Income Tax Appellate Tribunal - Ahmedabad
Assistant Commissioner Of Income-Tax vs Sushiladevi S. Agarwal on 11 March, 1994
Equivalent citations: [1994]50ITD524(AHD)
ORDER
Abdul Razack, Judicial Member
1. These are cross-appeals filed by the revenue and the assessee. The grievance of the revenue in its appeal is that the Appellate Commissioner (A.C.) erred in deleting the addition of Rs. 6 lakhs made by the Assessing Officer (A.O.) under Section 69 of the Act. The grievance of the assessee in her appeal is that the A.C. erred in confirming the addition of Rs. 15,000 towards low G.P. We shall first deal with the revenue's appeal.
2. The surrounding facts as culled out from the records are as under:
There was a search operation on 26-6-1981 in the business and residential premises of the assessee. During the course of search, the authorised officer found apart from jewellery two Banakhatas (agreement to sell), one executed on 18-12-1980 in respect of Shop No. 183 in New Cloth Market (hereinafter referred to as the said shop) for a consideration of Rs. 11,51,000 and another Banakhata executed on 19-12-1980 in respect of the said shop was also found in which the consideration was shown as Rs. 2,50,000. Both the documents were executed by the partner of M/s. Panachand Mangaldas (hereinafter referred to as the vendor-firm) on the one hand and the assessee on the other hand. The statement of the assessee was recorded on the date of search under Section 132(4) of the Act and the replies given by her were unstisfactoiy and evasive and the same have been extracted by the Assessing Officer in his order. The statement of the assessee as well as her husband Shri Shivbhagwan Agarwal were recorded subsequent to raid also on two or three different dates and the same have been duly extracted in the assessment order by the Assessing Officer. The Assessing Officer also on 20th July, 1981 examined one of the partner Shri Prabodhchandra Panachand of the vendor-firm who stated that the said shop was sold for a sum of Rs. 11,51,000 and the payments were received as under:
18-12-1980 Rs. 25,000 Cheque Manekchowk Co. Op. Bank
Rs. 5,00,000 Cash 29-12-1980
Rs. 1,00,000 Cash 5-3-1981
Rs. 3,26,000 Cash 24-4-1981
25-4-1981 Rs. 1,50,000 Cheque Manekchowk Co. Op. Bank
Rs. 37,000 Cash 27-4-1981
Rs. 8,000 Cash 28-4-1981
29-4-1981 Rs. 5,000 Cheque Manekchowk Co. Op. Bank
He also admitted having executed both the documents; one on 18-12-1980 evidencing consideration of Rs. 1,51,000 and the other on 19-12-1980 evidencing consideration of Rs. 2,50,000. The document dated 19-12-1980 was also witnessed by one Shri Mangaldas Dahyabhai Patel, but there are no attesting witnesses to the document dated 18-12-1980. The Assessing Officer also examined the witness who attested the document dated 19-12-1980 and he admitted his signature as witness in the said document. The said witness further stated before the Assessing Officer that though he was present on 18-12-1980 when the document was executed, yet he did not attest the same as a witness. The Assessing Officer also summoned the books of account of the vendor-firm wherein entries about the receipt of the total consideration of Rs. 11,51,000 were recorded and on query from us, the D.R. submitted that the books of account of the vendor-firm were also impounded under Section 131(2) of the Act. The other partners of the vendor-firm were also examined by the Assessing Officer who merely affirmed the version of one of their active partner Shri Prabhodhchandra Panachand. The witness as well as the partner were subjected to cross-examination by the assessee's counsel and the same are fully recorded in the assessment order. According to the assessee, the said shop was purchased for Rs. 2,50,000; whereas according to the vendor-firm, the said shop was sold for Rs. 11,51,000. Thus, there was a difference of Rs. 9,26,000 in respect of the consideration which was considered as extra money paid by the assessee and considered as unexplained investment and added by invoking the provisions of Section 69 of the Act. According to the partner of the vendor-firm, the extra amount of Rs. 9,26,000 was for the transfer of goodwill; whereas according to the assessee and her husband, though it was originally agreed on 18-12-1980 that the vendor-firm will transfer the said shop along with the