Gujarat High Court
Commissioner vs Samruddhi on 11 January, 2012
Author: Akil Kureshi
Bench: Akil Kureshi
Gujarat High Court Case Information System
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TAXAP/2127/2010 4/ 4 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 2127 of
2010
=========================================================
COMMISSIONER
OF INCOME TAX - Appellant(s)
Versus
SAMRUDDHI
CORPORATION - Opponent(s)
=========================================================
Appearance
:
MR
MANISH BHATT, SR COUNSEL
for
Appellant(s) : 1,
None for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 11/01/2012
ORAL
ORDER
(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) Revenue is in appeal against judgment of the Tribunal dated 12.2.2010 raising following question for our consideration :
Whether on the facts and in the circumstances of the case and in law the Appellate Tribunal erred in dismissing the Revenue's appeal and allowing the deletion of addition of Rs.6,57,57,690/- based on statements recorded during the course of search and survey operations?
The issue pertains to addition of Rs.6.57 crores made by the Assessing Officer on the ground that there was on-money transaction in the sale of plots of lands developed by the assessee. Primarily the Assessing Officer based his reasonings on statements of two witnesses namely, Rasikbhai Jogani and Mahesh Hemraj Shah. Of-course there was statement of Site Engineer Dilip Chotalia also recorded indicating booking of plots at a higher rate than reflected in books.
Assessee carried the issue in appeal. CIT(Appeals) though believed on-money transactions, brought to tax only profit element and not the entire receipt. CIT(Appeals) deleted the addition upon which Revenue approached the Tribunal. Tribunal confirmed the view of CIT(Apeals). Hence this Tax Appeal.
Having heard learned counsel for the Revenue and having perused the orders on record, we notice that the Tribunal confirmed the view of the CIT(Appeals) on the reasoning that statements of prospective buyers could not form basis for addition, that other than such statements, there was hardly any evidence on record. We may notice that even such statements were retracted by such prospective buyers. Assessee requested for cross examining the witnesses which opportunity also was not granted. Additionally, we also notice that Site Engineer whose statement was recorded during search operations had also retracted his statement shortly thereafter. Tribunal in particular made following observations for rejecting the Revenue's appeal :
8. We have carefully considered the relevant facts, arguments advanced by the parties and the decision cited. The bases of addition made by the Assessing Officer are:-
(i) That, the statement of prospective buyers and statement of Site Engineer.
(ii) That, disclosure of Rs.180 lacs by the assessee.
(iii) That, alternative pleas raised.
(iv) Preponderance of probabilities 8.1 In our considered opinion, none of these factors decide as to whether the assessee had actually received 'on-money' on sale of plots in Silent Zone Farm House Project. It is seen that the longest arm of the Revenue has been exercised by conducting the search at the premises of the assessee. Even during such search, nothing was found which revealed that the assessee had ever received 'on-money' on sale of plots. The disclosure was not on account of profits from such projects specifically. The persons whose statements are recorded have no locus standi to confirm as to what is the rate charged by the assessee. The persons whose statements were recorded have merely visited the site but has not actually transacted with the assessee. The Site Engineer is not empowered either book the plots or to quote the rate. If such statements are excluded, there is no evidence in the possession of Revenue to hold so. Since these persons are not competent to admit any undisclosed income, their statements cannot be admitted in evidence for taking a view against the assessee. If such practice is encouraged, this will simply result into chaos and all the accepted norms of taking evidence on record will have to be given a go-bye. This cannot be practiced or permitted.
8.2 If one goes behind presumption that there is always 'on-money' transaction in real estate, apart from levying tax on all assessee, all the public servants will be booked under Prevention of Corruption Act. One cannot presume that all the transactions in real estate can be effected only after payment of 'on-money'. Therefore, presumption alone howsoever strong cannot be allowed to partake the character of proof.
8.3 A person who while defending his case is entitled to raise alternative plea. However, when alternative pleas are raised, it do not result that the original plea is not to be considered. So long as the alternative pleas are not mutually destructive, such alternative pleas are valid in the eyes of law and permissible under the Civil Procedure Code. The decision of Hon'ble Supreme Court in the case of CIT v. P.V. Kalyanasundaram (2007) 294 ITR 49(SC) assists the case of the assessee. The head notes in the said case are extracted herein below :
"Appeal(High Court)-Substantial question of law-Computation of undisclosed income in block assessment-In his statement recorded on the date of search, seller admitted that he had received a total; consideration of Rs.34.35 lakhs from the assessee for land but later filed an Affidavit deposing that the sale price was Rs.4.10 lakhs only-In yet another sworn statement, the seller reverted to his earlier version and deposed that the sale price was Rs.34.85 lakhs-AO made addition of Rs.30,75,005 as undisclosed income- on appeal,CIT(A) held that the statement of the seller could not be relied upon and deleted the addition -Tribunal held that the notings on the loose pieces of paper were vogue and could not be relied upon, and upheld the deletion of addition-Questions as to what is the actual sale price of the property, the implication of the contradictory statements made by the seller and whether reliance could be placed on the loose sheets recovered in the course of search are all questions of fact and not substantial questions of law-Appeal rightly dismissed by the High Court-CIT vs. P.V. Kalyansundaram (2006) 203 CTR (Mad) 449 affirmed."
9. The Assessing Officer has never examined any of the actual buyers in order to find any evidence during search which reveals that rate charged by the assessee is much more than the rate recorded in the books of accounts. We, therefore, hold that merely on presumption no amount can be added as undisclosed turnover or profit thereon. Accordingly, the addition of Rs.6,57,57,690/- is not sustainable.
From the above, it can be seen that entire issue is in realm of appreciation of evidence on record. CIT(Appeals) as well as Tribunal found that on the available evidence on record, additions could not have been sustained. In particular, as already noticed, prime evidence available to the Revenue was retracted statements of two prospective buyers who were also not offered for any cross examination. Tribunal noted that the Assessing Officer had not examined the actual buyer to collect the evidence regarding on-money transactions, if at all.
In our view, no question of law arises. Tax Appeal is therefore, dismissed.
(Akil Kureshi,J.) (Ms. Sonia Gokani,J.) (raghu) Top