TMI Blog2016 (1) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. The overwhelming fact is that document itself has been found in the custody of the Assessee at the time of search. Thus, the Assessee is deemed to be a party to such deal on stipulated terms unless shown otherwise. There is another aspect of the matter. The same plot which is subject matter of impugned agreement was finally sold to the Assessee albeit in the name of minor son purportedly through a regular agreement. Thus, the deal understandably entered into by this MOU finally went through albeit with a lower price. Thus in our considered view, the evidentiary value of impugned MOU cannot be ignored as irrelevant or extraneous. We also notice that the statement was recorded on oath under S. 132(4) in the course of search wherein undisputedly, the contents of the MOU were endorsed. As a corollary, the statement is presumably true and voluntary since the statement was not withdrawn till the block assessment was taken up. No evidence has been placed before us to demonstrate that statement under section 132(4) given during the course of search has been successfully withdrawn. We do not find any material on record to show that there was any kind of duress or intimidation or coe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no cogent evidence available to support estimation @ 25% of sale as initial investment. On consideration and facts and circumstances and in the light of the decision of the coordinate bench, We are of the view that estimation @ 10% as pleaded by the Assessee would balance equities and would be a fair estimate. Addition towards sale proceeds received on sale of silver articles and estimated 5% commission thereon treated as unexplained receipt and thus undisclosed income - Held that:- It is admitted position that no incriminating document showing any unaccounted sale or investment has been found. The entries already recorded in the books cannot be source of addition / disallowance in block assessment. Some flippant or sweeping statement covering such larger block period by other members of the family without anything more cannot, in our view, override tangible book entry and grant jurisdiction to the AO under block assessment. The addition made on this score by the AO is therefore not sustainable. Estimation @ 10% of the unaccounted sale towards purchases as proper and justified. Addition towards unaccounted household expenses - Held that:- Estimation confirmed by the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 7,44,000/- u/s 69B as unexplained investment in respect of the plot No.194/8 at Waliwade treating it as undisclosed income of the Appellant. 2) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the addition of ₹ 1,25,000/- u/s 69B as unexplained investment in respect of the barracks at C.S. No.2904 at Waliwade purchased by the Appellant s son and treating it as undisclosed income of the Appellant. 3) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming ₹ 2,07,764/- as initial investment and ₹ 78,892/- as G.P. in respect of certain transactions which was assumed to be undisclosed sales and thereby treating ₹ 2,86,656/- as undisclosed income of the block period. 4) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the addition of ₹ 1,76,000/- u/s 69B as unexplained investment in respect of the plot No.194/9 at Waliwade purchased by the Appellant s son and treating it as undisclosed income of the Appellant. 5) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the addition of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal relates to addition towards unexplained investment in Plot No.194/8 at Waliwade Kolhapur for a sum of ₹ 7,44,000/-. 4.1 The relevant facts are culled out below:- 4.2 The assessee is engaged in wholesale cloth business at Gandhinagar under the name and style of M/s Amrutlal Company . The assessee was subjected to search and seizure action under section 132 of the Act and accordingly block assessment for the period beginning from assessment year 1989-99 upto 1998-99 were carried out under section 158BC(c) of the Act by the Assessing Officer vide its order dated 27.09.2000. The search was conducted on the business and residential premises of the assessee on 08.09.1998. Books of account, documents, loose papers were found and seized during the course of search action. 4.3 At the time of search in the premises of the Assessee, an original agreement of sale i.e. Sanchakar Patra dated 07/07/93 was, inter-alia, discovered, which was executed between Shri Rameshlal R Wadhwa i.e. brother of the Assessee (ITA No.965/PN/2002) and the Assessee (ITA No.964/PN/2002) as purchasers on the one hand and Shri Ashok T Khubchandani (ITA No.09/PN/2005) and Shri Ghansham Jas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.6 The Assessing Officer thus, calculated assessee s unexplained investment in the above plot at ₹ 7,44,000/- under section 69B of the Incometax Act and added the same to be undisclosed income of the block period. 