Income Tax Appellate Tribunal - Jaipur
Kamakshi Hospitality Pvt. Ltd., Jaipur vs Dcit, Jaipur on 20 December, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES , JAIPUR
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BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM
vk;dj vihy la-@ITA No. 481/JP/2016
fu/kZkj.k o"kZ@Assessment Year: 2010-11
M/s. Kamakshi Hospitality Pvt. Ltd cuke The DCIT
A-3, Moti Lal Atal Road, Jaipur Vs. Central Circle - 1, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGBPS 3591 D
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@Assessee by: Shri Rajeev Sogani, CA
jktLo dh vksj ls@ Revenue by:Shri R.A. Verma, Addl. CIT - DR &
Shri Virendra Mehta, CIT-DR
lquokbZ dh rkjh[k@ Date of Hearing : 30/11/2017
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 20 /12/2017
vkns'k@ ORDER
PER BHAGCHAND, AM
The assessee has filed an appeal against the order of the ld.
CIT(A)-4, Jaipur dated 29-03-2016 for the Assessment Year 2010-11 raising following grounds.
''1. In the facts and circumstances of the case and in law the search proceedings conducted u/s 132 is patently illegal and consequently the assessment made u/s 153A is illegal, without any basis and beyond scope. Relief may please be granted by holding the search proceedings illegal and consequently quashing the assessment proceeding u/s 153A being void and ab inito.
ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur 2(a). In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of AO in adding a sum of Rs. 10,63,66,700/- u/s 69 of the I.T. Act, 1961 towards alleged ''on money'' payment for buying plots of land. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 10,63,66,700/-
(b) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the addition of Rs. 10,63,66,700/- which is merely based on statement of Shri Nirmal Kumar Jain and Shri Bimal Kumar Jain, opportunity of whose cross examination was never provided. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition of Rs. 10,63,66,700/-
© In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO in not referring the matter to the Department Valuation Officer (DVO). The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the addition as being without any basis.
2.1 During the course of hearing, the ld.AR of the assessee has not pressed the Ground No. 1 and 2© of the appeal. Hence, the same are dismissed being not pressed.
3.1 Apropos Ground No. 2(a) and (b) of the assessee, facts as emerges from the order of the ld. CIT(A) is as under:-
''3.1.2 I have duly considered the assessee's submission and also carefully gone through the assessment order. T h e a s s e s s e e p u r c h a s e d p l o t n o . D-112 at P o w e r H o u s e Road, Bani Park, J ai p ur, m eas u ri n g 1 0 0 0 s q . yrd s . fro m J ai n Bro t h ers o n 1 7 . 0 4 . 2 0 0 9 & M / s Rawat Construction Pvt. Ltd. on 28.5,2009, the sale consideration paid as under:
• Plot No. D-112A (500 sq. yds) from Nirmal Kr Jain Rs. 1 Crore dt. 17.04.2009 • Plot No. D-112B (500 sq. yds)from Bimal Kr Jain Rs. 1 Crore dt. 17.04.2009 2 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur • Plot No. D-112(1000 sq. yds.) from M/s. Rawat Construction P Ltd. for Rs. 1,14,00,000/- on 25.08.2009 After including the registration cost of Rs. 22,33,300/- the value of the above investments comes to Rs. 3,36,33,300/-. During the course of search operation on 23.07.2009 conducted against Sh Nirmal Kr Jain & Sh Bimal Kr Jain incriminating documents suggesting on money payment with regard to Property at Plot D-112A & D-112B were found and seized. On being confronted with these seized documents during the course of search operation Jain Brothers have categorically admitted that each of them had received on money amounting to Rs. 2.50 crores (Total Rs.5 Crore) in addition to the registered sale consideration against the sale of those property and accordingly surrendered during sworn statements recorded on oath during the search operation conducted against them and later on offer the same as their undisclosed income for the year in their respective returns of income. H o w e v e r , a s s e s s e e o b j e c t e d t o t h i s a n d r e q u e s t e d t o a d o p t t h e D L C R a t e a s a d o p t e d A u t h o r i t y. F u r t h e r , assessee has objected to make any addition on the basis of sworn statement recorded of Sh Nirmal Kr Jain & Sh Bimal Kr Jain (Refer Asst Order pg 8 & 9) stating that addition cannot be made purely on the basis of voluntary disclosure made by Jain Brothers in their sworn statements recorded on oath which is nothing but an o r a l e v i d e n c e . It i s p e r t i n e n t t o m e n t i o n h e r e t h a t s w o r n s t a t e m e n t recorded on oath is an important piece of evidence and AO's finding is further corroborated by the facts that both the Jain Brothers have offered their undisclosed income ("on money" from t h i s t r a n s a c t i o n ) i n t h e i r r e t u r n s o f i n c o m e f o r t h e ye a r . F u r t h e r , i t is also facts that no evidence suggesting "on money payment"
with regard to property at plot no. D-112 purchased from M/s. Rawat Construction Pvt. Ltd. has been found during the course of search operation conducted.
Keeping in mind this fact, the AO observed that FMV ( Fair Market Value) of this plot should to be t ak en o n t h e b asi s o f t wo o t h er p lo ts p u rch as ed b y t h e a s s e s s e e , w h i c h a r e m a r k e d a s p l o t n o D - 1 1 2 A a n d D 112B from Jain brothers namely Sh Nirmal Kr Jain & Sh Bimal Kr Jain. The area of t h o s e t w o p l o t s i s a l s o 1 0 0 0 s q . y d s for which the purchase price has been adopted by the AO at Rs. 7 Crore, as against aggregate amount of Rs. 2 crores shown in the two sale deeds. The AO took the rate @ Rs 70000/= per sq. yrds and on that basis, the AO has held that the land in this area should accordingly be computed at the same purchase price of adjacent 3 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur p l o t m e a s u r i n g 1 0 0 0 s q . yr d s p u r c h a s e d f r o m M / s R a w a t C o n s t r u c t i o n P v t . L t d . F i n a l l y, h e e s t i m a t e d a t R s . 7 , 4 0 , 6 0 , 0 0 0 / - and added the difference u/s 69B of the Act. For the sake of c l a r i t y, r e l e v a n t e x t r a c t o f A O ' s f i n d i n g i n p a g e 9 & 1 2 o f t h e assessment order are reproduced inter alia here as under:
"............................................................................................ ..
In view of above facts, the contention of the assessee has no force in it. The addition is not proposed only on the basis of oral evidences. There are ample circumstantial evidences that prove the creditworthiness of the statements.
(i) The assessee has required the department to obtain the statements of M/s Rawat Construction Pvt. Ltd. and allow the assessee to cross examine them. It is the requirement of the Department and not of the assessee to take an action. The department is not liable to take an action on the directions of the assessee that suits the requirements of the assessee.
Since the department is in possession of above substantial evidences, therefore, it was not considered fit to require any statement of M/s. Rawat Construction Pvt. Ltd.
(ii) The locality where the said land is situated is in a post area of Jaipur City and it is situated the heart of the City. Further, the land in question is adjacent to the property at Plot No. D-112A and D-112B that the above mentioned Jain Brothers had sold during the same period admittedly @ Rs. 70,000/- per sq. yards. Therefore, the value of the property under question has rightly been proposed to taken @ Rs. 70,000/- sq. yard i.e. Rs. 7,40,60,000/-..........
.................................................................................... ............................................................................................. ...................19. On the basis of above facts and circumstances, the fair market value of the land in question i.e. D-112, D-112A & D-112B, Power House Road, Banipark, Jaipur is taken @ Rs. 70,000/- per sq. yards. Since, the above mentioned land measures to 2000 sq. yards (1000 + 500 + 500 sq. yds) its total value is taken at Rs. 14,00,00,000/-. Accordingly, the difference 4 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur amount between the fair market value and the value declared by the assessee i.e. Rs. 10,63,66,700/- (Rs. 14,00,00,000/- - Rs. 3,36,33,300/-) is hereby added to the total income of the assessee u/s 69B of the Income-tax Act, 1961. Initiate penalty proceedings u/s 271(1)(c) for concealment......"
On perusal of the above, it is seen that AO has adopted fair m a r k e t v a l u e @ R s . 7 0 , 0 0 0 / - p e r s q . yd s o n b a s i s o f s w o r n statement recorded on oath given by Sh Jain Brothers. It is also f a c t t h a t n o i n c r i m i n a t i n g d o c u m e n t s s u g g e s t i n g p a ym e n t o f o n money with regard to transaction with M/s. Rawat Construction Pvt. Ltd. were found from the search premise. Further, AO has also not ex amined M/s Rawat Construction Pvt. Ltd. to arrive at such conclusion.
It is seen that all the three plots D-112, D-112A and D-112B are part of a common plot( Refer Asst Order Pg 7) . In respect of Plot no D-112 A & D-112B, purchased from Sh Nirmal Kr Jain and Sh Bimal Kr Jain, both the sellers have accepted fact of receipt of "on money" to the extent of Rs 5 Crores and offered the same in their respective returns. This "on money" payment by Nirmal Kr Jain is also supported by the documents seized in search. Once, the seller has accepted the fact of giving on money, the same has to be considered as paid by the buyer. Similarly, plot no D-112 is part of the plot D-112A & D-112B and therefore, the on money payment in respect of plot no D-112 cannot be denied in view of circumstantial evidences.
