TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 1503
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.... 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(A) grossly erred, both on facts and in law, in confirming addition ....
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.... 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, in confirming addition to the extent of Rs. 25,00,000/-, made by the learned AO, in the appellant's income, on....
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....ed 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 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 inco....
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.... 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 holding that the identity, capacity and genuineness of the transaction stand proved without appreciating the fact that the AO exhausted all the channels before making the addition. 5.1 While holding so the ld. CIT(A) erred in a....
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....de 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 ld. CIT(A). The ld. CIT(A) while adjudicating the appeal in the case of the company, found that on the purported date of execution of the sale agreements, the company had not come into existence and therefore, he directed to delete such addition in the hands of th....
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....tice 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. IT DR submitted that that the statement of amount of enhancement in the show-cause notice under s. 251 was merely a typographical error on the part of the CIT(A) and merely for such an error, the enhancement, which is otherwise, in accordance with law, cannot be deleted. The ld. C....
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....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 AO also took note of certain loose papers inventorised as part of Annexure A-1, seized from the residential premises of the assessee. Based upon the jottings on the loose papers seized from the premises of the assessee, the AO arrived at a conclusion that the total amount of investmen....
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....oned 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/- for Bhaursala land deal. The appellant also claimed that said payment of Rs. 1,33,37,500/- was made out of on-money earned by the appellant. However in view of detailed discussion made by A.O. specifically of facts noted from para-8.2 to 8.10 of the order, wherein the statements of the sellers were n....
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.... 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 enumerated and extracted by A.O. in para-8.4 to 8.10 of the order. In view of the same, I consider it proper and appropriate to confirm the addition of Rs. 16,48,38,000/- in the hands of the appellant on substantive basis, as the details of such payment and documents were seized from the possession o....
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.... (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 submitted that 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-and-choose 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, it would be observed by Your Honours that as per these agreements only a sum of Rs. 39,37,500/-, Rs. 3,72,500/-, ....
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....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 establish the genuineness and existence of both the companies. It is submitted that even in the case of M/s. Arcadia Devcons Pvt. Ltd. assessment u/s 148/143(3) was framed for A.Y. 2010-11 by ITO-3(1) and during the course of such assessment, the sources of such company for purchase of the subject land were examined by the AO. The fact remained that the assessee had initially made the agreements for purchase of subject lands by paying an ....
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....t 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 are evident from the BS-8 diary which was found and seized from the assessee's premises. It is further submitted that at various places like at para 12.5 of the assessment order, the AO himself has given clear finding that the assessee had borrowed funds from Shri Manish Kedia, Shri Sushil Golecha, Shri Rohit Sethi, etc. Therefore, once the borrowing of the funds by the assessee is admitted by the revenue itself, its availability for making investment ....
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....on 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 be said that the amount of 41.10 crore was taken by AO on estimated basis. Moreover contents of those seized documents have also been correlated with main seized document of LPS A/9 and thus, it is clearly proved that actual payment was made of Rs. 41.10 crore and therefore, findings of CIT (A) to that extend is not justified and same may kindly be set aside." We have heard rival contentions of both the parties. This is the search case wherein as per the AO....
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....ew 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-tax proceedings and we hold that assessee had entered into agreement with six agreements for purchase of 11.592 hectares land situated at village Bhourasala with Shri Kedar Patel and others for a total consideration of Rs. 16,48,38,000/-. We also find from the copies of the agreements filed by the assessee at page nos. 239 to 262 of the paper book that these agreements were entered into by the assessee on 03.9.2007 and we also find that the co. M/s. PDPL, on who....
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..../-, 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 order, no finding as regard to making of payment by the assessee to the sellers of the land was noted by the AO. After having paid the advance of Rs. 1,33,37,500/-, as noted in the sale agreements, the assessee could not make any further payment to the sellers of the land with the result that the sellers had ultimately sold the land to some third parties. In our considered view, it is not in dispute that the assessee did not own the subject land at any point o....
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....ment 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 committing a patent error of linking the agreements pertaining to Bhourasla land with the excel sheets pertaining to some other project/land. We accordingly find that the assessee had made payments aggregating to a sum of Rs. 1,33,37,500/- only, during the previous year under consideration, for the purchase of the land at Bhourasla. Accordingly, the same is liable for addition u/s 69/69B of the Income-Tax Act. Assessee has taken a plea that even such investment of R....
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.... 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 the purchase of the land and sources of the investment in such land. In reply, the above named company submitted before the AO that since the Phoenix Green Project was being carried out under a ratio deal agreement and, therefore, it was not required to make any purchases of the land. Subsequently, the AO issued a summons under s. 131 to the assessee. The assessee, while making the statement before the AO, also stated the same facts i.e. Phoenix Green Project was on....
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..... 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 that in the instant case, the impugned addition so made is a result of bald estimation and guess work of the learned AO inasmuch the learned AO himself, without being sure about the actual previous year of the alleged transactions, divided the total addition of Rs. 21,26,75,000/-, equally, in two assessment years viz. A.Y. 2008-09 and A.Y. 2009-10. It is submitted that the very first and foremost condition for invoking the provisions of section 69/69B of the Act are that assessee mus....
