Sh. Rajinder Kumar Hak, Jammu V. The Income-tax Officer, Jammu

ITA 507/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8828 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 04-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V K SINGH
• Assessee Lawyers: M K KAUL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value
• Section: 143(3); 50C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) JAMMU CAMP BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.507(ASR)/2014 ASSESSMENT YEAR:2005-06 PAN: AANPH5188H SH. RAJINDER KUMAR HAK, VS. INCOME TAX OFFICER, TRIKUTA NAGAR, JAMMU. WARD-1(2), JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. M.K. KAUL, CA RESPONDENT BY:SH. K.V.K. SINGH, DR DATE OF HEARING: 01/12/2015 DATE OF PRONOUNCEMENT: 26/02/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2005-06 AGAINST THE ORDER, DATED 27.05.2014, PASSED BY THE LD. CIT(A), JAMMU. THE ASSESSEE HAS RAISED THE FOLLOWING CONCISE GROUN DS OF APPEAL: 1. THAT THE ORDER PASSED BY THE LD. CIT(A) IS AGAI NST FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW. 2. THAT THE LD. CIT(A) HAS ERRED IN FOLLOWING THE S TAND OF THE AO THAT THE PURCHASE OF RESIDENTIAL FLAT IN QUESTION H AS BEEN MADE IN THE F.Y. 2004-05. THE PURCHASE ACTUALLY REL ATES TO F.Y. 2005-06 CORRESPONDING TO THE AY 2006-07. RS. 8 LACS OUT OF TOTAL COST OF RS.8.50 LACS HAS BEEN PAID IN F.Y. 2005- 06 AND THE SALE DEED HAS ALSO BEEN EXECUTED IN THE F.Y. 2005-06. THE EVIDENCE ON RECORD IN THIS REGARD HAS BEEN OVERLOOKED. 3. THAT THE PURCHASE CONSIDERATION OF THE RESIDENTI AL FLAT IN QUESTION HAS BEEN ERRONEOUSLY ASSUMED AS RS.17.50 L ACS ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 2 AGAINST ACTUAL AND DOCUMENTED PURCHASE CONSIDERATIO N OF RS.8.50 LACS. THE ASSUMED DIFFERENCE OF RS. 9 LACS HAS ERRONEOUSLY BEEN TREATED AS INCOME FROM UNEXPLAINED SOURCES. THE ASSUMPTION IS BASED ON NO INFORMATION OTHER THAN THAT CONTAINED IN AN UNRELATED AND UNSUBSTANTI ATED LOOSE SHEET OF STATEMENT SAID TO HAVE BEEN SEIZED F ROM A THIRD PARTY. 4. THAT THE STATED SEIZURE OF LOOSE SHEET OF PAPER, THE CONTENTS OF WHICH DO NOT DRAW ANY DIRECT OR INDIRECT SUPPOR T FROM ANY DOCUMENTARY EVIDENCE OR ANY OTHER CORROBORATORY EVI DENCE, HAS BEEN ERRONEOUSLY MADE THE SOLE BASIS OF MAKIN G THE ADDITIONS TO THE TAXABLE INCOME OF THE APPELLANT. T HERE IS NO REFERENCE TO THE BOOKS OF ACCOUNT OF THE BUILDER/SO CIETY OR ANY OTHER EVIDENCE IN SUPPORT OF THE VERACITY CREDI BILITY OR RELIABILITY OF THE SEIZED STATEMENT RELIED UPON. 5. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THA T THOUGH THE PRESUMPTION U/S 132(4A) OF THE ACT IS AVAILABLE AGA INST THE PERSON FROM WHOSE POSSESSION A SEIZURE IS MADE BUT THIS PRESUMPTION CANNOT BE EXTENDED TO OTHERS AND WITHOU T ANYTHING ELSE THAN THE SOLE SEIZED DOCUMENT ANY ADD ITIONS CANNOT BE MADE. IN THE PRESENT CASE THE SOLE SO CA LLED COMPUTERIZED SLIP SEIZED FROM A THIRD PARTY CANNO T BE A CONCLUSIVE EVIDENCE TO JUSTIFY THE ADDITIONS, MORE SO IN THE AY 2005-06. THERE IS NOTHING ELSE TO SUGGEST THAT T HE APPELLANT HAS, IN FACT, PAID THE AMOUNT OF RS. 9 LA CS IN CASH IN ADDITION TO THE PAYMENT OF RS.8.50 LACS AS MENTI ONED IN THE SALE DEED. THE LOOSE COMPUTERIZED SLIP DOES N OT GIVE ANY DATE OF THE ALLEGED CASH PAYMENT(S). THERE CANNOT B E ANY PRESUMPTION WITH REGARD TO THE DATE(S) OF PAYMENT A LSO. 6. THAT WHEREAS EXPLANATION FOR THE ENTIRE INVESTME NT OF RS.8.50 LAKHS WAS SUBMITTED BEFORE THE AO AS WELL AS THE CIT(A) ONLY THE LOAN COMPONENT OF RS. 7 LAKHS HAS BEEN ACCEPTED AND THE BALANCE OF THE ADMITTED INVESTMENT AMOUNTING TO RS.1.50 LAKHS HAS ALSO BEEN TREATED AS INVESTMENT FROM UNDISCLOSED SOURCE U/S 69, AND ADDE D TO THE ASSESSED INCOME FOR THE AY 2005-06. 7. THAT THE ASSESSMENT MADE BY THE AO IS BASED ON CONTRADICTIONS AND THAT THE LD. CIT(A) HAS COMPOUND ED THE CONTRADICTIONS. 8. THAT IT IS PRAYED THAT THE ASSESSMENT ORDER MAY BE QUASHED IN THE ALTERNATIVE THE ADDITIONS AMOUNTING TO RS.10 .50 LAKHS ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 3 MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS U/S 69 O F THE ACT, DURING THE YEAR F.Y. 2004-05, MAY BE DROPPED O R ANY OTHER RELIEF MAY BE GRANTED AS MAY MEET THE ENDS OF JUSTICE. 3. THE FACTS ARE THAT THE COMPLETED SCRUTINY ASSESS MENT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 WAS REOPE NED ON THE BASIS OF INFORMATION FROM THE ADIT, JAMMU, THAT THE ASSESSEE HAD PURCHASED FLAT NO.6, BLOCK-A, 2ND FLOOR FROM DREAMLAND COOPERATIVE HOUSING BUILDING SOCIETY, JAMMU, FOR RS.17,50,000/-, THE PAYMENT FOR WHICH MADE AT RS.8,00,000/- BY CHEQUES AND RS.9,50,000/- IN CASH. THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SAID INVESTME NT. THE ASSESSEE STATED AS FOLLOWS: IN ITS REPLY THE ASSESSEE STATED THAT THE SAID PROP ERTY WAS PURCHASED FOR RS.8,50,000/- ONLY FOR WHICH THERE IS PROPER SALE DEED DULY REGISTERED WITH THE COURT OF LAW. THE INVESTME NT HAS BEEN MADE AFTER RAISING A HOUSING LOAN OF RS.7 LACS FRO M UCO BANK AND BALANCE PAYMENT OF RS.1,50,000/- FROM THE PAST SAVI NGS. THE ASSESSEE HAD PRODUCED THE PROOF OF LOAN AMOUNT OF R S. 7 LAC PAID TO THE DREAMLAND HOUSING SOCIETY AND NO PROOF OF THE S OURCE OF THE BALANCE INVESTMENT MADE IN CASH OF RS.10,50,000/- W AS PRODUCED. 4. THE AO ACCEPTED THE ASSESSEES EXPLANATION ONLY TO THE EXTENT OF RS. 7 LACS AND TREATED THE AMOUNT OF RS.10,50,000/ - AS THE ASSESSEES INVESTMENT FROM UNEXPLAINED SOURCES. IT WAS OBSERVE D AS UNDER: THE REPLY HAS BEEN CONSIDERED WHICH IS NOT CONVINCI NG IN VIEW OF THE FACT ALSO THAT WHILE SCRUTINIZING THE CASE OF S H. RAI BHARAT, SMT. KALPANA TIKOO AND SOME OTHER PERSONS WHO HAVE PURCH ASED THE FLATS FROM THE SAID SOCIETY IN THE SAME VICINITY A ND OF THE SAME TYPE, THE RECEIPTS ISSUED BY THE DREAMLAND SOCIETY TO THE SE ALLOTTEES HAVE BEEN PRODUCED BY THESE PERSONS AND WERE FOUND EQUAL TO THE AMOUNT CHARGED BY THE SOCIETY FROM THESE ALLOTTEES FOR THE PURCHASE OF THE FLATS AS AT A LESSER PRICE. IT IS ALSO A COM MON PRACTICE AMONG THE PUBLIC/PURCHASERS TO GET THE SALE DEED EXECUTE D AT MUCH LESSER PRICE. ALL THIS ESTABLISHES THAT OUT OF THE TOTAL P AYMENTS OF ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 4 RS.17,50,000/- THE ASSESSEE HAS MADE CASH INVESTMEN T OF RS.10,50,000/- ON OR BEFORE THE DUE DATE OF PAYMEN T ON 17.01.2005. I.E. DURING THE YEAR 2004-05 RELEVANT T O ASSESSMENT YEAR 2005-06 OUT OF THE SOURCES NOT DISCLOSED TO TH E DEPARTMENTS AGAINST CLAIM OF CASH PAYMENT OF RS.50,000/-. THERE FORE, THE ADDITION OF RS.10,50,000/- IS MADE TO THE INCOME R ETURNED U/S 69 OF THE I.T. ACT, 1961 AND PENALTY PROCEEDINGS U/S 2 71(1) HAVE BEEN INITIATED SEPARATELY. 5. THE LD. CIT(A) CONFIRMED THE ADDITION BY HOLDING AS FOLLOWS: GROUNDS OF APPEAL NO 2 TO 6 RELATES TO ADDITION OF RS 10.5 LAKHS ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE ASSESSMENT W AS MADE U/S 143(3) ON THE BASIS OF INFORMATION RECEIVED FROM AD IT JAMMU THAT ASSESSEE HAS PURCHASED A FLAT NO. 6, BLOCK-A, 2 ND FLOOR, FROM DREAMLAND COOPERATIVE HOUSING BUILDING SOCIETY JAMM U FOR RS 17.50 LACS. AS PER THE STATEMENT SEIZED DURING THE COURSE OF SEARCH OPERATION OF DREAMLAND COOPERATIVE HOUSING SOCIETY, THE APPELLANT WAS TO MADE PAYMENTS OF RS 8.50 LAKHS BY CHEQUE AND RS 9 LAKHS IN CASH. THE A.O ASKED THE APPELLANT TO EXPLAIN THE SOURCE OF INVESTMENTS OF RS 17.50 LAKHS MADE IN CASH AND BY C HEQUE. THE APPELLANT, HOWEVER, STATED THAT HE HAS MADE AN INVE STMENT OF RS.8.50 LAKHS, RS 0.50 LAKH WAS PAID IN CASH AND RS 8,00,000/- THROUGH DEMAND DRAFT OF WHICH 7 LAKHS GIVEN BY BANK AS LOAN AND BALANCE RS 1 LAKH DEPOSITED BY APPELLANT AS MARGIN MONEY. THE APPELLANT HOWEVER, COULD NOT EXPLAIN THE SOURCE OF RS 50,000/- PAID TO SOCIETY AND RS 1,00,000/- DEPOSITED IN BANK AS M ARGIN MONEY. THE A.O, ACCORDINGLY, REJECTED THE EXPLANATIONS OF THE APPELLANT AND ASSESSED THE INVESTMENT AT RS 18.50 LACS BY MAKING AN ADDITION OF RS 10.50 LAKHS AS UNEXPLAINED INVESTMENT. DURING TH E COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT WAS PROVIDED T HE COPY OF PAPER FOUND IN THE COURSE OF SEARCH IN WHICH THE DETAILS OF PAYMENTS MADE BY VARIOUS PERSON WHO HAVE PURCHASED FLATS IN THE D REAMLAND HOUSING BUILDING SOCIETY AT TRIKUTA NAGAR IS GIVEN. FROM THE SAID DOCUMENT, IT IS FOUND THAT 46 PERSONS HAVE INVESTED IN DREAMLAND COOPERATIVE HOUSING BUILDING SOCIETY AND BOOKED FLA TS OF VARIOUS SIZES FOR WHICH PAYMENTS AT VARIANCE WERE RECEIVED FROM THE INVESTORS. THIS STATEMENT CLEARLY SHOWS THE BLOCK N O, FLOOR, DATE OF ACQUISITION, DUE DATE OF PAYMENTS, CONSIDERATION AM OUNT, AMOUNT RECEIVED IN CHEQUE AND AMOUNT RECEIVED IN CASH AND BALANCE IF ANY. THIS FACT WAS BROUGHT TO THE COUNSEL OF THE APPELLA NT ON 22.04.2014 FOR HIS RESPONSE/COMMENTS. VIDE LETTER DATED 20.05. 2014 THE COUNSEL QUESTIONED THE VERACITY OF THE PAPER AND DI SASSOCIATED ITSELF HAVING ANY CORRELATION WITH THE PAPERS WHICH PURPOR TEDLY WAS NOT ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 5 SIGNED BUT ONLY A COMPUTERIZED GENERATED SHEET. FUR THER HE HAS ALSO QUESTIONED THAT AS PER THE DATE OF INVESTMENT IN TH E COMPUTERIZED SHEET, THE INVESTMENT OF THE APPELLANT DOES NOT FAL L IN THE RELEVANT ASSESSMENT YEAR. FURTHER HE ADDED THAT THE AO HAS N EVER SHOWN THIS PAPER TO THE APPELLANT DURING THE COURSE OF AS SESSMENT PROCEEDINGS. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE CON TENTION OF THE APPELLANT THAT THE PAPER WAS NEVER CONFRONTED HAS B EEN ADDRESSED AT THE APPELLATE STAGE AND THEREFORE THE CAUSE OF G RIEVANCES IS SETTLED. REGARDING VERACITY OF PAPER, I FIND THAT T HE DOCUMENT CANNOT BE BRUSHED ASIDE BECAUSE IT HAS BEEN DRAWN VERY MET ICULOUSLY WITH MINUTEST DETAILS. THE APPELLANT IS AGREEING TO HAVE MADE PAYMENTS APPEARING IN THE CHEQUE PAYMENTS RECEIVED COLUMN OF THE SAID PAPER AND WHICH ALSO TALLIES WITH THE SALE DEED. THEREFOR E, I FIND NO REASON TO DISREGARD THE CASH RECEIVED OR THE RECEIVABLE PA YMENTS IN THE SAID PAPER. EVEN THE FLAT NO MENTIONED ON THE SAID DOCUM ENT BELONGS TO THE APPELLANT. IF HALF CONTENTS OF THE PAPER IS COR RECT THEN THE ANOTHER HALF CANNOT BE QUESTIONED TO BE FABRICATED. IT IS T O MENTION THAT IN THIS SEARCH OPERATION ONE SH RAKESH KUMAR WHO WAS H ANDLING OOPERATIVE HOUSING BUILDING LTD HAS SURRENDERED AN AMOUNT OF RS.50 LACS IN FINANCIALLY YEAR 2006-07 & RS 75 LACS IN HI S PERSONAL HAND FOR I-SSESSMENT YEAR 2007-08. INCIDENTALLY, IT IS A LSO NOTICED THAT THE APPEAL OF ONE MR SUNII BHATT WHOSE NAME IS ALSO APP EARING IN THE SAID DOCUMENT IS ALSO PENDING BEFORE ME AND DURING THE COURSE OF APPELLATE PROCEEDINGS, HE HAS CONFIRMED TO HAVE MAD E BOTH CASH AND CHEQUE PAYMENTS MENTIONED IN THE SAID DOCUMENT TO THE SOCIETY AS PER THE REQUIREMENT OF THE SOCIETY. HE HAS PRODU CED RECEIPTS ISSUED BY THE SOCIETY IN RESPECT OF BOTH CASH & CHE QUE PAYMENTS BEARING RECEIPT NOS. 97,98,172,173,175,184,186,188, 190,191, 212,216,218 & 219 TOTALLING TO RS 17,25,000/- WHERE AS SALE DEED IS SHOWS A CONSIDERATION OF RS 11.70 LAKHS ONLY. IT ES TABLISHES THAT THE CONSIDERATION AMOUNT IN SALE DEEDS EXECUTED BETWEEN THE SOCIETY AND PERSONS PURCHASING THE FLATS WERE UNDERSTATED. IT IS A COMMON KNOWLEDGE THAT INVESTMENTS IN REAL ESTATE ARE ALWAY S UNDERSTATED AND THE CASH PORTION IS NOT DECLARED TO THE INVESTM ENT IN INCOME TAX DEPTT. IT IS TRUE THAT THESE PAPERS HAVE NOT BEEN R ECOVERED FROM THE APPELLANT IN THE SEARCH OPERATIONS, BUT THE VERACIT Y OF THE SAME CANNOT BE QUESTIONED. FURTHER, CONCERNING THE YEAR OF INVESTMENT OF CASH PAYMENTS OF RS 8 LAKHS, IT IS OBSERVED THAT TH E DATE OF AGREEMENT AND DUE DATE OF PAYMENT MENTIONED IN SEIZ ED DOCUMENT FALLS UNDER THE YEAR UNDER CONSIDERATION AND THEREF ORE, THERE IS NO REASON TO CONSIDER THE PLEA OF THE APPELLANT THAT T HE PAYMENT COULD HAVE BEEN MADE IN THE SUBSEQUENT YEAR. THEREFORE, T HE ARGUMENTS MADE BY THE APPELLANT ARE NOT SUSTAINABLE. FURTHER, IN RESPECT OF RS 50,000/- PAID IN CASH & RS 1,00,000/- DEPOSITED IN BANK AS MARGIN ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 6 MONEY, THE APPELLANT COULD NOT EXPLAIN THE SOURCE O F SUCH PAYMENTS EVEN DURING APPELLATE PROCEEDING. THE APPELLANT HAS AGREED THAT RS 50,000/- CASH WAS PAID IN THE YEAR UNDER CONSIDERAT ION AND NO EVIDENCE REGARDING THE DATE OF DEPOSIT OF RS 1,00,0 00/- WAS PROVIDED BY THE APPELLANT. THEREFORE, THE ADDITION OF RS 10,50,000/- ON ACCOUNT OF UNEXPLAINED SOURCE OF INVESTMENT IS U PHELD. 6. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL FOR THE ASSESSEE HAS MADE ORAL ARGUMENTS AND WRITTEN SUBMISSIONS HAV E BEEN FILED AS WELL. IT WAS SUBMITTED THAT THE LD. CIT(A) HAS E RRED IN FOLLOWING THE STAND OF THE AO THAT THE PURCHASE OF RESIDENTIAL FL AT IN QUESTION HAD BEEN MADE IN THE F.Y. 2004-05. THE PURCHASE ACTUALLY REL ATES TO F.Y. 2005-06 CORRESPONDING TO THE AY 2006-07 AND RS. 8 LACS OUT OF TOTAL COST OF RS.8.50 LACS HAS BEEN PAID IN F.Y. 2005-06 AND THE SALE DEED HAS ALSO BEEN EXECUTED IN THE F.Y. 2005-06. HE SUBMITTED THA T THE EVIDENCE ON RECORD IN THIS REGARD HAS BEEN OVERLOOKED. IT WAS F URTHER SUBMITTED THAT THE PURCHASE CONSIDERATION OF THE RESIDENTIAL FLAT IN QUESTION HAS BEEN ERRONEOUSLY ASSUMED AS RS.17.50 LACS AGAINST ACTUAL PURCHASE CONSIDERATION OF RS.8.50 LACS. THE ASSUMED DIFFEREN CE OF RS. 9 LACS HAS ERRONEOUSLY BEEN TREATED AS INCOME FROM UNEXPLAINED SOURCES. THE ASSUMPTION IS BASED ON NO INFORMATION OTHER THAN TH AT CONTAINED IN AN UNRELATED AND UNSUBSTANTIATED LOOSE SHEET OF STATEM ENT SAID TO HAVE BEEN SEIZED FROM A THIRD PARTY. 6.1. THE LD. COUNSEL FURTHER STATED THAT THE SEIZU RE OF LOOSE SHEET OF PAPER, THE CONTENTS OF WHICH DO NOT DRAW ANY DIRECT OR INDIRECT SUPPORT FROM ANY DOCUMENTARY EVIDENCE, OR ANY OTHER CORROBO RATORY EVIDENCE, ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 7 HAS BEEN ERRONEOUSLY MADE THE SOLE BASIS OF MAKIN G THE ADDITIONS TO THE TAXABLE INCOME OF THE ASSESSEE. THERE IS NO REF ERENCE TO THE BOOKS OF ACCOUNT OF THE BUILDER/SOCIETY OR ANY OTHER EVIDENC E IN SUPPORT OF THE VERACITY CREDIBILITY OR RELIABILITY OF THE SEIZED S TATEMENT RELIED UPON. IT WAS ALSO SUBMITTED THAT THE LD. CIT(A) HAS FAILED T O APPRECIATE THAT THOUGH THE PRESUMPTION U/S 132(4A) OF THE ACT IS AV AILABLE AGAINST THE PERSON FROM WHOSE POSSESSION A SEIZURE IS MADE, BUT THIS PRESUMPTION CANNOT BE EXTENDED TO OTHERS AND WITHOUT ANYTHING O THER THAN THE SOLE SEIZED DOCUMENT ANY ADDITIONS CANNOT BE MADE. IN TH E PRESENT CASE THE SOLE SO CALLED COMPUTERIZED SLIP SEIZED FROM A TH IRD PARTY CANNOT BE A CONCLUSIVE EVIDENCE TO JUSTIFY THE ADDITIONS, MORE SO IN THE AY 2005-06. THERE IS NOTHING ELSE TO SUGGEST THAT THE ASSESSEE HAS, IN FACT, PAID THE AMOUNT OF RS. 9 LACS IN CASH IN ADDITION TO THE PAY MENT OF RS.8.50 LACS, AS MENTIONED IN THE SALE DEED. THE LOOSE COMPUTERI ZED SLIP DOES NOT GIVE ANY DATE OF THE ALLEGED CASH PAYMENTS. THE LD. COUN SEL SUBMITTED THAT THE EXPLANATION FOR THE WHOLE INVESTMENT OF RS.8.5 0 LAKHS WAS SUBMITTED BEFORE BOTH THE AUTHORITIES BELOW BUT ONL Y THE LOAN COMPONENT OF RS. 7 LAKHS HAS BEEN ACCEPTED AND THE BALANCE O F THE ADMITTED INVESTMENT AMOUNTING TO RS.1.50 LAKHS HAS ALSO BEEN TREATED AS INVESTMENT FROM UNDISCLOSED SOURCE U/S 69, AND ADDE D TO THE ASSESSED INCOME FOR THE AY 2005-06. IN VIEW OF THE ABOVE SUB MISSIONS, THE LD. COUNSEL PRAYED THAT THE APPEAL OF THE ASSESSEE MAY BE ALLOWED. ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 8 7. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN SUBMITTED THAT THE ASSE SSEE, AS CORRECTLY HELD BY THE LD. CIT(A) IN THE DETAILED ORDER UNDER APPEAL, HAS MISERABLY FAILED TO EXPLAIN THE SOURCE OF AMOUNT OF RS.10.50 LACS INVESTED IN THE PURCHASE OF THE FLAT AND THAT THEREFORE, THERE BEIN G NO MERIT THEREIN, THE APPEAL OF THE ASSESSEE IS LIABLE TO BE DISMISSED. 8. THE RIVAL SUBMISSIONS OF BOTH THE PARTIES HAVE B EEN HEARD IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. THE ADDITIO N OF RS.10.50 LACS WAS MADE SINCE ACCORDING TO THE TAXING AUTHORITIES, THE ASSESSEE COULD NOT EXPLAIN THIS ALLEGED CASH INVESTMENT MADE BY THE AS SESSEE IN THE PURCHASE OF FLAT. AS PER THE AUTHORITIES BELOW, T HE PURCHASE PRICE OF THE FLAT WAS RS.17.50 LACS, WHEREAS THE ASSESSEE HAD SH OWN IT TO BE ONLY OF RS.8.50 LACS AND HE HAD ONLY BEEN ABLE TO PROVE TH E LOAN OF RS.7 LACS TAKEN FROM UCO BANK. THE AO REJECTED THE ASSESSEES EXPLANATION, OBSERVING THAT WHILE SCRUTINIZING THE CASE OF SH. RAI BHARAT, SMT. KALPANA TIKKOO AND SOME OTHER PERSONS, WHO HAD PURC HASED SIMILAR FLATS FROM THE SOCIETY, THE RECEIPTS ISSUED BY THE SOCIETY TO THE SAID ALLOTTEES HAD BEEN PRODUCED BY THEM BEFORE THE AO, AND THE AO FOUND ALL THE AMOUNTS EQUIVALENT TO THE AMOUNT CHARGED B Y THE SOCIETY FOR THE PURCHASE OF THE FLATS AS WELL AS THE INFORMATION IN THE POSSESSION OF THE DEPARTMENT WITH REGARD TO THE ASSESSEE, EVEN THOUGH THE SALE DEED IN THE CASE OF THE ASSESSEE HAD BEEN REGISTERED AT A LESSE R PRICE. THE ASSESSMENT ORDER DOES NOT FIND ANY MENTION THAT TH E SAID INFORMATION ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 9 REGARDING OTHER ALLOTTEES WAS EVER PUT TO THE ASSE SSEE. THE DETAILS OF THE SAID RECEIPTS OF THE OTHER ALLOTTEES ARE ALSO MISSI NG IN THE SHORT ASSESSMENT ORDER. NO NEXUS BETWEEN THE CASE OF THE ASSESSEE AND THOSE OF THE ALLEGED OTHER ALLOTTEES WAS ESTABLISHED BY T HE AO. THE ADDITION WAS MADE MERELY ON ASSUMPTION AND PRESUMPTION AND ON MA TERIAL COLLECTED AT THE BACK OF THE ASSESSEE AND NEVER CONFRONTED T O HIM. IT IS PERTINENT THAT THE LD. CIT(A)S ORDER DOES NOT REFER TO THE CASES OF SH. RAI BHARAT, SMT. KALPANA TIKKOO, THE OTHER ALLOTTEES REFERRED T O IN THE ASSESSMENT ORDER. MOREOVER, THE CONTENTION OF THE ASSESSEE THA T THE TRANSACTION SPANNED TWO FINANCIAL YEARS, I.E., F.YS. 2004-05 AN D 2005-06 AND THAT SO, SPECIFICATION OF THE POINT OF TIME WHEN THE A DDITIONAL AMOUNT WAS BELIEVED TO HAVE BEEN PASSED WAS NECESSARY, SO AS T O DEAL WITH THE SAME IN THE YEAR UNDER CONSIDERATION, WAS NOT CONSIDERED . ACCORDING TO THE AO, THE DUE DATE OF PAYMENT WAS 17.01.2005. ON THE