TaxTMI 
TaxTMI 
2019 (7) TMI 1880
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....circumstances of the case, the learned CIT(A) has erred in deleting the addition under s. 69 of the IT Act, 1961 of Rs. 2,59,57,040 on account of undisclosed investment in land made by the AO on the basis of seized material? 2. The order of the learned CIT(A) is erroneous both in law and on facts. 3. Any other ground that may be adduced at the time of hearing. Asst yr. 2010-11 1. Whether in law and on facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition under s. 69 of the IT Act, 1961 of Rs. 57,63,597 on account of undisclosed investment in land made by the AO on the basis of seized material? 2. The order of the learned CIT(A) is erroneous both in law and on facts. 3. Any other ground that may be adduced at the time of heating." 2. There is common issue is being involved in all the three appeals of undisclosed investment in land on the basis of seized material except difference in the amount of investment under s. 69 of the Act, and therefore, all these three appeals are being adjudicated by this consolidated order. 3. Briefly, the facts as per record, are being taken from ITA No. 178/Rpr/2014, ....
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....r referred to the details of purchase of another land admeasuring 32.68 acres consisting of 27 different pieces of land purchased on different dates. The AO observed that in the electronic data, record of individual lands with two sets of purchase price relating to them is maintained under the heading "Aarti Colonizer Company" and the information was reproduced in the query letter in tabulated form, referred to as table 2 in the assessment order. As per the tabulated details, spread over a period falling in financial years 2007-08, 2008-09 and 2009-10 the land admeasuring 32.68 acres was purchased for a consideration of Rs. 11,90,37,955 out of which the amount recorded in regular books was Rs. 5,99,73,090 and thus there was investment of Rs. 5,90,64,865 not reflected in regular books. The year wise details of the undisclosed amount are as under: financial year 2007-08 Rs. 2,73,44,233 financial year 2008-09 Rs. 2,59,57,035 financial year 2009-10 Rs. 57,63,597 3.2. It was observed by the AO that the incriminating material relating to purchase of land and the closing stock of unsold land in Dunda area, during the financial year 2007-08 and the record maintained in the electr....
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....e assessment order. The crux of the argument of the assessee before the AO was that the entries are fake and have no relevance or authenticity and it was the handiwork of Shri Ajay Atlani, who was suffering from health disorders. The AO rejected the explanation of assessee observing that Shri Ajay Atlani is a regular tax payer and showing income and healthy capital in his accounts and it cannot be accepted that such entries were made only out 'of whim or with the intention to harm the assessee. He further observed that the data cannot be imagined by any unconcerned person and the extent to which the entries made therein matches with the affairs of the assessee shows that it was under control and management of some person directly related to the management of the firm. The AO further observed that in the line of business of the assessee i.e., real estate business, undisclosed investment and cash payments out of books is a common feature hence there is preponderance of probabilities that record of undisclosed transactions of assessee was made in the seized material. Rejecting the explanation of assessee, the AO concluded that the transactions are in nature of investments and the ....
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....ate the data contained in the pen drive. The affidavits filed were rejected without examining the deponents. Hence, the theory of preponderance of probabilities has no role to play. Under these circumstances, looking to the facts of the case and the legal position settled in this regard, I am of the considered opinion that action of the AO making additions of Rs. 10,06,43,054 (asst. yr. 2008-09), Rs. 2,59,57,035 (asst yr. 2009-10), Rs. 57,63,597 (asst. yr. 2010-11) under s. 69 of the Act solely on the basis of data contained in pen-drive is not correct. Therefore, the addition is, deleted. This ground of appeal is accordingly, allowed." 5. Before us, the learned CIT-Departmental Representative argued that during search, incriminating material in the form of data in pen drive and some printout from computer data was found from the residence of Shri Kishore Atlani, brother of a partner of the assessee firm. This fact is not disputed by the assessee. In the pen drive and the loose papers found during search, extensive working depicting undisclosed investment in purchase of land was found. It is not the case that the lands, details whereof were found in the electronic media, are not b....
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....ake entries made by Shri Ajay Atlani, there is nothing available on record to support the so-called explanation of the assessee and therefore, it was rightly rejected by the AO. He argued that the explanation put forth by the assessee is a cooked up story to escape assessment. He argued that the burden was on the assessee to show that the impugned investment was not made by it and since this has not been demonstrated by means of any evidence the addition was rightly made by the AO and learned CIT(A) erred in deleting the same. He took us through various observations of the AO in the assessment order to drive home the point that the data in pen drive and the entries in the loose papers cannot be considered to be fake entries; that the assessee has not proved that all the entries in the pen drive were fake entries and therefore, addition was justified. In support of argument, he placed heavy reliance on various observations made by the AO in the assessment order and concluded that the addition was rightly made by the AO and therefore, the same may kindly be restored. 6. Per contra, learned Authorised Representative of the assessee argued that so far as asst. yr. 2008-09 is concerned....
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....oes not prove any payment by the assessee whatsoever and therefore, the test of s. 69 is not satisfied so far as this addition is concerned. He then took us through chart on table 1, given on page Nos. 2 and 3 of the assessment order and argued that this print out from the pen drive does not prove or show that any payment was made by the assessee; that the entries in the chart are not evidence of any payment outside the books of accounts and there is nothing on record to show that the alleged difference amount was paid by the assessee and therefore, the provisions of s. 69 is not satisfied here also. Thus, neither the journal entry nor the chart given on page Nos. 2 and 3 of the assessment order proves any payment by the assessee which has remained unaccounted. He argued that the initial burden has not been discharged by the AO and therefore addition made invoking s. 69 is illegal and not, justified. 6.1.1. He argued that the land described on page Nos. 2 and 3 of assessment order was not purchased by the assessee but by two other assessees as is evident from the narration in the journal entry. He took us through the narration wherein there is a reference of introduction of the la....
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.... source, the discretion to tax an amount or not should have been exercised by the AO in favour of the assessee. For this argument, he relied upon the decision in the case of CIT vs. Smt. P.K. Noorjahan (1999) 155 CTR (SC) 509 : (1999) 237 ITR 570 (SC) and Smt. Rajabai B. Kadam L/H of Late S.B. Kadam vs. Asstt. CIT (2002) 77 TTJ (Pune) 784 : (2002) 83 ITD 229 Pune). 6.1.4. Learned Authorised Representative of the assessee submitted that the addition has been made only on the basis of three figures given at the end of table 1 depicted on page No. 3 of the assessment order. He explained that as per the reasoning of AO, the 2nd figure is the figure as per books of accounts of the assessee; that in the table, the 2nd figure is Rs. 3,78,70,462 whereas the amount recorded in the books of the assessee is Rs. 2,33,86,759 which has also been mentioned in the last but one para of page No. 3 of the assessment order. 6.1.5. He concluded argument on this addition that the AO has not conducted any enquiry from any of the vendors and therefore, no addition could have been made without bringing any material whatsoever on record, especially when such grave dispute was being raised by assessee. 6.....
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.... in the case of Mehta Parikh & Co. vs. CIT (1956) 30 ITR 181 (SC). 6.2.1. Regarding the contents of the pen drive found "during search, the learned Authorised Representative of the assessee argued that the entries in the pen drive are unauthentic and fake entries, totally unrelated with the assessee. He explained that the entries were made by Shri Ajay Atlani, son of Shri Kishore Atlani from whose residence the pen drive was found. The said Shri Ajay Atlani had turned alcoholic and was under depression and eventually died thereafter. The said Shri Ajay Atlani was taught accounting by the accountant of the assessee group, with the idea that he would be engaged in some gainful employment which may help him to come out of his bad habits. During this process, the data in the regular books of different concerns of the group were used by the accountant and the said Shri Ajay Atlani and on the basis of such data/entries, he created new entities in tally data giving short names and made entries therein so that the regular entries and the learning entries do not get mixed up and these learning entries are clearly identified. Such work was mostly done by Shri Ajay Atlani in the pen drive, w....
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....en summarised in form of a chart. He took us through some of the explanations to show that the entries in the pen drive are fake. 6.2.4. Learned Authorised Representative of the assessee relied upon the ratio of decision in CIT vs. Lavanya Land (P) Ltd. (2017) 154 DTR (Bom.) 244 : (2017) 297 CTR (Bom) 204 wherein it was held that if the entries on loose sheet of papers found during search are not corroborated by any other evidence, no addition can be made. He also relied upon the decision in the case of Sahitya Housing (P.) Ltd. vs. Dy. CIT in ITA No. 246/Hyd/2011, dt. 24th Jan., 2014 of "A" Bench. In this case, some entries were found in pen drive on the basis of which addition was made. Hon'ble Hyderabad Bench of Tribunal held that unsubstantiated material found; in the pen drive cannot be considered in the hands of the assessee as a conclusive evidence so as to make addition towards unexplained credit. While so holding, it referred to the ratio of decision in the case of CBI vs. V.C. Shukla (1998) 3 SCC 410. 6.2.5. Regarding the additions made in asst. yRs. 2009-10 and 2010-11, learned Authorised Representative of the assessee submitted that since addition in those years h....
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....assessment proceedings, any material was found to show that the amount contained in the journal entry was paid by the assessee firm to anyone at any time. Therefore, only on the basis of journal entry, s. 69 could not have been invoked. As regards the details of land given on page Nos. 2 and 3 of assessment order as table 1, it merely contains some details about different lands and it does not contain even a whisper about any investment or payment made by anyone. We observe that the inference has been drawn by the AO only on the basis of the three figures mentioned at the end of the table, on page No. 3 of the assessment order. This, in our considered view, cannot be considered to be evidence of payment/investment. It is undisputed that during search or thereafter during the assessment proceedings, no material was found or brought on record evidencing that the three figures referred to above represent any actual investment/payment by the assessee. As rightly contended by the learned Authorised Representative of the assessee, that the details given in the chart are. not evidence of any payment/investment. Since no evidence has been brought on record by the AO and since nothing was f....
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....and made any undisclosed investment. In CIT vs. Smt. P.K. Noorjahan (supra), on behalf of the Revenue, it was argued that the word "may" in s. 69 should be read as "shall" against which Hon'ble Supreme Court observed that it was unable to agree. Hon'ble Supreme Court thereafter held that the use of the word "may" clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In that case the Tribunal held that the discretion had not been properly exercised by the ITO and the AAC in taking into account the circumstances in which the assessee was placed. Hon'ble Supreme Court observed that it did not find any error in the said finding recorded by the Tribunal. In Smt. Rajabai B....
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....ails of 32.68 acres of land and the details have been reproduced as table 2 in the assessment order, on page Nos. 4 and 5. We observe that apart from this printout found during search, no other corroborative material in the form of cash book ledger etc. was found during search. A perusal of the details shows that the lands were purchased over a period of three years, from different persons. It is not the case of AO that details of payment of individual lands were also found during search. What is to be noted is, apart from the chart found, no other corroborative evidence was found during search. It is not the case of AO that any books of accounts and other details supporting the entries in the printout were found during search or brought on record during the assessment proceedings. It is not. also the case of AO that any other details in respect of different lands like details of payment to the persons etc. were found during search. Although it is stated that tally data was found in the pen drive, corresponding books of accounts in such tally data were not found as there is no reference of any such corroborative books in the assessment order. We agree with the argument of learned A....
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....f the assessee filed a summarised form of his explanation in the form of a chart. The explanation given to the AO was to the effect that some of the entries in the pen drive do not match with the entries in regular books in the sense that in some cases, payments are mentioned to be made in cash in the pen drive while such payments are established to have been made through cheque in the regular books; that land situated 'at Labhandi is shown to have been sold to one Shri Suresh G. Atlani while actually, the land was sold to one Shri Vijay Kumar Motwani through registered sale deed, copy whereof has been placed at page Nos. 161 to 176 of paper book; that likewise, some entries were found in the pen drive which mentions that the payments were made through Bank of Baroda and State Bank of India, Pandri Tarai Branch while the assessee explained that nobody in the group of assessee had any account in any branch of Bank of Baroda and that the cheque number in respect of payment made through State Bank of India did not relate to any bank account held by the concerned person in that bank and similarly other many discrepancies were pointed out before the AO. All these explanations were r....
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....rch, 2008. As per the said sale deed, the consideration for the said land was Rs. 2,95,20,000 only. The stamp duty value of the said land was Rs. 3,68,90,000 at the time of execution of sale deed. Sec. 43CA was inserted in the statute by the Finance Act 2013 w.e.f. 1st April, 2014 and therefore, not applicable in the assessment year under appeal. Nowhere in the course of search, any agreement for the said sale of land in question for an amount other than Rs. 2,95,20,000 was found. On the basis of excel sheet contained in the pen drive, the AO inferred that the entire amount of Rs. 12,13,11,005 received/receivable from Suncity Project (P.) Ltd., was on account of sale of the land at Mowa whereas the explanation of the assessee was that on the basis of inflated and projected value of the land of which development was to be carried out by the assessee and its other associates, the Suncity Project (P.) Ltd., agreed to investment Rs. 12,13,11,005 with the assessee and its associates as unsecured loan and share application, etc. for becoming a future partner in the development of the said land. However, this deal could not be materialized and the loan etc. received from Suncity Project (....
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....g on record a single statement of the vendor of the land. None of the seller was examined to substantiate the claim of revenue that extra cash had actually changed hands. In the case of Sahitya Housing (P) Ltd., some entries were found in a pen drive which pertained to two persons, one of whom accepted the entries and offered for taxation while the other did not do so. It was held that it is not substantiated by any corroborative evidence that the second assessee was involved in the transaction so as to make addition in the hands of the second assessee. In absence of corroborative evidence, the addition was held to be not justified. 8.2.5. In view of that matter, and factual matrix of the case, in our considered opinion, the addition of Rs. 2,73,44,233 made by the AO on account of purchase of 32.68 acres of land merely on the basis of the excel sheet contained in the seized pen drive and entries in loose papers in the seized documents, unsubstantiated with any corroborative evidence, is not justified, which has been rightly deleted by learned CIT(A). 9. Following the Co-ordinate Bench decision in the assessee's own case, we hold that the entire addition of Rs. 10,06,43,054 ma....