Shri Vijay Jain, Ujjain V. The ITO 2(1), Ujjain

ITA 441/IND/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4454 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 13-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHMD JAVED
• Assessee Lawyers: S S DESHPANDE
• Keywords: Unexplained investment; Capital asset; Opportunity of being heard; Opportunity of cross examination; Additional evidence
• Section: 44AD; 143(3); 131; 68; 69; 148; 6

Judgement Text

I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 1 OF 21 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SHRI VIJAY JAIN 308 BAGDIYA TOWER, CENTRAL KOTWALI, UJJAIN PAN:AGMPJ 6227E VS. INCOME TAX OFFICER WARD 2(1) UJJAIN / APPELLANT / RESPONDENT / APPELLANT BY SHRI S. S. DESHPANDE , CA / RESPONDENT BY SHRI MOHMD. JAVED, SR. (DR) / DATE OF HEARING 27.09.2016 / DATE OF PRONOUNCEMENT 17.10.2016 / O R D E R PER O. P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-UJJAIN (HEREINAFTER REFERRED TO AS THE LD. CIT (A)) DATED 07.03.2013. T HIS APPEAL PERTAINS TO ASSESSMENT YEAR 2006-07. THIS APPEAL AR ISES OUT OF ASSESSMENT ORDER DTD. 08.12.2009 PASSED U/S. 143(3) /147 OF INCOME TAX ACT, 1961 [HEREIN AFTER REFERRED TO AS ' THE ACT) BY THE ITO WARD 2(1) UJJAIN [HEREINAFTER REFERRED TO AS T HE AO]. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- . . ./ I.T.A. NO.441 /IND/2013 %' ' / ASSESSMENT YEAR: 2006 - 07 I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 2 OF 21 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE ADDITION OF RS. 10, 28,000/- AS UNEXPLAINED INVESTMENT U/S. 69 WITH M/S. KUNJIKA CONSTRUCTION PVT. LTD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE ADDITION OF RS. 20, 00,000/- AS UNEXPLAINED INVESTMENT U/S. 69 IN PURCHASE AGREEMEN T. 2. SUCCINCTLY, FACTS OF THE CASE ARE THAT THE ASSESSEE IS INDIVIDUAL ENGAGED IN THE CONSTRUCTION BUSINESS AND DIRECTOR O F M/S. KUNJIKA CONSTRUCTION PVT. LTD. THE ASSESSEE HAS NOT FILED HIS RETURN WITHIN THE TIME ALLOWED UNDER SECTION 139(1) OF THE ACT. HENCE, A NOTICE UNDER SECTION 148 OF THE ACT WAS IS SUED ON 29.12.2008 AND SERVED UPON THE ASSESSEE ON 05.01.20 09. IN RESPONSE TO WHICH, THE ASSESSEE HAS FILED RETURN OF INCOME ON 16.01.2009 DECLARING TOTAL INCOME AT RS. 96,000/- A ND SHOWING INCOME FROM BUSINESS AND PROFESSION UNDER THE PROVI SIONS OF SECTION 44AD OF THE ACT. WHILE COMPLETING ASSESSMEN T IN THE CASE OF M/S. KUNJIKA CONSTRUCTION PVT. LTD., A STATEMENT U/S. 131 OF THE ACT WAS RECORDED FROM THE ASSESSEE SHRI VIJAY J AIN, DIRECTOR OF THE COMPANY. WHEREIN IT WAS ADMITTED THAT HE HAS PURCHASED SHARES OF RS. 35,000/- OF M/S. KUNJIKA CONSTRUCTION PVT. LTD. I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 3 OF 21 AND ALSO INVESTED IN SHARE APPLICATION MONEY AT RS. 44,28,000/-. THE SOURCE OF INVESTMENT WAS CLAIMED AS UNDER: FROM OWN CAPITAL/SAVINGS RS. 1,75,710/- LOANS FROM16 FRIENDS AND RELATIVES RS. 3,00,000/- LOAN FROM SHRI DEVI DUTTA YEOLO RS. 34,00,000/- FROM RECOVERY OF OPENING DEBTORS RS. 5,52,290/- TOTAL RS. 44,28,000/- 3. THE AO EXAMINED THE SOURCE AND FOUND THAT THE ASSES SEE HAS RAISED LOANS OF RS. 34,00,000/- ( RS. 29,00,000 ON 21.11.2005 AND RS. 5,00,000 ON 18.11.2005) FROM SHRI DEVDUTTA YEOLO. THIS SOURCE WAS FOUND ACCEPTABLE BY THE AO. HOWEVER, THE BALANCE AMOUNT OF RS. 10,28,000/- (44,28,000- 34,00,000) WA S NOT FOUND EXPLAINED. IT WAS FURTHER NOTICED THAT THE ASSESSEE DEPOSITED AMOUNT IN