TMI Blog1998 (2) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... taying outsideIndia. Unaccounted receipt/receivable money to the tune of Rs. 9,50,00,000 2. On P. 13 of Annexure A-1 was captioned as "Estimates" and the entries mentioned therein are given below: " Estimates " Area Rent Cost Sale GF 450 29,100 29.10 - - ) 29.10 - - MF 1,137 43,206 25.00 appx. ) @ 3000 @ 2,200 ) FF 2,005 76,190 44.00 @ 2,200 ) SF 2,005 76,190 44.00 ) 2,24,486 142.10 ) M-37 ) 6897 x 3000 FF 1,750 - 42.00 @ 2,400 ) 206.91 184.10 ) 236.01 4.50 2.36.01 ) Less sold to self 48+42 .90 3.600 @12% 64.8 18 month Dep. .28.32 2.07.69 ) 12 months Appx. 2.9520 2.0769 87.51/= For G14 5.00 1.20 Less 24 months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich some element of interest or rent or similar charge for the 12 months on approximate basis has been deducted which has been worked out at 2.832 crores and hence the figure of cost as worked out to Rs. 2.0769 crores. For G-14, the notings have been made on the extreme right hand corner where Rs. 1.20 crores have been subtracted from Rs. 5 crores, Rs. 1.2 crores appeared to be amount relatable to 24 months towards interest or rent or similar expense. The remaining 3.8 crores has been further reduced by the amount of cost at Rs. 2.0769 crores. The notings on the left hand side show that out of 4.5 crores after deduction of 0.9 crore, 3.6 crores remains. This amount is further reduced by 18 months deferred payments charges @ 12 per cent, which had been worked out at Rs. 64.8 lakhs. After allowing deduction at 2.0769 crores, the net amount has been worked out to 87.5 crores. He further observed that there could be two proposals for some property or group of properties the cost of which could be to the extent of Rs. 2.0769 crores. This might have been mentioned in the paper, one at left and other at the right hand side of the bottom of the paper. The right hand side proposal gives th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopers Engineers Ltd., who is an independent entity and its assessment is completed under s. 143(3) and under s. 158BC for asst. yr. 1995-96 and no addition of any kind was made there. It is further pointed out that transaction of the property at G-74, Hauz Khas did not belong to the assessee but belongs to M/s Rajhans Developers (P) Ltd., which is an independent entity and is assessed separately. The acquisition of the property by the said company has been duly disclosed in the return of the said company and an investment of Rs. 47,95,000 has been duly disclosed by that company on the acquisition and development thereof. It is pointed out that the sale of flat No. G-14, Hauz Khas and M-37, Greater Kailash has not taken place till the date of search. It is further pointed out that in the assessment of M/s Rajhans Developers (P) Ltd. the assessment was completed under s. 143(3) and no addition of any kind was made. The learned counsel invited our attention to the affidavit of Shri Sanjeev Gupta, director of M/s Rajhans Developers (P) Ltd. paper-book pp. 100 and 82 respectively, which were filed before the AO confirming these facts. The AO neither doubted nor controverted the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in property deals, particularly when the AO has not made any such allegation in the present case and no evidence was found during the course of search that any transaction entered into by the assessee is not disclosed by him. 3.1. The learned assessee s counsel further contended that as the AO has not given any reasoning or finding or had not mentioned any evidence or material as to how or on what basis the above figures were considered as the assessee s income. It was clear that he had not invoked any of the deeming provisions of ss. 69 to 69D of the IT Act. The assessee s case could not be put in within the ken of s. 68 also, as the piece of paper impounded at the time of search could not be construed to be a book. The learned assessee s counsel also contended that the presumption contained in s. 132(4A) did not override ss. 68 and 69 and the presumption could not be raised for the purpose of regular assessment. In this connection, reliance was placed on the decisions of the Tribunal in the case of Raj Pal Singh Ram Autar vs. ITO (1991) 39 TTJ (Del) 544, in which one of us was a party to the order, in the case of T. Mudduveerappa Sons and in the case of Pushkar Narain Saraf vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veal that the assessee extended every co-operation during the course of assessment proceedings. He pointed out that the assessee did so in spite of the fact that photostat copies of seized material was supplied to the assessee belatedly. He also emphasised the fact that it is a case in which extensive search of residential and business premises was conducted and the documents seized were in possession of the Department right upto the date of assessment order and continued to be there. Every explanation, clarification required by the Department was submitted. The assessee was called at least 25 times for this purpose. Witnesses required by the AO to be produced by the assessee were produced. Most significant aspect of the case is that the AO has himself not complained of any inadequacy of time which might have handicapped him in making the proper assessment. Therefore, the learned Departmental Representative was not justified in making a grievance of what was indeed not made out by the AO. The documents were seized on17th Nov., 1995, whereas the assessment was completed on29th Nov., 1996. Still they say that the AO needed more time. This