Matang Properties Pvt.Ltd., Ahmedabad V. The ACIT.,Cent.Circle-2(3), Ahmedabad

ITSSA 96/AHD/2012

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1785 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Keywords: Unexplained investment; Capital asset; Invalid notice; Income from undisclosed sources; Document seized; Principle of natural justice; Opportunity of cross examination; Cost of acquisition; Fair market value; Third party statement; Block assessment; Documents seized
• Section: 143(3); 153A; 131; 68; 148; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER IT(SS)A NO. 96/AHD/2012 / ASSESSMENT YEAR: 2008-09 MATANG PROPERTIES PVT LTD, GANESH CORPORATE HOUSE, 100 FT. HEBATPUR THALTEJ ROAD, NR. SOLA BRIDGE, OFF. S.G. HIGHWAY, AHMEDABAD .. APPELLANT PAN : AADCM 2571 L VS THE ACIT, CENTRAL CIRCLE 2 (3), AHMEDABAD .. RESPONDENT IT(SS)A NO. 97/AHD/2012 / ASSESSMENT YEAR: 2008-09 MEDHBHUTI COMPLEX PVT LTD, GANESH CORPORATE HOUSE, 100 FT. HEBATPUR THALTEJ ROAD, NR. SOLA BRIDGE, OFF. S.G. HIGHWAY, AHMEDABAD .. APPELLANT PAN : AADCM 2569 E VS THE ACIT, CENTRAL CIRCLE 2 (3), AHMEDABAD .. RESPONDENT IT(SS)A NO. 98/AHD/2012 / ASSESSMENT YEAR: 2008-09 MADHUMATI REALTY PVT LTD, GANESH CORPORATE HOUSE, 100 FT. HEBATPUR THALTEJ ROAD, NR. SOLA BRIDGE, OFF. S.G. HIGHWAY, AHMEDABAD .. APPELLANT PAN : AADCM 2567 L IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 2 - VS THE ACIT, CENTRAL CIRCLE 2 (3), AHMEDABAD .. RESPONDENT IT(SS)A NO. 99/AHD/2012 / ASSESSMENT YEAR: 2008-09 MAITRIK BUILDCON PVT LTD, GANESH CORPORATE HOUSE, 100 FT. HEBATPUR THALTEJ ROAD, NR. SOLA BRIDGE, OFF. S.G. HIGHWAY, AHMEDABAD .. APPELLANT PAN : AADCM 2570 M VS THE ACIT, CENTRAL CIRCLE 2 (3), AHMEDABAD .. RESPONDENT IT(SS)A NO. 100/AHD/2012 / ASSESSMENT YEAR: 2008-09 MARTAND ESTATE PVT LTD, GANESH CORPORATE HOUSE, 100 FT. HEBATPUR THALTEJ ROAD, NR. SOLA BRIDGE, OFF. S.G. HIGHWAY, AHMEDABAD .. APPELLANT PAN : AADCM 2572 K VS THE ACIT, CENTRAL CIRCLE 2 (3), AHMEDABAD .. RESPONDENT IT(SS)A NO. 101/AHD/2012 / ASSESSMENT YEAR: 2008-09 TIRTH DEVELOPERS PVT LTD, GANESH CORPORATE HOUSE, 100 FT. HEBATPUR THALTEJ ROAD, NR. SOLA BRIDGE, OFF. S.G. HIGHWAY, AHMEDABAD .. APPELLANT PAN : AABCT 7124 J IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 3 - VS THE ACIT, CENTRAL CIRCLE 2 (3), AHMEDABAD .. RESPONDENT IT(SS)A NO. 102/AHD/2012 / ASSESSMENT YEAR: 2008-09 MADHUJ REALTY PVT LTD, GANESH CORPORATE HOUSE, 100 FT. HEBATPUR THALTEJ ROAD, NR. SOLA BRIDGE, OFF. S.G. HIGHWAY, AHMEDABAD .. APPELLANT PAN : AADCM 2568 F VS THE ACIT, CENTRAL CIRCLE 2 (3), AHMEDABAD .. RESPONDENT ASSESSEE(S) BY : SHRI DHIREN SHAH , AR REVENUE BY : SHRI R.I. PATEL , CIT - DR / DATE OF HEARING 08/04/2016 /DATE OF PRONOUNCEMENT 12/05/2016 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: ALL THESE SEVEN APPEALS FILED BY DIFFERENT ASSESSEE S ARE DIRECTED AGAINST THE COMMON ORDER OF THE COMMISSION ER OF INCOME-TAX (APPEALS)-III, AHMEDABAD FOR ASSESSMENT YEAR 2008-09. SINCE ALL THESE APPEALS PERTAIN TO SAME G ROUP AND ALMOST IDENTICAL ISSUES WERE RAISED IN THESE APPEAL S; THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 4 - 2. IN IT(SS)A NO.96/AHD/2012, THE ASSESSEE HAS TAK EN THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ADDITION ON ACCOUNT OF ALLEGED CASH PAYMENT RECEIVED FROM CCCPL OF RS.1,48,42,565/- CONFIRMED B Y THE LD. CIT(A) MAY KINDLY BE DELETED. 2. DISALLOWANCE OF COMPENSATION PAID TO FRONTLINE FINANCIAL SERVICES PVT LTD OF RS.27,28,000/- CONFIR MED BY THE LD. CIT(A) MAY KINDLY BE DELETED. 3. THE BRIEF FACTS OF THESE CASES ARE THAT THE ASSE SSEE- COMPANIES WERE THE CO-OWNERS OF LAND BEARING PLOT N O.67/1, IN TP NO.42, VILLAGE SOLA, THALTEJ, AHMEDABAD. THE LA ND HAD BEEN PURCHASED BY M/S. CARE CARDIOVASCULAR CONSULTA NT PVT. LTD (HEREIN AFTER REFERRED AS CCCPL FOR THE SAKE OF BREVITY) FROM THE FOLLOWING 7 ASSESSEE-COMPANIES, INCLUDING THIS ASSESSEE. I. MATANG PROPERTIES PVT LTD, II MARTAND ESTATE PVT LTD III MAITRIK BUILDCON PVT LTD IV MEDBHUTI COMPLEX PVT LTD V MADHUMATI REALTY PVT LTD VI MADHUJ REALTY PVT LTD VII TIRTH DEVELOPERS PVT LTD 3.1 THE LAND WAS SOLD BY ASSESSEE-COMPANIES TO CCCP L ON 17.10.2007 FOR A CONSIDERATION OF RS.2.50 CRORE AS PER THE DOCUMENTS REGISTERED. M/S. CCCPL IS A COMPANY RUN BY GROUP IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 5 - OF HEART SPECIALIST DOCTORS, WHO ARE POPULARLY KNOW N AS HEART CARE GROUP AND THIS IS HEADED BY DR. KEYUR PARIKH, WHO IS A RENOWNED CARDIOLOGIST. THE MAIN PERSONS OF THE GROU P ARE AS UNDER :- CARDIOLOGISTS (1) DR KEYUR PARIKH (2) DR MILAN CHAG (3) DR. URMIL SHAH (4) DR. HEMANT BAXI (5) DR. ANISH CHANDRANA (6) DR AJAY NAIK (7) DR SATYA GUPTA CARDIAC SURGEON (1) DR ANIL JAIN (2) DR. S.N. MALLYA (3) DR. NAMAN SHASLRI (4) DR. VISHAL GUPTA (5) DR. CHIRAG MEHTA (6) DR. DHIREN SHAH (7) DR.BHARAT TRIVEDI 3.2 THE CARDIOLOGIST AND CARDIAC SURGEON GROUP DECI DED TO START A HOSPITAL PROJECT FOR WHICH LAND WAS IDENTIFIED NE AR SOLA, AHMEDABAD. THE LAND WAS DECIDED TO BE PURCHASED IN THE NAME OF CCCPL. FOR MEETING LAND COST AND OTHER EXPENSES OF THE PROJECT, IT WAS DECIDED TO BRING CAPITAL BY THE ABO VE PARTICIPATING DOCTORS. THE TOTAL COST OF THE PROJECT WAS ESTIMATE D AT RS.50 CRORES TO RS.52 CRORES. AFTER THE PURCHASE OF LAND, DIFFERENCES AROSE BETWEEN THE CARDIOLOGISTS AND CARDIAC SURGEON S. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 6 - THEREAFTER, CARDIAC SURGEON GROUP SEPARATED AND NEW DOCTORS WERE INTRODUCED IN THE GROUP ARE AS UNDER: I) DR. GUNVANT PATEL II) DR. P.S. IYENGAR III) DR. JOYAL SHAH IV) DR. MIHIR TANNA AS PER DOCUMENTS SEIZED AS ANNEXURE A-2, PAGE 1TO 5 0 FROM THE PREMISES OF CCCPL, THE DOCUMENTED PRICE OF LAND WAS RS.2.50 CRORE. AS PER THESE DOCUMENTS, THE PAYMENT FOR THE LAND WAS MADE ON 15.10.2007 AS UNDER:- RS. CHEQUE NO CHEQUE DATE 29,28,756 42007 15.10.2007 24,79,891 42008 15.10.2007 35,83,840 42010 15.10.2007 39,56,842 42011 15.10.2007 34,18,342 42012 15.10.2007 35,96,648 42013 15 .10.2007 50,35,681 42014 15.10.2007 2,50,00,000 3.3 IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS DISCUSSED THAT FOR THE PURCHASE OF LAND BY CCCPL FO R THE PURPOSE OF CONSTRUCTION OF THE HOSPITAL, BESIDES TH E CHEQUE PAYMENT OF RS.2.50 CRORES, THE DOCTORS PAID TOTAL C ASH OF RS.15.07 CORES APPROXIMATELY. THE SALE CONSIDERATIO N OF RS.15.07 CRORES RECEIVED BY THE ASSESSEE COMPANIES WERE ASSESSED BY THE ASSESSING OFFICER IN THE HAND OF TH E RESPECTIVE ASSESSEE-COMPANIES IN PROPORTION TO AREA OF LAND HE LD BY THEM. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 7 - AS PER THE DOCUMENTS, THE AREA OF LAND SOLD TO CCCP L, BELONGING TO EACH ASSESSEE-COMPANY IS AS UNDER:- SR. NO. NAME OF THE COMPANY AREA IN SQUARE METERS ADDITION MADE BY THE AO 1 MATANG PROPERTIES PVT LTD 1626 175,26,514 2 MARTAND ESTATE PVT LTD 1377 148,42,565 3 MAITRIK BUILDCON PVT LTD 1990 214,50,039 4 MEDBHUTI COMPLEX PVT LTD 2197 236,81,275 5 MADHUMATI REALTY PVT LTD 1998 215,36,270 6 MADHUJ REALTY PVT LTD 19 97 215,25,492 7 TIRTH DEVELOPERS PVT LTD 2796 301,37,845 AGAINST THE ABOVE ADDITIONS, ALL THE SEVEN COMPANIE S HAVE FILED APPEAL BEFORE THE CIT(A), WHEREIN VARIOUS CON TENTIONS WERE RAISED BY THE ASSESSEE WHICH ARE REPRODUCED HEREIN BELOW:- ADDITION ON ACCOUNT OF ALLEGED CASH PAYMENT RECEIV ED FROM CCCPL RS.2,15,36,270/- IN CONTINUATION OF THE SYNOPSIS OF ARGUMENTS DATED 15.04.2011, THE APPELLANT COMPANY HAS TO SUBMIT THE BULLET POINTS ARGUMENTS IN A SUMMARIZED MANNER AS UNDER:- I) THERE WAS NO SEARCH PROCEEDINGS IN THE CASE OF THE APPELLANT COMPANY AND OTHER SIX CO-OWNERS APPELLANT COMPANIES. II) THAT THE NOTICE U/S 153C DATED 11.06.2009 WAS ISSUE D IN THE CASE OF THE APPELLANT COMPANY AND OTHER FIVE CO- OWNERS APPELLANT COMPANIES. THE APPELLANT COMPANY CHALLENGED THE VALIDITY OF NOTICE ISSUED U/S 153C O F THE ACT DATED 11-6-2009 AND SIMILARLY AND OTHER FIVE CO - OWNERS APPELLANT COMPANIES HAVE ALSO CHALLENGED THE VALIDITY OF THE NOTICES ISSUED U/S. 153C DATED 11-6 - 2009. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 8 - III) THAT THE LD A.O. INFORMED THE APPELLANT COMPANY THA T THE NOTICE ISSUED U/S 153C OF THE ACT DATED 11-6-20 09 WAS WITHDRAWN AS THERE WAS A FACTUAL MISTAKE MENTIONING THAT THE SEARCH U/S. 132 WAS CONDUCTED I N APPELLANT'S CASE ON 21-08-2006. THE LD AO HAS ISSUE D NEW NOTICE U/S 153C DATED 7-09-2010 AND HE HAS ALSO COMMUNICATED THE APPELLANT COMPANY THAT BEFORE THE ISSUE OF FRESH NOTICE U/S 153 DATED 7-9-2010 ON THE BASIS OF SATISFACTION NOTE RECORDED BY THE LD A.O. ON 7- 9-2010. IV) THE ABOVE FACTS WERE INFORMED TO THE APPELLANT COMP ANY BY THE LD AO VIDE HIS OFFICE LETTER DATED 26-10-201 0 AND ALONGWITH THE SAID LETTER, THE SATISFACTION NOTE DA TED 7-9- 2010 RECORDED BY THE LD. AO FOR INITIATION OF PROCE EDINGS U/S 153C THE CASE OF THE APPELLANT COMPANY AND OTH ER SIX CO-OWNERS APPELLANT COMPANIES WERE ALSO ANNEXED WITH THE SAID LETTER. (PLEASE REFER PAGE NO, 14B TO 155 OF THE PAPER BOOK NO. I AND RELEVANT PAGE NO. 150 TO 1 55 OF PAPER BOOK -I ) FROM THE PERUSAL OF THE SATISFACTION NOTE DATED 7-9 - 2010, THE HEADING MENTIONED IS AS UNDER :- 'SATISFACTION NOTE FOR INITIATION OF PROCEEDINGS U/ S 153C AGAINST THE PERSONS WHOSE BOOKS OF ACCOUNTS / DOCUMENTS SEIZED FROM THE PREMISES OF DR KEYUR PARI KH DURING THE COURSE OF SEARCH ACTION U/S 132 ON 21-8- 2010' (CORRECT DATED 21-8-2008) IN THE SAID SATISFACTION NOTE, THE DOCUMENTS REFERR ED AS RELEVANT TO THE APPELLANT COMPANY AND OTHER SIX CO- OWNERS APPELLANT COMPANIES WERE ONLY REGISTERED SALE DEED / CONVEYANCE DEED OF LAND BELONGING TO THE APPELLANT COMPANY AND OTHER SIX CO-OWNERS APPELLANT COMPANIES WHICH ARE SOLD BY THEM TO CCCPL AND OTHER RECORDS W HICH WERE THE REGULAR RECORDS DULY REFLECTED IN THE BOOK S OF ACCOUNTS AND THE SATISFACTION NOTE WAS NOT REFERRIN G TO ANY OTHER INCRIMINATING MATERIAL AND/OR SEIZED MATERIAL FOR THE ALLEGED CASH TRANSACTIONS FOR WHICH THE ADDITION HA S BEEN MADE IN THE ASSESSMENT ORDER THE SATISFACTION NOTE WAS ALSO NOT REFERRING TO ANY OF THE STATEMENTS OF SIX DOCTORS WHICH HAS BEEN RELIED UPON BY THE LD AO WHILE FRAMI NG THE ASSESSMENT ORDER AS WELL AS THE LD A.O. HAS ALSO NO T RELIED UPON THE STATEMENT OF DR KEYUR PARIKH, NIHIR SHAH A ND IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 9 - ARPIT PATEL. IN SHORT, IT CAN BE SAID THAT THE LD A .O HAS NOT REFERRED AND/OR RELIED UPON THE ANY OF THE STATEMEN TS OF THE DIRECTORS OF CCCPL AND/OR ANY OTHER PERSONS OF THE MANAGEMENT OF CCCPL FOR RECORDING OF THE SATISFACTI ON NOTE. FROM THE AFORESAID ANALYSIS OF SATISFACTION N OTE, ONE CAN SAY THAT IN THE SEIZED MATERIAL, THERE