4.7 The Assessee assailed the order the AO on many grounds before the CIT(A). The Assessee contended that no addition can be made only on the basis of some statement made during the course of search unless some concrete evidence is found. The following decisions have been relied upon by them : ACIT vs. Govindan (63 TTJ 271) (Bang); Nagindas Dahyabhai Patel vs. ACIT (104 Taxman 80) (Ahd); J. K. Narayanan (HUF) (242 ITR 45) (Mad Trib); Kairoos M Bhaya (100 Taxman 165) (Mum); Jagdish Chand Gupta (58 ITD 142) (Chd); Pushpa Vihar (48 TTJ 389) (Bom) 4.8 Further, The Assessee submitted that the Sanchakar Patra seized by the department from the Assessees premises is not a valid document because it does not bear signatures of the assessee and his brother. It has been submitted that the land belonged to one Shri Powar and family and the Khubchandanis were only middlemen. The plot of land of 28000 sft. was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni Banik (115 Taxman 507) (Gau); ITO vs. Chidambareswara Rao (15 ITD 471) (Hyd); CIT vs. Smt. Amiya Bala Faul (240 ITR 378) (Gau) 4.11 The CIT(A) on consideration of entirety of factual matrix confirmed the action of the AO. The operative part of the order of the CIT(A) is self explanatory and is reproduced below for ready reference :- 21. I have gone through the order of the Assessing Officer as well as the detailed submission made on appellant s behalf. It is not disputed that the Sanchakar Patra i.e. the agreement to sale was recovered from the premises of the appellant and, therefore, the relevance of the document in appellant s case cannot be changed. Further, the contents of the seized documents were unambiguous. Furthermore, there was an admission by the appellant made under section 132(4) of the Incometax Act. It has been held by various Courts that the admission made under section 132(4) is an important piece of evidence, which can be used against the appellant during the course of Assessment proceedings. 22. It is further seen in this case that this statement made by the appellant was not withdrawn till the assessment of the appellant for the block ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden of proof on to the person making them or his representativein- interest. Unless shown or explained to be wrong, they are an efficacious proof of the facts admitted. 24. The claim of the appellant that the document is not valid because the appellant and his brother did not sign the same, is not correct because for a purchase document to be effective, only sellers of the property are required to sign. It is further seen that the document has been witnessed by two persons and the same witnesses have also signed the purchase deed made subsequently in December, 1993. It is also no correct to say that addition has been made only on the basis of admission. 25. Further, argument made on behalf of the appellant that the report of Valuation is binding on the Assessing Officer is also not correct because only when the matter is referred by the Assessing Officer to the Valuation Officer under section 55A of the Income-tax Act for capital gain purposes only then the advise of the Valuation Officer is binding on the Assessing Officer. In the present case, the addition has been made by the Assessing Officer not on account of the capital gain but towards unexplained investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... binding on the revenue in terms of S. 142A in the light of retrospective amendment. S. 142A vests power with the AO to make reference to the valuation for determining the investment referred to under S. 69 of the Act and the said section 142A is deemed to be in force w.r.e.f. 15-11-1972 as per amendment brought out by Finance (No. 2) Act 2004. The learned AR submitted that an appeal is only continuation of the assessment proceedings and therefore the ITAT can take cognizance of the amendment with retrospective effect. Subsequent to the hearing, the Ld. AR filed certain judicial decisions vide covering letter dated 22-09-2015 to support its contentions. 6. In the light of these contentions, the Ld. AR pleaded that the action of the CIT(A) in confirming the order of the AO on this score is patently wrong and deserves to be set aside and relief as sought as per Grounds taken be allowed. 7. We have carefully considered the rival contentions, orders of the authorities below perused case laws cited. 7.1 The main plank of the arguments on behalf of the Assessee is that the document found in the course of search namely Sanchakar Patrika is unsigned by the Assessee and thus jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sellers along with witnesses which was unearthed during the course of search. Some retraction thereof after a considerable gap is obviously an afterthought attempt to cast aspersion on the earlier statement. Seeking to retract from such statement appears to be only a self serving exercise which has no rational probative value in the absence of any evidence to show that initial admission made under section 132(4) was incorrect. Such belated and bald retraction is not capable of casting any aspersion on the original statement. While giving the statement, the deponent Assessee having special knowledge of the facts and privy to impugned document made assertions to this effect. In the absence of any proved allegation of coercion etc. or any other material circumstances adequate to impeach the true and voluntary character of the statement, the contents of the statement which endorses the hand written document