TMI Blog2000 (8) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... money" in relation to the office Nos. 1 to 7 at ground floor of Sunbeam Apartment over and above the payment made by Dr. Parmar by cheque. Accordingly, a notice under s. 158BC r/w s. 158BD was issued to the assessee-company on 21st Aug., 1997, by the Dy. CIT, Special Range-2, Surat, where Dr. Parmar was being assessed and the same was served on the assessee on 3rd Oct., 1997. Thereafter the proceedings were transferred to the Asstt. CIT, Circle-1, Navsari, on 18th March, 1998, who issued a letter dt. 19th March, 1998, to the assessee-company to file return of income for the block period of 1st April, 1986, to 23rd Aug., 1996. Ultimately the assessee-company filed the return of income on 9th June, 1998, declaring total undisclosed income at Rs. Nil. 4. During the course of assessment proceedings the AO required the assessee to explain the seized paper found from the residence of Dr. Parmar and the assessee furnished replies dt. 11th Sept., 1998, as well as 5th Oct., 1998, objecting to the proposed additions made by the AO relying on the seized paper. The AO on his analysis of the seized paper from the residence of Dr. Parmar came to the conclusion that the purchase/sale price of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative of the assessee that the entire addition on account of undisclosed income made by the AO is based on the seized paper found from the residence of Dr. Parmar. It was pleaded that the seized paper is a dumb document without any narration and the AO has not brought on record any evidence to indicate the actual transaction; who were the parties to it, what was the date of transaction, what the figures on the paper actually indicate and how those figures were related to the assessee-company. Accordingly it was pleaded that unless there is a corroborative evidence to show that the jottings on the paper relate to the transaction between the assessee and Dr. Parmar, much less relating to "on money" in respect of premises allotted to him, no adverse inference could be drawn against the appellant-assessee. Reliance was placed on the decisions in the cases of S.K. Gupta vs. Dy. CIT (1999) 63 TTJ (Del) 532, Jaya S. Shetty vs. Asstt. CIT (1999) 64 TTJ (Mumbai) 551, : (1999) 69 ITD 336 (Mumbai) and Smt. Neena Syal vs. Asstt. CIT (2000) 69 TTJ (Chd) 516 : (1999) 70 ITD 62 (Chd). 5.1. It was submitted that the finding/contention of the AO that the loose paper B/26 of Annexure B-1 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de only when Dr. Parmar started his own professional practice w.e.f. 1st April, 1994. It was pleaded that even Dr. Parmar in his statement has stated that the so-called unaccounted income earned by him was in the last four and five years and he has declared Nil income for asst. yrs. 1992-93 and 1993-94 in the return of undisclosed income filed by him. The undisclosed income computed in the order under s. 158BC passed by the AO for asst. yr. 1994-95 is only Rs. 2,66,552 and as such. Dr. Parmar could not have made the alleged "on money" payment of Rs. 8,78,000 to the assessee as Dr. Parmar was not having adequate funds at the relevant time. It was further submitted that Dr. Parmar has also purchased apartment in nearby complex know as Siddhi Apartment at a later date wherein he purchased the premises at the rate of Rs. 250 per sq. ft. and he has categorically stated that he has not paid any "on money" in respect of that premises. Then how the price of Rs. 400 per sq. ft. at which the assessee sold the premises to Dr. Parmar can be considered low as to infer the receipt of "on money" by the assessee from Dr. Parmar. 5.3. It was further submitted that the remaining addition on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acity on the basis of search under s. 132 on 23rd Nov., 1995. 6. The learned Departmental Representative strongly relied on the order of the AO and pleaded that there is a general practice of payment of "on money" in respect of booking of shops/flats and Dr. Parmar who is one of the purchasers of the ground floor at Sunbeam Apartment constructed by the assessee-company, has admitted having paid "on money" to the assessee and as such the AO was perfectly justified in making an equivalent amount of addition on account of non-disclosure of "on money" receipts by the assessee from Dr. Parmar. It was further submitted that since the payment of "on money" in respect of premises sold by the assessee-company to Dr. Parmer is proved by the seized paper from the residence of Dr. Parmar as well as the statement of Dr. Parmar, the AO was perfectly justified in assuming that similar "on money" was received by the assessee in relation to balance area of Sunbeam Apartment sold by the assessee-company. Accordingly, it was pleaded that the AO was perfectly justified in making the addition of Rs. 65,81,600. It was further submitted that the fact that the directors of the company have also made dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parmar which was recorded by the authorised officer under s. 132(4) on the date of search and thereafter subsequently in the course of assessment proceedings of Dr. Parmar under s. 131 by the AO and his cross-examination by one of the directors of the assessee-company Shri Amit Shah. The relevant questions and their answers in the statement of Dr. Parmar recorded on 9th Aug., 1996, copy of which has been given to us at pp. 63 to 78 of the paper book are as under: Q. 6.: Is the space occupied by the hospital belongs to you or has it been obtained on lease? Ans: The space occupied by my hospital belongs to me. It is approx. 