TaxTMI 
TaxTMI 
2018 (9) TMI 2069
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....arned CIT(A) has erred in allowing the claim of the assessee without appreciating that the Assessing officer has made the additions on the basis of documents found and seized during the course of search. 4. The learned CIT(A) has erred in allowing the claim of the assessee merely based on the self serving statements made by the MD of the assessee and its employees, also of the sellers. 5. The learned CIT(A) is erred in holding the that the documents found during the course of search contradicts, whereas it was supporting the findings of the assessing officer as a. the assessee has worked out the income tax of 150 lakhs on the cash payments in one of the documents was not for paying taxes but the extra burden on the cost of the assessee who is the developers as the reduced cost will enhance the profit margin of the assessee. b. the cost for the assessee works out to 22.30 Crores as it has to pay 19.30 Crores to sellers of the land and has to repay the advance of 7. 3 Crores given M/s Somayaji Holdings for purchase of the same piece of land before the assessee came into buy the land. 6. The learned CIT(A) has erred in holding that the asse....
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....ials were seized. During the course of assessment proceedings, the seized materials were examined by the AO and he arrived at a conclusion that assessee has made the payment in cash of Rs. 1.55 crores in assessment year 2010-11 and Rs. 3.45 crores in assessment year 2011-12 to the land owners in respect of Project "Plama Heights". While completing the assessment, the AO has observed that assessee company has undertaken a prestigious project by name "Plama Heights"under joint development agreement with the land owners M/s. T. V. Aleyas Engineers Pvt. Ltd., Bangalore, Shri. Anjannappa and others and Shri. Munikrishna and others. On the seized material, the AO has observed that unaccounted cash was paid by the appellant on various dates to the land owners. Before the AO, assessee company has admitted the payment of Rs. 22,30,00,000/- to M/s. T. V. Aleyas Engineers Pvt. Ltd., and M/s. Somoyaji Estate Ltd., for getting the land. Though there was a proposal to pay Rs. 17,30,00,000/- by cheque and blanace of Rs. 5 crores by cash, but ultimately the entire payment was made by cheque and nothing was paid in cash. The AO, having relied upon the communications by emails, noting and other reco....
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....s of Rs. 1.55 cores in assessment year 2010-11 and Rs. 3.45 crores in assessment year 2011-12. The relevant observation of the CIT(A) is extracted hereunder for the sake of reference : "4. I have gone through the assessment order, the submissions made by the AR of the appellant, the remand report submitted by the AO and the submissions of the AR on the remand report. This case involves multiplicity of agreements between the appellant and the owners of land which was taken by the appellant for joint development. I have perused all the agreements which were submitted in a paper book, some of which were found during the course of search in the premises of the appellant. The initial JDA entered by the appellant was way back in 05.05.2006 and thereafter, the supplementary agreements were entered into subsequently over a period of almost 5 years till 31.03.2011 and then came the confirmation deed dated 30.06.2011. There are multiple agreements between the parties for the reason that the project approvals could not materialize as originally planned and the appellant could not presumably pay the consideration as originally agreed which resulted in variation of the amount of consid....
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....ssessment order contains a loose sheet in which certain cheque as well as cash transactions are stated. The cheque transactions are available on the bank statements. The authenticity of the loose papers can be verified by comparing the cheque transactions written thereon with the bank statements. On verification of the loose sheets, it is found that the data on the loose sheets relating to cheque transactions do not match with the data in the bank statements. Thus when the data of cheque transactions is not matching with bank statements, the authenticity of cash transactions mentioned on the loose sheet becomes doubtful. I have explained in detail with the help of a table in Para 4.11 below as to how the figures on the loose sheet are not' matching with the actual transactions reflected in the bank statements. 4.3 Page No. 5 of the assessment order is another loose sheet which contains, according to the AO the payments made by the employees of the appellant co., allegedly by cash. If the said loose paper is analyzed, there are two sets of payments by the employees having about 9 transactions totaling to Rs. 3,05,00,000/-. With reference to this loose shee,t, the employees ....
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.... crore is completed only on 03.12.2012 but whereas the payments to M/s T.V. Aleyas are made on following dates. 26.07.2006 Rs. 50,00,000/- 14.12.2006 Rs. 80,00,000/- 13.06.2008 Rs. 50,00,000/- 08.07.2008 Rs. 1,00,00,000/- 06.12.2010 Rs. 50,00,000/- 10.02.2011 Rs. 1,00,00,000/- 30.03.2011 Rs. 9,30,00,000/- 18.05.2011 Rs. 1,00,00,000/- 16.09.2011 Rs. 25,00,000/- 12.10.2011 Rs. 25,00,000/- 11.07.2012 Rs. 40,00,000/- Total Rs. 15,50,00,000/- 4.6. Thus, as on 03.12.2012, when the payment of Rs. 3.00 crore was made to M/s Somayaji, as on that date the actual payment made to M/s T.V. Aleyas is Rs. 15.5 crores which does not match with the paper found. Further, an amount of 5 written as CS does not specify as to whether the cash is paid or payable etc. It also does not bear any date for any of the transactions. When the cheque payments on the loose sheet are not matching with the actual payment figures, it is difficult to accept that CS means cash paid by the appellant as held by the AO. 4.7. The next loose sheet is on page 9 of the assessment order. As per the AO, this is an email download, from the ....
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....nt of Rs. 5,00,00,000/- in cash. In remand report, the AO submits that the loose sheet in question is a sheet prepared to workout the cost of land to the appellant. He further clarifies that the appellant has mentioned income tax due of Rs. 150 lakhs as an additional burden on the appellant as the amount of Rs. 5,00,00,000/-would not be reflected in the books of the appellant and as a consequence of which the cost of land would get reduced in the books by Rs. 5 crore and profitability of the appellant increase by Rs. 5 crore. This interpretation of the AO goes to show that appellant would withdraw the cash of Rs. 5 crore from his bank and pay the same to the owners of the land. However, the AO has not been able to prove that any such amount was withdrawn in cash by the appellant. The bank statements produced before me for the relevant period do not show any cash withdrawals to the tune of Rs. 5 crores or any such higher amount. 4.10. In the remand report dated 27.10.2016, the AO on page 9 confirms that DDIT(Inv.), Mangalore has recorded the sworn statements of Mr. Arun Nayak u/s. 132(4) and Mr. Pradeep Shenoy u/s. 131 and they have not stated anything adverse against the a....
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....011 Axis Bank Ltd.: Bangalore 683911 25,00,000.00 12 30/3/2011 30/03/2011 Axis Bank Ltd.: Bangalore 724016 9,30,00,000.00 13 15/5/2011 18/5/2011 Axis Bank Ltd.: Bangalore 724010 1,00,00,000.00 14 16/9/2011 16/9/2011 Axis Bank Ltd.: Bangalore 782487 25,00,000.00 15 10/10/2011 12/10/2011 Axis Bank Ltd.: Bangalore 782488 25,00,000.00 16 9/12/2011 10/12/2011 Axis Bank Ltd.: Thrissur 006701 5,00,000.00 17 9/12/2011 26/12/2011 Axis Bank Ltd.: Thrissur 006702 5,00,000.00 18 11/7/2012 11/7/2012 Axis Bank Ltd.: Bangalore 635964 20,00,000.00 19 11/7/2012 11/7/2012 Axis Bank Ltd.: Bangalore 635965 20,00,000.00 TOTAL 16,60,00,000.00 Paid by Somayaji Holdings Pvt. Ltd. Annexure I 3,00,00,000.00 Interest paid by Soma y4 HoIdin.s Pvt. Ltd. Annexure, II 2,75,00,000.00 Grand Total 22,35,00,000.00 ANNEXURE I M/s Somayaji Holding Pvt. Ltd. Payment Statement Sl. No. Date Date of clearing of cheques Bank Name Ch. No. Amount 1 2/5/2006 Not available ABN AMRO Bank, Mangalore 102308 3....
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....ncluding the payment made to M/s Somayaji Holdings Pvt. Ltd. of Rs. 3 crore plus interest of Rs. 2.75 crore) is Rs. 22.05 crore. In case, if it is presumed that Rs. 5 crores were paid in cash in addition to the payments made in cheques, the cost of the land would go up to Rs. 27.05 crore. This figure is not found in any of the argeements found during the course of search or on the loose sheets as well. The contention of the AO that the total consideration was Rs. 22.3 crore which is evident from a supplementary JDA entered in 2008, is the highest figure of consideration found in the seized material or loose papers which includes the cash of Rs. 5 Crore. 4.15 From the above analysis of the agreements entered into between the parties, the loose sheets on the basis of which addition was made and the actual entries of payments made by the appellant to TVAEPL go to show that the actual payment made by the appellant to TVAEPL and M/s Somayaji is Rs. 22.05 crore. I have already analyzed in the earlier part of this order that the loose sheets found or downloaded from the hard disc during the search proceedings cannot be accepted as an evidence for the reason that the cheque entrie....
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.... evidences found during the course of search. Therefore,' addition of Rs. 5 crore as payment in cash from undisclosed sources in the hands of the appellant for A.Y. 2010-11 and 2011-12 cannot be sustained. Accordingly, the addition made by the AO for the assessment year in appeal amounting to Rs. 1,55,00,000/- is hereby deleted. Ground (a) and (b) are allowed." 4. Aggrieved with the order of the CIT(A), the Revenue is in appeal before the Tribunal and placed the heavy reliance upon the assessment order. Whereas, the learned Counsel for the assessee has invited our attention to the seized materials and the entries found therein and the order of the CIT(A) in which he has made a detailed analysis with regard to the payment made through cheques etc. He has also invited our attention to the statements recorded by the AO with the submission that no where it was admitted by the assessee that cash payment was ever made. At the first instance it was stated that these entries are pure estimates and not regular payments. The learned Counsel for the assessee further contended that the seized materials contains the payment made through cheque as well as cash. But the cheque entries found in....
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....he books of accounts. 7. We have carefully examined the orders of CIT(A) and we find that CIT(A) has made detailed analysis of the entries found in the seized material and the entries recorded in the books of accounts and he has rightly concluded where the entries with regard to payment through cheque do not co-relate with the entries recorded in the books of accounts, no cognizance of the entries recorded with regard to the entries relating to cash payment in the seized material can be taken. We therefore are of the view that CIT(A) has rightly ajudicated the issue. No defect has been pointed out by the learned DR. We therefore confirm the order of the CIT(A) deleting the additions in both the years. 8. In appeal No. 1363/Bang/2017, one more ground is raised with regard to the deletion of addition of interest payment outside the books of accounts to the extent of Rs. 1.09 crores. For the sake of reference, we extracts the grounds raised in this appeal as under: The CIT(A) ought to have upheld the decision of the Assessing Officer of making additions on account of cash payment to the sellers of the land to the tune of Rs. 1.55 Crores and interest payment outside the ....
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....loose sheet on page 4 of the assessment order. Page no 4 of the assessment order contains a loose sheet in which certain cheque as well as cash transactions are stated. The cheque transactions are available on the bank statements. The authenticity of the loose papers can be verified by comparing the cheque transactions written thereon with the bank statements. On verification of the loose sheets, it is found that the data on the said loose sheet do not match with the data in the bank statements. Thus when the data of cheque transactions is not matching with bank statements, the authenticity of cash transactions mentioned on the loose sheet becomes doubtful. I have already held in paras above that the authenticity of page 4 is not proved and therefore, transactions recorded therein cannot be taken as Conclusive evidence. In the same loose sheet, there is working of interest at the rate of 24%. This loose sheet is likely to have been prepared on 15.01.2011 and as per the supplementary agreement signed by the appellant and TVAEPL in 2008, there is a provision to charge interest at the rate of 24% on delayed payments of cheques. However, nothing is written on the loose sheet that this ....