Income Tax Appellate Tribunal - Chandigarh
Sh. Devinder Singh Gill, Mohali vs Dcit, Chandigarh on 23 October, 2018
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ -"ए",च डीगढ़ I N T H E I NC O ME T A X A P PE L L A T E T RI B U N AL D I VI S I O N B E NC H , ' A ' , CH A ND I G AR H ी संजय गग , या यकसद य एवं डा.बी.आर.आर,कुमार, लेखा सद य BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER आयकरअपीलसं./ ITA Nos.4 9 8 & 4 9 9 / C H D / 2 0 1 5 नधा रणवष / Assessment Years :2 0 0 7 - 0 8 & 2008-09 Sh. Devinder Singh Gill, बनाम The DCIT, Circle 5(1), H.No. 81, Sector 70, Chandigarh Mohali थायीलेखासं./PAN NO: ANXPG9419K अपीलाथ*/Appellant ,-यथ*/Respondent नधा रतीक ओरसे/Assessee by : Sh. ParikshitAggarwal, CA& Sh. Sanjay Garg, CA राज वक ओरसे/ Revenue by : Smt.Chanderkanta, Sr DR सन ु वाईक तार ख/Date of Hearing : 10.09.2018 उदघोषणाक तार ख/Date of Pronouncement : 23.10. 2018 आदे श/Order PerBench:
The captioned appeals have been preferred by the assessee against the separate orders of CIT(A) dated 26.2.2015 relating to assessment years 2007-08 and 2008-09 respectively. It is pertinent to mention here that these appeals of the Assessee were earlier decided vide ex-parte order of this Tribunal dated 19/04/2016. However, later on the assessee filed Miscellaneous Applications (Nos. 127 & 128/CHD/2018) under Rule 24 of the Income Tax (Appellate Tribunal ) Rules 1963 (in short the ITAT Rules) for setting aside of the ex-parte order and restoration of the appeals and of according hearing on merits. The Miscellaneous Applications filed by the assessee were allowed vide order dated 24/08/2018 whereby the appeals of ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 2 the assessee were restored to their original position and number. Hence, these appeals were heard afresh and are being disposed of with this common order. First we take up the assessee appeal bearing ITA No.498/Chd/2015 for assessment year 2007-08.ITA No.498/Chd/2015 for AY 2007-08
2. The assessee in this appeal has taken the following grounds of appeal:-
1. That the order passed u/s 250(6) of the Income-tax Act, 1961 by the Worthy CIT(A) is bad in law and against the facts of the case and thus against the provisions of the Act.
2. That the additions of Rs. 1.50 cores made by the Ld. Assessing officer & upheld by the worthy CIT(A) is on presumptive basis and not due to filing of any inaccurate particulars or due to concealment of income.
3. That the additions made by the Ld. Assessing officer is not correct as he himself has mentioned in his assessment order, the receipt of payment of Rs. 25 lacs instead of Rs. 1.50 cores. Thus the addition made by the Ld. Assessing officer of Rs. 1.50 crores is wrong and against the facts and provisions of Income-tax Act, 1961.
4. That the additions upheld by the worthy CIT(A) is on the basis of ex-parte decision and the assessee has not been given natural justice.
5. That the assessee craves leave to add / alter any of the grounds of appeal on or before the date of hearing.
Apart from the above grounds of appeal, the Ld Authorized representative of the assessee (AR) has sought to raise an additional legal ground regarding the validity of the reopening of the assessment u/s 147 of the Income tax Act, which has been objected to by the Ld. Departmental ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 3 Representative (DR) vehemently contending that the same was neither taken before the Ld. CIT(A) nor any formal application in this respect has been moved by the assessee.
3. The Ld. AR, on the other hand has submitted that the legal ground to challenge the jurisdictional validity of order passed by the Assessing Officer u/s 143(3) read with section 147 of the Act can be taken up in the appellate proceedings also. He in this respect has relied upon the ratio laid down by the Jurisdictional High Court in the case of 'VMT Spinning Co. Ltd. Vs. CIT' 389 ITR 326 (P&H).
4. We have considered the rival contentions. It is now a settled position of law that a legal issue of jurisdiction can be raised at any time even in appeal or execution. The jurisdictional Punjab &Haryana High Court in the case of 'VMT Spinning Co. Ltd. Vs. CIT' (supra) has held that the Tribunal while exercising appellate jurisdiction under section 254 could consider question of law arising from assessment proceedings which had not been raised earlier and that Rule 11 of the ITAT Rules in fact has conferred wider powers on the Tribunal. The relevant part of the order of the jurisdictional High Court (supra) is reproduced as under:-
"Rule 11 infact confers wide powers on the Tribunal, although it requires a party to seek the leave of the ' Tribunal. It does not require the same to be in writing. It merely states that the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal. In a fit case it is always open to the Tribunal to permit an appellant to raise an additional ground not set forth in the memorandum of appeal. The safeguard is in the proviso to Rule 11 itself. The proviso states that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground. Thus even if it is a pure question of law, the Tribunal cannot consider an additional ground without affording the other side an opportunity of being heard, We venture to state that even in the absence of ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 4 the proviso it would be incumbent upon the Tribunal to afford a party an opportunity of meeting an additional point raised before it.
Moreover, even though Rule 11 requires an appellant to seek the leave of the Tribunal, it does not confine the Tribunal to a consideration of the grounds set forth in the memorandum of appeal or even the grounds taken by the leave of the Tribunal. In other words the Tribunal can decide the appeal on a ground neither taken in the memorandum of appeal nor by its leave. The only requirement is that the Tribunal cannot rest its decision on any other ground unless the party who may be affected has had sufficient opportunity of being heard on that ground."
Similarly the full Bench of Bombay High Court in 'Godavari Sugar Mills Ltd. Vs. CIT'while dealing with Rule 11 of the Appellate Tribunal rules has observed as under:
"19.In this connection a reference may also be made to the Income Tax (Appellate Tribunal) Rules, 1963 which have been framed under section 255(5) of the Income Tax Act, 1961. Under Rule 11 of the Appellate Tribunal Rules the appellant shall not, except by leave of the Tribunal urge or be beard in support of any ground not set forth in the memorandum of appeal but the Tribunal in deciding an appeal shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule; provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being beard on that ground. So that in deciding the appeal the Tribunal is not restricted to the grounds which are taken or which have been allowed to be taken in the memorandum of appeal."
The Hon'ble Supreme Court in the case of NTPC v. CIT [1998] 229 ITR 352 (SC)has held that the view that the ITAT is confined only to issues arising out of the appeal before the Learned CIT(Appeals) has too narrow a view to take of the powers of the ITAT. Undoubtedly, the ITAT has the discretion to allow of not to allow a new ground to be raised but where the ITAT is only required to consider the question of law arising from the facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee.
A four Judge Bench of the Hon'ble Supreme Court in the case of 'Kiran Singh &Ors. v. ChamanPaswan&Ors.', [1955] 1 5CR 117 has held that:
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 5 "it is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties."
Even the Hon'ble Bombay High Court in the case of 'Inventors Industrial Corporation Ltd vsCIT' 194 ITR 548 (Bombay) has held that assessee was entitled to challenge the jurisdiction of the AO to initiate re-assessment proceedings before the CIT(A) even in the second round of proceedings, even though he had not raised it in earlier proceedings before the Assessing Officer or in the earlier appeal.
The Hon'ble Gujarat High Court in the case of 'P. V. Doshi Vs. CIT' 113 ITR 22(Gujrat) with reference to the provisions of Section 147 of the Income Tax Act dealing with re-assessment held that neither the question of res judicata nor the rule of estoppel could be invoked where the jurisdiction of an authority was under challenge. It has been further held, "finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never have any finality or conclusiveness. If the original order is without jurisdiction, it would be only a nullity confirmed in further appeals'.
In view of the above discussion and as per the settled position of law, since the issue of notice under section 148 involves the legal issue of ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 6 jurisdiction to frame the impugned assessment order, we hereby allow the additional ground taken up by the assessee.
5. Since the legal issue relating to the jurisdictional aspect of the assessment order in respect of the validity of the reopening of the assessment u/s 147 of the Act goes to the root of the case hence, the same is taken first for adjudication.
6. The brief facts relevant to the issue under consideration are that pursuant to certain criminal cases lodged against the assessee Sh. Devinder Singh, a search operation was conducted by the Central Bureau of Investigation, Chandigarh (CBI) and certain documents relating to property transactions entered into by the assessee were found and seized. The information was passed on to the Income Tax Authorities. Thereafter, the DDIT(Inv.) Chandigarh recorded the statement of Sh. Devinder Singh Gill whilst he was in the custody of the CBI at the office of the CBI, Chandigarh. On the basis of the said statement coupled with the documents found and seized by the CBI, the assessing officer reopened the assessment of the assessee for the years under consideration i.e Ay 2007-08 and AY 2008-09.
7. The following documents found and seized by the CBI from the premises of the assessee have been considered and relied upon by the assessing officer for reopening of the assessment as well as for making the impugned additions to the income of the assessee for the year under consideration:
1. Agreement to sell dated 17.8.2006
2. MOU dated 18.4.2011.
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 7
8. The contents of the Agreement to Sell (Biana) dt. 17/08/2006 for the purpose of ready reference are reproduced hereunder:
"AGREEMENT TO SELL (BIANA) This Deed of Sale Agreement is made at Mohali ,on 17th Aug.2006 BETWEEN
1. Sh. Nirrmal Singh s/o S. Balwant Singh, 2.Ujagar Singh s/o S.Balwant Singh, Satnam Singh s/o S. Balwant Singh, Iqbal Singh s/o S. Balwant Singh & Sh. Bikram Sigh s/o ShGopal Singh, all residents of village Baliali, tehsil &Distt.Mohali,(Hereinafter referred to as the Sellers which shall where the context so admits include his heirs, assigns, executors, successors, legal representatives, administrative and administrators) of the one part;
AND M/s Sky Heights House Building & Infrastructure Society, SCF 68,Phase-2, Mohali through its President Mr. Devinder Singh Gill, (Hereinafter referred to as the Purchasers) which term shall where the context so admits include their heirs, assigns, executors, successors, legal representatives, administrative and administrators of the other part).
Whereas the Sellers is absolute owner of agricultural land in Khewat/Khatuni N0.35& 36,KhasraNo. 23//16 (8-0),17 (7-4), 24/1 (2-
12),24/2(4-12)25/1 (2-14)25/2(5-4),24/21/1 (3-0),30//l/2 (0-10), total 33 kanal 18 marla&Khewat/Khatuni No.23/23, Khasra No.23//14/2 (4-19), 24//20/3.(5-14) total 10 kanal& 03 marla, total land 44 kanal2marla approx.
That the said land is in possession of the Sellers and is free from any kind of dispute and the said land is free from all sorts of encumbrances i.e. demands, claims, interest, sale transfer, charges, mortgages, litigation etc. etc. or subject to any previous agreement with any one.
AND WHEREAS the said Sellers have agreed to sell the above said land out of their...............
AND WHEREAS, both the parties have mutually agreed and settled the following terms and conditions with regard to the above property and shall comply the same.
NOW THIS AGREEMENT FURTHER WITNESSETH AS UNDER:
1. That the sale price of one acre land has been fixed at the rate of Rs.
1,06,00,000/-(Rupees one crore six lac only), as argued by both the parties.
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 8
2. That the said Seller have received and accepted a sum of Rs. 25,00,000/- (Rupees Twenty Five lac only), as earnest money (biana) of the above said consideration amount for the sale of the above land from the purchaser against separate receipt issued by the Seller under their signatures with desire to proceed with the compliance of requisite formalities for the sale of the land.
3. That the remaining consideration amount shall be paid to the seller by the purchaser as agreed by both the parties mutually time to time.
4. That in case the said Sellers backs out from this bargain, then, the sellers shall pay the said purchaser double of the amount of earnest money received by the said sellers from the said purchaser and the purchaser have the liberty to accept the amount from the sellers or in case the purchaser does not want to accept such liquidated damages, then the purchaser shall have the full right to get the sale effected through court of law under Specific Relief Act at the risk an cost of the said seller.
5. That the in case the said purchaser backs out from this bargain than the earnest money shall stand fortified in favour of the said sellers..............................necessary documents to the purchaser in case the same are required by the purchaser at any stage before execution of the Sale Deed.
7. That the Sellers hereby authorize the purchaser and give their consent to start construction on the said property after the execution of this Agreement to Sell. In case the present deal is not matured for any of the reasons, then the said sellers shall be bound to make the payment of double of the earnest money in addition to the expenses incurred by the purchaser for construction over the said residential plot after execution of this Agreement to Sell. IN WITNESS WHEREOF we have set my hands on this deed at Mohali, on the day, month and year herein mentioned above, in thepresence of witnesses.
RECEIPT Cash Payment of Rupees twenty five lac received from Shri Devinder Singh Gill C/o Sky Heights House Building & Infrastructure Society, Mohali being biana money of land 33 kanal 18 marla at Village Baliali, In Distt. Mohali on 17th Aug.2006. Date 17lh Aug.2006"
9. The assessee was confronted with the said agreement at the time of recording of his statement dated 9.5.2011 whilst in CBI custody, to which he replied as under:
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 9 "Page No.14 to 17 - Agreement to sell dated 17.8.2006 between Shri Nirmal Singh, Shri Ujagar Singh, Iqbal Singh, Sh. Bikram Singh all R/o Vill. Baliali, Teh. Mohali and M/s Sky Heights House Building & Infrastructure Society SCF 68, Ph-2, Mohali regarding land 44 Kanal 02 marla situated at villBilyali, Teh. Mohali @ Rs. 1,06,00,000/-. A sum of Rs. 25 lacs was given as earnest money (biana) on 17.8.2006.
