TaxTMI 
TaxTMI 
2025 (6) TMI 1217
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....36/Del/2021for AY 2016-17:- "1. On facts and circumstances of the case and in law. the Ld. CITAL erred in deleting the addition made by AO to the tune of Rs. 35,82,559/- on account of "On Money" as the assessee has given huge amount of discount on sale of two flats and now the assessee has denied stating that these flats does not pertains to him. The order of Ld. CIT (A) is not acceptable as the addition was made on the basis of document seized from the premise of the assessee and the assessee could not offer any explanation during the course of assessment proceedings. The assessee has taken plea before Ld. CIT(A) that one of property belong to M/s. Pary Developers (P) Ltd. and stated that the assessee company has sold the development right to M/s Pary Developers (P) Ltd. However, no such agreement was submitted by the assessee company and moreover the addition was made on the basis of document which was found from the premise of the assessee. 2. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by AO to the tune of Rs. 3,00,000/- on account of "on Money as the same was received by the assessee in cash and the sa....
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....Hard-Disk, the AO extracted the allotment letters relating to Villa No.C-12, measuring 1740 sq.ft. and flat measuring 4350 sq.fit. in Solitarian City booked by Shri Ajay Gupta. He submitted that the AO has reproduced the allotment letter in the assessment order itself and he brought to our notice findings of the AO that assessee has given discount @ 14.84% on both the properties and the discount allowed to the extent of Rs. 35,82,559/-. He submitted that the same cannot be verified/examined and reconciled from the books of account submitted by the assessee. The AO came to the conclusion that total discount offered by the assessee is nothing but on-money generated by the assessee by taking cash. Accordingly, AO proceeded to make the addition. 6. Aggrieved assessee preferred an appeal before the ld. CIT (A) and ld. DR brought to our notice detailed submissions submitted by the assessee before the ld. CIT(A). After considering the detailed submissions, he submitted that ld. CIT (A) deleted the addition made by the AO with the observation that AO made the addition on the basis of presumption and there is no evidence in support of such contention and further, he gave the benefit to t....
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.... property by freezing the net price of Rs. 81.50 lakhs. With regard to other property S-1-001, the AO also treated the discount offered by the assessee as on-money. However, it is brought to our notice that the said property was sold by Pary Developers (P) Limited and its transaction is not related to the assessee. Coming to the discounts offered to the assessee in Villa No.C-12, we also observed that it is a contract between the buyer and the allottee, the price agreed between them are final price and how the final price is arrived is part of the contract and there is no material brought on record by the AO to show that the assessee has in fact received the discount money as on-money. Therefore, we are inclined to agree with the findings of the ld. CIT (A). Accordingly, ground no.1 raised by the Revenue is dismissed. 9. With regard to Ground No.2, the relevant facts brought on record by the ld. DR of the Revenue from the assessment order, during the course of search, hard-disk was found and seized. From the hard-disk, a sheet was extracted which is reproduced by the AO at page 6 of the assessment order and the AO observed that assessee has received cash payment of Rs. 3 lakhs a....
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....unt and also paid applicable service-tax on the abovesaid amount. Since the above transaction is not related to the assessee, therefore, we do not see any reason to disturb the findings of the ld. CIT(A). Accordingly, Ground No.2 raised by the Revenue is dismissed. 13. With regard to Ground No.3 raised by the Revenue, ld. DR of the Revenue brought to our notice relevant facts from the assessment order, during the search proceedings at the office premises of the assessee, some loose papers were found and the relevant annexures were reproduced at pages 7 to 10 of the assessment order. Ld. DR brought to our notice findings of the AO that the above pages indicate that a single vehicle delivers so much of quantity at the same time. The AO discussed the discrepancies in the assessment order that Sl.No.840 and 841 in page 2 dated 01.10,2015 and it was shown to have delivered 780 bags and 620 bags of cement from the same vehicle. The AO observed that it is not practically possible for vehicle to load such quantity and same bags and deliver at the same time. Ld. DR submitted that the AO has rejected the explanation of the assessee that the items of two different challans and invoices wer....
