TaxTMI 
TaxTMI 
2023 (6) TMI 1330
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....in the case of Mr. Ibrahim Khaleel and others and simultaneously survey has been conducted on the premises of various entities including that of Emkay Hindustan Infrastructure (present assessee). During the course of search, various books of accounts, documents, etc., have been seized evidencing contract receipt in cash sales by cheque/RTGS/DD by M/s. Emkay Hindustan Infrastructure from Mr. Ali Kutti, Managing Partner of Creek Developers and Builders for the contract works done for the Creek Galaxy project. The information contained therein pertain to M/s. Emkay Hindustann Infrastructure - present assessee and having a bearing on the determination of total income of the assessee. Seized material A/IK/07 pages 145 to 150 which was found and seized during the course of search u/s 132 of the Act as the premises of Ibrahim Khaleel at Dr.No.20-6-363/1, Mannar, 2nd Cross, Kandak, Mangalore contains the following details:- 2.2 This was confronted to Shri Ibrahim Khaleel who said that he has received an amount of Rs.4,93,05,000/- in cash up to 3.1.2017. This amount is received either from Mr. Ali Kutti or the amount received from the buyers of flat Mr. Ibrahim Khaleel on behalf of Ali K....
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....ll 18/3/2016, as per the seized record: A/IK/8, page 17 amounts to Rs. 1,24,04,897/-. According to AO, the total expenditure up to 22/3/2016 as mentioned in the income & expenditure account, as per which 'expenses Rs. 1,24,11,897/- tallies and supported with proper supporting evidences. Further, most of the above expenses are liable for disallowance u/s. 40A(3) or 40(a)(ia). Even without considering any such aspects, the net profit ratio is about 28% of the total contract receipts. As per the accounted balance sheet, the assessee has got only very limited liabilities for the above period. If there exists any unaccounted liability, it is for the assessee to include all receipts and liabilities in the return filed u/s. 153C and to prove the same as when several opportunities were given. However, the assessee had not done this. The assessee has not even cared to furnish any reply to the statutory notices issued from time to time. 2.8 The ld. AO further observed that the statement has been recorded from Mr. Ibrahim Khaleel on-the total receipt and expenditure incurred up to 22/3/2016. He had stated in the sworn statement where in it was explained that Rs. 10,88,75,180/- was the ....
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....action in the hands of appellant. 7. The learned CIT(A)-2, Panaji has grossly ignored the CBDT Instructions F.No.286/2/2003-IT(Inv.) dated March 23, 2003 and various case laws, in respect of retractions on the ground of coercion and threat in the course of Search and Survey operations, as well as the various case laws on the loose sheets found during the course of search, additions made deleted. 8. The 14rned CIT(A)-2, Panaji has failed to appreciate the alternative plea of the appellant that, the learned Assessing Officer ought to have estimated the profit at 2 percent of the alleged additions made, as undisclosed income of the Appellant. 9. The leaned CIT(A)-2, Panaji has erred in relying on various case laws, which are not at all applicable to the Appellant's case. 10. The Appellant craves leave to add, amend or alter any of the forgoing grounds. 11. For these and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost." 2.11 The crux of above grounds of appeals are that the ld. CIT(A) erred in sustaining addition made by AO on the basis of entries i....
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....76, wherein held as under: "Held that the admission made under section 132(4) by the concerned officer could not be treated even as a valid piece of evidence. There being no incriminating document having been found or seized during search and the statement also being abstruse, the addition in question had no legs to stand on." 2.15 Further, she relied on the judgement of Karnataka High Court in the case of Shri Dinakar Suvarna Vs. DCIT 143 taxmann.com 362 page 11 of the case law book "Where Assessing Officer on basis of search conducted at premises of A reopened assessment of assessee, since no proceedings were initiated against assessee under section 153C and Assessing Officer did not record his satisfaction with regard to escapement of income, impugned reassessment proceeding was not sustainable Where Assessing Officer, on basis of search conducted at premises of A seized a diary which contained details of payment made by A to assessee, made addition in hands of assessee under section 69B as unexplained investment, in view of fact that author of diary had passed away prior to date of search and relevant entry had not been used in case of 'A' but it had been u....
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.... cash receipts in these assessment years since Mr. Ibrahim Khaleel has bee marketing the flats and collecting the consideration from clients with the consent of Mr. Ali Kutty who is an NRI who lives most of the time abroad. Mr. Ibrahim Khaleel had received this amount on behalf of Mr. Ali Kutty and this amount even Mr. Ibrahim Khaleel admitted to be received the said amount cannot be taxed in the hands of the present assessee who has no element of income on this count. Now the question before us is whether above incriminating material was found during the course of search, which is being scribbling in loose pad is sufficient enough to draw an adverse inference against the assessee to conclude that information contained therein the said incriminating material relates to undisclosed income of the assessee, though assessee's partner Mr. Ibrahim Khaleel categorically denied the receipt of said amount on behalf of present assessee and confirmed that it was received on behalf of Mr. Ali Kutty who was non-resident and lives in abroad. In our opinion, statement recorded under various provisions of the Income Tax Act are a vital tool in the hands of the Income Tax authorities to make an add....
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....hs has been received from Roshan Shameer and this amount was towards the instalment of flat booked by him in Creek Galaxy, Pumpwell and also Mr. Ibrahim Khaleel stated that this amount has been received on behalf of Mr. Ali Kutty of Creek builder. Regarding page 181 he has stated that it is an estimate given to customer for flat No.304 in Creek Galaxy. Page 180 is a receipt given to Mr. Sk. Nizamuddin for the same flat for Rs.7 lakhs and signed by Mr. Ali Kutty for flat no.304 and the amount received in cash. Page 179 was the total receipt of Rs.35 lakhs up to 14.9.2015 for the same flat signed by Mr. Ali Kutty. To the question No.33, Mr. Khaleel has stated as follows: 3.4 Finally, Mr. Ibrahim Khaleel has stated in Q.No.47 a reproduced in page 19 of this order 3.5 Thus, the AO came to the conclusion that the assessee has systematically recorded cash receipts from various parties, which are not recorded in regular books of accounts maintained by the assessee. The said finding has been arrived on the basis of admission of Mr. Ibrahim Khaleel. However, fact remains that there were no corroborative material either to support the assessee or AO's contention. The assessee has also ....
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....essee and his declaration obtained by search team towards undisclosed income for the period covering the assessment year 2017-18 only and it looks like this is an obtained statement without bringing any material on record to support the same. It is well settled principle of law that when any document like present scribbling pad/loose slips are recovered during the course of search action and the revenue wants to make use of it, the onus is on the revenue to collect cogent evidence to corroborate the noting in alleged documents. In this case, revenue has failed to bring on record any cogent evidence to prove conclusively that the noting in the seized documents refer to the unaccounted cash receipts of the assessee. Further, no circumstantial evidence in the form of unaccounted assets and liabilities outside the books of accounts were found in the course of search action except physical cash of Rs.55 lakhs. In our opinion, the impugned additions made by AO on the basis of seized materials in the form of entries in the loose slips/scribbling pad is an in-advocate material. As such, since it cannot stand on its own legs. 3.8 The main contention of ld. D.R. is that the statement reco....
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....ested by examination and by cross examining the parties, then obviously it would give rise to an occasion to the AO to rely on said documents to make additions. In the present case, the AO has not made any effort to verify the entries recorded in the loose slips/scribbling pads by making further enquiries and examination/cross examination of the alleged persons or payee of said amount. Further, on perusal of entries in the loose slips/scribbling pads as recorded by AO in the assessment order, we find that nothing was emanating regarding name and address of persons through whom the said amount was received and the parties for which it has been paid. In the absence of any effort from AO by way of further proper enquiries, merely on the basis of entries in the loose slips/scribbling pad coupled with the statement recorded during the course of search, addition cannot be sustained. Being so, we are inclined to delete the addition made by AO in these assessment years towards unaccounted cash receipts by assessee. These grounds of appeal in all these appeals are allowed. 3.11 Since we allowed the main ground of the assessee, the alternative ground of the assessee is infructuous and dis....
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....or the assessment year 2018-19, the AO has made additions as follows: 1. Seized cash under section 69A on Protective basis Rs.50,60,000 2. Unexplained investment u/s 69, being Purchase of foreign currency Rs.50,79,325 4.6 Against this assessee went in appeal before ld. CIT(A) who has confirmed the additions. Again, the assessee is in appeal before us challenging the above additions. The ld. A.R. submitted that the Commissioner of Income tax (Appeals) while upholding the additions made has grossly overlooked the fact that, additions made is purely on assumptions and presumptions based on the oath statements and no other materials were found at the time of search. Further, argued that, mere admission pf amounts under section 132(4) as additional unexplained income would not lead to drawing of adverse inference that, unexplained income was from sale of property was made by assessee, particularly when no evidence was produced to justify said receipts by assessee without cross examining the payee of the alleged cash receipts. Further, whatever amount received through cheques have duly been declared in the return of income filed as per the provisions of section 44AD ....
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.... to bring further evidence on record to show that, actual on money is exchanged between the parties, but literally failed to do so. The assessing officer did not conduct any independent inquiry relating to the value of the property instead, merely relied upon the statement, which is not correct. Further, there is no proof of origin and destination of on money * To tax any particular payments/receipts, primary evidence is very much necessary and unless there is primary evidence, circumstantial evidence cannot be considered as conclusive evidence against any person to tax any particular payments/receipts. Circumstantial evidence plays an important role in income tax proceeding. The payment/receipt of on money is purely a factual issue which cannot be decided based on circumstantial evidence. * Section 132(4) was subject to variation and once the appellant had access to seized documents and he realised subsequently that, there was no occasion to make this disclosure, he was having an inherent right to clarify the situation so that he could be taxed only on real income and not on an income which was not there at all, since there was no evidence to prove otherwise too. In addition....
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....discussed earlier, the answer to the question no.47 is the basis of addition 8.2 On the basis of above answer to question no.47, AO made addition of Rs.15 lakhs towards unaccounted cash receipts. As discussed in the case of Emkay Hindustan Infrastructure in ITA Nos.979 to 983/Bang/2022 in para Nos.3 to 3.10 of this order, this addition is deleted. 8.3 With regard to addition of Rs.88,000/- i.e. the profit estimated at 8% on Rs.11 lakhs amount received by cheques/RTGS, this being the actual amount received through banking channels, the AO has taken the income on Rs.11 lakhs at 8% which is very reasonable and the same is confirmed. This issue in ground No.2 of assessee is rejected. Hence, this ground of appeal in ground No.2 is partly allowed, thereby a sum of Rs.88,000/- is sustained out of Rs.15,88,000/- addition made by AO and Rs.15,00,000/- is deleted. 8.4 Next ground of assessee's appeal is with regard to declaration of Rs.5 lakhs for which statement recorded u/s 132(4) of the Act offered in the return of income. The assessee has not put any serious objection before us and this being admitted income in the return of income, hence, we do not find any merit in this ground....
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....the extent of cash balance available in the books of accounts of the assessee as on the date of search. Further, the claim of the ld. A.R. before us was that the assessee received certain amount of cash from his partners Mr. B. A. Ibrahim & Mr. Mohammad Mohideen for which the assessee required to furnish necessary evidence to prove the cash availability on this count. Accordingly, we direct the assessee to produce the cash book relating to the relevant period along with other evidence to prove the availability of cash balance as on date of seizure of this cash i.e. 30.8.2017. If the assessee produces such evidences before AO to prove the cash availability, the AO has to give credence to such evidence or material brought on record by assessee and to decide the issue on that basis. With this observation, we remit the issue in dispute to the file of AO for verification of the relevant evidence. This appeal of the assessee in ITA No.735/Bang/2022 for the AY 2017-18 is partly allowed for statistical purposes. 10. In the result, the appeals of the assessee in ITA Nos.733 to 734/Bang/2022 are partly allowed and ITA No.735/Bang/2022 is partly allowed for statistical purposes. Order p....
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....ses. Page No. 181 is an estimate given to a customer for flat No. 304 in Creek Galaxy. Page No. 180 is a receipt given to Mr. Sheik Nizamuddin for the same flat for Rs. 7 lakhs and signed Mr. Ali Kutty for Flat No. 304 and the amount received in cash. Page No. 179 shows total receipt of Rs. 25 lakhs upto 14.9.2015 for the same flat and is signed by Mr. Alikutty. Q5: Please explain your business relationship with Mr. All Kutty of M/s Creek Builders Document 3 M/s Emkay Hindustan Infrastructure Order u/s.144 r.w.s. 153C A.Y. 2015-16 CC-2,Mng DIN NO: ITBA/AST/M/153C/2019-20/1023049550(1) Q.47. Do you have anything else to say. I agree sir for most of the projects I have involved in Large scale cash transaction. These transactions are entered by me due to inadequate knowledge of the Tax laws. As discussed earlier the total unaccounted receipts from the various projects is as follows: S.No Issue Amount Assessment 1. EMKAY Hindustan Total Infrastructures unaccounted receipt in the Galaxy Creek project Rs. 4,93,05,000 years 2017-18 2 Ibrahim Kaleel Rs. 43,23,500 (Proprietor) 3 S EMKAY Hindust....
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....t the rate of 8% Disallowance of Interest on capital & remuneration - proviso to section 44AD(2) omitted Net Income estimated from contract business Less: Income 68,51,769 4,87,67,250 5,70,49,253 3,09,97,376 41,00,000 1,04,05,000 2,49,50,000 1,48,25,791 98,50,000 2,20,142 30,68,980 25,67,940 16,91,790 11,86,063 ÎΑ 43,20,142 NA 1,34,73,980 NA 2,75,918 15,0,000 2,75,17,940 1,18,17,708 13,36,063 disclosed in the return u/s. 153C Addition made 80,697 6,36,835 6,41,297 33,945 42,39,445 1,28,37,145 2,68,76,643 1,17,83,763 13,36,063 Document 7 alcha cah 1900000 batohn 500000 A laleh 1400000 Common Cann ofthe adjulmnt 1900000 48305000 49309000 Document 8 M/s Emkay Hindustan Infrastructure - Order u/s. 144 r.w.s.153C - A.Y. 2014-15 CC-2,Mng Q4. DIN NO: ITBA/AST/M/153C/2019-20/1023048748(1) During the course of search at your residence on 30.8.2017, certain documents were found seized. I am showing you page No. 178 to 182 of the seized folder A/K/07. Please go through these pages and explain the contents. Ans:....
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.... Document 10 M/s Emkay Hindustan Infrastructure- Order u/s.144 r.w.s.153C A.Y. 2014-15 DIN NO: ITBA/AST/M/153C/2019-20/1023048748(1) CC-2,Mng 147) 13/7/15 5 14,785000 1209000 18 3/2/15 Plumones Male Ale 65000 dean Advance One-Sile Only to Determan to 14/9/15 Can Pak monu 165,555 813/14 29/3/4 2/4/14 oth Bonk chy to Putere the Bank one Patum $550 10.00 15/914 1600 200 500 279 271914 ex-100/1/idis Putu Moni Flat.. 50000 ૨૦૦૨ 500,000 1100,000 1955500 500/14/12 " 24 500 Seyche 500000 19/3/4 200 " 308/14 500 til Shahab Booking 800000 1800000 Dilato 200000 23/9/46 15/6/14 8/1/14 8/17/14 10305000 193990 3/9/14 20/9/4 300 3/3dsha Naces Book 505 Cah Cself che) 14/2116 Putu mom Flat- 100021 office Bookirg (M) 09/2/4 904 Dooky 15/16 Ali kuteka 200 /2/ fr 500 3 Shalalan (904) stat 3400000 500000 9500000 2600000 1000 58000 1000 500000 1000000 1900000 18/7/to Ali kateha 3409000 10305000 2104000 9/2/15CM 10,00000 3/6/16 All Ca i ba....
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....r business relationship with Mr. All Kutty of Mis Creak Builders 8.6 Here are the scanned copies of some of the evidences for Mr. Ibrahim Khaleel having collected cash from the buyers of the flat. The documents serially numbered from 178 to 181 found and seized from the residence of Mr.. Ibrahim Khaleel at 20-6-363/1, Badriya, 2nd Cross, Kandak, Mangalore as folder 'A/IK/07' which clearly establishes the same. we have reams By yo0000f Cases) tou monhang in cap . Wa Rave لمنسي Po 300000 [Theed only on 9-4-2015 uppala, Pochan Manzil Idose. Thanky Totes Bomame recen 202000/- lok We Ban M.. 23-06-2015 By Roshan. дне Thel in Mangahus the tr 14.0226 டீசரின௠Dmount BEI KUTTY M 09895-1256 Document 14The have reel Rs. 400,000 from Shaikh Nijam 16/10/14 fr Hat #304 Document 15 8.7 It is also seen that on some occasion Mr. Ali Kutty himself had als collected the sale consideration of the flat either personally or through hi accomplice and subsequently paid towards the cost of construction. Date: Place (180) ....
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....ement u/s. 132(4), the assessee has stated that "..I under take to pay taxes on the above unaccounted cash receipts..". The relevant portion of the question and the answer given by the assessee in the voluntary statement given on oath u/s. 132(4) is reproduced here under: Document 17 M/s Emkay Hindustan Infrastructure Order u/s.144 r.w.s.153C A.Y. 2014-15 CC-2,Mng DIN NO: ITBA/AST/M/153C/2019-20/1023048748(1) Q.33. I am showing you the document marked as Annexure A/IK/07, page Nos. 145 to 150 which was found and seized during the course of search u/s 132 of the Income Tax Act at your residence at Door No 20-6-363/1 Manar, 2nd Cross, Kandak, Mangalore. Kindly explain the contents of these pages. Ans. The tally sheet reflects ledger account details of Creek Developers & Promoters. Mangalore. In page Nos. 148 to 150, I have summed up the total receipts received through bank accounts (Corporation Bank Account of Emkay Hindustan infrastructure) as Rs. 9,97,77,000 as on 22-07-17 as written by me in the sheets. Sheet Nos. 145 to 147 of this document, reflect the total receipts in cash as Rs. 4,93,05,000 as on 03-01-2017. After this, there hav....
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.... books of accounts and submit the updated books within 10 days time. DEPONENT VERIFICATION I state that whatever stated above is true and correct to the best of my knowledge and belief. The above statement is given by me voluntarily in a sound state of mind without any threat, coercion or undue influence. I am aware of the consequences of any wrong statement given. The above statement has been recorded correctly as deposed by me and I stand by it. (Before me) 31/8/12 शेपीफ रशीद SHERIEF RASHEED, IRS सहायक (2 Asst Director of care Tar NV Un Mangalur 13 ⚫ (Deponent) 231088/19 Document 19 M/s Emkay Hindustan Infrastructure Order u/s.144 r...153C A.Y. 2014-15 CC-2,Mng DIN NO: ITBA/AST/M/153C/2019-20/1023048748(1) Q.33. I am showing you the document marked as Annexure A/IK/07, page Nos. 145 to 150 which was found and seized during the course of search u/s 132 of the Income Tax Act at your residence at Door No] 20-6-363/1 Manar, 2nd Cross, Kandak, Mangalore. Kindly explain the contents of these pages. Ans. The tally sheet reflects ledger account d....