M/s. Konichiva Builders Ltd., New Delhi V. ACIT, New Delhi

ITA 3856/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74218 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 15-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 25-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Accommodation entries; Documents seized
• Section: 50C; 69; 132

Judgement Text

ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NOS. 3213-3214 & 3856/DEL/2012 AND 1080/DEL/2013 A.Y. RS : 2004 - 05, 2005 - 06 2007-08 & 2006-07 M/S KONICHIVA BUILDERS PVT. LTD., H-108, NEW ASIATIC BUILDING, CONNAUGHT PLACE, NEW DELHI 110 001 (PAN: AAACK5818M) VS. ACIT, CENTRAL CIRCLE-9, NEW DELHI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. K. SAMPATH, ADVOCATE DEPARTMENT BY : SH. D.K. MISHRA, D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THESE APPEALS BY THE ASSESSEE EMANATE OUT OF ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR THE RESPECTIVE ASSESSMENT YEARS. SINCE SOME OF THE ISSUES ARE COM MON AND THE APPEALS HEARD TOGETHER, THESE ARE BEING CONSOLIDATE D AND DISPOSED OF FOR THE SAKE OF CONVENIENCE BY THIS COMMON ORDE R. 2. AT THE THRESHOLD, IT IS NOTICED THAT THERE IS DA Y OF 43 DAYS IN FILING THE APPEALS BEFORE THE TRIBUNAL. FOR THE RE ASONABLE CAUSE FOR DELAY IT HAS BEEN SUBMITTED THAT FATHER OF THE DIR ECTOR, SH. S.K. GUPTA WAS CRITICALLY ILL AND CONFINED TO BED AND EV ENTUALLY HE PASSED AWAY. THEREFORE, THE DIRECTOR WAS PRE-OCCUPIED W ITH THE OBSEQUIES ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 2 ASSOCIATED WITH LAST RITES. HENCE, IT HAS BEEN PR AYED THAT THE DELAY MAY BE CONDONED. 3. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION, WE CONDONE THE DELAY IN FILING THE APPEALS AND ACCORDINGLY, THE APPEALS HAVE BEEN ADMI TTED. 4. THE ASSESSEE IN THIS CASE BELONGS TO A GROUP OF ABOUT 33 CASES OF VARIOUS COMPANIES OPERATED AND CONTROLLED BY ON E SH. SK GUPTA A CHARTERED ACCOUNTANT BY PROFESSION, FROM HIS OFFI CE PREMISES OF TRUMP AND GATES SITUATED AT H-108, 2 ND FLOOR, NEW ASIATIC BUILDING, CONNAUGHT PLACE, NEW DELHI AND ALSO FROM THE PREMIS ES OF HIS FIRM NAMELY M/S GUPTA & RAKESH ASSOCIATES AT 231, GULMOH AR ENCLAVE, NEW DELHI, WHICH WERE BOTH COVERED DURING SEARCH AN D SEIZURE OPERATION U/S. 132 OF THE ACT BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. IN THE VARIOUS STATEMENTS OF SH. SK GUPTA RECORDED ON VARIOUS DATES BOTH BEFORE THE OFFICERS OF THE INVESTIGATION WING AND IN POST SEARCH ENQUIRIES BE FORE THE AO, HE ADMITTED IN DETAIL, HIS MODUS OPERANDI OF PROVIDIN G ACCOMMODATION BILLS THROUGH THE ASSESSEE COMPANY AND ANOTHER COM PANIES IN LIEU OF CHEQUE RECEIVED AND CASH RETURN TO THE BENEFICIA RIES. THERE WAS ALSO SEIZURE OF DUPLICATE SET OF BOOKS OF ACCOUNTS, CHEQUES SIGNED BY VARIOUS AUTHORISED SIGNATORIES / DIRECTORS OF THE ASSESSEE COMPANY AND OTHER COMPANIES (WHICH WERE FOUND TO BE EMPLOYE ES, RELATIVES OR FRIENDS OF SH. SK GUPTA) FROM SHRI S.K. GUPTAS PREMISES. FROM THE ABOVE, AO OBSERVED THAT IT BECAME ABUNDANTLY CL EAR THAT THE ASSESSEE COMPANY, IN FACT, INDULGED IN ACCOMMODATI ON ENTRIES BUSINESS AND DID NOT DO ANY GENUINE BUSINESS. ALL THE SALE AND PURCHASES ETC. BOOKED IN THESE COMPANIES WERE FOUN D TO BE BOGUS. PROPER BOOKS OF ACCOUNTS WERE NOT FOUND TO HAVE BEE N MAINTAINED. IN THESE CIRCUMSTANCES, THE BOOKS OF ACCOUNTS OF TH E ASSESSEE WERE ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 3 REJECTED AND ADDITIONS WERE MADE ON ESTIMATE BASIS, THE SAME WERE AFFIRMED BY THE LD. CIT(A) IN APPEAL. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE FIRST ISSUE PERTAINS TO REJECTION OF BOOKS O F ACCOUNTS. LD. COUNSEL OF THE ASSESSEE IN THIS REGARD SUBMITTED TH AT HE IS NOT VEHEMENTLY PRESSING THIS ISSUE. WE FIND THAT IN TH E SEARCH AND ON THE BASIS OF MATERIAL RECOVERED AND STATEMENTS OBTA INED IT HAS BEEN DULY ESTABLISHED THAT ASSESSEE WAS INDULGING IN BOG US ACCOMMODATION ENTRIES. NO ACTUAL SALE AND PURCHAS E WAS DONE BY THE ASSESSEE. PROPER BOOKS OF ACCOUNTS WERE NOT MA INTAINED. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW IN WHICH THE BOOKS OF ACCOUNT S HAVE BEEN REJECTED. 7. ANOTHER ISSUE IN THIS CASE IS ESTIMATE OF INCOME ON ACCOMMODATION SALE BILL/TURNOVER @2% AS UNDER:- A.Y. A.Y. A.Y. A.Y. ACCOMMODATION SALE BILL/TURNOVER ACCOMMODATION SALE BILL/TURNOVER ACCOMMODATION SALE BILL/TURNOVER ACCOMMODATION SALE BILL/TURNOVER INCOME @2% INCOME @2% INCOME @2% INCOME @2% 2004-05 9,93,368 19,867 2005-06 16,78,070 33,561 2006-07 8,12,474 16,250 2007-08 1,22,62,916 2,45,258 8. HEARD BOTH THE PARTIES. ON THIS ISSUE, WE FIND T HAT IT IS ESTABLISHED THAT ASSESSEE WAS ENGAGED IN THE BUSINE SS OF PROVIDING BOGUS ACCOMMODATION ENTRY. HENCE, THE INCOME IN TH IS REGARD HAS TO BE ESTIMATED. IN THIS REGARD, THE ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF STATEMENTS GIVEN BY THE DIRECTOR , S.K. GUPTA. IN THIS REGARD, IT IS RELEVANT TO QUOTE THE PRECISE QU ESTION AND ANSWERS THEREOF GIVEN BY SH. SK GUPTA:- ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 4 Q.(2) PLEASE STATE CATEGORICALLY THE PERCENTAGE COMMISSION CHARGED BY YOU FOR PROVIDING ACCOMMODATION SALE BILLS, ACCOMMODATION PURCHASE / EXPENSES BILLS AND INVESTMENT AND LOAN ENTRIES THROUGH YOUR VARIOUS GROUP COMPANIES. ANS. THE AVERAGE COMMISSION EARNED BY VARIOUS GROUP COMPANIES IN PROVIDING DIFFERENT TYPE OF ACCOMMODATION ENTRIES WAS TO THE TUNE OF 1.5% TO 2.0% OUT OF WHICH I HAVE TO INCUR OUR NORMAL EXPENSE ON A/C OF SALARY, RENT, BANK CHARGES, CONVEYERS, TELEPHONE, WATER AND ELECTRICITY. 9. ON THE BASIS OF STATEMENTS AS WELL AS PREVALENT MARKET CONDITION, THE AO HAS ESTIMATED THE INCOME @ 2% WIT HOUT ALLOWING ANY AMOUNT FOR THE EXPENDITURE. LD. CIT(A) HAS AFF IRMED THE SAID. 10. IN THIS REGARD LD. COUNSEL OF THE ASSESSEE HAS PLEADED FOR ALLOWANCE OF EXPENDITURE INCURRED TO EARN THE INCOM E. WE FIND THAT WHEN ADDITION IS BEING MADE ON THE BASIS OF STATEME NT, THE STATEMENT HAS TO BE RELIED IN FULL . REVENUE CANNO T CHOOSE TO RELY ON ONE PART OF THE STATEMENT AND IGNORE THE REST OF THE STATEMENT IN THE ABSENCE OF ANY COGENT MATERIAL. THIS IS SUPPORT ED BY THE COMMON LAW MAXIM OF APPROBATE AND REPROBATE. 11. IN THIS CASE THE ASSESSEE COMPANYS DIRECTOR H AS AGREED THAT THE COMMISSION WAS TO THE TUNE OF 1.5% TO 2%. HENCE , ESTIMATION OF COMMISSION INCOME @ 2% CANNOT BE DISPUTED. HOWEVER , AT THE SAME TIME IT HAS ALSO BEEN SUBMITTED IN THE SAME ST ATEMENT THAT THE ASSESSEE HAS TO INCUR THE EXPENDITURE ON ACCOUN T OF SALARY, RENT BANK CHARGES, CONVEYERS, TELEPHONE, WATER AND ELECT RICITY. HOWEVER, ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 5 IT IS ALSO SETTLED THAT MERE SUBMISSION THAT EXPEND ITURE HAS BEEN INCURRED CANNOT LEAD TO ALLOWANCE OF EXPENDITURE. A SSESSEE HAS TO PROVE WITH COGENT MATERIAL THAT THE EXPENDITURE HAS BEEN INCURRED TO EARN THE INCOME. IN THESE CIRCUMSTANCES WE REMI T THE ISSUE TO THE FILE OF THE AO. THE ASSESSING OFFICER SHALL EXA MINE THE ASPECT OF ALLOWANCE OF EXPENDITURE ON THE BASIS OF COGENT MAT ERIALS TO BE SUBMITTED BY THE ASSESSEE. 