CASH AND PAID IN CASH TO SHRI NAVIN SODAN I, A STAMP VENDOR FOR PURCHASE OF STAMPS IN RESPECT OF REGISTR ATION OF IMMOVABLE PROPERTY PURCHASED IN THE CASE OF M/S. KU NJIKA CONSTRUCTION PVT. LTD. THUS THE ASSESSEE HAS PAID C ASH TO SODANI OF RS. 25,13,000/-. THE ASSESSEE HAS FOUND TO HAVE INVESTED RS. 19,15,000/- BY CHEQUE. THE AO OBSERVED THAT THE ASS ESSEE WAS HAVING CASH OF RS. 14,85,000 ( 34,00,000- 19,15,000 ) . THE I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 4 OF 21 ASSESSEE HAS NOT EXPLAINED THE SOURCE OF CASH DEPOS IT OF RS. 10,28,000/- ( 25,13,000- 14,85,000) OUT OF WHICH CA SH DEPOSITS OF RS. 25,13,000/- .THE SOURCE OF CASH OF RS. 10,28 ,000/- WAS EXPLAINED OUT OF OWN MONEY / SAVING OF RS. 1,75,710 /- RS. 3 LAKH FROM 16 PERSONS AS LOAN AND RS. 5,52,290/- OUT OF R ECOVERY FROM OLD DEBTORS OF WHICH SOURCE HAS NOT BEEN EXPLAINED , HENCE SAME WAS ADDED AS UNEXPLAINED INVESTMENT UNDER SECTION 6 9 OF THE ACT. THE CLAIM OF LOANS FROM 16 PERSON BEING FRIEND S AND RELATIVES WAS NOT FOUND ACCEPTABLE AS IDENTITY, CREDIT WORTHI NESS AND GENUINENESS OF TRANSACTIONS OF WAS NOT PROVED AS TH E CREDITORS AS THE ASSESSEE HAS FAILED TO PRODUCE THE CREDITORS IN -SPITE OF NUMBER OF OPPORTUNITY ALLOWED TO THE ASSESSEE. THE CONFIRMATION PRODUCED WAS NOT COMPLETE NOR WERE THE PERSONS ASSE SSED TO TAX. THE AO ALSO NOT ACCEPTED THE EXPLANATION REGARDING OWN CAPITAL BALANCE AND SAVINGS OF RS. 175,710/- AND OPENING BA LANCE OF DEBTORS AT RS. 5,52,290/-. IN ADDITION TO ABOVE, TH E AO HAS MADE ADDITION OF RS. 10,28,000/- BESIDE THIS, THE AO ALS O ADDED A SUM OF RS. 4,81,700/- DEPOSITED IN CASH IN THE BANK ACC OUNT IN ABSENCE OF DETAILS. BEING AGGRIEVED, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT (A) I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 5 OF 21 4. THE LD. CIT (A) HAS DELETED THE ADDITION OF RS. 4, 81,700/- CASH DEPOSITS IN BANK ACCOUNT BY HOLDING THAT CASH BALAN CE WAS AVAILABLE IN THE CASHBOOK OF THE ASSESSEE. HOWEVER, THE ADDITION OF RS. 10, 28,000/- WAS CONFIRMED BY HOLDING THAT T HE ASSESSEE HAS FAILED TO ESTABLISH CREDITWORTHINESS AND GENUI NENESS OF TRANSACTIONS OF THE CREDITORS. THE LD. CIT (A) ALSO SUPPORTED HIS VIEW BY PLACING RELIANCE ON NUMBER OF CASE LAWS DIS CUSSED IN THE APPELLATE ORDER AT PARA 3.1.7 TO 3.1.12 INCLUDING C IT VS. P. MOHANAKALA (2007) 291 ITR 278 (SC) WHEREIN IT WAS H ELD IN CASES WHERE THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF THE SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT IS NOT SATISFACTORY, THERE IS PRIMA FACIE E VIDENCE AGAINST THE ASSESSEE WITH VIZ THE RECEIPT OF INCOME. THE BU RDEN IS ON THE ASSESSEE TO REBUT THE SAME AND IF HE FAILS TO DO SO , IT CAN BE HELD AGAINST THE ASSESSEE THAT IT WAS A RECEIPT OF AN IN COME NATURE. THE MONEY CAME THROUGH CHEQUE AND WAS PAID THROUGH BANKING CHANNELS WAS BY ITSELF NOT OF CONSEQUENCE. THE L D. CIT (A) FURTHER RELIED IN THE CASE OF SUMATI DAYAL VS. CIT (1995) 214 ITR 801(SC) WHEREIN IT WAS HELD ANY SUM CREDITED IN T HE BOOKS OF ACCOUNT MAY BE ADDED UNDER SECTION 68 ,IF EXPLANATI ON OFFERED ABOUT NATURE AND SOURCE THEREOF IS , IN THE OPINION OF THE A.O. NOT I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 6 OF 21 SATISFACTORY. IN CIT VS. DURGA PRASAD MORE (1969) 72 ITR 807(SC) IT WAS HELD EVEN WHERE NO ENTRY WAS MADE I N THE BOOKS OF ACCOUNTS IN RESPECT OF CERTAIN RECEIPT, THE RECE IPT WAS ASSESSABLE AS UNDISCLOSED INCOME. THE