1. These appeals under section 260 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) arise out of the common order dated 9th January, 2015 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Ahmedabad (hereinafter referred to as “the Tribunal”) in ITA Nos.128/Ahd/2013, 129/Ahd/2013 and 130/Ahd/2013 and hence, all the appeals were heard together and are disposed of by this common judgment.
2. The appellant – revenue has questioned the above referred order of the Tribunal by proposing the following six questions:-
(1) Whether the Ld. Tribunal is right in law and on facts of the case in setting aside the orders of the lower authorities and thereby deleting the addition of Rs. 3,14,51,000/- out of Rs. 3,25,50,000/- made on account of unexplained investments u/s. 69 of the Act?
(2) Whether the Ld. ITAT is right in law and on facts of the case by not appreciating that there was an agreement to sell between the assessee and the seller dated 18.01.2005 which is a valid document giving specific dates of payment to be made by the assessee?
(3) Whether the Ld. ITAT is right in law and on facts of the case by not appreciating that the assessee was given an opportunity of cross examination on 14.08.2012, however he failed to avail the opportunity and thus could not prove that the MOU was cancelled?
(4) Whether the Ld. ITAT is right in law and on facts of the case by not appreciating that the seller Shri Somabhai Ambalal Prajapati in his statement recorded under section 132(4) of the Act admitted to have received the sale consideration from the assessee and he had disclosed the sale consideration as per the rates mentioned in banachithi and offered capital gains on the same as per the share held by them in the land sold consequent to banachithi?
(5) Whether the Ld. ITAT is right in law and on facts of the case by not appreciating that the plots of land were transferred to the ultimate purchasers at the insistence and directions of the assessee?
(6) Whether the Ld. ITAT is right in law and on facts of the case by not appreciating that the Additions made are based on the documentary evidences found during the search which corroborates the veracity of the agreement dated 18.01.2005?
3. The assessment years are 2005-06, 2006-07 and 2007-08. During the course of search in the case of one Shri Somabhai Ambalal Prajapati, certain documents were found which indicated that the respondent assessee had entered into agreements with him to purchase various plots of land. The banachithi (agreement to sell) had been seized and inventorized at page No.119 to 122 of Annexure A-22. As per the banachithi, the rate per vigha of juni sharat land (old tenure land) was fixed at Rs. 29,51,000/- while the rate of navi sharat land (new tenure land) was fixed at Rs. 21,85,000/-. The Assessing Officer noticed that the plots referred to in the agreement to sell were not transferred by the sellers as agreed therein. Thus, the statement of Shri Somabhai Ambalal Prajapati was recorded under section 131 of the Act wherein he clarified that plots bearing No.502, 505, 540, 497 and 487 were disputed and could not be transferred due to pending civil suits and that in place of those plots, plots bearing No.512A, 512B, 510 and 513, which are in the same vicinity, at Bhadaj were transferred to the persons specified by the respondent assessee. It was further the case of Somabhai that they had already received the consideration in terms of the banachithi and, therefore, were under an obligation to transfer the lands to the respondent assessee. The Assessing Officer made an addition of Rs. 3,25,50,000/- under section 69 of the Act for assessment year 2005-06. Similar additions were made in relation to assessment years 2006-07 and 2007-08. The respondent assessee carried the matter in appeals before the Commissioner of Income-tax (Appeals) who by a common order in relation to all the three assessment years held thus:-
“5.7 Facts of the case and arguments of appellant have been carefully considered. In his statement recorded on 14/12/2011 Shri Somabhai Prajapati has categorically stated that the entire deal was made by him with appellant for the purpose of selling various plots of land. He also stated that the total payment of all these deals was received by him but civil disputes were going on in respect of certain plots of land. Hence separate sale deeds were executed at the same rates for different plots of land even though the same were not included in the original agreement. He clarified that the sale deeds were executed in the names of persons which were suggested by appellant. He also clarified that cash was received from time to time from appellant through one of his person. The entire amount of cash was received by April, 2006 and the appellant took the confirmation on phone regarding receipt of cash. He also stated that the sale deeds were executed in the name of Shri Ajay Patel. The deeds were prepared by advocates of appellant and his signatures were taken in the presence of sub-registrar. Whenever these documents were executed, the respective amounts were returned back to the appellant in cash and in this manner the adjustments were internally settled.
5.8 The appellant on the other hand, has tried to argue that since he is not the ultimate buyer, he did not pay any cash to Somabhai and statement of Shri Somabhai is false. It is observed that the original agreement to sell or the banakhat is dated 18/1/2005 and as per this banakhat, the first installment of 25% was to be paid on 20/1/2005. It is unlikely that appellant came to know about defects in title of land proposed to be sold by this banakhat within 2 days and stopped the payment. Obviously, the amount due on 20/1/2005 was paid by appellant. Similarly, the remaining amounts were also paid by April, 2006. Only subsequently the appellant came to know about certain disputes in respect of these the same rates which was agreed earlier. The entire amount of Rs. 13.02 crore was paid by appellant as advance to Shri Somabhai. Therefore, the fact that the deal did not materialize subsequently is not relevant.
5.9 In view of categorical statement of Shri Somabhai that he received full payment of Rs. 13.02 crores in cash from appellant as per the terms of banakhat the burden on appellant was very heavy to prove that statement of Shri Somabhai is not correct. Appellant was also allowed opportunity for cross examination of Somabhai but even from this cross examination appellant has not been able to prove that statement of Shri Somabhai is false. Under these circumstances and in view of reasons given by AO in detail in the assessment order, I hold that AO has rightly concluded that sum of Rs. 3,25,50,000/- was paid by appellant on 18/1/2005 and 20/1/2005 to Shri Somabhai Prajapati, which period falls during A.Y. 2005-06. Addition of 3,25,50,000 u/s. 69 is justified in such a situation and the same is confirmed. Ground No.3 of the appeal is dismissed for A.Y. 2005-06.
5.10 Similarly, ground no.2 of the appeal for AY 2006- 07 and 2007-08 are also dismissed. Additions of Rs. 6,51,00,000/- for AY 2006-07 and Rs. 3,25,50,000/- for AY 2007-08 are confirmed.”
The assessee went in appeal before the Tribunal. By the impugned order, the Tribunal held that insofar as assessment year 2005-06 is concerned, the agreement proves that Rs. 11,00,000/- had been paid by the assessee on 18th January, 2005 and did not accept the submission of the assessee that such amount was paid by cheque and that the said cheque was subsequently taken away. It, accordingly, partly allowed the appeal preferred by the assessee in relation to assessment year 2005-06 by upholding the addition to the extent of Rs. 11,00,000/- and allowed the appeals in relation to assessment years 2006-07 and 2007-08.
4. Mrs. Mauna Bhatt, learned senior standing counsel appearing on behalf of the appellant in each of the appeals assailed the impugned order by submitting that it is an admitted position that the agreement to sell had been executed between the sellers and the respondent-assessee namely, Vivek Prahladbhai Patel. It was submitted that Somabhai in his statement recorded under section 131 of the Act has clearly stated that on-money had been received by him to the extent stated in the agreement to sell from the respondent assessee. A power-of-attorney had been executed in relation to one of the plots by the seller in favour of the assessee for taking steps for entering the name of the ultimate purchaser namely, Ajay Patel in the Government records. It was submitted that the assessee had been given opportunity to cross-examine Shri Somabhai Patel so as to dislodge the statements made by him. He, however, did not avail of the opportunity of cross-examination granted to him. Under the circumstances, the statement of the seller Shri Somabhai Patel recorded under section 132(4) of the Act has gone unrebutted. Reliance was placed upon the decision of the Delhi High Court in the case of Malik Brothers (P) Ltd. v. Commissioner of Income-tax, (2007) 162 Taxmann 43, for the proposition that when the assessee is afforded reasonable opportunity, despite which he does not ask for any documents for crossexamination, it goes to show that the assessee had nothing to explain and that he was not interested in cross-examining the witness. The decision of the Delhi High Court in the case of Commissioner of Income-tax v. Narinder Kr. Budhiraja, (2014) 89 CCH 44 Del HC, was cited wherein the court had held that the Commissioner (Appeals) had correctly appreciated the facts and the applicable law. The statement made by the assessee in pursuance of the summons under section 131 of the Act was apparently voluntary and there was no allegation that there was any undue influence or coercion had been used by the income-tax authorities. Ms. Bhatt submitted that Somabhai Prajapati having clearly stated in his statement under section 132(4) of the Act that the on-money