seized is to be necessarily deemed to be sacrosanct. We have to bear in mind that the impugned statement of the assessee to this effect induced the department to deintensify the entire process of the further investigation though search. It is because of such statement that too on oa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been found to be admissible on facts and raised estoppel against the assessee and consequent burden not found to have been discharged by the Assessee, the subsequent valuation indicating plausible and rational price is of no relevance. There is no scope for assumption and presumption when speaking evidence for a given price has been found in search proceedings. Hence, the question of applicability of S. 142A with retrospective effect or otherwise is only academic in the present case. 7.5 We have also weighed the fact that the sellers in its Statement in survey proceedings under S. 133A of the Act have endorsed the version of the Assessee. The statement of seller is not before us. Nevertheless, we do not find any substance in such purported statement which is contrary to written document signed by them. Also, the statement recorded under S. 133A does not have the same legal sanctity qua the statement recorded under S. 132(4). 7.6 In the totality of facts and circumstances, We concur with the findings of the CIT(A) and hence not inclined to interfere. 7.7 In the result, Ground No. 1 of the appeal of the Assessee is dismissed. 8. At the time of hearing, Ground No.2 is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed by the CIT(A). The transaction was among the same parties viz. (i) Shri Murlidhar Radhomal Wadhwa, ITA No.964/PN/2002; (ii) Shri Rameshlal Radhomal Wadhwa, ITA No.965/PN/2002; (iii) Shri Ashok Tekchand Khubchandani, ITA No.09/PN/2005; and, (iv) Shri Ghansham Jasumal Khubchandani, ITA No.10/PN/2005. 10.1. The relevant facts relating to the issue as noticed by the Ld. CIT(A) and his conclusion thereon is reproduced below for ready reference :- 36. The appellant had purchased a plot of 4670 sft. of R.S. No.194/9 at Valiwade, Kolhapur on 05/07/94 from Shri Ashok T Khubchandani and Shri Ghanshyam T. Khubchandani. The sale deed was executed in the names of assessee s minor son Master Amrutlal M Wadhwa and his brother s minor son Master Anilkumar R Wadhwa for total consideration of ₹ 60,000/-. It is next to the same plot for which an agreement to sale was discovered during the course of search indicating the sale price @ ₹ 65/- per sft. It appears that the original agreement of sale was for 30492 sft. out of which 28000/- was sold vide sale deed dated 22/12/93 for plot no.194/8. Since this plot also was adjoining to the plot no.194/9, the Assessing Officer took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the Assessee that part of the silver articles sold were acquired by his father and by him after his marriage and therefore the same were acquired before 1/4/1981 and sold to Deepak Refineries. Before the CIT(A), it was contended by the Assessee that the amount credited is duly accounted for in the books and therefore is not the subject matter of block assessment based on any incriminating documents found during search. The CIT(A) rejected the contention on the ground that during the course of search, statement of brother of the Assessee was recorded wherein it was stated that no silver articles were sold by the family during the block period. Such statement recorded during the statement brought necessary evidence for taking up the transaction as undisclosed income of the Assessee. 11.2 We are unable to agree with the findings of the CIT(A). It is admitted position that no incriminating document showing any unaccounted sale or investment has been found. The entries already recorded in the books cannot be source of addition / disallowance in block assessment. Some flippant or sweeping statement covering such larger block period by other members of the family without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee for estimation in respect of the rest of the period. Therefore, AO is directed to restrict the disallowance amount in conformity with seized material only. 14.2 In the result, Ground no. 9 is partly allowed. 15. In terms of Ground No. 10, the Assessee has objected to treating M/s D.R. Textiles, a partnership firm as benami firm of the Assessee and his brother and thus making addition of ₹ 1,70,066/-. 15.1 The CIT(A) confirmed the action of the AO holding M/s D.R. Textiles to be a benami concern of the Assessee in which wife of the Assessee is a benami partner on behalf of the Assessee. The premise for holding so is that in the light of statement recorded under S. 132(4), the wife has no knowledge of the business being in her name and is not privy to any details like name of the employee or any understanding of business. 15.2 We observe that the impugned Partnership firm is being separately assessed and grievances arising out of block assessment are also being adjudicated in this consolidated appeal. 15.3 In the light of facts narrated by the CIT(A) in para 84 to 91 of its orders, We find that it is admitted position that wife of the Assessee has co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating it as undisclosed income of the Appellant. 3) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the addition of ₹ 1,04,470/- being the sale proceeds received on the sale of silver articles and 5% commission thereon (estimated as unexplained receipts and thereby undisclosed income. 4) On the facts and in the circumstances of the case the Ld. CIT(A) erred in treating the advance of ₹ 50,000/- given to Mr. Kathade Collections as unexplained deposit and making addition on protective basis in the hands of the Appellant even though the substantive addition is made in the case of Murlidhar Wadhwa. 5) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming addition of value of 135 gms. of gold out of the total 546 gms. owned by the family, as undisclosed investment, and thereby, treating it as undisclosed income of ₹ 57,645/-. 6) On the facts and in the circumstances of the case the Ld. CIT(A) erred in confirming the action of the A.O. in treating D.R. Textiles a partnership firm as Benami firm of the Appellant and his brother and making addition in respect of ₹ 1,70,066/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Erred in not considering the existing market rates of the surrounding plots in Gandhi Nagar, Kolhapur which were much lower than the price mentioned in the Agreement to sell. 5. Without prejudice to the above, should have appreciated that in any case no addition could have been made on the basis of the Sanchkar-Patra which was found in the premises of Shri Murlidhar R. Wadhawa and hence no adverse inference could have been drawn in the Appellant s case. Reg. : Transaction of Plot No.194/9 :- B. Erred in confirming the addition of ₹ 1,76,000/- as unaccounted income for sale of plot at R.S.No.194/9 purchased by Shri Rameshlal R. Wadhawa and Shri Murlidhar R. Wadhawa. 1. Erred in arriving ₹ 1,76,000/- as additional consideration received by the Appellant only on basis of the following entries found in the Mahavir Diary maintained by the co-purchaser Shri Murlidhar R. Wadhawa. ₹ 26,000/- 26/01/1994. ₹ 1,50,000/- 22/03/1994. ₹ 1,76,000/- 2. In Shri Murlidhar R. Wadhawa s case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals), Kolhapur and filed with CIT(A), Pune-1. Reg. : Transaction of Plot No.194/8 :- A. Erred in making addition of ₹ 7,44,000/- as unaccounted income from sale proceeds of plot at R.S. No.194/8. 1. Erred in not accepting the income arising out of the sale proceeds of plot as income from short term capital gains. 2. Erred in adopting sale price at ₹ 65/- per sft. on the basis of Sanchkar-Patra (Agreement to sell) and not on actual registered sale documents in which the price is mentioned at ₹ 1,24,000/-. 3. Erred in not accepting the departmental Valuation Report for calculation of capital gains as was accepted by his predecessor in case of Shri Rameshlal R. Wadhawa and Shri Murlidhar R. Wadhawa, for ascertaining market price on the date of sale. 4. Erred in not considering the existing market rates of the surrounding plots in Gandhi Nagar, Kolhapur which were much lower than the price mentioned in the Agreement to sell. 5. Without prejudice to the above, should have appreciated that in any case no addition could have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, the price for plot no. 194/8 should not be adopted. We have upheld the sale price of plot no. 194/8 based on tangible evidence unearthed during search. Drawing the analogy, Plot no. 194/9 between same set of parties cannot be differently treated. We do not understand the purport of decision of Hon ble Bombay High Court in Lata Mangeshkar case 97 ITR 696 relied upon in the context of the facts of the case. Accordingly, the appeal of the Assessee is dismissed. 30. In the result, the appeal of the Assessee is dismissed. ITA No.478/PN/2003 : 31. Now, we take-up the appeal in the case of M/s D.R. Textiles in ITA No.478/PN/2003 which is directed against the order of Commissioner of Income Tax (Appeals)-I, Pune dated 18.02.2003 relating to block period 1989-90 to 1999-2000 passed under section 158BD r.w.s. 158BC(c) of the Act. 32. In this appeal, the assessee has raised the following Grounds of Appeal :- On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals)-1, Pune - 1. Erred in confirming the interest charged u/s 158-BFA(1). 2. a) Erred in directing to treat ₹ 1,61,671/- on account of purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases, the entire goods in the following 3 bills were returned : Date Bill No. Amount 31.03.1996 966 ₹ 41,691 31.03.1996 977 ₹ 61,630 31.03.1996 1060 ₹ 58,350 Rs.1,61,671 34. In view of this practice, the assessee states that in respect of three bills aggregating to ₹ 1,61,671/- above, it has neither made any payment against these purchases nor effected any sale out of these goods, nor the goods have been reflected in the closing stock. Therefore, the Assessing Officer has committed error in making addition of ₹ 1,61,671/- against purchases returns to M/s K.C. Shah Co.. The purchases and purchase returns have been duly recorded in the books of accounts. These papers regarding purchases and sales only have been found in the course of search. Therefore, while purchases are to be seen, purchase return also are to be seen. The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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