TMI Blog2017 (2) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... acs only. The agreement with construction was cancelled and the cancellation agreement was also seized during the search operation. The seller stated that there was no construction and no water and electric connection which is also established by Google earth Maps and photographs placed in the paper book. There is no evidence of payment of any on money on the purchase of the vacant plot. No statement of assessee was recorded during search operation while she was present at the time of search. The cancellation agreement was found and seized during search operation itself. Therefore, its authenticity cannot be doubted when the Revenue had not been able to establish otherwise. Therefore, looking all we find that the lower authorities have erred in confirming the addition of Rs 76.00 lacs on account of unexplained investment in purchase of Plot No. 281, 10B, Gopal Pura Bye Pass, Jaipur. Thus we do not concur with the findings of the ld. CIT(A). Hence ,the ground raised by the assessee are allowed. - SHRI BHAGCHAND, AM SHRI KUL BHARAT, JM For the Revenue : Smt. Pratima Kaushik, CIT -DR For the Assessee : Vijay Goyal, CA ORDER PER BHAGCHAND, AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the business and residential premises of the assessee group. Incriminating evidence was gathered during the course of search operations. Notice u/s 153A of the Act was issued on 06-09-2011 and in response to this notice a return of income was e-filed by the assessee on 6-12-2011 declaring total income at Rs. 2,86,24,330/-. The assessment u/s 153B/143(3) of the Act was completed on 31-03-2013 at total income of Rs. 3,62,24,330/- by the AO by observing as under:- 26. In nut shell, we can say that out of the three agreement made in respect of plot 281-B, Scheme 10-B, Gopalpura Byepass, Jaipur two were not authentic and were just the colourable devices. The agreement that was made on 25-06-2008, which reflected total sale consideration of Rs. 1,41,000,000/- is the actual agreement which reflects that ON money has been paid by the assessee for purchase of plot. 27. All these facts and circumstances clearly indicate that the assessee is deliberately misleading the Department to avoid payment of taxes on the true income, although admitted on a number of occasions during and after search 28. Reliance is placed on judicial pronouncement which clearly prove that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f plot and added the same to the total income of the assessee. 3.2 Being aggrieved, the assessee carried the matter before the ld. CIT(A) who confirmed the action of the AO by observing as under:- 4.4 I have carefully perused the order of the AO and submissions of the AR of the appellant and do not concur with the submissions of the AR on the following grounds: i) The facts of the case are that search and seizure operations were carried out in the case of Shree Ram Group, Jaipur to which the appellant belongs on 22.09.2010. During the course of search, documents regarding purchase of plot no. 281, 10B Scheme, Gopalpura Bypass were found and seized. ii) The chronological order of these Agreements to sale and the final registered sale deed is as follows:- a) Agreement to sale dated 15.5.2008 for Rs. 65 lakh b) Agreement to sale dated 25.06.2008 for Rs. 1.41 Cr. c) Third agreement was for cancellation of the Agreement to sale dated 26.06.2008 d) Final, registered sale deed dated 27.06.2008 was for Rs. 65 lakh which was as per the DLC rates. On perusal of both the Agreements to sale it is noted that they have been drafted using stamp pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re operations were conducted at the residential and business premises of the assessee and these two agreements along with the registered sale deed were found and confronted with the assessee s husband Sh. Ashok Agarwal on 22.09.2010 who was managing all the financial affairs of the appellant. He admitted to a payment of Rs. 1.41 Cr. having been made for the purchase of this plots in the name of his wife. The relevant excerpts of his statement u/s 132(4) are being produced herewith for ready reference:- To sum up, the husband of the appellant who was managing her financial affairs was very clear and consistent about having paid an amount of Rs. 1.41 Cr. just three months before for purchase of this plot of land. Given the short duration between the purchase of this property and the date of the search it is not surprising that he remembered that exact details of the payment made for the purchase of this plot and so this amount of Rs. 76 lakh was surrendered. It cannot be said that the statement was taken under duress because the admissions made correspond with the incriminating documents found at the premises of the