plea of the learned Departmental Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action. If at all, any such transaction took place for the parties to the transaction, what was the date of the transaction, what did the figure noted on the piece of paper represent, and whether in any manner the paper in question has any relevancy to the determination of the income in the hands of the assessee. No evidence has been brought on record to corroborate the allegation that the assessee had entered into any transaction or had earned any income. There was no evidence to show that there was any undisclosed investment or any sale of any property for the amount as given in this piece of paper. The assessee has alleged that the properties in question G-14, Hauz Khas and M-37, Greater Kailash were not sold during that period. These properties were sold after the date of the search. This fact has not been controverted by any material or evidence on record. Therefore, there was no question of any income arising from sale of these properties at the time of search. Besides this the property G-14, Hauz Khas belongs to different entity, M/s Rajhans Developers (P) Ltd., which is an independently assessed entity. The acquisition of the property by the said company had been duly discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of recovery and proof of the truth of the contents of the seized papers. So far as the truthfulness of the seized paper was concerned, the Department s case is that seized document contained details of secreted income. In this regard the Department had not brought on record any evidence conclusively that the seized documents contained details of sale of properties and profit earned, which was chargeable to tax. On the other hand, the assessee has now brought on record that no such sale of these properties had taken place prior to the date of search. No doubt the seized papers contained statement, the figures of which appeared to be certain unnamed transaction but there was nothing either in law or in logic to warrant the conclusion that the figures noted therein pertain to sale of properties and secret profits. Thus, going merely on the basis of the seized paper and nothing more, it could not be predicated that what was shown in the paper was secreted profits and sale proceeds. In other words, the details contained in the seized papers did not by themselves represent a preponderance of probabilities so as to support the Department s case that what was shown was taxable income. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure has provided under s. 132(4A) that the books of account, other documents, money, bullion, jewellery or other valuable articles seized from the possession of the assessee shall be presumed to belong to the assessee if they are found in the possession or control of the assessee in the course of the search. A similar presumption may also be made as to the correctness of the contents of the books of account so seized. So also the signature and every other part of the books of account may be assumed to be in the handwriting of the person by whom it is purported to have been written. This presumption cannot, however, have the effect of excluding s. 68 when regular assessment is made in regard to the income of the person from whose possession those books of account were seized under s. 132. It does not obviate the necessity to establish by independent evidence the genuineness of cash credits." Therefore, we hold that there is no corroborating evidence of the contents of the documents and also there is no material to ascertain the truthfulness of the statement. 3.6. In such circumstances, it cannot be presumed that seized document shows any transaction of sale and purchase entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was kept on record after verification. Those which were not explained, additions were made on the basis of those torn papers as undisclosed income from undisclosed sources of the assessee for this block assessment periods. The details of torn pieces of papers with amounts and block periods are given in an Annexure "X" to this order. The assessee furnished detailed reply in respect of each torn pieces of papers vide letter dt.15th Oct., 1996, and in an affidavit dt.22nd Nov., 1996. According to the AO, these torn pages contained some agreements to sell, receipts issued by the vendees and pages of ledger, etc. These documents were reconstructed and put to the assessee. According to the learned counsel these torn pages were found in a bedroom and the sewerage line, outside the house where several other sewerage lines join. Regarding the first set of papers recovered from the bed, the AO asked for the explanation from the assessee and there is no dispute on that matter. Regarding the second set of papers, which were reconstructed and put to the assessee, the AO accepted that these are rough trial balance and there is no dispute about the figures shown in the rough trial balance. The t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Departmental Representative relied on the order of the AO and repeated the contention for setting aside the assessment order with regard to this item as well. 4.3. We have considered the rival submissions and have gone through the entire material available on record. The papers in question are tiny pieces of papers. It does not indicate that any transaction ever took place. It does not contain any information as to what was the nature of the transaction, if at all, any such transaction took place, who were the parties to the transaction and what was the