TMI Blog2002 (2) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... eque ------- 10.65 cash .55 cheque II Actual paid" During the course of statement recorded under section 132(4), when confronted with this paper, Dr. Tanna spontaneously submitted as under: "Q. No. 7: Particularly I would like to show you back side of loose paper bearing Sr. No. 61 of Annexure A-1. Kindly go through it and explain to me the contents thereof?" Ans.: "It is very simple. I have to pay by cheque a sum of Rs.6.55 lacs as per agreement for purchase of flat at Pune from Somerset Developers. Some of the instalments have gone through my bank account. I have paid a sum of Rs.10.65 lacs as cash from my professional income not recorded as yet in my books of account and I wish to admit the same as my admitted concealed income." In his Block assessment completed by the Dy. CIT, Special Range-26, Mumbai, Dr. Tanna surrendered Rs.10.65 lakhs. The statement of Dr. Tanna under section 132(4) and the said seized paper was forwarded by the Dy. CIT, SR 26, Mumbai to the Dy. CIT, SR-4, Pune, who has jurisdiction over the assessee. Accordingly, the Dy. CIT, SR-4, Pune, issued notice under section 158BC read with section 158BD to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Shri Prakash, the learned Assessing Officer concluded "From the above discussion, it is clear that entries on this paper have some direct as well as indirect nexus with the sale of flat by the assessee to Dr. D.D. Tanna. No doubt various other entries are also recorded on this paper including those of amounts as well as area of flats but then only those entries are being considered for the purpose of block assessment which are found related to purchase of flat by Dr. Tanna. While the assessee discussing various entries has dismissed them as not relating to him, I am of the opinion that transaction which has been admitted by Dr. Tanna in his statement during the course of search pertain to the purchase of flat by him from the assessee." Reliance was placed by the assessee on the judgment of the Bombay High Court in the case of Addl CIT v. Miss Lata Mangeshkar[1974]97 ITR 696. The Assessing Officer distinguished the facts of the case of the assessee from those of Miss Lata Mangeshkar's case and concluded that Dr. Tanna had made a cash payment of Rs.10.65 lakhs over and above the price given by cheques and the assessee had not recorded this cash payment in its books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of the assessee-firm. His first submission is that the papers seized are not indicating in any manner that Dr. Tanna paid any such amount to the assessee. For this, following important aspects were highlighted by the learned counsel: (a) The seized paper is an undated and unsigned loose paper admittedly not in the handwriting of Dr. Tanna or his wife. The said paper refers to three flats and none of the areas of such flats as mentioned in the paper tallies with that of the flat sold to Dr. Tanna by the assessee-firm. (b) The paper mentions so many figures in cash and it is not known how the Assessing Officer adopted this figure of Rs.10.65 lakhs as on-money paid for the flat. (c) The total of all the figures is Rs.25.62 lakhs and it is not known on what basis the Assessing Officer selected only a sum of Rs.10.65 lakhs as on-money paid and did not adopt the entire sum of Rs.25.62 lakhs as on-money having been paid. (d) The papers mention the name of Mr. Prakash and he has confirmed that he was a broker in deal. Secondly, the paper clearly states that one Mr. Bachhubhai a friend of Dr. Tanna was the person in between for this deal because Dr. Tanna has handed over the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the controversy are on the back page which are self evident and which were duly admitted by Dr. Tanna in a spontaneous way during the course of statement under section 132(4). The learned D.R. further stated that Dr. Tanna is a leading Doctor, hence he must be an intelligent person and it is not expected that he would hand over so much of money to Mr. Bachhubhai or Mr. Prakash, the middleman. He would himself hand over the same to the assessee. Thus, he argued that it can be safely said that the assessee only has received this money. He further submitted that if it is the case of the assessee that Shri Bachhubhai has taken the money, the assessee should have produced him. Having not done that, the assessee cannot take up such a contention. The learned D.R. further submitted that Dr. Tanna's Affidavit was produced before the CIT only a few days before the assessment was getting time barred. Thus, no cognizance can be taken of the same. Secondly, it is filed after three years and thus it has no evidentiary value. The learned D.R. further submitted that Mrs. Tanna came over to Pune to see the flats and it is unlikely that she did not meet the assessee. Thus, the money must have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was given under coercion and pressure. Dr. Tanna's wife was summoned before the Assessing Officer and both Mrs. Tanna and Dr. Tanna's