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....e rival submissions and material placed on record. After considering the assessment order and findings of the ld. CIT (A), we observed that the AO has considered the transportation details of cement bags in the purchase ledger and found that such huge quantities cannot be delivered on the same vehicle and he treated all the purchases relating to the assessee as bogus. Whereas it is brought to our notice that all the purchases were belonged to the sub-contractors, namely, Jyoti Buildtech Private Limited and none of the purchases were recorded by the assessee as their own purchases. It is also brought to our notice that all these invoices were routed through excise office and transport receipts were supported by delivery of such quantities in the place of sub-contractors. Since these purchases are not recorded in the books of account of the assessee, the allegation of bogus transaction is not proved. It is only a suspicion and presumption of the Assessing Officer. Accordingly, ground no.3 raised by the Revenue is dismissed. 17. With regard to Ground No.4, ld. DR of the Revenue brought to our notice relevant facts from the assessment order, during assessment proceedings, the AO obs....
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....d that these parties have submitted confirmations and also assessee has paid the interest expenditures and claimed the same as business expenditures even the AO allowed the same. With regard to above, ld. DR objected to the deletion of abovesaid unsecured loans and submitted that he relied on the findings of the AO who has given several opportunities to the assessee during assessment proceedings and assessee has not submitted any cogent material before the AO. 19. On the other hand, ld. AR of the assessee submitted as under :- "Findings of Ld. CIT(A) are on page 21 of the appellate order and are relied upon. Reliance is also placed on statement of facts, grounds of appeal and written submissions reproduced at pages 4, 6 & 17-19 of the appellate order. It is respectfully submitted that the identity of the lenders was proved beyond doubt, the amount having been received through online fund transfer from the same company into the regular bank account of the appellant and was classified as a loan in its audited financial statements and almost 50% of the loans had also been duly repaid in the succeeding year itself. That none of the submissions of the appellant were....
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....sed by the Revenue, ld. DR of the Revenue brought to our notice relevant facts from the assessment order, during assessment proceedings, AO observed that assessee has claimed expenses under the head 'other expenses' and 'administrative expenses' to the extent of Rs. 4,32,29,427/-. Vide questionnaire dated 28.09.2018, assessee was asked to furnish the details of expenses debited to the Profit & Loss Account having value of more than Rs. 10 lakhs. The AO observed that assessee has not submitted any details regarding the abovesaid expenditure and he observed from the expenses claimed by the assessee that there are interest expenditure as penalty and late filing of service tax were claimed by the assessee which are in the nature of penal interest. Therefore, he disallowed to the extent of Rs. 26,62,735/- claimed by the assessee as penal charges and also proceeded to disallow 10% of the remaining expenditure to the tune of Rs. 40,66,669/- and he proceeded to disallow the same to the extent of Rs. 67,29,404/-. 22. Ld. DR of the Revenue also brought to our notice findings of the ld. CIT(A) at page 23 of the appellate order wherein ld. CIT (A) has deleted the penalty charges with the ob....
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.... details and further this is an assessment concluded u/s 153 of the Act and no disallowance can be made without there being any incriminating material found during search. Therefore, we do not see any reason to disturb the finding of the ld. CIT (A) and accordingly, ground no.5 raised by the Revenue is dismissed. 25. Ground No.6 is general in nature and does not require any adjudication. 26. In the result, the appeal filed by the Revenue for AY 2016-17 is dismissed. 27. Now we take up Revenue's appeal for AY 2017-18 where Revenue has raised the following grounds of appeal :- "1. On facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition made by AO to the tune of Rs. 4,15,01,981/- found during the course of search proceedings and he assessee has failed to offer any explanation neither at the time of search proceedings nor at the time of assessment proceedings. 2. On facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition made by AO to the tune of Rs. 25,25,000/-as the addition was made on the basis of the document and from the perusal of the document, it was clear that the assess....
