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TMI Blog2016 (12) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... peals as under. ITA 565/2015 (Assessee's Appeal) 3. Ground Nos. 1 and 8 are general and need no adjudication. 4. The ld. counsel for the assessee did not press ground No. 7 with regard to addition of Rs. 1,76,670/-. This ground is dismissed as not pressed. 5. Ground Nos. 2, 4 and 5 are connected matters and read as under:- "2. That the Learned CIT(A) has erred in confirming the addition of Rs. 1,12,04,166/- on account of unexplained investment in purchase of 25 kanal 10 Marla land at Lohgarh on the basis of photocopies of forged documents found from the third party premises and without making any inquiry. The ld. CIT(A) has also erred in ignoring the registered sale deed." "4 That the Learned CIT (A) has wrongly upheld the addition of Rs. 1,44,50,000/- on account of profit earned on sale of land of 25 Kanal 10 marlas at Lohgarh to M/s. Parshav Colonisers and Consultants Pvt. Ltd. without appreciating the fact that the appellant has not sold any land to M/s. Parshav Colonisers and Consultants Pvt. Ltd. and also erred by making addition on the basis of photocopies of forged documents found from the third party premises and without making any inquiry from any parties." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 664/CHD/2011 (Bimal Suri) "3. The Revenue has filed the present appeal on the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,12,04,166/- on account of investment in purchase of land of 25K 10M at Lohagarh made by the A.O. in the hands of the assessee (being 1/3rd share) on the basis of said agreement on account of unexplained sources of investment in the said property. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,44,50,000/- on account of profit on sale of land of 25K 10M at Lohagarh to M/s. Parsav Colonizers and Consultants (P) Ltd. in the hands of the assessee on account of profit on sale of land, the assessee having I/3rd share in such profit. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 19,65,625/- on account of profit on sale of land to M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rai, Shekhar Chawla and Bimal Suri (Assessee) for Rs. 42.50 lacs only. The deed was registered in the name of buyer in two parts, one half in the name of S/Shri Gulshan Rai Satija, Jagpal Singh and Bimal Suri and remaining one half in the name of Shri Shekhar Chawla on 17.06.2005. The Assessing Officer observed that there is a huge difference in value shown in the registered sale deed and agreement to sell and made addition of Rs. 1,12,04,166/-. The Assessing Officer reproduced the assessee's explanation in para 4 of the assessment order but did not accept the explanation of assessee that the property was purchased by them at throw away price in view of cash receipts of Rs. 2,62,50,000/- mentioned in impounded documents and cash receipts of Rs. 2.10 crores mentioned on the back side of page 2 of the agreement to sell. 9. During the course of appellate proceedings, the Assessing Officer produced document Nos. 18 and 19 of Annexure B2, Page 33 of Annexure B1, on which reliance was placed by the department while making addition of unexplained investment in land at Village Lohgarh. The copies of documents were supplied to the counsel of the assessee and he clearly denied that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th other persons, namely, S/Shri Jagpal Singh and Gulshan Rai Satija. The assessee and other two persons has paid total sum of Rs. 40 lacs in equal proportion as on 29.01.2005. The Assessing Officer has made addition of Rs. 1,12,04,166/- on the basis of forged photocopy of agreement of total consideration of Rs. 3,76,00,000/-, which the assessee and two other persons has never executed. It was further submitted that the photocopies of the documents were not found at the premises of assessee and it was found during the course of survey conducted at the premises of third party, i.e., not party to the agreement. Further, the Assessing Officer collected the evidence at the back of assessee and no opportunity was given to the assessee to cross examine the persons with whom the alleged agreement was entered into. The assessee had already denied the contents of agreement on the basis of which the addition was made. The Assessing Officer had not made any enquiry from any of the parties to verify the truth. The assessee alongwith other two persons to the agreement has paid in previous financial year 2004-05 Rs. 40 lacs in cash against the total consideration of Rs. 1.20 crores and due to fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price mentioned in the sale deed is not correct. 13. The counsel of assessee also placed reliance on judgment given by Madras High Court in case of CIT vs. P.V. Kalyana Sundaram, 282 ITR 259 concluding that in absence of any independent enquiry, Assessing Officer was not justified in making addition towards purchase consideration of land merely on the basis of statement of seller, who gave conflicting statements. He also stated that that the Hon'ble Supreme Court affirmed the decision of Madras High Court quoted supra. 14. The counsel also placed reliance on following judgments:- - Ram Saroop Saini, HUF vs. Assistant Commissioner of income Tax reported at 15 SOT 470 (Del). In this case the Hon'ble Tribunal concluded as under. - Moosa S. Madha and Azam S. Madha vs. CIT reported in 89 ITR 65 (sc). - PRARTHANA CONSTRUCTION P. LTD vs. DCIT 70 TTJ 122. - CIT vs. RAM KUMAR 163 TAXMAN 253 (P and H) - 19 TTJ 546, 77 TTJ (MUMBAI) (TM) (1), 59 TTJ 574. 15. The learned CIT (Appeals) considering the material on record deleted the entire addition. His findings in paras 20 to 23 of the impugned order are reproduced as under:- (a) The incriminating document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rstatement of sale consideration could not be implied in respect of certain transactions of sale of land merely on the basis of unverified statement of a property agent and copies of agreements to sell relating to some other transactions; understatement of sale consideration cannot be said to have been established even in respect of those transactions in relation to which AO was in possession of copies of agreement to sell which disclosed higher sale consideration as the purchasers have not signed on the first page of the documents, requisite Court fee stamp is not affixed, AO did not possess the originals and the assessee was not given any opportunity to cross-examine the property agent who had allegedly made an adverse statement and, therefore, no addition can be sustained." 22. In view of above discussion and judgment given by Kerala High court reported at 128 Taxman 848. Amount stated in the sale deed cannot be ignored on the basis of agreement of sale unless it is proved that the agreement of sale was acted upon and the amount stated in the agreement was actually paid. On the basis of agreement to sell it cannot be concluded that the price mentioned in the sale deed is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat these documents were forged and bogus and were not found from the premises of assessee. Further the department did not make any enquiry from M/s. Parsav Colonisers and Consultant Limited to know the truth. 20. During the course of appellate proceedings, the counsel of assessee submitted that M/s. Parshav Colonisers and Consultants Pvt. Ltd. had not purchased any land at Lohgarh from the assessee and Other two persons till date and therefore, the question of profit on sale of land at Lohgarh to M/s. Parshav Colonisers and Consultants Pvt. Ltd. does not arise. The department relied upon the agreement and from the para-C of Assessing Officer's order, it is clear that the department has calculated the profit only on the basis of agreement without ascertaining the fact that whether the land in question was actually sold to M/s. Parshav Colonisers and Consultants Pvt. Ltd or not. The assessee hereby undertook that no land at Lohgarh was ever sold to M/s. Parshav Colonisers and Consultants Pvt. Ltd. There is no evidence with the department that the land was actually purchased by M/s. Parshav Colonisers and Consultants Pvt. Ltd. from the assessee. Further, it was submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of sale of land to Parsav Colonisers and Consultant Private Limited. The addition so made is deleted, allowing assessee's plea on this ground." 22. On ground No. 4, the Assessing Officer made addition of Rs. 19,65,625/-. The Assessing Officer also observed from the impounded documents 23-30 of Annexure B-2 that on the back side of document No. 30 an amount of Rs. 1,30,01,100/- has been received as advance money by S/Shri Gulshan Rai, Jagpal Singh, Bimal Suri (assessee) and Shekhar Chawla. 23. As per details available on back side of Document No. 30 of Annexure B:2, an amount of Rs. 22,00,000/- by cheque has been received by Shri Shekhar Chawla, an amount of Rs. 22,00,000/- by Cheque has been received by the seller, i.e. Party No. 2 and another amount of Rs. 85,00,000/- by cheques has been received by the Party No. 1 and another amount of Rs. 1,01,000/- has been received in cash by Party No. 1. It is also mentioned that original owner i.e. Smt. Pushpinder Kaur and other would get land registered in the name of party No. 3. As per Point No. 28 of this agreement, total sale consideration of the land has been fixed @ of Rs. 3,65,00,000/- per acre. The total value of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.06.2005. 24. In view of this, the profit on sale of this land measuring 8 kanal 10 marlas is calculated as under:- Sale consideration @ Rs. 3.65 Crores per acre 3,87,81,250/- Cost price @ Rs. 2.54 crores per acre 2,69,87,500/- Short term capital gain 1,17,93,750/- Assessee' s share (l/6th) 19,65,625/- 25. The learned counsel for the assessee submitted that the Assessing Officer has made addition on the basis of Tripartite agreement (as mentioned in order) among Gee City Builders Pvt. Ltd., Parshav Colonizers and Consultants Pvt. Ltd. and Shekhar Chawla and Gulshan Rai and Others, which was never executed by the assessee. Further, no such documents were procured from the premises of the assessee. The Assessing Officer has not made any enquiry from Gee City Builders Pvt. Ltd, and by relying on the photocopy of documents which was not executed by assessee and made addition without any enquiry from Gee City Builders Pvt. Ltd. Further in photocopy, all parties to agreement have not signed and, therefore, it cannot be relied upon. The counsel also placed reliance upon the Jurisdictional High Court judgment in case of CIT vs. RAM KUMAR 163 TAXMAN 253. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon unreported decision of Delhi High Court in the case of CIT vs. Moorti Devi in ITA No. 979/2010 dated 20.9.2010, in which departmental appeal was dismissed observing that the original documents were never confronted to the assessee and nothing has been brought on record as to what happened to the original documents. There is no material even to indicate that photocopies are the copies of the original documents. The learned counsel for the assessee also submitted that no enquiry was conducted from any party, i.e. buyer or seller to the agreement to sell. In the case of one of the buyers, M/s. Gee City Builders Private Limited, the Assessing Officer passed order under section 153Ar.w.s. 143(3)) of the Act for assessment year 2006-07 but no addition have been made in this case. The copy of the assessment order dated 31.12.2010 is placed on record. The learned counsel for the assessee submitted that all the parties have not signed any agreement, therefore, additions have been rightly deleted by the learned CIT (Appeals). 