Sh. Neeraj Puri, Jalandhar V. The Dy. Commissioner of Income Tax, Jalandhar

ITA 461/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8728 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKER
• Assessee Lawyers: S S KALRA
• Keywords: Search and seizure
• Section: 153A; 131; 132

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, (CIRCUIT BENCH AT JALANDHAR) BEFORE : SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER NO. 461/ASR./2016 ITA ASSESSMENT YEARS: 2009-10 SHRI NEERAJ PURI, S/O SH. YOG RAJ PURI, 437/438, KALIA COLONY, JALANDHAR PAN: AGBPP 4622L (APPELLANT) VS. D.C.I.T., CENTRAL CIRCLE-1, JALANDHAR. (RESPONDENT) NO. 554/ASR./2016 ITA ASSESSMENT YEARS: 2009-10 D.C.I.T., CENTRAL CIRCLE-1, JALANDHAR. (APPELLANT) VS. SHRI NEERAJ PURI, S/O SH. YOG RAJ PURI, 437/438, KALIA COLONY, JALANDHAR (RESPONDENT) ASSESSEES BY SH. S.S. KALRA, C.A. REVENUE BY SH. BHAWANI SHANKER, D.R. ORDER PER A.D. JAIN, J.M.: THESE ARE CROSS APPEALS FOR THE ASSESSMENT YEAR 20 09-10 AGAINST CIT(A)S ORDER DATED 05.08.2016. DATE OF HEARING 19.01.2017 DATE OF PRONOUNCEMENT 03.03.2017 461 & 554/ASR./2016 2 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED C.I.T.(A) IS AGAINST L AW AND FACTS OF THE CASE. 2. THAT THE LD. C.I.T.(A) HAS ERRED IN SUSTAINING A N ADDITION OF RS.26,92,270/- BEING COMMISSION EARNED @ % OF THE SALE TRANSACTIONS AND HAS THUS GONE AGAINST THE VERY FACTS AND THE LEGAL POSITION OF THE CASE PARTICULAR LY HAVING ACCEPTED THE ARGUMENTS ON BOTH THE ISSUES BU T STILL SUSTAINING AN ADDITION @ % IS NOT UNDERSTOO D AND IS THEREFORE NOT SUSTAINABLE. 3. THAT THE C.I.T.(A) WHILE SUSTAINING THE ADDITION AS PER GROUND NO. 2 HAS LOST SIGHT OF THE FACT THAT NO COMMISSION WAS EVER RECEIVED BY THE ASSESSEE WHICH FACT WAS DULY CONFIRMED BY THE DAV MANAGEMENT EVEN IN INDEPENDENT ENQUIRES AND THERE WAS NO EVIDENCE W ITH THE DEPARTMENT TO HOLD IT OTHERWISE AND THUS THE ADDITION SUSTAINED IS WHOLLY UNJUSTIFIED. 4. THAT THE C.I.T.(A) IS ALSO NOT JUSTIFIED IN SUST AINING THE ADDITION AS PER GROUND NO. 2 ABOVE KEEPING IN VIEW THE LEGAL POSITION THAT IT IS A CASE WHERE SEARCH OPERA TIONS U/S 132 WERE CARRIED OUT AND THE CONSEQUENTIAL ASSESSMENT FRAMED IS U/S 153A OF THE ACT WHICH MAKE S 461 & 554/ASR./2016 3 IT AMPLY CLEAR THAT THE ASSESSMENT FRAMED IN SEARCH PROCEEDINGS HAVE TO BE BASED ON MATERIAL FOUND DURI NG SEARCH, AND SHOULD BE RELATABLE TO ANY DOCUMENTS FO UND WHICH VITAL ASPECT IS MISSING IN THIS CASE AND THUS ADDITION HAS WRONGLY BEEN SUSTAINED. 3. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL : 1. WHETHER LD. CIT(A) HAS ERRED IN REDUCING THE AD DITION MADE O ACCOUNT OF COMMISSION, ADOPTING THE RATE OF 0.50% AS AGAINST 1.50% ADOPTED BY THE AO. 2. WHETHER LD. CIT(A) HAS ERRED IN REDUCING THE ADD ITION MADE BY THE ASSESSING OFFICER FROM 40% TO 25% ON ACCOUNT OF EXPENDITURE ON AGRICULTURE IN THE ABSENC E OF ANY DOCUMENTARY EVIDENCE. 