TaxTMI 
TaxTMI 
2024 (5) TMI 233
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent Year ["AY"] 2006-07. 2. On account of similitude of facts and legal questions, both the appeals are being decided by this common judgment. 3. The respondent-assessee in the instant case is a company whose primary business activity is construction/development of real estate. A search and seizure operation was carried out on the GTM group of companies controlled by its Directors namely, Gautam Kumar and Tushar Kumar on 12.12.2006. In pursuance of the same, the proceedings under Section 153A of the Act were initiated against the respondent-assessee for AY 2006-07. 4. Subsequently, an assessment order was passed on 31.12.2008, whereby, the Assessing Officer ['AO'] made additions on account of bogus share application money received by respondent-assessee amounting to Rs. 5,34,50,000/- and a sum of Rs. 1,92,00,000/- being income on account of cash received by Tushar Kumar on the pretext of one Bhagwanti Co-operative Group Housing Society ["Bhagwanti CGHS"], Gurgaon. Resultantly, the assessed income of the respondent-assessee shot up to Rs. 7,45,81,159/-. 5. Being aggrieved by the order passed by the AO, the respondent-assessee preferred an appeal before the Commissioner o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iption. It was urged that the deletion of Rs. 2 crores towards unexplained share application money under Section 68 of the Act made by CIT(A) should not have been confirmed by the ITAT. 9. Secondly, the Revenue has also assailed the findings of the ITAT on the ground that the share application money received from M/s Arha Buildcon Pvt. Ltd. was not genuine, in view of the field enquiries conducted by the AO and therefore, the addition made by the AO in that regard should not have been deleted by the ITAT. 10. Thirdly, it is stated that while upholding the order of CIT(A) deleting the addition on account of raising of funds of Rs. 1,92,00,000/- from 48 flats concerning Bhagwanti CGHS, the ITAT failed to consider the incriminating material found at the premises of employee of the respondent-assessee's Group. According to him, the statements of office bearers and society members of Bhagwanti CGHS were also not considered. 11. It is, therefore, the case of the Revenue that the order of the ITAT suffers from perversity and thus, liable to be quashed. ANALYSIS 12. We have heard the learned counsels appearing for the parties and perused the record. 13. With regard to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts have been either refunded within the year, within two years or adjusted against the bookings. Under these circumstances, it cannot be said that the amounts have been accommodation entries solely based on the statement of Shri Mahesh Garg. xxx xxx xxx 22. Thus, we find that while a valiant attempt have been made by the ld. CIT DR, there has not been any tangible facts to treat these amounts u/s 68 especially when there is no premium involved, the parties have not been inquired into revenue, addition has been made solely on the basis of Shri Mahesh Garg, amounts have refunded at various intervals or adjusted against the bookings, we hold that the action of the Assessing Officer cannot be held to be valid. Appeal of the assessee on this ground is allowed. 23. Regarding the appeal of the revenue, we find that the ld. CIT (A) has duly satisfied himself as the assessee and the parties could provide documents relating to identity, genuineness and creditworthiness of the amounts received along with confirmations, address, cheque number and PAN. Hence, we decline to interfere with the order of the ld. CIT (A) on this issue." 15. With respect to the second c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any details 0of cheques that was issued by the assessee and how many of these cheques have actually not been presented for payment or whether any real payments were ever made". The statement is factually wrong as the bank statement of the assessee maintained at HDFC Bank A/c No. 1322000007148, Palam, New Delhi clearly shows the amounts received and paid with regard to M/s Arha Buildcon Pvt. Ltd. Hence, in view of the facts are unable to agree with the contentions of the ld. CIT (A). The addition on this account is directed to be deleted." 18. Regarding the third contention relating to the receipt of Rs. 4 lacs from each of 48 flats concerning Bhagwanti CGHS amounting to Rs. 1,92,00,000/-, the ITAT has made a categorical finding that the addition was made on theoretical premise on the basis of presumptions and there was no evidence gathered, collected or investigated by the Revenue to support the addition. 19. We, hereby, take note of the observations made by the ITAT in its order in paragraph no. 32, wherein, it was held as under:- "31. From the record, we find that Shri Tushar Kumar might have played some role but the society confirmed that initially each flat was e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hey only relate to the findings of fact and the order of the ITAT cannot be construed in any manner to be ex-facie perverse. 21. It would be apposite to refer to the decision of the Supreme Court in the case of K. Ravindranathan Nair v. CIT [(2001) 1 SCC 135], wherein, the Court has propounded the parameter to determine the findings of the Tribunal to be perverse. The relevant paragraphs of the said decision are extracted hereunder for reference: "7. The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact-finding authority. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a finding of fact reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the findings of fact reached by the Tribunal and to give an answer in law to the question o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....income amounted to Rs. 16,19,04,640/-. 5. Aggrieved by the order passed by the AO, the respondent-assessee preferred an appeal before the CIT(A). Vide order dated 28.05.2010, the CIT(A) partly allowed the respondent-assessee's appeal by upholding only the following two additions and deleting the remaining additions:- i. Addition to the extent of Rs. 3,01,00,000/- was upheld from Rs. 6,84,50,134/- on account of cash component of the consideration paid by the respondent-assessee for the GTM Forest and Hills Project, Dehradun; ii. An addition of Rs. 4,27,22,971/- on account of undisclosed investment in the stock of jewellery pertaining to M/s. GTM Jewellery Mart was confirmed. 6. Aggrieved by the said order, the Revenue and the respondent-assessee both preferred their respective appeals before the ITAT. Vide order dated 10.02.2021, the ITAT deleted the additions made by the AO in entirety. 7. The Revenue, therefore, being aggrieved by the order of the ITAT, preferred the instant appeals and has proposed the following substantial questions of law for our consideration:- "A. Whether on facts and in the circumstances of the case and also on the prevail....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Rs. 34,78,000/- towards undisclosed investment in M/s Sargam Estate Pvt. Ltd. without appreciating that it was acquired by the assessee company later on? H. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon'ble ITAT is justified in deleting the addition of Rs. 34,65,559/- towards unexplained advertisement expenses without granting the opportunity to AO to examine the correct claim recorded in the books of accounts by the assessee?" CONTENTIONS 8. The Revenue has challenged the order of the ITAT, firstly, on the ground that the ITAT has failed to appreciate that the material seized during the course of search, recorded in Tushar Kumar's own handwriting specified the total purchase consideration at Rs. 27,14,20,134/-, while the consideration recorded in the books for purchase of land in Dehradun was Rs. 20,30,27,000/-. It was urged by the Revenue that the ITAT also erred in concluding that that there was no corroborative material, as there was identity in the particulars of the land mentioned in the seized papers. According to the Revenue, the order of the ITAT considering the seized diary notings as mere estimates of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the advertisement expenditure was discovered by the AO through independent enquiries. 14. Seventhly, it is stated that the findings of the ITAT that the addition on account of undisclosed investment in jewellery cannot be sustained merely because GTM Jewellery Mart Pvt. Ltd. is a separate assessable entity, is completely erroneous. According to the Revenue, it is an admitted position that GTM Jewellery Mart Pvt. Ltd. is a unit of the respondent-assessee company and also that the respondent-assessee had surrendered a sum of Rs. 4.57 crores on account of undisclosed investment in jewellery and therefore, the addition made by the AO and confirmed by the CIT(A) should not have been deleted by the ITAT. ANALYSIS 15. We have heard the learned counsels for the parties and perused the record. 16. With regard to the first contention relating to the addition made by the AO on account of unexplained investment in properties in Dehradun, the ITAT has held that there was no scope to treat the amount as paid in cash to be brought under unexplained investment under Section 69 of the Act and came to a conclusion that there was no material to corroborate the addition as made by the AO. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e novo and find that the Assessing Officer has made addition based on the seized material of Annexure A 20 page no. 19 wherein it was mentioned that "Kashipur-10 acres @ Rs. 19,30,000 per acre". On page no. 20, it was mentioned Kashipur new land Mr. Shishir @ Rs. 19,30,000/- land 9.81 acres......... 27. On going through the entire factum and orders of authorities below, we find that the addition has been made on a presumptive basis. There was no evidence on record reflecting any payment of cash. Further, while the land has been purchased that Sargam Estate Pvt. Ltd. and reflected in the balance sheet of Sargam Estate pvt. Ltd., no addition is called for in the case of the assessee. It cannot be said that while the cheque has been paid on behalf of Sargam Estate Pvt. Ltd. cash has been paid by the assessee. The nature and contents of the seized material do not reflect any unexplained investment in the land purchased in Kashipur. Hence, we decline to interfere with the order of the ld. CIT (A) on this issue. The appeal of the revenue on this ground is dismissed.". 20. Regarding the third contention relating to the amounts received from Haryana CGHS and the alleged illegal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the ITAT, wherein, it had declined to interfere with the order of the CIT(A) and came to a conclusion that there was no evidence of payment of cash by the respondent-assessee for taking control of the Wings CGHS. The relevant extract is reproduced as under:- "38. We have gone through the entire material on record and the orders of the authorities below. We find that the Assessing Officer has made addition by holding that the MoU mentions about payment of amount by Shri Tushar Kumar to Shri Ajay Jain whereas the facts speak otherwise. During the search itself, it was conveyed that Shri Tushar Kumar did not want to enter into an agreement with Shri Ajay Jain as per the MoU. The said MoU was also not signed by Shri Tushar Kumar. The MoU cannot be treated as executed. There was no evidence of payment of cash. The seized material did not mention any payment of cash. Hence, it cannot be held that the assessee has paid an amount of Rs. 1.80 Cr. for taking the control of the WCGHS which is a Co-operative Society registered with Registrar of Cooperatives. Hence, we decline to interfere with the order of the ld. CIT (A). The appeal of the revenue on this ground is dismissed." 24.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on the facts of the case since no additions can be made on this account, the AO was therefore directed to delete the addition on this account. 47. Having heard the arguments of both the sides, we have perused the facts on record available before us and find that the ld. CIT (A) has rightly deleted the addition as the total expenditure debited on account of advertisement was Rs. 3.19 Cr. as against Rs. 2.85 Cr. alleged by the Assessing Officer. Hence, we decline to interfere with the order of ld. CIT (A) on this ground." 26. Regarding the seventh contention relating to the addition on account of undisclosed investment in jewellery, the ITAT, after thoroughly analysing the factual position, deleted the addition made by the AO which was also confirmed by the CIT(A), and held as follows: "51. Having heard the arguments of both the sides who relied on the respective orders and submissions, we have perused the facts on record available before us and find that, 1. A panchanama has been prepared by party A-4 showing warrant in the case of : M/s GTM Jewellery Mart Pvt. Ltd. (showroom GTM house, G-5, Pushkar Enclave, Outer Ring Road, Paschim Vihar, New Delhi) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in the assessee's hands it can be done only after recording a satisfaction of such items not belonging to the person from whose position they have been seized. 17. It is only after recording a satisfaction such items not belonging to the person from whose position they have been seized that the entity for the assessment can be shifted. 18. In the instant case, there has been no denial by the M/s GTM Jewellery Mart Pvt. Ltd. with respect to their ownership of the items. M/s GTM Jewellery Mart Pvt. Ltd. never mentioned in the statement that the jewellery do not belong to them but belong to the assessee. 19. The AO ignored this fact and without visiting the M/s GTM Jewellery Mart Pvt. Ltd. for obtaining explanation and elucidation as well as discharge of onus on that entity regarding the ownership of the jewellery straight away and made addition in the hands of the assessee which cannot be held to be legally valid as per Section 132(4A). 52. Keeping in view these facts, since there is a panchnama drawn in the case of M/s GTM Jewellery Mart Pvt. Ltd., stock inventory was made in the said company and keeping in view the fact that M/s GTM Jewellery ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ged the order of the CIT(A) only with respect to the deletions made on account of Haryana CGHS and Wings CGHS. Vide order dated 10.02.2021, the ITAT dismissed the appeal filed by the Revenue. 6. The Revenue, therefore, being aggrieved by the order of the ITAT, preferred the instant appeal and has proposed the questions of law for our consideration which are reproduced as under: "A. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon'ble ITAT is justified in deleting the addition of Rs. 1,25,00,000/- towards undisclosed cash receipts on sale of fact flats ignoring the documents seized during the search in GTM group and impounded during survey under Section 133A in the case of Haryana Citizen Cooperative Housing Society, also ignoring the provisions of section 132(4A) and Section 292C of the Income Tax Act, 1961? B. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon'ble ITAT is justified in deleting the addition of Rs. 1,80,00,000/- for acquiring certain rights in Wings CGHS ignoring the provisions of section 132(4A) and Section 292C of the Income Tax Act, 1961?" ANALYSIS 7....