TMI Blog2000 (5) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... enue. Once it is established that investment was made in the relevant financial year, the onus shifts on the assessee to explain such investment and in case it is not explained to the satisfaction of the AO, the unexplained investment is to be deemed to be the income of the assessee of the relevant financial year. The main question involved in the present appeal is whether the Revenue has been able to establish that assessee paid "on-money" of 5,22,500 while acquiring the aforesaid bunglow in Tulip Scheme-II. According to the assessee, he had invested only Rs. 6,12,000 whereas according to the Revenue, the assessee paid extra amount of Rs. 5,22,500 besides the admitted investment. 4. The relevant facts are that Revenue authorities carried out a search under s. 132 on 27th March, 1992 at the residential premises of Shri Dilipkumar D. Desai and Shri Bharatbhai S. Desai. These two persons were partners of M/s Desai Associates, M/s Desai Brothers and M/s Mahadevia Associates who were engaged in development of bunglows under scheme Tulip I II near Doordarshan, Ahmedbad. In their statement they admitted to have received "on-money" while selling bunglows in Tulip Scheme and categoric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Attorney Holder of Bharat A. Mehta 7-10-1998 Sd/- C.H. Parmar 7-10-1998 Sd/- B.S. Desai, dt. 7-10-1998" 4.2 The assessee was permitted to cross-examine the witness and English translation of the same is to the following effect: Q. 1 Is it true that I have booked one Bunglow in your Tulip-2 scheme? Ans. 1 Yes. Q. 2 Is it true that you have issued one allotment letter from your firm on 27th May, 1993, after the payment from 1st Nov., 1991 to 16th Feb., 1993, Rs. one lacs by cheques made to you, and value of the building was agreed Rs. 6,00,000? Ans. 2 Yes. Q. 3 As per the abovementioned allotment letter Rs. 12,000 was to be paid for additional land. Is it true? Ans. 3 Yes Q. 4 You had given possession of the building after the amount of Rs. 6,00,000 as agreed was paid? Ans. 4 Yes the possession of the bunglow was given. Q. 5 Were the receipts issued by you i.e., your firm for the amount received? Ans. 5 Yes Q. 6 What you have to say in the matter that I have not paid any additional amount excepting Rs. 6,00,000 and Rs. 12,000 as agreed to your firm to you? Ans. 6 It is true that no additional amount has been paid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2)? Ans. 4 It is wrong. Ordinarily 60 per cent 40 per cent were taken, but as there is no account, it is not possible to say what amount from whom has been obtained or not obtained. In reply to question 2 it is stated that there was no criteria but according to time and circumstances the amounts were obtained. This statement is made at this time while you are assessing the income of Bharat Mehta your question regarding withdrawal of immunity given me a shock and I am unhappy. Sd/- Umesh A. Mehta Power of Attorney Holder of Bharat A. Mehta 7-10-1998 Sd/- 7-10-1998 (C.H. Parmar) Ward-2(1), Ahmedabad Sd/- B.S. Desai, 7-10-1998" 4.4 To the same effect is the statement, cross-examination and re-examination of other partner Shri Dilipkumar Desai. There being no material difference in the two statements, it is not necessary to reproduce here the statement or Shri Dilipkumar. 4.5 The AO rejected the claim of the assessee that no "on-money" was paid. He was of the view that admission of Desai Brothers that they received 40 per cent of consideration as "on-money" and had disclosed the same making disclosure of Rs. 1.50 lacs coupled with other facts, adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs. Prabhat Oil Mill (1995) 52 TTJ (Ahd) 533. 6.1 Shri R.K. Gupta, the learned Departmental Representative, strongly supported the orders of Revenue authorities. He argued that the builder categorically admitted that they charged and received 40 per cent of total consideration as "on-money" from the purchasers, besides the consideration received by cheque. The above statement was supported by entries in the documents seized in the course of search. The builders further made huge disclosure of Rs. 1.50 crores on account of receipt of "on-money". According to the learned Departmental Representative, the statement of the assessee that it had paid no "on-money" was of no consequence in the light of documentary and oral evidence brought by on record. The assessee could not explain any reason as to why the bunglow with cost of construction at Rs. 11,35,000 would be sold for Rs. 6,12,000; such an act is clearly unnatural and, therefore, cannot be accepted. Shri Gupta also drew our attention to the statement of Desai Brothers recorded at the time of raid in which they admitted having received of "on-money". He also drew our attention to p. 35 of paper book filed by the Revenue whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and he is also to be allowed an opportunity to rebut the same. Use of any material or information without notice to the assessee is prohibited and any illegal use of material vitiates the whole assessment and renders it void. There are catena of authorities supporting the above proposition. We may usefully quote the following observations of the Hon'ble Supreme Court in the case of Kishinchand Chellaram vs. CIT (1980) 19 CTR (SC) 360 : (1980) 125 ITR 713 (SC) at 714: "Held, reversing the decision of the High Court, (i) on the facts, that the two letters dt. 18th Feb., 1995 and 9th March, 1957, did not constitute any material evidence which the Tribunal could take into account for the purpose of arriving at the finding that the sum of Rs. 1,07,350 was remitted by the assessee from Madras, and if these two letters were eliminated, there was no material evidence at all which could support its finding. The statements of the manager in those two letters were based on hearsay, as, in the absence of evidence, it could not be taken that he must have been in-charge of the Madras office on 16th Oct., 1946, so as to have personal knowledge. The Department ought to have called upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was carried, it not being clear whether assessee's representative insisted for such cross-examination or not. At any rate, in the re-examination, the witnesses did not state that they received any "on-money" from the assessee for sale of bunglow. The statement further established firstly that as per allotment letter dt. 27th May, 1993 and other documentary evidence, the assessee had shown to have paid only Rs. 6 lacs and Rs. 12,000 for acquiring the bunglow. Secondly, inspite of search, the Revenue authorities could not lay hand on any document which could show that the assessee had paid "on-money". Thirdly, the AO could not extract from the witnesses that assessee had paid "on-money" inspite of concealed threat in question No. 4 of the re-examination. The position that emerges is that witnesses when they were examined in presence of the assessee (as required by rule of natural justice) did not say that the assessee paid any "on-money" but, on the contrary, stated in reply to question No. 4 referred to and quoted above that no money other than Rs. 6,12,000 was paid to them. 7.2 The learned Departmental Representative vehemently contended that there is oral, documentary and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in period relevant to asst. yr. 1993-94 as under: (1) Unaccounted cash: (a) Cash seized from my house 10,30,000 (b) Cash seized from Bharat Desai 25,000 10,55,000 (2) Unaccounted gold ornaments: (a) Seized from my house 13,52,629 (b) Seized from Bharat Desai's house 1,02,471 14,55,100 (3) Unaccounted silver: (a) Seized from my house 1,20,000 (b) Seized from Bharat Desai's House 8,199 1,28,100 (4) Unaccounted valuables articles 5,00,000 (5) Investment in construction labour in Tulip Scheme 3,65,000 (6) Sundry receivables 85,00,000 1,50,03,200 He submitted that above disclosure has been made to explain cash and other valuable articles found with Desai Brothers who wanted to save their own skin. When the amount disclosed in dividend by number of bunglows sold it works out to approximately 1.50 lakhs per bunglow and not about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 recorded as under: "(8) On the basis of the seized loose papers and oral statement of Shri Dilip Desai, no additions with regard to the alleged 'on-money' payment have been made in the case of Shri Hasmukh R. Patel, Shri Pravin R. Patel, Shri Pravinkumar D. Tahakkar, Shri Sureshbhai Premchand Shah Shri Harkant C. Patel." It was ultimately held by learned CIT(A) as under: "The facts, however, show that in some of the cases of members where proceedings have been initiated for adding "on-money" under s. 69 of the IT Act, the proceedings have been ab initio dropped after examining full facts and the evidence available." The learned counsel for the assessee relied upon the above recorded fact which the learned Departmental Representative could not refute inspite of opportunity and time allowed to him to ascertain the position from the AO. This is an additional important fact going in favour of the assessee. But as order of CIT(A) was passed only on 20th Feb., 1999, and might be subjected to appeal, we do not decide the matter on this fact but on account of independent reasons given above. Having regard to all the circumstances mentioned above we hold that addition of "o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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