assessee. Moreover, he reiterated the details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by Rs. 14.80 lakhs. This report of the Sub-registrar of Govt. Rajasthan is held to be sufficient evidence to rebut the evidence filed by way of the affidavit of Ashok Agarwal and the fabricated evidence of the cancellation agreement. The term मय निर्माण meant the plot of land along with the building and did not imply any construction activity to be undertaken by the seller. viii) The AR of the appellant has submitted that the Subregistrar s report did not have any date. The assessee had registered the conveyance deed on 27.8.2008 and immediately started construction. It was submitted that he had requested the AO to issue commission u/s 131 (d) to his neighbours to confirm his submissions that there was no construction prior to the registration of the sale deed. I do not agree with this submission for the simple reason that the Sub-Registrar s report was required to be prepared before the registry of the sale deed and it was on this basis that the value was enhanced for existing construction by Rs. 14.80 lakh. Once a government official has made a personal inspection in the course of his duty and submitted a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng all the financial affairs of the family. Considering that the financial affairs of the appellant were being managed by her husband his admission on her behalf has valid evidentiary value. x) Finally, during the course of assessment proceedings, the seller Sh. Subhash Chand Bansal resident of Bharatpur was summoned and examined u/s 131. For obvious reasons he admitted to having received on Rs. 65 lakh. However, on perusal of his statement the relevant excerpts of which have been made part of the assessment order from pages 7 to 9 it is seen that he had no experience in construction business , in fact he has admitted that the only construction undertaken by him was of his house in June,2008. Moreover, he lived in Bharatpur so it was not possible for him to have undertaken any kind of construction for the appellant long distance. He was unable to give the details of the high quality of construction that was expected from him. He did not have any correspondence with the appellant regarding the specification of the construction either. On the basis of the above facts, as discussed in detail, it is held that the cancellation agreement dated 26.06.2008 was a colourable devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- was inclusive of agreed construction but since the seller expressed his inability to make the construction, the assessee purchased the vacant plot as originally agreed upon for a consideration of Rs. 65,00,000/- . Further, the ld AO has made inquiries from the seller of the plot. The seller of the plot on oath has confirmed that he has not received Rs. 1,41,00,000/- against the sale of the plot but he has received Rs. 65,00,000/- against the sale of the plot (PB page 113-117 kindly see answer to Q.no. 10, 13). Therefore the ld AO has no material to presume that the plot was purchased for Rs. 1,41,00,000/- and on money of Rs. 76,00,000/- was passed to the seller of the plot. In fact the amount of Rs. 76,00,000/- was never passed on to the seller. The answer to following questions are very relevant to decide the genuineness of the cancellation agreement found in search. (i) In answer to question no 8 (PB pg 115), the seller stated that he sold the vacate plot for Rs. 65.00 lacs to Smt Renu Agarwal. (ii) In answer to question no 10 (PB pg 115), the seller stated that he has not received Rs. 1.41 crore but he received only 65.00 lacs against the sale of plot. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Shri Ashok Agarwal in his statement dated 22/09/2010 (PB 41) The ld CIT(A) perversely held that this document is fabricated without bringing any positive material on record. As per the provisions of section 132(4A) the seized document are presumed to be correct. Further, the ld AO made specific inquiries from the seller of the plot and recorded the statements of seller of the plot. The seller of the plot has stated on oath that he has executed the cancellation agreement. (Answer to question no 13 18 (PB pg 116; 117). 