B.M. Kothari, Accountant Member -
(1.) BOTH these appeals involve consideration of connected points. Hence they are disposed of by this common order.
(2.) In the case of Smt. Ramilaben Ratilal Shah, the first ground relates to the challenge against the validity of proceedings of reassessment initiated under Section 147(a) of the IT Act, 1961 ('the Act'). The second ground relates to addition of Rs. 1,85,900 representing the difference between the actual purchase price of the first floor of the house property at Athugar Street, Nanpura, Surat, purchased in the name of Smt. Ramilaben Ratilal Shah, as mentioned in the seized diary, and the purchase price shown in the agreement for purchase as well as in the wealth-tax records of the assessee. In the case of Shri Ratilal Hajarimal Shah (husband of Smt. Ramilaben) the only ground of appeal relates to the addition of Rs. ] ,85,900 in respect of the aforesaid difference in the actual price of the property added in his hands on protective basis.
We will first deal with the appeal of Smt. Ramilaben as the decision in the case of the husband will be of a consequential nature depending on the decision in the case of the wife in whose hands the aforesaid addition was made on substantive basis.
(3.) SMT. Ramilaben submitted her return of income on 30-6-1984 declaring total income of Rs. 37,510. During the relevant previous year S.Y. 2039 (assessment year 1984-85) she agreed to purchase the aforesaid flat at Surat for Rs. 1,76,121 by executing an agreement on 7-10-1983, As per the balance-sheet furnished by the assessee and as per the wealth-tax return, a sum of Rs. 76,121 was paid towards purchase price of the said flat till the end of the accounting year under consideration. In the next year i.e., S.Y. 2040 relating to assessment year 1985-86, the assessee finally purchased the property by executing a sale deed on 31-8-1984 and she made balance payment of Rs. 1 lakh in the subsequent year as is verifiable from the copy of property account appearing in the books of account of the assessee. She also incurred expenses for stamp etc. of Rs. 14,100. The total cost of the said property as shown in the wealth-tax return for assessment year 1985-86 came to Rs. 1,90,221 (Rs. 1,76,121 plus Rs. 14,100). Proceedings of search were conducted at the residential premises of the assessee and her husband on 6-11-1985 which resulted, inter alia, in seizure of one diary, named as telephone diary, having page Nos. 1 to 53. On the last page of the said diary, the note was written in Gujarati. Its verbatim translation in English has been reproduced as under :
S.Y. 2039 Sravan-sud-5 and Saturday dated 13-8-1983 (August), the first floor of the house property at Athugar Street, Nanpura, Surat admeasuring about 1512 sq. ft. purchased from Shri Jagdishbhai for Rs. 3,76,121. An agreement to sale dated 7-10-1983.
4.1 During the course of search statements of Shri Ratilal H. Shah and SMT. Rarnilaben were recorded under Section 132(4). The relevant questions and answers given by them in the said statements have been reproduced at pages 2 to 4 of the assessment order. The assessee submitted an affidavit dated 4-1-1990 stating that she is the real owner of the said property. She also denied having paid any 'on money' payment for the purchase of the said flat. Statement of Shri Jagdishbhai, one of the sellers of the said flat, was also recorded under Section l31. He also denied having received any extra amount in addition to the consideration for sale mentioned in the agreement of sale as well as in the sale deed. The extracts of relevant questions and answers given by Jagdishbhai R. Shah, seller, have also been reproduced at pages 5 & 6 of the assessment order. The ITO, after taking into consideration the entire evidence came to the conclusion that the contents of the seized diary is very clear and leaves no scope for doubt that the consideration for purchase paid by the assessee was Rs. 3,76,121 as explicitly mentioned in the said seized diary with precise details like exact date and description of the property in question. He, therefore, made an addition of Rs. 1,85,900 being the difference between the purchase price of Rs. 3,76,121 mentioned in the seized telephone diary and the value of Rs. 1,90,221 shown in the wealth-tax return for assessment year 1985-86. In the case of the husband, the assessing authority observed that in the statement recorded during the course of search, SMT. Rarnilaben gave out clearly that she was not aware about the nature of the property, payment and about Shri Jagdishbhai. Because of her utter lack of knowledge about the purchase of this property, the ITO was of the view that everything has been done by her husband Shri Ratilal H. Shah. No concrete evidence could be collected during the search to prove Ramilaben as benaml of her husband regarding this property. As such an addition of Rs. 1,85,900 was made in the case of the husband also on protective basis.;