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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: Shri G. MANJUNATHA, & Shri RAM LAL NEGI
आदेश / O R D E R Per G. Manjunatha (Accountant Member) This appeal filed by the Revenue is directed against order of the Ld. CIT(A)-2, Mumbai, dated 10/12/2015 and they pertains to AY.2002-03. The Revenue has raised following grounds of appeal:-
Shri Vinod Kumar Anand “1. "Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) was correct in cancelling addition of Rs.4.09 crores without appreciating the fact that the Assessing Officer has relied on the impounded material for making the disallowance?. 2. "Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) was correct in not appreciating the fact that the Ld. CIT(A) relied upon a judgment (State of Orissa vs Maharaja Shri B P Singh (1970 76 ITR 690 S.C.). which is regarding the ‘best judgment assessment’ whereas the order in the case was made u/s 143(3) r.w.s. 147?”.
The brief, facts of the case are that the assessee is individual and director of M/s. Karimjee Pvt. Ltd. The assessee has filed return of income for the impugned assessment year u/s 139(1) of the Income Tax Act, 1961 (hereinafter ‘the Act’) and such return was processed u/s 143(1) of the Act on 26/02/2003 accepting the return of income of Rs.90,700/-. A survey action u/s 133A was conducted by DDIT(Inv.) Unit-1, Mumbai, on 05/03/2009 in the premises of M/s Karimjee Pvt. Ltd. During the survey, certain documents were found and impounded as per which, a letter to the Chief Minister of Maharashtra dated 03/10/2003 and an agreement between the assessee and the legal heirs of one Mr. B.C. Saxena was also found. The impounded documents shows that the assessee had acquired a property known as Kole Kalyanan BKC or certain rights therein for a consideration of Rs.4.09 crores. It was further noticed during the course of survey that although the assessee has paid an amount of Rs.4.09 crores for acquiring right in the property, but said amount was not recorded in the books of accounts. During the course of survey, while recording statement u/s 131 of the Act, in response to specific question from the Department, the assessee denied having paid any such amount of Rs.4.09 crores to either B.C. Saxes or his legal heirs, but stated
Shri Vinod Kumar Anand that he had paid a sum of Rs.17,15,000/- only to them till the date of survey and the same was recorded in the books of account.
Consequent to search, the case has been reopened u/s 147 of the Act ,for the reason to believe that income chargeable to tax had been escaped assessment, accordingly, notice u/s 148 was issued and served on the assessee. The assessee has filed an objection for issue of notice u/s 148 of the Act and such objection filed by the assessee was disposed off by the AO. Thereafter, the case has been selected for scrutiny and notice u/s 143(2) and 142(1) were issued. In response to notices, the Authorised Representative (AR) of the assessee appeared from time to time and filed various details as called for. During the course of assessment proceedings, the AO noticed that the assessee has entered into an agreement for sale with one B.C. Saxena for purchase of plot of land admeasuring 40516 sq. Yard bearing CTS No.32, 5526, and others of survey number 180,181/1 of village Kolekalayan CTS Road, Santacruz (East), located in Bandra Kurla Complex, Mumbai. The AO further observed that as per the said agreement, the assessee has paid an amount of Rs.4.09 cores to legal heirs of one Shri B.C. Saxena. The AO further observed that Mr. B.C.Saxena executed irrecoverable GPA in favour of the assessee on 01/01/2002 and delivered possession of the land. It was further observed that an affidavit cum letter of possession on 01/01/2002 was also issued as per which the vacant position of the land has been handed over to the assessee. Later, on 13/10/2003 an article of agreement was Shri Vinod Kumar Anand executed between the assessee and the legal heirs of Mr. B.C. Saxena, who expire on June 2002. The legal heirs were described as confirming party and Shri Vinod Kumar Anand, the assessee has been described as purchaser. Further, as per clause-8 of article of the agreement, it was stated that purchaser (Shri Vinod Kumar Anand) in good faith and expectation that the required documents shall be executed by the owner (i.e. Late B.C. Saxena) had already paid Rs.4.09 crores being the entire sale price and consideration to the owner. The AO further observed that during the course of survey, a letter dated 13/10/2003 written by Mr. Vinod Kumar Anand to the Hon’ble Chief Minister of Maharashtra was found, as per which it was agreed in the said letter that purchaser Shri Vinod Kumar Anand has already paid full and final consideration to Shri B.C.