Chartered Accountant, Mr. Ghabawalla categorically denied payment of any cash amount for purchase of the flat. 8. As rejoinder, Shri Naresh Kumar, the learned senior D.R. submitted that the seized paper forms part of record. it had two sides and the same was given to the assessee. In fact the whole controversy lay around the seized paper as a whole and particularly reverse side of the paper and now the learned counsel cannot say that is a fresh piece of evidence. First of all, the learned counsel did not produce this paper in his paper book and it was only when he (DR) produced the seized paper in original, the learned counsel chose to make a flimsy argument that the reverse side of the paper is a new piece of evidence. The loose paper as a whole was part of the seized record. It was seized from the residence of Dr. Tanna. Dr. Tanna had owned up this paper (both front side and back side) and on the basis of the entries on the back side which were particularly confronted to Dr. Tanna he admitted payment of cash money of Rs.10.65 lakhs and also su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is very clear that the seized paper with both sides was confronted to the assessee. We accordingly reject the argument of the learned counsel that the back side of the seized paper is a new piece of evidence and the same should not be admitted. 10. The argument of the learned counsel that the seized paper is an undated and unsigned loose paper admittedly not in the handwriting of Dr. Tanna or his wife is unreliable piece of evidence, has no legs to stand. It is an established fact that the seized paper was found during the course of search at the premises of Dr. Tanna and he owned up and on the basis of this seized paper, he also surrendered a sum of Rs.10.65 lakhs in his block assessment. No doubt, the seized paper is undated and unsigned and even if it is admitted that it is not in the handwriting of Dr. Tanna or his wife, it is a vital piece of evidence which was duly admitted by Dr. Tanna as belonging to him and on the basis of entries made on the back side of this paper, Dr. Tanna offered a sum of Rs.10.65 lakhs as undisclosed income (being cash component of the purchase price of the flat). Further, there is no evidence that the admission was made by Dr. Tanna under any pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed by the AAC, however, the same were deleted by the ITAT. A Reference filed by the department before the Bombay High Court was rejected after appreciating various facts and circumstances of the case and it was held that there were serious infirmities in the evidences presented by the department. While rejecting department's Reference, the Bombay High Court held that mere entries in the accounts regarding payments to the assessee was not sufficient as there was no guarantee that the entries were genuine. The Hon'ble Bombay High Court, inter alia, observed that the statement of Shri N. Vasudev Menon could not carry the case of the department as he had no personal knowledge of the actual payments made to the assessee Miss Lata Mangeshkar. Regarding the testimony of Shri C.S. Kumar, the Bombay Manager of M/s Vasu Films, it was pointed out that he used to receive amounts from Madras from out of which he used to make disbursement in Bombay, but he maintained no account in respect of same, which made it difficult to rely on his evidence. Observing thus, the Hon'ble High Court observed that entries in the day book or ledger would be a corroborative piece of evidence and once the direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded in the books of third person. In the circumstances, it was held by the I.T.A.T. that "Simply because in the books of a stranger assessee's name comes and the entry narrates that there were certain sales effected by the assessee, it will be unwise to tax the assessee on such infirm material i.e. the books of a third party." In the present case, the facts clearly show that the paper pertained to the transaction between Dr. Tanna and the assessee and the figure of Rs.10.65 lakhs was also found recorded and Dr. Tanna admitted having paid this amount to the assessee and also surrendered the same in his block assessment. Obviously, no prudent person would voluntarily subject himself to substantial tax burden unless he knows that he did earn undisclosed income. Accordingly, we hold that the decision of the I.T.A.T, Pune Bench, in the case of Bala Prasad R. Lokamanyawar is not applicable to the facts of the present case. 16. The above discussion covers the first nine grounds raised by the assessee which stand dismissed by us as indicated in the preceding paragraphs. 17. Ground No. 10 reads as under: "On the facts, in the circumstances of the case and as per law, the ld. Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to supra and relied upon by the learned counsel does not lay down the principle that undisclosed income can be taxed in the hands of only one person, especially when the facts suggest that the undisclosed income of one person is also the receipt of another and has not been disclosed in the hands of the latter as well as in this case (M/s Dhunjibhoy Stud Agricultural Farms). In the case before us, even if the income belongs to Dr. Tanna, the payment of the same amount to the assessee would amount to a receipt in the hands of the assessee, which would be taxable under Chapter-XIV-B and there would be justification to issue notice under section 158BC/BD. 20. It may also be mentioned that the Madras High Court in the case of Thanthi Trust v. Asstt. Director of Income-tax[1999] 238 ITR 635 has held that the judgments and orders of Courts and Tribunals cannot be construed or interpreted like Acts of Parliament or as Mathematical Theorems. The judgment has to be read in the context of actual findings of the case. The finding in the case before us is that the amount of Rs.10.65 lakhs was the undisclosed income of Dr. Tanna and that Dr. Tanna had passed on the same in cash to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal by the senior D.R. and it was never shown to the assessee either by the Assessing Officer in the assessment proceedings or by the CIT in the course of discussion before approval. By raising this contention, the learned counsel for the assessee had prayed that such new evidence should not be taken into consideration while deciding the issue on merits. The finding of fact has been recorded by him in the following words: "From the reading of the order of the Assessing Officer and that of the CIT, it is very clear that the seized paper with both sides was confronted to the assessee. We accordingly reject the argument of the learned counsel that the back side of the seized paper is a new piece of evidence and the same should not be admitted." 27. The order of assessment is well as Note of the CIT have been gone through by me very carefully. There is nothing either in the assessment order or in the Note of the CIT on the basis of which it can be said that back side of the loose paper was ever shown to the assessee. What has been stated by the Assessing Officer at page 2 of his order is that copy of the loose paper seized from the residence of Dr. Tanna was given to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first time that the back side of the loose paper was brought to the notice of the Tribunal by the senior D.R. in the course of his reply to the arguments of the learned counsel for the assessee. Admission of this evidence was seriously objected to by Mr. Pathak in his arguments as well as in the written Note copy of which is placed on record. Para 14 of the said Note states as under: "14. In reply to D.R.'s submissions, it was submitted by Shri Pathak that first of all, the alleged back side of the paper No. 37 which is produced by the DR. is fresh evidence. The alleged back side of paper No. 37 was neither shown to the appellants nor a xerox copy was furnished to the appellants and the appellants had no opportunity to deal with the notings made thereon. The appellants had given exhaustive comments on paper No. 37 (the front side of the loose paper) and if a copy of the back side had been given to the appellants, they would have definitely dealt with the same appropriately. No reasons were given by the DR as to why Assessing Officer and CIT have not referred to it at all or why they did not cross-examine the appellants with regard to this alleged back side. The said back side of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o cross-examine the manager of the bank with reference to the statements made by him." Proceeding further, it was observed at page 722 as under: "We are clearly of the view that the letters dated 18-2-1955, and 9-3-1957 did not constitute any material evidence which the Tribunal could legitimately take into account for the purpose of arriving at the finding that the amount of Rs.1,07,350 was remitted by the assessee from Madras, and if these two letters are eliminated from consideration, it is obvious that there was no material evidence at all before the Tribunal which could support this finding." In view of the above discussion, it is held that back side of the loose paper cannot be considered as an admissible evidence/material and, consequently, is excluded for consideration on merits. 30. Before coming to the merits of the case, it would be useful to refer to the settled legal position that what is apparent is real state of affairs and the onus to prove the contrary lies on the person who alleges that apparent is not the real one. Reference can be made to the two decisions of the Hon'ble Supreme Court in the case of CIT v. Daulatram Rawatmull[1973] 87 ITR 349 and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, nor the assessee was allowed an opportunity to cross-examine, in my opinion, the information used by the Assessing Officer suffers from serious infirmity and, therefore, in law cannot be used against the assessee as an evidence. Non-compliance of the natural justice has weakened the case of the Revenue. The statement of Dr. Tanna under section 132(4) and the loose paper found from his possession might have evidentiary