TaxTMI 
TaxTMI 
2016 (5) TMI 1503
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....substantive basis, as against the protective addition of Rs. 41,10,00,000/- made by the learned AO, on account of alleged unexplained investment in the certain Agricultural Lands situated at Village Bhaurasla, Indore, merely on guesswork, surmises and conjectures, without properly appreciating and accepting the explanation of the appellant. b). That, without prejudice to the above, the learned CIT(A) grossly erred in confirming an excessive addition to extent of Rs. 16,48,38,000/- in the appellant's income, without considering the material fact that the appellant had only made an initial investment of Rs. 1,33,37,500/- for purchasing certain lands at Village Bhaurasla, Indore, and the entire investment of Rs. 1,33,37,500/- was so made by the appellant out of the funds which were available in his hands, as a custodian of money, which were either borrowed by others on Promissory Notes and remained with the appellant or which were provided by the investors associated with the appellant or which were retained by the appellant out of the plot booking advances received by him on behalf of the companies in which he was one of the directors. 2a). That, the learned CIT....
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....hat whether or not the subject bank accounts were disclosed by the appellant prior to search through filing return of income without appreciating the material fact that there was no mechanism prevalent through which an assessee could have disclosed his bank accounts through the return of income. b). That, without prejudice to the above, the learned CIT(A), while adjudicating the grounds relating to the alleged unexplained cash deposits in the bank accounts of the appellant, grossly erred in not considering the material fact that the appellant was eligible for explaining the sources of cash deposits made in the bank accounts out of the cash withdrawals made in the same year from the same bank accounts irrespective of the fact that whether or not such bank accounts were disclosed prior to the date of search. c). That, without prejudice to the above, the learned CIT(A) grossly erred in not deleting the addition amounting to Rs. 94,18,510/- and Rs. 6,40,000/- respectively on account of cash deposits made by the appellant with his bank accounts with The Bank of Rajasthan Ltd. and Citibank. 5a). That, the learned CIT(A) grossly erred, both on facts and in law, ....
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.... 2008-09) The Revenue has raised the following grounds of appeal: "1. On the facts and the circumstances of the case the ld. CIT(A) erred in deciding the appeal against the principles of natural justice, without affording any opportunity to the AO or remanding it back in violation of the departmental instruction that in search assessments appeal order be passed either based on remand report or after hearing the AO. 2. On the facts and the circumstances of the case the ld. CIT(A) erred in holding that addition u/s. 69D was not justified because AO has not established that the appellant has borrowed such loans on Hundi and no Hundi, either live or discharged, was found and seized from any business premises of the group and deleted the addition of Rs. 90,24,410/-, Rs. 47,00,000/- Rs. 12,50,000/- and Rs. 35,25,000/- whereas, documents seized clearly mentioned of the Hundi dealings and the assessee failed to prove before the AO otherwise with evidences. 2.1 While holding so the ld. CIT(A) failed to appreciate that the transactions in hundies were confirmed in the statements of not only Sh. Nilesh Ajmera, the assessee, but his employee Sh. Pankaj Joshi....
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....essee before the AO. 3.3 While holding so the ld. CIT(A) wrongly directed to the AO to consider the amounting of Rs. 39,75,000/- withdrawn from Bank of Rajasthan Ltd. as source of cash deposit in the same bank account of the applicant if the applicant could adduce the source of the deposits in the bank account without following the procedure in appeal of remanding it back to the AO. 4. On the facts and the circumstances of the case the ld. CIT(A) has erred in deleting the addition of Rs. 4,93,73,000/- out of the total addition of Rs. 7,79,73,000/- made by the AO on account of unexplained investment in the purchase of land in Bhopal by accepting the contention of the appellant that some of Rs. 05 crore was received as on money on booking of plots of Phoenix Devcons Pvt. Ltd. which was retained by Sh. Nilesh Ajmera as against the findings of the AO that the said sum of Rs. 05 crore was utilized by Sh. Ajmera for making Dubai Hawala payment instead of retaining it as per the contents of the seized material. 5. On the facts and the circumstances of the case the ld. CIT(A) has erred in deleting the addition of Rs. 02 crore on account of unsecured loan by holdi....
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.... DR made counter arguments against the arguments of the ld. Authorized Representative of the assessee and relied upon the Order of the AO in respect of the relief granted by the ld. CIT(A) and for the additions confirmed by the ld. CIT(A), the ld. CIT DR also made written submission which after careful perusal is placed on record. The short facts of the case are that during the course of the simultaneous search & seizure operations in the case of one company namely M/s. Phoenix Devcons Pvt. Ltd. [in short, PDPL], in which the assessee is one of the directors, certain sale agreements purported to have been executed between the above named company and the sellers of the land in respect of certain pieces of land situated at village Bhaurasla, for a total consideration of Rs. 16,48,38,000/- were found and seized. Based upon such sale agreements and some other jottings, the ld. AO made an addition of Rs. 41,10,00,000/-, on substantive basis, in the hands of the above named company. However, the AO also made a similar addition of Rs. 41,10,00,000/- in the hands of the assessee on protective basis. Against these additions, both the company and the assessee came into appeal before the l....
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..... 16,48,38,000/- which is patently in violation of the provisions of section 251 of the Act.It shall be appreciated that, in view of such fact , the action of the learned CIT(A) cannot be legally approved beyond the enhancement of Rs. 1,33,37,500/- for which he had given a notice under s.251(2) of the Act. In support of our contention, we wish to place reliance on the judicial pronouncement of Hon'ble ITAT Amritsar Bench in the case of Delhi Building Material Corpn. Vs. ACIT (2006) 103 TTJ 0830 (Asr.Trib.). The published catch note is reproduced as under: "Appeal [CIT(A)]-Powers of CIT(A)-Scope on remand vis-a-vis enhancement-CIT(A) had no power of enhancement where the matter was remanded to him on a specific issue of addition of Rs. 1.25 lakhs-Further, enhancement notice having been given for Rs. 13 lakhs and odd, enhancement to the tune of Rs. 20 lakhs and odd was invalid in the absence of further notice under s. 251(2)-Even on merits, at the most, the addition worked out to Rs. 4.24 lakhs on account of excess stock and such addition, which amounted to addition under s. 69 having not been embarked upon by the AO himself, could not have been made by the CIT(A)" The ld....
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.... NO. 6 Facts, in brief, relating to the issue are that during the course of search carried out in the business premises of M/s. Phoenix Devcons Pvt. Ltd. [in short, PDPL], a company in which the assessee is one of the directors, six sale agreements in respect of land admeasuring 11.592 hectares situated at village Bhourasla, Tehsil Sanwer, District Indore for an aggregate consideration of Rs. 16,48,38,000/- were found and seized. During the course of the assessment proceedings, the AO asked M/s. PDPL to explain the source of investment in purchase of the above said land. However, the PDPL denied to have entered into any such agreement and also denied to have made any unaccounted payment against the purchase of the said land. The PDPL submitted that it had not made any investment in the subject land but it was only the assessee who might have made certain investments in his individual capacity. During the course of assessment proceedings in the case of PDPL the AO recorded the statements of the sellers of the land and confronted such statements to the PDPL. The PDPL pointed out various discrepancies in the statements of the sellers. Besides taking note of the sale agreements, the....
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.... in his hand of the aforesaid sum. 16.6 Having taken note of all the facts and submission available on record and also after taking note of the discussion made by the A.O. specifically of the statement recorded of the seller of the Bhaursala Land, as extracted in the assessment order mentioned above, I am of the considered view that the subject land deal has been entered into by the appellant on behalf of the company named M/s PDPL as it is evident from the details mentioned in the Vikray Anubhand Patra. Though it is true that M/s PDPL was incorporated with the registrar of companies as on 24/09/07 whereas the said subject deeds got executed on 03/09/07. Thus, I find substantial force in the appellant's this proposition that the as the company M/s PDPL was not in existence as the same was not incorporated, hence making of such investment by M/s PDPL was incorrect, as held by the A.O. But as I find from the appellant's own submission that the appellant has accepted for doing transaction of the land deal with the farmers as enumerated in LPS-A/9, however the appellant denied of making any such investment as held by A.O. except of making a cash payment of Rs. 1,33,37,500/- fo....
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....09/07. Therefore I am of the considered view that the entire transaction was entered into by the appellant for Bhaursala Land. As a result thereof such documents were found from the possession of the appellant. However I do not agree with the A.O. estimation of investment of Rs. 41.10 crores in the hands of the appellant based on page-91 of Annexure A-1 as extracted in para- 8.10 of the order in absence of any such evidence of entering of such payment. Even the A.O. has not brought on any evidence on record to suggest that payment of Rs. 41.10 crores was either made by M/s PDPL or by the appellant. Even I find that the details extracted on para-8.10 by the A.O. of excel sheet also does not establishes the payment of Rs. 41.10 crores. Thus, I am not in agreement with the A.O. this finding of addition of Rs. 41.10 crores in absence of any cogent evidence for such payment. However having taken note of all the facts available on record and also taking all circumstantial evidence and documents, I am of the considered view that the details noted in LPS-A/9 of the transaction of Rs. 16,48,38,000/- has been entered by the appellant, which is evident from the statement of the sellers, as en....
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....rs [purported to be agreements], as placed at PB Page No. 239 to 262, it shall be observed that : (a) The purported agreements are unsigned by any buyer. (b) The purported agreements are not bearing any date. (c) The purported agreements are unregistered. (d) The purported agreements are incomplete which is evident from clause (3) thereof. (e) They have not been shown to have been entered into by the appellant in his individual capacity. The Hon'ble Delhi High Court in the case of CIT vs. Gian Gupta (2014) 369 ITR 0428 (DelHC) has held that an unsigned MOU which has not been materialized cannot be relied upon. A copy of such decision is placed at Page No. 74 to 78 of Judgment Compilation Book [JCB]. Reliance is also placed on the following judicial pronouncements: i) CIT vs. Kulwant Rai (2007) 291 ITR 36 (Del) [JCB Page No. 41 to 46] ii) M.M. Financiers (P) Ltd. vs. DCIT (2007) 107 TTJ (Chen) 200 [JCB Page No. 47 to 68] iii) ACIT vs. Radheshyam Poddar (1992) 41 ITD (Kol) 449 [JCB Page No. 69 to 73] iv) Addl. CIT vs. Miss Lata Mangeshkar (1974) 97 ITR 696 (Bom.) It is submitte....
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....ssertions of the assessee that the actual and beneficiary owners of the land were above two companies only and the assessee could not be deemed to have made any payment over and above the initial payment of Rs. 1,33,37,500/- towards purchase of the said land. Even from the copies of the bank statements of Shri Ranveer Singh Chhabra and M/s. M.R. Devcons Pvt. Ltd. it may be observed that payments to the sellers have flown out from the bank accounts of these persons only and it was only these two parties only who made payments to Shri Kedar Patel (Khati) and others towards purchase of the subject land. From the copies of the pass-books of the sellers, as placed at page No.460 to 467 of our paper-book, it may also be noted that payment in the bank accounts of the sellers have got credited through the bank accounts of the ultimate buyers of the land i.e. M/s. M.R. Devcons Pvt. Ltd. through its director Shri Ranveer Singh Chhabra. Even the payments to the sellers, as noted by the AO vide para 8.14 of the assessment order, have been made from the bank accounts of Shri Ranveer Singh Chhabra. By producing the bank statements/financial statements/audited records, we could be able to establi....
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.... the table of the excel sheet, it may be observed that such table does not match with the payment details given by the AO himself at para 8.14 of his order. It shall further be appreciated that even in the BS-8 Diary there is no mention of payment of Rs. 41,10,00,000/- and on the contrary, as per the AO's own findings the payments stated in such diary against the subject land were to the extent of Rs. 52,00,000/- only. In nutshell, the excel sheet referred to by the AO does not pertain to the Bhourasla land in respect of which sale agreements were found. In such circumstances, there was absolutely no justification for the AO to estimate the investment in the Bhourasla land at Rs. 41,10,00,000/- by committing a patent error of linking the agreements pertaining to Bhourasla land with the excel sheets pertaining to some other project/land. Even the initial investment of Rs. 1,33,37,500/- was made by the assessee not from his own money but it was made by him only as a mediator on behalf of his various investors by receiving funds either directly from the investors themselves or from various persons as borrowing on behalf of the investors. The details of receipts of such funds ....
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....ands of assessee on substantive basis while in case of Shri Nelesh Ajmera on protective basis. CIT (A) has give the findings in para 16.5 on page 102 and 16.6 on page 104 in which he confirmed addition of Rs. 164838000 relying on the seized documents (agreement to sale) in LPS A/9 in which sale consideration was given and paid by the assessee but remaining amount has been deleted by treating as an estimation and without any corresponding evidences. The addition of Rs. 164838000/- has been sustained in hands of Shri Nelesh Ajmera on substantive basis while deleted in case of assessee company as company was incorporated and came into existence on 24.09.2007 while so called land transactions were executed on 03.09.2007. As far as concerned to the findings of CIT(A) in regard to deletion of addition from Rs. 164838000 to Rs. 41.10 crore are not correct because details of 41.10 crore are given specifically on the seized documents of page 91 and 95 of Ann. A/1 which was found & seized from residence of Shri Nelesh Ajmera at Bombay and also on excel sheet, taken from assessee's computer against which assessee could not submit any satisfactory evidences/explanation and thus, it cannot ....
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.... and Arcadia Devcons P. Ltd. The sale deeds of these two companies have been produced before us. We found that assessee is nowhere connected with these two companies and one Mr. Ranvir Singh Chhabra had made payment to the seller out of his bank account. The assessee has also produced the bank statements of Ranvir Singh Chhabra and department has also accepted for AY 2010-11 that M/s. Arcadia Devcons P. Ltd. has purchased this land. Therefore, we are of the view that though the document is found from the possession of the assessee, we have to read the document as a whole and we are of the view that the addition cannot be made in the hands of the assessee. The addition can be made only in respect of initial investment of Rs. 1,33,37,500/- which was made by the assessee either himself or by his various investors by receiving funds either directly from the investors or from various persons as borrowings from the investors.In view of the above facts, in our opinion, though the document was found from the possession of the assessee, the assessee has not made the entire investment in the Bhaurasala land. We are of the view that the strict rules of evidence are not applicable in income-ta....
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....rse of such assessment, the sources of such company for purchase of the subject land were examined by the AO.If any document is to be relied upon as an evidence then its entire contents have to be read and interpreted in its totality and part reference on pick-andchoose method should not be permitted. From a perusal of the sale agreements, and summary thereof placed on page No.263 of the assessee's paper-book, we find that a sum of Rs. 39,37,500/-, Rs. 3,72,500/-, Rs. 41,02,500/-, Rs. 8,36,250/- and Rs. 40,88,750/- have been stated to have been paid, on 03-09-2007, respectively to Shri Babulal Khati, Shri Malkhan Khati, Shri Badrilal Khati, Smt. Surajbai Khati and Shri Kedar Khati aggregating to a sum of Rs. 1,33,37,500/-. For the remaining consideration, there is mention of payment of schedule for future dates with the narration 'shall be paid'. We find that ld. AO has not given any finding to the effect that any evidence was found as regard to making of the payment to the sellers of the land on the various dates subsequent to the first payment date i.e. 03-09-2007. We find that even from the bank statements of the sellers of the land, as referred to by the AO, at para 8.14 of his....
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....isure & Lifestyle Pvt. Ltd.. We also found that such excel sheet noting is in respect of 110 acres project with some Hotel and Mall whereas at Bhourasla the total area of the subject land, as per the agreements, was found to be of 11.592 hectares i.e. of approximately 29 acres. Further, as per the excel sheet the per acre rate of the land is Rs. 80 lacs whereas in the agreements the rates have been stated to be at Rs. 55 lacs per acre only. Further, from the payment details given in the table of the excel sheet, we found that such table does not match with the payment details given by the AO himself at para 8.14 of his order. We also find force in the contention of the A/R that even in BS- 8 there is no mention of payment of Rs. 41,10,00,000/- and on the contrary, as per the AO's own findings the payments stated in such diary against the subject land were to the extent of Rs. 52,00,000/- only. In nutshell, the excel sheet referred to by the AO does not pertain to the Bhourasla land in respect of which sale agreements were found. Accordingly, in our view, there was absolutely no justification for the AO to estimate the investment in the Bhourasla land at Rs. 41,10,00,000/- by commit....
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....correlated, the addition to that extent, subject to maximum of Rs. 1,33,37,500/- shall be maintained in respect of unexplained investment in land at Bhaurasla. Accordingly, the grounds of appeal of the assessee 1(a) and 1(b) are partly allowed and ground No.6 of the Revenue is dismissed. ASSESSEE'S GROUND NO. 2(a) & 2(b) The facts relating to the above issue are that the assessee is a promoter of a company named and styled as 'M/s. Phoenix Leisure & Lifestyle Pvt. Ltd.' and such company is engaged in project referred with different names such as 'Phoenix Green', 'Phoenix Grande', 'Zenith Tower', etc. The AO further noted that the Phoenix Green Project was located in the village Piplya Kumar, near Bombay Hospital, Indore and it was a residential project spanning the area of over 2 lakh square feet. The AO further noted that from the various loose papers found during the course of search, it was found that the assessee had paid certain amount for acquiring the land at village Piplya Kumar but recorded only a part of expenditure in the books of M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. The AO required the above named company to furnish the details regarding investment made in t....
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....e AO further, on the basis of one loose paper inventorized as page No.182 of LPS-A/23 [PB-316] formed the view that the assessee, besides making payment of Rs. 18,42,50,000/- to Shri Mohan Chugh, had also made a payment of Rs. 2,53,75,000/- to some Mr. Kamal Kumar towards purchase of the land in the said village Piplya Kumar. Accordingly, as per the AO, the assessee had made total investment of Rs. 21,26,75,000/- (sic. Rs. 20,96,25,000/-) in purchase of the land at Piplya Kumar. On a perusal of the subject loose paper i.e. page No.182 of LPS-A/23 [PB-316] it shall be observed that on such loose papers, there is a mention of an amount of Rs. 21,26,75,000/- which comprises cost of purchases from Shri Mohan Chugh and Shri Kamal Kumar respectively at Rs. 18,73,00,000/- and Rs. 2,53,75,000/-. According to the AO, there was no clear-cut demarcation as to in which year the investments have been made and, therefore, the AO assumed that the payments were made equally in two assessment years i.e. in A.Y. 2008-09 and A.Y. 2009-10 and, consequently, addition to the extent of Rs. 10,63,37,500/- was made in the income of the assessee in each of the two assessment years. It is submitted ....
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....ce, the aggregate of payments cannot exceed the aggregate of receipts and if it is so, such receipt & payment account has to be treated as faulty one and accordingly, it cannot be trusted upon. In view of such position, the reliance placed by the learned AO on such a faulty receipt & payment account was patently wrong and consequently, the addition ought to have been deleted by the learned CIT(A) on this ground alone. Reliance is placed on the decision of ACIT vs. Ashok Kumar Vig (2007) 106 TTJ 422 (Ranchi). The fact remained that during the assessment year under consideration i.e. A.Y. 2008-09, the assessee, in the capacity of the promoter and director of a company named and titled as 'M/s. Phoenix Leisure & Lifestyle Pvt. Ltd.' [for the sake of brevity referred to as 'PLLPL'], had entered into one MOU for development of certain pieces of land admeasuring nearly 1.023 hectares situated at village Piplya Kumar near Bombay Hospital, Indore with the owner of such land namely M/s. Shivalika Realities Pvt. Ltd. [for the sake of brevity referred to as 'SRPL']. As per the MOU, certain residential multi-storey building blocks were proposed to be constructed by PLLPL at i....
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....hat under the column 'actual cost' against the names of Shri Mohan Chugh and Shri Kamal Kumar there is a reference of a sum of Rs. 18,73,00,000/- and Rs. 2,53,75,000/- respectively. However, under the column 'paid' there is a reference of a sum of Rs. 13,35,00,000/- and of Rs. 11,00,000/- respectively against the name of Shri Mohan Chugh and Shri Kamal Kumar. Correspondingly, under the column of the 'balance due' a sum of Rs. 5,38,00,000/- and a sum of Rs. 2,42,75,000/- have been shown respectively due to Shri Mohan Chugh and Shri Kamal Kumar. It may be noted that on such loose paper under the column of 'area' there is a mention of 2,04,800 sq. fts. which is the total area of the project under reference. It is submitted that when there are ample of documentary evidences as regard to payment made to Shri Mohan Chugh but except the noting made in above referred excel sheet inventorized as LPS-A/23 page No.182, 184 and 186, as regard to payment of Rs. 11,00,000/- there is no other evidence in respect of any other payment made to Shri Kamal Kumar In all these excel sheets, payments to Shri Kamal Kumar have been shown at Rs. 11,00,000/- only and remaining Rs. 2,42,75,000/- have....
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.... the LPS-A/3 [PB-320] which is in the nature of a Receipt and Payment Account of Phoenix Green project and which has been heavily relied upon by the AO for making the impugned addition. From such Receipt and Payment Account it may be noted that there is a mention of total receipts of Rs. 7,43,70,652/- of the said project which comprises cash receipts from booking of flats at Rs. 5,07,79,220/- and cheque receipts from booking of flats at Rs. 2,35,91,432/-. As against such booking receipts of Rs. 7,43,70,652/-, payments towards indirect expenses and development expenses have been shown respectively at Rs. 38,43,113/- and Rs. 2,17,69,190/- aggregating to Rs. 2,56,12,303/-. Thus, after making the payments, there can remain availability of funds for making any other payment to the extent of Rs. 4,87,58,349/- only but in the said account a sum of Rs. 18,42,50,000/- has been shown to have been paid to Shri Mohanlal Chugh and because of showing of such payment, there is reflecting a negative cash balance i.e. deficiency of Rs. 13,54,91,651/- at the bottom of the said receipt & payment account. Such negative cash balance proves that the receipt and payment account was not correct. ....
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....nd Rs. 1,64,35,000/- have already been made in the hands of M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. respectively for A.Y. 2008-09 and 2009-10. In support of such assertion, we have already filed copy of the assessment order of M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. which is placed at page No.430 to 434 of the paper book. The various documentary evidences furnished by us have not been contravend by the CIT DR. The remaining sum of Rs. 62,41,650/- was paid by the assessee in cash to Shri Mohan Chugh for which, presently, no corroborative evidences are available with the assessee. To sum up, it is submitted that the assessee had paid only a sum of Rs. 11,00,000/- to Shri Kamal Kumar. Further, out of sum of Rs. 18,42,50,000/- shown to have been paid to Shri Mohan Chugh at page No.25 of LPS-A/3, a sum of Rs. 8,00,00,000/- and Rs. 2,62,50,000/- were respectively purported to have been given in the form of plot in Dubai and flats in the projects. For such purported payments in kind, no case of unexplained investment can be made against the assessee. The assessee had paid only a sum of Rs. 7,80,00,000/-, in form of cash/ cheque, out of which a sum of Rs. 2,30,00,000/- was p....
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....uently, addition to the extent of Rs. 10,63,37,500/- was made in the income of the assessee in each of the two assessment years. The addition has been made on the basis of some loose paper, being in the form of some computer printouts taken during the course of the search in the premises of a company named & styled as 'M/s. Phoenix Devcons Pvt. Ltd.Such fact is evident from the findings given by the AO himself at para 15.5.1 at page no. 95 of the assessment order. It is a settled law that presumption as contemplated under s.292C and s.132(4A) is not available in respect of the documents not found in the premises of the assessee but in the premises of someone else. The AO relied on one loose paper inventorized as Page No. 25 of LPS-A/3 [filed at Page No. 320 of the paper book] for making the impugned addition by alleging that the assessee had made payment amounting to Rs. 18,42,50,000/- to Shri Mohan Chugh out of his undisclosed income. Such loose paper is purported to be in the form of receipts and payments. However, on a perusal of such purported receipt & payment statement, it is observed that there is resulting excess of payments over receipts by a sum of Rs. 13,54,91,650/-.....
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....espectively. Thus, a sum of Rs. 5,38,00,000/- and a sum of Rs. 2,42,75,000/- has been shown due to Mohan Chug and Kamal Kumar. In the loose paper, under the column for area, there is mention of 2,04,800 sq.ft. which is total area of project. As regards to payment made to Shri Mohan Chugh, there are ample documentary evidences but except the noting made in above referred excel sheet inventorized as LPS-A/23 page No.182, 184 and 186, as regard to payment of Rs. 11,00,000/- there is no other evidence in respect of any other payment made to Shri Kamal Kumar. In all these excel sheets, payments to Shri Kamal Kumar have been shown at Rs. 11,00,000/- only and remaining Rs. 2,42,75,000/- have been shown as due. It is a settled law that in the assessment there is no scope for any bald estimation and, further, it is also a settled law that any document has to be relied upon in its entirety and, therefore, based upon LPSA/ 23 page No.182, 184 and 186, it has to be inferred that the payments made to Shri Kamal Kumar were not to the extent of Rs. 2,53,75,000/- but these were to the extent of Rs. 11,00,000/- only as noted above. LPS-A/3 page No.21 [PB 317] contains the complete details of the su....
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..../-. Thus, after making the payments, there can remain availability of funds for making any other payment to the extent of Rs. 4,87,58,349/- only but in the said account a sum of Rs. 18,42,50,000/- has been shown to have been paid to Shri Mohanlal Chugh and because of showing of such payment, there is reflecting a negative cash balance i.e. deficiency of Rs. 13,54,91,651/- at the bottom of the said receipt & payment account. Such negative cash balance proves that the receipt and payment account was not correct. From the evidences on record, it transpires that the aforesaid sum of Rs. 18,42,50,000/- was proposed to be given by the assessee to Shri Mohan Chugh in three modes (i) Rs. 8,00,00,000/- in form of plot belonging to Shri Nitish Doshi situated in Dubai; (ii) a sum of Rs. 7,80,00,000/- in form of cash and cheque; and (iii) remaining Rs. 2,62,50,000/- in form of Shri Mohan Chugh's share in the flats of the project which was to be constructed under the ratio deal. Since eventually the deal came to an end, the proposal for giving plot of Shri Nitish Doshi to Shri Mohan Chugh could also not get materialized.Out of the aforesaid payment of Rs. 7,80,00,000/- made to Shri Mohan Chugh/....
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.... to Shri Mohan Chugh at page No.25 of LPS-A/3, a sum of Rs. 8,00,00,000/- and Rs. 2,62,50,000/- were respectively purported to have been given in the form of plot in Dubai and flats in the projects. For such purported payments in kind, no case of unexplained investment can be made against the assessee. The assessee had paid only a sum of Rs. 7,80,00,000/-, in form of cash/ cheque, out of which a sum of Rs. 2,30,00,000/- was paid through explained sources i.e. through cheques of the companies and the remaining Rs. 5,50,00,000/- was paid in form of cash. Again out of Rs. 5,50,00,000/- a sum of Rs. 4,87,58,350/- was made out of the on-money received against booking of flats in the project Phoenix Green for which separate additions have already been made by the AO in the hands of M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. For remaining Rs. 62,41,650/- paid to Shri Mohan Chugh, the assessee has no concrete evidence or explanation. Finally, the assessee could be said to have made unexplained investment to the extent of Rs. 73,41,650/- only [i.e. Rs. 11,00,000 + Rs. 62,41,650] equally in two assessment years and to this extent only, addition is sustained. The remaining addition so made by....
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....he AO that a sum of Rs. 100.00 lakhs was paid through account payee cheques issued by M/s. Money Care Leasing & Finance Pvt. Ltd.. According to the assessee's submission before the AO, the remaining sum was paid either out of the funds received by the assessee from his Mumbai based customers or out of the booking advances of Rs. 5,00,00,000/- received by the assessee on behalf of another company namely M/s. Phoenix Devcons Pvt. Ltd. in which the assessee was one of the directors. However, the AO could not get himself satisfied with the explanation of the assessee regarding the sources of investment in the subject land. Finally, the AO made an addition of Rs. 7,79,73,000/- [total investment Rs. 8,51,58,000 - Rs. 71,85,000 shown in the balance-sheet of M/s. Phoenix Leisure & Life Styles Pvt. Ltd.] in the assessee's hands, on substantive basis, by holding the making of unexplained investment in the subject land and making the similar addition in the hands of M/s. Phoenix Leisure & Lifestyles Pvt. Ltd. on protective basis. Matter carried to CIT(A) and the CIT(A) upheld the action of the ld. AO in determining the payment of on money on purchase of Bhopal land at Rs. 7,79,73,000/-. Ho....
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....oks of account of M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. -do- 16,00,000 Through cash -do- M/s. Money Care Leasing & Finance Pvt. Ltd. 1,00,00,000 Through cheque -do- Funds provided by Shri Nitesh Doshi/Shri Raju Doshi/Shri K. Goyal 1,70,00,000 Through cash Shri Nilesh Ajmera (Appellant) - out of the funds of Rs. 5 4,93,73,000 Through cash 13.6 In my considered view, the explanation as regard the payment through cheque by M/s. Phoenix Leisure & Lifestyles Pvt. Ltd. At Rs. 71,85,000/- is found to be correct, as the appellant's A/R submitted that the same is duly reflected in the audited financial statements of such company, which has also been affirmed by the A.O. in the assessment order. However, the appellant's claims regarding payment of Rs. 16,00,000/- in cash by M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. Cannot be accepted in the absence of any documentary evidence. 13.7 Even the claim regarding receipt of a sum of Rs. 1,00,00,000/- by the appellant from M/s. Money Care Finance & Leasing Pvt. Ltd. Cannot be accepted. I find that neither before the A.O. nor befo....
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....ant's request on this score cannot be accepted. 13.9 However, I find substance in the claim of the appellant as regard to payment of a sum of Rs. 4,93,73,000/- out of the funds of Rs,5,00,00,000/- received by him out of plot advance booking receipts on behalf of M/s. Phoenix Devcons Pvt. Ltd. I find that during the course of the search proceedings, in the case of M/s. Phoenix Devcons Pvt. Ltd., a company in which the appellant is one of the directors, a loose paper inventorized as page No.15 of LPS-A/4 was found and seized. Such loose paper contains the details of various payments made by the above named company. On such loose paper, a sum of Rs. 5,00,00,000/- has been found noted with the narration 'Dubai Hawala'. Based on such nothing, the AO who was also having simultaneous jurisdiction over the case of M/s. Phoenix Devcons Pvt. Ltd., made an addition of Rs. 5,00,00,000/- in the hands of the above named company for A.Y. 2008-09 in the assessment order dated 30.12.2011 passed under s. 153A r.w.s. 143(3) of the Act. The contention of the above named company in the case of its own assessment before the AO was that the above said sum of Rs. 5,00,00,000/- was not made toward....
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.... Cochin vs. P.D. Abraham @ Appachan (2012) 252 CTR (Ker) 407 has laid down the ratio that there must be a complete reliance on any seized material and department cannot discard a part of the entries by relying upon the other part of entries noted on the same seized record. 13.10 Thus, in my considered view, out of total investments of Rs. 8,51,58,000/- determined by the AO in making the payments for purchase of land at Bhopal, the appellant could substantiate the sources to the extent of Rs. 5,65,58,000/- only [i.e. Rs. 71,85,000 + 4,93,73,000]. Accordingly, the remaining investment to the extent of Rs. 2,86,00,000/- is held to be unexplained and addition to the extent of Rs. 2,86,00,000/- out of the total addition of Rs. 7,79,73,000/- made by the AO is confirmed. Thus, the appellant would get relief of Rs. 4,93,73,000/-. In the result these grounds of appeal are partly allowed." The ld. AR has made oral submission as well as written submission as under: "So far as the Revenue's appeal is concerned, it is submitted that the AO having given a finding in the case of the payer of the amount i.e. M/s. Phoenix Devcons Pvt. Ltd., to the effect that such company had p....
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.... Rs. 5,00,00,000/- were very well available with the assessee for making investment in Bhopal land. Thus, there cannot be said to be any infirmity in the CIT(A)'s action in granting set-off of a sum of Rs. 4,93,73,000/- to the assessee against the investment in Bhopal Land. It is submitted that out of remaining sum of Rs. 2,86,00,000/- in respect of which addition has been confirmed by the CIT(A), a sum of Rs. 1,00,00,000/- was directly paid by one company named and titled as M/s. MoneyCare Finance & Leasing Pvt. Ltd. to the sellers of the land. It is submitted that in support of the above assertion, we have already filed a copy of audited financial statements as of 31-03-2008 of the above named company as PB-198. In such balance sheet, two advances of Rs. 87,50,000/- and of Rs. 12,50,000/- have been shown respectively by such company in the name of Shri Irshad Ali Khan and Shri Iqbal Siddiqui. It is submitted that a copy of such financial statements were also filed by the assessee before the CIT(A) but for the technical reason of not filing an application for admission of such additional evidence under Rule 46A of the I.T. Rules, 1962 the learned CIT(A) has not admitted s....
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....tment of the assessee. Out of the total payment of Rs. 2,86,00,000/- in respect of which addition has been confirmed by the learned CIT(A), M/s. MoneyCare Finance & Leasing Pvt. Ltd. had provided a sum of Rs. 1,00,00,000/-, various investors of the assessee had provided a sum of Rs. 1,70,00,000/- as aforesaid and the remaining sum of Rs. 16,00,000/- was paid by assessee's one company namely M/s. Phoenix Leisure & Lifestyle Pvt. Ltd.. It is submitted that the property was eventually got registered in the name of the above company only. It is submitted that the above company in its financial statements as of 31-03-2009 has shown an investment of Rs. 96,74,000/- which comprises of the payment of Rs. 71,85,000/- paid through cheque towards purchase consideration, Rs. 16,00,000/- paid through cash towards purchase consideration and remaining towards stamp duty. In support of such contention, we rely upon the financial statements of the above named company as filed in a separate paper book in respect of appeal No. IT-196/Ind/2013 of such company before this Bench for A.Y. 2009-10." Ld. DR relied on the order of the AO and submitted that issue has been discussed by AO in para-....
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....0,000/- by the assessee from M/s. Phoenix Devcons Pvt. Ltd. and its subsequent utilization towards payment of on-money for purchase of land at Bhopal cannot be brushed aside abruptly. The assessee while rendering the account to M/s. Phoenix Devcons Pvt. Ltd. had shown the purpose of retention of sum of Rs. 5,00,00,000/- for making some investment in properties in Dubai through his one other company namely M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. but due to nonapproval of the necessary government permissions, the same could not be made and eventually such funds were utilized by the assessee for making investment in purchase of land at Bhopal. Even from perusal of assessee's BS-8 diary, it may be found that the assessee had made payment for purchase of land in Bhopal but no single evidence can be found as regard to making of any investment by the assessee in any property in Dubai. In our country any remittance, out of India, other than through banking channel is an offence and it is not the case of the Revenue that any Enforcement Agency has taken any action against the assessee on allegation of any Hawala transaction. Thus, there cannot be two views for the preposition that the fu....
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....00,000/- from Shri N. Doshi and at the backside of the same page, there is a mention of payment of a sum of Rs. 49,87,500/- to Dr. Yadav in Bhopal. Likewise, there is mention of payment of Rs. 50,00,000/- and Rs. 4,00,000/- as per page no. 122 (back) and page no. 124 to Dr. Yadav. The veracity and authenticity of the transactions recorded in such BS-8 have been relied upon by the Revenue for making various additions in the assessee's case and therefore, the assertion of the assessee as regard to receipt of funds from Shri N. Doshi and others gets self established from such BS-8. In view of the above facts and circumstances, we find that the AO has not verified this transaction in light of the transaction recorded in diary BS-8, therefore, on the issue of Rs. 1,70,00,000/-, we restore the matter back to the file of the AO with direction to verify the various notings made in BS-8 diary and other loose papers which suggest receipts of certain funds by the assessee from investors and others. For the remaining sum of Rs. 16,00,000/- paid by the assessee for purchase of Bhopal land through its company, the AO is directed to verify the balance-sheet of the assessee's such co. namely Phoen....
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....source of deposit in respect of Bank of Rajasthan Ltd. 12.5 The perusal of the appellant's submission suggests that the appellant intends to prove the source of deposit from the current year incme as disclosed by the appellant as per 153A return, wherein the appellant has disclosed software consultancy and property consultancy income to the extent of Rs. 25,00,000/- and other income which amounts to total income of Rs. 28,27,160/- as returned income u/s 153a of the Act. Further to that, the appellant intends to explain the source of cash deposit out of cash withdrawal made from the Bank of Rajasthan Ltd. of Rs. 39,75,000/-. Even the appellant make the claim that he was a custodian of some of the investors, which also was the source of cash deposits, though the appellant could not substantiate the identity, capacity, name and credential of such investors at any point of time either in appellate proceedings or in assessment proceedings. Hence appellant's this argument of being custodian of investors is of no relevance and completely unfounded. With this perspective the appellant intend to explain the source of cash deposits in both the aforesaid bank accounts. 12.6 ....
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....the appellant's these grounds of appeal are partly allowed." The ld. AR has made oral submission as well as written submission as under: "In this regard it is submitted that the assessee in his return of income, filed under s. 153A [PB-65], has declared an undisclosed income of Rs. 25,00,000/- from property consultancy/ broking etc. and therefore, eligibility of the assessee to claim credit for availability of such income for making deposit in his bank account cannot be doubted. It is further submitted that there is no justification in the CIT(A)'s finding that for working out the amount of explained cash deposits, credit for withdrawal of cash from the same bank account should be given to the assessee only if the said bank account was found in the regular return filed by the assessee. It is submitted that the learned CIT(A) ought to have considered that when an addition is made in respect of certain cash deposits made in one bank account, then the necessary consideration will also be required to be given in respect of the cash withdrawn from the same bank account irrespective of the fact that whether or not such bank account was duly disclosed by the assessee ....
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....aining 19 pages inventorized as LPS A/4 were seized from the premises of M/s. Phoenix Devcons Pvt. Ltd.. The AO further noted that on page No.19 of the LPS-A/4, there is noting in respect of details of funds received by the above named company. Amongst the details, there is a noting as regard to funds of Rs. 2,25,00,000/- given by the assessee to the company. The AO required the assessee to explain the sources of providing the funds by the assessee to the above named company. According to the AO, the assessee could not furnish the necessary details and, therefore, the AO by assuming the impugned receipts pertains to A.Y. 2008-09 only, made the addition of Rs. 2,25,00,000/- in the assessee's income under the head 'unexplained investment in M/s. Phoenix Devcons Pvt. Ltd.'. Matter carried to CIT(A) and the CIT(A) after considering the submission of the assessee, deleted the addition of Rs. 2,00,00,000/- and confirmed the addition to the extent of Rs. 25,00,000/- by giving his observations at para 14.4 to 14.6 of his order, which reads as under: "14.4 I have considered the AO's order as well as the appellant's A/R submissions. Having considered both, I find that the A.O. no....
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....hni Doshi. Accordingly I consider it proper and appropriate to confirm the addition made by the AO to the extent of Rs. 25,00,000/- on this account itself. Accordingly to this extent the addition is confirmed. 14.6 However, as the appellant could establish the source of sum introduced to the extent of Rs. 2,00,00,000/- in the name of M/s Money care Finance & Leasing Pvt. Ltd. by giving specific PAN No., therefore to this extent the addition so made by the A.O. is deleted. However the A.O. is directed to intimate the detail of said transaction to the Assessing officer of M/s Money care Finance & Leasing Pvt. Ltd. with his specific observation as made in the assessment order in respect of introduction of Rs. 2,00,00,000/- by M/s MCF & L Pvt. Ltd. for necessary action at his end. Thus, the addition to the extent of Rs. 25,00,000/- is confirmed. Accordingly, this ground of appeal is partly allowed." The ld. AR has made oral submission as well as written submission as under: "The very basis of making addition of Rs. 2,25,00,000/- in the assessee's hands by the AO was the loose paper page No.19 of LPS-A/4 found and seized in the premises of M/s. Phoenix Devcons Pvt. ....
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....der s. 69 or 69B of the Act. Consequently, the entire addition deserves to be deleted." Ld. DR relied on the order of the AO. We have heard the rival contentions of both the parties and have perused the material available on record. Looking into facts and circumstances, we find that CIT(A) held that a sum of Rs. 2,25,00,000 has been introduced by the assessee in the co. M/s. Pheonix Devcon P. Ltd as per page 19 of LPS A-4. The CIT(A) has held that LPS A-4 is not a dumb document. The CIT(A) has held that the document was found from the third party but assessee is director of the said company and as per the submission, Rs. 2 crores were received from Money Care Finance Leasing Ltd. and Rs. 25 lacs from Smt. Roshni Doshi. The CIT(A) has treated 2 crores as explained deposit, we find that before the CIT(A), the assessee could be able to explain the genuineness of deposit of Rs. 2 crores made by M/s. Money Care Leasing and Finance P. Ltd. by producing all the necessary documentary evidences. We also find that the CIT(A) has directed the AO to inform the concerned AO in respect of introduction of Rs. 2 crores for necessary action. Therefore, on the issue of Rs. 2 crores, our interf....
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....he above named company. Finally, the AO regarded the entire amount of Rs. 1,00,00,000/- received by the assessee from M/s. Phoenix Devcons Pvt. Ltd. as unaccounted receipts of the assessee for the year under consideration and made the impugned addition. Matter carried to CIT(A) and the CIT(A), after considering the submission of the assessee, confirmed the addition of Rs. 1,00,00,000/- by giving his findings at para 11.4 and 11.5 of his order. The ld. AR has made oral submission as well as written submission as under: "The learned CIT(A) at para 11.4 of his order has admitted the receipt of a sum of Rs. 1,00,00,000/- by the assessee from M/s. Phoenix Devcons Pvt. Ltd. in which the assessee was one of the directors. However, the CIT(A) doubted the nature of receipt in the hands of the assessee by stating that it was not clear whether it was in the form of revenue or capital in nature. The CIT(A) brushed aside the claim of the assessee that there was no withdrawal of sum of Rs. 1,00,00,000/- from the bank account of the assessee from which it could be inferred that the assessee received such sum from his company for making cash payments to the farmers from whom l....
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....crore, the closing debit balance as on 31.3.2008 in the name of the assessee is getting appeared which fully tallied with amount shown under head "directors advance" in the audited balance sheet of Phoenix Devcon P. Ltd. which is on page 195 of the paper book. It is the contention of the assessee that once the assessee received this amount from the company as advnace, it is capital receipt only, therefore, in our opinion, this requires verification at the end of the Assessing Officer. The AO is directed to verify the payment of Rs. 1 crore by the company to the assessee through account payee cheque on HDFC Bank. The Assessing Officer should also verify that whether or not the payment is shown under the head "director advance" in the books of Phoenix Devcon P. Ltd. The AO is directed to verify the claim of the assessee as per law. Accordingly, this issue is allowed for statistical purposes. Finally, appeals of the assessee are partly allowed in terms as indicated above. DEPARTMENTAL GROUND NO. 1 The Revenue has taken this ground of appeal against the action of the ld. CIT(A) in deciding the appeal against the principles of natural justice, without affording any opportunity ....
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....the CBDT is not binding upon the assessee and even otherwise any such instruction is only directive in nature and not mandatory. Although there is no statutory requirement for calling any remand report from the AO, but despite such fact, to the best of knowledge and belief of the assessee, the learned CIT (A) had called for necessary details and reports from the AO but there was no compliance as such by the then AO. It is submitted that in the instant case, the learned CIT (A) has framed the appellate order by taking into full consideration various observations and findings of the assessing officer, seized material, written submissions and various documentary evidences furnished by the assessee. It is submitted that the learned CIT (A) has not admitted any additional evidence in violation of Rule 46A of the Income-Tax Rules, 1962. Moreover, to issue a direction to the assessing officer for conducting any further inquiry or for submitting any further report, under the provisions of sub-section (4) of s. 250 is discretionary and not mandatory. It is submitted that any order validly passed by the first appellate authority after giving full thoughtful consideration to....
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....ts established that the assessee had borrowed huge amount of money on hundi from these persons. Accordingly, the AO required the assessee to explain the notings found in various seized documents. The assessee submitted that the various notings referred by the AO relate to the borrowings made by one of his Mumbai based investors from Mr. Sushil Golecha, Mr. Manish Kedia, etc.. It was further submitted by the assessee before the AO that the borrowings were not made on any 'Hundi' but such borrowings were only made on promissory notes. The assessee strongly agitated the applicability of the provisions of s.69D in his case for the very reason that there was no borrowing on any 'Hundi'. However, the AO was of the view that the assessee neither furnished the specific reply on various notings made regarding the hundies on different seized documents nor furnished the details of so called Mumbai based investors. According to the AO, in the present case, the amounts borrowed by the assessee were also getting hit by section 68 of the I.T. Act, 1961 as the assessee failed to offer any explanation with regard to the various credits appearing in his records. According to the AO, the expression '....
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....submission of the appellant extracted as above and also after taking note of judicial pronouncements cited by the appellant's A/R extracted as above, I am of the considered view that for making addition u/s 69D, it is imperative that the A.O. must establish that the appellant has borrowed such loan on 'Hundi'. Merely giving note of the word 'Hundi' as detailed in para-160 to 165 in LPS-A/23 and also in few occasions in BS-8 diary will not establish that the appellant has borrowed/ repaid the funds of Hundi, as contemplated u/s 69D of the IT Act. Even having taken note of CBDT circular No.208 dated 15/11/76 & CBDT circular No.221 dated 06/06/1997 explaining the provisions of section 69D of the Act, I find that the availability of evidence of borrowing on 'Hundi' is imperative for invoking provisions of section 69D, and the same should be in vernacular language. In common commercial parlance, it denotes an indigenous instrument in vernacular language which can be used by the holder thereof to collect money due thereon without using the medium of currency. It may also be regarded as an indigenous form of a bill of exchange expressed in vernacular language which has been in use in the ....
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....Since the facts of the case are similar to that facts as in A.Y.-07-08, I am of the considered view that the A.O. was not justified in making the aforesaid addition to the income of the appellant. 8.3 Thus, following the rule of consistency, I consider it proper and appropriate to hold that the A.O. was not justified and correct in his action. Thus, the addition so made by A.O. is deleted, as in this ground of appeal raised by the appellant, the issue is the same as also the similar facts have been noted by A.O., hence this ground of appeal is allowed. 9.4 I have considered the A.O.'s order as well as the appellant's submission. Having considered the factual position of the case, I find that the similar issue i.e. the borrowing on Hundi has been decided by me in favour of the appellant vide my order No.CIT(A)- IT-920/11-12 dated 28/03/2013 for A.Y.-07-08. Since the facts of the case in the appellant's case are similar to the facts as in A.Y.- 07-08, I am of the considered view that the A.O. was not justified in making the aforesaid addition to the income of the appellant. 9.5 Thus, following the rule of consistency, I consider it proper and appropriate to....
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....ddition, it may be found that such details are not given in vernacular language but these are in English Language. Further these documents are in the form of excel sheets in which the details such as the name of the lender, start date, amount, duration, renew date, interest, dalali and signatory of the documents etc. have been given. The fact remained that the assessee that he had not borrowed any loan on hundi but the entire borrowings were made by him, on behalf of others, through the instrument of Promissory Notes only. Merely because there is an erroneous mentioning with the title 'Hundi details of Manish Kedia', on Page No. 163 of LPS-A/23, would not per se change the very nature and character of the instrument of borrowing on 'Promissory Note' to 'Hundi'. It is submitted that there is a clear cut distinction between the term 'Hundi' and 'Promissory Note'. The term 'Promissory Note' has been defined under section 4 of the Negotiable Instruments Act, 1881 as under: A "promissory note" is an instrument in writing (not being a banknote or a currency-note) containing an unconditional undertaking, signed by the maker....
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....lar language which has been in use in the mercantile community in India for the purpose of collecting dues. In the same Circular, the CBDT has also given some characteristics of the Hundis. As per these characteristics, in any Hundi transaction, there is always three parties viz. a drawer, a drawee and a payee. The CBDT in its subsequent Circular No.221 dated 6th June, 1977, has reiterated that a hundi in common parlance denotes an indigenous form of bill of exchange, by and large in vernacular language, which is being used by the mercantile community in India. From both the Circulars, it becomes apparent and evident that the most important ingredient of any instrument for it to be regarded as a 'Hundi' is that it should be written in vernacular language only. In the instant case, neither the provisions of s. 69D nor the provisions of s.68 are applicable in respect of the notings found made in BS-8 diary and other loose papers. Consequently, no addition could have been made by the AO by invoking provisions of s. 69D / 68. Accordingly, the action of the CIT(A) on this count deserves to be upheld." Ld. DR relied on the order of the AO. We have heard the rival c....
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....ere noted down, cannot be regarded as books of account as contemplated under the provisions of s. 2(12A) of the I.T. Act. In absence of any books of account the provisions of s. 68 cannot be invoked as finding of credit entries in the books of account of an assessee is a sine-qua-non for invoking the provisions of s. 68 of the Act. For such proposition, we place reliance upon the decision of the Hon'ble Madras High Court in the case of CIT vs. Taj Borewells (2007) 291 ITR 232 (Mad.). In the similar circumstances the Coordinate Mumbai Bench in the case of ACIT vs. Om Prakash & Co., (2004) 87 TTJ 183 (Mum.) has held that a diary is not a books of account and, therefore, on the basis of jottings made in a diary, the provisions of s. 68 cannot be invoked. The relevant abstract of the Mumbai Bench's decision is given as under:- "63. Now, the next issue is whether the Mehul note book can be considered as a book of account maintained by the assessee. In the case of Central Bureau of Investigation vs. V.C. Shukla & Ors. (1998) 3 SCC 410, the apex Court has laid down that 'Book' ordinarily means a collection of sheets of paper or other material blank, written or printed, fa....
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....appeal read as under: 1(a). That, the learned CIT(A) grossly erred, both on facts and in law, in confirming addition of Rs. 15,26,500/-, made by the learned AO, in the appellant's income on account of alleged unexplained cash deposit in the Citibank Account No. 5896702547 made by the appellant on extraneous considerations without accepting the explanation of the appellant that he was having sufficient cash balance, from explained sources, before making subject cash deposits in his bank account. (b) That, without prejudice to the above, as an alternative ground, the learned CIT(A) grossly erred in confirming the addition of Rs. 15,26,500/- in the appellant's income, on account of alleged unexplained bank deposits, without giving any setoff to the appellant in respect of availability of funds in his hands, as a custodian of money, which were borrowed by others on Promissory Notes and remained with the appellant. Departmental's Appeal No.: 249/Ind/2013 A.Y. 2007-08 Grounds of appeal read as under: 1. On the facts and circumstances of the case the ld. CIT(A) erred in deciding the appeal against the principles of natural justice, without affording an....
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..... CIT(A) confirmed the addition of Rs. 15,26,500/-. The ld.AR has made oral submission as well as written submission as under: "In the Assessment Order, the AO himself has given a finding that the assessee had made borrowings on behalf of various persons as per the notings made in BS-8 and, therefore, these borrowings were very well available to the assessee for making cash deposits in his bank account. However, despite such fact, the learned CIT(A) had not given any relief to the assessee. It is, therefore, earnestly prayed that in the instant case, in order to meet the ends of justice, the issue may kindly be restored back to the file of AO with a specific direction to verify the claim of the assessee by making a reference of the BS-8 diary and other documents seized during the course of search and to the extent of direct nexus of funds received by the assessee from others with the cash deposits in bank account be granted to the assessee." Ld. DR relied on the order of the AO. We have heard the rival contentions of both the parties and have perused the material available on record. Looking to the facts and circumstances of the case, we find that the assessee has....
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....for such assessment year will also be applicable in the present appeal. Thus, by following the same, the departmental appeal is dismissed on this issue. Assessee's Appeal No.: 184/Ind/2013 A.Y. 2009-10 Grounds of appeal read as under: 1(a). That, the learned CIT(A) grossly erred, both on facts and in law, in confirming addition of Rs. 10,63,37,500/-, made by the learned AO, in the appellant's income, by invoking provisions of section 69C of the Income-Tax Act, 1961, on account of alleged unexplained expenditure in the Land for 'Phoenix Green Project', a project undertaken by 'M/s. Phoenix Leisure and Lifestyle Pvt. Ltd.', merely on guesswork, surmises and conjectures, without properly appreciating and accepting the explanation of the appellant. (b) That, without prejudice to the above, as an alternative ground, the learned Assessing Officer grossly erred in making the impugned addition of Rs. 10,63,37,500/- in the appellant's income, without giving any set-off to the appellant in respect of availability of funds in his hands, as a custodian of money, which were either borrowed by others on Promissory Notes and remained with the appellant ....
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....documents seized clearly mentioned of the Hundi dealings and the assessee failed to prove before the AO otherwise with evidences. 2.1 While holding so the ld. CIT(A) failed to appreciate that the transactions in hundies were confirmed in the statements of not only Sh. Nilesh Ajmera, the assessee, but his employee Sh. Pankaj Joshi also and Sh. Nilesh Ajmera admitted and even disclosed income of Rs. 1.45 crore as being received from one Sh. Manish Kedia, Hundi Provider, as his undisclosed income in A.Y. 2010-11. 2.2 While holding so the ld. CIT(A) failed to consider that various loose papers found during the course of search had details of hundi transactions of Pukhraj Soni, Sushil Golecha, Neetish Doshi, Sandeep Bhai, Raju Doshi it had narration of entries like name, start date, amount, duration, first renew date, end date, interest, dalali etc. which established the borrowing and repayment on hundies being made in cash as pointed out by the AO in the assessment order. 2.3 While holding so the ld. CIT(A) further erred in holding that the seized dairies cannot be treated as books of accounts whereas in view of the transactions recorded therein being unexpla....
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....ai observing that the AO could not adduce any evidence other than the papers seized because the assessee himself contended that he was a non-resident having business connections in foreign countries. Therefore, the involvement of the assessee in purchase and sale of properties in foreign countries cannot be ruled out particularly when such papers were found and seized from the assessee's company during search. 5.1 On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition of Rs. 2,09,66,099/- made by the AO under the head income from real estate trading in Dubai by observing that the AO could not adduce any evidence other than the papers seized which the assessee claimed to be dump documents whereas the assessee could not explain as to why and how such 'dump' documents were prepared and kept and its purpose. 6. It is, therefore, prayed that the order of the CIT(A) may be set aside and the order of the AO may please be restored. ASSESSEE'S GROUND NO. 1(a) & 1(b) This ground of appeal is similar to that of Ground Nos. 2(a) & 2(b) taken by the assessee in his appeal for A.Y. 2008-09 (Appeal No. IT(SS)A-183/Ind/2013), theref....
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....nt could not substantiate the identity, capacity, name and credential of such investors at any point of time either in appellate proceedings or in assessment proceedings. Hence appellant's this argument of being custodian of investors is of no relevance and completely unfounded. With this perspective the appellant intend to explain the source of cash deposits in the aforesaid bank account. 10.6 Having perused the appellant's explanation and also after taking note of return of income filed by the appellant u/s 153A of the Act, which is appearing on page-30 to 32 of the paper book, I am of the considered view that the appellant has disclosed income from different heads as stated on page-31 to 32 of the paper book of Rs. 32,13,459/- on which the appellant has made payment of tax. Though I find that the said return of the appellant was filed subsequent to search operation and i.e. on 26/11/07, thus, in my considered view after payment of tax the appellant has left with merely of Rs. 19,00,000/- in his hand approximately. After taking note of certain payments by the appellant towards house hold expenses and other financial commitments the possibility of availability of cash sho....
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....ee had withdrawn a sum aggregating to Rs. 92,20,000/- from the same bank on four occasions i.e. Rs. 8,00,000/- on 23-04-2008; Rs. 24,00,000/- on 24-4-2008; Rs. 60,00,000/- on 25-06- 2008 and Rs. 20,000/- on 20-02-2009. It is not the case of the revenue that the cash so withdrawn was utilized by the assessee for making some other investments or was expended. In these circumstances, it is submitted that by applying the peak theory of availability of cash, no addition was warran1ted. The learned CIT(A) has misconstrued the fact on the issue of availability of cash to the assessee out of total income of Rs. 32,13,459/- declared in the return by holding that out of such income the assessee had paid tax amounting to Rs. 19,00,000/-. However, the fact remained that the assessee had filed the return of income after the search and the entire tax was also paid by him after the search and, therefore, the question of utilization of cash towards payment of taxes does not arise with the result that the entire income, disclosed by the assessee in his return, after meeting reasonable household expenses was available to the assessee for making deposits in bank accounts. There is a....
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....by the assessee prior to search through filing of return of income. We are of the view that the CIT(A) has no powers to remand the matter but now, we after considering the facts and circumstances of the case, restore the matter to the file of the Assessing Officer with a specific direction that the full credit should be given to the assessee in respect of cash withdrawals made by him, from time to time, from his saving bank accounts in which cash deposits were found made by the Assessing Officer, as the Revenue Authorities could not establish that cash withdrawn by the assessee was utilized by the assessee for some other purposes and it was not available with him for making subject cash deposits. As regards availability of cash out of income of Rs. 30,00,000/- shown by the assessee in his return of income, for the assessment year under appeal, we find substance in the arguments of ld. Counsel of the assessee that tax on such income was paid by the assessee in subsequent years and not during the relevant year. Considering the fact that the assessee might have spent a sum of Rs. 5,00,000/- towards his household expenses, credit for remaining Rs. 25 lacs also deserves to be given to t....
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....pertains to Dubai Hawala by the assessee and others. On the basis of such loose papers, the AO required the assessee to explain the nature and sources of investment in real estates at Dubai but the assessee denied to have made any investment in any real estate at Dubai and also described the loose papers, referred to by the AO, as dumb documents only. The AO in body of the order, after discussing the details of a project titled as 'The World' at Dubai and after discussing the details of various overseas companies finally held that the assessee along with Shri Ritesh Ajmera and some Shri Chitresh Mehta have made substantial investment in the project 'The World' at Dubai. Thereafter, the AO by holding unexplained investment in Dubai project by Shri Ritesh Ajmera and the assessee respectively at Rs. 15,40,00,000/- and Rs. 5,60,50,000/- made an addition of Rs. 5,60,50,000/- in the assessee's income for the assessment year under consideration under the head 'Dubai Hawala'. The relevant findings of the Assessing Officer are recorded at Para 7.1 to 7.7 at page No.22 to 35 of the assessment order. The ld. CIT(A), after considering the submission of the assessee, deleted the addition of ....
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....elopers Ltd., no addition by alleging unexplained investment in the same property can be made in the hands of the appellant. In the instant case, as per the AO's own findings, the ostensible owners of the property at Dubai are only M/s. Neel 1 Ltd. and M/s. C S Developers Ltd. therefore, unless and until it is established that the appellant was the real owner of the property and the above entities were only benamidars of the appellant, in my considered view, no unexplained investment in the said property can be presumed to have been made by the appellant. For this proposition, my view also gets support from the pronouncement of Hon'ble High Court of Kerala in the case of CIT vs. K. Mahim Udma (2000) 242 ITR 133 (Ker.). 12.6 Further I find substance in the submission of appellant's A/R that the only basis taken by the AO for making the impugned addition is certain loose papers/ computer printouts which were not recovered from the possession or control of the appellant but the same were recovered only from a company namely M/s. Phoenix Devcons Pvt. Ltd., in which the appellant was merely one of the directors. The AO could not bring any evidence on record that the loose....
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.... (SC), has held that while making an assessment, there must something more than bare suspicion to support the assessment. The Apex Court, again in the case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) held that where any fact finding authority acts without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as the relevant law could have found, the Court is entitled to interfere. 12.9 I also find substance in the contention of the appellant's A/R that the loose papers inventorised as page No.75 to 78 of LPS-33 (Xerox copies whereof have been given by the AO himself at page no.29 to 32 of the impugned order), which are basically in the nature of computerized excel sheet printouts only, no significant details have been given by A.O. in the assessment order. I further find that in one of the above said loose papers there is any reference of any date/ month or year. Therefore, it cannot be perceived from such loose papers that to which period such loose papers pertain. 12.10 Further from a perusal of such computerized sheets, the vital d....
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....s raised in the absence of satisfactory explanation from the assessee. As there are deeming provisions the condition precedent for invoking such provisions are required to be strictly construed. The facts and circumstances giving rise to the presumption have to e established with reasonable certainty. The AO cannot first make certain conjectures and surmises and thereafter apply the deeming provisions based on such conjectures and surmises. In the absence of adequate material as to the nature and ownership of the transaction, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totaling various figures jotted down on the loose documents. In other words for the purpose of resorting to deeming provisions, dumb documents or documents with no certainty have no evidentiary value........ " 12.12 The Hon'ble ITAT, Patna in the case of ACIT vs. Dr. Kamla Prasad Singh (2010) 3 ITR (Trib) 533 (Pat) has also held that no additions can be sustained in the following words: "Having considered the rival submissions, the provisions relating to assessment for the block period under Chapter XIV-B of the Act and the assessee's case including th....
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.... the four components as described above. If it is not so, then document is only a dumb document. No charge can be levied on the basis of a dumb document." 12.14 The Hon'ble High Court of Gujarat in the case of Ushakant N. Patel vs. CIT 92006) 282 ITR 553 (Guj.) has pronounced that before invoking the provisions of s.69 of the Act, it is incumbent upon the authority to establish that there were investments made by the assessee; that such investments were not recorded in the books of accounts maintained by the assessee and that such investments had been made in the financial year immediately preceding the assessment year in question and without satisfying the pre-requisite conditions of s. 69 of the Act, AO cannot make any addition by invoking the provisions of s.132(4A) of the Act. 12.15 I also find substance in the appellant's A/R's contention that the various loose papers of LPS-33, as discussed by the AO at paras 7.4.1 to para 7.4.5 have no live link or nexus with the key page i.e. page No.76 of LPS-33 at which there is a mentikon with the narration - "Nilesh Ajmera - Rs. 5,55,00,000 and 55,000; 50,00,000 and 50,000 DHS - Cash". I find that on such page the tota....
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....h, the A/R of the appellant could not produce any documentary evidence in support of making of any reference by the Department to Enforcement Director or FEMA Authorities nor in support of his such assertion in respect of outcome of such enquiry. Further, even I find that the AO has not brought on record any adverse finding either of Enforcement Director or of the Foreign Taxation Division of CBDT in respect of the alleged 'hawala' transactions. 12.18 Taking note of all the factual position of the case, in my considered view, the impugned addition made by the AO on account of Dubai Hawala at Rs. 5,60,50,000/- is devoid of any merit. Accordingly, the addition so made by the A.O. is deleted. In the result, appellant's appeal is allowed. However, I would like to mention very categorically that if in future, the Enforcement Directorate or FEM Authorities or any other authorities regulating the remittance of money from India gives any conclusive finding as regard to making of the impugned hawala transaction by the appellant, then the A.O. would be free to take necessary action in accordance with the provision of law." The ld. AR has made oral submission as well as written su....
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.... funds to/from countries outside India do not come to a conclusion that any person has made/received any remittance to/from abroad, merely on the basis of guess work and surmises it would not be appropriate to charge any person for such offence and consequently, even under the provisions of the Income-Tax Act, 1961, no adverse view deserves to be drawn. Accordingly, it is humbly submitted that the order of the CIT(A) on this ground deserves to be maintained and consequently the ground No.4 and 4.1 of the Revenue deserves to be dismissed in limine. Ld. DR relied on the order of the AO. We have heard the rival contentions of both the parties and have perused the material available on record. We find that during the course of search, a loose paper inventorised as page no.75, 76 and 77 of LPS-33 which is placed on paper book as pages 131 to 133 was seized. The ld. CIT(A) has held that these documents are dumb documents. These documents do not contain any date or period. These documents also do not contain details that whether these are of nature of receipt or payment. The AO has not made any inquiry after loose paper found. The AO has held that some companies like, M/s. Neel I Lt....
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....d to some UAE based concern of the assessee and in turn, these were sold to other customers by Shri Nilesh Ajmera. The AO further from some loose papers of LPS-33 noted that certain sales and purchase transactions have taken place between overseas companies as per agreements entered into on 29th July, 2007. As per these agreements, the construction of the flats was supposed to be completed by July, 2008 by a company named as M/s. Wealth Care Investments Ltd. The AO also noted that the assessee was holding 100% shares in the various overseas concerns. The AO also noted that the assessee and his wife had completely denied having any property in Dubia and on the basis of such denial, the AO formed the belief that the flats in the building were sold to some other concerns. The AO presumed that the assessee must have sold the apartments in above building during the relevant previous year for AED 70,30,045 and thereafter estimating the margin of 20% of the purchase value i.e. at AED 14,06,009 made an addition of Rs. 1,54,66,099/- in the assessee's income on account of sale of flats in the above said building. The AO further found that certain flats in the above building were sold to some....
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....all be observed that the AO, in his order, has mentioned carrying out property transactions by some non-resident overseas companies but even if such finding is taken to be correct, the income from such transactions cannot be added to the income of the assessee. It shall be appreciated that during the course of the hearing, the learned DRs could not make reference of any loose paper or document or any other material on the basis of which the addition made by the AO could be said to be justified. Merely because at some point of time the assessee was non-resident, it cannot be presumed, without having any material on record, that during the previous year under consideration too the assessee carried out property transactions abroad. It may be observed that the assessee has shown carrying out property transactions in India and has shown the income from such transactions in his return of income filed post-search. In nutshell, the presumption of the AO as regard carrying out property transactions by the assessee abroad and deriving of income from such transaction, without any single documentary evidence, is baseless and as such, it was rightly deleted by the CIT(A). Accordingly, the....
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.... appeal read as under: 1. On the facts and circumstances of the case the ld. CIT(A) erred in deciding the appeal against the principles of natural justice, without affording any opportunity to the AO or remanding it back in violation of the departmental instruction that in search assessments appeal order be passed either based on remand report or after hearing the AO. 2. On the facts and the circumstances of the case, the ld. CIT(A) erred in holding that addition u/s. 69D was not justified because AO has not established that the appellant has borrowed such loans on Hundi and no Hundi, either live or discharged, was found and seized from the business premises of the group and deleted the addition of Rs. 1,45,00,000/- Rs. 4,00,000/- and 1,00,00,000/- whereas, documents seized clearly mentioned of the Hundi dealings and the assessee failed to prove before the AO otherwise with evidences. 2.1 While holding so the ld. CIT(A) failed to appreciate that the transactions in hundies were confirmed in the statements of not only Shri Nilesh Ajmera, the assessee, but his employee Sh. Pankaj Joshi also and Sh. Nilesh Ajmera admitted and even disclosed income of R....
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....consideration of this property at Rs. 1000 lacs on the basis of multi fold rise in guideline value of the property. Accordingly, the AO determined the profit on sale of subject land at Rs. 1,48,42,000/- [Rs. 10,00,00,000 (-) Rs. 8,51,58,000] and out of this estimated profit, after giving credit for profit of Rs. 13,76,000/- shown by the aforesaid company in its return of income, made an addition of Rs. 1,34,66,000/- [Rs. 1,48,42,000 (-) Rs. 13,76,000] in the assessee's income on substantive basis, with a corresponding addition on protective basis in the hands of M/s. Phoenix Leisure & Lifestyle Pvt. Ltd.. The relevant findings of the Assessing Officer are recorded at Para 7.1 to Para 7.14 from Page No. 6 to 48 of the assessment order. The ld. CIT(A), after considering the submission of the assessee, confirmed the addition of Rs. 1,34,66,000/-. The ld. AR has made oral submission as well as written submission as under: "The subject property at Bhopal was owned not by the assessee but by a company named and titled as M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. It shall be appreciated that during the course of entire search not a single document or any other evidence was....
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....given any basis for determining the sale price at Rs. 110.50 lacs only. In view of the same, as the assessee has actively participated and made the payment of sale consideration of Rs. 851.58 lacs in the purchase of Bhopal Land. In view of the same and also on the basis of reasons assigned by A.O. given in para-7.13.1 to 7.14 of the order for such estimation for determining the profit out of sale of Bhopal Land is correct and justified. Accordingly the addition so made by A.O. is held to be justified and correct. Accordingly the addition so made by the A.O. is confirmed. The appeal of the assessee on this issue is dismissed. However, we are in agreement with the contention of the ld. AR of the assessee that if action of the lower authorities in making the addition is confirmed, the assessee be given credit for availability of cash through receipt of onmoney on sale of land for explaining his other investments/payments. ASSESSEE'S GROUND NO. 2 This ground of appeal pertains to the addition of Rs. 50,00,000/- made in the hands of the assessee on account of unexplained payment allegedly made by the assessee to Shri Chirag Shah. The brief facts relating to the ground are....
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....td. in the very same year. In other words, the appellant was not in anyway connected with the subject transaction. Without prejudice to the above, it is submitted, presuming but not admitting, that the appellant made the alleged payment of Rs. 50,00,000/- to Shri Chirag Shah, even then in such a situation it is submitted that during the relevant previous year the appellant has earned an income of Rs. 1,45,15,000/- which includes an additional income of Rs. 1,45,00,000/- and, therefore, even if for the sake of argument it is presumed that the appellant made the alleged investment, the same being out of the additional income of Rs. 1,45,00,000/-, no further addition on this count was warranted. It is submitted that during the course of assessment proceedings, the appellant had claimed utilization of the income earned during the relevant previous year at Rs. 42,21,257/- only, i.e. Rs. 2,96,000 for making cash deposits in bank, Rs. 5,50,000 cash kept in bank locker and Rs. 33,75,257 unexplained investment in jewellery. It shall be appreciated by Your Honours that even the learned AO has not found utilization of the income of Rs. 1,45,15,000/-, as shown by the appellant in his ....