TMI Blog2021 (4) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... report from Departmental Valuation Officer to support the rate adopted by him. No incriminating material was found from the premises of M/s N.R. Finance Pvt. Ltd and similarly no evidence was gathered in the case of M/s N.R. Company to show that any consideration over and above the disclosed sale consideration in the books of accounts has been received. It is not in dispute that the sales recorded in the books of assessee are duly supported by registered sale deed signed by both the buyers and sellers and stating the consideration paid/received before the registering authority and transaction has taken place through proper banking channel. Ld. A.O has not rejected the books of accounts u/s 145(2) of the Act. Revenue has failed to prove that both the assessee(s) ever entered into any transaction of any nature with Mr. Kamal Goyal. Even in the affidavit given by Mr. Kamal Goyal he has not stated anything about the assessee(s) except that some plot of land of N.R. Estate was sold and it is also pertinent to note that even after specific request assessee was not offered any opportunity to cross examine Mr. Kamal Goyal which itself defies the principal of natural justice. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered view that the alleged additional evidence cannot be categorized as additional evidence for the issue raised in the instant appeals. We accordingly dismiss the additional ground raised by the revenue in the case of M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 and 2013-14. Excess development charges claimed by the assessee - HELD THAT:- From perusal of the finding of Ld. CIT(A) we find no inconsistency since sale consideration received from sale of extra land to M/s N.R. Finance Pvt. Ltd is already included in the gross sales shown by the assessee and the profit arising there from has been offered to tax. This fact is duly verifiable from the development charges paid to M/s N.R. Finance Pvt. Ltd for Assessment Year 2009-10 to Assessment Year 2013-14. We thus confirm the finding of Ld. CIT(A) and dismiss Ground No.3 raised by the revenue for Assessment Year 2013-14 in the case of M/s N.R. Company. Cross Objections filed by the assessee namely M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 and Assessment Year 2013-14 raising the issue that no opportunity was not given to cross examine the broker Mr. Kamal Goyal about the contents appearing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Goyal without appreciating the facts and evidences brought into light by the AO during assessment proceedings. The appellant reserves the right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal. ITA No.1043/Ind/2016 Assessment Year 2013-14 On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition of ₹ 13,31,01,675/- made by the AO on account of estimation of sale consideration on the basis of seized documents LPS-A3 found from the premises of the broker, Shri Kamal Goyal without appreciating the facts and evidences brought into light by the AO during assessment proceedings. The appellant reserves the right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal. 4. On 10.10.2018 when the instant appeals came up for hearing Ld. Departmental Representative requested to provide an opportunity to file additional grounds and the same was accepted by us. Following additional grounds were filed commonly for Assessment Year 2012-13 and 2013-14 pertaining to the assessee namely M/s N.R. Finance Pvt. Ltd :- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 2009-10 1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of ₹ 1,89,47,147/- without considering the seized documents page no.64,66 and 68 of LPS-A3 from the premise of the broker who sold the plots in the area developed by assessee and the fact that there is huge difference in guideline value and sale consideration shown by the assessee which supports that the sale price was suppressed in books. 2. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in holding that no opportunity was provided to assessee for cross examination even when in statement of the partner, recorded u/s 131 of the Act, the details of seized documents were provided to him as such sufficient opportunity was provided to assessee firm and the assessee firm never asked for cross examinations during the course of assessment proceedings. 3. The appellant craves leave to add to, deduct from, or otherwise amend the above ground of appeal. ITA No.206/Ind/2018 Assessment Year 2011-12 1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there is huge difference in guideline value and sale consideration shown by the assessee which supports that the sale price was under mentioned in books. 2. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in holding that no opportunity was provided to assessee for cross examination even when in statement of the partner, recorded u/s 131 of the Act, the details of seized documents were provided to him as such sufficient opportunity was provided to assessee firm and the assessee firm never asked for cross examinations during the course of assessment proceedings. 3. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in law by deleting the addition of ₹ 15,67,401/- made under the head excess development charged claimed without considering that the assessee remained fail to explain the reason of excess payment. 4. The appellant craves leave to add to, deduct from, or otherwise amend the above ground of appeal 7. From perusal of the grounds raised by the Revenue for both the assessee(s), we find that only following three issues needs to be adjudicated:- (i) Whether the Ld. CIT(A) erred in deletin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely on the basis of third party information gathered at the back of appellant. 9. We observe that the appeals before the first appellate authority were first decided in the case of M/s N.R. Finance Pvt. Ltd and subsequently in the case of M/s N.R. Company (In short NRC ). In the order of NRC , Ld. CIT(A) referred to the finding of Ld. CIT(A) given in the case of M/s N.R. Finance Pvt. Ltd. Therefore, as agreed by both the parties, we are taking the case of M/s N.R. Finance Pvt. Ltd as the lead case and the common issue arising in case of both the assessee(s) shall be decided on the basis of facts of M/s N.R. Finance Pvt. Ltd. 10. Brief facts of the case as culled out from the records are that the assessee is a private limited company engaged in the business of construction of residential and commercial complexes and development of residential colony and plots. The appellant is one of the companies of M/s Appolo Group of Indore which was searched u/s 132 of the Act on 29.01.2012. The assessee company entered into an agreement for development of land owned by M/s N.R. Company and others at Gram Bicholi Hapsi in the name and style of N.R. Estate vide agreement dated 04.04.2007. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual sale price and therefore the order of Ld. A.O should be confirmed. 15. Per contra Ld. Counsel for the assessee namely M/s N.R. Finance Pvt. Ltd took us through the paper book filed on 10.09.2018 running from page 1 to 153 as well as the written submissions filed before us which reads as follows:- At the outset, it is submitted that despite an extensive search proceeding being undertaken by the department, no incriminating material was found at appellant's place. The Ld. AO solely relied on the noting in the diary seized from the premises of broker namely Shri Kamal Goyal. Further, the additions made by the Ld. AO are based on estimate, guess work, presumptions which is bad on facts and in law. During the course of assessment proceedings, it was submitted to the ld. AO that the appellant does not have an business relation with the broker Shri Kamal Go al and no lots were sold through him. The Ld. AO did not dispute such fact but alleged that the brokerage might have been paid in cash to the said broker. Such allegation is totally based on presumption and highlights the fact that any material seized from Shri Kamal Goyal premises cannot be taken into considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided but such request was not considered by the Ld. AO. Thus, the alleged addition made by the Ld. AO was in total ignorance to the principles of natural justice. The department had recorded statements of broker Shri Kamal Goyal during the search proceedings u/s 132(4) where on oath he had stated that noting in the diary are trade inquiries. During the course of appellant had demonstrated the fact that noting mentioned seized diary in the form of buyers sale rates date of sale etc. are not matching with the actual registered documents. Thus such demonstration c1earl corroborates the fact that the noting in the seized diary were not related to the appellant and were merely trade inquires which had not crystalized into an material transaction. Also this fact adequately proves that the seized diary being relied for the alleged addition is nothing but a dumb document as department failed to link the same with another corroborative evidence and therefore it has no evidentiary value in the eyes of law. The following is the summary of judicial pronouncements in support to our contentions and may kindly be considered by your honours:- S.No. Cita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was undertaken by the Ld. AO to unearth the true factual position and mere reliance was placed on the particulars mentioned in the seized diary. The same observations are also evident from order of Ld. CIT(A). The Ld. AO was duty bound to collect complete material and take the case