value in the assessment of Dr. Tanna, but as far as the assessment in the case of third party is concerned, it has no evidentiary value, unless such information stands to the test of cross-examination. In the case of Miss Lata Mangeshkar it was held by the Bombay High Court that entries in the books of third party were corroborative evidence and could not be used against the assessee unless supported by direct evidence. Since direct evidence in that case suffered from infirmities, the High Court upheld the finding of the Tribunal that entries in the books of account of third parties could not be used against the assessee. In view of the above discussion, in my opinion, no addition can be sustained on the basis of such informations, inasmuch as it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased from this assessee and the amount of Rs.10.65 lakhs was offered just to avoid prolonged litigation and to buy peace. These correspondences appear at pages 61 to 67 of the paper book. Probably because of such specific denial, the Assessing Officer did not examine Dr. Tanna and conveniently did not refer to this factual aspect in the assessment order. In view of this factual aspect, it can be said that the information obtained by the Assessing Officer remained un-corroborated by direct evidence and, therefore, no addition could be made. 34. Even assuming for the sake of argument that the Assessing Officer was entitled to consider the aforesaid information as admissible material, still in my view, the said information does not lead to the conclusion that the assessee had received the sum of Rs.10.65 lakhs from Dr. Tanna. The front page of the loose paper refers to the area of the flat at 1140 sq.ft. while the flat purchased by Dr. Tanna was of a different size, i.e. 1010 sq.ft. built-up area with terrace of 83 sq.ft. Below the area, following entries were made: "1,00,000 New cheque 57,000 2nd cheque 10,26,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing at page 61 of the paper book. Therefore, the veracity of the informations received by the Assessing Officer cannot be said to have been established. 36. Even assuming for the sake of argument that back side of the loose paper was admissible material, even then, I am of the view that no addition can be made. It is pertinent to note that on the back side two names are written, viz. K.M. Associates and Somerset Developers (village). It is interesting to note that the name of K.M. Associates is scored out. It is not known as to how and why this name was scored out. Further, it is noted that payment by cheque has been shown at Rs.6.55 lakhs. As already mentioned by me, the agreed price for the flat was Rs.6 lakhs only and the payment by cheque received by the assessee was only Rs.6,03,600 including interest. Therefore, if the payment by cheque does not tally, then the question of attributing such payments to the transactions with the assessee does not arise. In such eventuality, the entire figures are to be rejected and cannot be relied on. 37. In view of the above discussion, I am of the view that the department has not been able to establish its case against the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second floor from Phase-II of the assessee's construction at Wanowrie, viz. Somerset Developers, vide agreement dated 17-9-1994, according to which the purchase price was fixed at Rs.6.55 lakhs. In this search, a loose paper, which was marked as Paper No. 37, was seized. The backside of this paper had the following contents: ------------------------------------------------------------------- "Somerset Developers - (village) 17.2 total value incl-garage A 6.55 cheque ------- 10.65 cash .55 cheque II Actual paid." ------------------------------------------------------------------- During the course of proceedings under section 132(4) of the Act a statement of Dr. D.D. Tanna was recorded in which Dr. D.D. Tanna was confronted with this loose paper and he explained as under: "Q. No. 7: Particularly I would like to show you back side of loose paper bearing Sr.No. 61 of Annexure A-I. Kindly go through it and explain to me the contents thereof? Ans. It is very simple. I have to pay by cheque a sum of Rs.6.55 lacs as per agreement for pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the simple reason that as against the flat of the value of Rs.6 lakhs, it is inconceivable that a sum of Rs.20.91 lakhs would be paid in cash. The flat in question sold to Dr. Tanna is in a complex developed in a remote undeveloped area of Wanowrie, where considering the slackness in the market and the number of flats available, the assessee was compelled to sell the flats at the best available price. It was further submitted that one Mr. Bachhubhai, who was a friend of Dr. Tanna, had contacted Mr. Prakash, a commission agent working for the assessee-firm. The statement of Mr. Prakash was recorded on 14-7-1998, wherein he has stated that he was doing the business of commission and brokerage. Though he did not know Dr. Tanna and his wife, he came in contact with Mr. Bachhubhai and took him to the office of Somerset Developers. On being shown loose paper No. 61, he admitted that telephone No. 655892 (written on the said piece of paper), which belonged to the assessee, was given by him to Mr. Bachhubhai as his contact number. From the statement of Mr. Prakash, the Assessing Officer concluded -- 'From the above discussion it is clear that entries on this paper have some direct as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, he held that the arguments of the assessee are devoid of any merit. 