TMI Blog2014 (4) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... r fresh adjudication – Decided in favour of Assessee. Treatment of income u/s 69 of the Act – Held that:- The nature of seized documents has not been brought on record by the AO or the CIT(A) - No details has been submitted by means of paper book - Nothing is on record to suggest that the brokers were examined or the assessee was asked to produce them - the purchases have been duly registered at the circle rate specified - No addition can be made on the basis of observation of the AO that element of payment outside the books of accounts over and above the sale deed is a normal feature in property transaction – Relying upon K.P. Verghese vs. Income Tax Officer, Erankulam [1981 (9) TMI 1 - SUPREME Court] - the burden of proving is that of Revenue when there is allegation of understatement on concealment in the consideration - no addition can be made in this regard on the basis of dumb documents - the matter is required to be remitted back to the AO for fresh adjudication. Confirmation of addition amount to sale on protective basis – Held that:- The statement /affidavit of the assessee after two months of the search was an afterthought and was not backed by necessary evidences a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er companies in lieu of cheque received and cash return to the beneficiaries. There was also seizure of duplicate set of books of accounts, cheques signed by various authorised signatories / Directors of the assessee company and other companies (which were found to be employees, relatives or friends of Sh. SK Gupta) from Shri S.K. Gupta s premises. From the above, AO observed that it became abundantly clear that the assessee company, in fact, indulged in accommodation entries business and did not do any genuine business. All the sale and purchases etc. booked in these companies were found to be bogus. Proper books of accounts were not found to have been maintained. In these circumstances, the books of accounts of the assessee were rejected and additions were made on estimate basis, the same were affirmed by the Ld. CIT(A) in appeal. 5. Now the Assessee is in appeal before us. 6. The first issue pertains to rejection of books of accounts. Ld. Counsel of the assessee in this regard submitted that he is not vehemently pressing this issue. We find that in the search and on the basis of material recovered and statements obtained it has been duly established that assessee was indul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the tune of 1.5% to 2%. Hence, estimation of commission income @ 2% cannot be disputed. However, at the same time it has also been submitted in the same statement that the assessee has to incur the expenditure on account of salary, rent bank charges, conveyers, telephone, water and electricity. However, it is also settled that mere submission that expenditure has been incurred cannot lead to allowance of expenditure. Assessee has to prove with cogent material that the expenditure has been incurred to earn the income. In these circumstances we remit the issue to the file of the AO. The Assessing Officer shall examine the aspect of allowance of expenditure on the basis of cogent materials to be submitted by the assessee. 12. Another addition made in this regard is @2% on accommodation fresh investments. A.Y. Accommodation fresh investment entries Income @2% 2004-05 2,73,48,000 5,46,960 2005-06 2,63,50,000 5,27,000 2006-07 89,78,880 1,79,578 2007-08 4,38,40,283 8,76,805 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing submissions:- The company has started its real estate venture in the state of Rajasthan during the financial year 2006-07 and with the intention to acquire were investigating the rates of rural agricultural land in different districts of the states of Rajasthan for competitive acquisition. For that purposes, apart from our internal network, we seek helps of Real Estate Brokers of different states of Rajasthan. As the buyer was a New Delhi based company, as usual the brokers have quoted high price of the rural agricultural land and sent their quotation to us. This is also the trend of property dealers to quote high price of the properties in normal course of business during the pre-negotiation period. However, we have purchased all the rural agricultural land through our own network as the promoters hails from Rajasthan only by directly negotiating with the seller. The referred documents, you have seized is one of those quotations received by the company from one of the property dealer. The documents were hand written in Hindi. This document was not prepared by any of the employee, associates, directors or any person associated with the company rather received by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explain as to whom the same belong and as to how the same has come into his possession. Ld. CIT(A) observed that no doubt the presumption available u/s. 132(4A)/292C is a rebuttable presumption but the onus to rebut the presumption lies on the assessee. Ld. CIT(A) further observed that as has been observed by the AO in the instant case the assessee has simply stated that seize documents are nothing but pre-negotiation quotations received from some broker and that in fact the lands were purchased for a much lower price and registered at circle rates. Accordingly, Ld. CIT(A) proceeded to affirm the addition. 19. Against the above order the Assessee is in appeal before us. 20. We have heard both the counsel and perused the records. We find that in this case certain documents were seized from the assessee s premises which revealed that assessee has purchased some lands. The payments thereof were higher than that noted in the registered sale deed. AO had presumed that the said payments were on money payments. When confronted in this regard, the assessee has submitted that the documents seized were quotations from brokers. It was further submitted that the property dealers general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n concealment in the consideration shown. Moreover, we note that in a number of sale transaction as noted above the value as per the sale registration has been accepted by the AO without any addition. 23. We further note that it is settled law that no addition can be made in this regard on the basis of dumb documents. In this regard, we refer to the decision of the Hon ble Apex Court in the case of C.I.T. vs. P.V. Kalyanasundaram in (2007) 294 ITR 49 (SC) in which allegations of on money transaction on the basis of non-convincing loose sheets found during the course of search and conflicting statement of the seller, was deleted by the tribunal (to which, one of us the Accountant Member was the party) and the same was affirmed by the Hon ble High Court and Hon ble Apex Court. 24. Accordingly, in the background of the aforesaid discussions and precedents, we are of the considered opinion that the matter needs to be remitted to the file of the AO. The AO shall examine the nature of the seized documents afresh as per the discussion hereinabove. Furthermore, AO shall also make the necessary verification as mentioned hereinabove. Accordingly, the issue stands remitted to the file o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee s claim that it has genuine sales to M/s Reliance Industries, is totally unjustified without any corroborative evidence and clearly an exercise to save the beneficiary of accommodation entry. The AO held that since assessee had failed to give complete details of the disclosure especially relevant to the transaction made with the Reliance Industries Ltd., the total sale amount of Rs. 84,00,000/- is added to the assessee s income on protective basis and substantially it has to be considered in the hands of the beneficiaries i.e. M/s Reliance Industries. 28. Upon assessee s appeal Ld. CIT(A) held as under:- I have carefully considered the fats and the arguments of the appellant. The AO has given the reason for not accepting the disclosure in respect of the appellant s business with the Reliance Industries Ltd. deeming it to be nothing but an afterthought geared towards saving the beneficiary of the accommodation entries. He has raised objections against the authenticity of the affidavit in view of the facts that the affidavit was made nearly two months after the search and that the deposition made in the affidavit is not backed by necessary evidences about genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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