TMI Blog2016 (2) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the question, while referring to the seized paper, he has explained that these are estimates and the actual fact remained that he has received money @ ₹ 3900/- per share. Shri Surinder Gulati did not make any allegation against the assessee in respect of shares purchased by the assessee. The seized paper as referred in his assessment order have been reproduced in which, on certain shares the value have been shown @ 3900/- as well as in another paper, the same rate is mentioned against the total shares of 3258 and in the third seized paper, total sale proceeds of 3258 shares have been considered by Assessing Officer in a sum of ₹ 2.13 Crores. This sale consideration was divided by 3258 shares and Assessing Officer concluded the value of each share at ₹ 6554/-. However, all the above material on record i.e. statement of Shri Surinder Gulati and the seized paper did not make any allegation against the assessee of purchase of shares at ₹ 6554/-. It was a presumption of the Assessing Officer that when one of the transactions is conducted by Shri Surinder Gulati for a sum of ₹ 6554/- then presumption would be that other shares have also been transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ₹ 50,46,200/-. 5. Briefly the facts of the case are that original return was filed declaring an income of ₹ 1,08,880/-. Thereafter the search under section 132 of the Income Tax Act was conducted at the residential premises of Shri Ashish Singla (assessee) and his family members on 30.06.2010. Notice under section 153A was issued and assessee filed the return of income declaring the same income as was declared in the original return of income. The Assessing Officer issued statutory notice to the assessee and also supplied copies of the seized material. The assessee is an individual and is having income under the head 'income from other sources' and long term capital gain . It is stated that assessee is not maintaining any personal books of account, hence, are not produced. 6. During the course of assessment proceedings, it was noticed that assessee purchased shares of M/s Pragati Nirman P. Ltd. (PNPL). The assessee was asked to file number of shares and source for the purchase. On perusal of the reply, it came to the notice that assessee had purchased 1900 shares of PNPL Chandigarh from Sh Harmohinder Singh Chadha. Search seizure operations were al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Further, during the course of search operation, no adverse document was found against the assessee or from the possession of the assessee to prove payment of any amount in excess of ₹ 3900/- per share. Therefore, in the absence of recovery of any adverse material against assessee, no addition can be made. The Assessing Officer, however, did not accept contention of the assessee and applied the rate of ₹ 6554/- per share instead of ₹ 3900/- and made addition of ₹ 50,46,200/-. 8. The addition was challenged before ld. CIT(Appeals). The assessee filed written submission which is quoted in the impugned order in which the assessee briefly reiterated the same facts as were pleaded before Assessing Officer. It was briefly explained that Assessing Officer adopted the rate of ₹ 6554/- without basis. The assessee did not purchase any share from Shri Surinder Kumar Gulati from whose possession the seized documents were recovered. No corroborative evidence has been filed to support findings of the Assessing Officer. No document or paper was found from the residence of Shri Harmohidner Singh Chadha, Chandigarh to prove any payment more than what is disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings in para 9 to 18 of the appellate order are reproduced as under : 9. I have considered the basis of addition made by the Assessing Officer, the arguments of the AR on the issue during assessment as well as appellate proceedings, the comments of the Assessing Officer in-the remand report and the rejoinder of the AR on the same. It is seen that the Assessing Officer has based his conclusion entirely on the conclusion of the Assessing Officer of Sh. Surinder Kumar Gulati assessing the sale consideration at ₹ 6554/- per share. The assessee on being confronted with the proposed addition in his own case filed detailed explanation as to how the same could not be done in his case. The Assessing Officer while making addition under section 69B has not recorded as to how the assessee's explanation was not acceptable. The Assessing Officer has just proceeded to conclude adversely without rejecting the explanation of the assessee on the basis of some logical reasoning. The decision of Hon'ble Jurisdictional Bench of ITAT in the case of Neena Syal vs ACIT 69 TTJ 516 is extremely relevant as it highlights the requirement to be fulfilled before making addition under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no extra consideration was received by them and at the end of that rate the total amount of shares at ₹ 1,34,30,825/- has been mentioned. This page again records the detail of amount received by cheques and which are not disputed at all and, there is no mention of any extra consideration. Further page no.3 and 4 of Annexure A-5 contains the following:- From PNP MRG- 1,15,24,240 BRG- 90,30,041(incl. 724,625 of BRG personal) 2,13,54,281 To Land 19822420 GSC 1500000 Back side 31861 21354281 10. The Authorised Officer at the residence of Sh. Surinder Kumar Gulati confronted the said documents to him and recorded his statement with reference to the same. It is seen that the Authorised Officer posed a specific leading question to Sh. Surinder Kumar Gulati in the following manner:- During the search p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age no. 3 and 4 of Annexure A-5 which are rather cryptic and devoid of details as against explicit and detailed description of sale transaction recorded at page no. 33,34 and 35 of Annexure A-2 by Shri Surinder Kumar Gulati. It is on the basis of this interpretation of the seized document detailed above that the total sale consideration had been worked out at ₹ 32 crores which has been taken as the basis by the Assessing Officer of the appellant to make the impugned addition by treating the sale consideration at Rs, 6554/- per share rather than ₹ 3900 per share. This means that the interpretation of part of the seized record referred to above in the case of Sh. Surinder Kumar Gulati by his Assessing Officer has been taken to make a further presumption that the other co-owners especially Sh. Harmohinder Singh Chadha would have also sold his share to the appellant at the said rate of ₹ 6554/-. This is against the background that the appellant as well as the seller of shares i.e Sh. Harmohinder Singh Chadha were subjected to search proceedings and nothing to evidence such transfer of unaccounted sale consideration had been found in their cases. The issue therefore is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer on being asked to offer his comments on the same merely stated that the two cases were not comparable. The assessee to support his claim had infact filed copy of the registration deed evidencing sale consideration of ₹ 12 crore especially when Jagat Theatre was a freehold property as against the property owned by the co-owners in this case being a leasehold. .Further the location of Jagat Theatre in sector 17 is definitely much more attractive from commercial point of view in comparison to location of property owned by M/s Pragati Nirman Pvt Ltd. Therefore the claim of the appellant that the assumption of the property being transacted at a price of ₹ 32 crore being farfetched, is acceptable. This fact is in direct contradiction to the observation of the Authorised Officer at the time of the search operation that market price of the property of M/s Pragati Nirman Pvt. Ltd was about ₹ 32 crores and was not backed by any documentary evidence but only on the basis of hearsay. Here it is important to consider the facts of the case in the light of Judicial Pronouncements in similar cases wherein the documents relied upon by the Assessing Officer had been sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue as is clear from following head note : Search and seizure-Block assessment-Computation of undisclosed income-Addition of premium allegedly paid over and above the cost of plot mentioned in the registered deed-Seized documents on the basis of which the impugned addition were made not found at the residence of the assessee but at the residence of a third party-Same have not been specifically confronted to the assessee before making the addition-Explanation given by assessee not controverted by AO-AO has not given any reason for either not accepting the explanation of the assessee or for finding the explanation as unsatisfactory-Thus, AO did not comply with the conditions stipulated in s. 69-Addition deleted-Remand of the case not called for-Power of remand under s, 254 is required to be exercised in a disciplined and responsible manner- Same cannot be invoked in a case where AO has not cared to follow the basic provisions of s. 69/69B. 16. The Hon'ble Punjab and Haryana High Court in the case of CIT vs Ravi Kumar 294 ITR 78 has also laid down that after the assessee had explained the rough notings, it was incumbent upon the revenue to rebut the same by some material e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer. The Assessing Officer, on the basis of seized paper, correctly calculated the sale price of each share at ₹ 6554/-. The seized material was recovered in the case of Shri Surinder Gulati, however, ld. CIT(Appeals) has deleted the addition in his case and no departmental appeal have been filed because of the low tax effect. The surrender made by Shri Surinder Gulati was of ₹ 1.50 Cr which includes the entries of the Blue Diary. The assessee purchased shares from Chadha Family. Since it was a financial transaction, therefore, considering the rule of prepondance of probabilities, the rates per share were correctly applied by the Assessing Officer. All transactions would have been held at the same rate. Shri Surinder Gulati surrendered separately 80 lacs in respect of the seized diary, therefore, case of the co-owner should be considered together. The ld. DR relied upon judgement of Hon'ble Punjab Haryana High Court in the case of Joginder Pal Vs CIT 56 Taxman.com 150, decision of Gujrat High Court in the case of Hiren Vasant Lal Shah 19 Taxman.Com 241 and decision of Hon'ble Punjab Haryana High Court in the case of R.P. Vashisht Vs DCIT 301 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aymond were confronted to him in which he has admitted that diary was written in his handwriting and belongs to him. He has also explained the abbreviations contained in the seized paper but none of the abbreviations were having any link or connection with the assessee. In answer to one of the question, while referring to the seized paper, he has explained that these are estimates and the actual fact remained that he has received money @ ₹ 3900/- per share. Shri Surinder Gulati did not make any allegation against the assessee in respect of shares purchased by the assessee. The seized paper as referred in his assessment order have been reproduced in which, on certain shares the value have been shown @ 3900/- as well as in another paper, the same rate is mentioned against the total shares of 3258 and in the third seized paper, total sale proceeds of 3258 shares have been considered by Assessing Officer in a sum of ₹ 2.13 Crores. This sale consideration was divided by 3258 shares and Assessing Officer concluded the value of each share at ₹ 6554/-. However, all the above material on record i.e. statement of Shri Surinder Gulati and the seized paper did not make any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Gulati from whose possession same were recovered, there is nothing left for consideration against the assessee. 10 (ii) The assessee in addition to the above also explained that when statement of Shri Surinder Gulati was also recorded in the case of Shri Madan Gulati, he has not supported the case of the revenue in his statement. He has also explained in the statement that ₹ 80 lacs was surrendered on account of dealing with the Varanasi party which has also no connection with the assessee. The assessee also filed Profit Loss Account of the PNPL to show that there was very little profit in their case and that property was lease-hold held by them and that re-valuation of the shares shows the lesser amount as against the purchase consideration declared by assessee would clearly support the case of the assessee that addition was made against him without any basis. The assessee also cited a comparable case of Jagat Theater in which the value per share was lesser and the sale consideration was also lesser. These evidences and material on record also support the findings of the ld. CIT(Appeals) that addition was made merely on presumption and without any basis. Since no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UF) 13. This appeal by revenue has been directed against the order of ld. CIT(Appeals) Patiala dated 14.08.2014 for assessment year 2006-07 challenging the deletion of addition of ₹ 50,42,600/- on account of unexplained investment made in purchase of shares of M/s PNPL. ITA 545/2014 ( Madan Lal Gulati ) 14. This appeal by revenue has been directed against the order of ld. CIT(Appeals), Central, Gurgaon dated 25.03.2014 for assessment year 2006-07 challenging the deletion of addition of ₹ 1,11,48,664/- on account of unaccounted sale consideration of shares of M/s PNPL. 15. Ld. Representatives of both the parties submitted that issue is identical in these remaining three departmental appeals and order in the case of Shri Ashish Singla may be followed. By following the reasons for decision in the case of Shri Ashish Singla (supra) we find that issues are same in these remaining appeals, therefore, we do not find any merit in these appeals and same are accordingly, dismissed. 16. In the result, remaining three appeals are also dismissed. 17. In the result, all departmental appeals are dismissed. Order pronounced in the Open Court. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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