Saxena and is ready and willing to pay all reasonable government dues including stamp duty and registration charges, etc, and requested the State Government to release the land.
The AO after considering relevant facts and also taken note of documents found during the course of survey, called upon the assessee to explain as to why the amount paid to legal heirs of Late B.C. Saxena shall not be treated as unexplained investment u/s 69 of the Act. In response, the assessee vide letter dated 18/12/2009 submitted that the property was beset with various lacunae and no original document was available and he acquired the title from Late B.C. Saxena in the hope that on release of the land by the Government, he will be benefited. The assessee further submitted that the said
Shri Vinod Kumar Anand land has been acquired by the State Government way back in the year 1966 by BMRDA, an authority, created by the State Government for development of infrastructure through acquisition process under the Land Acquisition Act and necessary compensation of Rs.1,73,676/- has been paid to the owner of the land. The assessee further submitted that he had purchased the rights of the land from Late B.C.
Saxena on the bona-fide belief that the title of the property are clear and no acquisition has been made by the State Government on the basis of terms and conditions of general power of attorney dated 01/01/2002, where Mr. Saxena had stated that no compensation was offered nor claimed by Mr. Saxena in respect of acquisition of the property. The assessee further submitted that he had wrote a letter to the Chief Minister of Maharashtra on the ground that title and interest in the property is with Mr. B.C.
Saxena, but when it comes to know that the property has been acquired by the State Government in 1966 and compensation has been paid to the previous owner, he has not proceeded with terms of sale agreement dated 13/10/2003 and further till today only an amount of Rs.17,15,000/- has been paid to legal heirs of Late B.C. Saxena and the same has been recorded in the books of accounts. He further stated that this fact has been reiterated during the course of survey in the statement recorded u/s 131 of the Act. The assessee further stated that although there are two more agreements between the parties one for development of property dated 22/10/2003 and another dated 27/10/2003 as per which the agreed consideration was Rs.4.09 crores was payable in instalments, but not the total consideration paid as per agreement dated 13/10/2003.
Shri Vinod Kumar Anand The assessee further stated that as per agreement dated 27/10/2003, called development agreement it was agreed that Saxenas grant development rights in respect of property upon released by MMRDA and the consideration of Rs.4.09 crores to be paid in instalments. Therefore, only on the basis of initial agreement, it is incorrect to hold that the assessee has paid full and final consideration of acquisition of property.
The AO, after considering the relevant submissions of the assessee and also taken note of documents found during the course of search, observed that there is no merit in the arguments of the assessee that he has not made payment of Rs.4.09 cores, because the documents found during the course of survey proves otherwise, as per which the agreement dated 13/10/2003, clearly proves that the assessee has paid full and final consideration of Rs.4.09 crores. This was further supported by the letter written by the assessee to the Hon’ble Chief Minister of Maharashtra, where it was stated that full and final consideration of acquiring the property has been paid, therefore, any arguments on the basis of subsequent documents is an afterthought to overcome the findings recorded by the survey team in respect of unexplained investment in purchase of property and hence reject the arguments of the assessee and made addition of Rs.4.09 crores u/s 69 of the Act.
Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee has challenged the reopening of assessment on the issue of sanction given by the authority u/s 151(2) of the Act. The Shri Vinod Kumar Anand assessee has also challenged the addition made by the AO towards unexplained money u/s 69 of the Act on the ground that the AO has made additions on the basis of agreement dated 13/10/2003 ignoring other two agreements dated 22/10/2003 and 27/10/2003 as per which agreed consideration of Rs.4.09 croes, but the assessee has paid a sum of Rs.17,15,000/- till the date of survey and such payment has been recorded in its books of accounts. The assessee further stated that it has explained the reasons for entering into agreement between assessee and letter written to the Hon’ble Chief Minister of Maharashtra. Although, the evidences clearly shows that no money has been paid as stated in agreement dated 13/10/2003, in spite of producing necessary evidences, the AO has made addition only on the basis of agreement dated 13/10/2003 ignoring the material facts during the course of survey in statement recorded u/s 131 of the Act, the assessee has categorically denied having paid money to legal heirs of Late B.C. Saxena. In fact, the AO has also recorded statement from legal heir of Late B.C. Saxena where they have categorically denied having receipt any amount over and above whatever stated by the assessee of Rs.17,15,600/-. Unless, the AO has brought out some more material in support of his finding on the basis of agreement dated 13/10/2003, no addition could be made towards unexplained investment in respect of purchases of said property, when the assessee disprove the allegations of the AO by filing necessary evidence.