goodwill, furniture, fittings, etc., and also eject the tenants from the said property, the same was later on retracted by the vendor-firm and, therefore, another document was executed on the next day, i.e., on 19-12-1980 agreeing to purchase the said shop for Rs. 2,50,000 and not for Rs. 11,51,000 as was originally agreed on 18-12-1980. The said shop in question was transferred in the name of the assessee on 5-6-1981. According to the version of the partner of the vendor-firm, the extra sum of Rs. 9,26,000 towards transfer of alleged goodwill was paid on three different dates which are as under and which found recorded in the books of account of the vendor-firm :
________________________________________________________________________________ Date Page No. of Amount Alleged mode Rojmel in Rs. of payment ________________________________________________________________________________ 29-12-1980 42 5,00,000 Cash 05-03-1981 82 1,00,000 Cash 24-04-1981 116 3,26,000 Cash __________ Total: 9,26,000 ___________ The assessee's husband and her Advocate Shri R.D. Pathak submitted before the Assessing Officer that the said shop was purchased for an apparent consideration of Rs. 2,50,000 and not for Rs. 11,51,000 as allegedly stated by one of the partners of the vendor-firm, and that the vendor-firm in order to bring on record its unaccounted and concealed income, took advantage of the recovery of the first document executed on 18-12-1980 and further to derive the tax benefits in view of the decision of the Hon'ble Supreme Court in the case of Shrinivas Shetty (supra), built up a story about transfer of the said shop for Rs. 11,51,000 and forged and fabricated their books of account by making false and incorrect entries evidencing extra payment of Rs. 9,26,000 on three different dates from the assessee towards transfer of goodwill. A detailed reply was also given by the assessee on 20-2-1984. The Assessing Officer was not at all convinced that the said shop was purchased for Rs. 2,50,000 and not for Rs. 11,51,000 as stated by the vendor-firm's partner and as recited in the document dated 18-12-1980. The Assessing Officer was also of the view that the statement given by the assessee on the day of search was incoherent and at variance with the statement given by her husband Shri Shivbhagwan Agarwal in relation to the "transaction. It is also pertinent to mention that the vendor-firm declared the extra sum of Rs. 9,26,000 as receipt on transfer of goodwill and claimed it as exempt/non-taxable in view of the decision of the Supreme Court in the case of Shrihivas Shetty [supra). This claim was negatived by the officer assessing the vendor-firm and was confirmed in appeal. We are not informed about the fate of the second appeal being preferred by the vendor-firm before this Tribunal. The Assessing Officer therefore, proposed an addition of Rs. 6,00,000 for the financial year 1980-81 relevant to the assessment year under appeal and Rs. 3,26,000 for the financial year 1981-82 relevant to the assessment year 1982-83 and referred the matter to the J.A.C. under Section 144B of the Act. The submissions and pleadings before the I.A.C. by the assessee through her counsel under Section 144B did not find favour who confirmed the draft order passed by the Assessing Officer. In respect of the other addition also, the I.A.C. agreed with the Assessing Officer. Not being satisfied with the addition so made to the returned income, the matter was carried to the desk of the first appellate authority namely, the A.C. The submissions made before the Assessing Officer as well as before the I.A.C. in proceedings under Section 144B were reiterated. The A.C. came to the conclusion that the document executed on 18-12-1980 was not genuine as the same was not acted upon and the second document dated 19-12-1980 was the genuine document under which the assessee purchased the said shop for Rs. 2,50,000. The A. C. was also of the opinion that no extra or on money was passed from the assessee to the vendor-firm and, therefore, the addition of Rs. 6,00,000 in the year under appeal under Section 69 of the Act was based on presumption and conjectures and not on any valid or cogent evidence. He, therefore, deleted the addition of Rs. 6,00,000 but confirmed the addition of Rs. 15,000 towards low G.P. Thus, the cross appeals before us.
