DCIT, Jaipur V. M/S SHRI RAJAT AGARWAL, Jaipur

ITA 834/JPR/2011

• Counselvise Citation: 83423114 RSA 2011
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 27-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Section: 133A; 69

Judgement Text

1 ITA 834(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 834/JP/2011 ASSTT. YEAR : 2007-08. THE DCIT, CIRCLE-4, VS. SHRI RAJAT AGARWAL, JAIPUR. 4YA-11, JAWAHAR NAGAR, JAIPUR. (APPELLANT) (RESPONDENT) C.O. NO. 81/JP/2011 ( ARISING OUT OF ITA NO. 834/JP/2011 ) ASSTT. YEAR : 2007-08. SHRI RAJAT AGARWAL, VS. THE DCIT, CIRCLE-4, JAIPUR. JAIPUR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI SANDEEP JHANWAR DATE OF HEARING : 21.11.2011. DATE OF PRONOUNCEMENT : 09.01.2012. ORDER DATE OF ORDER : 09.01.2012. PER R.K. GUPTA, J.M. THE ONLY GROUND TAKEN IN THIS DEPARTMENTAL APPEAL I S AGAINST DELETION OF ADDITION OF RS.1,85,00,000/- MADE BY THE ASSESSING OFFICER U /S 69. THE ASSESSEE ALSO HAS FILED A CROSS OBJECTION BUT THE SAME HAS BEEN WITHDRAWN BY THE LD. A/R DURING THE COURSE OF HEARING. 2 2. THE BRIEF FACTS RELATING TO THE ONLY GROUND OF T HE DEPARTMENTAL APPEAL ARE THAT THE ASSESSEE ENTERED INTO A TRANSACTION FOR PURCHASE OF A PLOT C-166 AT TILAK NAGAR, JAIPUR WITH SHRI SANJAY SURI AND SHRI RAJENDRA BLANA. AS T HE OWNERSHIP OF THE PLOT WAS WITH M/S SHAH BUILDCON PVT. LTD. AND MR. SANJAY SURI AND MR. RAJENDRA BLANA WERE THE SHAREHOLDERS OF THAT COMPANY, TRANSACTION WAS EFFEC TED THROUGH TRANSFER OF SHARES BY THESE PERSONS IN THE NAME OF ASSESSEES FAMILY MEMB ERS AND PAYMENTS WERE MADE TO THE EXISTING SHAREHOLDERS FOR PURCHASE OF SHARES AND TO THE COMPANY FOR MAKING PAYMENT OF LIABILITIES TOWARDS THE ERSTWHILE SHAREHOLDERS OF T HE COMPANY FROM THE SOURCES OF FAMILY MEMBERS OF THE ASSESSEE. THE ASSESSING OFFICER HAS MADE THIS ADDITION BY DEALING THE ISSUE AT PAGE 3-5, PARA 2, 2.1 & 2.2 AND GIVING CON CLUSIVE FINDINGS IN PARA 2.2 AT PAGE 4-5 OF THE ASSESSMENT ORDER. ASSESSING OFFICER HAS RELI ED ON THE FOLLOWING DOCUMENTS /PAPERS FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY AT M/S. GRAVITA INDIA LIMITED: I) DRAFT AGREEMENT BETWEEN M/S SHAH BUILDCON P. LTD. & SHRI RAJAT AGRAWAL. AS PER THIS DRAFT SALE CONSIDERATION OF THIS PLOT W AS RS. 2,51,00,000/- OUT OF WHICH SUM OF RS. 11,00,000/- HAD ALREADY BEEN PAID ON 30.12.2006 THROUGH CHEQUE AS ADVANCE. OUT OF THE BALANCE, A SUM OF RS. 14,00,000/- WAS TO BE PAID BY JANUARY 20.01.2007 AND RS. 2,26,00,000/- WE RE TO BE PAID WITHIN 60 DAYS OF THE DATE OF AGREEMENT. II) PAGE 47 OF ANNEXURE A-36: THIS LOOSE PAPER (DATED 3 0.12.2006) CONVEYS THAT DEAL FINALIZED IN 251/- AND ADVANCE PAID IS 11/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE SUBMITTED THAT THESE PAPERS FOUND FROM THE PREMISES OF M/S GRAVITA INDIA LIMITE D DID NOT INDICATE THE COMPLETE FACTS OF THE TRANSACTION. HE SUBMITTED THAT THE AGREEMENT SO FOUND WAS AN INCOMPLETE DRAFT AGREEMENT AND FURNISHED THE COPIES OF THE FINAL AGR EEMENT AND REVISED AGREEMENT 3 NARRATING THE COMPLETE FACTS OF THE CASE. HOWEVER, THE EXPLANATION GIVEN BY THE ASSESSEE HAS BEEN CONSIDERED AS A STRETCH OF IMAGINATION AND SIMPLY AN AFTERTHOUGHT IN ORDER TO MAKE AN EFFORT TO NEGATE THE FINDINGS WHICH EMERGED FROM THE VARIOUS DOCUMENTS FOUND/ IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDINGS. THE