6. Before the CIT, the assessee had also pointed out that the Registrar of Stamp Duty, Maharashtra State, had approved the rate of Rs.441 per sq. ft. for stamp duty purposes for the financial year 1994-95 in respect of Wanowrie area, whereas on the basis of the documented price of Rs.6 lakhs the rate of the flat sold by the assessee to Dr. Tanna worked out to Rs.594. On that basis, it was argued before the CIT that this was a cogent evidence of the fact that the rate was reasonable and there was no scope of passing of any on-money. However, the CIT rejected this argument of the assessee observing "This argument cannot be accepted when sufficient material is available as already indicated in the draft order. It is common knowledge that the rates approved for stamp duty purposes may not have any relation to the prevailing market rates which are normally substantially higher than the approved rate." 7. Aggrieved, the assessee filed an appeal before the Tribunal. The learned counsel for the assessee, Dr. Sunil Pathak, raised the following important aspects before the Division Bench: (a) The seized paper i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was on the basis of the entries made on this back side that Dr. Tanna, in answer to question No. 7, admitted that he had paid a sum of Rs.10.65 lakhs in cash from his professional income "not recorded as yet" in his books of account and admitted the same as his concealed income. As regards the front page of the seized paper, the learned Departmental Representative submitted that the paper refers to three flats and the figure in the middle portion refers to the flat in question. These notings were more in the nature of proposals and really the entries which go to the root of the controversy are on the back page, which are self-evident and which were duly admitted by Dr. Tanna in a spontaneous way during the course of proceedings under section 132(4) of the Act. It was emphasised that Dr. Tanna has stated that he is a leading Doctor, hence he must be an intelligent person and it was not expected that he would hand over so much of money to Mr. Bachbubhai or Mr. Prakash, the middleman. He would himself hand over the same to the assessee. Thus he had submitted that it could be safely stated that the assessee had received this amount. Under these circumstances, Mr. Bachhubhai, who had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphasised that the seized paper formed part of the record. it had two sides and the same was given to the assessee. Therefore, it cannot be said that it was a fresh piece of evidence. He submitted that the learned counsel for the assessee did not produce this paper in the paperbook and it was only when he produced the seized papers that the learned counsel choose to make a flimsy argument. The loose paper as a whole was part of the material seized from the premises of Dr. Tanna in Mumbai. It was pointed out that on the basis of the entries on the back side, which were specifically confronted to Dr. Tanna, he admitted payment of cash money of Rs.10.65 lakhs and also surrendered the same for assessment in his block assessment. 12. On consideration of the facts of the case and the submissions on either side, the learned Accountant Member came to the conclusion that the seized paper shows that it pertained to the transaction between Dr. Tanna and the assessee and the figure of Rs.10.65 lakhs was also found recorded therein and Dr. Tanna had admitted having paid this amount to the assessee and also surrendered the same in his block assessment. He held that the paper found during the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that the decisions relied upon by the learned counsel for the assessee, namely, Miss Lata Mangeshkar's case; V.C. Shukla's case and Bala Prasad R. Lokmanyawar's case have no application to the facts of the present case as they are distinguishable on facts. 14. The learned Accountant Member has also rejected the ground of the assessee that the Assessing Officer was not justified in invoking provisions of Chapter XIV-B of the Act in making the assessment. Since no reference has been made under section 255(4) of the Act to me on this issue, it is not necessary to incorporate the findings of the learned Accountant Member on this issue, in this order. 15. On the basis of the above observations, the learned Accountant Member held that the impugned addition of Rs.10.65 lakhs was perfectly justified as undisclosed income in the hands of the assessee. 16. The learned Judicial Member, however, observed that there is nothing either in the assessment order or in the Note of the CIT to indicate that the back side of the loose paper was ever shown to the assessee. He noticed that what has been stated by the Assessing Officer at page 2 of his order is that copy of the loose paper se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to the decision of the Hon'ble Supreme Court in the case of Kishanchand Chellaram. Referring to the decisions of the Hon'ble Supreme Court in the case of Daulatram Rawatmull and in the case of Durga Prasad More, the learned Judicial Member was of the opinion that what is apparent is real state of affairs and the onus to prove the contrary lies on the person who alleges that apparent is not the real one. He observed that in the instant case, the onus was on the revenue to prove that the assessee has received the alleged sum of Rs.10.65 lakhs as on-money, which can be discharged only by producing positive material/evidence and, therefore, no addition can be made on more assumptions or presumptions. 18. On merits, the learned Judicial Member observed that the so-called materials on the record on the basis of which addition has been made are:-- (i) jottings on the front page of the loose paper, and (ii) a part of the statement of Dr. Tanna, i.e. answer to question No. 7 recorded under section 132(4). He observed that the most pertinent question is whether the revenue can be said to have discharged this onus by bringing admissible material/evidence on record. In his opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such jottings that the assessee received payment of Rs.10.65 lakhs. The learned judicial Member has also observed that the payment by cheque of Rs.6.55 lakhs referred to by Dr. Tanna did not tally with the amounts received by the assessee as per its books. He observed that the agreed price for the flat was Rs.6 lakhs only and the payment by cheque received by the assessee was only Rs.6,03,600 including interest. Therefore, if the payment by cheque does riot tally, then the question of attributing such payments to the transactions with the assessee does not arise. 21. In the light of his above observations, the learned Judicial Member concluded that the department has not been able to establish its case against the assessee. Accordingly, the addition made by the Assessing Officer cannot be sustained. Consequently, the addition made by the Assessing Officer is deleted. 22. Before me, the learned counsel for the assessee, Dr. Sunil Pathak, reiterated basically the same arguments which were advanced by him before the Division Bench. He submitted that the seized paper is an undated and unsigned loose paper admittedly not in the handwriting of Dr. Tanna. However, on a query by me, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT. Therefore, it is evident that the back side of the paper No. 37 was not given to the assessee. Thus, it is a new piece of evidence which cannot be tendered as evidence unless the authenticity thereof or the contents thereof is proved by applying the principles of Evidence Act. It was further pointed out that Dr. Tanna's wife was summoned before the Assessing Officer and the Chartered Accountant of Tannas, Shri Ghabawalla, categorically denied the alleged cash payment for the purchase of the flat in question. The learned counsel for the assessee invited my attention to the Ready Reckoner of Stamp Duty of the Bombay Stamp Act, 1958 and pointed out that the stamp duty which was payable on Rs.6.25 lakhs was charged from the assessee in respect of the flat sold to Dr. Tanna. If the cost of the flat was more, the authorities cannot charge less stamp duty. Therefore, it is another circumstance which establishes that no on-money was paid for the purchase of the flat in question. The learned counsel for the assessee heavily placed reliance on the decision of the Hon'ble Supreme Court in the case of V.C. Shukla and also on the decision of the Bombay High Court in the case of Miss L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the back side of the paper on page 37. So the facts were disclosed to the assessee and it was aware of the back side of the disputed paper. As such, this piece of paper and its back side is admissible in evidence. Alternatively, it was pleaded that if it is assumed that the back side of the disputed paper was not within the knowledge of the assessee or given to it, the Tribunal can admit any additional evidence in an appeal before it for their fair and just disposal by exercising its inherent powers. In this connection, reliance was placed on the decisions of the Bombay High Court in the case of Smt. Suhasinibai Goenka v. CIT[1995] 216 ITR 518 and in the case of CIT v. Smt. Kamal C. Mehboobbani [1995] 214 ITR 15. He further pointed out that one cannot overlook the notorious fact that in real estate transactions on-money is paid for the purchase and sale of immovable properties and this fact has been taken note by the Hon'ble Supreme Court and various High Courts. He further reiterated that no prudent man of the status of Dr. Tanna would surrender the income himself and secondly by offering the income himself he has stopped further investigation in the matter. These facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Some of the instalments have gone through his bank account and he had paid a sum of Rs.10.65 lakhs in cash from his professional income not recorded in his books of account, which he admitted as his concealed income. Dr. Tanna had also admitted that this piece of paper pertains to the purchase of the flat by him from the assessee. 