TMI Blog2020 (5) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006 for ₹ 117 crores, TIDCO sold that property in 2010, therefore, market value of the property would have gone up to ₹ 200 -300 crores and assessee therefore would have received the commission. Sale deed of the property shows consideration of ₹ 122 Crores only. There was no corroboration of the valuation presumed by the dl CIT (A). He did not bring on record even the circle rate of the property to show that market value of the property has increased so much. Alleged commission was only ₹ 17.50 Crores. Had the property price would have gone up by (assuming at the lowest estimate of ld CIT (A) of ₹ 200 crores then the property is appreciated by ₹ 83 Crores ( ₹ 200 -117 ) Crores. Had the appreciation been so much, nobody would have forgone the profit of ₹ 83 Crores for ₹ 17.50 Crors. Therefore, such reason given by the CIT (A) cannot be the basis for confirming the addition. We reverse the orders of the lower authorities and direct the ld AO to delete the addition of commission income in the hands of Mr. Madhur Mittal and Mr. Sumit Mittal - Decided in favour of assessee. - ITA No. 5182/Del/2014, ITA No. 5181/Del/2014 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h respect to alleged commission on sale of a property. The assessee contested the addition before the learned CIT A III, New Delhi [The ld. CIT (A)]. He passed an order dated 23/7/2014 confirming the addition. Therefore, assessee is in appeal before us on that single issue. 5. During the course of search on Triveni Group of companies, Annexure A 23 was seized. Based on that the ld AO has alleged that assessee has received a commission of ₹ 8.75 crore in respect of sale of property at 7, Sikandra Road, New Delhi purchased by three individuals from court auction which was bid by Triveni group for purchase of the above property at ₹ 117 crores. 6. To understand the issue, it is important to look at the chronology of the events. On 26/9/2006, the Honourable Delhi High Court auctioned property at 7, Sikandara Road, New Delhi. Triveni infrastructure development Co Ltd [hereinafter referred to as TIDCO] made a bid of ₹ 117 crores, which was accepted. On 5/10/2006, the Honourable High Court received a 25% of the above consideration, roughly amounting to ₹ 29.25 crores and a schedule for payment of the balance installments was drawn. As the substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposal the three gentlemen namely Mr. Kabul Chawla, Mr. Chetan Shabarwal and Mr. Nitin Shabarwal came to its rescue. As per letter dated February 20, 20 10, they wrote letter to the assessee [ Mr. Madhur Mittal] and his brother [ Mr. Summit Mittal , another assessee] that they have agreed to buy property bearing number 7, Sikanadra Road, New Delhi and a definitive agreement is signed. In this regard, they have agreed to pay an amount of ₹ 2,18,75,000/- to Mr.Madhur Mittal and identical sum to Mr.Summit Mittal as commission for purchase of the said property. This was the communication by one of those three gentlemen. Identical communication was also received from another gentleman. The third communication was from the third gentlemen who agreed to pay an amount of ₹ 4,37,50,000/- to Mr. Madhur Mittal and identical sum to Mr. Summit Mittal as commission for purchase of the said property. Thus, three gentlemen issued letter dated 20/2/2010, to pay the assessee and his brother total commission of ₹ 17.50 Cr for the above property. However, On 24 February, 2010, the assessee responded to them with respect to the above draft proposal and sent an email communication app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the money that has been deposited by the assessee company for the purpose of purchase of the above property in pursuance of the bid of ₹ 29.25 crores could be recovered. This is so because of huge litigation involved in the property and severe financial crunch faced by TIDCO. Therefore, the main intention of the group was to save ₹ 29.25 cr paid as earnest money against the bid of the above property. It would be forfeited well as penalty could be levied further. It was further stated that the above letters stated to be have been written by the three different individuals have never been acted upon. Those documents are unsigned and did not materialize. Assessee also referred to the email communication dated 24 February 2010 written to all these three individuals amongst others, in response to their earlier communication for the payment of commission stating that the advocates have advised them that due to the pending court cases against the company and its directors, no payment can be received in personal name as commission or otherwise. Therefore, they requested that the total payment is required to be made as per the direction of the honourable High Court for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at above sum is paid by that buyers and received by the assessee as commission. Therefore, he confirmed the addition. Against that order of the learned CIT A, assessee is in appeal before us. 11. The LD AR vehemently submitted that addition made is devoid of any merit. His arguments have following points. a. The main plank of the argument is that the seized documents merely say that the parties agreed to pay‟ the above commission to these two persons. However, it was merely a proposed transaction which was refused by the assessee on 24th of February 2010 which was also prior to the date of search and whole consideration has been received as determined by the honourable High Court. It was stated that the proposal of these three gentlemen were never accepted. Full consideration was received for the sale of the above property through the High Court registry, which was agreed to in the bid proceedings except ₹ 29.25 crores, which is received by TIDCO Group. b. He further submitted that provisions of section 292C is a rebuttable presumption for which case the assessee has shown the details that the offer given by the three gentlemen was not at all accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to the assessee. Therefore, the AO has merely based on surmises and conjectures made the impugned addition. i. The learned authorised representative further relied on the decision of the coordinate bench in ITA number 7089/MUM/2011 as well as in ITA number 1551/BANG/2012. j. It was further submitted that a document cannot be used selectively against the assessee and portion of the document which are in favour of the assessee cannot be ignored just at the option of the assessing officer. He therefore submitted that the learned assessing officer should have given due weightage to the word used agreed‟ in the document as well to consider that the amount was merely proposed to be paid as against actually‟ paid. The ld AO simply ignored He further referred to the decision of the honourable Delhi High Court in CIT versus vatika Townships private limited in ITA number 1329/2010 dated 10/9/2010 and the honourable Gujarat High Court in case of Glass Lines Equipments Co Ltd versus CIT (2002) 253 ITR 454. k. The assessee further submitted that the observation of the learned CIT A in holding that the remaining infrastructure or to sell the property at higher rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have carefully considered the rival contention and perused the orders of the lower authorities. The facts of the whole transaction has already been narrated, therefore sake of brevity they are not repeated here. The crux of the issue and evidences based on which these appeals rotate are three letters found during the course of search from the laptop of the assessee. Admittedly, the addition has been made only on those documents. All these three letters are dated 20/2/2010. For the purposes of examination we reproduce the contents of Nitin letter.doc which is as under:- Dated February 20, 2010 To Madhur Mittal and Sumit Mittal Regarding : Payment of commission Dear Madhur and Sumit, I have agreed to buy the property bearing no 7, Sikandara Road, New Delhi and a definitive agreement is signed today. In regard to this I have agreed to pay an amount of ₹ 2,18,75,000/ to Madhur Mittal and ₹ 2,18,75,000 to Sumit Mittal as commission for purchase of the said property. Thanking you Sincerely Your Nitin Sabharwal 15. Identically worded of even date letter was one documents namely Chetan Letter.doc where the same amount was mentioned and ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o many persons which is placed at page no 5 of the paper book which reads as under :- Subject : Re: Draft Proposal Dear Sir, While appreciating the offer made by you on 20.02.2010 to pay ₹ 17.50 Crores to Mr. Madhur Mittal and Mr. Sumit Mittal under the head of commission to comply with the order of the supreme court of the total sales consideration. The legal opinion was taken in this regard from our legal team. It is advised by the Advocates that due to pending court cases against the company and its directors , no payment can be received in personal name as commission or otherwise. Thus, we cannot accept your offer nor can take any amount directly in the name of the directors. Thus, you are requested to make the entire amount of the sale consideration before the high court only for the execution of sale deed. The company is making legal efforts for vacation of stay , which will be intimated to you. Thanks Regards Nivedita Bisht 16. Therefore, it is apparent that, in absence of any other evidence, it was an offer by the buyers to the assessee for taking commission of ₹ 17.50 crores for giving only the solvent guarantee of ₹ 18 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AR that there should also be some corroborative material available with ld AO to make the addition , the Honourable Delhi High court in Sonal Construction [supra] that case has held in para no 17 as under :- 17. As to the corroboration sought by the Tribunal in support of the seized documents, it is not an inviolable rule applicable to all situations and to all cases that every seized document should be corroborated before any addition can be made based on it. If calculations and computations have been made in the seized documents in such a manner that its probative value and genuineness cannot be doubted, nothing prevents the Assessing Officer from making additions based on such documents despite the absence of any corroboration. It must be remembered that in such cases it is difficult to obtain corroboration, particularly of the type contemplated by the Tribunal. The Tribunal observed that corroboration could have come in the form of a valuation of the property by the Departmental Valuation Officer or from the purchasers of the property who could have said that they did pay consideration over and above what has been recorded by the assessee in the books of accounts. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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