TaxTMI 
TaxTMI 
2020 (10) TMI 187
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.... the revenue in the cases of various connected assesses and the remaining fifteen appeals are filed by three different but connected assesses for various Assessment years as noted above and these are directed against separate respective orders of CIT (A) - 2 Panaji. 2. Oral arguments were raised by both sides on issue basis and therefore, we will decide these appeals on issue basis and for this purpose, we will first take note of the issues involved in these Fifteen (Seven by Shree M. N. Rajendra Kumar for A. Ys. 2011 - 12 to 2017 - 18 and four each by Shree Subhakar Dombayya Kotian for A. Ys. 2011 - 12 and 2013 - 14 to 2015 - 16 and Shree Mohammad Ameer for A. Ys. 2014 - 15 to 2017 - 18) appeals of the assesses and the same is as per the following Chart:- Issue No. Issue Description 1 Alleged Undisclosed Investment in ULWE PLOTS ITA No. Ground No. Amount 2254 2 to 4 13,06,250/- 2258 2 to 5 39,18,750/- Total Amount 52,25,000/- Issue No. Issue Description 2 Alleged Investment in Om Sai Riddhi Siddhi Developers ITA No. Ground No. Amount 2255 2 to 4 37,50,000/- 2256 2 to 4 127,74,562/- ....
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.... 561,67,500/- Total Amount 5,61,67,500/- 3. Now we take note of the issues raised by the revenue in its nine appeals and the same are as per the following Chart:- Issue No. Issue Description 1 Deletion of the Addition made by the AO u/s 69A ITA No. Ground No. Amount 1630 2 183,00,000/- Total Amount 1,83,00,000/- Issue No. Issue Description 2 Deletion of the Protective Addition made by the AO as unexplained Cash Investment ITA No. Ground No. Amount 2334 2 510,98,250/- Total Amount 5,10,98,250/- Issue No. Issue Description 3 Deletion of the Addition made by the AO on Allegation of payment of On Money for 3 Projects ITA No. Ground No. Amount 2356 2 340,00,004/- 2357 2 580,00,000/- Total Amount 920,00,004/- Issue No. Issue Description 4 Deletion on the basis of Retraction of various Additions made by the AO ITA No. Ground No. Amount 2457 4 7,00,00,000/- Total Amount 7,00,00,000/- Issue No. Issue Description 5 Direction of CIT (A) to estimate income @ 8% out of ....
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....0 and 29.07.2020, time was allowed by the bench but in spite of this, as per letter dated 12.08.2020, the learned DR of the revenue is submitting that he will file written submissions in the case of Shree Walter Neronha, ITA No. 1630/Bang/2019 within 3 days and filed it on 18.08.2020 but for remaining appeals, he submitted that Excel sheet was not brought on record based on which the addition was made and the same is in the hard disk seized at Mumbai and this hard disk can be opened only in the presence of the assessee or assessee's AR in order to furnish the same before the tribunal and therefore, the assessee should be directed to extend cooperation to the department to facilitate the production of a cloned copy with a certified copy to ITAT. It is also submitted by him in this letter that further time should be granted to furnish detailed submissions and case may be heard after the full submission is made by the department. As per this last request of the learned DR of the revenue, it appears that he is making this request with this mistaken understanding that hearing of these appeals is not yet over. This submission in this request is also peculiar that some relevant documents ....
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....riminating material or any evidence of undisclosed income/ assets/ expenditure was found. Search action was also taken in the flat at Mumbai, which was being used as office premises. During the search action, one Mr. Sanjay was present in the premises whose statement was recorded. He had stated that the premise was being used as office premises for various firms. Therefore, it is clear that the premise was not in direct possession and control of the assessee. 8. In the Mumbai flat, various items comprising Hard disc, computers and papers were seized, which were marked as Al to A26, the details of which are listed in the assessment order. One of the items seized was a pen drive, belonging to Sanjay in which an excel sheet was found saved. The contents of this excel sheet has been made the basis of additions made in the hands of the assessee. 9. During the course of the search action, a statement u/s 132(4) was recorded from the assessee extracting a confession of undisclosed income. This statement was later retracted by the assessee in the form of a detailed statement, wherein he has explained the circumstances under which the statement u/s 132(4) was recorded and why the stat....
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.... 6. Burden of proof is on Revenue / Assessing Officer who is making allegations of on money transactions 7. Survey findings cannot be used for the purposes of S.153A 8. Alleged income of firms/ companies cannot be assessed in the hands of the directors ISSUE No. 1 Mr. M. N. Rajendra Kumar A.Y 2011-12 ; ITA No.2258/Bang/2019 Mr. Subhakar Dombayya Kotian A.Y. 2011-12 ; ITA No.2254/Bang/2019 Cash investment in purchase of plot in Ulwe, Navi Mumbai for projects undertaken by Om Sai Siddhi Riddhi Developers (OSSRD) Facts of the issue 10. Om Sai Siddhi Riddhi Developers (OSSRD) is a partnership firm in which the assessee and Mr. Kotian are partners, having share of 75 % and 25 % respectively. This firm had constructed three projects, Exotica, Nakshatra and Paradise at Navi Mumbai. 11. By relying on the excel sheet found in the pen drive of Sanjay, the A.O has surmised that there has been payment of cash for purchase of land for these three projects. As corroboration of the excel sheet, the A.O has relied on another loose sheet in A20, which was also found in the same premise and is only a prin....
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....rm and the land purchases were made by the firm. As such, the alleged cash component cannot be taxed in the hands of the partners. ISSUE No. 2 Mr. M. N. Rajendra Kumar A.Y 2011-12 & A.Y 12-13 ; ITA No.2258 and 2259/Bang/2019 Cash payments made to Deepak Pawar towards investment in project executed by KD Builders and for other purposes 13. Based on the excel sheet found in the pen drive of Mr. Sanjay, the A.O has surmised that the assessee has made the following cash payments to one Mr. Deepak Pawar, over a period of 2008 to 2011, for the following purposes i) Investment in KD Builders 4,45,37,000 ii) Payment for personal purposes 85,00,000 Hi) Payment for link road and Vasri hill 55,93,500 Total 5,86,30,500 14. Out of the above amounts, the amounts at i) of Rs. 4,45,37,000 was assessed in A.Y 2012-13 and the amount at ii) and iii) aggregating to Rs. 1,40,93,500 was assessed in A.Y 2011-12. 15. The CIT(A) upheld the additions but held that only those payments related to the year under consideration should be assessed to tax in the relevant year and the payments related to the earlier years were d....
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....n the form of files stored in the pen drive of Sanjay and the copies of the same found as loose sheets, the A.O surmised that an amount of Rs. 6,85,98,250 was made as cash investment in the lands purchased for projects executed by OSSRD, This amount was assessed as undisclosed income over various years, as under: A.Y Amount M. N. Rajendra Kumar Kotian 2013-14 1,50,00,000 1,12,50,000 (Wrongly Mentioned as Rs. 11,25,000 in the order 37,50,000 2014-15 5,10,98,250 3,83,23,687 1,27,74,562 2015-16 25,00,000 18,75,000 6,25,000 Total 6,85,98,250 5,14,48,687 1,71,49,562 Gist of our submission i) The A.O has made the addition based on surmises and assumptions, based on the excel sheet in the pen drive of Mr. Sanjay, without bringing any corroborative evidence on record. ii) It is settled principle that digital evidence stored in a pen drive cannot be the basis of addition, without any corroborative evidence to support the same. It is also settled principle that additions cannot be made merely on the basis of loose sheets, without any corroborative evidence iii) Additions cannot be made, merely bas....
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....extracted during search should be supported by collection of evidence of income v) Absence of corresponding entries in the accounts/ confirmation of opposite party make the addition untenable. No attempt has been made to make any verification on the veracity of the loose sheets vi) Burden of proof is on Revenue / Assessing Officer who is making allegations of on money transactions, which has not been discharged vii) The A.O had admitted that the project is carried out by the company, Global Star Realtors Pvt. Ltd. As can be seen from the assessment order, the projects have been carried out by an agreement between Global Star Realtors and Property Infra Tech Pvt. Ltd. (PIPL). As such, the alleged cash component cannot be taxed in the hands of the directors. viii) Alleged incriminating material found during survey proceedings, that too in the premise of a third party, cannot be used in search assessment proceedings. ISSUE No. 5 Mr. M. N. Rajendra Kumar A.Y. 2013-14 ; ITA No.2260/Bang/2019 Cash payment made to the retiring partner Mr. Jayantilal Jain 19. Mr. Jayantilal Jain was the erstwhile partner of Om Sai S....
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....nteiro. Gist of our submission i) From the assessment order, it is clear that the loose sheets of digital evidence relied upon by the A.O was found in the office premise of the SCDCC bank and therefore the documents were not in the possession and control of the assessee. No attempt has been made by the A.O to find out the actual ownership of these loose sheets and hence the documents cited are unreliable. ii) The addition has been made purely on assumptions and presumptions based on certain digital evidence found in third party premise, without any corroborative evidence. iii) It is settled principle that digital evidence cannot be the basis of addition, without any corroborative evidence to support the same. It is also settled principle that additions cannot be made merely on the basis of loose sheets, without any corroborative evidence iv) Additions cannot be made, merely based on disclosure statement, unless there are corroborative evidences. Confessions extracted during search should be supported by collection of evidence of income v) Absence of corresponding entries in the accounts/ confirmation of opposite party make the a....
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....vidence of income v) Absence of corresponding entries in the accounts/ confirmation of opposite party make the addition untenable. No attempt has been made to make any verification on the veracity of the loose sheets vi) Burden of proof is on Revenue / Assessing Officer who is making allegations of on money transactions, which has not been discharged vii) The A.O had admitted that the project is carried out by Smart Builders & Developers and therefore, the alleged cash component cannot be taxed in the hands of the assessee. viii) Alleged incriminating material found during survey proceedings, that too in the premise of a third party, cannot be used in search assessment proceedings. ISSUE No. 8 - Revenue Appeal Mr. M. N. Rajendra Kumar A.Y 2016-17 ; ITA No.2457/Bang/2019 Investment in Jewellery 24. During search proceedings, certain jewellery was found and since the assessee was not able to explain the source at that time, an amount of Rs. 98,00,000 was disclosed as undisclosed investment in jewellery. However, during assessment proceedings, the assessee was able to explain certain jewellery as belonging to w....
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....nds : i) It is settled position of law that unless disclosure statement is tested under cross examination, the same cannot be considered as evidence against the assessee ii) Admission itself cannot be considered as conclusive evidence, unless there is corroborative evidence on record 33. The finding of the CIT(A) is correct on principles, upheld by many decisions of higher judicial authorities and needs to be upheld. ISSUE No. 11 - Revenue Appeal Mr. M. N. Rajendra Kumar A.Y 2016-17 ; ITA No.2457/Bang/2019 Unexplained investment in construction of factory of Kusuma Cashew 34. The A.O had surmised that during search action, the assessee had declared an amount of Rs. 1 Crore towards unexplained investment in the factory premises of Kusuma Cashew and added the same to the undisclosed income of the assessee. 35. As this addition was without any basis and without any evidence, the CIT(A) deleted the addition, on the following grounds: i) It is settled position of law that unless disclosure statement is tested under cross examination, the same cannot be considered as evidence against the assessee ii) Admissi....
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....sed on statement recorded during search when it has been retracted and no evidence brought on record to corroborate the statement; 43. The findings of the CIT(A) is based on correct appreciation of the facts of the case and is in conformity with the principles enunciated by various decisions of the higher judicial authorities. No material has been brought on record to counter the findings of the CIT(A) and therefore it needs to be sustained. (oath statement enclosed herein). ISSUE No. 14 Mohammed Ameer A.Y 2014-15, 2015-16, 2016-17 & 2017-18 ; ITA No.2373, 2374, 2375 & 2376/Bang/2019 Cash receipts towards construction of projects 44. Search action was taken in the case of this assessee. The assessee was having a proprietary concern by name, M/s Coastal Construction. This has entered into an agreement with various developers for construction of three commercial buildings and site development. 45. Based on certain loose sheets found during search, the A.O had surmised that the assessee has received cash from the developers as consideration for the various projects constructed by the firms and these amounts as undisclosed income in the h....
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....s projects constructed by the firms and these amounts as undisclosed income in the hands of this assessee. Gist of our submission i) The A.O has made the addition based on assumptions, based on certain loose sheets, without bringing any corroborative or fresh evidence on record. ii) All the books of accounts were audited books of accounts and were uploaded. iii) The assesse has uploaded all relevant documents in the e-portal and has also filed its Return of Income in reply to the notice issued u/Section 153C of the Act iv) A.O has grossly erred in estimating the income at 8% on the figures noted/mentioned in the note book by multiplying the same some by Rs. 100 or some by Rs. 1,000/- without any basis. ISSUE No. 16 - Mohammed Ameer - Revenue appeal A.Y 2014-15, 2015-16, 2016-17 & 2017-18 ; ITA No.2453, 2454, 2455 & 2456/Bang/2019 Investment in Jewellery 51. Based on certain purchase bills found during search, the A.O had surmised that the assessee has made undisclosed investment in jewellery and added the same in various years, as detailed in the assessment order. 52. However, the CIT(A) deleted the addit....
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....books are audited books of accounts. 59. No independent enquiry with regard to cash paid by the Assessee was done by the Assessing Officer. If cash was paid by the Assessee, the Assessing Officer would have seized that the cash from Global Star Realtors Private Limited's director, Mr. M. N. Rajendra Kumar which was not done for obvious reason that there was no cash component found at all by the Assessing Officer during the course of search carried on in Mr. M. N. Rajendra Kumar, and neither any unaccounted asset. The Assessing Officer had made addition merely on assumption without primary evidence. Further, Assessing Officer also failed to verify with the other party whether he received cash or not. 60. No independent valuation was done by Assessing Officer to state that valuation of project was understated. The Assessing Officer also failed to bring any evidence on record to support of his contention that he paid cash over and above the value declared. 61. Assessing Officer erred in alleging that additional income over and above the consideration was made in cash by director of the assessee company, Mr. Rohan Monteiro to directors of M/s. GSRL purely on assumptions an....
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....09] 117 ITD 338 (Agra)), it was held by the Tribunal that the Commissioner rightly deleted the additions of the AO, and held that when the Partner had retracted the statement, the AO was to bring relevant cogent material in order to substantiate the additions. 70. The Hon'ble SC in the case of State v. Ganeswara (AIR 1963 SC 1850) has held that in the absence of corresponding entries in the accounts of the opposite party, the transaction made at the hands of the appellant were to be deleted. 71. We would also like to draw the lordship's attention to CBI v. V. C. Shukla (AIR SC 410) where loose sheets were ruled out to have any evidentiary value; and further in Amar feet Singh Bashi (HUF) v. A. CIT (263 ITR (AT) 75 Del) wherein it was also held that noting on loose sheets by itself cannot constitute as evidence. 72. Further, it is also humbly submitted that the onus lies upon the AO to prove that a transaction as stated in the said loose paper. The same concept was adjudicated in the case of Smt. Bommana Swarna Rekha v. A. CIT (147 Taxman 59) wherein the Tribunal held in the favour of the assessee. 73. It is submitted that the presumption of the AO is discretiona....
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....ed before CIT appeals even Appellant had filed all return of income, audited financial statement and other details were uploaded in portal for his reference 1. Appellant begs to submit that, the Commissioner of Income tax (Appeals) while upholding the additions made has grossly overlooked the fact that, Additions made is purely on assumptions and presumptions based on the loose sheets and AO has multiplied the figures in the loose sheets with multiples of hundreds/thousands, even for transactions made through account payee cheques purely based on the assumptions and presumptions. While multiplying the figures with 100/1000, the AO totally failed to cross verify the same with the third party who have received either cash or cheque payments. 2. The AO merely acted upon on the statement given by the appellant, which was subsequently retracted by him. It was a settled position of law that unless the statement is tested under the cross examination, the same cannot be considered as evidence against the assessee. The AO used the admission made in the statement recorded under section 132(4) of the Act. But the assessing officer failed to note that, admission itself cannot....
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....ed the same in various years, as detailed in the assessment order. However, the CIT(A) deleted the addition by accepting the contention of the assessee that, i) No gold was physically found during search, corresponding to the bills, thereby supporting the claim that these were purchased on behalf of family members ii) The assessee had sufficient drawings to explain the purchases 87. The decision of the CIT(A) is based on facts and nothing has been brought on record to counter the same. 88. Furthermore, we rely on the case of Common Cause v. Union of India (77 Taxmann.com 245) wherein the Apex Court has held that loose sheets found during the search were inadmissible as evidence. 89. Further, the Mumbai Bench in D. A. Patil v. D. CIT ([2001] 70 TTR (Mum.) 969) held that in case of discovery of sheets of paper disclosing loan given by an assesse and interest due thereon, during search, the assesse could not be saddled with tax liability. 90. The Hon'ble Tribunal at Vishakapatnam in Smt. Bommana Swarna Rekha v. A. CIT ([2005] 147 Taxman 59) observed that a sheet of paper without any name or date was seized to the premises of the husband of the asse....
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....ngs: (1) Whether in the facts and circumstances and in law of the case, the Ld.CIT(A) erred in deleting addition of Rs. 1.83 crores made u/s 69A and failed to appreciate the fact that the addition was made on the basis of the declaration by the assessee in the statement recorded u/s 132(4) of the I.T.Act in respect of financial business and also based on the documents found and seized and further failed to appreciate the fact that the assessee could not substantiate the reasons for retraction of the statement rendered by him u/s 132(4) . Submission: The Ld.CIT(A) perused all the records and statements submitted by the assessee and the assessment records and case laws relied on by the assessee and the A.O. On perusal of the same, the Ld.CIT(A) concluded that there is no merit in making additions only based on the statement recorded during the search and loose sheets found when the statement is retracted, and details in the paper are not deciphered, confronted and details written therein established. In view of the above the Ld.CIT(A) deleted the addition made u/s 69A of the Act and on the basis of statement recorded u/s 132(4) of the I.T.Act. The action of the Ld.C....
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....epresentative in order to furnish the same before the Hon'ble ITAT. In view of the prevailing pandemic situation the assessee's representative has expressed his inability to vest the office to facilitate the opening of the hard disk which contains the evidence. In view of this, it is requested to issue necessary directions to the assessee to extend his cooperation to the Department to facilitate the production of a cloned copy with a certified hard copy to the ITAT which will be a material evidence to be considered by the ITAT. Further, it was intimated by the Assessing Officer that during the month of July, he was in home quarantine for 14 days being a primary contact to a person tested positive for Corona. In addition to this, there was a complete lockdown in Dakshina Kannada District from 15.07.2020 to 23-7-2020. Further as per the orders of the competent authority the officers and staff are directed to work on rotation as per the specified roster with minimum staff. In view of this the Officials are reporting for duty only on alternate days subject to the containment zone restrictions. Hence there is a inevitable delay in culling out the details from a....
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.... Plots in A. Y. 2011 - 12 and out of this amount, 75% addition is made by the AO in the hands of Sri M. N. Rajendra Kumar and 25% addition is made by the AO in the hands of Sri S. D. Kotian. As per the assessment order for A. Y. 2011 - 12 in the case of Sri S. D. Kotian, in Para 2, it is noted by the AO that the assessee Sri S. D. Kotian is a partner in the firm M/s Om Sai Riddhi Siddhi along with Sri M N Rajendra Kumar and this firm is engaged in the development of Real Estate Projects. In Para 3.1 of the same assessment order, it is noted by the AO that various incriminating materials including digital evidences seized/impounded at the residence of the partner Mr. M N Rajendra Kumar in Mumbai reveals that the firm M/s Om Sai Riddhi Siddhi had purchased three sets of plots for the construction of residential complexes in Navi Mumbai. It is also noted that the real estate projects Exotica, Nakshatra and Paradise sit on these particular pieces of lands. Thereafter, in the same para of this assessment order, the AO has alleged that Evidences conclusively prove that Mr. M N Rajendra Kumar also paid cash for purchase of these lands and as per the seized material, land investment in ....
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.... regular books of accounts maintained by the firm and he has not invested any cash as alleged in the notice and request was made that the assessee can obtain confirmation from the vendor and the assessee also requested for the opportunity for cross examination of the vendor but the AO jumped to the conclusion on this basis that the assessee has not produced any material to show that the admission made by the assessee was incorrect in any way other than denying the payments stating that he was under stress. In our considered opinion, even the so called admission as noted by the AO in para 3.1 of the assessment order is this much only that cash payment was indeed made. Even if we accept this admission as sacrosanct, the said cash payment can be added in the hands of the firm and not in the hands of the partners without bringing cogent material on record to show that such cash payment was made by the partners out of their own funds by giving a break up of how much is from own source of which partner. Under these facts, in our considered opinion, addition might have been made in the hands of the firm and not in the hands of the partners and we delete the addition made by the AO in the ....
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....mponent cannot be taxed in the hands of the partners and therefore, we first consider the acceptability of this argument and other arguments will be considered if the assessee does not succeed on this argument. We find that this is admitted position that the lands in question are owned by the firm M/s Om Sai Riddhi Siddhi Developers and the AO also has made protective addition in the hands of the said firm after making substantive addition in the hands of these two individuals who are partners in the firm with share of 25% Mr. S. D. Kotian and 75% Mr. M N Rajendra Kumar. Since protective addition is made by the AO in the hands of the firm also, this argument is not decisive and therefore, we examine the acceptability of other arguments. This is one of the arguments that this addition is made on surmises and assumptions based on the excel sheet in the pen drive of MR. Sanjay without bringing any corroborative evidence on record. Reliance was placed on the tribunal order rendered in the case of Anil Jaggi vs. ACIT as reported in 168 ITD 612 (Mumbai), copy on pages 1 to 14 of Case Law Compendium. Para 14 of this tribunal order is relevant and the same reads as under:- "14. We....
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....is statement recorded on oath in the course of the Search & seizure proceedings had confirmed that the amounts aggregating to Rs. 475.60 crore recorded in the pen drive were the on-money received on sale of flats, which was offered as additional income under Sec. 132(4) and thereafter offered as such for tax in the petition filed before the Settlement commission. We are of the considered view that there is substantial force in the contention of the ld. A.R that mere admission of the amounts recorded in the pen drive as the additional income by Sh. Niranjan Hiranandani, falling short of any such material which would inextricably evidence payment of "on money" by the assessee would not lead to drawing of adverse inferences as regards the investment made by the assessee for purchase of the property under consideration. We rather hold a strong conviction that the very fact that the consideration paid by the assessee for purchase of the property under consideration when pitted against the "market value‟ fixed by the stamp valuation authority is found to be substantially high, further fortifies the veracity of the claim of the assessee that his investment made towards purchase of t....
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....t even as per the AO, all the materials on which basis, addition was made by him is digital evidences retrieved from computers, pen drive and lap tops. Hence, in our considered opinion, in the facts of the present case, this tribunal order is applicable. The tribunal also noted in that case that Shree Niranjan Hiranandani in his statement recorded on oath in course of search proceedings has confirmed that the amounts aggregating to Rs. 475.60 Crores recorded in the pen drive were the on - money received on sale of flats which was offered as additional income u/s 132 (4) and thereafter offered as such for tax in the petition filed before settlement commission. In spite of this, the tribunal in that case held that though the material acted upon by the department formed a strong basis for doubting the investment made by the assessee for purchase of the property under consideration but the same is falling short of clinching material and deleted the addition in that case. In the facts of the present case which are similar to that case, we respectfully follow this tribunal order and hold that the adverse inference drawn by the AO as regards payment of on money for purchase of various ....
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....after in para 11.12 of the same assessment order, the AO talks about payment of Rs. 40 lacs to DPP and states that this payment is of personal nature and also mainly towards the land at Link Road and Wasari Hill. He has noted down date wise details of various payments to DPP. Thereafter the AO has stated about the statement of Mr. MNR u/s 132 (4) in which he accepted about these alleged investments and also noted about the retraction of the assessee but rejected the retraction by saying that the assessee has not produced any evidence in support of retraction and made additions in these two years. In our understanding, these additions are only on the basis of statement which is later retracted also and asking for evidence in support of retraction is like asking for impossible to prove the negative. The assessee states in retraction that no payment in cash was made by him and there cannot be any evidence about non payment. On this issue also, although various arguments are raised by the learned AR of the assessee but this argument itself is conclusive in the facts of the present case that since the AO has admitted that land purchases were made by the firm KDB, the alleged cash com....
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....5 of the assessment order for A. Y. 2013 - 14 in the case of Mr. M N Rajencdra Kumar, it is noted by the AO that the assessee Mr. MNR is a director of M/s Global Star Realtors (P) Ltd. (GSRPL). The AO has observed that evidences in respect of cheque and cash payments were found in the office of Mr. MNR during survey u/s 133A on 27.12.2016over and above the sale consideration in respect of five pieces of land in Kodialabail village, Padavu village purchased by that company. After discussing about various entries in various digital evidences, in Para 14.2 of the same assessment order, the AO summarized the alleged cash payments of Rs. 141.90 Lacs in A. Y. 2012 - 13 and Rs. 345 Lacs in A. Y. 2013 - 14. Thereafter in Para 14.1.1 of the same assessment order, the AO observed again that these cash payments are for the land purchased for its projects by M/s Global Star Realtors Pvt. Ltd. The AO has noted about the admission by the assessee in statement recorded on 16.03.2017 and its retraction vide letter dated 28.07.2018 and 11.10.2018. Thereafter on page 34 of the same assessment order, the AO has noted about this argument of the assessee also that the cash payment if any is made by the....
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....i.e. A. Y. 2013 - 14 because more than 6 years have elapsed after the end of the relevant assessment year 2013 - 14. For A. Y. 2014 - 15, although the reassessment of the company is not yet time barred but we do not feel it proper to give such direction to the AO because in spite of this argument made by the assessee before the AO that cash payment if any, is made by the company, the AO has not taken required steps to ensure at least protective addition in the hands of the company and therefore, providing second innings to the AO under these facts is not proper in our humble opinion. This addition is deleted and Issue No. 4 is also decided in favour of the assessee. 104. Issue No. 5 in the appeals of the assessee as per Para 2 above is about alleged undisclosed payment to Mr. Jayanti Lal Jain (JLJ) Rs. 191,86,765/- as per Ground No. 4 in the appeal filed by Mr. MNR for A. Y. 2013 - 14 and in the written submissions filed by the learned AR of the assessee, arguments on this issue are the arguments in respect of Issue No. 5 as per him. The main argument raised is this that file created and stored in pen drive of a third party or on the basis of loose sheets cannot be the basis of ....
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....ara 10 above that this tribunal order is applicable in the facts of the present case and Issue No. 2 was decided in favour of the assessee by respectfully following this tribunal order as per Para 10 above. On the same line, for issue No. 5 also, we respectfully follow this tribunal order and decide this issue also in favour of the assessee. Accordingly, Issue No. 5 is also decided in favour of the assessee. 105. Issue No. 6 in the appeals of the assessee as per Para 2 above is about alleged cash collected in developed projects with PIPL Rs. 207.05 lacs in A. Y. 2014 - 15, Rs. 527,96,670/- in A. Y. 2015 - 16, Rs. 340,00,004/- in A. Y. 2016 - 17 and Rs. 23,98,326/- in A. Y. 2017 - 18 in the appeals filed by Mr. MNR for these years and in A. Y. 2016 - 17 in appeals filed by the revenue in the case of M/s Property Infotech India Pvt. Ltd. and in the case of Shree Rohan Monterio. In the written submissions filed by the learned AR of the assessee, arguments on this issue are the arguments in respect of Issue No. 6 as per him. The main argument raised is this that file created and stored in pen drive of a third party or on the basis of loose sheets cannot be the basis of addition with....
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....ASA Project and Rs. 116,66,670/- for PRIMERIO Project and Rs. 241.50 Lacs for VENTURA Project. Similarly, he noted that in A. Y. 2016- 17, the receipt was of Rs. 340,00,004/- including Rs. 42.85 lacs for MICASA Project and Rs. 140,00,004/- for PRIMERIO Project and Rs. 157.15 Lacs for VENTURA Project. For A. Y. 2017 - 18, he noted that the alleged receipt is only Rs. 23,98,326/- for PRIMERIO Project. This fact is admitted by the AO also that these three projects are owned and developed by two companies as per various MOUs and therefore, even if some on money in cash was received in respect of sale of these projects, income will be of these two companies in their agreed share but by no stretch of imagination, it can be considered as income of an individual i.e. Mr. MNR. Hence the addition made in the hands of MR. MNR is deleted for this reason alone and we do not discuss and examine other various arguments of both sides. 108. Now we discuss and decide Issue No. 3 in two appeals of the revenue for A. Y. 2016 - 17 i.e. in the case of M/s PIPL and Mr. Rohan Monerio. In para 5.1 of the order of CIT (A) in the case of the company M/s PIPL, it is noted by CIT (A) that the AO has stated ....
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....by giving a finding that Shree Rohan Monterio is M. D. of the company M/s PIPL. The AO has also noted that Mr. RM has sold Kadri Property and in addition to the agreed sale consideration of Kadri Property, cash component of Rs. 580 lacs was adjusted against cash component payable for the same three projects i.e. MICASA Project, PRIMERIO Project and PRIMERIO Project. In Para 5.15 of his order, learned CIT (A) has noted about various judicial pronouncements cited before him by the learned AR of the assessee and these judgments included the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. IBC Knowledge Park (P) Ltd., 69 Taxman.com 108. In para 5.16 of his order, learned CIT (A) decided this issue in favour of the assessee by following these judgments included the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. IBC Knowledge Park (P) Ltd. (Supra). In para 5.17 of his order, this finding is also given by CIT (A) that evidence found in the premises of third party cannot be imposed on the assessee without any corroborative evidence by the AO. He also observed that both the parties i.e. the searched party Mr. MNR and the assessee Mr. RM have....
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....he agreed that this will be offered as additional income in A. Y. 2017 - 18. The AO reproduced the relevant portion of the statement of Mr. MNR in which, he made a declaration of this amount of Rs. 105 Lacs but from this statement, this is not clear that whether the offer of Mr. MNR was as income of the firm or his individual income but since, this is admitted position that the property in question is developed by the firm MASD, the income on account of receipt of on money, if any, will be of that firm only and not of the partner of the firm. In our considered opinion, this addition is not sustainable for two reasons. First reason is this that when the property sold is owned by the firm, the income on account of receipt of on money, if any, will be of that firm only and not of the partner of the firm. The second reason is this that the addition was made by the AO on the basis of the statement of the supervisor and material impounded during the course of survey conducted at the head office of SCDCC Bank on 27.12.2016 without bringing on record any material for corroboration in support of entries in loose sheets or digital evidence. Hence, the receipt of on money itself is not establ....
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.... Ameer is relevant because in the remaining years also, the finding and decision of CIT (A) is identical and therefore, we reproduce these paras also for ready reference. These are as under:- "5.3.7. I have considered the facts of the case and case laws as well as board circular relied on by the AR. The fundamental issue is that since appellant did not appear before the AO, therefore, the entire receipt of contract had to be charged to tax, in the absence of explanation by the appellant. I find that the basis for multiplying the figures by 100 and 1000 is not validly delineated. No Enquiries in this regard have been conducted. The logic for multiplying the figures, even those of cheques, is improper. Perhaps, this emanates for the statement of the accountant Shri. Makeem, in which case he should have been allowed to be cross examined. If it emanates from the statement recorded during search of the appellant, then he has in effect retracted it; AO has failed to explain why the retraction is inadmissible, specially in the face of the evidence gathered which is claimed to have zeros missing; but this conclusion is not based on valid gathering of evidence as the accou....
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....O further suspected that some of the entries were made in code words- by virtue of these code words the Appellant has deliberately reduced two decimals of number. Finally, while concluding assessment she has stated that, only cash receipts brought to tax and the fact that, cash payments are originate from these receipts no disallowance is called for as the payments are also not brought to the books as detected hence, appellant also not given the benefit of claiming the expenses against the receipts since the expenses invariably calls for a disallowance u/s.40A(3) and 40a(ia) of the Act. 5.4.3. On the other hand, in the AR's written submissions dated 09.09.2019. the AR has forcefully argued in respect of entire cash receipts based on the loose sheets impounded during survey, which is as under. • AO is not correct in coming to the conclusion that. on money is exchanged between the parties based on a loose sheet found in the premises of M/s.Coastal Construction. • To sustain the addition, the AO should have conducted an independent inquiry about the value of the project and ascertain whether any under valuation is done, if so what is the correct ....
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.... by any form of evidence. Under these circumstances, based on paper jottings as conclusive evidence on money cannot be brought to tax as income from undisclosed sources. 5.4.4. Finally, during the appellate proceedings, the AR has produced before me the following decisions and argued that, these decisions are squarely applicable to appellant's case. 1. Common Cause (A Registered Society) Vs. Union of India [2017] (77 Taxmann.com 245) (SC). 2. CIT Vs. P.V. Kalyansundaram (164 Taxman 78) (SC). 3. Principal CIT, Central Vs. Krutika Land (P) Ld. (2019) 103 Taxmann.com 9 (SC). 4. CIT, Bangalore Vs. IBC Knowledge Park (P) Ltd. (69 Taxmann.com 108 (Kar). 5. CIT, Central - Ill Vs. Lavanya Land (P) Ltd. (83 Taxmann.com 161) (Bombay). 6. CIT, Central - III Vs. Arpit Land (P) Ltd. (78 Taxmann.com 300)(Bombay). 5.4.5. I have considered the facts of the case and case laws as well as board circular relied on by the AR, the ratio laid down in the said cases are applicable to the appellant's case. 5.4.6. The AO merely acted upon on the statement given by the accountant Mr. Makeem, which was subsequent....
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....find that, the appellant is a contractor. He is not the developer of the buildings himself. Even in his disclosure during search, he has disclosed the said "receipts", not income. Thus, the receipts on account of the project, even if unaccounted, are contract receipts, on which tax could be levied on the income, not on receipts. It would not be out of context to point out here that level of evidence required is preponderance of probabilities. Thus, based on the evidence available, the AO is directed to compute turnover, after deleting the accounted (cheque) amount from the above said amount. Income there from could be computed @ 8% on the said amount. Credit should be given from this income so computed of the income declared in the returns on account of these projects declared in any year, if these receipts are included therein. In the result, the appeal is partly allowed on this issue." 112. Now the first aspect to be decided is this as to whether extra amount was received by this assessee or not in respect of these projects. If it is found that there was no such receipt then there cannot be any addition but if it is found that extra receipt was there then we have to decide the....
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....n the returns on account of these projects in respective year should be reduced and only the balance should be brought to tax. On the second aspect about reducing the income declared in the returns on account of these projects in respective year from the income to be computed in respect of unaccounted turnover, we find no infirmity in the order of CIT (A) and we confirm the same. 115. Now the only aspect remains to be decided by us is about the percentage of unaccounted turnover to be considered as income. The AO has added the whole amount of alleged cash receipts but the CIT (A) held that only estimated income out of such alleged cash receipts can be added. In our considered opinion, the alleged cash receipts is unaccounted turnover only and 100% of turnover cannot be said to be income even in respect of unaccounted turnover and hence, we hold that there is no merit in this issue no. 5 raised by the revenue in its four appeals filed in the case of Mr. Mohammad Ameer. 116. Learned CIT (A) has directed the AO to compute the income @ 8% of unaccounted turnover. Although no basis is indicated by CIT (A) for adopting 8% rate but it appears to us that he has been guided by the pro....
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....ame for ready reference as under:- "6.7 I have considered the facts of the case and case laws as well as board circular relied on by the AR, the ratio laid down in the said cases are applicable to the appellant's case. The case laws relied on by the AO is not applicable to this case, which is more clearly stated in para supra. Considering all the aspects, I hold that, retraction cannot be countered unless there are other supportive evidence. I find that no serious effort has been made to trace the persons named in the loose paper beyond merely asking the appellant to provide the address. The details written on the loose sheet have not been properly deciphered. It is not established as to what they stand for. In the absence of these deciphering and unearthing of meaning and correlation and understanding the mathematics and the meaning of the transactions entered in the loose sheet, all of which may perhaps have been attempted by the AO, but without success. Hence, there is no merit in making additions only based on the statement recorded during the search and loose sheets found when the statement is retracted, and details in the paper are not deciphered, confronted and ....
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....asis of retraction of the assessee. This amount of Rs. 700 Lacs includes three additions being of Rs. 100 Lacs (Issue No. 4 (i)) added by the AO by alleging that there is unexplained expenditure in Global Export Ullal, Rs. 500 Lacs (Issue No. 4 (ii)) by alleging that there is unexplained investment of the assessee in M/s Sai Siddhi Developers and Rs. 100 Lacs (Issue No. 4 (iii)) by alleging that there is unexplained investment of the assessee in construction of factory premises of Kusuma Cashew. On this issue, learned DR of the revenue supported the order of AO and learned AR of the assessee supported the order of CIT (A). 121. We have considered the rival submissions and we find that Para 6.3.8 of the order of CIT (A) in this case is relevant for (Issue No. 4 (i)), Para 6.4.9 of the order of CIT (A) in this case is relevant for (Issue No. 4 (ii)) and Para 6.5.9 of the order of CIT (A) in this case is relevant for (Issue No. 4 (i)ii),and hence, we reproduce the same for ready reference as under:- "6.3.8 I have considered the facts of the case and case laws relied on by the AR, the ratio laid down in the said cases are applicable to the appellant's case. Considering ....
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....n admission; but it is not backed by any evidence. In the absence of evidence, the appellant could successfully retract that part of the statement. In the instant case, the appellant has denied having exchanged the on money for investment in factory building of Kusuma Cashew. Even after the Appellant's case is covered under search operations under section 132, the department did not unearth any evidence regarding exchange of cash in sale transaction except statement of the appellant at the time of search operation. In the absence of proper inquiry and sufficient evidences, I find no reason to confirm addition made by the AO towards on money. Hence, I delete the additions made amounting to Rs. 1,00,00,000/-, being unexplained expenditure in Global Export, Ullal." 122. We find that in the above three paras reproduced above, a categorical finding is given by the learned CIT (A) in each of these paras that the addition made is purely based on the statement made by the assessee without any corroborative evidence by the AO. Before us also, learned DR could not produce any corroborative evidence which was available with the AO to make these additions. This is a settled position of ....