TMI Blog2015 (1) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit of Shri Y.P. Trivedi ₹ 57,75,000/ -but he has proceeded on the basis of certain other entries amounting to ₹ 33 lakhs. In view of the above and in view of the detailed reasonings given by Ld. CIT(A) and following the decision of the Pune Bench of the Tribunal in the case of Shri Jitendra M. Thakkar (2011 (2) TMI 1397 - ITAT PUNE), we find no infirmity in the order of the Ld. CIT(A) deleting the addition - Decided in favour of assessee. - ITA No. 965/PN/2008 and CO No. 28/PN/2009 - - - Dated:- 30-1-2015 - Shri R.K.Panda Account Member JUDGEMENT R.K.Panda, Member (A) - 1. This appeal filed by the Revenue and CO filed by the assessee are directed against the order dated 30 -04 -2008 of the CIT(A) -II, Nashik relating to Block Period 1997 -98 to 2003 -04. For the sake of convenience, these were heard together and are being disposed of by this common order. 2. Facts of the case, in brief, are that a search action u/s. 132 of the I.T. Act was conducted at the residential premises of Shri Y.P. Trivedi and Shri J.M. Jhala, partners of M/s. Rishiraj Builders and Developers and business premises of M/s. Rishiraj Builders and Developers, Nashik. Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Shri Y.P. Trivedi was recorded. In his answer to Question No. 3 he has confirmed that cash payment of ₹ 57,75,400/ -was made over and above the recorded consideration as per agreement dated 04 -10 -1997. 2.3 The AO provided with the details of the person searched, reason for initiation of proceedings u/s. 158BD, copy of the relevant seized material, copy of the affidavit filed by Shri Y.P. Trivedi, copy of statement of Shri Y.P. Trivedi on 21 -03 -2005 and copy of statement dated 25 -03 -2003. The AO thereafter asked the assessee to explain as to why the amount of ₹ 57,75,400/ - as per the above details found on the seized paper during the course of search should not be treated as undisclosed income of the assessee. 2.4 The assessee was allowed cross examination of Shri Y.P. Trivedi. The assessee strongly denied receipt of any on -money and in respect of this claim furnished an affidavit of Shri Narendra M. Thakker. Various inconsistencies in the allegation of Rishiraj Builders and Developers regarding payment of on -money were brought to the notice of the AO. During the course of assessment proceedings u/s. 158BD Shri Y.P. Trivedi, partner of M/s. Rishir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Supreme Court in the case of V.C. Shukla reported in (popularly known as Jain Hawala Diary case). The A.O. stated that the Jain Hawala case was a case of criminal proceedings in which the Evidence Act was applicable in strict sense whereas the present case of a revenue proceedings in which the Evidence Act was not applicable in the strict sense. Further, the facts of that case are entirely different from the present facts of the case. v) Revenue proceedings are decided by pre -ponderance of probability and not by beyond reasonable doubt rule. 3. Before CIT(A) the assessee strongly challenged the addition made by the AO. It was argued that undisclosed income in the hands of the assessee has to be calculated on the basis of evidence found as a result of search. From the seized papers supplied to the assessee and the statement recorded u/s. 132(4), the name of the assessee is neither appearing in any of the seized papers nor in the statement recorded u/s. 132(4). Thus, there is no link between evidence found as a result of search and the undisclosed income in the hands of the assessee. It was argued that the assessee is a corporate body having its existence independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by him on the basis of information supplied to him or on the basis of account given to him by Mr. Shastri. Further, in answer to Q. No. 8 it is admitted by Mr. Trivedi that, the contents of affidavit are based on the payments recorded by him on the said seized papers. In short, Mr. Trivedi, guided by his full faith on Mr. Shastri, never confirmed with the assessee the price fixed and the payments received by assessee. Influence of Mr. Shastri was so great that, it was Mr. Shastri who was present in the office of sub registrar for registration of the Development Agreements. Thus, it was all along Shri Shastri, who dealt with assessee and not Mr. Trivedi or Mr. Jhala. It was Shri Shastri, who negotiated the deal, made the payments and got the documents registered under his supervision. Shri Shastri appears to have misled Shri Trivedi Shri Jhala. Therefore, A. O. erred in relying on notings on the seized papers (made on information supplied by Shri Shastri) and the affidavit of Shri. Trivedi (based on the information contained in the seized papers), without confirmation from Shri Shastri. A.O. has excessively relied on the absence of complaint from vendor of land regarding no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions of sale of plots. 4.5 Two affidavits by Shri Narendra Thakkar denying receipt of any cash beyond the documented consideration, were submitted by the assessee. However, A.O. has rejected both the said affidavits by branding them as 'self serving', without making any effort to ascertain the veracity of the affidavits. ( 4. ) BASED on the arguments advanced by the assessee the Ld. CIT(A) deleted the addition made by the AO by observing as under: 5.3 From the above, it may be seen that while determining the undisclosed income of the appellant, the A.O. relied on the entries made in the aforesaid seized document, the statement of Shri Y.P. Trivedi recorded on 21/03/2005 and his affidavits dated 21/03/2005 in respect of Plot No. 23 and No. 43 of S. No. 705/2/1/3. The appellant on the other hand objected to the reliance on the entries in the said seized document completely disowning the contents of the said seized document. The appellant also argued that an affidavit was filed by Shri Narendra M. Thakker denying the receipt of any cash amounts from M/s. Rishiraj Builders Developers and their associates. The appellant also objected to the use of evidence from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidavit. The A.O. preferred to rely on the affidavits and statement by Shri Y.P. Trivedi which were not supported by any corroborative evidence. The A.O. also did not give any reasons to disbelieve the affidavit of Shri Narendra M. Thakker. The affidavit filed by Shri Narendra M. Thakker remained un -controverted and could not have been ignored. The affidavit even if regarded as self -serving did not loose its evidentiary value as there was no material brought on record contrary to the averments, nor the A.O. made any investigation to support the affidavits or statement of Shri Y.P. Trivedi. Nothing was shown by the A.O. that there was other corroborative material correlated with the seized document. The A.O. failed to give any evidence to disprove the contents of the affidavit filed by Shri Narendra M. Thakker. In the absence of such an action, the assessment or undisclosed income in the hands of the appellant cannot be upheld. 5.6 It may be seen from the above that after the cross -examination of Shri Y.P. Trivedi that the entries in the seized document and register and the affidavit were prepared by Shri Y.P. Trivedi based on the information VI given by one Shri Shastri. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the admissibility of evidence under the Evidence Act found with the third party for framing charges. The A.O. held that the Evidence Act is not applicable in the strict sense to the Income -tax proceedings. Though the Evidence Act is not applicable in strict sense in the Income -tax proceedings, but the principles laid down in the Evidence Act cannot be ignored as Income -tax proceedings are quasi -judicial. Further, the A.O. relied on the preponderance of probability without proving the pre -ponderance of probability by any other evidence or material on record. Thus, the addition made by the A.O. based on the seized document is not on the basis of good evidence and there is no pre -ponderance of probability. 5.10 Shri Y.P. Trivedi claimed further that the cash payments to the extent of ₹ 27,75,400/ -were made after execution of the registered development agreement. The appellant stated that this was a false allegation and argued that it was just impossible, particularly when the partners of M/s. Rishiraj Builders Developers and the directors of the appellant were not very much familiar with each other. Further, it was argued that payment of any on -money was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 seized from the residence of Shri Y.P. Trivedi that certain payments were made in cash by M/s. Rishiraj Builders Developers on various dates in respect of lands/plots purchased/taken for development by M/s. Rishiraj Builders developers from M/s. Vasumati Marketing Pvt. Ltd. M/s. Manoj Marketing Pvt. Ltd., 7, T Near Nehru garden, Nashik. 5. On the facts and in the circumstances of the case, the learned CIT(A) has erred in not appreciating the fact that the A.O. has clearly analyzed the contents of the document to establish the credibility of the same as a piece of evidence and thus the principle of Evidence Act that an evidence should have direct nexus with the proceedings in issue is automatically observed. 6. The order of CIT(A) be vacated and that of A.O. be restored. 5. The Ld. Departmental Representative strongly objected to the order of the CIT(A). He submitted that the Ld. CIT(A) deleted the addition on the ground that presumption u/s. 132(4A) cannot be applied to third parties. Although the same is partially correct, however, it is an admitted fact that the transaction has taken place, the statements were recorded, documents were found, affidavits have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income -tax proceedings are quasi -judicial. This is self contradictory. He submitted that the AO has clearly analyzed the contents of the document to establish the credibility of the same as a piece of evidence. Thus the principle of Evidence Act that an evidence should have direct nexus with the proceedings in issue is automatically observed. He accordingly submitted that the order of the CIT(A) be reversed and that of the order of the AO be restored. 