TaxTMI 
TaxTMI 
2021 (1) TMI 945
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....ances of the case of the assessee the Ld Commissioner of Income Tax (A), was not justified in holding that the AO was justified in making addition even when the assessment proceedings were not pending and no incriminating material was found during the course of search. 2. That on the facts and in the circumstances of the case of the assessee the Ld Commissioner of Income Tax (A). was not justified in holding that the AO was justified in making addition of Rs. 12,00,000/- treating the unsecured loans received by the assessee as unexplained. 3. That the assessee craves leave to add, alter, delete or modify any ground( s) of appeal during or before the hearing of appeal. IT(SS)A No.185/Ind/2018 Assessment Year 2013-14 1. That on the facts and in the circumstances of the case of the assessee the Ld Commissioner of Income Tax (A), was not justified in holding that the AO was justified in making addition of Rs. 25,00,000/- said to be income declared by the assessee u/s 132(4). 2. That the assessee craves leave to add, alter, delete or modify any ground ( s) of appeal during or before the hearing of appeal. IT(SS)A No.186/Ind/2018 Asse....
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.... of the case, the Id. ClT(A) erred in deleting the addition of Rs. 4,38,32,956/- made by the Assessing Officer on account of undisclosed investment u/s 69B as per DVO's report. (2) On the facts and in the circumstances of the case, the ld. CIT(A) erred in Directing the Assessing Officer to provide deduction/set off of the addition made u/s 69B of the Income Tax Act,1961 in view of the spirit of section 115BHE of the Income Tax Act 1961. (3) On the facts and in the circumstances of the Case, the Id. CIT(A) erred in deleting the addition of Rs. 1,43,910/- made by the Assessing Officer on account of unexplained cash u/s 69A of the Income Tax Act, 1961. (4) The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. 4. In the case of M/s Signature Infrastructure assessee has raised following grounds of appeal:- IT(SS)A No.187/Ind/2018 Assessment Year 2013-14 1.That on the facts and in the circumstances of the case of the assessee the Ld Commissioner of Income Tax (A), was not justified in holding that the AO was justified in making addition of Rs.....
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....,00,000/- (3) The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. 7. As the instant appeals relates to the assessee(s) from same Signature Group wherein search was conducted u/s 132(4) of the Act on 29.01.2014 and the issues raised in various grounds and facts involved are mostly common, we have heard these appeals together. Since there is no objection by both the parties, all these appeals are being disposed off by this common order for the sake of convenience and brevity. As submitted by Ld. Counsel for the assessee and also by Ld. Departmental Representative M/s Signature Builders is the lead case. 8. Cross appeals have been filed for Assessment Years 2012-13 to 2014-15. 9. Brief facts of the case as culled out from the records are that the appellant is a partnership firm incorporated on 17.11.2009 and is part of the Signature Group of Bhopal engaged in the business of builders & developers. Search and seizure operations u/s 132 of the I.T. Act, 1961 was conducted on the business premises of the assessee group and its associate concerns as well as on the residential premi....
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..... 15,00,000/- income assessed Rs. 8,03,30,611/- 11. Against this impugned assessment order passed u/s 153A r.w.s 143(3)/143(3), the assessee has preferred appeals before Ld. CIT(A) and partly succeded. 12. Now both the assessee(s) and Revenue are in appeals against the finding of Ld. CIT(A). 13. As regards Ground No.1 of assessee appeal in the case of Signature Builders vide ITA No.184/Ind/2018 for Assessment Year 2012-13 since the same has not been pressed this ground is dismissed as not pressed. 13. As regards Ground No.2 of assessees appeal in the case of Signature Builders vide ITA No.184/Ind/2018 for Assessment Year 2012- 13 assessee has challenged the finding of Ld. CIT(A) confirming the addition u/s 68 for the unexplained unsecured loan of Rs. 12,00,000/- from Rimsha Maheshwari Ld. Counsel for the assessee submitted that; The assessee has taken a loan of Rs. 12,00,000/- from Smt. Rimsha Maheshwari. The assessee submitted the confirmation from the said party. The ld. A.O. made the addition on the ground that the bank statements and the copies of the ITR are not filed. Before the ld. CIT(A) the bank statement was ....
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....ich needs no adjudication. 17. Now we take up Ground No.3 raised for Assessment Years 2013-14 and 2014-15 in the case of Signature Builders vide ITA No.185&186/Ind/2018 through which common issue has been raised by the assessee contending that Ld. CIT(A) was not justified in confirming the addition made by the Ld. A.O for the amount declared by the assessee as additional income of Rs. 25,00,000/- and Rs. 3,00,00,000/- for Assessment Year 2013-14 and 2014-15 respectively in the statement given during the course of search u/s 132(4) of the Act. 18. Brief facts relating to this common issue as culled out from the records and as narrated by the Ld. Counsel for the assessee are that a search was conducted at the premises of the Signature Group on 29.01.2014 and also at the premises of the assessee firm. In the case of the assessee the search commenced on 29.01.2014 at 08.45 A.M and was concluded at 08.00 AM on 02.02.2014. The proceedings continued for 4 days (96 hours) without any break. The statement of Mr. Raj Kumar Khilwani commenced on 01/02/2014 and was concluded on 02/02/2014. During the course of the statement, the assessee declared the additional income of Rs. 25,00,000/- ....
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....ing the addition is the statement made by one of the partners. The Ld. A.O. has made various additions for the documents found. Thus, all the loose papers and the investments have been considered by the A.O. and accordingly he has made the additions under various heads. After making the additions on the basis of various papers there remains no scope for making the addition on the basis of declaration made in the statement. It could be observed that the question asked and the answer given in the statement recorded were both vague and general in nature and were not with reference to any specific document or asset found during the course of search which would indicate the acceptance of the assessee of earning of any unrecorded income. Rather the assessee has made a categorical unambiguous statement that the assessee has not earned any unrecorded income. Reference in this regards may be made to the statement of Mr. Rajkumar Khilwani recorded on 01-02/02.2014 Q-9: Do you take any payment from customers in cash other than the sale price mentioned in the registree and additional charges recovered. A-9: No. No additional payment is taken in cash in addition to above 23....
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....153A of the Act such additional income of Rs. 25,00,000/- and Rs. 3,00,00,000/- was not offered in the return of income. During the assessment proceedings it was submitted that various loose papers and documents narrated by the Ld. A.O found during the course of search does not pertain to the assessee. Since there was no such incriminating material relating to the assessee found during the course of search relating to the addition in question the alleged addition was made purely on the basis of the statement given u/s 132(4) of the Act. 27. We also observe that in the assessment order as well as order of the first appellate authority there is no mention of any incriminating material having its nexus with the alleged income declared u/s 132(4) of the Act. The Ld. A.O has failed to prove on record any specific instance with support of incriminating material found during the course of search which could show that the assessee has earned the alleged undisclosed income. It is not in dispute that various other additions have been made by the Ld. A.O for the undisclosed investment u/s 69B, undisclosed investment in projects of land and unexplained unsecured loan as well as unexplained ....