12. ANOTHER ADDITION MADE IN THIS REGARD IS @2% ON ACCOMMODATION FRESH INVESTMENTS. A.Y. A.Y. A.Y. A.Y. ACCOMMODATION FRESH INVESTME ACCOMMODATION FRESH INVESTME ACCOMMODATION FRESH INVESTME ACCOMMODATION FRESH INVESTMENT ENTRIES NT ENTRIES NT ENTRIES NT ENTRIES INCOME @2% INCOME @2% INCOME @2% INCOME @2% 2004-05 2,73,48,000 5,46,960 2005-06 2,63,50,000 5,27,000 2006-07 89,78,880 1,79,578 2007-08 4,38,40,283 8,76,805 13. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ESTIMATE OF INCOME CAN BE MADE ONLY WITH REFERENCE TO THE INITIAL AND FRES H INVESTMENT MADE BY THE ASSESSEE. THE ROTATION OF THE AMOUNT OF INVESTMENT CANNOT BE TAKEN FOR COMPUTATION OF THE INCOME. LD. DR ON THE OTHER HAND RELIED UPON HIS WRITTEN SUBMISSION. 14. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION. WE FIND THAT IN THIS CASE IT HAS BEEN ESTABLISHED THAT THE ASSESSEE IS INDULGING IN BOGUS ACCOMMODATION ENTRY BUSINESS AND NO ACTUAL SA LE AND PURCHASE ACTIVITY HAS BEEN DONE. THE BOOKS HAS ALS O BEEN REJECTED AND IT HAS BEEN NOTED THAT PROPER BOOKS ARE NOT MAI NTAINED. IN SUCH CIRCUMSTANCES, A REASONABLE ESTIMATES @2% OF INVES TMENT HAS BEEN MADE BY THE AO, WHICH CANNOT BE FAULTED WITH. HOWEVER, IN THIS REGARD, ASSESSEES COUNSEL SUBMISSION IS ALSO NOT WORTHY THAT ESTIMATE OF INCOME FOR INVESTMENT HAS TO BE MADE O N THE BASIS OF ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 6 INITIAL AND FRESH INVESTMENT MADE BY THE ASSESSEE. THOUGH WE NOTE THAT AO HAS WRITTEN THAT ADDITION WAS MADE ON THE B ASIS ACCOMMODATION FRESH INVESTMENT; THE METHOD OF COM PUTATION OF THE AMOUNT OF INVESTMENT IS NOT ON RECORD. FOR ASS ESSMENT YEAR 2004-05 INVESTMENT HAS BEEN TAKEN AS FIGURE OF INVE STMENT IN SHARES AND SECURITIES REFLECTED IN SCHEDULE 3 TO T HE BALANCE SHEET. FOR OTHER YEAR HOW THE AMOUNT HAS BEEN ARRIVED IT I S NOT DISCERNIBLE. LD. COUNSEL OF THE ASSESSEE AND THE LD. DR COULD N OT THROW PROPER LIGHT ON THIS ASPECT. IN THESE CIRCUMSTANCES, WE RE MIT THIS ISSUE TO THE FILE OF THE AO. THE AO SHALL EXAMINE THE ISSUE AFRESH. HE SHALL ARRIVE AT THE FIGURE OF INVESTMENT DONE BY THE ASSE SSEE ON A COGENT BASIS AND THEN THE ESTIMATE OF INCOME CAN BE MADE. 15. ANOTHER ISSUE RAISED IN ITA NO. 3856 FOR A.Y. 2 007-08 PERTAINS TO TREATMENT OF RS. 68,80,622/- AS INCOME U/S. 69 O F THE I.T. ACT, IGNORING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF K.P. VARGHESE REPORTED IN 131 ITR 597 AND IGNORING SECT ION 50C OF INCOME TAX ACT. 16. ON THIS ISSUE AO NOTED THAT THE SEIZED DOCUMENT S WERE FOUND PERTAINING TO CASH LOAN PAYMENTS FOR LAND AT BHIWA RI. ON COMPARISON OF SALE CONSIDERATION AS MENTIONED IN TH E SALE DEEDS AND THE HAND WRITTEN PAPERS IN THE SEIZED DOCUMENTS , AO OBSERVED THAT THERE WAS CONSIDERABLE DISCREPANCY. THE COMPA RISON IN THIS REGARD WAS AS UNDER:- I. I.I. I. II. II.II. II. III. III.III. III. IV. IV.IV. IV. V. V.V. V. VI. VI.VI. VI. VII. VII. VII. VII. S.NO. S.NO. S.NO. S.NO. LOCATION LOCATION LOCATION LOCATION & & & & KHASRA KHASRA KHASRA KHASRA NO. NO. NO. NO. AREA OF AREA OF AREA OF AREA OF LAND LAND LAND LAND (HECTARE) (HECTARE) (HECTARE) (HECTARE) SALE SALE SALE SALE VALUE AS VALUE AS VALUE AS VALUE AS PER DEED/ PER DEED/ PER DEED/ PER DEED/ DT. OF DT. OF DT. OF DT. OF SALE. SALE. SALE. SALE. AREA OF AREA OF AREA OF AREA OF LAND LAND LAND LAND (BIGHA) (BIGHA) (BIGHA) (BIGHA) SALE VALUE SALE VALUE SALE VALUE SALE VALUE AS PER AS PER AS PER AS PER HANDWRITTEN HANDWRITTEN HANDWRITTEN HANDWRITTEN PAPERS PAPERS PAPERS PAPERS DIFFERENCE DIFFERENCE DIFFERENCE DIFFERENCE (VI (VI(VI (VI- -- -IV) IV)IV) IV) 1 KHASRA NO. 178, 1.22 3416000 2-8-2006 4.823 1065000 PER BIGHA 5136994 1720994 ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 7 VILLAGE - RAMPUR TEHSIL- TIZARA 2 KHASRA NO. 188, VILLAGE- RAMPUR TEHSIL- TIZARA .295 708000 1.1663 850000 PER BIGHA = 991381 283381 3 KHASRA NO. 190, VILLAGE- RAMPUR TEHSIL- TIZARA .33 780000 1.3047 850000 PER BIGHA = 110 9002 329002 4 KHASRA NO. 201, VILLAGE- RAMPUR TEHSIL- TIZARA .54 1296000 2.1349 700000 PER BIGHA = 1494484 198484 5 KHASRA NO. 186, VILLAGE- RAMPUR TEHSIL- TIZARA .923 1825000 3.649 1400000 PER BIGHA = 5108923 3283923 6 KHASRA NO. 186, VILLAGE- RAMPUR TEHSIL- TIZARA .16 384000 .6325 NO INFORMATION 7 KHASRA NO. 186, VILLAGE- RAMPUR TEHSIL- TIZARA 1.8467 3650000 7.3012 NO INFORMATION 8 KHASRA NO. 190 KHASRA 0.33 0.0295 7908000 10.5562 85000 PER BIGHA = 89728383 1064838 ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 8 NO. 188 KHASRA NO. 186/228 KHASRA NO. 187 KHASRA NO. 188/227 KHASRA NO. 189 KHASRA NO. 191 VILLAGE RAMPUR TEHSIL TIZARA 0.09 0.97 0.05 0.58 0.98 2.67 9 KHASRA NO. 568 KHASRA NO. 569 KHASRA NO. 570 VILLAGE RAMPUR TEHSIL TIZARA 0.01 0.54 0.01 761000 2.2140 NO INFORMATION 10 KHASRA NO. 571 VILLAGE RAMPUR TEHSIL TIZARA 0.22 300000 27.9.2006 .8698 NO INFORMATION 11 KHASRA NO. 565 0.38 516000 27.9.2006 1.5023 NO INFORMATION 12 KHASRA NO. 565 KHASRA NO. 567 VILLAGE RAMPUR TEHSIL TIZARA 0.42 0.81 1671000 27.9.2006 4.8360 NO INFORMATION 13 KHASRA NO. 571 & 572 KHASRA NO. 565, 0.82 1.67 1050000 27.6.2006 9.8446 NO INFORMATION ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 9 567 & 574 VILLAGE RAMPUR TEHSIL TIZARA TOTAL TOTAL TOTAL TOTAL 68,80,622 68,80,622 68,80,622 68,80,622 WHEN CONFRONTED IN THIS REGARD, THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS:- THE COMPANY HAS STARTED ITS REAL ESTATE VENTURE IN THE STATE OF RAJASTHAN DURING THE FINANCIAL YEAR 2006-07 AND WITH THE INTENTION TO ACQUIRE WERE INVESTIGATING THE RATES O F RURAL AGRICULTURAL LAND IN DIFFERENT DISTRICTS OF THE ST ATES OF RAJASTHAN FOR COMPETITIVE ACQUISITION. FOR THAT PUR POSES, APART FROM OUR INTERNAL NETWORK, WE SEEK HELPS OF REAL ES TATE BROKERS OF DIFFERENT STATES OF RAJASTHAN. AS THE BUYER WAS A NEW DELHI BASED COMPANY, AS USUA L THE BROKERS HAVE QUOTED HIGH PRICE OF THE RURAL AGRIC ULTURAL LAND AND SENT THEIR QUOTATION TO US. THIS IS ALSO THE TREND OF PROPERTY DEALERS TO QUOTE HIGH PRICE OF THE PROPERT IES IN NORMAL COURSE OF BUSINESS DURING THE PRE-NEGOTIATI ON PERIOD. HOWEVER, WE HAVE PURCHASED ALL THE RURAL AGRICULTUR AL LAND THROUGH OUR OWN NETWORK AS THE PROMOTERS HAILS FROM RAJASTHAN ONLY BY DIRECTLY NEGOTIATING WITH THE SEL LER. THE REFERRED DOCUMENTS, YOU HAVE SEIZED IS ONE OF T HOSE QUOTATIONS RECEIVED BY THE COMPANY FROM ONE OF THE PROPERTY DEALER. THE DOCUMENTS WERE HAND WRITTEN IN HINDI. THIS DOCUMENT WAS NOT PREPARED BY ANY OF THE EMPLOYEE, ASSOCIATES, DIRECTORS OR ANY PERSON ASSOCIATED WITH THE COMPANY RATHER RECEIVED BY THE COMPANY DURING THE E ARLY PERIOD OF ITS REAL ESTATE VENTURE IN RAJASTHAN STA TE. ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 10 ITS THE GENERAL PROCEDURE TO INVITE THE QUOTATION, LEGAL VETTING OF DOCUMENTS AND TITLE DEED VERIFICATION WITH SUB-R EGISTRAR, PHYSICAL VERIFICATION OF THE RURAL AGRICULTURAL LAN D WITH THE OBJECT TO ASSESSEE THE ACCESSIBILITY AND ONLY AFTER SATISFACTORY VERIFICATION OF ALL THESE FACTS AND CIRCUMSTANCES, A REAL ESTATE PROPERTY IS GENERALLY PURCHASED. THE REFERRED DOCUMENT WAS JUST A PRE-NEGOTIATION QU OTATION OF ONE OF THE PROPERTY DEALER. HOWEVER, THE COMPANY H AS NOT PURCHASED THE RURAL AGRICULTURAL LAND AT THE RATE Q UOTED IN THOSE DOCUMENTS RATHER PURCHASED THE PROPERTIES AT A MUCH LOWER PRICE DIRECTLY FROM THE FAMERS BY NEGOTIATING WITH THEM AND THROUGH OUR OWN NETWORK AND ALL THE PRICES WAS FIXED AT THE PREVAILING CIRCLE RATE OF GOVT. OF RAJASTHAN FO R THE SAID AREA. DURING THAT TIME, THE SALE TRANSACTION EXECUT ED AND REGISTERS WITH SUB-REGISTRAR, BHIWADI WAS AT THAT P RICE ONLY; THIS FACT CAN BE VERIFIED FROM THE SUB-REGISTRAR OF BHIWADI ALSO, WHO IS WITNESS TO SAME. 17. AO WAS NOT SATISFIED WITH THE ABOVE. HE HELD THAT THE ASSESSEES REPLY IS NOT SUPPORTED WITH ANY DOCUMENTARY EVIDENC E; IT IS MERELY ON AFTER THOUGHT. AO OBSERVED THAT THE ELEMENT OF P AYMENT MADE OUTSIDE THE BOOKS I.E. OVER AND ABOVE THE SALE DEED IS A N ORMAL FEATURE IN PROPERTY TRANSACTION. ACCORDINGLY, AO ADDED THE D IFFERENCE OF RS. 60,80,622/- AS UNEXPLAINED INVESTMENT FOR PURCHASE OF PROPERTY AND THE SAME WAS ADDED TO THE ASSESSEES CONCEALED INCOME. 18. UPON ASSESSEES APPEAL LD. CIT(A) NOTED THAT AO S DECISION IS BASED ON LEGAL PRESUMPTION AVAILABLE IN SECTION 132(4A)/ 292C OF THE IT ACT. LD. CIT(A) OBSERVED THAT IN VIEW OF THE PRESUMPTION AS PER THESE SECTIONS QUOTED ABOVE A PERSON SUBJECT TO SEARCH CANNOT GET AWAY BY MERELY PLEADING THAT IT IS NOT FOR HIM, BUT IT IS FOR THE DEPARTMENT TO ESTABLISH THAT THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS OR ASSETS OF INCRIMINATING NATURE FOUND DURING SEARCH BELONGING TO THAT PERSO N OR TO PROVE HIS ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 11 HANDWRITING OR SIGNATURE THEREON OR THAT CONTENTS OF SUCH BOOKS OF ACCOUNT OR DOCUMENTS ARE TRUE. LD. CIT(A) OBSERVED THAT THE PERSON IS REQUIRED TO OFFER A REASONABLE EXPLANATION REGARDIN G THE NATURE OF SUCH BOOKS OF ACCOUNT OR DOCUMENTS FOUND IN HIS POSSESSI ON OR CONTROL AND IF THE SAME IS CLAIMED TO BE BELONGING TO SOMEBODY EL SE, THEN ALSO HE IS REQUIRED TO EXPLAIN AS TO WHOM THE SAME BELONG AND AS TO HOW THE SAME HAS COME INTO HIS POSSESSION. LD. CIT(A) OBSERVED THAT NO DOUBT THE PRESUMPTION AVAILABLE U/S. 132(4A)/292C IS A REBUTT ABLE PRESUMPTION BUT THE ONUS TO REBUT THE PRESUMPTION LIES ON THE ASSES SEE. LD. CIT(A) FURTHER OBSERVED THAT AS HAS BEEN OBSERVED BY THE AO IN THE INSTANT CASE THE ASSESSEE HAS SIMPLY STATED THAT SEIZE DOCUMEN TS ARE NOTHING BUT PRE-NEGOTIATION QUOTATIONS RECEIVED FROM SOME BROKE R AND THAT IN FACT THE LANDS WERE PURCHASED FOR A MUCH LOWER PRICE AND RE GISTERED AT CIRCLE RATES. ACCORDINGLY, LD. CIT(A) PROCEEDED TO AFFIRM THE ADDITION. 19. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 20. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED TH E RECORDS. WE FIND THAT IN THIS CASE CERTAIN DOCUMENTS WERE SEIZED FRO M THE ASSESSEES PREMISES WHICH REVEALED THAT ASSESSEE HAS PURCHASED SOME LANDS. THE PAYMENTS THEREOF WERE HIGHER THAN THAT NOTED IN TH E REGISTERED SALE DEED. AO HAD PRESUMED THAT THE SAID PAYMENTS WERE ON MONEY PAYMENTS. WHEN CONFRONTED IN THIS REGARD, THE AS SESSEE HAS SUBMITTED THAT THE DOCUMENTS SEIZED WERE QUOTATIONS FROM BR OKERS. IT WAS FURTHER SUBMITTED THAT THE PROPERTY DEALERS GENERALLY QUOT ED HIGHER PRICES. IT WAS FURTHER SUBMITTED THAT THE RURAL LAND WERE PURCHAS ED THROUGH ASSEESEES OWN NETWORK AS THE PROMOTERS HAIL FROM RAJASTHANN O NLY BY DIRECTLY NEGOTIATING WITH THE SELLER. IT WAS FURTHER SUBMITT ED THAT THE SEIZED DOCUMENTS WERE QUOTATION RECEIVED FROM ONE OF THE PROPERTY DEALERS. THE DOCUMENT WAS WRITTEN IN HINDI. THE DOCUMENTS WAS NOT PREPARED BY ANY EMPLOYEE, ASSOCIATE, DIRECTOR OR ANY PERSON OR ASSOCIATE WITH THE COMPANY. NOW THE ABOVE SUBMISSION BY THE ASSESS EE HAS NOT BEEN ACCEPTED BY THE REVENUE AUTHORITIES. ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 12 21. WE FIND THAT THE NATURE OF SEIZED DOCUMENTS HAS NOT BEEN BROUGHT ON RECORD BY THE AO OR THE CIT(A). NO DETAILS TH EREOF HAS BEEN SUBMITTED BEFORE US BY MEANS OF PAPER BOOK. THUS, WE ARE NOT IN A POSITION TO FACTUALLY EXAMINE THE SEIZED DOCUMENTS OR OFFER ANY COMMENT IN THIS REGARD. HOWEVER, WE NOTE THAT THE ASSESSEE IN REP LY TO THE AUTHORITIES HAS SUBMITTED THAT THE DOCUMENTS SEIZED WERE QUOTAT IONS RECEIVED FROM THE BROKERS. IN SUCH CIRCUMSTANCES, IN OUR CONSIDE RED OPINION, SUCH BROKERS SHOULD HAVE BEEN EXAMINED AND REPLY SHOULD HAVE BEEN OBTAINED. NOTHING IS ON RECORD TO SUGGEST THAT TH ESE BROKERS WERE EXAMINED OR THE ASSESSEE WAS ASKED TO PRODUCE THEM. WE FURTHER FIND THAT THE PURCHASES HAVE BEEN DULY REGISTERED AT TH E CIRCLE RATE SPECIFIED. IN SUCH CIRCUMSTANCES, WHEN IT IS ALLEGED BY THE RE VENUE THAT PAYMENTS WERE MADE OVER AND ABOVE THAT RECORDED BY THE REGIS TRATION AUTHORITIES, IT WAS NECESSARY TO CONFRONT THE SELLER IN THIS REG ARD. WE FIND THAT NO SUCH ACTION HAS BEEN TAKEN BY THE AUTHORITIES BELOW. IT IS SETTLED LAW THAT IN SUCH CASES THE NATURE OF EVIDENCE FOUND UPON SEARCH IS OF CONSIDERABLE SIGNIFICANCE. IF THE DOCUMENTS SEIZED COGENTLY PR OVED THAT ON MONEY WAS PAID BY THE ASSESSEE ONLY THEN THE SAID DOCUMENTS H AS TO BE RELIED OTHERWISE THE SAID DOCUMENT IS REQUIRED TO BE SUBJE CT TO NECESSARY VERIFICATION. 22. WE FIND THAT NO ADDITION CAN BE MADE ON THE BAS IS OF OBSERVATION OF THE AO THAT ELEMENT OF PAYMENT OUTSIDE THE BOOKS OF ACCOUNTS OVER AND ABOVE THE SALE DEED IS A NORMAL FEATURE IN PROPERTY TRANSACTION. IN THESE CIRCUMSTANCES, WE FIND THAT DECISION OF THE HONBL E APEX COURT IN THE CASE OF K.P. VERGHESE VS. INCOME TAX OFFICER, ERAN KULAM 131 ITR 597 (SC) IS VERY MUCH APPLICABLE. IN THIS CASE IT HAS BEEN HE LD THAT THE BURDEN OF PROVING IS THAT OF REVENUE WHEN THERE IS ALLEGAT ION OF UNDERSTATEMENT ON CONCEALMENT IN THE CONSIDERATION SHOWN. MOREOVER, WE NOTE THAT IN A NUMBER OF SALE TRANSACTION AS NOTED ABOVE THE VALUE AS PER THE SALE REGISTRATION HAS BEEN ACCEPTED BY THE AO WITHOUT AN Y ADDITION. ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 13 23. WE FURTHER NOTE THAT IT IS SETTLED LAW THAT NO ADD ITION CAN BE MADE IN THIS REGARD ON THE BASIS OF DUMB DOCUMENTS. IN THIS REGARD, WE REFER TO THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF C.I.T. VS. P.V. KALYANASUNDARAM IN (2007) 294 ITR 49 (SC) IN WHICH ALLEGATIONS OF ON MONEY TRANSACTION ON THE BASIS OF NON-CONVINCING LOOSE SH EETS FOUND DURING THE COURSE OF SEARCH AND CONFLICTING STATEMENT OF THE S ELLER, WAS DELETED BY THE TRIBUNAL (TO WHICH, ONE OF US THE ACCOUNTANT MEMBER WAS THE PARTY) AND THE SAME WAS AFFIRMED BY THE HONBLE HIGH COURT AND HON BLE APEX COURT. 