MRV Associates, Pune v. DCIT, Circle-5, Pune

ITA 860/PUN/2013 | 2005-2006
Pronouncement Date: 26-11-2014 | Result: Allowed

Appeal Details

RSA Number 86024514 RSA 2013
Assessee PAN AAKFM9081F
Bench Pune
Appeal Number ITA 860/PUN/2013
Duration Of Justice 1 year(s) 7 month(s) 11 day(s)
Appellant MRV Associates, Pune
Respondent DCIT, Circle-5, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 26-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 26-11-2014
Date Of Final Hearing 11-11-2014
Next Hearing Date 11-11-2014
Assessment Year 2005-2006
Appeal Filed On 15-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE MS. SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 860/PN/2013 (ASSESSMENT YEAR 2005-06) MRV ASSOCIATES 678 SHUKRAWARPETH RAMESHWAR CHOWK PUNE - 411002 PAN NO.AAKFM9081F .. APPELLANT VS. DCIT CIRCLE-5 PUNE .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI B.C. MALAKAR DATE OF HEARING : 20-11-2014 DATE OF PRONOUNCEMENT : 26-11-2014 ORDER PER R.K. PANDA AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 31-12-2010 OF THE CIT(A)-III PUNE RELATING T O ASSESSMENT YEAR 2005-06. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE THEY ALL RELATE TO ONE ISSUE I.E. THE ORDER OF THE CIT(A) IN CONFIRMING ADDITION OF RS.41 LAKHS MADE BY THE AO U/S.69C OF T HE I.T. ACT. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM AND FILED ITS RETURN OF INCOME ON 29-07-2005 D ECLARING TOTAL INCOME OF RS.9 22 070/-. THE AO NOTED THAT DURING A SURVEY U/S.133A CONDUCTED IN THE CASE OF M/S. SATHE & CO. CERTAIN LOOSE PAPERS WERE 2 FOUND OUT OF WHICH PAPER HAVING SERIAL NO.53 INDIC ATED FOLLOWING TRANSACTIONS : 1 10 00 000/- SUDHIR SABLE 41 00 000/- CASH 5 50 000/- S.D. 3 89 095/- AS PER STATEMENT 1 00 000/- SHARES 22 000/- CASH INTEREST 3 00 000/- MORTGAGE 4 00 000/- KAJARIA 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E AO ASKED THE ASSESSEE TO GIVE ENTRY-WISE EXPLANATION. THE ASSES SEE GAVE THE DETAILS OF SUCH EXPLANATION WHICH HAS BEEN INCORPORATED BY THE AO WHICH IS AS UNDER : PAGE NO. EXPLANATION 49 TO 51 THESE ARE THE WORKING OF EXPECTED EXPENSES O N CONSTRUCTIONS FURNITURE A.C. GEN. SETS CIVIL WORK DISPLAY COST ADVERTISING EXPENSES FOR NEW SHOWROOM TO BE STATED IN THE CAMP. 52. THIS IS LEDGER SUMMARY OF INDIRECT EXPENSES IN THE BOOK OF MRV ASSOCIATES AND HAND WRITTEN DETAILS ARE FOR THE PROFESSIONAL FEES PAID TO VARIOUS CONSULTANTS. 53. 1) THIS LEDGER SUMMARY OF SHOWROOM EXPENSES IN TH E BOOKS MRV ASSOCIATES INCURRED UPTO 15.10.2004. 2) THE HAND WRITTEN FIGURES ON THE ABOVE SHEET ARE INCURRED & EXPECTED EXPENSES TO START THE DISPLAY CENTR E & SHOWROOM AT CAMP AS UNDER A. RS. 1 10 00 000/-: WERE PAID TO MRS. MOHINI SUDHIR SABLE AND OTHERS FOR PURCHASE OF SHOWROOM. 53. B. RS. 41 00000/-: CASH ACTUALLY THIS IS A TOTAL SUM OF EXPECTED EXPENDITURE ON VARIOUS HEADS IN CASH AND BY CHEQUE FOR THE ITEMS AS SUMMARIZED ON PAGE NO. 49 TO 51 THE TOTAL IS RS. 53 60 000/- I.E. ABOUT RS.54 00 0 00/-. OUT OF THIS TOTAL DISPLAY COST OF RS.10 00 000/-IS A MATERIAL PROPOSED TO BE TRANSFERED FROM OUR SHUKRAWAR PETH GODOWN AND MATERIAL OF RS. 4 00 000/- WAS EXPECTED TO BE RECEIVED FROM KAJARIA CERAMICS LTD AS PER ITEM NO. 8 IN THE HANDWRITTEN LIST ON THIS PAGE. AFTER EXCLUDING THIS RS.14 00 000/- FROM RS. 54 00 000/-THE 3 BALANCE REMAIN RS. 40 00 000/- WHICH IS ROUNDED UP INCLUDING THE MARGIN OF RS.1 00 000/- WHICH COMES TO RS. 41 00 000/-. C. RS. 5 50 000/-: IS A AMOUNT OF STAMP DUTY P AID FOR PURCHASE OF PROPERTY FROM MRS.SABLE. D. RS. 3 89 095/-: THESE ARE THE EXPENSES INCURR ED AS PER INDIRECT EXPENSES LEDGER SUMMARY MENTIONED ABOVE ON PAGE NO. 52. E. RS. 1 00 000/-: THIS AMOUNT IS PAID FOR PURC HASE OF SHARES OF THE SHREE SUVAMA SAHAKARI BANK LTD. FOR SANCTION OF LOAN. F. RS.22 000/- : THIS IS AMOUNT PAYABLE TO BANK. G. RS. 3 00 000/- :THESE ARE THE EXPECTED EXPENSES FOR MORTGAGING THE PROPERTY WITH BANK FOR SECURING T HE LOAN GRANTED BY THE BANK. H. RS. 4 00 000/-: THESE ARE THE EXPECTED VALUES OF DISPLAY ITEMS RECEIVABLE FROM KAJARIA CERAMICS LTD. AS EXPLAINED IN THE NO.2 ABOVE. 4. HOWEVER THE AO WAS NOT SATISFIED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE. ALTHOUGH HE ACCEPTED THE EXPLANAT ION RELATING TO VARIOUS ENTRIES HOWEVER HE DID NOT ACCEPT THE EXP LANATION OF THE ASSESSEE RELATING TO THE NOTINGS AGAINST RS.41 LAKH S WHICH ACCORDING TO THE ASSESSEE REPRESENTS THE WORKING OF ANTICIPATED EXPENSES ON CONSTRUCTION FURNITURE AC GENERATOR SET CIVIL W ORK DISPLAY COST ADVERTISING EXPENSES FOR NEW SHOWROOM IN CAMP. ACC ORDING TO THE AO UNTIL AND UNLESS THE TRANSACTION FOR PURCHASE O F SHOP IS OVER THE ASSESSEE CANNOT THINK OF ANY EXPENDITURE FOR RENOVA TION. HE THEREFORE WAS OF THE OPINION THAT THE AMOUNT OF RS .41 LAKHS IS NOTHING BUT CASH COMPONENT PAID BY THE ASSESSEE FIRM TO MS. MOHINI SABLE & OTHERS FOR PURCHASE OF SHOP. HE ACCORDINGLY MADE A DDITION OF RS.41 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE U/S.69C O F THE I.T. ACT. 4 5. BEFORE THE CIT(A) THE ASSESSEE STRONGLY CHALLENG ED THE ADDITION MADE BY THE AO U/S.69C OF THE I.T. ACT. IT WAS ARG UED THAT THE ASSESSEE HAD NOT PAID ANY CASH OF RS.41 LAKHS TO M/ S. MOHINI SUDHIR SABLE AND MS. PALLAVI SUDHIR SABLE FOR PURCHASE OF THE SHOP. THE LOOSE PAPER FOUND DURING THE COURSE OF SURVEY DOES NOT INDICATE ANY PAYMENT OF CASH TO THE SAID PARTY. IT WAS ARGUED T HAT ALTHOUGH THE EXPLANATION WAS GIVEN BEFORE THE AO HOWEVER THE A O HAS SIMPLY MADE THE ADDITION WITHOUT EVEN POINTING OUT AS TO H OW THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT CORRECT. THE ASSESSE E FURTHER ARGUED THAT WHEN NOTINGS SUCH AS RS. 3 LAKHS BEING MORTGAG E EXPENDITURE RS. 1 LAKH TOWARDS SHARES RS.22 000/- BEING INTEREST P AYABLE TO BANK AND RS. 4 LAKHS RECEIVABLE FROM KAJARIA CERAMICS LTD. W ERE NOT ADDED THEREFORE FOLLOWING THE SAME PRINCIPLE RS. 41 LAKH S ALSO SHOULD NOT HAVE BEEN ADDED. THE ASSESSEE FURTHER SUBMITTED TH AT THE PURCHASE CONSIDERATION OF RS.1.10 CRORES PAID WAS DULY RECOR DED ON THE LOOSE PAPER. IF THE ASSESSEE PAID HIGHER AMOUNT IN CASH TO SABLE FAMILY THE SAME COULD HAVE BEEN SHOWN AS THE AMOUNT PAID TO SA BLE FAMILY AND NOT SEPARATELY. 5.1 THE ASSESSEE FURTHER ARGUED THAT THE TOTAL CONS IDERATION OF RS.1.10 CRORES WAS MUCH MORE THAN THE STAMP DUTY VA LUATION OF THE SHOP WHICH WAS AROUND RS.89 20 288/-. THEREFORE I T IS NOT A CASE THAT THE ASSESSEE HAS PURCHASED THE SHOP FOR A CONSIDERA TION LESSER THAN THE READY RECKONER RATE. THIS ALSO INDICATES THAT NO S UCH CASH PAYMENT HAS BEEN MADE. THE ASSESSEE FURTHER ARGUED THAT THE AO HAS NOT EXAMINED SABLE FAMILY NOR THEY HAVE ADMITTED ANYWHERE REGARD ING RECEIPT OF 5 SUCH CASH CONSIDERATION. THEREFORE THE ADDITION M ADE PURELY ON THE BASIS OF PRESUMPTIONS AND SURMISES SHOULD BE DELETE D. 5.2 THE ASSESSEE ALSO CLARIFIED THE INDIVIDUAL ITE MS NOTED IN THE IMPOUNDED MATERIAL AND ALSO RELIED ON THE FOLLOWING DECISIONS : 1. MONGA METALS REPORTED IN 67 TTJ 247 (ALL) 2. ASHWANI KUMAR REPORTED IN 39 ITD 183 (DEL) 3. ELITE DEVELOPERS REPORTED IN 73 ITD 379 (NAG) 6. HOWEVER THE LD.CIT(A) WAS ALSO NOT SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THA T THERE IS NARRATION FOR EACH AND EVERY ENTRY AND A PARTICULAR SEQUENCE IS FOLLOWED IN RECORDING THE ENTRIES. THE AMOUNT OF RS.41 LAKHS CASH IS WRITTEN WHICH IS AFTER THE FIGURE OF RS.1.10 CRORES SUDHIR SABLE AND BEFORE STAMP DUTY. ACCORDING TO THE LD.CIT(A) IF THE EXP LANATION OF THE ASSESSEE THAT ENTRY OF RS.41 LAKHS REPRESENT ANTICI PATED EXPENDITURE TO BE INCURRED ON RENOVATION OF SHOP IS TO BE ACCEPTED AS CORRECT THEN THERE WAS ABSOLUTELY NO REASON FOR THE ASSESSEE TO WRITE CASH AFTER THE FIGURE OF RS.41 LAKHS. HE NOTED THAT WHEREVER THE AMOUNT IS PAYABLE OR IT IS ONLY PROPOSED EXPENDITURE THE ASS ESSEE HAS NOT PREFIXED OR SUFFIXED THE AMOUNT BY THE WORD CASH WH ILE MAKING THE ENTRIES IN THE IMPOUNDED DOCUMENTS. HE NOTED THAT THE ENTRIES RECORDED ON PAGE 49 CONTAINING THE DETAILS OF RENOV ATION EXPENSES HAVE NOTHING TO DO WITH THE CASH ENTRY OF RS.41 LAK HS RECORDED ON PAGE 53. FURTHER THE TOTAL OF ENTRIES ON PAGES 49 TO 51 DOES NOT TALLY WITH THE AMOUNT OF RS.41 LAKHS NOTED ON PAGE 53. T HE ASSESSEE HAS ONLY MADE A DESPERATE ATTEMPT TO LINK UP THE SAID C ASH ENTRY WITH THE ENTRIES ON PAGES 49 TO 51. FURTHER THE SAID RENOV ATION EXPENSES WERE 6 MOSTLY MADE BY CHEQUE SUBSEQUENTLY AND RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THEREFORE IF THE INTENTION ALL ALONG WAS TO MAKE THE PAYMENT BY CHEQUES TOWARDS SUCH EXPENSES OF REN OVATION OF SHOP THERE IS ABSOLUTELY NO REASON FOR THE ASSESSEE TO W RITE CASH AFTER THE FIGURE OF RS. 41 LAKHS. ACCORDING TO THE LD.CIT(A) NO PRUDENT PERSON WOULD WRITE CASH AFTER THE AMOUNT IF IT IS ONLY ANTICIPATED EXPENDITURE MORE SO WHICH IS ABOVE THE ENTRY RELAT ING TO STAMP DUTY. THE SEQUENCE AND THE NARRATION OF ENTRIES RECORDED ON PAGE 53 ACCORDING TO THE LD.CIT(A) CLEARLY SHOW THAT THE AS SESSEE HAS PAID RS.41 LAKHS IN CASH OVER AND ABOVE THE CHEQUE PAYME NT. HE OBSERVED THAT THE STAMP DUTY IS FIXED LOCALITY WISE AND NOT WITH RESPECT TO A PARTICULAR PROPERTY AND THERE ARE SEVERAL FACTORS W HICH INFLUENCE THE MARKET VALUE OF A PROPERTY LIKE LOCATION ROAD FRON TAGE COMMERCIAL VALUE DEMAND AND SUPPLY ETC. FURTHER THE PROPERT Y IS SITUATED IN A PRIME LOCATION OF PUNE. THEREFORE MERELY BECAUSE THE CONSIDERATION SHOWN IN THE DOCUMENT IS MORE THAN THE STAMP DUTY V ALUATION IT CANNOT BE SAID THAT THE CASH ENTRY MADE IN THE IMPO UNDED DOCUMENT IS ONLY AN ESTIMATE AND DOES NOT REPRESENT THE CONSIDE RATION PAID IN CASH OVER AND ABOVE THE CHEQUE PAYMENT. DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM THE LD.CIT(A) HELD THAT THE CASH ENTRY OF RS.41 LAKHS DOES REPRESENT THE CASH PAID BY THE ASS ESSEE FOR PURCHASE OF SHOP IN ADDITION TO PAYMENT OF RS.1.10 CRORES. HE ACCORDINGLY UPHELD THE ADDITION MADE BY THE AO U/S.69C OF THE I .T. ACT. 6.1 AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSE E IS IN APPEAL BEFORE US. 7 7. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLE NGED THE ORDER OF THE CIT(A). REITERATING THE SAME ARGUMENTS AS M ADE BEFORE THE AO AND CIT(A) HE SUBMITTED THAT THE IMPOUNDED DOCUM ENT DOES NOT SHOW THAT THE ASSESSEE HAD PAID CASH OF RS.41 LAKHS TOWARDS PURCHASE OF THE PROPERTY OVER AND ABOVE WHAT WAS PAID BY CHE QUE. HE SUBMITTED THAT THERE ARE VARIOUS ENTRIES IN THE IMP OUNDED DOCUMENT AND THE AO HAS ONLY MADE THE ADDITION ON THE AMOUNT OF RS.41 LAKHS. REFERRING TO PAGE 5 OF THE PAPER BOOK HE DREW THE A TTENTION OF THE BENCH TO THE NOTINGS WHICH ARE AS UNDER : 1 10 00 000.00 SUDHIR SABLE 41 00 000.00 CASH 5 50 000.00 SD 3 89 095.00 AS PER STATEMENT 1 00 000.00 SHARES 22 000.00 CASH INT. 3 00 000.00 MORTGAGE 4 00 000.00 KAJARIA 7.1 REFERRING TO PAGE 6 OF THE PAPER BOOK HE DREW T HE ATTENTION OF BREAK- UP OF RS.3 89 095/-. REFERRING TO PAGE 7 8 AND 9 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO VARIOUS NOTINGS SUCH AS AC-RS.2 50 000/- GEN.SET RS.3 60 000/- ETC. ET C. AND SUBMITTED THAT THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF THESE NOTINGS THE TOTAL OF WHICH COMES TO RS.44 60 000/-. REFERRING TO PAGES 10 TO 35 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH T O THE SALE DEED WHICH IS DATED 02-09-2004 FOR A CONSIDERATION OF RS .1.10 CRORES AND THE MARKET VALUE IS RS.89 20 288/-. STAMP DUTY PAI D IS RS.5 50 000/-. REFERRING TO PAGE 39 TO 43 OF THE PAPER BOOK THE LD . COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE STA TEMENT OF SHRI GANESH SRIKRISHNA SATHE BROTHER OF PARTNER OF THE ASSESSEE FIRM AND 8 DREW THE ATTENTION OF THE BENCH TO HIS EXPLANATION REGARDING RS.41 LAKHS WHICH READS AS UNDER : 8. RS.41 00 000/- - CASH : THIS IS AN APPROXIMATE OF E XPENSES FOR INTERIOR WORK AT THE NEW SHOW ROOM AT CAMP. THE EXA CT DETAILS OF THE INTERIOR EXPENSES CARRIED OUT WILL BE FURNISHED ALONG WITH THE DOCUMENTARY EVIDENCE ON 16 TH FEBRUARY 2005. 7.2 REFERRING TO THE STATEMENT OF SHRI SRIKRISHNA V INAYAK SATHE FATHER OF ONE OF THE PARTNERS WHO IS LOOKING AFTER THE BUSINESS OF OTHER FIRMS HE SUBMITTED THAT NO SUCH QUESTION WAS PUT TO HIM ABOUT THE ENTRY OF RS.41 LAKHS. 7.3 AS REGARDS THE ALLEGATION OF THE AO THAT NO REN OVATION EXPENSES CAN BE INCURRED UNLESS THE PROPERTY IS PURCHASED H E SUBMITTED THAT THE NOTINGS ON THE IMPOUNDED DOCUMENT WHICH ALSO CONTAI NED THE GROUP SUMMARY FOR THE PERIOD FROM 01-04-2004 TO 15-10-200 4 HAS DEFINITELY BEEN WRITTEN ON OR AFTER 15-10-2004 WHEREAS THE SAL E DEED IS DATED 02- 09-2004. THEREFORE THE LOGIC OF THE AO IS NOT BAS ED ON FACTS. HE SUBMITTED THAT WHEN THE OTHER ENTRIES ON THE SAME P AGE ARE ACCEPTED AND NO ADDITION WAS MADE BY THE AO IT IMPLIES THAT A PART OF THE TRANSACTION IN THE PAPER IS ACCEPTED. HE SUBMITTED THAT THE IMPOUNDED DOCUMENT HAS EITHER TO BE ACCEPTED IN FULL OR REJEC TED IN FULL BUT A PART OF THE TRANSACTION CANNOT BE ACCEPTED AND THE OTHER PART REJECTED. HE SUBMITTED THAT IN ABSENCE OF ANY CORROBORATIVE EVID ENCE THAT THE ASSESSEE HAS PAID CASH FOR PURCHASE OF THE PROPERTY OVER AND ABOVE THE SALE CONSIDERATION NO ADDITION CAN BE MADE. FOR T HE ABOVE PROPOSITION HE RELIED ON THE DECISION OF THE HONB LE DELHI HIGH COURT IN THE CASE OF CIT VS.VED PRAKASH CHOUDHARY REPORTE D IN 305 ITR 245. REFERRING TO THE SAID DECISION HE SUBMITTED THAT IN THAT CASE 9 DURING THE COURSE OF SEARCH AND SEIZURE AN MOU WAS FOUND ACCORDING TO WHICH ASSESSEE PAID ADVANCE IN RESPECT OF PURCHA SE OF LAND. THE AO MADE THE ADDITION. THE CIT(A) AND THE TRIBUNAL DELETED THE ADDITION ON THE GROUND THAT THERE WAS NOT ENOUGH EV IDENCE TO ADD THE AMOUNT IN THE HANDS OF THE ASSESSEE. ON FURTHER A PPEAL THE HONBLE HIGH COURT HELD THAT IN ABSENCE OF ANY CORROBORATIV E EVIDENCE THAT THE ASSESSEE HAS TRANSFERRED MONEY TO THE OTHER PARTY A ND SINCE THE OTHER PARTY HAD DENIED TO HAVE RECEIVED ANY MONEY FROM TH E ASSESSEE THERE WAS NO JUSTIFICATION FOR THE ADDITION. HE SUBMITTE D THAT IN THE INSTANT CASE THE SABLE FAMILY HAS NOT BEEN QUESTIONED. THE REFORE IN ABSENCE OF ANY CORROBORATIVE EVIDENCE THAT THE ASSESSEE HAS PAID ANY EXTRA MONEY AND IN ABSENCE OF ANY EXAMINATION OF THE SABL E FAMILY THE AO CANNOT MAKE THE ADDITION. THE ONUS WAS ON THE REVE NUE TO PROVE THAT CASH HAS BEEN PAID FOR PURCHASE OF THE PROPERTY. F OR THE ABOVE PROPOSITION HE RELIED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF BANSAL STRIPS PVT. LTD. RE PORTED IN 99 ITD 177. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE LD.C IT(A) BE SET-ASIDE AND THE ADDITION BE DELETED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT IT IS AN OPEN SECRET THAT ON-MONEY IS GIVEN IN REAL ESTATE TRANSA CTIONS. THE IMPOUNDED PAPER CLEARLY SHOWS THAT THE ASSESSEE HAS PAID RS.41 LAKHS IN CASH. THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST ON HIM. THEREFORE THE ADDITION MADE BY THE AO AND SUSTAINE D BY THE CIT(A) IS JUSTIFIED. HE ACCORDINGLY SUBMITTED THAT THE AP PEAL FILED BY THE ASSESSEE SHOULD BE DISMISSED. 10 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE DURING THE COURSE OF SURVEY ACTION U/S.133A A PAPER WAS IMPOUNDED WHICH CONTAINS CERTAIN TRANSACTIONS THE DETAILS OF WHICH ARE AS UNDER : 1 10 00 000/- SUDHIR SABLE 41 00 000/- CASH 5 50 000/- S.D. 3 89 095/- AS PER STATEMENT 1 00 000/- SHARES 22 000/- CASH INTEREST 3 00 000/- MORTGAGE 4 00 000/- KAJARIA WE FIND THE ASSESSING OFFICER WHILE ACCEPTING THE V ARIOUS ENTRIES NOTED IN THE IMPOUNDED PAPER MADE ADDITION OF RS.41 LAKHS U/S.69C ON THE GROUND THAT THE ASSESSEE HAS PAID THE ABOVE CASH TO MS. MOHINI SUDHIR SABLE AND OTHERS FOR PURCHASE OF THE SHOW RO OM WHICH WAS PURCHASED FOR A CONSIDERATION OF RS.1.10 CRORES ON 02-09-2004. THE EXPLANATION OF THE ASSESSEE THAT THE NOTINGS OF RS. 41 LAKHS DOES NOT RELATE TO THE PURCHASE OF THE PROPERTY AND WAS THE TOTAL SUM OF EXPECTED EXPENDITURE ON VARIOUS HEADS WAS REJECTED BY THE ASSESSING OFFICER. ACCORDING TO THE ASSESSING OFFICER UNTIL AND UNLESS THE TRANSACTION FOR PURCHASE OF SHOP IS OVER THE ASSESS EE CANNOT THINK OF ANY EXPENDITURE ON RENOVATION. HE ACCORDINGLY HELD THAT THE AMOUNT OF RS.41 LAKHS IS NOTHING BUT CASH PAYMENT MADE BY THE ASSESSEE FIRM TO MS. SABLE FOR PURCHASE OF SHOP. HE ACCORDINGLY ADDED THE SAME U/S.69C OF THE I.T. ACT. WE FIND THE LD.CIT(A) UPH ELD THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT TH E AMOUNT OF RS.41 11 LAKHS IS WRITTEN IN BETWEEN CONSIDERATION OF RS.1.1 0 CRORES FOR WHICH THE PROPERTY HAS BEEN PURCHASED AND THE AMOUNT OF R S.5 50 000/- INCURRED FOR STAMP DUTY. THEREFORE ACCORDING TO H IM THE ENTRY IS NOTHING BUT CASH COMPONENT PAID BY THE ASSESSEE FOR PURCHASE OF SHOP IN ADDITION TO THE PAYMENT OF RS.1.10 CRORES PAID B Y CHEQUE. 9.1 IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE MEMBERS OF MS. MOHINI SUDHIR SABLE AND MS. PALLAVI SUDHIR SABLE WHO ARE THE SELLERS HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER. FURTHER THERE IS NO MENTION IN THE IMPOUNDED PAPER THAT CASH HAS BEEN PAID FOR PURCHASE OF THE SHOP. DURING THE COU RSE OF SURVEY THE STATEMENT OF SHRI GANESH SRIKRISHNA SATHE WAS RECOR DED ON 12-02- 2005 AND HE HAD CATEGORICALLY EXPLAINED THAT THE AM OUNT OF RS.41 LAKHS CASH IS AN APPROXIMATE OF EXPENSES FOR INTERI OR WORKING AT THE NEW SHOWROOM AT CAMP. FURTHER IT IS ALSO THE SUBM ISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ALTHOUGH THERE ARE VA RIOUS OTHER ENTRIES IN THE IMPOUNDED PAPER THE ASSESSING OFFICER HAS A CCEPTED THE SAME EXCEPT THE AMOUNT OF RS.41 LAKHS. ACCORDING TO HIM THE IMPOUNDED PAPER HAS TO BE ACCEPTED IN FULL OR REJECTED IN FUL L BUT CANNOT BE CONSIDERED ON SELECTIVE BASIS. IT IS ALSO THE SUB MISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN ABSENCE OF ANY COR ROBORATIVE EVIDENCE NO ADDITION CAN BE MADE. THE ONUS WAS ON THE REVEN UE TO ESTABLISH THAT THE ASSESSEE HAS INCURRED/PAID EXTRA CONSIDERA TION IN CASH FOR PURCHASE OF THE SHOP BY BRINGING SOME FURTHER MATER IAL ESPECIALLY WHEN THE ASSESSEE HAD CATEGORICALLY DENIED TO HAVE MADE ANY CASH PAYMENT. 12 9.2 WE FIND CONSIDERABLE FORCE IN THE ABOVE SUBMISS ION OF THE LD. COUNSEL FOR THE ASSESSEE. ADMITTEDLY DURING THE C OURSE OF SURVEY THE STATEMENT OF SHRI GANESH SRIKRISHNA SATHE BROTHER OF ONE OF THE PARTNER OF THE ASSESSEE WAS RECORDED WHO HAD CATEGO RICALLY STATED THAT THE AMOUNT OF RS.41 LAKHS CASH WRITTEN ON THE IMP OUNDED PAPER IS AN APPROXIMATE OF EXPENSES FOR INTERIOR WORK AT THE NEW SHOWROOM AT CAMP. THE ASSESSEE FROM THE VERY BEGINNING WAS DEN YING TO HAVE MADE ANY PAYMENT OTHER THAN THE AMOUNT OF RS.1.10 C RORE PAID BY CHEQUE TOWARDS PURCHASE OF THE PROPERTY. THE CONSI DERATION PAID IS ALSO MORE THAN THE STAMP DUTY VALUATION OF RS.89 28 288/-. IT IS ALSO OBSERVED FROM THE OTHER IMPOUNDED DOCUMENTS THAT NO ADDITION HAS BEEN MADE ON ACCOUNT OF SUCH NOTINGS THE DETAILS O F WHICH ARE AVAILABLE AT PAGES 7 TO 9 OF THE PAPER BOOK. SIMIL ARLY THE VARIOUS OTHER ENTRIES NOTED ON PAGE 5 ARE NOT ADDED EXCEPT THE AMOUNT OF RS.41 LAKHS CASH. THE SELLERS NAMELY MS. MOHINI SU DHIR SABLE AND MS. PALLAVI SUDHIR SABLE HAVE NEITHER BEEN SUMMONED NOR ANY EXPLANATION CALLED FROM THEM TOWARDS RECEIPT OF ANY EXTRA MONEY OVER AND ABOVE THE AMOUNT OF RS.1.10 CRORES. THERE IS N O OTHER CORROBORATIVE EVIDENCE BROUGHT ON RECORD BY THE ASS ESSING OFFICER TO SUBSTANTIATE THAT ASSESSEE HAS PAID THE ALLEGED RS. 41 LAKHS IN CASH TO THE SELLERS TOWARDS PURCHASE OF THE SAID PROPERTY. 9.3 IT IS ALSO THE OBSERVATION OF THE ASSESSING OFF ICER THAT UNLESS AND UNTIL THE TRANSACTION FOR PURCHASE OF SHOP IS O VER THE ASSESSEE CANNOT THINK OF ANY EXPENDITURE ON RENOVATION. HOW EVER FROM THE IMPOUNDED PAPER WE FIND THE NOTINGS ARE ON THE LED GER ACCOUNT WHICH SHOWS GROUP SUMMARY FOR THE PERIOD FROM 01-04-2004 TO 15-10-2004. 13 THIS OTHERWISE INDICATES THAT THE NOTINGS HAVE BEEN WRITTEN ON OR AFTER 15-10-2004 WHEREAS THE SALE AGREEMENT IS DATED 02-0 9-2004. THEREFORE THE FINDING OF THE ASSESSING OFFICER THA T UNTIL THE TRANSACTION FOR PURCHASE IS OVER THE ASSESSEE CANNO T THINK OF ANY EXPENDITURE ON RENOVATION IS FACTUALLY INCORRECT SI NCE THE NOTINGS ARE SUBSEQUENT TO THE DATE OF PURCHASE. 9.4 WE FIND THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. VED PRAKASH CHOUDHARY (SUPRA) WHILE HOLDING THAT NO ADDITION CAN BE MADE IN ABSENCE OF CORROBORATIVE EVIDENCE HAS OBSER VED AS UNDER : THE FACTS OF THE CASE MAKE IT VERY CLEAR THAT THERE WERE TWO MOUS ENTERED INTO BY THE ASSESSEE WITH RAVI TALWAR AND MADHU TALWAR IN RESPECT OF THE PURCHASE OF AGRICULTURAL LAND. THE TWO MOUS DID RECORD THAT THE PURCHASE CONSIDERATION SHALL BE RS. 123.30 LA KHS. THE PURCHASER HAVING PAID TO THE VENDOR THE SUM OF RS. 25 00 000 PART OF THE SAID PURCHASE CONSIDERATION AS A DEPOSIT AND SHALL PA Y THE RESIDUAL OF THE SAID PURCHASE CONSIDERATION TO THE VENDOR ON OR BEFORE APRIL 30 1999 WHEN THE PURCHASE WILL BE COMPLETED. NOTWITHSTANDING THIS THE ASSESSEE AS WELL AS RAVI TALWAR A ND MADHU TALWAR DENIED THE MONEY TRANSACTION. IN ADDITION THE RETO THE CASE SET UP WAS THAT THE AGRICULTURAL LAND HAD IN FACT BEEN SOLD TO M/S. DELHI TENT AND DECORATORS PVT. LTD. BY RAVI TALWAR AND MAD HU TALWAR. THIS WAS CONFIRMED BY SHRI N. K. MITTAL ONE OF THE DIREC TORS OF M/S. DELHI TENT AND DECORATORS PVT. LTD. QUITE CLEARLY THE MOU S DID NOT FRUCTIFY. SECTION 132(4A) OF THE ACT USES THE EXPRESSION IT MAY BE PRESUMED. IT IS NOT OBLIGATORY ON THE ASSESSING AUTHORITY TO MAKE A PRESUMPTION. EVEN IF A PRESUMPTION IS REQUIRED TO BE MADE THEN A S HELD IN CIT V. S. M. S. INVESTMENT CORPORATION P. LTD. [1994] 207 ITR 364 (RAJ) THE PRESUMPTION IS A REBUTTABLE ONE AND RELATES TO A QUESTI ON OF FACT. WHILE COMING TO THIS CONCLUSION THE RAJASTHAN HIGH CO URT RELIED UPON AN EARLIER DECISION RENDERED BY IT IN CIT V. S. M. S . INVESTMENT CORPORATION [1988] 173 ITR 393. EVEN IN ITO V. T. ABDUL MAJEED [1988] 169 ITR 440 ( KER) IT HAS BEEN HELD AS FOLLOWS (PAGE 444) : IT IS TRUE THAT SECTION 132(4A) OF THE ACT ENABLES TH E COURT TO PRESUME THE TRUTH OF THE CONTENTS OF SUCH BOOKS. HOWEVER IT I S A PRESUMPTION WHICH CAN BE REBUTTED. MOREOVER THE PRESUMPTION ENV ISAGED THEREIN IS ONLY A FACTUAL PRESUMPTION. IT IS IN THE DISCRETION OF THE COURT DEPENDING UPON OTHER FACTORS TO DECIDE WHETHER THE PRESUMPTION MUST BE DRAWN. THE EXPRESSION USED IN THE SUB-SECTION IS ' MAY BE PRESUMED' AS IS USED IN SECTION 114 OF THE EVIDENCE ACT 1872. IT IS NOT A MANDATE THAT WHENEVER THE BOOKS OF ACCOUNT ARE SEIZ ED THE COURT 14 SHALL NECESSARILY DRAW THE PRESUMPTION IRRESPECTIVE OF ANY OTHER FACTORS WHICH MAY DISSUADE THE COURT FROM DOING SO. IN SO FAR AS THE PRESENT CASE IS CONCERNED THE ASSESSEE HAD STATED THAT IN FACT THERE WAS NO TRANSFER OF MONEY BETWEEN HIM AN D RAVI TALWAR AND MADHU TALWAR. ON THE OTHER HAND RAVI TALWAR AN D MADHU TALWAR HAD DENIED THE RECEIPT OF ANY MONEY FROM THE ASSESSEE. IN THE FACE OF THESE DENIALS THERE OUGHT TO HAVE BEEN CORROBORATIV E EVIDENCE TO SHOW THAT THERE WAS IN FACT SUCH A TRANSFER OF MONEY. B OTH THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL HAVE COME TO THE CONCLUSION THAT THERE WAS NO SUCH MATERIAL ON RECORD. THE ASSESSING OFFICER RELIED ON CERTAIN OTHER TRANSACTIO NS ENTERED INTO BY THE ASSESSEE WITH RAVI TALWAR AND MADHU TALWAR FOR D RAWING A PRESUMPTION IN RESPECT OF THE TRANSFER OF MONEY BUT T HE TRIBUNAL RIGHTLY HELD THAT THOSE WERE INDEPENDENT TRANSACTIONS AND HAD NOTHING TO DO WITH THE MOUS WHICH WERE THE SUBJECT-M ATTER OF DISCUSSION. EVEN IF THERE WAS SOMETHING WRONG WITH SOME O THER TRANSACTIONS ENTERED INTO THAT WOULD NOT GIVE RISE TO AN ADVERSE INFERENCE IN SO FAR AS THE SUBJECT MOUS ARE CONCERNED. IN OUR OPINION NO SUBSTANTIAL QUESTION OF LAW ARISES. 9.5 IT IS TRITE LAW THAT IF AN INCOME NOT ADMITTED BY AN ASSESSEE IS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE THE BURDE N TO ESTABLISH THAT THERE IS SUCH INCOME CHARGEABLE TO TAX IS ON THE AS SESSING OFFICER. THIS VIEW OF OURS FINDS SUPPORT FROM THE DECISION O F THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF BANSAL STRIPS (P) LT D. VS. ACIT REPORTED IN 99 ITD 177. THE PROVISIONS OF SECTION 68 69 6 9A TO 69D HAVE PROVIDED FOR CERTAIN DEEMING PROVISIONS WHERE AN AS SUMPTION OF INCOME IS RAISED IN THE ABSENCE OF EXPLANATION FROM THE ASSESSEE. AS THESE ARE DEEMING PROVISIONS THE CONDITION PRECEDE NT FOR INVOKING SUCH PROVISIONS ARE REQUIRED TO BE STRICTLY CONSTRU ED. THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE PRESUMPTION HAVE T O BE ESTABLISHED WITH REASONABLE CERTAINTY. SINCE IN THE INSTANT CA SE NO CORROBORATIVE EVIDENCE/MATERIAL HAS BEEN FOUND TO PROVE THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS.41 LAKHS TO THE SELLERS AND SINCE T HE SELLERS HAVE NEITHER BEEN EXAMINED NOR STATED TO HAVE RECEIVED T HE AMOUNT OF 15 RS.41 LAKHS IN CASH FROM THE ASSESSEE AND SINCE THE ASSESSEE FROM THE VERY BEGINNING WAS DENYING THE PAYMENT OF ANY SUCH CASH TO THE SELLERS THEREFORE WE ARE OF THE CONSIDERED OPINIO N THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ORDER OF THE ASS ESSING OFFICER IN MAKING THE ADDITION OF RS.41 LAKHS U/S.69C OF THE I .T. ACT. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND D IRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 26-11-2014. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE DATED: 26 TH NOVEMBER 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-III PUNE 4. THE CIT-III PUNE 5. THE D.R A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT PUNE BENCHES PUNE