WAS NO INCRIMINATING MATERIAL WHERE THE NAME OF THE APPE LLANT COMPANY AND OTHER SIX CO-OWNERS APPELLANT COMPAN IES WERE APPEARING FOR THE ALLEGED CASH TRANSACTIONS AS WELL AS IN NONE OF THE GIVEN BY THE DIRECTORS OF CCCPL AND/ OR ANY PERSONS IN THE MANAGEMENT OF CCCPL THE NAME OF THE APPELLANT COMPANY OR OTHER SIX CO-OWNERS APPELLANT COMPANIES REFERRED TO OR FOUND TO BE STATED FOR ALL EGED CASH TRANSACTION. V) THE APPELLANT COMPANY HAS TO SUBMIT THAT THE FIRST NOTICE ISSUED U/S. 153C OF THE ACT HAS BEEN ADMITTE D AS INVALID NOTICE BY THE LD A.O HIMSELF AND EVEN WHEN THE FIRST NOTICE WAS ISSUED ON 11.06.2009, THE LD. AO H AS NOT EVEN RECORDED THE SATISFACTION NOTE FOR ISSUANC E OF NOTICE U/S. 153C OF THE ACT. FROM THE SUBMISSIONS M ADE IN EARLIER PARAS, IT SEEMS THAT THE LD. AO FOR THE FIRST TIME RECORDED THE SATISFACTION NOTE ON 7-9-2010. VI) THE APPELLANT COMPANY HAS TO SUBMIT THAT THE MATERI AL FOUND AND SEIZED FROM THE PREMISES OF CCCPL WHICH H AS BEEN REFERRED TO BY THE LD. A0 IN THE ASSESSMENT OR DER DOES NOT CONTAIN THE NAME OF THE APPELLANT CO MPANY AND/OR OTHER SIX CO-OWNERS APPELLANT COMPANIES . EVEN THE SEIZED MATERIAL REFERRED TO IN THE ASSESSM ENT ORDER DOES NOT HAVE ANY JOTTINGS AND/OR NOTINGS AS REGARDS TO THE ALLEGED CASH PAYMENTS TO THE APPELLA NT COMPANY AND OTHER SIX CO-OWNERS APPELLANT COMPANIES AND EVEN THE PARTICULARS OF THE LAND AS TO THE SURV EY NO, AREA OF LAND OR ANY OTHER DETAILS WERE ALSO NOT FOU ND TO BE NOTED IN THE SEIZED MATERIAL. HENCE, THE APPE LLANT COMPANY HAS TO SUBMIT THAT THERE IS NO C OGENT MATERIAL AND/OR INDEPENDENT CLINCHING EVIDENCES AVAILABLE WITH THE LD. AO FOR MAKING AN ALLEGATION AS REGARDS TO THE ALLEGED CASH PAYMENT BEING RECEIVED BY THE APPELLANT COMPANY AND OTHER SIX CO-OWNERS APPELLANT COMPANIES FOR WHICH THE ADDITION HAS BEEN MADE IN THE ASSESSMENT ORDER. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 10 - VII) THAT THE STATEMENTS OF SIX DOCTORS RELIED UPON BY THE LD. AO IN THE ASSESSMENT ORDER IS ALSO UNJUSTIFIED AND BAD IN LAW FOR THE FOLLOWING REASONS :- A) THAT NONE OF THE SIX DOCTORS IN THEIR STATEMENTS HAVE REFERRED THE NAME OF THE APPELLANT COMPANY AND OTHE R SIX CO-OWNERS APPELLANT COMPANIES AS REGARDS TO THE ALLEGED CASH PAYMENT TO THE APPELLANT COMPANY. B) THAT THE SEARCH LOOK PLACE IN THE CASE OF CCCPL GROUP AND AT THE RESIDENCE OF DIRECTORS ON 21-08-20 08 AND THE LD. A.O. HAS NOT RELIED UPON ANY OF THE STATEMENTS OF THE DIRECTORS RECORDED IN THE YEAR 20 08 WHEN THE SEARCH TOOK PLACE AND THEREFORE, IT CAN BE SAID THAT THE SAID SIX DOCTORS AS WELL AS DR. KEYUR PARI KH AND/OR OTHER PERSONS IN THE MANAGEMENT OF CCCPL HAVE ALSO NOT STATED ANYTHING ABOUT THE ALLEGED CAS H PAYMENT TO THE APPELLANT COMPANY AND OTHER SIX CO- OWNERS APPELLANT COMPANIES FOR WHICH ADDITION HAS B EEN MADE IN THE ASSESSMENT ORDER. C) THAT THE STATEMENTS OF SIX DOCTORS HAVE BEEN REC ORDED IN APRIL, 2010 WHICH ARE NEARLY AFTER A GAP OF MORE THAN ONE AND HALF YEAR AFTER THE SEARCH TOOK PLACE IN TH E CASE OF CCCPL GROUP ON 21-8-2008 AND THEREFORE, THE STATEMENTS WHICH WERE BROUGHT ON RECORD IN 2010 ARE AN AFTER-THOUGHT STATEMENTS OF 6 DOCTORS AND THE STATEMENTS GIVEN BY SIX DOCTORS ARE SELF-SERVING STATEMENTS. FROM THE PERUSAL OF THE STATEMENTS OF S IX DOCTORS BROUGHT ON RECORD IN APRIL, 2010 BY THE LD. A.O IN ASSESSMENT ORDER ARE NOT THE STATEMENTS ON OATH AS THE SAME SEEMS TO BE NOT RECORDED BY OBSERVING THE PROCEDURE LAID DOWN FOR RECORDING OF THE STATEMENT ON OATH AS PER THE PROVISIONS OF SECTION 131 OF THE AC T AND FROM THE QUESTIONS RAISED TO THE SIX DOCTORS, IT IS A STEREO TYPE QUESTIONS RAISED BY THE LD. A.O AND THE ANSWERS GIVEN BY THE SIX DOCTORS ARE ALSO STEREO TY PE AND THEREFORE, IT CAN BE INTERPRETED THAT IT IS NOT A S TATEMENT RECORDED ON OATH, BUT SEEMS TO BE THAT THE LD. A.O ISSUED THE QUESTIONNAIRE TO THE SIX DOCTORS AND THE SIX DOCTORS IN COMMON CONSENSUS BASIS SUBMITTED THE REP LY IN WRITING AS A SELF SERVING STATEMENT TO BUY PEACE AND TO AVOID LITIGATION WITH THE DEPARTMENT. WHATEVER, THE INCOME THE OFFERED IN THEIR RETURN OF INCOME, THEY HAVE NOT STATED THE SOURCE OF INCOME AND THE SAME HAS BE EN IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 11 - STATED TO BE FROM UNDISCLOSED SOURCES. FROM THE ANALYSIS OF THE STATEMENTS OF SIX DOCTORS AS NO WHE RE THE NAME OF THE APPELLANT COMPANY AND OTHER SIX CO-OWNE RS APPELLANT COMPANIES HAVE BEEN MENTIONED OR REFERRED BY THE SIX DOCTORS, THEREFORE, THE SAID STATEMENT CANN OT BE USED AGAINST THE APPELLANT COMPANY. FOR THE SAKE OF ARGUMENTS, YOUR HONOUR AS LD. CIT (A) PROPOSES TO CONSIDER THE SAID SIX DOCTORS STATEMENTS IN THE CAS E OF APPELLANT COMPANY, THEN AS THE LD. A.O HAS 'NOT GRA NTED THE OPPORTUNITY OF CROSS EXAMINATION OF SIX DOCTORS EVEN THOUGH THE APPELLANT COMPANY AND OTHER SIX CO-OWNER S COMPANIES HAVE REQUESTED TIME AND AGAIN TO THE LD. A.O TO GRANT THE OPPORTUNITY OF CROSS EXAMINATION OF SI X DOCTORS WHO ARE DEPARTMENTAL WITNESS, THE STATEMENT OF SIX DOCTORS CANNOT BE USED AGAINST THE APPELLANT COMPANY FOR WHICH THE APPELLANT COMPANY HAS RELIED UPON THE JUDICIAL PRONOUNCEMENTS OF THE HON'BLE SUPREME COURT, VARIOUS HIGH COURTS AND TRIBUNALS AS REFERRED TO HEREIN BEFORE IN EARLIER PARAS. D) THAT THE LD. A.O HAS NOT CARRIED OUT THE COMPLET E INQUIRY AND INVESTIGATION PROCEEDINGS EVEN AFTER BR INGING ON RECORD THE STATEMENT OF SIX DOCTORS IN APRIL, 20 10. THE SIX DOCTORS WHO ARE DEPARTMENTAL WITNESS HAVE IDENTIFIED DR. KEYUR PARIKH, NIHIR SHAH AND ARPIT P ATE! IN THEIR STATEMENTS THAT THEY WERE LOOKING AFTER TH E ENTIRE PROJECT OF THE CCCPL AND WHATEVER CONTRIBUTI ON MADE BY THE SIX DOCTORS TO CCCPL FOR THE PROJECT, T HE SAME HAS BEEN MADE TO DR. KEYUR PARIKH, NIHIR SHAH AND ARPIT PATEL AND THEREFORE, AS PER THE ENQUIRY A ND INVESTIGATION PROCEDURE NORMS, THE LD. A.O WAS DUTY BOUND TO CARRY .OUT NECESSARY ENQUIRY WITH DR. KEYU R PARIKH, NIHIR SHAH AND ARPIT PATEL BY RECORDING THE IR STATEMENTS ON OATH BY CONFRONTING THE STATEMENT OF SIX DOCTORS. AS THE LD. A.O HAS NOT BROUGHT ON RECORD T HE STATEMENTS OF DR. KEYUR PARIKH, NIHIR SHAH AND ARPI T PATEL AND ACCORDINGLY, THE APPELLANT COMPANY HUMBLY SUBMITS THAT EITHER DR. KEYUR PARIKH, NIHIR SHAH AN D ARPIT PATEL HAVE NOT ADMITTED IN THEIR STATEMENTS T HE ALLEGATION MADE BY THE SIX DOCTORS OR THE LD. A.O H AS NOT RECORDED THE STATEMENTS OF DR. KEYUR PARIKH, NI HIR SHAH AND ARPIT PATEL TO COMPLETE THE ENQUIRY AND INVESTIGATION PROCEEDINGS AND BRING THE ENQUIRY TO THE LOGICAL END. ACCORDINGLY, THE APPELLANT COMPANY HAS TO SUBMIT THAT THE LD. A.O HAS NOT BROUGHT ON RECORD A NY IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 12 - COGENT MATERIAL AND/OR IMPENDENT CLINCHING EVIDENCE FOR MAKING AN ADDITION IN THE CASE OF APPELLANT COMPANY AND OTHER SIX CO-OWNERS APPELLANT COMPANIES FOR THE ALLEGED CASH PAYMENT RECEIVED BY THE APPELLANT COMP ANY AND OTHER SIX CO-OWNERS APPELLANT COMPANIES AND THEREFORE, THE ADDITION MADE IN THE CASE OF THE APP ELLANT COMPANY DOES NOT STAND ON FACTS, ON MERITS' AND/OR LEGAL GROUNDS AND THE SAME IS REQUIRED TO BE DELETE D. E) THE LD. A.O HAS NOT BROUGHT ON RECORD ANY COMPARATIVE SALES INSTANCE FROM THE LAND REVENUE RECORDS IN SUPPORT OF THE ALLEGED CASH PAYMENTS REC EIVED BY THE APPELLANT COMPANY AND/OR OTHER SIX CO-OWNERS APPELLANT COMPANIES FOR THE ALLEGED LAND DEAL TRANSACTIONS FOR WHICH THE ADDITION IS MADE IN THE ASSESSMENT ORDER AND EVEN THE LD. A.O HAS ALSO NOT REFERRED THE MATTERS TO THE DVO TO ASCERTAIN THE FA IR MARKET VALUE ON THE DATE OF LAND DEAL TRANSACTION. THE APPELLANT COMPANY HAS TO SUBMIT THAT THE LD. A.O HA S NOT DISCHARGED HIS BURDEN THAT THE SALES CONSIDERAT ION STATED IN THE SALE DEED IS UNDERSTATED. AS AND WHEN THE ASSESSING AUTHORITY MAKES AN ALLEGATION THAT THE SA LES CONSIDERATION STATED IN THE SALE DEED IS UNDERSTAND , THE BURDEN IS ON THE ASSESSING AUTHORITY TO DISCHARGE T HE SAID BURDEN WHICH HAS NOT BEEN DISCHARGED IN THE PRESENT CASE OF THE APPELLANT COMPANY AND OTHER SIX CO- OWNERS APPELLANT COMPANIES WHILE BRINGING ON RECORD ANY INDEPENDENT CLINCHING MATERIAL AND/OR EVIDENCE. VIII) THE APPELLANT COMPANY RELIES UPON THE DECISIO N OF HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE VS. ITO & OTHERS (1981) 131 ITR 597 AND THE DECISION OF ITAT, AHMEDABAD IN THE CASE OF GAURANG B. SOLANKI V S. ACIT - ITAT AHMEDABAD BENCH-A (120 TAXMAN 162. CONSIDERING THE ABOVE FACTS AND LEGAL SUBMISSIONS A S WELL AS THE CONTENTIONS AND LEGAL SUBMISSIONS PUT F ORTH BEFORE YOUR HONOUR IN THE SYNOPSIS OF ARGUMENTS DAT ED 15.04.2011, THE ADDITION ON ACCOUNT OF ALLEGED CASH PAYMENTS RECEIVED FROM CCCPL OF RS.2,15,36,270/- DESERVES TO BE DELETED IN TOTO. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 13 - 3.4 THE STAND OF THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS BEEN THAT THE STATEMENT SHRI. SHEKARBHAI GOVIND BHAI PATEL WAS RECORDED ON 04.11.2008 BY THE ITO (INV.), UNIT- II, AHMEDABAD U/S 131 OF THE ACT. SHRI SHEKARBHAI GOVI NDBHAI PATEL, IN THE CAPACITY OF DIRECTOR OF 7 APPELLANT C OMPANIES IN RESPONSE TO QUESTION NO. 22 & 23 HAD STATED AS UNDE R:- 'Q.22. I AM SHOWING YOU PRINT OUT OF A FILE NAMED ' KIRTIS LETTER 31-3-2008' STORED AT THE COMPUTER OF CARE CARDIOVASCULAR CONSULTANTS PRIVATE LIMITED AT OFFIC E PREMISES AND PRINT OUT GENERATED FROM ITS BACK-UP. THE FOOTER OF THIS FILE, WHICH IS IN TWO PAGES, SERIALL Y NUMBERED AT 22 AND 23 MENTIONS THE PATH 'H:\AUDIT\CCCPL\2007-08\OBSERVATIONS ON KIRTI'S LETTER-31-03-08.DOC'. THE ABOVE PAGE IS THE COMMENT MADE BY AUDITOR OF THE COMPANY ON THE PROPOSED DRAF T LETTER DATED 31-3-2008 BEING WRITTEN BY DR. KEYUR PARIKH TO SHRI KIRFI PATEL IN RESPONSE TO HIS LETTE R DATED 29-3-2008. AT PARA 2 OF THIS LETTER, THE AUDITOR HA S MADE FOLLOWING OBSERVATIONS: 'CLAUSE 1 : THE FOUNDING PRACTICING CARDIOLOGY PARTNERS (PROMOT ERS) AND DR. ASIT JAIN (INITIAL INVESTMENT OF RS. __ MIL LION) HAVE PAID PER SHARE RS.66. HOWEVER, THIS CANNOT BE WRITTEN BY CCC AS RS. 56 IS PAID IN CASH TOWARDS PURCHASE OF LAND'. THE ABOVE OBSERVATION DEARLY ESTABLISH THAT CASH HA S BEEN PAID BY THE COMPANY CCCPL FOR PURCHASE OF LAND FOR HOSPITAL TO AFORESAID 7 COMPANIES. SINCE THE TO TAL NUMBER OF SHARES ISSUED TO THE DOCTORS ON 3-2-08 AN D 31-3-08 IS 2791838 SHARES, AT RS. 56 PER SHARE, THE CASH COMPONENT OF LAND PRICE, WAS RS. 15.63 CRORES. PLEASE OFFER YOUR COMMENTS ON THIS ISSUE. ANS. 22. YOUR OBSERVATION IS NOT CORRECT, IT IS ONL Y A GUESS WORK. THE PAGE 22 SHOWN TO ME NO WHERE REFERS THE NAME OF ANY OF THE 7 COMPANIES AS WELL AS IT DO ES IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 14 - NOT REFERS TO ANY PARTICULARS OF LAND SUCH AS LOCAT ION, SURVEY NO., FINAL PLOT NO. OR AREA, THEREFORE, THE OBSERVATION MADE BY YOU IN THE QUESTION IS ONLY A G UESS WORK NOT RELATED AS WELL AS RELEVANT TO THE 7 COMPA NIES. SIMILARLY, FROM VERIFICATION OF PAGE NO. 23, IT DOE S NOT MENTION ANY WHERE THE NAME OF ANY OF THE 7 COMPANIE S AND ALSO IT DOES NOT REFER TO THE PARTICULAR OF ANY LAND SUCH AS SURVEY NO., FINAL PLOT NO. OR AREA. ALLEGAT ION MADE IN YOUR QUESTION FOR THE CASH COMPONENT OF LAN D PRICE FOR AN AMOUNT OF RS. 15.63 CRORE IS A FALSE ALLEGATION. THE 7 COMPANIES HAVE EXECUTED CONVEYANC E DEED FOR SALE OF LAND TO CARE CARDIOVASCULAR CONSUL TANTS PRIVATE LIMITED AND THE SALE CONSIDERATION STATED I N THE CONVEYANCE DEED HAS ONLY BEEN RECEIVED BY THE 7 COMPANIES AS THE CO-OWNERS. THE COMPANIES HAVE NOT RECEIVED ANY AMOUNT OVER AND ABOVE THE SALES CONSIDERATION STATED IN THE CONVEYANCE DEED. Q.23. I AM NOW SHOWING YOU A DOCUMENT RECOVERED FRO M THE COMPUTER OF CCCPL AT ITS OFFICE PREMISES FROM A FILE NAMELY COPY OF HOSP.DET.XLS. THE DOCUMENT CLEARLY REVEALS THAT THE CCCPL HAS PURCHASED A PIECE OF LAN D FOR HOSPITAL CONSTRUCTION. COST OF THIS LAND COMPRI SES OF 85% AMOUNT TO BE PAID IN CASH AND 15% AMOUNT TO BE PAID IN CHEQUE. THE VALUE OF CHEQUE AMOUNT IS RS. 2 .5 CRORES WHILE THE VALUE OF CASH COMPONENT IS RS. 15. 