to the extent stated in the agreement to sell had been received through the person of the assessee, the Tribunal was not justified in holding that sufficient evidence had not been produced on record by the revenue. Reliance was also placed upon the decision of the Kerala High Court in the case of Commissioner of Income Tax v. P.M. Aboobacker, (2014) 107 DTR 383 (Ker), wherein one Mr. Noushad had declared the income from sale of property and had paid the tax and the question before the court was whether when these materials were available, could it be said that the revenue had not proved their case? The court found that if the assessee wanted to disprove the evidence given by Mr. Noushad, it could have proved otherwise by giving some evidence to show the market value of the land in the locality. No such evidence was adduced by the assessee. The court held that, therefore, this was a case in which the revenue has to prove the existence of a fact that undervaluation was made by the assessee and that the assessee had paid more amounts for the purchase of property amounting to Rs. 54,20,000/-. When that fact is proved, the burden shifts to the assessee to prove otherwise. He had an opportunity to cross-examine the witness and there was nothing on record to indicate that the witness had spoken a false story. The learned counsel submitted that in the facts of the present case, the respondent assessee has not crossexamined the witness. The revenue has clearly, on the basis of the seized documents and the statement of Somabhai Prajapati, proved the existence of the fact that undervaluation was made at the time when the sale deeds came to be executed. It was submitted that, therefore, the Tribunal has failed to appreciate the evidence on record in proper perspective.
4.1 Reliance was also placed upon the decision of the Delhi High Court in the case of Commissioner of Income Tax v. Jai Pal Aggarwal, (2013) 212 Taxmann 1 (Delhi), for a similar proposition of law. Reliance was also placed upon the decision of the Madras High Court in the case of Commissioner of Income Tax v. K. Dadakhan, (2003) 182 CTR 469 Mad. It was submitted that on the evidence which has been brought on record viz., the agreement to sell dated 18th January, 2005 is a valid document and a precise one giving specific dates of payment to be made by Vivek Patel; the assessee’s claim of having cancelled the agreement is not supported by any further cancellation agreement which should normally have been available with the seller and should have been found during the search; the fact of cancellation had not been accepted by the seller Somabhai Prajapati in his crossexamination conducted on 14th August, 2012; the receipt of cash as per the terms of the agreement is proved by the confirmation of the statement given by Somabhai Prajapati; the overall documentary evidence found during the course of search corroborates each other and proves the veracity of the agreement dated 18th January, 2005; it is evident that the revenue has clearly established payment of the amounts referred to in the agreement to sell by the assessee. It was submitted that moreover, the sellers namely, the Prajapatis have filed returns of income declaring receipt of the amount mentioned in the agreement to sell and have paid tax thereon, which shows that the transactions have gone through on the higher amount as per the agreement and not on the petty amount shown in the documents with the buyers. It was submitted that thus the revenue has clearly made out a case that the assessee had paid consideration to the sellers in terms of the agreement to sell, whereas the assessee had failed to discharge the onus of rebutting this evidence.
4.2 Next, it was submitted that over and above the material referred to hereinabove, a notarised power-ofattorney dated 18th June, 2009 was impounded during the course of search, which shows that Shri Vishnubhai Ambalal Prajapati (one of the sellers) had empowered the assessee to carry out necessary legal matters in connection with the sale of Block No.513 which was sold to Ajay Patel. It was submitted that this clearly shows the prior relationship between the assessee and Ajay Patel even before the date of search. It was, accordingly, contended that the revenue through overwhelming evidence has duly established the payment of on-money to the sellers by the assessee, under the circumstances, the Assessing Officer was wholly justified in making protective assessment in his hands and that the Tribunal was not justified in setting aside the order passed by the Commissioner (Appeals). It was urged that the appeals do give rise to questions of law as proposed or as may be formulated by this court and that the same deserve to be admitted.
