Commissioner Of Income-Tax ... vs Ramakant U.Khetan,Akola
2017 Latest Caselaw 1491 Bom

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                    IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                             NAGPUR BENCH AT NAGPUR

                               INCOME TAX APPEAL NO.55/2000

     APPELLANT:                 The Commissioner of Income Tax
                                Vidarbha, Nagpur.

                                               ...VERSUS...

     RESPONDENT :    Shri Ramakant U. Khetan, Akola.

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             Shri Anand Parchure, Adv. with Shri Bhushan Mohta, Adv. for appellant
            Shri C.J. Thakkar, Advocate for respondent
     --------------------------------------------------------------------------------------------------

                                                    CORAM  :  SMT. VASANTI  A  NAIK, AND
                                                                      MRS. SWAPNA JOSHI, JJ.

DATE : 06.04.2017

ORAL JUDGMENT (PER : SMT. VASANTI A. NAIK, J.)

Whether in the facts and circumstances of the case, the

Tribunal was justified in law in deleting the addition of Rs.66,50,000/- by

holding that there was no evidence for making such addition, is the

question of law framed by this Court at the time of admission of this

Income Tax Appeal.

Few facts giving rise to the Income Tax Appeal are stated

thus : -

A search action under Section 132 of the Income Tax Act

was carried out at the residential premises of the respondent - assessee on

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27.11.1996 and during the course of search certain jewellery, Hundies

etc. were seized. During the course of the search, some letters written by

Shri P.R. Agrawal of Bombay were found and seized from the residence of

the assessee. According to the Assessing Officer, the letters written by

Shri P.R. Agrawal related to a flat in Matunga, Mumbai that was given on

rent by the Society to the assessee on the application made by him in the

year 1995. According to the Assessing Officer, before the flat was given on

rent to the assessee Shri Sanjay Chokhani was occupying the flat and that

he had surrendered his tenancy rights and vacant possession of the flat

was handed over to the assessee through Shri P.R. Agrawal. On the basis

of those chits, the Assessing Officer came to a conclusion that the assessee

had finalized the deal with Shri Chokhani by which he had surrendered

his tenancy rights in favour of the assessee on receiving a sum of

Rs.66,50,000/-. On the basis of the material on record, the Assessing

Officer held that the correspondence between Shri P.R. Agrawal and the

assessee related to the flat in Matunga, which was given on rent to the

assessee. The assessee had made an application for allotment of the flat

on rent, to the Society - Trust on 28.12.1995 and the tenant

Shri Chokhani had executed an indemnity bond on 26.3.1996. The

Assessing Officer held that Shri Chokhani must have executed the

indemnity bond only after receiving the deposit/Pagadi as was suggested

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by Shri P.R. Agrawal, in his communication dated 1.1.1996. After holding

that there could be no surrender of tenancy rights in Mumbai without

payment of deposit or Pagadi, the Assessing Officer held that the assessee

had paid a sum of Rs.66,50,000/- for acquiring the the tenancy rights of

the flat at Matunga. Since the amount of Rs.66,50,000/- was not disclosed

by the assessee, the Assessing Officer treated the same as an unexplained

investment and subjected it to tax under the Act. The order of the

Assessing Officer was challenged by the assessee before the Income Tax

Appellate Tribunal.

The Income Tax Appellate Tribunal, on an appreciation of

the material on record came to a conclusion that there was no basis for

making the addition as there was no material to show that the assessee

had paid an amount of Rs.66,50,000/- to Shri Chokhani through Shri P.R.

Agrawal. The Tribunal held that merely because there could be no

transfer of flats in Mumbai without payment of Hundi/Pagadi, it cannot

be said that the assessee had paid an amount of Rs.66,50,000/- to Shri

Chokhani for handing over the possession of the flat, when there was no

material to prove the said fact. It was observed that the broker

Shri Agrawal was examined but he denied that the deal was made

through him. The Society-Trust, that had rented the flat to the assessee,

was also questioned and the Society denied the receipt of payment of any

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amount by way of Pagadi or deposit from the assessee. Apart from the

aforesaid, the Tribunal observed that in the loose papers at Annexure A-2

bearing paper nos.44 and 47 the description of the flat was different. The

description of the flat in the loose papers did not tally with the description

of the flat at Matunga. It was also not possible to gauge from the loose

chits that were seized during the search operations that the flat at

Matunga was referred to in the said chits. It was held by the Tribunal that

there was no material to hold, as held by the Assessing officer, that the

assessee had made the payment of Rs.66,50,000/- for securing the

possession of the property from Shri Chokhani. It was also observed that

the Assessing Officer could not have disbelieved the version of the Society

or the broker on the ground that the Society did not know the

whereabouts of Shri Chokhani after he left the flat that he was occupying

for a period of ten years. The Tribunal held on an appreciation of the

material on record that the addition made on the basis of the indication of

purchase of flat and payment based on a piece of paper, cannot be

upheld. In the instant case, since the broker had denied the receipt of

payment and the Society had also denied the same, the Assessing Officer

could not have held that the assessee had paid a sum of Rs.66,50,000/- to

Shri Chokhani for securing the possession of the flat though no paper

evidencing the payment except a letter of the broker was seized.

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The findings recorded by the Tribunal are pure findings of

facts based on a proper appreciation of the evidence on record. The

Tribunal has held on an appreciation of the material on record that there

was no evidence, much less any cogent evidence to prove that the

assessee had paid sum of Rs.66,50,000/- to secure the possession of the

flat. In the circumstances of the case, the question of law is answered in

the affirmative and against the Revenue.

The Income Tax Appeal is dismissed with no order as to

costs.

                      JUDGE                                                             JUDGE




     Wadkar