Dy. Commissioner of Income Tax vs Mahendra Ambalal Patel

H.N. Devani, J.—While admitting the appeal on 31-8-2000 the court had formulated the following substantial question of law:

Whether, the Tribunal is right in law and on facts in deleting the addition of Rs. 60 lacs made on account of investment in Thaltej Char Rasta land?

Simultaneous search and seizure operations came to be carried out at the residence of the Respondent Assessee and as well as at the residence of Shri Suresh A. Patel, land broker at Ahmedabad. During the course of search, at the residence as well as office of Shri Suresh A. Patel, certain incriminating documents were found containing details of transactions of land entered into with land owners and builders. With reference to noting recorded at p. 105 of the file Annex. A-l seized from his office, Shri Suresh A. Patel in his statement revealed that transactions were pertaining to one Shri Manoj Vadodaria and that the account was written as per the instructions of Shri Manoj Vadodaria and Rs. 60 lakhs was paid on behalf of one Shri G.C. Patel. Shri Manoj Vadodaria on being confronted with the statement of Shri Suresh Patel stated that he had paid Rs. 60 lakhs to Shri Mahendra A. Patel (Mahendra Mukhi), the Respondent herein, in connection with land bearing survey No. 274 situated at Thaltej Char Rasta. The assessing officer called upon the Assessee to explain as to why addition of Rs. 60 lakhs should not be made. The Assessee submitted written statements and also made a request to allow him to cross-examine Shri Manoj Vadodaria as well as Shri Govindbhai C. Patel. The assessing officer did not accept the explanation given by the Assessee holding that it was unlikely that Shri Suresh A. Patel and Shri Manoj Vadodaria would take the Assessees name in connection with a huge sum of Rs. 60 lakhs unnecessarily, knowing the fact that all are engaged in the same business. He, accordingly made addition of Rs. 60 lakhs in the hands of the Assessee in the previous year relevant to assessment year 1996-97. The Assessee carried the matter in appeal before the Tribunal, which came to be allowed insofar as addition of Rs. 60 lakhs made in his hands is concerned.

Ms. M.M. Bhatt, learned senior standing Counsel for the Appellant-Revenue has assailed the impugned order of the Tribunal contending that the order made by the assessing officer was just, legal and proper and the Tribunal was not justified in interfering with the same.

In the impugned order the Tribunal has recorded the following findings:

13.4 We have considered the rival submissions and have also gone through the order passed by the assessing officer. We have also gone through the order passed by the assessing officer dated 28-9-1998 in the case of Shri G.C. Patel u/s 158BC read with Section 158BD read with Section 113. In the said order the assessing officer has discussed the issue of Thaltej Char Rasta land in paras 13 to 13.5 of the assessment order and has made an addition of Rs. 42.60 lacs in the assessment year 1995-96. In the said order there is no mention of any payment of Rs. 60 lacs allegedly made by Shri G.C. Patel to the Assessee through Shri Manoj Vadodaria. The assessing officer in the case of Shri G.C. Patel has given English transaction of the land at Thaltej Char Rasta at p. 9 of Annex. A which forms a part of the assessment order which is as under:

---------------------------------------------------------- Land deal Thaltej Char Rasta Jamin (Rughu + Jivan) ---------------------------------------------------------- 30-11-1993 9,00,000 ---------------------------------------------------------- 30-12-1993 1,00,000 ---------------------------------------------------------- (Mohansingh) ---------------------------------------------------------- 01-01-1994 10,00,000 ---------------------------------------------------------- 06-01-1993 10,00,000 ---------------------------------------------------------- Dastavej Havalo ---------------------------------------------------------- 03-02-1994 10,00,000 ---------------------------------------------------------- (Beronet) ---------------------------------------------------------- 13-04-1994 10,00,000 ---------------------------------------------------------- 19-04-1994 24,00,000 ---------------------------------------------------------- 74,00,000 ---------------------------------------------------------- 10,00,000 19-05-1994 ---------------------------------------------------------- (Jagatpur) ---------------------------------------------------------- 20,00,000 10-08-1994 ---------------------------------------------------------- (Jagatpur) ---------------------------------------------------------- 20,00,000 10-08-1994 ---------------------------------------------------------- (For Rashmi Vora Jamin) ---------------------------------------------------------- 4-08-1994 ---------------------------------------------------------- (Paid to Ganga Ram 40+10 Completes) ---------------------------------------------------------- 70,00,000 (Jamin Manoj Apt) ---------------------------------------------------------- 1,45,00000 (Chukvya) ---------------------------------------------------------- 70,00,000 Baki) ---------------------------------------------------------- 75,00,000 (71 Profit + 4 Muji Khati) ----------------------------------------------------------

A perusal of the above transaction nowhere indicates that any sum whatsoever was paid by Shri G.C. Patel to the Assessee Shri Mahendra Mukhi. The assessing officer in the case of Shri G.C. Patel has also enclosed the copy of statement of Shri Manoj Vadodaria, dated 14-11-1995 recorded by ADI as Annex. 2 on which reliance has been placed by the assessing officer for making the addition in the case of the Assessee before us. In that statement in 4 it is stated that in respect of Thaltej Char Rasta, survey No. 274, Shri Manoj Vadodaria worked as a working broker along with Shri Suresh A. Patel. In para 4 it is stated that according to his knowledge this land was purchased from Shri Mahendra Mukhi and sold to Shri G.C. Patel and his job related only to the clearance whereas the dealing of sale and purchase between the seller and the purchase was done by Shri Suresh A. Patel. It is stated in para 4 that a sum of Rs. 60 lacs was paid.

However, a perusal of the assessment order passed by the assessing officer in the case of Shri G.C. Patel clearly indicates that no addition on account of alleged investment of Rs. 60 lacs was made in the hands of Shri G.C. Patel for purchase of this land which according to the statement of through him to the present Assessee. From the above it is clear that the assessing officer assessing Shri G.C. Patel who is considered to have made unexplained investment in the disputed transaction thought it fit not to tax Shri G.C. Patel on the basis of statement of Shri Manoj Vadodaria. Even Shri Manoj Vadodaria states that he has not received any consideration for acting as a broker in respect of the above land. It is no doubt true that the assessing officer has made addition of Rs. 60 lacs in the block assessment proceedings in the case of Shri Maonj Vadodaria which is stated to have been set aside by the Tribunal. Yet, the fact remains that the only basis for making the addition in the case of the Assessee before us is a bald statement of Shri Manoj Vadodaria which is not corroborated with any documentary evidence found at the time of search either in the case of Shri Suresh A. Patel, Shri Manoj Vadodaria or the Assessee. The Honble Bombay High Court in the case of Additional Commissioner of Income Tax, Bombay City-I Vs. Lata Mangeshkar, has held that no addition can be made in the case of an Assessee on the basis of entries in the seized record of a third party. The above view has since been approved by the Honble Supreme Court in the case of Jain Diaries. In the case before us however even there is no entry relating to the payment of Rs. 60 lacs allegedly made by Shri Manoj Vadodadria on behalf of Shri G.C. Patel to the Assessee but only a bald statement not supported by any evidence. On the other hand the Assessee categorically denies his involvement in any deal relating to Thaltej Char Rasta land. The seized paper found from the residence/office of Shri Suresh A. Patel does not contain the name of the Assessee at all as is evident from the copy of the paper attached with the assessment order of Shri G.C. Patel which has been extracted by us above. In this view of the matter we are of the opinion that there is absolutely no justification for making the disputed addition of Rs. 60 lacs which is directed to be deleted.

From the findings recorded by the Tribunal it is apparent that though it is the case of revenue that the land situated at Thaltej Char Rasta has been sold by the Assessee to Shri G.C. Patel through Shri Manoj Vadodaria, there is no material on record to indicate that the said land in fact belongs to the Assessee. Though the assessing officer has placed reliance upon the statements of Shri Manoj Vadodaria and Shri G.C. Patel for the purpose of taxing the amount in the hands of the Assessee, despite specific request being made by the Assessee for cross-examining both the said persons, the assessing officer has not permitted the Assessee to cross-examine them. In the circumstances, no reliance could be placed upon the statements of the said persons as the Respondent Assessee had no opportunity to cross-examine them. The statements made by the aforesaid persons would have no evidentiary value and as such, would not be admissible in evidence. Further, though the said Shri Manoj Vadodaria has stated that he has paid Rs. 60 lakhs to the Assessee on behalf of one Shri G.C. Patel, the said amount has not been taxed in the hands of Shri G.C. Patel. Moreover, no evidence has been adduced to indicate that any transaction in relation to the land in question has actually taken place.

In the backdrop of the facts noted hereinabove, the Tribunal has rightly found that the basis for making the addition in the case of the Assessee is merely a bald statement of Shri Manoj Vadodaria, which is not corroborated with any documentary evidence found at the time of search, either in the case of Shri Suresh A. Patel or Shri Manoj Vadodaria or the Assessee. No plea to the effect that the impugned order of the Tribunal suffers from any perversity has been raised.

In the aforesaid circumstances, the Tribunal having based its conclusion on findings of fact recorded by it after appreciation of the evidence on record, it cannot be stated that the impugned order of the Tribunal suffers from any legal infirmity while holding that there was no justification for making the disputed addition of Rs. 60 lakhs in the hands of the Assessee and directing deletion thereof. Besides it is not the case of the revenue that the order of the Tribunal is vitiated on account of any perversity.

In the light of the aforesaid, the question is answered in the affirmative, that is, against the revenue and in favour of the Assessee. The Tribunal was justified in law and on facts in deleting the addition of Rs. 60 lakhs made on account of investment in Thaltej Char Rasta land.

The appeal, is accordingly, dismissed.