In view of facts and circumstances of the case and duly considering the facts of the evidences found from the sellers' premises, the addition made u/s Sec 69B of the Act is confirmed.'' 3.2 During the course of hearing the ld.AR of the assessee prayed for deletion of addition of Rs. 10,63,66,700/- u/s 69 of the Act for which the ld.AR of the assessee filed the following written submissions dated 11- 08-2017 and dated 8-03-2017 respectively.
5 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Before A.O
1. Ld. AO completed the assessment u/s 143(3), making total additions of Rs. 10,63,66,700/- u/s 69 alleging undisclosed investment in purchase of the above 3 pieces of land.
2. Elaborate submissions were made before the ld. AO which he has reproduced at Para 15 page 4-5-6 of his assessment order.
3. Specific request for the following was made to the ld. AO:
i. Cross examination of ShriNirmal Kumar Jain. ii. Cross examination of ShriBimal Kumar Jain. iii. Income Tax Returns of ShriNirmal Kumar Jainand ShriBimal Kumar Jain.
iv. Cross examination of M/s Rawat Constructions Private Limited. v. Copies of alleged incriminating documents related to land purchases.
4. Ld. AO turned down the above requests without any cogent reasons and rather on flimsy grounds.(AO OrderPage 9)
5. Ld. AO made the addition solely on the basis of oral admission of ShriNirmal Kumar Jainand ShriBimal Kumar Jain and in respect of purchase from Rawat Constructions Private Limited, even without oral admission.
Before Ld. CIT(A)
1. Elaborate submissions were made before the ld. CIT(A) raising following contentions:
6 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur i. No addition can be made on the basis of oral admission of a third party without allowing the opportunity of cross examination.
ii. Additions are made only on surmises and conjectures and without any material, worth the name.
iii. Provisions of Transfer of Property Act do not permit admission of oral evidence in contradiction to the written and registered documents.
iv. The case laws relied upon by the ld. AO were also distinguished.
v. Further, reliance was placed before the ld. CIT(A) on following judicialpronouncements:
Gist at PB S. No. Case Law Page 1 Smt. K.V. Lakshmi Saviti Devi vs. Assistant Commissioner of Income Tax (2011) 148 TTJ (Hyd) 517 PB 113 2 SMT. SUNITA DHADDA vs. DY. COMMISSIONER OF INCOME TAX (2012) 148 TTJ (Jp) 719 PB 114 3 Rajesh Kumar & Ors. Vs. Dy. CIT (2006) 206 CTR (SC) 175: (2006) 287 ITR 91 (SC) PB 117 4 CIT vs. S.C. Sethi (2007) 295 ITR 351 (Raj) PB 118 5 Sheth Akshay Pushpavadan vs. Dy. CIT (2010) 130 TTJ (Ahd)(UO) 42 PB 118 6 CIT vs. Ashwani Gupta (2010) 191 Taxman 51 (Del) PB 118 7 Unique Organisers & Developers (P) Ltd. Vs. Dy. CIT (2001) 70 TTJ (Ahd) 131 PB 118 SUBMISSIONS
1. Written Submissions, made before the ld. CIT(A), appearing at Paper Book Pages 9-107, 108-119 and 120-125 may please be considered.
2. Ld. CIT(A) has passed a very skeptical and non speaking order in a most summary manner. His findings are contained in merely 3 pages at para 3.1.2 (CIT(A) Order pg 23-26), out of which page 25 is only reproduction of the ld. AO finding.
3. Ld. CIT(A) has not considered the pleadings madebefore him. The factual and legal issues raised are not even dealt with by the ld.CIT(A).
4. Ld. CIT(A) has rejected the appeal for the following reasons:7 ITA No. 481/JP/2016
M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Reason by ld. CIT(A) i. Incriminating documents suggesting on money payment with regard to property at Plot No. D-112-A and D-112-B were found and seized.
Submissions Ld. CIT(A) has mentioned about the incriminating documents suggesting on money payment. Neither the ld. AO nor the ld. CIT(A) have pin pointed the specific documents which suggested payment of on money in respect of Plot No. D-112-A and D-112-B. The incriminating documents seized at the residential premises of ShriNirmal Kumar Jain and ShriBimal Kumar Jain may suggest theiron money payment in respect of purchase of properties by them. To explain the source of such investment, both ShriNirmal Kumar Jain and ShriBimal Kumar Jain, in their self interest, admitted having received on money payment from the appellant company. Reason by ld.CIT(A) ii. On being confronted with these seized documents at the residence of Jain Brothers, Jain Brothers admitted receipt of on money. The statements of Jain Brothers were recorded on oath.
Submissions Statements of Jain brothers recorded on oath u/s 132(4), at worst, are binding on them. No adverse inference can be drawn against the appellant company. More so, when those statements are not corroborated by any evidence and the same are clearly motivated and self serving.
Reason by ld. CIT(A) iii. Jain Brothers offered the receipt of on money in their respective Income Tax Returns.
Submissions 8 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Merely the fact of Jain brothers offering the receipt in their Income Tax Returns can have no adverse bearing on the appellant company. It is submitted that copies of the Income Tax Returns, evenon specific request, were not made available to the appellant company. It is possible that Jain brothers have claimed benefit of section 54 and have not paid any tax on this alleged on money receipt.
Reason by ld. CIT(A) iv. In respect of purchase of Plot No. D-112 from M/s Rawat Constructions Private Limited, ld. CIT(A) admitted (at page 24) that no evidence suggesting on money payment with regard to this property were found but upheld the order of the ld. AO for the reason that the fair market value of the adjacent plot should also be taken at the same rate as that of plots sold by Jain Brothers. Ld. CIT(A) further, observed that fair market value @ 70,000/- square yard was based on sworn statements of Jain Brothers. Ld. CIT(A) has also admitted (at page 26 top para) that ld. AO has not examined Rawat Constructions Private Limited to arrive at such conclusion.
Submissions So far as the purchase of Plot No. D-112 from M/s Rawat Constructions Pvt. Ltd. is concerned, ld. CIT(A) has himself admitted that no incriminating documents were found and even ld. AO has not examined the directors of the company. Therefore, confirming the addition is unjustified.
Reason by ld. CIT(A) v. Ld. CIT(A) finally upheld the order of the ld. AO holding that once the seller accepted the fact of on money, the same has to be considered as paid by the buyer and in respect of Plot No. D-112 on money payment cannot be denied in view of circumstantial evidences.
Submissions The final conclusion of the ld. CIT(A) is based on his misconception that once seller accepts the fact of on money receipt, the payment of the same 9 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur by the buyer cannot be denied. Under the peculiar facts of the instant case, the buyers have admitted the on money receipt in their self interest and there is no corroborative evidence in this regard. Therefore, their acceptance has no evidentiary value against the appellant company. The request for cross examination was turned down which renders the statements of no evidentiary value.
5. Before the ld. CIT(A), following cases relied upon by the ld. AO were adequately distinguished:
Gist at PB S. No. Case law Page 1 Smt. Amar Kumari Surana V/s CIT 226 ITR 334 40
2 K.P. Varghese V/s ITO (1981) 131 ITR 597 (SC) 40-42 3 Raza Sugar Company Ltd. V/s CIT 130 ITR (Del.) 42 4 C.B. Gautam V/s Union of India (1993) 199 ITR 530 (SC) 42-43 5 M/S Hamamp Properties Pvt. Ltd. V/S ACIT. ITAT Delhi 43-44
6. Positive material needed to prove higher consideration: In the following judicial pronouncements, it is held that unless there is a positive material to show that real consideration paid by the buyer was more than what was stated in the registered sale deed, no higher price or value can be taken to be the basis for computation of taxable income in the hand of the buyer, simply because there is a wide gap between the actual consideration and fair market value. For the above 10 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur contention, reliance was placed on the following judicial pronouncements before the ld. CIT(A):-
Gist at PB S. No. Case law Page 1 CIT V/s Shivakami Co. (P) Ltd. (1986) 159 ITR 71 (SC) 44-45 2 K.P. Verghese V/s ITO (1981) 131 ITR 597 (SC) (supra) 45 CIT V/s George Henderson & Co. Ltd. (1067) 66 ITR 622 3 45-46 (SC) 4 CIT V/s Godavari Corpn. Ltd. (1993) 200 ITR 567 (SC) 46 5 46-47 CIT V/s Gillanders Arbuthnot & Co. (1973) 87 ITR 407 (SC) 6 CIT V/s Puneet Sabharwal (2012) 204 TAXMAN 16 (del.) 47-48 7 CIT V/s Smt. Suraj Devi (2010) 328 ITR 604 (Del.) 48 8 CIT V/s Smt. Nilofer I. Singh (2009) 221 CTR (Del.) 277 48 CIT V/s Lake Palace Hotels & Motels. (2008) 321 ITR 165 9 48-49 (Raj.) 10 CIT V/s Raja Narendra. (199r) 210 ITR 250 (Raj) 49 11 CIT V/s Naresh Khattar (HUF) (2003) 261 ITR 664 (Del) 49-50 12 CIT V/s Smt. Sushila Devi (2001) 256 ITR 179 (Del.) 50 DCIT V/s Jindal Equipments Leasing & Consultancy 13 50-51 Services Ltd. (2011) 131 ITD 263 (Del) 14 51-53 CIT V/s P.v. Kalyanasundaram, (2006) 282 ITR 259 (Mad.) 15 CIT V/s BhanwarLal Murawatiya (2008) 3 DTR 115 (Raj) 53-55
7. Before the ld. CIT(A), reliance was placed on following judicial pronouncements where alleged unexplained investment in house was deleted. It was requested that assessee case was stronger on facts and therefore, additions deserved deletion.