4. VIDE ORDER DATED 16.03.2015, THE AO OBSERVED THA T A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE I. T . ACT, 1961 WAS CONDUCTED ON 03.04.2012, I.E., DURING THE PREVI OUS YEAR 2012-13 RELEVANT TO A. Y. 2013-14, IN THE CASE OF ' REAL ESTATE DEVELOPERS-CUM-PROPERTY DEALERS OF JALANDHAR DISTT' ; THAT SINCE CASH AND OTHER DOCUMENTS WERE FOUND FROM THE RESIDE NCE OF THE 461 & 554/ASR./2016 4 ASSESSEE, NOTICES U/S 153A OF THE I. T. ACT, 1961 W ERE ISSUED IN THE CASE OF THE ASSESSEE FOR SIX ASSESSMENT YEARS I MMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SEARCH WAS CONDUCTED; AND THAT THEREFORE, NOT ICE U/S 153A OF THE I. T. ACT, 1961 WAS ISSUED FOR THE A.Y. 2009 -10, ASKING THE ASSESSEE TO FILE THE RETURN. IN RESPONSE TO THE SAI D NOTICE, ASSESSEE FILED THE RETURN OF INCOME ON 06.05.2015 D ECLARING INCOME OF RS. 13,59,550/-. 5. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADI NG OF AGRICULTURAL PRODUCTS, MAINLY IN POTATOES AND ENGAG ED IN PROPERTY DEALING ACTIVITIES UNDER THE PROPRIETARY C ONCERN, I.E., M/S BHAGWATI AGRICULTURAL FARMS, JALANDHAR ALONGWIT H HIS FATHER SH. YOG RAJ PURI. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS IT WAS STATEDLY FOUND THAT THE ASSESSEE HAD RECEIVED P AYMENTS FROM DAV COLLEGE TRUST MANAGEMENT SOCIETY (DAVCTMS) , NEW DELHI FOR SELLING OF LAND WHICH WAS PURCHASED BY TH E ASSESSEE FROM VARIOUS LAND HOLDERS AND SOLD THE SAME TO DAVC TMS, NEW DELHI. 461 & 554/ASR./2016 5 6. ON VERIFICATION OF CASE RECORDS AND SEIZED MATER IAL, IT WAS FOUND THAT THE ASSESSEE HAD PURCHASED LAND ADMEASUR ING 62 ACRES FROM VARIOUS LAND HOLDERS THROUGH POA/GPA/SPA AND HAD SOLD IT TO THE DAVCTMS, NEW DELHI, ON TOTAL SALE CO NSIDERATION OF RS. 59,97,19,000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT HE HAD ONLY PLAYED THE ROLE OF MIDDLE MAN IN BETWEEN THE VARIOUS LAND OWNERS/HOLDE RS AND THE DAVCTMS, NEW DELHI; AND THAT AS SUCH, HE HAD NOT EA RNED OR GET BROKERAGE/COMMISSION FROM THE ANY SIDE EITHER FROM THE SELLERS, OR THE PURCHASER. 7. THE AO OBSERVED THAT ON VERIFICATION OF RECORDS OF THIS SALE AND PURCHASE DEAL, IT WAS FOUND THAT THE WHOLE DEAL HAD TAKEN TIME OF MORE THAN TWO YEARS TO GET IT COMPLETED AND THAT ACCORDINGLY, THE ASSESSEE WAS FULLY ENGAGED IN PURC HASING AND SELLING OF LAND AND HAD USED HIS MACHINERY AND BANK ACCOUNTS AND HAD FACED A LOT OF LITIGATION IN VARIOUS COURTS TO RESOLVE THIS PURCHASE AND SALE ACTIVITY AND IN ACCORDANCE WITH T HE SAID ISSUE, THE ASSESSEE'S PREMISES, I.E., RESIDENCE AND BUSINE SS, WERE SEARCHED BY THE INVESTIGATION WING U/S 132 OF THE I NCOME TAX 461 & 554/ASR./2016 6 ACT, 1961; THAT LOOKING TO SUCH A HUGE DEAL OF LAND , THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF BROKERAGE/COMMI SSION RECEIVED BY HIM; THAT IN REPLY TO THE SAID QUERY, T HE ASSESSEE HAD SIMPLY DENIED TO HAVE RECEIVED ANY BROKERAGE/COMMIS SION FOR THIS DEAL. 8. THE AO OBSERVED THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE WAS CONFRONTED WITH THE I SSUE OF BROKERAGE/COMMISSION RECEIVED BY HIM AND IT WAS BRO UGHT TO HIS