TMI Blog2009 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.03.1995 and,(ii) 01.04.1995 to 14.03.1996. The High Court, after hearing the parties, vide order dated 28.04.1999 came to the conclusion that the preliminary objection as to maintainability of the Special Civil Application was required to be accepted and the petitioner was directed to avail of statutory remedy available under the provisions of Section 260A of the Income Tax Act, 1961 (the Act). The petitioner was permitted to convert the petition into Tax Appeal and permission was also granted to propose substantial questions of law stated to be involved in the case. 2. Accordingly, the Appellant herein, proposed 22 questions and the respondent herein also proposed two counter questions. Accordingly, vide order dated 10.05.1999 the Appeal was admitted on following 22 substantial questions of law formulated by the High Court as framed by the Appellant. The High Court also formulated two additional questions as suggested by the respondent by the same order : "1. Whether the findings of the Tribunal that there was no material brought on record to show that the assessee would not have included the undisclosed income in the Return for regular assessment is perverse in as much as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject land was not Rs.20,55,86,000/- as found as a matter of fact by the assessing officer on the basis of relevant documentary and oral evidence, but only Rs.12,41,57,296/- to be taken as Rs.12,80,00,000/- being the sum admitted to have been paid by the assessee, was a finding contrary to the evidence on record and, therefore, perverse? 9. Whether the Tribunal was justified in accepting the bare, unsupported assertion by the assessee of having undisclosed receipts of Rs.12,80,000/- wholly ignoring the finding of the assessing officer based on relevant oral and documentary evidence that the assessee had received a sum of Rs.19,00,000/- as on-money for sale/allotment of 5,68,000 sq.yd. of land? 10. Whether the finding of the Tribunal that the assessee had taken possession of only 7,50,000 sq.yd. of land and not 11,11,000 sq.yd. as determined in the assessment order, based solely on a Photostat copy of an alleged development agreement dated 16.3.1995 which the assessee itself through Shri Ashish Patel, the Managing Director of assessee-company, admitted had not been executed in the statement dated 14.3.96, was a finding based on inadmissible evidence and contrary to the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4 lakhs from the case of a 12 'fictitious booking' to that of 'deposit verification'. 20. Wether the finding of the Tribunal holding the testimony of Shri Ashish Patel, the Managing Director of the company, in the context of allowing deduction of Rs.12.80 crores to the assessee, as reliable, was not a finding contrary to Tribunal's own decision in the context of same transaction in the case of Shri Manoj Vadodaria where the testimony of Shri Ashish Patel was held unreliable and therefore, perverse. 21. Without prejudice to the above, whether the Tribunal has not committed a gross error in law in the allowance of deduction of payment of Rs.12.80 crores made by the company in cash to an unidentifiable and unverifiable person in gross violation of the provisions of Section 40A (3). 22. Whether the Tribunal was justified in deciding the issues respecting additions of Rs.4.51 crores, Rs.1.50 crores and Rs.70 lakhs in the hands of the company 1818 without having first decided these issues in the hands of Shri Ashish Patel as these additions in the case of assessee-company were only of consequential nature." Following two additional questions have been suggested by learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the development rights can be taxed only u/s.69C of the Income Tax Act, 1961 and not u/s. 69B of the Act ? 3. Whether, the Tribunal is right in law in holding that the amount of undisclosed income taxed u/s.69C of the Act could be correspondingly deducted u/s. 37 of the Act ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting addition of Rs.99.50 lacs and Rs.4.00 lacs made by the Assessing Officer as unexplained credits u/s. 68 of the Act? 5. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in deleting additions of Rs.1.5 crores, Rs.70 lacs and Rs.4.51 crores ? 5. In relation to the first addition, it is the case of the Assessing Officer, that the assessee Company had made an unexplained investment for acquiring land located in Shela village and described as Radhe Acre 1 and Radhe Acre 2. That the assessee had entered into a transaction involving total land area to the tune of 11 lacs sq.yds. and this was on the basis of loose papers file 'A-3', more particularly page No.103 of the said file, which was found from the residence of Shri Arun B. Shah, the employee of respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that the impugned order suffers from vice of perversity, the Tribunal having ignored various pieces of evidence and made factually contradictory statements. That the Tribunal had wrongly relied on the report of CIT filed before Settlement Commission. In relation to certain observations made by the Tribunal various submissions were made, including relying upon audited accounts, to submit that the Tribunal had proceeded on an erroneous presumption and thus the order was vitiated. On merits it was submitted that the Assessing Officer had given cogent reasons for working out the addition of undisclosed receipt at a sum of Rs.20,00,00,000/- and odd but