11 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Gist at PB S. No. Case law Page 1 CIT v/s K. Bhuvanendran & Ors. (2008) 303 ITR 235 (Mad.) 56 2 CIT v/s Dr. Raj Dhariwal ITA No. 138/2011 (Raj.) 56-59 Ramesh Pershad V/s Inspecting Assistant Commissioner 28 ITD 3 59-61 550 (Hyd.) 4 DCIT v/s Ratan Corporation (2005) 197 CTR (Guj) 536 61 5 Ushakant N. Patel V/s CIT (2006) 282 ITR 553 (Guj.) 61 6 Ms. Aishwarya K. Rai v/s DCIT (2007) 104 ITD 166 (MUM) (TM ) 62-63 7 Dadamchand Mochi V/s ITO (2006) 36 Tax World 11 (Jd) 63 8 ITO V/s Bua Dass (2006) 155 Taxman (Magzine) 131 (Amritsar) 63-64 9 Govind Ram Chhugani v/s ACIT (2002) 77 TTJ 339 (Jp) 64 10 ITO V/s L.N. Mehta (HUF) (2002) 77 TTJ 63 (Jd) 64-65 11 Radhey Shyam Tanwar V/s ACIT (2002) 77 TTJ 509 (Jd) 65 12 Maheshwari Industries v/s ACIT (2003) 81 TTJ 914 (Jd) 65 13 Vimal Raj Singhvi V/s ACIT (2006) 104 TTJ 321 (Jd) 65-66 14 Zakir Hussain v/s CIT & Ors. (2006) 202 CTR 40 (Raj.) 66 15 Shree Chand Soni v/s DCIT (2006) 101 TTJ 1028 (Jd) 67 16 Ajay Sharma v/s ACIT (2006) 101 TTJ (Del) 1065 67-69 17 Smt. Sujata Graover v/s ACIT (2006) 99 TTJ (Del) 837 69 18 CIT v/s naveen gera (2010) 328 ITR 516 (Delhi) 69-70 19 CIT V/s Bajrang Lal Bansal (2011) 335 ITR 572 (Delhi) 70-71 20 ITO V/s Dua Auto Components (P) Ltd. (2011) 135 TTJ (Del) 621 71
8. Heavy burden is on the Department where unexplained investment u/s 69 is alleged. Following case laws were relied upon which have been totally ignored by the ld. CIT(A):-
12 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Gist at PB S. No. Case law Page 1 CIT v. Daulat Ram rawatmull (1973) 87 ITR 349 (SC) 72 2 Kishanchand Chellaram v. CIT (1980) 125 ITR 713 (SC) 72 3 CIT v. P.K. Noorjahan (1999) 237 ITR 570 (SC) 73 4 Anil Kumar Roy Chowdhury & Ors. V. CIT (1976) 102 ITR 12 (SC) 73 Distict Superintendent of Police, Chennai v. K. Inbasagaran (2006) 5 73-74 282 ITR 435 (SC) 6 J.S. Parkar v. V.B. Palekar & Ors. (1974) 94 ITR 616 (Bom) 74-75 7 CIT v. Haji jan Mohd. Gaur (2004) 267 ITR 765 (Raj.) 75 8 Add. CIT v. karnail Singh V. Kaleran (1974) 94 ITR 505 (P&H) 75-76 9 V. Ramaswami Naidu v. CIT (1974) 93 ITR 341 (Mad) 76 10 CIT v. R.Y. Durlabhji (1995) 211 ITR 178 ( Raj) 76-77 11 Prahlad maliram v. CIT (1987) 166 ITR 149 (Raj) 77 12 Kalwa Devadattam & Ors. V. UOI & Ors. (1963) 49 ITR 165 (SC) 77 13 CIT v. Suresh Kumar Goyal (2004) 32 tax World 128 (Raj) 78 In the instant case, additions have been made without discharging the heavy burden where unexplained investment is alleged. Evidences have to be conclusive to suggest unexplained investment.
9. Suspicion, however strong, cannot take the place of evidence. Following judicial pronouncements cited before the ld. CIT(A) have been totally ignored by the ld. CIT(A):-
Gist at PB S. No. Case law Page 1 CIT v/s. Daulat Ram (1973) 87 ITR 349 (SC) 79 2 State of Kerala v/s. M.M. Mathew and Another (1978) 42 STC 348 (SC) 79 3 Omar Salay Mohamed Sait v. CIT (1959) 37 ITR 151 (SC) 79 4 Lalchand Bhagat Ambica Ram v. CIT (1959) 37 ITR 288 (SC) 80 Sheo Nath Singh v. Appellate Assistant Commissioner of Income Tax (Central), 5 80-81 Calcutta & Ors. (1971) 82 ITR 147 (SC)
10. No additions can be made on the basis of statements of third parties and documents found from the possession of third parties unless copies are supplied and opportunity for cross examination is allowed to 13 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur the assessee. The legal position settled by the following judicial pronouncements has been ignored by the ld. CIT(A):-
Gist at PB S. No. Case law Page 1 CIT v/s Bhanwar Lal Murwatiya (2008) 39 Tax World 214 (Raj.) 82 2 SCIT v/s M/s Swastik Enterpriss, Udaipur (ITA No. 329/JU/2008) & Ors 82-84 3 Prakash Chand Nahata v/s CIT. (2008) 301 ITR 134 (MP) 84 4 CIT v/s Dharam Pal Prem Chand Ltd. (2007) 295 ITR 105 (Delhi) 85 5 CIT v/s SMC Share Brokers Ltd. (2007) 288 ITR 345 (Delhi) 85 6 CTO, Anit Evasion, Zone Jaipur v/s Haryana Dal Mill. (1993) 90 STC (Raj.) 519 85 7 Anil Kumar mahipal v/s ITO (2006) 35 Tax World 33 (JD) 86 Laxmanbhai S. Patel v/s CIT Oct. 15,2008 114 ITD 8 86-87 (ITR No. 41 of 1997 dated 22.7.2008) (Guj.) 9 ITO v/s Permanand. (2007) 107 TTJ (JD) 395 87 10 Zakir Hussain v/s CIT (2006) 202 CTR (Raj.) 40 87-88 11 ITO v/s Dr. R.L. Narang (2008) 174 Taxman 96 (Mag.) (Chd.) 88-89 12 Eagle Seeds & Biotech Ltd. V/s ACIT (2006) 100 ITD 301 (Ind.) 89 13 CIT v. Gujarat Heavy chemicals Ltd. (2002) 256 ITR 795 (SC) 89-90 14 Shri J.R.C. Bhandari v. ACIT (2003) 79 TTJ (Jd) 90-91 15 Narayan Dass Singhi v/s Income Tax Officer (2004) 87 TTJ (JD) 615 91-92 16 Dr. Chetan Prakash Ranka v/s ITO (2005) 33 Tax World 72 (Jp.) 92-93 17 Unique Organisers & Developers (P) Ltd. v/s DCIT (2001) 70 TTJ (Ahd) 131 93 18 Kishanchand Sobhrajmal v/s Assistant Commissioner of Income Tax (1992) 41 ITD 97 (Jp) 94 19 Smt. Purnima Beri v/s Dy. CIT (2003) 264 ITR 54 (Amritsar) 94-95 20 Ramakant Umashankar Khetan v/s ACIT (1999) 107 Taxmann (Magzine) 44 (Nagpur) 95 21 CIT v/s R.Y. Durlabhji (1995) 211 ITR 179 (Raj.) 95-96 22 Jagdamba Rice mills v/s Assistant Commissioner of Income Tax (2000) 67 TTJ Chd) 838 96 23 Ashwani Kumar V/s Income Tax Officer (1991) 39 ITD 183 (Delhi) 96-97 24 A. Sadasivam v. ACIT (2002) 255 ITR 1 (cal) (AT) 97 25 T.S. Venkatesan v. ACIT 74 TTJ 298 (Cal) 97-102 26 M/s Peeyush Construction Pvt. Ltd. v. DCIT 28 Tax World 57 (Jp) 102 27 ITO v. M.A. Chidambaram (mad) 63 ITD p. 203 102-103 28 Associated Stone Industries (Kotah) Ltd. v. DCIT (JP) (1999) 68 ITD 312 (Jp) 103 29 Kishan Chand chela Ram v. CIT 125 ITR 713 (SC) 103-104 30 Gargidin Jawala Prasad v. CIT 96 ITR 97 (All) 104-105 31 Parimisetti Seetharamamma v. CIT 57 ITR 532 (SC) 105-106 32 ACIT v/s Miss Lata Mangeshkar (1974) 97 ITR 696 (Bom.) 106-107 33 P.R. Gupta v/s DCIT (2006) 36 Tax World 44 107 14 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur
11. Ld. CIT(A) has neither appreciated the facts properly nor has applied the settled law in this regard.
12. During the course of appellant proceedings, specific requests were made to the ld. CIT(A) to allow cross examination of the following persons which had not been allowed by the ld. AO:
(i) ShriBimal Kumar Jain
(ii) ShriNirmal Kumar Jain It was also requested to summon the following persons under section 131 for recording their statements to find out the truth:
(i) Directors of Rawat Constructions Pvt. Ltd.