3. Shri M.S. Rai, appearing for the revenue contended that the Assessing Officer has made out a good case in respect of the addition of Rs. 6,00,000 as income from undisclosed sources being unexplained investment in the said shop under Section 69 of the Act and the A.C. has wholly ignored and mis-appreciated the facts, material and evidence brought on record by the Assessing Officer. He relied on the reasons given by the Assessing Officer in his assessment order and took us through the contents and observations made therein by the Assessing Officer to convince us that the A.C. erred in deleting the sum of Rs. 6,00,000 added by the Assessing Officer under Section 69 of the Act. The D.R. also filed English translation copies of the two agreements datedd 8-12-1980 and 19-12-1980 and took us through the contents of the same. Our pointed attention was drawn to the answers given by the assessee, her husband the main partner of the vendor-firm Shri Prabodhchandra Panachand, the attesting witness Shri Mangaldas Dahyabhai Patel and the answers given by the concerned parties during the course of cross-examination by the assessee's counsel Shri R.D. Pathak. It was strenuously submitted by the D.R. that the statement given by the assessee on the date of search as well as on subsequent dates were at variance and there was incoherence in her statement and in the statement of her husband and these important factors were wholly sidetracked by the A.C. while deciding the controversy before him. According to the D.R., if this incoherence and variance statement are taken into account, then the assessee has no chance of any success or for any relief in law. On the basis of evidence, the Assessing Officer clearly established that the said shop was purchased by the assessee for Rs. 11,51,000 as per document dated 18-12-1980 and not for Rs. 2,50,000 as is agreed and recited in the second document executed on 19-12-1980. The assessee, according to the D.R., paid an extra money of Rs. 9,26,000 towards goodwill of the said shop spread over in the two financial years and the addition of Rs. 6,00,000 made in the year under appeal should have been sustained by the A. C. on the facts, circumstances and evidence on record. In end, it was urged by the D.R. that the order of the A.C. impugned in the revenue's appeal be reversed.
4. In reply to the argument advanced by the D.R., Shri R.D. Pathak, the assessee's counsel while reiterating the submissions made before the lower authorities further highlighted that the Assessing Officer has not made out any case whatsoever for sustaining the addition of Rs. 6,00,000 as income from undisclosed sources in terms of Section 69 of the Act and the A.C. very correctly appreciated the true facts and circumstances of the case in the light of evidence brought on record. It was further submitted by the assessee's counsel that the assessee fell ill and was unwell on the date of search and the A. D.I. was kind enough to summon a Doctor for her treatment. To support this, he drew our pointed attention to the answer given by the A.D. I. in the prosecution case launched by the revenue against the assessee and her husband, which is found in the assessee's voluminous paper-book filed during the course of hearing. The incoherent and variant statement by the assessee on the search day and thereafter was due to the fact that she was not well on the search day and besides, she being illiterate, rustic, aged Marwadi lady wholly dependent on her husband in respect of her business and legal matters including tax problems; there is, therefore, nothing wrong in the assessee stating that her husband was fully aware of the entire deal and transaction relating to the said shop. Her ignorance or lack of knowledge in respect of certain matters relating to the deal of the said shop cannot be weighed against her for making the addition under Section 69 of the Act and more particularly, when no concrete evidence was forthcoming or on record to make such addition. Making further submission the assessee's counsel Shri R.D. Pathak submitted that the vendor-firm took advantage of the recovery of the document dated 18-12,-'1980 and in order to bring on record their unaccounted and concealed income earned in their business, fabricated their own books of account by incorporating false entries on three different dates in respect of the excess amount of Rs. 9,26,000 allegedly stated to be received by the vendor-firm from the assessee for the transfer of the goodwill, whereas in fact no goodwill was transferred to the assessee nor the possession of the said shop was given free of tenants. It is highly improbable that the assessee paid extra consideration/sum of Rs. 9,26,000 after execution of the agreement dated 19-12-1980 evidencing consideration of Rs. 2,50,000. If this is to be considered as true, then after the execution of the agreement dated 19-12-1980 which was for Rs. 2,50,000 the vendor-firm had ho legal document for laying its claim for the extra consideration of Rs. 9,26,000 from the assessee and the partners of the vendor-firm being businessman were not so unwise to execute a document on 19-12-1980 for Rs. 2,50,000 and then receive the extra money of Rs. 9,26,000 without there being any check or guarantee for the receipt of the extra money from the assessee not recorded in the agreement dated 19-12-1980 or any other collateral document. If this vital and pertinent fact is kept in mind and considered, then there is no case for drawing any presumption or inference of payment of extra consideration of Rs. 9,26,000 to the vendor-firm as claimed before the Assessing Officer. Thus, the story built up by the vendor-firm is wholly unbelievable and is a ruse and guise for bringing into account its/their unaccounted and concealed income. Taking advantage of the search on the assessee and the recovery of the document dated 18-12-1980, the vendor-firm wanted to take advantage and benefit and, therefore, created a story that the said shop was sold for Rs. 11,51,000 out of which Rs. 9,26,000 was for goodwill and thus fabricated and forged its own books of account by incorporating false and incorrect entries of payment/receipt of extra sum of Rs. 9,26,000 from the assessee. There was ample time for the vendor-firm, from the date of search till 20-7-1981, when the books of account were summoned by the Assessing Officer, examined and then impounded. This extra time enabled the vendor-firm to fabricate and forge its/their own books of account over which the assessee had no control. Such one-sided and unilateral evidence was believed by the Assessing Officer for making the addition of Rs. 6,00,000 under Section 69 of the Act. It was further brought to our notice by the assessee's counsel that the vendor-firm declared before its own Assessing Officer about the receipt of the sum of Rs. 9,26,000 on transfer of goodwill but claimed the same as not taxable in view of the decision of the Supreme Court in the case of Shrinivas Shetty (supra), but the Assessing Officer assessing the vendor-firm upon examination on facts of the case and evidence was of the opinion that there was no goodwill to the vendor-firm and therefore, did not give any exemption to the vendor-firm. This is also one of the most important factor which has been lost sight of by the Assessing Officer and duly considered by the A.C. while giving relief to the assessee. To fortify the case of the assessee, her representative Shri R.D. Pathak submitted that there have been repeated requests to the Assessing Officer to send the account books of the vendor-firm for chemical examination to find out the truth about the fabrication and forgery of the account books to establish that no extra money was paid by the assessee to the vendor-firm and the entries were false and incorrect. But the Assessing Officer for the reasons best known to him did not accede to such request because he was fully aware that if chemical examination of the account books of the vendor-firm is done, then he will have no case for making the addition. The Assessing Officer for his inaction cannot put the assessee to sufferance by making huge addition to the returned income under Section 69 of the Act, submitted the assessee's counsel. This was justifiably understood by the A.C. while giving relief to the assessee and in directing deletion of the addition of Rs. 6,00,000 made by the Assessing Officer. In order to further convince us that the account books of the vendor-firm are false and unreliable, our specific attention was drawn to the answers given by the main partner of the vendor-firm regarding withdrawal of various sums by the partners of the vendor-firm after the alleged receipt of Rs. 9,26,000. It was, therefore, vehemently pleaded by the assessee's counse that the impugned order of the A.C. by the Revenue in this appeal was perfectly valid and justified in law and the same should be upheld by us by dismissing the revenue's appeal.
5. The Departmental Representative, Shri M.S. Rai was directed by us to file/produce the following to enable us to decide the appeal:
(i) To produce impounded books of the vendor-firm,
(ii) Financial state of the firm and all its partners.
(iii) The balance-sheet of the vendor-firm as on 31-3-1981 or any nearby date.
(iv) If the partners of the vendor-firm are wealth-tax assessees, then their wealth-tax computation statements or assessment orders for the assessment years 1980-81, 1981-82 and 1982-83.
(v) To obtain the assessment records of the vendor-firm.
(vij Facts about prosecution case against the vendor-firm as stated by the assessee's counsel regarding forgery of books of account.
The D.R. was given time up to 31-1-1994 for compliance. However, the D.R. informed us that in spite of his best efforts, he has not been able to obtain the directed and desired information. It was, therefore, decided to dispose of the appeal on the basis of the material available with us in the appeal records.
6. We have heard both the parties at great length. We have also perused the entire material available on record very carefully. In our view, the Revenue's appeal does not have merits to be allowed. The Assessing Officer made the addition due to incoherence and variance in the assessee's statement on different dates and that of her husband Shri Shivbhagwan Agarwal in respect of deal of the said shop. The Assessing Officer has also given undue weightage to the document dated 18-12-1980, the statement of one of the partners of the vendor-firm Shri Prabod-hchandra Panachahd and the statement of the attesting witness to document dated 19-12-1980. He has also given more credence to the entries incorporated in the books of account of the vendor-firm about the receipt of the extra money from the assessee which have been impeached by the assessee with a demand for chemical examination for finding out truth or otherwise of those entries.
7. It is well-known and admitted fact that search operations, particularly under the Income-tax Act is a lawful invasion on the privacy, life and property of a citizen which may affect him/her mentally also, besides causing several other inconveniences, hardships, embarrassment and harassment. There is every likelihood of a statement tendered to or recorded by the searching officers on the search day being incoherent or at variance with subsequent statements tendered to or recorded in any further or collateral proceedings. But to make addition to the returned income or to put such person to sufferance or to adverse consequences on such statement is not justified in law. By this we are not saying or laying down that every statement recorded on the search day has to be ignored as of no consequence or that no reliance or credence should be placed on such search day statement. All that we wish to say but with little emphasis, is that all that is stated by any deponent on the search day should not be taken as the truth, the whole truth and nothing but the truth. Such statements indubitably have evidentiary value and credibility in law, but the same should be viewed with great caution particularly when the same is denied, varied or retracted or established by the defendant to have been obtained or given under mental stress, coercion, undue influence or due to any other abnormal condition and circumstances when such statement was given. Any person may state different stories/versions to different persons/authorities on different occasions about certain facts. But when it comes to be tested or examined in a judicial or quasi-judicial proceedings before any Court, Tribunal or authority, then the question which arises for determination is as to which of the story/ Statement is right, truthful and/or reliable and believable. Though strict rules of evidence do not apply to income-tax proceedings yet, the substantive and normal rules of evidence do apply as an ingredient of rules of natural justice (refer Central Bank of India Ltd. v. Prakash Chand Jain AIR 1969 SC 983 and the decision of the Supreme Court in the case of Chiiharmal v. CIT [1988] 172 ITR 250 at page 255. Therefore, the statement recorded on the search day has to be tested in accordance therewith. If a person at a later stage retracts from the statement given on the search day, then the Court or the Tribunal should try to ascertain reasons or circumstances from such person for doing so and if satisfied, not to place heavy reliance on such earlier statement which has subsequently been denied and retracted. Now let us examine, whether there were any compelling or justifiable reasons or circumstances on the part of the assessee for giving different statements on different occasions before different officers. It is common knowledge, open secret and admitted fact in this ancient and cultured country that woman/females are heavily dependent on males more particularly, husbands to look after and manage, on implied authority, their business matters, property dealings, tax and legal matters and, therefore, no eyebrow should be raised in astonishment nor any adverse inference should be drawn by any Tribunal or authority that a particular Indian lady or woman is unable to say with precision the true state of affairs of her business, properties or for that matter regarding her tax and legal matters or when she says that her husband has full knowledge and information about certain facts or dealings made on her behalf on such an implied authority. The assessee, we were informed, during the course of hearing, is an illiterate, aged, rustic, domestic and tradition-bound Marwadi lady, who is not exposed to the vagaries of this now cruel world and she was, therefore, wholly dependent on her husband in relation to the entire transaction of the said shop. It is also evident from the deposition of the authorised officer in the prosecution case launched against the assessee and her husband in the Criminal Court to which our attention was drawn and which is found in the assessee's paper-book that the assessee was unwell during the course of search operations on 26-6-1981 when her husband was out of Ahmedabad and that a Doctor was summoned for her treatment on that day. In such circumstances, the statement of the assessee will surely be incoherent and will be at variance with that of her husband in further/collateral proceedings. After the search, perhaps the assessee was informed by her husband about the true facts and state of affairs in relation to the transaction of the said shop and it is at that later stage, the assessee came forward and gave a different but perhaps true statement requiring credence. The Assessing Officer, therefore, was not justified in drawing adverse inference against the assessee or her husband oblivious of such circumstances enumerated by us above and ultimately resorting to the addition under Section 69 impugned in the appeal.
8. It is not borne on records that the main partner of the vendor-firm Shri Prabodhchandra Panachand was neither examined on the date of search namely, on 26-6-1981 in relation to the deal of the said shop and the payment of extra money as recorded in the agreement dated 18-12-1980, nor there is evidence on record that on the search day, the books of account of the vendor-firm were summoned, verified and seized. The Authorised Representative on a specific question from us has stated that as per information available with him, the books of account of the vendor-firm were summoned under Section 131 after more than a fortnight's time perhaps on 20-7-1981 when his statement was recorded and the books were then impounded under Section 131(2) of the Act. There is every reason to believe the version/submission of the assessee's counsel that the vendor-firm being a leading firm of textile trade and, therefore, there is every likelihood of the vendor-firm introducing its own unaccounted or commonly called "Black Money" in its books by building up a story that the assessee paid the extra money of Rs. 9,26,000 taking advantage of the search on the assessee's premises and the recovery of the document dated 18-12-1980 in which consideration of Rs. 11,51,000 is found recorded. The case of the assessee before the Assessing Officer has been that the books of account of the vendor-firm have been fabricated and forged in order to put the assessee to sufferance and other attendant adverse consequences and in turn attempting to gain advantage in its income-tax proceedings by taking the stand that the extra sum of Rs. 9,26,000 was paid for goodwill of the firm which was not taxable under Section 45 of the Income-tax Act on the strength of the decision of the Supreme Court in the case of Shrinivas Shetty (supra). When there were persistent requests and obstinate demands from the assessee's side for sending the books of account of the vendor-firm for chemical examination (to pass ultra violet rays) for ascertaining the allegation about fabrication or forging of the same, we see no justifiable reasons recorded by the Assessing Officer anywhere in the assessment order for not following that course which, in our view, could have brought to light the truth or otherwise of the allegation made by the assessee in this regard. The Assessing Officer having failed to do so should not have heavily relied on such impeached and questioned books of account of the vendor-firm and make the addition under Section 69 of the Act. In our view, therefore, the entries in those books of account of the vendor-firm evidencing the extra payment made by the assessee to the vendor-firm loses credence and cannot inspire any confidence in law and, therefore, have to be rejected as of no consequence.
9. Another point which goes in favour of the assessee is that the officer assessing the vendor-firm has not accepted the claim of the vendor-firm that it had goodwill and that the same was transferred to the assessee for consideration of Rs. 9,26,000 and that the same was not taxable in its hand on the strength of the ratio laid down by the Apex Court in the case of Shrinivas Shetty [supra). On examining the contents of agreement dated 18-12-1980, we do not find that the vendor-firm agreed to transfer to the assessee the goodwill of its firm. It is during the course of recording of statement it was brought to light that when the agreement was executed on 18-12-1980, it was agreed that the vendor-firm will also> transfer the goodwill of the firm and that on the next day when the assessee found that there was no goodwill and the vendor-firm refused to eject tenants and give vacant possession of the said property, that another agreement came to be drawn up and executed on the next day, i.e., on 19-12-1980 wherein it was agreed that the said shop will be transferred to the assessee for a sum of Rs. 2,50,000. This very vital fact has a very strong bearing on the assessee's case and deserves due weigh age and consideration. The Assessing Officer has not established that the vendor-firm did have goodwill which was agreed to be transferred or ultimately transferred to the assessee as per agreement dated 18-12-1980. The Departmental Representative has not controverted this fact nor he has been able to place before us the assessment records of the vendor-firm or any of its partners to ascertain whether the vendor- firm in fact did have any goodwill to be sold or transferred and whether the same was reflected and recorded in its accounts. If there was any goodwill to the vendor-firm, whether all or any of the partners of the vendor-firm have declared in their respective wealth-tax returns their share or interest in the goodwill of the firm? This remains unanswered from the records. We do not find a shred of evidence in this regard nor any evidence has been placed before us by the revenue to persuade us to dislodge the finding and conclusion of the A.C. in the impugned order.
