Smt. Sunita Dhadda 1... v. The Dcit Central Cir...

PER N.L. KALRA, AM:- The assessee as well as Revenue have filed appeals against the order of the ld. CIT(A)-Central, Jaipur dated 01-07-2010 for the assessment year 2008-09. 2.0 First of all, we will take up the appeal of the assessee and the grounds of appeal raised by the assessee are as under:-

1. That on the facts and in circumstances of the case, the ld. lower authorities grossly erred in acting illegally on facts as well as in law, in assuming, presuming, on conjectures and surmises, in holding and making an addition of impugned amount of 4.07 crores (Rupees Four crores and seven lakhs only) as income on account of receipts by way of undisclosed income. 1.1. That the impugned addition is wholly unjustified and inferences so drawn are baseless, without evidence, without material and contrary to the material on record and are whimsical. 1.2. That the learned Assessing Officer grossly erred in relying upon the vague, unrelated statement of one Shri Ravindra Singh Thakkar which is unsupported by any other material or corroborative evidence, which was at the back of the appellant, the learned Commissioner of Income-tax (Appeals) also grossly erred in following the same without any application of mind and without providing a right to cross-examine the person who so stated adversely at the back of the appellant. 1.3. That it is categorically stated before the learned Assessing Officer as well as the learned Commissioner of Income-tax (Appeals) that user of material behind the back of the assessee is unjustified, is illegal, is bad in law, is in violation of principles of natural justice and such statement deserves to be excluded for non- consideration but both the learned authorities grossly erred in placing mechanical reliance on the statement, its user is in utter violation of principles of natural justice. 1.4. That specific challenge was before the learned Commissioner of Income-tax (Appeals) in the Written-Submissions and arguments and reliance was placed on several authorities of Honble Supreme Court, Honble Rajasthan High Court and various Courts, the learned Commissioner of Income-tax (Appeals) grossly erred in not even referring the same, in ignoring the same and in scuttling out the valid objection. 1.5. That user of said Annexure-D i.e. the Position of Funds as on 22.12.2008 and Requirement is vague, unsigned, unsupported by material evidence, unrelated with the assessee, is a sheer waste of paper was to be ignored, should have been ignored but both the learned Assessing Officer and the learned Commissioner of Income-tax (Appeals) grossly erred in using it, in part to suit their own convenience which is against the settled principles of law. 1.6. That it was specifically requested that appellant should be permitted to cross- examine the person who has provided the so called Annexure-D but both the learned authorities are totally mum and silent on the very valid objection though it is supported by innumerable authorities of the Courts, user of such material is in violation of principles of natural justice and such material ought to have been ignored and deserves to be ignored. 1.7. That merely on the basis of the alleged statement, if any, of Shri Ravindra Singh Thakkar dated 29.01.2009 and Annexure-D i.e. Position of Funds as on 22.12.2008 and Requirement, huge addition of 4.07 crores has been made which is unjustified, illegal, bad in law and deserves to be deleted. 1.8. That the impugned addition is contrary to the statement on oath of the appellant recorded on 25.02.2009 and 02.03.2009 under section 132(4)/131 of the Act where the appellant had categorically, repeatedly and in un-equivocal words emphatically asserted on oath that the sale was made as recorded in the registered sale deed and not at 2.50 crores per bigha. 1.9. That it was also stated that even the sale price duly stated in the registered sale deed is substantially higher (more than 3 times) than what was prevailing price (DLC price) by the Sub-Registrar, Sanganer Jaipur (City), District Jaipur. Even then, the learned lower authorities grossly erred in ignoring the same and in putting their own value which is based on no material and contrary to the material on record. 1.10. That the learned lower authorities grossly erred in illegally observing that in such type of dealings the transaction invariably has cash/on money component, which is based on assumptions, presumptions, conjectures and surmises and contrary to the findings of the registering statutory authority and the material on record. 1.11. That the learned lower authorities grossly erred in placing reliance on the so called alleged surrender, if any, by Shri Ravindra Singh Thakkar or/and group companies without providing any contrary material and without providing the basis as to on what basis surrender was made and tax if any was paid by Shri Ravindra Singh Thakkar and group companies. Even otherwise, using the said material behind the back of the assessee, in not providing the material, in mechanically following the same, is in utter violation of principles of natural justice. 1.12. That the appellant having not earned the said amount of 4.07 crores and same having not been received by the appellant, the addition is unauthorized, illegal, invalid, bad in law and misuse of provisions of law and deserves deletion.

2. That on the facts and in the circumstances of the case, the learned lower authorities grossly erred in levying interest under section 234B & 234D when there is no liability of such interest. 2.2 The brief facts of the case are that during the course of search on the members of Unique Builders Group of Jaipur on 28.01.2009, certain incriminating documents reflecting the payment(s) of 'on-money' in cash by the members of Unique Group were found and seized. The document seized as Page 78 of Exhibit 24 of Annexure A from C- 116, Jan Path, Lal Kothi, Jaipur [referred] to as "A-24/78"] reflected such payment by the members of Unique Group. The Assessee has sold a piece of land to a company M/s Milestone Dwellers Pvt. Ltd. ["MDPL'] in which the certain members of Unique Group have substantial stake. On the land so sold, MDPL is developing a housing project. In the return of income filed by one of the members of the Unique Group, the amount was surrendered as payment of 'on-money' and tax paid thereon. However, on examination of the return of income of the assessee by the A.O., no such receipt was reflected. After issuing show-cause letter dated 03.12.2010 and 16.12.2010 and considering the reply, the A.O. made the addition of RS. 4.07 crore as 'on-money received on sale of land from Unique group. The A.O. has considered the argument of assessee and observed/held as under :-

(i) At the outset it is stated that the whole reply of the Assessee is a bundle of stories and allegations against all and sundry including the buyer, M/s. Milestone Dwellers Pvt. Ltd. Sh. Ravindra Singh Thakkar, the director of the buyer-company etc. The opportunity through the said show-cause was given to the Assessee to defend her case in right manner and to furnish evidences which she could rely on while presenting her case/arguments. But, the learned Counsel has furnished 14 page reply which full of conjectures and surmises and the moot issue has not even been touched upon. The reply rotates around the District Level Committee (DLC) rate of the area, the provisions of section 50C, various supposed events which would have/have not transpired between the Assessee and Sh. Ravindra Thakkar of Unique Group and M/s. MDPL.

(ii) The Assessee in her reply has contended that the said land was already sold at three times the DLC rate prevalent during the time and alleged receipt of Rs. 4.07 crore would further raise the final sale consideration of land. This contention of the Assessee has no bearing on the fact of the case because the undersigned is in possession of seized document which clearly states otherwise that on-money was received in connection with the said land. Needless to mention that in this type of business, the transaction invariably has cash/on-money component which is out of books and the vehement reliance on the DLC rate by the Assessee does not actually serve her purpose.

(iii) The Assessee's reliance on the provisions of section 50C whereby it has been alleged that the Assessing Officer cannot adopt a value higher than the prevalent DLC rate for purpose of section 48 of the Act is misplaced because section 50C only deals with those payments which have been shown in the books of account only. However, in the instant case the whole issue is about the payments being made, and being received in cash as on-money which have not been reflected in the books. Thus, section 50C is irrelevant in the facts and circumstances of the case.

(iv) The issue basically as discussed elaborately is in respect of Rs. 4.07 crore which was given in cash by Sh. Ravindra Thakkar of Unique Group in lieu of purchase of Mahapura Land of the Assessee on which the project Unique Symphony was about to be developed. The Department is in possession of a seized document [Page 78 of Exhibit 24 of Annexure A seized from C- 116, Janpath, Lal Kothi, Jaipur - "A-24/78" & "the Annexure"] which is more than clear that Rs. 4.07 crore was given in cash to the seller of the said property because the said annexure mentions the found flow statement of the said project.

(v) That there has been a surrender of Rs. 4.07 crore by Sh. Ravindra Singh of Unique Group accepting categorically in his statement dated 28.01.2009 that the impugned amount has been paid in cash as on-money in lieu of buying the said land of the Assessee at Mahapura and has also accepted that the same is not reflected in his books of account and the source of which has been stated to be out of book sales consideration from various projects. Further, this surrender very much honoured by the Unique Group while filiing their returns of income. Had there been on substance in the statement of Sh. Ravindra Singh Thakkar, he would have not offered such a hefty amount as undisclosed and would have chosen to pay taxes on the same. It means, the statement of Sh. Ravindra Singh Thakkar should not be subjected to any question mark. Further, the sanctity of the said Annexure is established beyond doubts where in cash of Rs. 4.07 crore in lieu of purchase of Mahapura land is reflected and because it stands corroborated with the statement of Sh. Ravindra Singh Thakkar. And, hence, the authenticity of the said Annexure as well as its content is beyond question now.

(vi) The Assessee has questioned the reliance placed by the IT Authorities on the statement of Sh. Ravindra Singh. In this connection it is stated that, firstly, the statement in which he has stated to have made cash/on-money payments of Rs. 4.07 crore has been administered under oath. Secondly, the Unique Group has surrendered the amount so mentioned in the statement in their return of income. Thirdly, tax and interest has been duly paid and deposited in the government coffers. Fourthly, a document has been seized which contains mention of cash payment of Rs. 4.07 crore and this document corroborates the statement of Sh. Ravindra Singh Thakkar of Unique Group. Thus, all the facts pointed above leave no room for the suspicion of the statement of Sh. Ravindra Singh Thakkar of Unique Group taken on oath and there is no reason for the A.O. to have disbelieved the said statement anyway.

(vii) The Assessee in her reply para 3.3. has vehemently argued that the statement as well as the paper is baseless because it does not spell anywhere that the alleged payment of Rs. 4.07 crores was made to her. The argument of the assessee is ridiculous and devoid of any logic because very obviously, the assessee was the sole seller of the said land and when Rs. 7.6 crore is accepted to have been received by her through cheque, there is no reason as to why the payment of Rs. 4.07 crore in cash would not have been received by her and same has to be accepted because both the figures form part of the same annexure.

(viii) That various courts have held, from time to time, that the test of human probabilities and circumstantial evidence should be applied before arriving at any conclusion in any matter. Reliance is placed on the ratio of the decision in the case of Sumati Dayal 214 ITR 801 (SC) wherein it was held that "after considering the surrounding circumstances and applying the test of human probabilities had rightly concluded that the appellant's claim about the amount being her winnings from races was not genuine. 2.3 In view of the above elaborate discussion, A. O. held that it is established that the contention of the Assessee holds no water and therefore deserves to be rejected and an addition of Rs. 4.07 crores is made to the income of the Assessee on account of receipts of undisclosed income. 2.4 The submissions made by the ld. AR of the assessee before the ld. CIT(A) are summarized as under:-

1. The assessee agree to sell the land measuring 4.67 bigha out of agricultural land in village in Mahapura on Jaipur-Ajmer Highway in terms of agreement to sale dated 19-11-2007 to M/s. Milestone Dwellers (P) Ltd. through its director Shri Ajit Singh S/o Shri Sardar Ram Singh for a sale consideration of Rs. 7.60 crores. The part of the sale consideration was received vide cheque dated 19th Nov. 2007 and such part of sale consideration received was of Rs. 5.00 crores. The balance sale consideration of Rs. 2.60 crores was received by pay order dated 15- 03-2008 at the time of registration of sale deed on 15-0302008.