(ii) Broker ShriSandeep Ld. CIT(A) did not give any heed to the above request. Ld. CIT(A), having co-terminus powers, was expected to do what ld. AO had failed to do. Failure of both the lower authorities renders their orders unsustainable in the eyes of law and, therefore, deserves to be quashed.
13. The addition so made does not pertain to the Assessment year 2010-
11. The statements of ShriNirmal Kumar Jain and ShriBimal Kumar Jain on the basis of which additions have been made do mention (Question No. 14 to Nirmal Kumar Jain AO Page 8) that the alleged on money was paid during the period January 2009 to April 2009. The assessment year 2010-11 starts from 1st of April 2009. Therefore the addition so 15 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur made does not pertain to the assessment year 2010-11 and, therefore, the addition deserves to be deleted on this account.
It is the onus of the ld. AO to specifically pinpoint the dates for the purpose of deciding the relevant assessment year. The statements are very precise that the payments have been made during the period January 2009 to April 2009. This is without agreeing to the merit of the additions made by the ld. AO. This is an alternative argument and may not be treated as our agreeing to the addition.
14. The ld. AO has very conveniently ignored the following requests of the assessee company during the course of assessment proceedings:
i. Cross examination of ShriBimal Kumar Jain and ShriNirmal Kumar Jain.
ii. Examination and cross examination of persons who sold properties to ShriNirmal Kumar Jain and ShriBimal Kumar Jain in which ShriNirmal Kumar Jain and ShriBimal Kumar Jain admitted to have invested the on money received from the appellant.
iii. Examination and cross examination of Directors of Rawat Constructions Pvt. Ltd. (In this case even the oral admission of any of the Directors not available to the Department.) iv. Examination and cross examination of the Broker Shri Sandeep whose Mobile No. 9828788807 was also informed by ShriNirmal Kumar Jain while answering Question No. 12 (AO Order Page 7).
The AO has purposely ignored the requests of the assessee company because he was clear that truth will surface if proper procedure of law was followed and facts were examined from all related persons.
15. The moot questions requiring answers are:
16 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur i. How no document was found from the possession of the sellers and/or buyer when the premises of both the parties were searched to indicate the sale consideration which the Department is alleging or ShriBimal Kumar Jain or Nirmal Kumar Jain are accepting?
ii. Why the DalalShriSandeep was not examined by the Department to know the correct fact when his mobile number was made available instantaneously?
iii. Why the sellers of the different properties purchased by ShriBimal Kumar Jain and ShriNirmal Kumar Jain were not examined to find out the truth?
iv. Why no opportunity of cross examination, inspite of specific requests, was allowed to the appellant company?
v. What incriminating documents have been found from the possession of the Appellant?
vi. Which specific documents suggest the on money payment?
vii. What incriminating documents are found in respect of the property purchased from Rawat Constructions Pvt. Ltd?
16. Before the ld. CIT(A), reliance was also placed on the order of the Hon'ble ITAT Jaipur Bench in the case of Smt. SunitaDhadda(Supra). However the same was also not considered by the ld. CIT(A).
17. In case of Smt. SunitaDhadda(Supra),under identical circumstances, following contentions, raised by the assessee, were considered by the Hon'ble ITAT Jaipur Bench:-
17 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Reliance Placed on Case S.No. Contentions Relevant Law Judicial Pronouncements Law Page Section 54 - Transfer of Property Contents of the duly Act 1882 Executed and Registered CIT v. Motor & General Stores (P.) Ltd. 66 ITR 1 Sec. 17 - Indian Registration 16 Sale Deed become final and (1967) page 692 (SC) Act, 1908 unchallengeable.
Indian Stamp Act, 1899 Divansingh vs. Gurbachan Singh and others AIR 1932 Lahore 276 (Lahore High Court ) Doddamallappa v. Gangappa AIR 1962 Mysore 44 (Mysore High Court) Leelamma Ambikakumari and another Vs. Oral Evidence is not Narayanan Ramakrishnan Section 91 and 92 - Indian 2 admissible against AIR 1992 Kerala 115 (Kerala High Court) 17-18 Evidence Act, 1872 Registered Sale Deed. Febril Gasosa vs. Labour Commissioner and others AIR 1997 (S.C.) 954 Paramjit Singh Vs. Income Tax Officer (2010) 323 ITR 0588 (P&H) Smt. K.Narasamma vs. ITO (1990) 32 ITD 494 (Hyd Trib) Court should safeguard itself against the danger of basing its conclusions on suspicions, howsoever strong they may be.
State v. Gulzari Lal Tandon AIR 1979 S.C. 1382 It is equally well settled that the courts decision must rest not 3 and J.A. Naidu v. State of Maharashtra AIR 1979 19 upon suspicion but upon legal grounds established by legal S.C. 1537.
testimony.
Mere suspicion, however strong, cannot take the place of proof.
4 Allegation, of on money, by the revenue must be backed by mode of receipt by the assessee, the manner of receipt by the assessee, the date of receipt by the assessee and the evidence for its receipt by the assessee. 20 Sahara India (Firm), Lucknow v. Commissioner of Income Tax, Central- I & Ano. ([2008] 14 SCC 151] (SC) State of Kerala s. K.T. Shaduli Yusuff [1977] 39 STC 478 (SC) Kishan Chand Chela Ram v. CIT [1980] 125 ITR 713 (SC) Kalra Glue Factory v. Sales Tax Tribunal [1987] 167 ITR 498 (SC) CTO v. Haryana Dal Mill [1993] 90 STC 519 (SC) 5 Right of Cross Examination - Fundamental Right of Assessee 23-25 P.S. Abdul Majeed v. Agricultural Income tax & Sales Tax Officer [1994] 209 ITR 821 (Ker - HC) CIT v. Eastern Commercial Enterprises[1994] 210 ITR 103 (Cal - HC) Mahaveer Transport Co. v. ITO reported at [1987] Vol. 23 ITD 206 (Hyd-ITAT) Sunil Agarwal v. ACIT[2002] 82 ITD 1 (Delhi-
ITAT) Mahesh Gulab Raj Joshi v. CIT (A) [2205] 95 ITR 300 (Mum.)
18. Hon'ble ITAT Jaipur Bench, accepting the above mentioned contentions of the assessee, in the case of Smt. SunitaDhadda(Supra),held thatorder passed by the ld. AO, and upheld by the ld. CIT(A), was passed in gross violation of principles of 18 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur natural justice and none of the evidences relied on by the lower authorities established anything against the assesee.
19. Hon'ble Supreme Court in its order, in the case of Andaman Timber Industries,CIVIL APPEAL NO. 4228 OF 2006,dated 2nd Sept 2015, held "..that - not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected..."(Case Law Page 35). The said order of the Apex Court in the case of Andaman Timber Industries (Supra) has also been followed by the Hon'ble Gujarat High Court in the case of Raman Bhai B Patel (Tax Appeal No. 207,208,2010 of 2008) (Case Law Page 45) In view of the above, this ground of appeal may please be allowed and additions, made by the ld. AO and upheld by ld. CIT(A), may please be deleted GIST OF SUBMISSIONS - II (FURTHER TO GIST DATED 11.08.2016)
1. Department Paper Book received on 22.08.2016 (covering letter dated 19.08.2016) 1.1 Department has provided a Paper Book on 22.08.2016 which is not in compliance with the Income Tax (Appellate Tribunal) Rules, 1963. There is no certificate in the said Paper Book. There has to be certification from the Department whether these were confronted to the assessee at assessment stage.
1.2 If these papers have not been confronted to the assessee during assessment, we strongly object their admission at this stage. Otherwise also, since assessment is not based on these documents, they are not relevant for deciding the appeal.
19 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur 1.3 At the first page, at S.No. 6, following is mentioned:-
"There is no such evidence in the assessment records."
It is not clear what was sought from the ld. AO which was not in the assessment records. This requires clarification from the Department.