to its logical end. Without prejudice to the above, due to such reason also, the registered sale deeds cannot be considered as additional evidence but a clarificatory evidence as it being an extension of same trail initiated by the Ld. A.O. The sale registers being a legally executed document has clarified that the particulars mentioned in the seized documents vary with the actual transaction. Hence we humbly submit that the ld. CIT(A) was not required to confront the same material to AO and there is no violation of Rule 46A. We place reliance in the case of Dy. CIT v Rungta Mines Ltd (IT (SS) Appeal Nos. 30 to 33 (Kol) of 2015 dated 9-3-2018 which has held as under on the issue of public documents not being additional evidence 25. In the revised grounds of appeal, the department has challenged the aforesaid action of the Ld. CIT(A) as violation of Rule 46A, wherein the Ld. CIT(A) has not confro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion cannot be faulted. After comparing the results of consumption of iron ore by similar companies engaged in same business in State of Orissa, the Id CIT(A) came to the conclusion that it is not possible that Fe content of iron ore can be universally held as more than 65. which is evident from a glance over the results given in the chart supra. Further the Ld. C1T(A) referred to information bulletin issued by Andhra Pradesh pollution Control Board which suggested yield ratio of 1.60 to 1.75. These we note are public documents which are readily available in public domain, which cannot be termed as additional evidence. We note that it is not the case of the department that these reports which are taken note by the Id CIT(A) are false and concocted, and thereby the Id CIT(A) was misled to pass the impugned order. Moreover we note, even if these documents are excluded, then also the impugned order of Id CIT(A) survives. Therefore, there is no merit in the contention of the department raised in this revised ground. 16. Since similar issue relating to two different assessee(s) arising out of the common facts are under consideration, opportunity was also given to the Ld. Counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher rates than those reflected in the books of accounts. The entire addition was thus based upon the advice / dictate of the higher authority without any independent application of the mind of AO and without any attempt to verify as to whether the assessee has in fact effected any sales at higher rates. The AO being a quasi- judicial authority is required to make his assessment independently by application of his own mind and assessment merely on the dictate or advice of another authority is vitiated in law and deserves to be set aside on that ground alone. Reliance in this respect is placed upon following decisions:- a) In case of Dinshaw Daravshaw Shroff Vs CIT reported in 11 ITR 172 b) In case of Union of India others Vs. Sheo Shanker Sitaram another reported in 95 ITR 523 c) In case of J.K. Synthetics Ltd other Vs. CBDT others reported in 83 ITR 335 d) In case of The Hyderabad Allwyn Metal Works Ltd. Vs. DCCT reported in 29 STC 153 e) In case of Elphinstone Picture Palace Vs Union of India another reported in 74 ITR 115 f) In case of Ambica Oil General Mills Vs. TT officer cum Assessing officer reported in 158 Taxman 167(Del) g) In case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y did not relate to the assessee s transactions. In fact the diary was in nature of a dumb document without containing any particulars or any concrete material to connect the assessee with the same. The diary did not disclose the name of buyer , seller etc . No assumption could be made that noting in the diary relate to assessee s transactions. The assessee relied upon the provisions of section 49 of Indian Registration Act and submitted that since the transactions of sale of plots relate to immovable property compulsorily registerable under the Indian Registration Act , no other document except the registered sale deed could be accepted as evidence in respect of such transaction. Assessee also contended that in absence of any corroborative evidence, no addition on the basis of the information from broker s diary could be made in the hands of assessee . The assessee also submitted that the burden to prove the allegation was solely upon the department and no addition could be made without bringing on record any cogent and concrete evidence. c) Submission dated 23/12/2015 --- The assessee reiterated that it had no connection with broker Kamal Goyal by submitting the details/ name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates obviously because of advice of the higher authority.Under the circumstances the notings in the diary of Kamal Goyal can hardly constitute evidence against assessee, much less reliable, cogent, positive or acceptable