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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M.
These appeals are preferred by Shri Navneet Jhamb, appellant assessee, for the Assessment Year 2000-01, 2001-02, 2002-03, 2003- 04, and 2006-07. They were heard together and as issue involves the grounds of determination of the income of the assessee based on the documents found during the course of search, those are disposed of by this common order for all the Assessment Years. Assessment Year 1609/Del/2011 AY 2000-01 2. We first come to the appeal of the assessee in for the Assessment Year 2000-01 filed against the order of the ld CIT (A), Ludhiana dated 28.11.2011. 3. The assessee has raised the following grounds of appeal 1609/Del/2011 for Assessment Year 2000-01:- Page | 1 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153 A/143(3) and that too without assuming jurisdiction as per law.
2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153A/143(3) without assuming jurisdiction as per law and without recording requisite satisfaction as per law and without obtaining requisite approval as per law and without complying with the other mandatory conditions envisaged under the Act and has erred in not computing the alleged income in terms of the provisions of section 153 A.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs.2544305/- as undisclosed income allegedly being profit on sale of plots merely on the basis of surmises and conjectures and without any evidence or basis.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the assessment in violation of principles of natural justice in as much as passing the impugned order by recording incorrect facts and findings and without providing opportunity of cross examination and without confronting the entire adverse material used against the assessee and without providing adequate opportunity of hearing.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not granting the benefit of telescoping while confirming the addition made by Ld. AO.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in charging interest u/s 234A, 234B and 234C of the Income Tax Act, 1961.”
4. Brief fact of the case is that the assessee is an individual. Search and seizure operation was conducted at the residential premises address of the assessee on 04.08.2005. The assessee is a partner in a real estate broker concern namely M/s. Reliance Estate Agency along with Shri S.D. Kathuria. During the course of search, certain loose papers were found and seized from residential premises of the assessee. Consequent to that notice u/s 153A was issued on 08.05.2006. Page | 2 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Assessee filed the return of income on 16.06.2006 showing income of Rs. 216650/-. The assessment u/s 153A read with section 43(3) of the Act was passed on 24.12.2007 determining the total income of the assessee at Rs. 2760955/-. The only addition made in the hands of the assessee is with respect to undisclosed income at Rs. 2544305/- of commission received and not disclosed in the regular books of accounts of the assessee. The ld AO made the above addition vide para No. 4 of his order as under:- “4. Undisclosed profit on sale of Indl. Plot No.42 Sector-6, Faridabad 4.1 During the course of search, document detailed seized from the residential premises of the assessee during search conducted on 04.08.05. An examination of pages 50 to 54 of A-l was made. It is seen that these documents pertain to plot no.
Sector-6, Faridabad. Page 53 is a MOU containing terms of understanding between seller and buyer. As per clause 1, the seller will execute sale deed for an area 3750 sq. yds out of 10083 sq. yds to the purchaser. Page 50- 52 contains calculations relating to profit from sale of this plot. This has been shown below- Selling Price 1,68,38,610 1,68,38,610' C.P. 1.12,50.000 1,12,50,000 5588610 5588610 2794305 (-) 500000 50,88,610 25,44,305 Amount to be paid by Ash: 1,12,50,000 5,00,000 2544305 14294305 13370000(-) Bal 924305 The above calculations show that the selling price of plot was Rs. 1,6838,610/-. The cost price was Rs. 1,12,50,000. The difference is profit of Rs. 55,88610/- Out of this a sum of Rs. 5,00,000 has been deducted leaving a balance is Rs. 50,88,610/-. Below this the half share of this amount i.e. 25,44,305/- has been calculated. The cost plus Rs. 5,00,000/- plus the half share of profit has been added to get amount to be paid by Ash 27,94,305 i.e. Rs. 1,42,94,305/- An amount of Rs.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) 1,33,70,000/- has been deducted from this to get balance to be paid by Ash. Thus, it means that an amount of Rs. 1,33,70,000 has been paid by Ash whose break up is also written on this page. This is shown below- Paid 60.00 upto 21/6/00 Chqe 38.00 12/11/02 10.00 21/22/1/03 3.00 1,11.00 1-9-01 0.375 N.J. 10.00 Lab 0.100 0.100 0.500 0.360 I tax etc 0.080 1,36,15,000 (-) 0.245 133.70.000/- It can be seen from the above break up that an amount of „38.00‟, which would actually be abbreviated form of Rs. 38,00,000 (as the total of all amounts is Rs. 1,36,15,000) has been paid by cheque. 4.3 Enquiries were made with the present owner of plot no. 42, Sector-6, Faridabad. It was found that the plot is owned by M/s Avon Tubetec Pvt. Ltd, which is a company assessed at Delhi. The Director of the company who signed the sale deed on behalf of company is Ashwani Mahajan. Two sale deeds were executed for the sale of a total area of 10083.33 sq. yds for a sale consideration of Rs. 38,00,000. The details as per sale deed are shown below- Table 1 : Details of sale of plot no. 42, sector-6, Faridabad Property Name of Name of Date of sale Sale Stamp duty sold seller Buyer deed consideration Navneet Jhamb Vs ACIT ITA No. 1609, 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) One half M/s Gallant M/s Avon 29th 1900000 294500 Of Engineering Tubetec Pvt March industrial Enterprises Ltd through 2000 Plot no. Pvt Ltd Its Director 42, Sector- 6 through its Sh. Ashwani measuring MD Sh. Mahajan 10083.33 Sudhir Kumar sq yds Bahl 21st One half M/s Gallant M/s Avon June 1900000 294500 Of industrial Engineering Tubetec 2000 plot no. 42, Enterprises Pvt Ltd Sector- 6 Pvt Ltd through measuring through its its Director 10083.33 MD Sh. Sh. Ashwani sq yds Sudhir Kumar Mahajan Bahl As per the submission of Sh. Ashwani Mahajan the above property was purchased by him through Sh. Navneet Jhamb of M/s Reliance Estate Agency. 4.4 From the above facts it can be seen that „the Amounts to be paid by Ash' actually means amount to be paid by Ashwani Mahajan. This is further corroborated by the fact that cheque amount of 38.00 (to be read as Rs. 38,00,000/-) mentioned on 52/A1, as discussed above exactly matches with the amount paid as per registered sale deed. It means that Ashwani Mahajan has paid some amount over and above the registered sale deed. It is obvious that the total deal was struck at Rs. 1,68,38,610/- out of‟ which Rs.38,00,000/- was paid by cheque and the remaining in cash. From the calculations, it is also clear that 50% of the profit of Rs. 50,88,610/- has-been shared with the seller. Thus Rs.25,44,305/- has been paid to Sh. Navneet Jhamb and the remaining to seller. Thus the amount of Rs. 1,42,94,305 has been paid to SE. Sudhir Kumar Bahl (the seller) by Sh. Ashwani Mahajan and an amount of Rs. 25,44,305 has been paid to Sh. Navneet Jhmb as his share of profit. Thus an amount of Rs.25,44,305/- has been paid to Sh. Navneet Jamb as his share of profit account of sale of plot NO. 42, Sector 6, Faridabad which has been registered on 29.03.00. 4.5 During the course of assessment proceedings for the assessment year 2000-01, the assessee was asked to furnish various details including explanation/detail in respect of documents seized /impounded from the residence of the assessee, residence of Shri S.D.Kathuria, business premises of M/s Reliance Estate Agency during search/survey on 04.08.2005. Vide questionnaire dated 11.05.2007, note sheet entries dated 02.09.2007, 20.09.2007, 26.09.2007, 05.10.2007. No complete Page | 5 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) details/explanation in respect of above documents were filed. The assessee has filed part reply vide letter dated 13.09.2007, 20.09.2007 & 12.10.2007. The assessee was again asked to furnish complete details/explanation in respect of documents Seized impounded during the search/survey operation on 04.08.2005. He was further asked to give reasons as to why the transactions recorded on the above seized/impounded documents should not be treated as unexplained and be added as undisclosed income for the relevant year vide letter dated 15.10.2007. Again the assessee has not furnish any details and requested for adjournment. Case adjourned to 24.10.2007. No details/explanation in respect of above documents has been filed till 08.11.2007. However, on 15.11.07 the assessee submitted as under (in 2006-07) The assessee has gone through these documents and the same do not belong to the assessee. It is respectfully submitted that these documents seem to have come into existence in the ordinary course of business of property.... Page 53, 54 & 55 some transaction to be got done of sale and purchase of assessee as dealer to property No 42 of Sector 6 Faridabad between the buyer and seller. It is quite evident from the documents itself that assessee is never a partner or sharing profit. In fact this property is disputed property And since the dispute has not yet been finalized hence assessee has received no commission from the buyer. The submission of the assessee has duly been considered. But a perusal of the pages 50 to 55 of A-1 give a detailed account of the transaction with a break-up of cheque amounts received and cash amount paid by Sh Ashwani Mahajan to Sh S.K Bahl as also Sh Navneet Jhamb. In fact the deed has been registered on 29.03.00 itself. Once deal has been finalized there is no question of deferment of payment of commission. As per practice, commission is paid on the date of the registration itself. The assessee‟s plea therefore has no locus standi. In fact a perusal of the documents very clearly state that Rs 60.00 lacs has been paid till 21.06.2000. As the registration has been affected on 29.03.00 I believe it would be appropriate to make the entire addition in the A.Y 2000-01 itself. As this amount has not been reflected in the books of the assessee or in his return for the A.Y 2000-01 or even any subsequent year, I am satisfied that the amount of Rs 25,44,305/- is undisclosed income on account of commission received not disclosed in the regular books or return of income. Accordingly, I make an addition on this account for the A.Y 2000-01. I am also satisfied that this is tantamount to Page | 6 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) concealment of particulars of income on behalf of the assessee. I therefore, initiate a penalty u/s 271(1 )(c) for concealment of particulars of the said income.”