ASSESSING OFFICER MENTIONED THAT ALL THE PAPERS TO PURCHASE OF SAID PLOT WERE FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDINGS AND THE DOCUMENTS NOW PRODUCED B Y THE ASSESSEE HAVE NEVER COME TO SURFACE EARLIER NOR EVEN ANY SUBMISSION WAS MADE BY THE ASSESSEE IN THIS REGARD DURING THE COURSE OF SURVEY PROCEEDINGS AND AFTERWARDS ALS O. THE ASSESSING OFFICER ALSO OBSERVED THAT THE FINAL AGREEMENT SEEMED NON GENUINE AS THE SAME HAD NOT BEEN MADE ON PROPER STAMP PAPER WHICH WAS NOT POSSIBLE TO BE ARRANGED F OR BACK DATES OR FOR ANY EARLIER DATE. ACCORDINGLY, BY NOT TAKING INTO CONSIDERATION THE F INAL AGREEMENT AND REVISED AGREEMENT AND TAKING INTO CONSIDERATION THE PAPERS FOUND DURI NG SURVEY OF GRAVITA INDIA LIMITED, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE H AD PASSED ON A TOTAL CONSIDERATION OF RS. 2,51,00,000/- FOR BUYING THE CAPTIONED PROPERTY OF WHICH A SUM OF RS. 66,00,000/- HAS BEEN SHOWN FROM THE REGULAR SOURCES AND THE BAL ANCE AMOUNT OF RS. 1,85,00,000/- HAD BEEN PAID FROM UNEXPLAINED SOURCES. 3. THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) . 4. THE LD. CIT (A) FOUND THAT DURING THE COURSE OF SURVEY U/S 133A AT THE PREMISES OF M/S GRAVITA INDIA LTD., A DRAFT AGREEMENT FOR PU RCHASE OF PLOT AT C-166, JAIPUR BETWEEN THE APPELLANT AND SHRI SANJAY SURI WAS FOUND. AS PE R THIS DRAFT AGREEMENT BETWEEN THE APPELLANT AND SHRI SANJAY SURI, DIRECTOR OF M/S SHA H BUILDCON PVT. LTD., THE TOTAL SALE CONSIDERATION WAS RS. 2,51,00,000/-. AN AMOUNT OF R S. 11,00,000/- HAS BEEN PAID ON 4 30.12.2006 THROUGH CHEQUE AS AN ADVANCE. THE SUM OF RS. 14,00,000/- WAS PAYABLE BY 20.01.2007 AND RS. 2,26,00,000/- WAS TO BE PAID WIT HIN 60 DAYS FROM THE DATE OF AGREEMENT. HE, AFTER CONSIDERING THE SUBMISSION OF THE APPELLANT AND PERUSAL OF THE IMPOUNDED DOCUMENTS FOUND, THE FOLLOWING VITAL POIN TS IN RELATION TO THIS DRAFT AGREEMENT ARE ENUMERATED BELOW: I) THE DRAFT AGREEMENT IS UNDATED. II) THE DRAFT AGREEMENT IS NEITHER SIGNED BY THE BUYER NOR BY THE SELLER. III) THE DRAFT AGREEMENT IS ALSO NOT SIGNED BY ANY WITNE SSES. IV) THE DRAFT AGREEMENT IS ON A PLAIN SHEET OF PAPER AN D NOT ON STAMP PAPER. V) THERE ARE SEVERAL CORRECTIONS INCLUDING OVERWRITING . THE DATES OF PAYMENT OF RS. 14 LAKHS HAVE BEEN CHANGED FROM 16.01.2007 T O 20.01.2007 AND PAYMENT OF RS. 2.26 CRORES FROM 45 DAYS TO 60 DAYS FROM THE DATE OF AGREEMENT. VI) THERE IS NO MENTION THAT BALANCE PAYMENT WAS TO BE MADE IN CASH. THE LD. CIT (A) FOUND THAT THE DOCUMENT IN QUESTION COULD NOT BE TERMED AS RELIABLE EVIDENCE AS IT WAS UNDATED AND UNSIGNED BY THE PART IES IN QUESTION. IT WAS FURTHER OBSERVED BY LD. CIT (A) THAT THE DOCUMENT IMPOUNDED FROM THE ASSESSEE MAY NOT BE COMPLETE IN ALL RESPECTS AS BUSINESSMEN MAY NOT CHO OSE TO SIGN IT OR RECORD MINIMUM DETAILS ON A DOCUMENT AND KEEP THE REST IN THEIR ME MORY. IT IS THE DUTY OF THE ASSESSING OFFICER TO CARRY OUT THE NECESSARY INVESTIGATION BY CORRELATING THE DOCUMENT WITH OTHER DOCUMENTS SUCH AS THE REGULAR BOOKS OF ACCOUNT, WIT H RECORD KEPT BY OUTSIDE AGENCIES, SUCH AS BANKS OR FINANCIAL INSTITUTIONS OR DEBTORS/ CREDITORS AND FINALLY BY RECORDING THE STATEMENTS OF CONCERNED PARTIES SO AS TO FILL UP TH E GAPS IN CONFIRMING THE INFERENCE 5 ARISING FROM THE DOCUMENTS FOR A PROPER CHARGE OF T AX. SUCH CORRELATION IS NECESSARY. EVEN