Principal Commissioner Of Income Tax -2 v. Rohit Prahladbhai Modi

C/TAXAP/478/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 478 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX -2VersusROHIT PRAHLADBHAI MODI ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIandHONOURABLE MR.JUSTICE B.N. KARIA Date : 09/05/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 28.06.2017 raising following questions for our consideration: “[A] Whether the order of Appellate Tribunal is perverse since it has relied on irrelevant material and ignored the relevant material [B]Whether the Appellate Tribunal has erred in law and on facts in deleting the addition on account of ON-Money on sale of 65704 Sq feet by holding that such area was sold to the relatives and friends ? [C] Whether the Appellate Tribunal has erred in not giving due import to the provisions of Section 292C of the Act and the provisions of Section 16 and Clause (f) of Section 114 of Evidence Act? [D]Whether the Appellate Tribunal and the CIT(A) had been right in shifting the burden of proof on the department when the assessee himself had accepted the fact of receipt of ON-money on similarly placed units” 2.In Tax Appeal No.360 of 2018, similar issues concerning the same assessee came up for consideration before this Court. Tax Appeal was dismissed making following observations: “9.With respect to the first issue we may notice that the Assessing Officer mainly proceeded on the following basis : 1) That loose documents were found from the premises of Dasrath Patni. These handwritten loose documents tallied with the typewritten copies found from the same premises. 2) The assessees owned up to their involvement in the land deals referred to in such documents. 3) The assessees agreed that reference to 'PD' and 'KM' was of their dummies. 4) In the land dealings in which the assessees had admitted receiving on-money consideration, similar transactions were found from the same set of papers. There was no material difference between two sets of papers. The assessees' defence that sales eventually did not take place cannot be accepted. 10.CIT(Appeals) reexamined the issue by giving independent reasons. However on similar factors, he confirmed the additions, upon which, the assessee went in further appeal before the Tribunal. The Tribunal deleted the additions. The principal consideration which weighed to the Tribunal C/TAXAP/478/2018 ORDER were as under : 1) Documents were dumb documents. 2) They were not found from the premises of the assessee but from that of Dasrath Patni. 3) The typewritten copies of the handwritten documents carried a title “PROJECTIONS”. 4) The assessees' contention that the land deals referred to in such documents did not materialise and, therefore, the projected income was not generated. 5) The Assessing Officer did not dislodge the evidence produced by the assessees in the form of affidavit of the proposed sellers of the land that eventually the land deals fell through. deleted the additions. The principal consideration which weighed to the Tribunal C/TAXAP/478/2018 ORDER were as under : 1) Documents were dumb documents. 2) They were not found from the premises of the assessee but from that of Dasrath Patni. 3) The typewritten copies of the handwritten documents carried a title “PROJECTIONS”. 4) The assessees' contention that the land deals referred to in such documents did not materialise and, therefore, the projected income was not generated. 5) The Assessing Officer did not dislodge the evidence produced by the assessees in the form of affidavit of the proposed sellers of the land that eventually the land deals fell through. 11.As noted, the assessees themselves did not dispute their involvement in the land deals referred to in the documents found from the premises of Dasrath Patni nor did they disown the reference to two persons 'PD' and 'KM'. In fact, they pointed out that these two dummies whose names would be used for registration of documents since they had status of agriculturist and in the State of Gujarat, agricultural lands could be brought only by an agriculturist. Thereafter however, the assessees sought to bifurcate two sets of deals. One where the land deals were completed and sales executed. In such set of cases, the assessees accepted receipt of on-money in the eventual transactions. However, with respect to the rest of the deals, the assessees pointed out that they were merely proposed deals and documents themselves suggested that figures were on projected basis. There was nothing on record to suggest that the sale itself did eventually materialise. 12.We may take the case of Vejalpur land as a test case. CIT(Appeals) has also recorded that for such land, the assessees had paid throughchequesatotalsumof Rs.22,02,100/- to one Sherin Co. Op. Hsg. Soc. Ltd. during the period between 28.7.2003 to 31.1.2005. CIT(Appeals) also noted that entire amount was repaid by Sherin Co. Op. Hsg. Soc. Ltd. in different cheques during the period between 2.6.2005 to 5.12.2005. The Revenue did not have any further material to suggest that though the assessee might have exited from the land deal, Sherin Co. Op. Hsg. Soc. Ltd. had eventually sold the land to third party and in the process, the assessee had extracted its share of profit. The Tribunal therefore, accepted the assessees' contention that the loose documents did not refer to the actual receipt of on-money since the documents itself carried a title “PROJECTIONS” and further that the Assessing Officer had nothing to discard the assessees' theory that these land deals did not eventually materialise. 13.Essentially the Tribunal having referred to the materials on record and come to factual conclusion, in our opinion, no question of law arises. 14.The second issue, we may recall, pertains to the Assessing Officer making addition of projected on-money receipts by the assessee in sale of 49,929 sq. ft. of carpet area of Himalaya mall. The Assessing Officer had projected the on-money received by the assessee and duly admitted during the course of assessment proceedings for the remaining carpet area of commercial property in the Himalaya mall on the basis of documentsfoundduringsearch.The assessees' defence was that not necessarily in all sales, premium would be available. 13.Essentially the Tribunal having referred to the materials on record and come to factual conclusion, in our opinion, no question of law arises. 14.The second issue, we may recall, pertains to the Assessing Officer making addition of projected on-money receipts by the assessee in sale of 49,929 sq. ft. of carpet area of Himalaya mall. The Assessing Officer had projected the on-money received by the assessee and duly admitted during the course of assessment proceedings for the remaining carpet area of commercial property in the Himalaya mall on the basis of documentsfoundduringsearch.The assessees' defence was that not necessarily in all sales, premium would be available. 49,929 sq. ft. carpet area represented the shops which did not command prime location. These shops were sold to the family members and in some cases to outsiders without charging any premium. The assessees pointed out that many of these shops were not tenanted thereby suggesting that these shops did not have ready income generating potential. CIT(Appeals) and the Tribunal both accepted the assessees' viewpoint. There was no concrete material suggesting that in the sale of remaining shops also, the assessees had accepted the on-money. Merely because in rest of the sales, the assessees had admitted having received on-money, such admission cannot be projected for the remaining area where there was no such matching material found or admission made by the assessees. This was the view of the Tribunal. Significantly, the seized material did not include any reference of on-money with respect to these remaining shops. 15.This issue therefore, is virtually factual. CIT(Appeals) and Tribunal having concurrently held in favour of the assessees, we do not entertain this issue. 16.In the result all the tax appeals are dismissed. ” 3. In the result, this Tax Appeal is also dismissed. (AKIL KURESHI, J) ANKIT SHAH (B.N. KARIA, J)