TaxTMI 
TaxTMI 
2023 (4) TMI 208
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 3. The grounds raised by parties are as under: IT(SS)A No. 185/Ind/2020 - Revenue's appeal for AY 2008-09: "(1) On the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 1,89,52,017/-made by the AO on account of unexplained investment. (2) On the fact and in the circumstances of the case, the Ld. CIT(A) erred in granting the benefit of exemption under section 11 of the Income-tax Act, 1961 to the assessee." IT(SS)A No. 186/Ind/2020 - Revenue's appeal for AY 2009-10: "(1) On the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 98,52,368/- made by the AO on account of unexplained investment. (2) On the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 82,50,000/- made by the AO on account of unexplained investment. (3) On the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 19,01,500/- made by the AO on account of unexplained investment. (4) On the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 1961. A search u/s 132 was conducted upon the assessee on 20.03.2016, pursuant to which the assessments for AY 2007-08 to 2012-13 were made u/s 153A/143(3) and for AY 2013-14 was made u/s 143(3) vide a consolidated assessment-order dated 27.03.2015 wherein certain additions/disallowances were made. Being aggrieved, the assessee went in first-appeal and succeeded. Now, aggrieved by the order of first-appellate authority, the revenue/assessee have filed these appeals/cross-objections assailing the orders of Ld. CIT(A) for AY 2008-09 and 2009-10. 7. We would proceed year-wise. Since some of the grounds raised by revenue in appeals and by assessee in cross-objections are identical/interrelated, we would take up those inter-related grounds together for the sake of convenience and smooth adjudication. A.Y. 2008-09: Ground No. 1 of Revenue's appeal and Ground No. 2 to 5 of Assessee's C.O.: 8. These grounds relate to the addition of Rs. 1,89,52,017/- made by the AO on account of unexplained investment. 9. Facts apropos to these grounds are such that during assessment-proceeding, the Ld. AO observed that the assessee has made investments in construction of certain colleges.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... books of accounts of assessee. He submitted that such an action was itself beyond the scheme of section 142A as existing prior to 01.10.2014 and therefore illegal. In this regard, the Ld. AR straightaway carried us to direct decision of Hon'ble Supreme Court in Sargam Cinema Vs. CIT (2010) 328 ITR 513 (SC), wherein it was categorically held thus: "3. In the present case, we find that the Tribunal decided the matter rightly in favour of the Assessee in as much as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being rejected. In the present case, a categorical finding is recorded by the Tribunal that the books were never rejected. This aspect has not been considered by the High Court. In the circumstances, reliance placed on the report of the DVO was misconceived. 4. For the above reasons, the impugned judgment of the High Court is set aside and the order passed by the Tribunal stands restored to the file. Accordingly, the Assessee succeeds." Ld. AR also relied upon Goodluck Automobile Pvt. Ltd. 359 ITR 306 (Guj) where it was held that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the given facts and circumstances of the case, respectfully following judicial pronouncements referred and relied by the Ld. Counsel for the assessee and Ld. CIT(A) and also in the light of the fact that firstly the assessee has maintained regular books of accounts which are not found to be incomplete or unreliable and also have not been rejected by the Ld. A.O and secondly Valuation was done of the incomplete project which has been valued not on the basis of local price but on the basis of Delhi rates which are universally accepted on higher side. Therefore since no defects were pointed out in the books of accounts regularly maintained by the assessee and are duly audited and no incriminating material was found in the search to show that unaccounted investment in the building project has been made, addition made purely on the basis of Departmental Valuation Report, we find no reason to interfere in the finding of Ld. CIT(A) who was rightly deleted the addition for the alleged undisclosed investment u/s 69B of the Act made by the Ld. A.O at Rs.2,73,48,559/-, Rs.5,32,58,155/- and Rs.4,38,32,956/- for Assessment Years 2012-13, 2013-14 and 2014-15 respectively. We accordingly confirm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....10.2014 that sub-section (2) of section 142A empowers the Assessing Officer to make a reference without rejecting books of account. Now we are in a position to consider the implications in assessee's case. We observe that the Ld. AO has not rejected books of assessee. We further observe that the Ld. AO made reference to DVO on 24.09.2014 and the DVO submitted report on 04.03.2015. Thus, the event of making reference to DVO had taken place before 01.10.2014 and that too without rejecting books of account. In such a situation, we suffice it to say that the Ld. AO was not justified to make a reference in the light of decision of Hon'ble Supreme Court in Sargam Cinema (supra) and the provision of sub-section (2) of section 142A. 17. Regarding second contention raised by Ld. AR challenging the addition made in an abated year without having incriminating-material in his possession, we observe that the Hon'ble jurisdictional High Court in Gahoi Dal & Oil Mills (supra) has clearly held that in absence of incriminating material, addition cannot be made in an assessment of unabated year u/s 153A. Ld. DR is not able to demonstrate any decision of Hon'ble Supreme Court holding against the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Act. The appellant has taken a plea that it has been entitled for exemption u/s 11 which has not been provided by the AO. A remand report was called for on this specific issue and the AO in his remand report remained silent on this very issue which clearly shows that the AO has nothing on record to deny exemption u/s 11 of the Act. In view of the above discussion and remand report of the AO, the AO is directed to allow appropriate exemption u/s 11 of the Act as per prevailing provisions of the Act. Therefore, appeal on this ground is Allowed." 21. Before us, Ld. DR argued that the assessee was not entitled to exemption u/s 11 as there are additions made by department which shows that the activities of assessee were not genuine. With such short submission, the Ld. DR prayed to uphold the denial of exemption u/s 11 to assessee. 22. Per contra, the Ld. AR submitted that nowhere in the assessment order, the Ld. AO has made any comment on denial of exemption u/s 11 to the assessee. However, since the Ld. AO had computed the total income of assessee without giving the benefit of exemption u/s 11, the assessee agitated this issue before the Ld. CIT(A) during first-appeal and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee's Cross-Objection. Ground No. 2 of Revenue's appeal: 27. This ground relates to the addition of Rs. 82,50,000/- made by the AO on account of unexplained investment. 28. Facts apropos to this ground are such that during search-proceeding, the authorities seized a document marked as "LPS-A-2/17" which contained a sale-agreement of land executed between Smt. Neetu Sahibani and assessee. This agreement showed the actual consideration of land at Rs. 60,24,000/- as against the consideration of Rs. 75,00,000/- declared in final registry. When the Ld. AO confronted the assessee on this difference, the assessee submitted that the actual consideration paid by assesseeas per registry is Rs. 75,00,000/- which is more than the consideration of Rs. 60,24,000/- revealed by agreement and hence there is nothing adverse against assessee. After such reply, the Ld. AO moved to a different direction and observed that impugned land had been purchased/registered for Rs. 75,00,000/- which was below the "prevailing market price" of land in that area and hence the assessee must have paid on-money @ 110%. The Ld. AO estimated "prevailing market price" at Rs. 1,57,50,000/- and accordingly made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....69,000/-. Ld. AO further found that the assessee declared consideration of Rs. 3,00,000/- in the final registry. The Ld. AO confronted the assessee and ultimately framed a view that the land had been purchased/registered for Rs. 3,00,000/- which was below the "prevailing market price" of land in that area and hence the assessee must have paid on-money. The Ld. AO estimated "prevailing market price" at Rs. 22,01,500/- and accordingly made an addition of Rs. 19,01,500/- (Rs. 22,01,500 (-) Rs. 3,00,000] u/s 69B. 34. During first-appeal, the Ld. CIT(A) observed that the addition has been made on pure presumption and conjecture without bringing any material, loose-paper or any evidence whatsoever to establish that the assessee had actually paid the consideration over and above the declared consideration of Rs. 3,00,000/-. Ld. CIT(A) further held that there is no basis even to estimate the "prevailing market price" at Rs. 22,01,500/- and this was a mere guess-work done by Ld. AO. Based on these findings, the Ld. CIT(A) deleted the entire addition of Rs. 19,01,500/-. 35. Before us, Ld. DR dutifully defended the assessment-order. Per contra, the Ld. AR placed a heavy reliance on the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plain and reconcile the above expenditures with its regular books of accounts. The assessee was also requested to show cause why the amount of Rs. 5,80,00,000/- not be treated as unexplained expenditure and added to the income for relevant A. Yrs. The assessee has filed written submission which were placed on record. 12.3 The submission of the assessee has been considered and examined but the same is not acceptable:- A. The assessee has not submitted any material evidence to substantiate his claim. B. As per the sheet it is evident that the assessee has made cash expenditure of Rs. 5,80,00,000/- in AY. AY. 2009-10, 2010-11 and 2011-12. The above cash expenditure has not been entered in the books of accounts of assessee. ] C. This above handwritten note book has been found and seized from the premise of the assessee. Therefore, in view of provisions of section 132(4A) of the Income tax Act, 1961, it is presumed that the transactions recorded in this loose paper pertain to the assessee and the content of these transactions is true. 12.4 Therefore, in view of above facts and circumstances of the case, it is established and held that the abo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....interesting facts to light which needs to be discussed. The appellant stated that the statement of Shri Sanjay Pande was recorded by the AO on the basis of which a questionnaire was issued to appellant to explain the content of the impunged excel sheet under consideration, however, no reference has been made to any such statement by the AO in the body of assessment order. As culled out from assessment order, the impunged excel sheet was found from premises of the appellant, however, as per AO no year wise/date wise entries were mentioned in the excels sheet, hence it was presumed by the that the pertains to AYS 2009-10 to 2011-12. Therefore, it cannot be said that the impunged expenses represents actual expenditure for AYS 2009-10 to 2011-12. Therefore, the AO has erred in totality in making addition on sheer assumption and guess work. Further, the AO during assessment proceedings has verified books of accounts of the appellant and no adverse comment was pointed out. On plain reading of the contents of the excel sheet it was observed that the AO has made addition on the basis of entry in the name of Shri Sanjay Pandey of 580.00 lakhs as mentioned in bold fonts on page no 34 of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed excel sheets as "deaf & dumb document". The onus was solely on the AO to fill such vital gaps by bringing positive evidence on record and prove the allegation about alleged unaccounted expenditure by the assessee which he utterly failed to do so. CBI vs VC Shukla 3 SCC 410 The Hon'ble Supreme Court has held that loose sheets of paper cannot be termed as book within the meaning of s. 34 of Evidence Act. It has also been held therein by the Hon'ble Supreme Court that even correct and authentic entries in books of account cannot, without Independent evidence of their trustworthiness, fix a liability upon a person. The Hon'ble Supreme Court also observed that even assuming that the entries in loose sheets are admissible unders. 9 of the Evidence Act to support an inference about correctness of the entries still those entries would not be sufficient without supportive independent evidence. Rakesh Goyal Vs. ACIT (2004) 87 TTJ (Del) 151- The findings of Hon'ble Tribunal was as under- "20.1 After perusing the findings of the CIT(A) and the submissions of both the parties, we do not find any infirmity in these findings. Firstly....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt confirmed the findings of the Tribunal and relevant findings was as under "12. It is well settled that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or handwriting of that person, on such document by itself cannot prove the contents of the document. These are the findings of fact recorded by both the authorities i.e. CIT(A) and the Tribunal." "15. Similarly, in the present case, as already held above, the documents recovered during the course of search from the assssee are dumb documents and there are concurrent findings of CIT(A) and the Tribunal to this effect. Since the conclusions are essentially factual no substantial question of law arises for consideration". Jayantilal Patel Vs. ACIT &Ors (1998) 233 ITR 588 (Raj) - Held that- "During search at the residence of Dr. Tomar, the Department official found a slip containing some figures. This piece of paper claimed to have been recovered at the time of search contains figures under two columns. In one col....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., no entries are supported by any corroborative evidence; such loose paper cannot be called even the documents as they are simply the rough papers to be thrown in the waste paper basket. In this connection, the assessee relies upon the court decisions. CIT Vs. Chandra Chemouse P. Ltd. (2008) 298 ITR 98 (Raj.): it is held that- (i) Additions can be made only when evidence is available as a result of search or a requisition of books of accounts or documents and other material. However additions cannot be made on the basis of inferences. (ii) No facts were available to AO after search and inference of AO did not fail within the scope of Section 15888. (iii) Deletion of additions made by Tribunal of assumed undeclared payments made for purchase of property was on basis of facts. Ashwani Kumar V. ITO (1991) 39 ITD 183 (Del) and Daya Chand V. CIT (2001) 250 ITR 327 (Del) and S.P. Goel V. DCIT (2002) 82 ITD 85 (Mum.) Nine out of 19 slips found were without any name or amount and therefore were dumb documents and no adverse inference could be drawn. Common Cause (A Registered Society) Vs. Union of India - 30 ITJ 197 (S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re is no mention of the dates on which the alleged payments were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. They have been shown in abbreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to." 19. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus; 37. In Beni v. Bisam Dayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his books behind the back of the parties. There must be independent evidence the transaction to which the entries relate and in absence of such en relief can be given to the party who relies upon such entries to support his claim against another In Hira Lal v Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dditions not justified. In the instant case. similarly no other corroborative evidence was found in search to prove that details/figures mentioned in notings on page 117 to 119 of A/ represent 'on money' payments by the assessee). Atual Kumar Jain Vs. DCIT (2000) 64 TTJ (Del.Trib) 786- Held that additions based on chit of paper, surmises, conjectures etc could not be sustained in the absence of any corroborative evidence supporting it. [Similarly in present case, neither either parties have admitted payment/receipt of 'on money' nor any corroborative evidence was seized to support the findings of the AO. SK Gupta Vs. DCIT (1999) 63 TTJ (Del.Trib) 532 Held that "that additions made on the basis of torn papers and loose sheets cannot be sustained as same do not indicate that any transaction ever took place and does not contain any information in relation to the nature and party to the transaction in question." (vi) Jagdamba Rice Mills Vs. ACIT (2000) 67 TTJ (Chd) 838 Held that "No addition can be made on dump documents". It is settled legal position that onus of proof is on the person who....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). 4.5.6 The appellant during the course of appellate proceedings has contended that statement of Shri Sanjay Pande (third party) was recorded, however, no opportunity of cross examination was provided. The AO has solely treated the statement of Shri Sanjay Pande as gospel truth and issued a questionnaire to the assessee to explain the content of the loose paper However, the AO has not mentioned about any such statement in the body of assessment order. Nonetheless, the appellant has contended that the inference drawn by the AO is on the basis of statement of Shri Sanjay Pande which was recorded behind the back of the appellant and no opportunity of cross examination of the concerned third party i.e. Shri Sanjay Pande was provided to the appellant. Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise Kolkata in Civil Appeal No.248 of 2006 has held that in absence of cross-examination of parties, the assessment proceedings to be quash....
X X X X Extracts X X X X
X X X X Extracts X X X X
....). He also mentioned some vital aspects, which are also narrated by him in the written-note filed on 18.11.2022 as per liberty given by the Bench; the same is hereby re-produced below: "Ground. No. 3 Addition for unexplained expenditure The Ld. AO has made the addition of Rs. 5,80,00,000/- on the basis of some MIS of Excel File CFO contained in the hard disc allegedly impounded from the office of VNS. This figure appears in the statement on page 34 in the name of Sanjay Pandey and in the summary it appears in the name of VNS at page 36. The assessee contended before the Ld. AO (page 19 of the assessment order) that there is no file by the name CFO MIS in the computer disc seized from the office of the assessee. It was further requested to provide the information w.r.t. the punchnama/seizure memo which mentions the related hard disc/ other storage material from where this file has allegedly been extracted from. It was further requested to kindly let us know the source and the manner in which the aforesaid file has been extracted to enable to submit new response to the same. The same submission was reiterated in further two letters which are reproduced in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....SHEET-1 OF EXCEL FILE CFO: You have made certain extracts from Excel file CFO sheet "MIS' in Part B-2 and Part B-3 of the Questionnaire. You have not mentioned from which seized/ impounded data source you have extracted this file/ sheet. This file sheet was never confronted with us during the course of Survey proceedings at our premises or at the premises of any other person searched/surveyed along with the assessee. The assessee has only one office at VNS Campus, Vidya Vihar, Neelbud, Tehsil Huzur, Bhopal. All the premises as referred to in the said questionnaire do not belong to the assessee and the assessee has not carried on any business operations nor does it keep any records at any place other than the declared premises. You may please refer to the 'Panchnama drawn under section 1334. It may be mentioned that there is no panchnama drawn under section 132 of the Income Tax Act, 1961 in the case of the assessee. As can be seen from the 'panchnama made u/s 133A only two hard discs have been seized from the office the assessee -one relating to the Accounts section and the other relating to the fees counter. There is no mention of any file by....