IN THAT SITUATION, IT IS NECESSARY TO GIVE OPP ORTUNITY TO THE ASSESSEE FOR SEEKING HIS EXPLANATION AND CARRYING OUT INVESTIGATION TO STREN GTHEN THE DIRECT INFERENCE ARISING FROM THE DOCUMENT. NOTHING OF THIS SORT HAS BEEN DONE IN THE PRESENT CASE. EVEN THE VERIFICATION FROM ASSESSEE WAS NOT SOUGHT WITH REFE RENCE TO THIS IMPOUNDED DOCUMENT DURING THE SURVEY PROCEEDINGS OR POST SURVEY PERIOD . THE SELLER HAS ALSO NOT BEEN EXAMINED BY THE AO. THE LD. CIT (A) FURTHER FOUND T HAT THOUGH THE DRAFT AGREEMENT RELATED TO PURCHASE OF LAND AT C-166, TILAK NAGAR, JAIPUR WAS FOUND BUT ULTIMATELY THE SHARES OF M/S SHAH BUILDCON PVT. LTD. WERE PURCHASE D BY THE FAMILY MEMBERS OF THE ASSESSEE. IT WAS FURTHER NOTED BY LD. CIT (A) THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD SUBMITTED TO THE AO T HAT FINAL AGREEMENT DATED 2.01.2007 AND REVISED AGREEMENT DATED 14.03.2007 WHEREBY SHAR ES OF M/S SHAH BUILDCON PVT. LTD. WERE PURCHASED FOR AN AMOUNT OF RS. 67 LACS INCLUDI NG PAYMENT TO DISCHARGE LIABILITIES OF THAT COMPANY. HOWEVER, THESE DOCUMENTS WERE REJECTE D BY THE AO BEING IN THE NATURE OF AN AFTERTHOUGHT ONLY. IN THE FINAL AGREEMENT DATED 2.1.2007, IT WAS SPECIFICALLY MENTIONED THAT THE SELLER WILL GET NECESSARY APPROVAL FOR CON VERSION OF PLOT FOR CONSTRUCTION OF GROUP HOUSING RESIDENTIAL PROJECT AND WILL CONSTRUCT APPR OX 17000 SQ. FT. IN ACCORDANCE WITH THE APPROVED MAP WITHIN 75 DAYS FROM THE DATE OF AGREEM ENT. HOWEVER, SINCE THE SELLER COULD NOT GET THE NECESSARY APPROVAL, ANOTHER REVISED AGR EEMENT DATED 14.3.2007 WAS ENTERED FOR CONSIDERATION OF RS. 67 LACS. IT WAS CONTENDED BY THE ASSESSEE THAT THIS AGREEMENT WAS FINALLY ACTED UPON BY BOTH THE PARTIES. ON THE OTHE R HAND, THE AO HAD MADE THE ADDITION OF RS. 1,85,00,000/- ON THE PRESUMPTION THAT IT WAS PAID AS ON MONEY. HOWEVER, NO EVIDENCE OF PAYMENT OF RS. 14,00,000/- (WHICH WAS P AYABLE BY 20.01.2007) OR RS. 6 2,26,00,000/- (PAYABLE WITHIN 60 DAYS FROM THE DATE OF AGREEMENT) WAS UNEARTHED /FOUND DURING SURVEY PROCEEDINGS. THE SURVEY IN THE CASE O F M/S GRAVITA INDIA LTD. WAS CARRIED OUT ON 10.12.2009 AND NO EVIDENCE OF ON-MONEY PAYME NT OF RS. 14,00,000/- OR RS. 2,26,00,000/- WAS FOUND. THE DOCUMENT (PAGE 47 OF ANNEXURE A-36) MENTIONS THAT ADVANCE OF RS. 11 LACS HAS BEEN PAID AND BALANCE IS PAYABLE WITHIN 75 DAYS. IT DOES NOT PROVE OR CORROBORATE THAT CASH OF RS. 1.85 CRORES H AD BEEN PAID BY THE ASSESSEE. THERE IS NO DISPUTE THAT FAMILY MEMBERS OF THE ASSESSEE I.E. FATHER, MOTHER AND WIFE HAD ACTUALLY PURCHASED 10,000 SHARES OF M/S SHAH BUILDCON PVT. L TD. ON PAYMENT OF RS. 66 LACS FOR DISCHARGING LIABILITIES. FURTHER AN AMOUNT OF RS. 1 ,00,000/- WAS ALSO SPENT ON TRANSFER OF SHARES. NONE OF THESE AMOUNTS WERE FOUND MENTIONED IN THE DRAFT AGREEMENT. THEREFORE, THE LD. CIT (A) OBSERVED THAT IT WAS CLEAR THAT THE TERMS OF THE PURCHASE TRANSACTIONS AS MENTIONED IN THE DRAFT AGREEMENT WERE NEVER ACTED U PON. ACCORDING TO HIM, THE APPREHENSION OF THE AO THAT THE FINAL AGREEMENT DAT ED 02.01.2007 WAS NOT ON A STAMP PAPER IS UNFOUNDED SINCE IT WAS MADE ON A STAMP PAP ER (SPECIAL KIND OF ADHESIVE STAMP) WITHOUT PRINTED DENOMINATION AND WAS ALSO NOTARIZED BY NOTARY PUBLIC. THE LD. CIT (A) FOUND THAT THE AO HAD NOT MADE ANY ENQUIRY TO PROVE THAT THE CONTENTS OF THE FINAL AGREEMENT AND REVISED AGREEMENT WERE INCORRECT AND NOT TRUE. THE ASSESSEE HAS FILED COPY OF SHAREHOLDER REGISTER OF M/S SHAH BUILDCON PVT. L TD. WHICH SHOWED THAT SHARES WERE TRANSFERRED ON THE BASIS OF BOARD RESOLUTION ON 14. 