Due to dispute between society and the seller the deal could not finalized so far. Source of payment of Rs. 25 lacs is noticed to be paid from the A/c of Society. A/c of Societyare being maintained at SCO 68, Ph-2, Mohali."
10. The other document taken note of by the assessing officer is the MOU with Mr. Amrit Pal Singh, Director of Omega Infra Pvt. Ltd. (Omega), the contents of which are reproduced as under:
"Memorandum of Understandings This MOU is made at Mohali on today this 18th day of April 2011 between the following parties:
1. Mr. Davinder Singh Gill S/o Late S. Mehar Singh residence of #1077, Sector 40-B, Chandigarh (hereinafter referred to as the seller which term, shall where the context so admit his / her theirs heirs, executors, successors, assignees, legal representatives and administrators) of the one part of this deed.
And Mr.Amrit Pal Singh, Managing Director Omega Infra Estates Pvt Ltd., DesuMajra, Kharar) (hereinafter referred to as the purchaser which term, shall where the context so admit his / her / their heirs, executors, successors, assignees, legal representatives and administrators ) of the other part of this deed.
WHEREAS the above said Ist party who is seller in this agreement is an authorised person who is agreement holders of freehold approx..22.5 acres of land at village Baliyali, Sector 74, Mohali with all legal proprietary rights to enter into this sale agreement. The details of khasranos of this land duly signed are attached.
WHEREAS the sais Ist Party is interested to sell the said property including all its rights available to above said seller in favour of the purchaser and purchaser is also interested for purchasing the same. After detailed discussion both the parties have not mutually agreed with each other regarding the deal on following terms & conditions:
1. The sale price of the said approx. 22.5 acres of land at Baliali Village has been fixed as Rs. 1,50,000/- (Rs. One Crore Fifty Lacsonly ) per acre, the detail of Khasranos are attached.
2. That the said purchaser has paid to the seller earnest money as mentioned below:
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 10 A sum of Rs. 6,00,00,000/- (Rs. Six Crore only) as the earnest money (Rs. Four crores nintylacs) by cash and Rs. One Crore ten lacs only by cheqeus of Bank of Baroda), the details of which are given in receipt at page 4 of the agreement.
This MOU has been signed on the next following terms and conditions:
i) That another amount of Rs. 1,00,00,000/- will be paid to seller on or before 25th April 2011.
ii) That another sum of Rs. 7,00,00,000/- (Rs. Seven crores only) will be paid on or before 5th July 2011.
iii) That the balance amount pending will be paid to Ist party on completion of deal at the time of registration of land, the time for which will be fixed as 5th October 2011.
3. That the said purchaser shall have all the rights to further enter into agreement to sell of said property and to get the sale deed / AGREEMENT / WILL etc. of the said property executed in his name of any other persons of his desire and the seller will not make objection to this.
4. That the first party will arrange another land of approx. five to eight acres connecting to this land and connecting to the road of village at the prevailing market price.
5. That none of the parties will back out from this bargain. If the seller backs out from honouring the deal at appropriate time, he shall be liable to make payment of double of the amount of the earnest money received from the purchaser. In case the purchase backs out, then all earnest money shall stand forfeited in favour of the seller as per MOU.
6. That the Ist party also assures to provide consents from land owners in favour of 2nd party of its representatives within 15days of receipt of completion of Rs. 14,00,00,000/- (Rs. Fourteen Crores only) i.e. near 20th July 2011.
7. That the said seller shall hand over the physical / vacant possession of the said property along with all the original registration papers at the time of completion of the said bargain.
IN WITENSS WHEREOF, both the parties have put their hand on this deed on the day, month and year first above mentioned in the presence of witnesses Witness:
1. Sd/- Seller (Sd/-) JarnailGhuman Purchaser(Sd/-) S/o Sh. Hardev Singh, H.No.114, Sector 71, SAS Nagar."
11. The assessee was also confronted with the aforesaid MOU during the recording of his statement on 9.5.2011, to which he replied as under:
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 11 "Page 9 to 12 : This is a MOU with Mr. Amrit Pal Singh, Director of Omega Infra Pvt Ltd, DesuMajra, Karar, and me. As per this MOU, I am liable to purchase land on behalf of Mr. Amrit Pal Singh regarding 22.5 acres of land at Vill. Baliyali, Sector 74, Mohali. The above land is to be purchased for the above company @ 1 ½ crores per acres. For this purpose Shri Amrit Pal Singh Prop. Omega Infra Pvt Ltd. has given Rs. 6 cores (Rs. Six crore) as the earnest money regarding this land. Out of which 4.90 crores was given in cash and Rs. 1.10 crore through cheque. The total amount for 22.5 acres land was fixed at Rs. 34 crores approx. Remaining amount was to be given on or before 5/7/2011. Further I have booked land for Omega @ 1.10 crore per acre (Rs. One crore& ten lac per acre) from the farmers. I have given biana amount of Rs. 1.50 crore for booking of land to the farmers. That money was paid from the society account and raising of loans from various persons. I will prove the details later on."
12. On going through the statement and the above reproduced Agreements the following facts emerged:
a) An Agreement dated 17.8.2006 has been entered into s between Shri Nirmal Singh and others and Sky Heights House Building and Infrastructure Society through its president Mr. Devinder Singh Gill for purchase of land measuring 44 Kanals 2 Marla (about 5 acres)
b) As per this Agreement dated 17.8.2006, cash payment of Rs.
25,00,000/- has been paid by Sh. Devinder Singh Gill on behalf of Sky Heights House Building and Infrastructure Society to Shri. Nirmal Singh ansothers , the owners of the Land at Baliali, as Bayaana money.
c) In his statement, the assessee explained that due to some dispute between society and seller, the said deal could not be finalized so far.
d) An MOU dated 18.04.2011 has been entered into by the assessee with Amrit Pal Singh, Director of Omega Infra Pvt. Ltd. As per which the assessee was liable to purchase 22.5 Acres of land on behalf of Omega Infra Pvt. Ltd.
e) Omega Infra Pvt. Ltd. has given Rs. 6 Crores as the earnest money.
f) Out of Rs. 6 Crores Rs. 4.90 Crores was given in cash and Rs. 1.10 Crores was through Cheque.
g) As per the Annexure the amounts were paid in the F.Y. 2010- 11 and 2011-12 corresponding to the A.Y's 2011-12 and 2012-13.
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 12 h )The assessee had booked the land agreed to be sold to Omega from the farmers by way of agreement at the rate of 1.10 crore per Acre and had paid earnest money of Rs. 1.50 crores to them.
i) The said amount of Rs. 1.50 Crores was paid by the assessee from the SHBIS Society Account and by raising loans from various persons as per the statement of D.S. Gill recorded by the DDIT(Inv.).
13. Admittedly, the statement of the assessee was recorded by the DDIT (Inv.) of the Department whilst the assessee was in the custody of the CBI. Though the Ld. Counsel for the assessee has raised doubt not only about the veracity and validity of the statement but also about its admissibility as the statement being recorded whilst he was in police custody has been used as incriminating evidence against the assessee, however, without going into the question of validity or admissibility of the said statement at this stage, first we have to see as to whether from the above referred to documents coupled with aforesaid statement made by the assessee whilst he was in the CBI custody, there was any reason for the Assessing officer to believe that the income of the assessee had escaped assessment.
14. The contention of the Ld. AR of the assessee has been that the said statement and the document relied upon by the AO did not constitute sufficient information to form a belief by the Assessing Officer that the income of the assessee for the relevant year under consideration AY 2007- 08 has escaped assessment. Whereas the Ld. DR has strongly defended the action of the Assessing Officer for reopening of the assessment. We have heard and considered the rival contentions of the Ld. Representatives of the parties.
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 13
15. The assessing officer has recorded the following reasons for reopening of the assessment for the year under consideration i.e. AY 2007-
08.
"In the above said case, search operation was conducted by the office of the CBI, Chandigarh and the documents having financial implication relating to property transactions were found and seized. The DDIT(Inv.) Chandigarh recorded the statement of Sh. Devinder Singh Gill in the office of the CBI, Chandigarh.
On perusal of these seized documents of the assessee it is seen that an agreement to sell dated 17/08/2006 was found during the search operation conducted by CBI. It has been found that Sh. Devinder Singh Gill had booked total land of 44 Kanal 2 marla approximately from Sh. Nirmal Singh, Ujjar Singh, Satnam Singh, Iqbal Singh and Sh. Vikram Singh all R/o Village Baliyali, Tehsil and Distt. Mohali @ 1,06,00,000/- per acre. For this purpose, he had given earnest money of Rs. 1.50 crores for booking of land to the farmers by raising loan from various people but he could not give the details of persons from whom loan was raised. On verification of the assessment record of this year it has been seen that assessee has not shown this transaction of Rs. 1.50 crore. I therefore, have reason to believe that income chargeable to tax has escaped assessment for an amount of Rs. 1.50 crore for the assessment year 2007-08 within the meaning of Explanation 2(c) of section 147 of the I.T. Act. Issue notice under section 148 of the I.T. Act, 1961."
16 The Ld. AR of the assessee referring to the agreement dated 17.8.2006 has contended that there was no evidence or document suggesting or indicating the purported payment of Rs. 1.50 Crores as alleged by the Assessing Officer in the reasons for reopening of assessment. He has further contended that the Agreement clearly shows that it has not been entered with the assessee but with the entity namel y 'Sky Heights House Building and Infrastructure Society' (Sh. BIS) through its President, Mr. Devinder Singh Gill and hence,the reopening of the assessment in the individual case of the assessee was not based on any factual material but based on wrong interpretation of the facts on record. He argued that even the payment of Rs. 25,00,000/- had been made by Shri ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 14 Devinder Singh on behalf of the Society (SHBIS) and hence reopening of the case of the assessee was totally invalid.
17. The Ld. DR on the other hand has argued that the assessee himself has confirmed payment of Bayana amount (earnest money) of Rs. 1.50 Crores for booking of the Land to the farmers vide his statement recorded by the DDIT (Investigation ) under section 131 of the Income Tax Act on dt. 09/05/2011. It was argued that since the assessee in his statement had confessed about the aforesaid payment of Rs. 1.50 crores and hence the reopening has been rightly resorted by the Assessing Officer. She has further submitted that every entry in the seized material reflect the state of affairs of the assessee and is tallying with the statement. She tried to explain the contents of the documents and argued that they are the speaking documents indicating evasion of income by the assessee. The Ld. DR has also filed written submissions which reads as under:-
"Submissions of Department for A.Y. 2007-08 In this case the AO made addition on the basis of the agreement to sell dated 17/82006 seized by the CBI during the course of search operation (enclosed in page 1 to 9 of annexure) and the statement recorded on 9/5/2011 u/s 131 (enclosed in page 32 and 333 of annexure). As per the statement the assessee has paid Rs 1.5 cr as biana for booking land at Baliyali village Mohali to farmers. The asseesse stated that it was paid out of the society account and loans raisfd from various persons. Before the AO the asseesse couldn't satisfactorily explain the source of investment towards biana of Rs 1.5 crore for land at Village Baliyali, Mohali. The asseesseinfact denied the recording of statement and was evasive in response."
Before the CIT(A) the asseesee was non cooperative. On the said date of hearing, he took adjournment and thereafter didn't appear. As a result the CIT(A) passed order exparte based on material available on record. The CIT(A) upheld the addition after discussing the case on merit. The assesee filed appeal before the Honble ITAT and again did not appear. The Honble ITAT passed exparte order on merits. Only when the department initiated coercive recovery proceedings, the asseesee filed MA to recall the order, which was allowed restoring the appeal to its original position.
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 15 Now in the present proceedings the assessee through affidavit (page 42 to 44) has stated that the reason for non appearance before CIT(A) was that he was preoccupied with breaking criminal laws and in defending himself. The fact of the matter is that multiple FIRs for various crimes have been registered against him and that he was occupied to keep himself out of jail. This is no justifiable reason for non appearance before CIT(A). The assessee is proclaimed offender and this cannot be a justifiable reason for avoiding income tax proceedings.
In light of above stated facts, it is requested that the appeal may kindly be decided on merits and not be remitted back to CIT(A) as the reason for non appearance is not jutifiable. Reliance is placed on decision of Hon'ble HC of Gujarat in the case of AshokjiChandujiThakor in ITA no 710 to 717 of 2018 dated 27/6/2018 (copy enclosed). Hon'ble HC has held that the Ld ITAT cannot remand the matter back to CIT(A) when there was no justifiable reasons for the assessee not to appear before the CIT(A). The evidence found along with the sworn statement is enclosed as per which the assessee admitted that he had paid biana of Rs 1.5 Cr to the farmers. Before the AO the assessee couldn't explain the source. Even in the present proceedings, the assessee has not been able to offer any valid reason and substantiate his claim. It is hence prayed that the addition made by the AO may kindly be upheld."
18. Rebutting the arguments of the Ld. DR, the Ld. Representative of the assessee while referring to the earlier reproduced part of the statement of the assessee submitted that in the said statement, the assessee has been shown to have given answers/ explanation in respect of an MOU dated 18.4.2011 entered with Mr. Amrit Pal Singh, Director of Omega Private Ltd., Kharar and that as per the said MOU the assessee was liable to purchase land of 22.5 acres on behalf of M/s Omega Pvt. Ltd. at village Baliyali, Sector 74, Mohali wherein the assessee further stated that he had booked land for Omega @ Rs 1.10 crores per acre from the farmers and that he had given Biana (earnest money) amount of Rs. 1.50 crores for booking of land to the farmers. That it has been clearly mentioned that the said money was paid from the account of the Society (SHBIS) and by ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 16 raising loan from various persons. He has further submitted that the reference of payment of Rs. 1.50 crores in the statement of the assessee in respect of above reproduced MOU dated 18.4.2011 cannot be in any manner related to any transaction entered into by the assessee in the financial year 2006-07 relevant to the assessment year under consideration.That even the agreement dated 17.8.2006 entered into by the assessee on behalf of the society M/s SHBIS society and not in his individual capacity. That the assessing officer has mislead himself by equating Sh. Devinder Singh Gill, the assessee with the Society SHBIS. That even otherwise in the said agreement dated 17.8.2006, there is no mention of any alleged payment of Rs 1.50 crores by the assessee. The Assessing officer wrongly, without application of mind has formed the opinion that the income of the assessee for the year under consideration has escaped assessment. That even all the payments stated to have been paidfrom the account of the Society. He therefore, has pleaded that since the source of the amounts has been stated to be from the society, no addition in the hands of the assessee was warranted.
19. We have considered the rival contentions raised by the Ld. Representatives of the parties. The Assessing officer in this case has taken into consideration some part of the statement of the assessee dated 9.5.2011 made before the Investigating Authority whilst in the custody of the CBI and also from the two agreements seized by the CBI from the premises of the assessee. First is the agreement to sell dated 17.8.2006, which is entered into between S/Shri Nirmal Singh, Ujjagar Singh, Iqbal Singh and Vikram Singh, all residents of village Baliyali, Tehsil Mohali on one hand and M/s Sky Heights House Building Infrastructure Societ y ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 17 through its President Shri Devinder Singh Gill vide which the aforesaid farmers had agreed to sell their land measuring 44 Kanals 2 Marlas @ Rs. 1,06,00,000/- and a sum of Rs. 25 lacs received by them as earnest money on 17.8.2006. The said document was put to the assessee for explanation during the recording of his alleged statement by DDIT (Investigation) on 9.5.2011. The assessee admitted to the execution of the said agreement and further explained that due to some dispute between society and seller, the deal could not be finalized so far. That the source of payment of Rs. 25 lacs was from the account of the society and further that accounts of the society were being maintained at SCO 68, Phase-2, Mohali.
20. The aforesaid agreement read with the statement of the assessee recorded on 9.5.2011 does not in any manner even create a doubt or suspicion about the escapement of any income of the assessee in his individual capacity. This is because firstly, the agreement was entered into between the above named 'sellers' and the 'society' and not between the assessee in his individual capacity and secondly, the alleged payment made was of Rs. 25 lacs only, that too from the account of the society and there is no contradiction or any other fact coming out either from the agreement or from the statement of the assessee to show that the assessee in his individual capacity had paid any amount of Rs. 1.50 crores in part performance of the said agreement.
Even otherwise, if it is assumed that some payment might have been paid by the assessee subsequent to the payment of Rs. 25 lacs, there is a time gap of almost more than 5 years between the execution of the agreement dated 17.8.2006 and the date of recording of the statement of the assessee.
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 18 The satisfaction of the Assessing officer forming an opinion that the alleged amount of Rs. 1.50 crores was paid by the assessee in the year under consideration is not coming out from the facts on the record. Further, even there is no admission or confession by the assessee that the said amount of Rs. 1.50 crores was unexplained income of the assessee, rather assessee in the same statement explained that the amount has been paid from the account of the society namely "Sky Heights Housing Building Infra Structure Society". Admittedly, no corroborating evidence in respect of any alleged payment has been found or noticed except the aforesaid statement of the assessee recorded, which gives only a partial information. No investigation or enquiry has been made from the sellers that if they had received any money from the assessee over and above of Rs. 25 lakhs in lieu of the aforesaid agreement dated 17.8.2006.
21. The second document relied upon by the assessing Officer is an MOU dated 18.4.2011 entered into by the assessee with Omega Infra Pvt Ltd. In which the assessee has been mentioned to be the agreement holder of free- hold approx. 22.5 acres of land at Village Baliyali and the assessee had agreed to sell this land to the Omega @ Rs. 1.50 crores per acre. The details of the land &khasra numbers are also said to be attached with the Agreement. Then there is a mention of payment of earnest money by the purchaser to the seller. The assessee in his statement dated 9.5.2011 has admitted to the execution of the aforesaid agreement and there is no contradiction so far as the assessee had agreed to sell 22.5 acres of land at Village Baliyali of which the assessee allegedly had got right to sale in view of the agreement with the actual owners. The relevant part of the statement of the assessee explaining this document is that he had booked ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 19 the land for Omega @ Rs. 1.10 crores per acre from the farmers and that he had given 'baina' (earnest money) of Rs. 1.50 crores for booking of the land to the farmers. That this money was paid from the society's account and by raising loans from various persons and that he would provide the details later on. Now considering the above statement, the assessee allegedly paid Rs. 1.50 crores for booking of the land which the assessee was supposed to sell to Omega vide MOU dated 18.4.2011. There is nothing either in the statement or in the MOU to suggest that the alleged payment of Rs. 1.50 crores was paid by the assessee to the farmers in the financial year 2006-07 relevant to the assessment year under consideration i.e assessment year 2007-08. Even the assessee has explained in the said statement itself that the said money was paid from the society's account and raising of loans from various persons. There is no admission or confession on the part of the assessee to the effect that the said money of Rs. 1.50 crores was unexplained income of the assessee. The Investigating officer of the Department did not enquire to confirm the aforesaid fact recorded in the statement of the assessee whilst in the custody of the CBI by making enquiries from the farmers who had given authority to the assessee to enter into the agreement with Omega for the sale of their land. There is no enquiry made from them as to on which date and what amounts have been received by them as earnest money totaling Rs. 1.50 cores. The assessee in his statement has specifically stated that the money was paid from the account of the society and by raising loans from various persons. The assessee was at that time since in custody and did not give the details of the loans raised regarding which he had stated that he would give the details later on. The Assessing officer while forming the belief that the ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 20 income of the assessee had escaped assessment has taken into consideration the part of the statement vide which the assessee had stated that the had paid a sum of Rs. 1.50 crores as earnest money to the farmers, however, he has completely overlooked and ignored the later part whereb y the assessee had also explained the source of the said amount of Rs. 1.50 crores. He thereafter concluded that the second part of the statement made by the assessee was wrong and false and further assumed that the said payment of Rs. 1.50 cores was out of unexplained income of the assessee and further assumed that the said payment was made in Financial Year 2006-07. There is no effort made by the Departmental authorities to make enquiries about the veracity of the aforesaid statement and find corroborative evidence such as by way of making enquiries from the said farmers and also from Omega. As per the MOUs, the Omega had alread y paid a s sum of Rs. 6 crores as 'earnest money' to the assessee out of which Rs. 4.90 crores was paid in cash and Rs. 1.10 crores by cheques, the detail of which have already been mentioned at page 4 of the agreement. Further, another amount of Rs. 1 crore was agreed to be paid on or before 25.4.2011 and further an amount of Rs. 7 crores was agreed to the paid on or before 5.7.2011 and the balance amount on the completion of deal i.e. 5.10.2011. From the above, it is apparent that the assessee had funds of Rs. 6 crores as earnest money received even before the execution of above MOU as date of cheques mentioned is prior to the date of agreement. Further, another important factor is that out of the 10 cheques received by the assessee totaling of Rs. 1.10 cores, the first two cheques were issued in favour of the 'Sky Heights Housing Building Infra Structure Society' and other 10 cheques, were issued in favour of the 'Sky Heights Land ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 21 Promoters (P). Ltd.' as per the instructions of the assessee. The fact on the file is that the part of the earnest money received by the assessee had gone into the society's account. The assessee in his statement has categorically stated that the money was paid from the society account and raising loans from other persons. Under the circumstances, without any corroborating or even circumstantial evidence, how the Assessing officer assumed that the amount of Rs. 1.50 cores was unaccounted income of the assessee, is unexplainable. The Assessing officer allowed himself to mislead that the said amount of Rs. 1.50 cores which was allegedly paid by the assessee to farmers was out of the unaccounted income of the assessee. Moreover, none of the Departmental authorities asked the assessee even during his statement about the date of payment of the said amount of Rs. 1.50 cores to the farmers and even they did not bother to make enquiries from the concerned farmers despite the fact that the details of the land etc. was available / attached with the agreement even while on the same statement the assessee explained that the amounts have been paid from the society account.
22. The Assessing officer has linked both the agreements of 2006 and 2011 to assume that the assessee had booked the land in 2006 which was agreed to be sold to the Omega vide MOU dated 18.4.2011. Even if it is assumed so, the fact on the file is that the agreement of 2006 is regarding only 44 Kanals 2 Marla approx. of land, i.e about a little more than 5 acres of land, whereas, the MOU of 2011 is in respect of 22.5 acres of land . In the said MOU of 2011, it has been mentioned that the assessee had entered into the agreement with the farmers in respect of the said 22.5 acres of ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 22 land which the Revenue authorities have never enquired about or looked into.
23. The assessee in that very statement, as noted above, had also explained that the agreement of 2006 did not mature. There is only mention of payment of Rs. 25 lacs only. Further the Agreement of 2006 was between the assessee and 'Sky Heights Housing Building Infra Structure Society' and not by the assessee in his individual capacity. The SHBIS (society) is a independent entity with a separate PAN. The Assessing Officer has not called for or examined the books of account of the Society. Even the name of the farmers and addresses and details of the land was duly mentioned in the agreement of 2006 but no enquiry was made from the said farmers. How the Assessing officer formed the opinion that the said amount of Rs. 1.50 cores was paid in lieu of agreement of 2006 has remained unexplained. Neither there is a link proved between 2006 agreement and 2011 agreement nor any evidence of payment of money is available except the aforesaid statement of the assessee recorded in the year 2011. No date / dates of any payment made by the assessee have been mentioned to show that the assessee had paid the aforesaid amount of Rs. 1.50 crores out of his unexplained income. Even nowhere it could be borne from the record that the amount of Rs. 1.50 Crores pertains to the Assessment Year 2007-08 which the Assessing officer has made sole reason for reopening of the case. The Assessing Officer in the reasons recorded held that the assessee vide agreement dated 17/08/2006 has booked 44 Kanals of land from Shri Nirmal Singh and othrs. and has given earnest money of Rs.1.50 Crores for booking whereas the amount given as per the Agreement was Rs. 25,00,000/- only, that too on behalf of the Society. To that extent the reasons recorded by the ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 23 Assessing Officer are factually not correct. In view of the above discussion, we have no hesitation to hold that in this case, there was no reason to believe for the Assessing officer that the income of the assessee for the year under consideration had escaped assessment. The reopening, therefore, was not valid and the assessment framed consequent thereto is liable to be set aside.
24. Now coming to the merits of the assessment made by the assessing officer, the entire addition has been made on the basis of the aforesaid statement of the assessee recorded by the investigation authorities whilst he was in the custody of the CBI. Though the Ld. Counsel for the assessee has raised contentions about the validity and admissibility of the said statement as evidence against the assessee, however, in view of the discussion made above, we find that there is otherwise nothing incriminating coming out of the said statement against the assessee which may be taken as confession of the assessee warranting the impugned additions. The Assessing officer, in this case, did not make any effort to make any enquiry or to bring any evidence on record to prove or corroborate his assumption of fact that the income of the assessee for AY 2007-08 has escaped assessment. He has conveniently picked up a part of the statement of the assessee while making the addition under section 69 even though the documents prove otherwise. The assessee has been insisting right from the beginning that the amounts were paid by him on behalf of the Society and from the accounts of the Society. Whereas the Revenue has failed to prove by any cogent investigation, evidence, bank statements, documents or any other material to prove that the amounts are indeed taxable in the hands of the assessee. Mere reliance on the statement ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 24 and that too by way of half reading of the statement to tax the amounts in the hands of the assessee while the facts clearly point that these amounts belongs to the Society cannot be accepted / approved. The above discussion can be summed up in following points:
a) that case was reopened on wrong assumption of facts.
b) that there was no evidence to indicate that the amount of Rs. 1.50 Crores belongs to the A.Y. 2007-08.
c) that the amounts as per agreement of 2006 have been paid by the assessee on behalf of the Society which is a separate entity having separate PAN number.
d) that the statement of the assessee has been wrongly interpreted rather partly interpreted leaving the other part which explains the events completely.
e) that the Agreement to Sell dated 17.08.2006 (Biana) clearly shows that the assessee signed on behalf of the Society (SHBIS)
f) that the addition was made merely based on the partial reading of the statement.
g) that there is nothing incriminating in the statement of the assessee by which it can be said that he has ever confessed that he has given the earnest money of Rs.1.50 crore to farmers out of his unaccounted income
h) that the Revenue could not bring any primary evidence or any corroborative evidences to prove the fact of payment by the assessee.
i) that the Revenue has not even examined the accounts of the society wherefrom the amounts are purported to be paid.
j) that the agreement of 2011 can not be related to the year under consideration.
25. In view of the above discussion, we hold that the impugned additions are not warranted in this case and the same are accordingly, ordered to be deleted.
This appeal of the assessee stands allowed.
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 25 ITA No 499/Chd/2015for A.Y. 2008-09
26. The assessee in this appeal has taken the following grounds of appeal:-
1. That the order passed u/s 148 of the Income-tax Act, 1961 by Ld. Assessing officer and partly allowed u/s 250(6) of the Income-tax Act, 1961 is bad in law and against the facts of the case and thus against the provisions of the Act.
2. That the additions of Rs. 3,74,40,000/- made by the Ld. Assessing officer &partly upheld by the worthy CIT(A) at Rs. 1,56,16,000/- after allowing deduction of proposed expenditure on the basis of some typed, hand written papers and a joint venture agreement not evidently proved with proper documents is bad in law and against the provisions of the Act.
3. That the additions made by the Ld. Assessing officer and partly upheld by the worthy CIT(A) is purely on assumptive basis and never belonged to the appellant.
4. That the additions upheld by the worthy CIT(A) is on the basis of ex-party decision and the assessee has not been given natural justice.
5. That the assessee craves leave to add / alter any of the grounds of appeal on or before the date of hearing.
27. Brief facts of the case are that the assessee filed return of income declaring total income of Rs. 1,09,870/- received on account of sitting fee from colleges in Haryana. During the search conducted b y CBI and based on the document seized during the search, a statement of the assessee dated 9.5.2011 under section 131 has been recorded by the Deputy Director (Inv.) of Income Tax Department. Based on the statement recorded pertaining to the Joint Venture Agreement dated 25/09/2007 between the sellers namely Jaidev, Subhash Chand, and ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 26 others, the residents of Rajpura Town (as first party) and Sky Heights Land Promoters Pvt. Ltd.(as second party), Amarjeet Singh (as third party) TarsemLal Joshi (as fourth party) related to purchase of 12 Bighas&6 Biswas of land for the project named as Rajpura Pride, the case of the assessee was reopened on the grounds that income of Rs. 1,59,50,000/- has escaped assessment for the A.Y. 2008-09 within the meaning of explanation 2(c) of Section 147 of Income Tax Act,1961. The reasons recorded for reopening of the case are as under:
"In the above said case, search operation was conducted by the office of the CBI, Chandigarh and the documents having financial implication relating to property transactions were found and seized. The DOIT (inv), Chandigarh, recorded the statement of Sh. Devinder Singh Gill in the office of the CBI, Chandigarh.
During the course of CBI search, sonic typed, hand written papers and a joint venture agreement dated 25.09.2007 between Mr. Jai Dev. Mr. Subhash Chand, Mr. Ashok Kumar and Mr. Satish Kumar all Ri o H.No. 9, Block B-9., Rajpur Town, Distt. Patiala and M/s Sky Height Land Promoters Pvt. Ltd., Mr..Amarjit Singh R/n Rajpura, Mr. Tersem Lai Joshi Ri o Rajpura regarding land of 12 biglia 6 biswas situated at village Neelpur, Tehsil Rajpura with construction thereon, including 4 sheds, 7 rooms and one office along with one weigh bridge of 50 Tonne capacity was found and seized, As per this joint venture agreement, all the three purchasers agreed to purchase 75% share of the above said property. Further, it was mentioned in the agreement that a commercial complex, under the name of Rajpura Pride (at Rajpura) was to be developed on this land. It has been stated in the agreement that Sh. Devinder Singh Gill shall be entitled to make the booking/sale of the commercial property and get the same transferred to the prospective buyers. Share ratio between seller and purchaser was fixed as under:
First party i.e. seller- 25% Second party i.e. M/s Sky Heights Land Promoter Pvt. - 40% Third party - Mr. Amarjit Singh S/o Sit.Jaswant Singh R/oBhoglan, Tehsil Rajpura-25% Forth party-Mr. Tersem Lai Joshi R/o H.No. 140, Dasbmesh Colony, Rajpura-10% The above typed and hand written pages under the; title of Rajpura Pride were confronted to S'h. Devinder Singh Gill. As per page no. 3, a sum of Rs. 1.70 crores was stated to be paid by M/s Sky Heights Land promoters Pvt. Ltd.. to the various persons for different ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 27 purposes, In response 10 that he stated that these payments have been made to construct show room structures, roads, gates, civil work etc on the above said project. The construction work was carried out during September 2007 to 2008. These payments have' been made from books of account of M/s Sky Height Land Promoters Pvt. Ltd. Further, he was confronted with other hand written pages on which profit share distribution, expenses of some projects were written. He replied that these pages contained the details of receipts which were received from the project and its distribution among the partner; of company. Besides this, he stated"
that a sum of Rs. 4.48 crores were received from sale of sites in Rajpura project during 2008-09 and Rs. 30 lacs was received from the selling of malba of Rice Shelter cum marriage palace and he has shown this profit in his IT. Return. \ copy of agreement to sell dated 09.07.2007 was also confronted in respect of Rajpura Pride Project to Sh. Devinder Singh Gill. As per the agreement to sell, the value of Rajpura Pride has been fixed for Rs, 8.05 crores for which advance of Rs. 1 crore has been given. In this regard, he stated that out of the above money, he paid Rs. 40 lacs through cheque as his share and Rs. 60 lacs were paid by tiie remaining partners. As per these documents confronted to Sh. Devinder Singh Gil!, he with his partners has earnedincome of Rs. 4.78 crores from (his project. Verification of the assessment record of this year it has been seen that the assessee has not shown the transaction of Rs. 10 lacs and also has not shown profit of Rs.1,19,50,000/- as his profiti.e. 25% from Rajpuraproject.I have therefore, reason to believe that the assessee has escaped assessment of Rs, 1,59,50,000/- for the assessment year 2008-09 within a meaning of Explanation 2 (c) of section 147of the I.T.Act.Issuenotice u/s 148 of the I.T. Act. 1961. The joint venture Agreement based on which the notice under section 148 issued is as under:
This-agreement is executed on this 25th day of September 2007 at Rajpura amongst:
1. Mr. Jai Dev, Mr. Subhash Chand, Mr. Suresh Kumar, Mr. Ashok Kumar and Mr. Satish Kumar all sons of Late Shri Kanhaiya Lai resident of H.No.9, Block B-9, Rajpura Town, distt. Patiala (hereinafter called the first party);
2. Sky Heights Land Promoters (P) having its registered office at S.C.O. 0-68, Phase-II, Mohali through its Director Mrs. Sharda w/o Sh. D.S. Gil; (hereinafter called the second party);
3. Mr. Amarjit Singh s/o Sh. Jaswand Singh resident of Bhoglan, Tehsil Rajpura (hereinafter called the third party);
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 28
4. Mr. Tarsem Lai Joishi son of Shri Ram Parshad resident of H.No.140, DashmeshColony, Rajpura. (hereinafter called the fourth party) WHEREAS the first party to this agreement is the owner of a property of land measuring 12 Bighas 6 Jliswas having khewat No. 158/293 Khasra Numbers 27/2/1(3-5), 3/2/1(0-1), 9/1 (2-16, 9/2 (1-4), 12 (4-0), 19/1 (1-0) at village Neelpur, Tehsil Rajpura with construction thereon, including 4 sheds, 7 rooms and one office along with one weigh bridge of 50 Tonne capacity.(hereinafter referred to as property).
WHEREAS the parties of the second to fourth part to this agreement have agreed to purchase 75% (3/4 ) of the above said property vide agreement to sell executed on 08/09/07 amongst the parties to this agreement.
WHEREAS the parties to this agreement have decided to develop the property into a commercial complex under the name of RAJPURA PRIDE.
WHEREAS the parties have decided to reduce the terms into writing so as to avoid any future misunderstandings/dispute. NOW THIS AGREEMENT WITNESSTH AS UNDER:
1. That the commercial complex under the name/ of RAJPURA PRIDE shall be developed at the above said property. . .,
2. To this agreement RAJPURA PRIDE shall be entitled to make the bookings/sale of the Commercial property and get the same transferred to the prospective buyers.
3. That the selling rate of developed property will be determined by the parties by mutual consent.
4. All income and expenses for the development of the property shall be routed through the RAJPURA PRIDE. A Partnership Deed is attached herewith.
5. That the share of the parties in the '
a) First Party 25%
b) Second Party 40%
c) Third Party 25%
d) Fourth Party 10%
6. That the parties shall be at liberty to add, to vary or subtract anyterms(s) of this agreement by mutual consent at any time after itsexecution.
IN TOKEN WHEREOF the parties have set their hands and signatures onthe day and year first above written in the presence of:
Wittness/- Sd/-
Parties"
ITA Nos. 498 & 499/Chd/2015-
M/s Devinder Singh Gill
29
28. Based on the Agreement and the seized material the following facts emerged:
a) The share of profit among the four partners is as under:
25% to the Assessee 40% to M/s Sky Heights Land Promoters Pvt. Ltd. (SHLPL) 25% to Amarjeet Singh 10% to TarsemLal
b) Sum of Rs. 1.70 Crores was paid by SHLPL by cheque as well as by cash , from the books of accounts of SHLPL as per the statement of D.S. Gill, the assessee.
c) An amount of Rs. 4.48 Crores was received from sale of sites in addition to Rs. 30,00,000/- on account of sale of malba. Total earnings was of Rs. 4.78 Crores
d) As per the Agreement to sell the value of Rajpura Pride has been fixed at Rs. 8.05 Crores.
e) An amount of Rs. 40,00,000/- has been paid by the assessee towards the project
f) The assessee has categorically explained that the documents and the hand written sheets pertains to the period 2007-08 (A.Y. 2008-09 when the Agreement for the project was made.
29. The project consists of 2 Acres of land comprising of 64 show rooms, 32 booths and 18 bay shops. Against the documents and the statement recorded the Assessing Officer has held that an amount of Rs. 4.78 Crores has been received by the group as a whole and brought to tax an amount of Rs. 1,91,20,000/- being the 40% of the share of the assessee as per the JV Agreement. Further the Assessing Officer has added 40% of Rs. 4.56 Crores to the income of the assessee. As per the loose papers seized the total receipt of the amounts stands at Rs. 3,74,40,000/- out of which Rs. 95,04,000/- is treated to be the expenditure incurred by the assessee has ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 30 not been allowed by the Assessing Officer on the grounds that no evidences of this expenditure has been furnished by the assessee. Thus the Assessing Officer brought an amount of Rs. 3,74,40,000/-to taxation.
30. During the argument before us, the Ld. counsel in this case also has raised the issue relating to the validity of the reopening of the assessment. He has further submitted that the Assessing Officer has not even mentioned as to which provisions / section/ head of income of the Act the amount is being added to the total income. He has further reiterated the submissions taken up before the Assessing Officer by questioning the reliability on the statement recorded while in the custody of the CBI and also on the grounds that copy of the statement was not provided and no inspection of the records was afforded to the assessee. He argued that basic principles of natural justice have not been duly followed by the Authorities and in the absence of due opportunity given and also owing to the inability to represent himself before the Appellate Authorities being entangled in several criminal cases the matter needs to be examined properly. He has further submitted that the assessee has been appointed as Managing Director of the Company in the Promoter category from 01/09/2008 whereas the transactions mentioned in the seized material do not explicitly give any indication of the period of transactions except mentioning of 20 t h July and 15 t h March at two places. That the alleged transactions have been entered into by the SHLPL (company) and not by assessee in his individual capacity. That neither any enquiry has been made nor has any addition been made in the hands of the other parties to the transaction. That the Assessing Officer has not examined the books of accounts of SHLPL. The receipts determined of Rs.4,58,00,000/- and Rs.
ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 31 4,78,00,000/- prima facie appear to be duplicated. The additions have been made based on the loose papers and that no efforts have been taken by the Assessing Officer to independently verify the facts on record except completing the assessment based on the statement recorded whilst he was in CBI custody. That the assessee was not in a position to give any reasonable statement owing to the fact that he was in custody. That the statement recorded in the presence of the other investigating agencies cannot be taken as sacrosanct in the absence of bringing out of corroborative evidences.
31. Ld. DR on the other hand submitted written reply requesting for remanding matter of the issues back to the file of the Ld. CIT(A). The submission of the Ld. DR is as under:
"In this case the AO made addition on the basis of the loose sheets page 4 & 5 seized by the CBI during the course of search operation. The details of the transaction in these loose sheets are mentioned in tabular form in page 9 and 10 of the assessment order. Accordingly the AO made addition towards receipts mentioned in both pages ie 4 and 5 of seized document (enclosed in page 38 and 39 of annexure). Before CIT(A) the assessee took the plea that the profit from the single project has been added twice. The CIT(A) found the plea of assessee to be correct and upheld the addition of Rs 1,91,20,000 as detailed in para 6. The CIT(A) also allowed expenses against the receipts which is discussed in para 7. Both the department and the assessee filed appeal against the order of CIT(A). The department's appeal has been remanded back to the AO and the assessee's appeal is pending. Since the two issues are intrinsically linked and arising from the same seized documents, it is humbly requested that the present appeal may be remanded back to the CIT(A). It is also requested that looking at the non cooperative and evasive attitude of the assessee, he may kindly be directed to cooperate and to furnish prompt reply before CIT(A)."
32. Keeping in view the fact that in the appeal of the Revenue for the same assessment year is remanded to the file of the Ld. CIT(A) ITA Nos. 498 & 499/Chd/2015- M/s Devinder Singh Gill 32 earlier , hence, to avoid any contradictory findings on the same issue which can have wider ramification, we find it fit to remand the matter in this appeal of the assessee also to the file of Ld. CIT(A) to pass a speaking order in accordance with law after giving a due opportunity of being heard to the assessee. The Ld. CIT(A) will adjudicate by way of a common order upon all the issues and contentions that will be/have been raised by the assessee as well the issues raised by the revenue in alread y remanded matter vide order dated 13.10.2017 of this Tribunal passed in ITA No. 465/Chd/2015. The assessee is hereby directed to comply with the notices issued by the Authorities without seeking unnecessary adjournments.
33. As a result, this appeal of the Assessee is treated as allowed for statistical purposes.
Order pronounced in the Open Court on 23.10.2018.
Sd/- Sd/-
(बी.आर.आर,कुमार / B.R.R. KUMAR) (संजय गग / SANJAY GARG )
लेखा सद य/ Accountant Member या यक सद य/ Judicial Member
/दनांक/Date: 23.10. 2018
"आर.के."
आदे श क त!ल#प अ&े#षत/ Copy of the order forwarded to :
1. अपीलाथ)/ The Appellant
2. *यथ)/ The Respondent
3. आयकर आय,
ु त/ CIT
4. आयकर आय,
ु त (अपील)/ The CIT(A)
5. #वभागीय त न1ध, आयकर अपील य आ1धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File
आदे शानस
ु ार/ By order,
सहायक पंजीकार/ Assistant Registrar