AI Drafter 
TaxTMI 
TaxTMI 
2018 (6) TMI 494
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....ndisclosed income in respect rent received in cash from Shivani Oil and Gas Exploration. It is submitted that Ld. AO has made such addition on the basis of loose paper marked as Annexure A-l page no. 127 found in premises of Mr. Chand Mishra. It is submitted that no such rent receipts have been received in cash by the appellant. It is further submitted that neither evidences whatsoever have been found by the Income Tax Search team nor any loose papers have been found during search proceedings which indicates that your appellant has received such Rs. 4,80,000/- out of books and therefore assumption and presumptions of receipt of alleged undisclosed Income of Rs. 4,80,000/- is unreasonable and unlawful. Without prejudice, we would like to state that appellant follows Cash system of accounting and therefore, such receipts can be taxed only on the basis of evidence of receipt of such cash. It is further submitted that no evidence regarding receipt of cash has been found by search party as well as by the Ld. AO hence, adding of same on assumptions and presumptions is against basic of principles of law and against Natural justice. In view of the above facts, such additi....
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....le determining the notional rent has erred in relying in the case of Smt. Radhadevi Dalmiya Vs. CIT 125 ITR 134 wherein hon'ble ITAT had adjudged that fair return of about 7% on the investment in properties can be taken into account for determining Annual ratable value. It is further submitted that consequential to the above act of determining the notional rent, Hon'ble Commissioner of Income Tax (Appeal) erred in confirming the action Ld. AO who erred in making disallowance of depreciation of Rs. 18,43,347/- as claimed by your appellant in respect of said office on the pretext that the same was not used for the office purpose for the year under consideration. It is to state that such assumptions and presumptions were made by the learned assessing officer without verifying the facts. It is therefore prayed to your honour to delete such addition made on arbitrary basis and allow the depreciation claim in respect of such office. It is therefore prayed to give necessary direction in this regard. 3. The grounds of appeal raised in Revenues appeal read as under: (i) Whether on the facts and in the circumstances of the case and in law, the learned CI....
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....ceived during the wedding ceremonies without appreciating the fact that the addition has been made on the basis of statement of assessee's personal secretary Shri Chand Mishra, who handled and managed her entire business I endorsement and which is corroborated by other evidences seized during the course of search?" Assessee's appeal: 4. Apropos ground no.1 - addition of Rs. 4,80,000/- being undisclosed income in respect of rent received in cash from Shivani Oil and Gas Exploration: 4.1 On this issue the assessing officer made the addition by observing as under: On verification of the Annexure A-l page no, 127 of the loose papers seized from Navkaran Office on 21-03-2011, it is seen that the assessee was charging an amount of Rs. 55,000/- as gross rental per month from M/s.Sivani Oil & Gas Exploration Services in respect of Sky Garden, Oberoi property and as per the scribbling on the back side, it is evident that along with Rs. 55,000/- in cheque on which TDS was being deducted by the payee, the assessee was also receiving Rs. 60,000/- per month in cash. Thus the total monthly rent comes to Rs. 1,15,000/- per month, while the assessee is offering only Rs. 5....
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....ccepted. Therefore, the cash rental receipts to the tune of Rs. 4,80,000/- is added to the income of the assessee under the head income from house property for A.Y.2011-12 and is taxed accordingly. 5. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) confirmed the addition. 6. Against this order assessee, the assessee is in appeal before us. 7. We have heard both the counsel and perused the records. We find that the assessee's submissions on this issue are same as considered by us in assessee's own case for assessment year 2010-2011 vide order dated 16.01.2018. In the said order, the issue has been dealt with as under: 10. In this regard, we note that the assessee has submitted as under: It is submitted that Ld. A.O. has made such addition on the basis of loose paper marked as Annexure A-1 page no. 127 found in premises of Mr. Chand Mishra. It is submitted that no such rent receipts have been received in cash by the appellant. It is further submitted that neither evidences whatsoever have been found by the Income Tax Search team nor any loose papers have been found during search proceedings which indicates that you ....
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....ficer has made the addition by observing as under: In the return of wealth filed, the assessee had claimed the penthouse at 9* Floor in Navkaran apartments as exempt as an office, being used for the business purpose. However, during the course of search, it was noticed that the flat No.403 was used as office rather than 901. In this regard, statement on oath of one of the assessee's employee Ms.Deepika Prakash was recorded u/s.!32(4) of the I T Act on 24-01-2011, wherein she stated in reply to Q.5 that; "As per my knowledge the flat was purchased by Ms. Priyanka Chopra in 2008. The flat was since then never utilized for business or residence purpose. Hence the fiat is vacant since it was purchased." On further verification it is noticed that the said penthouse is of two different units and separate agreements are made. Further, as admitted above, the penthouse was not utilized, however, the assessee is claiming depreciation on the same. In this regard, the assessee was asked to submit the details with supporting documentary evidence that the said penthouse has been used for office purpose and why annual value under the provisions of sec.23(1)(c) should not be ....
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....lized and used for any business purpose the depreciation claimed has also been correctly disallowed by the AO. The AO has very clearly shown in the assessment order as to how the view of notional rent is attracted and as to how depreciation is not allowable on such notional rent. 11. Against this order, the assessee is in appeal before us. 12. We have heard both the counsel and perused the records. Upon careful consideration we note that this addition has been made by the assessing officer on the basis of a statement of the assessee employee that the said flat was vacant. Apart from the above, no other evidence is available with the Revenue. The assessing officer has noted that assessee was asked to submit with supporting documentary evidence that the said Penthouse has been used for office purpose. In response, the assessing officer has noted that assessee 's representative stated that the said Penthouse is used to keep the assessee's dresses as godown, however ,the assessing officer noted that no evidence has been furnished for official use. In this regard, now the learned counsel of the assessee has submitted that the said flat was used for office purpose of the as....
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....Realtors Pvt Ltd which was agreed upon by the assessee for Rs. 4.65 cores having an area of 2995.79 sq. ft only which is much less than the area of 5100 sq, ft. offered earlier. The assessee has substantiated this fact by submitting the agreement aggregating to Rs. 4.65 crores showing the details of payments through cheque which are recorded in the books of accounts of the assessee. 16. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) deleted the addition holding as under: It is seen that the Assessing Officer had relied only on page no. 114 for making addition, without taking cognizance of page no, 109 to 113 of the same Annexure A-1 which also shows the details of the actual transaction. Further, the retraction statement filed by the assessee's mother states that assessee has not made such cash payment to M/s Arjun Realtors Pvt Ltd which has not been considered by Assessing Officer. It is seen that Assessing Officer has not brought anything on record to substantiate the addition of Rs. 4.65 crores. Addition cannot be made on the basis of loose papers only which are not substantiated by documentary proof. Therefore the assessee's submiss....
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.... 19. The assessing officer made addition in this regard by observing as under: 19.2 Purchase of Sawantwadi property In respect of the property purchased at Sawantwadi, during the course of search, Axis Bank diary was seized which is marked as Annexure A-3. On the top of page 10 it was mentioned that 15th - 1.06 is the "cash". Further, it was also mentioned that Rs. 30 lakhs to clear to Vithal Kamat due, which is an admitted fact as per the assessee's statement. Further, as per the above said page Rs. 1.10 crores was paid by cheque and Rs. 66 lakhs was paid by cash as on 22.12.10. The above said transaction of Rs. 66 lakhs is supported by cash vouchers marked as page no.13 dated 18-10-2010 paid to Manual Fernandis Rs. 1,00,000/-, Page no.14 dated 30-10-2010 paid to Manual Fernandis Rs. 5 lakhs (signed), page no.16 dated 30-10-2010 paid to Selestian Almeida which was received and signed by Manual Fernandis, Page no.20 dated 15-12-2010 paid to Manual Fernandis of Rs. 3 lakhs, page no.21 dated 21-12-2010 paid to Manual Fernandis Rs. 10 lakhs, page no.24 dated 22-10-2010 paid to Manual Fernandis of Rs. 20 lakhs, page no.42 dated 30-10-2010 paid to Manual....
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.... To substantiate her statement, the assessee was asked to submit the copy of agreement along with the mode of payment in the bank entries to substantiate her claim that no cash payments are being made for purchase of the above said property. Accordingly during the course of assessment proceedings the assessee has submitted the copy of agreement dated 30-12-2012 entered into between Manual Fernandes and Smt.Madhu Chopra and second agreement dated 15-12-2010 entered into between Mr.Salestin Augustine Almedia and Smt. Madhu Chopra for Rs. 1.10 crores and Rs. 40 lakhs respectively. It is noticed that the above said two agreements were registered in the name of Smt. Madhu Chopra and the payments were made by Ms.Priyanka Chopra and Shri Ashok Chopra and after that the book entries were transferred as loans. This practice is followed for various payments in the group. Therefore, though the agreement was made in the name of Smt. Madhu Chopra, this issue of on-money payment in cash was taken in the case of the assessee, as most of the payments were gone through her account only. No payment whatsoever was paid by Smt.Madhu Chopra. Hence, this issue of Rs. 1.06 crores is tak....
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....30-10-2010 Payment made to Salestin Augustine Aimedia, in respect of Sawantwadi property purchase 5,00,000 A-l 40, 41 & 42 30-10-2010 Payment made to Mr. Manuel Fernandas 5,00,000 A-l 43 18-10-2010 Cash payment made to Mr. Manual Fernandas in respect of Sawantwadi property purchase 32,00,000 A-2 13 18-10-2010 -Do-- 1,00,000 A-2 20 15-12-2010 -Do- 3,00,000 A-2 21 21-12-2010 -DO-- 10,00,000 A-2 22 27-12-2010 -Do- 10,00,000 A-2 24 22-12-2010 -Do- 20,00,000 In reply to the above said payments, the assessee vide her representative's .letter dated 17-12-2012 had submitted as under: "Cheques dated 30-10-2010 No. 102726 of Rs. 5,00,000 in favour of Mr.Manual Fernandes Cheques dated 30-10-2010 No.102727 of Rs. 5,00,000 in favour of Mr. Salestin Augustine Alrneida It is submitted that the said cheques are duly recorded in the books of account and ledger account. It is submitted that page nos. 40, 41 & 42 are one and the same. Further Rs. 5 lacs was paid in cash which is fanning part of Rs. 7 lacs cash admitted by Mrs. Madhu Chopra as undisclos....
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....uring the course of assessment proceedings, the authorized representative of the assessee has contended that they had offered Rs. 54 lakhs in respect of the cash component involved in the above said transaction in the return of income of Mrs.Madhu Chopra and requested to give its application in Rs. 1.06 crores. The assessee's representative's contention is not accepted for the following reasons: i) The undisclosed income of Rs. 54 lakhs was offered in the case of Mrs. Madhu Chopra, therefore, its application cannot be given in the assessee's case. ii) Further, the application of Rs. 54 lakhs was given in the case of Mrs. Madhu Chopra in respect of cash found during the course of search of Rs. 21 lakhs, unexplained jewellery of Rs. 1,80,110/- and the balance of Rs. 31,19,890/- in the protective addition'made on account of purchase of sawantwadi property as an application. (Addition of Rs. 1,06,00,000) 20. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) deleted the addition. On some aspects of the addition made by the assessing officer, she referred to assessee's explanation and accepted the same. She further noted....
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....y perused both the assessment order and the appellant's submissions. The explanation of the Appellant is accepted and the ground of appeal is allowed. 8.1 This addition has been made on the basis of loose papers found at appellants premises numbered as page no.44 of Aonexure A-l showing cash payment of Rs. 1,70,000/- for expenses. The appellant has accepted that such cash payment is made out of cash receipts received on the sale of Gurgaon property for Rs. 54 lakhs and same has mother Smt. Madhu Chopra for A.Y.2011-12. Further appellant's mother has already of Mrs. Madhu Chopra and therefore, taxing the application of the funds tantamounts to submission/Therefore the explanation of the Appellant is accepted and the ground of appeal is allowed. 23. Against the above order, the Revenue is in appeal before us. 24. The main grievance of the Revenue is that the ld. Commissioner of Income Tax (Appeals) should not have allowed telescoping of the income with the declaration of undisclosed income by her mother. Here we find that the Revenue's plea is not sustainable. Throughout the search assessment it has been noted that assessee's mother has been handling all th....
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.... record.] It can be seen that there is no evidence whatsoever or any incriminating documents which indicates attendance of marriage functions by the appellant. The addition made by the AO on the basis of the statement of her secretary is not correct since it is based on hearsay and has no evidentiary value. I have carefully perused both the assessment order and the appellants' submission and accordingly the explanation of the appellant is accepted. The ground of appeal is therefore allowed. 27. Against this order, the Revenue is in appeal before us. 28. We have heard both the counsel and perused the records. We find that this addition has solely been made on the basis of a statement obtained from the secretary of the assessee. There is no corroborative material whatsoever. A mere statement by the secretary cannot be said to be a conclusive proof of undisclosed income earned. Hence, we are of the considered opinion that the ld. Commissioner of Income Tax (Appeals) has correctly accepted the assessee's submission in this regard and deleted the addition. Hence, we accept the ld. Commissioner of Income Tax (Appeals)'s finding and affirm her order. 29. In the result, both t....