ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(2), BANGALORE vs. DR.RANJAN PAI, BANGALORE

We have heard the rival contentions of the parties and perused the record. In our view, the assessee has given cogent reasons for not preferring the C.O. within the statutory period of time and we are convinced that the procedural aspect should not be road block for fair and just adjudication of the legal issues and accordingly, we condone the delay in filing the C.O. In our view, the judgments relied upon by the ld. DR of revenue are not germane to the issues before us as all the decisions of the Tribunal were in respect of delay in condonation of delay in filing of appeal and were not for delay in filing of CO. Moreover the decision of Hon’ble Supreme Court in the matter of Collector, Land Acquisition Vs. Mst. Katiji& Others as reported in (1987) 167 ITR 471(SC) was not considered by tribunal in any of these orders. .

The ld. DR in support of the revenue appeal has made the following submissions that Simultaneous search u/s. 132 was conducted on 12.04.2011 by the revenue at the residence of the assessee also done at the premises of Smt. Adlene Kagoo and Shri V. Rangrajan where some incriminating material was also found. Beside that some incriminating material were also found during the course of search at the premises of assessee . The ld. DR had submitted that based on the incriminating material found at the premises of Smt. Adlene Kagoo and Shri V. Rangrajan, the assessee had made the disclosure for an amount of Rs. 12,03,35,000/- before DDIT (Inv.). It was the case of the ld. DR that the seized material on the basis of which the disclosure was made, were not denied by the assessee. It was further submission of ld. DR that the C.O. No. 19/Bang/2019 Page 4 of 16 assessing officer has made addition of Rs. 3,08,35,000/- in Para 7 which was based on the seized material found in the premises of Smt. Adlene Kagoo which was not challenged by the assessee before ld. CIT(A) and lastly, it was submitted that the conduct of ld. CIT(A) for making the deletion of the amount of Rs. 4.50 Crores based on the seized material namely AK/PDP/12-Pg-125 was without any basis and was on account of some conjectures and surmises.

Our attention was drawn by ld. DR to Para 5.8 of the order of CIT (A) and on the basis of such Para, the ld. DR has submitted that the conclusion drawn by the ld. CIT(A) is not emanating from the record .It was submitted that the assessee cannot be allowed to admit ,same seized material on the basis of which disclosure were made and additions admitted by the assessee, and deny same the seized material when used for making the addition of of Rs. 4.50 Crores, under the circumstance when seized material was recovered on the same day from the same person, during the course of search simultaneously conducted and therefore, the revenue was right in making the addition based on the same of Rs. 4.50 Crores. 7. It was submitted that the document AK/PDP/12-Pg-125 was recovered from the premises of Smt. Adlene Kagoo and the said document was put up to the assessee, in this document the assessee had shown to have paid an amount of Rs. 4.50 Crores in cash for the purchases of Jakkur land. It was submitted that the entire action of ld. CIT (A) is without application of mind and was not based on any material available on the record. She submitted that the order of ld. CIT(A) is required to be set aside and the order of the AO is required to be upheld.

Per contra, the ld. Advocate for the assessee had vehemently opposed the appeal and had submitted that no incriminating material was recovered from the residential premises of the assessee or business premises of the assessee on the basis of which the addition was made to the tune of Rs. 4.50 Crores. The statement of the assessee was recorded u/s. 131 on 10.06.2011 wherein the assessee had denied of making any payment of Rs.

On the basis of this answer, it was submitted that the document AK/PDP/12- Pg-125 was not recovered from the person who is authorized person to keep it . Smt. Adlene Kagoo has not stated that the said document was C.O. No. 19/Bang/2019 Page 6 of 16 written in her handwriting nor it is submitted by her that she knows about the contents of the document nor it was submitted by her that the said document was written in her presence by somebody else nor it was that she has knowledge about the contents of these documents. In fact Smt. Adlene Kagoo was never examined by the revenue authorities nor MR Dayanad Pai was also examined by the revenue authorities. The Pith and substance of the argument of the AR was that this document is not a legal piece of evidence and it is not incriminating material within the eyes of law and therefore it cannot be formed basis of making addition of Rs. 4.50 Crores.

The ld. AR had also submitted that these two sale deeds were executed on 30.03.2007 and 06.08.2009 in respect of jakkur land and the alleged cash payment reflected in AK/PDP/12-Pg-125 was made on 13.10.2006. It was submitted that the sale deed shows that the cheques mentioned in the sale deed were not the same cheques which was referred in AK/PDP/12-Pg-125. It was submitted that in the AK/PDP/12-Pg-125, the following details of the transactions were mentioned as on page 89A of the paper book.

In rebuttal ld. DR had submitted that the decision relied upon by the assessee are distinguishable facts and therefore submitted that the appeal of the revenue is required to be allowed. We have heard the rival contentions of the parties and perused the record.

We have heard the rival contentions and perused the record. The basis of the addition made by the assessing officer is mentioned in paragraphs 8.2.5, 8.2.6 and 8.2.8 were to the following effect. “8.2.5It is here that the single entry of payment made in cash on 13/10/2006 amounting to Rs. 4.5 crores is found. The assessee was given an opportunity in the form of show cause notice dt. 21.01.2014 to explain the nature and content of the statement marked as AK/PDP/12-Pg-125 and show cause why the amount of Rs. 4,.50,00,000/- paid in cash along with the cheque payments made by M/s. Indiland Developers Bangalore Private Limited on his behalf should not be considered as unexplained income. 8.2.6 The assessee vide his reply dt. 24.02.2014 maintained his stand as taken before the office of DDIT – I (3), Bangalore that no such payments were made by him. The cheque payments reflected in the statement pertains to land transactions of that company i.e., M/s. Indiland Developers Private Limited for purchase and development other lands which is reflected in the ledger account. It has no relation with Jakkur Lands. Since the entries pertains to Jakkur Lands which is not the related the statement was to be held as erroneous.

From the perusal of the above said paragraphs, it is clear that the basis of making addition of Rs. 4.50 Crores was the document seized from the premises of Smt. Adlene Kagoo (AK/PDP/12-Pg-125). First of all, we have to examine whether this document which was found in possession of Smt. Adlene Kagoo can form basis for making addition in the hands of the present assessee. For the purposes of making any document to be incriminating material, it is necessary that the document should be found from the lawful custody of a person who is lawfully and naturally responsible for possessing it. In the present case, as is clear from the answer given by Smt. Adlene Kagoo, it is clear that the document was neither written by her nor she is aware of the content, nor she is aware who had written the document and it is also not the case of the revenue that the assessee had taken and kept said document in the custody of Smt. Adlene C.O. No. 19/Bang/2019 Page 10 of 16 Kagoo. On the other hand, the sole case of the revenue is this that the said document was allegedly kept by Shri Dayananda Pai. To prove the live link by the revenue , the statement of Shri Dayananda Pai should have been recorded categorically mentioning that this document belonged to the present assessee. In fact, the assessee under statement u/s. 131 had denied of the execution of this document and also the content. In our view, the document is required to be proved in accordance with principle of Evidence Act as applicable in Income Tax proceedings, either by primary evidence or secondary evidence. In the present case, none has been done by the revenue to prove seizure of document and contents thereof, so as to enable revenue to build up its case for the purpose of treating the document to be incriminating document. The document relied upon by the revenue has not been proved by the revenue that it belong to the assessee nor it was proved that it contain incriminating material on the basis of which addition can be made. We also draw strength from the judgment of Hon’ble Supreme Court in the matter of vs. CBI vs V. C. Shukla ( 1998) 3 SCC 410 where the Hon’ble Supreme Court has laid down as under. “16. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; and those provisions are to be found in sections 6 to 55 appearing in Chapter II. Section 5, with which Chapter Ii opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as under:- " Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability."

From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second park speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. 18. 'Book' ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work

In addition to the above, we may like to state that the assessee had admitted to disclose the amount of Rs. 12,03,35,000/- based on the document namely A/VR/Res/01-pgs 37,38 and 41 and page 127 of annexure AKP/PDP/15 Whereas the addition of Rs. 4.50 Crores were made on the basis of AK/PDP/12-pg 125. From the bare perusal of these documents , it is clear that both are different set of documents and are not part of the same series of documents. All the documents even as per the case of the revenue are loose document and are not forming part of the same book of account or diary. In case of the loose papers, each and every document is separate and distinct document and even if one document is admitted by the assessee then it will not lead to ipso facto conclusion that the document which are not admitted by the assessee or proved by the revenue as belonging to the assessee are required to be accepted. Further we would like to put on record that neither Smt. Adlene Kagoo has admitted this document nor the assessee admitted this document during the course of recording of statement reproduced herein above. Therefore onus of proving the document belonging to the assessee lies on the revenue to prove that the document belonged to the assessee and is correct hence it can be relied upon in accordance with law. In our view, the revenue has failed to discharge its onus.

In view of the above, the conclusion drawn by the assessing officer was without any basis as neither the document AK/PDP/12-pg 125 was proved nor it pertains to the payment of on money on the jakkur land transactions nor the transactions were forming part of the sale transactions mentioned. In view of the above, the appeal of the revenue is without any merit and is liable to be dismissed and we accordingly dismiss the same.

Before parting, we examine the whole issue from a different angle. We examine from this angle that even if it is assumed that the contents of the seized document i.e. page 125 of AK/PDP/12 are correct as stated by the AO in the assessment order, whether the addition made by the AO is sustainable. We find that the entire case of the AO is on the basis of the C.O. No. 19/Bang/2019 Page 13 of 16 seized material enclosed by the AO with the assessment order as Annexure – 1. This is available on page 89A of the paper book being page 125 of Annexure AK/PDP/12 already reproduced above in Para 11 above.

We have already reproduced Para 8.2.8 of the assessment order in Para 14 above but at the cost of repetition, we reproduce it again for ready reference. This Para is as under:-

From the above Para of the assessment order, it comes out that this is the whole case of the AO that the cheque transactions reflected on this page i.e. page 125 of Annexure AK/PDP/12 are recorded in the books of both parties i.e. Sri Ranjan Pai Group and Sri Dayanand Pai Group albeit as advance received against some other property account. The AO has come to the conclusion that the cash payment of Rs. 4.5 crores on 13.10.2006 is C.O. No. 19/Bang/2019 Page 14 of 16 by the present assessee for Jakur Property. As per the AO also, the Jakur Property is evidenced by Registered sale deed dated 30.03.2007. Copy of this sale deed is available on pages 90 to 104 of the paper book. As per this Sale Deed, the consideration fixed is only Rs. 2.60 Crores and it is paid by a cheque No. 719275 dated 30.03.2007 of Rs. 2.60 Crores drawn on ICICI Bank. It is seen that this cheque mentioned in the Sale deed is not recorded in the seized material i.e. page 125 of AK/PDP/12. The agreed sale consideration as per this seized material i.e. AK/PDP/12 is Rs. 29.10 Crores after reducing some Charaka adjustments Rs. 10.98 crores and part property taken back Rs. 9.90 Crores. After that, there is the alleged entry of Cash Rs. 4.5 Crores and there are several other entries of Rs. 9.20 Crores on 12.07.2006 from the company M/s Indiland Developers, Rs. 4.42 Crores by cheque on 17.01.2007 from the same company and another cheque from the same company of Rs. 8.82 Crores on 01.02.2007 leaving a balance of Rs. 2.16 crores transferred to Charaka Account. There is no reference to these cheques in the sale deed dated 30.03.2007. As per the AO, these cheques are entered in the books of that company as advance payments for some other properties. Hence, it is not established that the alleged cash payment on 13.10.2006 of Rs. 4.5 Crores is received by the vendor from the present assessee because none of the other entries on this page are linked with the assessee or Jakkur Property. If this page considers cheque payments from the said company i.e. M/s Indiland Developers as payment for Jakkur lands than the cash payment may also be by the said company and it cannot be added in the hands of the present assessee.

Moreover, on pages 57 to 61 of the paper book is the copy of statement of Smt. Adeline Kagoo recorded on 12.04.2011 u/s 132 (4) and in this statement, the question No. 11 is about loose sheets marked as AK/PDP/8 to 20 and in reply, it was stated that as stated by her in reply to question no. 10, she has no knowledge of the transactions undertaken by Shri Dayanand Pai recorded in these papers. She also stated that the papers were handed over to her by Shri Dayanand Pai for keeping in safe custody and in this manner, these papers are available at her residence. In spite of this, neither C.O. No. 19/Bang/2019 Page 15 of 16 Mr. Dayanand Pai was examined by the AO nor the search Party nor the vendor was examined. The lady Smt. Adeline Kago was also not examined by the AO and conclusions were drawn by the AO and addition was made on this basis that the cheque payments shown on this page i.e. page 125 of AK/PDP/12 are true and therefore, it has to be accepted that the cash payment shown in the same page is also true and it is for Jakkur property. We have seen above that all the cheque payments noted on this page are about payment by the company M/s Indiland Developers. Hence there is no basis to hold that the cash payment is by the present assessee and not by that company particularly in view of this fact that name of the company is mentioned against cheque payments but no name is mentioned against entry of cash payment. No concerned person i.e. Shri Dayanand Pai, the lady Smt. Adeline Kago or the vendor were examined by the AO and the entries on this seized paper indicates that this cash payment may also be by the said company only because all cheque payments are admittedly by the company.

The discussion in this Para 22 also supports our view as noted in Para 18 above.

Since we had dismissed the appeal of the revenue, therefore we do not deem it necessary to decide the C.O. of the assessee as in our opinion, now it is academic in nature.

In the result, the appeal filed by the revenue is dismissed and the C.O. of the assessee is also dismissed as academic. Order pronounced in the open court on the date mentioned on the caption page.