TaxTMI 
TaxTMI 
2019 (2) TMI 1010
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....mpany is engaged in the business of real estate developer and builder. Return of income for Assessment Years 2007-08 to 2012-13 were filed declaring income of Rs. Nil, Rs. 15,10,570/-, Rs. 22.48,320/-, Rs. 50,890/-, Rs. 15,87,090/, Rs. 1,36,84,390/-and Rs. 1,15,52,660/- for the respective assessment years on 30.10.2017, 22.10.2009, 22.10.2009, 12.10.2010, 29.09,2011, 28.09,2012 and 30.09.2013 respectively. Search u/s 132 of the Act were carried out at the business premises of the assessee company as well as on the premises of other concern/business associates from 29.11.12 to 24.12.12. Various documents Regular books and documents seized. Notice u/s 153A of the Act was duly served. Thereafter, a consolidated assessment for Assessment Year 2007-08 to 2013-14 were passed u/s 153A/143(3) of the Act dated 25.03.2015; whereby substantial additions were made against which assessee preferred appeal before Ld. CIT(A) who partly confirmed the addition as mentioned below; A.Y Date of filing of return u/s 139(1) Returned income Addition by Ld.A.O Relief by CIT(A) (Appeal by Department.) Confirmed by Ld.CIT(A) Appeal by assessee) 2007-08 30.10.2007 Nil 80,52....
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....n for "gross profit", addition should have been mad e for "net profit" on alleged Suppress ion of receipts. 5. That the ld CIT(A) erred in sustaining the addition for alleged undue benefits given to Directors of Rs. 10,85,000. 6. That the ld. CIT(A) erred in not directing the A.O. to consider provisions of section 234B(3) while levying interest u/s 234B. The appellant carves leave to add, amend or modify any of the grounds of appeal". Assessment Year 2009-10 "On the facts and in the circumstances of the case: _ I. The ld CIT(A) was not justified in sustaining the assessment order, which is bad-in-law, void-ab-initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled. 2. That the additions are illegal and bad in law as they are not based on any incriminating material found during the course of search. 3. That the ld CIT(A) erred in sustaining the addition of Rs. 95,37,512/- on account of alleged suppression of receipt. 4. That without prejudice, in any case, instead of making addition for "gross profit", addition should have been made for "net profit" on al....
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....count of alleged unaccounted transactions LPS 28 pg.39 seized from FS- 7. That the ld CIT(A) erred in sustaining the addition of Rs. 10,00,000 on account of alleged unaccounted transactions LPS 4/30 pg.3 seized fromFS-4. 8. That the ld CIT(A) erred in sustaining the addition of Rs. 2,60,000 on account of alleged unaccounted transactions balance sheet-21 pg.21. 9.That the ld. CIT(A) ought to have allowed telescopic benefit by way of set off of additions of Rs. 5,00,000/-, Rs. 46,86,348/- Rs. 10,00,000/- and Rs. 2,60,000/- made on account of alleged out of book expenditures/ payments with addition of Rs. 2,75,25,427/- made on account of alleged suppressed receipt. The appellant carves leave to add, amend or modify any of the grounds of appeal". Assessment Year 2012-13 "On the facts and in the circumstances of the case: _ I. The ld CIT(A) was not justified in sustaining the assessment order, which is bad-in-law, void-ab-initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled. 2. That the additions are illegal and bad in law as they are not based on any incr....
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....e. 9.That the ld. CIT(A) ought to have allowed telescopic benefit by way of set off of additions of Rs. 9,00,000/-, Rs. 59,80,000/- and Rs. 3,00,000/- made on account of alleged out of book expenditures/ payments with addition of Rs. 3,02,27,200/- made on account of alleged suppressed receipt. The appellant craves leave to add, amend or modify any of the grounds of appeal". 5. The grounds raised by the revenue are as under; Assessment Year 2007-08 "(1) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in deleting addition made by the A.O. of Rs. 45,40,259/- on account of suppression of receipts without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. (2) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in estimating Gross Profit @ 34.20% on suppressed receipts, in absence of any evidence of expenditure against the suppressed receipts. (3) The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal." Assessment Year 2008-09 "(1)....
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....g addition made by the A.O. of Rs. 5,29,58,277/- on account of suppression of receipts and Rs. 1,17,39,955/- on account of bogus deduction u/s 80IB(10) of the Income Tax Act, 1961 without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. (2) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in estimating Gross Profit @ 34.20% on suppressed receipts, in absence of any evidence of expenditure against the suppressed receipts. (3) The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal." Assessment Year 2012-13 "(1) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in deleting addition made by the A.O. of Rs. 5,38,01,894/- on account of suppression of receipts without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. (2) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in estimating Gross Profit @ 34.20% on suppressed receipts, in absence of any evidence of expenditure against the....
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....08 30.10.2007 30.09.2008 Assessment u/s 143(3) 07.12.2010 PB-81 2008-09 22.10.2009 30.09.2010 Assessment u/s 143(3) 07.12.2010 P.B-111 2009-10 22.10.2009 30.09.2010 Assessment u/s 143(3) 29.12.2011 P B 137 2010-11 12.10.2010 30.09.2011 Return processed u/s 143(1). No notice u/s 143(2).PB 167 2011-12 29.09.2011 30.09.2012 Return processed u/s 143(1). No notice u/s 143(2). PB 199 Ld. Counsel relied following judgments; CIT Vs Continental Warehousing Corporation 58 taxman 78 (Bom) Om Shakthy Agencies (Madras) P. Ltd 157 ITD 1062 CIT Vs Kabul Chawla 380 ITR 573 (Del) CIT Vs Lata Jain (Del. H.C.) 10. Ld. Departmental counsel vehemently argued and supported the orders of Ld. A.O. 11. We have heard rival contentions and perused the records placed before us. 12. The grievance of the assessee through this common Ground No.2 is that no incriminating material was found during the course of search. The additions should not have been made for the assessment years which stands abated on the date of search. Assessee has relied on various judgments. The commo....
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....s out of which some are taxable for service tax purposes and the remaining are non taxable under Service Tax Act. The Ld. A.O did the following:- Receipts for 9 months (as per sheet) Rs. 20,40,72,020 Receipts for 12 months (pro-rata basis) (purely on assumption) Rs. 27,20,96,026 Total turnover as per books Advance from customers (net closing-Opening) Rs.16,42,52,458 (Wrong figure taken by Ld.AO) Rs. 1,75,29,972 Rs.18,17,82,430 Net unaccounted receipts(estimated) Rs.9,03,13,956 Unaccounted receipts as per percentage Of Accounted receipts 49% The Ld. A.O therefore extrapolated 49% of the receipts for all years from what was shown in all the years, resulting in addition of Rs. 35,23,47,102/-. The Ld.CIT(A) applied gross profit of 34.20% on alleged unaccounted receipts of Rs. 35,23,47,102/-. Following is the details of addition for suppressed receipts by Ld. A.O and relief given by Ld. CIT(A):- Sr. No. A.Y. Sales as perITR Addition byLd.A.O CIT(A) confirmed G.No.3-4 of assessee CIT(A) deleted. Ground No.1-2 of Department A B C D (49% of C) E 34.20% of D F = D - E ....
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....asonable approach in the entire matter. He took the figures wrongly, as stated above. He took the sales for 9 months and extrapolated it for 12 months, assuming, and estimating, that sales across the year would in the same ratio. He took his own estimated figure (incorrect and based purely on surmises) for one year, and extrapolated this hypothetical figure with accounted sales. The data of each and every customer was available project-wise, party wise, date-wise; duly recorded in the books of the assessee. No defect was found in the said books. He however, assumed the unaccounted sales ratio to be 49%. The estimate, to say the least, was wrong as per the Id AO himself, who later on corrected it to 10.35%. He assumed the sales to be unaccounted for all years on this ratio. There was no basis for such presumption and extrapolation, moreover in search cases, where the addition has to be based on evidence found during the course of search. And this entirely hypothetical, erroneous approach lead to a whooping addition of Rs. 35 crores in the hands of the appellant. Ld CIT(A) in fact did not consider any of the submissions and merely....
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....s. 4,06,95,248 The closing balance is Rs. 10,54,79,568, which is as under: Advances from customers (PB 378) Rs. 14,37,91,113 Less: Receivable from customers (PB 377) Rs. 3,83,11,545) Rs.10,54,79,568 The entire amount was duly recorded in the books and tallies with the books. There were no unrecorded sales. d. List of party-wise/ flat-wise working of opening amount receivable; sales recorded during the year; refunded/ adjusted; amount received during the year; and closing balance is given. PB 365-375. The figures are same as in the audited accounts. Like Total of sales for the year (PB 375) Rs. 16,40,82,458 tallies with audited accounts PB 195. Total of Closing balance Rs. 10,54,79,568 (PB 375) tallies with net of advances, as above. Total of opening balance Rs. 4,06,96,248 (PB 375) tallies with net of advances, as above. e. In LPS pg. 25 page 7, the taxable receipts are mentioned. The same figure is shown as taxable in LPS 25 page 5. Service-tax paid on the taxable receipts is noted. This figure tallies with service-tax returns. The only difference is that the receipts noted on IPS 25 para 5 is ....
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....d there is no receipt which has been received out of books. To verify this, total receipts as per books are to be seen which are as under A.Y. Sales Advance received from customers Advance received from customers in the current year 2010-11 9,07,08,144/- 2,07,81,573/- --- 2011-12 16,42,52,458/- 3,83,11,545/- 1,75,29,972/- d. On perusal of the above table, it is clear that the assessee company has not declared total receipts in its ITR. Total receipts as declared by the assessee during A.Y. 2011-12 is Rs. 18,17,82,430/- (Rs. 16,42,52,458/- + 1,75,29,9721- ) only while the assessee himself has accepted that he has received an amount of Rs. 20,40,72,0191- from July 2010 to March 2011. e. If mathematical formula is applied then the assessee company has received an amount of Rs. 2,26,74,6681- per month during A.Y. 2011-12, re suiting total amount of Rs. 27,20,96,016/- during A.Y. 2011-12. As total receipts of the assessee company is Rs. 27,20,96,016/- and the assessee has declared only an amount of Rs. 18,17,82,430/- only hence there is no doubt that the assessee has suppressed its receipts by at least 49%. 11.9 In the....
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.... tax (2014) 89 CCH 179 AIlHC A.O rejected assessee's books of account u/s 152(2) and noticed that gross profit rate shown for the year in question is at 9.46% which was less as compared to previous years The High Court held 'once books of accounts are rejected, turnover has to be estimated and, while estimating turnover, past record of assessee, his method of accounting and his general reputation in market becomes relevant . while rejecting books of accounts. A.O assessed turnover based on the gross profit rates indicated by assesse in his previous assessment years. It is not only the right but duty of the assessing officer to consider whether or not the books disclose the true state of accounts and the correct income can be deducted there from. It is incorrect to say that the officer is bound to accept the system of accounting regularly employed by the assessee the correctness of which had not been questioned in the past. section 145 confers sufficient part upon the officer - it imposes the duty upon him- to make such computation in such manner as he determine for deducing the correct profits. 5.2 In para 11.8 and 11.9 the A.O has given a clear-cut finding re....
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....e rate of 34.20% on the enhanced turn over in each A.Ys 2007-08 to 2013-14 and give appropriate relief. The grounds of appeal for A Y s 2007 -08 to 2013-14 are partly allowed". 20. From perusal of the finding of lower authorities, the common facts which emerges is that the issue of suppression of receipts ignited from the seized document in page-7 of LPS-25 which resulted into extrapolation of gross receipts and calculation of profits thereon. It is not disputed that apart from the seized document at LPS-25 which was in the form of hand written account of receipt for various projects like estate, park and privilege for the month of March 10, 2011 there was no other document found during the course of search which could prove that the assessee has suppressed the receipts which have not been disclosed in the regular books of accounts. The main impetus is on page-7 of LPS-25 and it needs to be examined as to whether page-7 of LPS-25 seized from the assessee's premises could be taken as a sound basis of computing suppressed receipts. 21. Column No.5 of Page 7 of LPS 25 of the seized document from FS-4 shows the total receipt for Assessment Year 2011-12 out of which taxab....
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....ers to the gross receipt which the assessee is going to offer as revenue in its regular books of accounts and he presumed as non taxable suppressed receipts. It is further observed that the Ld. A.O has treated an amount of Rs. 2,01,81,573/- and Rs. 3,83,11,545/- as advance receipt from customers for Assessment Year 2010-11 and 2011-12 respectively, but actually these two figures are sundry debtors as on 31.3.2010 and 31.3.2011. This mistake committed by Ld. A.O seems to have resulted inaccurate working of gross receipts of Rs. 18,17,82,430/-. Based on these incorrect figures the Ld. A.O applied the mathematical formula to work out the alleged suppressed receipts @49% of the total sales of the assessee as shown in the Income Tax return. Merely on the basis of this incorrect finding taking incorrect figures and wrongly interpreting the word taxable and non taxable receipts as the one related to disclosed receipts in the regular books and suppressed receipts out of books, paved the way for the incorrect and defective working by Ld.A.O resulting into the addition for all the seven years and also for invoking the provisions of section 145(3) of the Act for rejecting the books of account....
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....umn is resultant non taxable receipts. During July,2010-March, 2011 total receipts of Rs. 20,40,72,019/- are mentioned which almost tallies to the gross receipts of 20,65,79,072/-shown by the assessee in the consolidated sheet of sundry debtors for the financial year 2010-11 placed at page 364 of the paper book which brings us to the conclusion that the observation of the Ld. A.O that 35% receipts are out of books and constitute 'on-money' is devoid of merits which is borne out from the facts that the entire receipts have been credited in the books. We further find that Ld. A.O computed the unaccounted receipts as 49% of the accounted receipts in the following manner; Receipts for 9 months (as per sheet) Rs. 20,40,72,020 Receipts for 12 months (pro-rata basis) (purely on assumption) Rs. 27,20,96,026 Total turnover as per books Advance from customers (net closing-Opening) Rs.16,42,52,458 (Wrong figure taken by Ld.AO) Rs. 1,75,29,972 Rs.18,17,82,430 Net unaccounted receipts(estimated) Unaccounted receipts as per percentage Rs.9,03,13,956 Of Accounted receipts 49% 27. The Ld. A.O thereafter extrapolated 49% of the receipts for ....
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....ed at page-7 of LPS-25 matches with the taxable services liable for service tax appearing at page 5 of LPS-25 which also matches with the service tax returns. The only difference is on account of gross receipts which are inclusive of service tax @2.5%. In view of our above discussion and in-depth examination of facts we find that except for Rs. 25,07,052/- there was no mismatch of the alleged incriminating document atpage-7 of LPS-25 with the receipts shown by the assessee in the regular books of accounts and the alleged difference of Rs. 25,07,052/- which is approximately 1% of gross receipts, that too being the part of rough calculation thuscannot be taken as a basis for rejecting the books of accounts and invoking provisions under section 145(3) of the Act. Therefore there is no justification in the finding of Ld. A.O in rejecting the books of accounts. We also find that the working of net unaccounted receipts by the Ld. A.O was based on wrong assumptions, incorrect figure, without understanding the laws of service tax about taxable and non taxable services and most importantly no incriminating material for any of the other assessment years except for Assessment Year 2011-12 was....
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....correct facts in his finding and merely sustained the addition applying net gross profit at 34.20% on the alleged unaccounted receipts. We find no justification in the finding of Ld. CIT(A) because the gross profit rate has to be applied on unaccounted receipts but when the very basis i.e. un accounted receipts have been wrongly calculated or computed then the application of such gross profit rate have no legs to stand for. We accordingly dismiss the common ground No.1 & 2 relating to gross profit addition made by the CIT(A). 32. We therefore in the given facts and circumstances of the case and detailed finding of facts mentioned hereinabove are of the considered view that the very basis adopted by Ld. A.O for making the addition for suppressed receipts is fatal, incorrect and has no justification because the document i.e. page-7 of LPS-25 relied on by the Ld. A.O for completing the suppressed receipts has not been examined properly and thus gravely erred in rejecting books of accounts by invoking provision of Section 145(3) of the Act. On our perusal and examination of this document we find that the figures mentioned in the seized document i.e. Page7 of LPS 25 were almost tally....
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....njay Sinha, Rajeev Sharma 26,87,100/- 38,55,000/- 11,67,900/- 3 14.5.2008 LG-01 &02, City Centre, Press Complex, M.P.Nagar, Bhopal Smt. Anjana Sinha 33,90,400/- 47,42,000/- 13,51,600/- 4 14.5.2008 LG-16 &17, City Centre, Press Complex, M.P.Nagar, Bhopal Smt. Anjana Sinha 19,63,100/- 27,46,000/- 7,82,900/- 5 25.10.2011 Plot No.51, Soumya Estate, Khajuri Kalan, Bhopal Smt. Anjana Sinha 18,50,000/- 19,55,100/- 1,05,000/- 6 14.05.2008 LG-18 &19, City Centre, Press Complex, M.P.Nagar, Bhopal Smt. Manju Sharma 26,25,500/- 36,72,200/- 10,46,700/- 7 29.03.2012 Plot No.111, Soumya Estate, Khajuri Kalan, Bhopal Smt. Manju Sharma 26,11,000/- 28,24,600/- 2,13,600/- 36. It was submitted before Ld. CIT(A) that nothing incriminating was found in search to that any unreasonable benefit was given to Directors. The provisions of Sec 43CA, which empower the addition of difference in stamp duty rate and registered sale valuation was applicable from A.Y. 2014-15, thus no addition can be made for A.Y. 2008-09 to A.Y. 2013-14. Collector rate or the stamp duty rate is not best tool to measu....
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.... to the date of search. ClT vs Continental Warehousing Corporation58 taxmann.com 78 (Bom.) Om Shakthy Agencies (Madras) P Ltd. 1571TD 1062 (Trib. Chennai) Parag M. Sanghvi 63 taxmann.com 118 (Trib. Mumbai) ClT vs Kabul Chawla 380 ITR 573 (Del.) ClT vs Lata Jain (Del HC). (b) Comparable Sales: The Summary of the similar properties sold to persons other then Directors, with their per sqft rate is at PS 426. This when compared to the per sq ft rate of the properties sold to Directors clearly shows that the rate at which the city centre shops are sold to Directors are at or above the price at which the properties were sold to others. (PS 427). The sale price in their cases have been accepted. The registries of City centre office property sold to other then directors are at PS 428- 474. (c) Stamp value not best estimate. Hindustan Motors Ltd Vs Members, appropriate authority (2001) 249 ITR 424 (Mad.). Guideline valued for collection of stamp duty, no application of determining market value. (d) Section 50C/43CA not applicable: The assets under consideration are the commercial shops in City Centre and plots at Soumya Estate, Bhopal. These are Stock in trade and....
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....tween the sale consideration shown in the sale deed as against stamp duty valuation adopted by the stamp authority for calculating stamp duty. Though the Ld. A.O has not mentioned section 50C of the Act for making the impugned addition but the basis of making the addition has been adopted from Section 50C of the Income Tax Act. The undisputed facts emerging out of the record are that the alleged transactions were duly recorded in the books. There was no iota of evidence in the form of incriminating documents to show that any 'on money' or underhand dealing took place in the case of the impugned transactions. The properties sold in question were commercial properties which apart from the Directors were also sold to the other unrelated parties. There is no observation of both the lower authorities which could show that the assessee had a different set of rule for the unrelated parties and another for the related parties which means that properties sold to the Directors/relatives/family members were at the fair market price. 43. Now the issue remains whether the provisions of Section 50C of the Act are applicable to such transaction or not. We find that the said provisions cannot b....
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....dly contained transactions between assessee company and Fortune Group. (Refer CIT{A) order pg. No 63 Para 7.1). It is pertinent to note that this diary was not found during search proceedings carried out at Assessee Company but was recovered during survey operations at M/s Fortune Builders. (as provided in Show cause notice at PB page 491- 492). This diary is not written in the handwriting of any of the employees of assessee. The assessee denied the contents of the diary. Relevant page 113-116 which allegedly relates to assessee, contains date; and amount paid/ received. This relates to period Sept. 2010 to July 2012. The Ld. AO during assessment proceedings issued a show cause notice, dated 12.02.2015, enquiring about the transactions and also whether they were duly recorded in 'books of accounts. In its reply, the assessee company denied to have entered into any such transactions with M/s. Fortune Builders. (PB page 493-494). The Submissions of the assessee company were not found acceptable as the Ld. AO alleged that the diary contains details of Land purchase. Ld. AO related some entries in the diary, which were not related to assessee, to be matching with certain transactio....
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.... 114 19.09.2011 Read 1600000 114 21.09.2011 Read 500000 114 23.09.2011 Read 7500000 114 23.09.2011 Int.recd 375000 114 21.09.2011 Read 500000 114 23.09.2011 Paid 5000000 114 05.01.2012 2800000 114 15.01.2012 924000 114 08.02.2012 3000000 114 21.02.2012 1000000 114 01.03.2012 1000000 116 28.07.2012 400000 116 31.07.2012 500000 116 Total 97,00,000 6,80,49,000 7.2 Accordingly a show cause notice dated 12/2/2015 was issued to the assessee wherein the assessee was asked as whether these transactions as mentioned above have been duly accounted in its books of accounts or not. It was also required to explain as to why the same should not be added to its total income. 7.3 In response to this notice, the assessee submitted as under: "We have been served with a show cause notice in connection with impounding of a all....
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....ansactions appearing in the diary are duly substantiated by documentary evidence as unearthed by this office. Therefore all the transactions appearing in the diary are correct. The evidences substantiating correctness of the entries appearing in the diary are as under: (a) Page no. 1 of this diary contains the details of land purchase Landmark: S.No. Date Particulars Amount Debit Credit 1 11.06.2009 1800000 2 29.09.2009 6500000 3 29.09.2009 6500000 4 08.l2.2009 4100000 5 08.l2.2009 3500000 6 14.12.2009 BROTHER 25000 7 18.12.2009 1000000 8 18.12.2009 3000000 9 05.05.2010 400000 10 08.05.20l0 400000 Page no. 1 of this diary contains the details of land purchase' Landmark'. This land was purchased from some Patidar family. Bank accounts of this family were perused and it was noticed that the payments as mentioned in the diary are duly reflected in the bank account....
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....No.903410110000411, BOI, Misrod in the name of Shashikant Patidar on 1.6.2010. 4. Cash deposit of Rs. 5,00,000/- in A/c No.903410110000412, BOI, Misrod in the name of Govind Patidar on 28.5.2010. As can be seen from the above table that the date of deposit in the bank a as well as the amount mentioned in the diary under reference is matching to the credit entries in the bank accounts of Patidar Family. (b) Page no. 1 to 105 of LPS-6 seized from FS-3 in the case of M/s Fortune Builders, contains following details- "Copy of Sale deed of agriculture land Khasra No. 390, Rakba 2.54 Hect. Khasra no. 398, Rakba 1.13 Hect. total rakba- 7.68 Hect. situated at Vill. Bharoupur, PHN- 42, Tehsil- Huzur, Distt.- Bhopal total consideration Rs. 523296001- dated 10.07.2007 between (Seller) 1) Smt. Shanti Devi Daga W/o Shri Brijratan daga, Rio 5, yadulal Malik Road Kolkata, 2) Shri Shivkishan Daga S/o Late Shri Gaurishankar Daga, Rio 150/1, Cotton Street, Kolkata (ADIPD4147J) (Purchaser) 1) Shri Ashok Palod S/o Shri Radheshyamji Palod, Rio 151, Zone-I, MP Nagar, Bhopal (ABEPP9496M) 2) Smt. Neeta Mohgaonkar Wlo Shri Ajay Mohgaonkar, Rio E-7/841 Arera C....
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....ked vide show cause notice dated 12.02.2015 to reconcile the above transactions in the books of account and was required to explain why Section 132( 4)A clearly states that 'where any books of account, other documents, money, bullion. jewellery, or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed that such books of account, other documents, money, bullion, jewellery, or other valuable article or thing belong or belongs to such person, that the content of such books of account and other document are true '. If the assessee disputes the liability for tax, it is the law. In the absence of any proof the A.0 is justified to charge it as taxable income. 8.3 In view of the above discussion, the transaction entries in the above mentioned has business dealing/transactions with the appellant assessee like fourtune soumya homes, clearly shows there were business transactions and dealings between the appellant company and M/s Fortune Builders and the details of transaction as mentioned in the diary BS-l are not recorded in the regular books of account of the appellant company. Thus, the add....
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.... Builders during survey on 10.11.2012, around 18-20 days before search on premises of assessee. It is also an undisputed fact that there was no dealing of assessee with Fortune Builders. The diary was not in the handwriting of employee of assessee. In our knowledge, no statement of that employee was recorded, asking for details in the diary. He was never confronted about the diary. There is no corroborate evidence to prove. In any case, statement, if any, was not confronted to assessee for cross examination. No such statement was referred in the orders. The document which was the basis of addition was not found in Possession of assessee, nor in handwriting of assessee. The person in whose handwriting it was recorded was never confronted. It was only on conjunctures that it was held that these reflect unaccounted payments. It is a trite law, that statement of third parties, entries in books of third parties, do not bind the assessee. They may bind third parties in their own cases, and not the assessee. The latest judgment in the sequence is the case of Common Cause (SC), which follows the locus classics of V.C. Shukla 1998 SCC 410. It is well settled in law that the loose papers and....
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....(c) Ld AO tried to match the entries with the cash deposits by Patidar family. Nowhere it was stated that Patidar agreed that the deposits in his bank account were out of money given by assessee- company. Those entries are unrelated and cannot be used as an evidence against the assessee. No addition for those entries have been made. Statement of Patidar was not recorded to the best of knowledge of assessee. His statement was never brought on record, if any. The source of deposit by Patidar can be explained only by Patidar. Ld. AO choose not to enquire the facts from any of the sellers. The Ld. AO added both debit and credit. Addition for both, in any case, was totally wrong and uncalled for, in any case. Thus, on such loose jottings by third person, which were not found from assessee's premises, cannot be used against the assessee. 53. In light of the various judgments referred above and examining the facts, we find that the alleged diary was not found during the course of search at the assessee's premises and the alleged document i.e. diary BS-1 undoubtedly relates to a third party i.e. Fortune Group in which certain transactions are mentioned which are not owned by the assess....
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....at based on the survey at Fortune Group, surrender of income has been made and whether any such surrender or addition has been made on account of alleged diary namely BS-1 is not placed on record. (h) No opportunity of cross examination has been provided to the assessee to question the surveyed person and others connected witness to unearth the truth. 54. Going through the above facts, one glaring fact is that the assessee was not provided any opportunity of cross examining the persons who possessed the alleged diary wherein certain transactions were mentioned under the heading of assessee's name. It is purely violation of principle of natural justice as the Ld. A.O has not granted the opportunity for examination to the assessee even after the request of the assessee and in such circumstances, we are inclined to refer to the judgment of Hon'ble Apex Court in the case of CIT V/s Sunita Dhadhha SLP(Civil) No.94392/2018 dated 20.03.2018 wherein the Hon'ble Apex Court dismissed the SLP filed by the revenue holding that no interference is called for in the order of Hon'ble High Court of Rajasthan in ITA No.197/2012 and others dated 31.07.2017 wherein Hon'ble High Court confi....
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....s letter, the assessee informed the AO that she has not received letter dated 3-12-2010 and requested that copy of this letter alongwith Annexures be provided to her. The assessee filed reply vide letter dated 23-12-2010 and copy of that letter alongwith Annexure is available at pages 55 to 79 of the paper book. This reply was filed after getting copy of letter dated 3-12-2010 alongwith Annexures. Vide this letter, AO was informed about the copies of the sale deed of lands situated in village Mahapura which showed that the land was not being sold aboutRs. 1.00 crore per hectare. Vide this letter, it was stated that Shri Ravinder Singh Thakkar has made a huge windfall in getting the land without investing his share in M/s. Milestone Dwellers Pvt. Ltd . He fabricated the document to show that he has put the cash from his side towards land purchase and towards liaison with the Govt. officials for giving land conversion and permission. The assessee required the AO to ascertain from the officials M/s. Milestone Dwellers Pvt. Ltd. as to whether any cash was paid. Vide this letter, the assessee made request that the copy of the entire statements should be given and an opportunity of cross....
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....g the benefit of going through all the papers mentioned in the statement relating to' such .issue as these have not been provided to the' assessee except fund flow statement. Thus we fed that the assessment order has been passed in violation of principle of natural justice. We had considered the similar issues in the case of Smt. Vijay Laxmi Dhadda, In that case also, the principle of natural justice was violated and the reliance was placed on documents found at the search of third party. It will be useful to reproduce the following paras from that order. "2.17 The revenue authorities recorded the statement of Shri Ravinder Singh Thakkar, a person belonging to M/s. Unique Group on different dates from 28-01-2009. The revenue authorities provided only page 4 of his statement recorded on 28-01-2009. The relevant portion of statement of Shri Ravinder Singh Thakkar is available at pages 40 to 42 0 the paper book. In respect of the document found -in the locker, Shri Ravinder Singh Thakkar explained the transactions with the assessee and her husband. Shri Ravinder Singh Thakkar has clearly mentioned that he negotiated the deal with the assessee and her husband but the d....
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....ee Shri Ravinder Singh Thakkar admitted such unaccounted payment and included in the calculation while working out the additional unaccounted income offered for taxation in the return of income so filed. The assessee was given show cause notice alongwith Annexure on 16-12-2010. The assessment has been completed vide order dated 29-12- 2010. Hence all the proceedings have been concluded within a fortnight of issuance of show cause notice. The search was conducted in Jan. 2009 and the statement 'of the assessee was recorded in March 2009. After receipt of the show cause notice, the assessee required the AO to provide him statement of computation of income filed by Shri Ajit Singh Thakkar. After getting the copies, the assessee should have asked for cross examination of Shri Ajit Singh Thakkar . The Hon'ble Gujarat High Court in the case of Heirs and Legal Representatives of Late Laxrnanbhai S. Patel vs. CIT, 327 ITR 290 had occasion to consider the addition in the hands of a person who has signed the promissory note which was found during the course of search at the prermses of the firm in which third party was partner and the firm disclosed such unaccounted income. The Hon&#....
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....he assessee in his statement in the month of March, 2009 clearly stated that the amounts were not received and cheques were returned back. Such facts is supported from the statement of Shri Ravinder Singh Thakkar made uls 132 (4) of the Act at the time of search. The concept of real income was again reiterated by the Hon'ble Apex Court in the case of Godhra Electricity Co. Ltd. Vs. CIT, 225 ITR 746. The Hon'ble Apex Court in the case of CIT Vs. Daulatram Rawatmull , 87 ITR 349 observed that there should be necessity of nexus between the conclusion and primary facts. The assessee has not been able to show that he received cheques and the same were returned because the deal could not materialize. The revenue is relying on the disclosure of income by Shri Ajit Singh Thakkar father of Shri Ravinder Singh Thakkar. Thus the primary facts are not confronted to hold that the assessee can be charged with undisclosed income. The Hon'ble Apex Court in the case of Parimisetti Seetharamarnma Vs. CIT 57 ITR 532 held that the case in which the receipt is sought to be taxed as income then burden is upon the Department to prove that it is within the taxing provisions. The AO in his orde....
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....eedings under the Act areas under:- "(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of, account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.]" 2.8 Section uses the word 'may'. The word 'may' leave it to the Court to make or not to make presumption according to the circumstances of the case. Such presumption is optional and the Court is not bound to make it. Section has not contained the word 'shall presume'. Similar wording of 'may presume' is contained in Section 132(4A) of the Act. The Jurisdictional High Court ....
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....xcept in cases where the facts are not available for cross examination or similar situation. The High Court in its impugned judgment proceeded to consider the issue on a technical plea, namely, no prejudice has been caused to the Appellant by such non-examination. If the basic principles of law have not been complied with or there has been a gross violation of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross examination is an integral part and parcel of the principles of natural justice." 56. Respectfully following the above judgments of Hon'ble Apex Court, High Court of Rajasthan and Co-ordinate Bench and various decisions referred and examining the facts in the instant appeal, we find that the additions made for unaccounted transactions with M/s. Fortune Group are uncalled for as they are merely based on diary BS-1 prepared by a third person who was working with M/s. Fortune Group and the alleged diary was also found during the course of survey at the premises of employee of Fortune Group. The transactions mentioned in one of the page of the diary shows the name of the ....
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....h of this document, Ld. A.O after considering the submission of assessee observed as follows; "During the course of search proceedings, page-29 of LPS-28 seized from FS-4 contains names of the persons along with amounts. 9.2.3 All these receipts as per paper and the amounts as per ledger have been tabulated as under: Name Flat No. Amount as per paper (in Rs.) Whether this amount mentioned the ledger or not Total accounted amount ledger (in Rs.) Shri Rajveer Singh 02201 1,07,500/- No 8,54,711/- Shri Sanjay Singh 02104 1,07,239/- No 9,71,656/- Shri Roshan Singh Negi C4104 92,200/- No 7,84,400/- Shri Manojit Shah 02403 1,38,274/- No 13,67,050/- Shri K.K. Sharma 02304 86,832/- No 8,99,000/- Shri Kulbhushan Deval 04602 98,500/- No 7,90,965/- Shri Ajay Kashyap 04302 5,30,000/- No 9,58,000/- Shri Shashikant Gupta 06302 2,90,000/- No 5,89,165/- Shri Ravindra Malviya 18301 32,500/- No 2,77,500/- Shri RadhakrishnanNair 06303 11,05,000/- No 1,05,000/- Shri V.S. Bhaduria 06402 2,68,500/- No &n....
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....me is hereby added in the hands of the assessee company for A.Y. 2011-12. Penalty proceedings u/s 271(1)(c) are hereby initiated for A.Y. 2011-12. 9.4.1 Page 21 of BS-1 contains receipt of Rs. 2.60 lacs from Pratibha Mishra on 30.01.2012. 9.4.2 Vide questionnaire u/s 142(1) dated 30.06.2014, the assessee was asked to explain this paper and at the same time the assessee company was show cause as why this amount should not be added to its total income. Vide reply dated 05.03.2015 the assessee company submitted as under: "The transaction of Smt. Pratibha Mishra is related to Tulip green project undertaken by M/s Fortune Soumya Housing which is a partnership concern. She has booked plot in that scheme. Her transaction are not related to us, " 9.4.3 The claim of the assessee is factually incorrect. The name of Smt. Pratibha Mishra has been found in the books of M/s Soumya Homes Pvt. Ltd. and the receipt of Rs. 2,60,000/- is not reflected in that ledger. 9.4.4 Accordingly an amount of Rs. 2,60,000/- is hereby added to the total income of the assessee company for A.Y. 2011-12 as the paper mentioned above is related to F.Y. 2010-11 i.e.....
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....nt of appellant except Rs. 10,00,000/-. The A.O vide questionnaire dated 30.06.2014 u/s 142(1) asked the appellant to reconcile the above transaction. The appellant assessee was unable to reconcile the above transaction in the books of account. If the amount of Rs. 10,00,000/- was for purchase of land, then the details of payments, person to whom the amount was paid, details of land purchased etc. were not filed by the appellant neither at the assessment proceedings nor at the appellate stage. Hence, the addition of Rs. 10,00,000/- made on this account is confirmed. 9.4 An amount of Rs. 2,60,000/- was received from Mrs. Pratibha Mishra The AO reconcile the above transaction in the regular books of account In reply to the questionnaire the appellant merely stated that the transaction relates to project Tulip Green undertaken by M/s Fortune Soumya Housing which is a partnership concern But A.O has clearly stated in para 9.4.3 that name of Mrs. Prathiba Mishra has been found in the books of account of the appellant company. If Mrs Pratibha Mishra is not directly linked with the appellant's company then how her name is reflected in the ledger of the which would cl....
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....Ld. Departmental Representative vehemently argued and supporting orders of lower authorities. 64. We have heard rival contentions and perused the records placed before us. The assessee has challenged the finding of Ld.CIT(A) confirming the addition for unaccounted transaction of Rs. 46,86,386/-, Rs. 10,00,000/- & Rs. 2,60,000/-. 65. We will first take up addition for Rs. 46,86,386/- which have its nexus from page-39 of LPS-28 seized during the course of search which contains details of respective parties. It is not doubted that the names in this document relates to the customers of the assessee who have purchased the flats. All these persons have the ledger accounts maintained in the books of the assessee. It is contended by the Ld. Counsel for the assessee that the figures mentioned in the seized document are the part of the diary entered /prepared by staff to follow the payment to be received from the customers for booking units in the project run by the appellant company. Confirmation from few of the customers were obtained which stated that apart from the amount mentioned in the ledger amount no other payment have been paid by them to the assessee. It was also brought to ....
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..... 10,00,000/-. In the result Ground No.7 of the assessee's appeal for Assessment Year 2011-12 is allowed. 67. As regards Rs. 2,60,000/- being the addition of unaccounted receipt from Smt. Pratibha Mishra, we find that the confirmation of Smt. Pratibha Mishra were not placed before the lower authorities wherein she had stated that apart from the amounts stated in the ledger account no other amount has been paid. We inclined to set aside this amount for afresh adjudication to the file of Ld. A.O directing the assessee to place documents appearing at page 575 to 579 of the paper book before the Ld. A.O in order to prove that no such amount of Rs. 2,60,000/- was received from Smt. Pratibha Mishra and if Ld. A.O is satisfied with the contents of the assessee he can decide accordingly. In the result Ground No.8 of the assessee's appeal for Assessment Year 2011-12 is allowed for statistical purposes. 68. Now we take up Ground No.8 of assessee's appeal for Assessment Year 2012-13 relating to addition of Rs. 2,00,000/- allegedly paid to CREDAI. 69. Brief facts of the case are that during the course of inquiry at Fortune builders Pg. No.60 of LPS-20 was seized from FS-1. It contains....
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.... 72. Ld. Counsel for the assessee submitted that the document is not in handwriting of any of its employees, it was not found from the assessee's premises. Ld AO choose not to verify the fact from the employee of Fortune Group, who wrote it. Also, Ld AO choose not to verify it from CREDAI about the document which was not found from the possession of the assessee, nor in handwriting of any of their employees therefore it could not be used against the assessee. Reliance is placed on V.C. Shukla 1998 SCC 410 Common Cause (SC) (supra). The authenticity of the other entries in the receipt and payment of CREDAI was never established by Deptt. Thus, addition purely on the basis of records of third party is not justified. The assessee company would always try to record all the expenses, and this being directly related to marketing expenditure of the real estate business, hiding such expenses is really out of question. Such a presumption would be totally wrong. In any case, telescoping benefit of the same ought to have been given from the additions, for unaccounted receipts, if any made for earlier or current year. 73. Per contra Ld. Departmental Representative vehemently argued and ....
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....hat the payments, could not be reconciled with the books of accounts, the addition needs to be confirmed. 77. As regards addition of Rs. 3,00,000/- on account of alleged unaccounted expenditure the brief fact is that cash payment of Rs. 3,00,000/- was shown to Ganga Bricks on 17.08.2012 at Pg no.179 of BS-1, FS-4. On enquiry, ledger a/c of Ganga Bricks wazs submitted and also that this payment is not related to Soumya Homes Pvt. Ltd and may be related to M/s. Fortune Soumya Housing. The Ld. CIT(A) confirmed the addition as the above was not recorded in the books of accounts of assessee company. 78. Now the assessee is in appeal before the Tribunal against the additions of Rs. 59,80,000/- and Rs. 3,00,000/- . 79. Ld. Counsel for the assessee submitted that the alleged additions for unaccounted transaction of Rs. 59,80,000/- found from the seized diary is a personal document of marketing executive, Kum. Vandana Rai, who has jotted the name and salary packages of prospective grooms from a matrimonial website. The page contains name of person, along with matrimonial site (www.kalarmatrimony.com) i.e like KLMXXXXXX etc. The pages from website with similar reference numbers are ....
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....hat similar codes are mentioned therein and amount mentioned in front of the codes are the yearly packages. In our considered view this document at page 29 of LPS- 28 is purely an information prepared and gathered by Kumari Vandana Rai for the prospective grooms and the amounts mentioned are the yearly packages of the boys and therefore there is no iota of evidence to prove that these amounts are the income of the assessee. Therefore the seized document at page-29 of LPS-28 is a dump document and no addition can be made on the basis of this document. We therefore delete the addition of Rs. 59,80,000/- made by the Ld. A.O and set aside the finding of Ld. CIT(A). In the result Ground No.7 of assessee's appeal for Assessment Year 2013-14 is allowed. 84. As regards Rs. 3,00,000/- for the alleged unaccounted expenditure, we find that cash payment of Rs. 3,00,000/- was given to M/s Ganga Bricks on 17.08.2012. The contention of the assessee is that this deal pertains to Fortune Soumya Housing has no basis to stand for because the document at page-179 of BS-1 seized from FS- 4 was found at the business premises of the assessee and the assessee being in the business of builder and develo....
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....pproval certificate and hence as per condition 8 certificate stands cancelled automatically. Hence the project is without any approval certificate and without the permission. While u/s 80IB (10) it is essential requirement for the deduction that project should be approved by a local authority while in case of assessee whole project is without the permission. * The assessee is not taken completion certificate from the local authority which is to be taken as per the amended provisions of the section 80IB (10). Since the project of the assessee is claimed to be completed on 31.03.2006 the year with the preview of amended provisions. * The assessee is building houses which are more then 1500 Sq. Ft, in area this violate the condition [or allow ability of 8OIB deduction as it violates section 80IB (l0)(c). In the light of above facts and discussion, it is established and held that the claim of the assessee u/s 80IB (10) is not maintainable as per Act. Accordingly the same is disallowed and is added to the total income of the assessee company". 88. Thereafter assessee came in appeal before Ld.CIT(A). It succeeded as the deduction u/s 80IB(10) was allowed by ....
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....d in clause (a) of Section 80 IB (10) read with Explanation (ii). We reject the argument of the assessee that the effect of amended clause (a) of sub- Section 10 of Section 801B, which has come into force with effect from 1st April, 2005, has retrospective effect or that it is unjust in any manner or incapable of compliance at all Similarly, the requirement of securing completion certificate issued by the Local Authority before the cut off date is nor directory, in view of the express provision in Section 80IB(10)(a) and the Explanation (ii) there under. The completion certificate granted by the Local Authority must hear the date of having been issued before the cut off date. That takes us to the argument of the assessee that the stipulation in Section 80IB(10)(a) of completion certificate issued by the Local Authority before cut off date, cannot be applied in the case of assessee following the work in progress accounting method in our opinion the provision in the form of Section 80IB(10)(a) applies uniformly to all the assessees - be it following work ill progress accounting method or otherwise. The benefit of deduction under this provision can be availed by the assessee ....
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....ion u/s 80IB(10) of the Act relates to the same project. 91. Ld. Departmental Representative though supported the order of Ld. A.O but could not controvert the submission of the Ld. Counsel for the assessee that the issue is covered by the decision of the Tribunal in the assessee's own case. 92. We have heard rival contentions and perused the records placed before us and also gone through the decision of the Tribunal. 93. The issue before us is the eligibility of deduction u/s 80IB(10) at Rs. 28,86,091/-, Rs. 74,78,422/- and Rs. 1,17,39,995/- for Assessment Year 2009-10, 2010-11 and 2011-12 respectively. We find that revenue is in appeal before the Tribunal against the finding of Ld. CIT(A) allowing the deduction u/s 80IB(10) of the Act for Assessment Years 2009-10, 2010-11 and 2011-12 which arises from the addition denied by Ld. A.O during the course of assessment proceedings. There is no dispute at the end of both the parties that the same project in the name Soumya Estate, Khajuri Kalan, Bhopal was in question allowing deduction u/s 80IB of the Act for all the three years. Therefore the conditions which are required to be fulfilled u/s 80IB of the Act have been adhered ....
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....ssessee is not hit adversely by the Explanation to Section 80IV(10), which was' made effective from 1st . April, 2001." 5. As the facts and circumstances in the instant case is pari material, respectfully following the same in the light of findings recorded by the Ld.. CIT(A) at para ,2.3 as reproduced hereinabove, we do not find any infirmity in the order of CIT(A) in deleting the disallowance of deduction claimed u/s 80IB(10) of the Act. In the result, the appeal of the Revenue is dismissed." 94. We therefore respectfully following the decision of the Co- ordinate Bench and the given facts and circumstances of the case find that the assessee is eligible for deduction u/s 80IB for Soumya Estate Project as held by the Tribunal that all the pre conditions have been fulfilled by the assessee which inter-alia includes the approval from the local bodies on 26.3.2007 for the housing project in the name of Soumya Estate and the completion certificate obtained on 29.10.2005 from the Municipal Corporation, Bhopal. We therefore find no reason to interfere in the finding of Ld. CIT(A) allowing the deduction u/s 80IB(10) of the Act for Assessment Year 2009-10, 2010-11 and 2011....