TMI Blog2014 (2) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... ch could be made basis for the reopening of the assessment. Accordingly, we set aside the notice u/s. 148 and hold the reassessment proceedings as invalid AO himself has examined those flats were some extra money in the form of interior decoration was found to be given. It was not the case of the AO that all the flats sold have fetched some on-money. The DR further brought to our notice that the Director of M/s. Ashoka Buildcom Ltd., have moved the Settlement Commission admitting payment of on-money therefore the same should be considered in the hands of the assessee. This submission of the Ld. DR cannot be accepted because what a third party is doing before the Settlement Commission cannot be said to have any relevance in the re-assessment proceedings of the assessee when the buyers have categorically stated that they have not paid any on-money which fact has also been stated in the form of affidavits. Considering all these facts in totality, in our humble opinion, the entire additions have been made on surmises and conjectures based upon irrelevant material ignoring direct evidences on record, therefore, the additions made by the AO cannot be sustained even on merit. - Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70,94,000/- as unaccounted sale proceeds. 4. The assessee challenged the reopening as well as addition before the Ld. CIT(A). It was contended before the Ld. CIT(A) that the belief of the AO was not bonafide. The contentions and submissions made by the assessee did not find any favour from the Ld. CIT(A) who was convinced that the AO has initiated proceedings for reopening on the basis of information received from DDIT (Inv), Nasik and the said information cannot be termed as vague or irrelevant. The Ld. CIT(A) further observed that what is sought to be assessed or reassessed under the new scheme is the total income of each of the relevant assessment years. Under the new scheme, the AO is not bound by the various constraints in distinguishing what is disclosed and what is undisclosed income. The AO is required to make a normal assessment or reassessment of total income in each of the relevant years, which would include all escaped income whether found as a result of search before or after the search and in pursuance of pre or post search enquiry. The Ld. CIT(A) accordingly held the reopening as valid. 4.1. On merit, the Ld. CIT(A) observed that the addition made by the AO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of the purchasers of the flats during the course of the original assessment proceedings itself and none of the purchasers have admitted to have paid on money on purchase of flat. The Ld. Counsel concluded by saying that the AO has acted only on the basis of suspicion and it could not be said that it was based on belief that income chargeable to tax has escaped assessment. It is the say of the Ld. Counsel that the AO has to act on the basis of reason to believe and not on reason to suspect. The Ld. Counsel has placed reliance on the decision of Punjab and Haryana High Court 311 ITR 38, Delhi High Court in 338 ITR 51. 5.1. Arguing on merits of the case, the Ld. Counsel stated that the statement of Shri Satish Kulkarni does not have any evidentiary value as the same was retracted within 17 days by filing an affidavit before Executive Magistrate, Nasik. The Ld. Counsel further stated that the said Annexure AB-1 is only an estimate which contains working of capital gains and it cannot be made basis for making additions in the hands of the assessee. The said document was found during the search at M/s. Ashoka Buildcom Ltd., therefore the presumption is that the said document be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the books of account. Therefore, there is suppression of income to that extent and income has consequently escaped assessment. 8. Annexure AB-1 which is the basis for reopening of the assessment is as under: S. No Unit name Flat No. Area in Sq.ft. Rate/ S.ft Total cost Agreement value 6600 sq.ft. Aminity agreement 2200 S. ft. Misc220 0 sq.ft. Parking extra cash Misc. at the time possession Tokan amount paid Capital gain investment 1 Asha 201 1305 1000 14355000 8613000 2871000 2871000 500000 221320 500000 4285000 2 SDP 202 1305 11000 14355000 8613000 2871000 2871000 500000 221320 500000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vinces 191 ITR 662 where in it has been held that the final out come of the proceedings is not relevant . Reliance was also placed on the decision of the Honb le Madras H.C in ASSP Co., 172 ITR 274 wherein it was held that the AO can issue number of notices to reassess escaped income. On fresh facts and fresh information the Ld. DR relied upon the decision of the Hon ble S.C in the case of Phoolchand Bajranglal 203 ITR 456. 10. In our understanding of the Law the facts of the cases relied upon by the DR are clearly distinguishable in as much as in the present case what the AO is relying upon is only a work sheet that too of a third party, most of the workings on which are not even remotely connected with the assessee. A document has to be considered as a whole and not in parts. As mentioned earlier, the document does not contain names of the purchasers. It is pertinent to note that the said document not even contains the name of the assessee, it is not signed nor it is dated. It is not clear to which assessment year it belongs to. In our humble opinion, the annexure appears to be dumb document which has no relevancy and cannot be made a basis for reopening of the assessment. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO against the assessee only on the statement of Shri Satish Kulkarni whereas the AO completely ignored the statements recorded by himself of the purchasers during the course of the original assessment proceedings. 11. Considering all the facts in totality, in the light of the aforestated annexure AB-1, we failed to persuade ourselves to find any relevancy on the said document which could lead to a reasonable conclusion that the assessee has received some on-money which could be made basis for the reopening of the assessment. Accordingly, we set aside the notice u/s. 148 and hold the reassessment proceedings as invalid. Ground No. 1 is accordingly allowed. 12. For complete adjudication of appeal, now we proceed to decide on merit, we find that the entire addition has been made solely on the basis of the documents found from the possession of Shri Satish Kulkarni, an employee of M/s. Ashoka Buildcom Ltd., coupled with the statement of Shri Satish Kulkarni which was retracted later on. The Revenue authorities have applied the test of human probabilities strongly relying upon the decision of the Hon ble Supreme Court in the case of Sumati Dayal Vs CIT 214 ITR 801 and CIT Vs Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f every flat. The AO has believed on the circumstantial evidences like the retracted statement of Shri Satish Kulkarni and Annexure AB-1 and in the process, the AO has completely ignored the direct evidences being the statements under oath of the buyers of the flats and their affidavits in this matter. 14. Apart from what we have stated hereinabove, we also failed to understand what prevented the AO to apply the test of human probabilities during the original assessment proceedings itself when it came to notice of the AO that assessee is taking some money outside the books of account. The only reason why the AO has not applied this test is that after thorough examination and verification, he found that only certain flats were sold where on-money was involved and the respective buyers of those flats have also confirmed this before the revenue authorities. However, in the matter before us, the buyers at the very first stage has categorically denied nor the AO has categorically stated that all the flats were sold for on-money. 15. Before us, the Ld. DR has also relied upon the decision of the Tribunal in the case of Diamond Investment in ITA No. 5537/M/10, wherein the Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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