APPARENT MUST BE CONSIDERED AS REAL UNTIL IT IS SHOWN THAT THERE WER E REASONS TO BELIEVE THAT APPARENT WAS NOT REAL AND TAXING AUTHO RITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES , TO FIND OUT THE REALITY AND THE MATTER HAS TO BE EXAMINED BY AP PLYING THE TEST OF HUMAN PROBABILITIES. SINCE THE THREE THING S WERE NOT SATISFIED VIZ: IDENTIFICATION OF THE CREDITOR, CRED IT WORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. THERE FORE, THE LD. CIT (A) UPHELD THE FINDING IN RESPECT OF CASH CREDI T OF RS. 3 LAKHS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED CONFIRMATION OF ALL THE SUNDRY CREDITORS AND PRODUCED BOOKS OF ACCOUNTS EVIDENCING ALL ENTRIES OF OPENING CASH BALANCE AND CASH RECEIVED FROM THE DEBTORS. THE LD. A. R. SUBMI TTED THAT FUND WAS WITHDRAWN FROM THE BUSINESS BEING CARRIED ON BY THE ASSESSEE. THE SAID BUSINESS WAS STOPPED DURING THE FINANCIAL YEAR UNDER CONSIDERATION AND THE ASSESSEE HAS START ED THE COMPANY M/S. KUNJIKA CONSTRUCTION PVT. LTD. IT WAS ALSO CLAIMED THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 13. 01.2006 FOR I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 7 OF 21 ASSESSMENT YEAR 2005-06 ( COPY PLACED AT PAGE 17 OF PAPER BOOK) IN WHICH IT WAS CLEARLY SHOWN THE OPENING CAPITAL B ALANCE AT RS. 8,08,718/- .(PAPER BOOK PAGE 18). THEREFORE, IT WAS CONTENDED THAT THIS AMOUNT OF CAPITAL BALANCE AND FROM THE RE COVERY OF THE BUSINESS DEBTORS, THE AMOUNTS WAS DEPOSITED IN THE COMPANY. 6. PER CONTRA, THE LD. SENIOR (DR) , RELIED ON THE ORD ERS OF LOWER AUTHORITIES AND CONTENDED THAT THE LD. CIT (A) HAS DEALT WITH THE ISSUE IN DETAILED AND ALSO SUPPORTED HIS VIEW BY PL ACING RELIANCE ON VARIOUS CASE LAWS AS DISCUSSED IN HIS APPELLATE ORDER AT PARA 3.1.15. THEREFORE, THE ACTION OF THE AO MAY BE UPHE LD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE T HROUGH THE ORDERS OF THE LOWER AUTHORITIES AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS CLAIMED TH E SOURCE OF CASH DEPOSITS OF RS. 11,28,000/- WITH M/S. KUNJIKA CONSTRUCTION PVT. LTD./ NAVIN SODANI IS OUT OF OWN CAPITAL/SAVINGS OF RS. 1,75,710/- , RS. 5,52,290/- FROM RECOVERY OF OPENING DEBTORS AND RS. 3,00,000/- LOANS FROM FR IENDS AND RELATIVES. THE LEARNED COUNSEL FOR THE ASSESSEE H AS CLAIMED THAT THE ASSESSEE HAD OPENING CAPITAL BALANCE AT RS. 8,0 8,718/- AS ON 31.03.2005. OUT OF WHICH PREVIOUSLY MENTIONED AMOUN T HAS BEEN INVESTED WITH THE COMPANY. THE LD. SENIOR (DR) HAS ALSO NOT I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 8 OF 21 REBUTTED THIS CONTENTION THAT THE ASSESSEE HAS FILE D HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 0N 13.01.2006 T HAT FULL AMOUNT OF THE OPENING CAPITAL BALANCE OF RS. 8,08,7 18/- WAS SHOWN AS ON 31.03.2005. HOWEVER, WE NOTICED THAT O UT OF THIS OPENING BALANCE , THE ASSESSEE HAS APPLIED FUNDS OF RS. 43,500/- AS INVESTMENT IN VEHICLE, RS. 75,600/- TOWARDS JEW ELLERY AND RS. 15,780/- TOWARDS HOUSE HOLD EQUIPMENTS AND RS. 1,2 1,481/- IS CASH AND BANK BALANCE. THIS LEAVES THE ONLY AMOUNT OF RS.3,65,450/- BEING OPENING CAPITAL BALANCE, RS. 36 ,840/- CAPITAL IN BUSINESS ON ACCOUNT OF CLOSURE OF BUSINE SS, AND RS. 1,50,000/- BEING LOAN AND ADVANCE, AGGREGATING TO R S. 5,52,290/-(365450+36840+150000). THEREFORE, THIS AM OUNT CAN BE TREATED AS EXPLAINED AS AGAINST THE SOURCE OF CA SH DEPOSITS OUT OF RS.7,38,000 CLAIMED AT RS. I.E. (175710+552290) LEAVING THE BALANCE OF RS. 1,75,710/- AS UNEXPLAINED INVESTMENT . AS REGARDS LOANS FROM FRIENDS AND RELATIVES OF RS. 3,00,000/- IS CONCERNED , WE FIND THAT THE ASSESSEE HAS FAILED TO PRODUCE THE SUNDRY CREDITORS FOR EXAMINATION HAVING BEEN ALLOWED SUFFI CIENT OPPORTUNITY OF BEING HEARD BY THE AO ON VARIOUS DAT ES VIZ. 03.07.2009, 03.08.2009, 10.08.2009, 14.09.2009, 07. 