TaxTMI 
TaxTMI 
2018 (9) TMI 2069
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.... 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 assessing officer has not proved that the amounts of Rs. 5 Crores supposedly paid in cash with....
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....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 records, came to the conclusion that assessee company has made payment of Rs. 5 crores in cash and he accordingly broug....
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....on 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 consideration. This is quite evident from the agreements between the parties for instance, in the first agreement dated 05.05.2006....
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....lable 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 of the appellant co. 11/1r Arun Nayak and Mr Pradeep were examined during the search/ assessment proceedings and they did not accept that they....
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....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 hard disc which was seized vide no. A/PDL/1 to 4 dated 09.01.2013 and vide no. A/PDL/1/10 to 12 dated 22.01.2013. The said email, was created in the computer/laptop on 18.03.2010. According to the email, Rs. 530 lakhs is claimed ....
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....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 appellant and hence, their statements were not used by the AO in the scrutiny assessments. Accordingly, opportunity of cross examination of these two persons was not given to the appellant. 4.11. In para 4, on page 15 of the remand report, the A....
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....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 30,00,000.00 2 5/5/2006 Not available ABN AMRO Bank, Mangalore 102313 10,00,000.00 3 9/5/2006 Not available ABN AMR() Bank, Mangalore 102312 10,00,000.00 4 27/3/2012 30/3/2012 SBI Commercial Branch 828250 2,00,00,000.00 5 30/11/2012 3/12/2012 SBI Commercial Branch 028835 50,00,000.00 TOTAL 3,00,00,000.00 Annexure II Interest paid by Somayaji Holdings Pvt. Ltd. Sl. No. Date Bank Name Ch. No. Amount 1 31/12/2012 SBI Commercial Branch 028830 41,25,000.00 2 31/12/2012 TDS on Interest 4,58,333.0....
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....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 entries on those loose sheets were not matching with the actual cheque entries reflected in the bank statements and therefore, the cash entries specified therein cannot be accepted unless it is established that there is a link between such loose sheets and other books of accounts or bank statements etc. Only the loose sheets cannot be considered alone as conclusive evidence. The appellant and his employees dur,ing the statements recorded u/s. 132(4) and 131 have stated that the figures on the loose sheets were merely the estimates and no such cash payment was actually made. Inspite of these facts, the AO concluded that the loose sheets conclusively proved that the payment of Rs. 5 crore was made by the appellant to the vendor. The AO canno....
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....tc. 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 the seized material do not co-relate with the actual payments made through cheque. Therefore, the seized material cannot be relied on for making addition on cash. 5. Having carefully examined the orders of authorities below in the light of rival submissions, we find that during the course of search, certain seized materials were found. On its perusal, the AO has drawn inference that the cash of Rs. 5 crore was paid by the assessee to the sellers of the land for developing the project. The copy of the seized material is placed on record at page Nos. 50 to 54 of the compilation. At document Annexure 1, though there are certain entries with regard to payments made through cheque as well as in cash, but these entries do not co-relate with the actua....
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....d 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 books to the extent of Rs. 1.09 Crores. 9. On careful perusal of the orders of the authorities below we find that this addition made was on the basis of the seized material in which certain entries of payment were found. In the foregoing paras when the seized material was not be relied on for making an addition on account of cash payment to the seller, this addition of Rs. 1.09 crores on account of payment as interest is not sustainable in the eyes of law. The CIT(A) has also made detailed analysis of the evidences filed on record in this regard and for the sake of reference, we extract the relevant portion hereunder: "4.18. Now, I come to second issue of ground no.(a) .and (b) that is, interest payment made in cash which is treated as unexplained expenditu....
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.... 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 interest is actually paid by the appellant to TVAEPL. 4.21. During appellate proceedings, it was submitted by the AR of the appellant that the provision to pay interest is there in the supplementary agreement signed in 2008 but actually_ ru) such interest was paid due to recession in real estate, which started in 2008 and onwards and hence, it was mutually decided between the parties not to enforce the interest clause. Further, it was submitted that when the provision to pay interest is present in the supplementary agreement, the interest if at all paid or payable it would be paid by cheque. The AO has not been able to prove any additional evidence that the appellant withdrew cash from the bank account and paid the interest. Moreover, the loose sheet also does not specify that ....