the Tribunal had restricted the same to a figure of Rs.12,80,00,000/- without assigning any reasons for reducing the said figure. It was further pointed out that the Tribunal had taken note of the statement made by Shri Ashish Patel but not correctly appreciated the same in as much as it was an accepted position that payment of Rupees Eight Crores and Rupees Seven and half Crores for sector No.1 and sector No.2 were respectively made for acquiring development rights but the Tribunal had restricted the said figure at a sum of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as unexplained credit brought in the Books of Account through cash under section 68 of the Act. It was submitted that the Tribunal had wrongly deleted the addition in question because it was always open to the Assessing Officer to make addition on the basis of inquiries made after the search. 7.4 In relation to the remaining three additions of Rs.1,50,00,000/-, Rs.70,00,000/- and Rs.4,51,00,000/- it was submitted that loose paper file Annexure A-1 which was seized from residence of Shri Ashish Patel contained parallel balancesheet as could be seen from page Nos. 1 and 18 of the said file and the said pages contained following three references: (a) Manoj 1,50,000.00 (b) Shikhar 70,000.00 (c) 154 4,51,000.00 That the aforesaid amounts had been added by the Assessing Officer after recording statement of Shri Ashish Patel and thus was required to be retained, the Tribunal having wrongly deleted the same. 8. The learned Senior Advocate appearing on behalf of the respondent-assessee at the outset submitted that all the issues raised in the Appeal were based on facts and appreciation of evidence on record and the impugned order of Tribunal did not give rise to any substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbur Pvt. Ltd. (2005) 273 ITR 1, sections 14 and 56 of the Act constitute a complete Code for the purpose of determining under which head a particular income would be taxed and, therefore, once an income is included under any one of the heads, it could not be brought to tax under the residuary provisions of section 56 of the Act. 8.2 In relation to two additions of Rs.99,00,000/- and Rs.4,00,000/-, it was submitted that Tribunal had found as a matter of fact that the same were based on entries recorded in Regular Books of Account and thus were outside the scope of special provisions for assessment of block period and had to be considered only in regular assessment as held by this High Court in the case of N.R.Paper And Board Ltd. and Ors. Vs. Deputy Commissioner of Income Tax, (1998) 234 ITR 733. 8.3 Similarly, in relation to the remaining three additions of Rs. 1,50,00,000/-, Rs.70,00,000/- and Rs.51,00,00,000/-, it was submitted that Tribunal had found, after appreciation of evidence on record, that the explanation of the assessee that these were mere projected budgetary figures and were not reflecting actual transactions and thus no addition was warranted. That thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Acre 2. The only point of diversion between the two is, as to whether the assessee has received anything over and above Rs.12,80,00,000/- as disclosed by the assessee. In this context, the reasoning adopted by the Assessing Officer is based on the documents seized from the residential premises of Shri Arun Shah, employee of the assessee Company, which is recorded in Gujarati and has been reproduced in paragraph No. 12.3 of the assessment order as under : Shelani tamam 11,11,000 vaar jaminno bhav rupaya dho so chhabis choras vaarno raheshe. Koyie bhav vadharo nahi . On a plain reading of the aforesaid extract, the only thing that transpires is that, the entire 11,11,000 sq.yds. of Shela land is contracted to be transacted @ Rs.226/- per sq.yd. and nobody will be entitled to raise the price. Thereafter, as recorded by the Assessing Officer, other terms and conditions of the agreement between the parties have been recorded. It is not in dispute that the agreement contemplates handing over the possession of land falling in sector 3 only after the transaction relatable to land falling in sector Nos. 1 and 2 is complete. It is not even case of the revenue that there is any evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that initially, onus was on Revenue to point out that such payment had not been made or that the amount of payment differed from the aforesaid figure of Rs.12,80,00,000/-. Neither from the seized material nor from any other evidence recovered during the search proceedings has the Revenue been in a position to point out any such difference viz. either there being no payment, or the payment being at variance with the amount claimed by the assessee. The Revenue does not dispute the fact of acquisition of development rights. It is not the case of the Revenue that the said development rights were gifted by the Cooperative Society to the assessee. In the circumstances, if the Tribunal has stated that the amount of payment towards acquisition of development rights has to be deducted even if provisions of section 69C of the Act are attracted, no infirmity can be found in the order of the Tribunal. Admittedly, Proviso inserted below section 69C of the Act has been made effective from 1.4.1999 as inserted by the Finance (No.2) Act, 1998. 15. The decisions of this Court in the case of Fakir Mohmed Haji Hasan (supra) and Krishna Textiles (supra) are neither relevant nor germane to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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