The assessee aggrieved with the order of the ld AO preferred an appeal before the ld CIT(A). The addition was challenged vide ground No. 4 of the appeal. The ld CIT(A) dealt with the issue vide para No. 5 of his order as under:- “5. Ground No. 4 is as under: "That having regard to the facts and circumstances of the case Ld. A.O. has erred in law and on facts in making addition of Rs. 25,44,305/- allegedly on account of commission earned merely on the basis of surmises and conjectures and without any evidence or basis and without affording adequate opportunity of hearing." 5.1 In support of this ground of appeal, the learned AR vide his written submissions has submitted as under: 'GROUND NO. 4: Ld. A.O. has made addition of Rs. 2544305/- on account of alleged commission earned by the appellant in 'respect of sale of Plot No. 42, Sector 6, Faridabad. The addition has been made by Ld. AO on the basis of page 50 to 54 of Annexure A-l on the ground that plot No. 42, Sector-6, Faridabad was sold to Mr. Ashwani Mahajan by M/s Gallant Engineering Enterprises(P)Ltd. through its MD Shri Sudhir Kumar Bahal and the total profit of Rs. 5088610/- was earned which has been paid/shared half to the appellant I.e. Shri Navneet Jhamb to the extent of Rs. 2544305/-. Copies of page 50-55 of Annexure-Al seized from the residential premises of the assessee is enclosed in the paper book and your good self would kindly see from the bare perusal of these documents that they do not bear any authentication or signature of anybody including that of the assessee. There is no corroborative evidence to support the suspicion of Ld. A.O. about any profit/commission and that too earned by the appellant and that too in the year under appeal. Your good self would kindly see from these documents that Page 55 of this document would show that it was dated 24.12.97, does not bear even the name of the assessee, and is Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) beyond the period covered by section 153A i.e. 6 years preceding the date of search on 4.8.2005. Page 54 of these document would show that it is MOU between the seller and the buyer and appellant is neither the seller nor the buyer as your good self would kindly see i.e. seller is M/s 'Gallant Engineering Enterprises (P) Ltd. and the buyer is M/s. Avon Tubetec (P) Ltd. Rather page 54 of this document would show that this is also dated 24.12.97 i.e. beyond the period covered u/s 153A as the date of search is 04.08.2005. Page 53 is the copy of page 54 and is also dated 24.12.97 and as submitted above, it does not have the name of the assessee. Page 51-52 of this document contain some calculations and how Ld. A.O. could arrive at a conclusion so as to make an addition in the hands of the assessee and that too of Rs. 2544000/- and that too in the year under appeal is not known. A bare perusal of page 50-52 of this very document would show that there are some calculations which do not bear the name of the assessee nor does it say that any profit was earned by the assessee. Rather your good self would kindly see from page 50 that there are certain dates, which do not fall within the year under appeal. Your good self would also kindly see that even if it is assumed though denied vehemently that some profit was earned but how could that profit be said to have been earned and realized by the assessee and that too in the year under appeal is bereft of any evidence, logic and rationale whatsoever. Thus the seized material as referred by Ld. A.O. i.e. page 50-55 of Annexure-Al does not establish at all that any profit was earned and that too by the assessee and more so in the year under appeal and thus addition made by Ld. A.O. cannot be sustained under any circumstances. It is relevant to submit as was submitted to Ld. A.O. too during the course of assessment proceedings of the appellant and that of the firm namely M/s Reliance Estate Agency that assessee is in the business of real estate Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) commission agency as partner of M/s Reliance Estate Agency. Your good self would kindly appreciate that in this kind of business, number of persons meet the assessee with different facts and figures, calculations are made, tentative profit or losses are worked out and various permutation and combination are thrown as suggestions by/ to the person engaged in such kind of business. Therefore, to ascribe any income on the basis of such jottings in the hands of the assessee cannot be justified. Moreover, it is matter of common knowledge that a commission agent receives the commission and is not concerned with the profit or loss which belongs to the owner of the property. As per the admitted facts, the owner of impugned Plot no. 42, Sector-6, Faridabad is in the name of M/s Gallant Engg. Electrical (P) Ltd. and therefore any profit if at all is there, though denied, cannot be treated to have been earned and realized by the appellant and added in the hands of the assessee. Your good self would also kindly see from page 4 of the assessment order on which table 1 has been made by Ld. A.O. to show as to who was the seller, who was the buyer and what was the date of sale deed and your good self would kindly see from this table that a portion of the subject property was transacted in the previous year relevant to A.Y. 2001-02 and therefore by any stretch of interpretation, no income can be brought to tax in the hands of any person including the assessee in A.Y.2000-01 under any circumstances. This is an attempt on the apart of the appellant to show that viewed from any angle, the addition made by Ld. A.O is not sustainable and may not amount to any admission whatsoever. It is also a matter of common knowledge that on a property which has been transacted, according to Ld. A.O., at Rs. 1.68 crores, commission cannot be 25.44 lacs as held by Ld. A.O. Rather page 55 of this document would also show that the commission at the figure of "3.60" which apparently belies the claim of Ld. AO. This is being shown as an attempt to highlight as to how and to what an extent, Ld. A.O. could be arbitrary and unrealistic qua the assessee making the impugned addition by misreading and mis-appreciating the evidences.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Ld. A.O. has not brought any material or evidence on record either on the basis of the documents referred or on the basis of any other enquiry to establish that there was profit of "Rs.50.88 lacs" which was allegedly shared equally between the seller and the appellant as alleged by Ld. A.O. The addition has been made merely on the basis of unrestricted flight of the imagination of Ld. A.O. and is based on surmises and conjectures. Therefore the addition made may please be deleted. Reliance is placed on the decision of Hon'ble Delhi Bench of the Income Tax Appellate Tribunal in the case of ACIT Vs. D.K. Gupta ITSS No. 133/2005 vide order dated 18.01.2008 in which Hon'ble Tribunal has relied upon the decision of Hon'ble Delhi High Court in the case of Girish Chaudhary 163 Taxman 608 to hold that no addition can be made on the basis of dumb document when the A.O. does not have any material to show as to on what basis he reached conclusion that the figures noted in the dumb document was income of the assessee. Income from undisclosed sources — Addition — Jottings on loose paper found during search operation — Additions based on jottings on paper could not be sustained in the absence of any corroborative material or evidence on record for rejecting the assessee's contention that jotting was an estimate and not actually expended amount — ADDL. CIT VS. PR 4 SANTAHL UWALIA 92 TTJ 464 (CTK). Computation of undisclosed income—No addition can be made on the basis of a dumb document in the absence of any corroborative material -N.KMALHAN VS. DY.CIT 91 TTJ 938 (DEL 'C'). Burden is on the revenue to establish that figures appearing in the loose papers found in search constituted undisclosed income of the assessee and taxable. Monga Metals (P) Ltd. Vs. ACIT 67 TTJ 247 (All) Since the loose papers did not indicate name of assessee, from list of persons given in loose papers it could not be inferred that either any loan or any advance was given to or received from those persons, and since total amount on those loose sheets indicated a very small amount, those loose papers alone would have to be considered as dumb papers having no evidentiary value and no addition could be sustained on the basis of them.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Chander Mohan Mehta Vs. ACIT 71 ITD 245 (Pune): 65 TTJ 327 Addition cannot be made for investment in diamond jewellery on the basis of papers seized when no such diamond jewellery was found. Jaya S.Shetty Vs. ACIT 69 ITD 336 (Mum) Chit of paper neither a document nor a book of account, addition, therefore, could not be sustained. Atul Kumar Jam Vs. DCIT 64 TTJ 786 (Del): 14 DTC 681 Documents seized during search not being clear as to whether items were payments or receipts or some other calculation, so no addition could be made on the basis of such a dumb documents. Jagdamba Rice Mills Vs. ACIT 67 TTJ 838 (Chd.) The word "Document" u/s 32 of the Indian Evidence Act, 1872 means any matter written expressed or described upon substance by means of letters, figures etc. intended to be used for recording that matter. Therefore, if the piece of paper seized during search is considered in light of the definition of the word "document" as given in the Indian Evidence Act and General Clauses Act it is found that the said paper contains jottings of certain figures but the same does not describe or express the substance of any transaction and even if the said paper has been seized from the possession of the assessee, the contents thereof are not capable of describing the transactions the way A.O. has deciphered them. Atul Kumar Jam Vs. DCIT 64 TTJ 786 (Del): 14 DTC 681 In the absence of concrete / positive / cogent evidence against the assessee, no addition can be made in block assessment. Ramakant Umashankar Khetan Vs.ACIT 66 TTJ 378 (Nag): 107 Taxman 44 David Dawan Vs. ACIT 71 ITD 1 (Mum) : 66 TTJ 188 S.K. Gupta Vs. DCIT 63 TTJ 532 (Del) Harakchand N.Jain Vs. ACIT 61 TTJ 223 (Mum): 101 Taxman 324 R. Ramanathan Vs. ACIT 65 ITD 108 (Mad) Page | 11 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Parakh Foods Ltd. Vs. DCIT 64 ITD 396 (Pune) 63 TTJ 532(Del)/ 63 ITD 153(Mum). 5.2 In this case written submissions of the AR were sent to AO for his report. AO submitted his report vide his common letter No. ACIT/CC-I/FBD/08-09/1079 dated 28-01-2009 for AYs 2000- 01 to 2006-07 copy of which is enclosed with this order. 5.3 Copy of above report was given to the assessee for his rejoinder. Assessee made his submissions for AYs 2000-01 to 2006-07 vide common letter dated 21-8-2009 copy of the same is enclosed with this order. AR further vide his letter dated 26- 03-2010 stated that commission of Rs. 39,900/- has been earned by M/s Reliance Estate Agency on the sale of plot No. 42 which was sold to Mr. Ashwani Mahajan by M/s Gallant Engg. Enterprises (P) Ltd and the assessee firm was acting merely as an agent on behalf of the seller. 5.4 I have considered the submissions of the AR. In this case during the course of search operation documents as per annexure A-l were seized from the residential premises of the assessee on 04-08-2005. Page No. 50 to 54 of A-1 pertain to plot No. 42, Sector-6, Faridabad. Page 53 is a MOU containing terms of understanding between seller and buyer. As per clause I seller will execute sale deed for an area of 3750 sq yards out of 10083 sq yards to the purchaser. AO noted that pages 50-52 contain calculations relating to profit from sale of above plot as under: Selling Price 1,68,38,610/- 1,68,38,610/- 1.12.50.000 C.P. 1,12,50,000 5588610 5588610 27.94.305 (-)500000 25.44.305 Amount to be paid by Ash: 1,12,50,000 5,00,000 25,44,305 1,42,94,305 1,33,70,000 Bal. 9,24,305 On the basis of above document AO concluded that profit of Rs. 50,88,610/- has been earned on the sale of above plot and 50% share of the assessee comes to Rs. 25,44,305/- which has been paid to the assessee and remaining to the seller. In view the Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) above, AO has made addition of Rs. 25,44,305/-. AR however contended that there is no corroborative evidence to support the suspicion of the AO about any profit/commission earned by the appellant in the year under appeal. According to AR page 55 of annexure A-l is dated 24-12-1997 and does not bear the name of the assessee and is beyond the period of 6 years preceding the date of search and therefore, is not covered by the section 153A of the Act. Further page 55 is a MOU between the seller and buyer and the appellant is neither the seller nor the buyer. AR has also submitted that assessee is in the business of real estate commission agency as partner of M/s Reliance Estate Agency in which number of persons meets the assessee with different facts and figures, calculations are made tentative profit or losses are worked out. Therefore, to ascribe any income on the basis of such jottings in the hands of assessee cannot be justified. AR has also submitted that M/s Gallant Engg. Electrical (P)Ltd is the owner of plot 42, sector 6 Faridabad and therefore, if at all there is any profit, same cannot be treated to have been earned and realized by the assessee. Moreover, the subject property was transacted in the previous year relevant to AY 2001-02 and therefore, no income can be brought to tax in the hands of any person including the assessee in Assessment Year 2000-01. AR also stated no addition can be made on the basis of dumb document. In view of the above AR contended that addition may be deleted. However, AR's contentions are not acceptable. Page No. 54 as stated by the AR is an MOU which no doubt is dated 24-12-1997. But the figures as noted on page 50 to 52 as also noted in para 4.1 of the asstt order and also above in this order contain meticulous details of property sold. This document clearly mentions the selling price, CP (cost price), amount to be paid by Ash [Ashwani Mahajan Director of M/s Avon Tubetec (P) Ltd.]. Two sale deeds were executed for sale of total area of 10083.33 sq yrds for sale consideration of 38 lacs as noted on page 4 of asstt order. These documents also show the amount paid as noted on page 2 and 3 of asstt order. From the facts discussed above and also in the ast order it is established that transaction of sale of plot has actually taken place. Though in the course of asstt proceedings after having been given repeated opportunities assessee submitted that these document do not belong to him and same seem to have come into existence in the ordinary course of business of property, however, no authenticated evidence to prove the above contention was filed even though the above documents in question revealed very precise and meticulous details of sale of plot which contained not only the Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) selling price, cost price, but also the amounts paid on different dates. Above documents, therefore, cannot be called dumb documents. The phrase paid 60.00 up to 21/6/00 noted on page 52 proves beyond doubt that various transactions noted on above documents have actually taken place in respect of which amount of Rs. 60 lacs has been paid up to 21-6-2000. As noted by the AO pages 50-55 of A-l give detailed account of transaction with break-up of cheque amounts received and cash mount paid by Sh. Ashwani Mahajan to Sh. S.K. Bahal as also Sh. Navneet Jhamb. In view of above discussion, various contentions the AR are not acceptable hence rejected and it is held that profit of Rs. 50,88,610/- has been earned on the sale of above plot which has been shared by Sh. Navneet Jhamb and the other seller in the ratio of 50% each. The assessee's share comes to 25,44,305/-. As far as AR's contention that these documents contain the date which do not fall in the period relevant to 2000-01 and therefore, addition cannot be made in the current asstt year, same is not acceptable for the reason that as noted in the asstt order deed has been registered on 29.03.2000 and once a deal has been finalized there is no question of deferment of payment of commission. In view of the discussion made above and also for the reasons discussed in the asstt order and AO's report dated 28-01-2009 enclosed with this order, various contentions of AR are rejected and the addition of Rs. 25,44,305/- is upheld. This ground of appeal is dismissed.” 6. assessee aggrieved with the order of the ld CIT (A) has preferred an appeal before us.