6. The Ld. Counsel for the assessee on the other hand supported the order of the CIT(A). He submitted that during the course of search on Rishiraj Builders and Developers certain documents were found according to which two plots being Nos. 23 and 32 were sold by M/s. Manoj Marketing Pvt. Ltd. and M/s. Vasumati Marketing Pvt. Ltd. Both these companies are having equal share in both the plots. Plot No. 43 was sold for ₹ 4,29,000/ - which was received by cheque. Similarly, plot No. 23 was sold for ₹ 4,26,866/ - and the amount was also received by cheque. Referring to page 10 of the paper book he submitted that Rishiraj Builders and Developers has constructed 2 buildings namely Bhavik and Bhargav . According to the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. No MOU, no receipt, no signature of assessee in token of receipt of any on -money was found. The AO himself has rejected the affidavit of Shri Y.P. Trivedi. Therefore, mere affidavit/seized paper cannot be the basis for addition. He submitted that Shri Shastri may be close associate of Shri Y.P. Trivedi. However, the statement of Shri Shastri was never recorded. There is also possibility that Shri Shastri might have pocketed the money. Referring to various decisions he submitted that addition in the hands of third party on the basis of uncorroborated document is not justified. An incorrect affidavit cannot be accepted as true and genuine and addition cannot be made in the hands of the assessee. He submitted that if ₹ 57 lakhs has been paid to the assessee as alleged, then the cheque payment also should have tallied. Referring to the decision of the Pune Bench of the Tribunal in the case of Shri Jitendra M. Thakkar he submitted that under identical facts and circumstances the Tribunal has deleted the addition. He accordingly submitted that the order of the CIT(A) be upheld and the grounds raised by the Revenue be dismissed. 8.2 The Ld. Departmental Representative i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to which the on -money amount is ₹ 33 lakhs. From the statement recorded of Shri Y.P. Trivedi during the course of assessment proceedings on 23 -04 -2007 we find Shri Y.P. Trivedi in his reply to Question No. 3 has stated that he has not made any of the above payments personally and it was made by his office manager Mr. Amulya Shastri on his behalf. Similarly, in his reply to Question No. 6 he says that he has prepared these particulars on the basis of discussion with Shri Jhala and Shri Shastri. Even in Question No. 10 he had stated that he did not verify the payments relating to the transactions of Plot Nos. 23 43 made by Shri Shastri since he has full faith in him. In Question No. 11 he says that the negotiations regarding the purchase of the Plot Nos. 23 and 43 were held by Shri Shastri. Therefore, we find some force in the argument of the Ld. Counsel for the assessee that it is Shri Shastri who might have played a foul play and might have pocketed the money. It is interesting to note that at no point of time the Assessing Officer has summoned Shri Shastri to verify the veracity of the transactions. Nothing has been brought on record to support the case of the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 in respect of plot Nos. 33 and 42. As per the seized documents, an amount of ₹ 9,45,000/ - was stated to have been paid to Shri Narendra M. Thakker and his representative on various dates in respect of plot No. 42 and similarly, an amount of ₹ 26,09,350/ - in respect of plot No. 33. The assessee objected the reliance on the entries in the said seized document disowning the contents of those seized documents. It was also contended that in his affidavit, Shri Narendra M. Thakker (brother of the assessee) has denied receipt of any cash amount from M/s. Rishiraj Builders Developers and their associates. It was submitted that the A.O. himself in the case of M/s. Rishiraj Builders Developers has disbelieved and did not allow the said payments while framing the assessment. Even affidavits filed by Shri Y.P. Trivedi regarding the said cash payments made to Shri Narendra M. Thakker based on the seized document were not considered by the A.O. The A.O., however, considered the contents of same seized document along with the affidavit of Shri Trivedi for assuming jurisdiction u/s. 158BD of the Act and for making an addition in the hands of the assessee without bringing any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to Q. No. 14). 