TaxTMI 
TaxTMI 
2025 (5) TMI 1940
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....on u/s 132 of the Act in the case of M.N. Rajendra Kumar & Others on 1.2.2017 and also on merit of various addition made by A.O and sustained by CIT(A) in these assessment years. 2.2 The grounds raised by the assessee in all these appeals are tabulated below for brevity: Years Reassessment Unexplained cash receipts (u/s 69B r.w.s. 115BBE of the Act) Interest on advances to Om Sai 2013-14 Initiation of reassessment proceedings based on material already on record is bad in law Rs. 1,41,90,000/- 2014-15 Initiation of reassessment proceedings based on material already on record is bad in law Rs. 5,52,05,000/- Rs. 36,00,000/- 2015-16 Initiation of reassessment proceedings based on material already on record is bad in law Rs. 6,94,63,330/- 2016-17 Initiation of reassessment proceedings based on material already on record is bad in law Rs. 5,40,00,000/- 2017-18 Initiation of reassessment proceedings based on material already on record is bad in law Rs. 56,66,666/- 3. The assessee has also raised common additional ground in all these appeals, which is as follows: "The learned Assessing Officer is right in making the assessment u/s 147....
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....as builders and real estate development, which belongs to Mr. M.N. Rajendra Kumar Group of cases. 7.2 The assessee filed the return of income on 24.9.2013, declaring therein total income of Rs. 8,49,560/- for the assessment year under question. The return of income was originally selected for scrutiny and assessment under section 143(3) was completed on 31.12.2015 by assessing the income at Rs. 12,16,711/-. 7.3 A search and seizure operation under section 132 was conducted on 1.2.2017 at the residential premises of Mr. M.N. Rajendra Kumar, one of the Directors of the Assessee, at Flat No.9, Chandra Nivas, Andheri, Kurla Road, Marol Church Road, Andheri East, Mumbai and at 1-276, PO 721, Pulikeri, Karkala, Udupi - 574 101, which was conducted on 3.2.2017. A Survey under section 133A of the Income tax Act, 1961 was also conducted at the headquarter of the South Canara District Credit Co-operative Bank Limited (in short SCDCC Bank) on 27.12.2016, wherein Mr. M.N. Rajendra Kumar is the Chairman and he has made a sworn statement. 7.4 Consequent to the search and seizure operation on Mr. M.N. Rajendra Kumar, and survey under section 133A on SCDCC Bank, wherein certain documents were f....
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.... following investment made by the assessee was detected: a) Micasa Land: Joint property purchased on 05-09-2012 for consideration of Rs. 6,62,20,000/- and a copy of same was impounded and marked as "A/PIPL/4" and the share of the same extends to Rs. 3,31,10,000/- to Mr. Rajendra Kumar. b) Ventura Land: Jointly purchased with the assessee's share at Rs. 1,75,00,000/- c) Premero Land: Jointly purchased with the assessee's share at Rs. 1,80,00,000/- d) Padavu Land: Jointly purchased with the assessee's share at Rs. 87,00,000/- e) Dairy Land: Individually purchased non-agriculture land at Rs. 1,60,00,000/- iii) During the course of survey at head office of SDCC Bank documents and books were impounded the document impounded A/S/SCDCC/16-17 revealed that there was an addition over and above the registered sale price a total of Rs. 4,86,90,000/- was paid in cash for above land for its project by M/s Global Star Realtors Pvt. Ltd. iv) Further, the managing director Rajender Kumar was confronted with the same during the course of search, he accepted that the cash component was involved in most of the deals however the AO had made addition of same in hand of individual hand in ....
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.... is found to be Rs. 10,99,00,000/- in respect of the three projects. During the course of search & survey, it was found that as per the agreement the above payments need to be regularly paid by Mr. Rohan to Mr. Rajendra Kumar on Monthly Basis. The details of the payments made by Rohan at different time periods are recorded in Pg no 9-11 of the A/S/SCDCC/16-17/1). During the course of search, it was also found that Mr. Rohan in lieu of the agreed cash amount to be paid to Mr. Rajendra Kumar, did not pay part of the amount and in lieu of this cash payment, a land belonging to Rohan in Kadri was given to Mr. Rajendra Kumar and the balance cash receivable amount was adjusted against the cash portion of the land. The evidences against this were collected and kept in the page number 4-8 of the impounded folder A/S/SCDCC/16-17/1. Thus, MNR has received the cash and Mr. Rohan has adjusted the land with the cash he needed to pay to Mr. Rajendra Kumar. As per the impounded material, the total share to be received by Mr. M.N. Rajendra Kumar from Mr. Rohan Monteiro was Rs. 27,32,00,000/- in which Rs. 16,72,83,668/- was already received. Out of the balance of Rs. 10,59,16,332/-, an amount of ....
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....264/Bang/2019 which was further deleted by ITAT. The addition is Rs. 2,00,00,000/- AY 2017-18 During the course of survey in SCDCC bank on 27/12/2016 the impounded document A/S/SCDCC/16-17/1 reveals that consideration over and above agreement was paid by PIPL. These documents were computerized print out. From this agreement the total consideration over and above the agreement was Rs. 10,99,00,000/- in respect of three projects. Further, Mr. Rohan had adjusted the Land with the cash which he needed to pay to Mr. Rajendra Kumar. This above arrangement was confronted to Mr. Rajendra Kumar the MD of the Co. to which he agreed that part of the Sale Consideration was paid in cash and based on this statement the addition was made in his individual case in ITA Nos.2258 to 2264/Bang/2019 which was further deleted by ITAT. The addition is Rs. 56,66,666/- 7.6 Against this assessee went in appeal before ld. CIT(A), who has confirmed the addition. Against this assessee once again in appeal before us in all these assessment years. 8. The contention of the ld. A.R. is that the above addition in these assessment years solely based on the impounded material collected during the course of su....
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....dra Kumar, in appeal, was deleted by the ITAT. Further addition was made on the basis of statements as no cogent material with regard to unexplained cash receipt. It was submitted by the assessee that a similar issue was arising in the case of MN Rajendra Kumar and group matter in the Income tax Appellate Tribunal, Bangalore Bench in ITA Nos. 2258 to 2264/Bang/2019, dated 24.8.2020, copy was also enclosed in the paper book, in which Assessment was completed u/s 153A/153C of the Act. However Hon'ble Tribunal has deleted the addition in the hand of director by stating that there was no cogent material on record to show that such cash payment was made by the director out of his own fund. And further it has also held that the addition cannot be made in the hand of the company for the AY 2013-14, because more than 6 years has been lapsed from the relevant year 2013-14. Cash Component Receipts of Rs. 1,41,90,000/- on the project of the assessee (Micasa, Ventura, Primero, and Padavu) 9. The addition of Rs. 1,41,90,000/- was made as the undisclosed cash component received in the Assessee's projects. This is based purely on assumptions and presumptions based on the impounded document....
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....at page 11 in para 11 the Assessee has withdrawn the above declaration, wherein he has made the following statements. * Assessee clearly mentioned that the alleged cash payments were made by the Company Global Star Realtors Private Limited and not by the assessee personally. * Assessee has not been actively involved in the regular operation of the Company. * The addition was made based on some loose sheets/rough sheets, which was on a plain paper, which was undated/unsigned having some figures. * The Assessee has requested the Department to call for the said information from the said vendors under section 131 for cross verification. Same is not done by the Department for the best reasons known to them. 9.5 Further, the above addition was made purely on assumptions and presumptions, based on some loose sheets/rough sheets, which was on a plain paper, which was undated/unsigned, which was unearthed during survey conducted under section 133A on 27.12.2016. In fact, no other materials were found at the time of Search. In this regard, the ld. A.R. relied on the following decisions, which are squarely applicable to the Assessee's case. 9.6 The ld. A.R. for the Assessee reli....
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....P) Ltd. 103 taxmann.com 9 (SC), held that, "Where Seized documents were not in the name of the assessee, no action could be undertaken in case of assessee under sec. 153C and further the entire decision being based on huge amounts revealed from seized documents, not being supported by actual cash passing hands, additions under sec. 69C was not sustainable." b) CIT, Mumbai Vs. Lavanya Land Private Limited (2017) 83 taxmann.com 161 (Bombay), held that, "Para 21.......... Further in his entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee. In our considerate view, there being no evidence to support the Revenue 's case that a huge figure, whatever be its quantum, over and above the figure booked in the records and accounts changed hands Para 21. Further in his entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee. In our considerate view, there being n....
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.... that, department had no evidence to prove that entries in these loose papers, computer prints, hard disk, pendrive etc., were kept regularly during course of business of concerned business house, has no evidentiary values and they could not have been relied to the direct registration of FIR Such materials and electronic data were not only irrelevant but were also legally inadmissible under section 34 of the Evidence Act, b) The Punjab and Haryana High Court in CIT v. Atam Valves (P.) Ltd. [2009] 184 Taxman 6 (P&H) held that "loose sheets by itself may not be enough to justify addition on estimated basis even though the explanation of the assessee is found unbelievable and circumstances may be pointing otherwise. The stand of the assessee in this case was that the loose slips recording wage payment did not represent payment of wages during the year in question, but were for the earlier year. The Assessing Officer did not accept the explanation and made an addition without bringing any other material on record and this precisely worked against the revenue." c) Asstt. CIT v. Ravi Agricultural Industries [20091117 ITD 338 (Agra) (TM), the premises of the assessee was subjected to ....
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....ry value. As a matter of fact as held by the Supreme Court in umpteen number of cases entries in the loose sheets are of no evidence value. Even assuming such entries as correct and authentic they cannot without independent evidence fix a liability upon a person. In that connection the court also referred to Section 9 of the Evidence Act and observed that even if such entries are admissible under the said provisions to support an inference about correctness of the entries still such entries would not suffice without supportive independent evidence. In the said case of CB1 v. V.C. Shukla (1998) AIR SC 410 loose sheets have been ruled out as of any evidentiary value. Their Lordships went the length of saying that even correct and authenticated entries in the books of account of one party cannot without independent evidence of their truth fix a liability upon another person. g) In the Third Member case of Amar Jeet Singh Bhashi (HUF) v. ACIT (2003) 263 ITR (AT) 75 (Del), it was held that any noting in the loose sheet is no evidence by itself. There has to be something more. h) In following cases the Tribunal Benches have held that merely on the basis of entries in loose sheets t....
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....ction did not relate to the assessee. l) In CIT v. C.L. Khatri [2006] 282 ITR 9742005/ 147 Taxman 652 (MP), on the basis of loose slip not bearing any date and also not stating as to which period they related, no estimate of household expenses on such loose slip could be made for a particular year. In the absence of any other evidence, the estimate of household expenses in a particular year with reference to income of later year or future year was arbitrary and illogical. The Tribunal was held to be justified in deleting the additions. m) In CIT v. P. V. Kalyanasundaram [2006/282 ITR 259 (Mad.)/155 Taxman 454 (Mad.), the assessee had shown purchase of land for Rs. 4.10 lakhs, which amount was depicted in cash flow statement. A statement was recorded of the seller on the date of search, which revealed that he received Rs. 34.85 lakhs for the sale. Later, the seller filed an affidavit that the amount received was only Rs 4.10 lacs. In a further sworn statement, the seller again stated that he received the amount of Rs. 34.85 lacs. Accordingly, an addition of Rs. 30,75,005/- was made as undisclosed income representing the difference of purchase consideration disclosed by the asses....
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.... substantial question of law arises for consideration. " b. Sheth Akshay Pushpavadan v Dy. CIT [2010] 130 TTJ 42 (ITAT Ahmedabad), wherein the Hon'ble Tribunal has held that, "There is no incriminating evidence available against the assessee on record. In the absence of any reliable or cogent evidence on record, we do not find any jurisdiction to uphold the findings of authorities below. " c. DCIT, New Delhi vs. Sh.Jaswant Singh Chawla (ITA Nos.3285 & 3286/Del/2013) (ITAT Delhi Bench 'D'), dated 20.3.2015. ". . . Ld. CIT(A) has rightly concluded that the attempt of the AO to connect seized paper with assessee has failed and finding given in the assessment order is erroneous on facts and is perverse and whimsical and stands vitiated and any additions based thereon deserves to be deleted In the background of the aforesaid detailed discussions and precedents, we find that, Ld. CIT(Ä) has rightly deleted the additions of Rs. 1,00,00,000/-. Therefore, we do not see any reason to inference with the well reasoned order of the Ld CIT(A), accordingly, we uphold the same and decide the issue against the Revenue by rejecting the ground of appeal filed by the Revenue....
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....ount mentioned therein as unexplained investment made by him. In the absence of cogent evidence on record, the addition could not be sustained. h. In the case of J.R.C. Bhandari v. Ass. CIT[2003/133 Taxman 44 (Jd.), it was observed that in the absence of any iota of evidence on record to fasten the liability on the assessee in respect of receipt of the amounts mentioned in the entry noted on a loose sheet which was found in the possession of a third person whose statement was also not on record, addition in the hands O of the assessee on the basis of said loose sheets was not legally sustainable. 9.10 This view is also supported by the decision in the case of Niranjan Kumar Agarwal [IT Appeal No. 658/C/98/Kol.]. In absence of any cogent evidence or corroboration in support of the entries in loose sheets, no adverse conclusion can be drawn against the assessee on mere guess and pure suspicion. 9.11 Finally, ld. A.R. for the stated that, the Hon'ble Commissioner of Income tax (Appeals), Panaji-2, Goa in ITA No. 131, 132, 133, 134, 130, 135/CIT- 2/PNJ/2018-19, dated 06.9.2019 as well as the Income tax Appellate Tribunal, Bangalore Bench in ITA Nos. 2258 to 2264/Bang/2019, date....
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....d impounded in the form of loose sheets pertaining to three developed projects viz., Micasa, Ventura and Primero of the Assessee Company M/s. Property Infratech Private Limited (in short PIPL) and M/s. Global Star Realtors Private Limited (in short GSRL), wherein Mr.Rajendra Kumar is the Managing Director. Consequent to the survey, search proceedings under Section 132 of the Act were carried out on Mr. M.N. Rajendra Kumar and his group companies, Mr. Rohan Moterio, Managing Director of the Assessee and also survey under Section 133A was conducted on the Assessee Company. 11.1 The materials impounded during survey proceedings under Section 133A of the Act at SCDCC Bank marked as A/S/SCDCC/16-17/1, the AO is of the view that, certain documentary evidences, which reveals that, consideration over and above the agreement value of the above three projects was paid by the assessee company. The details of such total consideration over and above the registered agreement value as per page No. 1- 3 in A/S/SCDCC/16-17/1 is reproduced by the AO at page 3 of 19 of the assessment order. The AO also produced in the assessment order at pages No. 4 of 19 to 16 of 19 in the form of Annexure, such as....
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....ther appeal has been preferred before the ITAT. 11.6 The AR has argued that the AO grossly ignored the audited financials filed through the e-filing portal. The assessee is a Company incorporated under the Companies Act and its books of account were audited under the provisions of Companies Act as well as under the provisions of the Income tax Act. Further, the books of account were prepared in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India and also, the Revenue is recognised based on the said Accounting Standard and uniform accounting policy consistently adopted by the assessee. 11.7 The ld. AR of the assessee argued that AO erred in alleging that additional income over and above the consideration was made in cash by the director of the Assessee, Mr. Rohan to the Mr. Rajendra Kumar, Director of M/S. GSRL, purely on assumptions and presumptions, purely on materials found during the course of survey under Section 133A of the Act conducted at SCDCC Bank on 27.12.2016. The AO erred in alleging that Mr. Rohan has undertaken the responsibility to sell the flats and pay back the proceeds of the sale to Mr. Rajendra Kumar and in this r....
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....ficient evidence to implicate a person since the same is only "corroborative" evidence; SC observes that the judiciary ought to be cautious while ordering investigation against any important constitutional functionary/officers in the absence of "prima facie reliable/legally cognizable material" which are not supported by 'other circumstances'; Holds that "In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or ess house that too not kept in regular books of accounts but on random papers at any given point of time."; As for Sahara raids, SC refers to Settlement Commission order dated November 11, 2016 wherein the Commission recorded a finding that transactions noted in the documents were not genuine and did not attach any evidentiary value to the pen drive, hard disk, computer loose papers, computer printouts; SC concludes" it would not be legally justified, safe, just and proper to direct investigation, keeping in view principles laid down in the cases of Bhajan Lal and V. C. Shukla." 11.12 The assessee also placed reliance on the decis....
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....on, conjectures and surmises and no addition can be made on the basis of such document or loose slips. b) In the case of K.V. Laxmi Savitri Devi Vs. ACIT 60 DTR 148 it was held by the ITAT Hyderabad Bench that "No addition can be made on the basis of a loose paper which does not contain the name and the date of payment. The department is precluded in drawing inferences on the basis of suspicion, conjecture and surmises and no addition can be made on the basis of such dump document or loose sheets. 11.16 On further appeal before the Hon'ble AP High Court, the court vide its order in ITTA No.563 of 2011 upheld the decision of the Tribunal. While upholding the decision of the Hon'ble ITAT, the court held as following: " We are of the view that the Tribunal has rightly held that the registered document dt.21-08-2006 under which the respondent purchased the above property showed that only Rs. 65.00 lakhs was paid to the vendor by the respondent; that there was no evidence to how that the respondent had paid Rs. 1.00 crore in cash also to the vendor; that no presumption of such payment of Rs. 1.00 crore in cash can be drawn on the basis of an entry found in a diary/loose she....
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.... 11.19 It was held by Hon'ble Delhi High court in the case of CIT Vs Sant Lal vide [2020] 118 Taxmann.com 432 that "13. In view of the aforesaid facts and the concurrent findings given by the CIT (A) and ITAT, it is evident that the Revenue has not been able to produce any cogent material which could fasten the liability on the respondent. The CIT(A) has also examined the assessment record and has observed that the AO did not make any further inquiry/investigation on the information passed on by the DCIT, Central Circle-19, New Delhi. No attempt or effort was made to gather or corroborate evidence in this relation. 14. In these facts and circumstances, we are not inclined to entertain the present appeal as no substantial question of law arises for our consideration. Accordingly, the present appeal is dismissed". 11.20 The seized material relied by the ld. AO for framing the assessment, wherein we do not find the name of the present assessee and also without mentioning of any amount or date referring to the PBT. Thus, in our opinion, placing reliance on the seized material for framing assessment u/s 153C of the Act wherein there was no name of PBT found place in the incri....
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.... parties involved herein. In our opinion, admission of the third party could not be enforceable against the other party. Further, the ld. AO pressed the assistance of Mr. R. Sendhil's statements recorded u/s 131 of the Act on 21.09.2017 to support his action without providing an opportunity of examining/cross-examining him, which is mandatory requirement under the Evidence Act. The ld. AO also pressed the service of section 292C of the Act. In our view, the section 292C of the Act only be invoked against such person in whose premises/possession, the said incriminating material was found during the course of search action u/s 132 of the Act. 11.23 The word "such person" used in section 292C of the Act is only referrable to the person in whose premises the things or materials were found in possession or control at the time of search. Admittedly, the assessee before us was not person in whose premises, the things were found in possession or control at the time of search action. Therefore, provisions of section 292C of the Act cannot be invoked to assist the department, which is without any basis and contrary to law. In our opinion, if any document is found in the premises/possess....
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....jandas Talreja, Bangalore two clauses i.e. a and b, where clause b is in the alternative and provides that 'such books of account or documents, seized or requisitioned' could 'pertain' to or contain information that 'relates to' a person other than a person referred to in Section 153A of the Act. * The trigger for the above change was a series of decisions under Section 153C, as it stood prior to the amendment, which categorically held that unless the documents or material seized 'belonged' to the Assessee, the assumption of jurisdiction under Section 153C of the Act qua such Assessee would be impermissible. The legal position in this regard was explained in Pepsi Foods (P.) Ltd. v. Asstt. CIT [2014] 367 ITR 112 (Del)where in para 6 it was held as under: '6. On a plain reading of Section 153C, it is evident that the Assessing Officer of the searched person must be "satisfied" that inter alia any document seized or requisitioned "belongs to" a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (....
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....e Revenue to show that the documents either 'pertain' to the Assessee or contains information that 'relates to' the Assessee. * In the present case, the Revenue is seeking to rely on three documents to justify the assumption of jurisdiction under Section 153 C of the Act against the Assessee. Two of them, viz., the licence issued to the Assessee by the DTCP and the letter issued by the DTCP permitting it to transfer such licence, have no relevance for the purposes of determining escapement of income of the Assessee for the AYs in question. Consequently, even if those two documents can be said to 'belong' to the Assessee they are not documents on the basis of which jurisdiction can be assumed by the AO under Section 153C of the Act. * As far as the third document, being Annexure A to the statement of Mr. D. N. Taneja, is concerned that was not a document that 'belonged' to the Assessee. Admittedly, this was a statement made by Mr. Taneja during the course of the search and survey proceedings. While it contained information that 'related' to the Assessee, by no stretch of imagination could it be said to a document that 'belonged' ....
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....see had not objected to the jurisdiction under Section 153C of the Act before the AO. Therefore, in the first instance, it needs to be determined as to whether ITAT was right in permitting the assessee to raise this ground for the first time before it, as an additional ground. * The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co- relation, document wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled ....
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....ijaya Kumar ITA No.930 & 931 of 2009 (Hyd). * CIT Vs R. Nalini Devi ITTA 232 of 2013 (A. P) * CIT Vs P. V Kalyana Sundaran (2007) 294 ITR 49 * Venkata Rama Sai Developers Vs DCIT ITA 453/Vizag/2012. * P. Venkateshwar Rao Vs DCIT ITA 25/825/Vizag/2012. 11.29 Further, Hon'ble Supreme Court in the case of Common Cause (A registered Society) Vs. Union of India in Writ Petition (Civil) No.505 of 2015 dated 2.7.2018 [2017] 394 ITR 220 (SC) wherein it observed that "the entries in the loose papers/sheets are not "books of accounts" and has no evidentiary value u/s 34 of the Indian Evidence Act. The Hon'ble Supreme Court dismissing the writ petition filed by Common Cause, a registered society, refused to give nod to investigate against the Sahara and Birla Groups in the alleged payoff scandal. The factual setting of the case are that, a search was conducted by the CBI in the premises of Birla Groups, as a result of which, certain incriminating materials and an amount of Rs. 25 crores were recovered. CBI referred the matter to Income Tax Department. In another search, the IT department recovered certain incriminating materials and unaccounted money of Rs. 135 crores from Sa....
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....ps. This ground of appeal of the assessee is allowed. 12. For assessment year 2014-15, there is one more addition of Rs. 36 lakhs towards interest on advances receivable from Om Sai Riddhi Siddhi Developers (OSRSD) on advance of Rs. 5,88,85,000/-. During the course of assessment proceedings, Mr. M.N. Rajendra Kumar and in the case of assessment of OSRSD case, a firm in which Shri M.N. Rajendra Kumar is a partner, it was observed that an amount of advance of Rs. 3.15 Crores was credited to the capital account of Shri M.N. Rajendra Kumar in the books of accounts of OSRSD and not reflected in the balance sheet of M/s OSRSD. Since the amount of Rs. 3.15 Crores was made from the OD account of the company, the interest on OD account was disallowed at 7% working out at Rs. 36 lakhs. 13. The contention of the ld. A.R. is that this amount has been advanced in ordinary course of business to promote the business interest of the assessee and there cannot be any disallowance on this count. 14. We have heard the rival submissions and perused the materials available on record. This investment has been made due to commercial expediency as it was a sister concern of the assessee. Further, this i....