25. The difference of opinion between the learned Accountant Member and the learned Judicial Member referred to me for decision is whether the back side of the loose paper No. 37 was shown or disclosed by the Assessing Officer to the assessee. If so, can it be considered as an admissible evidence. The learned Accountant Member was of the opinion that "from the reading of the order of the Assessing Officer and the note of the CIT, it is very clear that the seized paper with both sides was confronted to the assessee". He, therefore, rejected the argument of the learned counsel for the assessee that the back side of the seized paper is a new piece of evidence and the same should not be admitted. On the other hand, the view of the learned Judicial Member was that only the front side of the paper was supplied to the assessee, whereas the back side was never ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If one goes through the front-page of the loose paper, it can be seen that there are several entries relating to different flats. However, on the back side of the paper, the entry is related to Somerset Developers for the purchase of the flat. The notice was given to the assessee enquiring about the payment of Rs.10.65 lakhs in cash, based on the statement of Dr. Tanna. Therefore, it is not possible to presume that the Assessing Officer did not bring to the notice of the assessee the back side of the loose paper No. 37, when the entire case was built up on this loose paper relating to the purchase of the flat by Dr. Tanna from the assessee. Therefore, on the facts and attendant circumstances, I am of the opinion that the loose paper was brought to the knowledge of the assessee. There is another aspect of the matter that when the proceedings for block assessment were initiated, the statement of Dr. Tanna was brought to the notice of the assessee, in which it has been specifically admitted by Dr. Tanna that the entries on the back side of the loose paper were explained to him. So to say that the back side of the paper was not within the knowledge of the assessee is incorrect. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rigour of the rules of evidence contained in the Evidence Act is not applicable to the income-tax proceedings. But it did not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented from doing so. Further, Evidence Act embodied a salutary principle of common law jurisprudence, viz. where a person was found in possession of anything, the onus of proving that he was not its owner was on that person. This principle could be attracted to a set of circumstances that satisfy its conditions and was applicable to taxation proceedings. Following the principle laid down by the Hon'ble Supreme Court, in this case when this piece of paper was admitted by Dr. Tanna and he has also made a statement that he has paid Rs.10.65 lakhs in cash for the purchase of the flat from the assessee out of his unrecorded income and no material has been brought on record to controvert this fact, the irresistible conclusion is that this piece of paper speaks of true nature of the transaction taken place between Dr. Tanna and the assessee. Otherwise, Dr. Tanna may not have offered Rs.10.65 lakhs for taxation if he had not pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spects of black money in India'. The report has discussed the prevalence of notorious practice of payment of black money in real estate transaction in the metropolitan city of Mumbai. Though technically the report of National Institute of Public Finance and Policy, cannot be substituted for evidence, but one has to take note of this practice coupled with the attendant circumstances of this case. Therefore, when the purchaser says that he had paid the unaccounted money and he had also paid the tax thereon, even if the seller denies the receipt of the on-money, I cannot overlook this notorious practice which is published in the report of National Institute of Public Finance and Policy. There cannot be any direct evidence for receipt of on-money. Obviously no sane person would admit that he is receiving on-money. But this fact can be established by facts and attendant circumstances of a particular case. In the present case, the assessee had denied the receipt of on-money. But when a man of high status in the society had admitted at the first instance, giving of on-money and also had paid tax on it, these circumstances themselves coupled with the fact that the transaction of purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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