Income Tax Appellate Tribunal - Indore
The Acit, 1(1), Bhopal vs Shri Vinod Sharma, Bhopal on 10 January, 2017
IT(SS) A Nos.227 to 231/Ind/2012
ACIT vs. Vinod Sharma
आयकर अपील य अ धकरण, इ दौर यायपीठ, इ दौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
ी डी.ट .गरा सया, या यक सद य तथा
ी ओ.पी.मीना, लेखा सद य के सम%
BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER
AND SHRI O.P. MEENA, ACCOUNTANT MEMBER
आ.अ.सं./I.T.(SS)A. Nos.227 to 231/Ind/2012
Assessment Years: 2004-05, 2005-06, 2007-08, 2008-09 & 2009-10
ACIT 1(1)
Bhopal :: अपीलाथ /Appellant
Vs
Vinod Sharma
Bhopal
PAN - ANHPS - 8104M :: यथ /Respondent
राज व क ओर से/Revenue by Shri Lalchand
नधा रती क ओर से/Assessee by Shri Yeshwant Sharma
सन
ु वाई क तार ख 4.1.2017
Date of hearing
उ!घोषणा क तार ख 10.1.2017
Date of pronouncement
आदे श /O R D E R
PER SHRI D.T. GARASIA, JM
All these appeals relate to the assessment years 2004- 05, 2005-06, 2007-08, 2008-09 & 2009-10. These appeals 1 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma have been filed against the consolidated order dated 29.3.2012 of the learned CIT(A), Raipur Camp at Bhopal in the matter of orders passed by the Assessing Officer u/s 153A read with section 143(3) of the Act.
2. The short facts of the case are that the assessee is a real estate broker and also executed development on commission basis. Various additions were made by the Assessing Officer to the income returned and assessed in each of the assessment years. In all these appeals, the common ground is against estimation of profit of each year under consideration at 5 times deposit in all the bank accounts of the assessee and estimated NP @ 10% of such estimated receipt. The assessee failed to produce the documentary evidence on which the return of income was filed, vouchers in respect of various expenses claimed in trading and profit and loss account. The assessee explained that most of the expenses were from withdrawals from the 2 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma bank account and deposits in the bank account were explained. The Assessing Officer has not accepted the explanation of the assessee. As per the Assessing Officer the bank deposits were more than the net receipt shown by the assessee. The assessee has taken the contention that the net receipt is less then overall deposit included in the money received in advance. The Assessing Officer rejected the explanation b y stating that the loose papers found and seized during search indicated that the assessee was doing substantial business in cash transactions and the assessee has not filed any details of loans from relations, advance from customers and sundry expenses shown in the balance sheet and gross receipts from the business and NP shown in the return cannot be accepted. The Assessing Officer found that during the course of search, copy of sale deeds of the lands sold by Panch Seva Grah Nirman Sanstha were found and seized from the office of the assessee and as per 3 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma the Assessing Officer the assessee could not give details of work carried out by him for the members of the society and the amount charged by him. Therefore, the Assessing Officer was of the view that various loose papers suggest that various payments were made in cash towards labour payment, building material, etc. and, therefore, this transaction is not recorded in the books of accounts. The Assessing Officer, therefore, invoked the provisions of section 145(3) of the Act and since the transactions of the assessee were presumed by the Assessing Officer to be mostly in cash, some of the transactions were routed through banking channel. Therefore, the Assessing Officer has estimated the NP rate at 10% of such estimated receipt resulting into addition of Rs. 11,60,366/- for the assessment year 2004-05, Rs.14,69,801/- for the assessment year 2005-06, Rs.3,27,757/- for the assessment year 2007-08, Rs.21,92,334/- for the 4 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma assessment year 2008-09 and Rs. 20,72,173/- for the assessment year 2009-10.
3. The matter was carried in appeal and the learned CIT(A) granted relief by observing as under :-
1.4 I have carefully considered the submissions made on behalf of the appellant with reference to the facts obtaining from the record. There is no dispute with regard to the fact that the appellant maintained regular books of account and most of the transactions reflected in these books were routed through banking channels.
1.5 The AO had not brought any evidence on record to conclusively prove that the scribbling/jottings/rough workings in the impugned loose papers, were in fact the materialized monitory transactions relating to the suppressed receipts of the appellant. In the event of any doubt or dispute,before any adversity was to be held against the appellant, it was incumbent upon the AO to have summoned and examined the concerned parties to find out truth in the matter, but then, this essential exercise was not carried out by the AO since he chose a shortcut method to resort to hypothetical estimations of the receipts and NP which, in my considered view, does not substantiate framing of qualitative assessments for determining the real income.
1.6 As already stated, the rough jottings neither represent purchases nor sales--much less they represent any investment or receipt in respect of any dealings finalized. Such dump documents have no evidentiary value for the purpose of resorting to deeming provisions of sections 68 to 69C and no addition can be made on account of undisclosed income merely by arithmetically totaling various figures jotted down on loose documents found during search in the absence of any adequate material as to the nature and ownership nor could such unmaterialized rough jottings , constitute valid basis for resorting to wild and arbitrary estimation of receipts and NP, U/s,132(4A) there is a presumption against the appellant that such loose papers pertain to the appellant and its I contents are correct. However, such presumption is rebuttable. Loose papers, question, contain scrubblings or rough notes and do not mean anything. Hence, 5 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma income should not have been estimated on the basis at such unmaterialized rough jottings. Over the course of time, the courts have held that the Department has no such authority and unless meaningful data can be culled out which can be corroborated from other material, no addition is called for on the basis of such dump documents. it is for the Department to supply language to dump documents, substantiated on the strength of evidence. In the absence of any evidence about the nature of figures noted on loose papers seized, date, name of the party etc,, no addition can be made merely on suspicion (ACIT v Shailesh S. Shah (1997) 63 1.TR 153 (Born.). In the instant case, the only known facts are that certain papers were found in the business premises of the appellant and they contained certain calculations. (origin and connection of which is not known) and no intelligible inference therefrom can be drawn. No sensible inference of any fact can be drawn from such known facts. The appellant's materialized financial involvement was also not authenticated and proved from such loose papers seized. In this view of the matter, all the additions made were held imaginary as a result of suspicion (Brinjal Rupchand v ITO (1991) 40 Tn. 668 (Indore). It is trite law that if an income not admitted by an assessee is to be assessed in the hands of the assessee, the burden to establish that there is such income chargeable to tax is_on the AO.With a view to the AO and to reduce the rigour of the burden that lay upon the AO, provision of Sections 68,69,69A to 69D have provided for certain deeming provisions, where an assumption of income is raised in the absence of satisfactory explanation from the assessee. As these are deeming provisions, the conditions precedent for invoking such provisions are required to be strictly construed. The facts and circumstances giving rise to the presumption have to be established with reasonable certainty.
The AO cannot first make certain conjectures and surmises and thereafter apply' the deeming provisions based on such conjectures and surmises. In the absence of adequate material as to the nature and ownership of the transaction, undisclosed income could not be assessed in the hands of the assessee merely by arithmetically totaling various figures jotted down on the loose documents. In other words, for the purpose of resorting to deeming provisions, dump documents or documents with no certainty/ conspicuousness have, evidentiary value.
