(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgement of the Tribunal dated 19.12.2008 raising the following questions for our consideration :
“[A] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.3,43,20,956/- made in respect of unaccounted investments in property?
[B] Whether the Appellate Tribunal is right in law and on facts in deleting the addition made on account of unaccounted profit on sale of land situated at Chekhla?
[C] Whether the Appellate Tribunal is right in law and on facts in deleting the addition made on account of unexplained investment in petrol pumps?
[D] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.4,38,81,688/- made in respect of unaccounted sales?”
2. With respect to question “A”, we find that the Assessing Officer made the addition of Rs.3.43 crores (rounded off) in respect of unaccounted investment made by the assessee in the properties during the block period under consideration. CIT (Appeals), however, in the appeal filed by the assessee, reduced such amount to Rs.25.86 lakhs (rounded off to Rs.26 lakhs). Both the sides carried the issue in further appeal before the Tribunal. The Tribunal allowed the assessee's appeal in part and rejected the revenue's.
3. Having heard the learned counsel for the parties, we notice that CIT (Appeals) had given detailed reasons for reducing the unexplained investment from Rs.3.13 crores which was adopted by the Assessing Officer to Rs.3.15 lakhs. He thereafter calculated investments made in different lands by the assessee and thereby, came to a final figure of Rs.25.86 lakhs (rounded off to Rs.26 lakhs). The discussion of CIT (Appeals) and the materials on record would convince us that the entire issue is based on appreciation of the evidence on record. To the extent the CIT (Appeals) reduced the addition to Rs.26 lakhs, in our opinion, therefore, no question of law arises. CIT (Appeals) noted certain duplications and also gave cogent reasons for reducing the additions made by the Assessing Officer.
4. Coming to the Tribunal's approach with respect to such limited addition of Rs.26 lakhs sustained by CIT (Appeals), we are prima facie of the opinion that the Tribunal reduced the amount of Rs.22,71,708/- (i.e. Rs.25,86,708 – Rs.3,15,000) by one-fourth on the premise that all the lands were not in the sole name of the assessee, but were jointly held. From the record, it prima facie emerges that though some of the lands were jointly held, but not all. In that view of the matter, to the extent the Tribunal allowed the assessee's appeal and further reduced the addition to Rs.9 lakhs, the issue requires further consideration.
5. Insofar as question “B” is concerned, the Assessing Officer made certain additions towards unaccounted investment for purchase of Chekhla land. CIT (Appeals) reduced such addition from Rs.2.25 crores to Rs.19.72 lakhs (rounded off). This was on the basis that according to CIT (Appeals), the correct unexplained receipt would be Rs.1.06 crores taking the profit rate of 18.46 %, he was of the opinion that the addition could be sustained only to the extent of Rs.19.72 lakhs.
6. Both the sides appealed against such decision of CIT (Appeals). The Tribunal allowed the assessee's appeal and rejected the revenue's. The Tribunal was of the opinion that such additions were made on the basis of the documents which were dumb documents. The Tribunal relied on the decision of the Delhi High Court in the case of Girish Chaudhary reported in (2007) 163 Taxman 608. On overall consideration of evidence on record, the Tribunal concluded as under:
“19.3 After careful consideration of the law laid down by the Hon'ble High Court of Delhi in aforesaid case and the facts of the present case (details in the relevant seized documents), we are of the opinion that the Revenue having not disputed the fact that the entries in these documents do not specifically specify as to the nature of notings i.e. whether the notings are for outgoings or income, for business transaction or otherwise, we respectfully following the decisions of Delhi High Court (supra), come to the conclusion that the documents in question was a dumb document and, therefore, the CIT (Appeals) misdirected himself in considering the details therein as business transactions and, consequently, sustaining the addition of Rs.19,72,796/-. The addition sustained by the CIT (Appeals) is deleted and assessee's ground is allowed.”
7. Learned counsel for the revenue vehemently contended that in addition to the seized documents, there were statements of employees recorded which would clearly suggest investment in Chekhla land. She submitted that the entries in the documents represented the real amount divided by hundred. This was brought on record through the statements of the employees.
8. On the other hand, learned counsel Shri Soparkar for the assessee submitted that the Tribunal has examined the evidence on record and found that no additions on the basis of such documents could be made.
9. On the issue, we have perused the orders on record. The Tribunal having taken into account the nature of documents and other evidence on record, found that there was no justification for making addition for investment in Chekhla land. We have also been shown two documents on which the Assessing Officer placed heavy reliance. We are not in the process of re-appreciating the evidence; but cannot help observing that these documents do not reveal any involvement of the present assessee. Suffice it to note that the Tribunal having examined the evidence and come to factual conclusion, in our opinion, no question of law arises.
10. With respect to question “C”, issue arises out of the Assessing Officer's addition of Rs.75 lakhs. The assessee carried the matter in appeal. CIT (Appeals) retained only Rs.1,50,000/- under such head. Both the sides carried the issue in further appeal. The Tribunal deleted even the limited addition sustained by CIT (Appeals).
11. From the documents on record and in particular, the discussion of the Tribunal on the issue, it clearly emerges that the entire issue is purely factual in nature. The Tribunal was of the opinion that the investment in the petrol pumps as well as lands was in the names of Shri V. K. Bhatia and Shri Poonam Gadhavi. The document showing such investment was also seized from Shri Poonam Gadhavi and was with respect to account of Shri Gadhavi. The document did not show the assessee's investment. The Tribunal further observed that even the addition of Rs.1.50 lakhs sustained by CIT (Appeals) was not justified since the revenue could not show that the assessee was partner in the petrol pumps business.
12. From the above discussion, it can be gathered that the Tribunal on the basis of the evidence, found that the Assessing Officer erred in making the addition. According to the Tribunal, even CIT (Appeals) to the limited extent he retained the addition, erred in appreciating the evidence on record. The entire issue being purely factual in nature, in our view, no question of law arises.
13. Question “D” pertains to addition of Rs.4.38 crores (rounded off) made by the Assessing Officer. Such addition was deleted by CIT (Appeals) on the ground that the transactions pertain to the business of the assessee and that out of such transactions, profit element of Rs.1.10 crores alone could be sustained. Such business being jointly carried on, the profit was equally divided between two partners. It was this view that the Tribunal upheld. The Tribunal concluded that looking to the documents as well as the nature of receipts, the same must be held to be on account of business transactions and therefore, the revenue authorities were justified in considering the receipts as business turnover. The Tribunal also upheld CIT (Appeals)'s decoding of the documents. However, looking to the totality of the facts and circumstances, the Tribunal agreed that the assessee's contention that the transactions are business transactions and that, therefore, only the profit element embedded in such transactions should be charged to tax.
14. CIT (Appeals) as well as the Tribunal having given cogent reasons and having taxed income element of such transactions properly as business transactions, no question of law arises.
15. In the result, Tax Appeal is admitted only for the following substantial question of law :
“Whether the Income Tax Appellate Tribunal was justified in deleting the additions sustained by CIT (Appeals) to the extent of Rs.26 lakhs towards unaccounted investments of the assessee in properties?”
[AKIL KURESHI, J.] [HARSHA DEVANI, J.] parmar*