date of the transaction, what did the figures noted in the piece of paper represent and whether in any manner the paper in question has any relevance to the determination of income in the hands of the assessee. In fact the obtuse information, if any, then made out from these papers has not been shown to relate to the assessee. The case of the assessee is that it related to M/s Aerens Export Corporation and they constituted a rough trial balance, which was torn off after final trial balance was prepared. No evidence is brought on record either during the course of search and seizure operations or thereafter that any transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been made through banking channel. However, the AO was of the view that the gift is not genuine. He also doubted the genuineness of the donor also. In fact he also doubted the capacity of the donor to make the gifts and thus came to the conclusion that the gifts so made represent the undisclosed income of the assessee managed by him to receive back through this scheme. Therefore, an addition of Rs. 10,60,000 was made as income of the assessee for the block periods (Financial year 1995-96) relevant to asst. yr. 1996-97. 5.2. The learned assessee s counsel submitted that the addition is fully unjustified for the reasons that the assessee discharged his burden of proof to prove the identity, capacity and genuineness of the gifts. He emphasised that the identity of the donor is not in dispute. The capacity of the donor is also established, inter alia, by the fact that he has not only made the gift of Rs. 10.60 lakhs to the members of the family of the assessee but simultaneously he made a gift of Rs. 10 lakhs to his relations. Confirmation from the donor is duly filed. Confirmation from the father of the donor, confirming the receipt of gifts by his own family member is also file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en an iota of evidence to hold that the gifts were not genuine. The AO having accepted the documentary evidence placed on record and having failed to rebut the same was not justified in disbelieving the assessee s explanation. The correspondence indicated the fact that the assessee was keen to ensure that he is not caught within the mischief of Gift-tax Act. Therefore, as per advice required the donor to write the covering letters to make the gifts outside the taxable territory. In this connection, reliance was placed on the decision of the Supreme Court in the case of Dhakeswari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC) for the proposition that no addition can be made merely on the basis of suspicion. Reliance was also placed on the following decisions: (i) CIT vs. Daulat Ram Rawatmull 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC); (j) Omar Salay Mohamed Sait vs. CIT (1959) 37 ITR 151 (SC); (k) Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC); (l) Umacharan Shaw Bros. vs. CIT (1959) 37 ITR 271 (SC); and (m) K. Hari Prasad (1994) 50 TTJ (Hyd) 450 : (1995) 52 ITD 563 (Hyd). It is further pointed out that the seized documents in question establish that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record. The AO on the basis of correspondence between Shri S.K. Gupta and Shri J.P. Aggarwal dt.18th June, 1995, and10th June, 1995, came to the conclusion that the alleged gift amounting to Rs. 10.60 lakhs received from Shri J.P. Aggarwal, N.R.I. during the financial year 1995-96 is a procured gift made at the request of the assessee. It is not a genuine gift not in fact out of natural love and affection, rather instigated and schematic. So he treated the same as undisclosed income of the assessee. As against this, the case of the assessee is that Shri J.P. Aggarwal is a family-friend of the assessee and spent their childhood together with the assessee and was also his classmate, had given the aforesaid gift to the assessee and other family members out of natural love and affection, which has been received through banking channel. Details of gifts received and confirmation in the form of correspondence and confirmation from Shri J.P. Aggarwal was furnished from p. 55 to 81 of the paper-book and 90 to 94 of the paper-book. A perusal of the details filed by the assessee reveals that a sum of Rs. 3,00,000 has been received in the names of minors of the assessee, viz. Ash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del)(FB) supports the view. It is also a well-settled established principle of law that in the case of cash credit the onus is on the assessee to establish the identity and the capacity of the creditor as also the genuineness of the transaction. Similar is the position in regard to the gifts. It is the duty of the assessee to establish by necessary evidence that the gift claimed to have been received from the donor abroad is genuine and the same is made by a person having financial capacity. In the instant case the assessee had received the amount of gift through banking channel from a country outsideIndia. A reading of the letters referred to goes to show that the amounts were stated to be personal gift sent at the request of the assessee inIndia. The remitter, Shri J.P. Agarwal, has given a confirmation saying that the amount has been given out of natural love and affection to Shri S.K. Gupta. He further mentioned that he had also given gift to the extent of Rs. 10,00,000 to his family members out of natural love and affection, the details of which are given in paper-book at p. 91. The AO has not challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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