M/s. National Builders & Developers, Vapi V. The ACIT., Cent. Circle-2, Surat

ITSSA 135/AHD/2005

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8704 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 22-01-2013
• Assessment Year: misc
• Appeal Filed On: 27-04-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D P GUPTA
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Question of law; Corroborative evidences; Block assessment; Retraction
• Section: 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND SHRI A. MOHAN ALAN KAMONY, AM) IT (SS) A NO.135/AHD/2005 B. P. 2001-02 AND UP TO 17-07-2002 M/S. NATIONAL BUILDERS & DEVELOPERS, 11, GURUDEV COMPLEX, OPP. IMRAN NAGAR, VAPI SILVASA ROAD, VAPI P. A. NO. AADFN 9444 Q VS THE A. C. I. T., CENT. CIR-2, OPP. NEW CIVIL HOSPITAL, MAJURA GATE, SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J. P. SHAH, AR RESPONDENT BY SHRI D. P. GUPTA, SR. DR DATE OF HEARING: 22-01-2013 DATE OF PRONOUNCEMENT: 15-03-2013 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED CIT( A)-II, AHMEDABAD DATED 30 TH MARCH,2005 IN APPEAL NO. CIT(A))- II/CC.2/17/04-05 PASSED U/S 250 READ WITH SECTION 1 43(3) AND 158BC OF THE IT ACT, FOR THE BLOCK PERIOD ASSESSMEN T RELATED TO 2001- 02 AND UP TO 17-07-2002. 2. THE ASSESSEE HAS RAISED FIVE GROUNDS OF APPEAL WHEREIN GROUNDS NO.2 TO 5 ARE GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. THE LONE SURVIVING GROUND NO.1 IS REP RODUCED HEREIN UNDER FOR REFERENCE: IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 2 (I) UNDISCLOSED INCOME RS.84,00,001/- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN MAKING ADDITION OF RS.84,00,100/- WHEN NO SUCH INCO ME WAS EARNED AND NO SUCH EXPENDITURE WAS INCURRED. 3. THE ASSESSEE HAS ALSO RAISED THREE ADDITIONAL GR OUNDS BEFORE US VIDE ITS LETTERS DATED 18-06-2000 AND 28-07-2011. THE SAME ARE REPRODUCED HEREIN UNDER FOR REFERENCE: 1. THE ENTIRE BLOCK ASSESSMENT ORDER DATED 30.07.2 004 IS BAD IN LAW IN VIEW OF THE FACT THAT NO SEARCH WARRANT WAS ISSUED AND SERVED IN THE NAME OF THE ASSESSEE M/S. NATIONAL BUILDERS AND D EVELOPERS, VAPI. 2. SECTION 158BC ORDER ON ASSESSEE IS ALSO BAD FOR THE REASON THAT THE EVIDENCE RELIED ON FOR MAKING ADDITION IS NOT SEIZE D FROM ASSESSEE OR ITS OFFICE; IN FACT NO INCRIMINATING EVIDENCE WAS F OUND FROM ASSESSEE. 3. THE ASSESSMENT MADE ON THE ASSESSEE IS BAD BECAU SE WARRANT OF AUTHORIZATION WAS ISSUED NOT IN THE ASSESSEES NAME ONLY BUT IN THE NAME OF THE ASSESSEE AND TWO OTHERS. 4. AT THE OUTSET, THE LEARNED DR POINTED OUT THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE WILL NOT HOLD GOOD C ONSIDERING THE REASONED JUDGMENT OF THE HONBLE ALLAHABAD HIGH COU RT RENDERED IN THE CASE OF CIT VS DEVESH SINGH REPORTED IN 76 DTR 403 WHEREIN IT WAS HELD THAT THE ASSESSMENT MADE IN THE INDIVIDUAL CAPACITY OF EACH PERSON NAMED IN THE JOINT WARRANT OF AUTHORIZATION WAS PERFECTLY WITHIN THE JURISDICTION OF THE ASSESSING AUTHORITY. THE LEARNED AR COULD NOT CONTROVERT TO THE SUBMISSION OF THE LEARN ED DR. AFTER HEARING BOTH THE SIDES AND PERUSING THE ORDER OF TH E HONBLE HIGH COURT, SUPRA WE FIND THE SUBMISSION OF THE LEARNED DR TO BE ACCEPTABLE. THE HONBLE ALLAHABAD HIGH COURT HAD DE CIDED THE IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 3 SUBSTANTIAL QUESTION OF LAW THAT WHETHER THE JOINT WARRANT OF AUTHORIZATION U/S 132 OF THE ACT CAN BE ISSUED FOR MAKING AN ASSESSMENT INDIVIDUALLY IN FAVOUR OF THE REVENUE. FOLLOWING THE AFORESAID DECISION OF THE HONBLE HIGH COURT WE DIS MISS FIRST AND THIRD ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. WITH RES PECT TO THE ADDITIONAL SECOND GROUND, THE ASSESSEE DID NOT MAKE ANY SUBMISSION AND FURTHER IT IS OBVIOUS FROM THE FACTS THAT THE S EIZED MATERIALS WERE FOUND IN THE OFFICE PREMISES OF THE ASSESSEE AND TH E SAME IS ACCEPTED BY THE PARTNER OF THE ASSESSEE FIRM BY HIS AFFIDAVIT DATED 12- 02-2004 AND THE SAME IS REPRODUCED IN THIS ORDER AT PARA 5.1, SECOND PARAGRAPH. THEREFORE, THE SECOND ADDITIONAL GROUND PRESSED BY THE ASSESSEE IS ALSO DISMISSED. 4.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE, A PARTNERSHIP FIRM CONSISTING OF THREE PARTNERS NAMELY, (1) SHRI MUKUND R. PATEL, (2) SMT. SOBHANABEN M. BHAVSAR AND (3) M/S. NARVIRS INH R. PARMAR (HUF) ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CO NSTRUCTION OF REAL ESTATE PROJECTS WAS SEARCHED U/S 132 OF THE AC T AT ITS OFFICE PREMISES 11, GURUDEV COMPLEX, VAPI ON 17-07-2002. D URING THAT PERIOD THE ASSESSEE WAS SHARING THE OFFICE PREMISES WITH M/S. PARMAR BUILDERS & DEVELOPERS AND M/S. PARMAR CONSTR UCTIONS, VAPI. NOTICE U/S 158BC OF THE ACT WAS ISSUED TO THE ASSES SEE ON 24-09-2003 REQUIRING IT TO FILE THE RETURN OF INCOM E FOR THE BLOCK PERIOD WITHIN TWENTY FIVE DAYS OF THE SERVICE OF THE NOTIC E. THE NOTICE WAS SERVED ON THE ASSESSEE ON 11-10-2003 AND