07 CRORES. THIS IS ALSO BROUGHT TO YOUR NOTICE THAT TH E GROUP HAS PURCHASED ONLY ONE PIECE OF LAND I.E. THE LAND - REFERRED ABOVE AND SOLD BY THE 7 COMPANIES MANAGED BY YOU. THE PAYMENT OF RS. 2.5 CRORES MENTIONED, IN TH E DOCUMENT MATCHES WITH THE PAYMENT, MADE TO YOUR COMPANIES. SINCE THE PAYMENT OF CHEQUE AMOUNT, MATCHES WITH PAYMENT MADE TO YOUR COMPANIES, THERE IS EVERY REASON TO INFER THAT THE PAYMENT MADE IN CASH ALSO HAVE BEEN MADE TO THESE 7 COMPANIES. UNDER THE CIRCUMSTANCES, IT IS CLEAR THAT THE ACTUAL SALE CONSIDERATION OF THE LAND IS NOT RS. 2.5 CRORES BUT RS. 2.5 CRORES CHEQUE AND RS. 15.07 CRORES IN CASH TOTA LING TO RS. 17.57 CRORES. PLEASE EXPLAIN. ANS. 23. THE DOCUMENT REFERRED IN ABOVE QUESTION IS HAVING THE TITLE PAYMENT DETAILS FOR HOSPITAL PROJE CT AND IT DOES NOT STATE ANYTHING ABOUT LAND DEAL TRANSACT ION. IT SEEMS TO BE THE PROJECTION OF HOSPITAL PROJECT. THE DOCUMENT DOES NOT REVEAL THE PARTICULARS OF ANY IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 15 - PURCHASE OF LAND. THE SAID DOCUMENT SHOWN TO ME DOE S NOT GIVE THE DETAILS OF ANY LAND SUCH AS SURVEY NO. , FINAL PLOT NO., AREA & LOCATION. IT DOES NOT BEAR T HE DETAILS OF LAND OWNERS. ON VERIFICATION OF SAID DOC UMENT, IT REVEALS THE FACT THAT NOWHERE THE NAME OF ANY OF THE 7 COMPANIES HAVE BEEN MENTIONED ON IT. IN THE QUESTIO N, OBSERVATION MADE BY YOU THAT 'COST OF THIS LAND COMPRISES OF 85% AMOUNT TO BE PAID IN CASH AND 15% AMOUNT TO BE PAID IN CHEQUE. THE VALUE OF CHEQUE AMOUNT IS RS. 2.5 CRORES WHILE THE VALUE OF CASH COMPONENT IS 15.07 CRORES' IS A FALSE ALLEGATION ME RELY ON GUESS WORK. FROM THE VERIFICATION OF DOCUMENTS PRODUCED BEFORE ME, NOWHERE IT HAS BEEN FOUND TO BE NOTED AS CHEQUE OR CASH. FROM THE VERIFICATION OF COMPUTER PRINTOUT DOCUMENT, NO WHERE IT HAS BEEN MENTIONED ABOUT THE PAYMENT TO 7 COMPANIES. THE INFERENCE DRAWN BY YOU IS MERELY ON PRESUMPTION AND GUESS WORK AND YOU HAVE NOT PRODUCED BEFORE ME ANY EVIDENCE TO SUBSTANTIATE ALLEGATION MADE IN YOUR QUESTION. THE OBSERVATION MADE BY YOU THAT 'UNDER T HE CIRCUMSTANCES, IT IS CLEAR THAT THE ACTUAL SALE CONSIDERATION OF THE LAND IS NOT RS. 2.5 CRORES BUT RS. 2.5 CRORES IN CHEQUE AND RS. 15.07 CRORES IN CASH TOTALING TO RS. 17.57 CRORES' IS NOT CORRECT. I HAV E TO STATE THAT THE 7 COMPANIES HAVE RECEIVED THE AMOUNT OF SALES CONSIDERATION STATED IN THE SALE DEED AND OVE R AND ABOVE, THE SALES CONSIDERATION STATED IN THE SALE D EED THE COMPANIES HAVE NOT RECEIVED ANY AMOUNT. I SPECIFICALLY DENY THE RECEIPT OF ANY ALLEGED CASH A MOUNT OF RS. 15.07 CRORE BY 7 COMPANIES'. 3.5 TO SUM-UP, SHRI SHEKARBHAI GOVINDBHAR PATEL SPE CIFICALLY DENIED THE RECEIPT OF CASH OVER AND ABOVE THE CHEQU E AMOUNT. FURTHER, THE ASSESSING OFFICER GAVE A COPY OF THE S TATEMENT OF THE SURGEON DOCTORS TO THE ASSESSEES INTER ALIA STATED IN THEIR STATEMENT RECORDED ON 13/4/2010 THAT THEY HAVE PAID CASH OVER AND ABOVE THE CHEQUE AMOUNT TO SHRI KEYUR PARIKH AN D HIS ASSOCIATES FOR THE PURCHASE OF LAND. THE ASSESSEE D ENIED HAVING IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 16 - RECEIVED ANY CASH AMOUNT AND INSTEAD REQUESTED FOR THE CROSS EXAMINATION OF THE SIX DOCTORS NAMELY (I) DR. ANIL JAIN, (II) DR. BHARAT R. TRIVEDI, (III) DR. BASRUR SRINIVAS MALLYA , (IV) DR. VISHAL M GUPTA, (V) DR. CHIRAG B. MEHTA AND (VI) DR. NAMAN A SHASTRI. HOWEVER, THE ASSESSING OFFICER DID NOT ALLOW THE OP PORTUNITY OF CROSS EXAMINATION OF THE ABOVE MENTIONED 6 DOCTORS TO THE ASSESSEES ON THE GROUND THAT IT WAS NOT NECESSARY T HAT CROSS EXAMINATION SHOULD BE ALLOWED TO EACH AND EVERY PER SON. ACCORDING TO THE ASSESSING OFFICER, IT IS SUFFICIEN T TO GIVE THE COPY OF THE STATEMENTS RECORDED FROM THE 6 DOCTORS FOR T HE COMMENTS OF THE APPELLANTS. FURTHER, THE AR ALSO CONTENDED T HAT THE NOTICE UNDER SECTION 153C OF THE INCOME-TAX ACT ISSUED BY THE ASSESSING OFFICER WAS BAD IN LAW AS IN THE SEIZED D OCUMENTS THE NAMES OF THE ASSESSEE DID NOT APPEAR ANYWHERE AND T HAT THERE WAS NO DOCUMENTS INDICATING UNACCOUNTED INCOME OF T HE ASSESSEE. 3.6 IN NUTSHELL, IT WAS PRAYED THAT THE ADDITION M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED CASH RECEIP T ON SALE OF LAND REQUIRES TO BE DELETED FOR THE FOLLOWING GROUN DS/REASONS (I) THE ADDITION IS MERELY ON SURMISES AND CONJECTURES. (II) THE LD AO HAS NOT BROUGHT ON RECORD ANY COGENT MATERIAL EVIDENCE IN SUPPORT OF HIS ALLEGATION. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 17 - (III) THE STATEMENTS OF 6 DOCTORS RELIED UPON BY THE LD A O HAVE NO EVIDENTIAL VALUE IN APPELLANT COMPANY'S CAS E SINCE THE STATEMENTS ARE SELF SERVING ADMISSION BY THE SAID DOCTORS IN THEIR ASSESSMENT PROCEEDINGS. (IV) THE LD AO HAS NOT PROVIDED THE CROSS-EXAMINATION OF THE SAID SIX DOCTORS. (V) THE LD AO HAS NOT REBUTTED THE STATEMENT OF THE DIRECTOR OF THE APPELLANT COMPANY MR. SHEKHAR PATEL WHO HAS DENIED OF ANY CASH RECEIPT. (VI) THE LD AO HAS NOT EXAMINED DR. KEYUR PARIKH, CA ARPIT PATEL AND MR. NIHIR SHAH WHO WERE IDENTIFIED BY THE AFORESAID SIX DOCTORS IN CONNECTION WITH THE AL LEGED CASH TRANSACTIONS FOR THE SALE OF LAND. (VII) THE LD AO HAS ALSO NOT GIVEN THE CROSS-EXAMINATION OF AFORESAID 3 PERSONS. (VIII) THE LD AO HAS VIOLATED THE PRINCIPLE OF NATURAL JUS TICE AND EQUITY WHILE NOT ACCORDING THE OPPORTUNITY OF CROSS-EXAMINATION OF AFORESAID 6 DOCTORS AND OTHER 3 PERSONS. (IX) THE HIGHER AUTHORITIES MONITORING THE ASSESSMENT PROCEEDINGS HAVE ALSO VIOLATED THE PRINCIPLE OF NAT URAL JUSTICE AND EQUITY WHILE NOT OBSERVING THE CBDT INSTRUCTIONS/CIRCULARS AND OTHER JUDICIAL PRONOUNCE - MENT OF THE HON'BLE SUPREME COURT, VARIOUS HIGH COURTS AND TRIBUNALS. (X) THE LEGAL DECISIONS RELIED UPON BY THE LD. A.O ARE IRRELEVANT IN THE APPELLANT'S CASE. 3.6 THE CIT(A), HAVING CONSIDERED THE SAME, CONFIR MED THE ORDER OF THE ASSESSING OFFICER. REGARDING THE CONT ENTION OF THE ASSESSEE THAT THE NOTICE ISSUED UNDER SECTION 153C WAS BAD IN LAW, THE CIT(A) OBSERVED THAT MANY DOCUMENTS INCLUD ING THE ONES BELONGING TO THE ASSESSEES IN THE FORM OF SALE DEED WAS IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 18 - SEIZED FROM THE PREMISES OF CCCPL AND OTHER DOCTORS WHICH INDICATED THAT THE ASSESSEES HAVE SOLD LAND TO CCCP L FOR DOCUMENTED PRICE OF RS.2.50 CRORES. THESE DOCUMENTS ALSO INDICATED THAT BESIDE THE CHEQUE AMOUNT OF RS.2.50 CRORES, CASH OF RS. 15.07 CRORES WAS ALSO PAID FOR THE PURPOSE O F PURCHASE OF THE LAND. FURTHER, IN THEIR STATEMENT, THE 6 DOCTOR S CONFIRMED THAT THEY HAVE PAID CASH BESIDE THE CHEQUE AMOUNT F OR THE PURCHASE OF THE LAND. THE LAND IN QUESTION WAS THE SAME LAND WHICH HAS BEEN SOLD BY THE ASSESSEES TO THE COMPANY CCCPL. THE ASSESSMENTS OF THESE DOCTORS WERE ALSO COMPLETE D BY THE SAME ASSESSING OFFICER IN THE MONTH OF APRIL, 2010, WHO MADE THE ADDITION CASH COMPONENT PAID BY THEM FOR THE PU RCHASE OF LAND. THE SAME ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 153C ON 7/9/2010. FURTHER, IN THE CASE OF O THER CARDIOLOGIST DOCTORS WHO HAVE NOT ACCEPTED THE PAYM ENT OF CASH FOR PURCHASE OF LAND, THE ASSESSING OFFICER HAS MAD E ADDITION IN THEIR HANDS OF THE CASH COMPONENT ON THE BASIS OF T HE SEIZED DOCUMENTS FOUND FROM THE POSSESSION OF CCCPL AND OT HER DOCTORS PRIOR TO ISSUE OF NOTICE BY THE ASSESSING O FFICER. THEREFORE, THERE WAS ENOUGH MATERIAL BEFORE THE ASS ESSING OFFICER TO BELIEVE THAT THE ASSESSEES HAVE RECEIVED CASH OF RS.15.07 CRORES OVER AND ABOVE THE CHEQUE OF RS.2.5 0 CRORES SHOWN IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE C IT(A) DID NOT IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 19 - FIND ANY INFIRMITY IN THE NOTICE ISSUED U/S 153C BY THE ASSESSING OFFICER IN RESPECT OF THE ASSESSEES. ACCO RDINGLY, THE CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE IN T HIS REGARD. 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE REI TERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITI ES. ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. THE ASSESSING OFFICER MADE ADDITION OF RS. 15.07 CRORES IN THE HANDS OF ALL THESE ASSESSEES ON ACCOU NT OF FACT THAT SAME WAS PAID OVER AND ABOVE CHEQUE AMOUNT OF RS2.5 0 CRORES. SAME WAS CONFIRMED BY CIT(A). THE STAND OF THE AUTH ORIZED REPRESENTATIVE FOR THE ASSESSEE HAS BEEN THAT ONE O F THE COMMON DIRECTORS OF ASSESSEES COMPANY NAMELY, MR. S HEKHAR PATEL HAD CATEGORICALLY DENIED HAVING RECEIVED CASH AMOUNT ON THE SALE OF THE LAND IN QUESTION, THEREFORE, THE AS SESSING OFFICER SHOULD NOT HAVE MADE ADDITION OF CASH COMPONENT IN QUESTION. 5.1 THE NEXT CONTENTION OF THE AUTHORIZED REPRESENT ATIVE HAS BEEN THAT THE OPPORTUNITY OF CROSS-EXAMINATION OF T HE 6 DOCTORS WHO HAVE ADMITTED HAVING PAID CASH FOR THE PURCHASE OF THE IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 20 - LAND, WAS NOT ALLOWED TO THE ASSESSEE-COMPANIES; T HEREFORE, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS BAD IN LAW. ACCORDING TO THE CIT(A), THE 6 DOCTORS HAVE ADMITTE D HAVING PAID CASH COMPONENT FOR THE PURCHASE OF LAND TO DR KEYUR PARIKH, CA ARPIT PATEL AND MR.NIHIR SHAH WORKING FOR CCCPL. IN THEIR STATEMENTS, THEY HAVE NOWHERE STATED THAT THEY HAVE DIRECTLY PAID CASH TO THE ASSESSEE COMPANIES. THEREFORE, THE CIT(A) HELD THAT THE ASSESSEE-COMPANIES DID NOT HAVE ANY RIGHT TO ASK FOR THE CROSS-EXAMINATION OF THE 6 DOCTORS. SINCE THEY HAVE NAMED DR KEYUR PARIKH, C.A. ARPIT PATEL AND MR NIHIR SHAH WORKING FOR CCCPL, THE OPPORTUNITY OF CROSS EXAMINATION WAS ALL OWED TO DR KEYUR PARIKH IN THE MONTH OF JUNE AND JULY 2011 IN WHICH ALL THE 6 DOCTORS CONFIRMED THAT THEY HAVE PAID CASH TO CCCPL FOR THE PURCHASE OF LAND. ASSESSEE SHOULD HAVE BEEN PRO VIDED OPPORTUNITY OF CROSS-EXAMINATION AS PRAYED. DENIAL OF SAME IS AGAINST PRINCIPLES OF NATURAL JUSTICE WHICH SHOULD BE AVOIDED. 