TaxTMI 
TaxTMI 
2021 (10) TMI 452
X X X X Extracts X X X X
X X X X Extracts X X X X
....ight by the A.O. during assessment proceeding." Grounds of appeal in IT(SS)A No.260/Ind/2016 (A.Y. 2011-12) 1. "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 12,03,50,000/- on account of undisclosed receipts of 'on-money' received from sale of flats without appreciating the facts and evidences brought into light by the A.O. during assessment proceeding." Grounds of appeal in IT(SS)A No.261/Ind/2016 (A.Y. 2012-13) 1. "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 49,58,74,800/- on account of undisclosed receipts of 'onmoney' received from sale of flats without appreciating the facts and evidences brought into light by the A.O. during assessment proceeding." 2. Grounds of appeal in ITA No.1330/Ind/2016 (A.Y. 2013-14) 1. "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 39,10,91,600/- on account of undisclosed receipts of 'onmoney' received from sale of flats without appreciating the facts and evidences brought in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh facts and circumstances of the case in the light of judicial pronouncements as noted in the impugned order, deleted the additions made by the Assessing Officer. 4. Being aggrieved, the Revenue is in appeals before this Tribunal for all the present assessment years. 5. The ld. CIT-DR relied upon the order of the Assessing Officer. Per contra, the ld. counsel for the assessee referred and relied on the findings of Ld. CIT(A) and submitted that the additions based on the documents found during search were not related to assessee company as all the group concerns of Jhaveri Group are engaged in the business of development of land and sale thereof after plotting, whereas, the assessee company has not sold a single inch of land. It's main and core business is to construct residential and commercial units. The seizure made in other cases has no bearing whatsoever in the assessee's case. Learned Counsel for the assessee also submitted that the Assessing Officer referred to the summons issued to some Shri Ramesh Chandra Gupta, Garima Chelani and Kokila Chelani. However, the assessee has no business transactions with these persons. Further, no single incriminating document pertainin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plots in the said two projects @ Rs. 1500/- per sq. ft. The Assessing Officer has relied on this evidence seized in respect of the projects 'Silver Mansion' and 'Silver Mansion Extension' and the post search enquiries conducted in respect of the following projects:- (i) 'Shikharji' project developed by another member of the Jhaveri Group, Smt. Kokila Jhaveri. (ii) M/s Ajitnath Reality Pvt. Ltd. (iii) M/s Padmaprabhu Infrastructure Pvt. Ltd. In the post search enquiries conducted in the above cases some of the purchasers of the plots admitted that they have paid on money for purchase of the plots. The Assessing Officer held that on the basis of evidences seized in respect of 'Silver Mansion' and 'Silver Mansion Extension' projects and the post search evidences gather regarding acceptance of on money by the Jhaveri Group in its various projects, the assessee company has not shown correct receipts in its books of accounts. The Assessing Officer took the view that the rate of the constructed housing units in the assessee's project cannot be less than Rs. 1500/- per sq. ft., the rate at which developed plots have been sold in 'Silver Mansion' and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses, apartments, terrace cottage, town house etc.; the built up area and the circle rates for the different categories. It is seen that the appellant has not booked any sale below the rates prescribed by the Circle Rate of Authority i.e. Sub-Registrar of Indore. The details are as under :- Financial Year 2009-10 Product Name Sale Value Guideline Value Size Villa Ruby 1.00 to 1.21 Crore 5770445/- Plot 4500 sq. ft. and Built Up 4456 sq. ft. Villa Pearl 66.5 lacs 3547998/- Plot 2700 sq. ft. and Built Up 2893 sq. ft Mid-rise apartments 41.5 lacs 2329680/- 2089 sq. ft. Built Up Area Terrace Cottage 61 lacs 3514200/- 3386 Sq. Ft. Built Up (1667 Sq. Ft. sold out) Town House 55 lacs 2579650/- Plot 1635 sq. ft. and Built Up 2539 sq. ft. Flats Rs. 1700/- per sq. ft. Rs. 1115 per sq. ft. - Financial Year 2010-11 Product Name Sale Value Guideline Value Size Villa Ruby 1.00 - 1.21 Crore 5979553/- Plot 4500 sq. ft. and Built Up 4456 sq. ft. Villa Pearl 66.5 lacs 3673463/- Plot 2700 sq. ft. and Built Up 2893 sq. ft Mid-rise apartments 41.5 lacs 2523820/- 2089 s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T vs. JP Morgan India Pvt. Ltd. 46 SOT 250(Mumbai), held that the addition made by the AO based on the loose paper, which is not a conclusive evidence and therefore, the same is not sufficient for making the addition. The Tribunal also held that no addition can be made on the basis of dumb document/notebook/loose slips in absence of any other material to show that the assessee has made investment in land. The relevant observations and findings of the Tribunal in this case read as under:- 17 We have heard the arguments of both the padies, perused the record and have gone through the orders of the authorities below. In this case, the addition was made by the AO based on the loose paper and the same, in our view, cannot be considered as conclusive evidence. As held by the CIT(A) in the impugned order "except relying , the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the 'transaction particularly the vendor has not examined. In every transaction there is a circle concerning two padies. /t is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely on the ba....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Hon'ble Punjab & Haryana High Court in the case of CIT vs. Atam Valves (P) Ltd. (2011) 332 ITR 468 (P&H) held that when the loose papers did not relate to certain payments during the relevant period in question, then in absence of any supporting material or evidence, these loose sheets by itself were not found to be sufficient enough for making a sustainable and justified addition. ITAT Delhi 'E' Bench in the case of Atul Kumar Jain (1999) 64 TTJ 786 (Delhi) vs. DCIT held that when the seized papers have being not corroborated by any independent evidence it cannot be considered as a reliable document or acceptable piece of evidence as a proof of investment in the house property and therefore, these kind of documents/papers are liable to be ignored and addition made on the basis of such document is not sustainable and in accordance with law. In CIT v/s Kulwant Rai (2007) 291 ITR 36 (Del) the ruling of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. CIT (1954) 26 ITR 775 (SC) was relied upon. The Supreme Court held that even though Income Tax Authorities including the Assessing Officer has unfettered discretion and not strictly bound by the rules a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rein are not admissible u/s. 34 of the Evidence Act, 1872. 28. In the present case, the seized material (two note books) marked as KBR/A/02 and KBR/A/04 wherein certain entries are found recording various transactions pertaining to the assessee. These entries in the notebook are unsubstantiated and on that basis the AO reached to the conclusion that the figures mentioned therein are to be read by adding 3 zeros and thereby he came to conclude that there is undisclosed income in these 6 assessment years. In our opinion, the document recovered during the course of search was a dumb document and led nowhere. The CIT(A) rightly came to the conclusion that it cannot be acted upon and deleted the addition. 29. Other than the loose paper, the AO has not brought on record any corroborative material or evidence to show that the inference made by him is correct. The CIT(A) after taking the totality of the circumstances into consideration came to the conclusion that the addition made by the AO is not justified and the argument put forth by the assessee is supported by documentary evidence. This was not a case where relevant evidence had been ignored by the CIT(A) and their r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nquiry from the said employee or from the buyers of flats in respect of actual price paid by them. The Hon'ble Delhi High Court in the case of CIT vs. Ved Prakash Choudhary (2008) 305 ITR 245 (Del) has held that in the absence of corroborative material, the addition made on the basis of sketchy document which was unproved cannot be sustained in law. The Hon'ble Delhi High Court in the case of CIT vs. Vivek Agrawal (2015) 231 Taxman 392 (Del) has held that unless the amounts stated the document were actually paid it cannot be presumed that the amount mentioned in the sale deed was not correct. The Hon'ble M.P. High Court in the case of CIT vs. Kantilal Prabhudas Patel (2008) 296 ITR 568 (MP) has held that the addition cannot be made on guess work or estimates. On careful consideration of the entire material placed before me, inter alia the assessment order and the submissions made in the appeal proceedings, it is seen that the Assessing Officer has simply proceeded to make additions on the basis of the documents found and seized in respect of the 'Silver Mansion' and 'Silver Mansion Extension' projects and the post search enquiries con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....q Feet and for the purpose of calculation of saleable area, ingredients of space utilized in the construction of common area, roads, clubs, gardens, staircases and parking etc. are apportioned in the number of unit. Resultantly, a customer is required to pay 30% more than the carpet area bought by him. The Assessing Officer wrongly estimated rate per square feet, by comparing the rates adopted in the adjoining township, 'Silver Mansion', is a project of Jhaveri Group, totally disjoint with the assessee company. The said project, deals in the sale of plot only. Therefore, the comparison made by the Assessing Officer is baseless. Further, the Assessing Officer elaborated, the seizure made, in other cases of Jhaveri Group which has no bearing in the assessee's case but the Assessing Officer without establishing the relevance by bringing any cogent material made the additions. Similarly, some enquires conducted in the cases of Shikharji, Ajitnath Reality Pvt. Ltd. and Padmaprabhu Infrastructure Pvt. Ltd. were irrelevant as is evident from the computation of income of the assessee. Even otherwise, the issue of M/s Shikharji is before the Settlement Commission and therefore, the comparin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ersons. Therefore, the observations are baseless. Further, so far as the Assessing Officer's observation in respect of placing a figure of Rs. 1500/- per square feet is concerned, we find that the learned Counsel for the assessee explained that M/s Silver Realities and Infrastructure Pvt. Ltd was incorporated by Shri Mukesh Jhaveri and Abhishek Jhaveri on 27.09.2005 and later on in Nov 2005, Fire Capital Fund belonging to Republic of Mauritius joined hands with Jhaveris. Resultantly, 51% shares are held by Jhaveris and 49% by Fire Capital Fund. The investment made by Fire Capital Fund is from US Investors routed through Mauritius. Therefore, the observations made by the Assessing Officer are not justified as the assessee co. does not belong to Jhaveri Group accordingly. As explained above, we find that the assessee started its projects being incorporated by Shri Mukesh Jhaveri and Abhishek Jhaveri on 27.09.2005, whereas the seized documents relating to search & seizure operations u/s 132 carried out on 21.09.2012 on the business as well as residential premises of the other group concerns/projects named Silver Mansion, Silver Mansion Extension. Thus, it is clear that the assessee's ....