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....and deposited in the bank on 15.11.2016. The AO observed that the company has not produced any persons to whom abovesaid cash have been given. Further the assessee no doubt agreed that this cash were not lying at the office premises. However, the same was with the other office staff for day-to-day expenses like for payment of drivers, supervisors, field man and engineers at site incharge. After considering the reply of the assessee, the AO found that the abovesaid explanation is not acceptable. Accordingly, he proceeded to make the abovesaid cash as shortage of cash u/s 68 of the Act. 30. Further ld. DR brought to our notice findings of the ld. CIT (A) at page 14 and 15 of the appellate order and ld. CIT (A) deleted the same by observing as under :- "The Assessment order passed by the AO, the Written Submissions filed by the appellant, the remand report sent by the A.O and the Rejoinder of the appellant have been considered. The AO has made this addition on the basis that no cash was found at the office premises during the course of search and as the cash in hand as per the books of accounts was Rs. 41501981/- the same be added in the Income of the appellant under secti....
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....indings of Ld. CIT(A) are on pages 14-15 of the appellate order and are relied upon. Reliance is also placed on statement of facts, grounds of appeal and written submissions reproduced at pages 2-3, 8 & 12-13 of the appellate order. It is respectfully submitted that during the course of the assessment proceedings it was explained that the appellant's business activity requires its staff to maintain some cash balance at each of the sites for making payments to labourers and other expenses relating to construction that have to be paid immediately and therefore the cash balance as per the books of account also included the cash which was with the staff at the sites, at the relevant point of time. That subsequently, upon announcement of demonetization of currency notes of Rs. 1000/-and Rs. 500/- w.e.f. the midnight of 08.11.2016, the appellant collected back all the cash from the various staff/sites and deposited a sum of Rs. 4 crores, being the demonetized currency out of the total cash balance, in its regular bank account. Therefore, the explanation offered by the appellant was fully supported by the fact that cash was deposited within 1 week from the date of the Search ....
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....assessee has not explained satisfactorily nor produced any documentary evidences. In absence of any explanation or details submitted by the assessee, the AO proceeded to make the addition u/s 69 of the Act to the extent of Rs. 2,59,88,537/-. 37. Ld. DR of the Revenue brought to our notice page 33 of the appellate order and he objected to the relief granted to the assessee to the extent of Rs. 75,45,059/- with the observation that these books were related to Pary Developers Pvt. Ltd. He submitted that these documents were found at the premises of the assessee, therefore, addition should have been sustained in the hands of the assessee. With regard to sustenance of part addition of Rs. 1,84,73,478/-, he relied on the findings of the lower authorities. 38. On the other hand, ld. AR of the assessee submitted with regard to sustenance of part addition and deletion of addition as under :- "Ground No. 3 of the Departmental appeal & Ground Nos. 9-13 of the assessee's appeal: These grounds relate to the total addition of Rs. 2,59,88,537/- u/s 69A the on the basis of loose papers found during search. Ld. CIT(A) has rightly deleted the amount of Rs. 75,45,059/- for which depart....
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.... the appellant's income. Further, the Affidavit from M/s Investor Clinic is also submitted during appellate proceedings. In view of this the ground of appeal of revenue may please be dismissed and the grounds of appeal raised by assessee may please be allowed and may please be so held." 39. Considered the rival submissions and material placed on record. We observed from the records submitted before us that to the extent of Rs. 75,45,059/-, the information contained in the chart clearly indicate that these transactions are relating to Pary Developers Pvt. Ltd.. Therefore, these transactions are not related to the assessee even though it is found during search at the possession of the assessee. It is being the information relating to other related party, the addition cannot be made in the hands of the assessee. In our view, ld. CIT (A) has rightly deleted the addition to the tune of Rs. 75,45,059/-. Accordingly, ground no.3 raised by the Revenue is dismissed. 40. With regard to sustenance of addition as contested by the assessee in Grounds No.9 to 13 of the assessee's appeal, we observed that certain loose papers were found during the search containing the details ....
