TaxTMI 
TaxTMI 
2025 (1) TMI 753
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....d seized. As per the seized documents at pages 20, 23, 34, 35, 84 and 88 of Annexure A-79 revealed that assessee had made cash payment to the tune of Rs. 5,21,34,953/- and payments by cheque to the tune of Rs. 4,47,00,000/- to various farmers (land owners) and Earth Infrastructure Limited for purchase of certain land at Najafgrh, Delhi during the period from 01.04.2011 to 31.03.2012. The relevant extract of the above payments were produced in assessment order at page 2. In order to verify the source of the aforesaid payments, the summons under section 131 of the Act were issued to the assessee. During the course of investigation, the same was returned unserved. After verification of the records with the department, he observed that the opening cash and bank balance for the assessment year 2012-13 in which the assessee had made payments aggregating to Rs. 9,68,34,953/- was nil. He observed that the source of the above payments made by the assessee were not found established, therefore, there is sufficient reason to believe that income to the tune of Rs. 9,68,34,953/- has escaped assessment. After recording the reasons and approval under section 151(1) of the Act, he issued notice un....
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....age was dominantly of Sh. Pawan Sharma alias Shivmurti (SM) . 7. After some initial deals handled and done by Sh.Pawan Sharma alias Shivmurti (SM) as per the initial understanding, Sh Pawan Sharma had come to EIL Management with papers relating to Advances / Biyanas allegedly done by him with selling parties. But the Promoters of Earth Group smelled siphoning off funds by Sh Pawan Sharma alias SM in the dealing either in individual capacity or in connivance with the prospective sellers, point blank refused into or even recognize any such deal at such exorbitant rates. In turn Sh Pawan Sharma alias SM turned up later on and submitted that all deals were renegotiated and Murlidhar had to pay only the renegotiated prices as per the Registries. However, the payments through ATS and Receipts shown to Murlidhar were requested to be ignored, but cheque payments were requested by him to be considered. 8. However, when asked to contribute his share of 40% as agreed, Sh. Aditya Sharma / Pawan Sharma alias Shiv Murti requested that presently he is short of liquidity and accordingly would contribute not more than 20% /30% in the deal. As a consequence, on 03rd November, 2012 ....
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.... as is displayed in the table at Page No.2 above. The assessee has not given any justification with regard to the fact that its name is repeatedly reflected as "Payment Paid by Shivmurti" against such payments on various pages of the seized documents. Therefore, denial of the assessee of not having made any payments in respect of land deals just on the pretext that the documents belong to M/s Murlidhar Infracon Pvt Ltd is not acceptable. Further, on perusal of the sale deed agreement submitted by the assessee company in three cases, as mentioned above, it is seen that M/s Murlidhar Infracon P Ltd (vendee) has been represented by its Director Sh Aditya Sharma S/o Sh Pawan Sharma and he has also signed these sale deed agreements for Murlidhar Infracon Pvt Ltd. It may be mentioned that Sh Pawan Sharma is Director of the assessee company. Therefore, the submission made by M/s Murlidhar Infracon P Ltd during the assessment proceedings in its case (reproduced supra) that there was an agreement between the management of ElL and Shiv Murti for purchase and development of Land is found to be acceptable and hence role and involvement of the assessee company in purchase of lands in respect of....
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....e A-79 referred to in reasons recorded (Copy enclosed at Page No. 2-7 of Paper Book - 2) two types of payments have been mentioned: i. Cash Payment ii. Cheque Payment d. This fact further stands verified from copy of assessment order dated 31.03.2016 u/s 153C of M/s Murlidhar Infracon Pvt. Ltd. where the Ld AO has made an addition of Rs. 1,82,82,953/- (Copy enclosed at Page No. 58-62 of Paper Book) only the cash portion as appearing in the seized documents and the amounts of cheques has been ignored, the reasons is that the same stands verified from the books of accounts. It is further submitted that if the payment by cheques have travelled from bank account of M/s Murlidhar Infracon Pvt. Ltd. then the presumption automatically drawn that the payments have, been made by them by cheques which tally with their books of accounts the presumption the payment in cash should have been made by them and the document only belong to M/s Murlidhar Infracon Pvt. Ltd. and not to appellant company. e. That from the perusal of sample copy of conveyance deed for purchase of land executed in favor of M/s Murlidhar Infracon Pvt. Ltd. enclosed at Page No. 11 to 34 o....