2200 sq. ft. which I purchased from Shri Tusharbhai Desai at Rs. 10,00,000 (Rupees ten lacs only) in token of the commercial bargain I was credited approx. two lacs The residual is still to be paid. Q. 13: Who is the owner of the aforesaid Siddhi Complex wherein nine beds are accommodated.? Ans: The space which is occupied in "Siddhi Complex" is about 1,800 sq. ft. and it belongs to me. It was purchased at a cost of Rupees (4,50,000) four and a half lacs from Shri Shantilal Sethia a year ago. I have already paid an amount of Rs. 1,50,000. The relevant q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 18,00,000 ------------- The relevant questions and their answers during cross-examination of Dr. Parmar by Shri Amit Shah, director of the assessee-company are as under: Q. 1: When did you take possession of ground floor at Sunbeam Apartment? Please specify the exact date. Ans: I took possession of ground floor at Sunbeam Apartment approximately two months prior to 16th Jan., 1994, i.e., the date of inauguration function of my hospital. Q. 3: Will you please narrate the location of Siddhi Apartment where your hospital is situated? Ans: It is about 600 feet away from Sunbeam Apartment crossing the two main roads at 3rd floor of Siddhi Apartment. It is about 1,900 sq. ft. in area. Q. 4: When did you take possession of premises at Siddhi Apartment? Ans: It was in the month of April/May, 1995. Q. 5: Do you confirm of the rate and amount paid to Siddhi Apartment as stated in your statement recorded during the search proceedings in your case? Ans: On the date of search on 9th Aug., 1996, I have given the statement to the best of my memory which was verified and confirmed later on 20th Aug., 1996, in my s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts. The assessee had also declared this amount as undisclosed in his return of income filed for the block period 1st April, 1986 to 23rd Aug., 1996. 3. As M/s Unique Organisers Developers (P) Ltd. had received an amount of Rs. 8.70 lacs outside the books of account, which was admitted by Dr. Parmar in his statement as also from the part of the declaration of the undisclosed income, a notice under s. 158BD is required to be issued in the case of M/s Unique Organisers Developers (P) Ltd. 4. Issue notice under s. 158BD of the Act." These very reasons were again recorded by the AO who framed the assessment in the case of the assessee-company, viz, the Asstt. CIT, Circle 1, Navsari on 13th May, 1998, at the time of issuing second notice under s 158BD. 8.3. From the relevant portion of the statements of Dr. Parmar and the reasons recorded by the AO holding jurisdiction over the case of Dr. Parmar as well as the AO who finally completed the assessment in the case of the assessee-company, it s clear that initially Shri Mukesh H. Parmar stated before the search party that he has purchased the flats of Sunbeam Apartment from M/s Unique Organisers for Rs. 10 lacs for which a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicated at p. B-26 could very well have related to the office space acquired by Dr. Parmar in Siddhi Apartment rather than ground floor purchased by Dr. Parmar from the assessee-company. In this connection it is very much relevant to note that Dr. Parmar in his statement on 20th Aug., 1996, in answer to question No. 4 reproduced above has stated that even though my cheque payment was remaining to be paid, I was handed over possession by the company keeping in view of my humanitarian medical profession services, two months prior to the date 16th Jan., 1994 (the date of inauguration). Thus, as per Dr. Parmar's statement "on money" were paid to the assessee-company in full prior to 16th Jan., 1994. However, prior to this date Dr. Parmar had no funds to the extent of Rs. 8,70,000 to pay td anybody including the assessee which is quite apparent from the statement of Dr. Parmar's father who was also his accountant who has stated in the block assessment proceedings of Dr. Parmar that the suppression of receipts were made only when Dr. Parmar started his own profession w.e.f. 17th Jan., 1994, and there was no suppression of receipts for the period 23rd May, 1993 to 12th Jan., 1994, when D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceedings were initiated in relation to the alleged receipts of "on money" by the assessee from Dr. Parmar in the transaction relating to the premises taken into possession by Dr. Parmar in the ground floor of Sunbeam Apartment. Thus, the entire addition of Rs. 57,03,600 is based on presumptions and assumptions which cannot be sustained at all. In this connection it will be relevant to note that at p. 4 of the assessment order the AO has observed as under: "........The assessee has furnished details of names and addresses of the office/flat-holders, area covered by each premises, floorwise booking rate per sq. ft. for office and flats, total documentary price and the datewise collection received from the office and flats-holders. It is stated that all the datewise payments are received by cheque only from the respective shop/flat-holders. Confirmations of the shops/flat-owners have been filed on records after verification. Sources stand explained." And yet the AO has chosen to make the addition on account of alleged receipts of unaccounted money in respect of the entire building of Sunbeam Apartment as per the working given at p. 5 of the assessment order which we have ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