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....t 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 its own cost on the land owned by SRPL. In consideration, the SRPL was to receive 35% share in the constructed property and PLLPL was to receive 65% share in the constructed property. The PLLPL started constructing the residential buildings on the said land and also started booking of the flats. From booking of the flats, the assessee received some on-money which has been separately added by the AO in the assessment of M/s. Phoenix Leisure & Lifestyle Pvt. Ltd.. The receipt of on-money, in the individual capacity, was admitted by t....
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..... 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 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 LPS-A/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. It is submitted that LPS-A/3 page No.21 [PB 317] contains the complete details of the subject deal and as also ....
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....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. In fact, the aforesaid sum of Rs. 18,42,50,000/- was proposed to be given by the assessee 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. It is submitted that since eventually the deal came to an end, the proposal for giving plot of Shri Nitish Doshi to Shri Mohan Chugh could also not ge....
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....sessee. 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 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 onmoney 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. However, for remaining Rs. 62,41,650/- paid to Shri Mohan Chugh, the assessee has no concrete evidence or explanation. Thus, in nutshell, at the worst the assessee could be said to have made....
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....ments 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/-. However, the sources of meeting such deficiencies have not been mentioned on such statement. In any receipt & payment account, without having any opening cash balance, 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. 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 refer....
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....ents 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 subject deal and as also the mode, manner and amount paid by the assessee towards the subject deal. As per such loose paper, the ratio of Shri Mohan Chugh, director of SRPL was 25% and that of the assessee and his company was to the extent of 75%. As per the loose paper, in consideration of assessee getting 75% share in the constructed property, the assessee was required to pay a sum of Rs. 12.28 crores to Shri Mohan Chugh. Besides receiving Rs. 12.28 crores, Shri Mohan Chugh was also to receive 25% share in the constructed property. Again, towards payment of total consideration of Rs. 1....
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....,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/his company SRPL, through cash/ cheque, the assessee had paid a sum of Rs. 1,00,00,000/- through two cheques of Rs. 50,00,000/- each dated 25-07-2007 and 06-08-2007. The assessee had further made a payment of Rs. 1,30,00,000/- through the account payee cheques issued by his one other company namely, Phoenix Devcons Pvt. Ltd.. The assessee had paid the remaining sum of Rs. 5,50,00,000/- in the form of cash, which in its turn had emanated mainly from the collection of on-money from booking of flats in the project for which a separate addition has already been made in the hands of M/s. Ph....
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....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 the AO and confirmed by the CIT(A) is deleted. ASSESSEE'S GROUND NO. 3(a) & 3(b) AND DEPARTMENTAL GROUND No.4 The brief facts relating to the above grounds are that during the course of the search operation, certain loose papers and documents were seized from the premises of M/s. Phoenix Devcons Pvt. Ltd., 434, Orbit Mall, A.B. Road, Indore, in which the assessee is one of the directors. Amongst the loose papers seized, as per LPS-A/9, certain Vikray Anubandh Patra [Agreements to sell] as well as registered sale deeds for certain land admeasuring 14.94 acres at village Kurana and ....
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.... 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/-. However, out of such payment of on money, the CIT(A) has allowed set-off of a sum of Rs. 4,93,73,000/- out of the funds of Rs. 5,00,00,000/- received and retained by the assessee on behalf of a company named as 'M/s. Phoenix Devcons Pvt. Ltd.' in which the assessee was one of the directors. Accordingly, the CIT(A) restricted the addition in respect of payment towards Bhopal land from Rs. 7,79,73,000/- to Rs. 2,86,00,000/-. The relevant portion from the order of the ld. CIT(A) is reproduced hereunder: "13.4 I have considered the A.O.'s order as well as the appellant's submission and also ....
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....ly 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 before me, the appellant could establish the receipt of such sum by any cogent documentary evidence. The appellant could not even furnish the necessary letter of confirmation issued by the above named company in support of his claim. The appellant has merely furnished a copy of audited financial statements of the above named company by which also it does not get established that the above named company made any payment of Rs,1,00,00,000/- for purchase of the said land as claimed by the appellant. Even the appellant had not furnished a copy of such financial statements before the A.O. The appellant has filed the said financial statement before me however the same has been furni....
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....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 towards any Dubai Hawala but the same was retained by Shri Nilesh Ajmera, out of the plot booking advances received by him on behalf of the company. It was further contended by the above named company that Mr. Nilesh Ajmera, through his company namely M/s. Phoenix Leisure & Lifestyle Pvt. Ltd., was intended to make certain investment in real estate in Dubai, but due to non-receipt of necessary approvals and permissions from RBI and other Government agencies for making the investment in Dubai, Shri Nilesh Ajmera retained the said sum and no such investment in Dubai could actually take place. I find that against the addition of Rs,5,00,00,000/-, M/s. Phoenix Devcons Pvt. Ltd. In the appeal pr....
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....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 paid a sum of Rs. 5,00,00,000/- to the assessee, there stands no reason as to why the availability of such funds in the hands of the payee i.e. the assessee should not be accepted. It is submitted that in the case of M/s. Phoenix Devcons Pvt. Ltd., the AO as well as the CIT(A), both, have given a finding that such company had paid a sum of Rs. 5,00,00,000/- to the assessee out of their unaccounted receipts. The AO in the case of M/s. Phoenix Devcons Pvt. Ltd. has added such payment as undisclosed income in the hands of such company while making their assessment under s. 153A of the Act. The CIT(A) has also confirmed the action of the AO with the modification that the addition in the hands of M/s. P....
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....d 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 such financial statements. It is submitted that our such claim has not been rebutted by the learned DRs during the course of hearing and therefore, the claim of the assessee as regard sources of payment to the extent of Rs. 1,00,00,000/-, having been made by M/s. MoneyCare Finance & Leasing Pvt. Ltd., deserves to be allowed. The remaining sum of Rs. 1,70,00,000/- was paid by the assessee to the sellers of the Bhopal land, from time to time, by procuring funds from Shri Nitish Doshi and others. It is submitted that since the funds were given by the investors and the same were not result of any undisclosed income of the assessee, it could not be regarded as unexplained investment of the assessee under t....
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..../- 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-7 from page 20 to 24 in the assessment order of PDPL for assessment year 2008-09 where the entry of Rs. 5 crore for Dubai Hawala was found mentioned on page 15 of LPS A/4 seized from the premise of the assessee. Assessee admitted that said amount was retained by Shri Nilesh Ajmera, director of the company, out of the on-money received by the assessee company and that was not a Hawala to Dubai, but no supporting evidences were given and thus, addition was made. CIT (A) has, while adjudicating the appeal in the case of PDPL for assessment year 2008-09, given the findings in para 10.4 on page 69 of his order and addition is confirmed subject to directions to AO to give necessary set off to the company against the recei....
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....see 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 funds of 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. In respect of addition of Rs. 2,86,00,000/-, it is the contention of the assessee that a sum of Rs. 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. In support of the above assertion, assessee has 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/-....
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....iary 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 Phoenix Leisure & Life Style and decide the issue afresh. In the result, the departmental ground no.4 is dismissed and ground no. 3(a) and 3(b) of the assessee are allowed for statistical purposes. ASSESSEE'S GROUND NO. 4(a), 4(b) & 4(c) AND DEPARTMENTAL GROUND Nos.3 to 3.3 The brief facts relating to the ground are that during the course of the assessment proceedings, from the bank statements of the assessee, the AO noted that the assessee had deposited cash amounting to Rs. 94,18,510/- and Rs. 6,40,000/- on different dates in bank accounts with the Bank of Rajasthan Ltd. and Citi Bank Ltd. respectively. The AO noted that the assessee had claimed to have made cash withdrawals from the bank from time to time or out o....
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.... 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 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-63 to 65 of the paper book, I am of the considered view that the appellant has disclosed income from different heads as stated on page-65 of the paper book of Rs. 28,27,160/- 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. as on 26/11/07, thus, in my considered view after payment of tax the appellant has left with merely twenty lacs rupees in his hand approximately. After taking note of certain payments by the appellant towards house hold expenses and other financial commitments th....
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.... 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 in his return filed prior to search. It is submitted that for determining any undisclosed income of an assessee on the basis of certain documents the entire document has to be considered in its entirety and, accordingly, if the department wish to place reliance on one side of transactions i.e. of cash deposits in bank account it cannot close its eyes on the other side of the transactions i.e. of cash withdrawals. It is submitted that credit for cash withdrawals from a bank account deserves to be given to one assessee for explaining the sources of cash deposits in the same bank account unless and until it is brought on record by the revenue that the cash withdrawn was not available with the assessee for making re-deposits, which is not a case here. In v....
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....ns 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. noticed that a sum of Rs. 2,25,00,000/- has been introduced by the appellant in the company M/s Phoenix Devcon Pvt. Ltd., as per page No.19 of LPS-A/4. However, I am not in agreement with appellant's A/R this proposition that page No.19 of LPS-A/4 is a dumb document. The said document was seized from the premises of appellant's main group company M/s Phoenix Devcons Pvt. Ltd. therefore the appellant's A/R this argument that the said document was seized from third party premises is of no consequence and also having no relevance on the issue. As the appellant is a one of the director of the said company and the appellant's own submission suggests that the aforesaid sum of Rs. 2,25,00,000/- was brought by the appellant in the company M/s Phoenix Devcons Pvt. Ltd. The a....
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....t 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. Ltd. [a copy of such loose paper has been appended by the learned AO in the Assessment Order of the above named company for A.Y. 2008-09]. In such loose paper, there has been mention of funds of Rs. 6,00,00,000/- invested by various promoters of the company which, inter alia, includes investment of funds of Rs. 2,25,00,000/- by the assessee. Before both the authorities below, the assessee has taken the plea that such loose paper page No.19 contains both cash and cheque transactions of M/s. Phoenix Devcons Pvt. Ltd. and the transactions of Rs. 6,00,00,000/- as found stated in the said loose paper were taken place through cheques only. It was contended before the AO that such funds were managed by the assessee and other directors from their various associates, friends and relatives. A....
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....e 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 interference is not required. In respect of Rs. 25 lacs, the assessee did not produce any evidence but assessee has taken the contention that in respect of this Rs. 25 lacs, CIT(A) has already made enhancement in the hands of M/s. Phoenix Devcon P. Ltd., therefore, addition cannot be made in the hands of the assessee. We reverse the finding of the CIT(A) and restore this issue to the file of the AO to verity whether Rs. 25 lacs given by Smt. Roshni Doshi to Phoenix Devcon P. Ltd. has been assessed or satisfactorily explained in the hands of the company i.e. Phoenix Devcon P. Ltd. The AO is directed to verify accordingly. If the source of deposit of Rs. 25 lacs is not explained by the PDPL, the addition has to be made in the hands of PDPL only. Accordingly, the grounds of the assessee are allowed and th....
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....ee 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 land for the project of the company was purchased. The CIT(A) has also given a finding that the assessee and his group was indulged in large scale unaccounted transactions. Undisputedly, the impugned sum of Rs. 1,00,00,000/- was received by the assessee from his company through account payee cheque drawn on HDFC Bank. Such finding has also been given by the CIT(A) at para 11.4 of his order. It is submitted that such payment has been shown by the above named company as a loan to the assessee which is evident from the copy of the account of the assessee in the books of the company as placed at page No.212 of the paper book. It is submitted that as per such ledger account, after debiting the account of the assessee with the aforesaid payment of Rs. 1,00,00,000/-, closing debit balance as on 31-03- 2008 in the na....
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....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 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. The ld. AR has made oral submission as well as written submission as under: "At the outset, it is submitted that the necessary provisions prescribing for procedure of an appeal before the Commissioner (Appeals) are contained in section 250 of the Income-Tax Act, 1961. As per the provisions of sub-section (1) of s. 250, the Commissioner (Appeals) is required to give a notice of the appeal to the assessee and as also to the concerning assessing officer. It is submitted that no form has been statutorily prescribed either under the Income-Tax Act, 1961 or Income- Tax Rules, 1962 for issuance of the notice contemplated under s. 250. However, u....
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....ssue 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 the AO's order and materials which were also on record of the AO, cannot be leveled as an order against the principles of natural justice for the only reason that the provisions of s. 250 (4) were not invoked by the CIT (A). In view of the above facts and considering the direct judgment of this Hon'ble Bench in the case of M/s. Kalani Industries (supra), the first ground of appeal of the revenue deserves to be dismissed in limine." The ld. DR contended that in the instant case, the Assessing Officer was not given opportunity of hearing by CIT(A). We have heard the rival contentions of both the parties and have perused the material available on record. We find that in the instant case, the notice was issued to the concerned AO. The AO did not remain present before ld. CIT(A) during assessment proceedings. The CIT(A)has called for the remand report and AO h....
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....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 'books' under s.2(12A) should be given a wider meaning and, therefore, any loose paper, calculation sheets, computer print-outs, reports, magnetic device or computers should also be regarded as 'Books'. Having held the loose papers, diaries and computer print-outs as 'books', the AO held that any unexplained credit entry made in such books was liable for addition under s.68 of the Act. Accordingly, the AO made the addition under s.69D alternatively under s.68 of the Act in respect of the cash loans amounting to Rs. 92,24,410/-, Rs. 47,00,000/- Rs. 12,50,000/- and Rs. 35,25,000/- taken by the assessee in his income. The relevant findings of the Assessing Officer are recorded at Para 7.1 to Para 7.7 from Page No.7 to 9; Para 12.1 to Para 12.6 from Page No. 68 to 76; Para 13.1 to Para 13.6 from Page No. 77 to 86; Para 14.1 to Para 14.6 from Page No. 86 to 91 of the assessment o....
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....t 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 mercantile community in India for the purpose of collecting dues. Having taken note of the CBDT Circular and various judicial pronouncements describing the characteristics of Hundies, I find that there is no borrowing on Hundi by the appellant. I also find substance in the appellant's A/R submission that no Hundi, either alive or discharged, was found or seized from any business premises of the appellant or its group concern. In this perspective of the appellant's case and also after taking note of the decision of Madras High Court in the case of CIT vs. Paranjothi Salt co. (1995) 211 ITR 141 (Mad.) & the decision of S.K.S. Rajamani Nadar vs. CIT (1995) 216 ITR 696 (Mad) and other judicial pronouncements cited by the appellant's A/R specially Delhi High Court decision reported in 170 taxman 5, I am of the considered view that the addition made by the A.O. even alternatively u/s 69D of t....
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....t'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 hold that the A.O. was not justified and correct in his action. Thus, the addition so made by the A.O. is deleted, as in this ground of appeal raised by the appellant, the issue is the same and also the similar facts have been noted by A.O., hence this ground of appeal is allowed. 10.4 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. 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 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. 10.5 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 ac....
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.... 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, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument." However, the term 'Hundi' has neither been defined under the Negotiable Instruments Act, 1881 nor under the Income-Tax At, 1961 but, in the common parlance, the term 'Hundi' is regarded as a Bill of Exchange, as defined under section 5 of the Negotiable Instruments Act, 1881. The term 'Bill of Exchange' is defined under section 5 of the Negotiable Instruments Act, 1881 as under: "5. A "bill of Exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument." On a comparison of the Expressions "Promissory Note" and "Bills of Exchange", as given under the Negotiable Instruments Act, 1881, one can find that while there is a similarity in both the ins....
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....ade 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 contentions of both the parties and have perused the material available on record. We find that in the instant case, the AO has made addition on the basis of one diary BS-8, certain excel sheets in which details of borrowings by assessee from various persons with Hundi details have been given. During the course of entire search proceedings, not a single hundi was found, therefore, in our opinion, the issue in controversy is covered by the decision of Hon'ble High Court of Madras in the case of CIT vs. Paranjothi Salt Co. (1995) 211 ITR 141 (Mad.) wherein it was held that for the purpose of invoking the provisions of s. 69D there must be an existence of Hundi and unless and until one document fulfills the characteristics of a Hundi, no addition u/s 69D can be made in the assessee's income. The Hon'ble High Court of Andhra Pradesh in the case of CIT vs. Dexan Pharmaceuticals (P) Ltd. (1995) 214 ITR 576 (AP) has held that there are always three parties to Hundi transactions and if a transactio....
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....ion 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, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'Book' for they can be easily detached and replaced. In the present case, the Mehul note book as we have concluded above has not been maintained by the assessee for keeping the accounts of its business. As stated above, this book pertains to Mr. Paras Ram Rohira, therefore, the same has been written by him for keeping his accounts. In this note book only two pages are written, which can also be easily removed. This is a rough note book, the pages of, which can also be easily removed. Therefore, it cannot be considered as a book as the sheets of this note book can be easily detached and replaced. Even if it is considered as a book of account no addition can be made on the basis of the amounts mentioned in this note book as we have discussed above in detail. Thus, the provisions of s. 68 of the Act are not applicable to this case." Further, the ITAT, Mumbai Bench in the case of Bi....
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....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. 5,00,000/- 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 Shri Pankaj Joshi also and Shri Nilesh Ajmera admitted and even disclosed income of Rs. 1.45 crore as being received from one Shri Manish Kedia, Hundi Provider....
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....rused the material available on record. Looking to the facts and circumstances of the case, we find that the assessee has received cash from various investors who were willing to make investment in the certain property around the Indore through assessee. We find that the assessee has also received Rs. 5 lacs from Shri Manish Kediya. The assessee has not given any evidence before the AO and ld. CIT(A) for establishing the nexus of cash deposits of Rs. 5,00,000/- with City Bank out of funds received from Shri Manish Kediya. The assessee is directed to give the evidence before the AO and AO is directed to verify the claim of Rs. 5,00,000/- with reference to BS-8 diary and documents seized during course of search. Rest of the addition (Rs. 15,26,500 - Rs. 5,00,000) i.e. Rs. 10,26,500/- is confirmed. Accordingly, ground is partly allowed for statistical purposes. 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 to the AO or remanding it back in violation of the departmental instruction that in search assessments appeal order be....
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....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. 2(a). That, the learned CIT(A), while adjudicating the grounds relating to the alleged unexplained cash deposits in the bank account of the appellant, grossly erred, both on facts and in law, in issuing the direction to the AO to verify that whether or not the subject bank account was 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 account 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 account 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 account out of....
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....f the transactions recorded therein being unexplained the said material/dairies fell in the inclusive definition of books of accounts as defined u/s. 2(12A) of the I.T. Act. 3. On the facts and the circumstances of the case the ld. CIT(A) has erred in directing the AO to verify the source of cash deposits of Rs. 86,30,000/- added by the AO as unexplained cash credits u/s 68 of the I.T. Act in the bank accounts of the assessee. 3.1 While directing the verification of the cash deposits to be carried out by the AO the ld. CIT(A) travelled beyond his power of confirming, reducing, enhancing or annulling the addition. 3.2 While holding so the ld. CIT(A) grossly erred in accepting the additional arguments taken by the assessee before him by giving a direction to verify the said deposits out of the withdrawals made from the different bank accounts maintained by the assessee as said was not the plea of the assessee before the AO. 3.3 While holding so the ld. CIT(A) wrongly directed to the AO to consider the amounting of Rs. 92,20,000/- 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 sour....
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....r finding given in the abovesaid appeal will also be applicable in the present case. Thus, by following the same, the assessee's appeal on this issue is partly allowed. ASSESSEE'S GROUND NO. 2(a), 2(b) & 2(c) AND DEPARTMENTAL GROUND NO. 3 to 3.3 These grounds of appeal pertain to the additions of Rs. 86,30,000/- made in the hands of the assessee on account of cash deposits in The Bank of Rajasthan Ltd.. The relevant findings of the Assessing Officer are recorded at Para 9.1 to Para 9.4 from Page No.42 to 43 of the assessment order. The brief facts relating to the grounds are that during the course of the assessment proceedings, from the bank statements of the assessee, the AO noted that the assessee had deposited cash amounting to Rs. 86,30,000/- on different dates in bank account with the Bank of Rajasthan Ltd.. Before the AO, the assessee explained that cash deposits in bank were made by the assessee out of the brokerage and software consultancy income shown in the return as well as out of the cash withdrawn from the same bank account. However, the AO rejecting the explanation of the assessee held the entire cash deposits as unexplained and made the addition of Rs. 86,30,....
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....e A.O. taking note of the appellant's disclosure of additional income. Further, as far as the source of cash withdrawals from Bank of Rajasthan Ltd. is concerned, I consider it proper and appropriate to direct the A.O. to verify the nature of deposits in the said bank account before withdrawal through which the appellant intend to explain the source of cash deposits in the same bank account. The A.O. is directed to verify the credit entry in the said bank account and also to take note of fact that whether the said bank account was disclosed by the appellant prior to search through filing return of income. If the appellant could explain the source of deposit in the said bank account in relation to the appellant's returned income or business income then only the source of cash withdrawal as claimed by the appellant of Rs. 92,20,000/- can be taken into account as explained source for explaining the cash deposit in the bank account of appellant maintained with Bank of Rajasthan Ltd. In this perspective, if the appellant could adduce the source of deposit in the said bank account in relation to his return of income or source of income then the A.O. should treat the said deposit as expla....
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.... that credit for withdrawal of cash from the same bank account should be given to the assessee only if the said bank account was disclosed in the regular return filed by the assessee. It is submitted that when an addition is made in respect of cash deposit made in one bank account, then the necessary consideration will 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 disclosed by the assessee in his return filed prior to search. It is submitted that for determining any undisclosed income of an assessee on the basis of certain documents the entire document has to be considered in its entirety and, accordingly, if the department wish to place reliance on one side of transactions i.e. of cash deposits in bank account it cannot close its eyes on the other side of the transactions i.e. of cash withdrawals. Thus, credit for cash withdrawals from the same bank account deserves to be given to one assessee for explaining the sources of cash deposits in the same bank account unless and until it is brought on record by the revenue that the cash withdrawn was not available with the assessee fo....
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....osits. Thus, the Assessing Officer is directed to verify the claim of the assessee as regard to cash withdrawals from the same bank accounts and after verification, credit for such cash withdrawals along with Rs. 25 lacs be granted to the assessee. We adjudicate accordingly. . 17. 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 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. It was submitted before us by both sides that this ground of appeal is similar to that of Ground No. 1 taken by the Department in its appeal for A.Y. 2008-09 (Appeal No. IT(SS)A-250/Ind/2013), therefore, our finding given in such appeal will also be applicable in the present case. Thus, by following the same, the departmental appeal on this issue is dismissed. DEPARTMENTAL GROUND Nos.2 to 2.3 It was submitted before us that this ground of appeal is similar to that of Ground Nos. 2 to 2.5 taken by the Departme....
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....o 12.18 of his Order. Findings are reproduced hereunder: "12.4 I have considered the AO's order as well as the appellant's A/R submission and also various documents placed on record. Considering all the factual position of the case, I am of the considered view that the impugned addition has been made by the AO without having any cogent material or corroborative evidence on record. Therefore, I find no substance in the impugned addition being devoid of any merit. 12.5 In addition to this, I also find that the observations and findings of the AO in the impugned order are in radical contradiction to each other. I find that at the para 7.3, the AO has given the finding that some persons like Shri Nilesh Ajmera, Smt. Sonali Ajmera, Shri Ritesh Ajmera and others belonging to Satellite Group have invested in 'The World Project' by acquiring an island i.e. 'D 49'. However, at the conclusion part of para 7.4.5(v), the AO has stated as 'The purchaser of the island D 49 are M/s Neel 1 Ltd. and M/s C.S. Developers Ltd.'. The AO again at para 7.4.5(vi), stated that 'Therefore, from the above it is evident that the purchaser of the island 'D49' were M/s Neel 1 Limited and M/s C S Developer....
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....were prepared under the instruction of the appellant. In such circumstances, in my considered view, the provisions of section 292C giving presumption as regard to the trueness of such documents would have no application. 12.7 I find that the provisions of s.292C have been inserted in the statute by the Finance Act, 2007 w.r.e.f. 1.10.1975 to empower the Income Tax Authorities to make certain presumptions on books of account, other documents, money, bullion, jewellery or other valuable article or thing found in the possession or control of any person in the course of a search under s.132 even for the purpose of assessment. Such provision has been inserted in the background of decision of Hon'ble Apex Court in the case of P.R. Metrani vs. CIT (2006) 287 ITR 209 (SC) in which the Apex Court held that the presumption under s.132(4A) is not available for the assessment proceedings. The phraseology used in sub-ection (1) of section 292C is para-materia with that of section 132(4A). I find that many judicial authorities in the context of provisions of section 132(4A) have clearly laid down the ratio that the presumption under s.132(4A) is available only against the person from whose po....
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....a in computer for making such sheets, the name of the person or the entity for which such data's were fed in the computer are also not discernible. Further, it is not clear that whether such data's pertain to the receipt of money or payment of money. It is a settled law that no addition can be made on the basis of any non-speaking document. The Hon'ble High Court of Delhi, in the case of CIT vs. Girish Chaudhary (2008) 296 ITR 619 (Del) held that before an addition of undisclosed can be made, the AO has to bring on record the material found as a result of search to show that there is an undisclosed income. My view also gets support from various decisions i.e. ACIT vs. Ashok Kumar Vig (2007) 106 TTJ (Ranchi) 422, M.M. Financiers (P) Ltd. Vs. DCIT (2007) 107 TTJ (Chennai) 200, Dimsy Foods & Chemicals (P) Ltd. vs. DCIT (2007) 110 TTJ (Del) 450, ACIT vs. Ravi Agricultural Industries (2009) 121 TTJ (Agra) TM 903, Mahaan Foods Ltd. vs. DCIT (2009) 27 DTR (Del) (Trib) 185, Nagarjuna Construction Co. Ltd. vs. DCIT (2012) 52 SOT 178 (Hyd.), ACIT vs. Satyapal Wassan (2008) 5 DTR (Jab) (Trib) 202, Gyankumar Agarwal (Ind.) vs. ACIT (2012) 146 TTJ (Hyd.) 334, Jagdamba Rice Mills vs. ACIT (2000)....
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....settled that undisclosed income for the purpose of block assessment has to be computed solely on the basis of seized material and any enquiry made by the AO thereafter relatable to such material; meaning thereby neither any enquiry report nor any document procured either before or after the search can be considered while computing the undisclosed income. Similarly, it is also settled law that any document found and seized during the course of search has to be interpreted literally and nothing can be added or substracted. If facts of the assessee's case before us are evaluated in the light of the aforesaid settled principles of law, it will be revealed that the documents found and seized and relied upon for making the addition under appeal by the Revenue have neither date nor the name of the assessee and therefore, it cannot be assumed or presumed as to when and by whom the notings were recorded. It is also not known as to in what connection the notings even if considered as giving and taking - of money were made; meaning thereby that these documents being dumb documents, no addition can be made on the basis of assuming or presuming the notings in those documents relating to a....
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.... In my considered view, the AO could not establish that the subject loose paper, i.e. page No.76 of LPS-33, pertains only to the project "The World" as referred to by the AO at various parts of the order. In my considered view, the AO has made the impugned addition merely on assumption/hypothesis only. In such circumstances, relying upon the decision of the Hon'ble Apex Court in the case of Omar Salay Mohamed Sait vs. CIT (1959) 37 ITR 151 (SC), I do not find justification in the action of the A.O. of making such addition. 12.16 Further, in my considered view, if the appellant had made any investment in Dubai, as alleged by the AO then at least some documents such as money receipts, purchase agreement, title deed etc. could have been found from any of the premises of the appellant or his associates. However, neither during the course of search nor during the course of assessement proceedings, even the existence of such papers has been brought on record. Further, from the findings given by the AO himself in the impugned order, I find that the company M/s. Neel 1 Ltd. or Neel Holdings Ltd., in which according to the AO the appellant or his associates were having vested interest, a....
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....DRs could not controvert any of the findings of the CIT(A). On a perusal of the loose papers inventorized as page No. 75, 76 & 77 of LPS-33, as placed at page No.131 to 133 of the paper book, [copies whereof have also been made part of the assessment order], it may be observed that such loose papers are basically dumb documents. These documents do not contain any date or period. These documents also not contain the details that whether these are in the nature of receipts or payments. It may also be observed that no corroborative evidence for the entries made in these loose papers have been brought on record by the AO. It is submitted that the reliance by the AO on some internet information is misplaced as it has no direct nexus with the loose papers found during the course of search. On the other hand, it may be observed that the AO has given contradictory findings in his order inasmuch at some places the AO has alleged that the assessee has made investment in certain properties in Dubai and at some other places the AO has stated that some companies like M/s. Neel 1 Ltd. and M/s. C.S. Developers have made investment in such properties. Thus, the findings of the AO are not ger....
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....ubai property or in M/s. Neel 1 Ltd. or CS Developers who have allegedly made investment in the property. The ld. CIT(A) has further held that if alleged Dubai hawala is made by the assessee, no action has been taken by the other govt. agencies as Enforcement Director, Fema Authorities. The ld. CIT(A) has also given the direction to the AO that if the E.D. or Fema Authorities or any authorities regulating the remittance of money from India gives any conclusive finding as regard making of hawala transaction by the assessee then the AO would be free to take action against the assessee in accordance with the provisions of law. We find that when ld. CIT(A) has given the specific direction and the Department is not bringing any evidence that assessee has made any investment in the property, no addition can be made on the basis of simple documents found from the possession of the assessee. We are of the view that ld. CIT(A) is justified in his action for giving the direction and deleing the addition of Rs. 5,60,50,000/-. We are also in agreement with the direction of the ld. CIT(A), which reads as under: "However, I would like to mention very categorically that if in future, the Enfor....
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....also estimated an income of Rs. 55,00,000/- of the assessee on this deal. Finally, the AO made total addition of Rs. 2,09,66,099/- in the assessee's income from real estate trading in Dubai. The relevant findings of the Assessing Officer are recorded at Para 8.1 to Para 8.10 from Page No. 35 to 40 of the assessment order. The ld. CIT(A), after considering the submission of the assessee, deleted the addition of Rs. 2,09,66,099/- by giving his findings at para 13.4 of his Order. Findings are reproduced hereunder: "13.4 I have considered the AO's order as well as the appellant's A/R submission and also various documents placed on record. Considering the factual position of the case, I find no merit in the AO's action in making the impugned addition in the appellant's income. In my considered view, when the AO himself has given a finding that the sales and purchase transactions were taken between some overseas concerns which are not resident in India, how any gain from such transactions can be attributable or leveled as income of the appellant especially in a circumstance when the transaction involves transfer of immovable properties situated out of India without any nexus with an....
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....n record. We find from the ld. CIT(A)'s order that AO has held that sales and purchases transactions were taken between some overseas concerns which are not residents of India. We find from the assessment order and documents seized at loose papers LPS-33 which shows that some flats in Dubai have been sold by the Wealthcare Investment Ltd. Similarly, on page 137, 138, 139, 140 & 141 and 142, the Wealthcare Investment has sold apartment nos.603, 503, 803, 404, 402, 605, 401. The AO has not brought any evidence to show that assessee is connected with Wealthcare Investment Ltd. The assessee, during the course of search, has categorically denied that he and his wife has any business connection in Dubai. The AO has not made any inquiry that assessee had any interest in Wealthcare Investment Ltd. Therefore, we are of the view that no addition can be made without bringing the evidence on record. Moreover, the assessee is assessed to tax in India and he has not shown any income from outside India. Therefore, we are of the view that unless and until, the Department brings the concrete evidence that assessee has any interest in Wealthcare Investment Ltd., no addition can be made in the ....
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....s of hundi transactions of Manish Kedia, Sushil Golecha & Pawan Chhabra 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 unexplained the said material/dairies fell in the inclusive definition of books of accounts as defined u/s. 2(12A) of the I.T. Act. 3. 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 This ground of appeal pertain to the addition of Rs. 1,34,66,000/- made in the hands of the assessee on ad-hoc basis, on account of alleged profit on sale of Bhopal Land. The brief facts relating to the ground, as noted by the AO in the impugned order, are that during the course of search proceedings, certain 'vikray anubandh patra' were seized from the premises of M/s. Phoenix Devcons Pvt. Ltd. and from suc....
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....nd conjectures without having any single evidence or material on record. Without prejudice to the above, since it was M/s. Phoenix Leisure & Lifestyle Pvt. Ltd., who was the real and registered owner of the subject property, any gain or profit on the transfer of such property is liable to be assessed in the hands of the above named company only and in any case, no addition can be made in the hands of the assessee." Ld. DR has 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. Considering the facts and circumstances of the appellant's case, we find that the purchase price of the said land has been correctly taken by the AO at Rs. 851.58 lacs based upon various sales agreements seized during the course of search as well as on the basis of post-search enquiry. We find that the subject land was recorded by M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. only at a value of Rs. 87.50 lacs and since on sale of such land the company has shown profit of Rs. 13.76 lacs only, it can be inferred that the sale deed in respect of the sale of said land was executed by showing sales consideration of Rs. 101.26....
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.... assessee to Shri Chirag Shah against the project 'Satellite City'. Such project, according to the AO is being developed by M/s. Satellite City Homes Pvt. Ltd. in which Shri Chirag Shah is a 50% shareholder. The AO asked the assessee to furnish explanation in respect of the subject payments but the AO noted that in absence of any explanation from the assessee in this regard, the subject payments aggregating to Rs. 50,00,000/- have to be regarded as unexplained. Accordingly, the AO made the impugned addition. The relevant findings of the Assessing Officer are recorded at Para 9.1 from Page No. 50 to 51 of the assessment order. Matter carried to ld. CIT(A) and the ld. CIT(A), after considering the submission of the assessee, confirmed the addition of Rs. 50,00,000/-. The ld. AR has made oral submission as well as written submission as under: "It is submitted that the AO has made the impugned addition or Rs. 50,00,000/- on the allegation of payment of such `sum by the appellant to Shri Chirag Shah against some partnership in a Satellite City project. Now it is submitted that in the instant case the AO has not invoked the provisions of section 69/69A/69C and in absence of invoc....
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....,257] which was very much available with the appellant for making any investment including the alleged investment of Rs. 50,00,000/-. It shall be appreciated by Your Honours that under the scheme of the law both sides i.e. income and utilization thereof cannot be assessed to tax." Ld. DR has 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 the A.O. has given detailed reasons for making addition in para-9 of the order, wherein he has taken note of LPS-50 which was containing page-1 to 58. As the details enumerated by A.O. clearly evident that payment of Rs. 50,00,000/- was made by assessee, which was duly vouched as detailed by A.O. in the order, hence by no circumstances such duly acknowledged vouchers can be held to be wrong. In view of the same, we consider it proper and appropriate to hold that the addition made by AO of Rs. 50,00,000/- is completely justified and correct. Accordingly the addition so made by A.O. is confirmed. However, we are in agreement with the direction of the ld. CIT(A) that the assessee has already offered additional income of Rs. 1,45,00,000/- a....