02.2007 AND 14.03.2007 WHEREAS THE DRAFT AGREEMENT SHOWED THE DATE OF BOARD RESOLUTION AS 29.12.2006 WHICH NEVER TOOK PLACE. FURTHER THE ASSESSEE HAS ALSO FILED COPY OF RETURN OF INCOME TAX FOR AY 07-08 IN THE CASE OF SHAH BUILDCON PVT. LTD. AND THE BOARD RESOL UTION FOR INCREASE IN SHARE CAPITAL FROM RS. 1 LAKH TO RS. 10 LAKHS WHICH WERE ASSIGNED BY SH. MAHAVEER PRASAD AGRAWAL, 7 FATHER OF THE ASSESSEE ON 02.08.2007 MUCH PRIOR TO THE DATE OF SURVEY. THE SAME IS THE POSITION IN RELATION TO RETURN OF INCOME FOR AY 08- 09. THE ANNUAL RETURNS OF THE COMPANY WITH ROC WERE ALSO FILED BY THE FATHER OF THE ASSES SEE ON 17.10.2008 & 28.10.2009. THE EXPLANATION OF THE ASSESSEE CANNOT BE BRUSHED ASIDE WITHOUT PROVING OTHERWISE. THE ISSUE IN THE MATTER BOILS DOWN TO THE POINT AS TO WHETHER ANY ON-MONEY OVER AND ABOVE THE AGREEMENT VALUE WAS PAID AND IF SO, WHETHER THE MAT ERIALS AVAILABLE ON RECORD PROVE THIS FACT OR NOT. THE LD. CIT(A) ALSO HELD THAT AS PER T HE APEX COURT IN K.P. VARGHESES CASE 131 ITR 597, THE BURDEN LIES ON THE REVENUE TO SHOW THAT THE ASSESSEE HAD ACTUALLY PAID MORE THAN WHAT WAS ACTUALLY RECORDED IN THE BOOKS O F ACCOUNT WHICH HAS NOT BEEN DISCHARGED BY THE REVENUE IN THE PRESENT CASE. THE BURDEN CAN BE DISCHARGED BY THE REVENUE BY ESTABLISHING THE FACTS AND CIRCUMSTANCES FROM WHICH REASONABLE INFERENCE CAN BE DRAWN THAT THE ASSESSEE HAD NOT CORRECTLY DE CLARED OR DISCLOSED THE CONSIDERATION RECEIVED BY HIM AND THERE IS UNDERSTATEMENT OF CONS IDERATION. IT IS WELL SETTLED LAW THAT AN UNSIGNED DOCUMENT WHICH IS STATED TO HAVE BEEN N EVER ACTED UPON RIGHT FROM THE BEGINNING CANNOT BE PRESUMED THAT THERE IS ANY UNDI SCLOSED/UNACCOUNTED INCOME. THE LD. CIT (A) HAS RELIED ON THE DECISIONS OF DELHI TRIBU NAL IN THE CASE OF SH.ANIL KUMAR BHATIA VS. ACIT, 1 ITR (TRIB.) 484, COMMISSIONER OF INCOME TAX VS. OLD VILLAGE INDUSTRIES P. LTD., 165 ITR 88, COMMISSIONER OF INC OME TAX VS. VED PRAKASH CHOUDHARY 305 ITR 245, DELHI HIGH COURT IN THE CASE OF CIT VS . NARESH KHATTAR, 261 ITR 664, KERALA HIGH COURT IN THE CASE OF CIT VS. K C AGNES, 262 ITR 354, DELHI HIGH COURT IN THE CASE OF CIT VS. S M AGARWAL, 293 ITR 43, CHANDE R MOHAN MEHTA VS. ACIT, 71 ITD 245 AND HELD THAT IN THE PRESENT CASE, THE SUBSEQUE NT AGREEMENTS, EVEN IF REGARDED AS SELF- SERVING DID NOT LOSE THEIR EVIDENTIARY VALUE AS THE RE WAS NO MATERIAL CONTRARY TO THE 8 AVERMENTS MADE IN THE SUBSEQUENT AGREEMENTS. NOTHIN G WAS BROUGHT ON RECORD BY THE AO THAT THE ASSESSEE HAD ACTUALLY PAID THE AMOUNT. UND ER THESE CIRCUMSTANCES, THE ASSESSEE HAD SUCCESSFULLY SHIFTED THE ONUS ON TO THE REVENUE BY FILING THE FINAL AND REVISED AGREEMENTS DATED 02.01.2007 AND 14.3.2007. ONCE THE ONUS SHIFTED TO THE REVENUE, THE AO WAS DUTY BOUND TO COLLECT EVIDENCES SO AS TO BEL IEVE THE CONTENTS OF THESE AGREEMENTS AND HOLD THAT THE TRANSACTIONS RECORDED THEREIN WER E NOT TRUE. THE LD. CIT (A) HAS FOUND THAT THE AO HAD DRAWN INFERENCES WITHOUT CORROBORAT IVE EVIDENCES AND THUS MADE UNSUSTAINABLE ADDITIONS. HE ALSO RELIED ON THE DECI SION IN CASE OF D.N.KAMANI HUF VS. DCIT (70 ITD 77), POOJA BHATT VS. ACIT (79 ITD 205) AND AISHWARYA K RAI VS. DCIT (104 ITD 166) TO SUPPORT HIS VIEWS. 