TaxTMI 
TaxTMI 
2014 (7) TMI 675
X X X X Extracts X X X X
X X X X Extracts X X X X
....(i). That on the facts and circumstances of the case, the CIT(A) was not justified in sustaining addition of Rs. 6,65,00,000/- on account of alleged undisclosed cash receipt. (ii) That whole basis of addition is illegal, arbitrary and misconceived and merely based on presumption and surmises in the absence of any material or evidence in support of alleged cash receipt either at the time of survey or during the course of assessment proceedings and as such the impugned addition is not sustainable on facts and under the law. (iii) That alleged addition is not even in conformity with relevant annexure and in the absence of particulars of party, project or period in respect of alleged cash receipt, there is no legal or factual basis for any such addition. (iv) That lower authorities have not made reference to any corroborative evidence in support of cash receipt of Rs. 6,65,00,000/- and in the absence of availability of cash or any unrecorded investment, whole basis of addition is hypothetical and merely based on surmises and conjectures. (v) That having retracted survey statement, same is of no relevance particularly when alleged surrender is not the basis of any supporting and cor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d was not voluntary and bonafide and the same was obtained in an illegal and arbitrary manner, particularly in the absence of any evidence or material in relation to such surrender was called for and as such the alleged surrender was retracted. Reference of CBDT Circular No. 286 dated 10/3/2003 was made. It was contended that surrender at the time of search or survey cannot be a sole basis of addition without corroboration and proper apperception of facts and evidence on record. The AO countered the cause shown by the assessee with this observation that the disclosure of unaccounted income at the time of survey is based on the evidence gathered by the Department at the time of survey in the case of Shri S. K. Gupta, Chartered Accountant and also the Director in the assessee company and from the business premises of the assessee company itself. The AO observed further that another Director Shri R. C. Goyal available at the time of survey at the business premises of the assessee company was duly confronted with the evidences, on the basis of which the disclosure was made. The AO mentioned that during the survey no coercion was made by the survey team as the assessee did not register ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of survey making the surrender of Rs. 7,10,55,000/- after the lapse of 3 months from the date of survey thus it was nothing but an afterthought. There is no evidence that the statements of Shri R.C. Goyal were recorded during the course of survey under duress or coercion nor any to their effect immediately after the survey. The documents found during the course of survey was sufficient to support the allegation of the AO that entries of Rs. 7,10,55,000/- were nothing but accommodation entries taken in the shape of unsecured loans. The AO was thus justified in making the addition of the said amount on account of bogus accommodation entries which was also admitted by the assessee during the course of survey while surrendering the same. She referred contents of Para No.8 of the assessment order. 9. The Ld. AR on the other hand reiterated submissions made before the authorities below. He also referred Page No. 1 to 130 of the paper book i.e details of outstanding loans with supporting documents relating to loans. The Ld. AR submitted further that in earlier years, assessment u/s 143(3) was made. As per the balance-sheet details furnished, most of the unsecured loans from the stated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere impounded. The back up files relating to ledger accounts were retrieved and it was revealed that during the year under consideration Shri S. K. Gupta had provided accommodation entries to the assessee company through its Director Shri R. C. Goyal. The summary of these ledger accounts is as under:- Sl No. Particulars Closing Balance Remarks Debit Credit 1 AGM Holdings Ltd. 350000 Indirapuram 2 Belief Chits P. Ltd 23525000 Indirapuram 3 Beriwal Investment and Chit Fund P. Ltd 175000 Indirapuram 4 Champ Finvest P. Ltd 2000000 Indirapuram 5 Cubic Commercial Resources Ltd 1000000 Indirapuram 6 Dhamaka Trading and Construction Co.P Ltd 2500000 Indirapuram 7 Giriasho Co. P. Ltd 2500000 Indirapuram 8 Novino Marketing P. Ltd. 1116610 Indirapuram 9 V.A. Foods Pvt. Ltd 150000 Indirapuram 10 Vaudeva Farms P. Ltd 4600000 Indirapuram 11 Viagra Trading Co.P. Ltd 140000 Indirapuram 12 Belief Chits P. Ltd 16550000 Kaushambi 13 Mitsu Securities Management P. Ltd 8940000 Kaushambi 14 V.A. Foods P. Ltd 1500000 Kaushambi 15 Mitsu Securities Management P. Ltd 7300000 Head Office Total 12,91,610/- 7,10,55,000/- 11. The copies of this ledger accounts were sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y kindly make necessary verification/confirmation from the concerned parties butthe AO did not heed request of the assessee and rejected the explanation offered by the assessee with this observation that during the course of the surveys conducted at the premises of Shri S. K. Gupta, it was admitted that he had provided accommodation entries to various persons/concerns through a number of concerns effectively controlled by him. The A.O observed further that simultaneously, during the course of survey conducted at the business premises of the assessee company (in which Shri S. K. Gupta also a Director), Shri R. C. Goyal, another Director of the assessee company also admitted that he had received the accommodation entries from the concerned parties mentioned in the above table, when the ledger accounts of these companies were shown to him. The A.O has mentioned that the reply of the assessee at this stage that these were not the accommodation entries but actually this were unsecured loans, which has been returned in the subsequent years is not convincing as it is a cock and bull story to rebut from his earlier statement in which he had disclosed his unaccounted income. He noted furthe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nference except those statements to arrive at this conclusion that the claimed unsecured loan of Rs. 7,10,55,000/- from the above named parties was not correct. The AO has also not bothered himself to verify the explanation of the assessee that as per the balance-sheets furnished, most of the unsecured loan amount received by the assessee company from the above lender companies are carried forward opening balances from earlier years and during the year under consideration the assessee had repaid Rs. 1,15,40,000/- to three parties and had received only Rs. 23 lacs from three parties out of the above mentioned companies. Under these circumstances, we are of the view, that the Ld. CIT(A) has rightly held the action of the AO in making the addition of Rs. 7,10,55,000/- u/s 68 of the Act as unjustified. The first appellate order in this regard is also well supported by the decisions of Hon'ble High Courts and of Hon'ble Supreme Court followed by the Ld. CIT(A). The Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd (2008) 216 CTR 195 (SC) has been pleased to hold that even if the share application money received by the appellant company is from alleged bogus share holde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a comprehensive and reasoned order after discussing the case of the parties on issue in details. The same is upheld. Ground No. 1 is accordingly rejected. GROUND NO. 2 (REVENUE) & GROUND NO. 2 (ASSESSEE) 14. The relevant facts are that the AO made addition of Rs. 1,58,92,460/- on account of unexplained cash credit in the cash book. During the course of survey cash book and ledger of the assessee company for the period 1/10/2007 to 6/11/2007 were found and impounded as Annexure A 17 & 18. There were entries on the receipt side of Rs. 5.32 crores. In reply to Question NO. 21, Shri R.C. Goyal stated that this entry of Rs. 5.32 crores contain withdrawal from banks and cross entries of receipts and payments of Shri R. C. Goyal & ors after excluding these two types of entries net figure of receipt in this ledger comes to Rs. 1.25 crores which he surrendered as undisclosed income for tax purposes. During the course of assessment proceedings it was stated that above surrender was of a provisional nature without proper verification of entries and opportunity for necessary clarification. It was contended that complete details and evidence of all debit and credit entries were submitted befo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o Question No. 21 raised to him, Shri R. C. Goyal had stated that this entry of Rs. 5.32 crores contains withdrawal from banks and cross entries of receipts and payments of Shri R. C. Goyal & ors, exclusion of these two types of entries, net figure of receipts in this ledger comes to Rs. 1.25 crores which was surrendered by him as an undisclosed income for tax process. The Ld. DR contended that there was no reason for the Ld. CIT(A) to delete the addition of Rs. 95,59,200/- out of the total addition of Rs. 1,58,92,460/- made by the AO on account of unexplained cash credit in the cash book. 16. The Ld. AR on the other hand tried to justify the action of the Ld. CIT(A) to the extent of relief of Rs. 95,59,200/- given by him. He has, however, contended that the Ld. CIT(A) should have deleted the entire addition as the same has been made merely on the basis of statement of Shri R.C. Goyal recorded during the course of survey which was provisional in nature without any verification. He submitted that even during the course of survey in his statement Shri R.C. Goyal had accepted that there are various transactions relating to receipt and payment to the extent of Rs. 5.32 crores and it w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rvey proceedings. The relevant question was question no. 21. The same with reply of Shri R. C. Goyal thereto are being reproduced hereunder:- "Q. 21 During the course of survey cash book and ledger for the period 1/10/2007 of M/s Raj Hans Towers (P) Ltd. has been found which contains entries of receipts side of Rs. 5.32 Crore. Please explain these entries. Ans. This entry of Rs. 5.32 Crores contains withdrawals from the bank and cross entries of Receipts and Payments of Sh. R. C. Goyal & ors. Exclusion of these two types of entries, net figure of receipts in this ledger comes to Rs. 1.25 Crores, which I hereby surrender as undisclosed income for tax purpose." 18. Since the surrendered income was not declared during the assessment proceedings the AO issued show cause notice and being not satisfied with the explanation of the assessee he has made addition of Rs. 1,58,92,460/-. The contention of the assessee against this addition remained that even in the survey statement itt was accepted that there are various transactions relating to receipt and payment to the extent of Rs. 5.32 crores and it was noted that most of these credit entries are fully supported from bank withdrawals an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,860/-, - Rs. 47,79,600/-). In result the balance amount of Rs. 95,59,200/- was deleted. The first appellate order is thus upheld. 20. Consequently Ground No. 2 of the appeals are rejected. Undisclosed cash receipts of Rs. 6,65,00,000/- 21. During the course of survey, one handwritten sheet (page no. 96 of Annexure A-5) was also found on 20/11/2007, which contains the details of amount of Rs. 6,65,00,000/- received in cash against the booking of flats/shops, during the period of 2007-08. When the same was confronted to Sh. R. C. Goyal of M/S RHTPL, he admitted that this amount had not been included in the regular books of account and he offered this amount for taxation. The relevant portion of the statement of Sh. R. C. Goel, recorded in the capacity of the director of the assessee company, at the time of survey, is reproduced below:- Q.23 During the course of the survey, it is seen tht you have received advance on account of booking of flats and shops from various persons, which contains cash contents as per one sheet/paper found from your premises. The total amount of booking of flats/shops is Rs. 6.65 Crores. Please explain the nature of these receipts. Ans:- These receipts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- whereas amount was wrongly considered and adopted at Rs. 6,65,00,000/-. He submitted following facts in the context of said annexure: i. There is apparent totaling mistake in the said anneuxre. ii It is not known on what basis figure of Rs. 6,65,00,000/- was worked out. iii. There is no reference to any corroborative evidence. iv. There is no reference to details of project, party or person from whom the alleged cash was received. v. Even in the question raised at the time of survey, there is no reference to evidence or material but only observation is "it is seen". vi. The entire statement is vague without any corroboration, evidence or material in the context of which there can be a case of any surrender. vii. Further, there was no case of actual cash or any undisclosed or unrecorded investment or u se of such cash. viii. That piece of paper also not having the word CASH. The Ld. AR submitted further that it is self evident that there cannot be any addition on hypothetical basis or presumption and surmise. In view of above position, there is no factual or legal basis for surrender of Rs. 6,65,00,000/- or any addition even on merits." 25. The CIT(A) has confirmed the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t it was only observation of the survey team. Thus, the entire statement is vague without any corroboration, evidence or material in the context of which there can be a case of any surrender. There was no case of actual cash or any undisclosed or unrecorded investment or use of such cash. The piece of paper found also does not have the word "Cash". Thus the addition cannot be made on hypothetical basis or presumption and surmises. The Ld. AR placed reliance on the following decisions:- Sonia Magu & Ors Vs. CIT 336 ITR 227 (Delhi) CIT Vs. Anil Bhalla 322 ITR 191 (Delhi) CIT Vs. S. Khader Khan 214 CTR 589 (Mad) ACIT Vs. Manisha Gupta ITA No. 725/Del/2012 26.1 The Ld. AR also referred page nos. 19 to 59 of the paper book (a) wherein complete reconciliation along with supporting documents of capital account have been made available. 26.2 The Ld. AR also submitted that the statement made by Shri R.C. Goyal was later on retracted by him. He referred page no. 53 to 60 of the paper book in this regard wherein copy of the said retraction has been made available. 27. The Ld. DR on the other hand tried to justify the orders of the authorities below in this regard. She submitted that re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial to adjudicate upon the issue. i. There is apparent totaling mistake in the said annexure. ii. It is not known on what basis figure of Rs. 6,65,00,000/- was worked out. iii. There is no reference to any corroborative evidence. iv. There is no reference to details of project, party or person form whom the alleged cash was received. v. Even in the question raised at the time of survey, there is no reference to evidence or material but only observation is "it is seen". vi. The entire statement is vague without any corroboration, evidence or material in the context of which there can be a case of any surrender. vii. Further, there was no case of actual cash or any undisclosed or unrecorded investment or use of such cash. viii. That piece of paper also not having the word CASH. 30. In the light of the fact that there was totaling mistake of significant nature, it was necessary and obligatory for the Assessing Officer to bring relevant facts and evidence in support of allegation about alleged receipt of cash. It is self evident that in the referred document, neither there is reference to any cash receipt or any details relating to name of the party or name of the properties a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich the decisions of Supreme Court and Delhi High Court was considered and addition based on survey statement was deleted. In the light of settled legal position, the survey statement in itself cannot be a basis for addition and the Assessing Officer is under statutory obligation to establish that the notings on the said annexure represent undisclosed income of the appellant. It is further noted that the survey statement has been retracted and CIT(A) has made reference to this fact in para 5.4.8 of the appellate order while dealing with Ground No. 1 and as such survey statement looses its significance. Taking note of the retraction, the onus is on the Assessing Officer to establish that bald notigns in the alleged annexure represent undisclosed income. We are of the opinion that the contents of the seized annexure does not inspire any sound basis in the absence of any corroboration or any supporting details relating to parties and properties from whom the alleged cash was received. The Assessing Officer has not rejected the audited books of accounts u/s 145 of the Income Tax Act, 1961 and other than addition based on surrender, books of accounts were found to be in order and dec....