TaxTMI 
TaxTMI 
2015 (8) TMI 8
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....the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 39,65,106/- made by the Assessing Officer on account of disallowance of payment of sinking fund. 3. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 29,73,830/- made by the Assessing Officer on account of disallowance of maintenance security. 4. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 65,70,747/- made by the Assessing Officer on account of disallowance of commission. " Ground No. 1 of the Revenue 3. Apropos ground no.1, we have heard arguments of both the sides and carefully perused the relevant material placed on record. Ld. DR submitted that the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 1,24,90,084/- made by the Assessing Officer on account of disallowance of freehold charges. That the assessee made payment of freehold charges over and above what was accounted for in the books of accounts of Rs. 16.42 crore otherwise than by way of cheque i.e. from unacco....
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.... on the payment of freehold charges made by the assessee out of her books of accounts. Hence, we are unable o see any valid reason to interfere with the impugned order and hence, ground no. 1 of the revenue being devoid of merits is dismissed. Ground No. 2 & 3 of the revenue 6. Apropos ground no. 2, ld. DR submitted that the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 39,65,106/- made by the Assessing Officer on account of disallowance of payment of sinking fund made by the assesse over and above the capital expenditure booked by the assessee on purchase of property in her books of accounts. Supporting the conclusion of the AO, ld. DR submitted that the assessee made the payment of sinking funds and the same was not reflected and recorded in the books of accounts, therefore, the payment made by assessee out of unaccounted money was rightly added by the AO. Ld. DR also submitted that the CIT(A) also erred in law and on facts of the case in deleting the addition of Rs. 29,73,830/- made by the Assessing Officer on account of disallowance of maintenance security as this payment was also made by the assessee over and a....
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....alleged payments were made through cheque on both the counts to Suncity projects Pvt. Ltd. but the AO has not made any inquiry or verification in this regard from the bank account of the assessee payer or the said recipient as to whether any payment by way of cheque has been made by the assessee to the alleged payee, even otherwise, we are unable to see any detail, evidence or incriminating material found during the course of search and seizure operation or brought out by the AO during reassessment proceedings u/s 153C of the Act, to support this allegation that the assessee actually paid alleged amount either by cheque or in cash towards sinking fund and maintenance security to M/s Suncity Projects Pvt. Ltd. or any other entity or concern. The AO had also not brought out any fact on assessment records that the maintenance agreement was executed between the assessee and the developer i.e. M/s Suncity Projects during the FY 2009-10 pertaining to AY 2010-11 under consideration and the assessee made said payments towards sinking fund and maintenance charges during relevant financial period either by cheque or in cash over and above the expenses booked and reflected in her books of acc....
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.... 11. Replying to the above, ld. AR took us through operative part of the assessment order i.e. from para 4.3 to 4.4 and submitted that the AO proceeded to make addition on account of commission and other issues with a predetermined mind and by presuming that the assessee recorded the payment on purchase of property which was made through cheque and other payment was made over and above the books of accounts in cash out of income of unaccounted sources of the assessee. Ld. AR vehemently contended that as per Annexure A-1 page 5 available at page 16 of the paper book of the assessee, the payment of Sinking fund, maintenance security and freehold charges has been mentioned and against these payments, there is a mention of cheque in favour of Sun city Project Pvt. Ltd. but the AO proceeded to make addition by presuming that there was cash taken over and above the payment recorded by the assessee in her books of accounts and these additions were not found to be sustainable by the CIT(A) and have been deleted by the first appellate authority. Ld. AR further pointed out that in the right side down below corner of Annexure A-1, page 5, there is a mention of "Commission on sale 2% 6,570,747....
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....eration was found at his residence. The materials seized, following search operations u/s 132 conducted on him, have revealed his role as broker in property deals. Hence, the presence at his residence of the seized paper that gives detailed working of the cheque and cash components of the property deal involving the appellant is not an imaginary and fanciful draft, as contended by him and the AR of the appellant. It is a reasonable presumption u/s 292C that the sum of Rs. 65,70,747 was paid to him by the appellant as commission. The outcome of this inference is that though Rs. 65,70,747 is to be added as cash receipt that has remained to be accounted in the hands of the appellant, the same will stand deducted since the payment was made to Lalit Modi. Therefore, while the AO was right in adding this amount to the income of the appellant, he should have also allowed the deduction for the same as brokerage paid to Lalit Modi. The AO is directed to allow the deduction of Rs. 65,70,747 while giving effect to this order." 14. On careful consideration of the conclusion of the AO as well as observations of the CIT(A), we note that the AO had no other document, evidence, material or basi....
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.... (ii) That alleged seized annexure A-I (Party no. 2), Page 5 does not belong to appellant and as such whole basis of recording of alleged satisfaction and consequential assessment proceedings is illegal and invalid. (iii) That in the absence of any corroboration or verification of contents of the said annexure, same has no evidentiary value. 2(i) That CIT(A) has erred in sustaining addition of Rs. 16,42,68,522/- as unexplained investment and same is without any factual or legal basis and merely based on presumption and surmises. (ii) That adverse inference in respect of alleged seized annexure is without any corroboration or proper investigation and application of mind. (iii) That seized annexure does not belong to appellant nor same was found from the possession of appellant or executed by appellant and as such addition on the basis of such annexure is highly arbitrary and misconceived. (iv) That even person from whose possession the said annexure was found has not alleged or stated that same belongs to appellant and as such there could be no presumption that same belongs to appellant. (v) That in the absence of any opportunity for cross examination of La....
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....59,99,766 and enhanced the assessment by Rs. 5,50,72,700/-. The CIT(A) enhanced the assessment on the basis of only impugned document seized during the search operation in the case of Shri Lalit Modi by adding the amount of refund of Rs. 59,56,943 and amount of pending rent of Rs. 4,91,15,757. Now, the aggrieved assessee is before this Tribunal in this second appeal with the grounds as reproduced hereinabove. Ground No. 1(i) to (iii) 18. Ld. AR submitted that all the additions made by the AO and the CIT(A) are based on inference and there is no corroboration, inquiry or investigation by the revenue authorities on this issue and all disallowance and additions have been made in total disregard to the settled legal provisions and principles of the Act. Ld. AR further submitted that as per satisfaction note placed in assessee's paper book page no. 17, the AO of the searched person i.e. Shri Lalit Modi has recorded his satisfaction u/s 153C of the Act on 30.6.2011 but no satisfaction note was recorded in relation to the person other than the person searched i.e. the appellant of the present appeal. Ld. AR further submitted that satisfaction note in the case of Shri Lalit Modi (per....
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....ble Gujarat High Court in the case of CIT vs Meghmani Organics Ltd. in ITA 2077/2009, orders of ITAT Delhi in the case of DCIT vs Qualitron Commodities Pvt. Ltd. dated 6.1.2015 in ITA NO. 4666/Del/2012 and in the case of National Industrial Corporation Ltd. vs DCIT dated 23.11.2012 in ITA No. 1658 and 1871/Del/10 for AY 2003-04 and 2004-05 and other cross appeals of the assessee and the revenue. 20. Ld. AR further contended that the authenticity and legal sanctity of the seized document Annexure 1 has not been proved and substantiated by the AO and mere loose sheet of paper without any corroboration does not constitute an admissible and acceptable evidence as per section 34 and 93 of the Indian Evidence Act 1872. Ld. AR has further drawn our attention to the observations of the CIT(A) at page 10 para 12.2 and submitted that the first appellate authority itself has admitted that part of seized document is not true and does not represent the correct facts and certain additions on account of sinking funds, maintenance security and freehold charges were also deleted by the CIT(A) and in this situation, the part stipulation of the same seized documents cannot be considered for the co....
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.... no addition either u/s 69 or 69C of the Act can be made. 22. Ld. Counsel also pointed out that in the statement of Shri Lalit Modi recorded on 10.6.2009 before the CIT(A), Shri Modi made it clear that Annexure A-1 page 5 to 8 are rough planning and page no. 5 is a proposal for Vasant Square Mall property for sale but the deal did not materialise through him i.e. Shri Lalit Modi. Ld. AR further submitted that merely because Shri Lalit Modi signed the sale deed between the assessee and M/s Suncity Projects Pvt. Ltd., it cannot be presumed that the deal was materialised through Lalit Modi and the assessee made payment of unrecorded consideration of M/s Suncity Project Pvt. Ltd. and commission to Shri Lalit Modi over and above the consideration reflected in the books of accounts of the assessee in this regard and from the income earned by the assessee from unaccounted sources. 23. Ld. AR reiterating its arguments submitted that the presumption u/s 132(4A) and 292C of the Act is misplaced as once it is admitted that the document is a proposal, then presumption of correctness of the figures mentioned therein is of no consequence considering the nature of document. Ld. AR strenuous....
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....rpose of making addition u/s 153C of the Act. 25. Replying to the above, ld. DR supported the orders of the authorities below and submitted that there is no requirement of provisions of the Act to record satisfaction in the case of the person other than the person searched. Ld. DR further pointed out that the detail mentioned in the alleged Annexure A-1 seized during the search operation in the case of Shri Lalit Modi is from sale matching with the facts and figures recorded in the sale deed executed by M/s Suncity Project Ltd. in favour of present assessee, therefore, the AO was quite justified and right in making addition with regard to the over and above payment of consideration to the seller M/s Suncity Project on account of payment of sinking fund, maintenance security, freehold charges by the assessee to the seller M/s Suncity Project Pvt. Ltd. The ld. DR also submitted that as per stipulation and narration of the impugned document Annexure A-1, the assessee made payment of Rs. 16,42,68,832 by way of cheque which was recorded in the registered sale deed and similar amount was also paid by the assessee to the seller M/s Suncity Project Pvt. Ltd. by way of PDC i.e. post date....
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....leged seized document i.e. Annexure A-1 (paper Book page no. 16) does not belong to appellant assessee of the present assessee i.e. Vinita Chaurasia. Ld. AR further added that in absence of any corroborative evidence of the contents of said Annexure A-1, the same cannot be considered to "belong to" the assessee and the same has no evidentiary value. 26.1 Placing reliance on the decision of Hon'ble Jurisdictional High Court of Delhi in the case of Pepsico Holding Pvt. Ltd. vs ACIT (2015) 370 ITR 295 (Delhi), the ld. AR submitted that in the satisfaction note recorded by the AO of the person searched, there was nothing to indicate that the seized document Annexure A-1 did not belong to the person searched i.e. Shri Lalit Modi, secondly the said seized document, apparently a computer printout, seized during search operation on Shri Lalit Modi does not necessarily mean and imply that the same belongs to the person whose name is mentioned therein. Ld. AR also pointed out that unless it was established that the document in question, whether original or photocopy, did not belong to person in respect of whom search was conducted, the question of invoking section 153C of the Act would no....
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.... a proceeding is to be done in one particular manner under the law or rules, then the same has to be done in that manner alone and not the other way. 28. Replying to the above, ld. DR contended that when the AO of the person searched and the AO of the other person is the same, then there is no need of recording two satisfaction notes viz. first in the case of person searched and second in the case of the person other than the person searched. However the ld. DR fairly accepted that the satisfaction note available at page no. 17 of the assessee's paper book has been recorded by the AO of the person searched and no satisfaction note has been recorded in the case of the other person i.e. the present assessee. 29. On careful consideration of above submissions, we observe that this legal controversy revolves around the requirement of section 153C(1) of the Act which reads as under:- "153C. 3[(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned....
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....l for the appellant, submits that the word recording satisfaction is not a pre-condition for the object of the aforesaid Section. In any event, from a reading of the order passed by the Assessing Officer to initiate action, if it emerges that satisfaction is deemed to have been arrived at, mere non-use of the word of satisfaction does not vitiate the action. The argument apparently is very attractive, but the law is otherwise and the learned Tribunal has correctly applied. We therefore appropriately set out Section 153C of the Act. Assessment of income of any other person 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, Jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person ....
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....iate proceeding u/s. 153C of the I.T.Act. The aforesaid Section mandates recording of satisfaction of the Assessing Officer(s) is a pre-condition for invoking jurisdiction and it is not a mere formality because recording of satisfaction postulates application of mind consciously as the documents seized must be belonging to the any other person other than the person referred to in Section 153-A of the Act. It is contended that the same Assessing Officer is involved in the matter. This fact does not dispense with above requirement. It is settled position of law that when a thing is to be done in one particular manner under law this has to be done in that manner alone and not other way (See Nazir Ahmed v. King Emperor). We think the learned Tribunal has correctly followed the principle. We do not find any element of law to be decided." We accordingly dismiss the appeal." 31. In view of language used by the legislature in section 153C of the Act and the ratio laid down by Hon'ble Andhra Pradesh High Court in the case of Shetty Pharmaceuticals (supra) in similar set of facts and circumstances, we note that firstly satisfaction has to be recorded by the AO of the person searched....
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....ture, we respectfully take cognizance of the ratio laid down by the jurisdictional High Court of Delhi in the case of Pepsico India Holdings Pvt. Ltd. vs ACIT (supra) wherein para 14, 15 and 16 at page 304 of the judgement lay down the ratio as follows:- "14. First of all we may point out, once again, that it is nobody's case that the Jaipuria Group had disclaimed these documents as belonging to them. Unless and until it is established that the documents do not belong to the searched person, the provisions of Section 153C of the said Act do not get attracted because the very expression used in Section 153C of the said Act is that "where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A ...." In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searc....
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....tablished that the document does not belong to the searched person, the provisions of section 153C of the Act do not get attracted because the language used by the legislature in section 153C of the Act mandates that where the AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belonged to a person other than the person referred to in section 153 A of the Act. Their lordships speaking for Hon'ble High Court of Delhi further held that it is necessary before the provisions of section 153C of the Act can be invoked that the AO of the searched person must be satisfied that the seized material, (which includes documents) does not belong to person searched and the impugned satisfaction note dated 30.6.2011, there is nothing to indicate that the seized document Annexure A-1 does not belong to Shri Lalit Modi and we also note that there is no disclaimer on the part of Shri Lalit Modi with regard to this document Annexure A-1. 34. We further hold that finding of a document in possession of a searched person does not necessarily mean that the same "belongs to" or "belonged to" the other pe....
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....n who is being searched by the revenue authorities, normal presumption would be that the said document belongs to that person. At the same time, we further note that it is for the AO of the person searched to rebut that presumption and come to a conclusion by way of recording a satisfaction note that the document, in fact, belongs or belonged to somebody else. Obviously, there must be some cogent material available with the AO of the person searched before he arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. 36. At this stage, we find it appropriate to respectfully follow the decision of Hon'ble Jurisdictional High Court of Delhi in the case of Pepsi Foods P. Ltd. vs ACIT (supra) wherein their lordships in para 11 and 12 at page 121 of the judgment held as follows:- "11. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are WP(C) 415/2014 & Ors. Page 15 of 15 to be norm....
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....ition of property at Vasant Square Mall. Smt. Vinita Chaurasia 2. 0n the basis of document found and seized enquiries were conducted during the course of post search proceedings and it has come to notice that the property was acquired by the assessee for a consideration of Rs. 32,85,37,3541 - out of which only Rs. 16,42,68,832/- has been paid by cheque and recorded in books of accounts by the buyer as well as seller. Apart from the above certain other payments representing Sinking Fund, Maintenance Security, Freehold charges, and commission etc. have been paid by the assessee. As such amount of Rs. 19,02,68,2891- is required to be assessed in the hands of assessee as undisclosed investment on the basis of entries mentioned on seized documents. 3. In view of the facts stated above it is evident that documents belonging to the assessee have been seized from a person covered under search u/s 132 of the LT. Act,1961, Hence proceedings u/s 153 C are being initiated for AY 2004-05 to 2009-10." 37.1 In view of contents of the satisfaction note as reproduced hereinabove, we clearly note that the same has been recorded in the capacity of the AO of the person searched meaning the....
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....strongly pointed out that the only document picked up by the AO for making additions u/s 153C of the Act does not bear any signature of the present assessee or the person searched or anybody else and merely because the name of the present assessee has been mentioned therein and some details in regard to property purchased by the assessee is mentioned therein does not allow the revenue authorities to make additions u/s 69C or any other provision of the Act. 38.1 Ld. AR has further drawn our attention towards appellate order of the CIT(A) para 10 and 11 and submitted that the CIT(A) interpreted the contents of the document in her own way on the basis of hyper technical approach followed by surmises and conjectures which is not sustainable. Ld. AR further pointed out that as per document Annexure A-1 available at page 16 of the assessee's paper book, there is no allegation of making cash payment by the assessee over and above the amount which was recorded in the books of accounts of the assessee. Ld. AR submitted that when the amount of sinking fund, maintenance security and freehold charges was not found to be paid either by cheque or in cash by the assessee, by the CIT(A) while p....
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..... 16.42 crore towards sale consideration over and above the consideration recorded in her books of accounts out of income earned from unaccounted sources towards the purchase of the said property and had also paid commission or brokerage of Rs. 65,70,747 to Shri Lalit Modi over and above the books of accounts from the income earned from unaccounted sources. 40. Ld. Counsel further pointed out that admittedly, the assessee purchased said property in the month of May 2008 pertaining to AY 2009-10, then without any other incriminating document, evidence or material, it cannot be held that the assessee received pending rent from 1.10.2006 to 30.4.2009 amounting to Rs. 8,91,15,747, therefore, enhancement of income of the assessee for AY 2010- 11 by Rs. 4,91,15,757 and enhancement of income by Rs. 4 crore in AY 2009-10 as directed by the CIT(A) in para 15 of the impugned order cannot be held as sustainable and the same deserves to be deleted. 41. Ld. AR has placed reliance on the following judgments of Hon'ble Jurisdictional High Court of Delhi and ITAT Delhi and Hyderabad Benches:- i) CIT vs Gian Gupta in ITA No. 955/2011 dated 8.5.2014 (Hon'ble High Court of Delhi) ii) DCIT....
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.... fairly accepted that the additions made in the hands of Shri Lalit Modi (the person searched) has been deleted by the respective CIT of person searched, but the DR, at the same time, also pointed out that the revenue has filed an appeal before the Tribunal challenging the said deletion. 43. Ld. DR supporting the action of the AO and the CIT(A) finally submitted that the payment of commission to Shri Lalit Modi by the assessee establish the nexus between a property dealer and property purchaser and this fact also found support from the fact that Shri Lalit Modi witnessed to the registered sale deed between the purchaser assessee Smt. Vinita Chaurasia and the seller M/s Suncity Project Pvt. Ltd. and since the seized paper Annexure A-1 was found at the residence of Shri Lalit Modi which clearly reveals that the seized paper is the record of full and final settlement as on 18.5.2009 of all the transactions by cheque and in cash between purchaser assessee and seller Suncity Project Pvt. Ltd. and also between the purchaser assessee and broker Shri Lalit Modi. Ld. DR supporting the action of the CIT(A) submitted that the CIT(A) was not justified in enhancing the assessment by the amou....
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....usion of the CIT(A) in this regard, appeal of the revenue, on all three counts viz. freehold charges, sinking fund and maintenance security, has been dismissed by the Tribunal confirming the deletion of additions made by the AO. 45. From vigilant reading and careful perusal of Annexure A-1, we observe that this document appears to be a computer generated document which does not bear any signature or handwritten contents. On the top portion, there is detail of property in Vasant Square Mall in the name of present assessee Smt. Vinita Chaurasia in regard to area of 39651.06 sq ft. Down below there is a mention of value "Ch value" of Rs. 16,42,68,832 which was accepted by the AO as recorded by the books of accounts of the present assessee. Immediately below this content, there is a mention of "PDC value of Rs. 16,42,68,522 as per CIT(A) against this amount the assessee actually made payment of Rs. 17,02,25,465 in cash or by way of cheque over and above the payment which was recorded by the assessee in her books of accounts. However, in absence of any other supporting incriminating documents, evidence or material, we are inclined to hold that the additions made by the AO and enhance....
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....denied the transfer and also the purchase and sale of such land as mentioned in such document which is only a performa document. The performa document does not contain the signatures of both and besides it does not contain the signature of any witnesses. No evidence has been brought on record by the AO that there is any investment and there is any transfer of cash. There is no question of investment when the land has not been transferred and registered in the name of Gian Gupta. On the contrary, the AO himself admits in the assessment order that the addition was made on the basis of assumption. Therefore in my considered opinion the addition made by the AO on this ground is not tenable and therefore, the appeal of the appellant is allowed and the AO has been directed to delete the addition of Rs. 1 crore made on this account." 5. The Income Tax Appellate Tribunal also examined this issue once again and came to the conclusion that as the transaction itself never took place, there would be no question of investment and, therefore, no question of any unexplained investment. The amount of Rs. 1 crore, which was paid by cheque, was returned as the transaction had fallen through. The ....
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....; (Emphasis supplied by underlining) 46. Ld. AR has also placed reliance on the order of ITAT Delhi 'C' Bench in the case of DCIT vs G.S.C. Rao (supra) wherein the contents and credence of seized document has been interpreted as under:- "3.3 We have considered the facts of the case and submissions made before us. The facts are that in the course of search of the residence of the assessee a computer print out was found, which shows receipts in respect of sale of some immovable property and payments made in respect of some immovable property. The receipts exceed the expenditure by an amount of Rs. 13,900/-. The paper does not contain any name, the dates of transaction, details of bank or the descriptions of the property. The AO has ignored the receipt portion but has brought to tax the amount of investment o....
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....; (Emphasis supplied by underlining) 47. Ld. AR has also sought support from the decision of ITAT Hyderabad 'B' Bench in the case of DCIT vs M. Aja Babu (supra) wherein the Tribunal, respectfully following the decision of Hon'ble High Court of Delhi in the case of CIT vs Anil Bhalla (supra), CIT vs Dinesh Jain (HUF) 211 Taxman 23 (Del) and CIT vs Jaipal Aggarwal 212 Taxman 1 (Del), ITAT Mumbai in the case of ACIT vs. JP Morgan India Pvt. Ltd. 46 SOT 250(Mumbai), held that the addition made by the AO based on the loose paper, which is not a conclusive evidence and therefore, the same is not sufficient for making the addition. The Tribunal also held that no addition can be made on the basis of dumb document/notebook/loose....
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....dumb documents/note book/loose slips in the absence of any other material to show that the assessee has made investments in land. Noting on the note book/diary/loose sheets are required to be supported/corroborated by other evidence and should also include the statement of a person who admittedly is a party to the noting and statement from all the persons whose names there on the note book/loose slips and their statements to be recorded and then such statement undoubtedly should be confronted to the assessee and he has to be allowed to cross examine the parties. The vendor has not examined in this case. Therefore, we do not find any infirmity in the order of the CIT(A) in directing the Assessing Officer to delete the addition made on the basis of loose paper and the order of the CIT(A) is hereby upheld dismissing the grounds raised by the revenue on this issue. 18. As a result appeal in ITA No. 1756/Hyd/2012 is dismissed."  ....
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....vidence Act, 1872. 13. Similarly, the document Annexure A-37 recovered during the course of search in the present case is a dumb document and lead us nowhere. Thus, the Tribunal rightly deleted the addition of Rs. 48 lacs made by the Assessing Officer on account of undisclosed income on the basis of seized material. 14. The above being the position, no fault can be found with the view taken by the Tribunal. Thus, the order of the Tribunal does not give rise to a question of law, much less a substantial question of law, to fall within the limited purview of Section 260- A of the Act, which is confined to entertaining only such appeals against the order which involves a substantial question of law. 15. Accordingly, the present appeal filed by the Revenue is, hereby, dismissed." 11. In CIT vs. S.M. Aggarwal (2007) 293 ITR 43 (Del.) cited by the assessee, the Court in a similar situation held as follows : "11. In Mahavir Woolen Mills (supra) case, during the course of search and seizure proceedings, certain slips were found, which, the Assessing Officer concluded, contained details of payment beyond those which were made by cheques and drafts and were duly reflected in t....
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.... in this case because there is no other material. On the contrary the AO's acceptance and finalization of the assessment for 2007-08 on the basis of salary income of the assessee, undermines the entire findings with respect to the inferences drawn and the additions made, indicated above. The question of law urged, therefore, is not substantial and is answered against the revenue. 14. So far as the second amount Rs.41,32,800/- is concerned there cannot be any doubt that the above was sought to be made in respect of the period 1999-2000. Clearly that was beyond the block period and therefore time- barred. That apart the CIT(Appeals) noted that after the remand during the pendency of appellate proceedings, the affidavit relied upon by the assessee in Brij Bhushan Gupta was not adversely commented upon. This being a factual finding the Court finds no reason to interfere with the ITAT's order. 15. That leaves the Court with the addition initially made by the AO for the sum of Rs. 3.64 crores. Here too the addition was made only on the basis of some loose papers and a chit. This too would fall in the same category of material which could not have been the sole basis for add....
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....income in the absence of any other evidence on arbitrary basis. The unsubstantiated loose sheets cannot be considered as a conclusive evidence to make any addition towards undisclosed income. It was held by the Supreme Court in the case of CBI vs. V.C. Shukla (1998) 3 SCC 410 that "file containing loose sheets of papers are not books" and hence entries therein are not admissible u/s. 34 of the Evidence Act, 1872. 28. In the present case, the seized material (two note books) marked as KBR/A/02 and KBR/A/04 wherein certain entries are found recording various transactions pertaining to the assessee. These entries in the notebook are unsubstantiated and on that basis the AO reached to the conclusion that the figures mentioned therein are to be read by adding 3 zeros and thereby he came to conclude that there is undisclosed income in these 6 assessment years. In our opinion, the document recovered during the course of search was a dumb document and led nowhere. The CIT(A) rightly came to the conclusion that it cannot be acted upon and deleted the addition. 29. Other than the loose paper, the AO has not brought on record any corroborative material or evidence to show that the infer....
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....e present assessee, the addition made on the basis of the same should be held as valid and sustainable. On these contentions of the revenue, ld. AR strenuously contended that the facts of that case are clearly distinguishable from the facts of the present case as there were seized documents which had been written by the partner in his own handwriting and all the entries regarding various properties have been written clearly indicate the various properties which also depict true profit and investment which were not disclosed to the department in the return of income and, therefore, addition was held to be sustainable in that case. Ld. AR further pointed out that in the present case, the sole document Annexure A-1 has not been written or signed by the present assessee and even the same had not been found to be written or signed by the person searched i.e. Shri Lalit Modi. On careful and vigilant perusal of the judgment of Hon'ble Delhi High Court in the case of CIT vs Sonal Construction, we note that the benefit of the ratio of the decision is not available for the revenue as the facts of the present case are clearly distinguishable because the impugned document viz. Annexure A-1 has....
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.... (Emphasis supplied by underlining) 54. On careful reading of above decision of Coordinate Bench of the Tribunal, we note that the presumption and addition thereunder can be made on the basis of seized document only when the document is a speaking one. The document either should speak out of itself or in the support or company of other material, evidence and details found during search and seizure operation or during investigation or during assessment or reassessment poceedings. It was further held that the document should be clear and unambiguous in respect of....
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....aw. 57. Lastly, ld. AR has also placed reliance on the judgment of Hon'ble Delhi High Court in the case of CIT vs S.M.Aggarwal 293 ITR 043 (Del) wherein speaking for the Hon'ble Jurisdictional High Court, their lordships held that unless and until the contents of the document are proved against the person, the possession of the document or handwriting of that person on such document by itself could not prove the contents of the document. It was further held that the document recovered during the course of search from the assessee was held to be dumb document and the addition on the basis of the same is not sustainable. 58. Turning to the factual matrix of the present case, if we logically analyse the contents of the document and its reliability in the light of ratio laid down by the Hon'ble High Court and Coordinate Bench of the Tribunal, we note that it is not in dispute that the seized document was recovered during search and seizure operation carried on in the case of Shri Lalit Modi on 19.6.2009 and the same is a printed document which has not been either written or signed by the assessee of the present case or by the person searched i.e. Shri Lalti Modi. It is also perti....
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....d to be sustainable on fact and law by the respective first appellate authorities i.e. CIT(A). 59. The fact remains that the CIT(A) has upheld the addition of Rs. 16,42,68,522 as alleged cash component of the sale consideration and the CIT(A) has also enhanced the taxable income of the present assessee by an amount of Rs. 59,56,943/- by holding that the assessee actually paid Rs. 17,02,25,465 over and above the books of accounts from the income of unaccounted sources which resulted into the excess payment of said amount. Ld. CIT(A) also enhanced the taxable income of the assessee on account of alleged receipt of rent on the basis of Annexure A-1 and addition of Rs. 4,91,15,757 has been made for AY 2010-11 and the AO was also directed to take appropriate action about the cash payment of Rs. 4 crore in AY 2009-10. 60. On vigilant perusal of Annexure A-1 available at page 16 of assessee's paper book, we observe that first part of the document contains name of present assessee Smt. Vinita Chaurasia and detail of property purchased by the assessee and total cost has been mentioned as Rs. 32,85,37,354 @8285.71 per sq ft. Challenging these contents, ld. AR has drawn our attention to....
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.... the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." - 69C. 2 Unexplained expenditure, etc. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the 3 Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.] Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income." 62. On plain reading of section 69 of the Act, we note that where the assessee has made investment which are not recorded in the books of accounts, if any, maintained by him for any unaccounted source of income and the assessee offers no explanation about the nature and sour....
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....rchaser Smt. Vinita Chaurasia (other person) filed in this regard that the said deal did not mature through the assessee of that case i.e. person searched Shri Lalit Modi. The AO of person searched categorically held that the presumption u/s 132(4A) of the Act is a rebuttable presumption and the assessee Shri Lalit Modi had rebutted the same by way of filing confirmation of Smt. Vinita Chaurasia (other person) in this regard. At this stage of detailed deliberations, we further note that the person searched Shri Lalit Modi in his statement dated 19.6.2009 recorded u/s 132(4) of the Act during search and seizure operation answering question no. 25 replied that Annexure A-1, page 5 to 8 are rough planning and on page 5, proposal from Vasant Kunj Square Mall for sale was received and the deal did not materialise through him. The relevant part of said question answer verbatim reads as under:- "Q: 25. I am showing you page no. 5 to 8 of Annexure A-1, please explain the contents. Ans: Pages no. 5 to 8 are rough planning on page 5 proposal from Vasant Square Mall for sale was received and the deal did not materialise through me." 66. We further note that subsequently in the statem....
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....mission was earned by me." 67. It is also pertinent to take cognizance of confirmation/certificate (available at page 126 of assessee's paper book) given by Shri Lalit Modi has again repeated the very fact that the document in question viz. Annexure A-1, contains a draft proposal presumably by a broker who might have left this paper in his premise and the said document was not prepared by him. Shri Lalit Modi expressly denied that the said document in question does not represent any transaction of purchase of property by Smt. Vinita Chaurasia from M/s Suncity Project (P) Ltd. Shri Lalit Modi further stated therein that it is in his knowledge that there was a transaction of sale of property of Big Bazar, Vasant Square Mall by M/s Suncity Project (P) Ltd. to Smt. Vinita Chaurasia for Rs. 16.42 crore approximately as per registered document and no consideration whatsoever , as alleged by the department, was paid by purchaser Smt. Vinita Chaurasia to M/s Suncity Project Ltd. over and above the registered sale price in the property document. 68. In view of above noted facts, we further observe that the payment of commission on sale @2% has been categorically denied by the other pe....
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....e addition on account of alleged payment of commission and has held that while making addition in this regard the AO should have also allowed the deduction for the same as brokerage paid to Shri Lalit Modi. Ld. AR contended that the presumption u/s 132(4A) of the Act r/w section 292C of the Act can be made in the case of person searched, this presumption cannot be made in the case of the other person. Ld. AR also pointed out that the CIT(A) misinterpreted the relevant provisions of the Act while addressing the issue, which is clear from para 12.4 of the impugned order. Ld. AR pointed out that the brokerage or commission paid towards purchase of immovable assets is capital expenditure which cannot be deducted. Ld. AR pointed out that the brokerage or commission paid towards purchase of immovable assets is capital expenditure which cannot be deducted. Ld. AR further pointed out that when in the case of person searched, then the conclusion of the CIT(A) in the case of present assessee in para 12.4 of the impugned order is not justified and sustainable. Ld. AR vehemently contended that even the person from whose possession said Annexure A-1 was found has not alleged or stated that the ....
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....en by the CIT(A) u/s 292C of the Act against the present assessee is not valid as before taking such presumption, the CIT(A) was under obligation to hold that the document in question actually and factually does not belong to the person searched and the same belongs to the other person viz. present assessee. As we have already noted that the person searched never stated that the document in question Annexure A-1 belongs to the present assessee. Further, neither the AO of the person searched nor the AO of the other person has validly held that the document in question does not belong to person searched and actually or factually belongs to the present assessee. In this situation, presumption taken by the CIT(A) u/s 292C of the Act against the assessee is not valid and sustainable. We further hold that the directions given to the AO by the CIT(A) in operative para 12.4 of the impugned order are also not in accordance with provisions of the Act and law. We may further point out that in the case of person searched, who was alleged to be a broker in the deal being recipient of alleged commission, the CIT(A) herself has deleted the addition on account of receipt of unaccounted commission,....
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....d during first appellate proceedings, she had issued a notice of enhancement to the assessee, showing her intention to enhance the assessment on account of pending rent. Replying to the said notice, the assessee explained that no addition/enhancement was called for and the proposed addition pertain to alleged pending rent for the period 1.10.2006 to 31.4.2009, whereas the property was purchased by the assessee in May 2009, therefore, there is no question of making addition on said amount. 71. Ld. DR on this issue supported the action of the CIT(A) and contended that there was an undisclosed arrangement between the present assessee (purchaser) with M/s Suncity Project Ltd. (seller) for payment of pending rent to the assessee, therefore, the enhancement was quite justified. 72. On careful consideration of above submissions, we note that the CIT(A) has not made any inquiry from the seller of the property and payer of the rent as to whether the payment of 31 months starting from 1.10.2006 to 30.4.2009 was paid directly to present assessee purchaser or through the seller M/s Suncity Project (P) Ltd. except contents of document in question Annexure A-1. We are unable to see any oth....
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....tually paid Rs. 17.02 crore which resulted in excess payment of Rs. 59,56,943 which was reflected in the document in question "to refund" and she also made enhancement of said amount. 74. While considering the contentions of both the sides, we note that except addition on account of "PDC value" and enhancement on account of excess payment totalling to Rs. 17,02,25,465 other additions have not been found to be sustainable in the earlier part of this order. 75. As we have already noted addition that for making addition u/s 69 of the Act on account of unexplained investment and making addition u/s 69C of the Act on account of unexplained expenditure, the onus is on the AO and other competent revenue authorities to establish that there was an amount of investment or expenditure; which was actually invested or incurred by the assessee during the financial year under consideration; the same was unaccounted and not reflected in the books of accounts of the assessee and there was no satisfactory explanation provided by the assessee for the same or the explanation advanced or offered by the assessee has not been found to be satisfactory by the AO. As per requirement of relevant statut....
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....had been made. When the said onus is not discharged, it could not be concluded that an unexplained investment had been made by the assessee to attract addition u/s 69 of the Act. The Hon'ble High Court further upheld the observations of the Tribunal that AO ought to have established that the alleged land was purchased by the assessee and he failed to disclose the source of such purchase. In the present case undisputedly, the investment reflected in the sale deed has been recorded in the books of accounts of the assessee which is admittedly much higher than the circle rate which was effective and prevailing at the time of execution of sale deed and completion of transudation. Onus was on the AO to establish that the assessee made over and above payment, either by cheque or in cash to the seller M/s Suncity Projects Pvt. Ltd. amounting to Rs. 17,02,25,465 out of which Rs. 16,42,68,522 were retained by the seller as unaccounted consideration and excess amount of Rs. 59,56,943 was refunded or returned back to the assessee. 79. We further observe that although the revenue authorities including AO has unfettered discretion and not strictly bound by the rules and provisions of the Evid....
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....s and additions in the assessment. 81. On this issue, it is also relevant to consider the ratio of the order of ITAT Hyderabad in the case of DDCIT vs Shri Babu Rao (supra), as relied by the assessee, wherein it was held that other than the loose paper, the AO has not brought out any corroborative material to show that the inference made by him is correct and sustainable. The Tribunal further held that the only test that was required to be applied was whether on the facts found and the state of evidence on record, the conclusion arrived at by the CIT(A) was one which could be arrived by a reasonable person properly informed in law. The Tribunal also made it clear that the document recovered during the course of search which was a dumb document, then the same cannot be the sole basis for making additions. 82. Ld. AR has also placed reliance on the decision of ITAT Jabalpur in the case of ACIT vs Satya Pal Wassan (supra) wherein it was held that the document found during the course of search must be a speaking one and without any second interpretation and the same must reflect all the details about the transactions of the assessee in the relevant assessment year and any gap in ....
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....nable and we are unable to accept and uphold the same. Accordingly, ground no. 2(i) to (vi), 3(i) to (iv) and 4(i) to (iii) of the assessee are hereby allowed and the AO is directed to delete the impugned additions on account of unexplained investment, expenditure and receipt of pending rent for AY 2010-11. We further hold that under above noted conclusion, the directions of the CIT(A) to the AO for enhancement of income by Rs. 4 crores are also not sustainable and we also dismiss the same. 85. Since by the earlier part of this order, we have allowed ground of the assessee and have directed the AO to delete the addition on account of payment of over and above payment of sale consideration, commission/brokerage to Shri Lalit Modi and the addition made by way of enhancement by the CIT(A) on account of pending rent, therefore, ground no. 4 of the revenue in ITA No. 3551/Del/2013 also gets conclusion and we hold that the present assessee Smt. Vinita Chaurasia has not made any payment on account of commission or brokerage to Shri Lalit Modi or anybody else as the deal was materialised directly with the seller M/s Suncity Project Pvt. Ltd. and there was no occasion or question for pay....
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....as per this document, a commission of Rs. 65,70,747/- was payable to the assessee who is a property dealer and facilitates the transaction of immoveable property. Ld. DR also pointed out that it is a normal trade practice that in the deals of immoveable property transaction, the commission is always paid or received and the documents seized during search operation clearly show the quantum of commission and in the case of Smt. Vinita Chaurasia, the said property was duly found accounted for, therefore, the contentions of the assessee are not acceptable. Ld. DR also pointed out that u/s 132(4A) of the Act, the burden is on the assessee to prove that the contents of the document are not true and when the property transaction has actually taken place, then the AO rightly held that the assessee was part and parcel of the above deal and the assessee has earned commission of Rs. 65,70,747/- on the above deal. Ld. DR also submitted that the CIT(A) deleted the addition without any basis and justified reasoning, therefore, the impugned order may be set aside by restoring that of the AO on this issue. 89. Ld. AR supporting the impugned order submitted that the AO was not justified in makin....
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....d by the assessee in his submission and the grounds raised in appeal. The Assessing Officer has made the addition on the basis of presumption u/s 132(4A) of the Income Tax Act stating that it is the burden of the assessee to prove that the contents of the documents are not true. The Assessing Officer observed that when the property transaction has actually taken place, he has no hesitation in holding that the assessee had earned commission income of Rs. 65,70,747/- on the above mentioned deal. However, the Assessing Officer has completely ignored and not considered the confirmation of Smt. Vineeta Chaurasia filed in this regard that the said deal did not mature through the assessee. The presumption u/s 132(4A) is rebuttal presumption as also observed by the Assessing Officer and since the assessee had rebutted the same by way of filing of confirmation of Mrs.Vineeta Chaurasia in this regard, there is no justification on the part of the Assessing Officer to make addition of Rs. 65,70,747/- in the hands of the assessee as alleged commission received in the deal in favour of Smt.Vineeta Chaurasia regarding property of Big Bazar, Vasant Square Mall, New Delhi. In view of the above, the....
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....tablished. The AO has not brought out any allegation, evidence, document or opinion on record during the assessment proceedings or appellate proceedings to support this fact that the deal was actually materialised through the present assessee and, therefore, the presumption made by the AO only on the basis of document in question Annexure A-1 does not seem to be well-founded that the assessee had actually received commission or brokerage from the deal or transaction or sale of property between Mrs. Vineeta Chaurasia and Suncity project. The findings and conclusion of the CIT(A) are based on the legal principles and verification of the fact and we are unable to see any infirmity, perversity or any other valid reason to interfere with the same and hence, we uphold the same. Accordingly, ground no. 1 of the revenue being devoid of merits is dismissed. Ground No. 2 94. Apropos ground no.2, ld. DR submitted that during the search and seizure operation, the assessee's statement was recorded u/s 132(4) of the Act on 19.6.2009 at his residence. Ld. DR further pointed out that during statements vide question no. 33, the assessee was specifically asked about the possession of jewellery....
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....ote that the whole basis of addition made by the AO is the reply of the assessee to question no. 33 in the statements recorded during search operation u/s 132(4) of the Act on 19.6.2009. Replying to this question, the assessee accepted the difference between the jewellery shown as per the balance sheet and the assessee replied that the balance jewellery has been sold. During the assessment proceedings, the AO raised a question that how the income arising out of sale of jewellery has been accounted for and the assessee replied that the said income got subsumed in the surrendered amount of income made in AY 2010-11 of Rs. 62 crore. The AO did not consider the reply of the assessee dated 10.8.2009 submitted to DDI(Inv) wherein the assessee accepted the position of jewellery and this explanation was considered by the first appellate authority. Under the above noted facts and circumstances, we are in agreement with the conclusion of the CIT(A) that the said amount from sale of jewellery was duly covered in the amount of income declared during the course of search. The CIT(A) was quite reasonable and justified in holding that when the AO himself accepted the declaration of said jewellery....
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.... deserves to be dismissed and we dismiss the same. Ground No. 3 99. Apropos ground no. 3, ld. DR pointed out that the CIT(A) granted relief for the assessee by passing brief and slipshod observation without any basis. Ld. DR has drawn our attention towards para no. 8 of the assessment order and submitted that the assessee had claimed dividend income except u/s 10(34) of the Act and therefore, the expenses attributable to earning such exempt income need to be disallowed u/s 14A of the Act r/w Rule 8D of the Income Tax Rules 1962. Ld. DR further pointed out that as per tax audit report filed by the assessee, the assessee has shown expenses attributable to exempt income at nil and, therefore, the AO rightly took average of opening and closing balance of the investment between 1.4.2009 to 31.3.2010 for making .5% of disallowance amounting to Rs. 6,81,298/-. Ld. DR submitted that the impugned cryptic order may be set aside by restoring that of the AO on this issue. 100. Ld. AR replied that there is no dispute that the assessee has not claimed any exempt income for the year under consideration and, therefore, no disallowance u/s 14A of the Act r/w Rule 8D of the Income Tax Rules....