1.7 Record also evidences the fact that despite deep scrutiny of the books of account, with reference to the seized documents, the AO was not in a positicn to identify, specify and quantify the exact amount of unrecorded receipts, if there be any. The estimation of 6 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma receipts it five times of the bank deposits and NP 10%, as made by the AO were also not substantiated and co-related with the material evidence found/seized, if any, during each were corroborated by the AO on the strength of evidence brought by him on record against the appellant. None of the incomings/outgoings, found recorded in the books, were established to have not been genuine and none supported on the strength of necessary bills and vouchers Record also evidences the fact that most of the transactions were routed through banking channels and they reflected sale proceeds of land owned by the appellant and in case of sale through power of attorney or sales made on commission basis, such proceeds received in cash/cheque/DD, were proved to have been either given to the seller (land owner) or routed through appellant's bank accounts and in such transactions, the appellant established to have received only commission which was duly accounted for in the books of account. In case of sale proceeds received in cash in respect of land/plot/farm house, belonging to others, such sale proceeds received in cash were proved to have been deposited in the bank account of the appellant and subsequently transferred to the land owners, through cheques, after deducting commission, development charges etc, on such sales, The year-wise transactions reflected in the appellant's bank account, extracted from the regular books of account, are tabulated below:
Assessment Total actual Total sale of land Turnover year banking estimated by the AO 2004-05 Rs.27,27,692/- Only petty contract Rs.1,36,38,460/-
works 2005-06 Rs.33,60,322/- Only petty contract Rs.1,68,01,610/-
works 2007-08 Rs.20,41,812/- Sale of land of Rs.1,02,09,060/-
Suyog Mishra land of Sewania Gond Rs.12.33 lakhs with Development work 2008-09 Rs.60,05,568/- Sale of land of Rs.3,00,27,840/-
Suyog Mishra, Sewania Gond Anju 7 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma Jai Kothari Kamla Devil Sanjecv Kumar Rs.36.24 lakhs 2009-10 Rs.70,45,426/- Sale at land of Rs.3,52,27,130/-
Anju . Jai Kothari
Sewania Gond,
Meena Pant
Rs.31,56 lakhs.
1.8 As already stated, there was no basis and evidence brought by the AO on record to substantiate such hypothetical and arbitrary estimation of receipts. Details available on record demonstrate the fact that in A.Y. 2004-05, there was no sale of farm house or piece of land on commission basis/develop-net-it basis and that there were no substantial cash transactions in any of the assessment years:, under consideration, as incorrectly presumed by the AO. The appellant undisputedly is a real-estate broker and his interest was normally limited to 2% commission on the sale price of the land while the AO estimated the same (a), 10% which, in my considered view, was highly unreasonable and unsubstantiated on the strength of corroborative evidence. Record also evidences the fact that, in proceedings before the A.O, the appellant had submitted details of the land, part of the land, plot, farm land sold during each of the assessment years, under consideration, along with photocopies of the title deeds of such properties sold either directly or on commission basis, The source of purchase and sale were also explained and none of the properties, covered by the title deeds, seized during search from the appellant's premises, were proved by the AO to have not been disclosed by the appellant. The appellant had given before the A.O detailed chart of the land owned by the appellant and sold in pieces to various parties along with their mode of payment/receipt from the buyer/seller, together with cost of development, commission received/paid on such transactions which stood reflected in the bank statements and cash book filed in proceedings before the AO. The AO had not found any discrepancy in any of the aforementioned details filed by the appellant. No suppression in receipts nor inflation in 8 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma expenses, was detected by the AO and the AO had also not detected any serious omission or commission in the books of account regularly maintained by the appellant and there was also no evidence brought on record by the AO to conclusively prove that the appellant had suppressed the profit. In the given facts and circumstances of the case, I am of the considered view that provisions of section 145(3) of the Act were incorrectly invoked and since the estimation of receipts and estimation of NP made by the AO, as enumerated above, were without any basis of facts or evidence, the additions based on such unsubstantiated hypothetical estimations of AO, are unsustainable on facts and in law.
1.9 During search, some power of attorneys were found/seized and when confronted by the AO it was explained on behalf of the appellant that the property covered by the power of attorney belonged to the owners and since the appellant had to seek a prospective buyer, the same was held by the appellant: on the basis of power of attorney, without receiving any consideration from the concerned land owners and as and when the said property was sold to the prospective buyer, the title was transferred from the land owner to the buyer and the sale proceeds received were directly transferred from the buyer to the owner and if they were received by the appellant, the same were transferred to the owner after deducting the brokerage due to the appellant and., as such, for all practical purposes, the appellant was not the owner of such properties covered by the power of attorney.
1.10 The Supreme Court in its decision reported in 219 ITR 330 (SC) held that there cannot be tax on income on presumptive basis. Income in fact earned, is only taxable and not, the one presumed to have been earned.
1.11 Simply because the receipts were presumed to have been suppressed, books could not be rejected, unless specific defects were found in the books. It is undisputed that the AO had not detected any specific defect in the books examined by him. In Jagdish Oil Mills v 9 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma ITO(1995) 52 TTJ (102) Indore and in CIT v K.S. Bhatia (2004) 269 ITR 577 (P&H), it was held that rejection of books of account on account of either low profit or presumed suppression in receipts, was not sustainable, if no defects are pointed out in the books. The correctness of the entries made in the cash book forming part of books of account, was not disputed. Excepting this, no other reason was given for rejection of book results. The defects in the books should be of the nature of inflation in expenses or suppression of receipts which should be proved beyond all shadows of doubt. There being no such finding by the AO, rejection of book results, was not justified.
1.12 In the given facts and circumstances of the case, the impugned estimation made by the AO, in -my considered view, are unsustainable on facts and in law. Nothing incriminating was found either in kind or in coin to substantiate the impugned presumptive addition made by the AO.
1.13 In CIT v. Gotam Lime Khanij Udhyog, (2002) 256 ITR 243 (Raj.) it was held Section 145 of the IT Act, 1961, only provides the basis on which computation of income is to be made for the purpose of determining the amount of tax. The provisions by itself do not deal with unsubstantiated additions to be made on presumptions. Therefore, mere rejection of, or some deficiency in, the books of account would not mean that it must necessarily lead to additions to the returned income, Where as in the case of the appellant, under consideration no deficiency whatsoever was found/detected justifying rejection of book results.
1.14 The results shown on the basis of account books maintained in regular course of business, should not have been substituted by irrelevant, presumptive and erroneous considerations. Merely because the AO presumed that the receipts might have been suppressed, that could not be the correct scientific yardstick either -
for rejection of the book results or for resorting to wild estimation of receipts and NP. In CIT v. Paradise Holidays(2010) 325 ITR 13(Del.) it was held that: "The accounts which are regularly . maintained in the 10 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma course of business should normally be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. The onus is upon the Revenue to show that either the books of account maintained by the assessee were incorrect or incomplete or method of accounting adopted by him was such that true profits of the assessee could not be deduced therefrom. The AO had not pointed out any specific defect or discrepancy in the account books maintained by the assessee. Admittedly, the assessee had been maintaining regular books of account, and the financial results were fully supported by the assessee with vouchers and the books of account were complete and correct in all respects. If any particular receipt, or expense remained to be accounted for or unverified, the AO could have added such suppressed receipt or disallowed that particular expense. But, that by itself could not be a ground for rejection of accounts as a whole. Further the A.0 could not reject accounts on the ground that the profit: reported by the assessee was on the lower side. While in the case of the appellant this is no so, since the A.0 himself admitted that the NP shown was reasonable. Thus, rejection of accounts was held not justified." 1.15 In CIT v Padarnchand Ranigopal (1970) 76 ITR 719 (SC) it was held that: The AO has to find out some inherent defect in the systen-, followed by the appellant and should prove that correct profits cannot be deduced from the books maintained since insignificant mistakes found, in the books, cannot prompt the AO to simply reject the books of account and to make adhoc estimations. 1.16 In International Forest Co. v CIT 101 ITR. 721. (J&K.) it was held that: In absence of any omission, irregularity or other defect in the method of accounting or positive evidence to show that the accounts did not disclose the whole income of the appellant, the books cannot be rejected, It was also held by the J&K HC that if the AO opined that the profit shown as per books was less, then it is for the AO to bring evidence on record to prove that the assessee made more profits. In the case of the appellant, under consideration, no such evidence was brought by the learned AO on record, to substantiate the impugned estimation of GP.
11 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma 1.17. Similar was the view held in Geetanjali Woollens P. Ltd v ACIT (1994) 50 ITD 558 (Ahd.) wherein the learned Members of the ITAT Ahmedabad Bench took note of the fact that the accounts were regularly maintained and the AO had not shown that no method of accounting was regularly followed by the appellant and hence, rejection of book results was held to be incorrect. The Kerala HC in St. Teressa's Oil Mills v State of Kerala (1970) 76 ITR 365 (Ker.) held that accounts regularly maintained in the course of business have to he taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable. The department has to prove satisfactorily that the accounts are unreliable, incorrect or incomplete before it can reject the accounts. Rejection of books should not be done light heartedly. It was further held that accounts may be rejected, if important transactions are omitted or, if proper particulars and vouchers are not forthcoming or, if they do not include entries relating to a particular class of business. Further in Shankar Rice Co. v ITO (2000) 72 ITD 139 (Asr.) (SB), it was held that where no defects were pointed out in the books or register/records Maintained by the appellant, books could not be rejected, 1.18.No evidence whatsoever was brought on record nor communicated to the appellant to justify estimation of either receipts or NP. Reliance for this proposition is placed on the decisions in CIT v Popular Electric Co. (P)Ltd. (1993) 203 ITR 630 (Cal.) and Ganga Prasad Sharma v CIT (1981) 127 ITR 27 (MP.) and various other decisions mentioned in Chhattishgarh Steel Casting Pvt. Ltd. v ACTT (2009) 12 ITJ 741 (ITAT- Bilaspur Bench) wherein it was held by the Jurisdictional Bench of the ITAT that assessment of income has to be made on available evidences as per Section 143(3)(ii), which empowers the AO to go through the evidences for framing scrutiny assessment order -- viz., (a) evidence produced by the assessee (b) evidence required from the AO to be produced and
(c) after taking into account all relevant material gathered by the AO. It is, therefore, clear from plain reading of section 143(3) that assessment of the income should be based on relevant and gathered material and not beyond that. It was 12 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma further held by the ITAT that additions to the book results based on hypothetical calculation of turnover and estimation of profit rate merely on presumptions and surmises, are not sustainable. For this proposition, reliance is placed on the decisions in Mahesh chand v CIT (1993) 199 ITR 247 (All.); R.Y Durlabhij, (1995) 211 1TR 178 (Raj.) and various other decisions mentioned therein.
1.19. No evidence whatsoever was brought by the AO on record to substantiate the impugned estimated additions made by him. These estimates were based only on his imaginations and opposed to the settled legal position that the profit is to be estimated on the basis of proper material available with the AO as held in Dabros Industrial Co. (P) Ltd. v CIT (1977) 108 ITR 424 (Cal.), Making arbitrary and unreasonable estimate is not permissible in law as held in Sangrur Vanaspati Mills Ltd v ACIT (2003) 133 Taxman 37 (Chd.)(Mag.). The impugned estimation of receipts and NP did not have nexus with the material on record. The AO had not given opportunity to the appellant to contradict the material, if any, upon which he based his estimate and hence, the AO's action in this regard is opposed to the ratio held in Addl. ITO v Ponkunnam Traders (1976) 102 ITR 366, 370, 371(Ker.). The AO is required to give reason for arriving at a particular figure of the estimate as held in CIT v Ranicherra Tea Co. Ltd (1994) 207 ITR 979,983(Cal.) and to give basis for fixing his estimate, by affording opportunity to the appellant, to rebut the same. This was not done. In the assessment proceedings, the appellant was never confronted with the intention of the AO that he wanted to estimate both the receipts and NP. Thus, there was violation of mandatory requirement of law. In N. Raja Pulaiah v DCTO (1969) 73 ITR 224 (AP) & Ratanlal Omprakash v CIT (1984) 17 Taxman 201 (Orr.) it was held that where the estimate was made by the AO without giving the basis of its ,fixation the assessment was bad. The present case is covered by the ratio laid in aforesaid cases. Where the books of account are rejected, there must exist co-relation between additions made and the defects detected. This has been held in Cf.Krishnanlal & CO, v State of Kerala (2001) 123 STC 124, 126 (Ker.).
13 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma 1.20 It is settled position of law that, unless there is some evidence to prove the contrary, estimated addition on presumptions, is unsustainable on facts and in law particularly when the impugned assessments were claimed to have been made as scrutiny assessments completed after search. The impugned additions made on mere guess-work and without any cogent evidence are also opposed to the Supreme Court decision in 26 ITR775 (SC)(supra) and the decision of All. IHIC in 199 ITR 247 (All.) and Raj. HC decision in 211 ITR178 (Raj.). The law does not oblige a business man/professional to make the maximum profits that he can out of his trading transactions. Income which accrues to a trader is taxable in his hands, income which he could have, but has not earned, is not made taxable as income accrued to him(CIT v. A. Raman & Co. (1968) 67 ITR page 11-17 (SC).
1.21. Since extensive search operations were conducted and voluminous documents were seized, coupled with the books of account of the appellant, the AO should have diligently made a meaningful exercise to surface the instances of suppression in sales/receipts or inflation in purchases/expenses as also the undisclosed investment, made by the appellant, if any, and should have also appraised the appellant with the justification for rejection of book for invoking provisions of section 145(3) of the Act and without confronting the appellant with such serious discrepancies, I am afraid that the AO has no power/jurisdiction to summarily reject the books and to choose a short-cut method for estimating the receipts and profit margin. In the assessments to be completed after search and seizure operation, in my considered view, there is no scope for resorting to any estimations unless the same are corroborated with the specific material found/seized during search. Undisclosed income assessed, if any must invariably be matched with the unrecorded assets found/seized during search.
1.22. For the reasons extensively enumerated above, I have absolutely no hesitation in holding that the estimation of receipts and NP, as made by the AO, for each of the assessment years, under consideration, were unsubstantiated on the strength. of corroborative evidence 14 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma brought against the appellant on record. I have also given extensively enumerated in the preceding paragraphs the reasons as to why the rejection of book results, as made by the AO, was unsustainable. In the given facts and circumstances of the case, the estimated addition made by the AO in each of the assessment years, under consideration, in my considered view, are unsustainable on facts and in law. The same are therefore deleted. The appellant accordingly gets relief of Rs.11,60,366/- for the AY.2004-05; Rs.14,69,801/- for the AY.2005-06; Rs,3,27,757/- for the AY.2007-08; Rs.21,92,334/- for the AY.2008-09; and Rs.20,72,173/- for the AY.2009-10.
2. For the assessment year 2005-06, addition of Rs.10,94,000/- made by the AO, vide Para No.2.3 of the assessment order for that year, was also objected by the appellant. According to the AO, loose paper marked as LPS 3/24 containing details of properties, was found/seized; Pages No.78 to 97 was copy of sale deed dated 31.03,2005; the seller was Mls Linkers Securities Ltd., 22, Vaishali Nagar, Bhopal and the purchaser was Shri Anchit Goyal and the appellant Vinod Sharma. Stamp duty was Rs,1,88,000/- and selling price of Rs.20,00,000/- was paid through cheque No.463012 dated 30.05.2005 of Central Bank of India, Imami Gate Branch, Bhopal for Rs.10,00,000/- and cheque No.787195 dated 30.05.2005 of PNB Bhopal for Rs.10,00,000/-; the appellant had purchased this property jointly with Shri Anchit Goyal. The AO observed that the bank account of the appellant did not reflect debit of such payment. Since the payment made by the appellant to M/s Linkers Security Limited was not verifiable from the bank account of the appellant, the total investment of Rs.10,94,000/- was treated as unexplained investment and assessed as such in the hands of the appellant. 2.1. Against the above, in proceedings before me, it was submitted on behalf of the appellant that the appellant had purchased 6.93 acres of land jointly with Anchit Goyal for Rs.21.88 lakhs with 50% of the registry charges born by both the appellant and the other purchaser Anchit Goyal. The appellant had paid its share vide cheque No.787195 dated 30.05.2005 through PNB, Nehru Nagar Branch but due to personal reasons the seller had got the cash payment of Rs.10,00,000/- from the 15 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma appellant before the due date of payment of the cheque; that the appellant had made payment in parts out of the various receipts from construction, commission and development, to the seller M/s Linkers Securities Limited and confirmations of the same from the seller was filed in proceedings before the AO and, as such, the impugned addition according to the learned counsel for the appellant, was not justified 2.2. The rival submissions have been carefully considered with reference to the facts obtaining from the record. The facts stated by the appellant regarding payment of his share in the impugned purchase made to the seller, was verifiable from the confirmation obtained from the seller and filed in proceedings before the AO. The AO had not examined the seller nor had he brought any evidence on record to disprove the genuineness of the confirmation filed by the appellant. The appellant was proved to have sufficient funds available as per his books of account for making the impugned payment and, as such, the impugned addition made by the AO, on unverified facts, in my considered view, is unsustainable. The same is, therefore, deleted. The appellant accordingly gets relief of Rs.10,94,000/- for the AY 2005-06.
3. For the assessment year 2007-08, the appellant had also objected to the addition of Rs.12,00,000/- made by the AO vide Para No.2.4 of the assessment order appealed against. According to the AO, information received from Registrar Office, Bhopal revealed that the appellant had purchased 0.809 acres at village Mandory from ,Shri Suyoge Kumar Mishra and complete details as per registered sale deed were given in Para No.2.4 of the assessment order. The details of payment; according to the AO, were not verifiable from the bank account of the appellant and, as such, the total investment of Rs.12,00,000/- was assessed as unexplained and added to the income returned for the AY.2007-08.
3.1. I have verified the details of the payments made by the appellant, available on record and I find that the purchase price of Rs.12,00,000/- was paid by the appellant as under:
(a) Cheque No.903506 dated 26.04.2006 of PNB, Nehru Nagar Branch of Vinod Sharma (AO has wrongly mentioned as Union Bank of India, where 16 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma as it PNB); (b) Cheque No.340893 dated 27.01.2006 of Vinod sharma issued for the making demand draft in favour of Suyoge Mishra from PNB Nehru Nagar Branch; and (c) Cheque No.340893 dtd. 27.01.2006 of Vinod Sharma issued for the making demand draft in favour of Mishra from PNB Nehru Nagar Branch. To substantiate these facts, the appellant filed copy of relevant bank statements and confirmations from the concerned parties and none of them were proved by the AO as false. All the payments were made through account payee cheques and evident from the relevant bank statements available on record and as such the impugned addition made by the AO on unverified facts, in my considered view, is unjustified. The same is, therefore, deleted. The appellant accordingly gets relief of Rs.12,00,000/- for the AY.2007-08.
4. For the assessment year 2007-08, the appellant had also objected to the addition of Rs.11,00,000/- made by the AO vide Para No.2.8 of the assessment order appealed against. According to the AO, during search in the office premises of Shri Ashok. Goyal, copy of partnership deed duly signed by all the partners was found/seized. This deed was signed on 30.09.2006 and appellant was one of the partners. As per this deed Rs.11,00,000/- was. contributed by the appellant as his share of initial capital. However, the source of investment was not disclosed in the books of the appellant and as such the same was treated as undisclosed income of the appellant and added to the income returned for the AY .2007-08. 4.1. In proceedings before me as well as in proceedings before the AO, it was asserted that in the business activities in which the appellant was engaged, he use to work for Shri Ashok Goyal and Shri Ashok Goyal formed a partnership and the appellant was shown to have contributed Rs.11,00,000/- as his share in the said partnership. The firm was dissolved on 07.07.2007 and no sum was paid by the appellant as his share of capital and as such the impugned addition, according to the learned counsel for the appellant, was unjustified. 4.2. I have carefully considered the submissions made on behalf of the appellant with reference to the facts obtaining from the record. It is undisputed that the impugned deed of partnership, found/seized during search in the premises of Ashok Goyal, contained the signatures of the appellant affixed therein. If the appellant in fact had not paid the sum of 17 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma Rs.11,00,000/- as his inital. Share capital, there was no necessity for him to have sign such an instrument of partnership and the appellant's signature affixed therein clearly fortifies the fact that all that was mentioned therein was fully correct and the appellant's signature in the partnership deed also testifies his consent and agreement to all the facts and terms incorporated in the said partnership deed. It was in this background, it has to be held that the subsequent denial was only self- serving since the appellant had no evidence to prove the source of the impugned investment made in the said partnership as his initial share capital contribution. Despite specific opportunity given by the AO and also in appeal proceedings, by me, the appellant could not adduce any evidence to substantiate his assertion of having not contributed Rs.11,00,000/- as his initial share contribution in the said partnership. For the reasons aforementioned, I have absolutely no hesitation in holding that the impugned sum of Rs.11,00,000/- was contributed by the appellant as his initial share contribution in the said partnership, from sources undisclosed to the department and, as such, the addition of. Rs.11,00,000/- made by the AO, is confirmed. This ground of appeal relating to the AY.2007-08 is accordingly, dismissed.
5. For the assessment year 2008-09, the appellant had also objected to the addition of Rs.18,20,000/- made by the AO vide Para No.2.2 of the assessment order appealed against. According to the AO, Page No.185. to .188 of LPS 3/21 was copy of power of attorney given by Shri Alay Joshi amd Smt.Asha Joshi to Shri Harish Patel in respect of 8 acres of land at village Fatehpur Dobra. According to Shri Harish Patel, this land was purchased by the appellant and power of attorney was issued in his name to sell the land on commission basis. According to Shri Alay Joshi, he had received sale consideration of Rs.17,00,000/- only though the total deed was for Rs.20,00,000/-. As per the appellant, the cost of land for him was Rs.18,20,000/-. The AO noted the details of payment made by the appellant to Shri Alay Joshi were not given and hence, the total investment of Rs.18,20,000/- was treated as unexplained investment and assessed as such in the assessment for the AY 2008-09. 5.1. Against the above, as rightly submitted on behalf of the appellant in proceedings before the AO details extracted from the relevant ban 18 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma accounts demonstrate the fact that the payment of R.s.18,20,000/- made by the appellant to Shri Alay Joshi was as under:
Date Bank account Cheque Amount
07.03.2007 MP Rajya 386129 3.00 lakhs
Sahkari Bank
20.03.2007 MP Rajya 386133 0.2 lakhs
Sahkari Bank
MP Rajya 386131 2.00 lakhs
Sahkari Bank
26.03.2007 Axis Bank 422568 6.00 lakhs
10.04.2007 PNB 480640 5.00 lakhs
16.07.2007 SBI 890299
Total 18.20 lakhs
Copy of bank statement of the seller and receipt of confirmation with explanation from the seller were filed in proceedings before the AO together with all the relevant bank accounts. Payment was made on 26.03.2007 through Madhan Mohan Sharma, payment dated 10.04.2007 was made by Shri S.D.Sharma and payment dated 16.07.2007 was paid by M.N.Singhon behalf of Vinod Sharma. Without proving falsity in the aforementioned facts evident from the relevant bank statements, the impugned addition was made by the AO, presuming the same to have been met from undisclosed income of the appellant. Facts verifiable from the records were not verified and this led to this unsubstantiated addition. The same is, therefore, deleted. The appellant, accordingly, gets relief of Rs.18,20,000/- for the AY.2008-09.
6. For the assessment year 2008-09, the appellant had also objected to the addition of Rs.11,35,000/- made by the AO vide Para No.2.7 of the assessment order / appealed against. According to the AO, Pages No.61 and 62 of LPS 2/3 seized during search, was a sale agreement dated 11.05.2008 between the appellant Dr.Neha Khare, E- 8/104 Basant Kunj, Arera Colony, Bhopal for sale of farm land deluxe 12 measuring 10900sq.ft for Rs.16,35,000/-. As per agreement advance of RsI,00,000/- was given, to the seller on 11.05.2008 in cash and balance of Rs.I5,35,000/- was agreed to be paid by 10.08.2008. On Page No.77 it was mentioned that Rs.1,00,000/- was paid as advance and e paid in 19 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma three months. The AO noted that in the books of account of the appellant, total receipts from Smt.Neha Khare were shown citRs.5,00,000/- and, as such, Rs. 11,35,000/- was treated as undisclosed income of the appeilant and added to the income returned for the A V.2008-09. 6.1. Against the above, in proceedings before me, it was submitted on behalf of the appellant that the appellant had drafted a Pro-forma agreement with Neha Khare for sale of a farm house. The draft agreement was prepared for sale of farm house with 'development which included gate, boundary wall, plantation, charcoal road, main gate and other amenities and this agreement was not signed by the concerned parties since it was only a draft and subsequently Neha Khare refused for the development work and purchased the bare farm land without development for Rs.5,00,000/- and paid the same to the appellant and, as such, there was no monitory receipt of Rs.15,35,300/- to the appellant as presumed by the AO.
6.2. I have seen the relevant copies of the agreement and I find that the same was a draft not signed by the concerned parties and the appellant had not received any sum as presumed by the AO. In the event of any doubt or dispute, before holding any adversity against the appellant, the concerned party viz. Dr.Neha Khare should have been summoned and examined by the AO, to find out truth in the stated facts. This essential exercise was not carried out by the A.O. In. this view of the matter, the addition of Rs.11,35,000/- in my considered view, was unsubstantiated on the strength of evidence and hence, the same is deleted. The appellant, accordingly, gets relief of Rs.11,35,000/-
7. For the assessment year 2008-09, the appellant had also objected to the addition of Rs.34,50,000/- made by the AO vide Para No.2.10 of the assessment order appealed against. According to the AO, Pages No.171 to 174 of LPS 3/21 were the original copy of sale letter of land of 3 acres situated at village Mandori. This land was jointly held by Shri Vijit Raj Patni, Shri Hukunt Chand Jain, Shri Kishore Kotwani and Jawharlal Kotwani. They had sold this land to the appellant and Harish Patel for total sale consideration of Rs.2,77,04,160 .On the date of execution of sale letter Rs.44,00,000/- were paid in cash and Rs.6,00,000/- through cheque by the appellant and Shri. Harish Patel on 20 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma 22.03.2008. The AO observed that on another loose paper No.39 of LPS3/20 , it was seen that Shri Ashok Goyal had acknowledged payment of Rs.25,00,000/- on 08,02.2008 towards this Mandori land. Before the search team, the appellant admitted that the land deed was done along with Harish Patel and source of payment would be explained after asking from Harish Patel. The appellant also admitted having paid Rs.25,00,000/- to Ashok Goyal towards part payment of the above said land deal. In assessment proceedings before the AO, it was explained that only Rs.6,00,000/- was paid through cheque and since the deal was cancelled later, the sum paid through cheque was returned by the sellers. According to the AO, the appellant failed to explain the source of payment made in cash by him as mentioned in the sale letter and in the acknowledgement issued by Ashok Goyal. Since the appellant and Harish Patel had jointly invested amount in cash. Rs.34,50,000/- was treated and assessed as appellant's unexplained investment for the AY.2008-09. 7.1. As rightly submitted on behalf of the appellant, the aforementioned agreement was not signed by the other parties nor was it executed or enforced. Since the proposal was not materialized, the advance of Rs.6,00,000/- was returned and it stood reflected in the bank account of the appellant. Copies of confirmations from all the concerned parties, affirming the aforementioned facts, were filed in proceedings before the AO, which were not proved by the AO as false, The advance received by the seller, was returned by him through account payee cheque to the appellant as per details available on record. In this view of the matter, the impugned addition of Rs.34,50,000/- made by the AO, on extraneous considerations, unsubstantiated on the strength of corroborative evidence, in my considered view, is unsustainable. The same is, therefore, deleted. The appellant, accordingly, gets relief of Rs.34,50,000/-.
8. For the assessment year 2009-10, the appellant had also objected to the addition of Rs.51,20,000/- made by the AO vide Para No.2.6 of the assessment order appealed against. According to the AO, Pages No.58 to 60 of LPS 2/3 were copy of agreement dated 10,03.2008 between he appellant and Smt.Sangeeta Malaviya, HIG-17, Old Subhash Nagar, Bhopal for sale of farm land number deluxe No.4,5,10 and 11. measuring 43,600 sq.ft at village Mandori. As per Government 21 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma records the said land belonged to the joint family of Shri Khubilal Maran who owned 3.12. acres of agrl, land and agreement was already executed for development and sale of the said land by the appellant . The said land was agreed to be sold to Sangeeta Malaviya for Rs.63,20,000/-and advance of Rs.6,00,000/- was paid to the seller ie. Rs.5,50,000/- cash paid 10.03.2008 and R.s.50,000/- was paid on 10.03.2008 by cheque No.108818 through Bank of India, Arm Colony, Bhopal. Out of the balance payment, a sum of Rs.17,20,000/- was agreed to be paid on 30.04.2008 and the remaining by 30.05.2008. According to the AO, in the books of account of the appellant, the appellant had shown sale of this land on power of attorney given by Shri Khubilal Maran on commission basis @. Rs.5/- per sq.ft. Total transaction shown in the hands of Khubilal Maran and the appellant was for Rs.12,00,000/- only and rest of the amount of .Rs.51,20,000/- was not shown in the books of account and as such this SUM of Rs.51,20,000/- was treated as undisclosed income of the appellant added to the income returned for the AY.2009-10. 8.1. Against the above, as rightly submitted on behalf of the appellant in proceedings before the AO, Smt.Sangeeta Malaviya felt that after development the land would be very costly and as such she had not gone further with this agreement and had not paid any purchase consideration or advancement as mentioned in the agreement. Copy of bank statement of Sangeeta Malaviya available on record also shows that the cheque No.108818 of Bank of India was not cleared till date to complete the agreement. Smt.Sangeeta Malaviya has purchased two bare farrn land from original owner without development work i.e. from Khubilal Maran out of four farm houses mentioned in the said agreement and in this dea1, the appellant charged brokerage @ Rs.5/- per sq.ft. from the party since the farm land sold by the original owner to Smt.Sangeeta Malaviya was without development which fact is evident from copy of registry and also bank statement of the seller and confirmation of the buyer, available on record. From the above documentary evidences it is very clear that Smt.Sangeeta Malaviya purchased the land from Khubilal Maran and directly paid the consideration to him and the commission received by the appellant was duly account accounted for in the books. The AO had not proved falsity in the aforestated facts and confirmation available on record. In this view the matter the addition of Rs.51,20,000/- made by the 22 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma AO, on incorrect appreciation of facts cannot be sustained. The same is, therefore, deleted. The appellant accordingly get relief of Rs.51,20,000/- for the AY 2009-10."
9. The relief allowed to the appellant, year-wise, is summarized below:
Vide Assessment years
Para
No
04-05 05-06 07-08 08-09 09-10
1.21. Rs.11,60,366/- Rs.14,69,801/- Rs.3,27,757/- Rs.21,92,334/- Rs.20,72,173/-
2.2. Rs.10,94,000/-
3.1 Rs.12,00,000/-
4.1.
5.1. Rs.18,20,000/-
6. Rs.11,35,000/-
7.1 Rs.34,50,000/-
8.1. Rs.51,20,000/-
Total Rs.11,60,366/- Rs.25,63,801/- Rs.15,27,757/- Rs.85,97,334/- Rs.71,92,173/-
10. In the result, the appeals are partly allowed."
4. Now the department is in appeal before the Tribunal.
5. Before us, the learned DR submitted that there was search and seizure operation conducted at the residential premises of the assessee and the assessee is closely associated with Rajesh Rajora, IAS, and family memb ers and during the search, some incriminating documents were found and the assessee was found to be a broker for sale and purchase of property and involved in business of road work for developing colonies on contract basis. The assessee was not maintaining books of accounts and 23 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma during the course of search, it was found that the assessee is mainly in the business of sale and purchase of land on commission basis. The agricultural land bought from the land owners on power of attorney and developed into farm houses. These farm houses were shown to the individual customers. The power of attorney is taken from the land owners and thereafter the land has been sold, therefore, it was only a transaction out of unaccounted income. During the course of search and seizure, power of attorney was given by Harish Patel in respect of 8 acres of land and the land was purchased by Vinod Sharma and he has received money and Vinod Sharma has not accounted this income in his books of accounts. The various loose papers suggest that the assessee has purchased many lands in various villages and the documents suggest that the assessee has earned unaccounted income. Therefore, the Assessing Officer is justified in adopting 10% NP rate and the learned 24 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma CIT(A) without referring to the documents has simply reduced the NP. The learned CIT(A) without considering the cash transaction, has granted relief.
6. On the other hand, the learned counsel for the assessee while supporting the order of the learned CIT(A), strongly submitted that since the assessee has filed all the relevant documents and the Assessing Officer has utterly failed to negate the same, the learned CIT(A) was very much justified in granting relief to the assessee. The learned counsel for the assessee, therefore, prayed that these appeals deserve to be dismissed.
4. We have considered the submissions of both the sides. We find that in this case the revenue has not disputed the maintenance of regular books of accounts and as such has not applied the provisions of section 145(3) of the Act. We further find that most of the transactions reflected in the books of accounts were routed through 25 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma banking channels. Further, the Assessing Officer had not brought any evidence on record to conclusively prove that the scribbling/jottings/rough workings in the impugned loose papers, were in fact the materialized monitory transactions relating to the suppressed receipts of the assessss. In the event of any doubt or dispute, before any adversity was to be held against the assessss, it was incumbent upon the AO to have summoned and examined the concerned parties to find out truth in the matter, but this essential exercise was not carried out by the Assessing Officer. There was no basis and evidence brought by the AO on record to substantiate such hypothetical and arbitrary estimation of receipts. Details available on record demonstrate the fact that in A.Y. 2004-05, there was no sale of farm house or piece of land on commission basis and that there were no substantial cash transactions in any of the assessment years, under consideration. The 26 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma assessss undisputedly is a real-estate broker and his interest was normally limited to 2% commission on the sale price of the land while the Assessing Officer estimated the same @ 10% which was highly unreasonable and unsubstantiated on the strength of corroborative evidence. Record also evidences the fact that, in proceedings before the A.O, the assessss had submitted details of the land, part of the land, plot, farm land sold during each of the assessment years, under consideration.
5. We further find that during search, some powers of attorneys were found/seized and when confronted by the Assessing Officer it was explained on behalf of the assessee that the property covered by the power of attorney belonged to the owners and since the assessss had to seek a prospective buyer, the same was held by the assessss on the basis of power of attorney, without receiving any consideration from the concerned land owners and as and 27 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma when the said property was sold to the prospective buyer, the title was transferred from the land owner to the buyer and the sale proceeds received were directly transferred from the buyer to the owner and if they were received by the assessss, the same were transferred to the owner after deducting the brokerage due to the assessss and as such for all practical purposes, the assessss was not the owner of such properties covered by the power of attorney. Hon'ble Supreme Court in its decision reported in 219 ITR 330 (SC) held that there cannot be tax on income on presumptive basis. Income in fact earned, is only taxable and not, the one presumed to have been earned. Mere rejection of the books of account would not mean that it must necessarily lead to additions to the returned income. In our opinion, the results shown on the basis of account books maintained in regular course of business, should not have been substituted by irrelevant, presumptive and 28 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma erroneous considerations. It is a settled position of law that unless there is some evidence to prove the contrary, estimated addition on presumptions, is unsustainable on facts and in law particularly when the impugned assessments were claimed to have been made as scrutiny assessments completed after search. The impugned additions made on mere guess-work and without any cogent evidence are also opposed to the Supreme Court decision in 26 ITR 775 (SC)(supra) and the decision of All. IHIC in 199 ITR 247 (All.) and Raj. HC decision in 211 ITR178 (Raj.). For the reasons extensively enumerated above, we have absolutely no hesitation in holding that the estimation of receipts and NP, as made by the AO, for each of the assessment years, under consideration, were unsubstantiated on the strength of corroborative evidence brought against the assessss on record. On the facts and circumstances of the case, the estimated addition made by 29 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma the AO in each of the assessment years, under consideration are unsustainable in law. The same are, therefore, deleted.
6. So far as the assessment year 2005-06 is concerned, we find that the Assessing Officer has made the addition of Rs.10,94,000/-. According to the AO, loose paper marked as LPS 3/24 containing details of properties, were found and seized. ; Pages No.78 to 97 was copy of sale deed dated 31.03,2005; the seller was Mls Linkers Securities Ltd., 22, Vaishali Nagar, Bhopal and the purchaser was Shri Anchit Goyal and the assessss Vinod Sharma. Stamp duty was Rs,1,88,000/- and selling price of Rs.20,00,000/- was paid through cheque No.463012 dated 30.05.2005 of Central Bank of India, Imami Gate Branch, Bhopal for Rs.10,00,000/- and cheque No.787195 dated 30.05.2005 of PNB Bhopal for Rs.10,00,000/-; the assessss had purchased this property jointly with Shri Anchit Goyal. The 30 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma AO observed that the bank account of the assessss did not reflect debit of such payment. Since the payment made by the assessss to M/s Linkers Security Limited was not verifiable from the bank account of the assessss, the total investment of Rs.10,94,000/- was treated as unexplained investment and assessed as such in the hands of the assessss by the Assessing Officer. On appeal, the learned CIT(A) granted relief of Rs.10,94,000/-.
7. Before us, the learned DR relied upon the order of the Assessing Officer whereas the learned counsel for the assessee relied upon the order of the learned CIT(A).
8. We have considered the submissions of both the sides. We find that the Assessing Officer had not examined the seller nor had he brought any evidence on record to disprove the genuineness of the confirmation filed by the assessss. The assessss proved to have sufficient funds available as per his books of account for making the 31 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma impugned payment and, as such, the impugned addition made by the Assessing Officer is unsustainable. We, therefore, dismiss this ground of appeal of the revenue.
9. For the assessment year 2007-08, the revenue had also taken the ground that the learned CIT(A) was not justified in deleting the addition of Rs. 12 lacs made by the Assessing Officer on account of unexplained investment.
10. We have considered the submissions of both the sides. We find that the purchase price of Rs.12,00,000/- was paid by the assessss as under :-
(a) Cheque No.903506 dated 26.04.2006 of PNB, Nehru Nagar Branch of Vinod Sharma (AO has wrongly mentioned as Union Bank of India, where as it PNB);
(b) Cheque No.340893 dated 27.01.2006 of Vinod sharma issued for the making demand draft in favour of Suyoge Mishra from PNB Nehru Nagar Branch; and
(c) Cheque No.340893 dtd. 27.01.2006 of Vinod Sharma issued for the making demand draft in favour of Mishra from PNB Nehru Nagar Branch.
To substantiate these facts, the assessee filed copy of relevant bank statements and confirmations from the 32 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma concerned parties before the Assessing Officer and none of them were proved by the Assessing Officer as false. All the payments were made through account payee cheques and evident. We, therefore, find no flaw in the order of the learned CIT(A) and confirm the same.
11. For the assessment year 2008-09, the Revenue has also objected to the deletion of addition of Rs.18,20,000/- as made by the Assessing Officer.
12. We have considered the submissions of both the sides. We find that according to the AO, Page No.185. to 188 of LPS 3/21 was copy of power of attorney given by Shri Ajay Joshi and Smt.Asha Joshi to Shri Harish Patel in respect of 8 acres of land at village Fatehpur Dobra. According to Shri Harish Patel, this land was purchased by the assessss and power of attorney was issued in his name to sell the land on commission basis. According to Shri Ajay Joshi, he had received sale consideration of Rs.17,00,000/- only though 33 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma the total deed was for Rs.20,00,000/-. As per the assessee, the cost of land for him was Rs.18,20,000/-. The Assessing Officer noted the details of payment made by the assessss to Shri Ajay Joshi were not given and hence, the total investment of Rs.18,20,000/- was treated as unexplained investment by the Assessing Officer and assessed as such. On appeal, the learned CIT(A) granted relief of the addition made by the Assessing Officer against which the revenue is in appeal before the Tribunal. We find that the assessee has made the payment to Shri Ajay Joshi as under :-
Date Bank account Cheque Amount
07.03.2007 MP Rajya Sahkari Bank 386129 3.00 lakhs
20.03.2007 MP Rajya Sahkari Bank 386133 0.2 lakhs
MP Rajya Sahkari Bank 386131 2.00 lakhs
26.03.2007 Axis Bank 422568 6.00 lakhs
10.04.2007 PNB 480640 5.00 lakhs
16.07.2007 SBI 890299
Total 18.20 lakhs
We find that copy of bank statement of the seller and receipt of confirmation with explanation from the seller were filed in proceedings before the AO together with all the 34 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma relevant bank accounts. Payment was made on 26.03.2007 through Madhan Mohan Sharma, payment dated 10.04.2007 was made by Shri S.D.Sharma and payment dated 16.07.2007 was paid by M.N.Singh on behalf of Vinod Sharma. We are of the view that without proving falsity in the aforementioned facts evident from the relevant bank statements, the impugned addition was made by the Assessing Officer on the basis that same have been made from undisclosed income of the assessee. We, therefore, confirm the order of the learned CIT(A) on this issue.
13. Further, for the assessment year 2008-09, the Revenue had also objected to the relief of Rs.11,35,000/- given by the learned CIT(A) by deleting the addition made by the Assessing Officer.
14. We have considered the submissions of both the sides. We find that according to the AO, Pages No.61 and 62 of LPS 2/3 seized during search, was a sale agreement dated 35 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma 11.05.2008 between the assessss Dr.Neha Khare, E-8/104 Basant Kunj, Arera Colony, Bhopal for sale of farm land deluxe 12 measuring 10900sq.ft for Rs.16,35,000/-. As per agreement advance of RsI,00,000/- was given, to the seller on 11.05.2008 in cash and balance of Rs.I5,35,000/- was agreed to be paid by 10.08.2008. On Page No.77 it was mentioned that Rs.1,00,000/- was paid as advance and e paid in three months. The AO noted that in the books of account of the assessss, total receipts from Smt.Neha Khare were shown citRs.5,00,000/- and, as such, Rs. 11,35,000/- was treated as undisclosed income of the assessss and added to the income of the assessee. On appeal, the addition was deleted by the learned CIT(A) against which the Revenue is in appeal before us.
15. We have considered the submissions of both the sides. We find that the assessee had drafted a proforma agreement with Neha Khare for sale of a farm house. The 36 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma draft agreement was prepared for sale of farm house with 'development which included gate, boundary wall, plantation, charcoal road, main gate and other amenities and this agreement was not signed by the concerned parties since it was only a draft and subsequently Neha Khare refused for the development work and purchased the bare farm land without development for Rs.5,00,000/- and paid the same to the assessss and, as such, there was no monitory receipt of Rs.15,35,300/- to the assessss as presumed by the AO. In the event of any doubt or dispute, before holding any adversity against the assessss, the concerned party viz. Dr.Neha Khare should have been summoned and examined by the AO, to find out truth in the stated facts. This essential exercise was not carried out by the A.O. In this view of the matter, we have no alternate but to confirm the findings of the learned CIT(A). We, therefore, confirm the same.
37 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma
16. Further the revenue has objected to the addition of Rs.34,50,000/- made by the Assessing Officer. According to the AO, Pages No.171 to 174 of LPS 3/21 were the original copy of sale letter of land of 3 acres situated at village Mandori. This land was jointly held by Shri Vijit Raj Patni, Shri Hukunt Chand Jain, Shri Kishore Kotwani and Jawharlal Kotwani. They had sold this land to the assessss and Harish Patel for total sale consideration of Rs.2,77,04,160 .On the date of execution of sale letter Rs.44,00,000/- were paid in cash and Rs.6,00,000/- through cheque by the assessss and Shri. Harish Patel on 22.03.2008. The AO observed that on another loose paper No.39 of LPS3/20 , it was seen that Shri Ashok Goyal had acknowledged payment of Rs.25,00,000/- on 08,02.2008 towards this Mandori land. Before the search team, the assessss admitted that the land deed was done along with Harish Patel and source of payment would be explained 38 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma after asking from Harish Patel. The assessss also admitted having paid Rs.25,00,000/- to Ashok Goyal towards part payment of the above said land deal. In assessment proceedings before the AO, it was explained that only Rs.6,00,000/- was paid through cheque and since the deal was cancelled later, the sum paid through cheque was returned by the sellers. According to the AO, the assessss failed to explain the source of payment made in cash by him as mentioned in the sale letter and in the acknowledgement issued by Ashok Goyal. Since the assessss and Harish Patel had jointly invested amount in cash. Rs.34,50,000/- it was treated and assessed as assessss's unexplained investment.
17. We have considered the submissions of both the sides. We find that the aforementioned agreement was not signed by the other parties nor was it executed or enforced. Since the proposal was not materialized, the advance of 39 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma Rs.6,00,000/- was returned and it stood reflected in the bank account of the assessss. Copies of confirmations from all the concerned parties, affirming the aforementioned facts, were filed in proceedings before the AO, which were not proved by the AO as false, The advance received by the seller, was returned by him through account payee cheque to the assessss as per details available on record. In this view of the matter, the impugned addition of Rs.34,50,000/- made by the AO, on extraneous considerations, unsubstantiated on the strength of corroborative evidence. We, therefore, sustain the order of the learned CIT(A) on this issue.
18. So far as assessment year 2009-10 is concerned, the Revenue has objected to the deletion of addition of Rs.51,20,000/- made by the Assessing Officer. According to the Assessing Officer, Pages No.58 to 60 of LPS 2/3 were copy of agreement dated 10,03.2008 between he assessss 40 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma and Smt.Sangeeta Malaviya, HIG-17, Old Subhash Nagar, Bhopal for sale of farm land number deluxe No.4,5,10 and
11. measuring 43,600 sq.ft at village Mandori. As per Government records the said land belonged to the joint family of Shri Khubilal Maran who owned 3.12. acres of agrl, land and agreement was already executed for development and sale of the said land by the assessss . The said land was agreed to be sold to Sangeeta Malaviya for Rs.63,20,000/-and advance of Rs.6,00,000/- was paid to the seller ie. Rs.5,50,000/- cash paid 10.03.2008 and R.s.50,000/- was paid on 10.03.2008 by cheque No.108818 through Bank of India, Arm Colony, Bhopal. Out of the balance payment, a sum of Rs.17,20,000/- was agreed to be paid on 30.04.2008 and the remaining by 30.05.2008. According to the AO, in the books of account of the assessss, the assessss had shown sale of this land on power of attorney given by Shri Khubilal Maran on 41 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma commission basis @. Rs.5/- per sq.ft. Total transaction shown in the hands of Khubilal Maran and the assessss was for Rs.12,00,000/- only and rest of the amount of .Rs.51,20,000/- was not shown in the books of account and as such this SUM of Rs.51,20,000/- was treated as undisclosed income of the assessss which was added by the Assessing Officer to the income of the assessee.
19. On appeal, the learned CIT(A) deleted the addition against which the revenue is in appeal before the Tribunal.
20. We have considered the submissions of both the sides. We find that during the proceedings before the AO, Smt. Sangeeta Malaviya stated that she felt that after development the land would be very costly and as such she had not gone further with this agreement and had not paid any purchase consideration or advancement as mentioned in the agreement. Copy of bank statement of Sangeeta Malaviya available on record also shows that the 42 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma cheque No.108818 of Bank of India was not cleared till date to complete the agreement. Smt.Sangeeta Malaviya has purchased two bare and from original owner without development work i.e. from Khubilal Maran out of four farm houses mentioned in the said agreement and in this dea1, the assessss charged brokerage @ Rs.5/- per sq.ft. from the party since the farm land sold by the original owner to Smt.Sangeeta Malaviya was without development which fact is evident from copy of registry and also bank statement of the seller and confirmation of the buyer, available on record. From the above documentary evidences it is very clear that Smt.Sangeeta Malaviya purchased the land from Khubilal Maran and directly paid the consideration to him and the commission received by the assessss was duly account accounted for in the books. We, therefore, confirm the action of the learned CIT(A) in deleting the addition made by the Assessing Officer. 43 IT(SS) A Nos.227 to 231/Ind/2012 ACIT vs. Vinod Sharma
21. In the result, the appeals of the revenue are dismissed.
The order has been pronounced in open Court on 10th January, 2017.
Sd/- sd/-
(ओ.पी.मीना) (डी.ट .गरा सया)
लेखा सद य या यक सद य
(O.P.Meena) (D.T.Garasia)
Accountant Member Judicial Member
*दनांक /Dated : 10th January, 2017.
Dn/
44