29. We have considered the rival submissions. It is not in dispute that survey was conducted at the premises of Chandigarh Overseas Private Limited and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otocopies of the agreement to sell cannot be compared with original documents. Reliance of the learned D.R. thus on sections 63, 64 and 65 of the Evidence Act is clearly misplaced. There was thus no basis to make any addition against the assessee on account of investment or earning any profits out of any sale transaction alleged to have been recorded in the agreement to sell. Since the documents were impounded from third party and no enquiry have been made from them or from any party related to the agreement to sell, therefore, there was no justification to make any addition against the assessee on the basis of such agreement to sell. Even in the case of M/s. Gee City Builders Private Limited, the Assessing Officer passed regular assessment order under section 153A r.w.s. 143(3)) of the Act but no addition have been made in this case. The learned CIT (Appeals) on proper appreciation of facts and material on record correctly deleted the additions. 30. Considering the above discussion and totality of facts and circumstances, we do not find any infirmity in the order of the learned CIT (Appeals) in deleting all the above three additions. 31. The departmental appeal has no merit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), however, did not accept contention of the assessee and dismissed this ground of appeal of the assessee. 14. After considering rival submissions, we are of the view matter requires re-consideration at the level of the Assessing Officer. The explanation of the assessee that Rs. 42,50,000/- have been paid through banking channel and other expenses are reflected in the books of account, have not been adjudicated by the ld. CIT (Appeals) through any speaking order. The ld. CIT (Appeals), has not given any finding of fact on the same. The ld. counsel for the assessee also submitted that assessee has shown investment on these items of his share i.e. 1/6th, therefore, addition is wholly unjustified. However, these contentions of the assessee have not been adjudicated by the authorities below. We, therefore, set aside the orders of authorities below and restore this issue to the file of Assessing Officer with direction to re-decide this issue by giving reasonable sufficient opportunity of being heard to the assessee. The Assessing Officer shall pass speaking order on the basis of material produced on record by the assessee. This ground of appeal of the assessee is allowed for statistica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on regarding these credits were filed at assessment stage. The assessee at the appellate stage attempted to bring additional evidence on this issue in violation of Rule 46A of IT Rules. The ld. CIT (Appeals) noted that the joint account is operated by the assessee alongwith two other persons which was used for purchase and sale transaction of the land and ultimately sold to M/s. Gee City Builders. No explanation is filed at the assessment stage. The explanation submitted by assessee is not supported by any documentary evidence and is after thought. The ld. CIT (Appeals), however, considering that Assessing Officer computed the addition of Rs. 1,44,50,000/- as assessee's share of profit earned on sale consideration as per agreements therefore, telescoping benefit was given and addition was deleted for statistical purposes. 16 (ii) Both the parties agitated findings of ld. CIT (Appeals) in their respective grounds of appeal. 17. After considering rival submissions, we are of the view matter requires re-consideration at the level of the Assessing Officer. The Assessing Officer has mentioned in the remand report that assessee has not furnished any explanation on these credits at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. The only ground left for consideration is ground No. 1 in departmental appeal, which reads as under:- "Whether on the facts and circumstances of me case the Ld. CIT(A) has erred by deleting the addition of Rs. 32,91,383/- as assessee's share on account of profit generated from the registration of 2500 sq. yards land belonging to various parties". 21. During the assessment proceedings, Assessing Officer noted that as per agreement to sell dated 29.06.2005 with M/s. Gee City Builders, Shri Gulshan Rai and others and Parashav Colonizers were under obligation to arrange additional land of 2500 sq. yds. and transfer the same at the same rate of Rs. 3.65 Cr per acre to M/s. Gee City Builders. The Assessing Officer noted from the impounded documents that six properties were sold by different sellers namely S/Shri Surjan Singh, Karam Chand, Manjit Singh, Karamjeet, Bhagwant Singh, Deepak Sharma and Ishar Singh Nagpal. All six properties were registered in the name of buyer M/s. Gee City Builders. Although the sale amounts as per registered sale deed were lower as reflected in the chart noted in the assessment order but the Assessing Officer computed the sale value by applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Satija. In respect of two properties, the A.O. has mentioned the buyers as Gee City Builder through Sh. Gulshan Rai Satija. The AO has noted that Gulshan Rai Satija has acted as middle man. On the other hand, the appellant has submitted that the AO has made addition on account of notional profit on the basis of the registration of 2500 sq. yds. land belonging to various parties surrounded to 25 kanal 10 marla land. The properties were sold by the respective persons by entering into agreement directly with Gee city Builders and the appellant has never entered into any agreement with the six persons for purchase of properties and subsequent sale to the Gee City Builders. Even if, any profit is generated it can be assessed in the hands of the seller only. After considering the appellant submissions and facts of the case, it is noted from the details of property transactions as given in the chart by the AO in the assessment order; these are agreements from individual person for sale of property in the name of Gee City Builders. There is no evidence that the appellant was involved in such deals either through any document as agreement to sell or any other evidence showing that the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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