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.... from the customers. During the course of search operation u/s 132, various document/material other than above scanned sheet was also found and seized and on the basis of these document/material, it is established that the assessee company has taken cash money in the form of on-money He further brought to our notice that during the course of assessment proceedings, the assessee company was required to explain the contents of the above scanned sheets and was also required to provide the list of customers to whom total flats in Solitarian City were sold including Villas along with complete name & addresses & PAN No. vide various notices u/s 142(1). In response to this, the counsel of the assessee offered no comments, therefore, AO observed that it is obvious that the assessee has nothing to submit in this regard. He brought to our notice that that there are total 1520 flats in Solitarian Realinfra and out of that, total of 507 flats measuring 5,50,812 Sq ft area were sold and total BSP for these 507 Flats are Rs. 166,18,33,008/- and other charges are Rs. 37,35,35,030/-. He brought to our notice that on the basis of other document/material, if it is considered that 21% cash is being t....
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....with the written submissions and is found to be in order and copy of each party's account showing the amount as per the extracted details being amount received forms part of their ledger accounts, filed in the paper book and thus forms part of the sales recorded in the regular books of accounts. Ld. CIT (A) observed that since these receipts are found to be forming part of the regular books of account, which were also impounded in the course of search and seizure operation at the appellant group's premises, and were thus in the possession of the AO even in the course of the assessment proceedings, these cannot be treated as 'on-money' as alleged by the AO. Ld. CIT (A) further observed that the AO has used this extracted data to extrapolate and work out estimated addition in the form of "on money on the total flats sold by the appellant, however since the impounded material itself was neither properly examined nor properly construed by the AO, the same cannot form a basis of such an estimated addition. Ld. DR further brought to our notice that ld. CIT (A) concluded and held that thus as is evident from the page extracted from the Hard-disk, no amount of cash or on-money ....
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....axes in respect of the same. That in respect of amounts received in cash as well, the same was also part of the regular books of account and was fully verifiable from the regular books of account of the appellant which were also available with the Ld. AO. In view of this, the addition made by the assessing officer is without any basis, material or evidence and merely on surmises and conjectures and therefore, this ground of appeal of revenue may please be dismissed and may please be so held." 44. Considered the rival submissions and material placed on record. We observed that during search proceedings, a hard-disk was found and seized as per the spread sheet found which was reproduced in the assessment order. From the above spread sheet, the Assessing Officer observed that assessee has received cash from the customers and, therefore, he came to the conclusion that it is in the form of on-money. In the above spread sheet, the assessee has received cash from 34 cases. Therefore, he was of the opinion that assessee is habitually collecting cash to the extent of 21% of the total price. Accordingly, he calculated the cash portion collected by the assessee from the total of t....
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....ent order. During the assessment proceedings, the assessee was asked to explain whether the assessee and its Directors are holding any substantial interest in those companies from whom assessee has received unsecured loans and to explain whether provisions of section 2(22)(e) of the Act should be applied or not. However, in written submissions, vide letter dated 14.12.2018, it was submitted that provisions of section 2(22)(e) of the Act should not be applied in the case of the assessee. In absence of any explanation offered by the assessee and not satisfied with the submissions of the assessee, the AO treated the same as deemed dividend u/s 2(22)(e) of the Act. 47. Ld. DR of the Revenue brought to our notice findings of the ld. CIT (A)that assessee has filed detailed submissions and relevant papers before the ld. CIT (A) and ld. CIT (A) remanded the matter back to the AO and the AO submitted the remand report which is reproduced at page 45 of the appellate order where it is clearly brought to record by the AO that provisions of section 2(22)(e) are rightly invoked in the case of the assessee. After considering the remand report submitted by the AO, ld. CIT (A) gave relief to the....