OTHER HAND, AS PER THE ASSESSEE, HE HAD MADE THE LAST PAYMENT AMOUNTIN G TO RS.8 LACS ON 19.05.2005, IN THE F.Y. 2005-06. THE ASSESSEES CON TENTION OF PAYMENT OF RS.50,000/- FROM HIS OWN SOURCE AND PAST SAVINGS WAS ALSO NOT ACCEPTED, WITHOUT ANY OBSERVATION TO THE EFFECT TH AT THE ASSESSEE WAS NOT IN A POSITION TO HAVE SAVED THIS AMOUNT OF RS.50,00 0/-, SO AS TO BE ABLE TO INVEST IT TOWARDS PART PAYMENT OF THE PURCHASE P RICE OF THE FLAT. SIMILAR IS THE POSITION WITH REGARD TO THE AMOUNT O F RS.1 LAC. STATED TO HAVE BEEN PAID BY THE ASSESSEE ON 19.05.2005. THIS AMOUNT, ACCORDING TO THE ASSESSEE, HAD BEEN DEPOSITED WITH THE LENDIN G BANK, UCO, BANK, ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 10 FROM WHICH THE ASSESSEE HAD TAKEN A LOAN OF RS. 7 L ACS, AS MARGIN MONEY FOR THE SAID HOUSING LOAN. THE ASSESSEES ASSERTION THAT HE WAS A SALARIED PERSON, HAVING NO DEPENDANTS, WAS NOT CONSIDERED BY THE AO. 9. SO FAR AS REGARDS THE LD. CIT(A)S ORDER, HE OBS ERVED THAT THE PAPER FOUND IN THE SEARCH CONTAINED THE DETAILS OF PAYMEN T MADE BY VARIOUS PERSONS TO THE SOCIETY FOR PURCHASE OF FLATS IN THE SOCIETY. HE OBSERVED THAT THIS DOCUMENT COULD NOT BE BRUSHED ASIDE, SINC E IT HAD BEEN DRAWN VERY METICULOUSLY WITH THE MINUTEST DETAILS. HE OBS ERVED THAT THE ASSESSEE HAD ADMITTEDLY MADE PAYMENTS APPEARING IN THE CHEQUE PAYMENTS RECEIVED COLUMN OF THE SAID PAPER, WHICH PAYMENTS ALSO TALLIED WITH THE ASSESSEES SALE DEED; AND THAT EVEN THE F LAT NUMBER MENTIONED ON THE SAID PAPER BELONGED TO THE ASSESSEE. 10. HOWEVER, THE LD. CIT(A) HAS FAILED TO CONSIDER THAT FIRSTLY, THE PAPER IN QUESTION WAS NOT FOUND FROM THE PREMISES OF THE ASSESSEE. IT WAS FOUND IN THE SEARCH CONDUCTED ON THE HOUSING SOCIET Y. MOREOVER, IT WAS NOT A COMPUTER GENERATED DOCUMENT, BUT IT HAD BEEN TYPED ON COMPUTER. IT WAS MERELY BECAUSE THE NAME OF THE ASS ESSEE ALSO APPEARED IN THIS ALLEGED LIST OF ALLOTTEES, THAT THE CONTENT S THEREOF WERE TAKEN TO GO AGAINST THE ASSESSEE. THIS LIST/PAPER DID NOT HAPPE N TO FORM THE BASIS OF THE PASSING OF THE ASSESSMENT ORDER AND NO SUCH LIS T/PAPER STANDS REFERRED TO IN THE ASSESSMENT ORDER. FURTHER, AS PE R THE SEIZED PAPER, THE DATE OF ALLOTMENT WAS 17.09.2004. ON THE OTHER HAND , AS PER THE DOCUMENTS OF THE ASSESSEE, IT WAS 22.12.2004. THEN, ACCORDING TO THE ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 11 PAPER, DATE OF THE AGREEMENT WAS 17.09.2004, BUT TH E ASSESSEES PAPER SHOWED THE DATE OF AGREEMENT TO BE 18.05.2005. EVE N THE LOCATION OF THE FLAT OF THE ASSESSEE WAS MISQUOTED IN THE STATEMENT , TO BE ON THE SECOND FLOOR, WHEREAS ACTUALLY, IT WAS ON THE FIRST FLOOR . THE DUE DATE OF PAYMENT, AS NOTICED ABOVE, WAS SHOWN AS 17.1.2005 I N THE PAPER, WHEREAS ACCORDING TO THE ASSESSEE, IT WAS 21.4.2005 THESE GLARING DISCREPANCIES HAVE NOT BEEN TAKEN INTO CONSIDERATI ON BY THE LD. CIT(A). 11. THE LD. CIT(A) ALSO PLACED RELIANCE ON THE STAT EMENT OF ONE SH. RAKESH KUMAR WHO WAS HANDLING THE AFFAIRS OF THE H OUSING SOCIETY. THIS STATEMENT WAS RECORDED IN THE SEARCH CONDUCTE D ON THE HOUSING SOCIETY. SH. RAKESH KUMAR HAD SURRENDERED AN AMOUNT OF RS. 50 LACS IN F.Y. 2006-07 AND RS. 75 LACS IN HIS PERSONAL HAND F OR AY 2007-08. THE LD. CIT(A) FAILED TO CONSIDER THAT THIS STATEMENT O F SH. RAKESH KUMAR, GIVEN ON 9.4.2007, WAS ALSO NOT THE BASIS OF THE P ASSING OF THE ASSESSMENT ORDER AND THE ASSESSMENT ORDER DOES NOT EVEN MAKE MENTION OF SUCH STATEMENT. FURTHER, THE LD. CIT(A) DOES NOT ELABORATE UPON THE EXACT STATUS OF THE SAID SH. RAKESH KUMAR, IN RELAT ION TO THE HOUSING SOCIETY AND IT HAS ONLY BEEN MENTIONED THA HE WA S HANDLING THIS DREAMLAND COOPERATIVE HOUSING BUILDING LTD. AS TO WHAT WAS HIS KNOWLEDGE ABOUT THE AFFAIRS OF THE SOCIETY AND WHA T WAS THE AUTHENTICITY OF THE INFORMATION PROVIDED BY HIM, WAS ALSO NOT IN DICATED BY THE LD. CIT(A). THE AFORESAID PAPER/LIST OF ALLEGED ALLOTTE ES WITH ALL THE AFORE- ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 12 CONSIDERED DISCREPANCIES, IS GIVEN AS AN ANNEXURE TO THE STATEMENT OF SH. RAKESH KUMAR. SH. RAKESH KUMAR STATED THAT THE POSSESSION OF THE FLAT HAD BEEN HANDED OVER TO THE ALLOTTEE IN F.Y. 2007-08. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED THAT SINCE THE HANDI NG OVER OF THE POSSESSION OF THE FLATS IS TO IMMEDIATELY FOLLOW FU LL PAYMENT DUE, SOME PAYMENTS TOWARDS COST OF FLATS MAY HAVE ALSO BEEN M ADE/RECEIVED IN F.Y. 2006-07 AND AS SUCH, ALL PAYMENTS COULD NOT BE HELD TO HAVE BEEN MADE IN THE F.Y. 2004-05, I.E., ALMOST TWO YEARS IN ADV ANCE; THAT THIS WAS MERELY AN ASSUMPTION OF THE AO, WHICH WAS ENTIRELY AT VARIANCE WITH THE STATEMENT OF SH. RAKESH KUMAR. HOWEVER, THE LD. CIT (A) HAS NOT MADE ANY COMMENT ON THIS OBJECTION OF THE ASSESSEE. 12. OBSERVING THAT THE APPEAL OF ONE SH. SUNIL BHAT T, WHOSE NAME WAS ALSO APPEARING IN THE AFORESAID PAPERS/LIST OF THE ALLEGED ALLOTTEES WAS ALSO PENDING WITH HIM, THE LD. CIT(A) OBSERVED THAT THE SAID MR. SUNIL BHATT HAD CONFIRMED TO HAVE MADE BOTH CASH AND CHEQ UE PAYMENTS MENTIONED IN THE PAPERS/LIST OF THE SOCIETY, AS PE R THE REQUIREMENT OF THE SOCIETY; AND THAT MR. SUNIL BHATT HAD PRODUCED RECEIPTS ISSUED BY THE SOCIETY IN RESPECT OF BOTH CASH AND CHEQUES PAY MENTS TOTALING TO RS.17,25,000/-, WHEREAS HIS SALE DEED SHOWED THE CO NSIDERATION OF RS.11,70,000/- ONLY; THAT THIS ESTABLISHED THAT TH E CONSIDERATION AMOUNT IN SALE DEEDS EXECUTED BETWEEN THE SOCIETY AND THE PURCHASER, WAS UNDERSTATED. THIS OBSERVATION OF THE LD. CIT(A) IS ALSO OF NO CONSEQUENCE. FIRSTLY, WHAT HAS BEEN MADE MENTION OF , IS THE PROCEEDINGS ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 13 IN THE SAID APPEAL OF MR. SUNIL BHATT. THE FATE OF HIS APPEAL IS NOT KNOWN. THEN, AGAIN, THE ASSESSEE WAS NEVER CONFRONTED WITH SUCH PROCEEDINGS IN THE CASE OF MR. SUNIL BHATT, THEREBY PREVENTING THE ASSESSEE FROM REBUTTING THIS MATERIAL COLLECTED BY THE LD. CIT(A) AT THE BACK OF THE ASSESSEE AND USED AGAINST THE ASSESSEE. IT REQUIRE S TO BE REITERATED THAT AS AGAINST THE REGISTERED SALE DEED, NO COGENT MATE RIAL HAS BEEN BROUGHT ON RECORD TO CONNECT THE ASSESSEE TO THE PAPER/LIST OF ALLEGED ALLOTTEES, IN ORDER TO ESTABLISH THE ALLEGED UNDERSTATEMENT OF PU RCHASE PRICE OF THE FLAT BY THE ASSESSEE. 13. THE LD. CIT(A) HAS ADMITTED THAT THE PAPERS/LIS T OF ALLEGED ALLOTTEES HAD NOT BEEN RECOVERED FROM THE ASSESSEE IN THE SEA RCH OPERATIONS. HOWEVER, IN THE SAME BREATH, IT HAS BEEN STATED BY THE LD. CIT(A) THAT THE VERACITY OF THE PAPER COULD NOT BE QUESTIONED. FIRSTLY, AS NOTED, THIS PAPER WAS NOT A COMPUTER GENERATED DOCUMENT, BUT, UNDISPUTEDLY HAD MERELY BEEN TYPED ON A COMPUTER, RENDERING IT AS OF NO EVIDENTIARY VALUE AGAINST THE ASSESSEE SO FAR AS REGARDS THE ALLEGED UNDERSTATEMENT OF PURCHASE PRICE. THEN, AS ALSO EARLIER OBSERVED, THE SAID PAPER IS RIDDEN WITH NUMEROUS DISCREPANCIES WHICH THE LD. CIT(A) HA S NOT EVEN ATTEMPTED TO MEET. IT GOES WITHOUT SAYING THAT THE SAID PAPER WAS NOT IN THE HAND-WRITING OF THE ASSESSEE AND IT DID NOT BEL ONG TO THE ASSESSEE. IT DID NOT CONTAIN THE DATE ON WHICH THE ALLEGED CASH PAYMENT HAD BEEN MADE BY THE ASSESSEE. ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 14 14. IT IS ALSO EVIDENT FROM THE RECORD, THAT WHEREA S THE SURRENDER OF ABOUT RS.50 LACS BY SH. RAKESH KUMAR WAS ATTRIBUTAB LE TO THE ALLEGED CASH COLLECTION FROM THE ALLOTTEES OF FLATS AND IT RELATED TO F.YS. 2006-07 AND 2007-08, THE TRANSACTION OF THE ASSESSEE DID N OT FALL IN ONE YEAR, AS IT PERTAINED TO F.YS 2004-05 & 2005-06. THIS BEING THE POSITION, THE STATEMENT OF SH. RAKESH KUMAR AND THE ANNEXURE THER ETO, I.E., THE PAPER/LIST OF ALLEGED ALLOTTEES, DOES NOT EVEN REMO TELY INCULPATE THE ASSESSEE. IT GOES WITHOUT SAYING THAT THE STATEMEN T OF A THIRD PARTY CANNOT BE HELD AGAINST THE ASSESSEE IN THE ABSENCE OF OR CORROBORATIVE EVIDENCE. RELIANCE IN THIS REGARD HAS BEEN PLACED B Y THE ASSESSEE ON THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN T HE CASE OF SURINDER SINGH, KATHUA, RENDERED ON 25.09.2012, IN ITA NO.2 29(ASR)/2012 AND C.O. NO.23(ASR)/2012, FOR THE ASSESSMENT YEAR 2007- 08. A COPY OF THEREOF HAS BEEN PLACED ON RECORD. NO DECISION TO T HE CONTRARY HAS BEEN CITED BY THE DEPARTMENT BEFORE THIS BENCH. 15. THE LD. CIT(A) MERELY OBSERVED THAT THE DATE O F AGREEMENT AND DUE DATE OF PAYMENT MENTIONED IN THE SEIZED DOCUMENT FE LL IN THE YEAR UNDER CONSIDERATION AND THEREFORE, THERE WAS NO REASON TO CONSIDER THE PLEA OF THE ASSESSEE THAT THE PAYMENT COULD HAVE BEEN MADE IN THE SUBSEQUENT YEAR. THIS OBSERVATION OF THE LD. CIT(A) IS WHOLLY AGAINST THE FACTS AS DISCUSSED, WHICH FACTS HAVE NOT BEEN REBUTTED BY TH E LD. CIT(A). 16. THERE IS NO REBUTTAL TO THE ASSESSEES CONTENTI ON THAT ONLY TOKEN AMOUNTS OF RS.20,000/- AND RS.30,000/- WERE PAID ON 17.09.2004 & ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 15 21.12.2004 RESPECTIVELY, WHICH FELL IN THE F.Y. 200 4-05. THE PAYMENT OF RS.8,00,000/- WAS MADE VIDE DEMAND DRAFT ISSUED BY UCO BANK ON 19.05.2005, WHICH FELL IN THE F.Y. 2005-06. THE REC EIPTS ISSUED BY THE SOCIETY QUA THE THREE PAYMENTS WERE PLACED ON RECO RD BY THE ASSESSEE. HOWEVER, THE PAYMENT OF RS. 8,00,000/- HAS STILL BE EN TAKEN BY THE LD. CIT(A) TO HAVE BEEN MADE IN F.Y. 2004-05, QUITE AGA INST THE RECORD AND WITHOUT ANY BASIS. IT REQUIRES MENTION HERE THAT T HIS AMOUNT OF RS. 8,00,000/- WAS PAID AT THE TIME OF REGISTRATION OF THE SALE DEED WITH THE REGISTERING AUTHORITY. 17. AS AGAINST THE ABOVE, THE SALE DEED EXECUTED ON 18.05.2005 SPECIFIES IN NO UNCERTAIN TERMS, THE PURCHASE CONSI DERATION TO BE AT RS.8,50,000/-. THIS SALE DEED IS ADMITTEDLY A REGIS TERED ONE. THE CONTENTS THEREOF ARE DULY SWORN BEFORE THE MAGIST RATE. AS AGAINST THIS DOCUMENT, THERE IS NOTHING ON RECORD, OTHER THAN TH E ABOVE DISCUSSED ASSUMPTIONS AND PRESUMPTIONS OF THE AO AND THE LD. CIT(A), WHICH ALSO ARE CONTRADICTORY INTER-SE. THERE IS NO MATERIAL ON RECORD TO SUGGEST ANY UNDERSTATEMENT OF THE PURCHASE PRICE OF THE FLAT B Y THE ASSESSEE. THE PURCHASE VALUE STANDS ACCEPTED AS SUCH BY THE REGIS TERING AUTHORITY TOO. BESIDES, THE PROVISIONS OF SECTION 50C OF THE ACT A LSO DO NOT STAND INVOKED. 18. THUS, LOOKED AT FROM ANY ANGLE, THE ORDER UNDER APPEAL IS UNSUSTAINABLE IN LAW. IT HAS BEEN PASSED ON MERELY ASSUMPTIONS AND PRESUMPTIONS, WITHOUT ANY CORROBORATIVE EVIDENCE T O SUPPORT THE ITA NO.507(ASR)/2014 ASSESSMENT YEAR: 2005-06 16 OBSERVATIONS MADE. THE SAME, IS ACCORDINGLY, REVERS ED. THE ADDITION OF RS.10,50,000/- IS, ACCORDINGLY, DELETED. 19. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/02/2016 SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 26/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:SH. RAJINDER KUMAR HAK, TRIKUTA NAG AR, JAMMU. 2. THE ITO, WARD-1(2), JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.