2. The sale deed was registered by the Sub-Registrar after verification and satisfaction. The Sub-Registrar evaluated the value of land at Rs. 2,53,74,000/- based on the prevalent market rate / DLC rate

3. The assessee filed the return of income on 29th Sept. 2008 and disclosed the Long term capital gain on sale of agricultural land. The detailed reply dated 29-09-2010 by assessee was filed on 4-10-2010 and in this reply the assessee denied the receipt of an amount of Rs. 4.07 crores in cash from Shri Ravinder Singh Thakkar/ M/s. Milestone Dwellers (P) Ltd. Attention was drawn towards Section 50C of the Income Tax Act and it was stated that sale consideration was Rs. 7.60 crores as against the value evaluated by the stamp authority at Rs. 2.53 crores .

4. The loose pages which were confronted to the assessee were explained as fund flow statement and position of funds as on 21-12-2008. Reference has been made to pages 50 to 52 of the of Annexure A of page no. 78 of Annexure A on the basis of loose sheet. Shri Ravinder Singh Thakkar was required to explain the source of 5.65 crores . In his reply, he admitted the difference of Rs. 6.65 crores on account of investment and expenditure. In respect of source of expenditure, it was stated that sale consideration is out of books received by cash in respect of different projects. It was submitted before the ld. CIT(A) that DDIT did not call for further material or details to verify about credence and correctness of the statement.

5. The assessee filed the details of different sale deeds of land situated in village Mahapura and none of the land was sold below Rs. 1.00 crore per bigha. The assessee has sold 1.18 hectare of land for Rs. 7.60 crores

6. The AO without providing the supporting material, inspection record and cross examination made the addition of Rs.4.07 crores and such action of the AO was in haste and was in violation of principle of natural justice.

7. There is no evidence of receipt of on money. The Sub-Registrar is the competent authority to value the property for the purpose of assessment of stamp duty and the value as shown by the assessee was accepted.

8. The value as shown in the registered sale deed should be accepted as sale consideration and for this proposition, the ld. AR relied upon Section 50C of the Act and also relied upon the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Dr V.K. Bhaskaran Nair and another (1979) 116 ITR 873 2.5 Before the ld. CIT(A) the assessee relied on the following decisions:-

1) Parimisetti Seetharamamma vs. CIT (1965) 57 ITR 532 (SC)

2) Umacharan Shaw and Bros. vs CIT (1959) 37 ITR 271(SC)

3) Mangilal Agarwal vs ACIT (2008) 3000 ITR 372 (Raj High Court)

4) CIT vs. Anupam Kappor (2008) 299 ITR 179 (Punjab & Haryana High Court)

5) Dhakeshwari Cotton Mills vs CIT (1954) 26 ITR 775(SC)

6) Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) 2.6 The AO has tried to support the addition on the basis of statement at page 78. The onus was on the revenue to establish that such amount was received and was in the nature of income. 2.7 The revenue has failed to provide the mode of receipt by the assessee, the manner of receipt by the assessee , the date of receipt by the assessee and the evidence for its receipt by the assessee. Attention was drawn to Section 69A of the Act. This Section provides that the assessee is required to explain the source in case the assessee is found to be owner of money, bullion, jewellery etc. not recorded in the books of account. The legislature in its wisdom has put the burden on the revenue to first establish that the assessee is the owner of any money, bullion or jewellery. 2.8 The opportunity of cross examination was not provided to the assessee. The story of the on money payment has been concocted by Ravinder Singh Thakkar in order to blackmail and pressurize the assessee. The relations became constrained immediately after execution of the sale deed and handing over the possession. Ravinder Singh Thakkar wanted that balance of the land be also sold and on the old terms though the assessee was not agreeable. The assessee was threatened of dire consequence and also was informed of close contacts of Thakkar family with the ruling party. The so called on money payment is afterthought and manipulation on the part of Ravinder Singh Thakkar with malice and malafides. 2.9 The assessee has shown the capital gain on the entire sale consideration though she could have easily evaded the payment of tax by showing the sale of land at DLC rate i.e. the rate at which land could have been valued for stamp duty purposes. The revenue has not been able to point any other comparable case of sale. 2.10 It was further submitted that M/s. Milestone Dwellers (P) Ltd. has not taken the benefit of any such payment in computing the cost in books of accounts. The so called fund flow statements of the said project is after the material date and therefore, cannot be believed.. 2.11 Shri Ravinder Singh Thakkar in his statement has nowhere categorically stated that the amount has been paid in cash to the assessee as on money in lieu of buying the said land of the assessee at Mahapura 2.12 Shri Ravinder Singh Thakkar received the cash payment from the sales made in different projects in order to siphon such amount. Shri Ravinder Singh Thakkar concocted the storey of its payment and expenditure on conversion and consruction 2.13 From this statement, it appears that the amount has been surrendered as undisclosed income of Shri Ravinder Singh Thakkar in individual capacity. It is not known who has disclosed the impugned amount as his income whether Shri Ravinder Singh Thakkar in his individual capacity or the purchaser money. If the source was out of the sale consideration outside the books from various projects then it would be assessable in the hands of the relevant projects and its owners. Mere surrender made by M/s. Unique Group while filing their return of income is of no consequence. . There may be 101 hidden reasons for the so called surrender and its honouring by the M/s. Unique Group. 2.14 Shri Ravinder Singh Thakkar has stated that source is on money and profit earned in cash. Thus he has taken the advantage of set off / telescoping and in turn no real tax has indeed been paid by Shri Ravinder Singh Thakkar. 2.15 In this case, the AO has relied on the statement of Shri Ravinder Singh Thakkar while statement of Shri Ravinder Singh Thakkar was not accepted by the AO in thecase of Smt. Vijay Laxmi Dhadda and Shri Padam Chand Dhadda. 2.16 The assessee in her statement recorded on oath on 25-02-2009 and 02-03-2009 has stated that land has been sold at Rs. 1.50 crores per bigha to the company through Shri Vishal Jain, Broker. She clearly stated on oath that she has not received payment of Rs. 2.50 crores. 2.17 The ld. CIT(A) after considering the submissions of the assessee held as under:-

7. I have considered the submission of ld. A.R. and have perused the material on record. It is undisputed that the appellant has sold a piece of land admeasuring 4.67 bigha to the company M/s. Milestone Dwellers Pvt. Ltd. (referred as MDPL), in which members of Unique group of the builder have substantial stake. The apparent sale consideration this land as per the sale deed, was Rs. 7.60 crore. Meanwhile search nd seizure operation was carried out in the Unique group of cases and various incriminating documents were seized, which inter-alia included page 78 of exhibit 24 of Ann. A (hereafter referred as A-24/78). The scanned image of this page is available on page 6 of the assessment order. For ready reference the relevant portion is reproduced below:- Position of Funds as on 22.12.2008 & REquirement Total Amount Bank Cash Cost of Land 1167.00 760.00 407.00 Registration Exp. 33.20 33.20 Brokerage 7.50 7.50 Common Boundary 1.65 1.65 Total Cost of Land 1209.35 802.35 407.00 Conversion Exp. (Liason) 108.00 108.00 Expenses incurred till date Construction Expenses 200.19 150.1`9 50.00 Sales & Mktg. Exp. 18.81 18.81 Salary to Staff 13.85 13.85 Indirect Expenses 16.08 16.08 Fixed Assets 22.34 22.34 Less: Outstanding Liabilities - 1.35 - 1.35 269.92 219.92 Deposits & aDvance 22.82 22.82 Total Expenses Incurred So Far 1610.09 1045.09 565.00 From perusal of the aforesaid document, it is seen that it shows details of expenditure about some project and more particularly the expenditure/investment made in the project till 22.12.08. The cost of land under the bank column is mentioned as '760.00' and considering that such details are prepared by writing the amount in the units of 'lakh', obviously the cost of land is Rs.

760 lakhs under the bank column. The fact that figures have been written in units of 'lakh' is evident from amount of registration expenses incurred which is Rs. 32,94,660/- + Rs. 25,000/- (which can be rounded off to Rs. 33.20 lakhs) and is written as "33.20". Simultaneously, it is seen that the appellant has sold land to M/s MDPL for apparent consideration of Rs. 7.60 crore. According, it is quite evident from this document itself that it is reflecting the expenditure incurred by the Unique group on the project coming up on the land sold by the appellant to M/s. MDPL of Unique group. Immediately below the cost of land, the registration expenses, brokerage expenses and common boundary expenses are also mentioned and under the bank column respective figures of the expenses under these heads are shown. Against the head 'cost of land', apart from the figure of '760.00' under the 'bank' column, figure of '407.00' under the 'cash' column is also mentioned as well as total cost of land is mentioned as '1167.00'. These details amply prove that apart from making payment of Rs. 760 lakhs through cheque for purchase of impugned land, the directors/controlling person of M/s. MDPL have paid Rs. 407 lakhs in cash obviously as on-money. Hence this document is well self speaking and not a dumb document, as argued by the A.R. of the appellant. The argument of A.R. of name of Sunita Dhadda not mentioned on the page, is also irrelevant in view of above discussion. 7.1 This conclusion is further supported by the statement of Sh. Ravindra Singh Thakkar S/o Sh. Ajit Singh Thakkar (son and father, both being directors of the company) recorded on 29.1.09 during the course of search carried out in their group, wherein at question no. 23,he was confronted with page 75 to 78 of Annexure A-24 having position of fund as well as page 50 to 52 of A-24 having details of assets and liabilities of M/s MDPL as on 31.12.08. After going through these papers Sh. Ravinder Thakkar admitted that the group has incurred on-money expenditure of Rs. 4,07,00,000/- for purchase of land which is paid in cash. He has also stated about the other expenditure incurred in cash on construction and other item totaling to Rs. 5,65,00,000/- (including above referred Rs. 4.07 crore). He has also admitted that this amount is not recorded in the books of accounts of M/s MDPL or other entity of the group. 7.2 The statement of Sh. Ravindra Thakkar further clinches the issue that Rs.4.07 crore have been paid by the directors of M/s MDPL in cash over and above Rs. 7.60 crore paid through cheque for purchase of impugned land from the appellant. Appellant has undisputedly admitted to have received Rs. 7.60 crore through cheque which has also been shown in the sale deed and expectedly denied to have received Rs. 4.07 crore in cash. 7.3 Coming to the arguments of the natural justice and the opportunity taken by the appellant, as per the appellant, the copy of full statement of Sh. Ravindra Singh Thakkar was not given. Copy of fund flow statement on page 52 to 54 of Ann. A-24 not provided. It is seen by the undersigned and A.R. was also fair enough to accept that the copy of the relevant portion of the statement of Sh.Ravindra Singh Thakkar dated 29.1.09 particularly the question no. 23 and his answer to the question, which has been used as supporting evidence in the case of appellant, was supplied to this appellant during the assessment proceeding. Similarly, copy of page 78 of exhibit A-24, which has been used against the appellant for making aforesaid addition was also supplied. Thus it is quite evident that reasonable opportunity has been given to the appellant wherein the copies of the evidence used against her were given. It may be mentioned that the complete statement of Sh. Ravindra Singh Thakkar will obviously have numerous details about business affairs of their group which being personal for the group can not be disclosed to other parties. Moreover all the complete details of business of Unique group are otherwise also not relevant and has also not been used against the appellant and therefore not required to be supplied to the appellant. Similarly page 52 to 54 having details of assets and liability of M/s MDPL had also not been used against the appellant and would obviously contain the details of business affairs of M/s MDPL, which is also not required to be given to the appellant. Making such request will be extending the concept of natural justice too far which is not envisaged by the Hon'ble Courts. 7.4 Now coming to the example of DLC rates given by the appellant, firstly it is to mention that copy of registered sale deed of Smt. Mangli Devi being so furnished for comparison by the appellant, is considered by the undersigned. On perusal of this sale deed of Smt. Mangli Devi, it is seen that the said land is about