NOTICE THAT IN SUCH TYPE OF PROPERTY/LAND DEALS, NORMALLY COMMISSION/BROKERAGE IS TO BE CHARGED BY THE PERSON INVOLVED IN SUCH DEALS AS PER THE PREVAILING MARKET RATE OF THE DEAL AMOUNT; THAT HOWEVER, CONSIDERING THE QUANTUM OF TH E TRANSACTION, I.E., RS. 59,97,19,000/-, THE RATIO OF COMMISSION/BROKERAGE SHOULD NOT BE LESS THAN 1% OF THE DEAL AMOUNT; AND THAT CONSIDERING THE FACTS AND CIRCUMST ANCES AND TO BE MORE REASONABLE, AND BY JUSTIFYING THE ISSUE IN THE HANDS OF THE ASSESSEE, COMMISSION/BROKERAGE AT THE RATE OF 1 .5% OF RS. 53,84,54,000/- WAS BEING TREATED AS UNDISCLOSED INC OME, AS THE ASSESSEE HAD RECEIVED/PAID RS. 53,84,54,000/- OUT O F THE TOTAL 461 & 554/ASR./2016 7 SALE/PURCHASE CONSIDERATION OF RS. 59,97,19,000/- D URING THE YEAR UNDER CONSIDERATION, AND AS SUCH, THE COMMISSI ON AMOUNT OF RS. 80,76,810/- WAS BEING TREATED AS CONCEALED I NCOME FOR THIS YEAR AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 9. THE AO, THUS, MADE ADDITION OF RS.80,76,810/- BE ING COMMISSION ALLEGEDLY EARNED BY THE ASSESSEE AT THE RATE OF 1.5% OF RS.53,84,54,000/- (THE CONSIDERATION PAID BY DAV CTMS DURING THE YEAR FOR PURCHASE OF LAND). 10. THE LEARNED CIT(A), BY VIRTUE OF THE IMPUGNED O RDER, REDUCED THE RATE OF THE ALLEGED COMMISSION RECEIVED BY THE ASSESSEE, FROM 1.5%, AS TAKEN BY THE AO, TO 0.5%. O UT OF THE ADDITION OF RS.80,76,810/-, THE LD. CIT(A), THUS, D ELETED AN AMOUNT OF RS.53,84,540/- AND CONFIRMED THE ADDITION OF RS.26,92,270/-. THE RELEVANT PORTION OF THE CIT(A) S ORDER READS AS FOLLOWS : 461 & 554/ASR./2016 8 THE AO HAS MADE THE ADDITION ON THE PRESUMPTION THAT COMMISSION/BROKERAGE MIGHT HAVE BEEN EARNED ON SUCH HUGE TRANSACTIONS; HOWEVER NO POSITIVE EVIDENC E ABOUT SUCH COMMISSION/BROKERAGE EARNED BY THE ASSESSEE HAS BEEN MENTIONED. THE RATE HAS ALSO BEEN ADOPTED BY THE AO ON PRESUMPTION BASIS WITHOUT ANY DOCUMENT RELIED/REFERRED IN THIS REGARD. ON THE OTH ER HAND THE ARGUMENT OF THE AR IS THAT IT IS A CASE OF SEARCH WHERE THE ASSESSEE'S PREMISES I.E. RESIDENTI AL AND BUSINESS WAS SEARCHED BY THE INVESTIGATION WING U/S 132 OF THE IT. ACT AND THE ASSESSEE HAS CATEGORICAL LY DENIED TO HAVE RECEIVED ANY BROKERAGE OR COMMISSION AS HAS BEEN OBSERVED BY THE AO ALSO IN THE ASSESSME NT ORDER. THE AR HAS ALSO BEEN ARGUED THAT NOT A SINGLE PAPER OR DOCUMENT OR ANYTHING WAS FOUND OR SEIZED WHICH COULD INDICATE THE FACT OF RECEIPT OF COMMISS ION BY THE ASSESSEE. IT HAS FURTHER BEEN ARGUED THAT TH E AO SUMMONED THE LOCAL DIRECTOR OF DAV MR. C.L. KOCHHAR AND RECORDED HIS STATEMENT ON OATH WHERE SH. KOCHHA R HAS CONFIRMED THAT NO COMMISSION/BROKERAGE WAS PAID TO THE ASSESSEE BY THE DAC SOCIETY (DAVCTMS) NEW DELHI. A PERUSAL OF RECORD SHOWS THAT THE AO HAS RECORDED THE STATEMENT OF SH. C.L. KOCHHAR U/S 131 ON 24.02.2015 WHERE THE CONTENTION OF THE ASSESSEE WAS CONFIRMED AND THE CERTIFICATE DATED 21.02.2015 ISSU ED BY THE DAV UNIVERSITY JALANDHAR, DENYING PAYMENT OF COMMISSION/BROKERAGE TO THE ASSESSEE, HAS BEEN 461 & 554/ASR./2016 9 REAFFIRMED. ON CONSIDERATION OF ALL THESE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ARGUMENTS OF THE AR ARE FOUND ACCEPTABLE THAT THERE IS NO BASIS FOR CALCULATING THE COMMISSION @ 1.5% OF THE AMOUNT OF DEALS DONE DURING THE YEAR BY THE ASSESSEE FOR DAV SOCIETY (DAVCTMS) NEW DELHI. THE ADDITION MADE BY T HE AO IS THEREFORE NOT FOUND FULLY SUSTAINABLE. THE ALTERNATIVE ARGUMENT OF THE AR THAT IN CASE SUCH A H UGE TRANSACTION, THE MARKET RATE OF COMMISSION IS NOT M ORE THAN % AND THE ADDITION NEED TO SUITABLY REDUCED, IS FOUND ACCEPTABLE AND ACCORDINGLY THE ASSESSEE GETS A RELIEF OF 1%. THUS, THE ADDITION TO THE EXTENT OF RS.26,92,270 (I.E., @ % OF THE TRANSACTION RS.53,84,54,000/-) IS CONFIRMED AND THE ADDITION TO THE EXTENT OF RS.53,84,540/- IS DELETED. 11. ALL THE GROUNDS TAKEN BY THE ASSESSEE CHALLENGE THE CONFIRMATION OF THE AMOUNT OF RS.26,92,270/-. GROUN D NO. 1 RAISED BY THE DEPARTMENT, ON THE OTHER HAND, IS AGA INST THE DELETION OF THE AMOUNT OF RS.53,84,540/- BY REDUCIN G THE RATE OF ALLEGED COMMISSION RECEIVED BY THE ASSESSEE FROM 1. 50% AS ADOPTED BY THE AO, TO 0.5%. 461 & 554/ASR./2016 10 12. THE FACTS ARE NOT DISPUTED BY EITHER PARTY BEFO RE US. AS PER REPLY (COPY FURNISHED) DATED 11.05.2011 BY THE ASSE SSEE, BEFORE THE ADI, IN ENQUIRY PROCEEDINGS BEFORE THE SEARCH W AS CONDUCTED, THE ASSESSEE STATED THAT THE ASSESSEE AL ONGWITH HIS FATHER, MR. YOG RAJ PURI, WHO IS IN THE BUSINESS OF AGRICULTURE AND ALSO PURCHASE/SALE OF PROPERTIES, WAS INSTRUMENTAL IN PROCURING, FOR THE DAV.C.M. COMM., APPROXIMATELY 574 K 12M, I. E., 71.76 ACRES OF LAND IN VILLAGE SARMASTPUR, LOCATED ON THE NATIONAL JALANDHAR PATHANKOT HIGHWAY, DISTT. JALANDHAR; T HAT THE FATHER OF THE ASSESSEE, MR. YOG RAJ PURI, IS A MEMBER OF T HE PRESTIGIOUS INSTITUTION KNOWN AS DAV COLLEGE MANAGEMENT COMMITT EE, NEW DELHI.; THAT THE MANAGEMENT WANTED TO SET UP A DAV UNIVERSITY IN JALANDHAR AND FOR THAT, IT WANTED HUGE LAND TO B E PURCHASED; THAT SINCE THIS WORK OF PURCHASE OF LAND BY THE MAN AGEMENT ITSELF WAS NOT POSSIBLE FOR VARIOUS REASONS, THE FA THER OF THE ASSESSEE WAS ENTRUSTED WITH THE WORK OF PURCHASE OF LAND ON BEHALF OF THE INSTITUTION; AND THAT CONSIDERING THI S WORK TO BE OF A CHARITABLE NATURE, THE FATHER OF THE ASSESSEE ACC EPTED THE ASSIGNMENT AND PROCEEDED WITH ACQUIRING LAND FOR TH E UNIVERSITY; THAT A SEARCH WAS CARRIED OUT AT THE PREMISES OF TH E ASSESSEE ON 461 & 554/ASR./2016 11 28/03/2012, WHEN VARIOUS DOCUMENTS WERE SEIZED; THA T NOT A SINGLE PAPER, OR DOCUMENT, OR ANYTHING WAS FOUND OR SEIZED WHICH COULD PROVE, OR PINPOINT THE FACT THAT THE AS SESSEE HAD EVER RECEIVED ANY COMMISSION; AND THAT IN POST SEAR CH STATEMENT BEFORE THE A.D.I, THE SAME FACTS HAD BEEN STATED. 13. IN ASSESSMENT PROCEEDINGS, VIDE NOTICE (APB 3-4 ) DATED 12.11.14, THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF THE COMMISSION RECEIVED FROM DAV UNIVERSITY FOR THE DEA LING OF PURCHASE OF LAND FROM LAND HOLDERS, FOR THE DAV UNI VERSITY. THE ASSESSEE, VIDE REPLY (APB 5-17) STATED THAT THE COM PLETE DETAILS OF LAND PURCHASED FOR DAV FROM LAND HOLDERS HAD ALREAD Y BEEN FILED SUO MOTU WITH REPLY; THAT THE ASSESSEE, OR HIS FATH ER RECEIVED NO COMMISSION, AS THE ASSESSEE GOT CARRIED AWAY BY THE PURPOSE OF SETTING UP THE UNIVERSITY; THAT THE FACTS COULD BE VERIFIED FROM DAV INDEPENDENTLY; THAT THE COPY OF OUR A/C FROM TH E BOOKS OF DAVIET WAS ENCLOSED; AND THAT THE AFORESAID A/C COU LD BE GOT CHECKED UP AND CONFIRMED FROM DAVIET. 461 & 554/ASR./2016 12 14. A COPY OF THE ASSESSEES ACCOUNT IN THE BOOKS O F DAVCTMS HAS BEEN PLACED AT APB 18-23. 15. THE AO, AGAIN, VIDE NOTICE (APB 24-27) DATED 16 .02.2015, QUERIED THE ASSESSEE REGARDING THE COMMISSION ALLEG EDLY CHARGED. 16. THE ASSESSEE, VIDE REPLY (APB 28-35) DATED 23.0 2.2015 SUBMITTED AS UNDER : 'THAT ALTHOUGH THE ASSESSEE DEALS IN PURCHASE/SALE OF PROPERTY AND SHOW COMMISSION INCOME BUT UNFORTUNATELY NO COMMISSION HAS BEEN PAID OR EARNED BY THE ASSESSEE FROM THE TRANSACTIONS MADE FOR DAV. THIS FACT WAS MADE CLEAR IN THE STATEMENT RECORDED IN POST SEARCH PROCEEDINGS. YOUR ATTENTION IS INVITED TO THE COPY OF A/C OF DAV FURNISHED BY THE ASSESSEE AND AL SO ORIGINAL OF WHICH IS PROCURED BY YOU DIRECT WHERE T HEY HAVE SHOWN NO COMMISSION PAID TO US. FURTHER IN INVARIABLY LOT OF CORRESPONDENCE THE DEPTT. HAS WIT H DAV THEY HAVE DENIED THE PAYMENT OF COMMISSION. ENCLOSED PLEASE FIND A CONFIRMATION TO THIS EFFECT FROM DAV WHERE THEY HAVE CATEGORALLY STATED THAT NO COMMISSION IS PAID TO US. THUS NO RECEIPT ON A/C OF 461 & 554/ASR./2016 13 COMMISSION WHICH HAS NOT BEEN RECEIVED CAN BE ASSESSED IN OUR HANDS.' 17. THE AO RECORDED THE STATEMENT ON OATH (APB 37-3 9) OF MR. C.L. KOCHAR, THE LOCAL DIRECTOR OF DAVCTMS. THE REL EVANT PORTION OF THIS STATEMENT IS AS FOLLOWS : QUE. 12 WHAT WAS THE COMMISSION OR REMUNERATION PAID TO SH. NEERAJ PURI, M/S. BHAGWATI AGRICULTURAL FARMS, JALANDHAR FOR PURCHASE DEAL OF LAND FOR DAV UNIVERSITY. CONSIDERING SUCH A HUGE LAND AND HUGE PAYMENTS MADE TO FARMERS THROUGH SH. NEERAJ PURI, PROP. M/S. BHAGWATI AGRICULTURAL FARMS, JALANDHAR. ANS. M/S. BHAGWATI AGRICULTURAL FARMS, JALANDHAR SOLD THE LAND TO DAV COLLEGE TRUST AND MANAGEMENT SOCIETY AS POA, NO COMMISSION OR BROKERAGE WAS EVER PAID TO THEM. ALL PAYMENTS WERE MADE BY A/C PAYEE CHEQUES ONLY. QUE.13. HOW AND ON WHAT RELATION WITH DAV COLLEGE TRUST SOCIETY, MR. NEERAJ PURI, PROP. M/S. BHAGWATI AGRICULTURAL FARMS, JALANDHAR HAS 461 & 554/ASR./2016 14 CARRIED OUT SUCH A HUGE / BIG RESPONSIBILITY AND DEVOTED HIS TIME FOR MORE THAN A YEAR. ANS. I CAN'T SAY ANYTHING, IT MIGHT BE OUT OF RESPECT AND REGARDS THE DAVCMC. QUE.14 DO YOU AGREE WITH THE FACTS THAT WITHOUT ANY BENEFIT OR BY ANY MEAN ONE CAN INTERRUPT HIMSELF FOR SUCH A HUGE DEAL OF LAND AND DEVOTE HIS ENERGY AND TIME, WITHOUT ANY PERSONAL BENEFIR SINCE SH. NEERAJ PURI, PROP. M/S. BHAGWATI AGRICULTURAL FARMS, JALANDHAR IS ONLY A BUSINESSMAN ENGAGED IN BUSINESS OF POTATOES OR OTHER AGRICULTURAL PRODUCTS. ANS. YES, IT IS POSSIBLE IF ONE HAS TRUE LOVE AND AFFECTION FOR AN ORGANIZATION JUST AS IN DAV ALL OFFICIALS ARE WORKING HONORARY AS A REGARDS TO THE DAV SYSTEM. NORMALLY IT IS NOT POSSIBLE.' 