THE ASSESS EE FILED ITS RETURN FOR THE BLOCK PERIOD ON 8-12-2003 DECLARING ITS TOTAL IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 4 UNDISCLOSED INCOME AS NIL. DURING THE COURSE OF THE SEARCH A NOTE BOOK WAS FOUND IN WHICH TWO SHEETS CONTAINING CERTA IN NOTINGS, WHICH ARE ANNEXED TO BS 3 OF THE PANCHNAMA DATED 17-07- 2002. [XEROX COPY OF BOTH THE SHEETS IS ATTACHED AS ANNEXURE 1 A ND 2 FORMING PART OF THIS ORDER FOR REFERENCE]. WITH RESPECT TO BOTH THESE SHEETS OF NOTINGS, MR. NARVRISINH R. PARMAR, PARTNER OF THE A SSESSEE FIRM, STATED IN HIS SWORN STATEMENT DURING THE COURSE OF SEARCH ON 17-07- 2002 AS FOLLOWS [PAPER BOOK PAGE 5]: Q.3 I AM SHOWING YOU ANN. B-3. EXPLAIN NOTINGS ON PAGE NO.14 & 15 OF ANN. B-3 ANS. WE HAVE PROPOSED TO BUY A LAND SURVEY NO.194/2 P IN A NEW FIRM M/S. NATIONAL BUILDERS OF WHICH I AM ONE O F THE PARTNERS. OTHER PARTNERS ARE SHRI MUKUND PATEL AND SMT. BHAWSAR SHOBHABEN. THE FIRM IS REGISTERED AT VALSAD AND COPY OF THE PARTNERSHIP DEED IS THERE IN MY VAPI OF FICE AT GURUDEV COMPLEX. THE DOCUMENT OF THE LAND HAS BEEN DONE IN FORM OF AGREEMENT TO SALE. DUE TO SOME REMAINING TECHNICALITIES TRANSFER OF TITLE OF THE LAND HAS NOT BEEN POSSIBLE IN M/S. NATIONAL BUILDERS, I. E. OUR FIRM. ON THE SAID PAPER IT IS WRITTEN THAT AN AMOUNT OF R S.26 LAC WAS TO BE PAID IN WHITE AS AGAINST THE TOTAL LAND C OST OF RS.84,00,011/- AS SUCH THE DIFFERENTIAL AMOUNT OF R S.58 LAC WAS TO BE PAID IN CASH OUTSIDE THE BOOKS OF ACC OUNTS. IN THE BOOKS OF M/S. NATIONAL BUILDERS BILL 04-04-0 2 AN AMOUNT OF RS.25,94,000 HAS BEEN PAID OFFICIALLY ACCORDINGLY THE REMAINING AMOUNT OF RS.58 LAC REPRE SENTS UNACCOUNTED INCOME. THIS INVESTMENT HAS BEEN MADE O UT OF UNDISCLOSED INCOME OF THE GROUP OVER THE BLOCK P ERIOD. IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 5 5. HOWEVER, SHRI NARVIRSINH R. PARMAR HAD RETRACTED THE ABOVE STATEMENT VIDE AFFIDAVIT DATED 22-07-2002 [PAPER BO OK PAGE 8 TO 10]. THE CONTENT OF THE AFFIDAVIT IS REPRODUCED HEREIN U NDER FOR REFERENCE: ON 17.07.2002 THERE WAS ACTION U/S. 132 OF THE ACT, AT MY BUSINESS PREMISES AND MY RESIDENCE. ORIGINALLY, PROCEEDINGS U/S. 133 A WERE TAKEN, BUT SUBSEQUENTLY I WAS INFORMED THAT THEY WERE CONVERTED INTO ACTION U/S. 132 OF THE ACT. THE ABOVE PROCEEDINGS STARTED AT 11.30 A. M. O N 17.07.2002 UP TO 18.07.2002 AT 8.00 P. M. THIS WAS A NEW EXPERIENCE FOR ME AS THERE HAD NEVER BEEN ANY SUCH ACTION IN THE PAST AND I WAS DEPRESSE D CONSIDERABLY AND WAS NOT IN PROPER STATE OF MIND. IN THE COURSE OF INTENSIVE SEARCH THAT TOOK PLACE A T ALL THE PLACES, NO UNACCOUNTED CASH, INVESTMENTS, ETC. WAS FOUND IN THE COURSE OF THESE PROCEEDINGS, NUMBERS OF STATEME NTS WERE TAKEN FROM VARIOUS PERSONS AND I WAS ASKED TO MOVE FROM ONE PLACE TO ANOTHER. SINCE THE ADMINISTRATIVE WORK WAS CARRIED AT VARIOUS PLACES, ALL THE RECORDS AND PAPERS WERE NOT SIMULTANEOUSLY AVAILABLE AND I WAS NOT IN A POSITIO N TO COMPLY WITH VARIOUS QUERIES RAISED. THERE WAS, THEREFORE, CONSIDERABLE PRESSURE BROUGHT ON ME TO MAKE A DISCLOSURE. SINCE NOTHING WAS FOUND, I REFUSED. I WAS THREATENED AND CAJOLED INTERMITTENTLY BY STATING THAT IN CASE NO DISCLOSUR E WAS MADE, MY BUSINESS WOULD BE STOPPED AND ALL THE ASSETS WOU LD BE SEALED AND I WOULD BE PUT BEHIND BARS, AND ALSO I W OUND BE ON ROADS. AT THE SAME TIME I WAS ASSURED THAT IF I MAK E A DISCLOSURE AS EXPLAINED BY THE OFFICERS, I WOULD HA VE PEACE OF MIND AND WOULD NOT HAVE TO PAY ANY PENALTY OR PROS ECUTION OR ANY OTHER MEASURES AND THAT I WOULD BE IN A POSITIO N TO DO THE BUSINESS. I WAS NOT PERMITTED TO CONTACT ANYBODY INCLUDING MY TAX CONSULTANT AND I WAS NOT AWARE OF THE PROVISIONS OF THE INCOME- TAX ACT, 1961, NOR WAS I AWARE OF MY RIGHTS ETC. TH EREFORE, I BELIEVED WHATEVER THE OFFICERS OF THE DEPARTMENT TO LD ME, IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 6 THINKING THAT THEY WOULD NOT SAY INCORRECT THINGS A ND THAT I WOULD BE PUT BEHIND THE BARS IF I DO NOT MAKE A DIS CLOSURE. IT IS BECAUSE OF THESE INTIMIDATING CIRCUMSTANCES, MY MENTAL FRAME OF MIND AND ALL RELATED FACTORS I DISC LOSED A SUM OF RS.58/- LACS IN REPLY TO A QUESTION PUT TO ME ON 17.07.2002 IN CONNECTION WITH A PIECE OF PAPER THAT EXPLAINED THA T THIS WAS A PROJECT THAT WAS TO BE TAKEN UP BY NATIONAL BUILDER S & DEVELOPERS IN WHICH RS.26 LACS WAS TO BE PAID FOR L AND AND OTHER EXPENSES WERE REQUIRED TO BE INCURRED TAKING THE TOTAL BUILDING PROJECT COST TO RS.84 LACS. THE PAPER SHOW ED THE FINAL TOTAL, WHICH WAS AN ESTIMATE OF EXPENSES TO BE INCU RRED FOR VARIOUS PURPOSES LIKE MAKING THE LAND N. A. AND OTH ER REQUIREMENTS. I VERY, CATEGORICALLY INFORMED THAT N O SUCH AMOUNT WAS EVER PAID TO THE LANDLORDS FROM WHOM THE LAND WAS PURCHASED. THE AUTHORIZED OFFICER REFUSED TO NOTE D OWN THAT I HAD STATED AS ABOVE BUT WROTE DOWN THAT RS.58 LACS WAS PAID IN CASH OUTSIDE THE BOOKS OF ACCOUNTS. I WAS GIVEN ASS URANCE THAT THIS WAS ONLY A FORMALITY AND THAT I WOULD BE PERMI TTED TO MAKE A COMPREHENSIVE STATEMENT AT A SUBSEQUENT DATE AFTE R CONSIDERING ALL THE PAPERS AND CONSULTING MY PARTNE RS, ETC. BELIEVING THIS AND IN THE PECULIAR CIRCUMSTANCES NA RRATED ABOVE, I MADE THIS DISCLOSURE. I FOUND THAT I WAS M ISGUIDED AND, THEREFORE, AT THE FIRST OPPORTUNITY I HEREBY DENY H AVING PAID ANY UNACCOUNTED AMOUNT OF RS.58 LACS AS MENTIONED IN RE PLY TO QUESTION IN RESPECT OF LAND AT SURVEY NO.194/2P. I UNEQUIVOCALLY DENY THE AFOREMENTIONED STATEMENT MADE BY ME, AS AL SO WHEREVER ANY REFERENCE IS MADE IN RESPECT OF SO CAL LED UNACCOUNTED MONEY. AGAIN ON THAT VERY DAY IN THE COURSE OF SURVEY U/S. 133A I WAS ASKED TO ABOUT SO CALLED ON MONEY WHICH I WAS SUPPOSED TO HAVE RECEIVED ON SALE OF GURUDEV COMPLEX, VAPI SILVASSA ROAD, VAPI AND OTHER PROJECTS MENTIONED IN REPLY TO A QUESTION PUT TO ME. THE DEPARTMENTAL OFFICERS ADOPTED THE SAME TACTICS AS I HAVE MENTIONED AND I WAS MADE TO STATE THAT I HAD E ARNED RS.45 LACS ON-MONEY DURING THE LAST SIX YEARS IN TH E ABOVE MENTIONED PROJECT. I WAS ALSO TOLD THAT SIX YEARS P ERIOD WAS IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 7 WRITTEN TO COVER THE BLOCK ASSESSMENT. I SAY THAT I HAVE NEVER RECEIVED ANY SUCH AMOUNT. I, FURTHER UNEQUIVOCALLY DENY HAVING EARNED ANY SUCH MONEY AND THAT I DENY SUCH STATEMEN T MADE IN RESPECT OF SO CALLED ON-MONEY RECEIVED OR ON- MONEY PAID. BOTH THE DISCLOSURES MADE ON 17.07.2002 WERE NOT CORRECTLY MADE, AND WERE UNDER COERCION AND GIVING FALSE PROMISES AND ASSURANCES AND ARE NOT BINDING ON ME. 5.1 SUBSEQUENTLY, MR. NARVIRSINH R. PARMAR FURNISHE D ANOTHER AFFIDAVIT DATED 12-02-2004 [PAPER BOOK PAGE 12 AND 13] EXPLAINING THE CONTENTS IN THE TWO SHEETS. THE RELEVANT PORTIO N OF THE AFFIDAVIT IS REPRODUCED HEREIN BELOW FOR REFERENCE: I AM PARTNER OF M/S. NATIONAL BUILDERS & DEVELOPERS , HAVING 1/3 RD SHARE THEREIN WITH OTHER TWO PARTNERS VIZ. MR. MUK UNDBHAI R. PATEL AND MRS. SHOBABEN M. BHAVSAR EACH OF THEM HAVING 1/3 RD SHARE THEREIN. THE ABOVE FIRM HAD ENTERED INTO SAT AKHAT WITH SHRI RAJESH DESAI OF VILLAGE CHALA, VIA VAPI T O ACQUIRE 3.36 ACRES OF AGRICULTURAL LAND FOR ABOUT RS.16 LAC S AND 1727 SQ. MTRS. OF NON-AGRICULTURAL LAND FOR ABOUT RS.10 LACS. THE TOTAL PAYMENT FOR LAND WAS TO BE RS.26 LACS. IN CASE OF E VERY PROJECT WHERE THERE ARE DIFFERENT PARTNERS, THEY SIT TOGETH ER, DISCUSS AND HAVE MEETING AND WORKOUT DIFFERENT PROJECTIONS AND CONTRIBUTION THAT THEY ARE REQUIRED TO MAKE. AT THE TIME OF 132 ACTION, PAGE 14-15 IN VS-3 SIC. BS - 3WERE FOUND AND IN THIS PAPER VARIOUS FIGURES ARE MENTION ED. THE PARTNERS HAD MADE ROUGH WORKING OF THE PROJECT COST , THE BREAK- UP OF WHICH WAS AS UNDER:- COST OF LAND RS.26 LACS STAMP DUTY ETC. RS. 3 LACS COST OF CONSTRUCTION OF APPROX 15000 SQ. FT. RS.47 LACS EXPENDITURE FOR N. A. PERMISSION, ETC. RS. 8 LAC S TOTAL RS.84 LACS IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 8 I WAS UNDERSTOOD BETWEEN THE PARTIES THAT EACH OF T HEM SHOULD BE PREPARED TO CONTRIBUTE RS.28 LACS BEING 1/3 RD RS.84 LACS COMING TO SHARE OF EACH OF THEM. SO FAR AS EXPENDITURE FOR N.A. IS CONCERNED, THE FI GURE WAS WORKED OUT AT RS.8 LACS AND THERE IS REFERENCE ABOU T PAYMENT IN BLACK MADE IN THIS REGARD. I SAY THAT NEITHER I NOR ANY OF MY PARTNERS HAD GIV EN ANY MONEY OVER AND ABOVE THE MONEY SHOWN IN THE DOCUMENT OF T HE LAND FOR PURCHASE OF LAND TO LAND OWNER. IN FACT, THE ST AMP DUTY AUTHORITIES WHILE REGISTERING THE DOCUMENT EXPRESSE D SATISFACTION ABOUT THE CORRECTNESS OF VALUE AND HAV E ACCORDINGLY APPROVED. IN CASE THE VALUE SHOWN IS LE SS, STAMP DUTY AUTHORITIES GENERALLY IMPOUND THE DOCUMENT AND NOT ONLY8 INSIST ON MAKING PAYMENT OF STAMP DUTY BY LEVY PENA LTY THEREON. BUT THE STAMP DUTY AUTHORITIES HAVE FOUND THE DOCUMENT TO BE OF CORRECT VALUE. THIS PROPERTY IS IN VILLAGE CHALA WHICH IS BETWEEN VAPI AND DABHEL. CHALA IS NOT DEVELOPED TO THAT EXTENT. THE PLOT OF LAND ACQUIRED FROM SHRI RAJESH DESAI IS NEAR HINDU CREMA TION (SMASHAN). IT WOULD BE ALSO RELEVANT TO POINT OUT T HAT LAND BEARING SURVEY NO.482 WHICH IS SITUATED IN FAR BETT ER LOCATION AS IT IS NEAR THE COLONY OF HINDUSTAN LEVER AND OTHER ATTRACTIVE PLACES HAS BEEN ALLOTTED BY THE COLLECTOR AT RS.390 /- PER SQ. MTR. THIS IS JUST TO GIVE AN INDICATION OF THE PRIC E PREVAILING IN A BETTER LOCATION IN THAT AREA. 6. HOWEVER, THE LEARNED AO MADE AN ADDITION OF RS.8 4,00,100/- BASED ON THE ADMISSION OF THE ASSESSEE ON THE DATE OF SEARCH AND THE INCRIMINATING MATERIALS SEIZED VIZ. THE NOTINGS IN TWO SHEETS AS REFERRED ABOVE ON ACCOUNT OF UNDISCLOSED INCOME REL YING ON THE FOLLOWING PRINCIPLES: IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 9 A) ROLE OF PRESUMPTION IN SEARCH AS OBSERVED IN THE DECISION OF THE HONBLE SUPREME COURT RENDERED IN THE CASE