TaxTMI 
TaxTMI 
2022 (2) TMI 591
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....ief are that the assessee is an individual and derived income from salary, house property, income from business and income from other sources. He filed his return of income on 15.09.2011 declaring total income of Rs. 61,93,010/-. A search under section 132 of the I.T. Act was conducted on 28.02.2017 at the residential premises of the assessee at House No. 128, Sector-16, Faridabad, Haryana from where certain papers/documents belonging to the assessee were found and seized. The jurisdiction of the assessee was transferred from Pr.ClT-5, Delhi to PCIT, Central Circle-4, Delhi vide order under section 127(1) dated 30.11.2017. In response to notice under section 153A of the I.T. Act, the assessee filed return of income declaring total income of Rs. 61,93,010/-. The A.O. issued notice under section 143(2) and subsequently notice under section 142(1) along with questionnaire. In response to the same, the assessee appeared before the A.O. and filed the requisite details from time to time. The A.O. thereafter completed the assessment under section 153A of the I.T. Act determining the total income of the assessee at Rs. 1,64,54,330/-. 3. In appeal, the Ld. CIT(A) granted part relief to the....
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....Act, 1872, as the assessee involved in the transaction resultingly an unreasonable finding without even calling and summoning the person involved namely RA Financial Services and Om Shanti Educational Society. 9. Because the action is being challenged on facts and law for making an addition of Rs. 3,207/- by invoking the provisions u/s 69C by making presumption on presumption while law is settled that the presumption is supplied by Statute namely Income Tax Act, 1961, Schedule VII List 1 Entry 82 it is presumption of income and not presumption on presumption. 10. Alternatively and without prejudice to above, the action for not allowing telescoping of addition on account of u/s. 69A, u/s. 69C & commission expenses against addition on account of bogus purchases of group concerns is challenged on facts and law as both additions cannot be made simultaneously. 11. For any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee." 3.1. The assessee has also raised the following additional ground: i) B....
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....s. 1,00,000/- received back by the assessee from Mataji. Therefore, the amount of Rs. 1,00,000/- which assessee has given to them was received back. Alternatively, it was argued that if any addition on this account is to be made then assessee is entitled to telescoping against addition made on account of Bogus purchases which is treated as undisclosed income of assessee. It was further submitted that if telescoping of income is not allowed, it will amount to double addition. 8.2. However, the A.O. was not satisfied with the arguments advanced by the assessee and made addition of Rs. 12 lakhs to the total income of the assessee. 8.3. In appeal, the Ld. CIT(A) deleted the addition of Rs. 2 lakhs and sustained the addition of Rs. 10 lakhs by observing as under : "4.6. As far as amount of Rs. 2,00,000/- given to 'Mamaji' on 07.08.2010 is concerned, it is clearly mentioned in the seized paper itself that it was given for purchasing gold jewellery. The AO has certainly not disputed cash in hand of Shri Vishnu Kumar Garg (Rs. 1,75,446/-) and Smt. Lata Garg (Rs. 1,63,557/-) as on 07.07.2010. It is noted that Shri Vishnu Kumar Garg has declared income of Rs. 61,93,010/- for AY 2011-12 a....
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....m for safe custody, whenever he used to go out of station for either business purpose or some personal purpose. Referring to Page-267 of the PB, Learned Counsel for the Assessee drew the attention of the Bench to the details of cash in hand as on 07.07.2010 in various proprietorship firms and companies which are as under : Sr. No. Particulars Amount PB Pg 1. Blossom Landeal Pvt. Ltd., 8,001.00 268 2. LV Rustore Applications Pvt. Ltd., FBD 4,51,455.07 269 3. LV Rustore Applications Pvt. Ltd., - DL 17,392.25 270 4. Vishnu Kumar Garg - Proprietorship Firm 86,520.00 271 5. Lata Garg - Proprietorship Firm 3,77,827.00 272 6. Vishnu Kumar Garg 1,75,446.59 273 7. Lata Garg 1,63,557.00 274 Total Cash Balance as on 07 Jul 2010 12,80,198.91 8.6. He accordingly submitted that since the amount of cash available as on 07.07.2010 is Rs. 12,80,198/- which is more than the amount of Rs. 10 lakhs kept with Mamaji and Mataji, the same should be deleted. In his alternative contention, he submitted that if any addition on this account has been made, then the assessee should be entitled to telescoping against the addition made o....
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....o out of station for either business purposes or personal work. The assessee has also given the availability of cash on 07.07.2010 (the date of entry in the seized document) in the books of accounts of various proprietorship concerns and companies in which the assessee is a director at Rs. 12,80,198.91/- which is more than the amount of Rs. 10.00 lakhs. Therefore, merely stating that the explanation is not acceptable is not justified. Since, the availabilities of cash of Rs. 12.80 lakhs on 07.07.2010 in the books of accounts of various concerns of the assessee is not doubted, therefore, we are of the considered opinion that the Ld. CIT(A) is not justified in sustaining the addition of Rs. 10,00,000/-. The order of the Ld. CIT(A) on this issue is, therefore, set-aside and the AO is directed to delete the addition. The ground raised by the assessee is accordingly allowed. 11. Ground of appeal number.4 relates to the order of the Ld. CIT(A) in confirming the addition of Rs. 11 lakhs. 12. After hearing both the sides we find the A.O. during the course of assessment proceedings asked the assessee to explain the following entries dated 26.04.2010 as mentioned in page-14 of Annexure-A1 ....
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....operty relating Shri Mukut Bhaiya, elder brother of the appellant. The / did not accept this reply. The AO noted that Rs. 11,00,000/- were paid by the appella {Shri Vishnu Kumar Garg} and therefore, added this amount. This addition was dispute vide ground No. 3. 4.9 ' During the appellate proceedings, the appellant re-iterated the same stand as was taken before the AO. The appellant also raised alternative contention that the cash was available out of bogus purchases in the hands of Shri Vishnu Kumar Garg, Smt. Lata Garg, M/s. RR Carwell Pvt. Ltd. and M/s. L. V. Rustore Applications Pvt. Ltd. and this addition should be telescoped against the same. 4.10 In my considered opinion, there is a clear entry in the seized material to the effect that Shri Vishnu Kumar Garg paid Rs. 11,00,000/-. Therefore, there is no infirmity in the action of the AO in terms of making addition of Rs. 11,00,000/-. As far as alternative plea of telescoping is concerned, it has been dealt with in para 4.6(supra). The observations/remarks made therein are applicable to this addition, mutus mutandi. 4.11 In view of the above discussion, this ground (No. 3) of appeal is dismissed, subject to the above....
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....e addition of Rs. 11 lakhs since the amount of Rs. 11 lakhs was appearing against the name of the assessee. We find the Ld. CIT(A) sustained the addition on the ground that there is a clear entry in the seized material to the effect that Shri Vishnu Kumar Garg paid Rs. 11 lakhs. It is the submission of the Learned Counsel for the Assessee that the entries found in documents seized are rough calculations for purchase of same property which did not materialize and no such property was found to have been purchased by the assessee and, therefore, these are dumb documents and, therefore, in the absence of any corroborative evidence no addition should be made. It is the alternate contention of the assessee that benefit of telescoping should be given on account of additions made for bogus purchases etc. 14.1. We find the assessee had stated categorically before the AO that these are rough calculation for purchase of property which did not materialize. It is an admitted fact that no such document or papers pertaining to purchase of any property was found either during the course of search or post search enquiries. Apart from the noting in the seized papers, the revenue has no other eviden....
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....he Ld. D.R. that the Ld. CIT (A) erred in accepting fresh evidence then what is left after ignoring those affidavits is the bare document No. 7 with the bare details as referred to above. The moot question now arises is whether any addition can be made on the basis of that document. We have already pointed out above that this document is bereft of necessary details about year of transaction, ownership of transaction, nature of transaction, necessary code for deciphering the figures. It may be possible that a document may not be complete in all respects as the businessman or tax evaders may chose to record minimum details on a document and keep the rest in their memory. It is the duty of the AO to carry out necessary investigations by correlating the impugned document with other documents seized, with regular books of accounts, with record kept by outside agencies, such as banks or financial institution or debtors/ creditors and finally by recording the statements of concerned parties so as to fill up the gaps in confirming the inference arising from the documents for a proper charge of tax. Such correlation is necessary unless the document is capable of speaking giving frill detail....
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....ition of the same to the total income of the assessee. 15.3. In appeal, the Ld. CIT(A) sustained the addition made by the A.O. He, however, accepted the alternate plea of the assessee for telescoping subject to his observation at para-4.6 of the order reproduced at para 8.3 of his order. The relevant observations of the Ld. CIT(A) at para 4.15 of his order reads as under : "4.15. In my considered opinion, there is a clear entry in the seized material to the effect that on 14.09.2010, Rs. 5,00,000/- cash was received. Also, the entry "650000" shows either an amount of Rs. 6,50,000/- were received or adjusted so that balance became Rs. 8,45,000/- (instead of earlier balance of Rs. 14,00,000/-). Therefore, there is no infirmity in the action of the AO in terms of making addition of Rs. 14,00,000/-. As far as alternative plea of telescoping is concerned, As far as alternative plea of telescoping is concerned, it has been dealt with in para 4.6 (supra). The observations/remarks made therein are applicable to this addition, mutus mutandi. 4.16. In view of the above discussion, this ground (No.4) of appeal is dismissed, subject to the above mentioned remarks/observations." 16. Learn....
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....o be restricted to Rs. 10,55,000/- only (i.e., Rs. 14,00,000 - Rs. 3,45,000). We, therefore, modify the order of the Ld. CIT(A) and direct the A.O. to restrict the addition to Rs. 10,55,000/-. 18.2. So far as argument of Learned Counsel for the Assessee that telescoping benefit should be given is concerned, the same is acceptable in view of the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sonal Construction reported in [2013] 359 ITR 532 (Del.) where the Hon'ble High court has accepted the theory of benefit of telescoping. We, therefore, direct the A.O. to allow the benefit of telescoping and deduct the addition of Rs. 10,55,000/- from profits from bogus purchases etc. added in the hands of the assessee and his proprietorship concerns and in the case of the 02 companies namely LV Rustore Applications (P) Ltd., and RR Carwell Private Ltd., where he is a Director and is the controlling person. The A.O. shall do the necessary calculation and the ground raised by the assessee on this issue is accordingly partly allowed in terms indicated above. 19. In grounds of appeal number.6 and 7 the assessee has challenged the order of the Ld. CIT(A) in confirming the addition....
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....of the assessee that interest was not received cannot be accepted in the absence of any supporting evidence. 20.4. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 21. Learned Counsel for the Assessee referring to Pages 95 and 96 of the paper book submitted that the seized documents Pages 125 & 126 of Annexure A-5 contain details of Loan. He submitted that the A.O. presumed that the said documents contain details of loan amounting Rs. 75 Lakh given to Shri Rattan Prakash Mishra in the year 2009 instead of Shri Abhay Salwan merely on the basis that the said document contains signature of Shri Rattan Prakash Mishra. He submitted that the A.O. overlooked that the seized document Page 125 contains signature of 4 persons (PB Page 95) namely the assessee, Abhay Salwan, Rattan Parkash Mishra and Dinesh Gupta wherein Rattan Parkash Mishra and Dinesh Gupta had signed as witnesses & assessee had signed as payer and Abhay Salwan had signed as payee. The hand writing expert report is at PB Pages 239-259 who confirmed that signature of Abhay Salwan on various documents and initial signature of Abhay Salwan on Page 126 of Annexure A5 are similar. Furt....
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....Pages 125 & 126 (supra) and submissions of assessee and merely on presumption added interest amount Rs. 11,25,000/- during the year. 21.2. Learned Counsel for the Assessee submitted that Shri Rattan Prakash Mishra, in his proceedings under section 153C has denied to have any transaction with the assessee. He referred to the copy of assessment orders passed under section 153A/153C for the A.Ys. 2011-12 and 2012-13, copies of which, are placed at Pages 16-24 of second synopsis dated 03.08.2021 and drew the attention of the Bench to the submission before the A.O. He submitted that when both assessee and Shri Rattan Prakash Mishra are denying of any transaction and there is no other corroborative evidence or material before the A.O, the addition on account of interest received is not justified. 21.3. Referring to the decision of Hon'ble Delhi High Court in the case of CIT vs., Ved Prakash Choudhary reported in 305 ITR 245 he submitted that when both the parties are denying to have entered into the transaction, then no addition could be made, in absence of corroborative evidence as the presumption under section 132(4A) of the I.T. Act, 1961 is a rebuttal one. 21.4. The Learned Counse....
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....i Abhay Salwan and in spite of that they are a secure creditor in accordance with the principle of law laid down in the case of Vijay Bank vs., CIT (2010) 323 ITR 166 (SC). 21.7. He further submitted that in the Court of Saurab Gusain, Civil Judge (Sr. Div), Faridabad in the case of Vijay Sachdeva (Plaintiff) vs., Abhay Salwan (Defendant), vide order dt. 22.09.2015 (PB Pages 112-197) in suit for specific performance of contract where the issue is that the defendant Abhay Salwan agreed to sell the property to the plaintiff for a total sale consideration of Rs. 50 Lakhs vide sale agreement dt.31.12.2012. On same day defendant received a sum of Rs. 45 Lakh as part payment and also handed over the original sale deed dt.05.11.2009 to the plaintiff. The last date for execution and registration of sale deed was fixed on or before 30.06.2013. A separate receipt was also executed by defendant in presence of witnesses. It has been further claimed that since defendant was in need of money, he requested the plaintiff to make balance sale consideration of Rs. 5 Lakh, which was also paid by Plaintiff vide separate receipt. It was claimed that thereafter although plaintiff always remained ready ....
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....e hand of assessee and two companies namely LV Rustore Applications Pvt. Ltd. and R R Carwell Pvt. Ltd. where he is the director and the controlling person as undisclosed income of assessee. He submitted that if telescoping of income is not given than there will be double addition in as much as both the undisclosed income and the investment made out of such income are both brought to tax which was contrary to the basic principles of assessment. Therefore, undisclosed income and the undisclosed investment are to be set off against each other, thus giving benefit of telescoping to the assessee. For the above proposition, the Learned Counsel for the Assessee relied upon the following Judgments :- (i) CIT vs., Sonal Construction [2013] 359 ITR 532 (Del.) (ii) Anantharan Veerasinghaiah & Co. vs., CIT [1980] 123 ITR 457 (SC) 22. The Ld. D.R. on the other hand, heavily relied on the orders of the A.O. and the Ld. CIT(A). She submitted that when the seized documents clearly mention the interest @ 1.5% per month, therefore, in the absence of any evidence on record to show that assessee has not received the interest, the order of the Ld. CIT(A) be upheld. 23. We have considered the riv....
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....alwan. We find merit in the arguments of the Learned Counsel for the Assessee that the lower authorities have overlooked the submissions and added the interest merely on the basis of presumption and surmises. We find the Learned Counsel for the Assessee through various documents/Court order has established that Shri Abhay Salwan is absconding, is a proclaimed person and is a defaulter. Therefore, in absence of any evidence available with the Revenue, it cannot be said that the assessee has received the interest of Rs. 11.25 lakhs from Shri Abhay Salwan during the year especially when the seized document does not categorically mention that the assessee has in fact received the interest. 23.3. We find the Coordinate Bench in the case of Red Fort Shahjahan Properties Pvt. Ltd., (supra) vide ITA.No.742/Del./2020 dated 20.08.2020 has held as under: "16. In our considered opinion where the principle amount of loan/advance is doubtful of recovery interest thereon cannot be accrued and added to income even under the mercantile system of accounting. Our view is fortified from the decision of the Hon'ble Madras High Court in the case of CIT v. Motor Credit Co. P. Ltd.: 127 ITR 572. ....
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.... Road, Faridabad, Page Nos.67 to 71 of Annexure-A5 Hanspal Industrial Complex were seized. These pages are letters issued by R.A. Financial Services to Mr. Rattan Prakash Mishra, President Om Shanti Educational Society. As per this letter, Sh. Vishnu Garg has received Rs. 40,00,000/- (Rs. 18,00,000/- received on 19.10.2010 and Rs. 22,00,000/- received on 30.10.2010) from R. A. Educational Trust. The A.O, therefore, asked the assessee to explain the said amount and his interest in Omshanti Educational Society and the reasons as to why the said amount was paid to assessee. 25.1. The reply of the assessee vide letter dated 30.11.2018 has been reproduced by the A.O. which reads as under : "As regard Pg. No. 67 & 71 of Annexure 5(Pg. 155-159) seized from 17/6, Hanspal Industrial Complex, Mathura Road, Faridabad, letters issued by R A Financial Services to Rattan Prakash Mishra, President Om Shanti Educational Society. As per these letters, assessee received cash of Rs. 40,00,000/- on behalf of Om Shanti Educational Society from R.A. Financial Services. In this regard, it is submitted that assessee has received cash on behalf of Om Shanti Educational Society (as authorised person) whi....
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....ned in this letter was between RA financial services and Om Shanti Educational Society and assessee was not related to either with Om Shanti Educational Society or R. A. Financial Services. He submitted that assessee's role was only that of a witness to the transactions and he had not received any amount from any of the involved parties. During assessment proceedings under section 153A, statement of Sh. Rattan Prakash Mishra was recorded on dt. 16.11.2018 (PB Pg. 275-276) wherein specific question (Q-13) was asked relating to above said letter and money received by assessee amounting Rs. 40 Lakh from R A Educational Trust on behalf of Om Shanti Education Trust and in reply after looking the letter (supra), he has recalled about Ms. Ashima Salwan he had stated as under :- "Presently I can't recall about such information and I am unable to access books of accounts of Om Shanti Education Society now. After looking these pages I recall that Ms. AshimaSalwan is the wife of Sh. AbhaySalwan who is the controlling authority ofRA Financial services & RA Education Trust." 26.1. Thus from above submissions, letter and statement of Rattan Prakash Mishra, it is clear that the said su....
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....ttan Prakash Mishra, President Omshanti Educational Society, Mr. Vishnu Garg has received Rs. 40 lakhs from R.A. Educational Trust on various dates i.e., Rs. 18 lakhs on 19.10.2010 and Rs. 22 lakhs on 30.10.2010. The submission of the assessee that he has received the cash of Rs. 40 lakhs on behalf of Omshanti Educational Society from R.A. Financial Services and were subsequently passed-on to Omshanti Educational Society was rejected by the A.O. on the ground that the assessee failed to furnish any evidence that this money was actually further given to Omshanti Educational Society. It is the submission of the Learned Counsel for the Assessee that there is an agreement between R.A. Financial Services and Omshanti Educational Society and assessee was not related to either of them and his role was that of a witness to the transaction. It is also his submission that during the course of assessment proceedings under sections 153A/153C of the I.T. Act, 1961, the statement of Shri Rattan Prakash Mishra was recorded on 16.11.2018 wherein specific query was asked to him. The A.O. without any further enquiry from Omshanti Educational Society or Shri Rattan Prakash Mishra made the addition wh....
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.... That as per the clause 9 of MOU and the payment terms of the said agreement, the balance payment having already been paid to you on 30.10.2010 by R.A. Financial Services the land of RPS Education. Foundation has been transferred to Omshanti Educational Society vide Sale Deed No.149 dated 06.04.2011. It is further stated that after having received the amount of Rs. 1,35,00,000 (Rs. One Crore Thirty. Five lacs only) the undersigned and five of his associates were inducted as members of the Governing body of Omshanti Educational Society which fact is to your knowledge. The undersigned and five of his associates were inducted as members with all powers to deal with, the properties and management of Omshanti Educational Society. It is further to bring to your notice that the undersigned was .appointed as the Treasurer of the society and Ms. Aashima Salwan as the Vice President of the society. The aforesaid members were inducted on 12.10.2010. The intimation of the induction of the said members was duly communicated to the District Registrar, Firms and Societies, Faridabad vide letter dated 18.10.2010 addressed to him by your goodself. 4. It is further' brought to your kind notice tha....
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.... deny the receipt of payment, although it is in your active and full knowledge. To steer clear the misgivings, it is once again brought to-your notice in order to straighten the records that admittedly a sum of Rs. 1,35,00,000 has been received by you. The remaining amount of Rs. 40,00,000 stands paid to you by the, undersigned and the payment has been received by you through Mr. Vishnu Garg, your authorised person.. The details of payment have been given in the last letter dated 17.08.2011. You can cross check and co ordinate with your own representative.. Your bid to cancel the MOU is obviously mischievous and malafide attempt. It is beyond anybody's comprehension as to how and under what circumstances you can wriggle out of the aforementioned MOU when its terms and conditions have been, adhered to by the undersigned in its entirety. Regarding your assertion that attempts are being made to allegedly occupy or possess the land and building at Panhera Khurd, Ballabgarh by the undersigned and about the alleged trespass, it is yet another cock and bull story on your part. You are unnecessary trying to put curtain on your admitted stand. It is again emphasized that the land and ....
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....being challenged on facts and law for making an addition of Rs. 4,50,000/- (@ 1.5% of Rs. 50,00,000/- given to Mishra ji) which is unwarranted action by assuming the interest accrued of 1.5% which is a hypothetical income and against the principle of law (Godhara Electricity Co. Ltd., vs., CIT (1997) 225 ITR 746 (SC) whereas per assessee said loan of Rs. 50,00,000/- is given to Abhay Salwan & not to Mishraji. 4. Because the action is being challenged on facts and law for making an addition of Rs. 4,50,000/- (@ 3% of Rs. 50,00,000/- given to Abhay Salwan) which is unwarranted action by assuming the interest accrued @ 3% which is a hypothetical income and against the principle of law (Godhara Electricity Co. Ltd., vs., CIT (1997) 225 ITR 746 (SC). 5. Because the action is being challenged on facts and law for making an addition of Rs. 9,00,000/-, wherein the evidence and the fact of the payee Abhay Salwan being a proclaimed offender and absconding is matter of Judicial Review before the Hon'ble Allahabad High Court, yet wrongly invoking the jurisdiction of presumption u/s. 132(4A). Alternatively and without prejudice to above, the prayer is to allow the claim/relief in accordance....
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....riminating material/document found during the course of search u/ s 132 of the Act for the impugned year. 3. Because the action is being challenged on facts and law for invoking the jurisdiction u/s. 69A r.w.s. 115BBE as unexplained money for Rs. 2,39,25,000/- while assuming the presumption for addition bereft of material facts containing material particulars in the case proceedings. 4. Alternatively & without prejudice to above, the action for not giving benefit of Rs. 50,00,000/- (receipts dt. 01.01.2012 seized during search) received back from Abhay Salwan & R. A. Financial Services in peak cash balance. Similarly, A.O. has not given benefit of Rs. 50,00,000/- (receipts dt.15.12.2011 seized during search relating to L V Rustore Applications P. Ltd., wherein assessee is Share Holder & Director) received back from Abhay Salwan & R A Financial Services along with interest in peak cash balance. 5. Because the action is being challenged on facts law for charging interest of Rs. 41,86,000/- (Period 12.11.2012 to 31.03.2013) as income from other sources which is disputed since hypothetical income cannot be put to charge and alternatively without prejudice, the prayer is to allow ....
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.... seized. It is an MOU entered into by the Assessee and Gyaneshwar Education Trust on 12.11.2012. According to this MOU assessee had given a cash loan of Rs. 3.5 crores to Gyaneshwar Education Trust @ 2.6% interest per month for one year till 11.11.2013. This MOU is duly signed by Shri Abhay Salwan on behalf of the Trust and was found in the custody of the assessee. The A.O, therefore, asked the assessee to explain the source of Rs. 3.5 crores and explain as to why the same should not be added as unexplained income. 43. The assessee filed the following reply : "As regard Pg. No. 36 & 37 of the Annexure A-10 (Pg. 98-100 of submission for AY 2011-12) seized from premises 17/6, Hanspal Industrial Complex, Mathura Road, Faridabad, it is submitted that in MOU, Abhay Salwan has not signed at First Party place but made initial only as proposal of signing MOU(supra) & sent the same to the assessee for execution however assessee rejected said MOU & declined to sign the said MOU and however the document was kept as a matter of abundant caution to determine the acceptance of acknowledged debt by Mr Abhay Salwan. Moreover, the same is not having any seal of Gyaneshwar Education Trust nor the....
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....ri Abhay Salwan, third evidencing payment of cash loan of Rs. 25.00,000/- by Shri Vishnu Kumar Garg to M/s. RA Financial Services (signed by Shri Abhay Salwan) and fourth evidencing payment of cash loan of Rs. 25,00,000/- by M/s. L V. Rustore Applications Pvt. Ltd. to M/s. RA Financial Services (signed by Shri Abhay Salwan) } and cash generated out of bogus purchases in case of appellant, Smt. Lata Garg (W/o the appellant), M/s. L.V. Rustore Applications Pvt. Ltd. and M/s. R R Carwell Pvt. Ltd. has not been allowed. 22.7. As far as plea that this agreement was not enforceable by the law is concerned, the same cannot be accepted. The provisions u/s 132(4A)/292C are very clear. The presumption is that content of any seized material are to be taken as true. The MOU clearly stated that the appellant had given a total amount of Rs. 3,50,00,000/- as a loan in cash for a period of one year i.e. from 12th November, 2012 to 11th November, 2013. It is an evidence. Of course, it is a rebuttable evidence. However, the appellant produced no evidence to rebut the same. Therefore, this plea is rejected. The AO has rejected the theory of earlier loan of Rs. 75,00,000/- ( Rs. 50,00,000/- in Jan, ....
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....the assessee to Abhay Salwan. He submitted that a perusal of the MOU and other details given by the assessee to the AO at the time of assessment proceedings conclusively prove the amount of Rs. 3.50 Crores consists of the principal, interest and interest on interest be recovered from Abhay Salwan. He accordingly submitted that the addition made by the AO and sustained by the Ld. CIT(A) should be deleted. 47.1. He submitted that in the MOU, Abhay Salwan has not signed at First Party place but made initial only as proposal of signing MOU and sent the same to the assessee for execution. However, the assessee rejected the said MOU and declined to sign the said MOU. However the document was kept as a matter of abundant caution to determine the acceptance of debt acknowledged by Mr Abhay Salwan. He submitted that the MOU is not having any seal of Gyaneshwar Education Trust nor the document is notarized hence the same is not enforceable in accordance with the procedure of law. 47.2. He submitted that the two MOUs dated 12.11.2012 and 28.09.2013 are not supported by any book entries which could reveal that actual cash has been paid. He submitted that the above MOUs are only made up docum....
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.... made by the AO under section 69A of the I.T. Act. Referring to the provisions of section 69A, he submitted that these MOUs do not come under the category of money, bullion, jewellery or other valuable articles. Further, the date of payment is also not mentioned in the MOUs and therefore to which financial year it relates is not ascertainable which is mandatory requirement of provisions of section 69A of the I.T. Act, 1961. He submitted that addition, if any, could have been made only u/s 69 of the Act. 47.7. Ld. counsel for the assessee submitted that the first MOU dated 12.11.2012 does not have the signature of the assessee or any witness and not even notarized. The Second MOU dated 28.09.2013 has not been acted upon. The so-called property to be mortgaged by Mr. Abhay Salwan as mentioned in the MOU was already mortgaged to the bank and property documents were never handed over to the assessee, then it is against human probability that the assessee would have given such huge money especially when he is denying the same from the beginning. 47.8. Alternatively & without prejudice to the above, he submitted that the AO has not given the benefit in calculation of peak cash credit r....
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.... of peak credit of Rs. 1,10,75,000/- and made the addition of balance Rs. 2,39,25,000/-. We find the ld. CIT(A) upheld the same, the reasoning of which have already been reproduced in the preceding paragraph. It is the submission of the ld. Counsel for the assessee that since Mr. Abhay Salwan defaulted in making the payment, he came with a new proposal in the month of November, 2012 to secure the assessee's loan and voluntarily furnished an undertaking in the form of MOU with Gyaneshwar Education Trust for consolidated amount of Rs. 3.5 Crores which was outstanding with interest upto 12.11.2012. It is the submission of the ld. Counsel for the assessee that in the MOU dated 12.11.2012, there is only one initial of Mr. Abhay Salwan, which is not stamped or notarized. Further, it does not contain the signature of the assessee or any witness. It is his submission that Mr. Abhay Salwan is fraud and was only buying time to pay the principle as well as interest. It is the submission of the ld. Counsel for the assessee that there is no corroborative evidence regarding the amount of Rs. 3.5 Crores given by the assessee to Mr. Abhay Salwan and that the AO has not examined the available perso....
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.... the Assessee. 5. The Commissioner was of the view that all the parties had denied the transaction and in fact the property in question was eventually sold by Ravi Talwar and Madhu Talwar to M/s. Delhi Tent and Decorators Pvt. Ltd. whose Director gave a statement on 4th February, 2002 to the effect that he had purchased the agricultural land in question from Ravi Talwar and Madhu Talwar. It was also held that in view of the denial of receipt of any money by Ravi Talwar and Madhu Talwar, there ought to have been some independent corroboration of the payment but there was no such material forthcoming. 6. In so far as the Tribunal is concerned, it was of the view that under the provisions of Section 132(4A) of the Act, there was a presumption about the correctness of the contents of the MOUs but relying upon the decision of the Karnataka High Court in Commissioner of Income Tax vs. P.R. Metrani (HUF), [2001] 251 ITR 244, it was held that the presumption was rebuttable. It was further held that the Assessee had been able to successfully rebut the presumption. 7. Learned counsel for the Revenue reiterated the view expressed by the Assessing Officer. Unfortunately, we are not in ag....
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....at in fact there was no transfer of money between him and Ravi Talwar and Madhu Talwar. On the other hand, Ravi Talwar and Madhu Talwar had denied receipt of any money from the Assessee. In the fact of these denials, there ought to have been corroborative evidence to show that there was in fact such a transfer of money. Both the Commissioner as well as the Tribunal have come to the conclusion that there was no such material on record. 13. The Assessing Officer relied on certain other transactions entered into by the Assessee with Ravi Talwar and Madhu Talwar for drawing a presumption in respect of the transfer of money, but the Tribunal rightly held that those were independent transactions and had nothing to do with the MOUs, which were the subject matter of discussion. Even if there was something wrong with some other transactions entered into, that would not give rise to an adverse inference in so far as the subject MOUs are concerned. 14. In our opinion, no substantial question of law arises. 15. Dismissed." 49.2. We find the SLP filed by the Revenue was dismissed by Hon'ble Supreme Court vide order dated 09.01.2009 as reported in (2010) 3 taxmann.com 785 (SC) 50. In the....
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.... is shareholder and director and amount being received back from Mr. Abhay Salwan and R.A. Financial Services along with interest should be considered for computing the peak cash balance. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to decide the issue afresh after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Ground of appeal No.4 by the assessee is accordingly allowed for statistical purposes. 52. Ground no.5 relates to the addition of Rs. 41,86,000/- made by the Assessing Officer and sustained by the Ld. CIT(A). 53. After hearing both the sides, we find the Assessing Officer made the addition of Rs. 41,86,000/- being interest @ 2.6% of cash loan of Rs. 3.5 Crores given by Gyaneshwar Education Trust for the period 12.11.2012 to 11.11.2013 on the basis of MOU seized at the time of search. We find the Ld. CIT(A) sustained the addition by observing as under:- 22.9 Vide ground No. 4, the appellant has contested the addition of Rs. 41,86,000/-. This addition has been made because the AO has calculated the interest on the above....
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.... of Rs. 2,00,75,720/- on which interest has been paid. However, the AO noted that the assessee has utilized only Rs. 1,50,00,000/- out of the above amount of Rs. 2,00,75,720/- for the purchase of the house property and the remaining funds were diverted for other purpose. In absence of any satisfactory explanation given by the assessee, the AO made addition of Rs. 3,04,832/-, which has been upheld by the Ld. CIT(A). We do not find any infirmity in the order of the Ld. CIT(A) on this issue in absence of any satisfactory explanation even before us. Accordingly, the order of the ld. CIT(A) on this issue is upheld and the ground raised by the assessee is dismissed. 58. Ground No.8 being general in nature is dismissed. ITA No.9448/Del/2019 (Revenue's Appeal) for AY 2013-14. 59. The Revenue has raised the following grounds of appeal : 1. The order of Ld. CIT (A) is not correct in law and facts. 2. Whether the facts and circumstances of the case, the Ld. CIT (A) has erred in allowing telescoping effect of Rs. 2,39,25,000/- on account of bogus purchases made in the hand of other entity of Group to the assessee's case. 3. Whether the facts and circumstances of the case, the Ld. ....
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.... to the case controversy during the course of case proceeding and contrary to the judgement S. Sankappa vs. ITO ((1968) 2SCR 674). 2. Because the action is being challenged on facts and law for making additions in assessment proceedings u/s 153A when there is no incriminating material/ document found during the course of search u/s 132 of the Act for the impugned year. 3. Because the action is being challenge on facts and law for invoking the jurisdiction u/s 69A r.w.s. 115BBE as unexplained money for Rs. 3,59,64,000/- while assuming the presumption for addition bereft of material facts containing material particulars in the case proceedings. 4. Alternatively & without prejudice to above, the action for not giving benefit of Rs. 3,50,00,000/- (as per MOU dt. 12.11.2012 seized during search) received back from Gyaneshwar trust in peak cash balance. 5. Because the action is being challenged on facts law for charging interest of Rs. 91,50,000/- (Period 28.09.2013 to 31.03.2014) as income from other sources which is disputed since hypothetical income cannot be put to charge and alternatively without prejudice, the prayer is to allow the claim/relief in accordance with the provi....
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....8.09.2013. According to this MOU, the assessee had given a cash loan of Rs. 5 Cr in cash to Gyaneshwar Educational Trust on 28.09.2013 @ 3% interest per month for three years from 28.09.2013 to 28.09.2016. This MOU is duly signed by the assessee and Sh Abhay Salwan on behalf of Gyaneshwar Educational Trust and was found in the custody of the assessee. During assessment proceedings, the assessee was asked to explain the source of Rs. 5 Cr and to show cause as to why the amount Rs. 5 Cr not to be treated as unaccounted money and be added back to total income of the assessee during the year under consideration. 69. The assessee in his reply dated 30.11.2018 submitted that Pg. No. 13 & 14 of the Annexure A-10 were seized from premises 17/6, Hanspal Industrial Complex, Mathura Road. Faridabad. It is an MOU dt. 28.09.2013 executed between Gyaneshwar Educational Trust & assessee. It was submitted that during the year Abhay Salwan has not made any payment of whatsoever kind relatable to principal, interest & interest on interest. However it is most relevant to state that Abhay Salwan again offered to furnish an undertaking in the form of another MOU with Gayneshwar Education Trust for Rs.....
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....der with narration as shown below: AY 2011-12 Date Amount Received Amount Paid Narration 30.09.2010 2,25,000 Interest received on unsecured cash loan of Rs. 25 lakh given to Mishraji in Year 2009 for period from 01.04.2010 to 30.09.2010 30.09.2010 3,75,000 interest income for prior period on loan of Rs. 25 lakh given to Mishraji in Year 2009 for period from 01.04.2010 to 30.09.2010 19.10.2010 18,00,000 Received on behalf of Om Shanti education society from RA financial services 30.10.2010 22,00,000 Received on behalf of Om Shanti education society from RA financial services 11.11.2010 25,00,000 Received back principle amount of Rs. 25,00,000 given to Mishra in 2009 31.03.2011 9,00,000 Interest income on cash loan of Rs. 50 lakh given to Mishraji in 2009 for period from 01.04.2010 to 31.03.2011 31.03.2011 11,25,000 Prior period interest on Rs. 50 lakh cash loan given to Mishra in 2009 91,25,000 Cash in hand on 31.03.2012 AY 2012-13 30.09.2011 50,00,000 Received back principle amount of Rs. 50,00,000 given ....
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....be owner of Rs. 3,59,64,000/- but he did not furnish any explanation regarding the source of the money. Therefore, he treated the amount of Rs. 3,59,64,000/- as unexplained money of the assessee u/s 69A of IT Act. 74. In appeal, the Ld. CIT(A) confirmed the addition made by the AO by observing as under:- 29.7. During the present appellate proceedings, that AR repeated the stand taken before the AO. Additionally, the AR argued that calculation of availability of cash as on 28.09.2013 is not correct because benefit of Rs. 3.5 Cr received as per earlier (draft) MOU have already been added. The AR also said that the benefit of cash generated due to additions of bogus purchases in the hands of appellant, his wife (Smt. Lata Garg) and his companies namely, M/s. RR Carwell Pvt. Ltd. and M/s. L. V. Rustore Applications Pvt. Ltd. should be allowed, while calculating cash availability. 29.8. It was argument of the AR that MOU dated 28.09.2013 was made after rescinding the MOU dated 12.11.2012 or in other words only additional amount of Rs. 1.5 Cr was given which was in form of accrued interest. The AR submitted calculation by using a calculation of interest @ 3% per month, compounded ev....
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.... regarding giving benefit of Rs. 3.56 lakhs which was received back from M/s Gyaneshwar Educational Trust as per MOU dated 12.11.2012. 77.1. Since, we have already restored ground of appeal no.3, this ground is also restored to the file of the AO for fresh adjudication. The ground raised by the assessee is accordingly allowed for statistical purposes. 78. In ground No. 5, the assessee has challenged the order of the Ld. CIT(A) in confirming the addition of interest of Rs. 91,50,000/- made by the AO. 79. After hearing both the sides, we find the AO on the basis of MOU that the assessee has received interest @ 3% per month on the cash loan of Rs. 5 Crores given to Gynaeshwar Educational Trust on 28.09.2013 made addition of Rs. 91,50,000/- being interest. We find the Ld. CIT(A) upheld the action of the AO. It is the submission of the ld. Counsel for the assessee that Mr. Abhay Salwan is not traceable, is absconding, is a proclaimed person and offender. Therefore, no interest can be taxed on notional basis. For the above proposition, he relied on the argument while arguing for the interest on loan from Mr. Abhay Salwan for AY 2012-13. 80. The Ld. DR on the other hand heavily relied....
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....(A) has erred in allowing the benefit of cash generated due to the additions of bogus purchases in the hands of other entity of Group to the assessee's case. 4. Whether the facts and circumstances of the case, the Ld. CIT (A) has erred in allowing the cash generated due to out of books transactions of bogus purchases is to be treated at par with other out of books cash generating transactions in assessee's case. 5. Whether the Ld. CIT (A) has erred in appreciating the facts that additions on account of bogus purchases made in the cases of other entity whereas, the addition on account of un-explained money u/s. 69A of the Act, made in the assessee's hand. 6. The appellant craves for leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal." 88. After hearing both the sides, we find the above grounds are identical to the ground raised by the Revenue in ITA No.9448/Del/2019 for AY 2013-14. We have already decided this issue and the grounds raised by the Revenue have been dismissed. Following, the similar reasoning, the ground raised by the Revenue are dismissed. ITA.No.9151/Del./2019 - A.Y. 2015-16 : 89. The grounds raised by t....
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.... seized documents Pg. 13-14 of Annexure A-10 & Pg.46 of Annexure A-10 relating to assessee were found from the premises of third parties i.e., LV Rustore Appliations Pvt. Ltd., RR Carwell Pvt. Ltd., Blossom Landeal Pvt Ltd., & Elvi Bardahl India Pvt. Ltd., 17/6, Hanspal Industrial Complex, Mathura Road, Faridabad, therefore the additions on the basis of the said documents can only be made u/s 153C of the Act & not u/s 153A of the Act. 91. However, the ld. Counsel for the assessee did not press the additional ground for which the ld. DR has no objection. The additional ground raised by the assessee is accordingly dismissed. 92. The ld. Counsel for the assessee did not press grounds no.1 and 2 for which the ld. DR has not objection, accordingly, the grounds no.1 and 2 are dismissed. 93. In ground no.3 and 4, the assessee has challenged the order of the Ld. CIT(A) in confirming the addition of Rs. 90 lakhs being interest @ 3% on the amount of cash loan to Mr. Gyaneshwar Educational Trust. 94. After hearing both the sides, we find the above grounds are identical to grounds of appeal No. 5 to 6 in ITA No.9150/Del/2019. We have already decided the issue and the grounds raised by the ....
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....t Ltd and Rs. 5,00,000/- received from M/s NBS Engineers India Pvt Ltd is actually a payment made by Abhay Salwan against the loan given by the assessee in earlier years. He noted that as per submission made by the assessee, this payment of Rs. 30,00,000/- should have been shown as bad debt recovered or loan recovered in the hand of the assessee and not as unsecured loan in hand of the assessee. Moreover, the assessee has shown this received payment as a liability in his statement of affairs. That liability still exists in the statement of affairs as on 31.03.2017. That clearly shows that the assessee was trying to hide the actual nature of receipt and colouring it with character of liability in his statement of affairs. In view of the above the AO held that the assessee failed to prove identity, genuineness and credit worthiness of the unsecured loan but also tried to hide the actual nature of the payment by showing it as a liability. Therefore, he considered the said amount of Rs. 25,00,000/- received from M/s Giantmaker Developers Pvt. Ltd. and Rs. 5,00,000/- received from M/s NBS Engineers P Ltd as unexplained money of the assessee. He accordingly made addition of Rs. 30,00,000....
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.... from Mr. Abhay Salwan in his group companies. The ld. Counsel for the assessee drew the attention of the Bench to the following details:- S. No. Date Amount (Rs.) Mode of Payment Name of Party from whom Received Books of Acoounts in which received 1. 09.04.2014 10,00,000 RTGS Giantmaker Developers P. Ltd. Vishnu Kumar Garg (ROC Form 32 & Annual returns showing that Abhay Salwan is director & shareholder in said company (Submitted at submission dt. 23.07.2019 of Vishnu Kumar Garg AY 2011-12 Pg. 451 - 468) 2. 11.04.2014 15,00,000 RTGS Giantmaker Developers Pvt Ltd. Vishnu Kumar Garg 3. 05.05.2014 5,00,000 RTGS NBS Engineers India Pvt Ltd. Vishnu Kumar Garg (ROC Form 32 for appointment on dt. 13.04.2013 & resignation on dt. 01.07.2014 from directorship in said company (Submitted at submission dt. 23.07.2019 of Vishnu Kumar Garg AY 2011-12 Pg. 469 -478) 4. 28.04.2014/06.05.2014 10,00,000 RTGS SBN Construction Blossom Landeal Pvt Ltd. & Blossom has given cheque dt. 06.05.2014 to Vishnu Kumar Garg 5. 05.05.2014 10,00,000 RTGS NBS Engineers India P Ltd. L V Rustore Applications Pvt Ltd. 6. 14.09.2012 10,00,000 Chequ....
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....ld the action of the AO, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the Ld. counsel for the assessee that the amount of Rs. 30,00,000/- received by the assessee are in fact the recovery of principal amount earlier given to Mr. Abhay Salwan and the addition made by the AO and sustained by Ld. CIT(A) are on presumption basis. It is the settled position of law that for allowing any cash credit as genuine, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the identity and creditworthiness of the loan creditor and genuineness of the transactions. However, the assessee in the instant case has not discharged the onus. The submission of the ld. counsel for the assessee that these are in fact recovery of principal amount also needs to be established by the assessee. Considering the totality of facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case and decide the issue as per fact and law. We hold and direct accordingly. The ground raised....