5.2 WITHOUT PREJUDICE TO ABOVE, ON THE MERIT OF TH E CASE WHETHER OVER AN ABOVE THE CHEQUE AMOUNT CASH AMOUNT HAS BEEN PAID TO THE ASSESSEE OR NOT, THE ASSESSING OFF ICER DISCUSSED IN DETAILS THE VARIOUS SEIZED DOCUMENTS WHICH PROVE D THAT CASH AMOUNT OF APPROX. RS.15.07 CRORES WAS PAID TOWARDS THE PURCHASE OF LAND. THIS ISSUE HAS BEEN DISCUSSED B Y THE IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 21 - ASSESSING OFFICER AT PARAGRAPH 3 AND 4 OF THE ASSES SMENT ORDER. ON THE EXAMINATION OF THE SEIZED DOCUMENTS AND THE STATEMENTS RECORDED OF VARIOUS PERSONS, THE CIT(A) HELD IN THE CASE OF DR. KEYUR PARIKH AND OTHER DOCTORS FOR AY 2008-09 THAT THE ASSESSEES HAVE RECEIVED TOTAL CASH OF RS.15.07 CROR ES OVER AND ABOVE THE CHEQUE OF RS.2.50 CRORES AND FINALLY CONC LUDED AS UNDER:- 7.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT DR. KEYUR PARIKH. AS CAN BE SEEN FROM THE QUESTIONS AN D ANSWERS RECORDED DURING THE COURSE OF EXAMINATION A ND CROSS-EXAMINATION OF THE SIX SURGEON DOCTORS, ALL O F THEM HAVE ADMITTED THAT THEY HAVE PAID CASH OVER AND ABO VE THE CHEQUE AMOUNT FOR THE PURCHASE OF LAND AND THAT AT THE TIME OF THEIR SEPARATION FROM CCCPL, THEY RECEIVED BACK THE CHEQUE AS WELL AS THE CASH AMOUNT PAID BY THEM. THUS, CIT(A) GAVE CLEAR CUT FINDING IN THE APPELLAT E ORDER DATED 23.09.2011 OF DR.KEYUR PARIKH AND OTHERS THAT BESID ES THE CHEQUE OF RS.2.50 CRORES, CASH OF RS.15.07 CRORES W AS PAID BY THE DOCTORS AND THE CCCPL FOR THE PURCHASE OF LAND FROM THE 7 ASSESSEE-COMPANIES. FINALLY, THE CIT(A) IN CASE O F PURCHASER CONCLUDED AS UNDER:- 9.5. IN OTHER WORDS, THE PROCEEDINGS UNDER INCOME- TAX ACT ARE CIVIL PROCEEDINGS AND THE STRICT LAW OF EVIDENC ES PRESCRIBED IN THE CRIMINAL PROCEEDINGS DOES NOT APP LY TO CIVIL- PROCEEDINGS. IT IS NOT NECESSARY FOR THE REV ENUE TO PROVE BEYOND DOUBT. TO DISCHARGE ONUS IN INCOME-TAX PROCEEDINGS, DEGREE OF PROOF REQUIRED BY THE REVENU E IS ONLY IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 22 - PREPONDERANCE OF PROBABILITY AS INSISTED UPON IN CI VIL CASES AND NOT PROOF BEYOND DOUBT, WHICH IS INSISTED IN CR IMINAL CASES. IN THE PRESENT CASE, THE EVIDENCES COLLECTED FROM THE PREMISES OF THE BUYER OF THE LAND CLEARLY INDICATES THAT OVER AND ABOVE THE CHEQUE AMOUNT OF RS. 2.50 CRORES, CAS H OF RS.15.07 CRORES HAS ALSO BEEN PAID ON VARIOUS DATES FROM NOVEMBER 2006 TILL MARCH 2008. THIS FACT HAS BEEN ADMITTED BY THE SIX SURGEON DOCTORS IN THEIR STATEM ENTS RECORDED IN APRIL 2010 AND ALSO CONFIRMED BY THEM D URING THE COURSE OF THEIR CROSS EXAMINATION BY THE REPRES ENTATIVE OF DR KEYUR PARIKH IN THE MONTH OF JUNE AND JULY 20 11. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CAS E AND ALSO THE PREPONDERANCE OF THE PROBABILITIES, I HAVE NO HESITATION IN HOLDING THAT THE APPELLANT COMPANIES HAVE RECEIVED TOTAL CASH OF RS.15.07 CRORES OVER AND ABO VE THE CHEQUE AMOUNT OF RS.2.50 CRORES. THE ADDITION OF CA SH AMOUNT MADE BY THE AO IN THEIR RESPECTIVE HANDS ON THE BASIS OF THE AREA OF THE LAND OWNED BY THEM IS THER EFORE CONFIRMED. 5.3 IN THIS BACKGROUND, LD. AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE SUBMITTED THAT IN THE CASE OF ASSESSEE-COM PANIES, THE PROCEEDINGS U/S 153C OF THE ACT WERE INITIATED CONS EQUENT TO THE SEARCHED ASSESSEE'S CASE NAMELY DR. KEYUR PARIKH & OTHERS IN WHOSE CASES ASSESSMENT ORDERS U/S. 153A R.W.S. 143( 3) OF THE ACT HAVE BEEN RENDERED. IN THE CASE OF ASSESSEE-CO MPANY, THE ORDER U/S. 153C R.W.S. 143(3) OF THE ACT WAS RENDER ED ON 29-12- 2010 WHICH WAS CHALLENGED BEFORE THE CIT (A) WHO HA S RENDERED THE ORDER IN THE CASE OF THE ASSESSEE-COMPANY VIDE APPELLATE ORDER DATED 30-1 1-2011. AGAINST THE SAID ORDER OF THE CIT (A), THE ASSESSEE-COMPANY HAS PREFERRED AN APPEAL BEFORE US. IN THIS BACK GROUND, THE ASSESSEE-COMPANY SUBMITTED TH AT IN THE IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 23 - CASE OF ASSESSEE-COMPANY, IN THE ORDER U/S. 153C R. W.S. 143(3) OF THE ACT, THE ADDITIONS WERE MADE CONSEQUENT TO T HE ADDITIONS MADE IN THE ORDER U/S. 153A R.W.S. 143(3) OF THE AC T IN THE CASES OF SEARCHED ASSESSEES CASE NAMELY DR. KEYUR PARIKH & OTHERS. THE CASES OF DR. KEYUR PARIKH & OTHERS CAME UP BEFO RE THE ITAT IN APPEAL IT(SS)A NO. 604/AHD/2011 FOR A.Y. 2008-09 AND OTHERS IN WHOSE CASES THE ITAT 'B' BENCH HAS RENDER ED THE ORDER WHEREIN THE ADDITIONS MADE IN SEARCHED ASSESS EES CASE U/S. 153A R.W.S. 143(3) ACT HAS BEEN DELETED. THE I TAT, 'B' BENCH, AHMEDABAD, HAS RENDERED A DECISION IN THE CASE OF DR. KEYUR PARIK & OTHERS VIDE NO. IT(SS)A NO. 604/AHD/ 2011 18- 10-2013. IN THIS BACKGROUND, IT IS SUBMITTED THAT I N THE CASE OF ASSESSEE-COMPANY THE ADDITION HAS MADE CONSEQUENT T O THE ADDITION MADE IN THE SEARCHED ASSESSEES CASE DR. KE YUR PARIKH & OTHERS , WHEREIN THE ADDITION HAS BEEN MADE IN TH E ORDER U/S. 153A R.W.S 143(3) OF THE ACT AND CONSEQUENTLY IN A SSESSEE- COMPANY'S CASE, THE ORDER WAS RENDERED U/S. 153C R. W.S. 143(3) OF THE ACT, ONCE THE TRIBUNAL HAS DELETED THE ADDIT ION MADE IN SEARCHED ASSESSEES CASE IN RESPECT OF ADDITION MADE IN THE ASSESSMENT ORDER U/S.153A R.W.S 143(3) OF THE ACT, ASSESSEE COMPANY'S CASE BECAME A COVERED CASE BY THE ORDER O F THE ITAT, BENCH 'B' AHMEDABAD, VIDE COMMON ORDER DA TED 18-10- 2013 IN ITA (SS) NO.604/AHD/2011 FOR A.Y. 2 008-09 AND IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 24 - OTHERS. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DREW OUR ATTENTION TO THE CONCLUDING/VERDICT PARAGRAPH O F THE AFORESAID DECISION, WHICH IS REPRODUCED HERE UNDER: 8. WE HAVE HEARD BOTH THE SIDES AT LENGTH. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATIONS FILED FROM BOTH THE SIDES. A COMPA NY, NAMELY, CCCPL WAS FORMED TO ESTABLISH THE HOSPITAL. A PIECE OF LAND WAS PURCHASED FROM FEW COMPANIES VIDE A SALE DEED DATED 17.10.2007. AS FAR AS THE RECORDS ARE CO NCERNED THE DETAILS OF THE CHEQUES OF RS. 2,50,00,000/- ISS UED IN FAVOUR OF THE SELLER IS ON RECORD (DETAILS OF CHEQU E PAYMENT IS AS ABOVE) . THE AOS ALLEGATION IS THAT A SUM OF RS.5,52,50,000/- WAS PAID DIRECTLY IN CASH TO THE V ENDORS. FURTHER, A SUM OF RS.4,57,23,509/- WAS PAID TO THE SURGEONS ON THEIR EXIT FROM THE PROJECT. THESE FIGU RES WERE NOTED FROM CERTAIN CALCULATION SHEETS TAKEN OUT FRO M THE COMPUTER. THOSE COMPUTER SHEETS ARE NATURALLY NOT S IGNED BY ANY PERSON. FACTUALLY, THE DOCUMENT WHICH WAS RECOVERED BY THE REVENUE DEPARTMENT ON SEARCH OPERA TION ONLY CONTAINED THE PAYMENTS WHICH WERE MADE THROUGH CHEQUE. EVEN AFTER TAKING THE EXTREME STEP OF SEARC H, THERE WAS NO DOCUMENT TO DEMONSTRATE THAT SOME SPECIFIC C ASH AMOUNT WAS PAID OVER AND ABOVE THE SALE CONSIDERATI ON. AT THE OUT-SET AT THIS JUNCTURE IT IS NOTEWORTHY THAT IN THE ABSENCE OF ANY SPECIFIC DOCUMENT IN OUR CONSIDERED OPINION IT IS NOT JUSTIFIABLE TO PRESUME THAT THE ASSESSEE HAD MADE PAYMENT IN CASH. THE DOCUMENTS HAVE ESTABLISHED THE SALE CONSIDERATION AND THE PAYMENT OF STAMP DUTY BUT THE RE IS NO OTHER EVIDENCE. ON THE BASIS OF THOSE DOCUMENTS, THE ASSESSEE HAS PASSED CONNECTED ENTRIES IN THE BOOKS OF ACCOUNTS. THERE WERE SEVERAL WORKING OF THE PROJECT WHICH WERE FOUND FROM THE COMPUTER, BUT THERE WAS NO DIRE CT EVIDENCE IN POSSESSION OF THE REVENUE DEPARTMENT TO CONCLUSIVELY ESTABLISH THAT IN FACT THERE WAS A CAS H COMPONENT. THE REVENUE DEPARTMENT HAD MADE INQUIRIE S FROM THOSE PERSONS WHO HAVE SOLD THE PROPERTIES. TH OSE PERSONS HAVE MADE THE STATEMENT BEFORE THE AO AND AFFIRMED THAT THERE WAS NO CASH COMPONENT. THE AO H AD MADE UP HIS MIND TO THOROUGHLY INVESTIGATE THE EXIS TENCE OF THE CASH COMPONENT, BUT THEN AFTER THE INQUIRY IT W AS NOTICED THAT THERE WAS NO SUCH MONEY WHICH WAS DELI VERED IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 25 - AT THE TIME OF THE EXECUTION OF THE SALE DEED. FOLL OWING ARE FEW POINTS WHICH WERE PONDERED UPON BY US SO AS TO DECIDE THE SUBSTANCE IN THE ALLEGATION OF CASH ON-MONEY PA ID BY THE ASSESSEE. 8.1 FACT OF THE CASE HAVE REVEALED THAT THE REGISTE RED SALE DEED DATED 17.10.2007 WAS NOT EXECUTED BETWEEN TWO INDIVIDUALS BUT IT WAS PURCHASED ON BEHALF OF A COM PANY, NAMELY, CCCPL, ON ONE HAND, FROM OTHER CORPORATE EN TITIES, SEVEN IN NUMBER, ON THE OTHER HAND. THEREFORE, THE TRANSACTION CARRIED OUT WAS A WELL PUBLISIZED TRANS ACTION. RATHER FACTS OF THE CASE HAVE FURTHER REVEALED THAT EARLIER THE LAND IN QUESTION BELONGED TO CERTAIN CO-OPERATI VE SOCIETIES. SUCH A SALE DEED THUS CANNOT BE TREATED AS A CLOSE-DOOR-DEAL. BEFORE US IT HAS BEEN VEHEMENTLY ARGUED THAT IT WAS WRONG ON THE PART OF THE REVENUE DEPART MENT TO ALLEGE THAT THE PURCHASER AND SELLER HAVE CONNIVED WITH EACH OTHER AND THEREFORE SETTLED A SECRET DEAL WHIC H WAS OUT OF THE RECORD. THE ARGUMENT BEFORE US IS THAT S UCH A POSSIBILITY IS ONLY IF A DEAL IS BETWEEN TWO INDIVI DUALS BUT NOT POSSIBLE WHEN TWO CORPORATE ENTITIES ARE DEALIN G WITH EACH OTHER. RATHER THE SALE DEED IN QUESTION WAS EX ECUTED BETWEEN NUMBER OF ENTITIES; HENCE, SUCH A MULTI-PAR TY DEAL MUST NOT BE DOUBTED, ESPECIALLY WHEN EACH PARTY OUG HT TO HAVE WATCHED THEIR RESPECTIVE INTEREST. THIS ARGUME NT OF THE ASSESSEE CANNOT BE BRUSHED ASIDE ALTOGETHER. WE CAN JUSTIFIABLY ADJUDICATE ON THIS POINT ONLY AFTER TAK ING INTO CONSIDERATION THE SURROUNDING CIRCUMSTANCES AND CORROBORATIVE EVIDENCE. 8.2 NEXT POINT. OUR ATTENTION HAS BEEN DRAWN ON A L ETTER OF DEPUTY COLLECTOR, STAMP DUTY VALUATION OFFICE AHMED ABAD, DATED 16.10.2007, WHEREIN AFTER GOING THROUGH THE S ALE DEED, IN THE OPINION OF THE VALUATION OFFICE THE MA RKET VALUE AS PER STAMP ACT WAS RS.2,54,16,200/- OVER WHICH TH E APPLICABLE STAMP DUTY WAS RS.12,45,400/-. THE PURPO SE OF THIS REFERENCE WAS THAT THE STAMP VALUER HAD NOT OB JECTED THE SALE PRICE AS DECLARED BY THE ASSESSEE. HE HAS CHARGED THE STAMP DUTY ON THE SALE CONSIDERATION AS MENTION ED IN THE IMPUGNED SALE DEED. IN THIS CONNECTION, OUR ATT ENTION HAS ALSO BEEN DRAWN ON A LETTER ADDRESSED TO SUPERINTENDENT OF STAMPS DATED 5TH MARCH, 2007 WHER EIN THE ASSESSEE COMPANY HAS EXPRESSED THE DESIRE TO PA Y THE STAMP DUTY WHICH WAS LEGALLY REQUIRED TO BE PAID WH EN THE AGRICULTURAL LAND WAS CONVERTED / TRANSFERRED FROM CO- IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 26 - OPERATIVE SOCIETY TO PRIVATE LIMITED COMPANY. THE C CCPL HAS VOLUNTEERED TO PAY THE STAMP DUTY IN RESPECT OF THE TRANSFER OF THE NAMES. THE ADDITIONAL PAYMENT OF ST AMP DUTY WAS THEREAFTER PAID BY THE CCCPL. ON THE BASIS OF THESE EVIDENCES THE VEHEMENT CONTENTION OF THE ASSE SSEE IS THAT THE CORRECT FAIR MARKET VALUE AS PER THE REGIS TRATION OFFICE WAS ASSESSED ON TWO OCCASIONS; HENCE, THERE WAS NO QUESTION OF RAISING ANY DOUBT. IF ONE GOVERNMENT AU THORITY HAS REGISTERED A DOCUMENT ON AN AMOUNT OF CONSIDERA TION THEN THAT CONSIDERATION SHOULD NOT BE DOUBTED UNLES S AND UNTIL THERE IS CONCRETE EVIDENCE AGAINST THE SALE V ALUE DECLARED. 