18. THE AO FOUND NO FAULT WITH THE STAND TAKEN BY T HE ASSESSEE. HOWEVER, WITHOUT REBUTTING IT, THE AO MADE THE ADDI TION, OBSERVING THAT IN ANY SUCH TYPE OF PROPERTY/LAND DE ALS , NORMALLY , THE COMMISSION IS TO BE CHARGED BY THE PERSON INVOL VED IN SUCH DEALS, AS PER THE PREVAILING MARKET RATE. HE DID NO T EVEN RECORD 461 & 554/ASR./2016 15 ANY FINDING THAT THE ASSESSEE IN THE PRESENT CASE H AD, IN FACT , RECEIVED ANY SUCH COMMISSION. THE CIT(A) OBSERVED T HAT THE AO MADE THE ADDITION ON A PRESUMPTION THAT COMMISSION/ BROKERAGE MIGHT HAVE BEEN EARNED ON SUCH A HUGE TRANSACTION. HE OBSERVED THAT THE AO HAD NOT BROUGHT ANY POSITIVE EVIDENCE O N ACCOUNT OF SUCH COMMISSION HAVING BEEN EARNED BY THE ASSESSEE. HE OBSERVED THAT THE RATE OF COMMISSION HAD ALSO BEEN ADOPTED BY THE AO ON THE BASIS OF MERE PRESUMPTION, WITHOUT AN Y EVIDENCE. HE TOOK COGNIZANCE OF THE ACT THAT IN THE SEARCH CO NDUCTED, NO DOCUMENT INDICATING RECEIPT OF ANY COMMISSION BY TH E ASSESSEE WAS UNEARTHED. HE ACKNOWLEDGED THAT THE AO HAD RECO RDED THE STATEMENT ON OATH OF C.L. KOCHAR, THE LOCAL DIRECTO R OF DAVCTMS, WHO CONFIRMED THAT NO COMMISSION WAS PAID TO THE AS SESSEE AND ACCEPTED THE ISSUANCE OF CERTIFICATE DATED 21.02.20 15 BY DAV UNIVERSITY, JALANDHAR, DENYING ANY PAYMENT OF ANY C OMMISSION TO THE ASSESSEE. THE LD. CIT(A), THUS, ACCEPTED THE ASSESSEES CONTENTION THAT THERE WAS NO BASIS FOR CALCULATING THE COMMISSION @ 1.5% OF THE DEALS MADE BY THE ASSESSEE FOR DAVCTMS DURING THE YEAR. 461 & 554/ASR./2016 16 19. HOWEVER, DESPITE ALL THESE FACTS AND CIRCUMSTAN CES, NOT A SINGLE ONE OF WHICH GOES AGAINST THE ASSESSEE, THE LD. CIT(A) ARRIVED AT THE OPINION THAT THE ADDITION MADE BY TH E AO WAS NOT FULLY SUSTAINABLE. THE ASSESSEE HAD TAKEN AN ALTERNATIVE GROUND, THAT FOR SUCH A HUGE TRANSACTION, THE MARKET RATE O F COMMISSION IS NOT MORE THAN % AND THAT THE ADDITION BE SUITA BLY REDUCED. SURPRISINGLY, THOUGH HE HAD HIMSELF FOUND NO EVIDEN CE IN EXISTENCE ON RECORD PROVING THE RECEIPT OF ANY COMM ISSION BY THE ASSESSEE, THE LD. CIT(A), WITHOUT ANY BASIS, DE CIDED TO UPHOLD THE ADDITION TO THE EXTENT OF RS.26,92,270/-, HOLDI NG THE RATE OF %, BEING THE MARKET RATE OF COMMISSION IN SUCH CASE S, TO BE APPLICABLE. 20. NOW, AS DISCUSSED, THERE IS NO EVIDENCE ON RECO RD TO PROVE THE ASSESSEE HAVING EARNED ANY COMMISSION WHATSOEVE R. THE LD. CIT(A), FOR SUSTAINING THE ADDITION TO THE EXTENT M ENTIONED, ACCEPTED THE ASSESSEES ALTERNATIVE CONTENTION. BUT THE QUESTION OF CONSIDERING AND DECIDING THE ASSESSEES ALTERNAT IVE CONTENTION WOULD ARISE ONLY IF HIS MAIN ARGUMENT OF NOT HAVING EARNED ANY COMMISSION, HAD BEEN REJECTED, WHICH IS NOT SO. THE ALTERNATE 461 & 554/ASR./2016 17 PLEA HAS BEEN RAISED BY THE ASSESSEE ONLY TO ENABLE ANY SUSTAINABLE ADDITION TO BE MITIGATED. THE LEARNED CIT(A) HIMSE LF DID NOT FIND ANY JUSTIFIABLE REASON TO SUSTAIN THE ENTIRE ILLEGAL ADDITION MADE BY THE AO. THE LD. CIT(A)S ORDER, AS OBSERVED HEREINABOVE, IS ITSELF ELOQUENT ABOUT THIS. THE REA SONING WHICH APPLIES TO APPLICABILITY OF RATE OF 1 % COMMISSION , APPLIES EQUALLY AND WITH FULL FORCE NOT ONLY TO THE RATE OF % BUT TO ANY RATE WHATSOEVER, SIMPLY BECAUSE THE DEPARTMENT HAS NOT BEEN ABLE TO PROVE THE RECEIPT OF EVEN A SINGLE PAISA OF COMMISSION BY THE ASSESSEE. WHAT CANNOT BE DONE DIRECTLY, MUST NO T BE ALLOWED TO BE DONE INDIRECTLY. MERE TAKING OF A ALTERNATIV E PLEA BY THE ASSESSEE CANNOT MAKE THE ASSESSEE PRONE TO PREJUDIC E THERE- UNDER, IN THE ABSENCE OF EVEN AN IOTA OF EVIDENCE A GAINST THE ASSESSEE. IT IS TRITE THAT ALTERNATIVE PLEAS ARE ME ANT TO BE CONSIDERED AND ACCEPTED (IF FACTS AND LAW PERMIT) O NLY IF THE MAIN PLEA TAKEN FAILS. IN THE PRESENT CASE, THE ASS ESSEES MAIN PLEA, I.E., HE DID NOT EARN ANY COMMISSION, HAS NOW HERE FAILED, EITHER IN THE AOS ORDER OR IN THAT RENDERED BY THE LD. CIT(A). 461 & 554/ASR./2016 18 21. THE ALTERNATIVE PLEA OF THE ASSESSEE COULD HAVE BEEN ACCEPTED ONLY IN CASE SOME EVIDENCE HAD BEEN BROUGH T BY THE LD. CIT(A) THAT THE ASSESSEE HAD RECEIVED SOME COMMISSION, MAY BE, THOUGH, THAT SUCH EVIDENCE WERE NOT DIRECT AS TO TH E AMOUNT/RATE OF COMMISSION. HOWEVER, AS OBSERVED, NEITHER OF THE TAXING AUTHORITIES, IN THEIR RESPECTIVE ORDERS, HAS BROUGH T ON RECORD EVEN ASMUCH AS A SCINTILLA OF ANY SUCH EVIDENCE AGA INST THE ASSESSEE. AND, IN THIS LIGHT, THE ASSESSEES ALTERN ATIVE ARGUMENT IS NOT, NOR CAN IT BE TAKEN SO, AN ARGUMENT RAISED IN THE PROCESS OF PLEADING GUILTY TO A LESSER CHARGE, AS HAS BEEN SOUGHT BY THE LD. CIT(A) TO BE MADE OUT, IN ORDER TO AVOID A MORE SERIOUS ONE. THE ASSESSEE HAS, ALL THROUGH, UNAMBIGUOUSLY MAINTA INED THAT HE DID NOT RECEIVE ANY COMMISSION AT ALL IN THE LAND D EAL ON BEHALF OF THE DAVCTMS. THIS SANS EVIDENCE TO THE CONTRARY, COULD NOT RESULT IN ANY ADDITION TO THE INCOME OF THE ASSESSE E. IN THE ABSENCE OF EVIDENCE OF COMMISSION EARNED BY THE ASS ESSEE, THE ASSESSEES ALTERNATIVE PLEA WAS, OBVIOUSLY, REDUNDA NT AND IT IS, THEREFORE, THAT THE LD. CIT(A) EVIDENTLY ERRED IN A CCEPTING THIS PLEA AS A PLEA TAKEN BY THE ASSESSEE WITHOUT PREJUD ICE TO THE PLEA THAT THE ASSESSMENT ORDER MAKING THE ADDITION WAS P ER SE VOID 461 & 554/ASR./2016 19 AB INITIO. IT IS MERE SUSPICION WHICH HAS FORMED TH E BASIS OF PART SUSTENANCE OF THE ADDITION BY THE LD. CIT(A). AND S USPICION, IT IS WELL SETTLED, IS NO SUBSTITUTE FOR HARD EVIDENCE, W HICH IS ABSENT HEREIN. IN THIS REGARD, IT IS ALSO TO BE TAKEN NOTE OF THAT NO ADDITION CAN BE MADE U/S. 153A OF THE IT ACT IF, IN THE SEARCH CONDUCTED, NO MATERIAL IS FOUND, WHICH IS ALSO THE CASE HERE. 22. FOR THE ABOVE DISCUSSION, THE GRIEVANCE OF THE ASSESSEE IS JUSTIFIED AND IT IS ACCEPTED, WHEREAS GROUND NO. 1 TAKEN BY THE DEPARTMENT IS FOUND TO BE SHORN OF MERIT AND IT IS REJECTED. WE ARE NOT LOATH TO REGISTER OUR INDIGNATION, AT THIS JUNCTURE, AT THE VERY FACT THAT THE DEPARTMENT HAS TAKEN THIS GROUND BEFORE US. IT HAS BEEN HELD BY COURTS AND TRIBUNALS ALL OVER THE COUNTRY, TIME AND AGAIN, THAT FRIVOLOUS APPEALS OUGHT NOT TO BE F ILED. WE LEAVE IT AT THAT. 461 & 554/ASR./2016 20 23. GROUND NO. 2 OF THE DEPARTMENTS APPEAL STATES THAT THE LD. CIT(A) HAS ERRED IN REDUCING THE ADDITION MADE BY T HE AO ON ACCOUNT OF EXPENDITURE ON AGRICULTURE, FROM 40% TO 20%, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. 24. THE AO OBSERVED THAT THE ASSESSEE HAD ONLY SHOW N AGRICULTURAL INCOME AMOUNTING TO RS.4,15,000/- AND HAD NOT FURNISHED DETAILS OF EXPENDITURE ON THIS ACCOUNT. T HE AO, THEREFORE, ADDED RS.1,66,000/-, CONSIDERING IT AS A N EXPENDITURE ON AGRICULTURAL INCOME, CALCULATED @ 40% OF THE AGR ICULTURAL INCOME DECLARED. 25. THE LEARNED CIT(A) REDUCED THE ADDITION TO RS.1 ,03,750/-, I.E., 20% BY HOLDING AS UNDER : THE AO HAS MADE THE ADDITION ON THE PRESUMPTION THAT EXPENDITURE MIGHT HAVE BEEN DONE TO EARN THE AGRICULTURAL INCOME. ON THE OTHER HAND THE ARGUMENT OF THE AR IS THAT NO EVIDENCE IN THE MATTER WAS FOUND. THE AR HAS CONTENDED THAT THE AGRICULTURAL INCOME HAS BE EN SHOWN AS NET INCOME AND NO EVIDENCE HAS BEEN MENTIONED BY THE AO FOR MAKING THE ADDITION. THE AR 461 & 554/ASR./2016 21 HAS FURTHER ARGUED THAT THE ADDITION IN ANY CASE IS ON HIGHER SIDE AND THE PREDECESSOR OF AO IN EXACTLY SA ME CIRCUMSTANCES APPLIED RATE OF 25%. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THIS ARGUMENT OF THE AR A RE FOUND ACCEPTABLE SINCE THERE IS NO POSITIVE EVIDENC E WITH THE AO TO TAKE THE RATE OF EXPENDITURE @ 40% AND TH E RATE OF 25% AS PER PAST HISTORY IS FOUND REASONABLE . THEREFORE, THE ADDITION TO THE EXTENT OF 25% I.E. RS . 1,03,750/- IS SUSTAINED AND THE ASSESSEE GETS A REL IEF OF RS. 62,250/-. 26. IT REMAINS UNDISPUTED THAT THE ASSESSEE HAD SHO WN AGRICULTURAL INCOME AS NET INCOME, WHEREAS THE AO B ROUGHT NO EVIDENCE TO SUPPORT THE ADDITION. IT IS ALSO TRUE T HAT THE ASSESSEE HIMSELF STATED BEFORE THE LD. CIT(A) THAT IN EXACTL Y SIMILAR CIRCUMSTANCES, IN THE ASSESSEES OWN CASES, IN EARL IER YEARS, THE PREDECESSOR OF THE AO HAD APPLIED THE RATE OF 25%. IT IS THIS PAST HISTORY OF THE ASSESSEES OWN CASE WHICH PERSUADED THE LD. CIT(A) TO SUSTAIN THE ABOVE ADDITION TO THE EXTENT OF 25%, AMOUNTING TO RS.1,03,750/-, THEREBY GIVING A RELIEF OF RS.62,250 /-. OBVIOUSLY, THE ASSESSEE IS NOT IN APPEAL ON THIS ISSUE. 461 & 554/ASR./2016 22 27. IN THIS REGARD, WE FIND NO ERROR IN THE CIT(A) S ORDER. IT IS ACCORDINGLY UPHELD. GROUND NO. 2 RAISED BY THE DEPA RTMENT, THUS, STANDS REJECTED. 28. IN THE RESULT, ITA NO. 461/ASR./2016 IS ALLOWED , WHEREAS ITA NO. 554/ASR./2016 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.03.2017. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:03.03.2017 *AKS* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR, ITAT ASSISTANT REGISTRAR