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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM
The appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeals)-4, Pune dated 01.02.2016 relating to assessment year 2009- 10 passed under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).
2 ITA No.2172/PUN/2016 A.Y.2009-10
The assessee has raised following grounds of appeal:-
“1.The learned CIT(A)-4, Pune erred in law and on facts in sustaining jurisdiction u/s.147 of ITA, 1961 on the basis of documents found in the search action u/s.132 of ITA, 1961 in case of M/s. Pinnacle Group. Appellant contents that the rightful jurisdiction ought to have been assumed u/s.153C and not u/s 147 of ITA, 1961.
The learned ClT(A)-4, Pune erred in law and on facts in sustaining addition amounting to Rs.28,80,150/- made u/s.69C of ITA, 1961, on account of alleged payment of cash consideration for purchase of office (shop) merely based on some documents seized and statement of Mr. Gajendra Pawar recorded during the course of search in the case of M/s. Pincale Group.
The learned CIT(A)-4, Pune erred in law and on facts in sustaining the addition u/s.69C of the ITA 1961 without appreciating that the appellant has denied the allegation of such additional cash payment and that, the stamp duty value (index value) of the said offices-shops was Rs.44,46,750/-, and the same was lesser that the stipulated consideration of Rs.46,00,000 as per the registered agreement.
The learned ClT(A)-4, Pune erred in law and on facts in sustaining addition made by the learned AO, based on search findings in case of M/s. Pinacle Group, without granting opportunity of cross examination, though the same was specifically asked for.
Alternative & without prejudice to Ground 2, the learned CIT(A)-4 and learned AO erred in law and on facts in non grating telescoping of cash withdrawals & drawings of appellant, appellant's spouse and appellant's HUF.
Alternative & without prejudice to Ground 2, the learned CIT(A)-4 and learned AO ought to have granted credit of agricultural income arising out of agricultural land admeasuring around 7 Acre situated at Uruli kanchan Dist. Pune.
The appellant craves leave to add / modify / delete / amend a" / any of the grounds of appeal.”
The present appeal is filed after a delay of 98 days. The assessee has filed an
affidavit in this regard explaining the reasons for delay. In the entirety of the facts and
circumstances, there is merit in the plea of the assessee and the delay of 98 days is
hereby condoned.
The ground of appeal No. 1 raised is not pressed and hence, the same is
dismissed as “not pressed”.
3 ITA No.2172/PUN/2016 A.Y.2009-10
The issue raised in ground of appeal No. 2 is against the addition of
Rs.28,80,150/- made u/s. 69C of the Act.
Briefly in the facts of the case, the assessee had furnished return of income
declaring total income of Rs.1,72,800/-. Search action u/s.132 of the Act was
conducted in the case of “Pinnacle Group”, Pune. Shri Gajendra D. Pawar, prop. of
the firm M/s. Pinnacle construction, had constructed the projects known as
“Pinnacle Prestige”, Tilak Road, Pune. On verification of certain loose paper bundles,
it was found that Sudam Kamthe and Smt. Sumedha Kamthe, assessee had
purchased shop No.05 & 10 in the project “Pinnacle Prestige”. In the statement
recorded, Shri Gajendra D. Pawar, had accepted that he had received cash of
Rs.35,00,000/- over and above the agreement value of Rs.46,00,000/- from the
assessee and her husband. In view of above, the Assessing Officer recorded the
reasons for reopening of assessment u/s.147 of the Act and notice u/s.148 of the Act
was issued. The assessee stated that the original return of income filed on
31.12.2012 may be treated as filed in response to the notice u/s.148 of the Act and
requested for copy of the reasons recorded. The Assessing Officer sought
information from the assessee with regard to the transaction of purchase of office
shop premises in the project “Pinnacle Prestige”. The notings on the pages of the
seized documents were confronted to the assessee and the said notings also
contained note of receipts of cash of Rs.35,00,001/-. The assessee was asked to
clarify the total investment in the shop No.5 & 10 and the source of the said
investment. In response thereto, assessee furnished letter dated 27.12.2013 giving
certain information about bank account extract, copy of agreement to purchase the
property and the copy of balance sheet as on 31.03.2008 and 31.03.2009. The
assessee also asked for the copies of incriminating documents seized from
M/s.Pinnacle Construction which revealed the alleged cash payments. Summons
u/s.131 of the Act dated 30.12.2013 were issued to the assessee by the Assessing
4 ITA No.2172/PUN/2016 A.Y.2009-10
Officer asking the assessee to attend on 06.01.2014 with details of sources of
income. The assessee attended on 07.01.2014 and her statement was recorded. In
the statement no information about the transaction was given. Vide office letter dated
08.01.2014, the Assessing Officer handed over the copies of relevant documents and
copy of the statement of Gajendra D. Pawar recorded u/s. 132(4) of the Act in the
course of search. The documents wherein the name of the assessee was written
were also handed over on 10.01.2014. Thereafter, the assessee vide letter dated
16.01.2014 requested for time to provide information. Then, she filed a letter
withdrawing the letter of authority of Ld. Counsel and finally, the assessee filed a
letter dated 13.03.2014 stating that they had not paid any money for purchasing shop
No.10 at Pinnacle Prestige (project by Pinnacle Construction) in addition to
agreement value.
The Assessing Officer did not accept the explanation of the assessee firstly on
the ground that the booking of shop No. 5 and 10 has been reflected in the Balance
Sheet as on 31.03.2009. Further, the noting on page seized and marked as 368, part
of annexure 1 of loose paper bundle No.23 clearly shows the transaction in the name
of Kamthe wherein total cost is written as Rs.81,00,000/- and the word (I) is of
Rs.46,00,000/- and word (II) is of Rs.35,00,000/-. The Assessing Officer observed
that the word II means the unaccounted money in the common parlance in the
market. Page No.370 of the seized material was the account statement addressed to
Kamathe wherein agreement cost of Rs.46,00,000/- less cheque received
Rs.36,00,000/- and balance as on 31.06.2010 amount Rs.10,00,000/-. The noting at
right hand corner shows the cash received Rs.35,00,001/-. The date of agreement
was on 10.10.2018. Further, statement of Gajendra D. Pawar was recorded wherein
information was given regarding the summery of cash received over and above
agreement value. The Assessing Officer, thus, observed that in respect of payment of
‘on money’ there was documentary evidence on record recovered by the department
5 ITA No.2172/PUN/2016 A.Y.2009-10
during the search and the same was admitted by the person receiving the money, as
against which the assessee simply made the statement that she had not paid any
amount which is oral statement and did not support the claim of the assessee. The
Assessing Officer vide para 6 took note of the exact area of the shop No. 5 and 10,
assessee’s share regarding on money payment and unaccounted portion of the cash
and worked out the aggregate amount of on money to Rs.28,80,150/- and added the
same in the hands of the assessee u/s.69 of the Act.
The CIT(A) has scanned and reproduced the incriminating documents marked
as Pages 368 and page 370 of Annexure A-1, Bundle 23 seized from the possession
of Mr. Pawar at page 10 and 11 of the appellate order and verified the entries in the
account statement from the bank account of the assessee and observed that the
payment made by the assessee through her bank account were ample corroborative
evidence about the genuineness of incriminating documents found and seized from
Third party. Reference was made to the statement recorded of Gajendra D. Pawar.
The CIT(A) concluded his findings by observing as under:
“Thus, from the incriminating document and statement, the following points average emerge they are: 1. The veracity and authenticity of the document found and seized from the possession of Shri Pawar are proved by the Bank Statement of the appellant and Registered deeds of the properties. 2. The appellant never questioned the contents of the seized materials and above not refuted the entries recorded on them are "dumb documents", 3. The cheques entered on those two referred documents, as can be seen at the scanned page, are from the Bank of Baroda, Shivaji Nagar and Central Bank India, Shivaji Nagar and the appellant has never refuted that the cheque, dates and amounts are not in the existence. Rather, the entries stand corroborated with the transactions entered by the appellant.(emphasis added). 4. Page 370 of the referred document is an Account Statement of the appellant's transaction with the Builder Shri Pawar and except cash transaction of Rs.35,00,011/- everything else, stand corroborated. 5. Ld AR for the appellant has also never refuted the entries except pointing out the provisions of Sec.132(4A) of the Act. Be that as it may, Ld AR is right that there is presumption u/s.132(4A) of the Act if the document is seized from the possession of the third party that they do not belong to the appellant unless corroborated by other evidence ( emphasis added). In the instant case
6 ITA No.2172/PUN/2016 A.Y.2009-10
all the entries recorded in the referred documents stand corroborated from the Bank statements and Registered Agreement of the appellant and the same could not be refuted by the appellant, so where is the question of rebuttable presumption u/s.132(4A) of the Act, shifting the onus to the A.O. The case laws relied upon by the Ld. A.R. point out the same thing that presumption u/s.132(4A) is rebuttable and not conclusive in the absence of corroborative evidence. In my considered view, there has been corroborative evidence, brought out by the A.O and the same has not been reported by the appellant. In view of the above, I have no hesitation in upholding the addition of Rs.28,80,150/- made by the AO u/s.69 of the I.T. Act and dismissing the appeal filed by the appellant. With these grounds, 1 to 4 stand adjudicated against the appellant.”
The assessee is in appeal before the Tribunal against the order of CIT(A).
The Ld. AR for the assessee pointed out that on 26.12.2013, the assessee
after filing return of income had sought copies of the documents and copy of
statement recorded of Shri Gajendra D. Pawar and also sought cross examination.
Copies of the said documents are placed at page 124 to 125 of the paper book. He
then referred to the statement of assessee recorded on 07.01.2014, copy of which is
placed at page 141 to 143 of the paper book and English translation of the said
documents are placed at page 144 to 146 of the paper book. He further referred to
the question No.4 wherein information was sought about investment made in the
shop and reply of the assessee was that he purchased two shops from Pinnace
Prestige and the possession was received 5 years back. He, then, took me to the
assessment order and stressed that where the assessee had sought cross
examination of the witness and no cross examination was provided then the
assessment suffers from irregularities. It was put to the Ld. AR for the assessee, the
cross examination was sought on 26.12.13 after which copies of the seized
documents and statements were given to the assessee. The statement of the
assessee was also recorded but at no stage, after receiving statement, cross
examination was asked for. It was put to the Ld. AR for the assessee as to
proceedings after receipts of the copies of the seized documents and statements,
wherein the assessee had only sought adjournment as apparent from the letter
7 ITA No.2172/PUN/2016 A.Y.2009-10
placed at page 126 to 128 of the paper book. The Ld. AR stressed that because of
the circumstances; the assessee became sick and nervous and did not file any
explanation before the Assessing Officer. The Ld. AR for the assessee, however,
pointed out that there is no merit in the aforesaid addition in the hands of the
assessee on the basis of said documents. The Ld. AR for the assessee stressed that
the entries in some of the pages lead to the conclusion that the entries belongs to the
assessee but no cash consideration was paid especially when no evidence of cash
transaction was found. He stressed that the CIT(A) had asked assessee to prove the
negative and assessee cannot prove the same. He has placed reliance on the
following decisions:
i) CIT Vs. Salek Chand Aggarwal, reported as 300 ITR 426 (Allahabad)
ii) Pradeep Amrutlal Runwal Vs.Tax Recovery Officer, in ITA No.334/PUN/2013, A.Y.2004-05 decided on 30th May, 2014.
iii) Straptex (India) (P.) Ltd. Vs. Deputy Commissioner of Income tax, reported as 84 ITD 320 (Mum.)
iv) Additional Commissioner of Income Tax Vs. Miss Lata Mangeshkar, reported as 97 ITR 696 (Bombay).
The Ld. AR for the assessee also submitted that the issue raised in ground of
appeal No. 5 and 6 are on without prejudice basis and he fairly admitted that it was
new plea being raised before the Tribunal and also admitted no agricultural income
was shown in the hands of the assessee.
The Ld. DR for the Revenue pointed out that the assessee neither explained
the investment in the property nor sought any cross examination of the witness
before the Authorities below. He referred to the order of CIT(A) at page 12 and 13
and pointed out that in statement recorded of Shri Gajendra D. Pawar, he fairly admitted to have received on money on sale of his units in Pinnacle Prestige. The
8 ITA No.2172/PUN/2016 A.Y.2009-10
Ld. DR for the Revenue also pointed out that the case laws relied upon by the
assessee does not support the case of the assessee.
On perusal of the record and after hearing both the Authorized
representatives, the issue raised in ground of appeal No. 2 to 4 is against addition of
Rs.28,80,150/- u/s.69 of the Act. The assessee was individual and had made
investment in purchase of shop No.05 and 10 in the project “Pinnacle Prestige”
situated at Tilak Road, Pune. The said project was constructed by M/s. Pinnacle
Construction which was solely conducted by Prop. Gajendra D.Pawar. Search action
u/s.132 of the Act was conducted on the Pinnacle Group, Pune. Certain loose
papers were found during the course of search and the same were seized. It
transpires that assessee and her husband had purchased two shops No. 05 and 10
in the project of “Pinnacle Prestige”. The seized document reveals the cash payment
of Rs.35,00,000/- by the assessee and her husband to M/s. Pinnacle Construction
which was mentioned in the documents seized during search and even, account
statement was also found and seized. The statement of Shri Gajendra D. Pawar was
recorded u/s.132(4) of the Act and he admitted to have received money in cash which
was mentioned on the said documents. The Assessing Officer after receiving
information reopened the assessment u/s.147 of the Act on the basis of the aforesaid
documents and statement recorded and issued notice u/s.148 of the Act. The
assessee, thereafter, sought reasons for reopening of assessment. The Assessing
Officer supplied the information to the assessee and also issued questionnaire vide
letter dated 13.12.2013 seeking information from the assessee on the basis of the
documents seized and asked the assessee to clarify the total investment in the shop
No. 5 and 10 at Prestige Site and also source of the said amount. Clarification was
also sought in respect of the cheque payment of Rs.46,00,000/- and cash payment of
Rs.35,00,000/-. In response to the query raised, the assessee gave information vide
letter dated 27.12.2013 about bank account extract, copy of agreement to purchase
9 ITA No.2172/PUN/2016 A.Y.2009-10
the property and copies of Balance Sheet as on 31.03.2008 and 31.03.2009. The
assessee sought information about documents seized from M/s. Pinnacle
Construction. The copy of the said letter is placed at 124 & 125 of the paper book.
The assessee, undisputedly, asked for copies of relevant alleged incriminating
documents seized from M/s. Pinnacle Construction and also opportunity to cross
examine Shri Gajendra D. Pawar. The Assessing Officer, thus, handed over the
copies of seized documents and copy of statement recorded. All these documents
are placed at page 111 to 119 of the paper book and copy of statement of Shri
Gajendra D. Pawar is placed at page 120 to 122 of the paper book.
A perusal of the first document at page 117 of the paper book reveals it to be
a Party No. PO-I, Annex-A, Loose paper bundle No. 23 wherein at the top of the
page, it is written Kamthe = 35.00 Lac, Cheque = 15.00 Lac and agreement = 46.00
Lac. The details of the cheques are also provided and area of two shops and
bifurcation of consideration are also mentioned. The said document is scanned and
available at page 10 of the appellate order. The next page i.e. page No. 118, i.e.
party No. PO-I, Annexure A, Loose paper bundle No. 23 which talks about the total
costs of 81,00,000/- with bifurcation (I) =46,00,000/- & (II) =35,00,000/-. The
Assessing Officer has referred to the said documents and had come to the
conclusion that the word (II) means the unaccounted money in the common parlance
in the market. There were also other details of cheque payments of Rs.30,00,000/-
for shop No. 5 and Rs.16,00,000/- for shop No. 10 on the said document. The next
page i.e. page No. 119 of the paper book reveals it to be a Party No. I, Annexure A,
Loose paper Bundle No. 23 which talks about the account statement of Kamthe,
Shop No.5, 10, Prestige site. The said document is scanned and reproduced by the
CIT(A) at page 11 of the appellate order. The first entry is in respect of cost of shop
No. 5 which reveals the consideration of Rs.30,00,000/-as per agreement and then it
talks of cost of shop No.10 wherein consideration as per agreement is
10 ITA No.2172/PUN/2016 A.Y.2009-10
Rs.16,00,000/-. It also reveals the bifurcation of amount and details of cheque
payments totaling Rs.36,00,000/-. The said document then talks about the agreement
cost of Rs.46,00,000/- and cheque received amount of Rs.36,00,000/- as on
31.08.2010 and the balance amount of Rs.10,00,000/-.On the right side, there are
entries on various dates and cash received of Rs.35,00,001/-. In the said document,
there are two types of entries i.e. cheque amount and cash amount. The CIT(A)
during appellate proceedings has made bifurcation of the amount paid in cheque of
Rs.36,00,000/- which was made through the bank account of the assessee. The
details are tabulated at page 12 of the appellate order. In view of the payments made
by the assessee through her bank account are ample corroborative evidence about
the genuineness of incriminating documents found and seized from the third party. It
is not disputed and not being challenged that the assessee has not made aforesaid
investment in shop No.5 and 10 along with her husband. The assessee herself has
admitted to the cheque payments reflected in those documents. However, the
assessee challenges the cash payment of Rs.35,00,000/- Where in the documents
seized and found, part of the entries relates to the assessee i.e. entries of the cheque
payments then presumption is to be drawn that the entries about the cash payments
also relates to the assessee. The seized document is to be read as whole and it
cannot be presumed or accepted that only cheque entries relates to the assessee
and not the cash entries.
Another corroborative evidence of cash payment is the statement of Shri
Gajendra D. Pawar. He was confronted with the statement of the account and he
confirmed that he had received on money from certain buyers in the projects namely
Pinnacle Prestige, Pinnacle Kalpataru and Pinnacle Brookside. He admitted that the
on money received for the current financial year in the case of M/s. Pinnacle
Construction amounting to Rs.3,17,95,000/- and in the case of M/s. Pinnacle
Constro and Ecohomes Pvt. Ltd. amounting to Rs.3,52,48,500/-. The veracity and
11 ITA No.2172/PUN/2016 A.Y.2009-10
authenticity of the seized documents stands proved in view of the assessee’s having
shown investment in the said project through cheques. It cannot be said that no
evidence had been found against assessee especially in a case where evidence of
cheque payments and cash payment were available on some of the documents
which were seized from the person from whom the assessee had purchased the
property, whose statement was recorded and when confronted, he admitted to have
received on money. The onus is upon the assessee to prove its case. The Assessee
has failed to discharge the onus. Admittedly, the assessee cannot prove the negative
but in the case of assessee evidence had been found wherein both, the cheque
payments and cash payment are reflected. In view of the said evidence being
available, the onus was upon the assessee to prove its case but the assessee has
failed to discharge her onus.
Another point which may be kept in mind is that when confronted with the said
documents seized and copy of statement recorded, the assessee had not furnished
any explanation or evidence to show that they did not invest in the said property. The
statement of the assessee was also recorded and assessee was being confronted
with all the information/documents. However, the assessee failed to respond or
answer any queries. The plea of the Ld. AR for the assessee is that there was no
cross examination allowed and the same fatalled the assessment proceedings. There
is no merit in the plea of the assessee since the cross examination was sought before
the copies of statements were supplied to the assessee or incriminating documents
were handed over. After supplying the same to the assessee, she never sought for
cross examination; hence, assessee had failed to discharge her onus. In such
circumstances, it cannot be held that non-providing of cross examination had fatalled
the assessment proceedings.
12 ITA No.2172/PUN/2016 A.Y.2009-10
In view of the entirety of the facts, documents seized and statement recorded
of the Gajendra D. Pawar as well as the assessee itself and assessee having not
discharged her onus, there is no merit in the claim of the assessee and hence,
addition of Rs.28,80,150/- merits to be upheld in the hands of the assessee.
Before parting, it is pertinent to deal with the case laws cited by the Ld. AR for
the assessee. In the case of CIT Vs. Salek Chand Agarwal (supra.), wherein the
entry was made in books of account of third party searched; there was no material
which could link said advance/deposit to assessee, addition on account of such credit
entries was held to be not justified. However, in the facts of the present case, the
entry was made in the seized document in which both, cash amount and cheque
amount were written and it cannot said that there was no other material found which
could not link it with the entry of the assessee. Hence, the ratio laid down in the case
of CIT Vs. Salek Chand Agarwal (supra.), is not applicable.
In the case of Pradeep Amrutlal Runwal Vs. Tax Recovery Officer (supra.)
wherein some loose papers were seized, wherein certain amounts were written
against the name of assessee. The Tribunal held that since no evidence was found
relating to existence of any transaction between the assessee and third party, no
corroborative evidence was found to suggest that the assessee had actually received
the said amount; no addition could be made merely on basis of noting in loose papers
found during search action.
However, in the case of the assessee, there is existence of transaction
between the assessee and the person/ builder from whom incriminating documents
were found. The said evidences are correlative as cheque payments which the
assessee admitted to have paid and along with cheque payment entries, there were
also cash entries which relates to the assessee. Thus, addition was made in the
13 ITA No.2172/PUN/2016 A.Y.2009-10
hands of the assessee. Hence, the decision of the Tribunal in the case of Pradeep
Amrutlal Runwal Vs. Tax Recovery Officer (supra.), is not applicable.
In the case of Straptex (India) (P) Ltd. Vs. DCIT (supra.), held whether
presumption under section 132(4A) is only against person in whose possession
document is found and not against any other person, is correct. It has been further
held presumption u/s.132(4A) is a rebuttable presumption and not conclusive and
cannot be applied in absence of corroborative evidence. In the case of the assessee,
corroborative evidence was found; hence, decision of Mumbai Bench of the Tribunal
(supra.) is not relatable to the facts of the present case.
The Ld. AR for the assessee relied on the ratio laid down by the Hon'ble Bombay
High Court in the case of Addl. CIT Vs. Miss Lata Mangeshkar (supra.) wherein
statements of two persons were recorded that they have paid money in ‘black’ to
assessee, as well as entries in books belongs to them regarding alleged payments. It
was held that mere entries in accounts regarding payments to assessee were not
sufficient to prove that the assessee had received money in ‘black’, for which she did
not issue a receipt. However, in the facts of the present case, the entry was made in
the seized document in which both, cash amount and cheque amounts were written
and cheque amounts were not disputed by the assessee. It is an established rule that
seized document is to be read as a whole. In such circumstances, there is no merit in
the claim of the assessee and the same is rejected. Thus, upholding the order of
CIT(A), ground of appeal No. 2, 3 and 4 raised by assessee are dismissed.
Now coming to the additional plea raised by way of ground of appeal No. 5
and 6 are without prejudice basis, which relates to the investment and the assessee
explained the source of investment. No such plea was raised before the Assessing
Officer and CIT(A) and assessee now raises such new plea before the Tribunal. In
14 ITA No.2172/PUN/2016 A.Y.2009-10
the present case, assessee claims to have made investment out of her withdrawals and out of her agricultural income. However, the assessee has not declared any agricultural income in her return of income nor has shown the source of cash withdrawals, hence, the plea of the assessee on merit does not stand and, hence, the ground of appeal No. 5 and 6 are dismissed.
In the result, appeal of the assessee is dismissed.
Order pronounced on 26th day of October, 2018.
Sd/- (SUSHMA CHOWLA) �या�यक सद�य/JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 26th October, 2018. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-4, Pune. 4. The Pr. CIT-3, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, 5. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.