and the addition based on the same is unsustainable in law . iv) In response to the summons issued by the AO, the reply submitted by the broker Kamal Goyal is absolutely vague and does not establish any nexus with the information contained in his diary and the appellant . The said reply can by no stretch of imagination be treated as an evidence much less cogent or positive evidence to level an allegation against the assessee regarding sale of plots at the rates mentioned in his diary . The said person Kamal Goyal has not uttered a single word which can lead to the inference that he has at any time acted as broker for the assessee nor the said letter can constitute an evidence to say that the assessee has effected sale of plots through him or through the chain of brokers as alleged by him . Moreover the Plot Nos. referred to in his diary as well as reply do not match with the Plot Nos. sold by the assessee. As already stated above the information contained in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1971) 28 STC 683 where it is held :-- that if the taxing authority intends to bring to tax the turnover of dealer, which, according to him , has escaped assessment by reason of deliberate attempt on the part of dealer to avoid net of taxation , then it is fundamental that the dealer so called upon should be given a just and fair trial and indeed a fair opportunity to explain himself with all material on which he could support his case . The essential element in sales are seller, buyer, the goods (here the Plots) and the consideration for sale or purchase of goods and unless a nexus is established between two such persons and convincing proof is available to show that consideration did pass as a result of such sale , it would be difficult to assume that a sale of goods from one person to other has resulted. Where there is no clinching evidence to establish jural relationship of vendor and purchaser, the onus on the department become heavier, for, it should scrutinize the material with lynx eye and afford to the assessee at every material point of time an opportunity to countermand the same or let in evidence to outweigh the weight of such material . If the principles laid dow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property , have been reduced to the form of a document and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract , grant or other disposition of property or of such matter except the document itself or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions of law . Similarly as per section 72 of the Evidence Act where the terms of such contract, grant or other disposition of property or any matter required to be reduced to the form of a document, have been proved according to section 91 , no evidence of any oral agreement or statement shall be admitted , as between the parties to any such instrument or their representative in interest for the purpose of contradicting , varying , adding or subtracting from its terms. In view of the aforesaid principles of the Evidence Act, as against the registered sale deeds executed by appellant in favor of the buyers stating therein the consideration for which the property has been transferred to the buyers , the diary notings of a stranger viz broker Kamal Goyal are not admissible as evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee further submits that if the jottings contained in the diary of broker Kamal Goyal (which are the sole basis of present addition in question) are carefully seen, it would be apparent that the diary notings are nothing but in the nature of dumb documents without containing any particulars about any particular transaction between the assessee and any other buyer. In fact the diary does not even mention the name of assessee . Under the circumstances the said diary notings cannot be the basis of any addition against the assessee . At this stage it may also be important to note that since the said diary was recovered from the premises of Kamal Goyal it was for Kamal Goyal to explain the said transactions. As such , the addition on basis of such dumb documents cannot be sustained. Reliance in this respect is placed on following decisions a) Gyankumar Agrawal Vs. ACIT reported in 30 Taxman.com 114 (ITAT-Hyd). b) Ashwani Kumar Vs. ITO reported in 39 ITD 183 (Del) , c) CIT Vs. Girish Choudhary reported in 163 Taxman 608(Del) . d) CIT Vs. S. M. Aggarwal reported in 162 Taxman 3 (Del) . e) CIT Vs. Vatika Landbase P. Ltd . reported in 383 ITR 320(Del) . f) ACIT Vs. Ashok Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 150 to 1131. The date of sale were falling in Financial Year 2012-13. 