3). The search party has seized three agreements in search along with the copy of registered sale deed. In first agreement the sale consideration of the plot was stated Rs. 65,00,000/-. In second agreement the sale consideration was stated Rs. 1,41,00,000/- and third agreement states the cancellation of second agreement and reiterates the sale consideration of Rs. 65,00,000/- In such circumstances the seized records should be read as whole. The ld AO is relying the second agreement but has rejected the first agreement and cancellation agreement and registered sale deed. The ld AO cannot pick and choose the documents at her will. The seized records clearly de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lve the dangerous consequence of a notional or fictional income being brought to tax contrary to the strict provisions of Article 265 of the Constitution of India and Entry 82 in List I of the seventh schedule thereto which deals with Taxes on income other than agricultural income . This was one of the major considerations that weighed with the Supreme Court in K.P. Varghese (supra) in which case the provisions of sub-section (2) of section 52 fell for interpretation. It was observed that Parliament cannot choose to tax as income an item which in no rational sense can be regarded as a citizen s income or even receipt. Section 52(2) (which now stands omitted) applied to the transferor of property for a consideration that was lesser than the fair market value by 15 percent or more; in such a case, the Assessing Officer was conferred the power to adopt the fair market value of the property as the sale price and compute the capital gains accordingly. The Supreme Court held that it was the burden of the Assessing Officer to prove that there was understatement of consideration and once that burden was discharged it was not required of him to prove the precise extent of understatement an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ick to measure the precise extent of understatement. There can therefore be no compromise in the application of the section. It would seem to require the Assessing Officer even to show the exact extent of understatement of the investment; it does not even give the Assessing Officer the option of applying any reasonable yardstick to measure the precise extent of understatement of the investment once the fact of understatement is proved. It appears to us that the Assessing Officer is not only required to prove understatement of the purchase price, but also to show the precise extent of the understatement. There is no authority given by the section to adopt some reasonable yardstick to measure the extent of understatement. But since it may not be possible in all cases to prove the precise or exact amount of undisclosed investment, it is perhaps reasonable to permit the Assessing Officer to rely on some acceptable basis of ascertaining the market value of the property to assess the undisclosed investment. Whether the basis adopted by the Assessing Officer is an acceptable one or not may depend on the facts and circumstances of the particular case. That question may however arise only w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged by the Department, did pass to the seller from the purchase, it can not be said, that the Department had any right to make any additions. iii) Commissioner of Income Tax Vs. Naresh Khattar (HUF) High Court Of Delhi (2003) 261 ITR 664 (Del) To invoke the provisions of s. 69B, the burden is on the Revenue to prove that the real investment exceeds the investment shown in the books of account iv) Lal Chand Agarwal Vs ACIT 21 Taxworld 213;231 ITAT Jaipur Bench The initial burden u/s 69 of Income Tax Act is on department to prove the investment has been made by the assessee. v) ITAT Jaipur in Vishnu Prasad Maharwal Vs DCIT Central Circle-1, Jaipur in ITA No 867/JP/2013 order dated 31/03/2014 held that the onus u/s 69B is on department to prove investment. The addition u/s 69B cannot be made without bringing any positive material to show that the assessee has made undisclosed investment in purchases of plot. vi) ITAT Delhi Bench in Shri Ram Krishan Gupta Versus DCIT, Central Circle 4, New Delhi 2013 (8) TMI 329 - ITAT DELHI Held that:- When the document shows a fixed price, there will be a presumption that it is the correct price agreed upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs while starting the construction (Copy at PB Page 106-109). d) Further as on the date of purchase there was no water and electricity connection on the plot, without which no one could live in the house. e) Copy of Municipal Tax Deposited against the plot (Copy at PB Page 112), wherein the status of the plot is mentioned as vacant land. f) In the statement of seller of the plot Shri Subhash chand Bansal recorded by assessing officer (Copy at PB Page 113-116) he also admitted that he sold the vacant plot to the assessee. Thus the assessee submitted the sufficient/ample documents to prove that as on the date of purchases the plot was a vacant plot and no construction was thereon as on the date of purchases. 