5. Vehemently opposing the appeals, Mr. S.N. Soparkar, Senior Advocate, learned counsel for the respondent-assessee submitted that the evidence on record clearly reveals that though the agreement to sell was entered into on 18th January, 2005, it was never acted upon by both the parties. As per the agreement to sell, the assessee was to purchase nine plots of land from the three brothers namely, Somabhai Prajapati, Vishnubhai Prajapati and Chandubhai Prajapati, but not a single plot was ever purchased by the assessee. It was submitted that the agreement to sell was never acted upon and that in fact even the cheque for a sum of Rs. 11,00,000/- which had been handed over to the land owners at the time of execution of the agreement of sell was received back by the assessee and was cancelled. It was submitted that the respondent assessee had never acted upon the agreement to sell and that on the mere statement made by SomabhaI Prajapati to the effect that he had received money from the assessee, it could not be said that revenue has established by way of evidence the payment of on-money on the part of the assessee. It was submitted that when no sale deed has been executed in favour of the respondent, there was no reason as to why he would make payment of such a huge amount more so, when there was no relationship between him and the ultimate buyer – Ajay Patel to whom the plots of land which were agreed to be sold to the assessee, were eventually sold. It was pointed out that the revenue has failed to establish any connection between the assessee and Ajay Patel. It was contended that the Tribunal has duly appreciated the evidence on record and has recorded findings of fact on which it has based its conclusion, and that in the absence of any perversity shown in the findings recorded by the Tribunal, there is no warrant for interference by this court. In support of his submissions, the learned counsel placed reliance upon a decision of the Supreme Court in the case of Commissioner of Income-tax v. P.V. Kalyanasundaram, (2007) 294 ITR 49, wherein the Supreme Court in the facts of the said case held that the fact as to the actual sale price of the property, the implication of the contradictory statements made by the vendor or whether reliance may be placed on the loose sheets recovered in the course of the raid are all questions of fact and accordingly dismissed the appeal. Reliance was also placed upon unreported decisions of this court in the case of I.T.O. v. Bharat A. Mehta, rendered on 3rd February, 2015 in Tax Appeal No.429/2000 and allied matters and in the case of Dy. C.I.T. (Asstt.) v. Prarthana Construction Pvt. Ltd. rendered on 25th March, 2011 in Tax Appeal No.79/2000, wherein the court had recorded that in the absence of anything being pointed out to show that the findings recorded by the Tribunal are in any manner perverse, the order of the Tribunal being based upon findings of fact recorded by it upon appreciation of the evidence on record, did not give rise to a question of law. Reliance was also placed upon the decision of the Supreme Court in the case of K. Ravindranathan Nair v. Commissioner of Income-tax, (2001) 247 ITR 178, for the proposition that it is a cardinal principle that it is the Tribunal which is the final fact-finding authority. A decision on facts of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In the facts of the said case, no such question had been raised before the High Court. The Supreme Court held that unless and until a finding of fact reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the finding of fact reached by the Tribunal and to give an answer to the question of law that is before it. It was submitted that the above decision of the Supreme Court would be squarely applicable to the facts of the present case as no question has been raised challenging the impugned order on the ground of perversity. It was, accordingly, urged that the appeals being thoroughly devoid of merits, deserve to be dismissed.
6. This court has considered the submissions advanced by the learned counsel for the respective parties and has perused the record and proceedings of the case. The facts as emerging from the record reveal that an agreement to sell came to be found during the course of search at the premises of the Prajapatis. Such agreement to sell was executed between the three Prajapati brothers and the respondentassessee namely, Vivek Patel. As per the statement of Somabhai Ambalal Prajapati recorded under section 132(4) of the Act, the entire consideration in terms of the agreement to sell had been paid by a person/representative of the assessee. However, a perusal of the record of the case shows that no further details have been stated by Somabhai as to who was the person who had come to pay the money and on which dates such amount had been paid. It is an admitted position that pursuant to the agreement to sell no sale deed has been executed in favour of the assessee and the plots of land which were agreed to be sold to the assessee have ultimately been sold to one Ajay Patel by way of registered sale deeds for a much lower consideration than that reflected in the agreement to sell. In the sale deeds executed in favour of Ajay Patel there is no reference to the agreement to sell executed in favour of the assessee, nor is the assessee a confirming party to such sale deeds. Thus, the revenue has failed to establish that the assessee had paid any on-money in terms of the consideration reflected in the agreement to sell. A power-of-attorney executed by Vishnubhai Prajapati in favour of the assessee in relation to one of the plots sold to Ajay Patel permitting him to take necessary steps for entering the name of Ajay Patel in the revenue record is stated to be the link between Ajay Patel and the assessee Vivek Patel. In fact, it has been strenuously argued that the power-of-attorney duly establishes the fact that the assessee knew Ajay Patel even prior to the date of the search and, therefore, the submission that the assessee did not know Ajay Patel prior to the date of search is incorrect. A perusal of the power-of-attorney executed by Vishnubhai Prajapati in favour of the assessee indicates that the same only empowers him to carry out necessary procedures with the Government office for transferring the property in the name of Ajay Patel. However, such power-of-attorney has been found in the possession of Vishnubhai Prajapati and not in the possession of the assessee Vivek Patel. Moreover, no material has been brought on record to demonstrate that such powerof- attorney was ever acted upon by the respondent assessee. Evidently, therefore, no material has been brought on record by the revenue to establish any link between Ajay Patel and Vivek Patel or that they knew each other prior to the search. Thus, the revenue has failed to establish that the assessee paid any money pursuant to the agreement to sell and has also failed to establish any link between the assessee and Ajay Patel.
7. The Tribunal, in the impugned order has found that the statements of Somabhai Prajapati and the assessee are contradictory. No material has been brought on record to substantiate the factum that the lands were sold to Ajay Patel at the instance of the assessee as claimed by Somabhai Prajapati. The Tribunal has further noted that Shri Somabhai in his statement has stated that the amount received by him from the actual purchasers at the time of execution of sale deed was returned by him to the assessee; however, no material was brought on record to show that the sale consideration received by Somabhai Prajapati was paid to the assessee. The Tribunal found that according to Somabhai Prajapati while the agreement to sell was for nine specific plots, subsequently three plots bearing No.540, 487 and 497 were exchanged in place of plots bearing No.512, 510 and 513; but no material had been brought on record to show that there was an agreement with the assessee for such exchange of plots. The Tribunal was of the view that in the absence of any such material, it cannot be assumed that the statement of Somabhai Prajapati was sacrosanct and not a self serving statement more so, when the alleged amount which he claimed to have received was claimed by him as non-taxable receipt being exempt under section 54B of the Act. Upon appreciation of the entire material on record, the Tribunal has come to the conclusion that the revenue had failed to bring on record any reliable material to prove that the assessee had made actual investment of Rs. 3,25,51,000/-, Rs. 6,51,00,000/- and Rs. 3,25,50,000/- in the previous years relevant to assessment years 2005-06, 2006-07 and 2007-08 respectively. However, to the extent of Rs. 11,00,000/-, the Tribunal was of the view that the agreement was material to conclude payment of such amount and that the assessee had failed to show that the amount of Rs. 11,00,000/- was paid by him to Shri Somabhai Prajapati by cheque and not by cash and accordingly confirmed the addition to that extent for assessment year 2005-06.
8. For the reasons stated hereinabove, this court is in complete agreement with the findings recorded by the Tribunal upon appreciation of the evidence on record and finds no reason to take a different view. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between the assessee and the sellers, which shows the price of the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have stated that they have received higher amounts by way of on-money and have also shown receipt of such amount in their incometax returns, the circumstances do raise a suspicion. However, as held by the Supreme Court in Commissioner of Incometax v. Daulatram Rawatmull, (1964) 53 ITR 574 (SC), even if circumstances raise a suspicion, suspicion cannot take the place of evidence.
9. In the light of the above discussion, it is evident that the conclusion arrived at by the Tribunal is based upon findings of fact recorded by it upon appreciation of the evidence on record. The learned counsel for the appellant, despite strenuous efforts, is not in a position to point out any perversity in the findings recorded by the Tribunal. Under the circumstances, in the absence of any material to the contrary being brought to the notice of the court so as to dislodge the findings of fact recorded by the Tribunal, the impugned order of the Tribunal being based upon concurrent findings of fact recorded after appreciating the evidence on record, does not give rise to any question of law, much less, a substantial question of law so as to warrant interference. The appeals, therefore, fail and are accordingly dismissed.