ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, SURAT vs. SHRI JIGNESH MAHESH AMIN, SURAT

Brief facts of the case are that the assessee is an individual, engaged in the business of real estate development. The assessee filed his return of income for A.Y. 2013-14 on 30/09/2013 declaring income of Rs. 12,13,780/-. A survey under Section 133A of the Income Tax Act, 1961 (in short, the Act) was carried out at the business premises of assessee at White Wing Project on 02/07/2015. During the course of survey, one diary was found in the possession of real estate broker Pankaj Jariwala, who was present in the office of assessee at the time of survey, having reference of TP-43 (Bhimrad), “B No.91, 5470 Vaar X 45/540 dated 17/03/2012 Massimo”. Such loose paper was marked as Annexure BI- 1. In the loose paper, there was some noting with regard to transaction of land situated at Block No. 91, TP-43, Bhimrad and the flat bearing No. 902, Sai Residency. The Assessing Officer on perusal of such information/noting on the paper, formed belief that income of Rs. 19.97 crore is chargeable to tax has escaped assessment. The Assessing officer after recording reasons, issued notice under Section 148 dated 28/03/2018. In response to notice under Section 148 of the Act, the assessee filed reply dated 15/08/2018 and also furnished return of ACIT Vs Jignesh Amin income filed on 04/06/2018, in response to notice under Section 148 of the Act. The assessee requested for supply of reasons recorded. Reasons recorded were provided to the assessee on 12/07/2018. The assessee filed his objection against reasons recorded on 30/10/2018. The objection of assessee was disposed of by speaking order on 31/10/2018.

In the reasons recorded, the Assessing Officer noted that a survey under Section 133A was carried out on the project undertaken by assessee. During the course of survey, certain diaries and documents were found from the possession of a real estate broker, who was present at the premises during the course of survey which was later on impounded. On perusal of said diary, it was revealed that the assessee made unaccounted investment in land as Block No. 91, TP-43, Bhimrad amounting to Rs. 19.87 crores and Rs. 33.38 lacs in flat No. 902, Sai Residency through broker Pankaj Jariwala. The Assessing Officer further recorded that diaries and document was inventorised as Annexured-BI- 1 reflects details of land at B-91, TP-43, Bhimrad which corroborates with the certificate of stamp duty paid by Jignesh M Amin (assessee) and Anupa Jignesh Amin for purchase of said land. The details of land mentioned in the diary impounded from Pankaj Jariwala, a broker. The Assessing Officer further noted that as per details of the land found in the diary from Pankaj Jariwala and the sale deed of said land are ACIT Vs Jignesh Amin matches. The assessee made payment of Rs. 3.48 crores as shown in the registered sale deed. Thus, as per the sale deed and the noting’s on the diary, the income to the tune of Rs. 19.97 crores chargeable to tax as escaped assessment. The Assessing Officer during reassessment proceedings, on the basis of reasons recorded and the post survey statement, recorded by survey team, issued show cause notice as to why a difference of Rs. 19.87 crore between the price as per sale deed and the price mentioned in the impounded document should not be treated as unaccounted investment. (5470 x 45540=24,91,03,800/- i.e. 24.91- 3.48 =19.87) The Assessing Officer recorded that the assessee filed his reply.

The reply of assessee is recorded in para 3 of assessment order. The assessee in his reply contended that in the show cause notice, it is mentioned that at the time of survey, Pankaj Jariwala accepted unaccounted investment in the land at Block No. 91, TP-43, Bhimrad of Rs. 19.87 crores. Shri Pankaj Jariwala never accepted that the assessee made such unaccounted investment. Pankaj Jariwala in reply to question No. 42 in his statement recorded under Section 131 on 24/10/2015, denied such transaction. The assessee extracted question No. 41 and answer thereof in his reply. The assessee mentioned that Pankaj Jariwala explained that if assessee undertake the project of residence, the assessee would be able to realize sale consideration of ACIT Vs Jignesh Amin Rs. 45,540/- per Vaar from the project. The deal of land was under negotiation and he was having in mind for commercial project in the nearby locality and that terms and conditions of sale was not acceptable to him, therefore, transaction was not materialized. The assessee further mentioned that his statement was also recorded and the assessee referred question No. 36 to 42 and reply thereof. On the basis of such statement, the assessee explained that from the statement, it is clear that the assessee has not purchased the land for Rs. 19.87 crores. Rate of Rs. 45540/- mentioned on the paper was in relation to the probable sale consideration of Rs. 45,540/- per Vaar for residential project and commercial term used by builders for their calculation for viability of the project, if undertaken by assessee. The assessee purchased the land and launched commercial project instead of residential project and the total realization would be much more than Rs. 19.87 crores.

The reply of assessee was not accepted by Assessing Officer. The Assessing Officer recorded that entry at page No. 21 of Annexure BI-1 reads as “TP-43 (Bhimrad), B. Uo 91 5470 Vaar x 45540 dated 17/03/2012 Massimo”. The Massimo project is of assessee. To verify the certain facts/details, notice was issued to Sub-Registrar, Althan, Surat to furnish copy of registered document with respect to impugned land. In response to such notice, Sub-Registrar, Althan provided copy ACIT Vs Jignesh Amin of registered sale deed of the land. The Assessing Officer further noted that on perusal of said document, it was noted that the land has been registered under Massimo Enterprises by assessee and his wife. On such fact, the impugned land purchased by assessee is established. The assessee was also asked to explain the entry mentioned at page No. 21 of Annexure BI-1, in response to such explanation, the assessee submitted that he had purchased the land directly from the seller which is approximately 4574 square meter and was purchased at the rate of Rs.10,000/- to 11,000/- per square meter. He shown his ignorance/unaware of the details mentioned at page No. 21 of Annexure-BI-1. The Assessing Officer further on the basis of statement of broker recorded that on 19/11/2015, took his view that the assessee purchased land approximately 4547 square meter (approximately 5470 Vaar) at the rate of Rs. 44,000/- per square meter (Rs.9200/- per vaar Appox) and has shown consideration of Rs. 5.03 crores in the documents (sale deed). On the basis of such observation, the Assessing Officer took her view that the impugned land was actually purchased at Rs. 24,91,03,800/- (5470 X 45540 = 24,91,03,800). The assessee has shown consideration at Rs. 5,03,24,000/- thereby the difference of Rs. 19,87,79,800/- (24,91,03,800 – 5,03,24,000) between the price and the sale deed and the same was treated as unaccounted investment and ACIT Vs Jignesh Amin added to the total income of assessee in the assessment order dated 24/1/2018 passed under Section 143(3) r.w.s 147 of the Act.

Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee challenged the validity of reopening under Section 147 and notice under Section 148, as well as addition on account of unaccounted investment in land. The assessee filed detailed written submission on both the issues. The submission related with the additions of unaccounted investment recorded on page No. 5 to 12 in para 6.3 of order of ld. CIT(A). The assessee in sum and substance, submitted that the land situated at Block No. 91, TP-43, Bhimrad was purchased for a consideration of Rs. 5.03 crores through sale deed in the name of partnership firm Massimo Enterprises. The payment of land was made in instalments in F.Y. 2012-13 and 2013-14. The undisputed fact is that the assessee has not purchased the land (in individual capacity) as the same is recorded in the books of Massimo Enterprises having separate PAN being AAVFM0143A. The assessment or partnership firm was completed for A.Y. 2013-14 and no adverse view was taken. The Assessing Officer made addition on account of unaccounted investment merely on the basis of impounded material at page No. 21 of Annexure BI-1 and the statement of Pankaj Jariwala. The assessee has not purchased land for Rs. 19.87 crores. The rate of Rs. 45540/- mentioned ACIT Vs Jignesh Amin on the paper in relation to a probable sale consideration per Vaar for the residential project (commercial term used by builder in their calculation for viability of project) if undertaken. The assessee made commercial project and realization was more than Rs. 19.87 crores. The assessee also filed copy of impounded material at page No. 21 of Annexure-BI-1. The assessee further stated that the Assessing Officer has not found any corroborative evidence that the assessee paid any on money over and above the cost mentioned in the purchase deed. The writing on the impounded material is not in the handwriting of assessee. Nowhere the impounded material mentioned that assessee made such unaccounted investment. In fact, there is no mentioned of any transaction representing any payment made which can be covered under Section 69 of the Act, there is no word like on money or cash depicting any nature of unaccounted payment. The burden is on the revenue to show that the assessee made such investment. The year in which investment was allegedly made is not discernable from the document. Such document cannot be formed basis for making any addition. The figure of rate of Rs. 45540/- mentioned on the impounded material only depicts the probable sales consideration per Vaar for the residential project. From the date of survey and post survey period and at the time of reply to show cause notice, the stand of assessee remained the same as the assessee is neither the party nor the ACIT Vs Jignesh Amin Assessing Officer could confront with any document evidencing payment of unaccounted cash. The assessee further submitted that under which section, unaccounted investment would fall either under Section 69 or 69B of the Act, is mentioned. The presumption under Section 292(C) is available only in respect of document (possession or control) of the assessee. In the present case, the document was not seized from the assessee’s control or possession but was found from the possession of Pankaj Jariwala, who was present there during course of survey. Therefore, Section 292(C) is not applicable on the facts of the case of assessee. Non-speaking document without corroborative material has to be disregarded for the purpose of assessment. The document found in such survey and seizure perspective, such non- speaking seized document are referred as dumb document. The assessee also filed copies of relevant question and answer of statement of Pankaj Jariwala and submitted that the Assessing Officer made addition without any corroborative evidence that the assesse made payment over and above the purchase deed and addition is required to be deleted. To support his submission, the ld. assessee also relied on various case laws including decision of Tribunals in Nishant Construction Pvt. Ltd. Vs ACIT 57 CCH 0083, Abhay Kumar Bharamgouda Patil Vs ACIT (2018) 96 taxmann.com 377 (Panji Trib), Hon'ble Apex Court in K.P. Varshese Vs ITO (1981) 24 CTR 358 (SC)/131 ITR 597 (SC), ACIT Vs Jignesh Amin Hon'ble Delhi High Court in CIT Vs. D.K. Gupta (2008) 174 Taxman 476 (Delhi), Ashwani Kumar Vs ITO 39 SOT 183 (Delhi Trib), Amarjit Singh Bakshi (HUF) Vs ACIT (2003) 86 ITD 13 (Delhi), Gujarat High Court in CIT Vs Maulik Kumar K Shah 307 ITR 137 (Guj), ACIT Vs J.P. Morgan India (P) Ltd. 46 SOT 250 (Mumbai Trib), ACIT Vs Sharad Chaudhary (2015) 55 taxmann.com 324 (Delhi Trib) and DCIT Vs Haresh R Vasani IT(SS)A No. 580/Ahd/2010.

The ld. CIT(A) after considering the assessment order, submission of assessee held that the impugned document was found from the possession of Pankaj Jariwala, a broker by profession who was present in the survey premises. The noting referred by Assessing Officer on page No. 21 of impounded document was found from Pankaj Jariwala. Shri Pankaj Jariwala in his statement categorically stated that he brought the proposal of land at TP-43, Bhimrad for consideration of the assessee and explaining him the profitability in the case if the residential project is constructed. The land was purchased by a firm Massimo Enterprises wherein the assessee is a partner. The land was not purchased through Pankaj Jariwala. Such fact is confirmed by assessee as well as Pankaj Jariwala in their statement. The nottings made by Pankaj Jariwala in his diary cannot be taken as evidence for making addition in the hands of assessee. As per sale deed of land, on which project Massimo is constructed, the same is reflected in the balance ACIT Vs Jignesh Amin sheet of Massimo Enterprises. No such addition is made in the hands of firm. The Assessing Officer or Investigation Wing has not examined the seller of land to prove that there was on money payment. In no part of statement of assessee or Pankaj Jariwala stated that Rs. 45,540/- referred by him in the diary was on money payment. The assessee as well as broker in their statement stood that Rs. 45540/- was expected sale proceed per Vaar of the land. No other evidence of payment receipt, withdrawal of cash from bank were found during the course of survey which could correlate to the nottings by Pankaj Jariwala in his diary. On the basis of such observation, the ld. CIT(A) held that the basis on which the Assessing Officer made addition is not on very sound reasoning. The ld. CIT(A) noted that the provisions of Indian Evidence Act not strictly applicable on the proceedings under Income Tax Act but the broad principles of evidence applied to such proceedings. Entry in the books of account maintained in the regular course of business is relevant for the purpose of consideration, the nature and impact of transaction but noting on slips of paper or loose paper cannot falls in the category of entry. Nottings on loose papers or loose sheets required corroborative or supporting evidence which may include statement of person who admittedly is a party to the noting. The entire addition in the hands of assessee is based on the documents found but there is no iota of evidence to support the case of Assessing Officer that huge figure ACIT Vs Jignesh Amin whatever be its quantum over and above figure booked in the records and the accounts changed hands between the assessee and the seller.

The ld. CIT(A) further held that the document in question is not signed by assessee and not in his handwriting. Merely because the noting is matching with the property purchased by his firm in which the assessee is a partner, the addition cannot be made treating such figures as on money payment. The ld. CIT(A) by referring the decision of Hon'ble Apex Court in CBI Vs V.C. Shukla AIR 1998 SC 1406 and Common Cause (Registered Society) and Others Vs Union of India in Writ Petition Civil Appeal no. 505 of 2015 and decision of Hon'ble Gujarat High Court in CIT Vs Maulik Kumar K. Shah (supra) held that the case of assessee is clearly covered by the said decisions and addition made in the hands of assessee is not justified and deleted the entire addition. Aggrieved by the order of ld. CIT(A), the revenue has filed present appeal before this Tribunal.

We have heard the rival contentions of the learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the revenue and the learned Authorised Representative (ld. AR) of the assessee and the and have perused the orders of the lower authorities carefully. The ld CIT-DR for the revenue submits that during the survey action at the business premises of the assessee a diary was impounded from the person present on spot. In the said diary there was reference of area of ACIT Vs Jignesh Amin land at its rate i.e. the land admeasuring of 5470 vaar (yard) and the rate is mentioned as 45540. As per the nottings of the seized document the total consideration arrived was Rs. 24.91 Crore. The assessee has shown consideration of land only at Rs. 5.03 Crore. The assessing officer on the basis of such evidence has reason to believe that income of the assessee to the extent of Rs. 19.87 Crore (24.91-5.03=19.87) has escape from assessment. The particulars of the documents seized during the survey are clearly matches with the land of the assessee purchased by him. The assessing officer on the basis of evidences found during the survey action and the statement of the assessee and the broker made addition on account of on money paid by the assessee and made addition thereof while passing the assessment order. The ld CIT(A) granted relief to the assessee by accepting the plea of the assessee that broker Pankaj Jariwala brought the proposal of land to the assessee and that the deal could not be materialized. During assessment the assessing officer called the information from sub- registrar officer about the land purchased by the assessee. The details of the land clearly match with the land purchased by assessee and the details recorded on the diary impounded during the survey. The document impounded during the survey cannot be treated as dumb document. All the evidences relied by the assessing officer have been well corroborated with the registered document of land. In fact, the ACIT Vs Jignesh Amin diary belongs to the assessee and he was very well aware about the contents of such diary. The ld CIT-DR for the revenue prayed to reverse the decision of ld CIT(A) and to restore the order of assessing officer.

On the other hand, the ld. AR of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee submit that the Assessing Officer failed to appreciate that there was no signature of assessee on the impugned diary. There was no writing of assessee in the seized diary. It was recovered from the third party. The statement of Pankaj Jariwala was recorded, who clearly stated that the writing mentioned in the diary was projected figure of profit if commercial project is undertaken on such land. The presumption of section 292C is not applicable against the assessee as the documents is not recovered from the possession of the assessee. The assessing officer right from the beginnings has mentioned that the diary was recovered from the possession of Pankaj Jariwala. The ld AR for the assessee further submits that the land was purchased in the name of a Partnership firm. The assessee has not purchased the land in his individual capacity, the land is recorded in the books of Massimo Enterprises having separate PAN being AAVFM0143A. The assessment or partnership firm was completed for A.Y. 2013-14 and no adverse view was taken by the assessing officer. The ld CIT(A) granted relief to the assessee on appreciation of facts in proper manner.

We have considered the rival submissions of both the parties and perused the orders of the lower authorities carefully. The assessing officer made addition on the basis of impounded material found during the course of survey, wherein certain details of land purchased by the assessee was found. The assessing officer took his view that the nottings on the page no.21 of Annexure-BI-1, matches with the land purchased by the assessee. On page number 21, the area of land is mentioned as 5470 vaar and further figure of 45540 is rate of land, the assessing officer multiplied the area with 45540 and worked out the figure of sale consideration of Rs. 24.91 crore, allegedly paid by the assessee to seller. The registered sale deed reflects the consideration of Rs. 5.03 Core, hence, the assessing officer worked out payment of on money of Rs. 19.87 Crore. As recorded above, before ld CIT(A) the assessee filed detailed written submissions.

The ld CIT(A) deleted the entire addition by taking view that the impugned document was found from the possession of Pankaj Jariwala, a broker by profession who was present in the survey premises. The noting on page No. 21 of impounded document was found from Pankaj Jariwala, who in his statement categorically stated that he brought the proposal of land at TP-43, Bhimrad for consideration of the assessee ACIT Vs Jignesh Amin and explaining him the profitability in the case if the residential project is constructed. The land was purchased in the name of firm Massimo Enterprises, wherein the assessee is a partner. The land was not purchased through Pankaj Jariwala and that fact is confirmed by assessee as well as by broker Pankaj Jariwala in their statements. The ld CIT(A) held that nottings made by Pankaj Jariwala in his diary cannot be taken as evidence for making addition in the hands of assessee.

We find that ld CIT(A) also held that as per sale deed of land, on which project Massimo is constructed, the same is reflected in the balance sheet of Massimo Enterprises and such addition is made in the hands of firm. The said partnership is having its separate PAN. The Assessing Officer or Investigation Wing has not examined the seller of land to prove that there was on money payment. We find that nowhere either assessee or Pankaj Jariwala in their statement stated that Rs. 45,540/- referred by him in the diary was on money payment. The assessee as well as broker in their statement clearly stated that Rs. 45540/- was expected sale proceed per Vaar of the land. No other evidence of payment receipt, withdrawal of cash from bank were found during the course of survey which could correlate to the nottings by Pankaj Jariwala in his diary.

We further find that the ld. CIT(A) also held that the basis on which the Assessing Officer made addition is not on very sound reasoning.

We find that the ld. CIT(A) while granting relief to the assessee relied on the decision of Hon'ble Apex Court in CBI Vs V.C. Shukla AIR 1998 SC 1406 and Common Cause (Registered Society) and Others Vs Union of India in Writ Petition Civil Appeal no. 505 of 2015 and decision of Hon'ble Gujarat High Court in CIT Vs Maulik Kumar K. Shah (supra), and held that the case of assessee is clearly covered by the ratio of aforesaid decisions. The Hon’ble Jurisdictional High Court in CIT Vs Maulikumar K Shah (supra) held that mere entries in the seized material is not sufficient to prove that assessee indulged in such transaction in which ‘on money’ has been received. In view of the aforesaid factual and legal discussions, we do not find any infirmity or reason to interfere with the order of ld CIT(A), which we affirm. In the result, the grounds of appeal