6) Further the assessee has submitted her explanation as under before the AO (PB pg 103-104) on the inspection report of Sub-Registrar-I, Sanganer, Jaipur stating therein that construction measuring 3700 sq. ft. was found existing on the said plot and the same was valued at Rs. 14,80,000/- by registrar authorities. (Copy of report at PB Page 101): Your honour enclosed the report of sub-registrar submitted after the site inspection of the plot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales. Similarly the cancellation deed made is on plain paper to save them and also not authentic and again a colourable device and made to show that only Rs. 65 lacs was paid for the plot. In this regard, the assessee has explained that the agreement of Rs. 1,41,00,000/- was not original agreement and the original agreement to sale was executed for Rs. 65,00,000/- on 15.05.2008 and the agreement of Rs. 1,41,00,000/- was executed on 25.06.2008. Further in both the agreement no where it is admitted that there was some existing construction over the plot. The assessee has further submitted to lower authorities that all the agreements including cancellation agreement are part of seized record which was found and seized by the search party at the time of search, therefore there is no reason before to AO to believe some of the seized documents which are in favour of the department and disbelieve those seized documents which are in favour of the assessee. This attitude of the ld AO is against the principle of judicious approach . Further these documents cannot be said to a colourable device as the same not created/produced later stage and the same were also found to the search party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do construction work prior to selling who does not have any experience of construction. In this regard the assessee has explained as under : - a) In the reply of Q. No. 11 of the statement it was stated by the seller that at the time of sales only boundary wall was constructed over the plot and earth filing of plot was carried out. Except to this no construction work was carried out over the plot. It is relevant to mention here that on both these activities no major amount is required. b) In reply to Q. No. 13 of the statement it was chain of agreements and their significance was explained. He also explained the reason for cancellation of agreement dated 25.06.2008. c) In reply to Q. No. 14 to 17 of the statement the seller broadly stated the term of construction. He also stated that the constriction work was to be carried out through a contractor who was the friend of seller and in Q. No. 17 he explained that what was the demand of the assessee group for which the agreement of construction was cancelled. As regard to the non submitting the detail of construction/quality demanded by the assessee on the plot from Shri Subhash Chand Bansal this is to submit that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12) However, the husband of the assessee Shri Ashok Agarwal in his statement recorded on 22.09.2010 (Copy at PB Page 25-27) admitted that the payment of Rs. 76,00,000/- was made out of books and he surrendered the same as additional income but the surrender was not willful surrender of Shri Ashok Agarwal. The same was recorded by the search party at their own without saying the same by the Shri Ashok Agarwal and under pressure of search party Shri Ashok Agarwal had to sign the statement. The pressure of the search team was apparent as they kept the entire office of the assessee under seal and under PO order u/s 132(3) from 23/09/2010 to 12-10-2010 and forced Shri Ashok Agarwal to close his business operations for more than 15 days. This was nothing but harassment and pressure technique of search team to get unwarranted surrender of income. The search statement was recording in the hand writing of the search team and Shri Ashok Agarwal had to sign this statement under the pressure of the search team. It is also very important to mention here that the search party has not recorded any statement of the assessee particularly when the owner of the plot was assessee not Shri Ashok Agarwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders . The Hon'ble Supreme Court in case of Tanna And Modi vs. CIT, 292 ITR 209 (SC) has held that a fortiori, clarificatory circulars issued by the Central Board of Direct Taxes may also be taken into consideration for the purpose of construction of the statute. The Hon'ble Supreme Court in case of Kerala State Industrial Dev. Corporation Ltd., 259 ITR 51 (SC) has also held that Finance Minister's speech before Parliament while introducing bill can be relied on to throw light on object and purpose of provisions. In case of Durgesh Oil Mills, 273 ITR 305 (All.), the Hon'ble Allahabad High Court has held that it is well settled that the circular issued by the Central B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erally read in the provision relevant section a requirement of giving a reasonable opportunity of being heard before an order is made