1.4 Entries in the seized diary were made by Shri Y.P. Trivedi only on the basis of information supplied to him by one Shri. Amulya Shastri, which information was never cross verified by Shri. Y.P. Trivedi from recipient of money (please refer answer to Q. No. 15). 1.5 The affidavit submitted by Shri. Y.P. Trivedi, in the case of M/s. Rishiraj Builders and Developers was prepared and submitted on the basis of entries in the seized diary and register, written on the basis of unconfirmed information supplied by Shri. Amulya Shastri (please refer para 3 of answer to Q. No. 12). Thus, in view of the information, given during the course of cross -examination by Shri. Y.P. Trivedi, it is evident that, the entries in the seized diary and register and the affidavit prepared by Shri. Y.P. Trivedi are not based on confirmed information. Thus, all these evidences cannot be used against the appellant, in support of the allegation that appellant received any cash from M/s. Rushiraj Builders and Developers, in connection with the transactions of plot Nos. 33 and 42. These are no good evidences, which can be used against appellant. 2.1 As regards the transaction of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mandal, which was given on development agreement to M/s. Prasad Developers. M/s. Prasad Developers, in it's turn entered into an agreement of sale for Plot No. 42 with Mr. Paraji Karanjkar. It is on the strength of the rights acquired by Shri. Paraji Karanjkar, under the agreement to sale with M/s. Prasad Developers, M/s. Rushiraj Builders and Developers entered into development agreement with Mr. Paraji Karankar. It was only because the rights of Mr. Karanjkar were under an agreement to sale, M/s. Prasad Developers and Mahrashtra Prabodhan Seva Mandal were added as confirming party in the development agreement. It is conceded by Shri. Y.P. Trivedi in his answer to Q. No. 12 that, as per the Development Agreement, M/s. Rushiraj Builders and Developers, did not pay any consideration to Maharashtra Prabodhan Seva Mandal or M/s. Prasad Developers. It is further conceded in answer to Q. No. 12, by Shri. Y.P. Trivedi that, Thakker were not a party, in their own capacity, to the Development Agreement. Thus, in absence of any right in the property of Plot No. 42 there can not be any reason for M/s. Rushiraj Builders and Developers to make any payment to Thakker. In view of the info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The assessee also denied his role in the transaction in respect of Plot No. 33. The stand of the A.O. in this regard remained that the assessee was holder of general power of attorney for the total lay out of the plan. The A.O. also mentioned that Shri Y.P. Trivedi in his statements dated 21st March 2005 admitted that he had negotiations with Shri Narendra M. Thakker though Plot No. 33 was purchased from Shri Paraji Abaji Karanjkar and Shri Rajesh Navani. Shri Trivedi in his cross -examination has, however, contradicted his statements given on 21st March 2005. In answer to question No. 11, he stated that none of the Thakkers were either party to any document in relation to plot No. 33 or were paid any consideration against Plot No. 33 under any of the said document. Under these circumstances, in our view, Ld. CIT(A) has rightly observed that statements and affidavits given by Shri Y.P. Trivedi cannot be relied upon due to contradictions in his statements and affidavits without any valid corroborative evidence. In respect of transaction of plot No. 42 as well, there is no corroborative evidence brought on record by the A.O. either in the assessment order or in the subsequent en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in the case of Shri Jitendra M. Thakkar (Supra). As mentioned earlier, although 2 plots owned by M/s. Manoj Marketing Pvt. Ltd. and M/s. Vasumati Marketing Pvt. Ltd. (both having equal share in the 2 plots) were sold to M/s. Rishiraj Builders and Developers, however, we find no addition has been made in the hands of M/s. Vasumati Marketing Pvt. Ltd. No corroborative material whatsoever was found showing any on -money received by M/s. Manoj Marketing Pvt. Ltd. No MOU, no receipt, no signature of the assessee in token of receipt of any on -money was found during the course of search from the premises of M/s. Rishiraj Builders and Developers. Although according to the affidavit/statement of Shri Y.P. Trivedi that payments were made by Shri Shastri who is office manager, however, it is a fact that statement of Shri Shastri was never recorded. Further, even the cheque payments made to the assessee and cheque payments as per the seized documents also do not tally. We find the AO has not acted on the basis of the figures appearing in the seized papers at ₹ 57,75,370/ - or the affidavit of Shri Y.P. Trivedi ₹ 57,75,000/ -but he has proceeded on the basis of certain other ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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