IN GAUHATI HIGH COURT (THE HIGH COURT OF ASSAM, NAGALAND, MIOZRAM AND ARUNACHAL PRADESH) ITA 8/2012 Commissioner of Income Tax. -versus- Fantastic Buildcon Pvt Ltd PRESENT HON BLE CHIEF JUSTICE(ACTING) HON BLE MR JUSTICE P. K. SAIKIA For appellant : Sri S Sarma For respondent : Sri RP Agarwala Date of hearing and judgment : 24.2.2015 JUDGMENT-AND-ORDER Heard appellant and respondent. 2) respondent company purchased hotel by registered sale deed dated 30th October, 2006 for sum of Rs 10.40-crore. department during search operation in house of one Mr Modi, 2 real-estate broker, unearthed agreement between Mr Modi and erstwhile owner of hotel. In said agreement sale price was fixed at Rs 3,500/- per square feet. On basis of said agreement it was found that sale price shown in sale deed of private respondent at Rs 800/- per square feet is deliberately undervalued. It also appears that statement of Mr Modi was recorded in which he has stated that agreement seized from his custody was made by him on behalf of private respondent. On basis of said statement enquiry was initiated that company has suppressed its income to tune of Rs 35.10-crore. 3) assessing officer in enquiry found on basis of statement of Mr Modi and agreement found in search proceedings that respondent company is guilty of suppressing its income and avoiding tax and after issuing show-cause notice for reopening of assessment under section 148 of Income Tax Act, 1961 passed assessment order under section 16 of Income Tax Act. Aggrieved by said order respondent filed appeal before Commissioner of Income Tax(Appeals) Guwa-255/2010-11. 3 4) Commissioner of Income Tax dismissed said appeal. Aggrieved by said order respondent filed appeal before Income Tax Appellate Tribunal ITA 104/Gau/2011. Tribunal allowed appeal. Aggrieved by said order department filed this appeal. 5) This Court framed following substantial questions of law while admitting appeal. 1) Whether on facts and in circumstances of case, Tribunal was perverse in deleting addition made by Assessing Officer on ground that two documents relied upon for such addition did not refer to same property? 2) Whether on facts and in circumstances of case, Tribunal was justified and correct in law in holding that even if addition was justified, it should had been made under Section 69B of Income Tax Act, 1961 and not under section 69 of Income Tax Act, 1961. 3) Whether on facts and in circumstances of case, Tribunal was justified and correct in holding that Department has failed to discharge burden under Section 69B of Income Tax Act, 1961 of proving that assessee made additional investment? 4) Whether on facts and in circumstances of case, Tribunal was justified and correct in law in holding that provision of Section 114(g) of Indian Evidence Act, 1872 is attracted in case? 4 6) counsel for appellant submits that statement of agreement-holder clearly discloses that agreement was made on behalf of respondent company. agreement also discloses payment of advance amount of Rs 4-crore, which, according to agreement-holder, was paid by respondent company. respondent company issued cheques towards advance payment to vendor and virtually purchased property. Therefore there appears to be no reasonable nexus and substantial evidence available to show that agreement made by Mr Modi with erstwhile owner was in fact for benefit of company and that Tribunal did not appreciate evidence in proper perspective, thus erred in allowing appeal. 7) Per contra, counsel for respondent submits that (1) agreement which department is placing reliance on is dated 4th August, 2006 when company was not even incorporated, therefore question of authorising Mr Modi by company does not arise. (2) cheques issued by vendor company are in respect of agreement which was entered into with vendor company and towards which part payments have been made by cheques. (3) 5 statement of Mr Modi before assessing officer that he had entered into agreement on behalf of respondent company is incredible because to wriggle out of awkward situation he had to name only respondent company who has purchased property, since he could not have successfully attributed to any other person except respondent company. (4) person who executed sale deed on behalf of vendor company or any of its directors have not been examined by assessing officer in order to come to conclusion that agreement between vendor company and Mr Modi was in fact for benefit of respondent company. 8) Tribunal took all above aspects into consideration and came to right conclusion that order of assessing officer and Commissioner of Income Tax(Appeals) is illegal and thus set aside order. There is no perversity in findings recorded by Tribunal. We find that submissions made by counsel for respondent company appears to be sound and proper. first question of law is answered in negative. 6 9) In respect of question 2 and 3, respondent company has shown sale price in account books at Rs 9-crore odd. department has not found any contra material to controvert entries in account books of respondent company. Therefore question 2 and 3 are answered in affirmative. 10) It is contention that statement of responsible part of vendor company was recorded in course of survey and respondent company had insisted production of said statement and furnishing copy of same, which was not produced and copy not furnished to respondent company. In that view of matter adverse inference drawn by Tribunal is sound and proper. question 4 is also answered in affirmative. Accordingly appeal is dismissed. JUDGE CHIEF JUSTICE(ACTING) na/ 7 8 Commissioner of Income-tax v. Fantastic Buildcon Pvt. Ltd