Shri Vinod Kumar Anand 7. The Ld. CIT(A) after considering the submissions of the assessee and also taken note of various evidences during the course of appellate proceedings, reject the legal contention raised by the assessee regarding reopening of assessment. In so far as, the additions made by the AO towards amount paid to legal heirs of Late B.C.
Saxena observed that the AO has merely considered the agreement dated 13/10/2003 and letter written by the assessee to the Hon’ble Chief Minister of Maharashtra dated 03/10/2003 to come to conclusion that the assessee has paid a sum of Rs.4.09 crores for purchase of property to legal heirs of Late B.C. Saxena, ignoring other similar evidence filed by the assessee in the form of subsequent agreement dated 22/10/2003 between the assessee and legal heir of Late B.C. Saxena and also development agreement dated 27/10/2003 as per which the agreed consideration for property was at Rs.4.09 cores which was payable in instalments, but till date, the assessee has paid an amount only Rs.17,15,000/-. The Ld. CIT(A) has also taken the remand report of the AO dated 06/08/2003 wherein, Mr. B.B. Singh an agent who introduced the assessee to Late B.C. Saxena and also statement of Mr. Sabdarali B Saxena, legal heirs of late B.C.
Saxena, where in their statement they have categorically denied having receipt of sum of Rs.4.09 crores. He further confirmed that the legal heirs received only Rs.15,15,000/- after the death of his father and considering the amount of Rs.2 lakhs received when the father was alive the total amount received from Mr. Vinod Kumar Anand is only Rs.17,15,000/-. The Ld. CIT(A) has also taken legal opinion issued by M/s Mehta & Co. to decide the issue as per which the they have stated that the title of the property is not Shri Vinod Kumar Anand good because the land has been acquired by the State Government of Maharashtra from Mr. Chinoy, original owner and necessary compensation has paid to him for acquisition. All these evidences goes to prove on undisputed fact that the assessee has entered into agreement with Mr. B.C. Saxena on bona-fide belief and also on the basis of their admission in their MOU dated 01/01/2002, but subsequently when he comes to know that the title of the property was not good and also the possession was already with MMRDA, he started pursue the matter with government to get possession of land back to the owner on the hope that same can be purchased by him, but when it comes to know that the land has already been acquired by the State Government and necessary compensation has been paid to the owner, then he did not make further payments to the land owners. It is also evident from the fact that the legal heirs of Mr. B.C. Saxena had filed various letter to the assessee for asking balance amount payable for agreed consideration. Therefore, he opined that the AO was erred in considering the amount as per agreement dated 13/10/2003 and hence by following certain judicial precedence, including the decision of the Hon’ble Supreme Court in the case of State of Orissa vs Maharaja Shri B.P. Singh Deo (1970) 76 ITR 690(SC) deleted additions made by the AO towards unexplained investment u/s 69 of the Act. The relevant findings of the CIT(A) are as under:-
I have gone through the assessment order dated 29.12.2009, the “7. submissions given by the AR of the appellant, the remand report dated 06.08.2013, the MOU made between Mr. Vinod Kumar Anand and Late Mr. B.C. Saxena dated 01.01.2002 and the agreement made by the appellant with the legal heirs for sale of property dated 22.10.2003 and also the Development agreement made between Mr. Vinod Kumar Anand and the legal heirs on 27.10.2003 and also the judicial decision made by the AR of the appellant. On careful reading of the assessment order, the AO is of the opinion that having written letter to the higher authority i.e. Hon'ble Chief Minister of Maharashtra dated 03.10.2003, the appellant should have paid Rs. 4,09,00,000/- towards the consideration of purchase of property under question. However, the AR of the appellant strongly argues that the letter written to Hon'ble Chief Minister by the appellant, Mr. Vinod Kumar Ariand is just to impress the authority concerned to speed up the allotment of land but actually not been paid to the deceased Mr. B.C. Saxena. In support of this, he also relied on the following documents :
(1) The AR of the appellant vehemently argues that the AO highly relies on the letter written by appellant, Mr. Vinod Kumar Anand dated 03.10.2003 addressed to Hon'ble Chief Minister of Maharashtra wherein he has mentioned that he has paid full and final consideration to Late Mr. B.C. Saxena and is ready and willing to pay all reasonable Govt. dues including stamp duty and registration charges, etc., the relevant portion is as under ; "III Financial Stake : "To recapitulate, since your humble Petitioner has paid full and final consideration to Late B.C. Saxena and is ready and willing to pay all reasonable Gout, dues including stamp duty and registration charges, etc. the land in question ought to be released directly to the Petitioner. Subject to such release, your Petitioner is agreeable to execute Indemnity Bond in Government's favour against all or any claim by any of the petitioners predecessor in Title and/or any one else claiming through them. Besides, if so required, your Petitioner is agreeable to obtain and furnish to the Govt. no objection/disclaimer and confirmation deed from the legal heirs of Late B.C. Saxena,”
The AR further pleads that the fancy amount of Rs. 4.09 crores is never mentioned anywhere in the said letter and the AO has formed the opinion that the appellant should have paid considering the agreement made between the appellant and the legal heirs of Late Mr. B.C. Saxena on 13.10.2003.
(2) While Mr. jB.C. Saxena was alive the total amount paid to him was only Rs. 2,00,000/- (Rs. 1,50,0007- on 01.01.2002 and Rs. 50,000/- on 15.04.2002). Later on demise of Mr. B.C. Saxena, in order to keep the transaction alive he has paid Rs. 15,15,000/- between 2003 to 2008 to the legal heirs of Late :B.C. Saxena.
(3) For the first time the amount under question i.e. Rs. 4.09 crores as consideration to acquire the property of BKC from Mr. B.C. Saxena came into picture,in the agreement entered between the legal heirs of Late Mr. B.C.Saxena and the appellant dated 13.10.2003 as a sale agreement.
(4) The remand report dated 06.08.2013 wherein Mr. B.B. Singh and Mr. Sabder Ali Saxena have given their statement th at they have not received a sum of Rs. 4.09 crores as stated in the agreement dated 13.10.2003. However, they confirmed that the legal heirs have received only Rs. 15,15,0007- after the death of their father. Considering the 2 lakhs received when the father was alive, the total amount received from Mr. Vinod Kumar was only Rs. 17,15,000/- and not more. (5) From the Government records it has come to light that the said property under question was took over by Government of Maharashtra by acquisition process and due compensation was paid to earlier owner, Mr. Chinoy vide letter no. LAQ.WE.50 dated 17.04.1989 received from the office of Special Lanpl Acquisition (4) BSD Bombay and the relevant portion is as under :
"Please refer to your letter dated 22.12.88 on the above subject.
In this connection I have to state that as per this office record, the land bearing Survey No. 180 Hissa No. 1 area adm. 2A-17 Gunthas and S.No. 181 H.No. 1A and 13 area 4A 360 areas have been acquired, by Spl Land Acqn. Officer No. 6 BSD Bombay.
Award, has been declared on 23.3.67 and possession of the land has been taken on 6.4.87 and compensation of Rs. 173676-50 (one lakh seventy three thousand six hundred seventy six and paise fifty only) has been paid to the owner Shri Suleman H. Mohamed Chinoy on 6.4.87.
' The original case papers are not traceable in this office. However this i information is based on whatever record available in this office."
The legal opinion given by the Solicitor, M/s. Mehta & Co. vide letter R.No. H/1872/09 dated 23.01.2009 reveals the fact that the. alleged owner, Mr. B.C. Saxena did not have the clear title on the property, the relevant portion is as under :
January 23,2009 Ref.No,:H/1872/09 To, Shri Vinod KumarAnand, 1, Mistry Court, Dinshaw Vachha Road,. Mumbai 400 020. Sub : Lands bearing S.No. 166, H.No. 26, CTS No. 6887 S.No. 302, H.No. 4, CTS No. 7350, S.No. 288, H.No.20, S.No. 289, H.No. 13B, of Village Kole Kalyan, USD, Mumbai, Enclosed please find herewith the drafts of Deed of Conveyance, Power of Attorney and Deed of Indemnity, in respect of the above mentioned lands, proposed to be executed and registered between Hyder alias Haider AH Saxena, as Vendor, Smt. Maimoona Deguam Saxena & others as Confirming Party and yourself as Purchaser. This is to place on record that we have drafter the said documents as per your instructions, purely on the basis of the photocopies of the papers furnished and the oral representations made by you to us and that we have not examined ' the correctness of any papers furnished to us or the representations made to us. This is to further place on record that we have informed you that neiter Hyder AH Saxena nor any heir of later Shri Bahauddin Saxena has entitlement or authority to convey and transfer any right, title and interest in the above mentioned lands or any of them. Please note that we have also not examined the title to the above mentioned lands and shall not issue our certificate of title. Please'confirm on the duplicate of this letter. Yours faithfully, - ForM/s. Mehta & CO."
(6) AR prays that the land has already been acquired by Government of Maharashtra from Mr. Chinoy, the original owner had not possessed the clear title on the property under question and never in the past the property was passed over to Late Mr. B.C. Saxena.
(7) The AR of the appellant vehemently argues that the appellant himself a LLM graduate will not pay such huge amount when the prospective, seller does not have clear title on the property. (8) All the agreements made between the appellant, Mr. Vinod Kumar Anand and the legal heirs of Mr. B.C. Saxena were entered during the year 2003 and therefore the assessment could not -have been made for the AY 2002-03 assessing any investment as unexplained. (9) Further the AR of the appellant relies on the following judicial decision : (a) State of Orissa vs. Maharaja Shri B.P. Singh Deo (1970) 76 ITR 690 (SC). (b) Shri S.M. Hasan, S.t.O., Jhansi ,. vs New Gramophone House, Jhansi on 23 September 1975 Equivalent citations : AIR 1977 SC 1788 , (1976)4 SCC 854. (10) Further the AR also strongly argues that the appellant, Mr Vinod Kumar Anand did not have such huge liquid cash with him and AO has not brought any material other than the letter addressed to Hon'ble Chief Minister of Maharashtra by the appellant for having paid such huge amount. However, the AR argues that the AO has added Rs. 4.09 crores under presumption and assumption only and no concreate evidence brought on record except the letter addressed by the appellant to the Hon'ble Chief Minister of Maharashtra, Further, the AR argues that he approached the higher authority for allotment of the said property under question from Late Mr. B.C. Saxena who did not have proper title over the property under question but somehow or other he has given the impression that he was the owner of the property. Therefore he. pleads that this addition made of Rs. 4.09 crores is not sustainable before the eyes of law and is to be deleted. From the above discussion it is understood that on the strength of the letter written by the appellant himself to the Hon'ble Chief
Minister of Maharashtra and also the agreement for sale entered between the appellant and legal heirs of Late Mr. B.C. Saxena, alleged consideration of Rs. 4.09 crores came into picture. In the meanwhile remand report dated 06.08.2013, AO himself recorded statement from Mr. B.B. Singh (lesson name) and Mr.Sabder All B. Saxena and they have denied that on receipt of Rs. 4.09 crores as stated in the agreement dated 13.10.2003 but confirmed an amount of Rs. 15,15,000/- said to be received from Mr. Vinod Kumar Anand after the death of their father Mr. B.C. Saxena. It is understood that the concerned AO having jurisdiction over the legal heir of Mr. B.C. Saxena has made assessments for the alleged amount of Rs. 4.09 crores and the demand not yet been enforced or collected by the department and no appeal has been filed by the legal heirs of Mr. B.C. Saxena against the said assessment made on them. Further I have gone through the judicial decision relied by the AR of the appellant. Following the Hon'ble Supreme Courts decision in the case of State of Orissa vs. Maharaja Shri B.P. Singh Deo (1970) 76 ITR 690 (SC) wherein the Hon'ble Supreme Court held the decision as under : "It is no doubt true that the facts of this case justified an ex parts best Judgement assessment under s. 144 because of the defaults committed by assessee,: but in making a "best judgement assessment", the Assessing Officer cannot act dishonestly or vindictively or capriciously because he must exercise the judgement in the matter. -In making a "best judgement assessment", the Assessing Officer does not possess absolute arbitrary authority to assess any figure he likes and that although he is not bound by strick judicial principles, he should be guided by rule of justice, equity and good conscience. The limits of the power of the Assessing Officer are implicit in the expression "best of his Judgement". Though there is an element of guess work in a "best Judgement assessment", it shall not be a wild one but shall have reasonable nexus to be available material and the circumstances of each case." I have also gone through the Supreme Court decision in the case of Shri S.M. Hasan, S.T.O., Jhansi vs New Gramophone House, Jhansi on 23 September, 1975 Equivalent citations : AIR 1977 SC 1788 (1976) 4 SCC 854 wherein Supreme Court has observed as under :
Shri Vinod Kumar Anand "In case, the conditions for a best-judgement assessment are present, he will make it not on speculative or fanciful grounds but on reasonable gues since the best Judgement assessment does not negate the exercise of Judgement on the part of the officer." Considering the above facts on records, the remand report sent by the AO dated 06.08.2013, the Government record of Special Land Acquisition (4) BSD Bombay dated 17.04.1989 and also the legal opinion given by the :Solicitor, M/s. Mehta & Co. vide letter R.No. H/1872/09 dated 23.01.2009 and also respectfully following the Hon^ble Supreme Court decisions in the case of State of Orissa vs. Maharaja Shri B.P. Singh Deo (1970) 76 ITR 690 (SC) and Shri S.M. Hasan, S.T.O., Jhansi .... vs New Gramophone House, Jhansi on 23 September 1975 Equivalent citations : AIR 1977J SC 1788 (1976) 4 SCC 854, I am of the considered opinion the AO has j added a sum of Rs. 4.09 crores under presumption and assumption and without any concrete evidence except -the letter written byjiie__appellant to Hon'ble Chief Minister and the agreement dated 13.10.2003 entered between the appellant, Mr. Vinod Kumar Anand and the legal heirs of Late Mr. B.C. Saxena, I am of the opinion that the addition made of Rs. 4.09 .crores is not justifiable and not sustainable and therefore, I direct the AO to delete the addition.
The Ld. DR submitted that the Ld. CIT(A) was erred in deleting additions of Rs.4.09 cores without appreciating the fact that the Assessing Officer has relied upon impounded material for making additions as per which the assessee has entered into a sale agreement dated 13/10/2003 and paid full consideration of Rs.4.09 crores to Mr. B.C. Saxean. The Ld. DR further submitted that the Ld. CIT(A) had incorrect in relied upon the judgement of Hon’ble Supreme Court in the case of State of Orissa vs. Maharaja Shri B.P. Singh Deo (1970) 76 ITR 690 (SC) , which is regarding the best judgment assessment whereas, the order in the case was made u/s 143(3) r.w.s 147 of the Act.
Shri Vinod Kumar Anand 9. The Ld. Senior Counsel for the assessee, Shri J. D. Mistry, strongly supported the order the Ld. CIT(A) and submitted that the Ld. CIT(A) has considered all facts in right perspective to come to the conclusion that the addition made by the AO towards unexplained investment u/s 69 in respect of consideration paid for purchase of rights in properties form Mr. B.C. Saxena is incorrect on the basis of necessary evidences filed by the assessee including subsequent documents dated 22/10/2003 between the parties and development agreement dated 27/10/2003 between the assessee and Late B.C. Saxena. The Ld. AR for the assessee referring to paper book filed in support of its contention submitted that the AO has conveniently ignored other two agreements even though those agreements were found during the course of survey for the reason that those agreement goes in favour of the assessee. The Ld. AR further submitted that although in agreement dated 13/10/2003, it was mentioned that the consideration for purchase of property has been paid in full, but the said mistake was noticed and immediately entered into one more agreement dated 22/10/2003 correcting mistake in the original agreement as per which correct considerate for the property is at Rs.4.09 crores and such consideration has to be paid as per the instalment prescribed in the agreement. The assessee has paid an amount of Rs.17,15,000/- to Mr. B.C. Saxean and his legal heirs and this fact has been reiterated in his statement recorded during the course of survey. Further, legal heirs of Shri B.C. Saxena have also admitted that they have received an amount of Rs.17,15,000/- till date, which is evident from the fact that in their statement recorded during the course of assessment proceedings, they have Shri Vinod Kumar Anand denied receipt of Rs.4.09 crores and confirmed total amount received till date of Rs.17,500/- The Ld. AR further submitted that property in question was having disput and the said property has been acquired by the State Government way back in 1966 from the original owner Mr. Chinoy and also paid necessary compensation of Rs.1,73,676.58/- The assessee has also furnished a legal opinion from M/s Mehta & Co., where they have stated that title of the property is not good and further stated that Late B.C. Saxena or his legal heirs does not have any right or authority to convey the said property in favour of any person. The Ld. CIT(A) considering all these aspects rightly came to the conclusion that the AO was incorrect in relied upon only one agreement and on the basis of letter written by the assessee to the Hon’ble Chief Minister of Maharashtra that the assessee has paid a consideration of Rs.4.09 crores and hence, deleted addition made towards unexplained investment u/s 69 of the Act and his order should be upheld.
We have heard both parties, perused the material available on record and gone through the orders of authorities below. The whole controversy revolves around the document found during the course of survey action u/s 133A on 05/03/2009 in the case of the assessee. During the course of survey, a MOU between the assessee and Shri B.C. Saxena and also agreement of sale dated 13/10/2003 was found and impounded.
As per said agreement, the assessee has agreed to purchase certain property from one Mr. B.C. Saxena for a consideration of Rs.4.09 crores and such consideration has been Shri Vinod Kumar Anand paid in full to the seller. Further, one more document in the form of letter written to the Hon’ble Chief Minister of Maharashtra dated 03/10/2003, where the assessee stated that he had paid full and final consideration for acquiring the rights and title in the property and also willing to pay further cost to the Government including registration charges etc. During the course of survey, when these documents were confronted to the assessee, the assessee has categorically sated that although he had entered into agreement with Mr. B.C. Saxena on 13/10/2003, because of certain errors in the agreement a further agreement dated 22/10/2003 was entered into between the parties as per which the agreed consideration for purchase of property was fixed at Rs.4.09 cores and also such consideration has been payable in instalments as stated in the said agreement. Further, during the course of survey, in response to a question from the Department in the statement recorded u/s 131 of the Act, he categorically stated that he had paid till date a sum of Rs.17,15,000/- to Late B.C. Saxena and his legal heirs. The assessee has also explained the circumstances under which the letter was written to the Hon’ble Chief Minister of Maharashtra. The assessee claimed that he had entered into an agreement with Late B.C. Saxena on the basis of seller representation that he is the sole and absolve of the property and title, of the property are marketable but subsequently when it comes to know that the property has been acquired by the State Government in the year 1966 and also compensation has been paid to the erstwhile owner Mr. Chinoy, he had written letter to the State Government for possible return of land to the land owners, because the land was not developed by the State Government
Shri Vinod Kumar Anand for the purpose for which it was acquired. Further, from the government records, it has come to light that the said property under question was acquired by the State Government under Land Acquisition Act. He had obtained legal opinion from his advocates from M/s Mehta & Co. where they have qualified that the sale agreement between the parties entered into on 13/10/2003 was drafted on the basis of photocopies of the original documents and the oral representation made by you to us and that they have not examined the correctness of the papers furnished by us and their representation made to us. They have further stated neither Late B.C. Saxena nor his legal heirs had entitlement or authority to convey and transfer rights and title in the above mentioned land. Therefore, he was compelled to stop further payment to the legal heirs of the Mr. B.C. Saxena over and above whatever paid already which is evident from the fact that the legal heir of late B.C. Saxena had written various letters on various occasion and demanded balance consideration in respect of sale consideration of the property.
The AO had made additions only on the basis of documents found during survey action u/s 133A i.e. sale agreement between the parties dated 13/10/2003. It is claim of the assessee that the remaining two agreements dated 22/10/20003 and 27/10/2003 were already on record during the course of survey and the same were brought to the notice of the survey team, but they have conveniently ignored these documents so as to conclude that the assessee has made payment of Rs.4.09 crores to Late B.C. Saxena.
Shri Vinod Kumar Anand It is an admitted fact that the assessee has categorically sated in his statement recorded during the survey that he had paid only an amount of Rs.17,15,000/- to late Shri B.C. Saxena and its legal heirs. This fact has been recorded in the subsequent agreement between the parties where the payments schedule has been categorically mentioned as per which till date of survey, the assessee has paid only amount of Rs.17,15,000/-. This fact has been further supported by the statement of legal heirs of late Shri B.C.Saxena in their statement recorded during the course of assessment proceedings, where they have denied having receipt any amount of Rs.4.09 crores, but reiterated that the they have received a sum of Rs.17,15,000/- from the assessee. This is also evident from the letters written by the legal heirs of Late Shri B.C.Saxena on various dates demanding balance sale consideration form the assessee. All these evidences goes to prove an undoubted fact that the initial agreement dated 13/10/2003 is not sacrosanct and what is relevant is subsequent agreement between the parties and their conduct. If you go through the subsequent documents and conduct of the parties, it is very clear that the assessee had not paid any amount over and above whatever recorded in its books of accounts of Rs.17,15,000/-. Further, the AO has made addition solely on the basis of sale agreement dated 13/10/2003 and letter written by the assessee to the Hon’ble Chief Minister of Maharashtra dated 03/10/2003 ignoring all other documents furnished by the assessee even during the course of assessment proceedings and survey proceedings. From the above, it is very clear that the AO has conveniently ignored these documents so as to conclude that the assessee
Shri Vinod Kumar Anand has made payment of Rs.4.09 crores to Late B.C. Saxena towards sale consideration for purchase of certain property.
No doubt, there is document in the possession of the AO to reach to a conclusion that there is agreed consideration of Rs.4.09 crores and also such consideration has been stated to be paid in full as per clause of the agreement. But, in order to consider any amount within the ambit of unexplained investment u/s 69, something more than what is relied upon by the AO is required to be brought on record.
In this case, the AO failed to bring out any record other than documents relied upon by him i.e. sale agreement dated 13/10/2003 to prove that the assessee has paid a consideration of Rs.4.09 crores to legal heirs of Late Shri B.C. Saxena. In this case, on perusal of assessment order and documents relied upon by the assessee, we came to the conclusion that the AO has made additions towards unexplained investment u/s 69A in respect of consideration paid to Late Shri B.C. Saxena on the basis of suspicious and surmises manners without there being no further documents in his possession to prove that in fact the assessee has paid a sum of Rs.4.09 cores to Late B.C.Saxena for agreed consideration for purchase of property. On the other hand, the assessee has categorically proved with necessary evidences that he had paid only an amount of Rs.17,15,000/- to Late B.C. Saxean and his legal heirs till the date of survey ad such amount has been recorded in its books of account. Therefore, we are of considered view that unless the AO brought out further record to prove that the Shri Vinod Kumar Anand assessee in fact paid a consideration as per document dated 13/10/2003, subsequent documents executed by the assessee dated 22/10/2003 and 27/10/2003 and other evidences in the form of legal opinion issued by advocates who drafted sale agreement between the parties and also the information from the Government of Maharashtra that property has been acquired in way pack in 1966 cannot be ignored. The documents brought on record by the assessee including the legal title of the property in the light of acquisition of the property by the MMRDA and physical possession of the property decides whether the assessee has in fact paid consideration or not. No prudent person would make payment in full unless he or she ascertain the correctness of papers or documents of the property. It is very difficult to accept the argument of the AO that the assessee has paid full and final consideration for acquisition of property without verifying the documents of the property. No doubt there is solitary documents which was found during the course of survey which clearly indicates payment of full and final payment of Rs.4.09 cores but the assessee has explained with necessary facts that the document dated 13/10/2003 is incorrect and the mistakes in the said documents had been corrected in the subsequent document dated 22/10/2003 which clearly proves the actual consideration agreed between the parties and also payment made to the seller till date of survey. This fact is further supported by the statement of the assessee and also the statement of legal heirs of Late Shri B.C. Saxena. Therefore, we are of considered view that the Ld. CIT(A) was right in deleting the additions made by the AO towards unexplained investment u/s 69 in respect of sale consideration paid for Shri Vinod Kumar Anand purchase of property. We do not find any infirmity in the order of the Ld. CIT(A), hence, we are inclined to uphold the findings of the Ld. CIT(A) and dismissed the appeal filed by the Revenue.
In the result, appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 26/06/2019.