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TMI Blog2014 (4) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... ords. Upon careful consideration, we condone the delay in filing the appeals and accordingly, the appeals have been admitted. 4. The assessee in this case belongs to a group of about 33 cases of various companies operated and controlled by one Sh. SK Gupta a Chartered Accountant by profession, from his office premises of "Trump and Gates" situated at H-108, 2nd floor, New Asiatic Building, Connaught Place, New Delhi and also from the premises of his firm namely M/s Gupta & Rakesh Associates at 231, Gulmohar Enclave, New Delhi, which were both covered during search and seizure operation u/s. 132 of the Act by the Investigation Wing of the Income Tax Department. In the various statements of Sh. SK Gupta recorded on various dates both before the Officers of the Investigation Wing and in post search enquiries before the AO, he admitted in detail, his modus operandi of providing accommodation bills through the assessee company and another 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 we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , telephone, water and electricity." 9. On the basis of statements as well as prevalent market condition, the AO has estimated the income @ 2% without allowing any amount for the expenditure. Ld. CIT(A) has affirmed the said. 10. In this regard Ld. Counsel of the assessee has pleaded for allowance of expenditure incurred to earn the income. We find that when addition is being made on the basis of statement, the statement has to be relied in full . Revenue cannot choose to rely on one part of the statement and ignore the rest of the statement in the absence of any cogent material. This is supported by the common law maxim of approbate and reprobate. 11. In this case the assessee company's Director has agreed that the commission was to 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 cogen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the decision of the Hon'ble Apex Court in the case of K.P. Varghese reported in 131 ITR 597 and ignoring section 50C of Income Tax Act. 16. On this issue AO noted that the seized documents were found pertaining to cash loan payments for land at Bhiwari. On comparison of sale consideration as mentioned in the sale deeds and the hand written papers in the seized documents, AO observed that there was considerable discrepancy. The comparison in this regard was as under:- When confronted in this regard, the assessee made the following 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to establish that the books of accounts and other documents or assets of incriminating nature found during search belonging to that person or to prove his handwriting or signature thereon or that contents of such books of account or documents are true. Ld. CIT(A) observed that the person is required to offer a reasonable explanation regarding the nature of such books of account or documents found in his possession or control and if the same is claimed to be belonging to somebody else, then also he is required to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. 22. We find that 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. In these circumstances, we find that decision of the Hon'ble Apex Court in the case of K.P. Verghese vs. Income Tax Officer, Erankulam 131 ITR 597 (SC) is very much applicable. In this case it has been held that the burden of proving is that of Revenue when there is allegation of understatement on 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 Accountan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever say that I have provided accommodation bill to Reliance I can be prosecuted. 4. That I am ready to reconfirm the above facts in my statements u/s. 132(4) of the Income Tax Act, 1961 so that I could be saved from penalty proceedings." 27. The above statement of the assessee was not accepted by the AO. AO held that it was an after thought and affidavit was given only as a ploy to save the beneficiary of accommodation entry, by owning up part of the total transactions. Hence, the AO held that 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 appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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