7. The ld AR contested ground No. 3 of the appeal wherein the action of the ld CIT(A) in confirming the order of the ld AO in making the addition of Rs. 2544305/- on account of commission earned is challenged. The ld AR submitted that the ld AO has made an addition of Rs. 2544305/- because of alleged commission received by the assessee in respect of sale of plot No. 42, Sector 6, Faridabad. On the basis of Page 50 to 54 of Annexure-A1 on the ground that above plot was sold to Mr. Ashwani Mahajan, by M/s. Gallant Engineering Enterprises (P) Ltd through its MD, Shri Sudhir Kumar Bahal and the total profit of Rs. 5088610/- was earned and half of that is share of the appellant amounting to Rs. 2544305/-. He submitted that the addition made based on Page 50 to 55 annexure A1 do not bear any Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) authentication or signature of any persons. He further stated there are no corroborative evidence found during the course of search about the income earned by the assessee. He further stated that page 55-dated 24.12.1997 does not bear the name of the assessee and further it is covered 6 years preceding the date of search i.e. 04.08.2005. He further submitted that Page 54 of seized papers is merely an MOU between buyer and seller and appellant is neither the seller nor the buyer. He further stated that page 54 even otherwise is beyond the period covered u/s 153A of the Act. He further stated that in none of the pages the name of the assessee appears. Even otherwise, he submitted that there is no reason before the ld AO to say that the income is earned by the assessee in this year. He further stated that as the assessee is engaged in the business of commission agent, he meets many persons during the day and many persons come with different facts and figures. He submitted that many permutation and combination of profit are computed hypothetically to take business decision. Therefore, the presumption of any income based on such papers is not proper. He further held that plots are owned by M/s. Gallant Engineering Electrical P Ltd and therefore, any profit to be attributed shall be attributed to that party. He further referred to the decision of the coordinate bench in ITA NO. 3817/Del/2010 for Assessment Year 2001-02 wherein, the search was also conducted on Manav Rachna Group on 04.08.2005 along with the assessee wherein, the seized paper suggested that plot No. 42, Sector 6, Faridabad which was purchased by Ashwani Mahajan and sold by Avon Tubetec P Ltd for Rs. 1.68 crores. Based on above document the addition of Rs. 1.30 crores was made in the hands of that company. He submitted that the coordinate bench deleted the above addition. He specifically referred to the para 6 of the order dated 20.07.2012 he submitted that in that particular case the assessment was reopened by issue of notice u/s 147 of the Act and additions were made. He therefore, held that when Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) the additions has been deleted of the unaccounted sale price in the hands of the seller there is no reason that addition can be made in the hands of the commission agent. He further referred to the order of the ld CIT (A) stating that two-sale deeds were executed for the sale consideration of Rs. 38 lacs. He submitted that out of that Rs. 60 lacs are allegedly paid on 21.06.2000 which does not fall even otherwise in the impugned assessment order. He further stated that all these documents, which was seized showing the transaction of the immovable properties, are not conclusive proof of on money transaction and therefore no addition can be made u/s 69 of the Act based on those documents. He relied upon the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Prem Prakash Nagpal. He further referred to the statement of Shri Navneet Jhamb recorded on the date of search u/s 132(4) of the Act. He referred to question No. 13 and 14 of the statement wherein, it has been stated that the assessee is a mere broker. He further referred to the remand report dated 28.01.2009 also. His main contentions were that the documents seized do not show any profit resulted to the assessee. Another contention was that there is no presumption available to the revenue u/s 292C of the Act that those documents represent the income of the assessee. He further stated that even if the assessee does not give any reply it does not give any authority to the revenue to assess the income of the assessee. He relied on the decision on 282 ITR 553.
8. The ld DR vehemently referred to the statement of the assessee wherein, the assessee has given no explanation to the documents found during the course of search. She therefore, submitted that in absence of that, ld AO has to taken a view with respect to those statements. She referred to question No. 13, 14 and 15 of the statement wherein, the assessee has submitted that he is not in a state of mind to reply to the particular document and further when he confirmed that the same are in the handwriting of the assessee. The ld Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) AR further referred to page 51 and 52 of the seized material wherein, the specific name of „NJ‟ is mentioned. She therefore, stated that „NJ‟ is none other than the assessee himself. She further stated that all those orders of the various coordinate benches and CIT (A) are referred to by the ld AR are with respect to the legality of the assessment proceedings. She submitted that one CIT (A) has also confirmed the addition. She further stated that the decision of Avon Tubetech relied upon by the ld AR does not apply to the facts of the case in view of the para 2.7 of the order. She submitted that in that particular case there was no independent enquiry, no supporting agreement, no receipts etc was found. He submitted that in the present case there are clear-cut indication in the documents itself which shows that the assessee has earned the income.
In rejoinder, the ld AR further submitted that (NJ) does not mean the name of the assessee. He further stated that the assessee has given a detailed explanation in the case of the assessee for Assessment Year 2006-07.
We have carefully considered the rival contentions and perused the orders of the lower authorities. Both the lower authorities have confirmed the addition of Rs. 2544305/- as the profit earned by the assessee based on the documents found during the course of search. The lower authorities have also given a detailed reason that assessee has failed to explain the contents of the documents and merely stated that they do not belong to him. a. The first contention of the ld Authorised Representative is that the loose papers found during the course of search does not belong to the assessee, does not contain the signature of the assessee and there are no corroborative evidence found during the course of search with respect to the income of the assessee. Undisputedly the above papers were found from the assessee and therefore, the presumption would be available to the Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) revenue that the documents are found in the possession or control of the assessee in the course of the search and therefore, they belong to the assessee and the contents of those papers are true. The Provisions of section 292C of the act goes against the assessee. Therefore, the above arguments of the assessee are rejected. b. Second dispute raised by the assessee is that there is no indication that this income is chargeable to tax in the current year. For this the ld Assessing Officer has given the reason that as sale deeds have been registered during the year, the profits have accrued to the assessee then in absence of any other contrary evidence. There is no reason to not to accept the finding of the lower authorities that the commission/ profit has also accrued to the assessee during this year only. Further assessee has failed to show that assessee has accounted this profit in any of the subsequent years. Therefore, it is apparent that profit in the seized documents is chargeable to tax in the current year only. c. The next argument was that there could not be any presumption of the income from the documents found during the course of search. We agree with the contention of the ld AR that provisions of section 292C of the Act do not give any such right of presuming income from the seized documents. However, to prove that there is no income involved in those seized documents, is to be proved by the assessee because, he is the owner of the documents. In the present case the document, itself shows that the assessee has earned income of Rs. 2544305/- during the year. The assessee also could not explain the documents seized before the lower authorities. The most of the transaction of the paper are dated transaction and the lower authorities have corroborated them with the actual registered Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) deeds between buyer and seller. The documents were not at all explained by the assessee otherwise by giving any concrete evidence. The seized documents show that there are transaction of sale of plots where in the profits have arisen. Name of the assessee is shown in those documents. Ld AO asked assessee to explain those documents but assessee took shelter under the legal arguments and never explained the documents. He also did not attempt to explain that how his name crops up in those documents and to whom this income belongs. Assessee could not show that income stated in the seized document is not of the assessee but of somebody else. In view of the overwhelmingly apparent contents of the documents seized, absence of any contrary evidences produced by the assessee, we incline to agree with the finding of the lower authorities who have held that income contents in the seized documents to the extent mentioned there in belongs to the assessee. d. The argument of the ld AR that the profit of the sale of the plot are even otherwise chargeable to tax in the hands of the seller and when assessee is not the seller or shown to be the 50% owner of the plot, such profit cannot be taxed in the hands of the assessee. Such argument deserves to be rejected looking at the transaction shown in the loose papers. It is possible in the real estate transaction that the profit is not always earned by the real estate owner. In the present case, it is undisputed that unaccounted money has been transacted on sale of the above- impugned plots. It is also clear that assessee has earned 50% profit of Rs. 2544305/-. Off course the documented consideration paid by the buyer is chargeable to tax in the hands of the seller only. However, the documents shows that there are on money transactions on the sale of the plots where the profits are shared by persons where assessee is one of them having 50 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) % share therein. These evidences coming out of the seized documents are not controverted by the assessee by producing strong evidences. Hence, this argument is rejected. e. The argument of the ld AR that assessee is merely a broker and therefore could not have earned such profits. This argument is not at all supported by any evidence. It is also possible that the broker will also earn profit, the moment he takes the risk and reward of the transactions. This is evident in the present case. On page No. 52 the name of the assessee appears in short form, which itself shows that assessee has taken the role of more than a broker in the above deal. Even otherwise, if the assessee is not able to show that assessee has not earned this sum, when the seized document says so, onus lies on the assessee to rebut the presumption arising out of the document found with stronger evidences. Firstly, the assessee should have explained those papers during the course of search itself. During the course of search, in the statements recorded by the revenue, he did not explain those papers. Even before the ld, Assessing Officer and first appellate authority, the assessee did not explain so. Even before us, the assessee did not try to explain the paper but contended on the legal and technical issue only. In fact, the assessee could have proved the contents of the paper wrong by firstly explaining the papers and nature of transactions contained therein with the income contained therein belonging to whom, it is not done by the assessee at any stage of the proceedings. He also did not attempt to produce the buyer and the seller both, as his witnesses, to show that no such profit has accrued to him and it has accrued to the seller. He could have also explained every entry of the seized documents, but he has not done so. In absence of any explanation or any attempt by the assessee to rebut the presumption available from the seized Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) documents, the revenue authorities are justified in making addition of Rs. 2544305/- in the hands of the assessee. f. With respect to the several decisions in the case of the seller, where the addition has been deleted, does not help the case of the assessee for the simple reason that those additions have been deleted only on the technical grounds and no such grounds has been raised by the assessee. g. The assessee has further relied upon the decision of the Hon'ble Delhi High Court in case of CIT Vs. Prem Prakash Nagpal 40 Taxmann.com 353. We have carefully perused the facts of that case. In that particular decision the ld AO could not bring a single a word regarding the nature of document and how he has concluded that those documents belong to the assessee and that on money transaction has taken place. In that case, the ld AO merely relied upon the reasons recorded without application of mind on his part. These facts are recorded in para No. 3 of the order of the Hon'ble High Court wherein, other decision has been relied upon. Further, in para No. 6.1 and 6.2 the facts stated in that decision does not apply to the present case before us. In this case the documents were found from the assessee, wherein, the name of the assessee is also mentioned in short form, assessee failed to explain the contents of the documents including the paper showing the transaction as well as the contents of the MOU. Hence, the reliance on those decisions by the ld AR is misplaced. In view of this, we reject the contention of the ld AR, uphold the orders of the lower authorities confirming the addition Rs. 2544305/- as undisclosed income of the assessee, and dismiss ground Nos. 1 to 3 of the appeal of the assessee.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) 11. Ground Nos. 4 and 5 are not agitated before us and therefore same are dismissed. 12. Further, ground No. 6 on charging on the interest is consequential in nature and therefore, it is dismissed. 13. Hence, ITA NO. 1609/Del/2011 for Assessment Year 2000-01 filed by the assessee is dismissed.
ITA 1608/Del/2011 Assessment Year 2001-02 14. This appeal is preferred by the assessee against the order of the ld CIT (A)-1, Ludhiana dated 28.01.2011 in the appeal preferred by the assessee against the order of the ld ACIT, Central Circle, Faridabad dated 24.12.2007 passed u/s 153A read with section 143(3) of the Income Tax Act, 1961 for Assessment Year 2001-02. 15. The assessee has raised the following grounds of appeal:- “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153 A/143(3) and that too without assuming jurisdiction as per law.
2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153A/143(3) without assuming jurisdiction as per law and without recording requisite satisfaction as per law and without obtaining requisite approval as per law and without complying with the other mandatory conditions envisaged under the Act and has erred in not computing the alleged income in terms of the provisions of section 153 A.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs.6,97,834/- as undisclosed income allegedly being profit on sale of plots merely on the basis of surmises and conjectures and without any evidence or basis.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the assessment in violation of principles of natural justice in as much as passing the impugned order by Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) recording incorrect facts and findings and without providing opportunity of cross examination and without confronting the entire adverse material used against the assessee and without providing adequate opportunity of hearing.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not granting the benefit of telescoping while confirming the addition made by Ld. AO.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in charging interest u/s 234A, 234B and 234C of the Income Tax Act, 1961.”
The only issue involved in this appeal is that the LD AO has estimated the profit of Rs. 697834/- out of the total profit of Rs. 10923399/- contained in seized documents is pertaining to this year. Therefore, against the income declared in the return of income of Rs. 426750/- the total income of Rs. 1124584/- was assessed.
The assessee has challenged the addition vide ground no 3. The other grounds of appeal
are not pressed. In view of this we dismiss ground no 1,2 & 4 to 6 of the appeal.
18. Adverting to Ground no 3, brief fact shows that during the course of search on 04.08.2005 certain documents were found as Annexure A1 and Annexure A2 from the residence of the assessee relating to the sale of plots at Faridabad. On enquiry of the Managing Director of the seller, that M/s. Reliance Estate Agency was appointed for publishing the advertisement and land was to be sold to one private limited company for Rs. 1.5 crore. It could not be. Subsequently, the above plot was sub-divided in to 16 industrial plots and same were sold to different persons. The total sale amount was Rs. 1, 30,01,500/- as per the sale deed. The average rate per sale deed was worked out and same was compared by AO with seized documents in page 56 to 62 of Annexure-A1 and page 13 to 17, 53 to 57 of Annexure A-2. According to that, the ld Assessing Officer noted that substantial sale Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) consideration has been passed on in cash. He further noted that page 61 of annexure A1 clearly show details of cash and cheque consideration. Annexure A1 was found form the residence of the assessee which shows that the total consideration of the 16 plots was Rs. 45891800/-, out of which consideration in cheque was approximately Rs. 1.5 crores and balance consideration of Rs. 30891800/- was in cash. Further calculations were also mentioned in the paper according to which it was found by AO that out of total sale of Rs. 4.58 crores the cost of the project was Rs. 3.24 crore and the gross profit is of Rs. 1.34 crores. Interest was also shown to have been paid of Rs. 12.77 lacs resulting into net profit of Rs. 1.21 crore that was shared by Shri Manmohan Singh, the seller and Shri Navneet Jhamb assessee in 50:50 ratio. The cheque amount of the transaction is most of the cases exactly matched with the registered deed. The above calculation was also found corroborated at another page at 55 at Annexure A2 in case of four plots. Page No. 57 of annexure A1 also showed the revised calculation of the profit and further profit details of the four plots sold after 31.10.2001 and 12 plots sold prior to that date. Based on the above documents the ld AO found that the profit of Rs. 2.18 crores was shared between Shri Manmohan Singh and the appellant equally where in the share amounting to Rs. 10923399/- is belonging to the assessee and is chargeable to tax in the hands of the assessee. As the plots from which the income was earned is sold in different years, the ld AO bifurcated total income on the basis of the year in which plots are sold and determined the income of respective years. He accordingly determined the profit of Rs. 697834/- chargeable to tax in Assessment Year 2001-02, Rs. 2337343/- chargeable to tax in Assessment Year 2002-03 and Rs. 7888222/- in Assessment Year 2003-04.
The ld AO in assessment order has decided the whole issue as under:-
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) “4 Unaccounted Profit on Sale of Industrial plots at Village Jharsentli, Faridabad. 4.1 During the course of search operation documents detailed as Annexures A-l and A-2 were seized from the residence of the assessee. A perusal of Page 56 to 62 of A-1 & Page 13 to 17 and 53 to 57 of A-2 show that they relate to sale of Industrial plots at Vill. Jharsentli, Faridabad. Study of these documents as also the statement of Shri Navneet Jhamb dated 16.09.2007 (Copy attached as Annexure „A‟) has revealed that there was a plot of land bearing Khasra No.29, KilaNo.4/2 (7-0), 5(7-17), Khasra No.28/1 (8-0), 2/1 (2-3), 2/2(5-17), 3/1(5-17), 3/2(2-3), 4/2(4- fl), 5/2(-015), 6/2(0-16), 6/3(0-18), 7/1 (4-0),8(7-18),9(8-0), 12(7-19), 13(7-11), 14(8-0), 15/1(2-5), 26(0-16), 4/2(07), 5(7- 17), total area measuring 89 Kanals 13 Marlas situated at Village Jharsentli, Tehsil Ballabgarh, Distt. Faridabad, which had been acquired by the state of Haryana for development of Sector- 59. The land was owned by M s Indo American Electricals Limited having registered office at 21, Old Court House Street, Calcutta. Sh. Manmohan Singh who is resident of Ekomkar Farms, Kapashera, Bijwasan, New Delhi was the Managing Director of the company. Enquiries were made with S. Manmohan Singh in this regard. It has been learnt from the documents submitted by S. Manmohan Singh before the investigation wing that M/s Reliance (Estate Agency w as appointed by M s Indo American Electricals Limited" for publishing the advertisements and procuring bids for the sale of said land on lbt October, 1999. It was decided by M s Indo American Electricals Limited that the aforementioned Land would be sold to M/s TML Investments (P) Ltd for Rs 1.50 crore. However, M/s TML Investments (P) Ltd, subsequently cancelled its letter of intent to continue with their offer of purchase of land at Jharsentli. This was communicated to M/s Reliance Estate Agency vide letter dated 16th Feb 2000. 4.2 Out of the land measuring 89 Kanals 13 Marlas, a land of 75 Kanals was released by Director, Urban Estate, Madhya Marg, Sector-18, Chandigarh. The remaining land was acquired for roads and green belt. The released land was sub-divided into sixteen industrial plots of varying sizes as per plan approved by the town planner, MCF. The land at Vill. Jharsentli was sub- divided into sixteen industrial plots whose details were obtained from the Municipal Corporation of Faridabad. The details of plots as per sub-division plan have been tabulated as follows:-
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Table 1: Details of plots at Vill Jharsentli Plot No. Dimensions Area in Sq. Yards Area in Kanals/Marlas A-l 2K 1230 66’X165’ A-2 2K 1210 66’X165’ A-3 2K 1210 66’X165’ A-4 2K-9M 1476 80’-6”X185’ A-5 1K-1M 650 65’X90’ A-6 17M 500 50’X90’ A-7 17M 500 50’X90’ A-8 11K-6M 6756 165’368’6” B-l 10K 6046.48 521 ’X104’-6 B-2 2K 1213.36 104-6’X104-6” B-3 2K 1213.36 104’ 6”X104-6’ B-4 2K-2M 1277.22 110’Xl 04’-66” B-5 2K-2M 1277.22 110’X104’-6” B-6 10K-7M 6258 As perplan B-7 10K-13M 6428 137’-6”X420’-9” B-8 13K-5M 8016.25 165X437’03’ These plots were subsequently sold to several parties as detailed in Table 2 reproduced below Details of sale of plots measuring 75 Kanals at Vill Jharsentli as per sale deed Plot No. Area Seller Buyer Date of Sale sale amount (Rs.) A-1 2K M/s. Indo Dr. Mrs. 8-Nov-00 495000 American Shashi Electricals Verma Ltd through its managing Director Sh. Manmohan Singh A-2 2K -do- Sh. Deepak 28-Feb- 495000 Verma 01 A-3 2K -do- Sh. Sandeep 28-Feb- 495000 Vij 01 A-4 2K -do- Sh. Ram ji 12-Sept- 490000 Prasad 9M 00 A-5 IK -do- Usaka 19-Apr- 01 495000 Engineers 1.5M Navneet Jhamb Vs ACIT ITA No. 1609, 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) A-6 17M - Usaka 19-Oct- 400000 do- Engineers 01 A-7 17M - Raghvendra 04-Apr- 400000 do- Mittal 01 A-8 1 IK 6M - Flowmore 29-Sept- 1980000 do- Engg (P) 00 Limited through its Director Sh. Anshu Mittal B-l 10KV - Indication 16-Jul- 01 1980000 do- Instruments Limited through its Director Sh. T.M. Lalani B-2 2K -do- Meta Forge 19-Oct-01 500000 (India) B-3 2K - Survival Die 28-Feb- 490000 do- Cast Pvt 01 Limited through its Director Sh. R.B. Singh B-4 2K - Reliant 23-May- 200000 do- Engineer 2M 02 B-5 2K -do- Sh. P.P. 27-Apr-01 495000 2M Nagpal B-6 10K -do- Gurdayal 30-Dec- 1800000 Nirman 7M Udyog Pvt 02 1500000 Ltd B-7 10K -do- Sh. P.P. 23-May- 13M Nagpal 02 B-8 13M -do- Dua Auto 23-May- 800000 Components 02 (P) Ltd The sale amount detailed in column 6 above has been extracted from the sale deeds pertaining to the various plots (plot Numbers are detailed in column 1 of Table 1 detailed on pages 3 & 4 of this order) of land in village Jharsentli An examination of the sale deeds show that the average sale rate as per the sale deeds comes to 478 per Sq.Yds for the plots tabulated below:- Plot Sold to Total Cheque Area Date of sale. Rate No. per Sq.Yds A1 GLVERMA 1331000 495000 1210 409 08.11.2000 A2 GLVERMA 1331000 495000 1210 409 28.02.2001 A3 GLVERMA 1331000 495000 409 1210 28.02.2001 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) A4 RAMJIPRASAD 1623600 490000 1476 331 12.09.2000 A5 USAKA 650000 495000 650 761 19.04.2001 A 6 USAKA 500000 400000 500 800 19.10.2001 A7 MITTAL 400000 500 04.04.2001 600000 800 A8 MITTAL 6080400 1980000 6736 293 29.09.2000 B1 INDICATION 6652800 1980000 6048 327 16.07.2001 B2 METAFORGE 1313000 500000 1213 412 19.10.2001 B3 SURVIVAL 1331000 490000 1213 403 28.02.2001 B5 NAGPAL 1277000 495000 1277 387 27.04.2001 4.3 However, the calculations contained on pages 56-62 of Annexure A-l and pages 13 to 17 and 53-57 of Annexure A-2 shows that the actual sale consideration of the 16 plots tabulated in Table 1 and 2 is much more than what is shown in the registered sale deeds. In fact the aforementioned documents contain detailed calculations of profit from sale of plots belonging to M/s Indo American Electricals Ltd at village Jharsentli. Study of the documents show that a substantial part of the total consideration has been accepted in cash which is not reflected in the registered deed. Only the amount disclosed as cheques has been disclosed. Page 61 of Annexure A-l clearly details the cash and cheques amount on plots tabulated in 1 able 1 & 2 above. Table 4 Details of cash and cheque amounts received on plots sold at V Jharsentli as detailed on page 61 of A-1 seized from residence Navneet Jhamb Plot No. Sold to Total Cheque Cash Area A1 G.L.VERMA 1331000 495000 836000 1210 A2 G.L.VERMA 1331000 495000 836000 1210 A3 G.L.VERMA 1331000 495000 836000 1210 Cash 15205800 A4 Ramjiprasad 1623600 490000 1133600 1476 Project 11954040 A5 USAKA 650000 495000 155000 650 40 3251760 A6 USAKA 500000 400000 100000 500 A7 MITTAL 600000 400000 100000 500 3251760 A8 MITTAL 6080400 1980000 4100400 6736 Security 44000 B1 INDICATION 6652800") 1980000 46728003 6048 3207760 C T 213000 B2 JETAF9RGE 500000 "713000 12.13 SIRSA 50000 B3 SURVIVAL 1331000 490000 841000 1213 CASH IN 3157760 HAND B4 Not sold 1277000 500000 777000 1277 Paid to 2350000 msingh B5 NAGPAL 1277000 ‘ 495000 782000 1277 Sale b2 807760 713000 B6 Not sold 6250000 1980000 4270000 6250 Sale A6 100000 Page | 28 Navneet Jhamb Vs ACIT ITA No. 1609, 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) B7 Not sold 6428000 1825000 4603000 6428 813000 8016000 B8 Not sold 1980000 6036000 80.16 Road exp. 300000 Total 45891800 15000000 30891800 45214 Electricity 100000 407760 Land Sold AVG 1029 per Sq Yrds Paid 2000000 msingh 200000 Total cost of 12448040 1.11.2001 project Land 200000000 Paid to 207760 Navneet 32448040 Land for sale 45375 From Sq.Yds project paid to Costing 717.6547 Manmohan 2550000 Singh .... Navneet 207760 Total 45891800 selling price Cost 32448040 Cost price 20000000 Price Gross profit 13443760 Expenses 11954040 Lalani Principle 1277000 1000000 INT Security 44000 t.m. Oct.01 TML due Tentative 12166760 Sirsa 50000 profit Road 400000 expenses 1422575 intt Cost price 32448040 calculated but settled at 10000000 Gross Interest Net profit Nov to jan 17400 profit 02 Tentative MS 6083380 250000 5833380 Security NJ 6083380 750000 5333380 Gift to com 25000 Paid to msingh at Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Hospital 50000 ✓ on 19jan Paid to 500000 msingh Paid 200000 msingh Paid com 100000 Paid for 37000 coming Paid to ctp 50000 4.4 It is clear from the above that the calculations detailed on page 61 of A-l pertain to sale of plots A-l to A-8 and B-l to B-8 subdivided from the land belonging to M/s Indo American Electricals Ltd. These calculations show the cheques amounts and cash amounts received on account of the sale of plot. For instance plot A-l was sold to one GL Verma for a sum of Rs 23,31,000/- out of which 4,95,00/- is the cheque amount shown in the registered deed and 836000/- is the cash amount received and not reflected as income of the assessee in his books of account or his return for the relevant year. The total sale price of the plots has been calculated at Rs 4,58,91,800/- from which the cost of the project to Rs 3,24,48,040/- including cost of land of Rs 2,00,00,000) has been deducted to calculate the gross profit of Rs 1,34,43,760/-. The principal amount of loan of Rs 12,77,760/- from Lalani has been further deducted to get a net profit of Rs 1,21,66,760/-. This profit has been further shared by between Sh Manmohan Singh and Sh Navnnet Jhamb in a 50:50 ratio. The interest burden has been shared in the ratio of 25:75 ratio. 4.5 An examination of these calculations was made vis-a-vis the sale deeds and it was noted that the cheque amounts detailed on page 61 of A-1 exactly matches the amounts as per the registered deeds. This means that transactions detailed on page 61 of A-1 are genuine transactions. 4.6 The calculation of cheques and cash amounts received on plots have also been made on page 55 of Annexure A-2. The front side of page 55 is a hand written page containing calculation of cash generated from the sale of plots except plot No B4, B6, B7 &B8. These figures are identical to the figures Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) detailed on page 61 of A-l. Here out of a total sum of Rs 2,39,20,800/-, Rs. 87,15,000/- has been received by cheques and Rs. 15205800/- has been received by cash. From this an amount of Rs. 11954000/- and payment of Rs. 2350000/- made to Manmohan Singh have been deducted. The backside of page 55 details profits earned on the remaining plots i.e B4, B-6, B-7 & B-8. Sale amount of these plots has been calculated at Rs 2,02,23,000/- and further an amount of Rs 62,85,000- has been shown as payable to M/s Indo American Electricals Ltd. This amount is also the sum of the cheques component of sale consideration of plots B4, B6, B7 & B8 as detailed on page 61 of A-1. An amount of Rs 26,50,000/- on account of cash expenses has been further subtracted from this amount to get a profit of Rs 1,12,88,000/-which has been divided equally between Sh Navneet Jhamb and Sh Manmohan Singh. 4.7 An examination of page 57 of A-1 shows a final revised profit statement prepared as „new calculation‟. The first column calculates total profit of Rs 1,21,66,760/- with a profit of Rs 60,83,380/- in the hands of Navneet Jhamb and Manmohan Singh. The amount of Rs 1,21,66,760/-has been taken from page 61 of A-l and is n account of profit details of 12 plots sold upto 31.10.01 The second column calculates total profit of Rs 66,40,601/- with a profit of Rs 33,20,300/- in the hands of Navneet Jhamb and Manmohan Singh. These are profit details of 4 plots sold after 31.10.01. 4.8 A perusal of the all the aforesaid documents shows that these is some difference between figures detailed on page 61 and page 57 of A-l. Sale deeds were examined and it was seen that the sale deeds of plot No.B-4, B-6, B-7 and B-8, shows that the cheque amount actually received is Rs. 43,00,000/- (2,00,000+ 18,00,000+ 15,00,000+ 8,00,000) as against Rs. 62,85,000 (5,00,000+19,80,000+18,25,000+19,80,000) shown on page 61 referred to above. Thus the difference of Rs. 19,85,000/- in cash and cheque amount stands reconciled. Therefore, out of total sale consideration of Rs. 4,58,91,800/-, the actual cheque amount received works out to Rs. 1,30,15,800/- (1,50,00,000 - 19,85,000) and cash amount works out to Rs. 3,28,76,800/- (3,08,91,800 + 19,85,000). It is also noticed that a payment of Rs. 10,13,621/- was made to Municipal Corporation of Faridabad. Thus there was a net profit of Rs. 2,18,46,799/- on this deal. This profit of Rs-2.18,46,799/- was shared equally between the assessee and Shri Manmohan Singh which comes to Rs. 1,09,23,399/- each. The profit for different years works out as under:-
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Financial Plots sold Cash Cash Cash profit Share of Share of Year received deposits A-B Navneet Manmohan on sale A made with Jhamb Singh MCF B 2000-01 A-1 8583000 7187352 1395668 697834 697834 A-2 A-3 A-4 A-8 B-3 2001-02 A-5 6622800 1948114 2337343 2337343 A-6 A-7 B-1 B-2 B-5 2002-03 B-4 17671000 1894555 7888222 788822 B-6 B-7 B-8 Total 32876800 11030001 10923399 10923399 4.9.1 During the course of assessment proceedings for the assessment year 2003-04, the assessee was asked to furnish various details including 'explanation/details in respect of documents seized/impounded from the residence of the assessee, residence of Shri S.D.Kathuria, business premises of M/s Reliance Estate Agency during search/survey on 04.08.2005. Vide questionnaire dated 11.05.2007, note sheet entries dated 13.09.2007, 20.09.2007, 26.09.2007, 05.10.2007. No complete details/explanation in respect of above documents were filed. The assessee has filed part reply vide letter dated 13.09.2007, 20.09.2007 & 12.10.2007. The assessee was again asked to furnish complete details/explanation in respect of documents seized/ impounded during the search/survey operation on 04.08.2005. He was further asked to give reasons as to why the transactions recorded on the above seized/impounded documents should not be treated as unexplained and be added as undisclosed income for the relevant year vide letter dated 15.10.2007. Again the assessee has not furnish any details and requested for adjournment. Case adjourned to 24.10.2007. No details/explanation in respect of above documents has been filed till 08.11.2007. 4.9.2 The assessee was again asked vide show cause letter dated 08.11.2007 to furnish the complete details/reply in respect of above seized/impounded documents. The assessee has not furnished any details/explanation in respect of above documents.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) The assessee has filed reply vide letter dated 16.11.2007 with the submission that, “ Reply relating to document found during the search at the residence of the assessee i.e. pages 56-62 and Page 46 of Annexure A-1 and Page 13-17 and Page 53-57 of Annexure A-2 sale of Indl. Plot Vill. Jharsaitly, Faridabad. Page 50 to 55 of document A-1, Page 45 to 48[ of document A-1 is being given during the year of search i.e. assessment year 2006-07. Remaining details are still under preparation, therefore you are requested to please adjourned the case to a date convenient to yourself. The case was adjourned to 20.11.2007. No one attended on 20.11.2007. On 21.11.2007 Shri N.K.Handa, CA/AR present and filed letter seeking adjournment. He was finally asked to give complete details and the case was adjourned to 23.1 1.2007. On 23.11.2007 Shri Raj Kumar Agarwal, CA attended and again requested for adjournment. The case was again "- adjourned to 27.11.2007. 4.9.3 On 15.11.2007, the assessee has filed reply in all the above points which is reproduced below:- Page No. 56 to 62 of document A-1 are only projections/ estimation and showing calculations of tentative profit. At page 56 tentative profit for the whole project has been written as Rs. 79,17,601/-. & At Page 57 tentative profit has been shown as 66,40,601/-. Page 58 is the detail of expenses of the project by the client at 1,18,90,759/- but while making the calculation of alleged profit by your goodself the above figures of expenses have not been considered at all. Page 59 is showing tentative profit at 1,21,66,760/-. Page 60 & 61 are showing tentative expected sales price at RS. 458,91,80/- and cost price at 3,24,48,040/-. But your goodself has not considered total cost price mentioned in these papers while mentioning calculation of alleged profit in the notice. Moreover, over and above the cost price, the EDC charges of Rs. 1,10,30,00/- have also been paid in connection with the above project as mentioned by your good self only in the notice and based upon the information gathered from MCF Faridabad regarding EDC charges paid to them in connection with this project.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Your goodself would appreciate that the tentative profit has been worked out at different stages and different sheets by the clients but in actual there is hardly any alleged profit left after taking into account the cost price of Rs. 3,24,48,040/- and EDC of Rs. 1,10,30,001/- and further expenses as mentioned at Page 61 of 373400/-. It again shows that all the figures on these pages are were calculations of tentative/estimates/projections of profit and expenditure incurred at different stages relating to the project by the client. The only payment shown on these pages as made to Navneet Jhamb at Page 61 mentioned is of Rs. 2,07,760/- upto a particular stage and which in any case is covered within the total amount of commission received. In view of the above your goodself will appreciate that to attribute alleged profit of Rs. 1,09,23,399/- and that too to the assessee on the basis of above documents is totally incorrect and imaginary. Document A-2 Page 13 to 17 seems to be a draft assessment dated 1997 by IAEL and has no relevance. Page 54 is containing detail of expenses and repetition of Pg 58 of Dec. A-l to large extent. Page 55 & 56 is relating to area of different plots and rough calculation/tentative prices and projections of the sale prices and Page 57 to 60 are repetition of Page 61 of doc. A-1 making different calculation at different stages containing rough calculation/ tentative/ projection/ expenses incurred etc. After going through all these papers, no profit may be said to have been received by the assessee out of the deal and therefore no addition can be made. 4.9.4 The assessee has filed part reply on 27.11.2007 and further part reply vide letter dated 03.12.2007 in the assessment year 2006-07 with the submission that, Your goodself would kindly appreciate that the amount of Rs. 1,09,23,399/- relating to Indo American Electricals Limited (IAEL) deal worked out as mentioned in your notice is not correct and as Explained separately after taking sales price and cost as mentioned in those papers there is hardly any surplus out of papers/workings relating Page | 34 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) to these transactions. \(This is being submitted without prejudice to the fact that the assessee was handling this transaction only on commission basis as property dealer without having any interest as owner/partner in the deal).) Details reply with evidence in this connection had already been submitted. This fact is further strengthen from the fact that page 46 of document A-l which is summary of all three accounts mentioned on the top of this page and 13- (Shri Navneet Jhamb A. Y 2001-02) are relating to IAEL deal, the amount of commission/earnings mentioned is only Rs.6,23,300/-projected to be shared between the partners 4.9.5 The above reply/explanation of the assessee has duly been considered but has not been found convincing as the assessee has simply mentioned that the documents does not pertain to any transaction, it is quite old paper, it is simply discussion/ projection/tentative profit etc. He has not given any details of the transactions mentioned on documents and the actual/real profit of the said documents. 4.9.6 It is obvious that the assessee in his individual capacity along with Sh Manmohan Singh sold 16 plots in Jharsentli and made profits on the sale of the aforementioned plots after TML Investments Ltd backed out of the transaction with M/s Indo American Electricals Ltd. The cash profits arising out of sale of the said plots were not reflected in the books of account or the return of the assessee for the relevant years. This is clear from an examination of the following evidence: (a) It is clear from the above that the calculations detailed on page 61 of A-l pertain to sale of plots A-l to A-8 and B-l to B-8 subdivided on the land belonging to M/s Indo American Electricals Ltd. These calculations show the cheque amounts and cash amounts received on account of the sale of plot. For instance plot A-l was sold to one GL Verma for a sum of Rs 13,31,000/- out of which 4,95,000/- is the cheques amount shown in the registered deed and 8,36,000/- is the cash amount received and not reflected as income of the assessee in his books of account or his return for the relevant year. The total sale price of the plots has been calculated at Rs 4,58,91,800/- from which the cost of the project of Rs 3,24,48,040/-(including cost of land of Rs 20000000) has been deducted to calculate the gross profit of Rs 13443760/-. The principal amount of loan of Rs 12,77,760/- from Lalani has has been Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) further deducted to get a net profit of Rs 1,21,66,760/-. This profit has been further shared by between (b) Sh Manmohan Singh and Sh Navneet Jhamb in a 50:50 ratio. The interest burden has been shared in the ratio of 25:75 ratio. (c) The calculation of cheques and cash amounts received on plots have also been made on page 55 of Annexure A- 2. The front side of page 55 is a hand written pagecontaining calculation of cash generated from the sale of plots except plot No B4, B6, B7 &B8. These figures are identical to the figures detailed on page 61 of A-l. Here out of a total sum of Rs 2,39,20,800/-87,15,000/- has been received by cheques and 1,52,05,800/- has been received by cash. From this an amount of Rs 1,19,54,000/- and payments of Rs 23,50,000/- made to Manmohan Singh have been deducted. The backside of page 55 details profits earned on the remaining plots i.e B4, B-6, B-7 & B- 8. Sale amount of these plots has been calculated at Rs 2,02,23,000/- and further an amount of Rs 62,85,000- has been shown as payable to M/s Indo American Electricals Ltd. This amount is also the sum of the cheques component of sale consideration of plots B4, B6, B7 & B8 as detailed on page 61 of A-l. An amount of Rs 26,50,000/- on account of cash expenses has been further subtracted from this amount to get a profit of Rs 1,12,88,000/- which has been divided equally between Sh Navneet Jhamb and Sh Manmohan Singh. (d) An examination of page 57 of A-l shows a final revised profit statement prepared as „new calculation‟. The first column calculates total profit of Rs 1,21,66,760/- with a profit of Rs 60,83,380/- in the hands of Navneet Jhamb and Manmohan Singh. These are profit details of 12 plots sold upto 31.10.01 and are identical to the figures detailed on page 61 of A-l. The second column calculates total profit of Rs 66,40,601/- with a profit of Rs 33,20,300/- in the hands of Navneet Jhamb and Manmohan Singh. - These are profit details of 4 plots i. B4, B6, B7&B 8 sold after 31.10.01. 4.9.7 It is thus more than obvious that Sh Navneet Jhamb along with Sh Manmohan Singh sold 16 plots in Jharsentli and made profits on the sale of the aforementioned plots after TML Investments Ltd backed out of the transaction with M/s Indo American Electricals Ltd. The cash profits arising oik pf sale of Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) the said plots were not reflected in the books of account or the returfi of the assessee for the relevant year. As regards the contention of the assessee that the EDC charges of Rs. 1,10,30,000/- paid over and above the cost price in connection with the above project has not been considered for calculating the alleged profit is not correct. It has been gathered from MCF that total payment received from IAEL for release of land was Rs. 1,10,30,000/-. Hence the considering of EDC charges of 1,10,30,000/- in the hands of the assessee does not arise. In view of above facts the contention of the assessee is not acceptable. Since, the document clearly shows that the transaction has taken place and the assessee has earned total profit of Rs. 1,09,23,399/- out of which profit of Rs.6,97,834/- pertains to assessment year ^0di-u^ on' sale. Hence the profit of Rs. 6,97,834/- pertaining to assessment 2u01-uz is added to the assessee‟s taxable income as undisclosed income of the assessee. I am satisfied that this addition on account of concealed particulars attracts provisions of penalty proceedings u/s 271(1 )(c) of the I.T.Act.”
On appeal before the ld CIT (A) , the addition was confirmed. While deciding the issue ld CIT(A), has followed his order for Assessment Year 2002-03 wherein he has held as under:- “5. Ground No. 4 is as under: "That having regard to the facts and circumstances of the case Ld. A.O. has erred in and on facts in making addition of Rs. 23,37,343/- as undisclosed profit merely on the basis of surmises and conjectures and wit out any evidence or basis and without affording adequate opportunity of hearing." 5.1 In support of this ground of appeal, the learned AR vide his written submissions has submitted as under: "GROUND No. 4: Ld. A.O. has made addition of Rs. 23,37,343/- allegedly earned by the assessee on sale of industrial plots at village Jharshettly, Faridabad on the basis of page 56 to 62 of Annexure AI and page 13-17 and page 53-57 of Annexure A2. According to ld AO, the assessee during the year under appeal shared the alleged profit which Shri Manmohan Singh of M/s. Indo American Electrical Ltd. the working of this alleged profit has been given by Ld. A.O. in the table made at page 9 of assessment order.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) It is respectfully submitted that Ld. A.O. has grossly misread and mis-appreciated the seized documents as shown hereunder and on the basis of such jottings, no addition could be possible. Copies of page 56-62 of document A-l, page 13 to 17 and page 53-57 of Annexure-A2 are enclosed in the paper book and it would be shown from the bare perusal of all these documents that Ld. A.O. has based the impugned conclusion and addition on the basis of his whims and fancies, surmises and conjectures. Page 56 of annexure Al does not bear the name of the assessee or signature of the assessee and/or is not in the handwriting of the assessee. A bare reading of this document refers to some "tentative profit" and that too to the tune of Rs. 79,17,601 / and not at the figure added by Ld. AO. Page 57 of Annexure Al is again an unauthenticated document, does not bear the name or signature of the assessee nor is in the handwriting of the assessee. This document also refers to some "tentative profit" but this time at the figure of Rs. 1,21,66,760/-. The lower portion of this document would show again some "tentative profit" but this time a new figure of Rs. 66,40,601/-. Page 58 of Annexure A-l would show that again it is unauthenticated, does not bear the name or the signature of the asses see and is not even in the handwriting of the assessee. It is equally important to submit that these documents were found by the search team as the loose documents and were not even part of any books or any pad or any diary which prove that these depict any real transactions or profit as alleged by Ld. AO and thereafter added in the hands of the appellant. Page 59 of Annexure A-l again is unauthenticated, unsigned document and does not bear even the name of the assessee. It also refers to the word "tentative profit". Page 60 of document No. A-l is unauthenticated and unsigned loose document and is not in the handwriting of the assessee. The name of the assessee appears on this page but a figure of Rs. 2,07,760/- is mentioned there against but it cannot lead to Ld. A.O. for making the Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) impugned addition of this much of amount or for reaching to the conclusion as reached by Ld. A.O. It is again important to submit that this document also uses the expression "tentative profit". Page 61 of Annexure Al is the copy of page 60 and therefore the contentions submitted above in respect of page 60 are applicable here also. Page 62 of Annexure Al again is unauthenticated unsigned document which does not mention even the name of the assessee. Page 13 to 17 of Annexure A-2 would show that it is a blank agreement between M/s Indo American Electrical Ltd. and unnamed entity relating to compensation of the land which is unauthenticated, unsigned and does not bear the name of the assessee and how this blank document has got any relation with the assessee and that too for making the impugned addition and for reaching the conclusion made by Ld. A.O. is not clear. Page 53-57 of Annexure A-2 would also show that these are unauthenticated and unsigned documents and even on the basis of these documents how could the impugned addition be made and that too in the hands of the assessee and that too in the year under appeal is not clear. It is important to submit that the land belonged to M/s Indo American Electrical Ltd. and as admitted by Ld. A.O. also these plots were sold by that company to various persons, the names and details of which are given at page 4, 5, 6 & 7 of the assessment order. The profit or loss, your good self would kindly appreciate, any profit or loss if at all it is there, can be on account of the owner only. How could assessee and that too when he is partner of a real estate commission agency-firm be treated as the owner of any such profit? It is not out of place to submit that a document was supplied to the tax department by M/s Indo American Electrical Ltd. which is enclosed in the paper book which would show that M/s Reliance Estate Agency was acting as a commission agent for and on behalf of M/s Indo American Electrical Ltd. and even Ld. A.O. has taxed the commission income allegedly earned from these very deals in the hands of M/s Reliance Estate Agency.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) Therefore the action of Ld. A.O. in making the impugned addition in the hands of the assessee cannot be sustained under any circumstances. Ld. A.O. has made observations regarding the alleged cash paid by the buyers and since this observation of Ld. A.O. does not have material bearing on the fate of the case of the assessee, assessee leaves it at that stage and does not want to join issue with A.O. on that score as of now with the prayer for liberty to raise contentions later on when used against the appellant. Ld. A.O. has mentioned in para 4.4. at page 7 of the assessment order that for instance plot A-l was sold to one Mr. G.L. Verma for a sum of Rs. 13,31,000/- out of which Rs. 4,95,000/- is the cheque amount shown in the registered deed and Rs. 8,36,000/- is the cash amount received and was not reflected in the income of the assessee in his books of accounts or in his return. It is submitted in reply to this adverse observation that when the seller was M/s Indo American Electrical Ltd. and the purchaser was Mr. G.L. Verma, where was the occasion for the assessee to show any profit or loss arising on this purchase / sale transactions in his return of income even if the allegation of cash made by Ld. A.O. is accepted for the sake of academic interest? Ld. A.O. mentions in para 4.4 himself that the gross profit in respect of these plots was Rs. 1,34,43,760/- but Ld. A.O. when it comes to the taxing in the hands of the assessee, calculated the alleged profit at Rs. 2,18,46,799/- at page 9 of the assessment order. This inconsistent and contradictory approach of Ld. A.O. is bound to bring down the entire assessment order. Ld. A.O. in the same breath in para 4.5 & 4.6 of the assessment order at page 8 thereof by making certain calculations on his own worked out a different figure of alleged profit at Rs. 1,12,88,000/- whereas, as submitted above when it comes to taxing the assessee, Ld. A.O. has calculated the alleged profit at Rs. 2,18,46,799/-, the 50% of which that is Rs. 1,09,23,399/- has been ascribed to the appellant. This is again shifting inconsistent stand of Ld. A.O. which erodes the credibility of the conclusion drawn by Ld. AO completely. Alternative submission of the appellant without prejudice to above submission is that even action of Ld. A.O. in Page | 40 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) computing the alleged profit at Rs. 2,18,46,799/- cannot be sustained on the basis of the jottings made on the documents referred by him in the assessment order itself. Ld. A.O. has calculated the profit at Rs. 2,18,46,799/- in para 4.8 at page 8 & 9 of the assessment order by taking the alleged sales at Rs. 4,58,91,800/- and out of the said amount reduced a sum of Rs. 1,30,15,800/- as the cost and expenses. Whereas your good self would kindly see from the following documents that the action of Ld. A.O. in allowing/restricting the cost and expenses at Rs. 1,30,15,800/- is patently wrong. Page 56 of Annexure Al would show that the alleged cost and the new expenses mentioned were to the tune of Rs. 3,69,28,199/- thereby giving the alleged profit at Rs. 79,17,601/- and not what has been worked by Ld. AO. Page 57 of Annexure A-l would show that alleged cost was Rs. 3,24,48,040/- and expenses were Rs. 44,80,159/- which again would show that the calculation done by Ld. AO is patently wrong. Page 58 of Annexure A-l shows the alleged expenses to the tune of Rs. 1,18,90,759/-. And Page 59 of Annexure-AI show the alleged cost at Rs. 3,26,89,840/-. Page 60 of Annexure A-l shows the alleged cost at Rs. 2 crores and alleged expenses at Rs. 1,49,54,040/-. 53-57 of Annexure A-2 would further show that the alleged cost and expenses as worked out by Ld. A.O. at Rs. 1,30,15,800/- cannot be justified under any circumstances. All this is being shown as an attempt to demonstrate as to how arbitrary could Ld. A.O. become when he ignores even the apparent figures appearing on the seized documents just to make addition. In fact, all these loose documents have come in to existence in detailed and exhaustive submissions have already been made in other years and in the cases of the firm namely Reliance Estate Agency and thus no credence can be lent to these documents for the purpose of making addition as done by Ld. AO unfortunately. Thus the addition made by Ld. A.O. by presuming without any material so many things cannot be approved."
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) 5.2 In this case written submissions of the AR were sent to AO for his report. AO submitted his report vide his common letter No. ACIT/CC-I/FBD/08-09/1079 dated 28-01-2009 for AYs 2000- 01 to 2006-07 copy of which is enclosed with this order. 5.3 Copy of above report was given to the assessee for his rejoinder. Assessee made his submissions for AYs 2000-01 to 2006-07 vide common letter dated 21-8-2009 copy of the same is enclosed with this order. 5.4 I have considered the submissions of the AR. In this case during the course of search operation certain documents as per annexure A-l and A-2 were seized from residence of assessee which included certain pages such as page No. 56 to 62 of A-l and page 13 to 17 and 53 to 57 of A-2 which reflected the sale of Industrial Plots at village Jharsently, Faridabad. The land bearing Khasra No. 29 and 28 as noted in para 4.1 of asstt order had area measuring 89 kanals 13 marlas and was owned by M/s Indo American Electricals Ltd (IAEL) having the registered office at 21, Old Court House Street, Kolkotta. Sh. Manmohan Singh who is resident of Ekomkar Farms, Kapashera Bijwasan, New Delhi was the managing director of the company. As per inquires conducted from Sh. Manmohan Singh, M/s Reliance Estate Agency was appointed by IAEL for publishing the advertisement and procuring bids for sale of said land on 1-10-1999. It was decided by IAEL that the above land would be sold to M/s TML Investments (P) Ltd for Rs. 1.50 crores. However, M/s TML Investment (P) Ltd subsequently cancelled its letter of intent to continue with their offer of purchase of land at Jharsentli. This was communicated to M/s Reliance Estate Agency vide letter dated 16-02-2000. Out of the land measuring 89 Kanals 13 marlas a land of 57 kanal was released by the Director, Urban Estate, Madhya Marg, Sector 18 Chandigarh. The remaining land was sub-divided into 16 Industrial plots of varying sizes as per plan approved by town planner, MCF. The land at village Jharsentli was sub divided into sixteen Industrial plots whose details were obtained by AO from the Municipal Corpn. Faridabad (MCF) as per details noted in table I page 3 of assessment order. These plots were subsequently sold to several parties as per details noted in table 2 page 4 and 5 of the asst order for a total consideration of Rs. 1,30,15,000/-AO has noted in the asstt order that above sale amounts ^ihave been extracted from the sale deeds pertaining to various plots of the land at village Jharsentli. An examination of sale deed showed that average sale rate as per sale deed comes to Rs. 478/- per sq yard for the plots Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) given in table 3 page 5 of the asstt order. However, calculations given on page 56, 62 of annexure A-l and pages 13 to 17 and 53-57 of annexure A-2 showed that the actual sale consideration of the 16 plots was much more than what was shown in the registered sale deeds. In fact the aforesaid documents contain detailed calculations of profit from sale of plots belonging to IAEL at village Jharsentli. As per these documents substantial part of total consideration has been accepted in cash which is not reflected in the registered deeds. Only the amount disclosed as cheques has been shown. The details of cash and cheque amount received on the sale of plot has been given on page 61 of A-l seized from residence of Sh. Navneet Jhamb and the same has been noted by the AO in table 4 page 6 and 7 of asstt order. As noted in the assessment order the sale price of the plots has been calculated at Rs. 4,58,91,800/- from which the cost of project of Rs. 3,24,48,040/- (including cost of land of Rs. 2 crores) has been deducted to calculate the gross profit of Rs. 1,34,43,760/-. On the basis of above and also on the basis of entries made on page 55 of annexure A-2, page 57 of A-l and after considering the submissions of the assessee AO concluded that the assessee has earned total profit of Rs. 1,09,23,399/- out of which profit on sale of plots of Rs. 23,37,343/- pertains to asstt year 2002-03 the year under consideration and accordingly made the addition of above amount. Assessee however has contended that page No. 56 of A-l does 'not bear the name or signature of the assessee and /or is not in the hand writing of the assessee. Similar is the position of page No. 57 of annexure A-1 page No. 58 to 62 of Annexure A- 1, according to AR are unauthenticated and unsigned loose documents showing in some cases tentative profit. Page No. 13 to 17 of annexure A-2 according to AR is blank agreement between IAEL and unnamed entity relating to compensation of the land which is unauthenticated, unsigned and does not bear the name of the assessee. AR has also submitted that he is a partner in Real Estate Commission Agency firm and the profit or loss can accrue only to the owners of the land only and not to a Real Estate Agency firm. M/s Reliance Estate Agency was acting as commission agent for IAEL and AO has taxed the commission income allegedly earned from these deals in the hands of M/s Reliance Estate Agency. Referring to AO's observation in para 4.4 page 7 of asstt order to the effect that plot A-l was sold to one Mr. G.L. Verma for a sum of Rs. 13,31,000/- out of which Rs. 4,95,000/- is the cheque amount shown in the registered deed and Rs. 8,36,000/- is the cash amount received and not reflected income of the assessee, AR has submitted that when Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) the seller was IAEL and the purchaser was Mr. G.L. Verma there was no occasion for assessee to show any profit or loss arising on this purchase/ sale transaction in his return of income. AR has also stated that there are inconsistencies in AO's order in as much as in para 4.4 AO himself has mentioned the gross profit of Rs. 1,34,43,760/- in respect of these plots however when comes to the taxing of the same in the hands of the assessee alleged profit is shown at Rs. 2,18,46,799/- at page 9 of asstt order. AR has further submitted that AO has calculated alleged profit of Rs. 2,18,46,799/- 50% of which i.e. Rs. 1,09,23,399/- which has been ascribed to the ppellant and same cannot be sustained on the basis of jottings made 'n the documents referred to by the AO. In view of the above AR has contended that addition has wrongly been made and should be deleted. Assessee's above contentions are not acceptable. As already discussed, certain documents were found and seized from residence of assessee as well as of his partner S. D. Kathuria who are partners in M/s Reliance Estate Agency from where also certain documents were found and impounded. As per documents found and seized as has been discussed in this order above and also in the asstt order assessee has sold 16 industrial plots on which consideration in cash over and above the cheque amount has also been received. While the cheque amounts are as per sale deed, cash consideration has not been reflected in the accounts. The total sale price of plots has been calculated at Rs. 4,58,91,800/- from which the total cost of project of Rs. 3,24,48,040/- ( including cost of land of Rs. 2 crores) has been deducted to arrive at gross profit of Rs. 1,34,43,760/-. The principal amount of amount of Rs. 12,77,760/- from Lalani has further been deducted to get a net profit of Rs. 1,21,66,760/-. This, profit has been further shared by Sh. Manmohan Singh and Sh. Nanveent Jhamb in 50:50 ratio. The interest burden has been shared in the ratio of 25:75. As noted in the asstt order the cheque amounts detailed on page 61 of A-l exactly matches the amount as per registered deeds. The calculation of cheques and cash amounts received on plots have also been made on page 55 of annexure A-2. The front side of page 55 is a hand written page containing calculation of cash generated from sale of plots except plot No. B-4, B-6, B-7 and B-8. These figures are identical to the figures shown on page 61 of A-l. Here also out of total sum of Rs. 2,39,20,800/-, a sum of Rs. 87,15,000 has been received by cheques and Rs. 1,52,05,800/- has been received by cash. From this amount of Rs. 1,19,54,000/- payment of Rs. 23,50,000/- made to Sh. Manmohan Singh has been deducted. The backside of page 55 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) gives the details of profits earned on remaining plots i.e. B-4, B- 6, B-7 and B-8 which have been sold at Rs. 2,02,23,000/- and further amount of Rs. 62,85,000/- has been shown as payable to IAEL which is the amount of cheque component of sale consideration of above plots as per details given on page 61 of A-l. An amount of Rs. 26,50,000/- on account of cash expenses have been further deducted from this amount to get profit of Rs. 1,12,88,000/- which has been divided equally between Sh. Naveent Jhamb the assessee and Sh. Manmohan Singh. Similarly, page 57 of A-l shows final revised profit statement prepared as "new calculation". In the first column total profit of Rs. 1,21,66,760/- with profit of Rs. 60,83,380/- in the hands of Sh. Navneet Jhamb and Manmohan Singh has been calculated. This amount of Rs. 1,21,66,760/- has been taken from page 61 of A-l and is on account of profit details of 12 plots sold up to 31-10-2001. The second column calculates total profit of Rs. 66,40,601/- with a profit of Rs. 33,20,300/- in the hands of Sh Navneet Jhamb and Sh. Manmohan Singh in respect of four plots sold after 31-10-2001. As noted in para 4.8 of asstt order there is some difference between figure detailed on page 61 and page 57 of A-l which has duly been explained by AO in the same para. From the aforesaid discussion it is clear that assessee Sh. Navnnet Jhamb along with Sh. Manmohan Singh sold 16 plots in Jharshentli and made profit on the sale of such plots after TML investment (P) Ltd backed out of the transaction with IAEL. The contention of the assessee that these are tentative profits is not tenable as complete and proper details plot wise with their area name of the person to whom plots were sold, total consideration and the amount of cheque/cash have been given in the documents as per details noted in the asstt order. I am unable to find favour with the assessee's above contention that these are tentative profits only. Similarly contention of the assessee that he was partner in M/s Reliance Estate Agency a firm acting as commission agent only in respect of purchase and sale of property and not as an owner of property and therefore profit cannot accrue to him is not acceptable. There is no bar on Real Estate Commission Agent to purchase and sale the properties on profit basis. In other words a real estate commission agent is free to earn commission on the purchase and sale of property and can also venture into purchase and sale of property on profit basis. Assessee has not controverted with evidence the fact of earning profit noted in the above documents and therefore it cannot be accepted that assessee has not entered into purchase and sale of above plots with the profit motive. In any case the Page | 45 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) fact of the matter is that the documents clearly reveal earning of profit by the assessee along with Sh. Manmohan Singh and that itself is a substantive piece of evidence to disregard AR's specious contention that he was not earning any profit because he is partner in a firm M/s Reliance Estate Agency which is doing only business on commission basis. The contention of AR about different figures of profit noted by Assessing Officer in the assessment order is also not acceptable because Assessing Officer has just discussed what was appearing in the above documents. Assessing Officer has further explained and tried to reconcile such figures in the assessment order and finally come to the conclusion that the assessee has earned profit of Rs. 1,09,23,399/-. The documents have been found and seized from the possession of the assessee and therefore, onus is on him to prove with evidence the exact nature of the entries recorded in such documents. However, assessee has failed to discharge this onus and had just made general submissions and given routine explanations in order to wriggle out of the rigours of tax which may be fall on him on account of entries recorded on these documents. In view of above discussion and also for the detailed reasons discussed in the asstt order and AO's report dated 28- 01-2009, various contentions of the AR are rejected and it is held that assessee has earned total profit of Rs. 1,09,23,399/- out of which profit on sale of Rs. 23,37,343/- pertains to AY 2002-03 accordingly addition of Rs. 23,37,343/- is upheld. This ground of appeal is, therefore, rejected.”
21. Therefore, assessee is in appeal before us. The ld AR reiterated submissions made before the lower authorities. He also submitted that in case of the Buyers the additions were made on the same seized documents were deleted by the coordinate benches as well as honourable High court and therefore there is no reason that these additions can be sustained in the hands of the assessee. He supported his arguments with the orders in case of buyers. He also furnished paper book.
22. The ld DR contested that the documents were found from the possession of the assessee. Therefore, assessee is bound to explain them. The documents contain the details of the venture entered in to by the assessee with the seller of the plot, which is further improved, and then profit is earned. In the seized documents the complete Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) profitability is shown. It is neither an estimate nor projection but the actual existence of the transactions. She extensively referred the order of the lower authorities to show that assessee could not explain the contents of the papers, which shows the income earned by the assessee on sale of those plots along with the seller of the property. Referring to those decisions relied in case of buyers by the AR; she submitted that documents were not found from their residence but assessee‟s premises. Assessee has failed to explain the contents of the documents correctly. The Sale of plots is evidenced by the sale deeds. The decisions were based on reliance on another decision and further same has been referred to by the ld AR in other additions also in the hands of the assessee. She submitted that in view of the overwhelming evidences found during the course of search, which could not be rebutted by the assessee with any strong contrary evidences, there is no reason to deviate from the orders of the lower authorities.
We have carefully considered the rival contentions as well as perused the orders of the lower authorities. Facts relating on the issue is during the course of search at residence of assessee on 04/08/2005, certain documents were found and seized. It was found that there was a plot of land belonging to M/s Indo American Electricals Limited whose managing director is Mr. Man Mohan Singh. This plot of land was decided to be sold through M/s. Reliance Estate Agency, where in assessee is the partner. Therefore, advertisement etc was given in the newspapers however; this plot could not be sold. Later on this plot was divided into 16 plots and then those plots were sold. The seized documents show that according to page No. 61 is a titled as „account as on 31/10/2001‟. In that statement the detail of sale consideration of 16 plots amounting to Rs. 4 589 1800/- out of which the consideration payable by cheque is Rs. 1, 50, 00, 000/-and balance consideration is in cash amounting to Rs. 3,08,91,800/-. Profit was Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) worked out on that basis and 50 % thereof was found to be earned by the assessee. It was further bifurcated in the respective assessment years based on the year in which the plots are sold.
The first contention of the assessee is that above transaction has not happened and these are tentative or estimates. The Ld. assessing officer has given reasons to show that these are the actual transactions entered into by the assessee and cannot be stated to be estimates. We also agree with the finding of the lower authorities. These are the actual transactions entered into by the assessee and cannot be said to be the merely estimates because of the reason that only looking at page No. 61 shows that there are dated transactions and also shown the receipt of money on sale of plot number B2 for Rs. 7,13,000/- and sale of plot number A 6 of Rs. 1 lakh. The total of the sum is to the amount of cash in hand and from that road expenses, electricity expenses are also accounted for and then balance is drawn. After that it is mentioned that money is paid to the respective partners. It also refers to the amount of interest on loan taken by the parties. On looking at the paper at the bottom the total sale price is stated to be Rs. 4, 50, 91, 800/– and cost is to be Rs. 3, 24, 48, 040/– . Both the above figures are not stated to be tentative but final. However, the argument of the assessee is that out of the 16 plots, four plots have not been sold and therefore they cannot be considered as the final sale price. This argument does not merit any consideration for the reason that the Ld. assessing officer has divided the profit based on the date of sale of the plots when they are registered. The Ld. AO himself has stated that up to 31st October 2001 only 12 plots was sold and balance 4 plots were sold later on. Further the assessee has also borrowed jointly sum from somebody on interest and interest cost thereon as been reduced from the profit. With respect to the sale of 12 plots, the assessee has complete details about the name who bought the plot of land, the documented sale price etc. These facts are not Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) disputed. Therefore based on all these facts, it cannot be said that the papers are merely an estimate or projection.
The second contention of the assessee is that assessee is merely a broker and whatever profit arises would squarely falls on the shoulders of the owner of the property and not on the broker. On the similar facts and circumstances in the case of the assessee for different years, we have already dealt with this argument. For the similar reasons we also reject this contention of the assessee. Furthermore we are of the opinion that documents shows emphatically and clearly that in the whole project the assessee was also partner along with the managing director of the company sold plot. These facts were not denied by the assessee further assessee did not produce on its own the managing director of the seller company before the Ld. assessing officer to show that the profit belongs to him. It was also not denied that the plot originally to be sold was subdivided into 16 plots and therefore there is bound to be expenditure for roads, electricity etc, no evidences were furnished that who incurred this expenditure. Contrary to this, the document shows that the assessee has maintained a detailed account where cash has been received and expenditure have been defrayed. In view of this, it cannot be said that that assessee was merely a broker and has not earned profit on sale of the 16 plots.
With respect to the several decisions cited before us with respect to the buyers where the additions have been deleted in their hands, we have carefully considered all the decisions placed before us. Admittedly, in all the cases the coordinate bench or the Hon‟ble high court has deleted the addition. The main reasons for deletion of such addition was that in those cases the assessing officer could not bring any cogent basis as to how the documents pertain to those assessee and the money transactions taken place. However, in the present case the documents have been found from the possession of assessee. Therefore, it is clear that those decisions do not have any bearing on Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) the assessment proceedings of the assessee where the addition has been made based on documents found during the course of search.
With respect to the profit, there are serious objections raised by the Ld. authorized representative. The Ld. assessing officer stated that the gross profit is mentioned on page No. 61 of the seized documents which is Rs. 3,24,48,040/–. However subsequently the assessing officer noted that the above gross profit was worked out based on sale consideration with respect to 16 plots. However, by 31st in 2001 only 12 plots were sold. The sale price stated at page No. 61 and actual sale price documented are different with respect to four plots, which are sold later on then the date mentioned in the document. Therefore the Ld. assessing officer reduced the amount of lesser sale consideration received by cheque and added the same as a cash has been received of that amount by the assessee. We are not in agreement with the Ld. assessing officer on this issue. If there is a reduction in the sale price with respect to the 4 plots from the amount mentioned in the seized document, then the Ld. AO should have granted deduction of the same amount in the consideration paid by them by cheque however same should not have been added the cash receipt. In fact, he granted a sum of Rs. 1985000/- as deduction from the gross profit. To this extent the Ld. assessing officer is directed to reduce the overall profit of Rs. 2, 18, 46, 799/– and proportionate profit of the assessee.
With respect to the deduction of certain expenditure out of the profit of the profit, it is submitted that in page No. 62, there is a mention of some compensation of Rs. 5.5 Lacs and it is the cost of the project that should have been granted as deduction. We have carefully considered this contention of the assessee. Assessee has failed to explain to whom the compensation has been paid and for what reasons. It was also not shown to us that for what reasons the compensation was payable. However, the above amount is mentioned Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) in the seized documents and it is mentioned where the other expenditures are mentioned. The documents found during the course of search are required to be believed completely. When some additions are made based on those papers, there is no reason that information contained in those papers should not be believed. The amount of compensation is precisely mentioned in the seized papers. Therefore, such figure cannot be an estimate or projections. If the above amount of compensation is not included in to the total expenditure computed by the ld AO for working out the overall profit then, such sum must be granted to the assessee as deduction and then overall profit needs to be worked out. In view of this, the ld AO is directed to verify the computation of profit, if the amount of compensation is not included in the expenditure, then the profit amount deserves to be adjusted accordingly. Further, the amount of charges paid for EDC, the assessee has not given any evidence of payment of such charges. Further, in some of the decisions cited before us such charges have been borne by the buyers. Anyway assessee does not have any evidence that assessee has incurred these expenditure. Therefore, there is no information available that assessee incurred this expenditure. Therefore, we do not find any infirmity in the order of the Ld. assessing officer in not granting deduction of this amount from the gross profit shown by the assessee.
In view of this, we do not find any infirmity in the order of the lower authority in taxing the 50 % of the profit based on information contained in the loose papers found during the course of search. However, with respect to the determination of overall profit we direct the ld AO to reduce the sales consideration by Rs 1985000/- because of difference in sale price and further adjustment because of compensation paid of Rs 5.50 lakhs. Accordingly ground no three of the appeal is partly allowed with above direction.
Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) 30. The assessee has raised the following grounds of appeal 1610/Del/2011 for Assessment Year 2002-03:- “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153 A/143(3) and that too without assuming jurisdiction as per law.
2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153A/143(3) without assuming jurisdiction as per law and without recording requisite satisfaction as per law and without obtaining requisite approval as per law and without complying with the other mandatory conditions envisaged under the Act and has erred in not computing the alleged income in terms of the provisions of section 153 A.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs.2337343/- as undisclosed income allegedly being profit on sale of plots merely on the basis of surmises and conjectures and without any evidence or basis.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the assessment in violation of principles of natural justice in as much as passing the impugned order by recording incorrect facts and findings and without providing opportunity of cross examination and without confronting the entire adverse material used against the assessee and without providing adequate opportunity of hearing.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not granting the benefit of telescoping while confirming the addition made by Ld. AO.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in charging interest u/s 234A, 234B and 234C of the Income Tax Act, 1961.”
31. The assessee has raised the following grounds of appeal 1611/Del/2011 for Assessment Year 2003-04:- “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153 A/143(3) and that too without assuming jurisdiction as per law. Page | 52 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned assessment order u/s 153A/143(3) without assuming jurisdiction as per law and without recording requisite satisfaction as per law and without obtaining requisite approval as per law and without complying with the other mandatory conditions envisaged under the Act and has erred in not computing the alleged income in terms of the provisions of section 153 A.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs.7888222/- as undisclosed income allegedly being profit on sale of plots merely on the basis of surmises and conjectures and without any evidence or basis.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the assessment in violation of principles of natural justice in as much as passing the impugned order by recording incorrect facts and findings and without providing opportunity of cross examination and without confronting the entire adverse material used against the assessee and without providing adequate opportunity of hearing.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not granting the benefit of telescoping while confirming the addition made by Ld. AO.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in charging interest u/s 234A, 234B and 234C of the Income Tax Act, 1961.”
32. The issues involved in the appeal of the assessee for AY 2002-03 and 2003-04 are identical to ground No. 3 in the appeal of the assessee for AY 2001-02. These grounds are also against the addition sustained by the ld First Appellate Authority based on the same documents seized during the course of search. There is no change in the facts and circumstances of the case for these years. The arguments of both the parties were same as made for AY 2001-02.
33. On careful appreciation of the facts and based on the seized documents we have upheld the addition made by the ld AO in the Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07) hands of the assessee for Ay 2001-02. For the similar reasons we uphold the additions in the hands of the assessee in these two respective assessment years. However with respect to the quantum of addition we have directed the ld AO to reduce the sales consideration by Rs 19,85,000/- and to grant deduction of compensation expenses of Rs 5.50 lakhs after verification. Therefore with similar direction, we party allow ground no. 3 of the appeal of assessee for AY 2002-03 and AY 2003-04.
34. No other grounds of both these appeal are pressed and hence they are dismissed.
In the result appeal of the assessee for AY 2002-03 and 2003-04 is partly allowed. Assessment Year 2006-07
The assessee has raised the following grounds of appeal 1612/Del/2011 for Assessment Year 2006-07:- “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Learned Assessing Officer in making aggregate addition of Rs. 25,00,000/- and 39,00,000/- vide para 4 and 5.4 of the assessment.
2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the assessment in violation of principles of natural justice in as much as passing the impugned order by recording incorrect facts and findings and without providing opportunity of cross examination and without confronting the entire adverse material used against the assessee and without providing adequate opportunity of hearing.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not granting the benefit of telescoping while confirming the addition made by Ld. AO.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in charging interest u/s 234A, 234B and 234C of the Income Tax Act, 1961.” Page | 54 Navneet Jhamb Vs ACIT 1608, 1610, 1611 and 1612 /Del/2011 (Assessment Year: 2000-01 to 2003-04 and 2006-07)