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2015 (5) TMI 347 - ITAT AHMEDABAD

2015 (5) TMI 347 - ITAT AHMEDABAD - TMI - On money payment - CIT(A) deleted the addition - scope of Section 142A - Held that:- CIT(A) has given a finding that the DVO was called for valuation of the property on 18.12.2009 and he has given the report on 24.12.2009 without doing any inspection of the property and without supporting his valuation by any concrete evidence as to the actual market price in the same vicinity or surrounding locality. Ld CIT(A) has also given a finding that the assessee .....

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and scope of Section 142A is limited in its span only to determine the value of investment in respect of certain assets and there is no power vested with the A.O to seek the help of valuation officer in respect of determination of capital gain prescribed u/s 48 of the Act. Before us, Revenue has not brought any material on record to controvert the findings of Ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of Ld. CIT(A)- Decided against Revenue.

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eque and has been reduced from the project cost and therefore there is no loss to the Revenue as the project cost has been reduced. Before us, Revenue has not brought any material on record to controvert the findings of Ld CIT(A). We therefore find no reason to interfere with the order of Ld CIT(A) - Decided against Revenue. - I.T. A. No. 2157/AHD/2010 - Dated:- 17-4-2015 - Shri Mukul Kr. Shrawat And Shri Anil Chaturvedi JJ. For the Appellant : Shri Subhas Bains, CIT/D.R. For the Respondent : Sh .....

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0/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 31.12.2009 and the total income was determined at ₹ 7,65,15,600/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 31.03.2010 allowed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us and has raised the following grounds;- 1. On the facts and in the circumstances .....

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deleting the addition made by the AO of on-money receipt of ₹ 7.40 crores by rejecting the vital evidence of the seized diary and the statements recorded u/s 132(4) during the course of search proceedings confirming the entries of the said diary only because the same was retracted during their assessment and cross examination. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition made by the AO at ₹ 7.40 crores of the on-mon .....

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ce has valued the said property at the price similar to that alleged by the A.O. 5. On the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the addition made by the A.O of ₹ 13,50,000/- by accepting the assessee s claim of the income being out of sale of scrap despite the fact that as evident from the sale deed, the assessee had received open plot of land without the old structure. Ground no. 1 to 4 are interconnected and therefore considered toget .....

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ion of Arora Brothers wherein the figures for purchase of the aforesaid property was mentioned in codes and on its decoding it was noted that the property was purchased for total consideration of ₹ 12.40 crores of which ₹ 7.4 crores was paid in cash outside the books of accounts by both the directors, namely Shri Ramesh Arora and Axay Sheth. Shri Ramesh Arora in the statement that was recorded on 16.03.2007 u/s. 132 of the Act submitted that the property was purchased from the Assess .....

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was recorded in the diary. A.O has noted that statement of Shri Ajay Arora was also recorded on 22.03.2007 u/s. 132 (4) of the Act wherein he admitted and confirmed the statement given by Shri Ramesh Arora. Shri Axay Sheth the director of Avichal Weaves Pvt. Ltd. was also confronted on 16.03.2007 regarding the contents of the transaction from the seized document. A.O has noted that Shri Axay Sheth had denied making of any payment apart from the one that was mentioned in the registration deed. A .....

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s. 132 of the Act and the same was rejected by A.O. Similarly, Ramesh Arora had also retracted several of the statements made during search u/s. 132(4) of the Act. The retraction was rejected in view of the fact that in the statement recorded and on the basis of seized diary Shri Ramesh Arora had admitted to have made payment on money and in the cross-examination he did not give alternate explanation. In the cross-examination A.O has noted that Shri Axay Sheth had denied the on money transaction .....

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and above, the price reflected in its books at ₹ 5 crore. He accordingly made an addition of the differential amount of ₹ 7.4 crore (Rs 12.40 crore less ₹ 5 crore). Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who after considering the submissions of the Assessee deleted the addition by holding as under:- 5. I have considered the facts of the case, the reasoning of the AO for making addition as also the submissions of the appellant and the decis .....

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ves P. Ltd. In the course of search action at Amritsar, a pocket diary was found from the possession of Shri Ramesh Arora, brother of Shri Ajay Arora. In the said diary, page 10 contained some noting. The statement of both the brothers was recorded u/s. 132(4) especially in respect of page 10 of the diary. Shri Ramesh Arora explained the noting on page 10 since the same was in his handwriting and he stated that the notings are in respect of the transaction of the purchase of property at Surat an .....

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out in the case of Shri Axay Seth at Surat and the seized page 10 of the diary was faxed at Surat to be shown to Shri Axay Seth and his statement was also recorded u/s. 132(4) of the Act wherein Shri Axay Seth categorically denied of having paid any amount in cash in respect of the purchase of the said property at Surat and that the purchase price was as per the registered deed found in the course of search action in his premises, which was ₹ 5 cr. The statements so given by the Arora bro .....

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a and this income was offered due to out of books unaccounted sale transactions found in their independent cases relating to their other business income. Thus, the AO in the assessment order of Arora brothers has assessed at the income disclosed by them and since the cash payment for purchase of property was application of income, no separate additions were made in the hands of Arora brothers and hence, there was no appeal filed by Arora brothers as their disclosure was accepted. In the case of .....

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i Axay Seth has made any such payment in cash to Mahan Corporation for the purchase of the property at Surat. 5.1 On perusing the factual matrix in detail, the position as of date is that the property is purchased by Avichal Weaves P. Ltd. having directors Shri Ajay Arora and Shri Axay Seth. The addition in the hands of Axay Seth is deleted by the ITAT thereby concluding that no on money was paid by him to the appellant in respect of the property purchased. As regards the case of Shri Ajay Arora .....

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ers and taking into consideration the fact that in the case of Shri Axay Seth the Ahmedabad ITAT after considering the issue in detail has held that he has not made any payment of on money to the appellant, no case remains in the hands of the appellant. This is precisely the reason that the AO has thereafter tried to independently support the case by referring the property to DVO u/s.!42A of the Act for valuing the same as on 1/2/2007, which the DVO has valued by 2 different methods and arrived .....

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vestment in the property and not for determining the selling price of the property. Even otherwise, the appellant has brought on record various objections to the DVO report which are valid objections and the AO has tried to rebut the same however the basis of the DVO could not justified by the AO on the plea that the assessment is getting time barred. It is also pertinent to note that the DVO was called for valuation of the property only on 18/12/09 and the assessment was getting time barred on .....

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e said period as compared to sale price of other properties and that the rate of the appellant was even higher than the Jantri Rates i.e. the stamp duty rates to which provision of section 50C apply (in case of transfer of capital asset). However provision of section 50C does not apply in the case of the appellant being a builder since the income is offered as business income, but even then, a comparison can be made as to whether the appellant has sold at low price so as to made addition for und .....

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is a general trend that on money is involved in the transactions of purchase and sale of capital asset - however, I am not at all convinced that such general statement can lead to addition of crores of rupees more particularly in the light of the decision of the Hon'ble Supreme Court in the case of K.P. Varghese 131 ITR 597 (SC). 5.2 6.2 Even if the general statement of the AO is considered and going by his own assumptions, in that case it is well known fact that if any on money is involved .....

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e AO for making the impugned addition, it is mentioned on the said page that '3.70 to be paid' meaning thereby that it is not paid and even if the right side of the paper is seen, the last figure reflects the date as 10/3/2007 and the aggregate amount shown is at ₹ 3.35 crores whereas the registration took place on 1/2/2007 thereby supporting the case of the appellant that no on money was involved in the transaction. It is also pertinent to note that the Arora brothers have said th .....

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f that be the case, then it is Shri Axay Seth who is the right person to say the actual price at which the transaction was finalized and as per his statement, the transaction was finalized at total price of ₹ 5 crores plus stamp duty. Thus, if the Arora brothers have not even dealt with the appellant and neither met them before the date of registration, it is certain that they have not made any payment of on money to the appellant directly and in that case, it cannot be conclusively said t .....

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ora brothers. Thus, the conclusion that emerges is that as far as the appellant is concerned, it has not received any amount in cash either from Arora brothers or from Axay Seth. This finding gets further strengthened in view of the fact that the Arora brothers have retracted their statement in the course of their assessment proceedings and in the course of cross examination, they have categorically denied of having paid any on money to the appellant and that there was no cash payment involved i .....

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Ahmedabad in the case of Shri Axay Seth where the Tribunal has deleted the addition of on money payment to the appellant, the facts conclusively prove that no on money was received by the appellant from the sale of property and hence, the AO is directed to delete the addition made of ₹ 7.40 crores. This ground is allowed and the appellant gets relied of ₹ 7.40 crores. 6. Aggrieved by the aforesaid order of ld. CIT(A), Revenue is now in appeal before us. 7. Before us, ld. D.R. suppor .....

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Annexure A-l during the course of such proceedings the statement of Shri Ramesh was recorded on 16.3.2007 u/s. 132(4) and also on 22.3.2007 wherein he has confirmed the transactions in the said diary including the payment of on-money to the seller i.e. Mahan Corporation. This fact has also been confirmed by the CIT(A) vide para 6 wherein the CIT(A) has observed that such transactions are in the handwriting of Shri Ramesh. Subsequently, the overriding importance was given by the CIT(A) on the sub .....

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'ble Madras ITAT, "It is well known that the Income-tax Officers are not Police Officers and they do not use or resort to unfair means or third degree methods in recording oath statements and therefore whatever is confessed and admitted before them during the course of search operations or during the course of any proceedings before them then we think such statements, admissions and confessions are binding and cannot be retracted, unless and until, we repeat, unless and until it is prov .....

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not conclusive is decisive of the matter unless successfully withdrawn or proved erroneous.. ..Further, there is nothing on record that the said disclosure was made by the assessee under duress, pressure arid/or coercion. The retraction after a lapse of over two months from the date of disclosure by the assessee was an afterthought and the affidavit filed by the assessee on which much reliance has been placed by the assessee's counsel, was a self-servmg statement. We can, therefore, say tha .....

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voluntary declaration on oath and induced departmental authorities to act upon same at time of search, cannot be permitted to turn around later and deny truth of said declaration or representations made therein. The CBDT's Circular F.No. 286 '2/2003-IT (Inv.) dated 10-3-2003, has also been considered while delivering this judgment. In the case of CIT vs Hukum Chand Jam, 337 ITR 238; 236 CTR 92 (do): 10.08.2009), the Hon ble Chattisgarh HC has held as follows: "27". from the pri .....

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belief of fact or law, be should have for rectification to the authority who passed the order based upon his statement. The retraction should be made at the earliest opportunity and the same should be established by producing any contemporaneous record or evidence, oral or documentary, to substantiate the allegation that he was forced to make the statement in question involuntarily. …….. 29. From perusal of the order of the CIT(A) as also the Tribunal, we find that none of the foru .....

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e case of the assessed before any of (be forums that the surrender was on account of bona fide mistake. The Appellate Forums while reversing the orders of the Assessing Officer are legally bound to dwell upon specific reasons assigned by the Assessing Officer for not accepting the explanation of the assessee. " 3. Along with the evidence in the form of confirmatory statement, the A.O. has also referred property for the valuation to the DVO, Surat who have given his findings based on the fac .....

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laced and the facts of this judgment are reproduced below for ready reference : Head notes Section 52(2) of the Income-tax A-d, 1961 - Capital gains- Transfer in case of understatement - Whether understatement of consideration in a transfer of property is a necessary condition for attracting applicability of section 52(2) and it is not enough for revenue to show that fair market value of property as on date of transfer exceeds full value of consideration declared by assessee in respect of transf .....

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he said house at ₹ 65.000 and assessed the difference of ₹ 48,500 as capital gains in the asses see's hands. Though the sale of the house by the assessee was in favour of his daughter-in-law and of his children, the ITO could not invoke the aid of section 52(1) for bringing the impugned sum to tax, because there was admittedly no understatement of consideration in respect of the transfer of the house and it was not possible to say that the transfer was effected by the assessee wi .....

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nt of not less than 15 per cent of the value so declared. On writ, the learned Single judge set aside the ITO's order. However, by virtue of the IF/ill Bench's judgment, the decision of the Single judge was set aside and that of the ITO was held. It is amply evidenced that this judgment was given in different context with respect to computation of capital gain u/s. 52(2) of IT Act 1961 wherein the A.O. had observed understatement of consideration in respect of transfer of property. Needl .....

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to invoke or apply the case of K P Verghese 131 ITR 197 SC in the instant case. Considering all the above, it is prayed that the order of the Hon'ble A.O. be restored and the Ld.CIT(A) be set aside. 8. Ld. A.R. on the other hand reiterated the submissions made before A.O and Ld CIT(A) and further submitted that the addition in the case of Axay Sheth was deleted by the Tribunal vide order dated 5th February 2010 in ITA NO. 3178/AHD/2009. He also placed on record, the copy of the aforesaid ord .....

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hmedabad Tribunal in the case of ITO vs. Chandrakant Patel 131 ITD 180 (Ahd). He thus supported the order of Ld. CIT(A). 9. We have heard the rival submissions and perused the material on record. It is an undisputed fact that the addition in the case of the assessee was mainly made on the basis of the statements recorded during the course of search which were carried out at the place of director (Shri Axay Sheth and Ajay Arora), the purchasers of the property. It is also a fact that Shri Axay Sh .....

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payment in cash to the Assessee for the purchase of property at Surat. Before us, Revenue has not placed any material on record to demonstrate that the decision of the coordinate Bench of deleting the addition of on money in the case of Axay Sheth has been reversed by the H ble High Court meaning thereby that the decision of H ble Tribunal has attained finality. With respect to the A.O relying on the report of DVO u/s. 142A of the Act for the purpose of valuation, we find that while deleting the .....

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es and his rates were higher than the Jantri rates. We thus find that ld CIT(A) after considering the submissions and the factual aspect of the case and by detailed and well reasoned order has deleted the addition. We also find that the Co-ordinate Bench of Tribunal in the case of ITO vs. Chandrakant Patel (supra) has noted that that the area of operation and scope of Section 142A is limited in its span only to determine the value of investment in respect of certain assets and there is no power .....

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molition of ₹ 13,50,000/- which was set off against the overhead expenses of ₹ 15,79,462/- and the net expenses of ₹ 2,29,462/- was considered as cost of project. A.O has noted that in the sale deed entered by the Assessee, it has been stated that the building was already demolished before handing over the property for construction and Assessee had received property as free hold land only. He was therefore of the view that since there was no structure standing, there was no que .....

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