10.2009 AND FINALLY ON 04.11.2009. THE ASSESSEE HAS FILED C ONFIRMATION I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 9 OF 21 ONLY ON 08.12.2009, WHICH ARE STEREO TYPE LETTERS W ITHOUT PAN THEREON. FURTHER, NONE OF CREDITORS IS ASSESSED TO TAX. DETAILS OF DATE MONEY ADVANCED AND RETURNED BACK IS NOT FILED NOR ANY INTEREST IS CHARGED THEREON. IT IS PERTINENT TO NOT E THAT THESE ADVANCES WERE NOT RETURNED BACK EVEN AFTER LAPSE OF 4 YEARS. THE AMOUNT CLAIMED TO HAVE BEEN RECEIVED FROM 14 CREDIT ORS IS BELOW RS. 20,000/- WHICH HAS BEEN INTENTIONALLY DONE TO E SCAPE FROM RECEIVING THE AMOUNT BY CHEQUES. EVEN THE MODE OF R ECEIVING OF AMOUNT FROM SHRI KAILASH CHAND JAIN (FATHER) AND SM T. PUSHPA JAIN (MOTHER) RS. 50,000/- EACH IS ALSO IN CASH. TH E ONUS CAST UPON THE ASSESSEE TO PROVE IDENTITY, CREDIT WORTHIN ESS AND GENUINENESS OF TRANSACTIONS HAS NOT BEEN DISCHARGED . THUS, THESE THREE INGREDIENTS OF SECTION 68 OF THE ACT AR E REMAINED UNSATISFIED. FURTHER THE DECISION IN THE CASE OF CI T VS. P. MOHANAKALA (2007) 291 ITR 278 (SC) AND SUMATI DAYAL VS. CIT (1995) 214 ITR 801(SC) RELIED ON BY THE LD. CIT (A) ALSO SUPPORT THE VIEW OF LOWER AUTHORITIES. IN VIEW OF THESE CIR CUMSTANCES, THE FINDING OF LOWER AUTHORITIES ARE UPHELD FOR THE ADD ITION OF RS. 4,75,710/- AND THE BALANCE ADDITION OF RS. 4,75,710 /- IS DELETED. THIS GROUNDS OF APPEAL OF ALLOWED IS THEREFORE, PAR TLY ALLOWED. I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 10 OF 21 8. GROUND NO. 2 RELATES TO ADDITION OF RS. 20,00,000/- AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT IN PURCHA SE AGREEMENT. 9. BRIEFLY STATED FACTS OF THE CASE ARE THAT, THE ASSE SSEE IN HIS STATEMENT RECORDED ON 19.12.2008 HAS STATED THAT TH E AMOUNT DEPOSITED AS ADVANCE FROM DIRECTORS AT RS. 19,01,55 0/- IN M/S. KUNJIKA CONSTRUCTION PVT. LTD. RELATES TO HIM. THE SOURCE OF THIS INVESTMENT WAS CLAIMED TO BE A SUM OF RS. 8,00,000/ - ADVANCE AMOUNT RECEIVED FROM SHRI SANTOSH KUMAR LALWANI ON ACCOUNT OF AGREEMENT TO SALE OF LAND EXECUTED BY THE ASSESSEE ALONG WITH SHRI AJAY SINGH KUSHWAHA BETWEEN SHRI SANTOSH KUMAR LALWANI ON 15.08.2005. THIS AMOUNT WAS DEPOSITED WITH M/S. KUNJIKA CONSTRUCTION PVT. LTD. THE AO HAS ALSO RECORDED STA TEMENT OF SHRI SANTOSH KUMAR LALWANI ON 01.12.2009 U/S. 131 OF THE ACT. IN THE STATEMENT U/S. 131 OF THE ACT, SHRI SANTOSH KUMAR LALWANI STATED THAT AN AMOUNT OF RS. 20,00,000/- W AS PAID BY SHRI VIJAY JAIN AND SHRI AJAY SINGH KUSHWAHA TO SHR I DEVIDAS AND OTHERS AS TOKEN OF PURCHASE OF LAND; SITUATED AT GRAM- NANAKHEDA, HARI PHATAK ROAD, UJJAIN, SURVEY NO. 32 9, RAKHWA 0.067 AND CONSEQUENTLY, ON THAT BASIS HE HAD EXECUT ED AN AGREEMENT FOR PURCHASE OF LAND AND PAID RS. 8,50,00 0/- TO SHRI I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 11 OF 21 VIJAY JAIN . IT WAS OBSERVED THAT THE LAND SO INTEN DED TO BE PURCHASED FROM SHRI DEVIDAS AND OTHERS , THE ASSESS EE HAS MADE AGREEMENT OF SALE OF AROUND 1/3 RD OF LAND TO SHRI SANTOSH KUMAR LALWANI FOR RS. 43,27,4000/- AND RECEIVED ADVANCE O F RS. 8,00,000/- ON 15.08.2005. THE ASSESSEE