TaxTMI 
TaxTMI 
2023 (4) TMI 1276
X X X X Extracts X X X X
X X X X Extracts X X X X
....ders of ld. CIT(A)-24, New Delhi. The appeals deal with unaccounted interest payment by M/s Vatika Ltd. to M/s UK Paints, M/s Span India Pvt. Ltd., M/s SEH Realtors Pvt. Ltd. and M/s Scorpio Research & Consultants Pvt. Ltd. in case of Jaipur Project and NH8 Project. In addition, the other issues pertains to cash receipts, addition u/s 69A on account of cash received on booking of plots by M/s Vatika Ltd. 2. A search & survey operation was conducted by Investigation Wing in the case of Sh. K.S. Dhingra, Sh. G.S. Dhingra & others on 16.09.2011. On the basis of the seized documents, the revenue alleged that the assessee, M/s Vatika Ltd. has entered into a loan agreement with group entities of Dhingra group, Shahi Exports group and Span India group which has been camouflaged as sale-purchase of property transaction. A search and seizure u/s 132 and survey action u/s 133A were carried out on the premises of Vatika Group on 16.01.2013. During the search and survey operation, various incriminating documents pertaining to Vatika Group were alleged to have been found and seized. 3. The case of the assessee company was re-opened u/s 147/148 of the Income Tax Act, 1961 for the assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the entire period of the loan, o New PDCs for loan and interest amounts have been given by the borrowers. * A unilateral right has been given to the lender to opt for the purchase of residential plots. * The above right to land in lieu of principal and accrued interest amounts has to be exercised in writing by the lender. * In case the lender opts for land in lieu of principal and accrued interest amounts, the agreement will be deemed to be an agreement for sale and purchase of residential plots. In such a scenario the loan amount along with accrued interest thereon has to be adjusted towards the sale consideration. * In case the borrower fails to obtain necessary permissions from the state authorities or the lender does not opt for purchase of plots, the amendatory loan cum purchase agreement will automatically extend upto 30.06.2007. * As per clause 12 the borrower is under an obligation to buy-back the plots opted by the lender to purchase, at the sole option of the lender. The repurchase price has not been fixed and is to be paid by the borrower at the prevailing market rate. * As per clause 13, the lender need not pay t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6 plots in the books of Vatika Ltd. in the respective years including F.Y. 2010-11. The revenue alleged that this deal has actually nothing to do with the allotment of plots, the real motive of the deal is the loan and interest on it, which has been paid and received in a manner camouflaged as sale- purchase of property transaction. 11. The revenue has also relied on the statement of Sh. Navin Choudhary wherein he has admitted that the Jaipur deal was actually a loan transaction which was shown as sale-purchase of property transaction due to the fact that the lender got allotment of plots and NH8 deal, even the plots have not been allotted as per the agreement and hence held that this is a coloured transaction to evade payment of tax at higher rate. The revenue based on a letter dated 12.04.2010 from Vatika Ltd. addressed to Sohan Singh Dhingra (HUF), wherein it has been informed that Sohan Singh Dhingra HUF is being allotted 3410 sq. yards in the residential colony 'Vatika India Next' Gurgaon Haryana held that since in this letter reference has also been made to the original Loan cum Purchase agreement executed on 13.09.2005 between the parties, agreements for sale between the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0,000 UKPI LINCOLN 21.02.2011 7,25,00,000 Vatika Ltd. 24.02.2011 7,50,00,000 SPAN INDIA LINCOLN 24.02.2011 10,50,00,000 Vatika Ltd. 24.02.2011 3,00,00,000 UKPI LINCOLN 08.03.2011 2,40,60,000 SOHAN SINGH LINCOLN 08.03.2011 9,66,00,000 Vatika Ltd. 28.04.2011 25,00,000 SOHAN SINGH LINCOLN 01.04.2011 15,00,000 Vatika Ltd. 28.04.2011 5,00,000 SOHAN SINGH LINCOLN 31.05.2011 1,00,00,000 UKPI LINCOLN 31.05.2011 1,10,00,000 Vatika Ltd. 02.06.2011 1,50,00,000 SOHAN SINGH LINCOLN 02.06.2011 1,50,00,000 Vatika Ltd. 06.06.2011 1,00,00,000 SPAN INDIA LINCOLN 06.06.2011 1,00,00,000 08.06.2011 1,00,00,000 SPAN INDIA LINCOLN 08.06.2011 1,00,00,000 Vatika Ltd. 10.06.2011 1,00,00,000 SPAN INDIA LINCOLN 10.06.2011 1,00,00,000 14.06.2011 1,00,00,000 SPAN INDIA LINCOLN 14.06.2011 1,00,00,000 15.06.2011 1,00,00,000 SPAN INDIA LINCOLN 15.06.2011 1,00,00,000 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... TOTAL 50,00,00,000 19. The above parties executed 'agreements for sale' in which specific right was granted to the 'buyer(s)' that the 'plots' under sale may be re-sold by them to the 'seller' at a predetermined sales consideration. The agreements have been entered on 19.05.2005, 22.06.2005 and 11.06.2005 20. The above 'buyers paid following further amounts to Vatika Ltd. under the deal which is as under: SI No Name of the Company/Group Date of Payment Amount 1 U.K. Paints Pvt. Ltd. (Dhingra group) 25.04.2006 58,86,100/- 2 SEH Realtors Pvt. Ltd. (Shahi Exports group) 25.04.2006 85,82,900/- 3 Advantage Fashions Pvt. Ltd. (Span India group) 25.04.2006 37,72,300/- 4 Uttam Enterprises Pvt. Ltd. (Harman Singh Dhingra 25.04.2006 4,35,700/- TOTAL 1,86,77,000/- 21. Salient features of the agreement is as under: 'Buyer' 'Sale consideration' (Amount ) Sale price per sq. yards (Amount) Date of re-sale to Vatika group Re-sale price agreed per sq. yards( ) SEH Realtors Pvt. Ltd. 50,00,00,000/- (out of this 1.01 crores has beenpaid by the buyer) 3400/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s India Pvt. Ltd. which are as under: S. No. Name of party Amount (Rs.) Period Agmt. copy Available Remarks 1 Mera Baba Realty 2.33 Cr. 27.04.2009 26.10.2009 Yes No Renewal as advised by Naveen Sir (otherwise Mr. Parmeshwaran to follow up) 2 Aerotel Communication 15 Lacs 01.01.2010 30.06.2010 Yes Mr. K. S. Nair to provide the letter from the party 3 ORRIS Infrastructure 20.33 Cr 20.33 Cr 01.12.2008 30.11.2009 Yes No renewal as advised by Naveen Sir----- 4 Vatika Ltd. (Residential Plot (NH-8) 9375 sq. Yards) Amendatory Loan cum Purachase Agreement valid upto 30th June 2010 Yes Decision for extn. To be taken 5 Gurpal singh 1,00,00,000.00 01.07.2010 30.09.2010 Yes Sent for signature through Mr. K.S. Nair 6 Vatika Ltd. (Jaipur) 43,00,00,000.00 23.06.2010 Yes Mr. Parmeshwaran handling (Agmt. draft sent to party by Mr. B. Parmeshwaran) 7 ORRIS Infrastructure 4,00,00,000.00 29.05.2010 31.07.2010 yes Due for renewal 24. The revenue held that from the above document it can be seen that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e excel sheet showing the liability of Vatika group to pay more than 176 crores to the lender groups, reflects the subsisting understanding between the parties which has been suppressed in the agreements made by them. Camouflaging of transaction The agreements and letter have been finalized after several discussions with the lender groups. This corroborates the earlier email dated 13.10.2010 of Sh. Bala Parmeshwaran to Sh. Manmohan Mehra. In this email as discussion at pages 48&49 ante Sh. Bala Parmeshwaran had suggested that the agreements between the lender and ESPO should be drafted in a manner showing the slow down and the market situation for reduced prices. These documentary and oral clearly establish that the lenders alongwith Vatika, the borrower have deliberately shown less consideration as payable and the agreements have been designed by them in a manner which conceals the true nature of the transaction. Regarding the above Jaipur Deal statement of Sh. Harish Ahuja (Shahi Exports group) was also recorded on oath on 16.01.2013. relevant excerpt of his statement is reproduced below: - "Q. 2 Did you (or your group) enter into any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich was camouflaged as sale-purchase of property transaction by the parties concerned: A document extracted from Annexure A-66 (hard disc) seized from Vatika Triangle, Sushant Lok-I, M.G. Road, Gurgaon during the course of search on 16.012013. Navigation path for extraction is H Drive:\User Left ADC & System Backup\legal\Vivek Mishra\Vivek\Indra Madam folder\Shahi Group.xls. It can be seen from the above document that the 'Shahi Group' (Shahi Exports group, Span India group, Dhingra group and Harman Singh Dhingra group) have been referred to as "Lender\Purchaser' which shows that the essential nature of the transaction 'Jaipur' deal's loan transaction. Further corroborating the fact is the column of 'Rate of interest (if refundable)' made above, which snow that 25% a interest is payable by Vatika group to these groups on the advances made by them. This goes on the prove that the real understanding between the parties is the giving and taking of loan and its repayment along with interest @25%p.a. "Another fact which is known from the above document is that the original agreement signed between Vatika Landbase Ltd. and S E H Realtors Pvt. Ltd. was for 50 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er concern ESPO Developers Pvt. Ltd. However careful perusal of the fund flow of ESPO Developers Pvt. Ltd. shows that the funds for this 'buy back' were actually given by Vatika Ltd. only. The so called 'purchase' was shown through ESPO Developers Pvt. Ltd. just to layer the transaction and better camouflage the transaction. From the ledger it can be seen that an amount of Rs.11,27,86,417/- was transferred by ESPO to M/s S E H Realtors Pvt. Ltd. (which is payment for 'repurchase' of Jaipur 'plots') on 19.05.2010. On the same day an amount of Rs.11,28,00,000/- was received in its books from M/s Famous Dwellers Pvt. Ltd. Now perusal of books of Famous Dwellers Pvt. ltd. reveals that this amount of Rs.11,28,00,000/- was received in its books from M/s Vatika Ltd. on the same day. It can be seen that M/s Vatika Ltd. is the actual source of 'buyback' done through ESPO Developers Pvt. Ltd. This really corroborates the finding that the above paper work is a mere sham and has been done to camouflage the transaction and suppress the real amounts involved in the deal. Following fund flow shows the flow of funds to the lenders from the borrower Vatika Ltd. through ot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ATIKA- Vatika Ltd. It is abundantly clear from the above fund flow that out of Rs.75,03,12,000/ - paid by ESPO and Vincent to the Consortium more than 99% of the fund was provided/sourced from Vatika Ltd. only. It is therefore amply clear that the so called cash/fund deficit Vatika Ltd only provided requisite funds to M/s ESPO Developers Pvt. Ltd. and M/s Vincent Builders and Developers Pvt. Ltd. to purchase the plots from the Consortium. It is thus established that this transactions is thus a colourable device adopted by the parties to camouflage the nature of the transaction as well as suppress the actual amounts paid/ received by citing market situation for reduced price. During the course of assessment proceedings, the agreements entered into by the lender groups with M/s Vatika Ltd were called for. The perusal of the agreements shows that all the parties of the lender group - M/s SEH Realtors Pvt. Ltd., M/s Advantage Fashions Pvt. Ltd., M/s UK Paints Pvt. Ltd. and M/s Uttam Enterprises Pvt. ltd have entered into identical agreements with Ms Vatika Ltd. It is pertinent to mention that neither any plot buyers agreement has been entered into by M/s SEH Realtors ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 S E H Realtors Pvt. Ltd. 71,08,32,530.59 2 Advantage Fashions Pvt. Ltd. 52,39,60,975.46 3 U. K. Paints India Pvt. Ltd. 46,29,93,139.71 4 Uttam Enterprises Pvt. Ltd. 6,96,28,351.48 TOTAL 1,76,74,14,997.24 Therefore the following interest income accrued to the lenders: S. No. Lender Loan Advanced (Rs.) Total Amount received back (in Rs.) Interest income (Rs.) 1 SEH Realtors Pvt. Ltd. 20,85,82,900 71,08,32,530.59 50,22,49,630.59 2 Advantage Fashions Pvt. Ltd. 15,37,72,300 52,39,60,975.46 37,01,88,675.46 3 U. K. Paints India Pvt. Ltd. 13,58,86,100 46,29,93,139.71 32,71,07,039.71 4 Uttam Enterprises Pvt. Ltd. 2,04,35,700 6,96,28,351.48 4,91,92,651.48 51,86,77,000 1,76,74,14,997.25 124,87,37,997.25 Therefore total interest payout for Vatika Ltd. is Rs.124,87,37,997.25 during above F. Ys. The lenders as well as borrower suppressed the actually amount of interest payable by the borrower and receivable by the lender upon repayment. Following are the amount of suppression: S. NO. Name of the company ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ven the colour of a purchase and sale transaction or not? • Whether the seized documents, being the agreements entered into by the lenders with Vatika Ltd. and Lincoln Developers can be said to be incriminating materials discovered during the search or not? 32. The ld. CIT(A) on facts, has not disputed that the loan agreement with the five lenders was entered in the months May/June 2005 for a total loan amount of Rs.25 Cr. The ld. CIT(A) compiled the key features of all the agreements in a chronological order. "(i) It is entered into between Vatika Ltd. as the "Borrower", the "Lender", and Mark Buildtech P. Ltd & Omkareshwar Properties P. Ltd as "Confirming Parties". The "Confirming Parties" (which are wholly owned by the Vatika Group) are owners of certain tracts of land near NH-8 at Gurgaon, and have given the "Borrower" the rights to develop, sell and market the residential/commercial plots and flats on the said land in the name of "Vatika City". (ii) The borrower was in the process of securing requisite sanctions for development of the land, which were expected to be received within 3 months. (iii) Vatika Ltd. needs a loan to execute a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....epayment of the loan. In that event, the lender shall be allotted residential plots in Vatika City. (v) In case the Lender "opts for purchase", the same shall be exercised only in writing, and in that event, the "Amendatory loancum-purchase agreement" shall be deemed to be an agreement to sell and purchase of the plots and the loan amount and accrued interest thereon shall be adjusted towards the Sale consideration. (vi) In case the Lender does not opt to exercise its option to repurchase, the amendatory loan-cum-purchase agreement shall be extended to 30.06.2007, on the same conditions. In that case, the PDCs for principal and interest shall be replaced with the appropriate amounts and dates. (vii) In case the lender opts for purchase, then the total area to be allotted to each lender was defined. No other payments towards Development charges, licence fee etc shall be payable. However, if the Lender opts for extra plots in preferential locations, it has to pay preferential location charges at the then applicable rates. (viii) In the case of allotment of plots, the Borrower shall, at the option of the Lender, purchase back the plots at the then p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y shows that the nature of the transaction continues to be a loan transaction. Of course, an additional amendatory clause has been inserted that the Lender has now been given a right to opt for purchase of plots. But is noteworthy that the new right only provides an option to purchase at a future date, and by itself does not bring about a conversion from a loan agreement to a purchase agreement. The Amendatory agreement specifically states that as and when the Lender opts for purchase, the same shall be separately communicated in writing, and the sale consideration shall be adjusted accordingly with the principal and accrued interest. In fact, the Amendatory agreement dated 31.03.2006 specifically states at para 4.2 that "if the lender opts for purchase", then the total area to be allotted to the Lender would be 9375 sq yards, thus establishing beyond doubt that the lender has not exercised the option to purchase. Moreover, the recitals at para 4.2 of the Amendatory agreement provide that in case the Lender does not exercise the option to purchase, the loan shall be extended for a further period as specified in the extension agreements. Thus the fact that the loan has been extended....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he appellant subsequent to the main loan agreement have been mentioned in the assessment order, but not confronted to it. To my mind, even if this claim were to be true, this is an irrelevant consideration. The seized loan agreements constitute the primary evidence on basis of which the additions have emanated. The other documents mentioned by the A.O., are only supporting documents of the main evidence entered into consequentially, and no conclusion has been drawn by the A.O. solely on basis of these supporting documents, to the exclusion of the seized initial loan agreements. In any case, all these documents belong to the appellant in the first place, it being one of the parties to the transaction represented in the agreement. The appellant cannot claim that it was in the dark about these documents. Finally, each of these documents have been submitted by the appellant itself during appellate proceedings and it has been heard in detail. Therefore, this claim has to be rejected. 4.3.2.19 The A.O. has also considered the transaction with SEH Realtors P. Ltd., on the same footing as that of the appellant with UK Paints P. Ltd. Span India P. Ltd. and SS Dhingra (HUF). It is n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Parties" ( which are wholly owned by the Vatika Group) are owners of certain tracts of land near NH-8 at Gurgaon, and have given the "seller" exclusive rights to develop, sell and market the residential/commercial plots and flats on the said land in the name of "Vatika City", Gurgaon. (ii) Detailed development plans for the project have been submitted for securing of sanctions, and that the requisite sanctions were expected to be received within 3-4 months. (iii) Director, Town and Country Planning has determined the entitlement of fully developed land. These plots would be the exclusive right and privilege of the purchaser. (iv) The "Seller" and the "Confirming Parties" were in need of finances of Rs.10 crores till 11.01.2006 to implement the project, and SEH Realtors P Ltd. has agreed to extend the amount with an option to purchase the said plots from the Sellers/Confirming Parties. The agreement provides that in the event of any delay in project implementation, SEH Realtors P Ltd. has an unfettered right to recall the amount with interest @18% p.a. or to extend the periodicity of the loan beyond 11.01.2006. (v) The consideration paid by SEH Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered as collateral security, a different tract of land admeasuring 11.43 acres having market value of Rs. 10,00,00,000/- to securitize the sum of Rs. 10,00,00,000/-. The collateral security so provided in listed at Schedule -1 to this agreement ( as seen in the Schedule-1, actually two tracts admeasuring a total of 12 acres, 2 kanal and 17 maria of land , equivalent to 12.35 acres, belonging to Mark Buildtech was placed as collateral Security). g. In the event of default in handing over the plots by the agreed date of 12.01.2006, the seller agreed to pay back Rs. 10,00,00,000/- plus interest @ 24% p.a. beyond the date of 12.01.2006. 4.3.2.21 It transpires that the Seller could not fulfill its obligations to transfer the plots Amendatory Loan cum purchase Agreement' dated 31.03.2006, extended the period of the "loan" by another six months i.e. till 31.12.2006. The PDCs were replaced by another set of PDCs, of Rs.10,00,00,000/- towards principal and Rs. 2,96,28,377/- towards interest (net of TDS of Rs.85,72,212/-). An amendatory Guarantee agreement was also entered into on the same date, whereby the 12.35 acres of land belonging to Mark Buildtech P. Ltd. placed as c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....greement comes earlier in the agreement than the purchase agreement................... This clause forms part of the "loan agreement" portion of the document. It is abundantly clear that this clause sets out that the primacy of the agreement lies in the "purchase agreement". It is only when the appellant would choose not to exercise option of purchase the property that the agreement would acquire the colour of a loan transaction. No other clause to the contrary is provided, either specifically or by implication. The "purchase agreement" part of (Part B) of the agreement reads as a pure purchase agreement, and does not anywhere refer to the sum of Rs.10 crores as a loan; rather, it is referred to the "sale consideration". Undoubtedly, the consideration amount of Rs. 10 crores has been referred to as "loan" amount in the extension agreements (though not in the main agreement) but the extension agreements invariably mention that the extension is taking place on the same terms and conditions as instead of main agreement. Therefore, I am of the view that the mere mention of the word "loan" to describe the sum of Rs. 10 crores in the extension agreements is in the context of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect of these plots relating of "Old NH-8" transaction, which constitutes independent contemporaneous evidence of internal discussions within the parties to the agreement, and which actually support the view that the transaction was one of purchase and not a loan transaction. I am therefore of the view, that the conclusion drawn by the A.O. on the appellant's transaction with SEH Realtors P. Ltd. is erroneous. I therefore direct the A.O.to exclude the transaction with SEH Realtors P. Ltd., while computing unaccounted expenditure in the appellant's hands. 4.3.2.27 A connected question is whether as a consequence of the agreements, (other than with SEH Realtors Pvt. Ltd.) interest income should be held to have accrued in the hands of the appellant, year after year, as has been done by the A.O. The payment, nor debited any interest expenditure in each year, there is no case to make additions every year on account of deemed interest paid. I have evaluated the appellant's submission in the light of the seized material. The incriminating materials relied upon by the A.O. are the loan agreements and the extension agreements themselves, and therefore these documents have to be appr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2010 shall be computed by the A.O. @ 24% p.a., compounded quarterly (as per terms of agreement) for the period starting from the date of receiving the loan till 27.08.2010 (i.e. the date of allotment of plots), shall be assessed in the assessment year 2011-12 only. To that extent, the taxable amount shifts from the A.Y. 2006-07, 200708, 2009-10 and 2010-11 to the AY 2011-12. 4.3.2.28 There is yet another way of looking at this transaction. Even assuming that the appellant has not actually paid this accrued interest as it claims, it would be seen that the agreements provided that the loan plus accrued interest would be utilized as the sale consideration. On the other hand, when the actual sale/transfer was reflected in the books of the appellant in the A.Y. 2011-12 (the allotment letters were issued in August 2010), the recorded sale was for a much smaller consideration viz., the original loan amount. Thus, for example, in the case of loan amount of Rs.5.50 crores taken from UK Paints P. Ltd., the accrued interest amount alone on 30.06.2009 was Rs.7,80,94,128/- (as per the loan extension agreement dated 31.12.2008), whereas the plots were transferred to UK Paints P. Ltd. f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... purchase transaction. • The option to purchase at a future date by itself does not convert the loan agreement into a purchase agreement. • The frequent extension of the agreements gives a credence to the fact that these are loan agreement. • The plots have been allotted in A.Y. 2011-12 and hence the unaccounted interest paid has also to be taxed in the A.Y. 2011-12. • The loan transactions with SEH Realtors Pvt. Ltd. and the clauses thereof are different from the other agreements and hence the transactions with SEH Realtors Pvt. Ltd. can be treated as loan-cum-purchase agreement and hence no unaccounted interest can be charged on the loans received from SEH Realtors Pvt. Ltd. • At the same time, the ld. CIT(A) has also held that there is no contemporaneous documentation found during search or adduced later by the appellant before the search team or the A.O. to show that the exhaustive terms of the earlier loan agreements and the repeated extensions and PDCs were explicitly overridden so as to free the appellant from its contractual obligations to pay interest to the lenders. The plots have been transferred in consequ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the intention was to purchase the plots but not loans as same from the vary first agreement and the accounting treatment also proves the same. • None of the evidences referred to by the A.O. either individually or collectively, can be said to indicate that the specific transaction between the buyer and the assessee was actually a loan transaction. 38. Aggrieved with the deletion made by the purported unaccounted interest payment in the case of Jaipur Project, the revenue filed appeal before us. Similarly, in the case of NH8 Project, the revenue filed appeal against the deletion of the unaccounted interest payment in the case of SEH Realtors Pvt. Ltd. and the lender groups namely, U. K. Paints Pvt. Ltd., Span India Pvt. Ltd, S.S. Dhingra (HUF) and Smt. Heminder Kumari and the assessee filed appeal against the confirmation of unaccounted interest payment. 39. The arguments in writing of the ld. DR is as under: "Sub: Written submission on merits in the above case - reg. I. Addition on unaccounted interest on WHS Deal:- Facts:- 1. During the course of search action u/s 132 and survey action 133A on UK Paints/Dhingra Group, Sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd. 31.03.2006 (1) 107 to 99 (2) 158 to 149 (3) 48 to 10 (1) (2) (3) A41 A43 A4 (1 & 2) Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon (3) 19 DDA commercial complex, zamrudpur, Kailash Colony, New Delhi Heminder Kumari Vatika Landbase Pvt. Ltd., Wonder Developers Pvt. Ltd. 31.03.2006 55 to 46 A41 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon Span India Pvt. Ltd. Vatika Landbase Pvt. Ltd., Buzz Estates Pvt. Ltd. 31.03.2006 35 to 30 A41 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon v. The lender and Borrower group concern entered into again guarantee agreement to secure right of lenders and obligations of the borrower assumed in amendatory loan cum purchase agreement. Such agreements are detailed as under:- Lender Borrower Date of the agreement Page No. Annexure No. Seized from Sohan Singh Dhingra (HUF) Vatika Landbase Pvt. Ltd. 31.03.2006 136 to 132 A41 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon U.K. Paints India Pvt. Ltd. Buzz Estates Pvt. Ltd. 31.03.2006 (1) 92 to 88 (2) 131 to 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A41 Vatika Triangle, Sushant Lok-1, M.G.Road, Gurgaon U.K. Paints India Pvt. Ltd. Vatika Ltd. Buzz Estates Pvt. Ltd. as confirming party 30.06.2007 80 to 77 A41 Vatika Triangle, Sushant Lok-1, M.G.Road, Gurgaon Span India Pvt. Ltd. Vatika Ltd. Buzz Estates Pvt. Ltd. as confirming party 29.06.2007 17 to 14 A41 Vatika Triangle, Sushant Lok-1, M.G.Road, Gurgaon The following were some of the features of this extension agreement/MOU: Lender Extended period of loan and the right of the lender group concern to exercise the option of purchasing the land, upto Extended period of the right o the lender group concern to re-sell the land so purchased to the seller (borrower group) SEH Realtors Pvt. Ltd. 31.12.2007 31.12.2008 Sohan Singh Dhingra (HUF) 31.12.2007 31.12.2008 U.K. Paints India Pvt. Ltd. 31.12.2007 31.12.2008 Span India Pvt. Ltd. 31.12.2007 31.12.2008 Similar extension agreements between Lenders group members and Borrowers was found were found in physical form or in hard drive during the Search action conducted on Vatika Triangle, Sushant Lok, Gurgaon. ix. Further, excel ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 7,25,00,000 UKPI Lincoln 21.02.2011 7,25,00,000 Vatika Ltd. 24.02.2011 7,50,00,000 Span India Lincoln 24.02.2011 10,50,00,000 Vatika Ltd. 24.02.2011 3,00,00,000 UKPI Lincoln 08.03.2011 2,40,60,000 Sohan Singh Lincoln 08.03.2011 9,66,00,000 Vatika Ltd. 28.04.2011 25,00,000 Sohan Singh Lincoln 01.04.2011 15,00,000 Vatika Ltd. 28.04.2011 5,00,000 Sohan Singh Lincoln 31.05.2011 1,00,00,000 UKPI Lincoln 31.05.2011 1,10,00,000 Vatika Ltd. 02.06.2011 1,50,00,000 Sohan Singh Lincoln 02.06.2011 1,50,00,000 Vatika Ltd. 06.06.2011 1,00,00,000 Span India Lincoln 06.06.2011 1,00,00,000 08.06.2011 1,00,00,000 Span India Lincoln 08.06.2011 1,00,00,000 Vatika Ltd. 10.06.2011 1,00,00,000 Span India Lincoln 10.06.2011 1,00,00,000 14.06.2011 1,00,00,000 Span India Lincoln 14.06.2011 1,00,00,000 15.06.2011 1,00,00,000 Span India Lincoln 15.06.2011 1,00,00,000  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer has given the finding that assessee has incurred liability of interest expenditure proceeded to invoke Section 69C to make addition. 5. Ld. CIT(A) has erred in confirming the entire addition for NH-8 deal for A.Y. 2011-12 without any evidence. 6. For unabated assessment, no addition can be made u/s 153A in absence of incriminating materials found as a result of search. 7. In enhancement notice CIT(A) has not quantified the enhancement notice. My submission on the issue of addition of interest in NH-8 are as under: 1. All lenders have entered into agreement with advancing of money to the assessee initially as loan agreement except SEH Realtors Pvt. Ltd. where initial agreement is Loan cum Purchase agreement. In all other cases the initial lenders have entered into loan agreement and subsequently loan agreement was changed to loan cum purchase agreement. However, in all cases material facts has remained same i.e. the advances are fully backed up by security agreement, guarantee agreement and obtaining PDCs at different times of extension of agreement. For the sake of brevity following security for amount advanced....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and sale transaction, therefore, there is contradiction in treating the transaction as loan transaction and payment of interest for same transaction. The revenue's stand is the payment of unaccounted interest which is not reflected and recorded in Books of Accounts. Therefore, unaccounted interest payments has no bearing in recorded transactions. If the transaction is held to be loan transaction and unaccounted interest payable is upheld, to the extent of change in work in progress due to buy back of property, set off can be given from the interest. Ld. ARs argument that the section 69C has been wrongly involved by the Ld. AO is not tenable as from the conduct of assessee by accepting buy back value less than principal and interest at buy back proves the assessee has paid unaccounted interest and therefore such expenditure has incurred and section 69C can be invoked. Ld. ARs argument that Ld. CIT(A) has enhanced the interest for A.Y. 201112 without any basis is also not tenable as CIT(A) has held that all interest was paid at the time of buy back when all the liability of assessee got discharged towards the lender. Ld. ARs contention that CIT(A) has enh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....initial agreements was a loan agreements. Accordingly Ld. CIT(A) deleted the addition of unaccounted interest made by the AO. My Submission against deletion of unaccounted interest in case of SEH Realtors Pvt. Ltd. (Revenue's Appeal): In substance, the agreements between the assessee and U.K Paints & other are similar to agreements entered between the assessee & SEH Realtors Pvt. Ltd. Only change of date of agreements and initial agreement in the case U.K Paints Ltd. & other being loan agreements and loan cum purchase agreement in the case of SEH Realtors Pvt. Ltd will not change the basic character of the transaction. Basic Characters of the transaction are as under which are common in both transaction either with U.K paints & other with SEH Realtors Pvt. Ltd. 1. In both the cases the amount of principle with interest is guaranteed by a guarantee agreement where immovable property of a group concern is offered as guarantee which can be utilised for securing interest plus Principals in case of default by leaders. 2. In both cases the personal guarantee has been offered the personal guarantee agreement by sh. Bhalla being promoter of the M/s Vatik....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an / ICD including the hand written dairy in the handwriting of Sh. Naveen Choudhary was seized from this cabin marked as annexure AA-1 & AA-2 respectively. Contents of various pages of AA-1 & AA-2 has been analyzed by AO and where ever 'M / Material' is written, on such pages has been held as Cash interest paid by M/S Vatika Ltd. AO's finding in supported by interest calculation of interest which comes @ 36% per annum, 15% interest has been disclosed in the books of accounts and balance interest has been paid in cash by M/s Vatika ltd. Content of the seized documents of Page No. 12 of AA1, Page 52 of annexre-AA1, Page 53 of AA1, Page 12 of AnnexureAA1, Page 52 of Annex AA-1 which contains the interest calculation of loan advanced by lender group and interest Calculation is codified with 'M / Material' has been scanned & reproduced in the assessment. Sh. Naveen Choudhary, CFO of U.K. Paints Ltd has accepted that the dairy is in his hand writing but gave evasive reply by saying that "I don't recall". He subsequently stated that 'M' stands for material supplied by U.K. Paint to Vatika Ltd. & finally answer to question no 60 & 61 of statement to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... making addition namely AA-1, AA-2 from the premises of U.K. paints group are dumb documents. 3. No opportunity to cross examine the person has been given by the AO. Before utilizing the such statement. 4. During the present search, no incriminating documents were seized, therefore, no addition Can be made for non abated assessment u/s 153A relying on the decisions of Hon'ble Delhi in the case of Kabul Chawla. My arguments in support of additions made for unaccounted interest on ICDs Confirmed by (CIT (A) & against the arguments of Ld. AR: 1. Ld. AR has raised the issue of invoking provisions of Section 153C for utilizing the seized documents AA-I, & AA-2 seized from the premise of Zamrupur, from third party on U. K. Paint group on 24.11.2011 for invoking addition & argued, that without invoking provisions of See 153C, such evidences cannot be used. The primary issue is whether during the present Search where M/s Vatika ltd & U.K. Paints, group were simultaneously searched on 16.01.2013 evidence for making the addition of unaccounted interest on ICD was found or not. During the present search .evidence in form of emails & texts were foun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 153A and 153C. Further, comprehensive view of evidence gathered during search operation u/s 132 cannot be taken if each separate evidence is analyzed for undisclosed income separately, Such interpretation will jeopardies the operation of present search and assessment scheme u/s 153 A & 153C. (iii) I rely on the decision of Hon'ble Supreme Court in the case of Sh. Vinod Gupta 2018-TIOL-350 (SC) Where Hon'ble Supreme Court has upheld the use of evidence gathered from one person in the hands of other person in simultaneous search. In view of the above the contention of Ld. AR is not tenable that satisfaction should have been recorded u/s 153C & proceedings should have been taken u/s 153C before utilizing the seized documents of one persons in the hands of other person when both person were simultaneously searched being part of same group by virtue of common satisfactions and proceedings are pending u/s 153A for same block period. ii. Second arguments of Ld. AR is that these documents are dumb documents. These documents have been analyzed by the assessing officer Ld. CIT(A) in details in the assessment order. The contents of various pages in annexure AA-1 &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted the addition made for the interest paid on ICD in case of other lender of UK Groups, Shahi Group, Span Group. The Ld. CIT(A) has deleted the addition in case of other lender for unaccounted interest on ICD on the ground that there is no evidences in case of another lender. Evidence is only for U.K. Paints and Wang Investment (Para 4.6.10 of CIT(A)'s order). Hon'ble CIT(A) has over looked the findings of AO on page 49 for A.Y. 2007-08 which contains the scanned copy of page 81 & 82 of annexure A13 seized during the search on page 49 & 50 of AO (for AY 2007-08). Scanned copies of page 49 & 50 shows that Sh. Naveen choudhary was in possession of interest cheques for M/Sarla fabrics Pvt. Ltd. (Shahi group), Span Holdings P. Ltd. (Span group) & Wang Investment & Finance P. Ltd. Similar findings in given for all AYs. Therefore, in seized documents for all three group of lenders namely U.K. Paints group, Spangroup and Shahi group, interest cheques are mentioned. Sh. Naveen Choudhary used to coordinate all lenders for interest on ICDS. Therefore, similar cash interest payment must have been made to all members of U.K. Paints group, Shahi group & Span Group. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es as per RTGS, as per seized mail there is accounted payment of Rs. 3 crore before 20.001.2010. Therefore, even accounted payment does not match hence email is a proposal only & not in respect of agreement to sale. 3. No statement was recorded u/s 132(4) in respect of these seized paper. My submission on this issue:- 1. Undisputedly M/s Vatika Ltd. has entered into 3 agreements of sale to 3 group companies of Shahi, Dhingra & Span group as tabulated in earlier paragraph of AO's findings. The period of such agreements of sale is Jan. 2010. In case of Scorpio research & consultants Pvt. Ltd. The date of agreements to sale is 20.01.2010. 2. All three mails are in the month of Jan 2010 i.e. date 02.01.2010. 13.01.2010 & 15.01.2010. 3. These emails are between promoters of M/s Vatika Ltd. & senior persons of Purchaser group or copy worked to them such as Sh. Anil Bhalla of M/s Vatika Ltd. Sh. Parmeshwara Arora, Sh. Naveen Chourdhary CFO of U.K. Paints group, Dhingra group. 4. Email dated 13.01.2010 has attached with documents named Vatika 100 crores NH 8 agreement word 1997 documents. Therefore, the name of documents clearly suggest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uments attached with the mail dated 13.01.2010. Total Black/unaccounted fund already given group wise as under: a. SHAHI Group "B" Rs.1.50 crore b. U.K Paint Group "B" Rs. 3.00 Crore c. SPAN Group "B" Rs. 12.00 crore (Page No. 68 & 69 of AO) ii) In the documents attached the mail dated 20.01.2010. total black/unaccounted fund already given/to be given is as under: a) SHAHI Group B 8.50 Crore B+ - 6.50 crore (to be given) b) . U.K paint funding 'B' - Rs. 7.00 crore B+ - Rs. 8.00 crore(to be given) c) . SPAN funding 'B' - Rs. 12.00 crore B+ - Rs. 3.00 crore(to be given) (Pg No 72 & 73 of AO) Total comes to Rs. 45 Crore. These fund already given or to be given is reduced from total costing to arrive at the figure for agreement to sale. In view of the above , total black/unaccounted fund already given or to be given as per record email dated 20.01.2022 should be considered as final black money correspondent which is Rs. 45 crore in the deal which is just a day earlier to date of agreement to sale. Since the wordings of seized material are quite clear & specific, the addi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ltd., Dhingra Group, Span India Pvt. Ltd. and Heminder Kumari are business transactions and there was no evidence that the assessee made any actual payment, be it A.Y. 2006-07 or 2011-12, in the case of NH8 Project. It was argued that the assessee received advance against the sale both in respect of Jaipur Deal and NH8 deal and that against such advances, the plots of land have been allotted, the same have been reflected in the regular books of accounts and then sold and offered to tax as income on the basis of percentage completion method. It was argued that the revenue has accepted the income so offered by the assessee while framing assessment, thus, accepting that the transactions have been accepted as that of sale. The ld. AR argued that notwithstanding the fact whether these transactions were loan transactions or advance received against sale of plots, the interest cannot be charged in the A.Y. 2011-12 as no evidence was found either as a result of search or even otherwise to indicate that the assessee actually made the payments. It was argued that even the ld. DR during the arguments did not bring out any evidence to prove that any interest has been paid to the lender parties....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd., M/s SEH Realtors Pvt. Ltd and Smt. Heminder Kumari have lent monies for purchase of space in NH-8 Gurgaon known as "Vatika India Next", which aggregate to Rs. 25 crores and learned CIT(A) had held that out of the five customers, amount advanced by four customers i.e. other than M/s SEH Realtors Pvt. Ltd., was on account of loan till the date of allotment of the plot and the amount advanced by M/s SEH Realtors Pvt. Ltd. was on account of purchase of space, as such, proportionate interest in respect of sum received as advance of Rs. 10 crores from M/s SEH Realtors Pvt. Ltd. was deleted. Whereas, the proportionate interest in respect of sum of Rs. 15 crores received from 4 customers/lenders has been sustained on the ground that transaction with such 4 customers/lenders was loan simplicitor till the date of allotment of plot. While concurring with the decision of the ld. CIT(A) pertaining to M/s SEH Realtors Pvt. Ltd. on the issue of deletion made on account of alleged interest paid, we are unable to agree with the decision of the ld. CIT(A) holding that transaction with such 4 customers/lenders was loan simplicitor for the following reasons. In respect of NH-8 deal qua aforesai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....all be deemed to be an agreement to sell and purchase of the residential plots. Under the loan agreements, Amendatory Loan cum Purchase Agreement and Extension Agreements, PDCs were given to the lender/customer in respect of principal amount and interest amount. However, since the lenders/customers never treated the agreement as loan agreement but always wanted to purchase the plot, as such, PDC's were never encashed. Had it been a case of loan instead of advance then obviously the allottees of the land, instead of taking the delivery of plots would have enchased the PDCs. The PDCs were given only as a security pending allotment so that the amounts are secured. 47. It is an undisputed fact that ultimately the plots were allotted to these parties as per Amendatory Loan cum Purchase Agreement/extension agreements. The situation could have been different, had they not exercised the option to purchase the plots or the plots were not allotted to such lenders. Once the plots were ultimately allotted to such parties, the nature of the agreements changed from loan agreement to agreement to sell/purchase of the plots. It is also a fact on record that no evidence of payment of any such in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dified agreements and in the absence of any material found and seized/impounded suggesting interest payment in cash/unaccounted, we hold that no interest can be taxed on notional basis. ITA No. 3709/Del/ 2017 : A.Y. 2010-11 Addition on account of Cash Receipts: Excerpts from the Assessment Order 51. Vatika group and Shahi Exports group, Span India group and Dhingra group entered into a deal in the F.Y.2009-10 and 2010-11. As per this deal the various groups agreed to 'buy' and Vatika group agreed to 'sell' land in sector 84 & 85 of Gurgaon, Haryana. Separate 'Agreements for sale' were entered into between these groups and Vatika group. Following are the amounts stipulated [in the 'agreements to sell'] to be 'advanced' by each of these groups: 'Buyers/Group Total 'sales' Rate per Total area Consideration (Amount Rs.) sq. yards (Amount Rs.) (Sq. yards) under 'sale' Scorpio Research & Consultants Pvt. Ltd. /Dhingra group 35,00,00,000/- 8140/- 43000 H.A Realtors Pvt. Ltd. (Shahi Exports group) 35,00,00,000/- 8140/- 43000 Positive Buildwell Pvt. Ltd. (Span In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l size of Rs. 150 crores out of which Rs. 30 crores is the 'present loan'. * Further, an email dated 13.01.2010 sent by Sh. Bala Parmeswaran to Sh. Anupam Nagalia. This email has also been extracted from the above referred hard disc Annexure A66. 55. The scanned image as found from the seized material is as under: FUNDING PROPOSED Total Funding Rs.130 Cr. Funding by each party Rs.130 Cr. divided by 3 i.e. Rs.43,33,33,330/- Cost agreed Rs.1.50 Cr per acre Plots agreed per acre 1300 sq.yds. per acre Cost agreed per sq. yd. Rs.1.50 Cr divided by 1300 i.e. Rs. 11538.50 per sq. yd. Total No of Plot area to be Allotted to each party Rs.43,33,33,330 divided by Rs. 11538.50. i.e. 37555.430 sq. yd. of plots That is, 37556 sq. yd. of Plots (making round Figure) SHAHI FUNDING Total Plots to be taken 37555 sq.yds @ Rs.11538.50 per sq.yd i.e. Rs.43,33,39,906.00 Funds Already given "A" .. Rs.1.50 Cr ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....e. Rs.93,89,00,000/- 56. The AO held that on the perusal of the document, it can be seen that: * The deal therein relates to Sector 84 & 85 Gurgaon deal. * These agreements are to be entered in the month of January 2010. * As a part of deal it is pre-decided that addendum agreements to agreement for sale are to be entered. These addendum agreements will give the 'buyer' the right to re-sell the 'plots' to the seller at a predetermined rate. * This deal is regarding 'funding' of Rs. 130 crores to be provided by three groups to Vatika group. * Each party will fund approx. Rs. 43 crores. * Based on above total funding rate per sq. yards is agreed to be Rs. 1538.50. * Based on this rate of total funding each party of the Consortium will get 37556 sq. yards. * Now 'money already given' is brought into calculations and adjustment is made in the rate per sq. yards to exclude 'B' amount already received. In the result rate per sq. Yards goes down. However the total area to be 'sold' does not gets changed. The following becomes the rate per sq. yards: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1, M.G.Road, Gurgaon. The navigation path for its extraction is Backup:\All Archive Mail\Current User Archive\Anagalia\archive.nsf. Scanned image of this email is inserted below: [email protected] 01/16/2010 02:23 PM To [email protected] cc Subject: Vatika New Transaction Dear Mr. Nagalia, Vandana's agreement will be in the name of Positive Buildwell Pvt. Limited having office at 222, Okhla Industrial Estate, Ph-III, New Delhi. The funding will be same as I already sent to you. There will be a fourth person/ agmnt., as I told you. It is for 2600 sq. yd of plots @ Rs.1153B.50 for a total investment of Rs.300,00,100./- (Three Crores and Hundred). Name is Mr. Sanjay Israni S/o GK Israni, R/o 101-A, Pearl Apartments, 3rd Cross Road, Lokhandwala Complex, Andheri (W), Mumbai-53. Rest all terms are same as other three. Rgds. Parameswaran From the above email it can be seen that Sh. Bala Parmeswaran is telling Sh. Nagalia that the agreement for this deal in the case of Span India group would be in the name of Positive Buildwell Pvt. Ltd. 57. The Assessing Officer relied on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lready given Rs.3,00,00,000/- Balance to be given by 20.1.10 Rs.31,61,50,000/- Re-purchase agreed after 2years 43000 sq.yd @ Rs.25000/- per sq.yd i.e. Rs.107,50,00,000/- SPAN FUNDING Total Plots tobe taken 43000 sq.yds @ Rs. 11538.50 per sq.yd i.e. Rs.49,61,55,500.00 Funds Already given "A" ..Rs. 1.00 Or "B" .. Rs. 12.00 Cr "B+".. Rs.3.00 Cr (To be given) Cost of plot per sq.yd re-worked after giving adjustment of "B" and "B+" is Rs.34,61,55,500/- divided by 43000 which is Rs.8050.127 (roundabout figure of Rs.8050 per sq.yd) After above adjustments, 43000 sq.yd @ Rs.8050/- per sq.yd i.e. Total Plots to be taken by Span Rs.34,61,50,000/- Money already given Rs.1,00,00,000/- Balance tobe given by 20.1.10 Rs .33,61,50,000/- Re-purchase agreed after 2 years 43000 sq.yd @ Rs.25000/- per sq.yd i.e. Rs. 107,50,00,000/- 58. From the perusal of this word document, the AO held that an amount of Rs.45 Cr. needs to be taxed being the cash money involved in the transactions. For the sake of ready reference, the relevant part of the order of the AO is reproduced as under: * The deal therein relates to Sector 84 & 85 Gurga....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsideration' clearly corroborate the above mentioned email of Sh. Anupam Nagalia to Sh. Anil Bhalla highlighting the understanding of the deal with the Consortium, wherein cheque portion of the deal is Rs. 100 crores out of total deal size of Rs. 150 crores. It is worthwhile to mention that the above understanding of funding and the modus operandi was then executed between the parties. This is evident from the seized documents evidencing the "Agreement for sale" between Vatika group and these lender groups. These documents have been discussed in detail in para 7.4.1 (B.5) infra. From these agreements it can be seen that the following area was 'sold' at the given rates: 'Buyer' Total 'sales' consideration (Amount Rs.) Rate per sq. yards (Amount Rs.) Total area (Sq. yards) under 'sale' Scorpio Research & Consultants Pvt. Ltd. 35,00,00,000/- 8140/- 43000 H.A Realtors Pvt.Ltd. 35,00,00,000/ 8140/- 43000 Positive Buildwell Pvt. Ltd. 35,00,00,000/ 8140/- 43000 TOTAL 105,00,00,000/- 129000 Comparison of the above terms of the agreement with the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....20.01.2010 from Bala Parmeswaran to Anupam Nagalia 1. Date of agreement/ email 20.01.2010 02.01.2010 13.01.2010 20.01.2010 2. Area(Developed area only) 1,30,000 1,30,000 1,12,666.29 1,30,000 3. Total Consideration Rs. 105 cr. Rs. 150 cr. Rs. 130 cr. Rs. 150 cr. 4. Payment to Vatika (only for U.K. Paints group) Rs.35 crores Not mentioned Rs.43,33,39,906 (including 'A' Rs. 3.00 crores 'B' Rs. 7.00 crores Rs.49,61,55,500 (including 'A'= Rs.3.00 cr 'B'= Rs.7.00cr 'B+' = Rs.8.00 cr (to be given) 5. Payment to Vatika by U.K. group, Span group, Shahi group Rs. 105 crores Rs. 150 cr. (including 'present loan' Rs. 30 crores) Rs. 130 cr. (including A (Rs.5.50 Cr.) & B (Rs.27.50 cr.) = Rs.33 crores) Rs. 150 cr. (including A, B & B+ = Rs. 50.50 crores (incl. Rs. 17 crores under 'B+' "to be given") 6. Sale price computed after, excluding 'B' & 'B+' - Rs. 7692 Rs.9675 Rs.8050 62. The ld. CIT(A) held that subsequent to these emails, Scorpio Research & Consultants Pvt. Ltd. has entered into an agreement to Sale with Vatika Ltd. on 20.01.2010, in which the sale rate is Rs.8050/- p. s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the consideration paid does not include any sum of Rs. 3 crores paid earlier, thus showing that the proposals seen in the emails could not be in respect of the land which is the subject matter of the Agreement to Sale dated 20.01.2010. Similar is the case with the transactions with H.A. Realtors P. Ltd and with Positive Buildwell P. Ltd. 64. To wrap up, the ld. CIT(A) held that the conclusions drawn by the A.O. are neither backed by any conclusive evidence nor can any such conclusion be logically drawn from an interpretation of the seized material. 65. Aggrieved the revenue filed appeal before us. 66. In these grounds the appellant challenges the additions made on the merits of the A.O's interpretation of the seized documents, The materials relied upon by the A.O. pertains to emails recovered from certain hard disks seized during the search actions of both 16.09.2011 and 16.01.2013. These emails contain an internal discussion of Vatika group and also exchange of emails between the Shahi group and Vatika group, and copies. These emails contain reference to a certain proposed transaction of purchase of developed land from Vatika Ltd by Shahi group, UK Paints group and Spa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... materials on record, except the email communications, the Assessing Officer has no other corroborative evidence to conclusively prove that money in cash had actually changed hands. Except the email communications, no other documents have been seized, either from the assessee or from other entities to indicate that cash payment was actually made. Apart from relying upon the email communication, the Assessing Officer has not made proper inquiry to establish on record that cash payments were actually made to the assessee. As rightly observed by learned Commissioner (Appeals), the emails on which the Assessing Officer placed reliance, essentially, do not patently show any agreement or discernible consent arrived at between the buyer and seller regarding the land to be purchased or the rate per sq. yards. The emails are in the nature of discussions and proposals to a planned purchase transaction. It has been factually found by learned Commissioner (Appeals) that the figures relating to the alleged total deal vary in different emails. Learned Commissioner (Appeals) has also given a factual finding that no seized materials were found conclusively establishing that any amount in cash was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m H. NO. -16 Village and Post Office, Sikender Pur, Badha Distt Gurgaon-122004 35,00,000 7. Dharam Bhushan Jain S/o RC. Jain PAN: AAFPJ9620G Shakahar Building, 1, Ansari Road, Daryaganj, New Delhi110002 20,00,000 8. Krishna Yadav - Prop Devi Construction PAN: AADPY8394A 116-119, Anand Nagar, Sisri Road, Vaishali Nagar, Jaipur 50,00,000 9. Mahender Talk S/o Ram Prtapji Tak 71, Shanti Nagar, Sirohi, Distt, Rajasthan 95,00,000 Total 3,10,00,000 73. The evidence submitted by the assessee are allotment applications, allotment letter, confirmation from the party and allocation card from these persons. It was submitted that these persons had duly confirmed having made advanced the respective sums to the appellant. The Assessing Officer examined four parties namely, Dharam Bhushan, Deepak, Chhote Lal and Jagbeer. The observations of the Assessing Officer are as under: Sh. Dharam Bhushan Jain From the examination of Sh. Dharam Bhushan Jain S/o P. C. Jain it is observed that the party has claimed certain cash withdrawals to have been made prior to the claimed date of booking of flat wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Sh. Jagbeer It is observed that he has also claimed the source of investment in M/s. Vatika Ltd to be on account of sale of his mother's agricultural land. No supporting document of such sale could be furnished by the-party. When the party was asked to explain the details of withdrawal he claimed to have made a withdrawal of a sum of Rs. 50,00,000/- in February 2012. But he could not explain any plausible reason as to why such huge amount was kept in cash with him for around one year. Hence, the genuineness of the claim of the assessee is not established as no prudent man would keep so much of cash with him for such a long period without any purpose of utilization. Another fact which raises doubt over the claim of the assessee is he could not establish whether this cash withdrawal had actually been received by him from his mother. This once again doubts the genuineness and creditworthiness of these transactions could not be established by M/s. Vatika Ltd. 74. Hence, the AO held that the parties produced by the assessee shows that the assessee could not establish his claim regarding the cash receipts on account of booking amount received from various parties. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peration conducted on 16.01.2013. However, perusal of record reveals that before the departmental authorities the assessee had submitted booking application, allotment letter, confirmations and some other evidences to prove the source of cash found and seized. Having taken note of factual position emerging on record, we are of the view that proper inquiry has not been conducted, either by the Assessing Officer or learned Commissioner (Appeals) to ascertain the veracity of assessee's claim regarding receipt of money from 9 persons towards advance booking of land. When the assessee has furnished the booking application, allotment letters, names and addresses of the persons, who had given advance booking with their PAN, bank statements etc., the minimum that the department could have done is to conduct necessary inquiry not only with the assessee but with the concerned persons to find out, whether, actually the lands were allotted to the concerned persons subsequently. Absolutely, no such inquiry has been made by the Assessing Officer. It is evident, in course of assessment proceeding, not only the assessee had requested the Assessing Officer for issuing summons to the concerned perso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that no interest has been paid by M/s Vatika Ltd., the additions made in the hands of M/s U.K. Paints, M/s Span India Pvt. Ltd., M/s Scorpio Research & Consultants Pvt. Ltd., M/s SEH Realtors Pvt. Ltd. on account of interest income are unsustainable. * Owing to the conclusion on merits that no interest has been paid, the additions made in the hands of M/s Span India Pvt. Ltd. and M/s SEH Realtors Pvt. Ltd. would not survive, hence the COs in the case of M/s Span India Pvt. Ltd. and M/s SEH Realtors Pvt. Ltd. are treated as allowed for statistical purpose. * Since, the matter has been adjudicated on merits of the issue based on facts and judicial pronouncements, any adjudication on the grounds raised on account of Section 148 and Section 153D becomes academic in nature hence not adjudicated. 81. In the result, the appeals of the assessee are allowed, the COs of the assessee are allowed for statistical purpose and the appeals of the Revenue are dismissed. Order Pronounced in the Open Court on 20/04/2023. ============= Document 1 Lender Borrower Date execution of Pages No. Annexure No. Seized/impounded from premises U.K. Paints Vati....