8.3 NEXT POINT. WE HAVE ALSO EXAMINED THE MEMORANDU M OF UNDERSTANDING (MOU) ARRIVED AT BETWEEN THE CCCPL (HOSPITAL) AND THE GROUP OF DOCTORS. THIS MOU WAS I N POSSESSION OF THE REVENUE DEPARTMENT, OBTAINED DURI NG SEARCH OPERATION. THERE WAS NOTHING INCRIMINATING I N THIS MOU. THE MOU HAS STATED THAT THE HOSPITAL PROJECT W ILL COST RS.45,00,00,000/-. THE PURCHASE OF LAND WAS TO BE FINALIZED BEFORE THE END OF 31ST JANUARY, 2007. THE SHARE CAPITAL WAS FIXED AT RS.25 CRORES. THROUGH THIS MOU A CHAIRMAN, VICE CHAIRMAN, MD, ETC., WERE SELECTED. T HERE IS A CLAUSE OF SEPARATION AND THE EITHER GROUPS WERE AUTHORIZED TO LEAVE THE PROJECT. THERE WERE CERTAIN RESTRICTIONS FOR LEAVING THE PROJECT AND TO SAFEGUA RD THE PROJECT, A LOCK-IN-PERIOD HAS ALSO BEEN FIXED. ON T HE BASIS OF THIS MOU LEARNED AR HAS CONTESTED THAT THE TOTAL COST OF THE PROJECT AND THE CONTRIBUTION OF SHARE CAPITAL W ERE AS PER THE LEGAL NORMS, WHICH WERE ALSO DULY RECORDED IN THE BOOKS OF ACCOUNTS. IT IS ARGUED THAT THE GROUP OF D OCTORS WHO HAVE LEFT THE PROJECT HAVE BECOME HOSTILE WITH THE PROJECT OF THE HOSPITAL AND THEREFORE MADE CERTAIN HARMFUL STATEMENTS. ONE OF THE CLAUSE WAS THAT THE DOCTORS LEAVING THE PROJECT SHALL NOT BE ALLOWED TO PRACTICE WITHIN 100 KMS. OF THE HOSPITAL. BECAUSE OF THIS CLAUSE THE DOCTORS WERE NOT AT EASE WITH THE ASSESSEE COMPANY AND HENCE MADE STATEMENT TO TAKE THE REVENGE. WE ARE NOT DECIDING THE PERSONAL ISSUES CROPPED UP AMONG THE GROUP OF DOCTO RS, BUT WE ARE CONCERNED ABOUT THE ALLEGATION OF THE UNRECORDED INVESTMENT MADE BY THE ASSESSEE. THE POSSIBILITY IS THAT THE DOCTORS WHO HAVE LEFT THE P ROJECT MIGHT BE HAVING SOME GRUDGE AGAINST THE DOCTORS SUBSEQUENTLY RUNNING THE HOSPITAL AND DUE TO THAT R EASON MIGHT HAVE MADE THE STATEMENT AGAINST THE ASSESSEE. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 27 - HOWEVER THE MOU IS GIVING AN INDICATION THAT THE CO ST OF THE PROJECT WAS DULY UNDERSTOOD BY THE DOCTORS AND THAT INVESTMENT WAS REQUIRED TO BE MADE IN THE YEARS TO COME. THEREFORE, A QUESTION CAN BE RAISED IN RESPECT OF T HE CORRECTNESS OF THE STATEMENT MADE BY THOSE LEAVING DOCTORS. ON THESE FACTS, WE CAN HOLD THAT THE STATEMENT OF T HE GROUP OF DOCTORS WHO HAVE LEFT THE PROJECT HAVE MADE A CONTROVERSIAL STATEMENT, HENCE THEIR CONDUCT WAS NO T BEYOND DOUBT. 8.4 NEXT POINT. THE REVENUE DEPARTMENT HAS PLACED A VEHEMENT RELIANCE ON PAGE 46 APPENDIX-I OF THE SEIZ ED MATERIAL THE SAME IS REPRODUCED BELOW: SYNOPSIS 1 EURO=RUPEES 57 (APPROX. 60 TO ROUND THE FIGURES EQUITY : RS.22,00,00,000(RS.18,00,00,000 FOUNDER DOCTORS + RS.2,00,00,000 (AT PAR FOR THE FOUNDER DO CTORS OVER 2008) DEBT:RS.20,00,00,000(APPROX.) 1 ST ROUND: FOUNDER DOCTORS: AT PAR RS.18,00,00,000 INVESTED IN 2006-07 2 ND ROUND: FOUNDER PARTNERS RS.400,00,000 AT 100% PREMIUM TO GIVE RS.800,00,000 EXPECTED INVESTMENT FROM KIRTI PATEL M PHARM- (ANGEL INVESTOR FROM UK): RS.200,00,000 AT 100% PREMIUM TO GIVE RS.400,00,000 EXPECTED INVESTMENT FROM AALST GROUP: RS.200,00,000 AT 100% PREMIUM TO GIVE RS.400,00,000 APPROX. EUROS 6,66,000.00 OR LESSER. THE LAND IS 13,500 SQUARE METERS BUYING PRICE- RS.18,00,00,000+ APPROX. 3 MILLIONS EUROS) INTERESTINGLY THE LAND VALUE HAS DOUBTED SINCE TH E TIME WE PAID/BOUGHT IT 1.5 YEARS AGO! SO THE PREMIUM IS ALREADY ABSORBED BY VALUATION OF LAND SO IN REALITY YOU ARE GETTING THE EQUITY AT THE ACTUAL NEWER PRICE OF THE LAND. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 28 - IF YOUR GROUP DOES NOT COME, THEN TWO OUTSIDE INV ESTORS (NON DOCTORS) ARE WILLING TO COME AT 200% PREMIUM A T RS.6,00,00,000. OUR GROUP HAS ENOUGH FUNDS SO WE WOULD RATHER HAV E A VALUE ADDED PARTNER LIKE YOURS AND KIRTI PATEL (WHO WILL DEVELOP MEDICAL TOURISM FOR INDIAN PATIENTS RESIDIN G IN UK NHS SYSTEM AND BRING THEM TO INDIA) WE HAVE CAREFULLY EXAMINED THE CONTENTS OF THIS PAG E. INDEED, IT IS MENTIONED THAT AN AMOUNT OF RS.18 CRO RE INVESTED IN 2006-07. BUT THIS PAGE ALONE AND THE WO RD INVESTED ALONE DID NOT LEAD TO A DEFINITE CONCLUS ION THAT THE SAID AMOUNT OF RS.18 CRORES WAS THE CONSIDERATI ON OF THE LAND. THE AMOUNT MENTIONED AS RS.18 CRORES COUL D HAVE BEEN NOTED BY ESCALATING THE PRICE TO INFLUENC E THE OTHER PARTICIPANTS SO THAT THE MAXIMUM CAPITAL CONTRIBUTION COULD BE MADE BY THEM. THE IMPUGNED INVESTED AMOUNT COULD HAVE BEEN ESCALATED SO AS TO GIVE AN IMPRESSION THAT AN INVESTMENT IN THE LAND HAD ALREA DY BEEN MADE, HENCE A PROPORTIONATE EQUITY WAS TO BE CONTRIBUTED BY THE DOCTORS/INVESTORS DESIROUS TO JO IN THE PROJECT. THIS PRESUMPTION HAS A BASIS BECAUSE IN TH E NOTES UNDERNEATH THE CHART THERE WAS A REFERENCE PREMIUM ON THE VALUATION OF THE LAND WHICH WAS REQUIRED TO BE CONTRIBUTED BY THE GROUP OF DOCTORS. BY MENTIONING THE WORD PREMIUM THE LEARNED AR HAS PLEADED THAT IN F ACT NO PREMIUM AMOUNT TOWARDS LAND WAS PAID BUT IT WAS MER ELY A PROJECTED FIGURE TO ATTRACT THE HIGHER FIGURE OF INVESTMENT. HE HAS DRAWN OUR ATTENTION ON NUMBER OF SUCH PAGES WHICH WERE EXTRACTED FROM THE COMPUTER DISK TO DEMONSTRATE THAT THERE WERE SEVERAL PROJECTIONS OF THE TOTAL VALUE OF THE PROJECT. THE PROJECTED VALUE HAD CHANG ED ON NUMBER OF OCCASION CONSIDERING THE INTEREST SHOWN B Y THE INVESTORS. SO THE ARGUMENT IS THAT SINCE THE PROJEC TIONS HAVE NOT DISCLOSED A STATIC OR A CONSTANT FIGURE TH EREFORE SUCH FIGURES SHOULD NOT BE HELD AS AN ACTUAL INVEST MENT BY THE ASSESSEE. THIS PROBABILITY, WHICH GENERALLY PRE VAILS IN SUCH TYPE OF PROJECTS, THUS MUST NOT BE BRUSHED ASI DE ON THE FACE OF IT. 8.5 NEXT POINT. WE HAVE ALSO EXAMINED THE STATEMENT S OF VARIOUS DOCTORS WHICH WERE USED BY THE REVENUE DEPARTMENT AGAINST THE ASSESSEE. A STATEMENT OF DR. ANIL R. JAIN WAS RECORDED ON 23RD OF SEPTEMBER, 2008 U/S . IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 29 - 132(4) OF IT ACT. IN THAT STATEMENT, THERE WAS NO S UCH ACCEPTANCE OF INVOLVEMENT OF CASH TRANSACTION. QUES TION NO.7, 8 &9 AND ANSWER NO.7, 8 & 9 OF THE SAID STATE MENT WERE THE DIRECT QUESTIONS BUT IN THOSE ANSWERS THER E WAS CATEGORICAL DENIAL OF ANY INVESTMENT OTHER THAN THE SHARE CAPITAL. DR. ANIL JAIN HAS STATED THAT HE HAD OPTED OUT FROM THE PROJECT AND THE AMOUNT HE HAS INVESTED WAS REFU NDED AS HIS SHARE APPLICATION MONEY. LATER ON AN ANOTHER STATEMENT WAS RECORDED BY THE ITO AND IN THAT STATE MENT DR. ANIL JAIN HAD TAKEN A TURTLE-TURN AND ALLEGED T HE CASH COMPONENT. IF WE COMPARE A STATEMENT U/S.132(4) WIT H THE STATEMENT MADE U/S.131 OF IT ACT THEN THE LAW IS VE RY CLEAR THAT A STATEMENT U/S132(4) HAS EVIDENTIARY VALUE AN D NOT THE STATEMENT MADE U/S.131 OF IT ACT. A STATEMENT RECORDED U/S. 132(4) IS A STATEMENT ON OATH. THEREF ORE, A STATEMENT RECORDED ON OATH CAN BE USED AS AN EVIDEN CE. AS AGAINST THAT A STATEMENT RECORDED U/S.131 IS NOT A STATEMENT ON OATH, THEREFORE, IT CANNOT BE USED AS AN EVIDENCE HENCE, SUCH A STATEMENT HAS NO EVIDENTIARY VALUE. RATHER IN THIS CASE IT WAS MADE IN THE FORM OF A QUESTIONNAIRE HANDED OVER TO THOSE OUT-GOING DOCTOR S, WHO HAVE NOT ANSWERED THE QUESTIONS UNDER OATH. THIS IS ONE OF THE REASON THAT WE ARE HESITANT TO UPHOLD THE REVEN UES RELIANCE ON A STATEMENT MADE BEFORE THE AO. MOREOVE R, DR. ANIL JAIN HAS KEPT ON CHANGING HIS STATEMENT THEREF ORE AS FAR AS HIS STATEMENTS ARE CONCERNED, THOSE ARE NOT SAID TO BE VERY DEPENDABLE. IN THIS CONNECTION, IT IS ALSO WORTH TO MENTION THAT A THIRD PARTY STATEMENT SHOULD NOT BE MADE THE BASIS OF ADDITION FOR INCOME TAX PURPOSE. THE TAX PROCEEDINGS SHOULD BE BASED UPON CERTAIN DIRECT EVI DENCE SO THAT THERE MUST NOT BE ANY MISCARRIAGE OF JUSTIC E. 8.6 NEXT POINT. THE ASSESSEE HAS ALSO TRIED TO DEMO NSTRATE THAT THERE WAS A DISPUTE AMONG THE DOCTORS AND BECA USE OF THAT DISPUTE A GROUP OF THE DOCTORS HAVE SEPARATED FROM THE PROJECT. FEW OF THEM HAVE MADE A STATEMENT AGAINST THE ASSESSEE AND ALSO DISCLOSED AN UNACCOUNTED INCOME A S IF IT WAS THE CASH COMPONENT RETURNED TO THEM BY THE COMP ANY. THE ASSESSEE HAS ARGUED THAT THOSE WERE HOSTILE TO THE ASSESSEE. THE ARGUMENT IS THAT A THIRD PARTYS (SPE CIALLY A HOSTILE PARTY) CONFESSION CANNOT BE USED AGAINST AN Y PERSON UNLESS THAT CONFESSION IS INDEPENDENTLY SUPPORTED B Y A COGENT EVIDENCE. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 30 - A SERIOUS QUESTION HAS BEEN RAISED THAT HOW MUCH CREDIBILITY CAN BE GIVEN TO SUCH INTIMIDATING WITNE SSES. NATURALLY, A WITNESS IF PROVED TO BE ANTAGONISTIC C ANNOT BE WHOLLY RELIED UPON. HIS STATEMENT OR HIS ACTION HAS TO BE WEIGHED IN THE LIGHT OF THE SURROUNDING CIRCUMSTANC ES. WE THEREFORE, MAKE AN OBSERVATION THAT FEW STATEMENTS OR THE FILING OF RETURN OF THOSE DOCTORS WHO HAVE PARTED-W AYS FROM THE ASSESSEE CANNOT BE MADE THE SOLE BASIS FOR THE IMPUGNED ADDITION. THIS LEGAL ISSUE CAN ALSO BE JUDGED FROM AN ANOTHER ANGEL. THE CREDIBILITY OF A WITNESS IN THE EYES OF LAW HAS CERTAIN DEFINITE NORMS AND STANDARDS. A COMMON LAW IS THAT IT IS UNSAFE TO RELY UPON AN INTERESTED WITNE SS. IT IS POSSIBLE THAT AN INTERESTED WITNESS MIGHT BE HAVI NG REVENGE IN HIS MIND TO THE EXTENT TO IMPLICATE FALS ELY, THEREFORE, KEEN IN SEEING THE OTHER PERSON PUNISHED . NATURALLY THE LAW SAYS THAT SUCH A TESTIMONY IS NOT TO BE BELIEVED. A DEPENDABLE AS ALSO RELIABLE WITNESS HAS TO BE A THIRD-PARTY DISINTERESTED AS WELL AS UNRELATED WITNESS. IT IS A STARE-DECISIS NOW REST IN PEACE BEING SO OFT EN ADJUDGED. WE ARE RIGHT NOW DEALING WITH THE TAX PROCEEDINGS HENCE CAN NOT EVEN ATTEMPT TO MAKE A SWEEPING GENERALIZATION ON THIS SUBJECT BEING OUT O F THE SCOPE OF THE I T ACT, BUT CAN ADD THAT INSTEAD OF F OLLOWING A THUMBRULE EACH CASE OUGHT TO BE DECIDED ON ITS OWN FACTS. HENCE AS FAR AS THE FACTS OF THE CASE IN HAND IS CO NCERNED, ONCE IT IS AN UNDISPUTED FACT THAT THE GROUP OF DOC TORS HAVE DISASSOCIATED THEMSELVES DUE TO CERTAIN DIFFERENCES , THEREFORE, ANY OF THEIR ACTION CAN NOT BE HELD TO B E UNBIASED OR IMPARTIAL. 