O F CHUHARMAL VS CIT, 172 ITR 250 (SC) VIZ. (I) THAT WHAT WAS MEANT BY SAYING THAT THE EVIDENCE ACT DID NOT APPLY TO PROCEEDINGS UNDER THE INCOME- TAX ACT, 1961, WAS THAT RIGOUR OF THE RULES OF EVIDENCE CONTAINED IN THE EVIDENCE ACT WAS NOT APPLICABLE, BUT THAT DID NOT MEAN THAT WHEN THE TAXING AUTHORITIES WERE DESIROUS OF INVOKING THE PRINCIPLES O EVIDENCE ACT IN PROCEEDINGS BEFORE THEM, THEY WERE PREVENTED FROM DOING SO, (II) THAT ALL THAT SECTION 110 OF THE EVIDENCE ACT, 1872, DID WAS TO EMBODY A STATUTORY PRINCIPLE OF COMMON LAW JURISPRUDENCE, VIZ. WHERE A PERSON WAS FOUND IN POSSESSION OF ANYTHING, THE ONUS OF PROVING THAT HE WAS NOT ITS OWNER WAS ON THAT PERSON. THIS PRINCIPL E COULD BE ATTRACTED TO A SET OF CIRCUMSTANCES THAT SATISFY ITS CONDITIONS AND WAS APPLICABLE TO TAXATI ON PROCEEDINGS. B) ADMISSION/CONFESSION DURING THE COURSE OF SEARCH :- (I) THE LEARNED AO HAS PLACED RELIANCE IN THE CASE RENDERED BY THE HONBLE SUPREME COURT TIRU JOHN VS RETURNING OFFICER, A, 1977 SC 1724 WHEREIN IT WAS HELD THAT AN ADMISSION IF CLEARLY AND UNEQUIVOCALLY MADE, IS THE BEST EVIDENCE AND THOUGH NOT CONCLUSIVE, SHIFTS THE ONUS ON TO THE MAKER. (II) RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF STATE OF U. P. VS. BOOTA SINGH REPORTED IN 1978 SC 1770 WHEREIN IT WAS HELD AS, HOWEVER, THE CONFESSION WAS A RETRACTED ONE IT COULD BE ACTED UPON ONLY IF SUBSTANTIALLY CORROBORATED BY INDEPENDENT CIRCUMSTANCES. IT IS NOT NECESSARY THAT A IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 10 RETRACTED CONFESSION SHOULD BE CORROBORATED IN EACH MATERIAL PARTICULAR, IT IS SUFFICIENT THAT THE RE IS A GENERAL CORROBORATION OF THE IMPORTANT INCIDENTS MENTIONED IN THE CONFESSION. C) VIABILITY OF AFFIDAVITS:- WITH RESPECT TO THE VALIDITY OF AFFIDAVITS, THE LEARNED AO OBSERVED THAT THE AFFIDAVIT FILED BY THE ASSESSE E AND THE SELLER OF THE LAND ARE SELF-SERVING AND HAVE NO EVIDENTIARY VALUE. THE CONFESSION MADE BY THE ASSES SEE IN HIS STAMEN U/S 132(4) OF THE ACT WAS INDEPENDENT LY CORROBORATED BY THE CONTENTS OF PAGES 14 AND 15 OF THE SEIZED ANNEXURE BS-3. FURTHER, COPIES OF THE AGREEM ENT FILED BY THE ASSESSEE DURING THE HEARING SHOWING TH E APPARENT CONSIDERATION AND ITS CO-RELATION TO THE S EIZED MATERIALS EVIDENCES PAYMENT OF RS.84,00,100/-. THE LEARNED AO RELIED ON THE FOLLOWING DECISIONS FOR AR RIVING AT HIS CONCLUSION:- (1) STATE OF BOMBAY VS PURUSSHOTTAM REPORTED IN AIR 1952 SC 317 WHEREIN IT WAS HELD THAT VERIFICATION SHOULD INVARIABLY BE MODELED ON THE LINES OF ORDER 19, RULE 3 O THE CIVIL PROCEDURE CODE, WHETHER THE CODE APPLIES IN TERMS OR NOT. AND WHEN THE MATTER DEPOSED TO IS NOT BASED ON PERSONAL KNOWLEDGE THE SOURCE OF INFORMATION SHOULD BE CLEARLY DISCLOSED. (2) AKK NAMBIAR VS UNION OF INDIA AIR (SC) WHEREIN IT WAS HELD AS UNDER: THE IMPORTANCE OF VERIFICATION IS TO TEST THE GENUINENESS AND AUTHENTICITY OF ALLEGATIONS AND ALSO TO MAKE THE DEPONENT RESPONSIBLE FOR ALLEGATION. IN ESSENCE VERIFICATION IS REQUIRED TO ENABLE THE COURT TO FIND OUT AS TO WHETHER IT WILL BE SAVE TO ACT SUCH AFFIDAVIT EVIDENCE. IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 11 (3) SUKHWINDER PAL VS. STATE OF PUNJAB AIR 1982 SC 65 WHEREIN IT WAS HELD THAT UNDER ORDER 19, RULE 3, OF THE CODE OF CIVIL PROCEDURE, 1908, IT WAS INCUMBENT UPON THE DEPONENT TO DISCLOSE THE NATURE AND SOURCE OF HIS KNOWLEDGE WITH SUFFICIENT PARTICULARITY. (4) SMT. SAVITHRAMMA VS. CECIL NARONHA & ANOTHER, 1988 (2) CCC 525 (PARA 2) WHEREIN IT WAS HELD THAT AN AFFIDAVIT WHICH DOES NOT COMPLY WITH THE PROVISIONS OF ORDER XI OF THE SUPREME COURT RULES, HAS NO PROBATIVE VALUE AND IT IS LIABLE TO BE REJECTED. (5) CHHAGANLAL VS. RAM NARAYAN, AIR 1956 MB 244(PARA 6) (DB), GANDAGHAR VS. UNION OF INDIA, AIR 1967 PAGE 142 (PARA 6), CHITRA SEN GUPTA VS DHRUBA JYOTI SENGUPTA, AIR 1988 CAL 98 (PARA 8) (DB) AND MUKLINATH DAS VS. BRINDA DAS, AIR 1990 GAUHATI (PARA 4) WHEREIN IT WAS HELD THAT DISCLOSURE OF SOURCE OF INFORMATION IS MANDATORY. 7. FURTHER, THE LEARNED AO EXAMINING THE CONTENTS O F THE SEIZED MATERIALS VIZ. THE NOTINGS CONTAINED IN THE TWO SHE ETS OF PAPERS OF THE NOTE BOOK ARRIVED AT THE FOLLOWING CONCLUSIONS: - ON PAGE NO.15, VARIOUS DATES AND AMOUNTS CLEARLY I NDICATES THAT PAYMENTS WERE MADE EQUALLY IN THREE INSTALLMEN TS, RS.28,00,000/- EACH. ON PAGE NO.15 ALSO, THE DESCRI PTION 26 1/3, BALANCE 1/3 ARE WRITTEN, WHICH INDICATES THAT BOTH THE FIGURES OF RS.26,00,000/- AND RS.84,00,000/- ARE SE PARATE FIGURES, WHICH COMES TO RS.1.10 CRORES PAGE NO.15 A LSO CONTAINS DETAILS OF PAYMENT OF RS.84 LACS IN THREE INSTALLMENTS OF RS.28 LACS EACH. ON PAGE NO.15, RS.28 LACS IS WR ITTEN IN CODE AS 28, FIRST PART IS TO BE PAID ON 14.8.01, 2 ND PART IS TO BE PAID ON 25.11.01 AND THIRD PART IS TO BE PAID BY 25 .2.02. FOR THE IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 12 FIRST AND SECOND PART, CLEARLY 28 IS WRITTEN, WHICH MEANS RS.28 LACS ARE FOR THE THIRD PART THE WORD BALANCE 1/3 IS WRITTEN, WHICH MEANS RS.28 LACS IN VIEW OF NOTING ON PROCEEDINGS P AGES. THIS IS ALSO BROUGHT OUT BY THE FACTS THE LUMPSUM COST O F NONAGRICULTURAL LAND OF RS.10,00,000/- AND AGRICULT URAL LAND OF RS.16,00,000/-. THIS CLEARLY INDICATES THAT THE FIN AL PRICE FOR THE LAND WHICH WAS AGREED TO BE PAID WAS RS.1.10 CRORE, AS EVIDENT FROM PAGE NO.14 AND 15 OF THE SEIZED FILE A NNEXURE BS- 3. THEREFORE, IT IS CLEAR THAT RS.84,00,000/-, AS U NACCOUNTED INVESTMENT WAS MADE ON BEHALF OF THE FIRM M/S. NATI ONAL BUILDERS IN THE PURCHASE OF LAND AT CHALA. -------- --------------------- --------------------------------------------------- --------------------------------- --------------------------------------------------- --------------------------------- 8. THE ABOVE STATEMENT UNDER SECTION 132(4) O THE A CT, MADE BY THE ASSESSEE WAS RELATABLE TO THE CONTENTS OF THE SEIZED MATERIAL. THE ASSESSEE HAS TRIED TO EXPLAIN THE USE OF THE WORD BLACK AS MISCELLANEOUS EXPENSES, INCIDEN TAL EXPENSES DO NOT FORM PART OF A FOR INVESTMENT. THE OTHER DETAILS AS MENTIONED IN THE AFFIDAVIT DATED 12.7.2004, I.E. STAMP DUTY, COST OF CONSTRUCTION ETC. DO NOT APPEAR ON THE SEIZ ED PAPERS. (COPIES OF THE SEIZED PAPER ENCLOSED AS ANNEXURE I TO THIS ORDER.) THE CONTENT OF THE SEIZED MATERIAL EVERY CLEARLY IN DICATE THE NATURE OF INVESTMENT I.E. WORD BLACK IS USED IN THE SEIZED MATERIAL. IT IS A COMMON PRACTICE THAT IN LAND DEAL S, THERE IS SMALL PORTION OF BLACK MONEY TO BE PAID OVER AND AB OVE THE DOCUMENT PRICE IN MOST CASE, THE ENTRIES OF SUCH BL ACK MONEY ARE CORROBORATED WITH S. NO. OF CERTIFICATES AND TH E DOCUMENT PRICE CLEARLY TALLIES WITH THE AGREEMENT FOR SALE. THEREFORE, CREATES BI DOUBT, WHILE INTERPRETING THE ABOVE DOCU MENTS THAT THE BLACK MONEY HAS TO BE PAID FOR ACQUIRING THE SA ID LAND. THE STATEMENT U/S 132 (4) IS IN APPARENT CONSONANCE WIT H THE NATURE OF ENTRIES, AS EXPLAINED ABOVE. THE SUBSEQUENT RETR ACTION IS BASELESS AND AN AFTERTHOUGHT, AS THE WORD CONSTRUC TION HAS NEVER BEEN USED IN THE SAID SEIZED PAPER. THE ASSES SEES EXPLANATION THAT 26 WHITE MEANS THAT THE COST OF TH E LAND AND THE BALANCE BLACK REFERS TO THE ESTIMATED COST OF C ONSTRUCTION IS TOTALLY OUT OF CONTEXT AND FARFETCHED. THE TONE OF THE STATEMENT OF THE ASSESSEE, WHILE ANSWERING THE Q. NO.8, AS ME NTIONED ABOVE, IS VERY DESCRIPTIVE. BY NO STRETCH OF IMAGIN ATION, THE IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 13 ANSWER CAN BE STATED TO BE FORCED AND WITHOUT ANY A PPLICATION OF MIND. THE LUCID ANSWER SHOWS THAT THE ASSESSEE W AS IN PROPER FRAME OF MIND BECAUSE HE REFERRED TO THE TEC HNICALITY OF THE AGREEMENT AND OTHER FACTORS, WHICH BELIES THE S TATEMENT MADE IN AFFIDAVIT THAT THE DISCLOSURE MADE BY HIM W AS MADE UNDER COERCION, FALSE PROMISES AND SURMISES. 9. IN VIEW OF THE ABOVE DISCUSSION, IT IS APPARENT THAT THE ASSESSEE HAS MADE UNACCOUNTED PAYMENT OF RS.84,01,0 00/-, FOR ACQUISITION OF LAND AT SURVEY NO. 368/A AND 194 /2/P AT CHALA, WHICH IS OVER AND ABOVE THE DOCUMENT PRICE OF RS.26 .00 LACS, AS MENTIONED IN THE SEIZED MATERIALS. AS SCHEDULE O F PAYMENT OF RS.84.00 LACS IN THREE INSTALLMENTS OF RS.28 LAC S EACH, DOES NOT TALLY WITH THE SCHEDULE OF PAYMENT OF APPARENT CONSIDERATION I.E. RS.26.00 LACS, THEREFORE, NECESSARILY, THE PAY MENT OF RS.84.00 LACS WITH SPECIFIC SCHEDULE, AS MENTIONED EARLIER, IS DIFFERENT FROM PAYMENT OF RS.26.00 LACS. HENCE, I H OLD THAT THE ASSESSEE HAS MADE UNACCOUNTED INVESTMENT OF RS.84,0 0,101/- IN THE LAND AT LAND SURVEY NO.368/A AND 194/2/P AT CHALA. HENCE, IN VIEW OF FACTUAL FINDINGS, AS ABOVE, WHICH ARE INDEPENDENTLY CORROBORATED, THE RETRACTION BY THE A SSESSEE IS MEANINGLESS. THE UNEXPLAINED INVESTMENT OF RS.84,00 ,101/-, IS ASSESSED AS UNDISCLOSED INCOME OF THE ASSESSEE FIRM FOR THE BLOCK PERIOD. TOTAL UNDISCLOSED INCOME IS ASSESSED AT RS.84,00, 101/- I. E. RS.84,00,100/-. 8. WHEN THE MATTER CROPPED UP BEFORE THE LEARNED CI T(A), THE LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BRIEFLY STATING AS UNDER: I HAVE PERUSED THE FACTS AND CIRCUMSTANCES OF THIS CASE. THE APPELLANT HAS UNNECESSARILY STRETCHED THE ISSUE TO ALARMING PROPORTIONS WHEREAS AS PER THE FACTS OF THE CASE TH E ISSUE IS VERY SIMPLE AND STRAIGHT. THE AFFIDAVITS FILED BY T HE APPELLANT AS IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 14 WELL AS THE OWNER REGARDING NON-PAYMENT OR NON-RECE IPT OF ON MONEY IS ONLY AN AFTERTHOUGHT AND CREATED TO JUST COVER UP THE AFFAIR. THE RETRACTION IS JUST SIDETRACKING THE ISS UE REGARDING TAXABILITY OF UNDISCLOSED INCOME DETECTED BY MEANS OF SEARCH. WITH CLEAR, SELF REVEALING AND PECULIAR FACTS OF TH IS CASE, THE APPELLANT CANNOT HIDE BEHIND THE PROTECTION OF JUDI CIAL PRONOUNCEMENTS. THE SEIZED MATERIAL HAS ABUNDANTLY MADE IT CLEAR THAT PAYMENT OF RS.84 LACS WAS REQUIRED TO BE MADE IN THREE INSTALLMENTS OF RS.28 LACS EACH. THERE IS NO MENTION OF BUILDING PLAN OR PROPOSED CONSTRUCTION OR PROJECT A IMING AT EXPENDITURE OF RS.84 LACS. THE REQUEST FOR VALUATIO N IS NOTHING BUT TO GAIN TIME AND SIDETRACK THE PROCEEDINGS. SIN CE CONCRETE EVIDENCE HAS BEEN LOCATED IN THE SEIZED MATERIAL WI TH RAGED TO UNDISCLOSED INCOME, THERE IS NO NEED OF VALUATION A T THIS STAGE. CONTENTIONS RAISED BY THE APPELLANT ARE NOTHING BUT AFTERTHOUGHT. THE APPELLANT, AT COST, GET RID OF TH E GLARING MATERIAL FOUND AGAINST HIM DURING THE SEARCH. IN VI EW OF THESE FACTS ADDITION OF RS.84,00,100/- IS SUSTAINED. 