HAS CLAIMED THAT THE AMOUNT OF RS. 7,85,000/- WAS DEPOSITED ON 21.11.200 5 WITH M/S. KUNJIKA CONSTRUCTION PVT. LTD. OUT OF THE AMOU NT RECEIVED ON 15.08.2005. THE AO ALSO NOTED THAT THE ASSESSEE HAS NOT DENIED THE CONTENTION OF THE STATEMENT OF SHRI SANT OSH KUMAR LALWANI. THE AO FURTHER OBSERVED THAT THE ASSESSEE INTENTIONALLY NOT PRODUCED THE AGREEMENT EXECUTED BETWEEN SHRI DE VIDAS AND OTHERS AND SHRI VIJAY JAIN & SHRI AJAY SINGH KUSHWA HA, BECAUSE ONLY AGREEMENT CAN TOOK THE TRUTH OPEN. THE ASSESSE E HAS NOT PRODUCED SOURCE OF AMOUNT ADVANCED TO SHRI DEVIDAS & OTHERS. IN VIEW OF THE STATEMENT OF SHRI SANTOSH KUMAR LALW ANI; AND NOT FILING THE COPY OF AGREEMENT ENTERED INTO BETWEEN T HE ASSESSEE WITH SHRI SANTOSH KUMAR LALWANI, THE AO HELD THAT T HE ASSESSEE HAD PAID RS. 20,00,000/- AS BAYANA TO SHRI DEVIDAS AND OTHERS AT THE TIME OF EXECUTING AGREEMENT FOR PURCHASE OF LAND. BEING AGGRIEVED, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE LD. CIT (A). I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 12 OF 21 10. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASS ESSEE HAS TAKEN A PLEA THAT HE HAD AGREED TO PURCHASE LAN D SITUATED AT SURVEY NO. 329, NANAKHEDA UJJAIN FROM SHRI DEVIDAS S/O SHRI NATHARMAL AND OTHERS ON ORAL AGREEMENT AND PAID RS. 51,000/- BY WAY OF TOKEN MONEY. IMMEDIATELY, THEREAFTER HE A GREED TO SELL 1/3 RD OF THIS LAND TO SHRI SANTOSH KUMAR LALWANI AND REC EIVED RS. 8 LAKHS AS (BAYANA) ADVANCE AMOUNT. IT WAS ALSO CONTENDED THAT SHRI SANTOSH KUMAR LALWANI HAS LODGED A CIVIL SUIT AGAINST THE ASSESSEE, THEREFORE, HE INTENTIONALLY GIVEN A F ALSE STATEMENT AGAINST THE ASSESSEE. IT WAS ALSO CONTENDED THAT IN RESPONSE TO SUMMON ISSUED U/S. 131 , SHRI DEVIDAS, OWNER OF THE PROPERTY APPEARED BEFORE THE AO ON 19.04.2012 , BUT THE AO W AS NOT THERE THEREFORE, HE HAS FILED AN WRITTEN SUBMISSIONS TO I NCOME TAX DEPARTMENT WHEREIN HE HAS CONFIRMED THE CONTENTION OF THE ASSESSEE THAT HE HAS RECEIVED RS. 51,000/- FROM SHR I VIJAY JAIN AND SHRI AJAY SINGH KUSHWAHA AGAINST AGREEMENT TO S ALE OF LAND SITUATED AT 329 , NANAKHEDA UJJAIN. HE ALSO ADMITTE D THAT THERE WAS AN ORAL AGREEMENT FOR SALE OF LAND. IN SUPPORT OF HIS CONTENTION, THE ASSESSEE ENCLOSED WRITTEN SUBMISSIO NS OF SHRI DEVIDAS AND AFFIDAVITS OF HIMSELF AND SHRI AJAY SIN GH KUSHWAHA. IN THE REMAND REPORT, THE AO STATED THAT SHRI DEVID AS HAS NOT I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 13 OF 21 MENTION THE DATE OF RECEIPT OF ADVANCE AND WHEN THE AMOUNT WAS RE PAID BACK AS AGREEMENT CANCELLED. THE AO ALSO OB JECTED THAT THE ASSESSEE HAS NOT PRODUCED AGREEMENT EXECUTED WI TH SHRI DEVIDAS, NOR FILED WRITTEN SUBMISSIONS FROM HIM DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS NOT COMMENTED ON THE STATEMENT OF SHRI SANTOSH KUMAR LA LWANI NOR FILED ANY AFFIDAVIT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO ALSO STATED THAT THE AGREEMENT EXECUTED BETW EEN WAS NOT AN ORAL AGREEMENT RATHER IT WAS WRITTEN AGREEMENT W HEREIN IT SPECIFICALLY BEEN WRITTEN THAT THE AGREEMENT EXECUT ORS (PURCHASER) SHALL RESERVE THE RIGHT TO REGISTER TH E PROPERTY IN THE NAME OF SELLER OR OTHERS IN PART OR IN FULL. THE L D. CIT (A) OBSERVED THAT THERE IS CLEAR MENTION IN THE AGREEME NT DTD. 15.08.2005, THAT THERE HAD BEEN A WRITTEN AGREEMENT BETWEEN THE APPELLANT AND THE OWNERS OF THE PROPERTY SHRI DEVID AS S/O NATHER MAL, SHRI ASHOK S/O NEMAN DAS AND SHRI LAL C HAND