6. THE CIT(A) ALSO PROVIDED AN OPPORTUNITY TO THE A SSESSING OFFICER WHO VEHEMENTLY ARGUED THAT THE AGREEMENT WAS FOUND FROM THE CONTRO L AND POSSESSION OF THE ASSESSEE. IN THIS REGARD THE CIT (A) FOUND THAT ASSESSEE HAS NOT DISPUTED THE OWNERSHIP OF THE DOCUMENTS. WHAT IS CONTENDED BY THE ASSESSEE IS THA T THE TRANSACTIONS AS CONTAINED IN THE DRAFT AGREEMENT WERE NEVER ACTED UPON AND THERE IS NO EVIDENCE OF PAYMENT OF ON-MONEY OF RS. 1.85 CRORES. IT WAS ARGUED BY THE ASSESSING OFFICER THAT THE IMPOUNDED AGREEMENT DOES NOT TALK ABOUT PURCHASE OF SHARES OF M/S SHAH BUILDCON PVT. LTD., THEREFORE, IT CANNOT BE SAID THAT THE SUBSEQUENT EVENTS ARE IN TH E NATURE OF AN AFTERTHOUGHT ONLY AND LATER AGREEMENTS HAVE BEEN BACK DATED FOR CONVENIEN CE OF THE APPELLANT. 6.1. HOWEVER, LD. CIT(A) FOUND THAT IT IS FAR FROM BEING TRUE. ACCORDING TO HIM, THE ASSESSEE HAS FILED SUBSTANTIAL EVIDENCE IN THE FORM OF RETURNS OF INCOME TAX OF M/S SHAH BUILDCON PVT. LTD FOR A.Y. 07-08 AND A.Y. 08-09 ALO NG WITH ANNUAL RETURNS FILED WITH REGISTRAR OF COMPANIES WHICH PROVE THAT SHARES OF S AID COMPANY WERE PURCHASED BY THE 9 FAMILY MEMBERS OF THE ASSESSEE IN THE BEGINNING OF 2007 AND SURVEY TOOK PLACE AT THE PREMISES OF M/S GRAVITA INDIA LTD. ON 10.12.2009. H E ACCORDINGLY HOLD THAT THE ASSESSEE COULD NOT HAVE MANIPULATED THE TRANSFER OF SHARES S O AS TO SUIT HIS INTERESTS. THE RETURN OF INCOME OF M/S SHAH BUILDCON PVT. LTD. FOR A.Y. 07-0 8 WAS FILED ON 8.10.07 AND DIRECTORS REPORT AND AUDITED ACCOUNTS WERE SIGNED BY SHRI MAHAVIR PRASAD AGARWAL, FATHER OF THE ASSESSEE ON 2.8.2007. IT WOULD AMPLY PROVE THAT THE TRANSACTION OF PURCHASE OF SHARES ACTUALLY TOOK PLACE. SINCE THE SHARES OF M/S SHAH BUILDCON PVT. LTD. WERE PURCHASED BY THE FAMILY MEMBERS OF THE ASSESSEE, TH E LATER AGREEMENTS COULD NOT BE FOUND AS THE SURVEY PROCEEDINGS WERE CARRIED OUT AT THE OFFICE PREMISES OF M/S GRAVITA INDIA LTD. AND NOT AT THE RESIDENCE OF THE ASSESSEE . CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND FOLLOWING THE ABOVE DECISIONS, THE LD. CIT (A) HELD THAT THE AO WAS NOT RIGHT IN MAKING IMPUGNED ADDITI ON OF RS. 1,85,00,000/- ON THE BASIS OF UNSIGNED AND UNDATED DRAFT AGREEMENT AND WITHOUT BRINGING ANY CORROBORATIVE EVIDENCE ON RECORD. ACCORDINGLY THE LD. CIT(A) DIRE CTED AO TO DELETE THE ADDITION OF RS. 1,85,00,000/- MADE BY HIM. 7. BEFORE US, THE LD. DR HAS ARGUED THAT THE ADDITI ON WAS MADE ON THE BASIS OF PAPERS FOUND DURING THE COURSE OF SURVEY. HE SUBMITTED TH AT LOOSE PAPER NO. 47 OF ANNEXURE A- 36 FOUND DURING THE COURSE OF SURVEY AT THE PREMISE S OF M/S GRAVITA INIDA LIMITED WHEREIN THE ASSESSEE IS MANAGING DIRECTOR CLEARLY S HOWS THAT THE DEAL OF PLOT OF LAND WAS FINALIZED FOR RS.2.51 CRORES, THE ASSESSEE PAID RS. 11 LACS IN ADVANCE TO THE SELLERS. AN AGREEMENT WAS ALSO FOUND SHOWING TOTAL CONSIDERATIO N OF RS.2.51 CRORE OF WHICH THE ADVANCE OF RS.11 LACS WAS PAID ON 30.12.2006 AND FU RTHER RS.14 LACS WAS TO BE PAID BY JANUARY 20.01.2007 AND RS.2.26 CRORES WAS TO BE PAI D WITHIN 60 DAYS OF THE AGREEMENT. 