9. THE LEARNED AR SUBMITTED BEFORE US THAT THE ADD ITION MADE FOR RS.84 LACS BY THE ASSESSING OFFICER ON THE BASIS OF THE LOOSE PAPER FOUND AT THE TIME OF SEARCH CANNOT BE SUSTAINED BEC AUSE OF THE FOLLOWING REASONS:- (I) ADMISSION BY THE PARTNER OF THE ASSESSEE FIRM A T THE TIME OF SEARCH U/S 132 OF THE ACT WILL NOT HOLD GOOD BEC AUSE THE SAME WAS OBTAINED BY COERCION. (II) THE PARTNER OF THE ASSESSEE FIRM HAD SUBSEQUEN TLY RETRACTED HIS ADMISSION VIDE HIS AFFIDAVIT DATED 22 -07- 2002 AND 12-02-2004. IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 15 (III) SUBSEQUENTLY, THE CONTENTS OF THE TWO SHEETS OF THE NOTE BOOK WERE ALSO EXPLAINED TO THE REVENUE. (IV) THE VENDOR OF THE LAND SHRI RAJESH P. DESAI HA D ALSO FILED AFFIDAVIT CONFIRMING THE RATE AT WHICH HE HAD SOLD THE PROPERTY. (V) THE REVENUE DID NOT CROSS EXAMINE THE VENDOR, S HRI RAJESH P. DESAI IN ORDER TO VERIFY THE TRANSACTIONS . (VI) THERE ARE NO OTHER CORROBORATING EVIDENCES BRO UGHT IN BY THE REVENUE TO SHOW THAT THE ASSESSEE HAD MADE PAYMENT OTHER THAN WHAT WAS DISCLOSED IN ITS BOOKS OF ACCOUNTS. (VII) THE STAMP VALUATION AUTHORITIES HAVE ALSO ACC EPTED THE MARKET VALUE OF THE LAND PURCHASED BY THE ASSESSEE. WITH THESE SUBMISSIONS IT WAS PRAYED THAT THE ADDIT ION MADE BY THE LEARNED AO MAY BE DELETED. 10. THE LEARNED DR ON THE OTHER HAND, RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND ARGUED IN SUPPORT OF THE SA ME. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF THE AUTHORITIES BELOW AND CAREFULLY CONSIDERED THE MATE RIALS INCLUDING THE PAPER BOOK CONTAINING PAGES 1 TO 50 FILED BY THE AS SESSEE AND THE PAPER BOOK FILED BY THE REVENUE AND THE CASE LAWS R ELIED UPON BY BOTH THE PARTIES. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE LEARNED AO HAD MADE THE ADDITION BASED ON THE NOTIN GS IN THE NOTE BOOK WHICH ARE INFERRED BY THE LEARNED AO AS FOLLOW S WHICH WE REPRODUCE HEREIN UNDER FOR REFERENCE:- IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 16 FINDINGS ON THE SEIZED MATERIAL:- THE SEIZED PAPER ANN. BS-3, P. 14 & 15 ARE ANNEXED TO THIS ORDER AS ANNEXURE I. PAGE NO.14 SHOWS THE FOLLOWING INSCRIPTIONS:- 1] RAJESH DESAI } 368A 2) PROPERTY DETAIL } 194/2P 3] FRONT SIDE ------ X ----- 2327 SQ. MTR. .000 SQ. MTR. SOLD 1727 BAL X RS. 600 SQ. MTR. LUMP = 10,00,000 3 PART DIVIDED = 28 + 28 AGRI. 3.36 ACRE + 28 LUMP 16,00,000 LAND COST. 26 WHITE BAL BLACK TOTAL = 84,00,101 HOWEVER, ON EXAMINING THE ABOVE SAID SEIZED MATERIA L WHICH IS ANNEXED AS PART OF THIS ORDER, THE CONTENTS 26 WHI TE/BAL BLACK IN THE LAST TWO LINES CANNOT BE CATEGORICALLY INFERRED AS SUCH. THE FINDING OF THE LEARNED AO FROM THE ABOVE SEIZED MATERIAL IS TH AT THE TOTAL COST OF THE LAND WAS RS.26 LACS PAID IN WHITE AND BALANCE R S.84 LACS WERE PAID IN BLACK BY THREE EQUAL INSTALLMENTS OF RS.28 LACS EACH, THUS AGGREGATING THE TOTAL COST OF THE LAND TO RS.1.10,0 0,000/-. HOWEVER, WE DO NOT FIND ANY MENTION OF RS.1,10,00,000/- FROM THESE SEIZED PAPERS. MOREOVER IN THE SWORN STATEMENT THE ASSESSE E HAD STATED THAT THE COST OF THE LAND WAS RS. 84 LACKS AND THE UNACCOUNTED IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 17 AMOUNT WAS RS. 58 LACKS WHICH IS CONTRARY TO THE IN FERENCE OF THE REVENUE. FURTHER IT IS PERTINENT TO NOTE THAT THE REVENUE HAD RELIED CONSIDERABLY ON THE FOLLOWING TWO REASONS FOR MAKIN G THE ADDITION OF RS.84 LACS:- (I) THE ABOVE MENTIONED SEIZED MATERIAL (II) ADMISSION OF THE ASSESSEE AT THE TIME OF SEARC H 12. IT IS QUITE NATURAL THAT WHEN AN INDIVIDUAL IS SEARCHED AND THAT TOO FOR THE FIRST TIME, HE WILL BE UNDER PRESSURE, STRESS AND UNBALANCED STATE OF MIND. AT SUCH POINT OF TIME, AD MISSIONS MADE BY HIM CANNOT BE TAKEN AS A PIECE OF EVIDENCE BY ITSEL F THOUGH IT MAY HAVE A PERSUASIVE VALUE. SOME INCRIMINATING DOCUMEN TS AND CORROBORATIVE EVIDENCES ARE REQUIRED WHEN IT COMES TO MAKING AN ADDITION IN THE HANDS OF THE ASSESSEE. THIS ASPECT IS MADE CLEAR FROM THE BUDGET SPEECH OF THE FINANCE MINISTER FOR THE F INANCIAL YEAR 2003-04 WHEREIN HE STATED THAT NO CONFESSION STATEM ENT SHALL BE OBTAINED DURING SEARCH AND SEIZURE OPERATIONS [PARA 152(I) PAGE 29 OF 260 ITR (AT.) 