18. Based on this information the sale transactions shown by both the assessee(s) were examined and Ld. A.O formed a view that the per sq. feet rate of plot of land is much lower than those appearing in the seized diary. Though both the assessee(s) submitted that they have no relation of any nature with Mr. Kamal Goyal and the alleged information in the diary seems to be rough since the actual transaction has taken place with other persons whose names are not appearing in the seized diary. Assessee(s) also submitted that no incriminating material was found from the premises of the assessee namely M/s N.R. Finance Pvt. Ltd which could prove that any on money was received. Ld. A.O however estimated the rate of sale as per his own working and made addition in the hands of both the assessee(s) in the respective assessment years for the area of plots of land sold by them. In the instant appeal the common issue relating to the suppressed income of sales for respective assessment years under appeal were computed by the Ld. A.O in the following manner:- N.R. FINANCE PVT. LTD Assessment Yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious documents were found and seized from the residential premises of Shri Kamal Goyal, 502, Yash Tower, 18- 19, Durga Nagar, Janki Nagar, Indore. Here it is notable that Shri Kamal Goyal is a broker. The document A-3, seized from the said premises, is a diary of calendar year 2012, On perusal of the said diary, it is seen that the transactions pertain to the period 01 .01.2012 to 20.09.2012 (prior to date of search). From the document A-3, it is also seen that the rates of the plots are shown between Rs, 1,150/- to ₹ 1,311/_. However, as per the books of accounts of M/ s NR Finance Pvt. Ltd., the plots in N. R. Estates have been registered between the rate of Rs, 250/- to ₹ 500/- per sq. Ft. 2. Since, Shri Kamal Goyal is a broker, the above rates quoted to the customer may be a bit higher than the actual sale price. Taking the above rates, as a bit higher, an average rate of NR Estates may be estimated in view of the facts that rates in properties appreciates every year. Accordingly, you are requested to show cause as to why the assessment year Wise, average rate sale of flats in NR Estates be estimated as under: - Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has reflected purchase of plot at ₹ 269.64 per sq. ft. and has reflected sales of ₹ 270/- to ₹ 560/- per sq. Ft. in all the five years viz A.Ys. 2009-10 to 2013-14. Most of the sales have been shown in the range of ₹ 270/- to ₹ 325/- and only three sale are at ₹ 560/-. ii) The assessee has further stated that the rates quoted in the diary may be in respect of resale transactions proposed to be carried out by the broker. If at an the rates were in respect of transaction proposed to be carried out by the broker then the same would not have been recorded in the diary. Further, if the rate at which resale transaction are being undertaken at a higher rate, then by no stretch of imagination it can be considered 'that the assessee has been selling its plots at a such an abnormal lower rate. iii) The assessee in its submission has stated that no opportunity to cross examine the witness has been provided to it. In this respect it can be stated that the assessee has already been supplied the copy of LPS-A-3 found and seized from the premises of Shri Kamal Goyal which is self explanatory and therefore, the plea of the assessee for cross-exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction of seized document it is typed that 'Shri Nanak has sold a plot to some Sanjeev Gang. Shri Nanak Ram Kalra is a partner in N.R. Company'. The appellant has submitted with documentary proof that the plot G 12A was first time sold to Mrs. Shweta Kedia in March 2013. The sale consideration is shown at ₹ 14,49,900/- for the 4833 sq. ft. plot which works out to ₹ 300 per sq. ft. 3.3.3 Page No. 66 of LPS A-3 bearing the date 15.05.2012 is m respect of Plot No.D20. On the left hand side of the said page it is written - N R Estate, D20, 4000 sq. And 1275/-. On the right hand side it is written that it is sold by Kothari and purchased by AL. The appellant has submitted withG documentary proof that the plot D20 was first time sold to Mrs. Sharda Jain in March 2013. The sale consideration is shown at ₹ 15,53,175/ - for the 4779 sq. ft. plot which works out to ₹ 325 per sq. ft. 3.3.4 Page No. 68 of LPS A-3 bearing the date 27.05.2012 is in respect of plot no. S-385, Silicon and plot G 12A of N R Estate. The project Silicon is not connected with the appellant's business. Regarding the plot G-12A of N R Estate it is written 4800 sq. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered as conclusive evidence. As held by the CIT(A) in the impugned order except relying, the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the 'transaction particularly the vendor has not examined. In every transaction there is a circle concerning two parties. It is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely on the basis of presumption and some corroborated notings additions cannot be made. In our opinion, the deletion of addition by the CIT(A) is justified and no interference is called for in the order of the CIT(A). The following cases support the action of the CIT(A): 1. CIT Vs. Anil Bhalla [2010) 322 ITR 191 (Del.) - wherein held that the notings recorded on the loose sheet of paper do not represent any expenditure incurred by the assessee director and that the entries related to the company in as much as the assessee could explain from the books of the company that these projects were undertaken by it, and upheld the deletion of the impugned addition under s. 69C, findings arrived at by the Tribunal are pure findings of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, these kind of documents/papers are liable to be ignored and addition made on the basis of such document is not sustainable and in accordance with law. 3.4.5 In CIT v / s Kulwant Rai (2007) 291 ITR 36 (Del) the ruling of the Supreme Court in Dhakeshwari Cotton Mills Ltd v CIT (1954) 26 ITR 775 (SC) was relied upon. The Supreme Court held that even though Income Tax Authorities including the Assessing Officer has unfettered discretion and not strictly bound by the rules and pleadings as well as materials on record and is legitimately entitled to act on the material which may not be accepted as evidence, nevertheless such discretion does not entitle them to make a pure guess and base an assessment entirely upon it without reference to any material or evidence at all. Given the above state of law the Delhi High Court stated that it has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO. 3.4.6 ITAT, Hyderabad in ITA 329/Hyd/2012 dated 04.01.2014 in the case of DCIT vs. Shri Babu Rao where in Para 26 to 29 held thus:- 26. It is clear from the above p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29. Other than the loose paper, the AO has not brought on record any corroborative material or evidence to show that the inference made by him is correct. The CIT(A) after taking the totality of the circumstances into consideration came to the conclusion that the addition made by the AO is not justified and the argument put forth by the assessee is supported by documentary evidence. This was not a case where relevant evidence had been ignored by the CIT(A) and their relevant evidence has been taken into consideration. The only test that was required to be applied was whether on the facts found and the state of evidence on record, the conclusion arrived at by the CIT(A) was one which could be arrived by a reasonable person properly informed in law. Applying this test, it could not be said that the decision recorded by the CIT(A) one which could not have been arrived at by a reasonable person properly informed in law considering the state of evidence on record. Hence, in our considered opinion, the CIT(A) has reached a correct conclusion in deleting the addition made by the AO on the basis of loose sheets . 3.4.7 The Hon'ble ITAT Jabalpur in the case of ACIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... das Patel (2008) 296 ITR 568 (MP) has held that the addition cannot be made on guess work or estimates. 4. Turning to the factual matrix of the present case, if we logically analyze the contents of the documents seized from the premises of the broker, Shri Kamal Goyal and its reliability in the light of the documentary evidences submitted by the appellant regarding the actual registered sale documents in respect of plot nos. G-12A and D-20 of N R Estate, the sale price mentioned in the seized documents 64, 66 and 68 of LPS-A3 cannot be made the basis of the estimate made in the appellant's case. It is seen that . the plot nos. G-12A and D-20 have been sold for the first time in March- 2013 and at rates of ₹ 300 per sq. ft. and ₹ 325 per sq. ft. respectively. Further, on both page nos. 64 and 68 the plot no. mentioned is G-12A but the rates written on page nos. 64 and 68 are 1211 and 1311. In view of these facts the Assessing Officer was not correct in estimating the sales of the appellant on the basis of the notings on page nos. 64, 66 and 68 of LPS-A3 seized from the premises of Shri Kamal Goyal. 4.1 On careful consideration of entire material placed befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled his submissions on 30/11/2015. The same are reproduced as under:- During the course of summon proceeding as issued U/s 131 of the Income Tax Act, you have shown certain papers as found and seized during the course of search in my residential and business premises wherein certain details were recorded in connection with the sale and purchase of plots in NR Estates. In this respect I have to submit as under:- 1} I have seen all the papers as shown by you at the time of hearing which was seized during the course of search in my possession. 