S/O RAM CHANDRA, WHICH DULY AUTHORISED THE APPELLANT TO REGISTER THE PROPERTY IN THE NAME OF SELF OR OTHERS IN PART OR IN FULL . THEREFORE, THE CONTENTION OF THE APPELLANT THAT THI S WAS ONLY AGREEMENT CANNOT BE ACCEPTED, BECAUSE SUCH AUTHORIZ ATION CAN`T BE GIVEN BY THE SELLER ONLY BASED ON ORAL AGREEMENT . FURTHER, NO I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 14 OF 21 ONE WOULD PAY SUCH HUGE AMOUNT OF RS. 8 LAKH BASED ON ORAL AGREEMENT, WHICH CANNOT BE DISPLAYED TO ANYONE. MOR EOVER, THE AMOUNT CLAIMED TO BE RS. 51,000/- ONLY TOWARDS ORAL AGREEMENT CAN`T FORM THE BASIS FOR PASSING RS. 8,00,000/- FOR ONE THIRD OF THE LAND. THE LD. CIT (A) FURTHER OBSERVED THAT AFF IDAVITS SUBMITTED ARE SELF-SERVING EVIDENCE DOCUMENTS AND G IVEN AS AFTER THOUGHT CANNOT BE ACCEPTED. ACCORDINGLY, THE LD. C IT (A) CONFIRMED THE ADDITION BY HOLDING THAT AS THE APPEL LANT HAD RECEIVED RS. 8, 00,000/- AS ADVANCE AGAINST AGREEME NT TO SELL 1/3 RD OF THE SAID PROPERTY FROM SHRI SANTOSH KUMAR LALWA NI. SINCE THE APPELLANT FAILED TO PRODUCE THE COPY OF T HE FIRST AGREEMENT EXECUTED BETWEEN THE APPELLANT AND THE OW NERS OF THE PROPERTY WHICH DULY EXISTED AS MENTIONED IN THE COP Y OF AGREEMENT EXECUTED BETWEEN THE APPELLANT AND SHRI S ANTOSH KUMAR LALWANI. 11. BEING AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT SHRI DEVIDAS RESIDES IN DUBAI. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS , IN RESPONSE TO SUMMON U/S. 131 , SHRI DEVIDAS ATTENDED THE OFFICE ON 19.04.2012 BUT SINCE THE CASE COULD NOT BE TAKEN UP BY THE AO HENCE HE FILED A LE TTER STATING I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 15 OF 21 THAT HE ENTERED INTO AN ORAL AGREEMENT AND HAD RECE IVED RS. 51,000/- AS AN ADVANCE. IT WAS FURTHER STATED THAT AGREEMENT WAS CANCELLED DUE TO UNAVOIDABLE CIRCUMSTANCES, FOR TRANSFER OF LAND AND THE AMOUNT OF RS. 51,000/- WAS RETURNED BA CK. THUS IT WAS CONTENDED THAT SHRI DEVIDAS HAS CATEGORICALLY S TATED THAT HE RECEIVED ONLY RS. 51,000/- THE STATEMENT OF SHRI SA NTOSH KUMAR LALWANI CANNOT BE CONSIDERED UNDER ANY CIRCUMSTANC ES, SINCE NO OPPORTUNITY FOR CROSS EXAMINATION WAS PROVIDED. FURTHER, HE IS A HOSTILE WITNESS AND HAS FILED A SUIT UNDER SEC TION 138 AGAINST THE ASSESSEE. UNDER THESE CIRCUMSTANCES, THE STATEM ENT OF THIRD PARTY CANNOT BE RELIED ON AND ON THAT BASIS, NO ADD ITION CAN BE MADE. 12. PER CONTRA, THE LD. SENIOR (DR) SUBMITTED THAT SHRI VIJAY JAIN IS UNABLE TO PRODUCE COPY OF AGREEMENT BETWEEN HIM AND SHRI DEVIDAS WHEREAS SHRI SANTOSH KUMAR LALWANI ADM ITTED THAT HE HAS SEEN THE SAID AGREEMENT AND AS PER THE AGREE MENT, SHRI VIJAY JAIN GAVE THE AMOUNT OF RS. 20 LAKHS TO SHRI DEVIDAS. THEREFORE, THE STATEMENT OF SHRI SANTOSH KUMAR LALW ANI IS IN THE NATURE OF EVIDENTIAL VALUE. IN PARA 3.3.5 OF APPEAL ORDER, THE LD. CIT (A) HAS RECORDED A CATEGORICAL FINDING THAT WIT HOUT A WRITTEN AGREEMENT , THE APPELLANT HAS NO POWER TO REGISTER ANY PROPERTY I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 16 OF 21 OF WHICH HE HAS NO OWNERSHIP ONLY ON THE BASIS OF A N ORAL AGREEMENT. THE ADDITIONAL EVIDENCE IN FORM OF AFFID AVITS ARE AFTER THOUGHT AND SELF-SERVING EVIDENCE. THE AO HAS GIVEN A FINDING AFTER CONSIDERING ENTIRE FACTS AND NOT ONLY BASED O N STATEMENT OF SHRI SANTOSH KUMAR LALWANI. THEREFORE, THE LD. SENI OR (DR) ARGUED THAT THE APPEAL OF THE ASSESSEE DESERVED TO BE DISMISSED. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS, HAVE GONE THRO UGH THE ORDERS OF THE LOWER AUTHORITIES, AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. WE FIND FROM THE ORDERS OF LO WER AUTHORITIES THAT THE ASSESSEE IN HIS STATEMENT RECORDED ON 19.1 2.2008 BY THE AO HAS CLAIMED THAT THE AMOUNT DEPOSITED AS ADVANCE FROM DIRECTORS AT RS. 19,01,550/- IN M/S. KUNJIKA CONSTR UCTION PVT. LTD. RELATES TO HIM. THE SOURCE OF THIS ADVANCE IS CLAIMED TO BE RS. 8,00,000/- RECEIVED FROM SHRI SANTOSH KUMAR LAL WANI AS ADVANCE TOWARDS AGREEMENT TO SALE OF LAND TO VIDE A GREEMENT EXECUTED ON 15.08.2005. TO VERIFY THIS CONTENTION O F THE ASSESSEE, THE AO EXAMINED SHRI SANTOSH KUMAR LALWANI AND RECO RDED HIS STATEMENT ON OATH ON 01.12.2009 U/S. 131 OF THE ACT . WE FIND THAT SHRI SANTOSH KUMAR LALWANI HAS ACCEPTED THAT H E HAD ENTERED INTO AN AGREEMENT TO PURCHASE LAND SITUATED AT GRAM NANAKHEDA, UJJAIN ON 15.08.2005 AND PAID AN AMOUNT OF RS. 8 I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 17 OF 21 LAKH AS ADVANCE BECAUSE OF BAYANA BEING ADVANCE FOR LAND INTENDED TO BE PURCHASED BY HIM. IT IS ALSO NOTICED THAT THE ASSESSEE ALONG WITH SHRI AJAY SINGH KUSHWAHA HAVE P URCHASED THE SAID LAND FROM SHRI DEVIDAS & OTHERS BY PAYING RS. 51,000/- AS BRYANA AMOUNT. THE ASSESSEE FURTHER STATED THAT THEY HAVE ENTERED INTO AN AGREEMENT FOR SALE OF 1/3 RD LAND TO SHRI SANTOSH KUMAR LALWANI ON 15.08.2005 AND RECEIVED RS. 8 LAKH AS ADVANCE OUT OF WHICH THE ASSESSEE HAS DEPOSITED RS. 19.05 LAKH AS ADVANCE IN M/S. KUNJIKA CONSTRUCTION PVT. LTD. WE FIND THAT SHRI SANTOSH KUMAR LALWANI HAS ALSO ACCEPTED THIS F ACT AND THE AO HAS ACCEPTED THIS SOURCE OF PAYMENTS. HOWEVER, W E FURTHER FIND THAT SHRI SANTOSH KUMAR LALWANI HAS ALSO STATE D IN THE SAME STATEMENT RECORDED ON 01.12.2009 STATING THAT SHRI VIJAY JAIN AND SHRI AJAY SINGH KUSHWAHA HAVE PAID A SUM O F RS. 20 LAKHS TOWARDS PURCHASE AGREEMENT OF SAID LAND TO SH RI DEVIDAS & OTHERS. WE FIND THAT THE ASSESSEE IS NOT ABLE TO EX PLAIN THE SOURCE OF PAYMENT OF RS. 20 LAKHS. IT IS THE CONTENTION OF THE ASSESSEE THAT NO SUCH PAYMENT HAS BEEN MADE BY THEM. HOWEVER , WE FIND THAT THIS CONTENTION IS NOT SUPPORTED BY ANY DOCUME NTARY EVIDENCE. IT IS THE CLAIM OF THE ASSESSEE THAT THER E WAS ORAL AGREEMENT FOR PURCHASE OF LAND AT SURVEY NO. 329 NA NAKHEDA I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 18 OF 21 UJJAIN AND ONLY RS. 51,000/- WERE GIVEN AS ADVANCE. THIS CONTENTION OF THE ASSESSEE IS NOT FOUND ACCEPTABLE BY THE AO AND LD. CIT (A). WE FIND THAT THE ASSESSEE HAS NOT BEE N ABLE TO PRODUCE SHRI DEVIDAS FOR EXAMINATION BEFORE THE AO. THE ASSESSEE HAS ALSO FAILED TO PRODUCE AGREEMENT FOR P URCHASE OF LAND FROM SHRI DEVIDAS & OTHERS. THE LEARNED COUNS EL FOR THE ASSESSEE STATED THAT THE STATEMENT OF SHRI SANTOSH KUMAR LALWANI IS NOT RELIABLE AS NO OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED AND WITNESS HAS FILED SUIT AGAINST THE ASSESSEE HENCE HE IS HOSTILE WITNESS. WE FIND THAT THIS CON TENTION OF THE ASSESSEE IS NOT TENABLE IN LAW AND FACTS. WE FIND F ROM ASSESSMENT PROCEEDINGS THAT AO HAS ASKED THE ASSESSEE TO PRODU CE SHRI DEVIDAS FOR EXAMINE BUT THIS OPPORTUNITY WAS NOT AV AILED BY THE ASSESSEE. WE ALSO NOTE THAT SHRI VIJAY JAIN HAS NOT MADE ANY COMMENTS ON THE CONTENTION OF THE STATEMENT OF SHRI SANTOSH KUMAR LALWANI, DURING THE COURSE OF ASSESSMENT PROC EEDINGS. WE FURTHER FIND THAT AT ONE HAND THE ASSESSEE IS RE LYING ON THE STATEMENT OF SHRI SANTOSH KUMAR LALWANI OF HAVING R ECEIVED RS. 8 LAKH FROM HIM, BUT ON THE SAME FOOTING THE ASSESS EE HAS NOT ACCEPTING THE OTHER PART OF THE STATEMENT OF SHRI S ANTOSH KUMAR LALWANI, THAT HE HAS PAID A SUM OF RS. 20 LAKH TO S HRI DEVIDAS & I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 19 OF 21 OTHER AS AGAINST THE INTENDED PURCHASE OF LAND. IT IS SETTLED POSITION OF LAW THAT THE STATEMENT IS TO BE BELIEVE D AS A WHOLE AND NOT IN PIECEMEAL AS ONE-PART SUITS TO THE ASSESSEE AND OTHER PART DOES NOT SUITS TO THE ASSESSEE. WE HAVE SEEN THE AG REEMENT FOR PURCHASE OF LAND DTD. 15.08.2005 BETWEEN SHRI VIJAY JAIN ALONG WITH SHRI AJAY SINGH KUSHWAHA AND SHRI DEVIDAS & OT HERS. THE PERUSAL OF PARA 1 OF THE SAID AGREEMENT PLACED AT P APER BOOK PAGE 36 OF THE ASSESSEE, WHICH FIND PLACE AT PAGE 5 OF ASSESSMENT ORDER ALSO AND SAME IS REFERRED IN QUESTION 14 OF S TATEMENT OF SHRI SANTOSH KUMAR LALWANI, WHICH CLEARLY SHOWS THA T THE THERE IS A WRITTEN AGREEMENT WITH THE ASSESSEE FROM THE O WNER OF LAND AND AS WRITTEN IN THE SAID AGREEMENT, THEY HAVE RIG HT TO SELL THE PROPERTY AND REGISTER THE PROPERTY IN THE NAME OF S ELF OR OTHERS IN PART OR IN FULL. FURTHER, IN REPLY TO QUESTION 14 O F HIS STATEMENT (SHRI SANTOSH KUMAR LALWANI) , HAS CLEARLY STATED T HAT HE HAS ENTERED INTO THIS AGREEMENT AND PAID A SUM OF RS. 8 LAKHS AFTER SEEING THE EXECUTORS OF SAID AGREEMENT FOR PURCHASE OF 1/3 RD PART OF LAND HAD AN AGREEMENT WITH ORIGINAL OWNER OF THE LAND IN WHICH IT WAS CLEARLY MENTIONED THAT THEY HAVE RIGHT TO SELL THE SAID PROPERTY AND SO FAR AS HE REMEMBER THEY HAVE P AID RS. 20 TOWARDS BAYANA FOR THE PURCHASE OF SAID LAND. WE AL SO FIND THAT I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 20 OF 21 SHRI SANTOSH KUMAR LALWANI HAD AGREED TO PURCHASED 1/3 RD OF LAND FOR RS. 43,27,400/- AND PAID RS. 8 LAKHS AS A DVANCE FOR THE SAME WHICH MEANS THAT THE TOTAL VALUE OF THE SAID L AND MUST BE THREE TIMES OF RS. 43 LAKH MEANING THERE BY AROUND RS. 120-130 LAKHS. THEREFORE, IN THE SAME WAY , SHRI VIJAY JAIN , IS VERY LIKELY MIGHT HAVE PAID 1/5 TH OF AS ADVANCE AS BAYANA AT RS. 120/5=24 LAKHS OR RS. 20 LAKHS ). SINCE THE ASSESSEE HAS FAI LED TO PRODUCE THE AGREEMENT FOR PURCHASE OF LAND WITH SHRI DEVIDA S & OTHERS, THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE L OWER AUTHORITIES HAVE JUSTIFIED IN MAKING ADDITION OF RS. 20 LAKHS O N THIS ACCOUNT. WE ALSO FIND THAT THE AO HAS NOT ONLY MADE ADDITION BASED ON THE STATEMENT BUT ALSO HAVING REGARDS TO ENTIRE CIR CUMSTANCES OF THE CASE. THE CIRCUMSTANTIAL EVIDENCE AND SURROUND ING CIRCUMSTANCES MAKE THE VIEW OF THE AO AS CORRECT. W E ALSO FIND MENTIONED THAT THE PURCHASER (EXECUTORS) OF SAID AG REEMENT HAVE A WRITTEN AGREEMENT OF PURCHASE OF SAID LAND OR EXE CUTOR. WE FIND THAT IN THE SAID AGREEMENT, IT HAS BEEN CLEARLY MEN TIONED THAT THE ASSESSEE HAS AN AGREEMENT BY WHICH THEY HAVE AUTHOR ISED TO SELL THE LAND AND GET REGISTERED THE SAME IN NAME OF P ROSPECTIVE BUYERS. IN VIEW OF THESE CIRCUMSTANCES, WE UPHOLD T HE FINDING OF I.T.A. NO. 441/IND/2013/A.Y:06-07/ SHRI VIJAY JAIN PAGE 21 OF 21 LOWER AUTHORITIES. ACCORDINGLY, GROUND NO. 2 OF APP EAL IS DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. THE ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH OCTOBER, 2016. SD/- ( . . ) (D.T.GARASIA) JUDICIAL MEMBER SD/- ( . . ) (O.P.MEENA) ACCOUNTANT MEMBER & / DATED : 26 TH OCTOBER, 2016.OPM