29. FURTHER, THE CONTENTS OF THE S EIZED MATERIAL DO NOT FULLY SUBSCRIBE TO THE FINDING OF THE LEARNED AO WI TH RESPECT TO THE COST OF THE LAND AND PAYMENT IN BLACK AND WHITE, TH OUGH SOME INFERENCES CAN BE GATHERED. THE LEARNED AO HAD ALSO NOT EXAMINED THE SELLER OF THE LAND EVEN THOUGH; HE HAD FURNISHE D AN AFFIDAVIT STATING THE SALE PRICE OF THE LAND HE HAD SOLD TO T HE ASSESSEE. THE LAND REGISTRATION AUTHORITIES HAVE ALSO NOT POINTED OUT ANY DISCREPANCY WITH RESPECT TO THE SALE VALUE OF THE L AND. THE ASSESSEE HAD FURNISHED THE SALE DEED OF THE LAND AND OTHER D OCUMENTS TO ESTABLISH THAT SUCH VALUE WAS ACCEPTED BY THE REGIS TRATION AUTHORITIES IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 18 IN ITS PAPER BOOK PAGE 15 TO 49 AND THE SAME IS NOT DISPUTED BY THE REVENUE. THE ASSESSEE HAD ALSO FURNISHED THE ORDER OF THE COLLECTOR, VALSAD TO SHOW THE RATE OF LAND WAS RS.390/- PER SQ . MTR. THE SAME IS ALSO NOT DISPUTED BY THE REVENUE. FURTHER, THE A SSESSEE HAD FURNISHED SALE INSTANCES OF ADJOINING LANDS. ALL TH ESE EVIDENCES FURNISHED BY THE ASSESSEE SUGGEST THAT THE VALUE OF THE LAND CANNOT BE EXORBITANT AMOUNT AS INFERRED BY THE REVENUE. TH OUGH, IT IS QUITE POSSIBLE THAT THE MARKET VALUE IN REALITY MAY BE MO RE THAN WHAT IS STATED IN THE REVENUE RECORDS, TO NAIL THE ASSESSEE ON THIS ISSUE AND TO MAKE ADDITION IN ITS HANDS, SOME CORROBORATIVE E VIDENCES OTHER THAN SIMPLE AMBIGUOUS SCRIBBLING IN PLAIN PAPER IS ESSENTIAL. THE REASONING OF THE LEARNED AO WITH RESPECT TO ADMISS ION AT THE TIME OF SEARCH, PRESUMPTION ON SUCH ADMISSION AND THE V ALIDITY OF THE AFFIDAVITS CITING THE DECISION OF VARIOUS COURTS A ND THE HONBLE APEX COURT IS NOT DISPUTABLE, HOWEVER, THE SAME HAS TO B E EXAMINED WITH RESPECT TO THE FACTS OF EACH AND EVERY CASE. CONSID ERING THE FACTS OF THIS CASE WE ARE OF THE VIEW THAT THE DECISIONS REL IED BY THE LEARNED AO IS NOT APPLICABLE. IN THE AFFIDAVIT DATED 12 -02-2004 THE ASSESSEE HAD EXPLAINED TO THE REVENUE THAT THE AMOU NT OF RS.84 LACS PERTAINED TO THE ROUGH WORKING ON THE COST OF PROJE CT THE BREAK-UP OF WHICH WAS AS UNDER:- PARTICULARS AMOUNT (RS. IN LACS) COST OF LAND 26,00,000 STAMP DUTY ETC. 3,00,000 COST OF CONSTRUCTION OF APPROX. 15000 SQ. FT. 47,0 0,000 EXPENDITURE FOR N. A. PERMISSION ETC. 8,00,000 TOTAL 84,00,000 IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 19 IT WAS FURTHER STATED THAT THE AMOUNT OF RS.28 LACS PERTAINED TO ONE THIRD CONTRIBUTION OF THE PARTNERS FOR MEETING OUT THE EXPENDITURE OF RS.84 LACS. IT IS PERTINENT TO MENTION HERE THAT DU RING THE COURSE OF SEARCH THE SITE PLAN AND THE BUILDING PLAN WERE ALS O SEIZED WHICH IS ANNEXED TO PAGE 109 OF THE PAPER BOOK. THE BUILDING PLAN SHOWS THE AREA TO BE BUILT-UP AS 415.25 SQ. MTRS. PER FLOOR. THUS, THE ASSESSEE HAD TRIED TO EXPLAIN THE AMOUNT OF RS.84 LACS NOTED IN THE SEIZED PAPER. CONSIDERING THE FACTS AND CIRCUMSTANCES OF T HE CASE, NOTHING MUCH COULD BE DRAWN AFFIRMLY, TO STATE THE CORRECTN ESS OF THE INFERENCE DRAWN BY THE REVENUE AND ALSO THE EXPLANA TION SUBMITTED BY THE ASSESSEE, WITH RESPECT TO THE CONTENTS OF IN THE SEIZED PAPER. THE LEARNED ARS ARGUMENT WITH REGARD TO RETRACTION OF THE STATEMENT WAS THAT THE ASSESSEE HAD DONE SO WITHIN A PERIOD O F FIVE DAYS FROM THE DATE OF SEARCH. THE LEARNED AR HEAVILY RELIED O N THE DECISION OF THE HONBLE JURISDICTIONAL GUJARAT HIGH COURT IN TH E CASE OF SHYAMAL DEVELOPERS (TAX APPEAL NO.1409 OF 2005 DATED 04-09- 2006) [WRITTEN SUBMISSION FILED BY THE ASSESSEE DATED 26-10-2009 P AGE 6] WHEREIN IT WAS HELD AS UNDER: ORAL ORDER THE FOLLOWING QUESTION HAS BEEN PROPOSED FOR THE AD MISSION OF THIS APPEAL:- WHETHER THE ITAT WAS RIGHT IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,00,000/- MADE ON THE BASIS OF DISC LOSURE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT? THE CASE OF THE REVENUE IS THAT ONCE DISCLOSURE STA TEMENT UNDER SECTION 132(4) OF THE ACT IS GIVEN, THE SAME CANNOT BE RETRACTED. IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 20 WHILE CONSIDERING THE FACTUAL ASPECTS, THE TRIBUNAL HAS CONSIDERED THIS ISSUE IN PARAGRAPH 9 OF ITS ORDER, WHICH IS REPRODUCED BELOW:- WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE AUTHORITATIVE PRONOUNCEMENTS RELIED UPO N BY BOTH THE SIDES. IT IS TRUE ANY DISCLOSURE MADE U/S. 132( 4) DURING THE SURVEY PROCEEDINGS IS AN ADMISSIBLE EVIDENCE AGAINS T THE PERSON MAKING THE DISCLOSURE. HOWEVER, A PRESUMPTIO N OF REBUTTAL IS ALSO ATTACHED WITH SUCH DISCLOSURE AND, IF ANY, PERSON ABLE TO DEMONSTRATE WITH THE HELP OF MATERIA L, THAT SUCH ADMISSION WAS EITHER MISTAKEN OR UNTRUE, THEN SOLEL Y ON THE BASIS OF SUCH ADMISSION, ADDITION IS NOT REQUIRED T O BE MADE. THE ASSESSING OFFICER SHOULD TAKE THE AID OF SOME CORROBORATIVE MATERIAL. IN THE PRESENT CASE, NO DOU BT, DISCLOSURE WAS MADE, BUT IT WAS RETRACTED WITHIN TWO DAYS AND