2.1} I act as a property broker and engaged in the business c purchase and sale of plots houses etc. 2,2} That in broking business entire transactions were executed through brokers only and we are not in touch with the actual buyer and seller. 2.3} That in most of the transactions three brokers involved for execution of a deal, one broker represent the seller party, one represent the buyer and third one who know both the brokers and therefore brokerage as received distributed amongst the three brokers. 3.1} That on Page No 64, detail of Plot No G-12A of 4800 Sq Fts which was sold at ₹ 1211/- Per Sq Fts was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court in the case of H.R. Mehta vs. ACIT in ITA No. 58 of 2001 in its order dated 30/06/2016 wherein it is held that the revenue was not justified in making addition at the time of reassessment without having given the assessee an opportunity to cross examine the deponent on the statement relied upon by the ACIT. Forget about denial of cross examination, the Revenue did not even provide the material on the basis of which the Department short to conclude that the loan was bogus transaction. This not having been done, the denial of such opportunity goes to the root of the matter and strikes at the very foundation of the reassessment. Further reliance is placed on the decision of Hon'ble M. P. High Court in the case of Prakash Chandra Nahta V / s CIT 201 ITR 134. 2.11 The Assessing Officer has primarily relied upon the notings on page nos. 64, 66 and 68 of the diary seized from Shri Kamal Goyal. As discussed above, the additions made on basis of the said notings have been deleted in the case of M/s N.R. Finance Pvt. Ltd. Further, the statement of Shri Kamal Goyal cannot be relied upon as the Assessing Officer has not provided the opportunity of cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported by registered sale deed signed by both the buyers and sellers and stating the consideration paid/received before the registering authority and transaction has taken place through proper banking channel. Ld. A.O has not rejected the books of accounts u/s 145(2) of the Act. 25. We further observe that revenue has failed to prove that both the assessee(s) ever entered into any transaction of any nature with Mr. Kamal Goyal. Even in the affidavit given by Mr. Kamal Goyal he has not stated anything about the assessee(s) except that some plot of land of N.R. Estate was sold and it is also pertinent to note that even after specific request assessee was not offered any opportunity to cross examine Mr. Kamal Goyal which itself defies the principal of natural justice. 26. We observe that the contents of the seized diary showing few transactions of sale of plot at N.R. Estate are totally different with the actual transaction which took place for plot numbers mentioned in the seized diary. Besides the mismatching of dates and names even the actual plot size do not tally. This fact is more clear from the following chart showing relevant information about the mismatch of details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manju Sati -- 141 1100 OK 141 3595 Not sale till date -- D 16 1125 OK 31-Mar-13 D 16 6415 325.779423 Vikash Thakar -- D 17 1125 OK 30-Mar-13 D 17 7578 325 Umrani Yadav -- C6 6500 1250 OK 28-Mar-13 C6 6074 269.639941 N.R. Finances Pvt. Ltd -- B 17 CW B 17 That Plot No. estate colony not exist in N.R. 27. From the above chart it is very much clear that the information contained in the seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and convincing proof is available to show that consideration did pass as a result of such sale , it would be difficult to assume that a sale of goods from one person to other has resulted. Where there is no clinching evidence to establish jural relationship of vendor and purchaser, the onus on the department become heavier, for, it should scrutinize the material with lynx eye and afford to the assessee at every material point of time an opportunity to countermand the same or let in evidence to outweigh the weight of such material . 31. In the light of above stated judicial pronouncements and the facts as narrated above and in the given facts and circumstances of the case we find merit in the finding of Ld. CIT(A) and submission made by both the assessee(s) and are of the considered view that the additions made by Ld. A.O applying the estimated rate of per sq. feet of land sold by both the assessee(s) seems to be purely a guess works and is merely made on surmises and conjectures and the impugned additions has thus been rightly deleted by Ld. CIT(A) in view of our following finding:- (i) The alleged seized document in the form of Page No.64, 66 and 68 of LPS-A3 seized diary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property are registered before the registering authority appointed by the Government and the documents are available on public domain. These documents could have been called for by the Ld. A.O without informing the assessee(s). In these given facts and circumstances of the case and also under the provisions of I.T. Act which provides co-terminus power to Ld. CIT(A) as are there with the Ld. A.O, we are of the considered view that the alleged additional evidence cannot be categorized as additional evidence for the issue raised in the instant appeals. We accordingly dismiss the additional ground raised by the revenue in the case of M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 and 2013-14. 