10. One more point which goes in favour of the assessee is that on 18-12-1980 the vendor-firm agreed to sell to the assessee the said shop for a consideration of Rs. 11,51,000 which is inclusive of the price of the goodwill amounting to Rs. 9,26,000. And on the very next day, i.e., on 19-12-1980 the vendor-firm without receiving Rs. 9,26,000 from the assessee or without taking any assurance, guarantee or security under any supplemental or collateral document for the sum of Rs. 9,26,000 enters and executes another document on 19-12-1980 and agreeing to sell the said shop to the assessee for Rs. 2,50,000. This is a strange and highly improbable conduct on the part of the partners of the vendor-firm who are very prudent and successful businessman. The main partner of the vendor-firm Shri Prabodhchandra Panachand has stated that extra sum of Rs. 9,26,000 was paid by the assessee on three different dates (as extracted by us above) and the last payment was on 24-4-1981 as found recorded in the books of account of the vendor-firm, whereas the said shop with goodwill was sold on 5-6-1981. It does not appeal to us that the assessee paid the entire sum of Rs. 9,26,000 to the vendor-firm after 19-12-1980 when she had in her hand a legal and enforceable document wherein the vendor-firm agreed to sell the said shop to her for Rs. 2,50,000 and there being no other supplemental or collateral document or indenture from the assessee to or in favour of the vendor-firm assuring, securing and guaranting the vendor-firm that the balance extra sum of Rs. 9,26,000 will be paid by her. This unusual and abnormal circumstances when considered force us to disbelieve the story put up by the vendor-firm that the assessee paid the extra sum of Rs. 9,26,000 on three different dates for the transfer of goodwill. Under such facts and circumstances, we see no case for the revenue to make any addition under Section 69 of the Act.
11. When two documents are found evidencing varying amounts of consideration of a property, then it is the cumulative and totality of the facts and circumstances as discussed above, which has to be weighed and considered. Single document should not be picked up and considered in isolation with the other document and the surrounding facts and circumstances. It is also under such circumstances and facts to be seen which of the document was bona fide and acted upon by the contracting parties. We find no such extenuating circumstances or evidence on record nor our attention was drawn of any such circumstances or evidence by the D.R. which could go to establish or at least demonstrate that the agreement dated 18-12-1980 was scrupulously acted upon by both the contracting parties or that the extra money/consideration passed from the assessee to the vendor-firm through its partners for goodwill of the firm. It is also not established by the revenue from the records of the vendor-firm that the assessee did have goodwill and the same was transferred to the assessee for an agreed consideration The Assessing Officer has simply preferred and believed the statements of the partners of the vendor-firm and the attesting witness and has sidetracked, ignored and disbelieved the statements of the assessee and her husband that the agreement dated 18-12-1980 was inoperative and not acted upon. The entries in the books of account of the vendor-firm of receipt of extra money/consideration towards transfer of goodwill on various dates from the assessee are impeachable and rightly impeached by the assessee.
12. We find that the A.C. has also taken into account the sale instances of the other shops in the New Cloth Market which could go to establish that the said shop purchased by the assessee was not for a consideration of Rs. 11,51,000 but for Rs. 2,50,000 only. Since the assessee impeached and questioned the entries on three different dates about the payment of extra money of Rs. 9,26,000 on the ground that there were erasion and interpolation, we ourselves wanted to examine those entries in the books of account of the vendor-firm and, therefore, direction was given to the D.R. to produce the same before 31-1-1994. The same were not produced. In the absence of which we are unable to express any opinion and, therefore, an inference has to be drawn in favour of the assessee and against the vendor-firm. The A.C. has given very valid and cogent reasons in coming to a conclusion that the assessee did not pay any extra money/ consideration amounting to Rs. 9,26,000 spread over in two financial years under the agreement dated 18-12-1980 and, therefore, directing deletion of the addition of Rs. 6,00,000 made in the year under appeal under Section 69 of the Act.
13. The Revenue, in our view, has not made out a case to persuade us to demolish the reasons, finding and conclusion of the A.C. given in the impugned order. From the foregoing discussion, the order of the Assessing Officer cannot be upheld and was rightly not upheld by the A.C.
14. The Revenue's appeal is dismissed. Assessee's Appeal (ITA No. 2528/And./1990)
15. The assessee challenges confirmation of the addition of Rs. 15,000 in respect of gross profit.
16. We have heard the arguments advanced by the representatives of both the sides in this regard and also the reasons given by the A.C. in confirming the said addition. We are in full agreement with the A.C. for sustaining the addition of Rs. 15,000. No interference is called for.
17. The assessee's appeal is dismissed.