRA/2010 46 15. SIMILARLY IN ASSESSMENT YEAR 2007-08, THE REVENUE O N GROUND NO. 3 CHALLENGED THE DELETION OF ADDITION OF RS.6,38,111/ - U/S. 80IB(10) OF THE IT ACT IN RESPECT OF THE PROJECT, NIKHIL ESTATE. THE FACTS AR E SAME AS HAVE BEEN NOTED IN PARA 32 TO 34 OF THE APPELLATE ORDER AND FOR THE SAKE OF BREVITY, THE SAME ARE NOT REPRODUCED HERE. THE LD. CIT(A) ON THE SAME REASONI NG AS GIVEN IN THE PRECEDING ASSESSMENT YEAR, 2006-07 DELETED THE ADDITION AND A LLOWED THE DEDUCTION U/S. 80IB(10 OF THE IT ACT. 16. THE LD. DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT THE AO HAS NOT EXAMINED ALL THE CONDITIONS OF SECTION 80IB(10) OF THE IT ACT WHILE CONSIDERING THE ABOVE ISSUE. THEREFORE, THE MATTER MAY BE REMANDED TO THE AO FOR RECONSIDERATION. THE LD. DR RELIED UPON THE ORDER O F HONBLE DELHI HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO AND FINVEST LTD. VS. ACIT, 281 ITR 394. 17. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE AO HAS EXAMINED ALL THE CONDITIONS OF SECTION 80IB(10) OF THE IT ACT AND DI D NOT DISPUTE THE CLAIM OF THE ASSESSEE. HOWEVER, THE AO DISALLOWED THE CLAIM OF T HE ASSESSEE BECAUSE THE ASSESSEE WAS NOT OWNER OF THE LAND IN QUESTION AND THAT IT WAS A TRIPARTITE AGREEMENT BETWEEN THE PARTIES. HE HAS SUBMITTED TH AT AS PER LAW, THERE IS NO NEED ITA NO. 385 & 386/AGRA/2010 47 THAT THE ASSESSEE SHOULD BE OWNER OF THE PROJECT IN QUESTION. THEREFORE, THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD, RIGHTLY DELETED THE ADDITION. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE FINDINGS OF THE AUTHORITIES BELOW. HONBLE GUJRAT HIGH COURT RECENT LY IN THE CASE OF CIT VS. RADHEY DEVELOPERS, 341 ITR 403 (GUJ.) CONSIDERED TH E IDENTICAL ISSUE IN DETAIL AND HELD THAT OWNERSHIP OF THE PROPERTY IS NOT A CONDIT ION PRECEDENT FOR GRANT OF DEDUCTION U/S. 80IB(10) OF THE IT ACT. HONBLE HIGH COURT HELD AS UNDER : HELD ACCORDINGLY, (I) THAT THE TERMS AND CONDITION S UNDER WHICH THE ASSESSEES UNDERTOOK THE DEVELOPMENT PROJE CTS AND TOOK OVER POSSESSION OF THE LAND FROM THE ORIGINAL OWNERS, IN DICATED THAT THE ASSESSEES HAD TOTAL AND COMPLETE CONTROL OVER THE L AND IN QUESTION. THE ASSESSEES COULD PUT THE LAND TO USE AS AGREED B ETWEEN THE PARTIES. THE ASSESSEES HAD FULL AUTHORITY AND ALSO RESPONSIB ILITY TO DEVELOP THE HOUSING PROJECT BY NOT ONLY PUTTING UP THE CONSTRUC TION BUT BY CARRYING OUT VARIOUS OTHER ACTIVITIES INCLUDING ENR OLLING MEMBERS, ACCEPTING MEMBERS, CARRYING OUT MODIFICATIONS ENGAG ING PROFESSIONAL AGENCIES AND SO ON. MOST SIGNIFICANTLY, THE RISK EL EMENT WAS ENTIRELY THAT OF THE ASSESSEES. THE LAND OWNERS AGREED TO AC CEPT ONLY A FIXED PRICE FOR THE LAND IN QUESTION. THE ASSESSEES AGREE D TO PAYOFF THE LAND OWNERS FIRST BEFORE APPROPRIATING ANY PART OF THE S ALE CONSIDERATION OF THE HOUSING UNITS FOR THEIR BENEFIT. IN SHORT, THE ASSESSEES TOOK THE FULL RISK OF EXECUTING THE HOUSING PROJECT AND THEREBY M AKING PROFIT OR LOSS, AS THE CASE MAY BE. THE ASSESSEES INVESTED TH EIR OWN FUNDS IN THE COST OF CONSTRUCTION AND ENGAGEMENT OF SEVERAL AGEN CIES. IT COULD NOT BE SAID THAT THE ASSESSEES ACTED ONLY AS WORKS CONT RACTORS. IN THAT VIEW OF THE MATTER, THE ADDITION OF THE EXPLANATION TO SECTION 80-IB(L0) WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2001, WOULD HAVE NO MATERIAL BEARING IN THE CASES ON HAND. ITA NO. 385 & 386/AGRA/2010 48 (II) THAT THE ASSESSEES HAD, IN PART PERFORMANCE OF THE AGREEMENT TO SELL THE LAND IN QUESTION, BEEN GIVEN POSSESSION THEREOF AND HAD ALSO CARRIED OUT THE CONSTRUCTION WORK FOR DEVELOPMENT OF THE HOUSING PROJECT. A COMBINED READING OF SECTION 2(47 )(V) OF THE ACT AND SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 18 82, WOULD LEAD TO A SITUATION WHERE THE LAND WOULD FOR THE PURPOSE OF T HE ACT BE DEEMED TO HAVE BEEN TRANSFERRED TO THE ASSESSEES. IN THAT VIEW OF THE MATTER, FOR THE PURPOSE OF INCOME DERIVED FROM SUCH PROPERT Y, THE ASSESSEES WOULD BE THE OWNERS OF THE LAND FOR THE PURPOSE OF THE ACT ALTHOUGH TITLE IN THE LAND HAD NOT YET PASSED ON TO THE ASSE SSEES AND WOULD PASS ONLY UPON EXECUTION OF A DULY REGISTERED SALE DEED. FOR THE LIMITED PURPOSE OF DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT, THE ASSESSEES HAD SATISFIED THE CONDITION OF OWNERSHIP ALSO, EVEN IF IT WAS NECESSARY: . . (III) THAT EVEN IN CASES WHERE THE AGREEMENT PROVID ED THAT THE ASSESSEE WAS TO RECEIVE A REMUNERATION, THE ASSESSE E WAS GIVEN FULL RIGHTS TO DEVELOP THE LAND BY PUTTING UP THE HOUSIN G PROJECT AT ITS OWN RISK AND COST. THE ENTIRE PROFIT FLOWING THEREFROM WAS TO BE RECEIVED BY THE ASSESSEE. THE PROJECT WAS BEING DEVELOPED BY THE ASSESSEE AT ITS OWN, RISK AND COST AND NOT THAT OF THE LAND OWNERS. THE ASSESSEE THUS WAS NOT WORKING AS A WORKS CONTRACTOR. INTRODUCTION OF THE EXPLANATION TO SECTION 80-IB(10) IN THIS CASE ALSO WOULD HAVE NO EFFECT. THE ASSESSEE WAS ENTITLED TO THE BENEFIT UN DER SECTION 80-IB(10) OF THE ACT EVEN WHERE TITLE TO THE LAND HAD NOT PAS SED ON TO THE ASSESSEE AND THE DEVELOPMENT PERMISSION MAY ALSO HA VE BEEN OBTAINED IN THE NAME OF THE ORIGINAL LAND OWNERS. 19. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ABOVE DECISION, WE ARE OF THE VIEW THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASS ESSEE BY THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF RADHEY DEVELOPERS (SUPRA). THE MAIN REASON FOR DISALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80IB(10) WAS THAT THE LAND DID NOT BELONG TO THE ASSESSEE AND THE OWNERSHIP DI D NOT PASS ON TO THE ASSESSEE. THIS ISSUE NO MORE SURVIVES IN FAVOUR OF THE REVENU E AS PER THE ABOVE DECISION. ITA NO. 385 & 386/AGRA/2010 49 THE AO HAS NOT GIVEN ANY OTHER COGENT REASON FOR DI SALLOWING THE CLAIM OF THE ASSESSEE, WHICH PROVES THAT THE AO WAS SATISFIED WI TH THE OTHER CONDITIONS OF THE AFORESAID SECTION. THEREFORE, IN OUR VIEW, THERE IS NOTHING EVEN TO REMAND THE MATTER TO THE FILE OF THE AO. SINCE THE CLAIM OF TH E ASSESSEE HAS BEEN ALLOWED IN ASSESSMENT YEAR 2006-07, THEREFORE, IN RESPECT OF T HE SAME PROJECT, DEDUCTION SHALL HAVE TO BE ALLOWED IN SUBSEQUENT ASSESSMENT YEAR 20 07-08 ALSO. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT( A) IN ALLOWING THE CLAIM OF THE ASSESSEE. IN THE RESULT, THE GROUND NO. 2 OF APPEAL OF THE REVENUE IN ASSESSMENT YEAR 2006-07 AND GROUND NO. 3 OF THE DEPARTMENTAL A PPEAL FOR THE ASSESSMENT YEAR 2007-08 ARE ACCORDINGLY DISMISSED. THIS ISSUE IS, T HEREFORE, DECIDED AGAINST THE REVENUE. ISSUE NO.3 : 20. IN ASSESSMENT YEAR 2006-07, THE REVENUE RAISED GROUND NO. 3 CHALLENGING THE DELETION OF ADDITION OF RS.1,08,000/- MADE BY T HE AO BY DISALLOWING THE INTEREST EXPENSES CLAIMED ON THE AMOUNT OF RS.9,00, 000/- GIVEN TO SHRI MANOJ GOEL FOR HIS PERSONAL PURPOSES. SIMILAR GROUND IS RAISED IN ASSESSMENT YEAR 2007-08 AS GROUND NO. 4 BY THE REVENUE. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE AO NOTICED THAT SOME OF RS.9,00,000/- WAS ADVANCED TO SHRI MANOJ GOEL ON 31.12.2004 AS LOAN FOR PERSONAL USE AND, THEREFORE, THE SUM OF RS.1,08,000/- PAID AS INTEREST WAS DISALLOWED U/S. 36(1)(III) OF THE I T ACT IN BOTH THE ASSESSMENT YEARS. ITA NO. 385 & 386/AGRA/2010 50 ADDITIONS WERE CHALLENGED BEFORE THE LD. CIT(A) IN BOTH THE YEARS AND IT WAS EXPLAINED THAT THE ASSESSEE HAD ADVANCED RS.9,00,00 0/- TO SHRI MANOJ GOEL AGAINST LAND. DUE TO SOME DISPUTE, THE DEAL COULD NOT BE FI NALIZED AND STILL AWAITED. IT WAS UPTO SHRI MANOJ GOEL, HOW HE USED THIS ADVANCE MONE Y GIVEN TO HIM. IT WAS FURTHER SUBMITTED THAT ACTION OF THE AO IN DISALLOW ING THE INTEREST OF RS.1,08,000/- IN BOTH THE YEARS AS INTEREST PAID ON ADVANCE OF RS .9,00,000/- GIVEN TO MR. MANOJ GOEL U/S. 36(1)(III) IS ILLEGAL BECAUSE THE AFORESA ID SECTION WILL APPLY ONLY WHEN INTEREST IS PAID ON THE CAPITAL BORROWED FOR THE PU RPOSE OTHER THAN BUSINESS. IN THE CASE OF ASSESSEE, ADVANCE HAS BEEN GIVEN BY THE ASS ESSEE AND NO INTEREST WAS PAID TO SHRI MANOJ GOYAL AND NO INTEREST WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT. THEREFORE, DISALLOWANCE OF INTEREST IS HIGHLY UNJUS TIFIED. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT SINCE NO INTERE ST WAS PAD TO SHRI MANOJ GOYAL, THEREFORE, NO DISALLOWANCE U/S. 36(1)(III) COULD BE MADE. ADDITIONS WERE, ACCORDINGLY DELETED. 21. THE LD. DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT THE ADVANCE WAS GIVEN TO SHRI MANOJ GOEL FOR PERSONAL PURPOSES, WHICH IS CLEAR FROM HIS STATEMENT MADE ON 03.06.2009 AND 23.06.2009 AND HIS STATEMENT WAS SUBJECTED TO CROSS EXAMINATION, THEREFORE, THE MATTER MAY BE REM ANDED TO THE AO FOR RECONSIDERATION. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE ITA NO. 385 & 386/AGRA/2010 51 SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND REFERRED TO QUESTION NO. 29 OF STATEMENT DATED 23.06.2009 ABOVE, IN WHICH SRI MANO J GOEL EXPLAINED THAT HE HAS USED THE ADVANCE MONEY FOR PERSONAL PURPOSES. HE HA D SUBMITTED THAT SINCE THE ADVANCES WERE GIVEN FOR BUSINESS PURPOSE AND NO INT EREST IS PAID AND HOW MANOJ GOEL USED THE ADVANCE MONEY LATER ON HAS NO CONCERN FOR MAKING SUCH DISALLOWANCES. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THESE GROUNDS OF APPEALS OF THE REVENUE. THE STATEMENT OF SHRI MANOJ GOEL REFERRED TO BY THE LD. DR CLEARLY REVEALS THAT THERE WERE LAND DEALINGS BETWEEN THE ASSESSEE AND SHRI MANOJ GOEL AND THAT THE ADVANCE WAS GIVEN TO SHRI MANOJ GOEL AS NOTED BY THE AO. IT WAS, THEREFORE, A BUSINESS TRANSACTIO N, IN WHICH ADVANCE WAS GIVEN. ADMITTEDLY, NO INTEREST IS PAID TO SHRI MANOJ GOEL AND NO CLAIM IS MADE FOR DEDUCTION IN THE PROFIT AND LOSS ACCOUNT. THEREFORE , THE PROVISIONS OF SECTION 36(1)(III) WOULD NOT APPLY IN THE CASE OF THE ASSES SEE. HOW, MANOJ GOEL USED THE ADVANCE MONEY LATER ON WOULD NOT BE RELEVANT TO THE MATTER IN ISSUE. THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. IN THE RESULT, GROUND NO. 3 OF THE DEPART MENTAL APPEAL IN ASSESSMENT YEAR 2006-07 AND GROUND NO. 4 IN ASSESSMENT YEAR 2007-08 ARE DISMISSED. THIS ISSUE IS DECIDED AGAINST THE REVENUE. THERE IS NO OTHER GROU ND OF APPEAL RAISED BY THE ITA NO. 385 & 386/AGRA/2010 52 DEPARTMENT IN ASSESSMENT YEAR 2006-07. THEREFORE, D EPARTMENTAL APPEAL IS DISMISSED. ISSUE NO. 4 23. IN ASSESSMENT YEAR 2007-08, THE REVENUE ON GROU ND NO. 2 CHALLENGED THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.1,50,00,000/- MADE BY THE AO ON ACCOUNT OF PAYMENT MADE TO SHRI MANOJ GOEL. T HE BRIEF FACTS OF THIS CASE ARE THAT DURING THE SURVEY OPERATION U/S 133A CONDU CTED ON 12.08.2008, A DEED OF AGREEMENT CUM UNDERSTANDING (ANNEX -21) EXECUTED ON THE STAMP PAPER OF RS 100/= ON 24.02.2007 FOR A CONSIDERATION OF RS 17.25 CRORE TO PURCHASE LAND AT FARAH BETWEEN SRI MANOJ GOYAL AND THE ASSESSEE ,WAS FOUND. THE AO HAS ASSUMED THAT THE SAID DEED WAS SIGNED ON 24.02.2007 AND THE ASSESSEE WAS SUPPOSED TO MAKE PAYMENT OF RS 1.50 CRORE ON 15.02.2007.IT WAS FURTHER ASSUMED BY THE AO THAT IMPUGNED DOCUMENT COULD NOT HAVE COME TO EXIST ENCE UNLESS THE INITIAL PAYMENT OF RS 1.50 CRORE MUST HAVE BEEN MADE BY THE ASSESSES COMPANY. IT WAS ALSO ADMITTED BY THE AO THAT BOTH THE PARTIES, SRI MANOJ GOYAL AND ASSESSEE HAVE STATED THAT THIS LICENCE DEED DID NOT MATERIALIZE O R COME INTO EXISTENCE AND IT WAS ALSO ADMITTED BY THE AO THAT SRI MANOJ GOYAL WAS CR OSS-EXAMINED BY THE ASSESSEE COMPANY. THE AO NOTICED THAT VIDE QUESTION NO 10,11 , AND 12, MR. MANOJ GOYAL HAS STATED THAT THE SUM OF RS 1.50 CRORE WAS PAID B Y THE ASSESSES COMPANY IN CASH AND AO CONCLUDED AS UNDER :- ITA NO. 385 & 386/AGRA/2010 53 (A) THIS MAY BE IN DISPUTE WHETHER SRI MANOJ GOYAL WAS THE OWNER OF 90 BIGHAS OF LAND OR 20 BIGHAS OF LAND BUT IT IS UN-DISPUTABL E FACT THAT NO LICENSE DEED CAN BE FRAMED ON STAMP PAPER ON 24.02.2007 UNLESS P RIMARY CONDITION OF INITIAL PAYMENT WHICH WAS SUPPOSED TO BE PAID ON 15 .02.2007 HAS BEEN MET. (B) THERE IS AN ENGINEERING COLLEGE RUNNING ON THE SAME LAND AND THE SAME BELONGS TO THE ASSESSEE GROUP. (C) THE ASSESSEE HAS DEVELOPED FARM HOUSES ON THE SAID LAND. MEANING THEREBY THAT THE IMPUGNED LAND WAS PURCHASED BY THE ASSESSE E FROM THE FARMERS AND ONE OF THE COMPANY SHRI MANOJ GOYAL I.E LUNAR DIAGN OSTIC PVT. LTD. WITH WHOM THE IMPUGNED DEED WAS SIGNED. ON THE BASIS OF THESE FACTS, THE AO MADE THE ADDITI ON OF RS 1,50,00,000/= IN THE INCOME OF THE ASSESSES COMPANY. 