35. Now we take up Ground No.3 of Revenue s appeal for Assessment Year 2013-14 in the case of M/s N.R. Company challenging the deletion of addition of ₹ 15,67,401/- by Ld. CIT(A) which was made by the Ld. A.O for the excess development charges claimed by the assessee. 36. Brief facts relating to this issue are that during the course of scrutiny proceedings on perusal of P L account along with the computation of income of the assessee for the F.Y 2012-13, it was found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. Finance (a non-related concern though there is a similarity in name) and as per the agreement, the development of the land was to be made by M/s N.R. Finance. Copy of Agreement is enclosed herewith. c)The total development amount agreed was ₹ 23,11,00,000/- for the total Plot area of 14,63,796 Sq. Ft. d)Thus the Development cost worked out to ₹ 157.87 per Sq. ft. This Development cost was debited in the Books of accounts year wise as per the Bill received from the developer on the basis ofQ actual work completed during each respective year. e)When the assessee firm could not pay the Development amount te the developer, it mutually entered into a Supplementary Development Agreement dated 05/04/2008 with the developer. The copy of Agreement is also enclosed herewith. As per this Supplementary Development agreement, the assessee firm agreed to give developed plots to the developer. f)These developed plots were of the sold plots to the developer. Details developer is enclosed herewith. The said sales are included in the gross sales shown by the assessee as per trading a/c enclosed herewith. g) Out of the total plot area of 14,63,796 Sq. ft. ,total area o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Company the revenue has challenged the deletion of addition made by Ld. A.O towards development charges at ₹ 15,67,401/-. We observe that as per the agreement between the assessee and M/s N.R. Finance Pvt. Ltd 468396 sq.ft of area was agreed to be given to developer M/s N.R. Finance Pvt. Ltd (In short NRFL ) against the agreed development charges of ₹ 12.63 crores. Selling rate was fixed in the year 2008 at ₹ 269.64/- per sq. Ft but finally as against the 468396 sq. ft of land agreed to be sold to the developer, 473221 sq. ft of land was sold, in other words 4825 sq. ft of extra area was given. Ld. A.O denied the benefit of development charges computed at ₹ 15,67,401/. on this extra land sold to developer at 4825 sq. Ft. Ld. CIT(A) deleted this addition observing as follows:- 8.2 It is true that as against total area of 4,68,396 sq. Ft to be sold to the developer as per the supplementary agreement dated 05/04/2008 the appellant has sold extra 4825 sq. Ft totalling to 4,73,221 sq. ft. However, the extra area sold to the developer is already included in the gross sales booked by the appellant and the development charges debited in the books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd is already included in the gross sales shown by the assessee and the profit arising there from has been offered to tax. This fact is duly verifiable from the development charges paid to M/s N.R. Finance Pvt. Ltd for Assessment Year 2009-10 to Assessment Year 2013-14. We thus confirm the finding of Ld. CIT(A) and dismiss Ground No.3 raised by the revenue for Assessment Year 2013-14 in the case of M/s N.R. Company. 43. Now we take up the Cross Objections filed by the assessee namely M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 and Assessment Year 2013-14 raising the issue that no opportunity was not given to cross examine the broker Mr. Kamal Goyal about the contents appearing in the seized diary. We find that since we have already dismissed Revenue s appeal and confirmed the finding of Ld. CIT(A) deleting the impugned addition made by Ld. A.O by estimating the unaccounted sales applying the estimated rate of sale per sq. ft of land sold, but still for academic purpose we decide to deal with this issue also. 44. In the preceding paras we have already made specific observation that the action of Ld. A.O of making additions based on the third party information witho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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