Income Tax Appellate Tribunal - Nagpur
Ramakant Umashankar Khetan vs Assistant Commissioner Of Income Tax on 28 May, 1999
Equivalent citations: (2000)66TTJ(NAG)378
ORDER
K.P.T. Thangal, J.M.:
This appeal by the assessee is for the block assessment period 1987-88 to 199798.
2. The first ground of objection by the assessee is against the order of the learned assessing officer in determining the value of gold at Rs. 10,57,540 as against Rs. 9,60,786 claimed by the assessee.
3. The second ground of objection by the assessee is connected with the first ground and directed against the order of the assessing officer rejecting the claim of the assessee that the impugned gold was acquired by the assessee during the assessment years 1994-95 and 1995-96 whereas the assessing officer treated the year of acquisition as 1997-98.
4. There was a search and seizure operation under section 132 of the Income Tax Act, 1961, at the residential premises of the assessee on 27th November, 1996. During the course of search, jewellery worth Rs. 10,57,540 and Hundies worth Rs. 51,94,000 were seized. A notice under section 158BC of the Act was issued on 17th April, 1997. The assessee filed the return of income for the block assessment years under consideration in response to the above notice on 5th November, 1997. The case was taken up for scrutiny vide notice under section 143(2) dated 5th November, 1997. The assessee filed the details. During the search and seizure operation, the gold weighing 2073.100 grams valued at Rs. 10,57,540 was found and seized as per the Annexure J-4 of the Panchanama dated 30th November, 1996. On questioning, the assessee replied that the gold was purchased at different times and it was not possible for the assessee to explain with the help of books of account. In view of the above, the assessing officer treated it as the assessee's undisclosed income. As per Panchanama dated 30th November, 1996, the gold was valued at Rs. 10,57,540. The assessee's case was that the investment in these gold were made at different point of time and it was acquired with the amounts available with the different family members. A separate sheet explaining the yearwise acquisition of gold was filed. The assessee claimed that he purchased 688.500 gms. of gold during the assessment year 1994-95 worth Rs. 3,16,710. Again in stated that he acquired the gold weighing 1385.110 during the assessment year 1995-96 worth of Rs. 6,44,076. Thus, the assessee claimed that he purchased total gold weighing 2073.610 worth Rs. 9,60,786 during the assessment years 1994-95 and 1995-96. The assessing officer treated that the entire gold was acquired by the assessee after 31st March, 1996 and he valued it at Rs. 10,57,546. The difference was added. The assessee challenges the addition before the Tribunal.
5. The learned counsel for the assessee submitted that during the search on 30th November, 1996, the assessee stated that the gold was purchased at different times. He reiterated the same on 16th October, 1997. The counsel for the assessee brought our attention to paper book p. 1 of Paper Book-III for the above stated facts. The details of acquisition of the gold during the assessment year 1994-95 are given at pp. 4 of the Paper Book Vol. 1. p. 4A of Paper Book-1 is the inventory of gold found and seized.
6. The learned departmental Representative submitted that the assessee was to prove the acquisition of the gold; the onus is on the assessee and the same has not been discharged. Hence he submitted that the order of the assessing officer may be confirmed.
7. In the absence of any evidence but merely claiming that the acquisition of gold should be presumed to be made in the years 1994-95 and 1995-96, we are of the opinion that the acquisition of the gold should be presumed to be made in the year of detection. The appeal by the assessee on these grounds is without merit and is dismissed.
8. The third ground of objection by the assessee is against the order of the assessing officer in not allowing the credit in respect of the income shown by the family members for the assessment year 1996-97 at Rs. 8,70,000.
9. The assessee explained and it was accepted by the assessing officer that the total investment and the income from interest received for the period from 1st April, 1985 to 30th November, 1996, amounted to Rs. 46,21,000. Out of this, the amount of Rs. 14,79,800 was treated as bad debts and to this extent, the assessing officer also accepted the same. The balance investment remained at Rs. 31,41,200. The assessee filed the statement showing additional/other income shown by the different family members of the assessee including the assessee, in the assessment years 1994-95, 1995-96 and 1996-97, before the assessing officer, which reads as under
Asst. yr. 1994-95 Rs.
Asst. yr. 1995-96 Rs.
Asst. yr. 1996-97 Rs.
Ramakant
-
30,000 5,84,000 Ramakant HUF
-
4,45,000 1,05,000 Sumitra (wife) 34,406 60,325
-
Gopal (HUF) 1,21,332
-
-
Mamta Govind 75,193 1,09,949
-
Shashikala 27,073 1,78,493
-
Geeta Gopal 58,706 20,171
-
Total 3,16,710 8,43,948 6,89,000 = 18,49,648 The assessing officer accepted for the assessment year 1996-97, the fund available to the extent of Rs. 6,89,000 whereas the assessee's claim was of Rs. 15,59,000. The assessing officer without discussion disallowed the claim of the assessee and treated it as undisclosed income of the assessee. The assessee is agitating the same before us.
10. The learned counsel for the assessee submitted that the assessing officer was not justified in not allowing the claim of the assessee to this extent without any discussion in the assessment order.
11. The learned departmental Representative, on the other hand, submitted that this was not accepted by the assessing officer as the returns were not filed on the date of search.
12. We have considered the rival submissions and gone through the order of the assessing officer. The assessing officer has not given any reason as to why the claim of the assessee to this extent has not been accepted. It appears that it was not accepted on the ground that they had not filed the return on the date of search and it was filed subsequent to the date of search. Though the return of income in the cases of family members were submitted after the date of search, there were no search warrants against the family members and they have paid advance tax and TDS which covers the total income shown. In view of the above, there was no justification in disallowing the claim of the assessee since the claim of the assessee was accepted for the earlier year and family members were not subject to search and for the year under consideration i.e. 1996-97. We allow the claim of the assessee. The appeal by the assessee on the ground No. 3 is allowed.
13. The fourth ground of objection by the assessee is against the order of the assessing officer in making the addition of Rs. 20,000 by holding that the amount was given by the assessee to one Shri Dalu Guruji on l lth December, 1993.
14. At the time of hearing, the learned counsel for the assessee submitted that he is under instruction not to press this ground. Hence, the appeal by the assessee on this ground is dismissed as not pressed.
15. The next grounds, that, is, ground Nos. 5, 6, 7, 8, 9 and 10 raised by the assessee are against the addition of Rs. 20,00,000 made by the assessing officer as per communication received from the Deputy Commissioner, Special Range-I, Nagpur, being estimated on money which would have been received by the assessee.
16. The case of the assessee is that there is no discussion on the point in the assessment order. No communication was made to the assessee as to why this addition is being made except saying that the Deputy Commissioner, Special Range-1 has directed to make this addition. The assessee states that he had not given an opportunity to make submission in respect of this addition. No documentary evidences were supplied to the assessee. The evidence said to be the basis for making the addition is some paper found in the cases of Kolte/Patil group. The learned counsel for the assessee submitted that during the search operation at Akola in the premises of the assessee, nothing incriminating document connecting the assessee with the transaction was found. Papers of Balewadi was found at Pune with Sudhir Kohte and Patil group. No evidence connecting the assessee either with receipt or payment of on money was detected or found. The assessee acquired the right by virtue of agreement dated 6th April, 1996 with Shri Babu Bala Chavhan and Smt. Shobha Babu Chavhan and the right was transferred to M/s Elite Erectors (P) Ltd. on 24th December, 1996. The circumstances under which the deponent Shri Babu Chavhan came in contact with the vendors are explained in his affidavit dated 13th November, 1997. Somewhere before 6th April, 1996, the assessee met them and made enquiry regarding the plot and after discussion, agreed to sell the property for the total amount of Rs. 11,20,000. They agreed to sell the property to Shri Dilip Ramchandra Chavhan and Shri Uttam Prataprao Dhanwala after getting the permission from the Government of convert the land into non-agriculture land on making payment of 50 per cent of the market price (Nazrana) and they could not do that as they were having some problems. It was under these circumstances, the assessee came into contact. The counsel for the assessee submitted that the addition was made without any basis for the following reasons :
No date and name are mentioned on the basis of which the addition was made. There was no mention of survey No. or village Balewadi on the seized paper which was said to be the basis for the addition. Schedule of payment as per agreement dated 6th April, 1996 does not tally with paper No. 10 of bundle No. 8 supplied to the assessee. Nazrana challan was paid on 24th October, 1997 for Rs. 15,39,000 and there cannot be any on money payment in Nawana because it is a payment to the Government.
17. The counsel for the assessee further submitted that the affidavit of Shri Babu Bala Chavan was not at all considered and he was not at all questioned. The counsel further submitted that even the case of the department that this addition was made on the basis of the facts in the cases of Kolta/Patil is also incorrect because in the case of Sudhir Kolta, the assessment order was passed on 30th November, 1997, whereas in the instant case of the assessee, the assessment was made earlier. Therefore, there cannot be, an order which was not in existence, a basis for an order which was passed earlier in time. No papers in connection with Kolta/Patil group was supplied to the assessee, nor even the statement on the basis of which the assessment was said to be made. Not even the summons were issued to the land-owner and confirming parties. The counsel further added that to the best of his knowledge, there was no addition proposed even in the draft' order and counsel farther submitted that to the best of his knowledge, there was not even approval from the Commissioner. The addition made on the basis of some direction from Commissioner or Deputy Commissioner, the learned counsel submitted, is invalid. He relied on the following decisions :
(1) Kirloskar Investment & Finance Ltd. v. Assistant Commissioner (1999) 67 ITD 504 (Bang),.
(2) Kirti Lal Kah Das & Co. v. Dy. CIT (1999) 64 M (Mad) 77: (1999) 67 ITD 573 (3) Income Tax Officer v. Ghanshyam Das Hassa Nand (1986) 24 M (Born) 68,.
(4) Kishan Chand Chella Ram v. CIT (1980) 19 CTR (SC) 360: (1980) 125 ITR 713 (SC);
(5) KP. Varghese v. Income Tax Officer (1981) 24 CTR (SC) 358: (1981) 131 ITR 597 (SQ.
(6) CIT v. A.S. JayaKumai.(11995)215 ITR 422 (Mad);
(7) Zafarul Hassan Iraqui v. Income Tax Officer (1998) 61 M (JP) 387;
(8) Ashymikumar v. Income Tax Officer (1992) 42 M (Del) 44: (1992) 39 ITD 183 (Del);
(9) Kishan Chand Sobhraj Mal v. Asstt. C7 (1992) 41 ITD 97 (Ahd) (TM) and (10) Udairaja Goliya (HUF) v. Assistant Commissioner (1998) 64 1M 21 (Mumbai)(TM)
18. The learned departmental Representative supported the order of the assessing officer.
19. We have heard the rival submissions and gone through the decision ' S cited supra. In the case of Kirloskar Investments & Finance Ltd. v. Assistant Commissioner (supra), the Tribunal, Mangalore Bench held that the Commissioner cannot give any direction to the assessing officer of any sort, being not provided with any power to modify or enhance or reduce the assessment. In the case of Kirtlal Kalidas & Co. v. Dy. CIT (supra), the Tribunal held that the Commissioner's approval to the draft without hearing the assessee and without giving or, recording any reason for approval is against the principle of natural justice and, therefore, void and nullity. In the case of Udairaja Gollya (HUF) v. Assistant Commissioner (supra), the Tribunal Bombay Bench held that the statement recorded at the back of the assessee and no opportunity was provided to the assessee to cross-examine the deponent cannot be a basis for any addition. The Tribunal further held that in the absence of any evidence to show that the sum had been paid by the assessee, the letter head cannot be a basis for making any addition. In the case of Ashwini Kumar v. 1M (supra), the Delhi Bench of the Tribunal held that on the basis of a slip found at the residential premises of the assessee's father during the search, there cannot be any addition in the hands of the assessee if the assessee denies it. On the basis of the above decisions, the learned counsel for the assessee's submission that there cannot be any addition in the hands of the assessee and is to be deleted. This was found not in the residence of the assessee nor any name of the assessee was mentioned in the payment of on money or receipt of on money. In the case of Income Tax Officer v. Ghanshyamdas Hassanand, (supra), the Tribunal held that for invoking section 69 of the Income Tax Act, 1961, the burden is on the Revenue to show that the assessee has made some investment.
20. The learned assessing officer in the impugned order does not mention under which provision the addition is made. It is seen that the basis of the addition, i.e. records said to be seized, were not put to the assessee. The statement if any recorded was also not provided to the assessee. The order of the assessing officer which was the basis for making the addition came into existence after the order in the case of the assessee. In view of the above matter, we are of the view that there was no basis to make the addition in the case of the assessee. There is no evidence to show that the assessee had received any on money. In the affidavit of Shri Babu Bala Chavhan, he specifically states that he has not received any money other than recorded in the agreement. His version was not discredited nor he was questioned. No evidence is brought on record nor any convincing reason is given in the assessment order for making the impugned addition. The impugned addition made is deleted. The appeal by the assessee on this ground stands allowed.
21. The ground Nos. 11 and 12 raised by the assessee are against the order of the assessing officer in making the addition of Rs. 66,50,000 holding that the assessee has paid this sum for acquiring the tenancy rights of the flat situated at Matunga, Mumbai. The case of the assessee is that there was no evidence on record.
22. During the course of search operation, some letters written by one Shri P.R. Agrawal were found and seized from the residence of the assessee. All these letters are relating to the flat in Mumbai. It was stated that the Akhil Bharat Varashiya Marwadi Agarwal Jataya Kosh, 227 Kalbadevi Road, Bombay 400 002 (Marwadi Trust) had a flat No. 5 in Agrawal Nagar, Dr. Babasaheb Ambedkar Road, Matunga, Bombay 400 019. The said flat was about 1,200 sq. ft. in area. It was given on rent to the assessee at Rs. 160* per month, on the strength of application made by him on 28th December, 1995. Prior to this, one Shri Sanjay Shriprakash Chokhani was occupying this flat. Ke surrendered the tenancy rights to the landlord. Then it was handed over to the assessee. From some of the letters seized, the assessing officer came to the conclusion that the assessee had paid some huge amount for the transaction. From the letter dated 6th Nov,, 1995, written by Shri P.R. Agrawal to the assessee which reads as under :
"The flat is approximately 1,350 sq. ft. On super built up and about 900 sq. ft. or above carpet area. You have offered Rs. 70 lakhs for the same and it can be settled around Rs. 70.50 lakhs or so 2-3 other buyers are taking interest in the above matter as seller may take decision shortly. Hence your immediate action in the matter is appreciated." The Revenue came to the conclusion that the assessee paid huge amount for acquiring the tenancy rights and possession of the flat. The Revenue also noticed another letter being the ~c)c)2e paper No. 47 which reads as under
"Dear Shri Ramakantji Khetan, Pleas refer to my various letters. Kindly note that we are in touch with Agrawal Nagar Matunga flat Owners* and brokers regularly and they have received offer of about 66 lakhs and owner has given final non-negotiable offer of 68 lakhs (non-negotiable) looking to in market which is very attractive for sugar built up area 1,200 sq. ft. (carpet area 875 sq. ft.) 5,660 sq. ft. against original price 90 lakhs demanded by owner. Earlier they got offer about 75/80 lakhs in January/February, 1995 so we hope this is the best offer and you should not loose this opportunity. Please inform your decision yes/no on Andheri property at 3,200 sq. ft. ".
Again vide another letter seized vide S. No. 48 of Annexure-2, Shri P.R. Agrawal informed Shri R.U. Khetan that Shri Agrawal had finalised deal after great negotiation at Rs. 66/50. Agrawal. advised the assessee to remit about 4-5 initial deposit immediately and then pay 10-15 in future days. Full payment was to be made to 45 days or maximum 50 days or so.
23. Again the Revenue has taken note of another letter vide Serial No. 49 of Annexure A-2- This letter mentions about the previous letter dated Ist January, 1996 calling for the payment of 2-4 as early as possible as the seller's wife is likely to be in Bombay till 15th January, 1996 and it was further mentioned in this letter that the seller M11 be in Bombay between 13th, 14th and 15th January, 1996 and to make total advance payment of 7-10 before 14th January, 1996" including pay now". It concludes as follows :
"You will do the needful at earliest and oblige. Please ring the position from where to call the amount. "
24. So as to ascertain the genuineness of these facts mentioned in the letters, the assessing officer asked the assessee to produce Shri P.R. Agrawal. Shri Agrawal. was produced on 20th October, 1997 and his statement was recorded. All the letters written by him were shown to Shri Agrawal. Writing of the letters was admitted. He also admitted that he had communicated the information to the assessee. He further stated that the letter at serial No. 48 of Annexure-II is not related to flat No. 2/5 and the transaction relating to the flat No. 2/5 has not been finalised through him. It was stated that it was finalised directly by the trust as they never allow anybody to interfere. Summon was issued to the trust and in response to that, they submitted as follows :
"We are accepting the tenants on our monthly tenancy basis. We have various appeals, request and recommendations from various person that Mr. Ramakant Umashankar Khetan is in dire need of a suitable accommodation in Bombay and the trust should consider the allot him suitable accommodation. Accordingly, on 23rd March, 1996 the said tenancy was allotted to him.
We do not know Mr. P.A. Agrawal, Mr. R.U. Khetan of Akola has not paid any amount except 6 months deposit of rent and the monthly rent to us or through Mr. P.R. Agrawal. We do not know the where about of Mr. Chokhani and his family. It has been reported to us that the said Chokhani family has shifted to Bangalore.
The assessing officer personally visited the office of the Trust and made enquiries regarding the procedure of the allotment of the flat, as to whether they accept deposit/Pagadi/donation from tenants, as to whether the flat No. 2/5 was allotted to Shri R.U, Khetan through broker or directly. It was also enquired with them as to when they were not knowing the address of Mr. Chokhani, then how they could manage his signature on indemnity bond on 26th March, 1996. In response to the letter dated ' 8th November, 1997, they submitted that Mr. Chokhani has shifted his residence from Mumbai to either in Madras or Bangalore. Mr. Chokhani himself filed the affidavit and indeminity Bond on 26th March, 1996 as he was in Bombay at that time. Regarding the Pagadil deposit, they stated that they do not accept from anybody the deposit/Pagadi or donation, etc. They also stated that they had not taken any donation or deposit or Pagadi from Shri R.U. Khetan.
25. On 16th October, 1997 the assessee made the written submission. The relevant portion is reproduced at p. 10 of the assessment order which reads as under ..
"The assessee did not pay any sum of Rs. 66.5 lakhs to any one i.e. either to trust or Ckokhani family through Mr. P.R. Agrawal. Though there are letters from Mr. P.R. Agrawal proposing a flat at Matunga, but the assessee did not acquire any flat though Mr. P.R. Agrawal. Else Mr. P.R. Agrawal has no role in getting any allotment of flat in Agrawal. Nagar. The assessee do not remember as to in respect of which flat Mr. P.R. Agrawal was suggesting. However, on going through all the letters of Mr. P.R. Agrawal the assessee submits that he has not confirmed, settled negotiable or purchased any flat through Mr. P.R. Agrawal for a sum of Rs. 66.5 lacs nor assessee has paid anything to him or through him."
From the above facts, the assessing officer was not satisfied with the explanation of all the parties that there were no transaction amounting to Rs. 66.50 lakhs regarding the transfer of tenancy rights to the assessee in respect of flat No. 215. From the above letters, the assessing officer came to the following conclusion :
All the correspondence made by Shri P.R. Agrawal was pertained to flat No. 2/5 which was given on rent to the assessee by the trust. Mr- Chokhani was occupying the flat previously. Mr. Chokhani signed the agreement only after the receipt of deposit/Pagadi as suggested by Shri Agrawal, broker in his letter dated Ist January, 1996. He came to the above conclusion especially in view of the letter dated 2nd January, 1996, which clearly mentioned "that seller, Sanjay Chokhani will be in Bombay between 13th, 14th and 15th January, 1996. So make total advance payment of total 7- 10 before 14th January, 1996, including paid now." The assessing officer further came to the conclusion that the trust's stand that were not aware or known to Mr. Agrawal was incorrect as they mentioned about Mr. Agrawal, broker in some letter, He also rejected the explanation of the trust that they are not aware of where about of Shri Sanjay Chokhani as he was staying in their flat for more than 10 years. The assessing officer came to the conclusion that the assessee has paid some deposit or Pagadi as it is an accepted fact that in Bombay, no transaction regarding the flat takes place without such payment. He further came to the conclusion that Shri Sanjay Chokhani would have received the money from the assessee for relinquishment of the tenancy rights. The assessing officer further came to the conclusion that the assessed had invested in the flat and not for doing any business. The assessing officer noted that the trust vide its letter dated 19th November, 1997, stated that the committee of the Board of trustees will consider the application of the assessee only if he is a bona fide resident of Bombay and is in need of residential accommodation. From the above, the assessing officer came to the conclusion that the assessee being not-resident of Bombay, so as to overcome the difficulty, might have paid something. He came to the conclusion that the assessee paid Rs. 66.50 lakhs for acquiring the, tenancy rights in respect of flat 2/5 at Matunga, Bombay and had added the same to the total income of the assessee under section 69 of the Income Tax Act, 1961. Aggrieved by the above addition, the assessee is in appeal before the Tribunal.
26. The learned counsel for the assessee submitted that even from the assessment order it becomes, clear that Shri R.R. Agrawal was trying by repeated letters to finalise the transaction of the flat' However, the' fact remains that it was offer always and there was no response from the side of the assessee. There is nothing to show that the assessee had responded and struck the deal through the broker Shri BR Agrawal. The learned counsel for the assessee brought our attention to paper book p. 76, PR-III, which is a letter written in November', 1995 showing the area of the flat approximately at 1,350 sq. ft. whereas even, according to the assessing officer, 'the' flat that' owned by the assessee in Matunga, Bombay in Akhil Bharat Varashiya Marwadi Agrawal Jataya Kosh Trust was only of 12,00 sq. ft. Even assuming that this a rough' estimate, the learned counsel for the assessed submitted ' that it leads to the conclusion that Shri P.R. Agrawal had nothing to do with this, flat. The A0 refers this letter on p. 8 in para. 2 of his order being Annexure-2 loose paper No. 44. Inviting our attention to paper book-Ill, p. 73 which is the letter dated 18th December, 1995, the learned counsel for the assessee submitted that a perusal of this letter will make it clear that the broker was referring more than one flat and he was not specifically referring that he is in touch with regard to Agrawal Nagar, Matunga flat's owners and brokers and it states that they have received the offers. This letter does not specify any flat. Again inviting our attention to paper book p. 72 of PB-III, which is a letter reproduced by the assessing officer in his order, the learned counsel for the assessee submitted that the assessing officer conveniently omitted certain relevant portion which he perceived that it may not improve the case of the department. The letter specifically states that the broker tried, to contact the assessee on the previous day and on next day, i.e. on 1st January, 1996 the day oil which the assessee was out of Akola and, therefore, he could not contact on telephone. Inviting our attention to the letter reproduced by the assessing officer in his order being the letter at serial No. 49 of Annexure A-2, the counsel for the assessee submitted that from this letter, the conclusion reached by the assessing officer that the assessee has paid certain amount is wrong. The assessing officer inferred from the letter dated 2nd January,1996, that the assessee has made certain payment. -From the letter relied upon by the assessing officer, it can be seen that on Ist January, 1996, the assessee was out of station and could not be contracted. From the letter dated 2nd January, 1996, the assessing officer came to the conclusion that the assessee has made certain payment. If both the letters are read together, it makes clear that the assessee could not make the payment and an inference reached by the assessing officer was erroneous as the letter itself speaks as follows :
"Shri Ramakantji Khetan, You must have received our letter dated 1st January, 1996."
If it is established that the assessee had received the letter written on 1st January, 1996, there no need to mention this, letter's mentioning that "including pay now" is a misnomer and there was no reason to come to the conclusion that the assessee paid anything for the flat. Inviting our attention to paper book p. 70, P.B. III, which is a letter written by Shri P.R. Agrawal on 14th March, 1996, the learned counsel. for the assessee submitted that the assessing officer had deliberately left out this letter and has not considered this letter for obvious reason. In this letter, it is mentioned :
"You have not made any payment nor confirmed offer of 66.5, dated 2nd January, 1996 same stand cancelled."
which leads, the learned counsel for the assessee submitted, to an irresistible conclusion that the reference made in the letter dated 1st January, 1996, that the assessee has made certain payment is incorrect. The learned counsel for the assessee further submitted that the assessing officer himself mentioned that he had been to Bombay and the statement of the trust was recorded and he has never given the copy of this statement to the assessee as the statement was in favour of the assessee to the effect that the trust had not charged anything. The learned counsel for the assessee submitted that all these letters and offers put together will show that there is no evidence that any money was passed from the assessee either through Shri P.K. Agrawal to Shri Sanjay Chokhani or trust, to make the addition. The learned counsel for the assessee strongly relied upon the statement of the broker Mr. P.R. Agrawal recorded on 20th October, 1997 wherein he specifically states that there was no transaction of Agrawal Nagar, Matunga flat through him. Therefore, the learned counsel for the assessee concluded that there was no basis for making the addition. Even according to the assessing officer, the learned counsel for the assessee submitted that the addition is made only on the basis of suspicion and this suspicion is based on the fact that in Mumbai, no transfer of tenancy right takes place without payment of deposit or Pagadi or by whatever name it is called. This suspicion alone was not sufficient to make the addition, contended the counsel.
27. Replying to the above submissions, the learned departmental Representative submitted that it is an established fact that in Mumbai no transfer of tenancy right of flat takes place without making certain payment. He specifically stressed the letter No. 49 of Annexure-11 where it is mentioned that the seller will be in Bombay between 13th, 14th and 15th January, 1996 and make total advance payment of 7-10 before 14th January, 1996 including pay now". It further mentions that "you will do the needful at earliest and oblige. Please ring the position from where to called amount." The learned departmental Representative brought our attention to the specific mention of the assessing officer where the assessing officer demolished the statement of the trust vide which +they said that they were not aware about Mr. P.R. Agrawal or Mr. Chokhani. He supported the order of the assessing officer and stated that (sic-contradiction, falsity) in the statement of the parties is glaring. They say that the assessee is not aware and known of Shri P.R. Agrawal still the fact remained that the trust had received the deposit of flat 2/5 given on rent to Shri Khetan through Shri P.R. Agrawal. If they were not known about the where about of Shri Sanjay Chokhani, it was not possible to have an agreement signed by the trust and an indemnity bond was executed by the previous tenant Shri Sanjay Chokhani. The learned departmental Representative submitted that all these facts put together show that the assessee made the payment and the deal was finalised through Shri P.R. Agrawal, the broker. Therefore, the learned departmental Representative submitted that the order of the assessing officer may be confirmed.
28. We have heard the rival submissions, gone through the order of the assessing officer and the papers filed before us. This addition is made by the assessing officer on the basis of the letters written by Shri P.R. Agrawal, the broker to the assessee, wherein the broker mentions about the readiness of the other party to hand over the possession of the flat to the assessee. However, during the search, no papers or any record indicating the assessee's willingness of the acceptance of the offer has been detected or came to the knowledge of the department. The broker has been examined. He denied that the deal had been done through him. The society/trust on this point was questioned and they also denied either receipt or payment of any amount by way of Pagadi/deposit whenever transaction takes place of the flat in the building. In the loose paper No. 44 of Annexure A-2 and loose paper No. 47, the descriptions of the flat are different, In paper No. 44, the super-built up area is explained at 1350 sq. ft. and carpet area about 900 sq. ft. In letter No. 47, the super built-up area of the flat is mentioned at 1200 sq. ft and carpet area 875 sq. ft. Letter Nos. 48 and 49 did riot give any description of the area and does not indicate whether the same flat is referred to in all these letters. As the learned counsel for the assessee rightly contended that if the letters at serial No. 48 of Annexure A-2 and 49 of Annexure A-2 read together, the conclusion reached by the assessing officer that the assessee has made certain payment on 1st January, 1996 appears to be incorrect. The letter dated 2nd January, 1996, starts by mentioning that "the assessee must have received our letter dated 1st January, 1996, and broker wants to make some initial deposit immediately", and in second letter on the next day, he mentions that he was not aware of whether the assessee received letter or not, 'including pay now'. The letter filed at paper book p. 71 of P.B. III indicates that on that date and on the previous day, the assessee was out of station. From all these, the conclusion that the some payment has been made either on 1st January, 1996, or even on 31st December, 1995, or on the next date is highly impossible. The letter produced by the assessee vide paper book p. 70 P.B. III, which was with the department also leads to the same conclusion that no payment was made by the assessee. This letter specifically states :
"You have not made any payment nor confirmed offer of 66.5 dated 2nd January, 1996. same stand cancelled."
Further the said letter continues "Marwari trust wants to finish above before 25th March."
If we take into consideration the first portion regarding the payment and confirmation which has not been done by the assessee, it leads to the conclusion that the broker wants the deal to be done through him which has not taken place Coming to the next part of the letter, it is also clear that some discussion with the trust was going on either directly by the assessee or even through the broker. This letter does not speak of Mr. Sanjay Chokhani or any other person to whom the amount is required to be paid. There is a submission of the assessee before the assessing officer regarding flat No. 2/5, Agrawal Nagar, Matunga, which states that the transaction had taken place looking to the social status of the assessee, being recognised social worker of state level and his active participation in society. The ass:essee had made an application to the trust at different time for allotment of the flat and the agreement was executed by the trust in favour of the assessee on 23rd March, 1996. Taking all these facts together, we are convinced that there is no material to hold that the assessee had made any payment for acquisition of tenancy right of the flat.
29. The assessing officer did not believe the version of either of the society/trust or the broker on the ground that though the trust has stated that they did not know whereabouts of Shri Sanjay Chokhani, as he was occupying the flat for last 10 years. The assessing officer also found that though the trust mentioned that the transaction was not done through Shri P.R. Agrawal, or they did not know Shri Agrawal or they did not receive any deposit in respect of the flat. given on rent to 1 the assessee through Shri Agrawal. In our view, the above all these do not lead to the conclusion that the assessee, had 'made the payment of, Rs. 66. 50 lakhs since there is no evidence to that effect on' the record.
30. The version of the assessing officer that without payment, no transfer of flat takes place in Mumbai is an accepted position. But in the absence of any evidence to show that the assessee had parted any amount, we are unable to hold that the assessee had made payment in the instantcace. As we have mentioned earlier, the broker's offers and even his letters are contradictory sometime. The broker himself and the trust deny the receipt and payment of any amount in the transaction. In the case of UdaLrala Goliya (HUF) v. Assistant Commissioner (supra), the Bombay Bench of the Tribunal held that the addition made on the basis of an indication of purchase of land and payment and that too supported by the statement of the broker under section 131 and the seized paper cannot be upheld as the broker's statement was recorded at back of the assessee and no opportunity was provided to the assessee to cross examine the broker. As far as the instant case is concerned, the broker denies the receipt or payment. The trust also denies the payment of any deposit or Pagadi. There is no paper seized evidencing the payment except the letters of the broker. In view of the above, we are of the view that there was no evidence for making the addition. In the light of the above discussion and on the basis of the decision cited supra, we hold that there is no basis to make the addition. The impugned addition is deleted.
31. In the result, the appeal by the assessee is allowed in part.