24. ACCORDINGLY, IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS, WE ARE OF THE CONSIDERED OPINION THAT T HE MATTER NEEDS TO BE REMITTED TO THE FILE OF THE AO. THE AO SHALL EXAMI NE THE NATURE OF THE SEIZED DOCUMENTS AFRESH AS PER THE DISCUSSION HEREI NABOVE. FURTHERMORE, AO SHALL ALSO MAKE THE NECESSARY VERIF ICATION AS MENTIONED HEREINABOVE. ACCORDINGLY, THE ISSUE STANDS REMITT ED TO THE FILE OF THE AO. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 25. ANOTHER ISSUE RAISED IN ITA NO. 3856 FOR A.Y. 2 007-08 IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 84,00,000/- BEING AMOUNT OF SALE TO RELIANCE INDUSTRIES LTD. ON PROTE CTIVE BASIS. 26. ON THIS ISSUE AO NOTED THAT ASSESSEE HAD SHOWN SALES TO RELIANCE INDUSTRIES TO THE TUNE OF RS. 84,00,000/-. THIS WAS SAID TO HAVE BEEN TOWARDS VARIOUS SOFTWARE AND IT RELATED SERVICES RENDERED FOR PROJECTS OF THE RELIANCE INDUSTRIES LT D. IN THIS REGARD, INITIALLY DURING THE SEARCH AND SEIZURE OPERATION, ASSESSEE HAD ADMITTED THAT IT HAD NO CORROBORATIVE EVIDENCE TO S UPPORT THE SALE OTHER THAN THE SALE BILL ITSELF. ASSESSEE HAD NO EVIDENCE TO SUPPORT THE ABOVE SALES TO THE RELIANCE INDUSTRIES. HOWE VER, IN POST SEARCH INVESTIGATIONS. THE ASSESSEE GAVE FOLLOWING STATE MENTS:- ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 14 1. I HAD GIVEN STATEMENTS U/S. 131 AND 132(4) OF TH E INCOME TAX ACT, 1961 ON DECEMBER 27, 2006 AND DECEMBER 13, 2006, THAT I HAVE PROVIDED ACCOMMODATION BILLS TO RELIANCE AND VARIOUS OTHER PARTIES, AND I AFFIRM THAT WHATEVER I HAVE SAID IN MY ABOVE STATEMENTS IS CORRECT EXCEPT THAT I HAVE DONE ACTUAL WORK FOR RELIANCE ALSO. 2. THAT I AM WILLING TO PAY TAX WORK DONE FOR RELIA NCE GROUP AMOUNTING TO RS. 8.48 CRORE (RUPEES EIGHT CRORE FORTY EIGHT LACS ONLY) (AS PER ANNEXURE B ATTACHED). I HAVE BOOKED EXCESSIVE EXPENDITURE TO UNDERSTATE THE PROFITS, BUT CERTAIN EXPENSE WERE ACTUALLY INCURRED FOR EARNING THE INCOME AND AS SUCH MY GROUP OF COMPANIES MAY PLEASE ALLOWED THE SUITABLE EXPENDITURE, AS GENUINE EXPENDITURE HAS BEEN INCURRED FOR EARNING THE INCOME. I AM MAKING THIS DISCLOSURE IN ADDITION TO MY EARLIER SURRENDER OF RS. 3 CRORE AND I SHALL NOT CLAIM ANY SET OFF AGAINST THIS SURRENDER IN ANY SUBSEQUENT PROCEEDINGS UNDER THE INCOME TAX ACT, 1961. 3. THAT THIS MY FINAL STATEMENT AND IF EVER SAY THA T I HAVE PROVIDED ACCOMMODATION BILL TO RELIANCE I CAN BE PROSECUTED. 4. THAT I AM READY TO RECONFIRM THE ABOVE FACTS IN MY STATEMENTS U/S. 132(4) OF THE INCOME TAX ACT, 1961 SO THAT I COULD BE SAVED FROM PENALTY PROCEEDINGS. ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 15 27. THE ABOVE STATEMENT OF THE ASSESSEE WAS NOT ACC EPTED BY THE AO. AO HELD THAT IT WAS AN AFTER THOUGHT AND AFFID AVIT WAS GIVEN ONLY AS A PLOY TO SAVE THE BENEFICIARY OF ACCOMMOD ATION ENTRY, BY OWNING UP PART OF THE TOTAL TRANSACTIONS. HENCE, THE AO HELD THAT THE ASSESSEES CLAIM THAT IT HAS GENUINE SALES TO M /S RELIANCE INDUSTRIES, IS TOTALLY UNJUSTIFIED WITHOUT ANY CORR OBORATIVE EVIDENCE AND CLEARLY AN EXERCISE TO SAVE THE BENEFICIARY OF ACCOMMODATION ENTRY. THE AO HELD THAT SINCE ASSESSEE HAD FAILED TO GIVE COMPLETE DETAILS OF THE DISCLOSURE ESPECIALLY RELEVANT TO TH E TRANSACTION MADE WITH THE RELIANCE INDUSTRIES LTD., THE TOTAL SALE A MOUNT OF RS. 84,00,000/- IS ADDED TO THE ASSESSEES INCOME ON PROTECTIVE BASIS AND SUBSTANTIALLY IT HAS TO BE CONSIDERED IN THE HA NDS OF THE BENEFICIARIES I.E. M/S RELIANCE INDUSTRIES. 