8.7 NEXT POINT. WE HAVE ALSO PONDERED UPON AN ARGUM ENT WHICH WAS RAISED BY LEARNED AR THAT WHAT WAS THE MA TERIAL EVIDENCE IN POSSESSION OF THE REVENUE DEPARTMENT ON THE BASIS OF WHICH IT WAS ALLEGED THAT ONMONEY WAS PAID FOR PURCHASE OF THE LAND. WHAT WAS THE INCRIMINATING EV IDENCE IN POSSESSION OF THE REVENUE DEPARTMENT IN SUPPORT OF THE SAID ALLEGATION. WE ARE OF THE VIEW THAT A CLINCHIN G INCRIMINATING MATERIAL CAN BE USED AGAINST A TAX PA YER IF UNEARTHED AT THE TIME OF SEARCH. THE DOCUMENTS WHIC H WERE REFERRED BY THE REVENUE DEPARTMENT CANNOT BE S AID TO BE FALLING UNDER THIS CATEGORY OF DOCUMENTS. THOSE WERE COMPUTER GENERATED DOCUMENT WHICH WERE NEITHER SIGN ED BY ANY PERSON NOR PROPERLY DATED. BE THAT AS IT WAS , BUT IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 31 - WHETHER THOSE DOCUMENTS CAN BE SAID TO BE AN AUTHEN TIC DOCUMENT TO BE USED AGAINST THE ASSESSEE TO ALLEGE THAT ON- MONEY WAS TRANSACTED FOR PURCHASE OF LAND. WE ARE O F THE VIEW THAT IN THE CONTEXT OF THE PREVAILING FACTS IT SHALL NOT BE FAIR AND REASONABLE TO TAKE AN ADVERSE VIEW AGAI NST THE ASSESSEE MERELY ON CERTAIN SUPPOSITIONS. THOUGH WE ARE AWARE THAT IN THE PRESENT ERA A COMPUTER GENERATED RECORD IS IMPORTANT AND TRUSTWORTHY, HENCE THE ABOVE OBSER VATION IS NOT TO BE USED UNIVERSALLY AS WE ARE CONSCIOUS N OT TO MAKE A SWEEPING GENERALIZATION IN RESPECT OF THE CO MPUTER RELATED EVIDENCES, FOR THAT REASON, TO BE ADJUDGED ON THE BASIS OF THE SURROUNDING FACTS OF EACH CASE. 8.8 NEXT POINT. WE HAVE ALSO PONDERED UPON AN ANOTH ER POINT ABOUT THE FAIR MARKET VALUE OF THE LAND IN QU ESTION. IT WAS NOTED THAT THE AGRICULTURAL LAND WAS CONVERTED INTO NON AGRICULTURAL BY THE EFFORTS OF THE ASSESSEE/CCC PL. NATURALLY, NON- AGRICULTURAL LAND FETCH HIGHER PRIC E IN THE MARKET. WHEN THE LAND IN QUESTION WAS TRANSACTED TH EN ITS NATURE WAS AGRICULTURAL LAND. AN ANOTHER ADVERSE FACTOR WAS THAT THE LAND IN QUESTION WAS UNDER DISPUTE AMO NG THE OWNERS. EARLIER THE LAND WAS OWNED BY FEW INDIVIDUA L PERSONS. THEN THE CO-OPERATIVE SOCIETY WAS FORMED A ND SUBSEQUENTLY CERTAIN COMPANIES WERE FORMED. THE ASS ESSEE HAD ENTERED INTO THE NEGOTIATIONS WITH THOSE PERSON S AND THEREAFTER COMPLETED THE PURCHASE TRANSACTIONS. IN THAT SITUATION, IT WAS DIFFICULT TO PRESUME THAT THE ASS ESSEE HAD PAID ON-MONEY OVER AND ABOVE THE SALE PRICE AS DETE RMINED BY THE REGISTRAR FOR STAMP DUTY PURPOSE. IT HAS BEE N ARGUED THAT THE SALE PRICE WAS ESCALATED BY THE STA MP DUTY AUTHORITY TIME AND AGAIN TO MATCH WITH THE FAIR MAR KET PRICE OF THE LAND OF THAT AREA. DUE TO THIS REASON, THE SALE PRICE AS DETERMINED BY THE STAMP DUTY OFFICER WAS A T PAR WITH THE PREVAILING MARKET PRICE OF THE LAND. THIS ARGUMENT OF THE ASSESSEE HAS SUBSTANTIAL FORCE ESPECIALLY WH EN THE REVENUE DEPARTMENT HAS NOT PLACED ANY COMPARABLE INSTANCE OF PREVAILING MARKET PRICE. THERE IS NO EV IDENCE ON RECORD THROUGH WHICH IT COULD BE DEMONSTRATED BY TH E REVENUE DEPARTMENT THAT AS PER SOME OTHER SALE INST ANCE THERE WAS INDEED HIGHER PREVAILING MARKET PRICE THE N THE SALE PRICE RECORDED IN THE SALE DEED. IN THE ABSENC E OF ANY SUCH EVIDENCE IT IS WRONG ON THE PART OF THE REVENU E DEPARTMENT TO PRESUME THAT THE PREVAILING MARKET PR ICE WAS HIGHER THAN THE SALE PRICE AS RECORDED IN THE R EGISTERED SALE-DEED. IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 32 - 8.9 AN ANOTHER IMPORTANT POINT HAS ALSO BROUGHT TO OUR NOTICE THAT WHETHER REVENUE DEPARTMENT HAD GATHERED ANY EVIDENCE THROUGH WHICH IT COULD BE DEMONSTRATED THA T THE ASSESSEE HAD GENERATED UNACCOUNTED INCOME WHICH WAS ALLEGEDLY USED FOR THE PURCHASE OF LAND. THERE WERE SEVERAL WORKING SHEETS EXTRACTED FROM THE COMPUTER BUT THOS E WERE FOUND DULY RECORDED IN THE BOOKS OF ACCOUNT. THE BO OKS OF ACCOUNTS OF THE CCCPL AND THE ASSESSEE WERE EXAMINE D BY THE REVENUE DEPARTMENT. THERE WAS NO SUCH EVIDENCE UNEARTHED EVEN WHEN THE EXTREME STEP OF SEARCH OPER ATION WAS TAKEN AGAINST THE ASSESSEE. THE REVENUE DEPARTM ENT HAS NOT FOUND THAT THE PROFESSIONAL FEES WAS NOT FU LLY RECORDED BY THE ASSESSEE. IF THERE WAS NO ELEMENT O F EARNING OF UNACCOUNTED INCOME THEN IT WAS WRONG ON THE PART OF THE REVENUE DEPARTMENT TO PRESUME THAT UNACCOUNTED INCOME WAS USED FOR PURCHASE OF LAND. W HERE WAS THE ELEMENT OF UNACCOUNTED CASH AVAILABILITY, I S THE QUESTION REMAINED UNANSWERED?. WHEN THERE WAS NO EVIDENCE OF GENERATION OF UNACCOUNTED CASH BY THE A SSESSEE THEN THE ALLEGATION OF CASH PAYMENT REMAINED UNSUBSTANTIATED. THERE WAS NO PROOF FOUND EVEN AFTE R THE SEARCH TO ESTABLISH THAT THE ASSESSEE HAD GENERATED UNACCOUNTED INCOME FROM MEDICAL PROFESSION. EVEN IT IS DIFFICULT TO BELIEVE IN THE CASE OF THE CCCPL, WHIC H WAS IN THE NASCENT STAGE, THAT THERE WAS A POSSIBILITY OF AVAILABILITY OF SUCH HUGE UNACCOUNTED CASH. WE ARE NOT THEREFORE CONVINCED ABOUT THE DIRECTION OF LD. CIT(A) TO EXAM INE THIS ISSUE IN THE HANDS OF CCCPL. 8.10 THE REVENUE DEPARTMENT HAS HELD THAT THE 15% PAYMENT WAS IN CHEQUE AND 85% PAYMENT WAS IN CASH WHICH WERE MENTIONED ON NUMBER OF OCCASION AS PER T HE DATA SHEETS OF THE COMPUTER. PRIMA FACIE, THOSE SHE ETS HAVE DEMONSTRATED THAT THE CONTRIBUTION OF THE DOCTORS W AS TO BE MADE IN THE SAID PROPORTION. THE EXPLANATION OF THE ASSESSEE IN GENERAL IS THAT PERCENTAGE OF CONTRIBUT ION WAS FIXED IN THE LIGHT OF THE PROGRESS OF THE CONSTRUCT ION, KEEPING IN MIND THE COMPLETION OF THE PROJECT. THE ASSESSEE HAS ALSO EXPLAINED THE 15% OF THE TOTAL PROJECT WAS IN FACT ALLOCATED TOWARDS THE LAND WHICH WAS REQUIRED TO BE ARRANGED BY THE DOCTORS AT THE TIME OF THE JOINING OF THE PROJECT AND REST 85% WAS ALLOCATED TOWARDS THE COST OF THE PROJECT. THERE WERE SEVERAL SHEETS SHOWING VARIOUS PERMUTATION AND COMBINATION ABOUT THE INVESTMENTS M ADE IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 33 - BY THE DOCTORS BUT ALL THAT WHICH WAS RECORDED IN T HE COMPUTER HAVE ALSO BEEN SYSTEMATICALLY RECORDED IN THE RESPECTIVE BOOKS OF ACCOUNTS. RATHER, THE BANK ACCO UNTS IN SUPPORT OF THE INVESTMENT HAVE ALSO BEEN PLACED DUR ING ASSESSMENT PROCEEDINGS. ON THOSE BANK TRANSACTIONS AND THE TRANSACTIONS RECORDED IN THE BOOKS THE REVENUE DEPARTMENT HAS NOT CASTED ANY DOUBT. THOSE WERE FOU ND TO BE TRUE AND CORRECT AS THERE WAS NO FALLACY IN THE TRANSACTION HAPPENED TO BE MADE THROUGH BANK. 8.11 LEARNED AR HAS RAISED AN ARGUMENT THAT NO CORRESPONDING LEGAL ACTION SO FAR WAS TAKEN AGAINST THE SELLERS OF THE PROPERTY. ACCORDING TO HIM, REVENUE DEPARTMENT SHOULD HAVE CHARGED THE CAPITAL GAIN ON THE ALLEGED CASH COMPONENT FROM THOSE COMPANIES WHO HAV E SOLD THE PROPERTY. BY NOT TAKING ANY ACTION THE REV ENUE DEPARTMENT HAD WEAKENED THE ALLEGATION. WE HAVE ASK ED THIS QUESTION FROM THE REVENUE DEPARTMENT BUT FAILE D TO GET ANY SATISFACTORY REPLY. 8.12 FROM THE SIDE OF ASSESSEE FEW CASE LAWS HAVE B EEN CITED IN SUPPORT OF THE CONTENTION THAT LEARNED CIT (A) WENT WRONG IN DIRECTING THE ASSESSMENT TO BE IN THE HAND S OF THE ASSESSEE COMPANY. IN THE CASE OF CIT VS. KRISHI UDP ADAN MANDI SAMITI, 336 ITR 77 (ALD), IT WAS HELD THAT TH ERE WAS NO MATERIAL WITH CIT(A) TO DIRECT THE RECEIPTS TO B E TAXED IN THE HAND OF THE MANDI PARISHAD. IT WAS HELD THAT SU CH DIRECTIONS WERE WITHOUT JURISDICTIONS. LIKEWISE IN THE CASE OF MRS. BANOO E. CAWASJI, 10 TAXMAN 97 (MP) IT WAS HELD THAT CIT(A) WAS NOT COMPETENT TO ISSUE DIRECTION TO CANCEL AN ASSESSMENT MADE IN THE CASE OF THE DECEASED. AN ANOTHER ORDER HAS ALSO BEEN CITED, NAMELY, SUN META L FACTORY (I) (P.) LTD., 124 ITD 14 (CHENNAI). IN THI S JUDGMENT, A SEARCH WAS ON THE ASSESSEE AND ON THE MANAGING DIRECTOR. ON APPEAL CIT(A) HAD HELD THAT THE ADDITI ON MADE IN THE BLOCK ASSESSMENT DID NOT EMANATE FROM THE EV IDENCE FOUND AT THE TIME OF SEARCH HENCE THE ADDITION WAS NOT SUSTAINED. HOWEVER, LEARNED CIT(A) HAS DIRECTED TO ISSUE NOTICE U/S 148 TO BRING TO TAX THE BOGUS ADVANCES. IT WAS HELD THAT THE LEARNED CIT(A) HAS FAILED TO RECORD A CATEGORICAL FINDING JUSTIFYING THE DIRECTION GIVEN TO THE AO WHEN THE AO HAD NOT CHOSEN FOR REOPENING OF THE ASSESSMENT THEN THE DIRECTION GIVEN BY LEARNED CIT (A) WERE TO BE SET ASIDE. IN THE LIGHT OF THESE DECISIONS, L EARNED AR HAS VEHEMENTLY PLEADED THAT THE DIRECTION MADE BY L EARNED IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 34 - CIT(A) TO ASSESS THE CASH COMPONENT IN THE HANDS OF THE COMPANY WAS BEYOND HIS JURISDICTION THEREFORE REQUI RED TO BE OVER RULED. CONSIDERING THE CIRCUMSTANCES UNDER WHICH SUCH DIRECTIONS WERE GIVEN, IT IS HEREBY HELD, NOT VALID IN THE EYES OF LAW. 8.13 NEXT POINT. IT IS A UNIVERSAL LAW THAT THE SU SPICION HOWSOEVER STRONG CANNOT TAKE THE PLACE OF EVIDENCE . AT BEST, IT CAN ONLY LEAD TO INVESTIGATION. NO PERSON CAN BE PUNISHED MERELY ON THE BASIS OF A DOUBT, BUT SIDE B Y SIDE, MUST NOT BE SPARED ON THE BASIS OF UNFAVORABLE EVID ENCE. SO THE PROCEDURE IS THAT A MISTRUST LEADS TO INVEST IGATION AND AN INVESTIGATION LEADS TO COLLECTION OF EVIDENC E. THERE ARE SEVERAL DECISIONS IN THE PAST PRONOUNCED BY THE HONBLE APEX COURT WHEREIN A GENERAL RULE IS FRAMED THAT AL THOUGH THE ITO IS NOT FETTERED BY THE TECHNICAL RULE OF EV IDENCE, BUT ITO IS NOT ENTITLED TO MAKE A PURE GUESS, HOWEVER, REQUIRED TO MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVID ENCE. THERE MUST BE SOMETHING MORE THAN BARE SUSPICION. I N THE PRESENT APPEAL A FUNDAMENTAL QUESTION IS THAT WHETH ER THERE WAS SUFFICIENT CLINCHING EVIDENCE UNEARTHED B Y THE REVENUE DEPARTMENT CONSEQUENT UPON THE SEARCH TO MA KE A FIRM BELIEF THAT IN FACT THERE WAS THE EXISTENCE OF UNACCOUNTED INVESTMENT IN THE PURCHASE OF LAND. SID E BY SIDE A SECOND QUESTION THEREFORE ARISES THAT WHETHE R THE IMPUGNED ADDITION WAS IN THE NATURE OF SUSPICION ON LY. WE HAVE CAREFULLY EXAMINED BOTH THESE QUESTIONS AND TH EN ON CRITICAL ANALYSIS OF THE EVIDENCES AND UNDER THE TO TALITY OF THE CIRCUMSTANCES, WE HEREBY HOLD THAT THOSE WERE N OT EVEN THE INCRIMINATING MATERIAL BUT SIMPLY COMPUTER GENE RATED PROJECTIONSHEETS, THEREFORE, HARD TO SAY, SYNONYMOU S TO CLINCHING MATERIAL EVIDENCE DEPICTING CASH TRANSACT ION, HENCE ERRONEOUSLY SUSPECTED BY THE REVENUE DEPARTME NT. WE HEREBY HOLD THAT THERE WAS NO EVIDENCE IN POSSES SION OF THE REVENUE DEPARTMENT TO HOLD THAT THE ASSESSEE HA D IN FACT MADE AN UNACCOUNTED INVESTMENT TOWARDS THE PURCHASE OF THE PROPERTY. 