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....ance Sheet as on 31.03.2012 (enclosed on Page No. 4-20 of Paper Book). Further it is not a case that Ld AO who has ever claimed that the assessee company is found in possession of any land in the name of assessee company. i. That the headline of seized documents shows "PAYMENT PAID BY SHIVMURTI". There is no basis with Ld. AO to read "SHIVMURTI" written on seized documents as "Shivmurti Developers Private Limited" or Ld. AO has not assigned any reason in reasons recorded what made him to read "SHIVMURTI" as "Shivmurti Developers Private Limited". The word Shivmurti may represent to any proprietorship/partnership concern also. j. That there is no statement available from M/s Earth Infrastructure from whose possession material were seized or any other person mentioned in the seized material stating that the cash and cheque payment mentioned in seized material have been made by the appellant company or the transactions recorded therein belongs to the appellant company. On the basis of judgment at S.M Aggarwal, 293 ITR 43 (DEL) where held that "only the person competent to give evidence on the truthfulness of the contents of the documents is the writer, therefore only....
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....case of Kultar Singh v. Mukhtiar Singh, (1964) 7 SCR 790 and Jagannath Deb Roy v. Byomkesh Roy, AIR 1973 Cal 397 that One of the well established rule of construction is that the document must be read as a whole. A piecemeal reading of the document either of recital or operative portion or the covenants cannot bring about a fair and proper construction of a document. The reasons for making addition as stated by Ld. AO in assessment order reads as under: "The reply of the assessee is not acceptable in view of the fact that as per the documents seized as per said Annexure the name of the assessee company i.e. "PAYMENT PAID BY SHIVMURTI" is clearly mentioned against cash/cheque payments made to various farmers and to Earth and its name repeatedly appearing on other pages of the said annexure as well as is displayed on the table in the page No. 2 above. The assessee has not given any justification with regard to the facts that its name is repeatedly reflected as "PAYMENT PAID BY SHIVMURTI'' against such payments on various pages of seized documents. Therefore, denial of assessee of not having made any payment in respect of land deals just on the pretext that document ....
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....he same is to he returned; and he acted accordingly. As time elapsed, Mr. Pawan Sharma Alias SM admitted in talks with the promoters of Earth group that cash component in fact never existed and the value of the properties is as per the Registries only". As per the submission of M/s Murlidhar Infracon Pvt. Ltd. that Mr. Pawan Sharma finally admitted in talks with the promoters of Earth Group that cash component in fact never existed and the value of the properties is as per registries only and all the registries were in the name of M/s Murlidhar Infrcon Pvt. Ltd. only. It is not the case of Ld AO that any of the registry is in the name of appellant company. m. It is not the case of Ld. AO whereby he had found any undisclosed source of income of the appellant to suggest any such large payment. Further the evidence available also does not suggest any such payment being made by appellant company whose net worth is only Rs. 11,64,675 on 31.03.2011 & Rs. 6,89,943 as on 31.03.2012. In view of the facts stated herein before, your honour will appreciate that the allegation of Ld AO that the cash payment of Rs. 5,21,34,953/- mentioned in seized material has been ma....
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...., it could not be said that there was any iota of evidence to support revenue's case that a huge figure over and above figure booked in records and accounts changed hands between parties and, therefore, no addition could be made based on such document in hands of assessee - Held, yes 3. Jindal Stainless Ltd., 120 ITD 301 (Del) Whether documents recovered from residential premises of 'S' could not be made basis for making addition in assessment framed in case of assessee without providing assessee an opportunity to cross-examine 'S' and also without bringing on record any positive material that assessee had received extra money from customers outside books of account - Held, yes - Whether therefore, impugned addition made to income of assessee was not Justi fied and deserved to be deleted. Yes. 4. TS Venkatesan, 74 ITD 298 (Cal) In the absence of corroborative material, addition of undisclosed income could not be made simply on the basis of entries on loose papers recovered from third party and certain general statement of said party. 5. Doon Valley Roller Flour Mills P. Ltd., 31 ITD 238 (Del) Whether mere fact that certain books of account were found ....
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....uced by the ld.CIT(A) at pages 21 to 23 of the order and in response, assessee has submitted rejoinder to the remand report and the same is reproduced at pages 24 to 29 of the order. Further, assessee also filed an affidavit before ld. CIT (A) and the same was considered under section 250(4) of the Act and same was reproduced at pages 31 to 34 of the order. After considering the remand report and response to the remand report and affidavit, ld. CIT (A) deleted the substantive addition in the hands of the assessee and directed to initiate the proceedings in respect of correct entity by observing as under :- "Having considered the facts of the case, the affidavit filed supra is considered. The appellant has not undertaken any such transaction as there is no substantive evidence on record to establish. The appellant produced evidence in the form of conveyance deed for purchase of land executed in favour of Murlidhar Infracon Pvt. Ltd. during the year under consideration which contains cheque details which are also stated in seized material as well as issued from bank account of Murlidhar Infracon Pvt. Ltd. The AO concluded that appellant company M/s Shiv Murti Developers Pvt.....
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....d the substantive addition in the hands of the assessee. He brought to our notice para 7.2 of the assessment order and submitted that all the payments were made by cheques/cash before incorporation of Murlidhar Infracon Pvt. Ltd. and he submitted that ld. CIT (A) has not appreciated the above facts properly. He submitted that the payments were made before incorporation of Murlidhar Infracon Pvt. Ltd., who had made the abovesaid payments. He submitted that ld. CIT(A) also found that the information found in the seized documents are genuine. In this regard, he brought to our notice page 193 of the paper book which is the sale deed entered by Murlidhar Infracon Pvt. Ltd. with Palak Properties Pvt. limited and he brought to our notice page 197 of the paper book wherein certain payments were made during 2011-12 and submitted that a payment of Rs. 22 lakhs vide cheque no.575073 was made on 21.11.2011 which is before incorporation of Murlidhar Infracon Pvt. Ltd.. Similarly, he brought to our notice page 204 which is another sale deed with Murlidhar Infracon Pvt. Ltd.. In this case also, similar payment was made before incorporation of Murlidhar Infracon Pvt. Ltd.. By bringing the above ag....
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....to our notice page 35 of the first appellate order and supported the findings of the ld. CIT(A) and no prejudice is caused to the Revenue with the findings of ld. CIT (A) that the addition has to be made in the hands of Murlidhar Infracon Pvt. Ltd.. By referring to the submissions of the ld. DR for the Revenue, he submitted that no doubt, certain payments were made before the incorporation of Murlidhar Infracon Pvt. Ltd. but these payments were not made by the assessee and he submitted that absolutely no prejudice caused to the Revenue and ld. CIT (A) only gave direction to the AO to redo the assessment properly under section 150 of the Act. 11. Considered the rival submissions and material placed on record. We observed that the assessee is a private limited company engaged in the business of commission agent and as per records, the assessee has only one bank account maintained with HDFC Bank, Old Rajender Nagar, New Delhi. Subsequent to search conducted in the case of Earth Infrastructure Ltd., Delhi, certain documents were found and seized which included documents identified as Annexure A-79 whereby certain cash payments and payments by cheque were found which were made to var....