Dy. CIT v. Rajat Agarwal - Taxpublishers.in

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The Tax Publishers2012 TaxPub(DT) 1837 (Jp-Trib) : (2012) 144 TTJ 0753 : (2012) 068 DTR 0058 INCOME TAX ACT, 1961 --Income from undisclosed sources--Addition under section 69Unexplained investment in purchase of plot--The assessee entered into a transaction for purchase of plot with S Suri and R Blana. As the ownership of the plot was with M/s. S Buildcon Pvt. Ltd. and Mr. S Suri and Mr. R Blana were the shareholders of that company, transaction was effected through transfer of shares by those persons in the name of assessee's family members and payments were made to the existing shareholders for purchase of shares and to the company for making payment of liabilities towards the erstwhile shareholders of the company from the sources of family members of the assessee. The AO made this addition by dealing the issue at pages 3-5, Paras 2, 2.1 & 2.2 and giving conclusive findings in para 2.2 at page 4-5 of the assessment order. AO relied on the certain documents/papers found and pounded during the course of survey at M/s. G India Limited. During the course of assessment proceedings, the assessee submitted that these papers found from the premises of M/s. G India Limited did not indicate the complete facts of the transaction. He submitted that the agreement so found was an incomplete draft agreement and furnished the copies of the final agreement and revised agreement narrating the complete facts of the case. However, the explanation given by the assessee had been considered as a stretch of imagination and simply an after thought in order to make an effort to negate the findings which emerged from the various documents found/impounded during the course of survey proceedings. The AO mentioned that all the papers pertaining to purchase of said plot were found and impounded during the course of survey proceedings and the documents now produced by the assessee have never come to surface earlier nor even any submission was made by the assessee in this regard during the course of survey proceedings and afterwards also. The AO also observed that the final agreement seemed non genuine as the same had not been made on proper stamp paper which was not possible to be arranged for back dates or for any earlier date. Accordingly, by not taking into consideration the final agreement and revised agreement and taking into consideration the papers found during survey of G India Limited, the AO concluded that the assessee had passed on a total consideration of Rs. 2,51,00,000 for buying the captioned property of which a sum of Rs. 66,00,000 has been shown from the regular sources and the balance amount of Rs. 1,85,00,000 had been paid from unexplained sources. On appeal considering the facts and circumstances of the present case and following the certain decisions, the CIT(A) held that the AO was not right in making impugned addition of Rs. 1,85,00,000 on the basis of unsigned and undated draft agreement and without bringing any corroborative evidence on record. Accordingly, the CIT(A) directed AO to delete the addition of Rs. 1,85,00,000 made by him. Held: Justified. A loose paper and a draft agreement was found during the course of survey relating to the deal of purchase of Plot No. C-166 in Tilak Nagar owned by M/s. S Buildcon Private Limited. Mr. S Suri & Mr. R Blana were the existing shareholder and directors of the company. The seller party in the draft agreement is M/s. Shah Buildcon Private Limited and the assessee is purchaser. As per these documents the assessee had paid a sum of Rs. 11,00,000 as advance on 30-12-2006 against total consideration of Rs. 2,51,00,000. Out of balance amount, sum of Rs. 14,00,000 lacs was to be paid by 20-1-2007 and the balance amount of Rs. 2,26,00,000 has to be paid within 60 days. A perusal of the draft agreement show that there are number of cuttings, corrections, hand written insertions, etc., in the same and it is not signed by any of the parties. The deal has been finalized by transferring of shares of M/s. S Buildcon and not by transferring of the said plot by the company. In the signed agreement subsequently submitted by the assessee during the course of assessment proceedings, the consideration mentioned/amount paid and to be paid are same but there were certain conditions of approval of map for housing project and construction of 17000 sq. ft., which were to be fulfilled by the seller party before finally closing the deal. Application for such approval had already been made in the month of September, 2006 by the sellers. This agreement is between the existing shareholders/directors of M/s. S Buildcon and the assessee. The assessee has also produced a revised agreement dt. 14-3-2007. In this agreement, as the sellers could not fulfill the conditions, the amount of consideration and the terms of payment were revised and the payments have been made according to the said terms which are verifiable from the books of accounts and other records of the company M/s. S Builder Private Ltd. A total of Rs. 67,00,000 have been paid of which Rs. 1,00,000 is paid by the new shareholders, Shri M.P. Agrawal, father of assessee, Smt. S Agrawal, mother of assessee and Smt. A Agrawal, wife of the assessee to the existing shareholders for purchase of shares and this fact is recorded in the share transfer register of the company placed in the paper book pages 25 & 26. The balance amount of Rs. 66,00,000 have been paid by these 3 persons related to the company as unsecured loan which have been used by the company to repay the existing loan obligations towards the seller group. The details of payment so made as per the books of the company is placed in the paper book at page 24. Taking into account the above facts, the CIT(A) found that the balance amount of Rs. 1,85,00,000 cannot be said to have been paid by the assessee only on the basis of the draft agreement and the papers found. The agreements and the revised agreement cannot be denied merely for the reason that they were not found during the course of survey at the premises of assessee's company M/s. G India Limited. The assessee claims that the same were there at his residence. The assessee's statements were not recorded during the course of survey otherwise he could have explained the complete facts at that time itself. Further, these agreement are written on the stamp papers issued prior to the date of transactions. [Para 9] As apparent from the statutory records of the company M/s. S Buildcon Private Limited, the said deal was finally closed in the manner written in the revised agreement. No evidence is there on record showing the payment of balance amount by the assessee or his family members. The amount remaining to be paid in terms of the draft agreement also remain payable in terms of the signed agreement but the terms were subsequently revised and payment was made as per the revised terms. Moreover, the final payments were made on 14-3-2007 i.e. after 75 days in terms of signed agreement as against 60 days mentioned in the draft agreement. In view of these facts and circumstances of the case, the CIT(A) has given a well reasoned and well founded order after dealing with each and every aspect of the issue and Tribunal is in full agreement with the findings of the CIT(A) that the addition of Rs. 1,85,00,000 made by applying the provisions of section 69 is not justified. Tribunal also draws support from the cases relied on and discussed by the CIT(A) in detail to arrive at this finding. Therefore, the order of CIT(A) is confirmed on this issue. 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The Tax Publishers2012 TaxPub(DT) 1837 (Jp-Trib) : (2012) 144 TTJ 0753 : (2012) 068 DTR 0058

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 69Unexplained investment in purchase of plot--The assessee entered into a transaction for purchase of plot with S Suri and R Blana. As the ownership of the plot was with M/s. S Buildcon Pvt. Ltd. and Mr. S Suri and Mr. R Blana were the shareholders of that company, transaction was effected through transfer of shares by those persons in the name of assessee's family members and payments were made to the existing shareholders for purchase of shares and to the company for making payment of liabilities towards the erstwhile shareholders of the company from the sources of family members of the assessee. The AO made this addition by dealing the issue at pages 3-5, Paras 2, 2.1 & 2.2 and giving conclusive findings in para 2.2 at page 4-5 of the assessment order. AO relied on the certain documents/papers found and pounded during the course of survey at M/s. G India Limited. During the course of assessment proceedings, the assessee submitted that these papers found from the premises of M/s. G India Limited did not indicate the complete facts of the transaction. He submitted that the agreement so found was an incomplete draft agreement and furnished the copies of the final agreement and revised agreement narrating the complete facts of the case. However, the explanation given by the assessee had been considered as a stretch of imagination and simply an after thought in order to make an effort to negate the findings which emerged from the various documents found/impounded during the course of survey proceedings. The AO mentioned that all the papers pertaining to purchase of said plot were found and impounded during the course of survey proceedings and the documents now produced by the assessee have never come to surface earlier nor even any submission was made by the assessee in this regard during the course of survey proceedings and afterwards also. The AO also observed that the final agreement seemed non genuine as the same had not been made on proper stamp paper which was not possible to be arranged for back dates or for any earlier date. Accordingly, by not taking into consideration the final agreement and revised agreement and taking into consideration the papers found during survey of G India Limited, the AO concluded that the assessee had passed on a total consideration of Rs. 2,51,00,000 for buying the captioned property of which a sum of Rs. 66,00,000 has been shown from the regular sources and the balance amount of Rs. 1,85,00,000 had been paid from unexplained sources. On appeal considering the facts and circumstances of the present case and following the certain decisions, the CIT(A) held that the AO was not right in making impugned addition of Rs. 1,85,00,000 on the basis of unsigned and undated draft agreement and without bringing any corroborative evidence on record. Accordingly, the CIT(A) directed AO to delete the addition of Rs. 1,85,00,000 made by him. Held: Justified.

A loose paper and a draft agreement was found during the course of survey relating to the deal of purchase of Plot No. C-166 in Tilak Nagar owned by M/s. S Buildcon Private Limited. Mr. S Suri & Mr. R Blana were the existing shareholder and directors of the company. The seller party in the draft agreement is M/s. Shah Buildcon Private Limited and the assessee is purchaser. As per these documents the assessee had paid a sum of Rs. 11,00,000 as advance on 30-12-2006 against total consideration of Rs. 2,51,00,000. Out of balance amount, sum of Rs. 14,00,000 lacs was to be paid by 20-1-2007 and the balance amount of Rs. 2,26,00,000 has to be paid within 60 days. A perusal of the draft agreement show that there are number of cuttings, corrections, hand written insertions, etc., in the same and it is not signed by any of the parties. The deal has been finalized by transferring of shares of M/s. S Buildcon and not by transferring of the said plot by the company. In the signed agreement subsequently submitted by the assessee during the course of assessment proceedings, the consideration mentioned/amount paid and to be paid are same but there were certain conditions of approval of map for housing project and construction of 17000 sq. ft., which were to be fulfilled by the seller party before finally closing the deal. Application for such approval had already been made in the month of September, 2006 by the sellers. This agreement is between the existing shareholders/directors of M/s. S Buildcon and the assessee. The assessee has also produced a revised agreement dt. 14-3-2007. In this agreement, as the sellers could not fulfill the conditions, the amount of consideration and the terms of payment were revised and the payments have been made according to the said terms which are verifiable from the books of accounts and other records of the company M/s. S Builder Private Ltd. A total of Rs. 67,00,000 have been paid of which Rs. 1,00,000 is paid by the new shareholders, Shri M.P. Agrawal, father of assessee, Smt. S Agrawal, mother of assessee and Smt. A Agrawal, wife of the assessee to the existing shareholders for purchase of shares and this fact is recorded in the share transfer register of the company placed in the paper book pages 25 & 26. The balance amount of Rs. 66,00,000 have been paid by these 3 persons related to the company as unsecured loan which have been used by the company to repay the existing loan obligations towards the seller group. The details of payment so made as per the books of the company is placed in the paper book at page 24. Taking into account the above facts, the CIT(A) found that the balance amount of Rs. 1,85,00,000 cannot be said to have been paid by the assessee only on the basis of the draft agreement and the papers found. The agreements and the revised agreement cannot be denied merely for the reason that they were not found during the course of survey at the premises of assessee's company M/s. G India Limited. The assessee claims that the same were there at his residence. The assessee's statements were not recorded during the course of survey otherwise he could have explained the complete facts at that time itself. Further, these agreement are written on the stamp papers issued prior to the date of transactions. [Para 9] As apparent from the statutory records of the company M/s. S Buildcon Private Limited, the said deal was finally closed in the manner written in the revised agreement. No evidence is there on record showing the payment of balance amount by the assessee or his family members. The amount remaining to be paid in terms of the draft agreement also remain payable in terms of the signed agreement but the terms were subsequently revised and payment was made as per the revised terms. Moreover, the final payments were made on 14-3-2007 i.e. after 75 days in terms of signed agreement as against 60 days mentioned in the draft agreement. In view of these facts and circumstances of the case, the CIT(A) has given a well reasoned and well founded order after dealing with each and every aspect of the issue and Tribunal is in full agreement with the findings of the CIT(A) that the addition of Rs. 1,85,00,000 made by applying the provisions of section 69 is not justified. Tribunal also draws support from the cases relied on and discussed by the CIT(A) in detail to arrive at this finding. Therefore, the order of CIT(A) is confirmed on this issue. [Para 9.1]