5.4 IN THIS BACKGROUND, WE FIND THAT THE ADDITION H AS BEEN MADE ON THE ALLEGATION THAT THE ASSESSEE-GROUP HAS RECEIVED RS.15.07 CRORES AS DISCUSSED ABOVE AS ON-MONEY FROM SALE OF IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 35 - LAND IN QUESTION FROM CCPL. AS DISCUSSED ABOVE, IN THE CASE OF DR. KEYUR PARIKH AND OTHERS IN IT(SS)A NOS. 604/AHD /2011, IT HAS BEEN HELD BY THE ITAT THAT THERE WAS NO EVIDENC E IN POSSESSION OF REVENUE TO HOLD THAT THE ASSESSEE MAD E UNEXPLAINED INVESTMENTS TOWARDS THE PURCHASE OF LAN D IN QUESTION. NOTHING CONTRARY WAS BROUGHT TO OUR KNOW LEDGE ON BEHALF OF THE REVENUE. SINCE THE ASSESSEE IS A REC IPIENT IN RESPECT OF THE SAME PROPERTY AND IT HAS BEEN HELD B Y ITAT THAT IN CASE OF PURCHASER NO UNEXPLAINED INVESTMENT HAS BEEN MADE IN RESPECT OF SAID PROPERTY AS DISCUSSED ABOVE. SO , THE ADDITION ON RECEIVING ON-MONEY IN QUESTION IN THE HANDS OF T HE ASSESSEE- GROUP ARE NOT JUSTIFIED UNLESS THERE IS EVIDENCE ON THE ISSUE IN FAVOUR OF REVENUE WHICH IS MISSING IN THIS CASE. M OREOVER, REVENUE AUTHORITIES IGNORED THE FACT THAT ONE OF CO MMON DIRECTORS OF ASSESSEE COMPANIES, NAMELY MR. SHEKHA R PATEL HAD CATEGORICALLY DENIED HAVING RECEIVED CASH AMOUNT ON THE SALE OF LAND IN QUESTION. REVENUE HAS IGNORED THE SAME WHIC H IS NOT JUSTIFIED. ASSESSEES HAVE NOT BEEN PROVIDED CROSS E XAMINATION OF PERSON WHO IS ALLEGED TO HAVE MADE PAYMENT OF CASH OF RS.15.07 CRORES. TO THE ASSESSEES WHICH IS AGAIN NOT JUSTIFI ED. TAKING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITI ON MADE BY THE REVENUE IN ALL THESE GROUPS ALLEGED TO BE RECEI VED FROM CCPL DOES NOT SURVIVE AND SAME IS DIRECTED TO BE DELETED . THIS TAKE IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 36 - CARE OF MAIN ISSUE OF ON MONEY IN LAND DEAL IN CASE S OF ALL THESE ASSESSEES OF THIS GROUP. 6. NEXT ISSUE IS WITH REGARD TO THE DISALLOWANCE OF COMPENSATION OF RS.2.75 CRORES PAID TO FRONTLINE FI NANCIAL SERVICES PVT LTD BY THE SEVEN ASSESSEE-COMPANIES I. E,. RS.32,22,400/- (M/S. MARTAND ESTATE PRIVATE LIMITED ), RS.27,28,000/- (M/S. MATANG PROPERTIES PRIVATE LIMI TED), RS.39,42,400/- (M/S. MATRIK BUILDCON PRIVATE LIMITE D), RS.43,53,600/- (M/S. METHBHUTI COMPLEX PRIVATE LIMI TED), RS.37,60,000/- (M/S. MADHUMATI REALITY PRIVATE LIMI TED), RS.39,56,800/- (M/S. MADHUR REALITY PRIVATE LIMITED ) AND RS.55,40,800/- (M/S. TEERTH DEVELOPERS PRIVATE LIMI TED). THIS ISSUE IS COMMON IN ALL THESE APPEALS. THE RELEVANT DISCUSSION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER OF MA THUR REALTY PRIVATE LIMITED IS REPRODUCED AS UNDER:- IN THE PROFIT & LOSS ACCOUNT SUBMITTED WITH RETURN OF INCOME OF A.Y. 2008-09, THE ASSESSEE HAS DECLARED P ROFIT OF RS.3,95,2961- ON THE SALE OF THIS LAND. IN'THE COMP UTATION OF INCOME, THE ASSESSEE DECLARED THE PROFIT ON SALE OF LAND AS LONG TERM CAPITAL GAIN AMOUNTING TO RS.4,45,672/ - AS UNDER: GROSS SATES CONSIDERATION ON THE BASIS OF STAMP DUT Y VALUE 4528079 LESS: COMPENSATION PAID TO FRONTLINE FINANCIAL SERVICES LTD IN CONNECTION WITH THE TRANSFER OF LAND 3956800 NET SALES CONSIDERATION ON SALE 573279 LESS: INDEXED COST OF ACQUISITION OF LAND 125607 LONG TERM CAPITAL GAIN ON SALE 445672 IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 37 - 5.2 IN THE ABOVE MENTIONED COMPUTATION, THE ASSESSE S REDUCED THE AMOUNT PAID TO M/S. FRONTLINE FINANCIAL SERVICES LTD AMOUNTING TO RS.39,56,800/-, FROM THE GROSS SALE CONSIDERATION. THE ASSESSEE WAS ASKED TO JUS TIFY THE SAME. IN RESPONSE TO THIS, THE ASSESSEE SUBMITS T HAT A DEVELOPMENT AGREEMENT WAS EXECUTED IN RESPECT OF LA ND PLOT NO.67/2 IN T.P. SCHEME NO.42 AT SOLA, THALTEJ WITH FRONTLINE FINANCIAL SERVICE LTD ON 27.03.2007. AN AGREEMENT IN THIS REGARD WAS SUBMITTED, AS PER TH E AGREEMENT, M/S. FRONTLINE FINANCIAL SERVICES LTD WA S TO DEVELOP THE LAND FOR RS.2,510/- PER SQ. MTR TOTALIN G TO RS.4,31,49,900/-. BUT IF DUE TO SOME REASON THE L AND IS NOT DECIDED TO BE DEVELOPED THEN M/S. FRONTLINE FIN ANCIAL SERVICES LTD WILL BE PAID COMPENSATION @ RS.1600/- PER SQ. METER. THE ASSESSEE SUBMITTED THAT THE LAND WAS NO T DEVELOPED HENCE ANOTHER AGREEMENT DATED 18.08.2007 WITH M/S. FRONT LINE FINANCIAL SERVICES LTD WAS EXECUTED AS PER WHICH THE 7 LAND OWNERS HAD TO PAY THE AMOUNTS OF COMPENSATION TO M/S. FRONTLINE FINANCIAL SERVICES L TD WITHIN 15 MONTHS OF THE AGREEMENT. THE ASSESSEE ST ATED THAT PAYMENT OF RS.39,56,800/- IS MADE BY IT TO THE FRONTLINE FINANCIAL SERVICES LTD HENCE THE SAME IS REDUCED FROM THE SALE CONSIDERATION OF LAND. 5.2 THE ASSESSEE WAS ASKED TO SUBMIT THE EVIDENCE O F PAYMENT MADE TO FRONTLINE FINANCIAL SERVICES LTD AN D THE CONFIRMATION FROM THEM AND THE REFLECTION OF SAME I N THE INCOME TAX RETURN OF THE RECIPIENT. IN RESPONSE TO THIS, THE ASSESSEE DID NOT SUBMIT ANY CONFIRMATION. AS PER TH E DETAILS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO AMOUNT HAS BEEN PAID TO M/S. FRONTL INE FINANCIAL SERVICES LTD TILL 31.03.2009. THE AMOUNT OF SALE CONSIDERATION OF LAND RECEIVED BY THE COMPANY IS TRANSFERRED TO ANOTHER GROUP COMPANY M/S. GANESH PLANTATION LTD. THE ACCOUNTS OF M/S. FRONTLINE FINA NCIAL SERVICES LTD FOR THE AY. 2008-2009 AND A. Y. 2009-2 010 DO NOT REFLECT ANY SUCH INCOME. THE COMPANY IS ALSO NO T SHOWING ANY DEBTORS EQUIVALENT TO THE AMOUNTS OF COMPENSATION RECEIVED FROM ASSESSEE COMPANY. THEREF ORE, THE 'DEVELOPMENT AGREEMENT' WITH FRONTLINE FINANCIA L SERVICES LTD LTD IS A CONCOCTED DOCUMENT CREATED FO R REDUCING THE TAX LIABILITY OF ASSESSEE-COMPANY. THI S IS FURTHER SUPPORTED BY THE FACT THAT IN MARCH-2007 TH E PURCHASER OF LAND M/S. CCCPL WAS PAYING STAMP DUTY ON BEHALF OF VENDOR THAT MEANS BY THAT TIME THE LAND W AS IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 38 - DECIDED TO SALE LAND TO M/S. CCCPL, ON THE OTHER HA ND THE DEVELOPMENT AGREEMENT WITH A CLAUSE OF HEAVY PENALT Y IN CASE OF TERMINATION, WAS BEING ENTERED SIMULTANEOUS LY WITH OTHER COMPANY. THE COPY OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT OF FRONTLINE FINANCIAL SERVICES LTD WA S DOWNLOADED FROM INTERNET, WHICH SHOWS THAT M/S. FRO NTLINE FINANCIAL SERVICES LTD HAS NOT SHOWN ANY RECEIPT FR OM THE ASSESSEE COMPANY. THIS WAS JUST A COLOURABLE DEVISE TO AVOID PAYMENT OF TAX BY THE ASSESSEE COMPANY. IN VI EW OF THE ABOVE FACTS, THE CLAIM OF COMPENSATION PAID TO FRONTLINE FINANCIAL SERVICES LTD OUT OF THE SALE PROCEEDS IS REJECTED. THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF IN COME AND CONCEALED PARTICULARS OF INCOME, THEREFORE, PEN ALTY PROCEEDINGS U/S. 271(1 )(C) OF THE ACT IS INITIATED SEPARATELY. THE COMPUTATION OF CAPITAL GAIN IN THE CASE OF ASSE SSEE IS WORKED OUT AS UNDER : SALE CONSIDERATION AS DECLARED BY ASSESSEE RS. 45,28,0791/- ADD: SALE CONSIDERATION RECEIVED IN CASH RS.2,15,25,492/- RS.2,60,53,571/- LESS: INDEXED COST OF ACQUISITION RS. 1,25,607/- LONG TERM CAPITAL GAIN RS.2,59,27,964/- 6.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED BY THE ASSE SSEE WHICH ARE REPRODUCED HEREIN AS UNDER: 1. THE APPELLANT COMPANY WOULD LIKE TO SUBMIT THAT IT ALONG WITH OTHER 6 CO-OWNERS COMPANIES HAVE ENTERED INTO-A DEVELOPMENT AGREEMENT IN RESPECT OF LAND WIT H PARTY NAMELY FRONTLINE FINANCIAL-SERVICES LTD. (HEREINAFTER REFERRED TO AS FFSL FOR THE SAKE OF CONVENIENCE). THE COPY OF DEVELOPMENT AGREEMENT WAS PROVIDED 'TO THE LD. A.O. (REFER PAGE NO.129 TO 135 OF PAPER BOOK NO.1). AS PER THE SAID DEVELOPMENT AGREEMENT, IF THE CO-OWNERS COMPANIES SOLD THE LAND WITHOUT DEVELOPMENT, THEN THE SAID DEVELOPMENT AGREEMENT IS REQUIRED TO BE CANCELLED AND FOR THAT COMPENSATION OF RS. 1600/- PER SQ. MTR. IS REQUIRED TO BE PAID FOR RELINQUISHMENT OF RIGHTS OF THE DEVELOPMEN T FOR THE DEVELOPER FFSL. DURING THE FINANCIAL YEAR 2007- 08 RELEVANT TO A.Y. 2008-09, THE LAND UNDER QUESTION H AS IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 39 - BEEN SOLD BY THE APPELLANT ALONG WITH OTHER CO-OWNE R COMPANIES AND THEY HAVE PAID THE COMPENSATION FOR RELINQUISHMENT OF RIGHTS OF DEVELOPMENT TO FFSL BY ENTERING INTO AN AGREEMENT FOR RELINQUISHMENT OF RI GHTS OF THE DEVELOPMENT BY ALL 7 COMPANIES WITH THE SAID FF SL AS PER THE TERMINATION AGREEMENT DATED 18-08-2007 (REF ER NO.136 TO 141 OF PAPER BOOK NO.L) 2. AS PER THE SAID TERMINATION AGREEMENT, THE APPEL LANT COMPANY HAS PAID RS.39,56,800/- AS COMPENSATION FOR RELINQUISHMENT OF RIGHTS OF DEVELOPMENT TO FFSL. TH E APPELLANT COMPANY HAS PAID THE COMPENSATION AMOUNT TO FFSL AND THAT IS WHY THE APPELLANT COMPANY COULD EXECUTE CONVEYANCE DEED FOR SALE OF LAND WITH OTHER CO- OWNERS. THEREFORE, UNLESS THE APPELLANT COMPANY HAS SETTLED THE PAYMENT OF COMPENSATION TO FFSL, THE SA LE TRANSACTIONS OF THE LAND OF THE COMPANY WOULD NOT H AVE BEEN MATERIALIZED AND THEREFORE, THE COMPENSATION P AID TO FFSL FOR RELINQUISHMENT OF RIGHTS OF DEVELOPMENT IS AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH THE TRANSFER OF LAND OF THE APPELLANT COMPANY AND THEREFORE, THE SAID EXPENDITURE IS DEDUCTIBLE AS PE R THE PROVISIONS OF SECTION 48(1) OF THE ACT IN COMPUTATI ON OF CAPITAL GAIN. IN SUPPORT OF AFORESAID CONTENTION, T HE APPELLANT COMPANY HAS RELIED UPON THE FOLLOWING DEC ISIONS OF VARIOUS HIGH COURTS: I) CIT VS. SHAKUNTALA KANTILAL 190 ITR 56 (BOM.) II) CIT VS. ABRAR AM 247 ITR 312 (BOM.) III) CIT VS. BRAD FORD TRADING GO. PVT. LTD. 261 ITR 222 (MAD.) IV) GOPEE NATH PAUL & SONS & ANOTHER VS. DCIT 278 ITR 240. 3. IN VIEW OF THE AFORESAID FACTS AND LEGAL SUBMISS ION, THE COMPENSATION PAID TO FFSL IS DEDUCTIBLE WHILE COMPU TING THE CAPITAL GAIN IN THE CASE OF THE APPELLANT COMPA NY AS AN 'EXPENDITURE IN CONNECTION WITH THE SALE OF LAND OF THE APPELLANT COMPANY AND THEREFORE, THE EXPENDITURE INCURRED IN RESPECT OF COMPENSATION PAID TO FFSL FO R THE LAND AT VILLAGE SOLA, TAL - DASKROI IN THE REGISTRA TION DISTRICT & SUB-DISTRICT AHMEDABAD SOLD DURING THE FINANCIAL YEAR 2007-08 HAS BEEN DEDUCTED IN COMPUTA TION OF CAPITAL GAIN AS EXPENDITURE INCURRED WHOLLY AND IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 40 - EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER OF LAN D AND IS ALLOWABLE U/S. 48(1) OF THE ACT. 4. FURTHER, IT MAY BE NOTED THAT THE APPELLANT COMP ANY HAS PAID THE COMPENSATION TO FFSL FOR TERMINATION O F DEVELOPMENT AGREEMENT BY ACCOUNT PAYEE CHEQUES ONLY . 5. SINCE THE COMPENSATION FOR TERMINATION OF THE DEVELOPMENT AGREEMENT IS PAYABLE TO FFSL IN TERMS O F DULY EXECUTED DEVELOPMENT AGREEMENT AND TERMINATION AGREEMENT, THE SAME IS REQUIRED TO BE ALLOWED AS DEDUCTION FROM THE GROSS SALES CONSIDERATION WHILE COMPUTING THE CAPITAL GAIN ON SALE OF THE SAID LAND . ACCORDINGLY, THE DISALLOWANCE MADE BY THE LD. A.O DESERVES TO BE DELETED. 