23.1 THE ASSESSEE FILED ITS REPLY ON 04.12.2009 BEFORE THE AO STATING THAT AS PER THIS PROPOSED DEED, THE SECOND PARTY WAS T HE OWNER OF 90 BIGHA LAND AT THE TIME OF PAYMENT, WHEN DOCUMENTS WERE ASKED FROM THE SECOND PARTY WHO COULD NOT PRODUCE ANY DOCUMENTS IN HIS NAME, HENCE NO QUESTION ARISES TO MAKE ANY PAYMENT AGAINST THIS DEED. AND ALSO AS PER THE STATEMENT OF SRI MANOJ GOYAL, HE WAS NOT OWNER OF THE SAID LAND. THE DATE OF EXECUTION OF LICENSE DEED WAS 24.02.20 07 AND AS PER TERMS AND CONDITION OF PARA (A), FIRST PARTY SHALL MAKE THE P AYMENT OF RS 1.5 CRORE AT THE ITA NO. 385 & 386/AGRA/2010 54 TIME OF SIGNING THIS DEED AS ADVANCE MONEY AGAINST THE LAND WHILE AS PER PARA (2),THE FIRST PARTY SHALL MAKE PAYMENT TO SECOND PA RTY AS UNDER :- 15.02.2007 1.50 CR 31.05.2007 2.50 CR WHEN ADVANCE OF RS 1.50 CR WAS TO BE MADE ON THE DA TE OF SIGNING THIS DEED WHICH WAS EXECUTED ON 24.02.2007 THEN HOW THE FIRST DATE OF PAYMENT MAY BE 15.02.2007. AND ALSO AS PER CONTENTS MENTIONED ON PAGE NO 03, T HAT AFTER MAKING THE INITIAL ADVANCE OF RS 1.50 CR, THE FIRST PARTY SHALL BE ENT ITLED FOR RIGHTS MENTIONED WHICH CLEARLY REFLECTS THAT AT THE TIME OF SIGNING THIS D EED NO RIGHT WAS GIVEN AND ALSO NO ADVANCE WAS GIVEN. WITHOUT SEEING THE TITLE DEED, H OW THE PAYMENT CAN BE MADE.? WHEN HE COULD NOT PROVIDE THE TITLE DEED OF 90 BIGH AS, NO ADVANCE PAYMENT WAS MADE AND DEED WAS TREATED AS CANCELLED. 24. THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT( A) AND THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT ON THE BASIS OF THIS AG REEMENT, THE AO DREW AN INFERENCE THAT THE ASSESSEE HAS MADE CASH PAYMENT O F RS.1.5 CR. TO SHRI MANOJ GOYAL AS ADVANCE FOR PURCHASE OF TOTAL 150 BIGHAS O F LAND ON 15.02.2007. THE PERUSAL OF THIS DOCUMENT WOULD REVEAL THAT SHRI MAN OJ GOYAL HAD AGREED TO SELL TOTAL 150 BIGAHAS OF LAND OUT OF WHICH ABOUT 90 BIG AHS OF LANDS WERE OWNED BY HIM AND REST 60 BIGAH LANDS WERE TO BE PURCHASED/ARRANG ED BY HIM (I.E. SHRI MANOJ GOYAL) FOR SELLING IT TO THE ASSESSES COMPANY. ITA NO. 385 & 386/AGRA/2010 55 24.1 A.O. MENTIONED THAT IN THIS DOCUMENT DATE OF P AYMENT HAS BEEN SHOWN AS 15.02.07 FOR PAYMENT OF RS.1.5 CRORE WHERE AS FIRST PAGE WILL REVEAL THAT THE DEED WAS MADE ON 24-02-2007. IN FACT A.O.S OBSERVATION IS NOT CORRECT AS HE HAS NOT APPRECIATED THE FACTS CORRECTLY. IT WAS SUBMITTED T HAT IF WE TOTAL UP ALL THESE AMOUNTS WHICH ARE MENTIONED AT PAGE 2, WE WOULD FIN D THAT THE PAYMENT MADE ON 15-02-2007 FOR RS.1.5 CR HAS BEEN INADVERTENTLY MEN TIONED THERE. AS PER PARA 2(B) OF THIS DEED, THE ASSESSEE WAS TO MAKE THE PAYMENT AS UNDER : DATES [FIGURES IN CRORES] 15.02.07 1.50 31.05.07 2.50 31.08.07 3.00 30.11.07 3.00 28.02.08 3.00 31.05.08 .80 ----------- ITS TOTAL COMES TO RS 13.80 (CRORE WHILE DEED REFLECTS 12.30 CR RESULTING INTO DIFFERENCE OF RS 1.50 CR THUS THE SUM OF RS 1.50 CR WAS INADVERTENTLY MENTIONED IN THE DEED.) 24.2 AS PER THIS DEED, TOTAL SALES CONSIDERATION WA S RS 17.25 CR. AND AS PER THE TERMS (A) OF THIS DEED, THE SUM OF RS 1.50 CR WAS S UPPOSED TO BE PAID AT THE TIME OF SIGNING THIS DEED WHICH WAS 24.02.07 AND THE SUM OF RS 3.45 CR WAS TO BE PAID BY WAY OF GIVING 36 FINISHED FARM HOUSE AT THE TIME OF COMPLETION OF PROJECT AND REST ITA NO. 385 & 386/AGRA/2010 56 AMOUNT OF RS 12.30 CR WAS TO BE PAID AS PER PARA 2(B) OF THE DEED WHICH CLEARLY REVEALS THAT THE SUM OF RS 1.50 CR MENTIONED ON 15. 02.2007 IN PARA 2(B) HAS NOT BEEN INCLUDED IN TOTAL OF RS 12.30 AND THE SAME WAS INADVERTENTLY MENTIONED THERE. THEREFORE, IT IS APPARENT ON THE FACE OF IT THAT IN FACT NO ADVANCE PAYMENT WAS MADE BEFORE SIGNING OF THE DOCUMENT. HENCE THE ASSUMPTIO N OF THE AO ON THE BASIS OF DEED EXECUTED ON 24.02.07 THAT THE ASSESSEE WAS SUP POSED TO MAKE PAYMENT OF RS 1.50CR ON 15.02.2007 IS NOT BASED ON FACTS AND WITH OUT ANY OTHER CONCRETE EVIDENCES BROUGHT ON RECORD. HOWEVER, IT IS PERTINE NT TO NOTE THAT AO HAS NOTICED AND ACCEPTED THAT BOTH THE ASSESSEE AND MR MANOJ GO YAL HAS STATED THAT THIS LICENSE DEED DID NOT MATERIALIZE OR COME INTO EXISTENCE, EV EN THEN THE SAID ADDITION WAS MADE. 24.3 THE ASSESSEE FURTHER CONTENDED THAT THE STATEM ENT OF SRI MANOJ GOYAL WAS RECORDED BY A.O. ON 03-06-2009 AND THEREAFTER ON 23 RD OF JUNE 2009. FURTHER THE CROSS EXAMINATION WAS MADE WITH SHRI MANOJ GOYAL BY THE ASSESSEE ON 07-12- 2009, WHEN LAST STATEMENT OF SHRI MANOJ GOYAL WAS R ECORDED. IT IS PERTINENT TO NOTE THAT CONTENTS OF STATEMENT RECORDED ON 03.06.09 ARE ENTIRELY CONTRADICTORY WITH THE CONTENTS OF STATEMENT RECORDED ON 23.06.09 AND THER EAFTER ON 07.12.2009 THE CONTENTS OF STATEMENT RECORDED ON 03.06.09 AND QUESTIONS NO 10,11 12 ON THE BASIS OF WHICH LD AO HAS MADE THE ADDITION WERE AS UNDER :- ITA NO. 385 & 386/AGRA/2010 57 1. [ PAGE NO 02,REPLY NO 01 ]: - 20 BIGHAS LAND WAS ARRANGED BY HIM FOR ENGINEERING COLLEGE IN THE F.Y 2006-07 2. [ PAGE N0 06 , REPLY NO 10 ] :- HE ADMITTED THAT HE WAS NOT THE OWNER OF 90 BIGHAS LAND AND FOR REMAINING 60 BIGHA LAND, HE HA D TO TALK WITH THE FARMERS. AND RS 1.50 CR WAS GIVEN TO FARMERS IN DIF FERENT INTERVALS IN INSTALLMENTS THROUGH HIM. 3. REPLY NO 11 , HE STATED THAT HE DID NOT REMEMBER THE TIME INTER VALS. 4. REPLY NO 12, HE DID NOT REPLY ABOUT LANDS FOR WHICH ADVANCES WE RE GIVEN TO FARMERS. WHILE THE CONTENTS OF STATEMENT RECORDED ON 23.06.0 9 WERE AS UNDER :- 1. [ PAGE NO 10 REPLYNO 20 ] :- HE ADMITTED THAT APPOX THE SUM OF RS 100 LACS WAS GIVEN TO 6 TO 7 FARMERS. 2 [ PAGE NO 12, REPLY NO 25 ] :- THE NAME OF THE FARMERS TO WHOM PAYMENTS WERE MADE WERE SRI RAM JI LAL, PUNJABI, BANGALI, SU RESH CHAND, CHARAN SINGH AND MADAN LAL. 3 [ PAGENO 12, REPLY NO 27 ] :- TOTAL 20 BIGHAS OF LAND WERE ARRANGED BY HIM. AND VIDE REPLY NO 28 HE ADMITTED THAT WHATEVER MONEY WAS RECEIVED FROM NIKHIL HOMES LTD WERE GIVEN TO THE ABOVE CITED 06 F ARMERS. AND THE CONTENTS OF STATEMENT CROSS EXAMINED ON 07 .12.09 WERE AS UNDER :- 1. [PAGE NO 01,REPLY NO 01 ] HE WAS NOT CONFIRMED ABOUT THE YEAR IN WHICH THE TRANSACTION OF 20 BIGHAS OF LAND TOOK PLACE. 2 [ PAGE NO 02 REPLY NO 02] :- HE ADMITTED THAT HE COULD NOT DEMONSTRATE THE DOCUMENTS OF 90 BIGHAS OF LAND HENC E THIS DEED COULD NOT BE MATERIALIZED AND NO ADVANCE WAS RECEIVED BY HIM AGA INST THIS DEED. 3. [PAGE 02, REPLY NO 03 ]:- THAT PAYMENT OF RS 100 LACS MADE TO 06 FARMERS AGAINST THE 20 BIGHAS OF LAND WERE MADE AFTER THE C ANCELLATION OF THIS DEED EXECUTED ON 24.02.07 AND VIDE REPLY 04 , HE ADMITTED THAT AS PER HIS STATEMENT RECORDED ON 03.06.2009, THE TOTAL AMOUNT PAID TO 06 FARMERS WAS ONLY RS 1 00 LACS INSTEAD OF RS 150 LACKS. 24.4 THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONT ENDED THAT GOING THROUGH THESE THREE STATEMENTS, A CONCLUSION CAN BE DRAWN THAT TH E ABOVE SAID IMPUGNED DEED WAS MADE BETWEEN SHRI MANOJ GOYAL AND ASSESSEE FOR THE PURCHASE OF 150 BIGAH ITA NO. 385 & 386/AGRA/2010 58 OUT OF WHICH MR. MANOJ GOYAL WAS STATED TO BE OWNER OF 90 BIGAH OF LAND. LATER ON, DEED WAS CANCELLED DUE TO THE FACTS THAT MR. MA NOJ GOYAL COULD NOT DEMONSTRATE THE EVIDENCE OF HIS OWNERSHIP AT THE TI ME OF SIGNING THIS DEED AND NO ADVANCE WAS GIVEN TO HIM ON 15.02.2007 , HOWEVER ANOTHER DEAL OF 20 BIGAHS OF LAND WAS UNDER CONTEMPLATION WHICH WAS DONE BY SHRI MANOJ GOYAL WITH SHRI SHAILENDER AGARWAL, MANAGING DIRECTOR OF THE ASSESS EE COMPANY, IN HIS PERSONAL CAPACITY. MR. MANOJ GOYAL HAS CLARIFIED THAT HE REC EIVED APPROXIMATELY A SUM OF RS.1CR. IN RESPECT OF ABOVE SAID DEAL OF 20 BIGAHS OF LAND IN THE NAME OF SHANTI DEVI MEMORIAL TRUST, WHERE THE COLLEGE IN THE NAME OF NIKHIL INSTITUTE OF ENGINEERING & MANAGEMENT HAS BEEN SET UP. THE PAYME NT FOR THIS DEAL WAS MADE BY SHRI SHAILENDER KUMAR AGARWAL. IT MAY BE SEEN TH AT SHRI SHAILENDER KUMAR AGARWAL HAS DISCLOSED THIS DEAL IN HIS RETURN OF I NCOME FILED BY HIM FOR A.Y. 2008-09. 24.5 IT WAS CONTENDED BY THE ASSESSEE THAT MR. MANOJ KUMAR GOYAL HAS GIVEN THE NAMES OF 6 FARMERS FROM WHOM THE ABOVE SAID LAND (I .E. 20 BIGHAS) WAS PURCHASED BY SHRI SHAILENDER KUMAR AGARWAL IN HIS PERSONAL CA PACITY IN THE NAME OF M/S SHANTI DEVI MEMORIUL TRUST. A.O. HAS MISSED THIS POINT AND CONFUSED HIMSELF BY NOT APPRECIATING THE BASIC FACT THAT THI S DEAL OF 20 BIGAH OF LAND IS DIFFERENT FROM THE IMPUGNED DEAL OF 150 BIGAHS OF L AND. NO PAYMENT WAS PAID BY ITA NO. 385 & 386/AGRA/2010 59 THE ASSESSEE COMPANY AGAINST. THE DEAL OF 20 BIGAH OF LAND WHICH IS FURTHER EVIDENT FROM THE FACT THAT THIS DEAL HAS ALREADY BEEN DISCL OSED BY SHRI SHAILENDER KUMAR AGARWAL IN HIS RETURN OF INCOME. ON THE OTHER HAND THE DEAL OF 150 BIGAHS OF LAND COULD NOT MATERIALIZE AND THE SAME WAS CANCELLED ON THE INCEPTION STAGE AND THEREFORE NO AMOUNT CAN BE ADDED MERELY ON THE BASI S OF AOS WHIMS AND FANCIES IN THIS REGARD. 24.6 IT WAS FURTHER CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THIS FACT WAS FURTHER CORROBORATED BY SHRI MANOJ KUMAR GOYAL IN H IS STATEMENT WHEREIN HE HAS CLARIFIED THAT NO PAYMENT HAS EVER BEEN RECEIVED BY HIM FOR THE DEAL OF 150 BIGAH OF LAND ( FOR WHICH PAPER WAS FOUND ). IT WAS FURTH ER CLARIFIED BY MR. MANOJ KUMAR GOYAL THAT HE HAD ARRANGED ANOTHER DEAL OF 20 BIGAH S OF LAND THROUGH 6 FARMERS FOR WHICH SUM OF RS.1 CRORE WAS PAID. IMMEDIATE REFEREN CE CAN BE MADE TO QUESTION- 2, 3, 4 OF HIS STATEMENTS. A.O. HAS NOT BEEN ABLE T O GATHER ANY EVIDENCES TO SHOW THAT STATEMENT MADE BY MR. MANOJ GOYAL WAS NOT CORR ECT OR TO SHOW THAT THE PAYMENT OF RS.1.5 CR WAS MADE BY THE ASSESSEE AS AL LEGED BY A.O. AND THEREFORE NO AMOUNT CAN BE ADDED MERELY ON THE BASIS OF HIS W HIMS AND FANCIES. ITA NO. 385 & 386/AGRA/2010 60 25. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE IN THE LIGHT OF THE MATERIAL ON RECORD DELETED THE ADDITION. HIS FI NDINGS IN PARA 29 TO 31 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER :- 29. I HAVE CONSIDERED THE SUBMISSION MADE BY THE AR OF THE ASSESSES, EXAMINED THE ASSESSMENT ORDER, AND THE O THER RELEVANT EVIDENCES ON RECORDS AND ALSO CONSIDERED THE ORAL P LEADINGS, IN MY OPINION, THE ONLY ISSUE INVOLVED IN THIS CASE IS WH ETHER THE APPELLANT HAS MADE THE CASH PAYMENT OF RS 1.50 CR TO MR. MANO J GOYAL ON 15.02.2007 OR NOT.? BEFORE COMING TO THE CONCLUSIO N, IT BECOMES NECESSARY TO EXAMINE THE CONTENTS OF THE IMPUGNED A GREEMENT CUM MEMORANDUM OF UNDERSTANDING. THE RELEVANT FACTS OF THE SAID DEED WERE THAT - (A) THAT DEED OF LICENCE WAS EXECUTED ON 24.02.200 7 BETWEEN THE NIKHIL HOMES LTD AND SRI MANOJ KUMAR AGARWAL. TO PU RCHASE 150 BIGHA LAND FOR RS 17.25 CR. (B) THAT AS PER PARA (A) OF THIS DEED, THE FIRST P ARTY SHALL MAKE THE PAYMENT OF RS 1.50 CRORE AT THE TIME OF SIGNING THI S DEED AS ADVANCE AGAINST LAND (C ) THAT AS PER PARA (B) OF THIS DEED, THEREAFTER THE FIRST PARTY SHALL MAKE PAYMENT TO THE SECOND PARTY AS UNDER : DATES [ FIGURES IN CRORES] 15.02.2007 1.50 31.05.2007 2.50 31.08.2007 3.00 30.11.2007 3.00 28.02.2008 3.00 31.05.2008 .80 ------------ 12.80 (D) AND THE REST PAYMENT SHALL BE MADE BY THE FIRST PARTY TO SECOND PARTY BY WAY OF GIVING 30 BUILT-UP FARMS MEASURING EACH 1000 YARDS @ RS 1150/= PER YARD RESULTING VALUE OF PER HOUSE BEING RS 11.50 AND MAKING TOTAL SALES CONSIDERATION OF RS 3.45 CRO RE. ITA NO. 385 & 386/AGRA/2010 61 THUS THE TOTAL PAYMENT WHICH ARE TO BE MADE BY FIRS T PARTY TO SECOND PARTY SHALL BE AS UNDER :- 1) ADVANCE PAYMENT 1.50 CR 2) CHEQUE & CASH 12.30 CR 3) 36 FARMS HOUSE 3.45 CR ------------ 17.25 CR UPON CAREFUL EXAMINATION OF FACTS MENTIONED ABOVE, I AM OF THE OPINION THAT AS PER PARA (A) OF THIS DEED, APPELLAN T WAS SUPPOSED TO MAKE PAYMENT OF RS 1.50 CR AT THE TIME OF SIGNING T HIS DEED WHICH WAS EXECUTED ON 24.02.2007 AND AS PER PARA (D) OF T HIS CLAUSE, IT WAS CONTENDED BY THE ASSESSEE THAT THE TOTAL PAYMENT WH ICH ARE TO BE MADE BY THE FIRST PARTY TO SECOND PARTY WAS RS 17.25 CR AS PER DEED EXECUTED ON 24.02.2007 INCLUDING ADVANCE PAYMENT OF RS 1.50 CR. AS PER THIS PARA (D),THE PAYMENT WAS TO BE MADE AS PER SCHEDULE PRESCRIBED ABOVE FOR RS 17.25 CT WHICH CLEARLY REFL ECTS THAT THE SUM OF RS 1.50 CR WAS TO TO BE MADE AS ADVANCE PAYMENT AT THE TIME OF SIGNING OF THIS DEED EXECUTED WHICH IS ALSO WELL EV IDENT WITH TERNS AND CONDITIONS MENTIONED IN PARA (A) OF THIS DEED THAT THE FIRST PARTY SHALL MAKE THE PAYMENT OF RS 1.50 CR AT THE TIME OF SIGNI NG OF THIS DEED AS ADVANCE MONEY ON 24.02.2007.I HAVE ALSO EXAMINED TH AT PAYMENT OF SCHEDULE REFLECTED IN PARA (B) REFLECTING THE SUM O F RS 12.80 CR WHILE IF IT IS IS SUMMED UP, IT COMES TO RS.13.30 CR. THU S IN MY OPINION, IT IS VERY CLEAR THAT THE SUM OF RS 1.50 CR WAS NOT PAID BY THE APPELLANT ON 15.02.2007 AND THE SAID AMOUNT WAS INADVERTENTLY MENTIONED IN THIS DEED. THE CONTENTION OF THE AO THAT THE APPELL ANT WAS SUPPOSED TO MAKE PAYMENT OF RS 1.50 CR HAS NOT FORCE AS NO COR ROBORATIVE EVIDENCED WERE BROUGHT BY THE AO ON RECORD. 30. I HAVE ALSO CONSIDERED THE QUESTION NO.1, 10, 1 1 AND 12 RECORDED ON 03.06.2009 MENTIONED BY AO IN HIS ASSES SMENT ORDER ON THE BASIS OF WHICH THE ENTIRE ADDITION WAS MADE. IN THE STATEMENT RECORDED ON 03.06.2009, MR MANOJ GOYAL HAS STATED T HAT HE HAS ARRANGED ONLY 20 BIGHA OF LAND FOR ENGINEERING COL LEGE IN FY 2006.07 AND ALSO HE ADMITTED THAT THAT HE WAS NOT T HE OWNER OF 150 BIGHA LANDS AND FOR REMAINING 60 BIGHA OF LAND, HE HAD TO TALK WITH THE FARMERS AND THE SUM OF RS 1.50 CR WAS GIVEN TO FARMERS AT DIFFERENT INTERVALS THROUGH HIM. AND VIDE REPLY NO 11 HE HAD STATED THAT HE DID NOT REMEMBER THE TIME INTERVALS AND ALS O VIDE RELY 12,HE ITA NO. 385 & 386/AGRA/2010 62 DID NOT REPLY ABOUT LANDS FOR WHICH ADVANCES WERE G IVEN. I HAVE ALSO EXAMINED THE STATEMENT OF MR. MANOJ GOYAL RECORDED ON 23.06.2009 IN WHICH HE STATED THAT THE SUM OF RS 100 LACS WERE GIVEN TO SEVEN FARMERS THROUGH HIM IN DIFFERENT INTERVALS. HE DISC LOSED THE NAME OF FARMERS NAMELY SRI RAM JI LAL, BANGALI MAL, CHARAN SINGH AND MADAN LAL AND VIDE REPLY 27 HE ADMITTED THAT 20 BIG HA OF LAND WERE ARRANGED BY HIM AND VIDE REPLY NO 28,HE ADMITTED T HAT WHATSOEVER MONEY WAS RECEIVED FROM NIKHIL HOMES LTD WERE PAID TO FIVE TO SIX FARMERS MENTIONED ABOVE. I HAVE ALSO CONSIDERED THE CROSS-EXAMINED STATEMENT OF MANOJ GOYAL HELD ON 07.12.2009 IN WHIC H HE HAS STATED VIDE HIS REPLY NO. 1 THAT HE WAS NOT CONFIRMED ABOU T THE YEAR IN WHICH THE TRANSACTION OF 20 BIGAS OF LAND TOOK PLACE , AN D VIDE REPLY 2 HE HAS ADMITTED THAT HE COULD NOT DEMONSTRATE THE DOCU MENTS OF 90 BIHGA OF LAND, HENCE THIS DEED COULD NOT MATEREALIZE AND NO ADVANCE WAS RECEIVED BY HIM AGAINST THIS LAND OF 150 BIGHA, AND VIDE REPLY NO. 3 HE HAS ADMITTED THAT THE SUM OF RS 100 LACS RECEI VED FROM NIKHIL HOMED LTD WERE GIVEN TO SIX FARMERS AGAINST THE 20 BIGHA OF LAND WERE MADE AFTER CANCELLATION OF THIS DEED ON 24.02. 2007 AND VIDE REPLY 4, HE ADMITTED THAT AS PER HIS STATEMENT RECO RDED ON 03.06.2009, VIDE QUESTION N0 10, THE TOTAL AMOUNT PAID TO SIX F ARMERS WAS ONLY 100 LACS INSTEAD OF RS 150. LACS. . 31. UPON CAREFUL PERUSAL AND EXAMINATION OF THESE FACTS , I AM OF THE OPINION THAT MR MANOJ KUMAR WAS NOT THE OWNER OF THE SAID LAND. HE TOOK THE SUM OF RS 100 LACS FROM SRI SHAIL ENDRA AGARWAL, DIRECTOR OF NIKHIL HOMES LTD WHICH WAS GIVEN BY MR. SHAIENDRA AGARWAL IN HIS PERSONAL CAPACITY TO PURCHASE THE 20 BIGHAS LAND IN THE NAME OF M/S SHANTI DEVI MEMORIAL TRUST WHERE TH E ENGINEERING COLLEGE IS BEING RUN. AND SAID MONEY WA S GIVEN TO FARMERS WHO WERE THE OWNERS OF THESE LANDS. HERE MA NOJ KUMAR ACTED AS A MIDDLE MAN. SECONDLY NO LAND WAS PURCHAS ED IN THE NAME OF THE APPELLANT. 20 BIGHAS OF LAND WAS PURCHASED I N THE NAME OF M/S SHANTI DEVI CHARITABLE TRUST AND SAID FACTS HAVE BE EN DULY REFLECTED BY MR SHAILENDRA AGARWAL IN HIS RETURN O F INCOME FILED FOR THE SAID ASSESSMENT YEAR AND PAID TAX ACCORDINGLY. HENCE ONCE TAX HAS BEEN OFFERED OR PAID ON ONE INCOME THEN IT CAN NOT BE IMPOSED TWICE. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF CASE AND AFTER CAREFUL EXAMINATION OF ASSESSMENT ORDER AND AVAILAB LE ASSESSMENT RECORD, I AM OF THE OPINION THAT NO ADVANCE WAS GIV EN TO MR MANOJ ITA NO. 385 & 386/AGRA/2010 63 KUMAR AGARWAL ON 15.02.2007, HENCE THE ADDITION OF RS.1,50,00,000/- IS HEREBY DELETED. 26. THE LD. DR RELIED UPON THE ORDER OF THE AO AND REFERRED TO ANNEXURE A-21 WHICH WAS SEIZED DURING THE COURSE OF SURVEY AND SU BMITTED THAT THE ASSESSEE PAID RS.1.50 CRORES TO SHRI MANOJ GOYAL, WHICH IS SUPPOR TED BY THE SEIZED DOCUMENT. THEREFORE, THE AO CORRECTLY MADE THE ADDITION. ON T HE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BE FORE THE LD. CIT(A) AND SUBMITTED THAT SHRI MANOJ GOYAL WAS NOT OWNER OF TH E PROPERTY REFERRED TO IN THE AGREEMENT AND THE DEAL DID NOT MATERIALIZE. THEREFO RE, THERE IS NO QUESTION OF MAKING ANY PAYMENT TO SHRI MANOJ GOYAL. HE HAS SUBM ITTED THAT SINCE AGREEMENT IS DATED 24.02.2007, THEREFORE, THERE IS NO QUESTIO N OF MAKING ANY PAYMENT TO SHRI MANOJ GOYAL ON 15.02.2007 PRIOR TO THE EXECUTION OF THE AGREEMENT. HE HAS SUBMITTED THAT AS PER AGREEMENT ITSELF, THE TOTAL P AYMENT STATED TO BE RS.12.30 CRORES WHICH WOULD EXCLUDE 1.50 CRORES ALLEGED TO H AVE BEEN PAID ON 15.02.2007. HE HAS SUBMITTED THAT THERE ARE VITAL CONTRADICTION S IN THE STATEMENT OF MANOJ GOYAL, WHO HAS NEVER ADMITTED RECEIPT OF THIS AMOUN T THROUGH THIS AGREEMENT AND THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. ITA NO. 385 & 386/AGRA/2010 64 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE FINDIN G OF FACT RECORDED BY THE D. CIT(A). THE SEIZED AGREEMENT IS DATED 24.02.2007 AN D SHRI MANOJ GOYAL IS STATED TO HAVE AGREED TO ARRANGE FOR 60 BIGHAS OF LAND APA RT FROM HOLDING 90 BIGHAS OF LAND. THE CONTENTS OF THE AGREEMENT GIVE DETAILS OF PAYMENT OF RS.12.30 CRORES WHICH WOULD EXCLUDE RS.1.50 CRORES. IT IS ALSO UNNA TURAL TO BELIEVE THAT RS.1.50 CRORES WOULD HAVE BEEN PAID PRIOR TO EXECUTION OF T HE AGREEMENT. NO EVIDENCE HAS BEEN BROUGHT ON RECORD IF THE AGREEMENT TO SALE WAS EVER ACTED UPON AND THE TOTAL LAND OF 150 BIGHAS HAS BEEN ARRANGED BY SHRI MANOJ GOYAL. THERE WERE VARIOUS DISCREPANCIES EXPLAINED IN THE STATEMENT OF MANOJ G OYAL AND ULTIMATELY, NO EVIDENCE WAS FOUND THAT THE ASSESSEE PAID ANY AMOUN T IN QUESTION TO SHRI MANOJ GOYAL OR MANOJ GOYEL HAS ARRANGED FOR THE ENTIRE LA ND TO THE ASSESSEE. THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION IN THE MATTER. THE LD. DR HAS NOT BEEN ABL E TO POINT OUT ANY INFIRMITY IN THE FINDING OF FACT RECORDED BY THE LD. CIT(A). IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). IN THE RESULT, GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS DISMIS SED. ISSUE NO.5: 28. IN ASSESSMENT YEAR 2007-08, THE REVENUE RAISED GROUND NO. 5, CHALLENGING THE DELETION OF ADDITION OF RS.3,00,000/- MADE BY A CCEPTING SOME ADDITIONAL ITA NO. 385 & 386/AGRA/2010 65 EVIDENCE AS THE AO DISALLOWED THE PROVISION OF EXPE NSES. THE AO NOTICED THAT THE ASSESSEE HAS FOLLOWED THE PROJECT COMPLETION METHOD AND DURING THE YEAR ONE PROJECT, NIKHIL ENCLAVE WAS DECLARED COMPLETED BY T HE ASSESSEE. THE PROVISION FOR EXPENSES OF RS.3,00,000/- HAVE BEEN MADE AGAINST TH E CLOSING STOCK OF FINISHED GOODS OF RS.9,00,000/- AND RAW MATERIAL OF RS.1,00, 000/-. IT WAS STATED THAT THE PROVISION MADE BY THE ASSESSEE IS AGAINST THE CONTI NGENT LIABILITY, MORE SO, WHEN THE ASSESSEE COMPANY DECLARED THIS PROJECT AS COMPL ETED. MOREOVER, WHEN THERE IS ONLY FLAT FOR SALE, PROVISION OF RS.3,00,000/- CANN OT BE ALLOWED. THEREFORE, THE SAME MAY BE TREATED AS CONTINGENT LIABILITY AND ADD ED BACK TO THE INCOME OF THE ASSESSEE. IT WAS SUBMITTED BEFORE THE LD. CIT(A) T HAT DURING THE ASSESSMENT PROCEEDINGS, THE AO DID NOT RAISE ANY QUERY IN THIS CONNECTION AND NO EXPLANATION WAS CALLED FOR. THEREFORE, NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE OF BEING HEARD. IT WAS CONTENDED THAT ALTHOUGH DURING THE ASSESSMEN T YEAR, SAID PROJECT WAS DECLARED TO BE COMPLETED YET SOME PETTY WORKS WERE PENDING WHICH WERE COMPLETED IN NEXT ASSESSMENT YEAR 2008-09. THE ASSE SSEE FILED COPY OF THE ACCOUNT OF THESE EXPENDITURE RECORDED IN THE BOOKS OF ACCOU NT IN THE NEXT ASSESSMENT WITH RELEVANT VOUCHERS FOR EXPENSES. THE LD. CIT(A) FOUN D THAT THESE EXPENSES HAVE BEEN ACTUALLY INCURRED IN SUBSEQUENT ASSESSMENT YEA R 2008-09 FOR COMPLETION OF THE PROJECT, THEREFORE, THE AO WAS DIRECTED TO DELE TE THE ADDITION. ITA NO. 385 & 386/AGRA/2010 66 29. THE LD. DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT IT WAS A CONTINGENT LIABILITY FOR WHICH THE PROVISION WAS MA DE. THEREFORE, THE AO RIGHTLY DISALLOWED THE CLAIM. ON THE OTHER HAND, THE LD. CO UNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). 30. ON CONSIDERATION FOR THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THE ASSESSEE EXPLAINED THAT NO OPPORTUNITY WAS GIVEN AT THE ASSESSMENT STAGE. THER EFORE, THIS ISSUE WAS EXPLAINED BEFORE THE LD. CIT(A). IT WAS EXPLAINED THAT ALTHOU GH THE ASSESSEE CLAIMED THAT PROJECT WAS COMPLETED IN THE YEAR UNDER APPEAL, BUT SOME PETTY WORKS WERE PENDING, WHICH WERE ACTUALLY COMPLETED IN THE SUBSE QUENT YEAR. THE EXPENSES INCURRED WERE SUBJECTED TO RELEVANT VOUCHERS TO SHO W THAT THE EXPENSES WERE ACTUALLY INCURRED BY THE ASSESSEE AGAINST THE PROVI SIONS MADE. IT WAS, THEREFORE, NOT A PROVISION MERELY IN THE NATURE OF CONTINGENT LIAB ILITY. THE ASSESSEE ACTUALLY ANTICIPATED THAT SOME SMALL WORK WERE TO BE COMPLET ED, WHICH WERE ACTUALLY COMPLETED IN THE NEXT YEAR WOULD SHOW THAT THE PROV ISION WAS NOT MERELY CONTINGENT BUT BASED UPON THE ACTUAL FACTS. THE LD. CIT(A), THEREFORE, ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD, RIGHT LY DELETED THE ADDITION. THERE IS NO MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. T HE SAME IS, ACCORDINGLY DISMISSED. ITA NO. 385 & 386/AGRA/2010 67 31. GROUND NO. 1, 3 & 4 OF THE APPEAL OF THE REVENU E IN ASSESSMENT YEAR 2007- 08 HAVE ALREADY BEEN DECIDED WHILE DECIDING THE AP PEAL FOR THE ASSESSMENT YEAR 2006-07. LD. COUNSEL FOR ASSESSEE DID NOT PRESS APP LICATION UNDER RULE 27 OF ITAT RULES IN A.Y. 2007-08. THE SAME IS DISMISSED BEING NOT PRESSED. NO OTHER GROUND IS ARGUED OR PRESSED. IN THE RESULT, THE DEPARTMENT AL APPEAL FOR THE ASSESSMENT YEAR 2007-08 IS DISMISSED. 32. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY