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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the assessee against the order of CIT(A)-11, Pune, dated 25-02-2015 for the Assessment Year 2010-11.
Assessee raised the following grounds of appeal :
“1. The Ld.CIT(A) erred in law and on facts in sustaining the action of the AO in making addition of Rs.31,00,000/- (Rupees Thirty One lakhs) to the returned income of the appellant on account of alleged “On money” on purchase of flat. 2. The Ld.CIT(A) erred in law and on facts in confirming invocation of provisions of section 69B to make an addition of Rs.31,00,000/- (Rupees Thirty One lakhs). 3. The appellant craves leave to add, alter, clarify, explain, modify and delete any of the grounds of appeal or to raise any new ground of appeal, and to seek any just and fair relief.”
Briefly stated relevant facts are that the assessee is connected with Finolex Group of cases. There was search action u/s.132 of the Act on the assessee on 18-11-2010. Search resulted in the discovery/
seizure of papers connected to the ‘on-money’ transaction of assessee.
Copies of the said papers are filed before us in the form of a paper book.
One diary containing pages 1 to 160 was seized wherein the details of
acquisition of flats at Baner was mentioned. In response to notice
u/s.153A of the Act, the assessee filed the return filed the return of
income declaring total income of Rs.38,85,851/- which is repeat of the
total income returned in the original return of income.
Apart from others, in connection with the said acquisition of flats
at baner, the total consideration payable by the assessee is shown on
the seized pages as Rs.1.42 crores (rounded off). Details of the said
acquisition as given in Para No.6 of the assessment order. The said
consideration of Rs.1.42 crores excludes the charges like registration,
stamp duty/brokerage, society etc. The property in question involves 3
flats at Baner and the same were acquired jointly in the name of the
assessee and his son, Mr. Kamal Jain with 50% share each. Mr. Aamod
Shashikant Wagh is the seller of the flats. As per the sale agreement,
which was seized during search action, the total consideration payable
in respect of 3 flats comes to Rs.1.11 crores only. Thus, there is a
difference of Rs.31 lakhs (i.e. Rs.1.42 crores – Rs.1.11 crores). All these
figures have emanated from the seized papers. The fact that assessee
and his son Shri Kamal Jain has 50% share is also evident from the
said seized papers, where the shares are shown as Rs.71 lakhs each.
After examining the seized papers and considering the explanation of
the assessee, AO taxed the said difference amount of Rs.31 lakhs as
undisclosed investment u/s.69B of the Act. Relevant discussion and
decision of the AO as appearing in Para No.6 of the assessment order is
extracted here as under :
“6. . . . . . .Thus the contents on the above pages clearly indicate that the consideration of Rs.1.42 crores has been paid for the three flats have been paid to Shri Aamod Shashikant Wagh which include on money of Rs.31 lacs. Jottings on the backside of Page No.15 are clear and evidences payment of consideration of Rs.31 lacs in cash to the seller and this conclusion is also supported by another jottings on Page No.16 and Page No.155. In view of this the amount of Rs.31 lacs is assessed as undisclosed investment u/s.69B of the Income Tax Act and added it to the total income….”
During the First Appellate proceedings, the assessee made
various submissions against the AO’s decision of making addition of
Rs.31 lakhs. For the first time, the assessee raised a new argument
before the First Appellate authority stating that the said sum of Rs.31
lakhs constitutes advance towards the repairs/renovation of the flats.
Further, assessee mentioned that the said amount of Rs.31 lakhs was
never paid to the assessee eventually as the seller fails to undertake the
said repairs and renovations. On considering the same, the CIT(A)
rejected the said argument considering the absence of any evidence in
this regard and eventually confirmed the addition of Rs.31 lakhs made
by the AO. Contents of Para No.4.3.6 are relevant and therefore the
said para is extracted here as under for the sake of completeness :
“4.3.6 For the foregoing reasons, the AO is justified on facts and in law in treating the on-money amount of Rs.31,00,000/- as unexplained investment of the appellant u/s.69B of the I.T. Act, 1961. Accordingly, the addition of Rs.31,00,000/- made by the AO on this ground does not call for any interference and the same is hereby affirmed. Ground of appeal No.1 fails.
Aggrieved with the same, the assessee is in present appeal with
the grounds extracted above.
After examining the background facts of the case and the issue
that led to the addition of Rs.31 lakhs on account of on-money paid by
the assessee, Shri Sunil Pathak, Ld. Counsel for the assessee, without
prejudice to the arguments raised before the lower authorities,
submitted that the flats are owned by the assessee as well as his son
Mr. Kamal Jain with 50% share each. Further, he submitted that
making entire addition of Rs.31 lakhs in the hands of the assessee
alone is unfair and unsustainable in law as assessee has only 50%
share on the said flats at Baner. Not pressing the core arguments on
the issues raised in the main grounds and deviating from the same, Ld.
Counsel for the assessee submitted that the addition should be
sustained only to the extent of 50% of Rs.31 lakhs, i.e. Rs. 15,50,000/-
in the case of the assessee.
In reply, Ld. DR for the Revenue submitted that this argument of
the assessee’s counsel without prejudice relates to the core issues
raised in the grounds and is raised for the first time. Further, he relied
on the orders of the AO and the CIT(A) dutifully.
We heard both the parties on the facts leading to the addition of
Rs.31 lakhs in the light of the seized papers placed before the Tribunal.
It is undisputed fact that the value as per the agreement of the flats is
Rs.1.11 crores and the seized documents indicate the acquisition of flat
at Rs.1.42 crores. Another undisputed fact is that the assessee is the
owner of the flats to the extent of 50% and the rest is owned by his son
Mr. Kamal Jain. Before us, reiterating the arguments raised before the
lower authorities, Ld. Counsel for the assessee submitted that the said
amount of Rs.31 lakhs was never paid by the assessee to Mr. Aamod
Shashikant Wagh, the seller, promised towards repairs and renovations.
Mr. Wagh did not undertake the repairs in the flats. As per the Ld.
Counsel, none of the seized papers indicate the actual payment of on-
money to Mr. Aamod Shashikant Wagh. The expressions like ‘cash
paid’ or ‘payable’ were found missing in the seized papers. On
considering the said reasons and arguments of the Ld. Counsel, we
closely examined the relevant papers. In the light of these submissions,
we examined the seized papers and found that the figure of cost of
consideration of the flats is Rs.1.42 crores and it does not refer to any
advance for repairs. Further, we find the figure appearing in the
agreement to sale is only Rs.1.11 crores. None of the seized papers
indicate directly or indirectly to the claims relating to repairs, advances
payable or paid to Mr. Aamod Shashikant Wagh. In view of the same,
the argument of the Ld. Counsel for the assessee that Rs.31 lakhs was
paid towards repairs or renovations is unsustainable. Accordingly, the
argument raised by the Ld. Counsel for the assessee are dismissed.
Coming to the alternate plea of taxing only 50% of Rs.31 lakhs in
the hands of the assessee, proportionate to the share in the acquired
property, we find the same is fair considering the fact that the assessee
is the owner of the flats only to the extent of Rs.71 lakhs which is 50%
of the total investment. Accordingly, we direct the AO to restrict the
addition to the tune of 50% only, i.e. Rs.15,50,000/-. Grounds raised
by the assessee on this issue are partly allowed.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on this 23rd day of May, 2018.
Sd/- Sd/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER
पुणे Pune; �दनांक Dated : 23rd May, 2018 सतीश
आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत
अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. The CIT(A)-11, Pune 4. CIT-11, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “A Bench” Pune; 5. गाड� फाईल / Guard file. 6.
आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
स�यािपत �ित //True Copy// //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune