TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 1016
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....tted by the Ld. Counsel for the assessee(s) and also duly accepted by the Ld. Departmental Representative that most of the issues raised in these appeals are common and inter-linked and as also, are arising out of the similar facts, for the sake of convenience and brevity, all these appeals were heard together on the request of both the parties and are being disposed of by this common order. 2.1 Grounds of appeal raised by the Revenue for AY 2010-11 in IT(SS)A No.149/Ind/2019, in the case of M/s. K.L. Sharma & Sunita Maheshwari: "1 On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,33,43,800/- and Rs. 36,343/- made by the A.O. on account of undisclosed investment u/s 69B of the Income Tax Act, 1961 on the basis of the report of the D.V.O. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 3,04,78,000/- made by the A.O. on account of unexplained expenditure u/s 69C of the Income Tax Act. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,50,00,000/- made by the A.O. on account of unaccounted payments ....
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....e Revenue for AY 2010-11 in IT(SS)A No.45/Ind/2020, in the case of Shri Suresh Kumar Maheshwari: "1 On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,70,00,000/- made by the AO for A.Y. 2010-11 on account of unaccounted cash receipts." 2.6 Grounds of appeal raised by the Revenue for AY 2012-13 in IT(SS)A No.46/Ind/2020, in the case of Shri Suresh Kumar Maheshwari: "1 On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,00,00,000/- made by the AO for A.Y. 2012-13 on account of unaccounted cash receipts. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,00,00,000/- made by the AO for A.Y. 2012-13 on account of unaccounted loan given in cash. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 5,50,000/- made by the AO for A.Y. 2012-13 on account of unaccounted interest received. 4. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 3,00,00,000/- made by the AO for A.Y. 2012-13 on account....
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.... CIT(A) has erred in deleting the addition of Rs. 99,00,000/- made by AO for A.Y. 2013-14 on account of unaccounted interest received." 2.11 Grounds of appeal raised by the Assessee for AY 2009-10 in IT(SS)A No.22/Ind/2020, in the case of Smt. Sunita Maheshwari: "1 That on the facts and in the circumstances of the case, the learned CIT(Appeals) erred in giving relief of Rs.24,42,240/- only out of the total addition of Rs.43,55,072/- made on account of unaccounted investment in construction of hostel building and thereby confirming the addition of Rs.19,12,832/- without considering the explanation offered by the assessee and without considering the facts properly and hence, the addition should be deleted by giving full relief in this case. 2. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing." 2.12 Grounds of appeal raised by the Assessee for AY 2013-14 in IT(SS)A No.35/Ind/2021, in the case of Shri Vijay Maheshwari: "1 That, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.8,00,000/- out of the total addition....
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....e material fact that the subject loose paper was an unsigned document seized from the premises of a third person and was not pertaining to the appellant. 3b). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.20,30,000/- made by the AO in the appellant's income without considering and appreciating the facts and circumstances of the case and without properly considering the written and oral submissions made by the appellant. 4. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary." 3.1 First, we shall take up the departmental appeals filed in the case of M/s. K.L. Sharma & Sunita Maheshwari for the assessment years 2010-11 to 2012-13. 3.2 The brief facts of the case as culled out from the records are that the assessee is a partnership firm, consisting of four partners, constituted on 01-08-2000 with the main object of carrying out the business of builders & developers of housing project and is also engaged in civil construction work. The assessee firm furnished its returns of income u/s. 139(1) of the Act....
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....2 Briefly stated facts of the issue, as culled out from the records, are that during the years under consideration, the assessee firm had made investment in the construction of two housing projects namely 'Regal Mohini' at Awadhpuri, Bhopal and 'Abhinav Homes Phase-III Extension' at Ayodhya Bypass Road, Bhopal. During the course of the assessment proceedings, Ld. AO vide letter dated 30-06-2016 made a reference to DVO, Bhopal for obtaining valuation reports in respect of the aforesaid two projects of the assessee. The valuation reports were submitted by the DVO on 24-11-2016. The DVO made an estimation of the total investment in "Regal Mohini" project at Rs.26,41,86,626/- as against the same shown by the assessee at Rs.22,07,75,642/- in its audited books of account. Likewise, the DVO estimated the total investment in Abhinav Homes Phase-III Extension project at Rs.5,93,06,535/- as against the same shown by the assessee at Rs.5,91,86,626/-. Thus, on the basis of the valuation reports, the AO computed difference of Rs.4,20,93,398/- in project Regal Mohini and of Rs.1,19,909/- in project Abhinav Homes Phase-III Extension. Accordingly, Ld. AO supplied the copies of valuation reports to....
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....ating material suggesting unaccounted investment in the projects of the assessee, for which a reference to the DVO was required. The ld. CIT(A) further noted that the AO did not spell out any basis which necessitated reference to DVO and had also not given any basis for making addition except relying solely upon DVO's Report. The ld. CIT(A) also observed that the assessee had maintained regular books of account which were subject to audit and the Auditors had not made any adverse remarks about any discrepancy or undervaluation in the projects of the assessee firm. The ld. CIT(A) further observed that the assessee firm had duly produced the necessary bills, vouchers, records etc. before the AO but, the AO could not point out any specific defect or discrepancy in the records. The ld. CIT(A) noted that the AO had not specifically addressed/ replied to the objections, both on technical and merits, raised against the DVO's report. The ld. CIT(A), by placing reliance on various judicial authorities, held that the addition made solely on the basis of valuation report is not sustainable in law. The ld. CIT(A) further noted that the DVO had prepared his report based on DPAR-2007 after apply....
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....eference of any incriminating material which acted as a clinching evidence for making a reference to DVO. Further, even in the Remand Report dated 01-05-2019, the AO did not make any comments on the reference of any incriminating material qua the subject issue. Para (11.1), Page 19 of AO's Order 49 to 54 (Remand Report of the AO) 2 Sec. 69B v/s. Sec. 69C The AO invoked the provisions of s.69B which is applicable for investment in a property. In the instant case, the investment in housing projects, being valuation of inventories, is the business expenditure of the assessee for which sec.69C could have been invoked. Para (11.5) Page 25 of AO's Order - 3 AO's action for making reference to DVO is bad in law. Pre-amended and Post-amended Section 142A Pre-amended s.142A (before 1.10.2014) conferred the power to the AO to make reference to DVO for estimating value of investment referred to in s.69 or 69B, or the value of any bullion, jewellery or other valuable article or thing referred to in s.69A or 69B or fair market value of any property referred to in s.56(2). After amendment, the provisions of s.142A only contemplates reference to DVO for estimating the value o....
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....hinav P-III Extn. is almost near to the cost shown by the assessee with a negligible variation of 0.20%. This shows rates adopted by DVO are inconsistent, adhoc and unreliable. - 7 Important points not considered by DVO i) DVO did not consider that the partners of the firm are engaged in this line of business from last 20 years. They had advantage of lower cost of material and labour. Further, they have their own plant and machineries. ii) Both the projects were meant for providing duplex housing facilities for lower & middle class families. The projects were made up of simple housing & basic amenities only. iii) Regal Mohini project also comprised of 722.67 sq.mtr. of EWS units which involve relatively lower cost. Such fact was ignored by the DVO. iv) The books of assessee were audited and duly supported by bills, vouchers etc.. Further, payments were made through banking channels. v) DVO prepared his report based on DPAR-2007 after applying cost index on above DPAR as base 100 and interestingly, the DVO had applied same rate for cost of construction of the projects even though the investment is spread over many years and more than 75% of construction was complete b....
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.... not sustainable It is a settled law that addition made solely on the basis of DVO report is not sustainable. DVO's report is not conclusive. M/s. Golden Realities & Ors. vs. ACIT (2021) 42 ITJ 544 (Indore Trib.) - 16 Case laws relied by AO not applicable to assessee None of the cases referred to by the AO in the assessment order are relevant for the assessee's case and are entirely on different set of facts. 30-31 17 Onus of the Revenue The burden is upon the revenue to establish that the actual consideration was more than that disclosed by the assessee. Decision of Hon'ble Supreme Court in the case of K.P. Varghese 131 ITR 594. - 8.1 Before us, the ld. counsel for the assessee firm primarily contended that the additions have been made by the AO solely on the basis of the Report of the DVO and that the AO, neither at the time of making a reference to the DVO nor at the time of making the impugned additions, had made any reference to any incriminating material found during the course of the search. The ld. Counsel of the assessee also stressed that the assessee had filed its detailed objections challenging the valuation made by the DVO but, these objections ....
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....ich was filed before the ld. CIT(A) and was also forwarded to the AO for his comments) wherein cost of construction was estimated at Rs.22,81,50,500/- which was close to the amount of actual cost of construction incurred and shown by the assessee in its audited books of account. The Ld. Counsel vehemently argued that DVO prepared the valuation report by applying CPWD rates completely ignoring the fact that duplex units were constructed near Bhopal, Madhya Pradesh and therefore, valuation ought to have been made using the local PWD rates instead of CPWD rates. 8.4 The Ld. Counsel for the assessee also argued that addition on account of undisclosed investment in construction of project was made by the Ld. Assessing Officer solely on the basis of valuation report of the DVO more so when no incriminating material was unearthed during the course of search and seizure action which itself makes the addition unsustainable. The ld. Counsel of the assessee vehemently submitted that addition made solely on the basis of DVO report is not sustainable for which he relied upon the decision of this Tribunal in the case of M/s. Golden Realities & Ors. vs. ACIT (2021) 42 ITJ 544 (Indore Trib.). 9....
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....wards various discrepancies crept into the said report. Even on valuation, we are in agreement with the findings given by the Ld. CIT(A) that in the instant cases, PWD rates ought to have been adopted by the DVO instead of adopting CPWD rates as the subjected properties were not constructed in any metro city. We find that the case of the assessee is covered by various judicial authorities, some of which are listed as under: i) CIT vs. Raj Kumar 182 ITR 436 All HC ii) CIT vs. Prem Kumar Murdiya 296 ITR 508 Raj HC iii) ITO vs. Nilesh Maheshwari (2011) 53 DTR 43 ITAT Jaipur iv) Rajeev Mewara 35 SOT 001 Indore Trib. v) ITO vs Prakash Chand Soni 94 TTJ 0631 Indore Trib. vi) Shri Jagmohan Jaiswal (2008) 10 ITJ 187 Indore Trib. vii) Kalpana Surana (2016) 28 ITJ 277 Indore Trib. viii) Biswa Mitra Singh vs Dy. CIT (2014) 23 ITJ 413 Indore Trib. ix) M/s. Golden Realities & Ors. vs. ACIT (2021) 42 ITJ 544 Indore Trib. 9.4 We find that this Tribunal in the case of M/s. Golden Realities & Ors. vs. ACIT (2021) 42 ITJ 544 (Indore Trib.) has already held that the additions made solely on the basis of DVO Report are not sustainable especially in a circumstance w....
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....e papers and to reconcile the same with its books but, the assessee did not submit any explanation. However, as per the assessee, vide its letter dated 18.11.2016 (placed at page no. 134 of the Paper Book) it had duly furnished copies of ledger accounts of persons appearing in its books of account. Further, as per the AO, the assessee was also issued a showcause notice dated 21.11.2016 [placed at Page no. 130 & 131 of the Paper Book] which remained uncomplied. However, as per the assessee, it had duly submitted its reply before the AO [placed at PB Page No. 135]. In its reply, the assessee firm categorically stated that the said diary was not related to it. The AO, from pages 2 to 12 of LPS-12, noted that the names mentioned as Shankar Traders, Prakash Malviya, A.K. Mangal and almost all names were available in the ledger accounts of the assessee firm which established that these pages were related to the firm. Accordingly, the AO prepared a table and bifurcated the amounts noted in the said diary in two columns of cheque and cash aggregating to a sum of Rs.1,30,00,000/- and Rs.3,04,78,000/- respectively. Finally, the AO made an addition of Rs.3,04,78,000/- in the assessee's income....
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....ils made the impugned loose papers as 'deaf and dumb document'. The ld. CIT(A) further noted that not a single transaction mentioned in the diary related with suppliers/ contractors was found in the books of account of the assessee. The ld. CIT(A) observed that the AO, on the one hand, at para (8.3)(i), stated that these amounts were made to different firms/ suppliers but on the other hand, at para (8.3)(iv), the AO stated that the said amounts were paid to Shri K.L. Sharma. The ld. CIT(A) also noted that the AO did not find any major discrepancy in books of account and therefore, the books were not rejected. Finally, the ld. CIT(A) deleted the addition of Rs.3,04,78,000/- made by the AO for A.Y. 2010-11. 10.4 Aggrieved with the Order of the ld. CIT(A), the revenue is in appeal before us. 10.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 10.6 Per Contra, Learned Counsel for the assessee apart from placing reliance on the finding of Ld. CIT(A) has also filed written synopsis. The relevant portion of such synopsis is being reproduced as under: "E. Key Points of Assessee's Submission and Relevant Pages of Paper Book: S. No. ....
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....pliers are very common and renowned suppliers and therefore, their names could appear in almost all other concerns of the group. The similarity of names would not ipso facto attribute the belongingness of diary to the assessee. - 8 No evidence found for on-money receipts/ unaccounted cash income During the course of entire search, not even a single piece of evidence was found which could suggest any receipt of on-money by the assessee or any of its partners. When the assessee is not found to have generated unaccounted income/ receipts, how the unaccounted payments in cash would be made. - 9 No addition of on-money/ unaccounted payment in earlier Assessments The assessee firm, since its constitution in the year 2000, had undergone various assessments u/s. 143(3)/147 in the past but, in none of the assessments, any addition on account of unexplained income/ expenditure was made. Even a block assessment u/s. 153C for AY 2002-03 to AY 200809 was made in which except making disallowance of claim u/s. 80-IB(10), no other addition was made. - 10 Contradictory averments of AO At para (8.3)(i) on page 7, the AO stated that these amounts were made to different firm....
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....ses of a partner, was actually pertaining to the assessee firm only. The ld. counsel for the assessee stressed upon that during the course of entire search, not even a single unaccounted bill or voucher relating to the assessee firm was found from any of the premises. The assessee firm also contended that the jottings made in the diary were undated, unsigned and further, these jottings were unclear regarding the nature of transaction, whether a receipt or payment, mode of receipt or payment, whether the jottings were in hundreds, thousands or lakhs. As per the assessee, the AO did not make any enquiry from the persons/ entities whose names were found in the said diary. It was also contended that during the course of entire search, not even a single incriminating material was found which could suggest any receipt of on-money by the assessee or any of its partners and when the assessee was not found to have generated any unaccounted income/ receipts, then how the unaccounted payments in cash would have been made by it. Finally, the ld. counsel for the assessee contended that the jottings made in the diary were only rough jottings which do not convey either receipt/ payment, mode ther....
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....asis of such jottings. We also note that from these jottings, it is not discernible that who made such jottings, when such jottings were made and what was the purpose of making such jottings. These jottings also do not speak about carrying out of any actual transaction and as also, the nature thereof if they at all pertain to any transaction. From such jottings, it cannot be conclusively proved that these jottings pertained to the assessee firm only and not to any other entity. 12.2 We find that during the course of the assessment proceedings, the assessee firm had furnished the complete details of the creditors and debtors along with copies of their ledger accounts. From such details and ledger accounts, the AO noted that the names of maximum creditors in the books were getting tallied with those listed in the loose papers and reached to a conclusion that the diary pertains to the assessee firm. However, the AO despite giving a finding that certain jottings were containing transactions of cheques, could not bring on record any single instance to establish any correlation with the transactions of the assessee firm. We note that the AO had not conducted any independent enquiry from....
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.... Settlement Commission. The order has been placed on record along with I.A.No.4. The Settlement Commission has observed that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disk and pen drive etc. do not comply with the requirement of the Indian Evidence Act and are not admissible evidence. It further observed that the department has no evidence to prove that entries in these loose papers and electronic data were kept regularly during the course of business of the concerned business house and the fact that these entries were fabricated, non-genuine was proved. It held as well that the PCIT/OR have not been able to show and substantiate the nature and source of receipts as well as nature and reason of payments and have failed to prove evidentiary value of loose papers and electronic documents within the legal parameters. The Commission has also observed that Department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis o....
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....of ACIT vs. JP Morgan India Pvt. Ltd. 46 SOT 250 (Mumbai), held that the addition made by the AO was based on the loose paper, which is not a conclusive evidence and therefore, the same is not sufficient for making the addition. The Tribunal also held that no addition can be made on the basis of dumb document/notebook/loose slips in absence of any other material to show that the assessee has made investment in land. The relevant observations and findings of the Tribunal in this case read as under:- "17 We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. In this case, the addition was made by the AO based on the loose paper and the same, in our view, cannot be considered as conclusive evidence. As held by the CIT(A)in the impugned order "except relying, the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the 'transaction particularly the vendor has not examined. In every transaction there is a circle concerning two parties. It is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely ....
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....Courts and Tribunals, we are of the considered view that the impugned addition for unaccounted cash expenditure has rightly been deleted by the Ld. CIT(A) as they were merely based on the rough jottings on the alleged seized loose papers which do not convey either receipt/ payment, mode thereof, nature of transaction etc.. Undisputedly, neither during the course of the assessment proceedings nor during the course of submission of remand report before the ld. CIT(A), the AO was able to bring any single cogent material or evidence on record to justify the addition made on the basis of uncorroborated jottings in the diary. Therefore, the alleged seized loose papers are only Dumb documents and no addition could have been made on such dumb documents. We therefore, do not find any reason to interfere in the findings of the ld. CIT(A) deleting the addition of Rs.3,04,78,000/- made in the assessee's income for A.Y. 201011. Accordingly, the ground No. 2 of the Revenue for A.Y. 201011 is dismissed. 13. Ground Nos. 3 & 4 of the Revenue for A.Y. 2010-11 and Ground Nos. 2 & 3 for A.Y. 2011-12 & A.Y. 2012-13 13.1 Through the ground no. 3 for A.Y. 2010-11 and ground no. 2 for A.Y. 2011-12 & A.....
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....he Paper Book) had duly furnished copies of ledger accounts of all the partners appearing in its books of account. Further, as per the AO, the assessee was also issued a show-cause notice dated 21.11.2016 [placed at Page no. 130 & 131 of the Paper Book] which remained uncomplied. However, as per the assessee, it had duly submitted its reply before the AO [placed at Page No. 135 of the Paper Book]. In its reply, the assessee firm categorically stated that the said diary was not related to it. The AO, from pages 13 to 16 of LPS-12, noted that these pages contain details of account of Shri K.L. Sharma and contain date-wise transactions in cheque and cash under the heading 'KLS'. Further, as per AO, the pages 17 to 20 of LPS-12 contain details of account of Smt. Sunita/ Shri Suresh Maheshwari and contain date-wise transactions in cheque and cash under the heading 'SM' which denotes Sunita Maheshwari. Further, the AO noted that the pages were duly signed by Shri K.L. Sharma and Shri Suresh Maheshwari which clearly establishes that these pages contain details of transactions between Shri K.L. Sharma, Shri Suresh Maheshwari and the assessee firm. Finally, the AO made an addition of Rs.4,0....
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....ect nexus of payments by the assessee firm. Thus, as per the ld. CIT(A), in absence of any cogent evidence having direct nexus with the impugned transactions, the said pages cannot be used against the assessee. Accordingly, the ld. CIT(A) deleted the entire additions of Rs.4,02,00,000/- and Rs.4,55,00,000/- respectively on account of payments to Shri K.L. Sharma and Smt. Sunita/ Shri Suresh Maheshwari, made by the AO for four assessment years. 13.4 Aggrieved with the Order of the ld. CIT(A), the revenue is in appeal before us. 13.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 13.6 Per Contra, Learned Counsel for the assessee apart from placing reliance on finding of the Ld. CIT(A) has also filed written synopsis. The relevant portion of such synopsis is being reproduced as under: "E. Key Points of Assessee's Submission and Relevant Pages of Paper Book: S. No. Marginal Notes Submission in Brief Relevant Pages of PB 1 The AO failed to establish any nexus of the subject incriminating material with the assessee. The AO has not brought on record any corroborative material to establish that the subject incriminating mate....
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....rm (30%). On the pages from 1 to 20, nowhere the name of the Shri J.C. Sharma was appearing. If at all the diary was pertaining to firm, the names of all the partners ought to have been found therein. - 9 No cogent material or evidence brought on record The AO failed to bring on record any single corroborative material or evidence which could prove that the said diary was pertaining to the assessee firm. - 10 No independent enquiry by AO The AO, except solely relying upon the uncorroborated jottings made in the diary, had not conducted any independent enquiry to establish that the said jottings actually pertained to the transactions of the assessee firm. - 11 Personal Unaccounted Income of Shri K.L. Sharma Shri K.L. Sharma had admitted the amounts of Rs.4,02,00,000/- as jotted down in the diary as his unaccounted income derived from his independent business and had filed an application before ITSC on 09-02-2017. 138-143 12 Amount already taxed would lead to Double addition Once Shri K.L. Sharma had accepted the entire amount of Rs.4,02,00,000/- as his separate unaccounted income other than that of the assessee firm, then no addition remains to be mad....
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....counted cash income During the course of entire search, not even a single piece of evidence was found which could suggest any receipt of on-money by the assessee or any of its partners. When the assessee is not found to have generated unaccounted income/ receipts, how the unaccounted payments in cash would be made by the assessee firm. - 7 No addition of on-money/ unaccounted payment in earlier Assessments The assessee firm, since its constitution in the year 2000, had undergone various assessments u/s. 143(3)/147 in the past but, in none of the assessments, any addition on account of unexplained income/ expenditure was made. Even a block assessment u/s. 153C for AY 2002-03 to AY 2008-09 was made in which except making disallowance of claim u/s. 80-IB(10), no other addition was made. - 8 Name of 4th partner Mr. JC Sharma not appearing Shri J.C. Sharma was also one of the partners of assessee firm (30%). On the pages from 1 to 20, nowhere the name of the Shri J.C. Sharma was appearing. If at all the diary was pertaining to firm, the names of all the partners ought to have been found therein. - 9 No cogent material or evidence brought on record The AO fa....
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....d cash payments would have been made by it to its partners. Finally, the ld. counsel for the assessee contended that the jottings made in the diary were only rough jottings which do not convey either receipt/ payment, mode thereof, nature of transaction etc. and thus, the said diary could only be termed as a 'dumb' document. In support of the contention that no addition is permissible on account of imaginary and non reliable jottings found made in diary, the Ld. Counsel for the assessee placed reliance on various judgments of Hon'ble Apex Court/Hon'ble High Courts and Tribunals referred to in the preceding paras. 15.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We find that the AO except relying solely upon the jottings made in the diary, has not brought any corroborative evidence on record to justify the addition made on the subject issue. We further find that the jottings made in the said diary are in ....
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....ayments to Partner Shri K.L. Sharma. Similarly, we also consciously uphold the findings of the ld. CIT(A) in deleting the additions of Rs.1,50,00,000/-, Rs.1,65,00,000/- and Rs.1,00,00,000/- respectively for A.Y. 2010-11, A.Y. 2011-12 and A.Y. 2012-13, made by the AO on account of unaccounted cash payments to Partners Smt. Sunita Maheshwari and Shri Suresh Kumar Maheshwari. Accordingly, the Ground Nos. 3 & 4 of the Revenue for A.Y. 2010-11 and Ground Nos. 2 & 3 for A.Y. 2011-12 and A.Y. 2012-13 are hereby dismissed. 16.1 Now, we take up the Revenue's appeals filed in the case of Shri Suresh Kumar Maheshwari for the assessment years 2009-10, 2010-11, 2012-13 and 2013-14. 16.2 The brief facts of the case as culled out from the records are that the assessee is an individual and as informed by ld. counsel for the assessee the Suresh Kumar Maheshwari has passed away on 13-05-2021. The main sources of income of the assessee were from rental income from house properties and interest income. The assessee furnished his returns of income u/s. 139(1) of the Act. A Search u/s 132 of the Act was also carried out on 12.08.2014 in the residential premises of the assessee located at A-61, Indrap....
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....ed that it was a joint venture agreement as per which duplexes were to be constructed by the second party on the land owned by the first party. The AO noted that as per such agreement, the second party will pay Rs.1.25 crore to first party out of which Rs.75 lacs will be paid through cheque and Rs.50 lacs in cash. It was further written in the agreement that cash of Rs.11 lacs was already paid and the remaining amount was to be paid from 01-04-2009 to 1004-2009. The AO also scanned the relevant pages 33 to 39 of LPS-3 at page no. 33 to 39 of the assessment order. As per the AO, the assessee was asked to explain these papers and to reconcile the same with his books and also show-caused as to why an addition be not made. In response, the assessee vide his letter dated 03-12-2016, made his reply which has been reproduced by the AO at para (10.3) on page no. 39 & 40 of his Order. The AO, while rejecting the submission of the assessee, further noted that during the course of the search, the agreement was confronted to the assessee and he was requested to explain the transactions made till date. In response, the assessee in his statement confirmed that the joint venture was done with Shr....
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....e agreement did not get materialized because the third partner of the assessee namely Shri Arvind Jain did not agree to the terms of agreement and which is why there is no signature of Shri Arvind Jain on the said agreement and for such reason, the cancellation agreement was prepared. The ld. CIT(A) also noted that the JV agreement was not notarized or registered and was not a legally enforceable document. The ld. CIT(A) further found that a joint account was opened in the name of firm with Canara Bank and on a perusal of bank statement, sum of Rs.65,00,000/- was paid through cheques on various dates. The ld. CIT(A) further noted that the AO did not make any field enquiry which could have proven that there existed a colony as proposed. The ld. CIT(A) stated to have verified from land revenue records that no such joint venture got actually executed for construction of duplex bungalows and the lands were still in the ownership of their original owners namely Shri Sushil Kumar Bajpai, Shri Vaibhav Sharma & Shri Upendra Singh. The ld. CIT(A) further held that the onus was lying upon the revenue to establish, through some cogent evidence, that the assessee had in-fact paid a sum of Rs.1....
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....-11-2014, recorded on oath before the search party, was confronted with such loose papers and the assessee, in reply to Q. No. 6, had categorically in an unambiguous term, had stated that such JVA did not get executed due to disputes and the amount of Rs.11,00,000/- given earlier got returned. Para (10.4) on page 40 - 6 Draft Cancellation Agreement also found & seized Along with such JVA, a draft cancellation agreement had also been found and seized as page no. 36 to 44 of LPS-13 which proves that the JVA had got cancelled subsequently. - 66 to 68 7 No reference in cancellation agreement of Rs.1 crore paid by assessee There is no mention of any amount of Rs.1,00,00,000/- in cancellation agreement which was allegedly paid by the assessee as per clause (34) of the JVA. If the assessee had actually paid such amount, the same would have also found mentioned in cancellation agreement. - 65, 66 to 68 8 No cogent material or evidence brought on record - ONUS OF REVENUE The AO failed to bring on record any single corroborative material or evidence which could prove that the cash of Rs.1,50,00,000/- was actually paid by the assessee. The onus was lying upon the....
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....ions of the JV and therefore, he did not sign the said agreement which is also clearly evident from the draft JV agreement itself that out of total 4 persons, only 3 persons put their signature on the purported agreement. The ld. counsel for the assessee further contended that the AO failed to bring any cogent material or evidence on record to establish that the cash of Rs.1,50,00,000/- was actually paid by the assessee. It was also contended that the AO did not make any independent enquiry from any of the other 3 persons whose names were mentioned in the draft agreement, especially from Shri Sushil Kumar Bajpai. The ld. counsel for the assessee also pointed out the finding given by the ld. CIT(A) at first para on page no. 72 of his Order, that on verification of the land revenue records, it was found that the lands were still in the ownership of Shri Sushil Kumar Bajpai, Shri Vaibhav Sharma & Shri Upendra Singh which fact goes to prove that no such joint venture agreement actually got executed or implemented for construction of any duplex bungalows on the subject lands. 22.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circu....
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....36 to 44 of LPS-13. As per such agreement, the JV agreement dated 16.03.2009 was cancelled and the second party was withdrawing from the joint venture. 22.3 Considering the facts and circumstances of the case, we find sufficient merit in the contention of the ld. counsel for the assessee that the JV agreement did not materialize due to disputes between the members of the second party which could be ascertained from the vital fact that Shri Arvind Jain did not sign on the said agreement and as a result whereof the cancellation agreement was also prepared. It is noteworthy that the JV agreement under consideration is not notarized or registered. In our considered opinion, since the Joint Venture itself did not materialize, the terms and conditions stipulating the payments cannot be treated to be materialized either. 22.4 We find sufficient force in the contention of the ld. counsel for the assessee that the AO had not brought on record any corroborative material or evidence to show that the Joint venture agreement had actually been executed or for that matter, any unaccounted payments were actually made by the assessee or anyone else. We note that the AO had not made any field enqu....
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.... diary has already been discussed at length by us in the preceding paras while dealing with the revenue's appeals in the case of the partnership firm 'M/s. K.L. Sharma & Sunita Maheshwari' in which the assessee is one of the partners, where we have already held that the subject seized diary was a 'dumb document' and from such document, the allegation of the AO regarding payments to Shri Suresh Maheshwari (the assessee here) and others does not get established. We have already deleted the substantive addition made in the hands of the aforesaid partnership firm while adjudicating the Appeal Nos. IT(SS) 149 to 151/Ind/2019 in case of M/s. K.L. Sharma & Sunita Maheshwari and therefore, as a consequential result, we find no justification in the action of the AO in making the additions in the hands of the assessee on the allegation of receipts aggregating to a sum of Rs.3,10,00,000/- from the partnership firm. Accordingly, we do not find any infirmity in the findings of the ld. CIT(A) in deleting the additions of Rs.1,70,00,000/-, Rs.1,00,00,000/- and Rs.40,00,000/- respectively for A.Y. 2010-11, A.Y. 2012-13 and A.Y. 2013-14, made by the AO, on protective basis, on account of unaccounte....
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.... 28 & 29 of his Order. The AO, while rejecting the submission of the assessee, further averted that during the course of the search, the agreement was confronted to the assessee and in response, the assessee stated that the agreement was a draft which was never executed. The AO observed that cash of Rs.3 crores had been given as loan by the assessee and Smt. Sunita Maheshwari to Shri Bhav Singh Rajput till the date of agreement and rest of Rs.1 crore was to be given within one month of the agreement. Further, the AO noted that although the loan agreement is not signed, however there were evidences that this agreement was executed for example an undated cheque no. 000016 for amount of Rs.75 lacs was given by Shri Bhav Singh Rajput to the assessee. Such cheque was seized as page no. 52 of LPS-13 from the residence of the assessee. A copy of such cheque is scanned by the AO at page no. 30 of the Assessment Order. The AO further noted that during the search, page no. 48 of LPS-13 was also seized which was an affidavit dated 29.05.2014 of Shri Bhav Singh Rajput on 100 Rs. Stamp paper and which was duly signed by Shri Bhav Singh Rajput. The affidavit of Shri Bhav Singh Rajput is scanned ....
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.... according to which the 2 acres of land would be acquired by the first party. Further, the ld. CIT(A) observed that the AO never examined the only beneficiary of the loan i.e. Shri Bhav Singh Rajput. Finally, the ld. CIT(A), in view of his detailed findings, deleted the entire additions of Rs.1,00,00,000/- & Rs.5,50,000/- for A.Y. 2012-13 and Rs.3,00,00,000/- & Rs.99,00,000/- for A.Y. 2013-14 so made by the AO respectively on account of unaccounted cash loans given to Shri Bhav Singh Rajput and interest income thereon. 24.4 Aggrieved with the Order of the ld. CIT(A), the revenue is in appeal before us. 24.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 24.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: "E. Key Points of Assessee's Submission and Relevant Pages of Paper Book: S. No. Marginal Notes Submission in Brief AO's Comments Relevant Pages of Paper Book 1 Draft, unsigned, undated and unexecuted loan agreement The loan agreement is not signed by any of the parties and not by any witness. Further, the loan agreement is....
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....) to such person. - - 8 Impugned document is not speaking one, hence 'dumb' It is a draft loan agreement. It is completely unsigned and is undated. It is not even on a stamp paper (even required by clause 8 of such agreement) - 56 to 58 9 No incriminating material found in search evidencing that cash loan Rs.2 crores was given earlier It is written in the opening para of the draft agreement that loan of Rs.2 crores was given earlier by the first party to second party and the second party was making regular payment of interest on such loan. During the course of search, no incriminating material was found which could suggest that the cash loan of Rs.2 crores was given earlier to Shri Bhav Singh Rajput. - 56 25. Before us, the ld. counsel of the assessee strongly contended that the impugned loan agreement was undated, unsigned and was just a draft agreement which did not materialize at all. The ld. counsel for the assessee vehemently argued that the agreement was neither signed by both the parties nor by any witnesses and it was neither on a stamp paper nor notarized. It was further contended that the wife of the assessee Smt. Sunita Maheshwari on an earlier ....
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....y lying upon the AO to establish the contents of the seized loose paper beyond all doubts and the AO has miserably failed to do so. We also find that the AO, except solely relying upon the uncorroborated draft loan agreement, had not conducted any independent enquiry from the sole beneficiary of the loan agreement namely Shri Bhav Singh Rajput. Such fact has also been conceded by the ld. CIT (DR) before us. 26.3 We find that the AO has referred to one undated cheque of Rs.75 lakhs issued by Shri Bhav Singh Rajput in favour of the assessee, which was found and seized during the course of search and the AO has alleged the same as a security cheque given by Shri Bhav Singh Rajput against the cash loan given by the assessee under such agreement. We find that the AO has proceeded on mere presumption and undisputedly, there is no material on record which could relate the aforesaid cheque of Rs.75 lakhs with the subject loan agreement. As against the same, it was contended by the assessee that such undated cheque of Rs.75,00,000/- was not related to the loan agreement and the assessee, in his statement recorded during the course of search, had categorically stated that such cheque was gi....
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...."The Assessing Officer has failed to prove that any cash transaction had been undertaken between the assessee and the sellers of the land in question. No such evidence has been brought on record before us by the authorities below. In our view, the addition on the basis of unsigned, undated draft agreement, the figures written on which had been struck off, cannot be a basis of addition in this case, especially in the absence of any other incriminating or corroborating evidence of exchange of cash." 26.4.3 The Coordinate Bench of ITAT Mumbai again in the case of Shri Bharat Singh vs. ACIT [ITA Nos. 2001 & 3256/Del/2017 Dated 25.01.2019] held as under: "We are of the opinion that no addition can be sustained only on the basis of the unsigned draft agreement to sell found from the premises of the third party and that too without any corroborative evidences. Accordingly, we set aside the order of the Ld. CIT(A) and the Assessing Officer on the issue in dispute and direct the Assessing Officer to delete the addition for alleged cash received on sale of 1st floor of the property under reference. The grounds No. 2 and 3 of the appeal are, accordingly, allowed." 26.4.4 We also find th....
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....so dismissed. 27. Ground No. 4 of the Revenue for A.Y. 2012-13 27.1 Through this ground of appeal, the revenue has challenged the action of the ld. CIT(A) in deleting the addition of Rs.3,00,00,000/- made by the AO for A.Y. 2012-13 on account of unaccounted cash loans given. 27.2 Briefly stated facts of the issue, as culled out from the records, are that the AO noted that during the course of search, page nos. 19 & 20 of LPS-4 were seized which contain ledger account of cash paid against loan repayments handed over to Shri Vijay Maheshwari and others between 03.01.2012 to 23.05.2013 totaling to Rs.1.62 crores. Further, page no. 21 of LPS-4 also contains month wise amounts from January, 2012 to August, 2012 totaling to Rs.300 lacs. The AO also scanned the relevant loose papers at page no. 42 to 44 of the assessment order. The AO noted that these loose papers are systematic ledger accounts and monthly sheet, the veracity of transactions contained cannot be doubted. The AO concluded that on page no. 21, cash loan of Rs.3,00,00,000/- was given by the assessee before January 2012 and schedule was fixed for repayment. Finally, the AO made an addition of Rs.3,00,00,000/- in the assesse....
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....ssue. 27.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: "E. Key Points of Assessee's Submission and Relevant Pages of Paper Book: S. No. Marginal Notes Submission in Brief AO's Comments Relevant Pages of Paper Book 1 Projection of the assessee for receipts/ expenses The assessee is a builder having various projects at various sites. The assessee might have prepared the same for estimating the future receipts in some project or estimating the future expenses of some project. - 71 2 Not related to any loan Nowhere in the entire page, there is any mention of any name of payer of loan or receiver of loan. If such a huge amount is given, atleast there would be some name. Date on which the alleged loan was given is not mentioned anywhere. On what basis, the AO presumed that loan was given during the previous year relevant to A.Y. 2012-13? - 71 3 Vital details missing The very basic details such as loan beneficiary, agreement of loan, terms and conditions of loan, date of loan, mode of loan in cash/cheque/kind were completely missing in these papers. Hence, no ....
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....e assessee vehemently argued that the loose paper did not contain vital details such as name of the receiver of money or payer of money, date of loan, mode of giving the loan etc. It was further contended that the presumption of the AO for signature on the loose paper is actually written as '1 July'. The ld. counsel for the assessee also contended that if the page no. 19 & 20 of LPS-4 are presumed to be related with recovery of loan, then as per accounting principles, the entries should have been appearing on the credit side and not on the debit side. Further, it was also contended that the AO failed to bring any corroborative material on record to establish that the cash loan of Rs.3,00,00,000/- was actually given by the assessee to any person. The ld. counsel for the assessee stressed that the AO had not conducted any independent enquiry from various persons whose names were stated on the loose papers, by issuing summons u/s. 131 or letter u/s. 133(6) to such persons. It was also contended that the allegation of the AO to the effect that the loose paper page no. 21 was getting tallied with loose papers page no. 19 & 20, is factually incorrect. Lastly, the ld. counsel for the asse....
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....independent enquiry. Such fact has also been conceded by the ld. CIT (DR) before us. 29.4 In view of above discussions and our detailed findings, we consider it appropriate to hold that there is no evidentiary value of the impugned loose sheets especially in a circumstance when the AO had neither brought any corroborative material on record nor made any independent enquiry from the persons whose names were stated in the said loose papers. Thus, the said loan agreement could only be termed as a 'dumb' document. Since we have already discussed at length the various judicial authorities while giving our findings in respect of Ground No. 2 of the Revenue in the case of the partnership firm M/s. K.L. Sharma & Sunita Maheshwari for the A.Y. 201011 supra, the same are not being referred to here again. Thus, considering the facts and circumstances of the case, we do not find any infirmity in the findings of the ld. CIT(A) in deleting the addition of Rs.3,00,00,000/- for A.Y. 2012-13, made by the AO, on account of unaccounted cash loans given by the assessee. Accordingly, the Ground No. 4 of the Revenue for A.Y. 2012-13 is hereby dismissed. 30.1 Before us, the ld. counsel for the assessee....
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.... raised by the assessee. Accordingly, the legal ground so raised by the assessee before us is hereby dismissed. 31.1 Now, we take up the appeals filed in the case of Smt. Sunita Maheshwari for the assessment years 2009-10, 201011, 2012-13 and 2013-14. 32.2 The brief facts of the case as culled out from the records are that the assessee is an individual presently aged 56 years. The main sources of income of the assessee were from rental income from house properties and interest income. The assessee duly furnished her returns of income u/s. 139(1) of the Act for the assessment years under consideration. A Search u/s.132 of the Act was carried out in the Regal Homes and Dwarkadhish Haweli Builders Group of Bhopal on 12-08-2014. A Search was also carried out in the residential premises of the assessee located at A-61, Indrapuri, Bhopal. Subsequently, Notices u/s. 153A of the Act were issued to the assessee and in response, the assessee furnished letters declaring same income for the assessment years under consideration as was declared by her in the returns filed u/s. 139(1) of the Act. During the course of the assessment proceedings, the assessee also furnished copies of her financia....
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....hy the difference be not treated as undisclosed investment in hostel building and addition should not be made on the basis of DVO's report. In response, the assessee vide her letter dated 03-12-2016, filed her detailed objections, which have been reproduced by the AO at para (10.4) on page no. 29 of his Order. Finally, the AO, by discarding the objections of the assessee, made an addition of Rs.43,55,072/- on account of undisclosed investment in hostel building for A.Y. 2009-10 on the basis of the DVO's Report. 36.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences which were also furnished by her before the AO. The ld. CIT(A), vide Para (4.1) at page no. 32 to Para (4.1.9) at page no. 50 of his Order, has given his findings on the subject issue. The ld. CIT(A) observed that the AO had not made any specific reference of any incriminating material suggesting unaccounted investment of the assessee in the hostel building. The ld. CIT(A) further noted that the AO did not s....
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....ent. 36.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: "E. Key Points of Assessee's Submission and Relevant Pages of Paper Book: S. No. Marginal Notes Submission in Brief AO's Comments Relevant Pages of Paper Book 1 Not based upon any incriminating material The AO has not made any specific reference of any incriminating material which acted as a clinching evidence for making a reference to DVO. Completed year of assessment - Return u/s. 139 filed on 1503-2010. No assessment pending on the date of search. Para (10.1), Page 28 25 2 Objections filed against the DVO report In response to the show-cause notice issued by the AO, the assessee filed its detailed objections challenging the valuation made by the DVO. Such objections have also been reproduced by the AO in the Assessment Order. Para (10.4) Page 29 - 3 The objections against DVO Report remained uncontroverted The objections of the assessee were neither sent to the DVO for his comments nor the AO deemed it necessary to deal with the genuine objections. Para (10.5) Page 29 - 4 Mistakes in the....
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....nding upon AO The AO did not apply his independent mind and did not care to make any comment on the objections raised. The AO also did not call for the record of DVO and other documents relied upon by DVO for making valuation, before finalizing assessment. It is a settled law that the DVO's report is not binding upon the AO and is only an opinion of expert. - - 11 Valuation method of DVO is prone to difference of 20-25% In Rajhans Builders vs. DCIT (2010) 41 SOT 331 (Ahd.), the DVO himself quoted that variation of 20% is possible. In CIT vs. Abeeson Hotels (P) Ltd (2004) 191 CTR 253 (MP), the Hon'ble MP High Court held that difference of 10% is usual phenomenon. - - 12 Addition solely on DVO report not sustainable It is a settled law that addition made solely on the basis of DVO report is not sustainable. DVO's report is not conclusive. M/s. Golden Realities & Ors. vs. ACIT (2021) 42 ITJ 544 (Indore Trib.) - - 13 Onus of the Revenue The burden is upon the revenue to establish that the actual consideration was more than that disclosed by the assessee. Decision of Hon'ble Supreme Court in the case of K.P. Varghese 131 ITR 594 (SC). - - 37.1 B....
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....& Ors. vs. ACIT (2021) 42 ITJ 544 (Indore Trib.). 38.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We find that the assessee had constructed a hostel building in the city of Bhopal, Madhya Pradesh. During the course of assessment proceedings, the AO referred the matter to the DVO who submitted his report to the AO. The assessee filed her detailed objections before the AO pointing out the various discrepancies in the DVO's report. The AO neither sent the objections to the DVO for his comments nor the AO himself controverted the objections of the assessee and instead, the AO relied upon the DVO's report and accordingly made the addition to the total income of the assessee on account of undisclosed investment in construction of hostel building. 38.2 As regard the legal contention of the ld. Counsel for the assessee that the impugned addition has been made by the AO without having recourse to any incriminat....
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....e by the AO, on substantive basis, on account of unaccounted cash receipts from the partnership firm M/s. K.L. Sharma & Sunita Maheshwari, respectively for A.Ys. 2010-11, 2012-13 & 2013-14, on the basis of jottings made in some diary seized during the course of search from the residence of the assessee. 39.2 Briefly stated facts of the issue, as culled out from the records, are that the AO, from pages 17 to 20 of the diary LPS12, made an addition of Rs.4,55,00,000/- in the assessee's income, on substantive basis, as unaccounted receipts from partnership firm M/s. K.L. Sharma & Sunita Maheshwari in four assessment years i.e. Rs.1,70,00,000/- in A.Y. 2010-11; Rs.1,45,00,000/- in A.Y. 2011-12; Rs.1,00,00,000/- in A.Y. 2012-13; and Rs.40,00,000/- in A.Y. 2013-14. A corresponding addition of Rs.4,55,00,000/- was also made by the AO, on protective basis, in the hands of the assessee's husband namely Shri Suresh Maheshwari which has already been dealt by us in the preceding paras. 39.2 We find that the issue relating to the subject diary has already been discussed at length by us in the preceding paras while dealing with the revenue's appeals in the case of the partnership firm 'M/s. K.....
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....i Suresh Kumar Maheshwari while adjudicating the Appeal Nos. IT(SS) 46 & 47/Ind/2020 in his case and therefore, as a consequential result, we find no justification in the action of the AO in making the additions in the hands of the assessee on the basis of an unsigned and undated draft agreement. In such eventuality, we uphold the findings of the ld. CIT(A) in deleting the additions of Rs.5,50,000/- and Rs.99,00,000/- respectively for A.Y. 2012-13 and A.Y. 2013-14, made by the AO, on protective basis, on account of unaccounted interest income on the cash loans given to Shri Bhav Singh Rajput. Accordingly, the Ground Nos. 2 and 3 of the Revenue for A.Ys. 2012-13 and 2013-14 are hereby dismissed. 41.1 Now, we take up the appeals filed in the case of Shri Vijay Maheshwari for the assessment years 2013-14 and 2014-15. 41.2 The brief facts of the case as culled out from the records are that the assessee is an individual presently aged 43 years. The main sources of income of the assessee were from carrying out the business of construction and interest income. The assessee duly furnished his returns of income u/s. 139(1) of the Act for the assessment years under consideration. A Search ....
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....0,000/- made by the AO on account of unexplained cash credit u/s. 68 for A.Y. 2013-14. 45.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the assessment proceedings, the AO found that the assessee had claimed to have received unsecured loan of Rs.8,00,000/- from Shri Pushpraj S/o. Shri Gendraj Singh. The AO required the assessee to furnish documentary evidences with regard to identity and creditworthiness of the lender and genuineness of transaction. However, the assessee merely submitted the confirmation of Shri Pushpraj which according to the AO, was a bald confirmation. The AO noted that Shri Pushpraj was not even assessed to tax as he did not even had a PAN. Thus, as per AO, the assessee had not established the identity and creditworthiness of the lender and genuineness of transaction. Accordingly, the AO made an addition of Rs.8,00,000/- u/s. 68 of the Act on account of unexplained credit in the form of unsecured loan. 45.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). The ld. CIT(A), vide Para (4.3) at page no. 14, noted that the assessee was ....
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....ssee. [First Proviso to sub-section (1) of section 153C] Accordingly, in the case of the assessee, the date of search would be construed as 22-07-2016 i.e. the date on which Order u/s. 127 was passed by the CIT for transferring jurisdiction to the AO [here, the date of recording of reason i.e. on 05-07-2016 is irrelevant as by such time, the AO did not have any valid jurisdiction over the case of assessee]. Thus, on 22-07-2016, the assessment proceedings in the case of the assessee for A.Y. 2013-14 were deemed to have been completed. Accordingly, the A.Y. 2013-14 was a completed year of assessment. 3 Addition without incriminating material It is a settled law that no addition could be made in a completed year of assessment without having recourse to any incriminating material. - S. No. Marginal Notes Submission in Brief Relevant Pages of PB 1 Not based upon any incriminating material The AO has not made any single reference of any incriminating material for making the impugned addition of Rs.8,00,000/-. [refer para (6.1) on page no. 10 of the assessment order] - 2 No question of belongingness arise. Decision of SC in Super Malls Pvt. Ltd.....
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....t no addition could have been made by the AO in a completed year of assessment without having recourse to any incriminating material for which the ld. Counsel relied upon the decision of the Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla 380 ITR 573 (Del.) and other judicial authorities on this issue. The ld. Counsel for the assessee also contended that both the authorities below had failed to appreciate the very vital fact that the subject transaction was not that of a loan but was an advance against sale of house and Shri Pushpraj in his confirmation had clearly stated that he had given advance against sale of house. It was further contended that the assessee had duly furnished confirmation letter of Shri Pushpraj Singh containing his complete name, phone no. and address and the AO could have issued a summons u/s. 131 or notice u/s. 133(6) to Shri Pushpraj Singh to verify the claim of the assessee. However, no independent enquiry was made by the AO. 46.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from b....
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....of the time limit for issuance of notice under s.143(2) of the Act had already got expired and as such, no assessment proceedings were pending on the date of search. In such eventuality, the A.Y. 2013-14 cannot be considered as an abated assessment year. Undisputedly, the AO has not brought any incriminating material on record for making the impugned addition. Such fact has also been conceded by the ld. CIT (DR). Thus respectfully following the settled judicial precedence which are squarely applicable on the instant issue we are of the view that no addition could have been made by the AO in the assessee's income without having recourse to any incriminating material. Accordingly, we are inclined to delete the addition of Rs.8,00,000/- so made by the AO for the A.Y. 2013-14. Since we have already deleted the addition on the legal ground raised by the assessee, we do not consider it necessary to adjudicate the issue on merits. 46.5 We find that through legal ground No. 2, the assessee has contended that the AO had invoked the provisions of s.153C of the Act in the case of the assessee for the A.Y. 2013-14 without having recourse to the incriminating material belonging/ pertaining to ....
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....lishes that the transaction actually took place and it was not a projection as claimed by the assessee. Accordingly, the AO held that the assessee had given an unsecured loan of Rs.20,30,000/- in cash to Shri R.B. Singh on 03.01.2014 and the source was unexplained. Finally, the AO made an addition of Rs.20,30,000/- in the hands of the assessee. 48.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). The ld. CIT(A), vide Para (4.2) at page no. 13 & 14, held that the paper clearly states the amount of loan taken and repayment of loan and it was not a projection but it was an actual transaction between the assessee and Shri R.B. Singh. Finally, the ld. CIT(A) confirmed the addition made by the AO. 48.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 48.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 48.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: "Key Points of Assessee's Submission and Relevant Pages of Paper Book: S. No....
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.... to Shri S.K. Maheshwari. However, subsequently, Shri R.B. Singh got his funds arranged from some other source and he did not obtain the said funds from Shri S.K. Maheshwari or the assessee. The factum of the non-materialization of transaction is clearly evident from the loose paper itself which is completely unsigned, missing various important details such as mode of loan, address of payer/payee etc. In such eventuality, merely because some draft unsigned and unexecuted promissory note was found from the premises of a third person, no addition can be made in the hands of the assessee. 27 2 No enquiry by the AO The AO merely on the basis of some draft, unsigned and unexecuted promissory note, ventured into making of addition in the hands of the assessee. The AO could have made an enquiry from Shri R.B. Singh by issuing summons u/s. 131 or notice u/s. 133(6) which was not done. - 49. Before us, the ld. counsel of the assessee contended that in respect of the impugned loose paper page no. 48 of LPS-6 which was seized during the course of search from the premises of Smt. Sunita Maheshwari, no presumption u/s. 292C can be drawn against the assessee. It was further conte....