10 HE SUBMITTED THAT THOUGH THIS AGREEMENT WAS NOT SIG NED BUT, SINCE, THE DEAL IS ULTIMATELY FINALIZED BY TRANSFERRING SHARES OF THE OWNER COMPA NY INTO THE NAME OF FAMILY MEMBERS OF THE ASSESSEE, THEREFORE, THERE CANNOT BE ANY DO UBT AS TO MAKING PAYMENT OF THE BALANCE CONSIDERATION AS SHOWN IN THESE PAPERS FOUND DURING THE COURSE OF SURVEY. HE REFERRED THE SUBSEQUENT AGREEMENTS SUBMITTED BY THE ASSESSEE AND ARGUED THAT SINCE THESE WERE NOT FOUND DURING THE COURSE OF SURVEY, THESE ARE MERELY AFTERTHOUGHT AND NO COGNIZANCE OF THE SAME CAN BE TAKEN. HE THEREFORE, REQUESTED TO REVE RSE THE ORDER OF THE CIT(A) AND SUSTAIN THE ADDITION MADE BY THE AO. 8. THE LD. A/R ON THE OTHER HAND HAS RELIED ON THE ORDER OF THE LD. CIT(A) AND SUPPORTED ALL HIS FINDINGS AND JUDGMENTS RELIED UPO N BY HIM IN DELETING THE ADDITION. HE DREW OUR ATTENTION TOWARDS THE DRAFT AGREEMENT FOUN D DURING THE COURSE OF SURVEY AT GRAVITA INDIA LIMITED PLACED IN THE PAPER BOOK AT P AGE 8 AND SUBMITTED THAT IT IS UNSIGNED AND MANY CORRECTIONS HAVE BEEN MARKED WHIC H IS SUFFICIENT EVIDENCE TO SHOW THAT IT WAS A DRAFT ONLY. HE FURTHER SUBMITTED THA T THE TRANSACTION HAS NOT BEEN FINALLY EXECUTED IN THE MANNER MENTIONED IN THIS AGREEMENT. AS PER THIS AGREEMENT, M/S SHAH BUILDCON PRIVATE LIMITED WAS TO TRANSFER THE SAID P LOT NO. C-167 TO THE ASSESSEE AS AGAINST WHICH THE SHARES OF THE COMPANY M/S SHAH BUILDCON P RIVATE LIMITED HAVE BEEN PURCHASED BY THE SHRI M. P. AGRAWAL, SMT. SHASHI AG RAWAL AND SMT. ANCHAL AGRAWAL WHO ARE FATHER, MOTHER AND WIFE OF THE ASSESSEE RES PECTIVELY. HE THEREFORE, SUBMITTED THAT THE DEAL HAS NOT BEEN MATERIALIZE AS PER THIS DOCUMENT. HE ALSO DREW OUR ATTENTION TOWARDS THE FINAL AGREEMENT DATED 2 ND JANUARY, 2007 PLACED IN THE PAPER BOOK AT PAGE 14. THIS AGREEMENT WAS NOT FOUND DURING SURVEY BUT WAS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE TOTAL CON SIDERATION AND THE PAYMENT ALREADY 11 MADE IN ADVANCE AS PER THIS AGREEMENT WERE SAME BUT THERE WERE FEW CHANGES IN THIS AGREEMENT AS COMPARED TO THE DRAFT UNSIGNED AGREEME NT. THIS AGREEMENT WAS BETWEEN THE EARSTWHILE SHAREHOLDERS/DIRECTORS OF THE SAID C OMPANY AND THE ASSESSEE FOR TRANSFER OF PROPERTY OR SHARES OF THE COMPANY BY THE SELLER PAR TIES TO ANY OF THE PERSONS NAMED BY THE ASSESSEE. IT CONTAINS A VERY IMPORTANT CONDITION T HAT THE SELLERS ARE UNDER OBLIGATION, FIRSTLY, TO CONVERT THE PLOT USE FOR CONSTRUCTION O F RESIDENTIAL APARTMENT OF 17000 SQ. FT. AREA FOR WHICH APPLICATION HAD ALREADY BEEN SUBMITT ED TO THE MUNICIPAL CORPORATION ON 26 TH SEPTEMBER, 2006 AND SECONDLY, TO CONSTRUCT 17000 S Q. FT. ARE ON THE SAID PLOT. CLAUSE NO. 5 IN THE AGREEMENT ALSO CONTAINS THE CONDITION THAT IF THE CONSTRUCTION AREA IS LESS THAN 17000 SQ. FT. THE CONSIDERATION WOULD BE REDUCED. HE THEN DREW OUR ATTENTION TO THE REVISED AGREEMENT DATED 14 TH MARCH, 2007 PLACED IN THE PAPER BOOK AT PAGE 20. HE SUBMITTED THAT SINCE THE SELLERS WERE NOT IN POSITI ON TO FULFILL THE CONDITION AS TO APPROVAL OF MAP AND CONSTRUCTION OF 17000 SQ. FT. TILL THE S TIPULATED DATES, THEY AGREED TO TRANSFER THE SHARES OF THE COMPANY M/S SHAH BUILDCON PRIVATE LIMITED FOR WHICH TOTAL SUM PAYABLE IS RS.1,00,000/- AND RS.66,00,000/- TOWARDS THE SHARE CAPITAL AND LOAN OBLIGATIONS OF THE COMPANY RESPECTIVELY. HE SUBMIT TED THAT THE TRANSACTION HAS FINALLY CLOSED EXACTLY IN THIS MANNER AND THE SAME IS EVIDE NT FROM THE ANNUAL REPORTS, SHARE TRANSFER REGISTER AND BOOKS OF ACCOUNTS OF M/S SHAH BUILDCON PRIVATE LIMITED. ALL THE ANNUAL REPORTS ETC. WERE TIMELY FILED WITH THE REGI TRAR OF COMPANIES BEFORE THE DATE OF SURVEY ITSELF. THE ADVANCE PAYMENT MADE AS PER THE DOCUMENTS FOUND ALSO FINDS PLACE IN THE FINAL AGREEMENTS AND THE SAME HAVE BEEN FOUND D ULY RECORDED. HE ACCORDINGLY ARGUED THAT THE UNSIGNED AGREEMENT FOUND DURING SUR VEY WAS JUST A FIRST DRAFT PREPARED BY SOME DEED WRITER WHICH REACHED FINALITY IN FORM OF THE SIGNED AGREEMENT SUBMITTED 12 DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE SU BMITTED THAT THE SURVEY WAS CARRIED OUT AT GRAVITA INDIA LIMITED AND THE ORIGINAL FINAL AGREEMENTS WERE PLACED BY THE ASSESSEE AT HIS RESIDENCE AND THEREFORE, THE SAME WAS NOT FO UND DURING THE COURSE OF SURVEY. HAD THERE BEEN STATEMENTS OF THE ASSESSEE DURING THE CO RUSE OF SURVEY, HE COULD HAVE EXPLAINED THE COMPLETE FACTS DURING THE COURSE OF S URVEY PROCEEDINGS. HE SUBMITTED THAT BOTH THE AGREEMENTS ARE ON THE PROPER STAMP PAPERS OF RS.100/-, DULY ATTESTED BY THE NOTARY AND THEIR ENFORCEABILITY IN COURT OF LAW CAN NOT BE DINED. HE ALSO PRODUCED ORIGINAL AGREEMENTS FOR OUR VERIFICATION. ON THE BASIS OF ABOVE HE ARGUED THAT THE DEPARTMENT IS DRAWING CONCLUSION ON THE BASIS OF AN INCOMPLETE DRAFT AGREEMENT IGNORING THE FINAL SIGNED AGREEMENTS WITHOUT BRINGING ANY CO NTRARY MATERIAL ON RECORD. THERE IS NO CONTRADICTION AS TO THE PAYMENTS ALREADY MADE AN D TO BE MADE AS PER THE SAID DRAFT AGREEMENT AND THE FINAL AGREEMENT, BUT THE DRAFT AG REEMENT DID NOT CONTAIN THE IMPORTANT CONDITIONS, NON FULFILLMENT OF WHICH HAS RESULTED I NTO REDUCTION IN THE AMOUNT TO BE PAID FOR THE DEAL. HE REQUESTED FOR REJECTING THE GROU ND OF APPEAL TAKEN BY THE DEPARTMENT. 9. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A LOOSE PAPER AND A DRAFT AGREEMENT WAS FOUND DURIN G THE COURSE OF SURVEY RELATING TO THE DEAL OF PURCHASE OF PLOT NO. C 166 IN TILAK NAGAR OWNED BY M/S SHAH BUILDCON PRIVATE LIMITED. MR. SANJAY SURI & MR. RAJENDRA BLANA WERE THE EXISTING SHAREHOLDER AND DIRECTORS OF THE COMPANY. THE SELLER PARTY IN THE DRAFT AGREEMENT IS M/S SHAH BUILDCON PRIVATE LIMITED AND THE ASSESSEE IS PURCHASER. AS PER THESE DOCUMENTS THE ASSESSEE HAD PAID A SUM OF RS.11,00,000/- AS ADVANCE ON 30.12.20 06 AGAINST TOTAL CONSIDERATION OF RS.2,51,00,000/-. OUT OF BALANCE AMOUNT, SUM OF RS .14,00,000/- LACS WAS TO BE PAID BY 20 TH OF JANUARY, 2007 AND THE BALANCE AMOUNT OF RS.2,26 ,00,000/- HAS TO BE PAID WITHIN 13 60 DAYS. A PERUSAL OF THE DRAFT AGREEMENT SHOW THA T THERE ARE NUMBER OF CUTTINGS, CORRECTIONS, HAND WRITTEN INSERTIONS ETC. IN THE SA ME AND IT IS NOT SIGNED BY ANY OF THE PARTIES. THE DEAL HAS BEEN FINALIZED BY TRANSFERRI NG OF SHARES OF M/S SHAH BUILDCON AND NOT BY TRANSFERRING OF THE SAID PLOT BY THE COMPANY . IN THE SIGNED AGREEMENT SUBSEQUENTLY SUBMITTED BY THE ASSESSEE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE CONSIDERATION MENTIONED/ AMOUNT PAID AND TO BE PAID ARE SAME BUT THERE WERE CERTAIN CONDITIONS OF APPROVAL OF MAP FOR HOUSING PROJECT A ND CONSTRUCTION OF 17000 SQ. FT., WHICH WERE TO BE FULFILLED BY THE SELLER PARTY BEFO RE FINALLY CLOSING THE DEAL. APPLICATION FOR SUCH APPROVAL HAD ALREADY BEEN MADE IN THE MONT H OF SEPTEMBER, 2006 BY THE SELLERS. THIS AGREEMENT IS BETWEEN THE EXISTING SHAREHOLDERS /DIRECTORS OF M/S SHAH BUILDCON AND THE ASSESSEE. THE ASSESSEE HAS ALSO PRODUCED A REV ISED AGREEMENT DATED 14 TH MARCH, 2007. IN THIS AGREEMENT, AS THE SELLERS COULD NOT FULFILL THE CONDITIONS, THE AMOUNT OF CONSIDERATION AND THE TERMS OF PAYMENT WERE REVISED AND THE PAYMENTS HAVE BEEN MADE ACCORDING TO THE SAID TERMS WHICH ARE VERIFIABLE FR OM THE BOOKS OF ACCOUNTS AND OTHER RECORDS OF THE COMPANY M/S SHAH BUILDCON PRIVATE LI MITED. A TOTAL OF RS.67,00,000/- HAVE BEEN PAID OF WHICH RS.1,00,000/- IS PAID BY TH E NEW SHAREHOLDERS, SHRI M. P. AGRAWAL, FATHER OF ASSESSEE, SMT. SHASHI AGRAWAL, M OTHER OF ASSESSEE & SMT. ANCHAL AGRAWAL, WIFE OF THE ASSESSEE TO THE EXISTING SHARE HOLDERS FOR PURCHASE OF SHARES AND THIS FACT IS RECORDED IN THE SHARE TRANSFER REGISTER OF THE COMPANY PLACED IN THE PAPER BOOK PAGES 25 & 26. THE BALANCE AMOUNT OF RS.66,00,000/- HAVE BEEN PAID BY THESE 3 PERSONS RELATED TO THE COMPANY AS UNSECURED LOAN WHICH HAVE BEEN USED BY THE COMPANY TO REPAY THE EXISTING LOAN OBLIGATIONS TOWARDS THE SELLER GR OUP. THE DETAILS OF PAYMENT SO MADE AS PER THE BOOKS OF THE COMPANY IS PLACED IN THE PAPER BOOK AT PAGE 24. TAKING INTO ACCOUNT 14 THE ABOVE FACTS, THE LD. CIT(A) FOUND THAT THE BALA NCE AMOUNT OF RS.1,85,00,000/- CANNOT BE SAID TO HAVE BEEN PAID BY THE ASSESSEE ONLY ON T HE BASIS OF THE DRAFT AGREEMENT AND THE PAPERS FOUND. WE FURTHER FIND THAT THE AGREEMENTS AND THE REVISED AGREEMENT CANNOT BE DENIED MERELY FOR THE REASON THAT THEY WERE NOT FOU ND DURING THE COURSE OF SURVEY AT THE PREMISES OF ASSESSEES COMPANY M/S GRAVITA INDIA LI MITED. THE ASSESSEE CLAIMS THAT THE SAME WERE THERE AT HIS RESIDENCE. THE ASSESSEES ST ATEMENTS WERE NOT RECORDED DURING THE COURSE OF SURVEY OTHERWISE HE COULD HAVE EXPLAINED THE COMPLETE FACTS AT THAT TIME ITSELF. FURTHER, THESE AGREEMENT ARE WRITTEN ON THE STAMP P APERS ISSUED PRIOR TO THE DATE OF TRANSACTIONS. 9.1. FURTHER, AS APPARENT FROM THE STATUTORY RECORD S OF THE COMPANY M/S SHAH BUILDCON PRIVATE LIMITED, THE SAID DEAL WAS FINALLY CLOSED IN THE MANNER WRITTEN IN THE REVISED AGREEMENT. NO EVIDENCE IS THERE ON RECORD SHOWING THE PAYMENT OF SUM OF RS.1,85,00,000/- BY THE ASSESSEE OR HIS FAMILY MEMB ERS. THE AMOUNT REMAINING TO BE PAID IN TERMS OF THE DRAFT AGREEMENT ALSO REMAIN PA YABLE IN TERMS OF THE SIGNED AGREEMENT BUT THE TERMS WERE SUBSEQUENTLY REVISED AND PAYMENT WAS MADE AS PER THE REVISED TERMS. MOREOVER, THE FINAL PAYMENTS WERE MADE ON 14 TH MARCH, 2007 I.E. AFTER 75 DAYS IN TERMS OF SIGNED AGREEMENT AS AGAINST 60 DAYS MENTIONED IN THE DRAFT AGREEMENT. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS GIVEN A WELL REASONED AND WELL FOUNDED ORDER AFTER DEALING WITH EACH AND EVERY ASPECT OF THE ISSUE AND WE ARE IN FULL AGREEMENT WITH THE FINDINGS OF THE C IT(A) THAT THE ADDITION OF RS.1,85,00,000/- MADE BY APPLYING THE PROVISIONS OF SECTION 69 IS NOT JUSTIFIED. WE ALSO DRAW SUPPORT FROM THE CASES RELIED ON AND DISCUSSED BY THE LD. CIT (A) IN DETAIL TO ARRIVE AT THIS FINDING. WE THEREFORE, CONFIRM THE ORDER OF LD. CIT (A) ON THIS ISSUE. 15 10. IN THE RESULT THE DEPARTMENTAL APPEAL AS WELL A S THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 .01.2012. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE DCIT, CIRCLE-4, JAIPUR. SHRI RAJAT AGARWAL, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 834(2)/JP/2011) BY ORDER, AR ITAT JAIPUR.