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....ee during the year under consideration. However, there is no information available on record with regard to actual shareholding of the assessee with the abovesaid group concerns. It is fact on record to the extent of reserves held by these companies to the extent those companies lent unsecured loans to the shareholders attracts the provisions of section 2(22)(e) of the Act. The unsecured loans received by the assessee from the group companies who had reserves, to the extent of such reserves are considered as deemed dividend. We observed that ld. CIT (A) has held that provisions of section2(22)(e) to the extent of reserves held by these companies and we observed that HP Agro Developers Pvt. Ltd. and Jyoti Aquatech Pvt. Ltd. held reserves to the extent of Rs. 1.61 crores and Sahni Aquatech Pvt. Ltd. has zero reserves. Therefore, to the extent of distributable profit, the ld. CIT (A) has sustained unserved loan as the deemed dividend. Therefore, we do not see any reason to disturb the same. Accordingly, the Ground No.6 raised by the Revenue as well as Ground Nos.14 to 17 raised by the assessee are dismissed. 51. With regard to Ground No.7, since the facts are exactly similar to Gro....
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.... 6. That the Ld. CIT(A)-IV, Kanpur erred in law as well as on facts in rejecting the appellant's appeal as regards the addition of Rs. 25,00,000.00 made by the L.D A.O on the basis of a loose paper wherein some calculations pertaining to Villa B-06 were made and amounts in the nature of rough noting were written, without considering the fact that the document is a rough estimate and a dump document. 7. That the Ld.CIT(A)-IV, Kanpur erred in law as well as on facts in rejecting the appellant's appeal as regards the addition of Rs. 25,00,000.00 without considering the fact that the "Villa/Property" referred to in the alleged document was never sold by the appellant. 8. That the Ld. CIT(A) -IV, Kanpur erred in law as well as on facts in rejecting the appellant's appeal as regards the addition of Rs. 25,00,000.00 without considering the fact that the amounts mentioned in the alleged document as received in "white" were not received by the appellant and therefore the amounts mentioned to be received in Black" cannot be pre-assumed to be received by the appellant. 9. That the Ld.CIT(A)-IV, Kanpur erred in law as well as on facts in holding ....
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....ated Concern, due to business needs and no benefit had been passed on to any of the shareholders from this amount. 17. That the Ld. CIT(A)-IV, Kanpur erred in law as well as on facts in upholding an addition of Rs. 1,60,54,894.00 out of an addition of Rs. 6,21,30,000.00 in the hands of the appellant company even though the addition if any under section 2(22) (e) of the Act could have been made only upon the Substantial Shareholders. The advance has been made to the company and the addition if any sustainable could only be made in the hands of the Shareholders and the appellant company does not hold any shares in the lending company. The addition thus made is bad in law. 18. That the order appealed against is contrary to the facts, law, principles of natural justice and equity." 55. Ground Nos.1 & 2 are general in nature, hence do not require any adjudication. 56. With regard to Ground Nos.3 to 5, ld. AR of the assessee brought to our notice page 1 of the assessment order wherein a loose paper was reproduced by the AO which was found during the search proceedings. The basis of addition was that the Flat No.S3-1703 sold at the cost of Rs. 45,60,000/- and the k....
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....he A.O and the Rejoinder of the appellant have been considered. The AO has made an addition on the basis of a loose paper which was found and seized during the course of search from premise A-56, Sector 136, Noida. The paper has been scanned in the assessment order. From the paper it is evident that in this calculations relating to Villa-B-06 were written. Though in this loose paper date is not written but it belongs to the person from whose premise it is found as per the presumption of section 132(4A) and section 292C of IT Act and it was duty of the person from whose premise it was recovered, to explain the period. Further the LP also does not mention any amount received or paid but in both the cases, in case of unaccounted receipt, as well as unaccounted payment, the amount written in 'black', needs to be taxed in the hands of the assessee. The paper mentions Rs. 25,00,000/- as 'black'. The AR of the assessee has contended that in this page brokerage amount is written as Rs. 12,51,675/-, which by no means can be in respect of property for which the consideration shown by the AO is Rs. 53,63,713/-. But it is possible that the black and white amounts are just ....