6.2 HAVING CONSIDERED THE SAME, THE CIT(A) OBSERVED THAT A LETTER DATED 05.03.2007 WAS WRITTEN BY CCCPL TO SUPERINTENDENT OF STAMPS AND INSPECTOR GENERAL OF R EGISTRATION, GANDHINAGAR. FROM THE CONTENTS OF AFORESAID LETTER, THE CIT(A) OBSERVED THAT THE COMPANY CCCPL HAS ALREADY NEGOTIA TED THE PURCHASE OF THE LAND BEARING PLOT NUMBER 67 OF TPS 42 SITUATED AT SOLA, DISTRICT AHMEDABAD ADMEASURING 17,190 M 2 AND THEREFORE THEY HAVE WRITTEN TO THE SUPERINTENDENT O F STAMPS AND INSPECTOR GENERAL OF REGISTRATION, GANDHINAGAR TO P ROVIDE THE AMOUNT OF PENDING STAMP DUTY. THE AR OF THE ASSESSE E-COMPANY WAS CONFRONTED FOR SAME. THE ASSESSEE HAVE DISOWNED THE CONTENTS OF THE LETTER DATED 5/3/2007 WRITTEN BY TH E COMPANY CCCPL TO THE REGISTRAR OF STAMP DUTY INTER ALIA STA TED THAT THE LETTER IS NOT WRITTEN BY THE CCCPL. THIS CONTENTION OF THE IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 41 - ASSESSEE WAS NOT FOUND CORRECT BY CIT(A). THE GENUI NENESS OF DEVELOPMENT AGREEMENT DATED 27/03/2007 ENTERED BY A SSESSEES WITH FFSL WAS TERMED DOUBTFUL BY CIT(A). ACCORDING TO REVENUE SHRI TUSHAN SHAH, THE DIRECTOR OF FFSL (FRONTLINE F INANCIAL SERVICES LTD.) STATED BEFORE THE ADIT (INVESTIGATIO N) THAT HE HAD NOT RECEIVED ANY AMOUNT IN QUESTION. HE ALSO DOUBTE D TERMINATION OF SAME AND MADE DISALLOWANCE IN QUESTI ON. 6.3 ACCORDING TO REVENUE SAID TUSHAR SHAH THE DIRE CTOR OF FFSL STATED BEFORE THE ADIT (INVESTIGATION) THAT HE HAD NOT RECEIVED ANY AMOUNT FROM ASSESSEE COMPANIES. IN THI S REGARD, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE COMPA NIES WAS ASKED TO PRODUCE THE DIRECTORS OF ALL THE SEVEN ASS ESSEE COMPANIES BEFORE THE CIT(A). SHRI SHEKHAR PATEL, DI RECTOR OF ALL THE SEVEN ASSESSEE COMPANIES WAS PRODUCED BEFORE HI M INTER ALIA HE STATED THAT SHRI TUSHAR SHAH OF FRONTLINE F INANCIAL SERVICES LTD WAS INTRODUCED TO HIM BY SHASHIKANT PA TEL. AT THE RECOMMENDATION OF SHRI SHASHIKANT PATEL, A BROKER, THE DEVELOPMENT AGREEMENT WAS EXECUTED WITH FFSL. AS PE R THE DEVELOPMENT AGREEMENT, THE SEVEN ASSESSEE COMPANIES WERE TO RECEIVE RS. 4.31 CRORES FROM FFSL TOWARDS DEVELOPME NT CHARGES. SUBSEQUENTLY, THESE COMPANIES DECIDED TO SELL THE L AND FOR RS. 2.50 CRORES AND PAID COMPENSATION OF RS.2.75 CRORES TO FFSL IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 42 - STATED BY SAID PERSON. ON THIS POINT, SHRI SHEKHAR PATEL STATED THAT HIS FATHER LATE SHRI GOVIND BHAI PATEL (WHO DI ED IN OCTOBER 2009) WAS LOOKING AFTER THE LAND TRANSACTIONS AND T HEREFORE, HE WAS NOT AWARE AS TO WHY THE LAND WAS SOLD FOR RS. 2 .50 CRORES TO CCCPL AND COMPENSATION OF RS. 2.75 CRORES WAS PAID TO FFSL. A COPY OF THE STATEMENT OF SHRI TUSHAR SHAH DATED 11/ 10/2011 RECORDED BY THE ADIT (INVESTIGATION) UNIT 1(3), AHM EDABAD WAS GIVEN TO SHRI SHEKHAR PATEL FOR HIS COMMENTS. HE CA TEGORICALLY STATED THAT THE STATEMENT GIVEN BY SHRI TUSHAR SHAH WAS NOT CORRECT. THE CHEQUES PAID TO FFSL FOR RS. 2.75 CROR ES HAS NOT BEEN RECEIVED BACK BY THE 7 COMPANIES OR ANY OTHER CONCERN OR INDIVIDUAL OF GANESH HOUSING CORPORATION OR WITHDRA WN THE AMOUNTS IN CASH. IT WAS FURTHER STATED THAT THE PAY MENT OF RS.2.75 CRORES WAS MADE TO FFSL AFTER TWO AND HALF YEARS IN DECEMBER 2009 EVEN THOUGH AS PER THE CANCELLATION A GREEMENT DATED 18 TH AUGUST 2007, THE PAYMENT WAS TO BE MADE WITHIN 15 MONTHS OF THE TERMINATION AGREEMENT. ACCORDING TO S HRI SHEKHAR PATEL, THE DELAY WAS DUE TO THE ILL HEALTH OF SHRI GOVIND BHAI PATEL WHO ULTIMATELY EXPIRED IN OCTOBER 2009 AND TH AT SHRI TUSHAR SHAH OF FFSL NEVER DEMANDED THE MONEY FROM H IM. SUBSEQUENTLY, A LETTER WAS FILED BY THE AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE, INTER ALIA, REQUESTED FOR CROSS E XAMINATION OF SHRI TUSHAR S SHAH, DIRECTOR OF FFSL WHICH WAS DENI ED BY IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 43 - CIT(A). HE OBSERVED THAT CASE, THE ASSESSEE DID NOT HAVE ANY RIGHT OF CROSS EXAMINATION OF HIS OWN WITNESS. THER EFORE, THE QUESTION OF ALLOWING THE CROSS EXAMINATION OF SHRI TUSHAR SHAH TO THE ASSESSEE DID NOT ARISE. IN OTHER WORDS, THE ASSESSEE HAS NO RIGHT WHATSOEVER TO ASK FOR THE CROSS EXAMINATIO N OF HIS OWN WITNESS SHRI TUSHAR SHAH. ACCORDINGLY, THE CIT(A) H AS WRITTEN A LETTER DATED 17/11/2011 TO THE ASSESSEE COMPANIES A S UNDER: 'TO THE PRINCIPAL OFFICER (1) MATRAND ESTATE PVT. LTD (2) MATANG PROPERTIES PVT. LTD. (3) MADHUJ REALTY PVT. LTD. (4) MEDHBHUTI COMPLEX PVT.LTD (5) MADHUMATI REALTY PVT.LTD. (6) TIRTH DEVELOPERS PVT. LTD. (7) MAITRIK BUILDCON PVT. LTD. 'GANESH CORPORATE HOUSE' 100 FT. HEBATPURTHALTEJ ROAD, NR.SOLA BRIDGE, OFF S.G. HIGHWAY, AHMEDABAD. SUB: YOUR REQUEST FOR CROSS EXAMINATION OF SHRI TU SHAR S. SHAH, DIRECTOR OF FRONTLINE FINANCIAL SERVICES LTD. - REGARDING PLEASE REFER TO YOUR LETTER FILED IN THIS OFFICE ON 15/11/2011 BY SHRI DHIREN SHAH, YOUR CHARTERED ACCOUNTANT, REQUESTING TO ALLOW CROSS EXAMINATION O F SHRI TUSHAR S. SHAH, THE DIRECTOR OF FRONTLINE FINANCIAL SERVICES LTD (FFSL IN SHORT). IN THIS CONNECTION IT IS TO BE MENTIONED THAT SINCE FRONTLINE FINANCIAL SERVICES LTD. WAS YO UR CREDITOR IN THE ASSESSMENT YEAR 2008-09 AND 2009-10 AND DURING THE COURSE OF APPELLATE PROCEEDINGS YOU WERE ASKED TO PROVE THE GENUINENESS OF THE CREDITS BY PRODUCIN G THE DIRECTOR OF FRONTLINE FINANCIAL SERVICES LTD., IN R ESPONSE TO WHICH VIDE YOUR LETTER DATED 15/9/2011 YOU EXPRESSE D YOUR INABILITY TO PRODUCE SHRI TUSHAR S SHAH ON THE GROU ND THAT IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 44 - YOU HAVE NO OBLIGATION TO PRODUCE HIM BEFORE ME AS THE TRANSACTIONS WITH FFSL ARE NOT COVERED BY SECTION 6 8 OF THE IT ACT WHERE THE BURDEN IS ON THE ASSESSEE TO PRODU CE THE PERSON FOR EXAMINATION. YOU ALSO REQUESTED ME TO IS SUE SUMMONS TO HIM U/S. 131 OF THE I.T. ACT VIDE YOUR L ETTER DATED 15/11/2011. ACCORDINGLY SUMMONS WERE ISSUED T O HIM U/S. 131 OF THE IT ACT BY ME AND BY THE ADIT, U NIT-1 (3) AT MY REQUEST. IN OTHER WORDS, THE SUMMON U/S. 131 WERE ISSUED TO SHRI TUSHAR S. SHAH AT YOUR REQUEST AS YOUR WITNESS BECAUSE IN YOUR BOOKS OF ACCOUNTS OF A.Y. 2 008-09 AND 2009-10 FFSL WAS SHOWN AS A CREDITOR AND TO PRO VE THE GENUINENESS OF THE CREDITS IS YOUR RESPONSIBILI TY. THAT MEANS THE STATEMENT OF SHRI TUSHAR S. SHAH, DIRECTO R OF FFSL WAS RECORDED U/S. 131 IN THE CAPACITY OF FFSL BEING YOUR WITNESS. A COPY OF THE STATEMENT WAS GIVEN TO YOU ON 14/11/2011 WHEN THE DIRECTOR SHRI SHEKHAR PATEL WAS PRODUCED BEFORE ME. THEREFORE, YOU HAVE NO RIGHT TO CROSS EXAMINATION YOUR OWN WITNESS. IN OTHER WORDS, THE OPPORTUNITY OF CROSS EXAMINATION OF SHRI TUSHAR S S HAH CANNOT BE DEMANDED BY YOU. 2. HOWEVER, CONSIDERING YOUR REQUEST, FOLLOWING THE PRINCIPLE OF NATURAL JUSTICE, I AM READY TO ALLOW Y OU AN OPPORTUNITY OF CROSS EXAMINATION IF YOU CAN PRODUCE SHRI TUSHAR S SHAH BEFORE ME DURING ANY WORKING DAY FROM 18TH NOVEMBER, 2011 TO 30TH NOVEMBER, 2011 (EXCEPT FOR 28TH AND 29TH OF NOVEMBER, 2011) BETWEEN 11.00 A.M. TO 6.00 P.M.' 6.4 ACCORDING TO CIT(A) THE ASSESSEE COMPANIES HAV E NOT DISCHARGED THE ONUS OF PROVING THE CREDIT AMOUNT OF RS. 2.75 CRORES UNDER THE GUISE OF COMPENSATION TO FRONTLINE FINANCIAL SERVICES LTD. SAME WAS FOUND BOGUS BY HIM. THE AUTH ORIZED REPRESENTATIVE INSISTED FOR CROSS EXAMINATION OF TU SHAR SHAH WHO IS ALLEGED TO HAVE STATED THAT ABOVE AGREEMENT WAS TERMINATED AND TERMINATION WAS BOGUS. CROSS EXAMINA TION OF TUSHAR SHAH SHOULD NOT BE RELIED AND THE DISALLOWAN CE IN IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 45 - QUESTION BE SET ASIDE. ON THE OTHER HAND, LD. DR SU PPORTED THE ACTION OF CIT(A) ON THE ISSUE. 6.5 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD WE FIND THAT ASSESSEE COMPANIES CLAIMED TO H AVE PAID RS.2,75 CRORES TO M/S FRONT LINE FINANCIAL SERVICES . ASSESSEE- WISE BREAK UP OF THE SAME IS AS UNDER :- I) M/S MARTAND ESTATE PVT. LTD. RS.32,22,400/ - II) M/S MATANG PROPERTIES PVT. LTD. RS.27,28,000/ - III) M/S MAITRIK BUILDERS PVT. LTD. RS.39,42,400/ - IV) M/S MEDH BHUTI COMPLEX PVT. LTD. RS.43,53,600/ - V) M/S MADHUMATI REALTY PVT. LTD. RS.37,60,000/ - VI) M/S MADHUJ REALTY PVT. LTD. RS.39,56,800 VII) M/S TIRATH DEVELOPERS PVT. LTD. RS.55,40,800/ - CASE OF ASSESSEES IS THAT ALL ASSESSEE COMPANIES HA VE ENTERED INTO A DEVELOPMENT AGREEMENT IN RESPECT OF LAND WIT H M/S FRONTLINE FINANCIAL SERVICES LTD. AS PER SAID AGREE MENT, IN CASE OF ASSESSEE CO-OWNERS HAD TO SALE THE LAND IN QUEST ION WITHOUT DEVELOPMENT AS AGREED WITH FFSL. THEN ASSESSEE COMP ANIES WOULD HAVE TO PAY COMPENSATION OF RS.1600/- PER SQ. METER. ACCORDING TO ASSESSEES SITUATION AROSE IN SUCH WAY THAT IT HAD IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 46 - TO SELL THE LAND IN QUESTION WITHOUT DEVELOPMENT AN D FOR RELINGUISHMENT OF DEVELOPMENT RIGHT ASSESSEES PAID IN TOTAL RS2.75 CRORES TO FFSL AS DISCUSSED ABOVE. SAME WAS DISBELIEVED BY CIT(A) FOR REASONS DISCUSSED ABOVE. THOUGH ASSESSEES DID NOT PRODUCE TUSHAR SHAH BEFORE CIT(A) , HOWEVER, BUT HIS PRESENCE WAS COMPELLED BY CONCERNED ADIT (INVESTIGATION) AND STATEMENT OF TUSHAR SHAH WAS RE CORDED BY CONCERNED INVESTIGATION WING INTER ALIA SAID TUSHAR SHAH REFUSED TO ACCEPT THE FACT THAT HE HAD RECEIVED AN AMOUNT OF RS.2.75 CRORES ON BEHALF OF FFSL FOR ASSESSEES GROU P. RELYING ON SAME STATEMENT OF SAID TUSHAR SHAH AMOUNT OF RS. 2.75 CRORES PAID TO FFSL BY ASSESSEES GROUP WAS DISALLOW ED. WE FIND THAT DISALLOWANCE IN QUESTION HAS BEEN MADE MA INLY ON ACCOUNT OF DENIAL BY TUSHAR SHAH AS DISCUSSED ABOVE . THE FACTS REMAIN THAT MAIN FOCUS OF REVENUE IS ON STATE MENT OF TUSHAR SHAH BEFORE ADIT (INVESTIGATION). IRRESPECTI VE OF PECULIAR BACKGROUND OF CASE ASSESSEES HAD RIGHT TO CROSS EXAMINE TUSHAR SHAH WHOSE STATEMENT RECORDED BY CON CERN ADIT (INVESTIGATION) HAS BEEN MAINLY RELIED BY REVE NUE WHILE MAKING DISALLOWANCE IN QUESTION DENIAL. DENIAL OF O PPORTUNITY OF CROSS EXAMINATION OF SAID TUSHAR SHAH IS VIOLATI ON OF PRINCIPLE OF NATURAL JUSTICE WHICH IS NOT JUSTIF IED. TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDERATION, WE SET ASIDE THIS IT(SS)A NOS. 96 TO 102 AHD 2012 MATANG PROPERTIES PVT LTD + 6 OTHERS VS. ACIT AYS 2008-09 - 47 - ISSUE TO CIT(A) WITH DIRECTION TO DECIDE THE ISSUE AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO BOTH PARTIES INCLUDING CROSS EXAMINATION OF SAID TURSHAR SHAH OF FFSL BY ASSESSEES AS DISCUSSED ABOVE. THUS THE SECO ND ISSUE IN ALL THESE APPEALS IS ALLOWED FOR STATISTICAL PUR POSES. 7. AS A RESULT, ALL THESE APPEALS OF ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AS DISCUSSED ABOVE . ORDER PRONOUNCED IN THE COURT ON 12/05/ 2016 AT AHMEDABAD. SD/- SD/- SD/- SD/- ANIL CHATURVEDI SHAILENDRA KUMAR YAD AV (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD; DATED 12/05/2016 BIJU T., PS ! '! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A), 5. !'# $$ , , / DR, ITAT, AHMEDABAD 6. #() / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD