TaxTMI 
TaxTMI 
2022 (1) TMI 119
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....Y. 2008-09 wherein the Revenue has raised solitary ground of appeal which reads as under: "Whether on the facts and in the circumstances of the case and in law the Ld. CIT (A) was justified in deleting the addition of Rs. 3,62,32,413/- made by the AO on the basis of loose paper, impounded during survey u/s 133A without appreciating facts and circumstances of the case. " 5. The brief facts of the case are that the assessee company was incorporated on 06-06-2005. The following persons are directors of the company. 1. Sh. Girraj Agarwal 2. Sh. Laxmi Ram Khandelwal 3. Sh. Ramesh Dangayach The main object of the company was to carry on business in real estate. The assessee company originally filed its return of income on 30-09-2008 declaring total income at Rs. Nil. A survey u/s 133A of the Income Tax Act, 1961 (hereinafter referred as the Act) was carried out at the business premises of company on 18-11-2009 wherein certain loose papers were found and impounded by the survey authorities. A notice u/s 148 of the Act was issued on 14-05-2013 after getting approval from Addl. CIT, Range-3, Jaipur dated 19-01-2015. The case was reopened by the A.O.....
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....he course of survey. 9. On the other hand, the ld. AR appearing on behalf of the assessee has relied on the order passed by the ld. CIT(A) and also reiterated the same arguments as were raised before the ld. CIT(A) as well as the written submissions filed before the Bench and the same is reproduced below: "a) During the course of appellate proceeding's, it was submitted that the amounts noted on the papers have been considered as sale of land in respect of any transaction in land, it is well understood and accepted fact that if any such transaction takes place, there are bound to exist certain documents and other evidences which corroborate the execution of such transaction. For example - Registered Sale deeds, purchase deeds, relevant entries in the bank statement showing payments towards purchase of land and receipt consequent to sale of land, the entries in revenue records, names of sellers from whom purchases were made and names of buyers to whom sales were made and many other things. Further as is evident, the land stated purchased was agricultural land and whereas the alleged sale is of residential plots, which can only be done after getting the conversion of land....
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....eal relates to assessing an income @ 25% on the alleged sale amount Rs. 4,23,10,000/- and Rs. 2,58,09,703/-. In this connection it is submitted that the amount Rs. 4,23,10,000/- is noted on seized page No.10 bearing date 21-11-2006 and notings on the said page have been considered/taken into account in the A.Y. 2007-08. The year-wise particulars/details of the receipts Rs. 2,58,09,703/- are enclosed. From the said particulars it is verifiable that during assessment year under appeal no amount was received by the assessee company. Complete documentary evidences for verification the said facts are enclosed. From said details/documents it is verifiable that the said amount was received in the A.Y(s). 2005-06, 2006-07 and 2007-08. Thus the impugned addition made on this account in the A.Y. 2008-09 is wrong and bad in law. (d) This ground of appeal is against estimation of profit rate @ 25% on the alleged sale of Rs. 14,49,29,653/-. In this connection it is submitted that on the facts and circumstances of the case and verifiable from the record that the amount(s) paid by the various customers are only advances against sale and in the year under appeal no sale(s) was made by the....
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....f which the alleged sale of plots has been taken and profit has been estimated. The ld AR has relied on the following case laws: (i) DCIT Vs. Rajendra Kumar Sancheti (ITAT Jaipur) 42 Taxworld 152 dated 27.03.2009 Addition cannot be made on the basis of seized paper which is not prepared by the assessee and which appears to be a deaf and dumb document. (ii) Mahaan Foods Ltd. Vs. DCIT (ITAT Delhi) (2009) 27 DTR 185 In the absence of any other evidence found during the course of search or brought on record by the Assessing Officer to show that the expenditure found noted on seized documents was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee. No inference could be drawn against the assessee much less any inference of unexplained expenses on the basis of a dumb document found at the residence of its director as there is no proof to show that the amount mentioned in the said document was paid by the company. (iii) Moolchand Kumawat & Sons Vs. DCIT (Ajmer) ITAT Jaipur Bench 42 Taxworld 241 in M.A. No. 93/JP/2008 arising out ITSSA No. 24/JP/2005 order dated 20.02.2009 Addit....
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.... under consideration. At the most, the diference of Rs. 975000 (42310000 - 41335000) can be considered for the year under consideration. Further, page No. 16 of the impounded documents pertained to payments amounting to Rs. 2,58,09,703/- received from the customers through Shri Girraj Agarwal as on 12-07-2007 which is nothing but out of the plots booked by Shri Girraj Agarwal for Rs. 4,23,10,000/- as mentioned on page No. 21 of the impounded documents. Therefore, in view of the above discussion, at the most, only a sum of Rs. 7,68,09,975/- (page No.21) on account of booking made by Shri Ramesh Dangayach and Rs. 975000/- can be considered as the sale of plots by the appellant company and not Rs. 14,49,29,653/- as taken by the AO. (vii) Further, there cannot be any justification for applying net profit rate of 25% on the total booking amount solely on the basis of statement of Shri Ramesh Dangayach as the AO has not brought on record any material to indicate that sale of 107007 square yards of land has taken place during the year under consideration. Thus, the addition made by the AO cannot be sustained in view of the decision of Hon'ble Apex Court in the case of CI....
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....ement cannot be made the basis of any assessment." In the case of ACIT Vs. Satya Narayan Agarwall (2002) 255 ITR (AT) 69 (Kol), the Coordinate Bench of Tribunal relied in the decision of Abdul Qayum Vs. CIT (1980) 184 ITR (404) (All), wherein it was held that "an admission cannot be a foundation for assessment and that the assessee can always prove his income to be otherwise and, therefore, the retraction made by assessee was justified." In case of Kailash Ben Mohan Lal Choksi Vs. CIT (2008) 14 DTR (Guj) 257 wherein it was held by the Hon'ble Court that "it is too much to give credit to a statement recorded at mid night where a person may not be in a position to make any correct and conscious disclosure. Disclosure statement recorded at odd hours cannot be considered to be voluntary statement. In case of Ajit Chintaman Karve Vs. ITO (2009) 311 ITR (AT) 66 it was held that offer in statement without cogent basis or material is not valld. 12. We observed from perusal of the impounded pg No.16 that Shri Girraj Agarwal booked land and has received payment of Rs. 2,58,09,703/- till 12-07-2007. Further, as per page No.21, Shri Girraj Agarwal and Shri Ramesh Dangayach have booked 37720....
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....sideration. The AO has not brought on record any evidence that the assessee company has neither executed any sale deed or handed over the possession of the plots to the customers during the year under consideration. Even, the assessee has not declared any sale in its books of accounts for the year under consideration. It has already been discussed in the earlier part of this order that the assessee has suppressed its sale over the number of years and the AO has already been directed to initiate proceedings u/s 147 of the Act for making appropriate additions in a number of years. 14. In view of the above discussion/observation, the AO has not brought on record any evidence that the assessee has either executed any sale deed or handed over any possession of the plots to the customers. Therefore, the ld. CIT(A) after considering all those facts had correctly deleted the addition made in various assessment years. Further no new facts or circumstances have been brought on record by the Revenue thereby controverting the order of the ld. CIT(A) to the issue in question. In this view, of the matter, we find no reason to interfere into or deviate from the order of the ld. CIT(A). Thus, w....
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....he basis of loose papers no. 67 and 69 without appreciating facts and circumstances of the case? 9. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 1,17,500/- made by the AO on the basis of loose paper no. 68 without appreciating facts and circumstances of the case? 10. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 17,500/- made by the AO on the basis of loose paper no. 69 without appreciating facts and circumstances of the case? 11. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 2,57,19,000/- made by the AO on the basis of loose paper no. 71 without appreciating facts and circumstances of the case? Grounds of assessee's appeal: "1. That the Ld. CIT (A) is wrong and has erred in law in directing in impugned appeal order that the AO is hereby directed to initiate proceedings u/s 147 of the Act in case of Radha Govind Estate (a Firm) for A.Y. 2006-07 and for A.Y. 2006-07, 2007-08 and 2008-09 in the case of app....
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....f company as advance payment received for which value has still to be given pertaining to booking/sale of plots holding that appellant failed to discharge the onus casted upon it u/s 68 of the Act to prove identity of the payer, genuineness of the transactions and creditworthiness of the payer. 3. That the Ld. CIT (A) has erred in law in giving finding on the basis of impounded papers found in course of survey that the appellant made huge unexplained investment in purchase of land in A.Y. 2006-07 to 2008-09 amounting to Rs. 9,40,93,125/- and suppression of sales of Rs. 4,03,97,685/- in A.Y. 2010-11 and 2013-14 which finding is wrong, without any cogent material or evidence and by misappreciation of rough notings/ projections in impounded papers. The Ld. CIT (A) on the basis of above unsubstantiated finding is wrong and has erred in law in making an addition of Rs. 1,14,36,034/- in income of appellant company for alleged suppression of sales in the year under consideration as against no addition made by A.O. 4. The assessee craves permission to add to or amend to or withdraw any of the above grounds of appeal." 16. Firstly, we taken up Revenue's appeal in ITA No....
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....asis of these impounded documents no addition could be made in the hands of the appellant company. In support of its contention, it relied upon a number of judicial pronouncements. It is to be noted that Shri Ramesh Dangayach, Director of the appellant company has brought these documents from his residence to the business premises of the appellant company and it has been stated by Shri Ramesh Dangayach during the course of survey u/s 133A of the Act that these documents pertained to the residential scheme of the appellant company at village Nimeda and in fact, on the basis of these documents only, Shri Ramesh Dangayach has made a disclosure of Rs. 3,55,31,259/- in the name of the appellant company for the AY 2009-10. Therefore, this contention of the appellant has no weight and thus is hereby rejected. (ii) I have duly considered the assessment order, submissions of the appellant and the material placed on record. It appears that these calculations are relating to 25% share in sale proceeds, cost of acquisition and other expenses and there was final liability of Rs. 7,48,200/-. I fail to understand that how working of 25% share could be treated as 25% profit. It is noted t....
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....of Rs. 2,16,45,000/- is without any basis. The estimated sales collection almost matches with sale collection of plots recorded in books of accounts of company and correct profit has been shown therein. Thus, according to the ld. AR, the addition is thus wrong and unwarranted. 23. We have considered the rival contentions and carefully perused the material placed on record, from perusal of record, we observed that the ld. CIT(A) has dealt with the issue in para 3.4.2 of his order and the same is reproduced below: "3.4.2 Determination: It appears that total sale collection was recorded in code language which was deciphered by the AO as Rs. 8,65,80,000/- and the share of Girraj Agarwal @ 40% was stated at Rs. 3,46,32,000/-. The AO has made an addition of Rs. 2,16,45,000/- as profit on sale, being 25% of total sales collection of Rs. 8,68,80,000/- on the basis of the statement of Shri Ramesh Dangayach only without bringing on record any corroborating material. Thus, it is held that the AO was not justified in making addition of Rs. 2,16,45,000/- in view of the decision of Hon'ble Apex Court in the case of CIT vs S. Khader Sen (Supra) and Hon'ble Rajasthan H....
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....t be sustained in view of the decision of Hon'ble Apex Court in the case of CIT vs S. Khader Sen (Supra) and Hon'ble Rajasthan High Court in the case of CIT vs. Roshan Lal (Supra) and thus hereby deleted. 3.9.2 Determination: On this page, some calculations are appearing therein, I fail to understand how the AO has treated figure of 26.00 appearing on the said paper as sale consideration amounting to Rs. 26,00,000/-. Further, the AO has made an addition of Rs. 6,50,000/- being 25% of Rs. 26 Lac without bringing on record any material for such addition and the same cannot be sustained in view of the decision of Hon'ble Apex Court in the case of CIT vs S. Khader Sen (Supra) and Hon'ble Rajasthan High Court in the case of CIT vs. Roshan Lal (Supra). Therefore, the addition made by the AO is hereby deleted." 29. After having gone through the facts of the case and after hearing the arguments, we observed that the AO has taken the same as sale proceeds and computed 25% profit thereof and has made addition of Rs. 6,38,183/- thereof. It appears that the AO has made the addition on the basis of assumption and presumption only. The AO has not brought on r....
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....hallenging the order of the ld. CIT(A) in deleting the addition of Rs. 2,19,03,529/- and Rs. 16,35,800/- made by the A.O. on the basis of loose papers No. 65 to 66. 35. In this regard, the ld. CIT-DR has vehemently supported the order of the A.O. 36. On the other hand, the ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and submitted that the said papers are estimated amount of charges for conversion which was worked which may be payable to JDA. These charges were actually calculated by JDA at Rs. 4,00,95,045/- as per demand notice of JDA enclosed. The details of working tallies except that JDA charged internal development charges more than estimated on the paper. The assessee company made provision for said payment to JDA in books of accounts for F.Y. 2009-10 and payments recorded in book of account in subsequent years as and when made. The A.O. without making any enquiry from JDA for actual payment or referring books of accounts of assessee company made said addition simply by taking estimated working on a rough sheet as payment made which is wrong and baseless. The addition made deserves to be deleted. 37....
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....ted the same arguments as were raised before the ld. CIT(A) and submitted that these papers contain some figures written which is a rough dumb paper. The A.O. wrongly presumed it to pertain to sales of Rs. 98,39,586/- and estimating profits @ 25% thereon at Rs. 24,59,897/-. The assumption is only a guess work based on surmises and conjectures without verification and is thus baseless and unsubstantiated. With regard to addition of Rs. 1,17,500/-, the ld AR also submitted that this paper contains some figures and notings written which is a rough dumb paper. The A.O. wrongly presumed sales of Rs. 4,70,000/- and estimating profits @ 25% thereon at Rs. 1,17,500/-. The assumption is only a guess work based on surmises and conjectures without verification and is thus baseless and unsustainable. The addition deserves to be deleted. 42. We have considered the rival contentions and carefully perused the material placed on record, from perusal of record, we observed that the ld. CIT(A) has deleted the additions by holding that the notings on page no. 67 and 68 appears to be relating to the booking of the plots for a total consideration of Rs. 98,39,586/-, out of which a sum of Rs. 39,24,5....
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..... 70,000/- in view of the decision of Hon'ble Apex Court in the case of CIT vs S. Khader Sen (Supra) and Hon'ble Rajasthan High Court in the case of CIT vs. Roshan Lal (Supra). Hence, the addition of Rs. 17,500/- made by the AO is hereby deleted." 47. After having gone through the facts of the case and after hearing the arguments, we observed from perusal of the record that in the remand report, it was stated by AO that the amount of Rs. 70,000/- was paid to Shri Krishan Kumarji by the assessee in cash on 07/10/2009. Thus, it appears that the AO itself is not sure about the nature of transaction and thus there cannot be any question of treating the same as sale and estimating profit thereof at Rs. 17,500/- being 25% of Rs. 70,000/-. Considering the totality of facts and circumstances, we do not find any reason to interfere or deviate from the findings so recorded by the ld. CIT(A) qua this issue and we uphold the same and consequently, this ground raised by the Revenue stands dismissed. 48. Ground No. 11 of the Revenue's appeal relates to challenging the order of the ld. CIT(A) in deleting the addition of Rs. 2,57,19,000/- made by the A.O. on the basis of loose paper ....
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....al. 54. During the course of arguments, the ld. AR appearing on behalf of the assessee has stated at bar that the assessee does not want to press this ground and the same may be dismissed as not pressed. 55. On the other hand, the ld. CIT-DR has raised no objection, if this ground of appeal is dismissed being not pressed. Therefore, considering the request of the assessee, ground No. 1 of the assessee's appeal is dismissed being not pressed. 56. Ground No. 2 (i) to (viii) of the appeal relates to challenging the order of the ld. CIT(A) in confirming the various additions made on account of loose papers found during the course of survey U/s 133A of the Act. In this regard, the ld. AR has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the Bench and the same is reproduced below: "(2) The ground No. 2(i) of appeal relates to objecting the addition of Rs. 2,08,002/- on the basis of impounded page - 25 to 28. The pages contains rough untallied notings of registration and other expenses on purchase of land by company. These expenses on actual basis are recorded in books of accounts of th....
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.... (7) The ground No. 2(vi) of appeal relates to addition of Rs. 9,98,529/- on the basis of page No. 64 (undated). The paper contains notings of figures & names etc. This is a rough paper contains notings for some prospective purchaser which appears to have not been materialized. The Ld. A.O. has wrongly assumed sales of Rs. 39,94,116/- and estimated profit @ 25% thereon at Rs. 9,98,529/-. The presumption is only a guess work, surmises and conjectures which is baseless and unsubstantiated. The addition sustained is wrong and bad in law and is hereby deleted. (8) The ground No.2 (vii) of appeal relates to objecting the addition of Rs. 1,23,00,000/- u/s 40 (a) (ia) for alleged non deduction of TDS from payments made to contractors for land development expenses and land survey expenses. This ground of appeal relates to the disallowance of expenditure of Rs. 1,23,00,000/- on account of non deduction of TDS for payment made to contractor M/s. Devi Infra Developers Pvt. Ltd., Jaipur. The Ld. AR argued that the said contractor is a Pvt. Ltd. Company, a copy of return of income of the said company was filed. It is argued by the Ld. AR that once it is establis....
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..... 2,08,002/- made on the basis of impounded page nos. 25 to 28. The ld. CIT (A) vide para 3.2 of his order discussed the issue that during the year the assessee company did not purchase the land and therefore the registration expenses could not be pertained to the year under consideration. It is also mentioned by the ld. CIT (A) that as per details submitted by the assessee, expenditure incurred on account of registration etc. was Rs. 35,70,898/- and as per the notings on the impounded paper the expenditure amounted to Rs. 37,78,900/- and accordingly the ld. CIT (A) sustained the addition of Rs. 2,08,002/-. 58.2 We observed from perusal of the record that it is verifiable from the record that no land was purchased during the year and accordingly no registration/other expenses were required to be incurred in the year under appeal. It is argued that the AO has made the addition without verifying the details from the books of accounts. The ld. A/R submitted that the facts are also supported by the ld. CIT (A)'s order that a sum of Rs. 35,70,898/- are debited in the books of accounts. Further, it is also submitted that the notings on the impounded paper are rough notings and esti....
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....e impugned addition is made without any supporting documentary evidences and no legs to stand, therefore, we direct to delete the same. 58.4 Ground No. 2(iii): This ground of appeal relates to objecting to the addition of Rs. 20,52,500/- made on the basis of impounded page no. 50 undated. This addition is made on the basis of notings on undated impounded page no. 50. The AO made the addition of Rs. 20,52,500/- on the basis of notings on the paper pertaining to sales amounting to Rs. 82,10,000/- by taking profit @ 25% thereof. However, the ld. CIT (A) during the course of appellate proceedings observed that the transactions of payment made by the assessee Company and also included a brokerage amount etc. of Rs. 4.60 lacs to one Shri B.B. Agarwal. Accordingly, the ld. CIT (A) made an addition of Rs. 82,10,000/- instead of Rs. 20,52,500/- made by the AO. We found that it is an established and accepted fact that the assessee is engaged in the business of real estate and the land area is determined vide page no. 11 of the ld. CIT (A)'s order. The sales are recorded in the books of account and the advances received from the various customers on account of sales are also shown separate....
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....haser's name, registration of sale deed, payment receipt and other evidences which corroborates the execution of such transaction. It is by the ld. A/R that the seized papers do not bear the name of the assessee company and the transactions are not in the handwriting of any of the Directors or employees of the company and these papers are deaf and dumb documents do not bear the name(s) of sellers/purchasers, area of land, rate per sq. yard etc. and accordingly merely on the basis of some rough notings on the impounded papers, legally no addition can be made to the income of the assessee.Therefore, in our view, the impugned additions have been made on the basis of notings on the seized papers without bringing on record any supporting and corroborative evidences. The additions are made purely on the basis of guess work, estimation which are not sustainable in law. Accordingly we find no merit in sustaining the additions accordingly we direct to delete the same. 58.6 Ground No. 2(v): This ground of appeal relates to objecting the addition of Rs. 1,60,000/- made on the basis of impounded paper no. 62 undated. The facts relating to this ground are available in the assessment order as....
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....ound relates to sustaining the addition of Rs. 1,23,00,000/- U/s 40(a)(ia) of the Act for alleged non-deduction of TDS from payments made to contractors for land development. We observed from perusal of the record that the assessee company in case of land development expenses due TDS was deducted at the time of credit / payments made. The proof of payment of TDS is submitted. The A.O. made the addition without proper verification from books of accounts of assessee company. It is an important fact that M/s Devi Infra Developers Pvt. Ltd. to whom development expenses paid has filed its return of income including the above said development charges paid by the assessee as its income. A copy of return of income of said company is already attached. Thus even in absence of submitting the declaration on prescribed Form u/s 201(1) of the Act no disallowance of the development charges paid to the said company deserves to be made. In this regard, we draw strength from the decision of the Coordinate Bench of this Tribunal in case of ACIT Vs. Girdhari Lal Bargoti in ITA No. 757/JP/2012 wherein the Coordinate Bench has held as under: "The recipient are NBFC, therefore, not possible to n....
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....the earlier part of this order that during the FY 2009-10 relevant to the AY 2010-11 i.e. the year under consideration, the suppression in sale of plots was determined at Rs. 1,14,36,034/-. Therefore, the AO is hereby directed to include the sum of Rs. 1,14,36,034/- to the income of the appellant for the AY 2010-11 while giving appeal effect to this order." 61. The ld. CIT (A) for making the above addition has made some working at page 28 of the impugned order. In the said working, the ld CIT (A) worked out the estimated sale price and also an average selling price and based on said working, he calculated the suppression of sales for the financial years 2009-10 to 2012-13. The ld. A/R against the said addition argued that the impugned addition has been made by the ld. CIT (A) on the basis of estimation and without any supporting corroborative evidence and also without giving an opportunity of hearing to the assessee. It is also submitted by the ld. A/R that the AO after going through the entire seized material did not notice any suppression of sales as there is no finding in the impugned assessment order passed by the AO regarding suppression of sales as alleged by the ld. CIT (....