28. UPON ASSESSEES APPEAL LD. CIT(A) HELD AS UNDER :- I HAVE CAREFULLY CONSIDERED THE FATS AND THE ARGUME NTS OF THE APPELLANT. THE AO HAS GIVEN THE REASON FOR NOT ACCEPTING THE DISCLOSURE IN RESPECT OF THE APPELLAN TS BUSINESS WITH THE RELIANCE INDUSTRIES LTD. DEEMING IT TO BE NOTHING BUT AN AFTERTHOUGHT GEARED TOWARDS SAVI NG THE BENEFICIARY OF THE ACCOMMODATION ENTRIES. HE H AS RAISED OBJECTIONS AGAINST THE AUTHENTICITY OF THE A FFIDAVIT IN VIEW OF THE FACTS THAT THE AFFIDAVIT WAS MADE NE ARLY TWO MONTHS AFTER THE SEARCH AND THAT THE DEPOSITIO N MADE IN THE AFFIDAVIT IS NOT BACKED BY NECESSARY EVIDENCES ABOUT GENUINE OR NON-GENUINE BUSINESS. DURING THE APPELLATE PROCEEDINGS, THE AR HAS NOT BE EN ABLE TO CONTROVERT ANY OF THE FINDINGS OF THE AO IN THIS REGARD WITH SUITABLE EVIDENCES. MOREOVER, THE ADDI TION HAS BEEN MADE ONLY ON PROTECTIVE BASIS. HERE, IT M AY BE NOTED THAT A PROTECTIVE ASSESSMENT HAS BEEN RECOGN ISED ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 16 FOR THE PURPOSES OF INCOME TAX BY THE HONBLE APEX COURT IN THE CASE OF LALJI HARIDAS VS. ITO 43 ITR 3 87 WHEREIN IT HAS BEEN LAID DOWN THAT WHERE THERE IS D OUBT AS TO THE HANDS IN WHICH THE INCOME IS TO BE ASSESS ED, PROTECTIVE ASSESSMENT CAN BE MADE SO THAT THE REVEN UE IS NOT IRRETRIEVABLY LOST. IN CIT V. BACHU LAL KAP OOR 60 ITR 74 (SC), THE HONBLE APEX COURT OBSERVED THAT WHEN THERE IS DOUBT AS TO WHICH PERSON AMONG THE TWO ASSESSEES WAS LIABLE TO BE ASSESSED, PARALLEL PROCEEDINGS MAY BE STARTED AGAINST BOTH. BUT THE ASSESSMENT IN THE HANDS OF ONE WILL ONLY BE EFFECTI VE ASSESSMENT WHILE THE OTHER WILL BE BECOME IN FRUCTU OUS ON FINALITY. THERE IS NO EVIDENCE ON RECORD THAT T HE SUBSTANTIVE ASSESSMENT IN THE CASE OF M/S RELIANCE INDUSTRIES LTD. HAS BEEN COMPLETED ALREADY. THERE FORE, FOLLOWING THE RATIO LAID DOWN BY THE HONBLE SUPREM E COURT IN THE ABOVE CITED CASES, IT IS HELD THAT THE ASSESSMENT OF RS. 84,00,000/- ON PROTECTIVE BASIS IN THE HANDS OF THE APPELLANT HAS BEEN CORRECTLY MADE BY T HE AO AND THIS GROUND OF APPEAL IS DECIDED AGAINST THE APPELLANT. 29. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 30. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT AUTHORITIES BELOW ON THE FACTS AND CIRCUM STANCES OF THE CASE HAVE HELD THAT THE STATEMENT /AFFIDAVIT OF TH E ASSESSEE AFTER TWO MONTHS OF THE SEARCH WAS AN AFTER THOUGHT AND W AS NOT BACKED BY NECESSARY EVIDENCES ABOUT GENUINE AND NON-GENUIN E BUSINESS. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE HAD N OT BEEN ABLE TO COUNTER ANY OF THE FINDINGS OF THE AUTHORITIES BELO W WITH SUITABLE EVIDENCE. WE FURTHER NOTE THAT THE ADDITION HAS BE EN MADE ONLY ON ITA NO. 3213-3214&3856 /DEL/2012 & 1080/DEL/2013 17 PROTECTIVE BASIS. IN THIS REGARD, LD. CITS RELIAN CE UPON THE CASE LAW FROM THE APEX COURT IN THE CASE OF LALJI HARI LALJI HARI LALJI HARI LALJI HARIDAS V. ITO 43 ITR 387 DAS V. ITO 43 ITR 387 DAS V. ITO 43 ITR 387 DAS V. ITO 43 ITR 387 (SUPRA) IS GERMANE. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), ACCORDIN GLY, WE UPHOLD THE SAME. 31. IN THE RESULT, ALL THE APPEALS FILED BY THE AS SESSEE STAND PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14/2/2014. SD/- SD/- [ [[ [I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 14/2/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES