TaxTMI 
TaxTMI 
2024 (7) TMI 1368
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....velopment agreement with M/s URS Gehna through its partner Shri Upendra Soni, for construction of building project named 'Royal Imperia'. As per this development agreement, M/s URS Gehna is landowner and Appellant is builder who would construct the project at its own cost on the basis of sharing of the units in the constructed building. The sharing of the units in the constructed building in between the assessee and M/s URS Gehna has been specified in development agreement, which is at PB page 268-272 and 283-292. For the year under consideration, there was no sale of flats and only advance money was received by the Appellant against the booking of the flats in the project Royal Imperia. Appellant booked its sales of Rs. 1,45,13,735/- by adopting percentage of completion method. The books of account of the appellant firm were audited by Chartered Accountant u/s 44AB of IT Act. The copy of the audit report and audited financial statements were filed by the assessee in Paper Book at page no 54-72. The department carried out search at the premises of Resonance Group, Kota and Shri Upendra Kumar Soni u/s 132 of the Act on 07.09.2017, where certain documents were seized. According to th....
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....as dismissed by Ld. CIT(A) on following footings: - i) Rejected the ground of invalidity of assessment on for the reason of non-mentioning of DIN in the assessment order dated 27.12.2019 for the reason that the DIN issued for demand notice was communicated to appellant on 28.12.2019 and also replying the judgement of Hon'ble Supreme Court. (para 4.8 of the order of ld. CIT (A) at page 8 to 10 of the order). ii) Rejected the ground of non-obtaining the approval as required u/s 153D by holding that the same was validly obtained. (para 4.8 of the order of ld.CIT (A) at page 10 of the order). iii) Rejected the ground of no satisfaction note of search person on the ground that where the AO of searched person and other person are same, then requirement of two satisfaction note are not necessary and one satisfaction note is sufficient. (para 5.6 (i) of the order of ld.CIT (A) at page 18 to 23 of the order). iv) holding that the satisfaction note recorded by the AO of the assessee is reasonable and nexus of the documents found is established with the appellant. (para 5.6 (ii) of the order of ld.CIT (A) at page 23 to 24 of the order). v) holding ....
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....hall be treated as invalid and shall be deemed to have never been issued. It is also submitted that it has not been mentioned in the assessment order that the assessment order has been issued manually in exceptional circumstances and approval of the Chief Commissioner/Director General of the Income tax was obtained before issue of manual communication. It was also argued that though the A.O. issued an intimation letter dated 19.02.2021 for the year under consideration, to inform about the DIN of order passed u/s 143(3) of the Act wherein the date of order is mentioned as 31.12.2019, however, there is no order passed by the department on 31.12.2019 for AY 2018-19 u/s 143(3) in the case of assessee but it was passed on 27-12-2019. Therefore, the said intimation letter issued by the Ld. AO is beyond time limit of 15 working days specified by CBDT Circular and also not with reference to impugned assessment order dated 27.12.2019 passed without DIN. It was also submitted that in the remand report the reference of communication letter dated 28.12.2019 has been given but this communication is with reference to demand notice u/s 156 of IT Act. The Ld. AR submitted that separate DIN is requ....
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....e further argued that on the approval granted by Additional Commissioner of Income Tax DIN was not generated and mentioned on the approval letter of Addl CIT. 4.1.3 The Ld. AR of the assessee also argued in detail as regard issue of Satisfaction note recorded by the A.O. for initiating the proceedings u/s 153C of the Act against the assessee, issue of addition on surmises and conjectures and violation of principle of natural justice by not providing the opportunity of cross examination of Shri Upendra Kumar Soni. 4.2 On the other hand the Ld. D/R vehemently relied on the finding of Ld CIT (A) and argued that the AO has issued communication under DIN vide letter dated 28-12-2019 and communication issued for demand Notice u/s 156 is in reference to the assessment order passed by the AO 27-12-2019. Ld. D/R further argued that, the approval by the Additional Commissioner given u/s 153D of IT Act was after due application of mind and the fact of giving approval is duly mention in the body of assessment order itself, therefore there is nothing on record to presume that the approval is given in mechanical manner. It was also argued that before initiation of assessment proceeding, th....
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.... ld. CIT (A) on the ground of receiving the unaccounted money by the assessee on sales of flats at Royal Imperia Apartment. 5.1 Before us, the Ld. A/R of the assessee has argued the case and filed the elaborate written submission. The brief of the arguments raised by Ld. A/R are as under: - 5.1.1 At the outset, the A/R of the assessee relied on the decision of decision of ITAT Jaipur Bench in the case of M/s Moti Developers (ITA No. 102 to 104/JP/2017 order dated 03.07.2017 and contended that on the identical facts, the similar issue has already been decided by Hon'ble ITAT, Jaipur Bench in the aforementioned case. The findings of Hon'ble ITAT in this case are in Para 3.5 of the order. The Ld. A/R submitted that the fact of the case of the assessee's are identical to facts of above referred case and also submitted the comparison of facts of the case of the assessee viz a viz cash of Moti Developers, which are as under: - S. No. Facts of case of Moti developers Facts of case of Appellant 1. The Appellant (Moti developers) having a land at Janta Colony and entered into a development agreement with Ashirwad Buildtech Private Limited for construction of flats. T....
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....on of 40% of cash receipts in the hands of M/s Moti Developers. The Ld. A.O. made the addition of part of the cash receipts in the hands of Appellant. 5.1.2 It was also contended that, no nexus of the document with appellant is established. It was also contended that certain documents were found from the possession and control of Shri Upendra Kumar Soni and seized as per Annexure AS page 1 to 83 of Exhibit 5. The AO found the page 83 of the impugned Annexure as incrimination and he provided the copy of this page only to the assessee for confrontation. On this page in column No 1 description of floor is mentioned. In column no 2 Total amount against each floor in totality is mentioned. In column No 3 cash amounts against each floor in totality is mentioned. In column No 4 cheque amounts against each floor in totality is mentioned. In column No 5 & 6 Total Received and balance against each floor in totality is mentioned respectively. The Ld. AR submitted that the name of the assessee is not mentioned over the impugned seized paper page 83. There is division of flats/units in between the assessee and URS Gehna in the constructed building as per the development agreement and deta....
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....n sheet Balance as per sheet Remarks 17 33,26,400 14,00,000 0.00 0.00 33,26,400 In column Cash received, amount of Rs. 14,00,000 is shown, whereas in column of Total figure 0 is mentioned, Accordingly, the balance is also wrongly worked out. 18 22,51,200 2,00,000 0.00 14,00,000 8,51,200 In column Cash received, amount of Rs. 2,00,000 is shown and in colu cheque 0 is shown, whereas in column of Total figure 14,00,000/- is mentioned, Accordingly, the balance is also wrongly worked out. 19 23,24,750 7,50,000 5,00,000 7,00,000 16,24,750 In column Cash received, amount of Rs. 7,50,000 is shown and in cheque received amount of Rs. 5,00,000/- is mentioned. The sum of both the receipts comes Rs. 12,50,000/-, whereas in column of Total figure Rs. 7,00,000/- is mentioned, Accordingly, the balance is also wrongly worked out. 20 23,24,750 0.00 0.00 7,50,000 15,74,750 In column Cash and cheque received, amount 0 is shown. The sum of both the receipts comes 0, whereas in column of Total figure Rs. 7,50,000/- is mentioned. Accordingly, the balance is also wrongly worked out. ii) In some of the cases....
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....noj Kumar Bilochi Alok Sharma 54 101-A Vinod Kumar Garg Harjeet Singh Chawla 55 107-E Palak Agarwal Abhilash Thakur The Ld. AR has drawn our attention towards entry at S. No 17 of the sheets prepared in name Srishti Associates for Flat No 904C, (APB page 80) Total amount stated at Rs. 33,26,400/- cash received stated Rs. 14,00,000/- Cheque Received shown at Rs. 0.00 and Total of these two Cash and cheque shown at Rs. 0.00 and outstanding Balance is shown at Rs. 33,26,400/-. Had the cash of Rs. 14,00,000/- is correctly mentioned then the figure in total amount would be 14,00,000/- and figure in Balance should be 19,26,400/- as against Rs. 33,26,400/- shown in the sheet. Similarly, entry at S. No. 18, for Flat No 905D, (APB page 80) Total amount stated at Rs. 22,51,200/- cash received stated Rs. 2,00,000/- Cheque Received shown at Rs. 0.00 and Total of these two Cash and cheque shown at Rs. 14,00,000 and outstanding Balance is shown at Rs. 8,51,200/-. Had the cash of Rs. 2,00,000/- is correctly mentioned then the figure in total amount would be 2,00,000/- and figure in Balance should be 20,51,200/- as against Rs. 8,51,200/- shown in the sheet. Similarly,....
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....inst the assessee as evidence. 5.1.4 It was also contended that AO while making this adverse inference against the Appellant relied on the extracts of statements of Upendra Kumar Soni recorded u/s 132(4) of the Act whereas bare reading of the extract of statement of Mr. Upendra Soni suggest that he received an amount of Rs. 72.07 lakh from the purchasers as booking advance on account of URS Gehna. As regard cash amount he stated that he already returned to the purchaser. Shri Upendra Kumar Soni has nowhere stated that he has passed over part of the cash or on money to the assessee or part of the cash amount belongs to the Appellant. The attention was drawn by Ld. AR towards the following relevant questions and answers of the statements of Upendra Kumar Soni recorded u/s 132(4) of the Act as under: - Answer to Q. No PB Page What has been stated 68 86 Pg 80-83 relates to booking of Royal Imperia; some of flats cancelled as detailed at page 67. (copy not given to assessee) 72 39 Booking rights are with the appellant M/s Sirsthi Associates 74 89-90 Total on money received Rs. 72.07 lacs pertain to M/s URS Gehna 78 92 Total cash received 8....
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....pellant is not mentioned over the impugned seized paper. No date and year of alleged cash receipt has been mentioned. No any nexus of cash receipt of Rs. 8,19,19,000/- shown in this seized paper with the alleged-on money received by the assessee Rs. 3,96,05,000/- can be ascertained from this seized paper. This is not acceptable evidence which can be used against the Appellant. It is highly possible that such sheets might have been prepared by Shri Upendra Soni for his own purpose, which is best known to him. Shri Upendra Soni never said to have passed over any cash to the Appellant. No documents were found to show that any cash was passed over to the appellant. Regarding the applicability of section 34 of the Evidence Act and fastening of the liability to third parties on the basis of entries made in the books of account, documents, etc. of the third parties the reliance was placed on the decision of Hon'ble Supreme Court of India in the case of CBI v. V. C. Shukla & Ors. -AIR 998 SC 1406 /JT 1998 (2) SC 172 ) (popularly referred to as Jain Hawala case) and decision in the case of Common Cause (a registered society) and others v/s UOI 2017-TIOL-27-SC Misc (popularly referred as Sah....
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....ignature of witnesses and Annexure Number, Exhibit No and Page Number is also not mentioned over these pages of Excel Sheet. The AO has no seized material to hold that the Rs. 3,96,05,000/- was assessee's share and the same was passed on to the assessee. He derived this figure only from these impugned pages of Excel Sheet which are not part of the seized material and also have no evidentiary value. It is trite law that the satisfaction note itself must display the reasons or basis for the conclusion that the AO is satisfied that the seized documents belong to a person other than searched person. The AO must reach a clear conclusion that good ground exists for the AO of the third person to initiate proceedings as material before him belongs/pertains to third person. In the present case, on the bare perusal of the said satisfaction note, the AO has failed to establish the nexus of the said figure of Rs. 3,96,05,000/- with the only seized incrimination document page 83 of AS-5. There is no clarity in the said satisfaction note about the date or year to which alleged cash receipts belong. In the satisfaction note at page 12 of the Satisfaction Note (APB page 84) in para 3 held the alle....
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....axmann.com 355 (Gujarat), (viii) CIT v/s G.Krishnan (1994) 210 ITR 707 Mad. (ix) Jodhpur ITAT Bench in Maheshwari Industries v. Asstt. CIT [2005] 148 Taxman 74 (Jodh) (Mag.), (x) Rajesh Jain Vs. DCIT 100 TTJ 929 (ITAT, Delhi 'A' Bench), (xi) KRISHNA TERINE (P) LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, AHMEDABAD 'D' BENCH 56 DTR, ITAT 395, (xii) Hon'ble ITAT Jaipur Bench in the case of Shri Pawan Lashkary ITA No 808/JP/2011 dated 06.01.2012 (xiii) Hon'ble ITAT Jaipur Bench in the case of Ashok Kumar Lakhyani vs DCIT ITA No 30/JP/2018 order dated 24/07/2018 and Hon'ble ITAT Jaipur Bench in the case of DCIT Vs Ashok Kumar Agarwal in ITA No 847/JP/ 2015 order dated 3/10/2016. It was also argued that the statement recorded u/s 132(4) of the Act are binding only on the person who makes it not to third person. The Ld. A/R also submitted that the addition was made without allowing the assessee cross examination of Shri Upendra Kumar Soni. The AO did not establish the nexus of the statement recorded in the case of Upendra Kumar Soni with Appellant. Secondly, it is also to be appreciated that it is trite law that no addition/adverse inference against the Appellant can be d....
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.... the assessee to enable the assessee to make cross examination of other party. The cross examination is not mere formality but it is demand of principle of natural justice and the AO should make effective efforts to enable the assessee opportunity of effective cross examination. The Ld. AR relied upon the decision of Hon'ble Raj. High Court in the case of Ronak Distributors (P) Ltd vs CTD 2015-TIOL-1422- HC-Raj-VAT wherein Hon'ble Rajasthan High Court has held that now allowing the petitioner-assessee to have access to the alleged incriminating material i.e. the statement of witnesses, who have deposed against it, and further not permitting it to cross examine the witnesses is a clear case of violation of principles of natural justice. The ld. AR further relied upon the decision of Hon'ble Supreme Court in the case of Kerala V.K.T. Shaduli Grocery Dealer (1977) 2 SCC 777 in this regard. 5.1.9 The Ld. AR submitted that the assessment is based on surmises and conjectures, without having any material or on irrelevant material and thus arbitrary, whimsical, capricious and perverse. The department has carried out intensive search operations over Shri Upendra Soni and during the cours....
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.... GST (Appeals) is in para 7 of the order (APB 174-184). The concluding findings are in para 7.3.6 (APB page 184), wherein it has been held that investigation of the case was not made in proper manner and core issues i.e. actual receipt of cash, actual number of units against which cash was claimed to be received etc. were not addressed properly and he rejected the demand of short payment of GST and this issue was decided in favor of Appellant. 5.1.11 The Ld. AR in alternate, without prejudice to his core submission that the appellant has not received any cash as booking advance, submitted that booking advance is not an income at all, in any case, if the said booking advance is sourced from real estate business, then also only reasonable profit element on the said booking advance/receipts can be attributed as additional income in the hands of the Appellant. It is also submitted, that if the entire cash receipt is considered as income of the Appellant, then the resulted Net Profit would be 74% of sales which could not be possible in the trade of the Appellant. In support of this argument The ld A/R placed reliance on various decisions including the decisions of Jaipur ITAT in the ....
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....he unit wise bifurcation no conclusion can be drawn. Further the dates of the receipts are also not mentioned therefore, year of the receipt of the amount by Cheque as well as Cash cannot be ascertained. On the basis of this seized paper Annexure AS Exhibit 5 page 83 (APB page 85) the amount added by the AO in total income of the assessee cannot be ascertained. Admittedly, this paper was found and seized from the possession of Shri Upendra Kumar Soni, so primary onus is on Shri Upendra Kumar Soni to explain the entries of this seized paper with corroborative evidence. The AO has not brought to notice any other seized paper showing the cash receipts of Rs. 3,96,05,000/- by the appellant on account of on money in sale of flats/units in "Royal Imperia" project. No any inquiry, if any conducted, from the assessee by the Investigation Wing was brought on records by the AO. No any statement of the assessee, if any, recorded by the Investigation Wing or by the AO was brought on record by the AO. The search team recorded the statement of Shri Upendra Kumar Soni u/s 132(4) of the Act. The AO has not provided copy of complete set of the statement of Shri Upendra Kumar Soni to the assessee, w....
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....ar. These papers of Excel Sheet do not contain signature of authorized officer of search party, signature of searched person, signature of witnesses, which are basic requirements to put on seized documents and which is there on page no. 83 of Exhibit-5. Further, the AO as well as ld. CIT(A) has not brought on record from where these papers of Excel Sheet were seized and what is their Annexure No, Exhibit Number and page number of the documents seized by the department. What was the source of receipt of these pages of excel sheet with the AO has not been disclosed by lower authorities. Further, the search team has not put any question to Shri Upendra Kumar Soni on these pages of excel sheet as appears from the copy of Extracts of statement provided by the AO to the appellant. Further the basis of bifurcation of cheque receipts as well as cash receipts in these papers of excel sheet in between the units owned by GRS Gehna and Appellant has not been disclosed or correlated with other material which if any, the AO had. 5.3.2 Otherwise also, these papers of the excel sheet is not reliable and cannot be used as evidence against the assessee as during the course of hearing the Ld. A.R ....
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....the Ld. AR submitted that the pages of Excel sheet reproduced at page 3-11 of satisfaction note are not appears to be seized documents so these papers cannot be used for formation of satisfaction for the purpose of initiating the assessment proceeding against the assessee. Besides these excel sheet the AO has no material to bifurcate the cash amount in between the URS Gehna and Appellant and no any basis to determine the addition amount of Rs. 3,96,05,000/-. During the course of hearing the ld Sr. D/R could not explain the discrepancy in the satisfaction note, source of the relied upon excel sheet and also could not satisfactorily explained to the discrepancies as pointed out by Ld. A/R in these excel sheet. This, proves that the AO made a general satisfaction note which is not reasonable and not enough to initiate the proceedings against the assessee. The said satisfaction note is not speaking, not backed with corroborative material and also not for the year under consideration. 5.3.4 We find that the in support of the addition so made the A.O. relied on the document found from the possession of Shri Upendra Kumar Soni and also on some extracted statement, though in such statem....
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.... the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them". 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose....
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....f natural justice. Thus, the additions made by the AO on the basis of such statement without any tangible material is not sustainable in law and liable to be deleted. Accordingly, the addition made by the AO is also deleted on merits apart from the legal issue decided in favour of the assessee." 5.3.5 Further, we have gone through the order of appellate authority under GST Act filed by the appellant. The findings of the Addl Commissioner of GST (Appeals) is in para 7 of the order (APB 174- 184). The concluding findings are in para 7.3.6 (APB page 184), wherein it has been held that investigation of the case was not made in proper manner and core issues i.e. actual receipt of cash, actual number of units against which cash was claimed to be received etc. were not addressed properly and he rejected the demand of short payment of GST and this issue was decided in favor of Appellant. This order of the GST authorities also supports the contention of the appellant that no addition should be made in the hands of the appellant. 5.3.6 Further, Jaipur Bench of ITAT has also decided the similar issue in the case of Moti Developers ITA Nos. 101, 102, 103 & 104 vide order dated 1....
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....r, the statement of Shri Sandeep Chhabra, partner of assessee firm was also recorded on 18-02-2013 (Relevant extracts are reproduced by AO in his Assessment Order at pg 4) wherein the partner Shri Sandeep Chhabra had categorically denied to have received any cash amount on account of sale of flats by M/s Ashirwad Buildtech Pvt Ltd. A pen drive seized from the possession of the partner of the assessee also did not contain any cash entry received from the collaboration with M/s Aashirwad Buildtech Pvt. Ltd. The copy of ledger account of M/s Ashirwad Buildtech Pvt Ltd in the seized books of Moti Developers has also been reproduced by AO at pg 5 of Assessment Order. Rs. 1,82,48,800/- has been recorded in the seized books of assessee which has been received by cheques only in project in collaboration of Ashirwad Buildtech Pvt Ltd. No document from any searched premises was seized which could show that assessee had received any cash on the project in collaboration with M/s. Ashirwad Buildtech Pvt Ltd. The developer M/s Ashirwad Buildtech Pvt Ltd and its director Shri Virendra Kumar Ghuwalewala approached Hon'ble Settlement Commission by filing application u/s 245C of Income Tax Act on 28....