2. Departmental Paper Book - II made available on 19.10.2016 (covering letter dated 17.10.2016) 2.1 Letter of ACIT, Central Circle - 1, Jaipur, dated 13.10.2016 mentions the following:
"In the question no. 13 of the statement of Shri Nirmal Kumar Jain, he was asked about the sale of plot no. D-112, in reply of which he has admitted a receipt of cash of Rs. 2.5 crore. However, no seized record has been referred to in the question or the reply by the assessee. In the question no. 20 only, the seized record Annexure-A (page no. 1 to 35) has been referred to, the copy of which is enclosed herewith."
From the above, it is crystal clear that no specific seized document has ever been referred to.
2.2 Department has provided a Paper Book on 19.10.2016 which is not in compliance with the Income Tax (Appellate Tribunal) Rules, 1963. There is no certificate in the said Paper Book. There has to be certification from the Department whether these were confronted to the assessee at assessment stage.
2.3 If these papers have not been confronted to the assessee during assessment, we strongly object their admission at 20 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur this stage. Otherwise also, since assessment is not based on these documents, they are not relevant for deciding the appeal.
3. Ld. DR has referred to certain pages of the paper book filed by the Department. In this regard following submissions are made:-
3.1 These pages were never confronted to the assessee by the ld. AO during assessment proceedings nor these have ever been referred to by the ld. AO in his show cause notice.
3.2 During the course of appellate proceedings, before ld.
CIT(A), it was submitted that no copies of so-called incriminating documents were provided to the assessee nor opportunity of cross examination was allowed (CIT(A) page 6, para 4.ii & CIT(A) page 16, para 6.vi). Even ld. CIT(A) did not provide any such documents nor allowed any opportunity of cross examination.
3.3 Thus, not only the assessment is completed without reference to any pin-pointed document but even appeal was also dismissed without any mention of such documents or allowing opportunity of cross examination.
3.4 Therefore, the documents, now referred by the ld. DR, have no relevance to the proceedings before the Hon'ble ITAT.
3.5 Ld. AO did not read these documents against the assessee or alternatively, he was not aware of these documents. In either situation, now at this stage, these documents cannot be referred. The recourse available to the Department may be re-opening the assessment or invoking revisionary powers u/s 263.
3.6 Any attempt to improve the case of the ld. AO is not permissible at this stage.
3.7 Without prejudice to above in respect of so-called notings by Shri Bimal Kumar Jain, attention is drawn towards the judgement of the C.B.I v. V.C. Shukla 1998 (3) SCC 410 wherein Hon'ble Supreme Court observed as under:-
21 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur "In Beni Vs. Bisan Dayal [ A. I. R 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate an din absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another."
4. Shri Bimal Kumar Jain 4.1 Statements dated 24.07.2009:
In response to Q.10, Shri Bimal Kumar Jain answered that he was not in touch with the buyer nor he could recognize the buyer. Where such huge cash is alleged having changed hands, not recognizing each other is impossible. It confirms that no cash changed hands. Answer to Q.11 is contradictory in itself.
Answer to Q.14 gives details of investments by Shri Bimal Kumar Jain which he has covered by showing it as on- money.
4.2 Statements dated 23.07.2009:
In Question 25, Shri Bimal Kumar Jain had replied that he was not remembering that, to whom and for what consideration, the said plot was sold. Just after five questions, while replying to Question 30 he could recollect everything. It proves that he developed a story in his own defence.
4.3 Acceptance of on-money to cover his own unaccounted investment:-22 ITA No. 481/JP/2016
M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Shri Bimal Kumar Jain made unaccounted investments in purchase of properties which is evident from the letter written by him to ADIT [DPB I - 49]. Relevant portion of his letter is reproduced below:-
"2. That I purchased a residential flat no. 624 in Unique Sanghi Apartment vide sale deed dated 13- 4- 2009.The registry of flat took place for Rs. 30,87,432/- though actual cost was 41,16,576/- (1715.24 sq. ft. @2400/-) as evident from Page 25 of A-3. The expenses incurred on registration was Rs. 2,31,530/- and Rs. 3.75 lacs was paid for car parking, generator charges and society charges as evident from page 1 of A-1. Further to this Rs. 6 lacs was spent on furnishing of the flat as stated in the statements recorded during search. Thus, the total cost of the flat comes to 53,23,106/-.
3. The long term capital gain on sale of property at D- 112 and tax thereon works out as under:-
Amount
Particulars
(in Rs.)
Sale consideration of property 3,50,00,000
Less: Brokerage Paid 3,50,000
3,46,50,000
Less: Purchase cost of the property 4,52,062
Assessee's share 1/2 of the same 2,26,031
Indexed cost (2,26,031 * 632 /133) 10,74,072
Long term Capital Gain 3,35,75,928
Less: Deduction u/s 54F for purchase of residential flat 51,57,999 Purchase cost (53,23,000 / 3,46,50,000 x 3,35,75,928) Chargeable Long Term Capital Gain 2,84,17,929 Tax on above @ 20% 56,83,586 Add: Cess @ 3% 1,70,508 Total Tax 58,54,094 23 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur
5. Shri Nirmal Kumar Jain - Acceptance of on-money to cover his own unaccounted investments Similarly, Shri Nirmal Kumar Jain also made investments in purchase of properties, part of which was funded out of his own undisclosed income and evidences of which were found and seized during the search. He, in his own interest, admitted the on- money receipt to set right his own tax issues.
Following portion of his letter addressed to ADIT, Jaipur, confirms the fact [DPB I - 51]:-
"2. That I purchased a house no. B-89, Shyam Nagar, Ajmer Road, Jaipur vide sale deed dated 15-4-2009. The registry of house took place for Rs. 35 lacs though actual cost was Rs. 140 lacs. The expenses incurred on registration was Rs. 2,84,560/- and Rs. 20 lacs was further incurred on construction as stated in the statements recorded during search. Thus the total cost of the house as on date comes to Rs. 1,62,84,560/-.
3. The long term capital gain on sale of property at D-112 and tax thereon works out as under:-
Amount Particulars (in Rs.) Sale consideration of property 3,50,00,000 Less: Brokerage Paid 3,50,000 3,46,50,000 Less: Purchase cost of the 4,52,062 property Assessee's share 1/2 of the same 2,26,031 Indexed cost (2,26,031 * 632 /133) 10,74,072 Long term Capital Gain 3,35,75,928 Less: Deduction u/s 54F for purchase of residential flat Purchase cost (1,62,84,560 / 3,46,50,000 x 1,57,79,775 3,35,75,928) 24 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Chargeable Long Term Capital Gain 1,77,96,153 Tax on above @ 20% 35,59,231 Add: Cess @ 3% 1,06,777 Total Tax 36,66,008 In addition to this, he also purchased a flat at Chitrakoot which was registered for Rs. 29.31 lacs but actual investment was Rs. 82,33,780 [DPB II - 10 and DPB II - 66]. The relevant portion of the AO order in case of Shri Nirmal Kumar Jain is reproduced below:-
"12.(ii) The assessee has also made investment in purchase of flat at 2/55, Chitrakoot Yojna, Jaipur on 1.4.2009. The building in which this flat was situated was under construction at that point of time and there was no electricity connection when the assessee took the possession of this flat. The total investment made by the assessee in this flat is Rs. 82,33,780/-."
6. The appellant seeks the opportunity of cross examination and also the opportunity to make submissions in respect of alleged incriminating documents now referred before the Hon'ble ITAT. However, without prejudice to the above, it is submitted that no second innings can be allowed to AO for making up the deficiency in the completed assessment. Reliance is placed on following judicial pronouncement:-
A. JURISDICTIONAL BENCH Abdul Latif [2011] 130 ITD 255 (JAIPUR) "5.... We do not feel to provide second inning to the revenue because the entire facts were before the Assessing Officer and the Assessing Officer made an addition on wrong grounds."
Indian Shaving Products Ltd.
25 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur [2007] 106 ITD 80 (JAIPUR) (TM) "In the case of CIT v. Harikishan Jethalal Patel [1987] 168 ITR 4721 , Hon'ble Gujarat High Court through Justice A.M. Ahmadi as his Lordship then was, observed as under :
". . . It is obvious from the demand made before the Appellate Tribunal that the Revenue desires to examine the genuineness of the firm and the transaction on fresh facts, not the existing facts, for the existing facts do not even remotely create any doubt regarding the genuineness of the firm and/or the transaction. The question then is, whether, in these circumstances, it would be permissible to grant a second innings to the Revenue to introduce new facts for the purpose of deciding the genuineness of the firm and/or the transaction. The material on record at present does not create any doubt regarding the genuineness of the firm and/or the transaction. What the Revenue desires is an opportunity for a shot in the dark without there being any foundational facts on record. A mere fishing inquiry is contemplated on remand in the hope of digging out material which would throw a doubt on the genuineness of the firm and/or the transaction." "
Ambeshwar Grih Nirman Sahkari Samiti Ltd.
[2003] 84 ITD 139 (JP.) (TM) Held that ".....the matter could not be restored back for giving another inning to the Department to improve its case."
Veto Electropowers [2012] 20 taxmann.com 279 (Jaipur) Reliance is placed on the decision in the said case in which request of the Department to set aside the case was rejected and law in this regards was discussed by the Hon'ble ITAT in the following paras:-
26 ITA No. 481/JP/2016M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur "19. The first decision relied upon by the assessee is in the case of Raja Vikramaditya Singh (Decd.) v. CIT [1988] 169 ITR 55 , the Hon'ble Indore Bench of the Madhya Pradesh High Court has held (headnote) "that the power of the Appellate Tribunal to remand a matter in an appropriate case to investigate fresh facts cannot be disputed, but that power must be exercised with proper discretion and it should not be exercised if all the basic facts required for disposal of the matter are already on record. It would not be a sound exercise of discretion by an appellate authority to remit a case to the subordinate authority for writing such order as would, in the opinion of the appellate authority be a proper and better order."
20. The second case law on which reliance has been placed is in the case of CIT v. Harikishan Jethalal Patel [1987] 168 ITR 472 (Guj). The hon'ble Gujarat High Court has held (headnote) :
"that in cases where foundational facts do not exist raising even a remote doubt regarding the genuineness of the firm and/or the transaction in question, a second innings should not be permitted to the Revenue as it would result in avoidable hardship and harassment to hundreds of assessees whose cases stand covered by the aforesaid decision of the Supreme Court. It was only because the Income-tax Officer thought that the transaction in question was a genuine one and the agricultural land was transferred to the firm, the genuineness of which was not in doubt, that the Income-tax Officer, after deducting the cost of acquisition of the land, computed the capital gain at Rs. 1,32,172 and added the same to the net income of the assessee for the assessment year 1976-77. The genuineness of the firm as well as the transaction was, therefore, never in doubt. Therefore, the Appellate Tribunal was right in law in not remanding the matter to the Income-tax Officer for redeciding the issue."27 ITA No. 481/JP/2016
M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur ...24. In this respect we further find support from the order of the Hon'ble apex court in case of Suresh Chand AIR 1988 SC 247 (sic) wherein it was observed that "in case where it is found that no useful purpose will be served by a remand and the issue can be decided on admitted facts, empty formality must be eschewed to advance the cause of justice." "
B. OTHER HIGH COURTS Rajesh Babubhai Damania [2002] 122 taxman 614 (GUJ.) "Section 254, read with section 68, of the Income-tax Act, 1961 - Appellate Tribunal - Orders of - Assessment year 1985-86 - Assessing Officer treated deposits received by assessee from six parties as not genuine and made addition - While Commissioner (Appeals) deleted same with observation that assessee had repeatedly produced creditors before Assessing Officer and had filed affidavits in support of credit entries and also filed confirmations and given names and addresses of concerned parties as well as proved repayment by account payee cheques and had done all that was within his power to prove genuineness of loans - Tribunal restored matter back to Assessing Officer to give him one more inning to cross-examine creditors - Whether Tribunal committed an error of law in restoring matter to Assessing Officer instead of dismissing appeal - Held, yes"
Harikishan Jethalal Patel [1987] 33 Taxman 217 (GUJ.) "In the present case, the ITO never doubted the genuineness of the firm or the genuineness of the transaction in question throughout the proceedings. Had he doubted, there would have been no occasion for him to vary the income of the assessee by adding the amount of capital gains. It was obvious from the demand made before 28 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur the Tribunal that the revenue desired to examine the genuineness of the firm and the transaction, on fresh facts, not the existing facts, for the existing facts did not even remotely created any doubt regarding the genuineness of the firm and/or the transaction. If the demand was conceded, it would mean that all cases concluded by the decision of the Supreme Court in Sunil Siddharthbhai's case (supra) would be reopened in the mere hope that the revenue might be able to fish out material casting a doubt on the genuineness of the firm and/or the transaction. Hundreds of cases which stood finally settled by the above decision of the Supreme Court and in which no foundational facts exist for doubting the genuineness of the firm and/or the transaction would on remand be reopened to enable the revenue to make a fishing inquiry hoping that in the course of the inquiry some material might fall into its hands which might throw a doubt on the genuineness of the firm and/'or the transaction. The result would be that hundreds of assessees would be unnecessarily vexed and put to avoidable hardship. Therefore, in cases where foundational facts did not exist raising even a remote doubt regarding the genuineness of the firm and/or the transaction in question, a second innings should not be permitted to the revenue as it would cause considerable harassment, hardship and expenditure to the assessees."
Saraladevi Sarabhai (P-1) D Trust [2002] 123 Taxman 1064 (Gujarat) "In the case of Harikishan Jethalal Patel (supra), this Court has already observed that in cases where foundational facts do not exist raising even a remote doubt regarding the genuineness of the firm and/or the transaction in question, a second innings should not be permitted to the revenue, as it would result in avoidable hardship and harassment to hundreds of assessees whose cases stand covered by the aforesaid decision of the Supreme Court. We are of the 29 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur opinion that there are no foundational facts on the record of this reference raising doubt regarding genuineness of the partnership firm and/or the transaction in question and, therefore, a second innings should not be permitted to the revenue for reconsidering the entire matter, more particularly when the reference is with reference to the assessment year 1974-75. Permitting the revenue to have the second innings in the facts of the case, would result in avoidable hardship and harassment to the present assessee."
Bhogilal Ramjibhai Atara [2014] 43 taxmann.com 55 (Gujarat) "On the facts of the case, we do not consider it appropriate to restore the matter to the file of the CIT (A)/AO so as to give them second inning in order to establish the applicability or non-applicability of section 41(1). It is a settled principle of law that a statutory provision can be invoked only when the conditions stipulated by it are established. In the present case, conditions of section 41(1) are not satisfied. It is the policy of law to ensure that the litigations are brought to an end expeditiously. In this view of the mater, matters under appeal cannot be restored at the request of the parties so as to give second inning to the parties to establish their cases." "
Siksha "O" Anusandhan [2012] 20 taxmann.com 798 (Orissa) "The Allahabad High Court in A.D. Sons v. Commissioner of Sales Tax [1989] 29 STL 37, held that on the facts of the case and in view of the finding recorded in the said impugned order, the Tribunal was in error in remanding the case to the assessing authority for giving second innings to the Department, and it was not open to the Tribunal under the law to do so."30 ITA No. 481/JP/2016
M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Sheikhar Chand & Sons [1990] 186 ITR 269 (ALL.) "However, learned standing counsel for the Revenue brings to our notice a particular observation made by the Income- tax Tribunal in para 11 of his judgment to the following effect:
"Therefore, when there is a registered valuer's report, the Valuation Officer's job is not merely to report the value as assessed by him but also to clarify where the registered valuer has erred. We have already stated that in this case the registered valuer's report had been made available to the Valuation Officer and yet he chose not to comment on its accuracy. We, therefore, find no justification for the plea that the case should be sent back to the Inspecting Assistant Commissioner (Assessment) for examination of the accounts. If he chose not to do so he must have his own reason for the same and a second innings would be thoroughly unjustified."
We agree with learned standing counsel that this part of the reasoning of the Tribunal may not be strictly correct in law, but the said observation, in our opinion, has not vitiated the finding of the Tribunal which has been arrived at independently on the basis of the material on record. "
Manish Build Well (P.) Ltd [2011] 16 taxmann.com 27 (Delhi) "In our view of these facts and circumstances it cannot be held that CIT(A) (sic) violated Rule 46A, he had acted in a judicious and proper manner and his order being based on proper appreciation of facts and record cannot be called violative of a procedural provision. CIT(A) is statutory first appellate authority and has independent power of calling for information and examination of evidences and poses conterminous power of assessment apart from appellate 31 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur powers. In our view CIT(A)'s order is to be upheld. The matter should not be set aside on general ground as it amounts to causing the assessee injustice and giving the AO another innings. Besides it is not explicit that AO insisted for confirmations."
Dell International Services India P. Ltd.
[2016] 382 ITR 37 (KAR) "it was a settled law that remand was not a power to be exercised in a routine manner and should be used sparingly as an exception only when the facts warranted such course of action."
C. OTHER BENCHES Lalitha Karan v. ACIT, Hyderabad ITA No. 1130/ Hyd /2015 "7.6 Litigation in the Bombay, particularly, under the Maharashtra Rent Control Act, is well known and needs to be taken judicial notice. A property which is in the occupation of tenants for more than 60 years one cannot fetch full market value and in fact the party who purchased the property had agreed to the terms and conditions i.e. the property was purchased on "as is where is" condition with a specific clause that any further litigation will be dealt with by the purchaser and under those circumstances, generally, market value cannot be adopted. In these circumstances, the Courts time and gain held that reference u/s 50C(2) of the IT Act is mandatory and the AO having failed to follow the provisions of the Act, he should not be given one more chance to refer the matter to the DVO. Recently, the Hon'ble Supreme Court in the case of Manish Mahaeswari Vs. ACIT and another, and Indore Construction P. Ltd. Vs. CIT, [2007] 289 ITR 341 (SC) vis-à-vis the provisions of section 153C of 32 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur the Act, observed that if the AO has not recorded his satisfaction for issue of notice u/s 153C of the Act, the proceedings deserve to be quashed rather than giving the AO another chance to record proper reasons. The same ITA No. 1130/H/15 Smt. Lalita Karan principle holds good even in this case; when the AO has not followed the procedure prescribed in law, the addition made deserved to be deleted."
Smt. Sudhadevi Modi [2003] 84 ITD 604 (MUM.) "That apart, it is not legally permissible to allow the Assessing Officer innings after innings to make good the omissions and to improve the assessment order. He had a clear-cut mandate from the Commissioner (Appeals) which he chose not to give effect to. It would not be unreasonable to draw the inference that he had no material or evidence to discredit the appellants' version. If that was so, the benefit thereof had to be given to the appellants and the additions had to be cancelled. In the result, the set of appeals against the orders of the Commissioner (Appeals) were allowed."
7. Case laws relied by Department:-
The case laws (copies of which were made available on 24.08.2016) relied upon by ld. DR are distinguished below:-
Case 1:- Smt. Kusum Lata Thakral vs. CIT 327 ITR 424 (P&H) The facts of this case are very different. In this case Hon'ble Supreme Court held that there was no necessity for cross examination of donor because of the peculiar fact that donor had denied giving gift and there was no relationship between donor and assessee.
Attention is drawn towards the recent decision of Hon'ble Supreme Court in case of Andaman Timber Industries (Civil Appeal no. 4228 of 2006).33 ITA No. 481/JP/2016
M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Case 2 and 3:- B. Kishore Kumar vs. DCIT 273 CTR 468 (MAD) and B. Kishore Kumar vs. DCIT 62 taxmann.com215 (SC) In this case additions were based on sworn statement of assessee during search whereas in the present appeal additions are based on the basis of statement of third party.
Case 4:- CIT vs. P.M. Aboobacker 45 taxmann.com 172 (KER) In this case opportunity of cross examination was granted which in the present appeal has not been granted inspite of specific request. Case 5: Amar Kumari Surana vs. CIT 226 ITR 344 In this case before the Hon'ble Rajasthan High Court assessee offered no explanation as to why land was sold to her at half the rate of market price whereas the present appellant had purchased the land above DLC rate Case 6: K.P. Varghese vs. ITO 131 ITR 597 The case is in favour of assessee as is evident from the following:-
"Since literal interpretation of section 52(2) leads to manifestly unreasonable and absurd consequences, the same should be construed having regard to the object and purpose for which it has been enacted and the setting in which it occurs. A fair and reasonable construction of section 52(2) would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in case of a bona fide transaction where the full value of the consideration for the transfer is correctly declared by the assessee." Case 7: Raza Sugar Co. Ltd. Vs. CIT 130 ITR 421 This case is related to trading transaction and therefore has no relevance in the present case.34 ITA No. 481/JP/2016
M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur Case 8: C.B. Gautam vs. Union of India 199 ITR 530 This decision was delivered under a different law of section 269UD. Hence is not relevant.
Case 9:- M/s Hamamp Property P. Ltd. vs. ACIT 3811/DEL/2005 The present case is distinguishable because the purchase by the appellant company of land was at a rate higher than DLC value. Case 10:- Pranav Construction Co. vs. ACIT 61 TTJ 145 In this case from para 8, it is clear that partner of the assessee firm admitted on money receipt under section 132(4). Whereas in our case there is no such admission.
Case 11:- Digvijay Chemicals Ltd. vs. ACIT 248 ITR 381 In this case addition was based on undisclosed advance detected from seized documents whereas no such document is seized from assessee's possession in the present case. Case 12:- Narayan Bhagwantrao.. vs. Gopal and others 1960 AIR 100 In this case the party itself had admitted whereas the appellant or its directors have never admitted any on money payment. Case 13:- H.M. Sarif & Sons vs. CIT 8 OF 1991 This is a case of trading addition with reference to section 145. Therefore, the same is distinguished in facts and law.
Case 14:- DXN Herbal Mfg. India P. Ltd. vs. ITO 110 ITD 99 In this case non furnishing of copy of statement given by production incharge did not amount to denying opportunity of cross examination to assessee as it did not cause any prejudice to assessee especially when addition was made solely on the basis of return filed, document produced and submission made by assessee. Such is not the case of the assessee appellant.
Case 15:- GTC industries Ltd. vs. ACIT 65 ITD 380 35 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur This case is with reference to secondary and subordinate material which is evident from the following:-
"Section 143(3) of the Income-tax Act, 1961 - Assessment - Principles of natural justice - Assessment year 1985-86 - Whether, where material or evidence used for purposes of assessment is of collateral nature, rule that adverse evidence and material relied upon to reach finality should be disclosed to assessee is not applicable - Held, yes - Whether right to cross-examine witness who made adverse report is an invariable attribute of requirement of dictum audi alteram partem - Held, no - Whether where statements of witnesses were only secondary and of subordinate material used to buttress main matter connected with amount of additions, it had to be held that there was no denial of principles of natural justice if witnesses were not allowed to be cross-examined by assessee - Held, yes"
In the appellant case addition is based on those material copies of which have not been provided.'' 3.3 On the other hand, the ld. DR supported the order of the ld. CIT(A) and filed following case laws.
1. CIT vs Durga Prasad More, 82 ITR 540 (SC)
2. Sumit Dayal vs CIT , 214 ITR 801 (SC)
3. C. Vasantlal & Co. vs CIT, 45 ITR 206 (SC)
4. Smt. Kusum Lata Thakral vs CIT,327 ITR 424 (P&H)
5. B Kishore Kumar vs DCIT , 273 CTR 468 (Mad.)
6. B. Kisshore Kumar vs DCIT , 62 Taxm. Com 215 (SC)
7. CIT vs P.M. Aboobacker, 45Taxm (Ker.) 36 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur
8. Smt. Amar Kumari Surana vs CIT, 226 ITR 344 (Raj.)
9. K.P. Verhese vs ITO , 131 ITR 597 (SC)
10.Raza Sugar Co. Ltd vs CIT, 130 ITR 421 (Del.)
11.C.B. Gautam vs Union of India, 199 ITR 530(SC)
12.M/s. Hamamp Property P.Ltd vs ACIT ,3811/Del/2005
13.Pranav Construction Co. vs ACIT, 61 TTJ 145 (Bom.)
14.Digvijay Chemicals Ltd. vs ACIT , 248 ITR 381 (All.)
15.Narayan Bhggwantrao vs Gopal and others 1960AIR 100 (SC)
16.H.M. Sarif & Sons vs CIT 8 of 1991 (High Court of Allahabad
17.DXN Herbal Mfg.India P Ltd vs ITO 110 ITD 99 (CHH)
18.GTC Industries vs ACIT 65 ITD 380 (Bom.) 3.4 We have heard the rival contentions and perused the materials available on record. Brief facts of the case are the assessee company was incorporated on 13-02-2009 wherein Smt. Aruna Sankhla an Shri Hemant Raj Sankhla are promoter Directors. The assessee company came into existence on 13-02-2009. During the period 13-02-2009to 31-03-2009, corresponding to A.Y. 2009-10, no business activity was carried out by the assessee company. Therefore, the year consideration is the first year of its operation. On perusal of the balance sheet of the assessee company, 37 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur the AO noted that the assessee company had invested Rs. 3,53,01,306/- in fixed assets.viz. Building for Rs. 2,67,180/-, building under construction for Rs. 11,63,840/- and land amounting to Rs. 3,38,70,286/-. The AO during the course of assessment proceeding required the assessee to submit the details of the above mentioned fixed assets appearing in the balance sheet. In response the assessee submitted that during the year under consideration it had purchased the following properties for the sale consideration as mentioned against each.
(i) Plot No. D-112-A, at Power House Road, Bani Park,Jaipur measuring to 500 sq. yards from Shri Nirmal Kumar Jain S/o late Shri Nathmal Jainfor Rs. 1.00 crore vide registered agreement dated 17-04-2009.
(ii) Plot No. D-112-B at Power House Road, Bani Park, Jaipur measuring 500 sq. yars from Shri Bimal KumarJain S/o late Shri Nathmal Jain for Rs. 1.00 crore vide registered sale agreement dated 17-04-2009.
(iii) Plot No. D-112 at Power House Road, Bani Park, Jaipur measuring to 1000 sq. yards from M/s. Rawat Construction Pvt. Ltd for Rs. 1.14 crores vide registered agreement dated 28-05- 2009.
The AO noted that after including the registration cost of Rs. 22,33,300/-
the value of above investment comes to Rs. 3,36,33,300/- (Rs.
1,00,00,000+Rs. 1,00,00,000+1,14,00,000+Rs. 22,33,300/-). Further the 38 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur AO in this case also mentioned that a search u/s 132 of the Act was carried out on 23-07-2009 at the business and residential premises of Shri Bimal Kumar Jain and Shri Nirmal Kumar Jain wherein various incriminating documents were found and seized. But no incriminating documents were confronted with the assessee nor such documents are specified in his order. It was found that Shri Bimal Kumar Jain and Shri Nirmal Kumar Jain sold the following properties to M/s. Kamakshi Hospitality Pvt. Ltd. Jaipur.
(i) Plot No. D-112-A, at Power House Road, Bani Park,Jaipur measuring to 500 sq. yards from Shri Nirmal Kumar Jain S/o late Shri Nathmal Jainfor Rs. 1.00 crore vide registered agreement dated 17-04-2009.
(ii) Plot No. D-112-B at Power House Road, Bani Park, Jaipur measuring 500 sq. yars from Shri Bimal KumarJain S/o late Shri Nathmal Jain for Rs. 1.00 crore vide registered sale agreement dated 17-04-2009.
The AO noted that the documents seized from the business/ residential premises of Shri Bimal Kumar Jainand Shri Nirmal Kumar Jain show that the property was registered on an undervalued amount and on-money was paid to the sellers viz. Shri Bimal Kumar Jain and Shri Nimal Kumar Jain but no such document is mentioned or elaborated in his order. It is also noted by the AO that during the course of search both the persons admitted that each of them had received on-money amounting to Rs. 2.50 39 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur crores (total Rs.5.00 crores) in addition to the registered sale consideration against the sale of above property at D-112, Power House Road, Bani Park, Jaipur but no opportunity to cross-examination was provided to the assessee even when it was asked for. The AO further noted that the transaction of on-money is not reflecting in the sale deed of the above property but no supporting documents specified. The AO further noted that both the above persons Shri Bimal Kumar Jain and Shri Nirmal Kumar Jain admitted the fact of receiving on-money amounting to Rs. 5.00 crores in their statements recorded during the course of search conducted on 23-07-2009 and accordingly surrendered the above amount for taxation treating the same as their undisclosed transaction. Further in response to notices u/s 153A of the I.T. Act, 1961 for the A.Y. 2010-11, Shri Bimal Kumar Jain and Shri Nirmal Kumar Jain have filed their return of income wherein they have duly disclosed the admitted amount of Rs. 5.00 crores but fact suggests that taxes were not paid as these persons claimed benefit of section 54 of the Act.
3.4 (ii) The AO further noted that Plot No. D-112, Power House Road, Bani Pak, Jaipur which had been purchased by the assessee from 40 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur M/s. Rawat Construction Pvt Ltd Jaipur for a consideration of Rs. 1.14 crores vide registered agreement dated 28-05-2009 which is exactly adjacent to Plot No. D-112A and D-112B. The AO observed that the plots D-112A and D-112B are nothing but parts of Plot No. D-112. Later on Plot No.D-112 was sub-divided creating plot No D-112A (D-112A was further divided into two parts i.e. D-112A and D-112B). Thus the above Plot No. D-112 as per registered sale deed was at Rs. 11,400/- per sq. yard. According to the AO, both the above plots D-112 and ( D-112A & D-112B) combined are exactly of same size i.e. 1000 sq. yards as well as adjacent to each, therefore, there seems to be no concrete reasons for having any major variation in the market of the above mentioned properties. According to the AO, it is evident that the market value of the above properties are higher side but the registries of the same are made at lower value. The AO adopted the market value of Plot No. D-112 exactly the same as of the above Plots Nos. D-112A & D-112B i.e. Rs. 7.00 crores (since the size of Plot No. D-112 and Plot No. D-112A + D-112B is exactly same i.e. 1000 sq. yard each) or to say Rs. 70,000/- per sq. yard and not Rs. 11,400/- per sq. yard as shown in the registered sale deed.
The value of Plot No.D-112A & B is taken at Rs. 7.00 crores and the 41 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur difference of value be added to the total income of the assessee treating the said amount as undisclosed investment. Similarly value of plot No. D-112, Power House Road, Bani Park admeasuring 1000 sq. yards have been taken at Rs. 7 crores and the difference of amount was treated as his undisclosed investment. The following properties were purchased.
Date of Purchase
S. No. Name of Seller Address Area
Agreement Consideration
Plot No. D-112-A, Power House
1 17.04.2009 Nirmal Kumar Jain 500 sq. yards 10,000,000
Road, Bani Park, Jaipur
Plot No. D-112-B, Power House
2 17.04.2009 Bimal Kumar Jain 500 sq. yards 10,000,000
Road, Bani Park, Jaipur
Plot No. D-112, Power House
3 28.05.2009 Rawat Constructions Pvt Ltd. Road, Bani Park, Jaipur 1000 sq. yards 11,400,000
As per respective registered agreement dated 17-04-2009, the assessee had purchased the Plots D-112-A and D-112B at Power House Road, Bani Park, Jaipur measuring 500 sq. yards each (i.e. 1,000 sq. yards) from Shri Nirmal Kmar Jain and Shri Bimal Kumar Jain for a consideration of Rs. 1.00 crores each i.e. totaling to Rs. 2.00 crores. In the statements recorded during the course of search in their premises, they have disclosed certain on money received which have further been invested in acquisition of properties and for such investment incriminating documents were found from their premises. Both of them have also 42 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur claimed benefit of section 54 of the Act on this amount so disclosed to be unaccounted investment. The AO considered the rate of property at Rs.
70,000/-per sq. yard for working out the on money in respect of D-112A and D-112B, Power House Road, Banipark. Assessee prayed for cross-
examination from both these persons i.e. Shri Bimal Kumar Jain and Shri Nirmal Kumar Jain but the same was not allowed. Admission by a person is good evidence in his own case but it is not sufficient and conclusive in case of other person when that person had own interest in giving such statement unless the other person is given cross examination and statement is supported by any other independent evidence. The facts of this case clearly establishes that denial of appointment of cross examination resulted into violation of principles of natural justice. The object of cross examination is to test the veracity of the version given in examination in chief. In this case the persons who gave statements were interested persons as they were found in possession of unaccounted investment and by giving such statement they have explained such unaccounted investment and also claimed benefit u/s 54 of the Act on the amount so admitted. No incriminating document were found at the business premises of the assessee company or residence of the directors 43 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur of the assessee. The assessee had not been provided any incriminating documents which could suggest that any on-money was paid. It is important to note that the Jain Brothers have explained their unaccounted investment by making such statement and also claimed benefit u/s 54 of the Act for such amount. In our considered view no addition can be sustained on the basis of such oral admission of interested party without providing opportunity of cross examination and not supported by independent evidence. The provisions of Transfer of Property Act also does not permit admission of oral evidence in contradiction to the written and registered documents. Hence, in these peculiar facts and circumstances of the case, the purchases consideration declared in respect of the Plot No. D-112A and D-112B, Power House Road, Bani Park, Jaipur admeasuring 500 sq. yards each at Rs. 1.00 crore (@ Rs.
20,000 x500 sq yard) each cannot be rejected.
3.4(iii) As regards the purchase of Plot (admeasuring 1000 Sq.
Yards) No. D-112, Power House Road, Bani Park by the assessee from M/s. Rawat Construction Pvt.Ld, Jaipur for Rs. 1.14 crores, it is noted that the Plot No. D-112 as per registered sale deed was at Rs. 11,400/- per 44 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur sq. yard. The AO noted that the market value of the plot should exactly be the same as of the above Plots No. D-112A & D-112B i.e. Rs. 7.00 crores. According to the AO, the size of the both the plots No. D-112A & D-112B (500+500 sq.yards) are similar to Plot No. D-112, Power House Road, Banipark, Jaipur. Hence, the AO took the value of the same at Rs.
70,000/-per sq. yard instead of Rs. 11,400/- per sq. yard as shown in the registered sale deed. In respect of purchase of Plot No D-112 from M/s.
Rawat Construction Pvt Ltd. it is noted at page 24 of the ld. CIT(A)'s order wherein the ld. CIT(A) admitted that no evidence suggesting on money payment with regard to property at Plot No.D-112 Purchased from M/s. Rawat Construction Pvt. Ltd has been found during the course of search operation conducted. It is also noted that no incriminating documents were found from the assessee and the authorities below have not examined the directors of the assessee company to this effect. It is noted that the assessee had purchased the plot admeasuring 1000 sq. yards for Rs.1.14 crores which appears to be on lower side in comparison of purchase price of adjacent Plots No. D-112A and D-112-B, Power House Bani Park, Jaipur @ Rs.20,000/- per sq. yard in the same year. In view of this , the cost of the same is to be estimated at Rs. 20,000/- per sq 45 ITA No. 481/JP/2016 M/s. Kamakshi Hospitality Pvt. Ltd vs DCIT, Central Circle-1, Jaipur yard. Accordingly, the AO is directed to work out the addition as indicated above. Thus Ground No. 2 (a) & (c) of the assessee are partly allowed.
4.0 In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open Court on 20-12-2017.
Sd/- Sd/- ¼dqy Hkkjr½ ¼HkkxpUn½ (KUL BHARAT) (Bhagchand) U;kf;d lnL; /Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 20/12/ 2017 *Mishra
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant-M/s. Kamakshi HospitalityPvt. Ltd, Jaipur
2. izR;FkhZ@ The Respondent- The DCIT, Central Circle-1 , Jaipur
3. vk;dj vk;qDr¼vihy½@ CIT(A).
4. vk;dj vk;qDr@ CIT,
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 481/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar 46