200 meter (i.e. about 656 feet away) from Jaipur Ajmer Road Highway, whereas the land of the appellant is just adjoining (rather touching) Jaipur-Ajmer Highway, and in fact the north side of the land so sold is surrounded by Jaipur-Ajmer Road as is clearly mentioned in the first schedule attached with the registered sale deed of the impugned land dated 15.3.08. Secondly, the other copy of the sale deed by Smt. Premlata Bansal to M/s. Salasar Overseas Pvt. Ltd. is regarding the agricultural land which is not at all on the Jaipur-Ajmer Highway but is on small road going from village Mahapura to village Newta and thus is not at all comparable. Without prejudice to above, it is seen that when there is document proving payment of on-money in cash by the purchaser against sale of the land for the project to be developed by the purchaser, and thereby consequent receipt of money by the appellant unaccountedly which is further supported by the statement of Sh. Ravindra Kumar Thakkar of M/s MDPL (The purchaser) averring incurring of expenses by way of on-money paid in cash for purchase of impugned land, such direct evidences will obviously override these sales instances of the claimed nearby lands (though they are not nearby land as mentioned above). 7.5 The another argument taken by the appellant regarding provision of section 50C being not applicable as the DLC rate was found lower than the apparent consideration shown in the registered sale deed is of no relevance because the A.O. has not made addition by invoking the provision of section 50C but has made addition of unaccounted on-money consideration received on sale of impugned land. The other argument of the appellant that A.O. has squarely failed to give details of subsequent investment by the appellant of the claimed receipt of on-money, is also rejected as A.O. has made addition of uncounted receipt on sale of impugned land on the basis of written as well as oral evidences and A.O. is not required to substantiated his finding by unearthing subsequent investment, if any, so made by the appellant. 7.6 The other argument is that purchaser of the land is M/s MDPL not Shri Ravindra Singh or Unique group. The A.O. has not spelt out as to what is Unique group. On being asked by the undersigned, the A.O. has informed that Sh. Ajit Pal Singh and Ravindra Singh are the directors in M/s Milestone Dwellers Pvt. Ltd. Moreover it is a known fact in the common parlance, the various concerns of Sh. Ravindra Singh and Sh. Ajit Pal Singh including M/s MDPL and other concerns are collectively known as 'Unique group'. 7.7 The other argument of the appellant that in the statement Sh. Ravindra Singh Thakkar has not stated as to on which date, to whom and before whom the alleged amount of Rs. 4.07 crore was paid in cash to the appellant has been considered by me. The argument is having no force, as obviously the cash amount would be given before the execution of the sale deed and it has to be given to the seller of the land, namely the appellant. It need not be given in the presence of someone else. 7.8 The other argument was that surrender made by the member of the Unique group while filing their return of income is of no consequence and there may be 101 hidden reasons for the same, has been considered by me. Firstly, as far as surrender of unaccounted income is concerned, no purchaser is going to make the surrender, if he has not entered into unaccounted transaction by payment of on-money. Secondly, Sh. Ravindra Singh Thakkar in the statement has very categorically stated that for purchase of impugned land payment of Rs. 4.07 crore was made in cash (apart from 7.60 crore made through cheque), then assumption of the A.R. that there may be 101 reasons for the so-called surrender is far fetched and frivolous. Further as regards date of cash flow statement being 22.12.08, being after 15.3.08 i.e. date of registration is concerned, from careful perusal of the details mentioned on impugned document i.e. A-24/78, it is seen that though the heading indicate 'the position of fund as on 22.12.08' but the details mentioned below clearly show the broad expenditure incurred in purchase of land and thereafter in the construction till 22.12.08. Obviously, as against the heading 'cost of land' under the column 'bank' and 'cash', figures of '760.00' and '407.00' are written apart from figure under the column total amount as '1167.00', it evidently provides that apart from Rs. 760 lakhs, the purchaser group has paid Rs. 407 lakhs in cash to the seller of the land at the time of purchase of land. Therefore the argument of the A.R. of the date being different is rejected. 7.9 Now coming to the decision cited by the A.R. of the appellant, in the case of Parimisetti Seetharamamma vs. CIT (1965) 57 ITR 532 the Hon'ble Supreme Court has held that in cases where receipt is sought to be taxed as income, the burden lies on the department to prove that it is within taxing provision. Facts of this case were different. Even otherwise, it is clear from the aforesaid discussion, that the A.O. has discharged its burden of proving that the aforesaid unaccounted payment so received are taxable. 7.10 Another case referred was of Umacharan Shaw and Bros. vs CIT (1959) 37 ITR 271 wherein Hon'ble Supreme Court has held that suspicion however strong cannot take the place of the material or evidence. I also rely on the same judgment referred by ld. A.R. In the instant case of the appellant, it is seen that addition has not been made by the A.O. merely on the suspicion. The additions have been made on the basis of written as well as oral evidences. 7.11 The facts in the case of CIT vs. Anupam Kappor (2008) 299 ITR 179 (P&H) are different wherein there was no material before that A.O. to prove that the cash equivalent to the cheque amount was given. However in the instant case of the appellant, there is clear evidence. The facts of reported case of Mangilal Agarwal vs. ACIT (2008) 3000 ITR 372 decided by Hon'ble Rajasthan High Court are quite different then that of appellant. The decision in the case of Lal Chand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) is also not applicable as facts of this reported case are quite different. Similarly other cases referred by the ld. A.R. of the appellant are distinguishable on facts. 7.12 In view of facts and circumstances and the documentary as well as the oral evidence, it is held that the appellant has received Rs. 4.07 crore as on-money in cash for sale of impugned land apart from apparent consideration of Rs. 7.60 crore received through cheque and A.O. was justified in making addition of Rs. 4.07 crore to the income of the appellant. 7.13 However, I agree with the alternative submission of the A.R. of the appellant that the said income of Rs. 4.07 crore so upheld to have been received as on-money on sale of impugned land, then as the amount has been upheld to be received on account of sale of land on which capital gain is chargeable. Accordingly, instead of taxing the on-money received separately under the head income from other sources it will be reasonable and fair to consider it as unaccounted addition sale proceeds received and to work out the capital gain accordingly. 2.18 Before us, the ld. AR has filed the written submission alongwith the paper book containing 147 pages. We are reproducing the written submission though most of the submissions are the same which have been raised before the ld. CIT(A) and have been considered by him. 2.1 The ld. Assessing Officer in his assessment order at Pg 2 claims to have sent a letter dated 03.12.2010 but it was not received by the appellant. However, the appellant received a letter dated 16.12.2010 for 20.12.2010. With this letter too copy of the alleged statement of Shri Ravinder Singh Thakkar was not provided. A reply dated 20.12.2010 was submitted. PB 49-51. There upon copy of part of the alleged statement of Shri Ravinder Singh Thakkar dated 29.01.2009 was provided, giving only questions No. 23 & 24 and its reply. (PB 52-54)

3. The appellant submitted two detailed letters of explanations and objections dated 23.12.2010. These objections have been considered by the AO in his assessment order and mentioned by us in brief in this order and hence are not reproduced.

4. The ld. Assessing Officer without providing the supporting material, inspection of records and cross-examination, in haste and in violation of principles of natural justice arbitrarily, capriciously, mechanically made an addition of Rs. 4.07 Crores, after discussion in Para

5. The replies filed before the ld. lower authorities is based on true and correct facts and not on conjectures and surmises. The moot issue as to the alleged payment has been thoroughly dealt and discussed with convincing reasoning. DLC rate (being the fair market value) has been given statutory recognition and is based on real facts and the day-to-day dealings. It is suitably revised from time to time based on cogent material. Value evaluated by the District Level Committee formed by the Government is considered as real, actual and proper index of the prevalent rates. 5.1 The story of the on money payment has been concocted by Shri Ravinder Singh Thakkar in order to blackmail and pressurize the appellant. Relations became constrained immediately after execution of the Sale Deed and handing over of possession. He wanted the balance of the land be also sold and on the old terms, to which the appellant was not agreeable and refused. He threatened of dire consequences and also stated of his close contacts with the ruling party. It is an after-thought and manipulation on the part of Shri Ravinder Singh Thakkar with malice and malafides. 5.2 There is no material, worth credence found in the search, stating that on money was received by the appellant in connection with the impugned land. No copy of such seized document which clearly states that on-money was received in connection with the said land was provided to the assessee. 5.3 The ld. Assessing Officer has indulged in surmises and conjectures in stating that in this type of business, the transaction invariably has cash/on-money component which is out of books. If the inference is correct, where was the necessity to record sale consideration at Rs.7.60 Crores when the prevalent value evaluated by the competent authority was Rs. 2.53 Crores only? By further reducing the sale consideration from real amount of Rs.7.60 Crores, the appellant would have been a beneficiary and avoided the tax on capital gain but she never wanted to indulge in under statement and truly recorded the sale consideration. The assessee has already paid huge capital gains tax. The purchaser too would have paid lesser stamp duty and registration. Further the ld. Assessing Officer has utterly failed to find subsequent investment of the alleged on-money. Where the alleged on-money evaporated remains unexplained, though it is more than three years. 5.4 The understanding of the ld. lower authorities that section 50C only deals with those payments which have been shown in the books of account only is erroneous and highly misunderstood. Section 50C on the contrary substitutes the recorded value in the sale deed and does not talk of the books of account. The alleged on-money was not received by the appellant and hence has not been reflected in her books regularly maintained and has also not been found to have been invested or spent. Books have been accepted by the learned Assessing Officer. Section 50C is relevant and has been rightly relied upon. 5.5 The ld. lower authorities have utterly failed in finding any other transaction of similarly situated land at the alleged rate of Rs.2.50 Crores per bigha. When such rate was not fair market rate and was not prevalent on the material date, question of additional payment of Rs.4.07 Crores by cash does not arise. If the land would have been sold below the fair market rate, any inference could have been drawn. In-spite of the continual challenge given to the ld. Assessing Officer, he has utterly failed to find any transaction above Rs.1 Crore per hectare. He could not find even any transaction at Rs.1 Crore per bigha around that time or even later. 5.6 The ld. lower authorities have summarily and mechanically believed the statements of Shri Ravinder Singh Thakkar, which is in violation of principles of natural justice. As commented herein above page

78 of Exhibit-24 of annexure A, remains un-proved and the questions posed remain unattended, unsolved and unanswered. Copies of page 52-54 reflecting funds flow statement was not provided to the assessee. The ld. Assessing Officer utterly failed in providing the supporting material, as also not permitting inspection of the relevant record and cross- examination. It has been established beyond doubt that no credence was given by the purchaser company; M/s. Milestone Dwellers Pvt. Ltd. while computing cost in its books of account, which too have been audited and submitted before the ld. Assessing Officer. The so called fund flow statement of the said project is after the material date has not been recognized and believed by the purchaser company and not recorded in its books. Further it has not been explained as to how and in what manner conversion related expenditure of Rs.1.08 Crores and construction expenses of Rs.50 lacs were incurred. No supporting material has been produced or found. It is all manipulation and misstatement on the part of Mr. Ravindra Singh Thakkar, in his personal interest and for personal gain. 5.7 The appellant has not been provided with copy of the statement dated 28.01.2009. The appellant was provided only question Nos. 23 and 24 and its answers given on 29.01.2009. 5.8 In fact the observations of the ld. Assessing Officer is contrary to the statement of Shri Ravindra Singh Thakkar. In the said statement too Shri Ravindra Singh Thakkar has nowhere categorically stated that the impugned amount has been paid in cash to the appellant as on-money in lieu of buying the impugned land of the appellant at Mahapura. 5.9 It appears that out of book sales consideration from various projects was received and siphoned by Mr. Ravindra Singh Thakkar and to pocket that amount he concocted the story of its payment and expenditure on conversion and construction. Further the cash flow statement as on 22.12.2008 is after 15.03.2008, the date of registration of the sale deed. The position of funds as on 22.12.2008 and requirement is even otherwise internal working unconnected with the appellant. 5.10 Mr. Ravindra Singh Thakkar has nowhere stated: as to on which date, to whom and before whom the alleged amount of Rs.4.07 Crores was paid by cash to the appellant. He has not produced any receipt or contemporary evidence. From the statement it appears that such amount was surrendered as undisclosed income of Shri Ravindra Singh Thakkar in individual capacity. It is not known as to who has disclosed the impugned amount as his income whether Shri Ravindra Singh Thakkar in his individual capacity or the purchaser company. If the source was out of book sales consideration from various projects, then it would be assessable in the hands of the relevant projects and its owners. 5.11 We submit mere surrender having been made by the Unique Group while filing their return of income is of no consequence. There may be 101 hidden reasons for the so called surrender and its honouring by the Unique Group. It is also not known and not clearly stated by the ld. Assessing Officer as to what is the status of the so called Unique Group. The queries raised in the objections completely remain unsolved and unanswered in the impugned order. We submit the ld. Assessing Officer has avoided solving the real objections raised before him and has tried to by-pass the same by repeating his own version, unworthy of credence by a reasonable and un-interested person well versed in law. 5.12 On posing of question No. 24 Shri Ravindra Singh Thakkar has stated that the source is on-money and profit earned in cash. It is thus crystal clear that he has taken the advantage of set-off/telescoping and in turn no real tax has indeed been paid by Shri Ravindra Singh Thakkar. Tax; if any, has been paid by Mr. Ravindra Singh Thakkar and not by M/s. Milestone Dwellers Pvt. Ltd. as alleged by the ld. Assessing Officer. 5.13 The ld. Assessing Officer has mentioned that statement of Shri Ravindra Singh Thakkar should not be subjected to question mark. We are surprised at the faith reposed by the ld. Assessing Officer who himself has rejected the statements given by the very same person in the case of Smt. Vijay Laxmi Dhadda / Padam Chand Dhadda. 5.13.1 Mere recording of statement after administering on oath cannot be mechanically, summarily and blindly believed to be true and correct. The said statement is false and has been emphatically denied as true by the assessee appellant. Mr. Ravindra Singh Thakkar has definitely committed offence of perjury. Non-putting of questions, which are very relevant and appropriate by the ld. Deputy Director clearly creates suspicion and certain assurances and protection extended to Shri Ravindra Singh Thakkar. It is apparent that when Shri Ravindra Singh Thakkar was found indulging in out of book sales consideration and pocketing such amount, he concocted the story with malafides against the appellant. As explained earlier, mere surrender and payment of tax by Unique Group does not imbibe confidence of such motivated and malafide surrender. In fact; the purchaser is M/s. Milestone Dwellers Pvt. Ltd. and not Shri Ravindra Singh Thakkar or Unique Group what is Unique Group has not been spelt out by the ld. Assessing Officer. The so called facts made as a base for foundation of the addition are surmises, conjectures, assumptions, presumptions, suspicions on the part of the learned Assessing Officer and the action is arbitrary, capricious unreasonable, unfair and illegal; offending Article 14, 19 and 265 of the Constitution of India. 5.14 Statement of the assessee appellant were also recorded u/s.132(4)/131 of the Act on oath on 25.02.2009 and 02.03.2009 wherein she clearly and categorically stated that the impugned land has been sold at Rs.1.50 Crore per bigha to the company through Vishal Jain broker. She stated that entire sale consideration was received by cheques and no cash amount was received. She clearly stated on oath that she has not received payment at Rs.2.50 Crore per bigha and has not received any amount other than recorded in the registry. 5.15 The inference drawn by the ld. lower authorities on the basis of position of funds as on 22.12.2008 and requirement is erroneous, unbelievable and insufficient to make such a huge addition in the hands of the appellant. It is rather no evidence. As submitted herein before the appellant was not provided relevant record as well as its inspection to verify and make further comment. The ld. Assessing Officer utterly failed in providing true and full copy of the alleged statement, the relevant record and to permit the cross examination so called for. 5.16 Furthermore the alleged Position of Funds has also been partly relied by the ld. lower authorities. Copy extracted by the ld. Assessing Officer and by the ld. CIT (A) in their orders is as follows: Whereas the actual sheet is as follows PB 54:

i) It is abundantly clear that Share of Milestone Group is shown @ 60% and Ajit Group is shown @ 40%. ii) Ajit Group in order to extract more money from Milestone Group and justify its share of investment has inflated the alleged amount spent by it and shown it entirely under Cash. Out of 642.39 shown under the head of Ajit Group it claims to have spent 565.00 in cash which is approx 88% and is highly doubtful. The figures appended in the above- mentioned sheet needs to be confirmed by M/s. Milestone Group which has not been done so by the ld. lower authorities. It fortifies the argument of the assessee appellant that Rs. 407.00 lacs represent the justification of share of investment by Mr. Ravindra Singh Thakkar/ Unique Group in M/s. Milestone Dwellers Pvt. Ltd. without actual investment made by it and extract more money from Milestone Group. iii) Further what is most surprising is the fact that entire Conversion Expenses (Liaison) to the extent of Rs. 108.00 lacs have been shown to have been incurred in Cash and not a single penny have been incurred in official charges. Such huge amount is highly unlikely for conversion. The figures appended in the above-mentioned sheet needs to be confirmed by M/s. Milestone Group which has not been done so by the ld. lower authorities. It fortifies the argument of the assessee appellant that Rs. 108.00 lacs represent the justification of share of investment by Mr. Ravindra Singh Thakkar/ Unique Group in M/s. Milestone Dwellers Pvt. Ltd. without actual investment made by it. iv) Further what is most surprising is the fact that Construction Expenses to the extent of Rs. 50.00 lacs have been shown to have been incurred in Cash and another Rs. 150.00 lacs by Bank. No detail of payment of such huge amount in cash is provided by the department. Incurring such huge expenses without obtaining 90B permission & approval of maps from JDA is highly doubtful, as one cannot start construction before obtaining 90B & approval of maps. Construction activity is barred over agricultural land without transfer of land use and approval of maps. The figures appended in the above-mentioned sheet needs to be confirmed by M/s. Milestone Group which has not been done so by the ld. lower authorities. It fortifies the argument of the assessee appellant that Rs. 50.00 lacs represent the justification of share of investment by Mr. Ravindra Singh Thakkar/ Unique Group in M/s. Milestone Dwellers Pvt. Ltd. without actual investment made by it.

v) It is nothing but a dumb document as far as assessee appellant is concerned. There are many pitfalls and unanswered questions as mentioned earlier. It is no evidence.

6. It is submitted that the Sale Deed has been duly executed and registered and the contents of the said document have become final and unchallengeable. We submit there is no evidence that alleged on money of Rs. 4.07 Crores was paid by Cash to the assessee appellant. No receipt of Rs. 4.07 Crores allegedly received by the assessee was provided. There is no acceptable evidence that any amount over and above the recorded value was paid in actuality. 6.1 Section 54 of the Transfer of Property Act 1882 defines sale as a transfer of ownership in exchange for a price paid or promised or part paid and part promised. Such a transfer in the case of tangible immovable property of the value of 100 rupees and upwards, can be made only by a registered instrument. The word 'price' is used in its ordinary sense as meaning money only. It is used in the same sense as in sec. 77 of the Contract Act. The Supreme Court in CIT vs. Motor & General Stores (P) Ltd. reported in 66 ITR (1967) page 692 held that though 'price is not defined in the act, it is used in the same sense as in the Sale of Goods Act,1930 and means the money consideration for the sale of goods. 6.2 Sec.17 of the Indian Registration Act, 1908 lists the documents which are compulsorily registerable. Sale deed is compulsorily registerable u/s. 17(1)(b) of the Act. The Sale Deed was registered on 15.03.2008. Sec.34 of the said Act is in respect of enquiry before registration by Registration Officer. Detailed enquiry was conducted u/s.

34. Document has been registered after scrutiny, verification and satisfaction. Certificate of registration has been affixed u/s. 60 of the Act. In the present case independent valuation was arrived at by the Competent Authority and stated on the Deed. 6.3 The Indian Stamp Act, 1899 requires payment of stamp duty. In respect of sale, it is advolarem based on the sale consideration. The competent authority has to satisfy in respect of the value and to adjudicate as to proper stamp duty. In case of deficient stamp duty, the deed can be impounded. No action for any additional stamp duty on the alleged amount of Rs. 4.07 Crore has been initiated by the Competent Authority. 6.4 It is well settled proposition of law that the Sub-Registrar of assurances is a competent authority to value a property for the purpose of assessment of stamp duty as also for the purpose of charging the registration fees under the Indian Stamp Act and Indian Registration Act respectively. It is an independent authority having complete data of prevalent market rates. 6.5 The legislature in its wisdom has inserted sec. 50C of the Act with effect from 1st April, 2003. As per the said section, the full value of the consideration for the purposes of sec. 48 of the Income-tax Act shall be deemed as is assessed by the Stamp valuation authority for the purpose of payment of stamp duty. The legislature have reposed confidence in and have held for substitution of that value considering it as more realistic. We submit in the present case the value as computed by the stamp authority should prevail. We rely upon the decision of the Honble Bombay High Court in CIT v. Dr. V.K. Bhaskaran Nair and another (1979) 116 ITR 873.

7. Sec.91 & 92 of the Indian Evidence Act, 1872 are extracted hereunder:

91. Evidence of terms of contracts, grants and other dispositions of property reduced to form of document. When the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions herein-before contained.

92. Exclusion of evidence of oral agreement - When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying adding to or subtracting from, its terms. 7.1 In view of the said sections, it is well settled proposition of law that sale consideration as recorded in the registered sale deed is conclusive and no other evidence can be adduced against such documentary evidence. The ld. Assessing Officer totally/utterly failed to adduce any evidence as to additional payment to the seller. In spite of the consistent claim of the appellant as to non-payment of any additional amount, the learned Assessing Officer failed to provide reliable supporting material and meet with the objections made and dealt hereinbefore. 7.2 The Lahore High Court in Divansingh vs. Gurbachan Singh and others AIR 1932 Lahore 276 held that in case of a sale, other evidence of the transaction, than the deed itself is barred by the provisions of sec. 91, Evidence Act. 7.3 The Mysore High Court in Doddamallappa v. Gangappa AIR 1962 Mysore 44 held "When a sale deed has been executed and registered in respect of certain immovable properties, in a suit for possession by the vendee it is not open to the vendor to let in oral evidence to show that the terms of the contract between the parties were different or were at variance with the terms contained in the registered document." 7.4 The Kerala High Court in Leelamma Ambikakumari and another Vs. Narayanan Ramakrishnan AIR 1992 Kerala 115 at 119 held: Section 91 and 92 of the evidence act is a complete bar for any party to set up a case that the consideration for sale is morel than what is mentioned in the conveyance or in the contract. In the present case the plaintiff has no case that the consideration mentioned in the document was not paid, or that there was any failure of consideration or that the consideration agreed to between the parties was of a different kind than what was mentioned in the document. The definite case of the plaintiff is that the real consideration for the sale was Rs.16,000/- where as the conveyance shows the consideration to be Rs.10,000/-. In view of the provisions contained in sec.91 and 92 of the Evidence Act, the plaintiff is not entitled to plead such a case, nor he is entitled to adduce evidence in support of the same. 7.5 The Honble Supreme Court in M/s. Febril Gasosa vs. Labour Commissioner and others AIR 1997 (S.C.) 954 at 958 has held A written settlement arrived at between the parties could not, therefore, be varied or modified except by a written settlement or by a written memorandum duly signed by the parties incorporating the terms of the so- called understanding. Sec.92 of the Indian Evidence Act, 1872 also lays down that when the terms of any contract, grant or settlement, as are required by law to be reduced to the form of a document, have been proved as per the provisions of sec.91 of the Evidence Act, no evidence of any oral agreement or settlement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting varying adding to or subtracting from its terms. 7.6 The Punjab & Haryana High Court in Paramjit Singh v. Income Tax Officer (2010) 323-ITR-588 at 591 observed: There is well known principle that no oral evidence is admissible once the document contains all the terms and conditions. Sections 91 and 92 of the Indian Evidence Act, 1872 (for brevity the 1872 Act) incorporate the aforesaid principle. According to section 91 of the Act when terms of contracts, grants or other dispositions of property have been reduced to the form of documents then no evidence is permissible to be given in proof of any such terms of such grant or disposition of the property except the document itself or the secondary evidence thereof. According to section 92 of the 1872 act once the document is tendered in evidence and proved as per the requirements of section 91 then no evidence of any oral agreement or statement would be admissible as between the parties to any such instrument for the purposes of contradicting varying, adding to or subtracting from its terms. According to illustration b to section 92 if there is absolute agreement in writing between the parties where one has to pay the other a principal sum by a specified date then the oral agreement that the money was not to be paid till the specified date cannot be proved. Therefore, it follows that no oral agreement contradicting / varying the terms of a document could be offered. Once the aforesaid principle is clear then the ostensible sale consideration disclosed in the sale deed dated September 24, 2002 (A-7) has to be accepted and it cannot be contradicted by adducing any oral evidence. In the above-said case payment of sale consideration of Rs. 24,65,000/- was recorded. It was pleaded that sale consideration was not paid and affidavit of the vendor was filed, but was rejected being a self- serving document. It was observed that the consideration reflected in the Sale Deed, accepted by the Registering Authority, is relevant and must prevail. It also observed that the argument of the assessee is absurdly wrong argument for which no credence should be given and the Assessing Officer has no right to vary the terms of the contract between the parties and in the same way, the assessee has no right to change the contents of the sale deed, which are already executed and reached finally. (Page 591) 7.7 Hyderabad Bench of ITAT in Smt. K.Narasamma vs. ITO (1990) 32 ITD 494 held: any evidence stood precluded by virtue of provisions of sections 91 and 92 of the Indian Evidence Act, 1872, according to which, when the terms of any disposition of property, etc., have been reduced to the form of a document, no evidence shall be given in proof of the terms of such disposition of property except the document itself. This being the position, on facts and in law, no weight could be given to the statement of B to prove that an amount of Rs. 3.5 lakhs and not Rs. 3 lakhs passed on from B to the assessee as sale consideration. 7.8 We may further mention that the learned lower authorities have not proved his claim and has also not been able to disprove the claim of the appellant. Section 3 of the Indian Evidence Act, 1872 is interpretation clause. We are extracting here under the sense in which the expression proved, disproved and not proved have to be understood: PROVED: A fact is said to be proved when after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. DISPROVED: A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non-existence so probable that prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist. NOT PROVED: A fact is said not to be proved when it is neither proved nor disproved. On the question of the standard of proof, there is but one rule of evidence which in India applies to both civil and criminal trials and what is contained in the definition of proved and disproved in Sec.3 of the Evidence Act. The test in each case is, would a prudent man after considering the matters before him deemed the fact in issue proved or disproved. 8.1 It is well settled proposition of law that the court should safeguard itself against the danger of basing its conclusions on suspicions, howsoever strong they may be. It is equally well settled that the courts decision must rest not upon suspicion but upon legal grounds established by legal testimony. Mere suspicion, however strong, cannot take the place of proof. We rely upon State vs. Gulzari Lal Tandon AIR 1979 S.C. 1382 and J.A. Naidu vs. State of Maharashtra AIR 1979 S.C. 1537. We may further mention that the lower authorities failed to find even a single instance of sale during FY 2007-08 at Rs. 2.50 Crore per bigha as alleged by it. 8.2 The above stated principles of the indian evidence act are equally applicable and have been applied with full force in Income-tax proceedings. The Honble Supreme Court in Chuharmal v/s. C.I.T. (1988) 172-ITR-250 stated: what was meant by saying that the Evidence Act did not apply to proceedings under the Income-tax Act, 1961, was that the rigour of the rules of evidence contained in the evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented from doing so. 8.9 The ld. Assessing Officer on page 3 and onwards of the impugned order has tried to support the addition on above discussed statement and page 78 which is faulty and without jurisdiction. It is well settled proposition of law that when any addition is made by the Revenue by way of income, the burden to prove that such amount was received and was in the nature of income is on the Revenue. In the instant case, the ld. Assessing Officer has utterly failed to discharge his burden which heavily lied upon him. As far as the burden of appellant is concerned it was discharged by statements recorded under oath and otherwise. 9.1 In the case of the appellant, the Revenue has utterly failed to prove that the impugned amount of Rs. 4.07 Crore was received by the appellant during the assessment year in question from Shri Ravinder Singh Thakkar or anyone else. 9.1.1. The Honble Supreme Court in Parimisetti Seetharamamma v. CIT (1965) 57-ITR-532 at 536-537 observed: By sections 3 and 4, the Indian Income-tax Act, 1922, imposes a general liability to tax upon all income. But the Act does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases, in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision. Where however a receipt is of the nature of income, the burden of proving that it is not taxable, because it falls within an exemption provided by the Act, lies upon the assessee. 9.1.2 Similar view as to the burden of proof that the assessee has received extra payments rests on the Revenue has been reiterated in Dr K. George Thomas v/c. CIT (1985) 156 ITR 412 (S.C.) at 420. 9.1.3 Similar view has also been expressed in CBI vs. VC Shukla & Ors AIR 1998 SC 1406 wherein it was held: The rationale behind admissibility of parties books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in sufficient degree of trustworthiness. Since, however, an element of self interest and partisanship of the entrant to make a person behind whose back and without whose knowledge the entry is made liable cannot be ruled out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in section 44 by incorporating the words such statements shall not alone be sufficient to charge any person with liability. (Para 34) 9.2 We submit that the Revenue has failed to provide its mode of receipt by the assessee, the manner of receipt by the assessee, the date of receipt by the assessee and the evidence for its receipt by the assessee. No receipt or acknowledgement of the appellant individual has been found or produced, though the ld. Assessing Officer states on Pg 2 but no such alleged receipt has been found, shown, produced or annexed. 9.3 The documents furnished by the ld. Assessing Officer cannot be admitted in evidence and therefore no addition in this regard can be sustained. It is settled law that suspicion, howsoever, strong cannot take the place of legal proof, as has been held by the Honble Supreme Court in the case of Umacharan Shaw and Bros. v. CIT (1959) 37-ITR-271. Further reliance is placed upon: Krishnand vs. State of Madhya Pradesh: AIR 1977 SC 796 Jayadayal Poddar vs. Mst. Bibi Hazra: AIR 1974 SC 171 CIT vs. K Mahim Udma: 242 ITR 133 (Ker) Dhakeshwari Cotton Mills: 26 ITR 775 (SC) Omar Saha: 37 ITR 151 (SC) Jindal Saw: 118 TTJ 228 (Delhi) 9.4 The circumstances narrated by the learned Assessing Officer do not justify the ultimate inference drawn by him. The finding of the learned Assessing Officer based on the circumstances is perverse and is only a surmise or conjecture, which does not entitle a judicious quasi-judicial authority to make such a fanciful addition and create fictitious-imaginary tax demand. 9.5 The proposition that burden to prove while making any addition in the hands of an assessee is on the Revenue is well settled. The Legislatures in its wisdom, to make the said proposition explicitly, inserted section 69A by the Finance Act, 1964 with effect from 1.4.1964, putting the burden on the Revenue to prove that the assessee is owner of any money, bullion, jewellery, etc. not recorded in the books of account, if found to be the owner of such money, bullion, jewellery, etc. Once the assessee is found as the owner, the burden to explain its source is on the assessee else it shall be assessable as undisclosed income. The question of furnishing explanation would arise only when the Revenue proves beyond doubt that the money was paid to the appellant. In the present case nothing is there except the alleged statement which too does not mention the name of the appellant or payment for purchase of land of the appellant. 9.6 The Honble Rajasthan High Court in the case of Mangilal Agarwal v. Asstt. CIT (2008) 300 ITR 372 after analyzing the provision contained u/s. 69A observed: Apparently the condition precedent for invoking section 69A is the finding that the assessee is found to be the owner of any bullion, jewellery or other valuable articles. No presumption of ownership has been raised statutorily in favour of the Revenue and against the assessee, nor is there any warrant to invoke section 69A merely on the basis of the assessees possession. On his disclaimer that such articles found in his possession do not belong to him, the burden lies on the Revenue to establish the ownership of the assessee before raising any presumption against him. The Honble Court referred to the decision of the Supreme Court in CIT v/s. Daulat Ram Rawatmaull (1973) 87 ITR 349 thus: It was a case in which a sum of Rs. 5 lakhs standing in the name of B was sought to be assessed in the hands of the assessee-firm as belonging to it. The Assessing Officer has found that the said Rs. 5 lakhs stood deposited in the name of B, did not belong to B and found that it is belonging to the assessee-firm and assessed as income from undisclosed sources of the assessee. However, the Commissioner of Income-tax (Appeals) had set aside the said additions and up to the Tribunal, the finding was affirmed. On a reference being submitted to the High Court in terms of directions issued under section 66(2) of the Indian Income Tax Act,1992, the High Court set aside the additions made on account of undisclosed income in relation to the said amount. On appeal, affirmed the judgment of the High Court, the Supreme Court said (head-note). That the question was not whether the amount of Rs. 5 lakhs belonged to B, but whether it belonged to the respondent-firm. The fact that B had not been able to give a satisfactory explanation regarding the source of Rs. 5 lakhs would not be decisive even of the matter as to whether B was or was not the owner of that amount. A person could still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money was found to be not correct. From the simple fact that the explanation regarding the source of money furnished by X, in whose name the money was lying in deposit, had been found to be false, it would be a remote and farfetched conclusion to hold that the money belonged to Y. There would be in such a case no direct nexus between the facts found and the conclusions drawn therefrom. 9.7 In the present case the real question before the ld. Assessing Officer was whether the sum of Rs. 4.07 Crores was paid by Shri Ravinder Singh Thakkar by cash to the appellant in person and on which date and what is the evidence for the payment. We submit noting as provided on page

78 and statement is not sufficient and adequate evidence. It is a dumb document. Even the name of the assessee does not appear. There are many pit- falls and unanswered questions noted earlier. It is no evidence. 9.7.1 On perusal of the alleged statements of Shri Ravindra Singh Thakkar (though it does not have any evidentiary value) even it does not spell the name of the appellant at all, further it does not mention even payment of money to the extent of Rs. 4.07 Crores of land of the assessee by him/them. Even Shri Ravindra Singh Thakkar does not say as to how and in what manner huge amount of Rs. 4.07 Crores was paid. A person making such huge payment of Rs. 4.07 Crores will certainly obtain a receipt but no receipt has been produced/placed/found in the possession of Shri Ravindra Singh Thakkar/ Unique Group/Milestone Group in the search proceedings if found has not been produced/placed for perusal of anyone. 9.7.2 Even the alleged page 78 does not mention at all the name of appellant or even the payment for purchase of land from the appellant. How any adverse inference can be drawn when neither the alleged statements of Shri Ravindra Singh Thakkar prove anything or the noting on page 78. Can reliance on the alleged statement be placed when name of the appellant does not figure anywhere? So far Right to cross-examination has not been allowed or denied can a huge addition of Rs. 4.07 Crores be made on such a dumb document which even otherwise doesnt mentioned the name of the appellant or even payment of on money on the land purchased from the appellant. Who says that the payment of Rs. 4.07 Crores has been made to the appellant? In whose presence? When, Where & How? One who makes huge payment of Rs. 4.07 Crores will certainly remember as to whom paid, when paid & how paid. In the instant case nothing is forthcoming from anyone neither Shri Ravindra Singh Thakkar / Milestone Dwellers Pvt. Ltd. / Unique Group / Shri Ajit Singh nor even by the ld. lower authorities. 9.7.3 As stated earlier to extract/get more money from the promoters of Milestone Group/Milestone Dwellers Pvt. Ltd. which is based in Mumbai some inflated figures were created in internal papers of Shri Ravindra Singh Thakkar/Unique Group so that Unique Group need not have invested amount to the extent of Rs. 4.07 Crores or Rs. 5.65 Crores. Shri Ravindra Singh Thakkar has even allegedly stated the money was from various projects but does not spell investment in the land purchased from the appellant. 9.8 The Punjab & Haryana High Court in CIT v/s. Anupam Kapoor (2008) 299 ITR 179 did not believe on the allegation: A cheque had been taken by the beneficiary i.e. by paying cash equivalent to the cheque amount and the premium thereon. The Honble Court at page 182 observed: There was no material before the Assessing Officer, which could have led to a conclusion that the transaction was, simpliciter a device to camouflage activities, to defraud the Revenue. No such presumption could be drawn by the Assessing Officer, merely on surmises and conjectures. The Income Tax Appellate Tribunal rightly relied on C. Vasantlal and Co. v. CIT (1962) 45- ITR-206 (SC); M.O. Thomakutty v. CIT (1958) 34-ITR-501 (Ker.) and Mukand Singh and Sons v. Presiding Officer, Sales Tax Tribunal (1997) 107- STC-300 (P&H). It also took support from the binding precedents observing: The Income Tax Appellate Tribunal also took into consideration that it was only on the basis of a presumption that the Assessing Officer concluded that the assessee had paid cash and purchased the cheque. 9.9 The Honble Supreme Court in Dhakeshwari Cotton Mills

v. C.I.T. (1954) 26-ITR-775 at 782 observed: As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income Tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of Section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under Section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab. (It is by bench of 5 judges and is being repeated in all the subsequent binding precedents). 9.10 The Honble Supreme Court in Lalchand Bhagat Ambica Ram v. C.I.T. (1959) 37-ITR-288 did not approve of the addition when the circumstances relied on by the Income-tax Officer were matters of pure conjecture, suspicion and surmises: the notoriety for smuggling foodgrains was merely a background of suspicion and the appellant could not be held to have indulged in smuggling without any evidence; the cancellation of the foodgrain license and the prosecution of the appellant were of no consequence inasmuch as the license was restored and the appellant was acquitted of the offence with which it was charged; the mere possibility of the appellant earning considerable amounts in the account year was a matter of pure conjecture; and the fact that the appellant indulged in speculation did not legitimately lead to the inference that the profits in speculative transactions could exceed the value of the notes. It held that the Tribunal in arriving at its conclusion indulged in suspicions, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained : the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found. After applying number of judgments of the Apex Court it held as follows: When a court of fact arrives at its decision by considering material which is irrelevant to the enquiry, or acts on material, partly relevant and partly irrelevant, and it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it in arriving at its decision, a question of law arises : whether the finding of the court of fact is not vitiated by reason of its having relied upon conjectures, surmises and suspicions not supported by any evidence on record or partly upon evidence and partly upon inadmissible material. An assessment made without disclosing to the assessee the information supplied by the departmental representative and without giving any opportunity to the assessee to rebut the information so supplied and declining to take into consideration all materials which the assessee wants to produce in support of the case constitutes a violation of the fundamental rules of justice and calls for interference by the court. It also held: Conclusions based on facts proved or admitted may be conclusions of fact but whether a particular inference can legitimately be drawn from such conclusions may be a question of law. Whether, however, the facts finding authority has acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law could have found; the court is entitled to interfere.

10. Opportunity of cross-examination not provided: 10.1 Principles of natural justice have an ancient ancestry. Law presumes that Man has an innate sense of goodness, of fairness, and of morality. Since certain principles are considered to be omnipresent in Nature, Mans conscience has been able to discover them. These principles are not part of the codified law, but they permeate the codified laws like ether. Two main principles of natural justice are firstly nemo judix in causa sua or nemo debet esse judex in propria causa sua that is no man shall be a judge in his own cause. The second rule is audi alteram partem, that is, hear the other side. A corollary has been deduced from the above two rules and particularly the audi alteram partem rule, namely qui aliquid statuerit, parte inaudita altera acquum licet dixerit, haud acquum fecerit that is, he who shall decide anything without the other side having been heard, although he may have said what is right, will not have done what is right or in other words, as it is now expressed, justice should not only be done but should manifestly be seen to be done. Till the beginning of 20th Century, the applicability of these principles was restricted to the judicial and quasi-judicial authorities. However, with the obscuring of the demarcation between the quasi-judicial and administrative functions, these principles were equally applied to the administrative functions. Thus, in the case of State of Orissa v Dr. (Mrs) Binapani Dei (AIR 1967 SC 1269), the Apex Court observed that even an administrative order which involves civil consequencesmust be made consistently with the rules of natural justice. In the case of Mohinder Singh Gill v Chief Election Commissioner, New Delhi [(1978) 1 SCC 405], while defining the term civil consequence, the Honble Supreme Court said, Civil consequence undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and nonpecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence. The Apex Court has reiterated this view as in the case of S. L. Kapoor v Jagmohan & Ors [(1980) 4 SCC 379] and in Canara Bank & Ors. V Debasis Das & Ors [(2003)

4 SCC 557] 10.2 In the case of Sahara India (Firm), Lucknow v Commissioner of Income Tax, Central- I & Ano. [(2008) 14 SCC 151] the Apex Court underlined the aim of these principles when it held as: The underlying principle of natural justice, evolved under the common law, is to check arbitrary exercise of power by the State or its functionaries. Therefore, the principle implies a duty to act fairly

i.e. fair play in action. The aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. They do not supplant the law but supplement it. 10.3 The Full Bench of Supreme Court in the case of State of Kerala vs. K.T. Shaduli Yusuff (1977) 39 STC 478 held as under One of the rules which constitutes a part of the principles of natural justice is the rule of audi alteram partum which requires that no man should be condemned unheard. It is indeed a requirement of the duty to act fairly, which lies on all judicial authorities, and this duty has been extended also the authorities holding administrative enquiries involving civil consequences or affecting rights of parties. 10.4 The Honble Supreme Court in Kishan Chand Chela Ram vs. CIT reported in (1980) 125 ITR 713 held that The department ought to have called upon the manager to produce the documents and papers on the basis of which he made the statements and confronted the assessee with those documents and papers. It was true that proceedings under the income-tax law were not governed by the strict rules of evidence, and, therefore, it might be said that even without calling the manager of the bank in evidence to prove the letter dated February 18, 1955, it could be taken into account as evidence. But before the income tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him. 10.5 The Honble Supreme Court in Kalra Glue Factory vs. Sales Tax Tribunal (1987) 167 ITR 498 set aside the order of the Tribunal as well as order in revision of High Court on the ground that the statements of a partner of another firm upon which the Sales Tax Tribunal relied, had not been tested by cross examinations. 10.6 The Honble Rajasthan High Court in CTO Vs. Haryana Dal Mill (1993) 90 STC 519 dismissed the departmental revision petitions on the ground that the respondent not having been given opportunity to discredit the entries or cross examine the agent and the entries not having been proved nor the agent examined, the order of the Board of Revenue was justified. 10.7 The Honble Kerala High Court in P.S. Abdul Majeed Vs. Agricultural Income tax & Sales Tax Officer (1994) 209 ITR 821 in a writ petition by the Petitioner-Assessee held that there were two inspections of the Petitioners holdings on November 3, 1981, and on September 19, 1985, before and after the assessment year in question, when the inspecting authorities estimated the yield of cardamom from the petitioners holdings at 180 Kgs. The order of reassessment was made without any reference to either of these inspection records but merely on the strength of the entries in the auctioneers records. Reliance on the auctioneers records and treating them as if they were conclusive did violence to the principles of natural justice. The petitioner had denied the sales in toto. He had also prayed for an opportunity to cross-examine the auctioneers. When such a request was made it was incumbent on the officer to afford opportunity to the assessee to cross-examine the authors of those books. The petitioner had been denied the reasonable opportunity which was due in law, in relation to the assessment, and that was sufficient to vitiate the order. The order of reassessment was not valid and was liable to be quashed. 10.8 The Honble Calcutta High Court in CIT Vs. Eastern Commercial Enterprises (1994) 210 ITR 103 held that Cross examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross examine the witness. 10.9 The Income-tax Appellate Tribunal, Hyderabad Bench in Mahaveer Transport Co. vs. ITO reported at (1987) Vol. 23 ITD 206 held further while finalizing the assessment even an opportunity to cross examine those lorry owners from whom the statements and sworn depositions were recorded was prayed for by the assessee. However, that request was not considered. It was against principles of natural justice and the statements of the lorry owners could not be used for any purpose whatsoever in as much as no fair opportunity was given to the assessee to cross-examine these witnesses. 10.10 The Honble ITAT, Delhi Bench in Sunil Agarwal vs. ACIT (2002) 82 ITD 1 held that additions to income could not have been made by the AO without confronting the assessee with the statements of witness which were adverse to assessee. 10.11 In Mahesh Gulab Raj Joshi vs. CIT (A) (2205) 95 ITR 300 (Mum) on the basis of statement recorded of one V during Survey conducted of his proprietary concern. The AO treated sale of diamonds by assessee to D as fictitious and made addition u/s. 68 in hands of assessee. No opportunity of cross examining V having been allowed to the assessee, statement of V could not be relied upon or made basis of addition. We submit and it is well settled that: on no account whatever should the learned Assessing Officer base its findings on suspicions, conjectures or surmises, nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures and surmises. We request to ignore the findings solely based on the unproved documents.

11. The reliance placed by the ld. Assessing Officer on the decision of the Supreme Court in the case of Sumati Dayal reported in 214 ITR 801 is misplaced. In the said case Settlement Commission found the following facts:- (1) The lady moved an application before the Settlement Commission wherein she stated that she was agreeable to reasonable addition on a reasonable basis with regard to inadequate drawings for purchase of jackpot gifts, other expenses in connection with races and losses etc. The finding of the Settlement Commission in order to come to the conclusion that the apparent is not the real and that the appellant's claim about her winning in races is contrived and not genuine was based on the following reasons:

(i) The appellant's knowledge of racing is very meager;

(ii) A Jackpot is a stake of five events in a single day and one can believe a regular and experienced punter clearing a Jackpot occasionally but the claim of the appellant to have won a number of Jackpots in three or four seasons not merely at one place but at three different centres, namely, Madras, Bangalore and Hyderabad appears, prime facie, to be wild and contrary to the statistical theories and experience of the frequencies and probabilities;

(iii) The appellant's books do not show any drawings on race days or on the immediately preceding days for the purchase of Jackpot combination tickets, which entailed sizable amounts varying generally between Rs. 2,000/- and Rs. 3,000/-. The drawings recorded in the books cannot be co-related to the various racing events at which the appellant made the alleged winnings;

(iv) While the appellant's capital account was credited with the gross amounts of race winnings, there were no debits either for expenses and purchases of tickets or for losses; and

(v) In view of the exceptional luck claimed to have been enjoyed by the appellant, her loss of interest in races from 1972 assumes significance. Winnings in racing became liable to income tax from April 1, 1972 but one would not give up an activity yielding or likely to yield a large income merely because the income would suffer tax. The position would be different; however, if the claim of winnings in races was false and what were passed off as such winnings really represented the appellant's taxable income from some undisclosed sources.

(II) The Honble Court commented on the approach of the Chairman of the Settlement Commission and approved of the majority opinion after considering surrounding circumstances and applying the test of human probabilities and rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence. We submit the ratio of the said decision does not support the Revenue but supports the appellant. The surrounding circumstances which were created in the course of the search with Shri Ravindra Singh Thakkar and applying the test of human probabilities the rightful conclusion which should have been drawn would be that the explanation of payment and the other expenditure stated by Mr. Thakkar is not genuine. We submit the finding of the ld. Assessing Officer that the impugned amount of Rs.4.07 Crores is income of the appellant is not based on evidence but is contrary to the material on record and human probabilities.

12. The Honble Supreme Court in Kishan Chand Chelaram vs. CIT (1980) 125 ITR 713 at 723 observed: The burden was on the revenue to show that the amount of Rs. 1,07,350/- said to have been remitted from Madras to Bombay belonged to the assessee and it was not enough for the revenue to show that the amount was remitted by Tilokchand, an employee of the assessee, to Nathirmal, another employee of the assessee. It further observed that the assessee cannot be expected to call for the specified persons in evidence for the purpose of helping the Revenue to discharge the burden which lay upon it. 12.1 We submit that it was the burden of the ld. Assessing Officer to prove that the amount of Rs.4.07 Crores was paid by Shri Ravinder Singh Thakkar and was received by the appellant by way of sale consideration of the impugned land. We submit the material is totally absent for making addition in the hands of the appellant. The Revenue has utterly failed to discharge the burden heavily casted upon it.

13. In the light of the facts, submissions, contentions and the law analyzed herein above, it is most humbly and respectfully submitted that there is no material evidence on the basis of which the ld. Assessing Officer could legally come to the conclusion that the amount of Rs.4.07 Crores was paid by Shri Ravinder Singh Thakkar and was received by the appellant. The addition deserves to be deleted and be directed to be deleted. 2.19 Before us, the ld. DR submitted that evidence filed during the course of search and the statement recorded on oath of Shri Ravinder Singh Thakkar clearly suggest that on money has been passed in respect of purchase of land. The sale consideration as mentioned in the sale deed is shown in the position of fund as on 22-12-2008. The cost of land has been taken at Rs. 11.67 crores which included the consideration paid through bank and consideration of Rs. 4.07 crores paid in cash. It is not the case of the assessee that the expenses mentioned in such documents are incorrect. In respect of construction expenses, the ld. DR submitted that the group which purchased the land made construction. The expenditure must have been incurred even before getting the approval because for incurring the expenditure, the decision of the group in making investment is important. The group may incur the expenditure even not permitted by the Rules and Regulations. What we were considering is as per document of incurring expenses and the party who has incurred the expenses admitted it. At the time of search in the case of M/s. Unique Group, the statement of Shri Ravinder Singh Thakkar and his father were recorded on 29-01-2009 and were confronted with pages 75 to 78 of Annexure A-24 as well as pages 50 to 54 of Annexure A-24 having details of assets and liabilities of M/s. Milestone Dwellers Pvt. Ltd. as on 31-12-2008. Shri Ravinder Singh Thakkar admitted that group has incurred on money expenditure. In the case of on money payment, one has to rely on the circumstantial evidence. Since project was being managed by M/s. Milestone Dwellers Pvt. Ltd. of Shri Ajit Singh in the ratio of 60:40 and therefore, the payment, if any, made outside the books of accounts was kept recorded in the loose papers. The ld. DR drew our attention that the company M/s. Milestone Dwellers Pvt. Ltd. is a concern belonging to M/s. Unique Group. The ld. DR stated that evidence should be evaluated on the basis of the human probability. For this purpose, the ld. DR relied on the decisions of Hon'ble Apex Court in the case of CIT Vs. Durga Prasad More ,

82 ITR 540 and Sumit Dayal vs CIT, 214 ITR 801. 2.20 We have heard both the parties. The search in the case of M/s. Unique Group was conducted in the month of Jan. 2009. The loose papers found at the time of search were confronted to the persons in whose premises searches were made. The AO for the first time issued a letter dated 21-09-2010 vide which he sought information u/s 133(6) in the case of M/s. Milestone Dwellers Pvt. Ltd.. The assessee filed the rely vide letter dated 29th Sept. 2010 and copy of this letter is available at pages 35 to 37 of the paper book. Vide this letter, the assessee stated that she has never received the amount of Rs. 4.07 crores in cash. It was further submitted in the letter that she is not aware as to how Shri Ravinder Singh Thakkar, Director of M/s. Milestone Dwellers Pvt. Ltd. has stated to have paid a sum of Rs. 4.07 crores. She requested the AO to kindly provide the copy of the statement of Shri Ravinder Singh Thakkar and also requested to provide the cross examination of Shri Ravinder Singh Thakkar. Alongwith this letter, he submitted the copies of the bank account as desired. The AO during the course of assessment proceedings in the case of the assessee for the first time issued a letter dated 3-12-2010. The AO in his order has mentioned that in the letter dated 3rd Dec. 2010, the assessee was required to explain as to why a sum of Rs. 4.07 crores in respect of receipt of on money be not added to her income for the assessment year 2008-09. In the written submission, the ld. AR submitted that the assessee received a letter dated 16-12-2010 and filed reply vide letter dated 20-12-2010. Vide this letter, the assessee informed the AO that she has not received letter dated 3-12-2010 and requested that copy of this letter alongwith Annexures be provided to her. The assessee filed reply vide letter dated 23-12-2010 and copy of that letter alongwith Annexure is available at pages 55 to 79 of the paper book. This reply was filed after getting copy of letter dated 3-12-2010 alongwith Annexures. Vide this letter, AO was informed about the copies of the sale deed of lands situated in village Mahapura which showed that the land was not being sold about Rs. 1.00 crore per hectare. Vide this letter, it was stated that Shri Ravinder Singh Thakkar has made a huge windfall in getting the land without investing his share in M/s. Milestone Dwellers Pvt. Ltd.. He fabricated the document to show that he has put the cash from his side towards land purchase and towards liaison with the Govt. officials for giving land conversion and permission. The assessee required the AO to ascertain from the officials M/s. Milestone Dwellers Pvt. Ltd. as to whether any cash was paid. Vide this letter, the assessee made request that the copy of the entire statements should be given and an opportunity of cross examination of Shri Ravinder Singh Thakkar be given. M/s. Milestone Dwellers Pvt. Ltd. is a joint venture of Milestone Real Estate Fund and M/s. Unique Dream Builders Contribution in M/s. Milestone Real Estate Fund has been contributed by promimant people of India/ Mumbai for real estate investments. According to the assessee, Shri Ravinder Singh Thakkar in order to justify his share of investment from his side cooke a story of spending the cash so that he can get the maximum benefit without bringing his share of funds. Thus the assessee requested to cross examine Shri Ravinder Singh Thakkar, Shri Ajit Singh and employees of Milestone Real Estate Fund. The AO has passed the assessment order on 29-12-2010. The assessee vide letter dated 23-12-2010 requested the AO to allow her to examine Shri Ajit Singh, Ravinder Singh Thakkar and employees of M/s. Milestone Real Estate Fund before any adverse inference is taken. As per principle of natural justice, it was obligatory on the part of the AO to have provided all the materials which were being used against her. In case the AO was relying on the statement of a person then the assessee will have to be given an opportunity to cross examine. Moreover, in case the AO wants to make reliance for making addition on the basis of the documents found during the course of search at 3rd party then presumption u/s 292C will not be available against the assessee. Such presumption, even in the case of the assessee in whose case the document has been found during the course search, is rebuttable. Reliance is placed on the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. S.M.S. Investment Corporation Ltd., 207 ITR 364. While recording the statement of Shri Ravinder Singh Thakkar at the time of raid, he was confronted with pages 75 to 78 of the paper and pages 50 to 52 of Annexure A-24. However, the AO in his order has mentioned only to the fund flow statements and copy of such fund flow statements was given to the assessee. In the statement, Shri Ravinder Singh Thakkar was asked to explain as to why the entry of Rs. 5.65 croes is not reflected in the assets and liabilities of M/s. Milestone Dwellers (P) Ltd. According to Shri Ravinder Singh Thakkar, there is difference between two balance sheets and the difference is to the extent of Rs. 5.65 crores i.e. the amount invested in cash. We are not having the benefit of going through all the papers mentioned in the statement relating to such issue as these have not been provided to the assessee except fund flow statement. Thus we feel that the assessment order has been passed in violation of principle of natural justice. We had considered the similar issues in the case of Smt. Vijay Laxmi Dhadda. In that case also, the principle of natural justice was violated and the reliance was placed on documents found at the search of third party. It will be useful to reproduce the following paras from that order. 2.17 The revenue authorities recorded the statement of Shri Ravinder Singh Thakkar, a person belonging to M/s. Unique Group on different dates from 28-01-2009. The revenue authorities provided only page 4 of his statement recorded on 28-01-2009. The relevant portion of statement of Shri Ravinder Singh Thakkar is available at pages 40 to 42 o the paper book. In respect of the document found in the locker, Shri Ravinder Singh Thakkar explained the transactions with the assessee and her husband. Shri Ravinder Singh Thakkar has clearly mentioned that he negotiated the deal with the assessee and her husband but the deal could not mature and therefore, he received back the cheques which were issued. Thus Shri Ravinder Singh Thakkar has not admitted of making the payment in cash. The contention of the revenue that Shri Ajit Singh Thakkar has admitted these unaccounted payments and included in the calculation while working out the additional unaccounted income offered for taxation in the return of income so filed. It is the contention of the assessee that he has not been provided the copy of the documents on which revenue is placing reliance including the admission of Shri Ajit Singh Thakkar in the return of income. The Hon'ble Apex Court in the case of Kanwar Natwar Singh v. Directorate of Enforcement, 330 ITR 374 held that right to fair hearing is a guaranteed right. However, the person has a right to know the evidence to be used against him. The supply of material relied upon by the authorities on the basis of which the law has been set into motion are to be given as per requirement of natural justice. In that case, the Hon'ble Apex Court directed the authorities to provide all the documents on which reliance has been placed. In the instant case, Shri Ravinder Singh Thakkar has not given any adverse statement. In case the revenue wanted to rely on the unacounted income offered by Shri Ajit Singh Thakkar then the assessee should have been provided an opportunity of not only seeing the document but also cross examination. The Third Member decision in the case of Kawin Internactive (P) Ltd. ,

133 ITD 29 upheld the findings of the ld. CIT(A) in deleting the addition because the AO relied upon uncomparbale cases and has not provided the opportunity to the assessee of being heard. The Third Member had an occasion to consider the issue of making an addition merely on the basis of evidence procured from Third party in the case of ITO Vs. Mayur Agarwal , 128 ITD 55. It was held that no addition can be made merely on the basis of evidence procured from Third party when the assessee denied transactions unless such party to be put up for cross examination. 2.19 We had noticed that search operations were carried out in the case of M/s. Unique Group on 28-01-2009. The statement of the husband of the assessee was recorded on 4-03-2009 and the statement of the assessee was recorded on 16-03-2009. We are not aware as to when Shri Ajit Singh Thakkar, father of the assessee Shri Ravinder Singh Thakkar admitted such unaccounted payment and included in the calculation while working out the additional unaccounted income offered for taxation in the return of income so filed. The assessee was given show cause notice alongwith Annexure on 16-12-2010. The assessment has been completed vide order dated 29-12-2010. Hence all the proceedings have been concluded within a fortnight of issuance of show cause notice. The search was conducted in Jan. 2009 and the statement of the assessee was recorded in March 2009. After receipt of the show cause notice, the assessee required the AO to provide him statement of computation of income filed by Shri Ajit Singh Thakkar. After getting the copies, the assessee should have asked for cross examination of Shri Ajit Singh Thakkar . The Hon'ble Gujarat High Court in the case of Heirs and Legal Representatives of Late Laxmanbhai S. Patel vs. CIT, 327 ITR 290 had occasion to consider the addition in the hands of a person who has signed the promissory note which was found during the course of search at the premises of the firm in which third party was partner and the firm disclosed such unaccounted income. The Hon'ble High Court held that the amount covered of promissory note could not be assessed as income of the assessee from undisclosed sources as the assessee was not given an opportunity of cross examination the third party in whose search promissory note was found. It will be useful to reproduce the held portion from this decision.

(ii) That except the statements of K and R there was no other evidence available with the Department. A copy of the statement of R was not given nor was an opportunity of cross-examining R given to the assessee. K had subsequently retracted his statement. Even after retraction, he along with two other partners had filed disclosure petition disclosing this very amount in the disclosure petition. The assessee's statement was recorded by the Assessing Officer and some discrepancies were pointed out but merely on the basis of such discrepancies, adverse presumptions could not be drawn against him. The Department had failed to establish any nexus between the promissory note and the amount said to have been given by the assessee to K. The Tribunal was not right in law in upholding the addition of Rs. 8,78,358 in the hands of the assessee. 2.20 The Hon'ble Apex Court in the case of Rajesh Kumar v. DCIT , 287 ITR 91 held that principle of natural justice should be followed in the case where a person suffers civil consequences though the principle of natural justice is not impliedly mentioned. By passing of assessment order and creating a demand, there are civil consequences and the AO should have provided an opportunity. The Hon'ble Apex Court in the case of Kishinchand Chellaram v. CIT, 125 ITR 713 held that if an evidence to be used against the assessee is not shown to him then such evidence is not admissible. In this case, Hon'ble Apex Court held that the Department ought to have called upon the bank manger to produce the documents and papers on the basis of which he has made the statement and confronted the assessee with those documents and papers. The Hon'ble Apex Court in the case of CIT Vs. Bokaro Steel Ltd. , 236 ITR

135 had an occasion the issue of accrual of income and principle of real income. In this case, the original agreement seized to be operative abinito and reversal of entries were there in the account books. The assessee did not receive any real income. In the instant case, the assessee in his statement in the month of March, 2009 clearly stated that the amounts were not received and cheques were returned back. Such facts is supported from the statement of Shri Ravinder Singh Thakkar made u/s 132 (4) of the Act at the time of search. The concept of real income was again reiterated by the Hon'ble Apex Court in the case of Godhra Electricity Co. Ltd. Vs. CIT, 225 ITR 746. The Hon'ble Apex Court in the case of CIT Vs. Daulatram Rawatmull, 87 ITR 349 observed that there should be necessity of nexus between the conclusion and primary facts. The assessee has not been able to show that he received cheques and the same were returned because the deal could not materialize. The revenue is relying on the disclosure of income by Shri Ajit Singh Thakkar father of Shri Ravinder Singh Thakkar. Thus the primary facts are not confronted to hold that the assessee can be charged with undisclosed income. The Hon'ble Apex Court in the case of Parimisetti Seetharamamma Vs. CIT

57 ITR 532 held that the case in which the receipt is sought to be taxed as income then burden is upon the Department to prove that it is within the taxing provisions. The AO in his order has not mentioned any section under which he has taxed the receipt. The Hon'ble Jurisdictional High Court in the case of CIT Vs. S.C. Sethi, 295 ITR 351 had an occasion to consider the case in which the addition was made on the basis of entries of loose papers found during the course of search. No opportunity was given to the assessee of cross examination of the person from whose possession loose papers were recovered. The Hon'ble Jurisdictional High Court therefore, upheld the findings of the Tribunal in deleting the addition. The Hon'ble Jurisdictional High Court also noticed that revenue in this case did not file any appeal against the order of the Tribunal for the subsequent assessment year on the same facts. In this case, we do not feel that second inning be given of the Department. The revenue was having sufficient time to confront with the assessee with the evidence which it wanted to rely. Even upto first appellate stage, the assessee was not confronted with all the evidences on which the revenue is placing reliance and drawing inference against the assessee. ITAT Ahemdabad Bench in the case of Sheth Akshay Pushpavadan Vs. DCIT, 130 TTJ 42 held that presumption u/s 132(4A) cannot be invoked against the assessee in a case when the seized paper was not recovered during the course of search from the possession of the assessee. In this case, the documents which are being relied upon by the revenue were found during the course of search of third party. The Hon'ble Delhi High Court in the case of CIT Vs. Ashwani Gupta, 191 Taxman 51 confirmed the order of the ld. CIT(A) in which the ld. CIT(A) cancelled the order because there was violation of principle of natural justice. In this case, the assessee was neither provided copies of seized materials nor he was allowed to cross examine the person on the basis of whose statement, the addition was made. The ITAT Jaipur Bench in the case of ITO Vs. Shri Prem Chand Narang (ITA No. 1183/ JP/2010 dated 11-02-2011) had an occasion to consider the presumption as contained in Section 292C of the Act. It will be useful to reproduce following para from that order. 2.7 Section 292C refers to the presumption in respect of books of account and documents found in the possession and control of any person in the course of survey u/s 133A of the Act. The presumption which may be made for any proceedings under the Act are as under:-

(i) that such books of account, other documents, money, bullion, jewelleryor other valuable article or thing belong or belongs to such person;

(ii) that the contents of such books of account and other documents aretrue; and

(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that persons handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.] 2.8 Section uses the word may. The word may leave it to the Court to make or not to make presumption according to the circumstances of the case. Such presumption is optional and the Court is not bound to make it. Section has not contained the word shall presume. Similar wording of may presume is contained in Section 132(4A) of the Act. The Jurisdictional High Court in the case of CIT Vs. SMS Investment Corporation (P) Ltd, 207 ITR 364 has held that presumption is rebuttable. In that case, seized paper showed the calculation of compounding interest while agreement was in respect of receiving the simple interest. The Hon'ble High Court held that presumption in Section 132(4A) is rebuttable. In view of the factual position, the reopening of the assessment was invalid on the ground that the assessee has received compound interest. The presumption mentioned in Section 132(4A) is similar to presumption u/s 292C of the Act. The ITAT Ahemdabad Bench in the case of Unique Organiors and Developers (P) Ltd Vs. DCIT , 70 TTJ 131 held that presumption cannot be applicable to a third party from whose possession such documents have not been found by the Revenue. The Hon'ble Apex Court in the case of State of West Bengal Vs. EITA India Ltd (2003) 5 SCC 239 had an occasion to consider the distinction between the word may and shall presume. In the case of may presume the fact is to be considered as proved unless and until it is disproved or may call for prove of it. The ITAT Ahemdabd Bench in the case of Sheth Akshay Pushpavadan Vs. DCIT, 130 TTJ 42 (UO) held that payment of on-money on the basis of diary seized from the third party cannot be considered for the purpose of making addition u/s 69 of the Act. We therefore, hold that the ld. CIT(A) was justified in deleting the addition. The ld. CIT(A) has also considered the alternate submissions in respect of availability of funds with all the family members of the assessee and the addition could not have been made even if the entry in the document is to be presumed as correct. 2.21 Following our findings that there is violation of principle of natural justice and evidences not established against the assessee and hence the ld. CIT(A) was not justified in confirming the addition. We accordingly delete the addition. 3.0 The Hon'ble Punjab & Haryana High Court in the case of Paramjit Singh Vs. ITO , 236 CTR 466 had an occasion to consider the issue of admissibility of oral evidence as against documentary evidence. It will be useful to reproduce the held portion from the above judgement.. Held. There is well-known principle that no oral evidence is admissible once the document contains all the terms and conditions. Section. 91 and 92 of the Indian Evidence Act, 1872 (for brevity the 1872 Act) incorporate the aforesaid principle. According to Section 91 when terms of a contract, grants or other disposition of property have been reduced to the form a of a document then no evidence is permissible to be given in proof of any such terms or such terms or such grant or disposition of property except the document itself or the secondary evidence thereof. According to section 92 of the 1872 act, once the document is tendered in evidence and approved as per the requirements of Section 91 then no evidence of any oral agreement or statement would be admissible as between the parties to any such instrument for the purpose of contradicting, varying, adding to or subtracting from its terms. According to illustration b to Section 92 if there is an absolute agreement in writing between the parties where one has to pay the other a principle sum by specified date then the oral agreement that the money was not be paid till the specified date cannot be proved. Therefore, it follows that no oral agreement contacting / varying the terms of a document could be offered. Once the aforesaid principle is clear then ostensible sale consideration disclosed in the sale deed dated 24th Sept. 2002 has to be accepted and it cannot be contradicted by adducing any oral evidence. Therefore, the order of the Tribunal does not suffer any legal infirmity in reaching to the conclusion that the amount shown in the registered sale deed was received by the vendors and deserves to the gross income of the assessee. 3.1 In the instant case, secondary evidences cannot be relied on as neither the witnesses produced or the person who prepared the documents were produced.. Thus the sale consideration as shown in the documents is to be accepted. 4.0 Now we take up the appeal of the revenue . 4.1 The ld. CIT(A) has given alternate finding that a sum of Rs. 4.07 crores is to be taxed under the head capital gain. 4.2 The issue before the ld. CIT(A) was against addition of Rs. 4.07 crores. The ld. CIT(A) has not touched any new source of income. The power of the ld. CIT(A) are coterminous with the power of the AO. The ld. CIT(A) was therefore, justified in recording the finding that the amount should be taxed under the head capital gain. Since we have held while deciding the appeal in the case of the assessee that the amount is not to be added, therefore, the appeal of the revenue is academic.

4. In the result, the appeal of the assessee is allowed and that of the revenue is dismissed. The order is pronounced in the open Court on 30-12-2011. Sd/- Sd/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur Dated; 30/12/2011 *Mishra Copy forwarded to :-

1. Smt. Sunita Dhadda, Jaipur

2. The DCIT, Central Circle- 2, Jaipur

3. The ld. CIT By Order

4. The ld. CIT(A)

5. The ld.DR

6. The Guard file (ITA No.751 & 852/JP /11) A.R, ITAT, JAIPUR