ALLEGED ENTRIES APPEARING IN ANNEXURE 13 HAVE DULY BEEN EXP LAINED BEFORE THE ASSESSING OFFICER. THESE ENTRIES HAVE DU LY BEEN ACCOUNTED IN THE BOOKS OF ACCOUNT EXCEPT THE DISCLO SURE, THE ASSESSING OFFICER COULD NOT BRING ANY MATERIAL O RE CORD INDICATING THE UNEXPLAINED INVESTMENT BY THE ASSESS EE OR POSSESSION OF ASSESSEE EVEN UNEXPLAINED ASSETS. THE ASSESSEE HAVE DEMONSTRATED BEFORE US THAT DECLARANT WAS SEMI-LITERATE PERSON, COULD NOT UNDERSTAND THE COMP LEXITY OF THE QUESTION AS WELL AS THE IMPLICATION OF THE DISCLOSU RE. THE ALLEGED DISCLOSURE OF RS.9 LACS BY SHRI JAYESHBHAI PATEL AND RS.4 LACS BY SHRI BABUBHAI C. CHAUHAN WERE MADE UND ER THE MISTAKEN BELIEF OF FACTS. OTHERWISE, ALL THE ENTRIE S HAVE BEEN DULY EXPLAINED BY THE ASSESSEE. IT WOULD NOT BE SAF E TO REVERSE THE FINDING OF THE CIT(APPEALS) AND CONFIRM THE ADD ITION PURELY ON THE BASIS OF DISCLOSURE MADE BY THESE TWO PERSON WHO COME FROM A RURAL BACKGROUND HAVING LACK OF SUFFICIENT K NOWLEDGE AND MORE PARTICULARLY SUCH DISCLOSURE WAS RETRACTED WIT HIN JUST TWO DAYS. THE LEARNED CIT (APPEALS) HAS EXAMINED THIS I SSUE IN DETAIL. THE LEARNED DR EXCEPT HARPING UPON THE ADMI SSIBILITY OF THE DISCLOSURE MADE U/S.132(4) OF THE ACT COULD NOT DRAW OUT ATTENTION TOWARDS ANY OTHER MATERIAL FOR SUBSTANTIA TING THE ADDITION BASED ON SUCH DISCLOSURE. IN OUR OPINION, IN THE FACTS OF THE PRESENT CASE BEFORE MAKING THE ADDITION ON THE BASIS OF RETRACTED DISCLOSURE, THE ASSESSING OFFICER OUGHT T O HAVE IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 21 CORROBORATED THIS ADMISSION BY SOME OTHER INDEPENDE NT EVIDENCE EITHER DIRECT OR CIRCUMSTANTIAL. WE DO NOT SEE ANY GOOD REASON TO INTERFERE IN THE FINDING OF THE LEAR NED CIT (APPEALS) AND UPHOLD THE SAME. THE CIT (APPEALS) AS WELL AS THE TRIBUNAL BOTH HAVE FOUND THAT AFTER RETRACTING FROM EARLIER STATEMENT, NO EFFORTS WERE MADE TO BRING ON RECORD ANY MATERIAL TO JUSTIFY THIS ADDITI ON. CONSIDERING THE CONCURRENT FINDINGS OF CIT (APPEALS ) AND THE TRIBUNAL, WE FIND NO JUSTIFICATION TO INTERFERE WIT H THE IMPUGNED JUDGMENT. WE SEE NO SUBSTANCE IN THE APPEAL. NO SUB STANTIAL QUESTION OF LAW DOES ARISE. THE APPEAL STANDS DISMI SSED. 13. SINCE, IN THE PRESENT CASE BEFORE US, THE REVEN UE HAS NOT CORROBORATED THE ADMISSION OF THE PARTNER OF THE AS SESSEE FIRM WITH ANY COGENT EVIDENCE ON RECORD, OTHER THAN THE SEIZE D PAPER MARKED WITH SOME AMBIGUOUS NOTING, THEREFORE WE ARE BOUND BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT CITED SUPRA ON TH IS ISSUE. THE LEARNED ARS ARGUMENTS THAT THE ASSESSEE ONCE HAVI NG RETRACTED THE STATEMENT, THE ONUS SHIFTS TO THE ASSESSING OFFICER TO MAKE PROPER ENQUIRY AND TO BRING EVIDENCE ON RECORD TO SUSTAIN THE ADDITION IS OF CONSIDERABLE FORCE. THE ASSESSEE HAD ALSO RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MEHTA PARI KH VS CIT, 30 ITR 181 WHEREIN IT WAS HELD THAT WHEN AN AFFIDAVIT IS FILED THE AVERMENTS THEREIN ARE ASSUMED TO BE CORRECT UNLESS THE SAME IS PROVED OTHERWISE. THE LEARNED AR FURTHER REFERRED TO THE DECISION OF THE JURISDICTIONAL GUJARAT HIGH COURT IN THE CASE O F GLASS LINES EQUIPMENTS CO. LTD. VS CIT REPORTED IN 253 ITR 454 IN SUPPORT OF HIS ARGUMENTS THAT THE AO WAS BOUND TO ACCEPT THE EXPLA NATION OF THE IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 22 ASSESSEE UNTIL AND UNLESS THE CROSS EXAMINATION PRO VES OTHERWISE. AFTER ANALYZING THE FACTS OF THE CASE, WE FIND THAT THE ADDITION OF RS.84 LACS IS MADE BY THE REVENUE ONLY ON THE BASIS OF THE AMBIGUOUS NOTING IN A SHEET OF PAPER SEIZED DURING THE COURSE OF SEARCH FROM WHICH NO DEFINITE INFERENCE IS POSSIBLE . FURTHER, THE AFFIDAVIT FURNISHED BY THE SELLER OF THE LAND IS AL SO NOT EXAMINED BY THE REVENUE AND THE SELLER IS NOT CROSSED EXAMINED TO V ERIFY THE CORRECT FACTS. THERE IS NO CORROBORATIVE EVIDENCE TO SUGGES T THAT THE ASSESSEE HAD MADE UNACCOUNTED INVESTMENT OF RS.84 L ACS FOR PURCHASE OF THE LAND. THE MARKET VALUE ACCEPTED BY THE LAND REGISTRATION AUTHORITIES HAS NOT AT ALL BEEN CONSID ERED WHILE FRAMING THE ASSESSMENT ORDER. FOR THE ABOVE SAID REASONS, W E ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE LEARN ED AO FOR RS.84 LACS TOWARDS ALLEGED UNDISCLOSED INVESTMENT IS NOT SUSTAINABLE, AND, THEREFORE, WE HEREBY DIRECT THE SAME TO BE DELETED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-03-2013 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT LAKSHMIKANT LAKSHMIKANT LAKSHMIKANTA AA A DEKA/ DEKA/ DEKA/ DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD IT (SS) A NO.135/AHD/2005 (B. P. RELATED TO 2001-02 AND UP TO 17-07-2002) M/S. NATIONAL BUILDERS & DEVELOPERS VS ACIT, CC-2, VAPI 23 1. DATE OF DICTATION: NO DICTATION: APPLIED MULTIP LAN - 07-03-13/08-03-13/12-03-13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: N.A. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: