Dy. CIT v. Countrywide Buildestate (P.) Ltd.

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The Tax Publishers2013 TaxPub(DT) 0921 (Jp-Trib) : (2013) 154 TTJ 0422 : (2013) 083 DTR 0346 INCOME TAX ACT, 1961 --Income from undisclosed sources--Addition under section 69bCost of properties vis-a-vis supporting evidences--Assessee-company was incorporated in 2005 b AS and Sl of 'L' Group who was searched on 6-8-2008 as its shareholders. During relevant assessment ear 2007-08 as its shareholders. During relevant assessment year 2007-08 there was no trading activity. During course of search operations a paper contents of seized paper were noted in Code numbers. Assessing officer mentioned that 'P' key person of group was scribed names of properties owned by companies in 'KL' group. In statement recorded by assessing officer of 'P' he stated that it was total land of group in square meters. Also figures written against each plot, i.e., column 3 was expenditure for taking possession of said plot. figures in column 1 were written b omitting three zeros and it was market rate of purchase sale per Bigha. In view of these facts, assessing officer observed that statement given by P during post-search inquiry was not correct on this issue. Assessing officer treated same as representing cost of land after omitting five zeros and made addition under section 69B towards undisclosed investment in land on basis that total cost of land was 33 crores as agent 1.30 crores shown in balance sheet. Held: Not justified. There was no narration on seized paper to as certain as to whether said figure represents cost or market value of land, assessing officer failed to prove by positive evidence that bald figures mentioned if in column 4 was cost of land. Other seized papers who only projection estimation of proposed joint ventures which have been prepared by some third party developers. Thus, cost of land could not be visualized from those papers. Addition deleted by Commissioner (Appeals) was justified. We have taken into consideration all these supporting evidences as well as written note and reply of the learned counsel of the assessee and after taking into consideration, we find that Commissioner (Appeals) has examined the issue in detail as mentioned above and the finding of Commissioner (Appeals) remained uncontroverted, therefore, in our considered view, the findings of Commissioner (Appeals) do not suffer from any infirmity. [Para 15.1] Regarding the supporting evidences, all these materials were available with the assessing officer before making assessment and if he wanted to consider these evidences, i.e., statements of original owners, then he should have taken into consideration. However, he has not taken into consideration for the simple reason that as per seized document p. 37 of Annex. A57, the amount was more than the amount accepted by the original owners over and above the amount recorded in the sale deed. Even before learned Commissioner (Appeals) these supporting evidences were not filed on behalf of the department. Now the department wants to make a new case that supporting evidences should be accepted. These supporting evidences, cannot be accepted for the reason that Department itself is not sure that which amount is to be added. Whether the amount of Rs. 3.3 crores mentioned in the column No. 4 of the seized p. 37 of Annex. A-57 is to be taken into consideration or the figure stated by the original owner, i.e., Rs. 1.68 crore is to be taken into consideration. The assessee had already shown an amount of Rs. 1.25 crore on account of purchase of land through its power of attorney holder Shri P. All these facts have been discussed in detail by the Commissioner (Appeals). [Para 15.2] The statements were not taken into consideration. It means now Department wants that if the entire addition is not sustainable, then the addition should be sustained on the basis of statements of Shri Badri Narain and his brother Shri M Lal recorded at the back of the assessee without confronting the assessee that the sale consideration was of Rs. 1.68 crore. In our considered view, this plea of the Department should not be admitted and cannot be admitted because as per this written note it is amply proved that the statements were before the assessing officer, however, he has not taken into consideration knowingly. Now they want to take into consideration these supporting evidences, in our view is not permissible either in the eyes of law or in the facts of the present case, therefore, Tribunal refuse to accept these supporting evidences, as, in fact, these evidences are not supporting evidences but are totally new evidences which were not taken into consideration by the assessing officer. Now the Department wants to take into consideration these evidences just to make a new case which cannot be allowed. Accordingly Tribunal decline to take into consideration these additional evidences at this point of time. Various Courts at various levels have held that if any document which was relied by the assessing officer, wanted to rely by the department, then the first and foremost duty of the department is that the piece of evidence which they want to rely upon has to be confronted to the assessee or the other party as the case may be. If there is any statement of any person which they want to take into consideration, then cross-examination has to be allowed. [Para 15.3] In the present case, neither statements recorded which now they wanted to rely upon were confronted to the assessee nor the cross-examination was allowed to the assessee. [Para 15.4] In this case also now the Department wants to utilize the statement recorded at the back of the assessee which was neither confronted to the assessee nor assessee has opportunity to cross-examine the same. Therefore, at this stage, the statement of any third party which the Department wanted to rely upon cannot be considered as it will tantamount to make a new case. [Para 15.10] Tribunal has already decided similar case in Rising Build State (P) Ltd. in IT Appeal No. 962/Jp/2011 by order dated 22-6-2012 in which the identical facts are involved. The addition was made on the basis of column No. 4 of p. 37 of Annex. A-57. The addition was deleted by Commissioner (Appeals) and the order of Commissioner (Appeals) has been confirmed by Tribunal. Since the facts are identical in the present case, therefore, in view of the above facts and circumstances discussed above and in view of the reasoning given in that case, i.e., M/s Rising Buildestate (P) Ltd., the order of Commissioner (Appeals) in this case is confirmed also. [Para 16] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0921 (Jp-Trib) : (2013) 154 TTJ 0422 : (2013) 083 DTR 0346

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 69bCost of properties vis-a-vis supporting evidences--Assessee-company was incorporated in 2005 b AS and Sl of 'L' Group who was searched on 6-8-2008 as its shareholders. During relevant assessment ear 2007-08 as its shareholders. During relevant assessment year 2007-08 there was no trading activity. During course of search operations a paper contents of seized paper were noted in Code numbers. Assessing officer mentioned that 'P' key person of group was scribed names of properties owned by companies in 'KL' group. In statement recorded by assessing officer of 'P' he stated that it was total land of group in square meters. Also figures written against each plot, i.e., column 3 was expenditure for taking possession of said plot. figures in column 1 were written b omitting three zeros and it was market rate of purchase sale per Bigha. In view of these facts, assessing officer observed that statement given by P during post-search inquiry was not correct on this issue. Assessing officer treated same as representing cost of land after omitting five zeros and made addition under section 69B towards undisclosed investment in land on basis that total cost of land was 33 crores as agent 1.30 crores shown in balance sheet. Held: Not justified. There was no narration on seized paper to as certain as to whether said figure represents cost or market value of land, assessing officer failed to prove by positive evidence that bald figures mentioned if in column 4 was cost of land. Other seized papers who only projection estimation of proposed joint ventures which have been prepared by some third party developers. Thus, cost of land could not be visualized from those papers. Addition deleted by Commissioner (Appeals) was justified.

We have taken into consideration all these supporting evidences as well as written note and reply of the learned counsel of the assessee and after taking into consideration, we find that Commissioner (Appeals) has examined the issue in detail as mentioned above and the finding of Commissioner (Appeals) remained uncontroverted, therefore, in our considered view, the findings of Commissioner (Appeals) do not suffer from any infirmity. [Para 15.1] Regarding the supporting evidences, all these materials were available with the assessing officer before making assessment and if he wanted to consider these evidences, i.e., statements of original owners, then he should have taken into consideration. However, he has not taken into consideration for the simple reason that as per seized document p. 37 of Annex. A57, the amount was more than the amount accepted by the original owners over and above the amount recorded in the sale deed. Even before learned Commissioner (Appeals) these supporting evidences were not filed on behalf of the department. Now the department wants to make a new case that supporting evidences should be accepted. These supporting evidences, cannot be accepted for the reason that Department itself is not sure that which amount is to be added. Whether the amount of Rs. 3.3 crores mentioned in the column No. 4 of the seized p. 37 of Annex. A-57 is to be taken into consideration or the figure stated by the original owner, i.e., Rs. 1.68 crore is to be taken into consideration. The assessee had already shown an amount of Rs. 1.25 crore on account of purchase of land through its power of attorney holder Shri P. All these facts have been discussed in detail by the Commissioner (Appeals). [Para 15.2] The statements were not taken into consideration. It means now Department wants that if the entire addition is not sustainable, then the addition should be sustained on the basis of statements of Shri Badri Narain and his brother Shri M Lal recorded at the back of the assessee without confronting the assessee that the sale consideration was of Rs. 1.68 crore. In our considered view, this plea of the Department should not be admitted and cannot be admitted because as per this written note it is amply proved that the statements were before the assessing officer, however, he has not taken into consideration knowingly. Now they want to take into consideration these supporting evidences, in our view is not permissible either in the eyes of law or in the facts of the present case, therefore, Tribunal refuse to accept these supporting evidences, as, in fact, these evidences are not supporting evidences but are totally new evidences which were not taken into consideration by the assessing officer. Now the Department wants to take into consideration these evidences just to make a new case which cannot be allowed. Accordingly Tribunal decline to take into consideration these additional evidences at this point of time. Various Courts at various levels have held that if any document which was relied by the assessing officer, wanted to rely by the department, then the first and foremost duty of the department is that the piece of evidence which they want to rely upon has to be confronted to the assessee or the other party as the case may be. If there is any statement of any person which they want to take into consideration, then cross-examination has to be allowed. [Para 15.3] In the present case, neither statements recorded which now they wanted to rely upon were confronted to the assessee nor the cross-examination was allowed to the assessee. [Para 15.4] In this case also now the Department wants to utilize the statement recorded at the back of the assessee which was neither confronted to the assessee nor assessee has opportunity to cross-examine the same. Therefore, at this stage, the statement of any third party which the Department wanted to rely upon cannot be considered as it will tantamount to make a new case. [Para 15.10] Tribunal has already decided similar case in Rising Build State (P) Ltd. in IT Appeal No. 962/Jp/2011 by order dated 22-6-2012 in which the identical facts are involved. The addition was made on the basis of column No. 4 of p. 37 of Annex. A-57. The addition was deleted by Commissioner (Appeals) and the order of Commissioner (Appeals) has been confirmed by Tribunal. Since the facts are identical in the present case, therefore, in view of the above facts and circumstances discussed above and in view of the reasoning given in that case, i.e., M/s Rising Buildestate (P) Ltd., the order of Commissioner (Appeals) in this case is confirmed also. [Para 16]