which will have adverse civil consequences for parties effected. g) Rajesh Jain Vs. DCIT 100 TTJ 929 (ITAT, Delhi 'A' Bench) Search and seizure - Block assessment - Retraction of statement - Addition of Rs.25 lacs made solely on the basis of confessional statement of assessee that he earned the said amount in the last ten years was not justified - Confessional statement should be corroborated with some material to show that assessment made is just and fair. h) KRISHNA TERINE (P) LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, AHMEDABAD D BENCH 56 DTR, ITAT 395 Held that it appears that both the additions have been made by the AO because the assessee in the statement under s. 132(4) of the IT Act made surrender of the above amounts but later on did not disclose the same in the return of income filed for the block period. However, on consideration of the orders of the authorities below, we are of the view that no evidence or material is discussed to show any incriminating material recovered during the course of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 that any admission made in the ignorance of the legal rights or under duress, cannot bind the maker of the admission. This right has been tested under Income-tax Act and the same has been upheld by Punjab Haryana High Court in Kisan Lal Shivchand Rai v. CIT, (88 ITR 293). m) Hon ble Rajasthan High Court in the case of CIT Vs. Bhanwarlal Murwatiya reported in 215 CTR (Raj) 489 (2008) (2008)/ 3 DTR (Raj) 115 has held as under :- A retracted statement of any person cannot be made the sole basis for addition because an admission is an extremely important piece of evidence. But it cannot be stated that it is conclusive. It is open to the person who made the admission to show that it is incorrect. Needless to say that this is the law laid by the Highest Court of this country in the case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala Ors. (1973) 91 ITR 18 (SC)....... 16) Further the search statement of Shri Ashok Agarwal is not binding for the assessee. The search team has not recorded any statement of the assessee. The assessee is owner of the plot and she was present at the time of search but nothing was asked from her about the impugned sale agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons given at page 15-20 of her order, upheld the findings of AO and confirmed the addition made by AO. After going through available records before us, the facts emerges that during the year under consideration the assessee purchased a plot No. B-281, 10B Scheme, Gopal Pura Bye Pass, Jaipur. This was a vacant plot which was purchased by the assessee for Rs. 65,00,000/- vide registered sales deed dated 27.06.2008. (Copy at PB Page 82-88). The department found and seized the following documents in respect to purchase of this plot: - (i) The first agreement to sale of this plot was made on 15.05.2008 for Rs. 65,00,000/-. Which was seized by department at Annexure AS-7 Page 10-12 (Copy at PB Page75-77). (ii) Later on another agreement dated 25.06.2008 was executed for a sum of Rs. 1,41,00,000/-, which was also under seizure of the department at Annexure AS-7 Page 7-9 (seized from 281-282, 10-B Scheme, Gopal Pura Bye Pass, Jaipur) (Copy at PB Page 78-80), wherein the term of agreed construction over the land was included, therefore the sale consideration was revised to Rs. 1,41,00,000/- as against original consideration of Rs. 65,00,000/-. (iii) Cancellation Agreement d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st appeal. The seller Shri Subhash Chand Bansal had given a statement on oath that he had received Rs. 65 lacs only. The agreement with construction was cancelled and the cancellation agreement was also seized during the search operation. The seller stated that there was no construction and no water and electric connection which is also established by Google earth Maps and photographs placed in the paper book. There is no evidence of payment of any on money on the purchase of the vacant plot. No statement of assessee was recorded during search operation while she was present at the time of search. The cancellation agreement was found and seized during search operation itself. Therefore, its authenticity cannot be doubted when the Revenue had not been able to establish otherwise. Therefore, looking to the present facts, circumstances of the case and the case laws relied on by the assessee (supra), we find that the lower authorities have erred in confirming the addition of Rs 76.00 lacs on account of unexplained investment in purchase of Plot No. 281, 10B, Gopal Pura Bye Pass, Jaipur. Thus we do not concur with the findings of the ld. CIT(A). Hence ,the ground nos. 1 to 3 raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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