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....t given u/s 132(4) of the Act for which the addition was made by the Ld. A.O without corroborating it with any incriminating material and the addition was confirmed by Ld. CIT(A). When the matter travelled before this Tribunal the addition of Rs. 2.25 crores was deleted by this Tribunal observing as follows:- "9. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to and relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant appeal is against the order of Ld. CIT(A) confirming the addition of Rs. 2,25,00,000/- made by the Ld. A.O on account of undisclosed income surrendered during the course of search by the partner of the assessee firm. 10. At the cost of repetition we would like to recite and recapitulate the facts once more. The assessee is a partnership firm engaged in real estate business. It is the part of Signature Group. Search action was initiated in the Signature Group and its associates on 29.1.2014. The assessee's association with the Signature group is on account of the common partners in various concerns. Assessee is separately assessed....
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....atement. 12. Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its case already concluded on 31.1.2014. He further submitted that no incriminating material was found during the course of search and as held by Hon'ble Tribunal in the latest decision in the case of ACIT(1) vs. Sudeep Maheshwari (supra) that "no addition was called for which has been made merely on the basis of the statement without correlating the disclosure made in the statement with the incriminating material gathered during the course of search". 13. So the contention of the Ld. Counsel for the assessee can be summarised that the addition cannot be made merely on the basis of statement which too was taken after conclusion of the search and no correlation has been made with the incriminating material found during the course of search. 14. On the other hand Departmental Representative gave reference to v....
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....014. 18. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee's premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee's business premises. 19. As regards the statement of Mr. Vipin Chouhan given on 02.02.2014 is concerned, we find that this statement contains the surrender for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to other business concerns namely M/s. Virasha Infrastructure, Signature Infrastructure, Signature Builders and Signature Builders and Colonisers. Certainly the search in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stoo....
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....action from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain corroborative evidences. In the absence of corroborative evidences, the admission is merely a hollow statement. We have given our thoughtful consideration to the rival contentions of the parties. It is undisputed fact that the statement recorded u/s 132(4) of the Act has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In ....
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....the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee's said retraction was not accepted by any of the authorities below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of Rs. 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee. 6. We are of the considered opinion that statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the....
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....e incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. 26. In the given facts and circumstances of the case and respectfully following the judgements and decisions referred above we find that firstly the statement given by Mr. Vipin Chouhan u/s 132(4) of the Act on 02.02.2014 cannot be considered as the statement given u/s 132(4) of the Act in the instant case of the assessee firm since the search action in case of assessee was concluded on 31.1.2014 by the Authorised Officer. Secondly as regards to other business concerns referred by Mr. Vipin Chouhan in his statement given on 02.02.2014 and in case of such business concern wherein search action u/s 132 of the Act was continuing the said statement dated 02.02.2014 will be considered as the statement u/s 132(4) of the Act. Thirdly, no reference has been given by the Revenue Authorities to any incriminating material found during....
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..... 35. Brief facts relating to this issue as culled out from the records are that during the course of search operations on the Group, the valuation of the project Signature Residency, Near JK Hospital, Kolar Road, Bhopal was done by the registered valuer on 30.01.2014 and accordingly valuation report was furnished by the registered valuer. As per the valuation report, the total value of the project was ascertained at Rs. 50.46 crore. This fact was confronted with Shri Vipin Chauhan, partner of the assessee firm, during the course of his statement recorded on 24.07.2014 and he was requested to reconcile the value ascertained by the registered valuer with the books of account of the firm and explain the differences. A copy of the report of the registered valuer was also provided. In the statement he has stated that the actual cost incurred in the project has been shown in the books of the firm, which is approximately Rs. 29.08 crore. As regards the difference, he stated that since the valuation was done on the basis of estimation therefore detailed explanation regarding the difference will be submitted after examining the valuation report in detail. In view of the above, during th....
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.... Provisions of section 69C have no applicability in the case as the assessee is not found to have incurred any expenditure and the difference is only on account of difference in estimate". As regards, the valuation done by the registered valuer during search proceedings, the assessee has filed the written submission as under:- "The valuation report prepared by the valuer at the instructions of the Department is a vague report which has been prepared on a rough estimated basis. As per the books of accounts of the assessee the total direct expenses incurred on the project (excluding cost of land) is Rs. 33,12,15,143/- as per details below: F.Y. 2010-11 Rs. 2,05,72,030/- F.Y. 2011-12 Rs. 5,52,53,932/- F.Y 2012-13 Rs. 10,48,55,314/- F.Y 2013-14 Rs. 15,05,33,867/- Total Rs. 33,12,15,143/- It may be mentioned that at the time of search and even today the project is under construction. Valuation of the cost incurred on the project during the course of its implementation is not justified as each flat, each room and each segment of the project is in difference stage of construction/completion and applying of any common formula/rate....
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....entioned table is treated as undisclosed investment u/s 69B of the Act for A.Y 2008-09 to 2014-15:- A.Y Undisclosed investment (In Rs.) 2011-12 99,82,487/- 2012-13 2,73,48,559/- 2013-14 5,57,58,155/- 2014-15 7,38,32,956/- Total 16,69,22,157/- However, since additions on account of undisclosed income of Rs. 25,00,00/- and Rs. 3,00,00,000/- for A.Y 2013-14 and A.Y 2014-15 respectively, has already been made on account of admission of undisclosed income during search, in the earlier para of this order, the set off of these additions are given in respect of additions made on account of unexplained investment in construction of the project at Rs. 5,57,58,155/- and Rs. 7,38,32,956/- for A.Y 2013-14 and 2014-15 respectively. Thus, the net addition on account of unexplained investment in construction of the project for A.Y 2013-14 and 2014-15 works out to Rs. 5,32,58,155/- (Rs. 5,57,58,155/- (-) Rs. 25,00,000/-) and Rs. 4,38,32,956/- (Rs. 7,38,32,956/- (-) Rs. 3,00,00,000/-).Therefore the amount shown in below mentioned table is added to the total income of the assessee on account of undisclosed investment u/s 69B of the Act for A.Y 2011-12 to 2....
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....tes of Delhi cannot be adopted in Bhopal which is much cheaper. The DVO has adopted the rate of Rs. 9913/- per sq. m. for slit area and Rs. 18075/- per sq. m. for each floor. The security room has been valued @ 15073 per sq. m. Thus, it was submitted that the rates adopted by the ld. DVO was unrealistic and very high. 3.After considering the various objections raised by the assessee and analysing the different case laws, the Ld. CIT(A) allowed the assessee's appeal. 41. Now the revenue is in appeal before the Tribunal. 42. Ld. Departmental Representative vehemently argued and strongly supported the finding of Ld. A.O contending that the impugned addition for undisclosed investment has been rightly made by the Ld. A.O on the basis of Departmental Valuation Officer who has rightly carried out the valuation as per the guidelines provided under respective rules. 43. Ld. Counsel for the assessee relied on the detailed finding of Ld. CIT(A) and also made following written submission:- In the course of the assessment proceedings all the information as required by the AO from time to time was furnished. The assessee is in the business of real estate, builders and....
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....e about the exorbitant valuation. Even today the complexes are constructed at the value of about 1500 per square feet. The Collectors guideline price is the best norm for determining the value. Further the additions made are illegal and invalid on the following grounds: a. The assessee has maintained regular books of accounts which are not found to be incomplete or unreliable. The books of accounts are not rejected. Accordingly addition cannot be made on the basis of DVO Report. b. Even if reliance was placed on the report of DVO, set off of the corresponding expenses should have been given which would have resulted in NIL addition. c. No additions could have been made without considering the submissions of the assessee and without providing the assessee with an opportunity to cross examine the DVO specially when the assessee has made a specific request for the same. d. No exact valuation could have been done till the completion of the project. Further, the DVO has not given the valuation on actual detailed measurement basis. e. Valuation should have been done taking the local prices in consideration in place of Delhi rates whic....
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....tion, attention is drawn to the following judgments (v) CIT v. Star Builders (2007)294 ITR 338 (Guj.)wherein in Para 4 of the order it was held by the court that: "Assuming but not accepting that some unexplained income has been invested in the construction, the fact remains that the business of the assessee is construction. If we add on account of unexplained income in the investment, that will give rise to the cost of the construction and the result will remain the same i.e. "zero". After considering the submissions made by the assessee and the papers filed during the course of the appeal the ld. CIT(A) allowed the appeal. In view of the above, it is humbly submitted that the order of the ld. CIT(A) is correct in deleting the said addition. Thus, the addition deleted by ld. CIT(A) is correct and may please be upheld. 44. We have heard rival contentions and perused the records placed before us and carefully gone through the orders of Ld. CIT(A) as well as the submissions and various case laws relied and referred to by Ld. Counsel for the assessee. Revenue's sole grievance through Ground No.1 raised in its appeal for Assessment Year 2012-13 to....
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....made by the assessee were not sufficient to convince the Ld. A.O and he made the addition for undisclosed investment u/s 69B of the Act. However the Ld. A.O did not rejected the books of accounts and also failed to bring on record any positive material or cogent evidence to establish that the assessee has made investment out of books i.e. over and above the amount invested as shown in the books. 46. The issue before us can be summarised in a question that "whether the Ld. A.O was justified to make addition for undisclosed investment in construction of building projects solely on the basis of Departmental Valuation Report without rejecting the books of accounts and without brining on record any material evidence to prove such unaccounted investments in the case of the assessee who was subjected to search u/s 132 of the Act." 47. We observe that Ld. CIT has dealt with the issue in detail examining the facts and also referring to various judgments squarely applicable on the instant issue raised before us by the revenue authorities. The relevant extract of Ld. CIT(A) finding is reproduced below:- "5.8 As far as merit of this issue is concerned AO made addition of Rs. 99,....
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....ssee has understated or concealed the actual cost of construction and without discharging the onus, the Assessing Officer is not empowered to rely upon the valuation given by the Departmental Valuation Officer, when the books of account were never rejected. 6. The learned standing counsel for the Revenue is not disputing the fact that the books of account furnished by the assessee were never rejected by the Department. 7. In the case on hand, it is beyond any cavil that the books of account furnished by the assessee were never rejected. No explanation was called for from the assessee stating that there was concealment or understatement of amount in the books of account. The initial burden cast on the Department to prove that there was understatement or concealment of income has not been discharged and, therefore, the Assessing Officer is not empowered to refer the matter to the Departmental Valuation Officer or rely on such report. 8. 'The above said view of this court is fortified by the following decisions: (i) In Sarqam Cinema v. CIT {2010/328 ITR 513[2011]197 Taxman 203, the Supreme Court has held as under (page 514) : "In the pr....
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....the decisions referred to supra, this appeal deserves to be allowed. (3) CITVs. Khushal Chand Nirmal Kumar 263 ITR 77 (M.P) Section 158BC of the Income-tax Act, 1961 - Block assessment in search cases - Procedure for _ Block period 1-4-1986 to 31-3-1996 - Whether no additions could be made in income of assessee merely on basis of report obtained from Departmental Valuation Officer, whose evidence was not found during course of search - Held, yes - Whether, in instant case, since nothing was found during search in assessee's premises with regard to investment in house, Tribunal was justified in deleting additions made by Assessing Officer on account of unexplained investment in construction - Held, yes CIT Vs. Manoj Jain287 ITR 285(Delhi)- section 158BC of the Income-tax Act, 1961 - Block assessment in search cases - procedure for - Tribunal having found as a fact that search on assessee's premises did not lead to seizure of any incriminating evidence to Suggest that any income had not been or would not have been disclosed for tax purpose, deleted addition made by Assessing Officer on basis of report of valuation Officer in regard to....
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....e Rs. 3,41,33,000/- as against the declared value of Rs. 59,50,000/-. The difference of Rs. 2,81,83,000/- was added by the assessing officer by invoking the provisions of Section 69B of the said Act. 3. Being aggrieved by the said addition the respondent assssee preferred an appeal before the CIT(Appeals) who deleted the said addition after referring to the decision K.P. Varghese v ITO (1981) 131 ITR 597/7 Taxman 13(SC). The Commissioner of Income Tax (Appeals) held that the addition had been made on the basis of the valuation report without there being any other material to indicate that any extra consideration had passed in respect of the said purchase of property. Thereafter, the revenue, being aggrieved by the order passed by the CIT(Appeals),preferred an appeal before the Tribunal which has been dismissed by the Tribunal by confirming the deletion made by the CIT (Appeals). 4. The only point to be considered is whether the valuation rendered by the DVO is to be taken into account or not. It has been argued by the learned Counsel for the revenue that the assessing officer was justified in referring the matter to the DVO for an opinion with regard to the fair m....
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....fore, the same cannot be relied upon for making an addition. In these circumstances, the question which has been framed is decided in favour of the assessee and against the revenue. The appeal is dismissed. (6) CIT Vs Lahsa CPvt. Ltd 357 ITR 671 (Delhi)- Section 142A of the Income-tax Act, 1961 - Estimate mode by Valuation Officer - Assessment year 1999-2000 _ Whether addition con be mode solely relying upon report of Departmental Valuation Officer - Held, no [Para 5) 1. Revenue in this appeal under Section 260A of the Income Tax Act, 1961 ("Act" for short) impugns order dated 25.06.2010, passed by the Income Tax Appellate Tribunal in the case of M/s Labsa Construction Pvt Ltd.' on the ground of perversity. The appeal pertains to the Assessment Year, 1999-2000. (incorrectly mentioned in the impugned order as assessment year 2006-07). 2. Property in question bearing No.C-20, NDSF, South Ex., Part-II, New Delhi had two sellers. The respondent/assessee- Lahsa Construction Pvt. Ltd. had sold 50 shale of the property in favour of Mrs. Madhu Arora, whereas the second group of owners consisting of four individuals had sold 50 of the property in favo....
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....ntioned in respect of each item In the books Simply because the valuation report was of a high amount, the books could not be said to be unreliable. The Tribunal was therefore, justified in deleting the addition of Rs. 55,780/- (8) CIT v/s Vijay Kumar D Gupta (2014) 365 ITR 470 (Guj) " ....Moreover, it is apparent that the only reason for making the addition under section 69 of the Act is that there is a difference in the cost of construction as determined by the Valuation Officer and as shown by the assessee. At no stage of the assessment proceedings does the assessing officer appear to have mentioned that the books of accounts are defective or that the cost of construction as shown in the books of account is not the true cost of construction. Thus, while making the reference to the valuation officer, the assessing officer has not recorded any defect in the books of account nor has he rejected the same. Except for the difference in the estimated cost determined by the Valuation Officer and the actual cost as shown by the assessee, the assessing officer has not brought any material on record to establish that the assessee had made any unaccounted investment in the....
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....reme Court - the findings on this issue in respect of peculiar facts of this case are as below; Admittedly, the assessee firm maintained its regular books of accounts supported by bills/vouchers and other records which were subjected to Audit. The AO has neither pointed out any defect in books nor brought any positive material on record to establish alleged unaccounted investment in project "Signature Residency". Most importantly, AO has not even rejected the books of accounts even alter receipt of valuation report. In view of these facts, valuation report obtained from DVO cannot form a foundation ipso facto for making addition towards alleged suppression of cost of investment. Neither DVO nor AO has pointed out that certain expenditure on certain items/construction was incurred which was not recorded in the books maintained by the assessee. Hence, additions made by AO is not sustainable in law being based merely on valuation report received from OVO. ii) The A.O. has not mentioned any reason in the assessment order or in the reference to the valuation, that he had any incriminating material which led to form his belief that the appellant had under slated the cos....
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....the cost of value of property as per CPWD rates. Similarly, in the case of CIT v/s Prem kumere Murdlye 296 ITR 508 (Raj) wherein hon'ble court refused to interfere in the order of ITAT holding that appropriate to be taken into consideration would be PWD rates and holding difference between CPWD rates and PWD rates at 20. Similar views have been expressed in the case of ITO v/s Nilesh meheshweri (2011) 53 DTR 43 (ITAT Jaipur). In view of this, a difference of 20 between cost shown in books and estimated by DVO falls within 'tolerance band' as held by various courts. Further, appellant purchased material on wholesale basis which brings 'economy of scale' into construction cost which as per appellant would result into savings upto 25. AO has acknowledged this aspect but did not provide any relief while making addition. Appellant has also argued about savings in cost of construction for other reasons as well i.e. self-supervision. consultancy charges etc. however. AO failed to allow any benefit to the assessee on any of the count which is not justified. I am of the view that as a consequence of such under reporting, the AO is required to reject the books of....
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....e copy of construction account for the period under consideration and to produce the books of accounts and supporting vouchers for verification which was duly complied by the assessee. 5.10 It is interesting to note that valuation of the property under consideration was done by the DVO alter applying cost index on the basis of DPAR-2007 (as base). It is settled law that DPAR rates adopted by DVO are higher than PWO rates. Hon' ble High Court of Rajasthan in the case of CIT v Is Prem Kumari Murdiya 296 ITR 344 (Raj) refused to interfere in the order of IT AT holding that appropriate rate to be taken into consideration would be PWO rates and holding difference between CPWO rates and PWO rates at 20. Similarly, in the case of ITO v/s Nilesh Maheshwari (2011) 53 DTR 43 (ITAT Jaipur) held alter relying on the decision of Tek Chand v/s ITO 51 TTJ (JPR) 607 that there is variation in local PWD rates and CPWD rate by margin of 20. It has been held in the case of CIT v/s lahsa Construction (P) Ltd (2013) 357 ITR 671 (delhi) that no addition can be made solely on the basis of valuation report of OVO. Ld AR also placed reliance on the decision of CIT v/s VS Pralap Singh Amro Sing....
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....ference the court held that "we do not find we have any authority to enter into the controversy on valuation of assets which is a pure factual issue" and the court further held that ''The claim for spreading over of the investment for several years con be granted only if it is proved that the investment is mode in several years. There is no such evidence in this case". Thus it would be seen that the said judgment has no applicability to the case of the assessee. CIT v A O Ali Mohammad 296 ITR 570 (Mad) The issue in this case was that the DVO had estimated the cost of construction at Rs. 64,88,000/- as against recorded cost of Rs. 47,42,629/- . The addition mode was restricted to Rs. 9 lokh and too was, directed to be spread over 0 period of 5 years by the CIT(A) and the ITAT both. This was challenged by the deportment before the High court and the court held that ''The valuation is not a mathematical precision and there is bound to be difference between one valuer to another valuer and it is, only a pure question of fact" CIT vs, P. Mohonokala (2007) 210 CTR (SC) 20 : (2007) 291 1TR 278 (SC), referred to by the High Court held "that whenev....
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....counted investment in the building project has been made, addition made purely on the basis of Departmental Valuation Report, we find no reason to interfere in the finding of Ld. CIT(A) who was rightly deleted the addition for the alleged undisclosed investment u/s 69B of the Act made by the Ld. A.O at Rs. 2,73,48,559/-, Rs. 5,32,58,155/- and Rs. 4,38,32,956/- for Assessment Years 2012-13, 2013-14 and 2014-15 respectively. We accordingly confirm the finding of Ld. CIT(A) on this issue and dismiss Revenue's common Ground No.1 raised for Assessment Years 2012-13, 2013-14 and 2014-15 in ITA No.174 to 176/Ind/2018. 49. As regards common Ground No.2 of Revenue's appeal for Assessment Years 2012-13, 2013-14 and 2014-15 in case of M/s. Signature Builders the revenue has challenged the finding of Ld. CIT(A) allowing the assessee's claim of set off income against the additions made u/s 69B of the Act. During the course of assessment proceedings when the Ld. A.O initiated to make addition u/s 69B of the Act for the unexplained investment in the construction of residential projects it was submitted before the Ld. A.O that provision of section 69C specifically mentions that in case of unexp....
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....d to be allowed. The claim was made by the appellant before the AO, however the same was not accepted and no specific reason for the rejection is assigned by the AO. 6.2 During the appellate proceedings, Id. AR of the appellant has filed the written submissions dated 09.02.2018. The relevant extract of his submission is reproduced as under: "The addition regarding unexplained investment is made by the AO U/S 69B after making detailed discussion in Page 30-31 of the assessment order. Reliance is placed by him on the judgment of MP. High Court in the case of CIT V Omprakash Bagria (HUF) 287 ITR 523 and various other judgments of the Supreme Court and various other High Courts to substantiate that the addition under consideration is required to be made u/s 69B In this regards it may be mentioned that in case the Aa has formed an opinion that the assessee has incurred some unaccounted investment on the construction he was duty bound to adjust the construction expenses and should have increased the expenses by a similar amount which would nullify the effect of addition if any. It may be mentioned that provisions of section 69C specifically mentions th....
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....he appellant have been perused and considered. Due consideration has been given to the findings arrived at in the assessment order and in the remand report. It is seen that as per the provisions of section 142A (1) reference can be made to the valuation officer for estimating " .... the value including fair market value, of any asset, property or investment .. " Thus the Act does not provide for any reference to be made for ascertaining or estimating the unexplained expenses. Further it is seen that the provision of section 69C provides that where the assessee is found to have incurred any expenditure and he fails to explain the source of such expenditure to the satisfaction of the assessing Officer the expenditure may be deemed to be the income of the assessee. The proviso to the section provides that such expenditure will not be allowed as deduction under any head of income. Similarly provision of section 69 and 69B provide that where the assessee is found to have made any investment, the source of which is not explained to the satisfaction of the Assessing Officer the value of unexplained portion of the investment may be deemed to be the income of the ....
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....ost of the construction and the result will remain the same i.e. "zero". Thus as per the provisions of the Act and relying on the judgments of the High Courts referred above I am of the firm opinion that the assessee is entitled to claim deduction of any expenses which has been deemed to be its income u/s 69B. Accordingly the AO is directed to provide deduction of the addition made u/s 69B towards unexplained expenditure incurred by the assessee. In view of the above discussion Ground No. 4 for AYs 2011-12 to 2014-15 is hereby allowed. 54. We have perused the above finding of Ld. CIT(A) and find no reason to interfere in the same as it has been arrived at after considering the settled judicial precedence which has not been rebutted by Ld. Departmental Representative. In the result the common Ground No.2 raised by the Revenue for Assessment Years 2012-13 to 2014-15 is dismissed. 55. As regards Ground No.3 of Revenue's appeal in the case of M/s. Signature Builders for Assessment Year 2012-13 the finding of Ld. CIT(A) deleting the addition of undisclosed investment at Rs. 10,00,000/- in purchase of land is under challenge. Brief facts relating to this issue are....
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....hows that the amount is deposited by the assessee and thus the addition made by the Ld. A.O is merely on surmises without any basis of positive evidence. 60. We have heard rival contentions and perused the records placed before us. The revenue has challenged the deletion of addition made by Ld. CIT(A) at Rs. 10,00,000/- for undisclosed investment in purchase of land. Ld. CIT(A) after considering the submissions and other relevant material facts deleted the addition observing as under:- "7.3 Submission filed by appellant along with the details / material brought on record have been duly considered. Due consideration has been given to the findings arrived at in the assessment order. The appellant during assessment proceedings as well as appellate proceedings strongly opposed the addition made by the AO on account of cash deposit in third party account i.e. Smt Kamla Devi Sahu. On perusal of written submission filed by the assessee before AO it has been claimed that the land purchased from Smt Kamla Devi Sahu is adjoining to slum cluster and has been encroached by the slum dwellers therefore, the assessee was not in possession of the said land. The appellant has also filed....
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....e made on account 0f shear presumption. however. how strong the presumption may be. It has been presumed by the AO that cash deposited in the bank account 0f seller was deposited by the appellant and treated the same as unexplained investment made by the appellant. This is potently wrong and unjustified approach on the part of the A.O. because he has made such huge addition simply on presumption and assumption without bringing any positive evidence on record. In the case of CIT v/s Ram Narain Gael 224 ITR 180 (P & H) it has been held that suspicion however strong cannot take the place of evidence. Hon'ble P & H High Court in the case of CIT v/s faquir Chaman Lal 262 ITR 295 (P & H) has held that it is well settled proposition that the presumption however strong cannot substitute evidence. Similar were the findings of Hon'ble Calcutta High Court in the case of CIT v/s Emerald commercial Ltd & Anr 250 ITR 539( cal), In view of the above discussion additions made by the AO does not hold ground. Thus, addition of Rs, 24,00,000/- in AY 2011-12 and Rs, 10,00,000/- in AY 2012-13 made by the AO on account of unexplained investment in purchase of land is hereby deleted. The appeals ....
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....g the course of search the assessee was found to be in physical possession of cash of Rs. 1,43,910/- at the time of search. The appellant before AO and before me has claimed that as per its books of accounts cash in hand as on date of search was Rs. 4,06,672/- put of which Rs. 3,00,000/- was kept by Shri Vipin Chauhan and balance of Rs. 1,06,672/- is part of cash fund at premises of the appellant. The AO had however not accepted the claim of the assessee on the basis that the assessee has not furnished any supporting evidence. It has to be appreciated that the cash balance as per books of account maintained in regular course of business is required to be verified from the cash book and no other supporting evidence is required. The AO had not brought on record any observation that the claim of the assessee of having a cash balance of Rs. 4,06,672/- as per the books of account seized and as per the books of account produced before the AO is incorrect. In fact appellant has furnished books of accounts before AO which were duly verified by him. Therefore the addition made by the AO on this account to the tune of Rs. 1,43,910/- is directed to be deleted. The appeal on this ground is all....
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.... income declared by the assessee u/s 132(4) of the Act during the course of search carried out on 29.01.2014. Income was declared by the authorised representative of the Signature group under the name of various concerns in the statement made u/s 132(4) of the Act. Subsequently when the assessee was required to file return of income in response to notice u/s 153A of the Act the impugned income was not shown in the Income Tax Return on the basis of the assessee's observation that there was no incriminating material seized during the course of search which could support the impugned amount. During the course of assessment proceedings also the addition made by the Ld. A.O was purely on the basis of statement given during the course of search. Nowhere in the assessment order the Ld. A.O has brought on record any incriminating material or loose paper seized during the course of search having its nexus with the addition made on the basis of statement. We further observe that in one of the group concern M/s Ultimate Builders ITA No.134/Ind/2019 order dated 9.8.2019 similar issue came for adjudication and this Tribunal on the basis of the facts of the case as well as relying on the judicia....
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....d/2019. Ground No.1 raised by the revenue reads as follows:- (1) On the facts and in the circumstances of the case, the Id. ClT(A) erred in deleting the addition of Rs. 3,36,13,000/- made by the Assessing Officer on account of undisclosed investment u/s 69B.. 74. Brief facts relating to this ground are that the assessee had purchased 6.40 acres of land at Village Bagli from Shri Motilal vide three registered purchase deeds dated 19.07.2011, 23.01.2012 and 31.05.2012 for a total purchase consideration of Rs. 2,91,62,000/- which was duly recorded in the regular books of accounts of the assessee. During post search investigation statement of Mr. Motilal who was the seller of the land was recorded who stated that he has sold the land under consideration to Mr. Thakur Prasad @Rs. 1 crore per acre. Based on this statement show cause was issued to the assessee proposing an addition of Rs. 3,48,30,000/- as unexplained investment in purchase of the land(Rs. 6.40 crore - 2.92 crore). Detailed submissions were made before the AO on the proposed addition which were found not acceptable and the addition was made by the AO after making the following observation: i. The selle....
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....the fact that the land is sold to Signature Infrastructure, Bhopal. The statement of the farmer was recorded after the search and the copy of the same was not provided to the assessee. Without providing any opportunity to cross examine, the said statement is not binding on the assessee. The seller also was not able to give the complete account of the sale consideration. During the appellate proceedings the matter was remanded to the Ld. A.O. for giving the opportunity of cross examination. In the cross examination, the seller specifically asserted that the land has been sold for Rs. 1 crore per hectare and not Rs. 1 crore per acre (Pg.14 of ld. CIT(A) order). Thus, it is very clear that the land was sold for Rs. 2.8 crores and not Rs. 6.4 crores. Thus, the addition was made on the wrong assumption of facts. The ld. A.O. has not been able to bring on record any evidence to show that the land in question was purchased for more than the consideration shown in the registered document. There is no evidence found during the course of search which show that the assessee has paid any extra amount. Under these circumstances the ld. CIT(A) was right in deleting the addition. 80. We have h....
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.... examine nor copy of the statement was provided to the assessee. The Ld. A.O after giving opportunity to cross examine submitted the remand report on 29.6.2018. In this remand report placed at page 16-17 of the impugned order of Ld. CIT(A) dated 30.10.2008, the statement of the seller Mr. Motilal was again taken. Incidentally in the original statement given during the course of post search enquiry he stated to have sold the land at Rs. 1 crore per acre but in the remand proceedings in reply to Question no. 6 he stated to have sold the land @Rs. 1 crore per hactre. The assessee also filed a rejoinder to the remand report on 29.6.2018 which reads as follows:- The AO was also issued directions to provide the assessee with an opportunity to cross examine Shri. Motilal Rajput. The AO had provided the assessee with an opportunity to cross examine the said person on 20.06.2018 and have submitted her report on the cross examination along with copy of the statement of Mr. Motilal recorded during the course of cross examination. The said person in his initial statements recorded on 09.06.14 during post search proceedings have stated that he has sold the land under consideration to t....
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....he remand report, rejoinder filed by the assessee and other submissions filed during the course of the appellate proceedings and also considering the fact that in the initial statement the seller have stated to sold the land @ Rs. 1 crore per acre and in the remand proceedings he stated to have sold @Rs. 1 crore per hectre and looking to this fact that 1 hectre is equivalent to 2.47 acre which completely changes the calculation of the investment made by the assessee in the land in question, deleted the addition of Rs. 3,36,13,000/- for Assessment Year 2012- 13 observing as follows:- 5.4 Submission filed by appellant along with the details / material brought on record have been duly considered. Due consideration has been given to the findings arrived at in the assessment order and the remand report. It is seen that the addition is made solely on the basis of statement of Mr. Motilal recorded during post search enquiry. It is seen that during search no paper was found/seized which could indicate that the assessee has purchased the land under consideration for a consideration other than what is mentioned in the registered purchase deed. No evidence of the assessee ha....
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....idered view that the sole basis on which the impugned addition was the price of Rs. 1 crore per acre stated by the seller which was subsequently revised/rectified in the remand proceedings by the seller stating at Rs. 1 crore per hectare and the same if applied to the transaction under consideration and the same will arrive at 2.59 crores which is less than the actual purchase consideration paid by assessee at Rs. 2.91 crores (approx.) and thus do not call for any addition for unexplained investment in the purchase of 2.59 ha of land at Village Bagli by the assessee. Since there is no inconsistency in the finding of Ld. CIT(A) we uphold the same and dismiss Revenue's Ground No.1 for Assessment Year 2012-13. 83. Now we take up Ground.2 for Assessment Year 2012-13 which reads as follows; (2) On the facts and in the circumstances of the Case, the Id. CIT(A) erred in deleting the addition of Rs. 4,32,40,000/- made by the Assessing Officer on account of unexplained investment in purchase of land at village Bagli.. 84. Brief facts of this issue is that during the course of search four unsigned agreements were found. Out of these two agreements related to purchase of 2.40 a....
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.... 1.12 crores per acre in preference to the agreement mentioning the rate of Rs. 20 lakhs per acre. The ld. CIT(A) further observed that none of the parties to these agreements have made any statement that the higher consideration is paid than mentioned in the sale deed. It was observed that the A.O. has failed to bring on record any other sale instances of the same area. Under these circumstances the additions are uncalled for. Thus, the ld. CIT(A) deleted the addition. 86. Now the revenue is in appeal before the Tribunal. 87. Ld. Departmental Representative vehemently argued supported the order of Ld. A.O. 88. Per contra Ld. Counsel for the assessee relied in the finding of Ld. CIT(A) and also made following written submissions; It is humbly submitted that the draft agreement were unsigned. The complete loose papers have to be considered. The Ld. AO ignored the fact that the sale deed is executed duly signed by the sellers and the purchasers in front of the witnesses. Neither the purchaser nor the seller has confirmed any variation in the sale consideration. No evidence has been found during the course of search or afterwards indicating that the assessee has made....
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....ct and may please be upheld. 89. We have heard rival contentions and perused the records placed before us. Revenue's grievance in Ground No.2 is against the deletion of addition of Rs. 4,32,40,000/- made by the Ld. A.O on account of unexplained investment in purchase of land at village Bagli. The basis of the impugned addition were 4 unsigned agreements found during the course of search. 2 agreements related to purchase of 2.40 acre land in which sale rates were mentioned @Rs. 20,00,000/- per acre and Rs.l,12,00,000/- per acre. The remaining 2 agreements relates to purchase of 4.20 acre land out of which in one agreement sale rate was mentioned Rs. 20,00,000/- per acre and in other 1,12,00,000/- per acre. During the course of assessment proceedings it was submitted by the assessee that the actual transaction place out of the area of khasra mentioned at 2.40 acre and 4.2 acre mentioned in the draft agreements. The assessee purchased 2.19 acre at a consideration of Rs. 1 crore vide registered sale deed dated 15.10.11 and 4.01 acre for a consideration of Rs. 1.62 crores vide registered sale deed executed on 2.11.2011. The rate per acre of 2.19 acre land purchase deal is at Rs. ....
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....he agreement having a mention of the sale rate at Rs. 1.12 Crore per acre in preference to the agreement mentioning sale consideration at Rs. 20 lakh per acre. Both the agreements were unsigned and similar in its content except for the rates and the observations made by the AO were equally applicable to both. None of the parties to these agreements have made a statement that the consideration paid was in excess of the consideration stated in the registered purchase deed. The AO have also failed to bring on record any instance of sale having been undertaken in the same area for a near about consideration. The logic for drafting an agreement mentioning a value of Rs. 20 lacs per acre when the actual purchase has taken place at Rs. 40-45 lac per acre can only be that it was done at a negotiation stage. Thus there was no reason to disbelieve the submission of the assessee that the agreements seized were draft agreements especially when they were unsigned and no evidence of the assessee having made any excess payment has been found in search. The onus of establishing the investment was on the AO and he has failed to discharge his onus. 6.4 It is also seen that the land purchase....
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....as mentioned and further was not justified in accepting the actual purchase consideration paid by the assessee ranging between 40 to 45 lakhs per hectre. Thus there remains no reason to disbelieve the submission of the assessee that the unsigned draft agreements cannot be the basis to make any addition in the hands of the assessee. The judgment of Hon'ble Rajasthan High Court in the case of CIT V/s Khandelwal Shringi & Co (supra) (2017) 299 CTR (Raj) 437 is squarely applicable on the facts of the instant case wherein Hon'ble Court had observed that the Ld. AO had made the addition on the basis of earlier agreement to sale supposedly entered into by the seller with another party which was never executed and the same cannot be taken as an evidence of the fair market value of the land in question and further since the Ld. A.O did not adduce any other evidence to show that the market value applied by him, the addition made by the Ld. A.O has been rightly deleted by the Tribunal. 92. In the instant case also the rates mentioned in the unsigned draft agreements is the basis and Ld. A.O had applied the higher rate mentioned in the seized unsigned two draft agreements i.e. 1.12 ....
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....been received earlier. Thus, the payment was made on a Sunday and is accordingly covered by the exception provisions of rule 6DD(j). Balance payment of Rs. 765000/- was included in the payment made by cheque issued on 25.06.2011 for Rs. 10,00,000/- and thus no disallowance was called for." As regards the payment of Rs. 78,00,000/-, it was submitted before the ld. AO that the payment against the said purchase was partly made by cheque as detailed hereunder: Amount Paid Ch No Date Drawn on Issued in the name of Rs. 50,000/- 6482 14.02.11 HDFC Bank Manphool Singh Rs. 2,65,000/- 25086 25.06.11 HDFC Bank Manphool Singh Rs. 10,00,000 25087 25.06.11 HDFC Bank GopalSingh Rs. 50,000/- 6491 14.02.11 HDFC Bank Gopal Singh Rs. 10,00,000 25088 25.06.11 HDFC Bank Bala Prasad Rs. 50,000/- 6486 14.02.11 HDFC Bank BalaPrasad Rs. 10,00,000 25085 25.06.11 HDFC Bank Gorelal Rs. 50,000/- 6491 14.02.11 HDFC Bank Gorelal Thus Rs. 34,65,000/- was paid by cheque against the said purchase and balance of Rs. 4335000/- only was paid in cash. The p....
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....the genuineness of payment and identity of receiver is established, disallowance u/s 40A (3) is not justified. The aforesaid judgments in turn are based on the judgment of the Hon'ble Supreme Court in the case of Attar Singh Gurmukh Singh v. ITO [1991] 191 1TR 667. Without prejudice to the above, it is submitted that the land purchased has been shown as stock. Thus the assessee has not made any claim of expense during the year. As the assessee has not made any claim for allowance of the expenses, there cannot be any disallowance of the same. 98. We have heard rival contentions and perused the records placed before us and carefully gone through the submissions made by the Ld. Counsel for the assessee. Through Ground No.3 revenue is aggrieved with the finding of Ld. CIT(A) deleting the addition of Rs. 98,35,000/- made by Ld. A.O on account of disallowance u/s 40A(3l of the Act. We note that the assessee during this course of business made the transaction of purchase for land. In one of such transaction vide registry dated 24.10.11 and 01.06.11 for the land purchased from Mr. Manphool Singh Bagli Payment of cash of Rs. 32,00,000/_ and Rs. 78,00,000/- respectively ....
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.... payment on Sunday was evidenced from the seized cash book and the purchase deed made a specific mention earlier, the AO was not justified in making disallowance of Rs. 24,35000/- and the disallowance mode is directed to be deleted. 7.5 It is further seen that the genuineness of the payments and the identity of the sellers of the land ore established beyond any doubts and the AO has also not raised any doubt about the some. The only point for consideration is whether the payri1ent though genuine should be disallowed on account of violation of section 40A (3) of the Act and not being covered by the specific exemptions provided in section 6 DD.- It is seen that the cash payment and the purchase of land ore duly recorded in the regular books of account. Now the only issue which remains for adjudication is whether a genuine recorded transaction undertaken in cash in the best interest of the business and otherwise allowable can be disallowed only on a mere technical default. Reference in this regards is mode to the decision of the Hon'ble Supreme Court in the case of Attar Singh Gurmukh Singh v. ITO 59 taxmann.com 11 wherein the object of insertion of section 40....
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....nt of non-observation of subsection (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A (3) has been brought on the statute books has been clearly satisfied in the instant case. Therefore, being a case of genuine business transaction, 110 disallowance is called for by invoking the provisions of section 40,A (3) of the Act", The appellant submitted that he had purchased the land from agriculturist, The seller refused to accept the payment by cheque, therefore, the appellant has to make the payment in cash. It has been held in the case of Gurdas Garg v /s The commissioner of Income Tax Appeals, IT Appeal No, 413 of 2014 the hon'ble High court of Punjab and Haryana held that '" The Identity of the payees i.e.: the vendors in respect of the land purchased by the applicant was established ", each of these agreement was certified by the stomp registration Authority ",the transaction were genuine and bar against the grant of deduction under section 40A(3) was not attracted. ....
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....orted by judicial pronouncements referred herein above which are squarely applicable on the facts of the instant case where also the genuineness of the payment were not doubted and there is no iota of evidence to show that the assessee wanted to evade any tax liability and more so the transactions have been carried out before the Registering authority of State Government and impugned cash payments are part of the consideration appearing in the registered deed. We thus respectfully following the judicial precedents referred herein above find no inconsistency in the finding of Ld. CIT(A) deleting the disallowance u/s 40A(3) of the Act for the alleged cash payment of Rs. 98,35,000/- u/s 40A(3) of the Act and the same is upheld. Revenue's Ground No.3 for Assessment Year 2012-13 (IT(SS)A No.02/Ind/2019) is dismissed. 100. Ground No.4 is general in nature which needs no adjudication. 101. In the result appeal of the Revenue for Assessment Year 2012-13 in the case of Signature Infrastructure vide appeal No. IT(SS)A No.02/Ind/2019 stands dismissed. 102. Now we take up Revenue's Appeal No. IT(SS)A No.13/Ind/2019 for Assessment Year 2014-15 in the case of M/s Signature Colonisers Pv....
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....ion does not establish the credit worthiness and the genuineness of the transaction. He therefore, made the addition of Rs. 2,45,00,000/- u/s 68 of the Act. Before the ld. CIT(A) the assessee filed complete details under Rule 46A which consisted of the following papers 1. Copy of pass port 2. Electricity bill of Dubai to prove the address 3. Copy of the PAN card bearing number BHFPS0322A 4. The amount received through Demand Draft prepared at Dubai. The advises of DD prepared in the name of the assessee and the name of the lender. 5. On the direction of the ld. CIT(A) the following papers were also filed to establish the creditworthiness of the lender: a. The lender is carrying on his business under the business name of "Smart Gulf General Trading L.L.C" since 09.03.1988. The copy of license issued by the Dubai authorities as filed. b. The lender is owning 49% of the shares and balance 51% of the shares have been allotted to local residents of Dubai. It may be submitted that the laws of Dubai requires that any foreign national can do business in Dubai only after taking a local person as partner who should hold the major....
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....ther submitted that the genuineness of the transaction of receipt of money is not questioned by the AO, but he has raised doubt regarding the entries in the books as to whether the amount is received as share capital or as an unsecured loan. The addition made is accordingly requested to be deleted. The ld. CIT(A) after considering all the documents allowed the assessee's appeal. 108. We have heard rival contentions and perused the records placed before us and carefully gone through it. Revenue's sole grievance for 2014-15 in the case of M/s Signature Colonisers Pvt. Ltd is with regard to deletion of addition of Rs. 2,45,00,000/- by Ld. CIT(A) which was made by the Ld. A.O u/s 68 of the Act for unexplained cash credit received from Non Resident Indian Shri Rajesh Sadhwani. 109. From perusal of the record we observe that Shri Rajesh Sadhwani is a Non Resident Indian and lives in Dubai and is the managing person of the company in the name of Smart Textiles LLC, A1-Fahidi Street, Bur Dubai. The impugned amount of Rs. 2,45,00,000/- has been received through banking channel. Ld. A.O has not doubted the identity and creditworthiness of the lender. Only because of the confirmation le....
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.... S.No. Demand Draft No Date of Issue Amount INR 1 00220061300139 20.06.2013 Rs. 9,00,000 2 00220061300138 20.06.2013 Rs. 9,00,000 3 00220061300136 20.06.2013 Rs. 9,00,000 4 00220061300143 20.06.2013 Rs. 9,00,000 5 00220061300142 20.06.2013 Rs. 9,00,000 6 00220061300141 20.06.2013 Rs, 9,00,000 7 00220061300140 20.06.2013 Rs. 9,00,000 8 00220061300145 20.06.2013 Rs. 9,00,000 9 00220061300144 20.06.2013 Rs. 9,00,000 10 00220061300147 20.06.2013 Rs. 9,50,000 11 00220061300146 20.06.2013 Rs. 9,50,000 12 -- -- Rs. 9,40,000 13 00020069 31.08.2013 Rs. 9,40,000 14 00020070 31.08.2013 Rs. 9,40,000 15 00020071 31.08.2013 Rs. 9,40,000 16 00020072 31.08.2013 Rs. 9,40,000 17 202885 10.l0.2013 Rs. 7,00,000 18 202884 10.l0.2013 Rs. 7,00,000 19 202875 30.09.2013 Rs. 5,00,000 20 202874 30.09.2013 Rs, 5,00,000 21 202872 30.09.2013 Rs. 9,00,000 22 202871 30.09.2013 Rs. 8,50,000/- 23 202870 30.09.2013 Rs. 8,5....
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....he same view has been upheld by Honb'le ITAT in the following cases:- Umesh Electricals vis Asst. CIT(2011) 18 IT] 635 (Trib.- Agra): (2011) 131 ITD 127: (2011) 141 TTJ Establishment of identity and credit-worthiness proved- Assessee produced the bank account of creditor in his bank account on the same day on which loan was given- Assessee furnished the cash flow statement of creditor-Based on inquiry, AO noted that creditor was engaged in providing accommodation entries-HELD- In group cases, it has been held that there was no evidence against the creditor to prove that he was providing accommodation entries-Further, mere deposit of money by the creditor on the same day, does not establish that the loan is not genuine-Assessee has proved the source of credit and also the source of source -Addition cannot be made. Aseem Singh v/ Asst. ClT (2012) 19lTJ 52 (Trib.-Indore) Identity and credit-worthiness proved-Assessee took loan of Rs. 1,00,000/- confirmation of creditor was filed-Lower authorities made addition u/s 68 holding that amount was deposited in cash in the bank account of lender immediately prior to date of loan - HELD- Assessee has est....