TaxTMI 
TaxTMI 
2024 (9) TMI 1782
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....as received cash over and above the value as per the sale deed? 2) Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 43,15, 000/- made by the assessing officer u/s 69C of the I T Act on account of brokerage/commission paid in cash to the brokers on sale of flats, without considering the facts and circumstances of the case that there was sufficient incriminating material in the form of loose papers, excel sheet entries, whatsapp chats and statements recorded during the search and post search proceeding to establish that the assessee has paid brokerage/ commission in cash? 3) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by the assessing officer u/s 69A of the Act on account of alleged on money received on sale of flats & u/s 69C of the IT Act on account of brokerage/commission paid in cash to the brokers on sale of flats, without considering his/her own findings in the same order whereby the contention of the assessee in challenging the authenticity and credibility of incriminating material in the form of loose papers, ....
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....eement, therefore, the AO has calculated the on money as under: 1 2 3 4 5 6 7 8 9 Sl. No Agreement data Brok % Brokerage Amt. Name Flat No Project Name Sales agreement On money (2-8) 1 21400000 5% 1070000 Narayan Rajput A-1201 Ekjyot Sanman 14400000 7000000 2 20000000 5% 1000000 Sharvan Agarwal A-1101 Ekjyot Sanman 13100000 6900000 3 21900000 5% 1095000 Sanjeev Agarwal A-1001 Ekjyot Sanman 13100000 8800000 4 23000000 5% 1150000 Mr. Patronis A-801 Ekjyot Sanman 13100000 9900000 Total 86300000 4315000 5. The assessee in its reply in respect of amount received of Rs. 10,00,000/- from Tina Agarwal, explained that Mrs Tina Agarwal and Shri Sharvan Agarwal have purchased flats for Rs. 1,31,00,000/- vide sale agreement dated 12.10.2018. In respect of allegations of the assessing officer of on money of Rs. 10,00,000/- as mentioned in the seized paper, the assessee explained that it had never received cash and that said Rs. 10,00,000/- in fa....
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.... the amount mentioned in the agreement. Therefore, the assessing officer has treated the amount of Rs. 65,00,000/- out of Rs. 70,00,000/- as unexplained money u/s 69 of the Act for the year under consideration after reducing Rs. 5,00,000/- which was already added to the total income of the assessee in A.Y. 2017-18. In respect of allegation that Smita U Parekh has paid Rs. 25,00,000/-, reflected in loose papers the assessee explained that on 05.11.2018, Smita U Parekh along with Shri Upendra N Parikh has purchased the Flat No. 401 in their project. The copy of the sale agreement was also submitted. The assessee also submitted that sum of Rs. 25,00,000/- was received from Smita U parekh through banking channel in current account with IDBI Bank. However, the AO has not agreed with the submission of the assessee stating that assessee failed to give satisfactory explanation therefore, the amount of Rs. 25,00,000/- was considered as unexplained money u/s 69A of the Act. Similarly, in the case of Chetan Mohanlal Barola Jain and Barkha Chetan Jain on the basis of rate of brokerage mentioned in the loose paper the assessing officer calculated Rs. 2....
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....zed and they have not paid any brokerage to him for sale of above flat. It is further explained that in fact neither Flat No. 1001 nor any other flat was sold to Mr. Sanjeev Agarwal as mentioned in the referred sheet. Similarly, neither Flat No. 801 nor any other flat was sold to Mr. Patronis as mentioned in page no. 39 of the loose paper. The assessee categorically stated that neither any brokerage of Rs. 43,15,000/- towards sale of flat as mentioned in page no. 39 of loose paper has been given nor the same has been accounted in the books of account. The AO has not agreed with the submission of the assessee. The AO has referred the FIR filed by Vicky Wadhavani that assessee has transferred one office and one shop to Mr. Wadhavani against the total amount which included amount due for commission/brokerage -. However, during the course of assessment, a notice u/s 133(6) of the Act has been issued to M/s. Sai Estate Consultant and in response to the same, M/s. Sai Estate Consultant stated that their company has neither accrued/received any commission income from M/s. Ekjyot Properties in F.Y. 2013-14 to F.Y. 2019-20 nor raised any invoice towards such commission to be ....
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.... make a note or an inventory, etc. In fact section 132(1) specifically provides that "(iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of subsection (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorized officer the necessary facility to inspect such books of account or other documents". Besides S. 132(4) categorically states that they can be used in evidence in any proceeding under the Income Tax Act. Further, S. 132(4A) states that there is a presumption that such contents are true and they belong to such person. Apart from the above, S. 292C of the Act also categorically speaks of presumption as regards the material found in the possession or control of any person in the course of a search. 4.12. Thus, there are material differences vis-a-vis a commercial agreement where evidence has to be proved by the claimant unlike in a search action where the assessee has to rebut the presumption. There is no claim of the appellant that the WhatsApp Chats were not found in the phone or that such chats have been ....
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....ckground, the specific safeguards of presumptions laid down in the provisions of the Income Tax Act in favour of the department cannot be ignored. In every search and seizure action, the seizure is made in the presence of independent witnesses and a detailed panchnama including how the electronic evidences were handled / seized is given to the search person. The appellant had conveniently omitted to refer to them. Thus, I have no doubt in my mind that WhatsApp chats and other electronic evidences, loose papers etc seized during the search proceedings have ample evidentiary value to the extent they are corroborative in nature. The decisions relied upon by the appellant cannot be imported into the Income Tax proceedings mechanically, in view of the specific presumptions available in S. 132 and S. 292C. Such evidences cannot be rejected outright without examining the specific strength of such evidences. This part of the argument of the appeal stands rejected. 4.18. I am not able to accept this argument of the appellant to reject the evidentiary value of the whatsapp chats / electronic evidences / contents found therein etc. Nevertheless, in respect of the addition, the merit ....
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....essment order, it is evident that adequate opportunity was indeed granted. The hearings have been held over a staggered period of time, which is visible from the "dates of hearings". The appellant indeed was aware as to what was happening. Thus, this argument of the appellant is also not accepted and is rejected." B.15. As regards the opportunity of hearing, it is seen that multiple opportunities have been given by the AO as mentioned in the assessment order (for the year under reference). No fault can be found with the action of the AO. B.16. Coming to the merits of the case, the first issue is in respect of on money for 5 flats aggregating to Rs. 2.93 Crores. According to the AO, the appellant is in receipt of on-money in respect of 5 flats aggregating Rs. 2,93,00,000/-. According to the appellant, the sheet referred to by the AO is not cash dealing for sale of flats but an exercise undertaken with a view to find out the cash flow for payments. B.17.1. As regards on-money receipt of Rs. 54 lakhs from Tina Agarwal and Sharvan Agarwal, a similar issue came up in AY 2017-18 where the same was discussed as follows: "4.22.2. As regard....
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....s received through banking channel on 01.09. The appellant's alternative plea is that (if at all), it was a receipt of AY 2017- 18. B.17.4. As regards on-money receipt of Rs. 50 lakhs from Chetan Mohanlal Barola Jain and Barkha Chetan Jain, the said flat 1101 was reflected in the seized paper as sold to Shravan Agarwal for Rs. 2.00 crores whereas it is actually sold Chetan Mohanlal Barola Jain and Barkha Chetan Jain for Rs. 1.50 crores. B.17.5. As regards on-money receipt of Rs. 99 lakhs from Mr Patronis, it is the contention of the appellant that the flat no. 801 is actually sold to Manish Laxmilal Jain & Dipika Manish Jain for Rs. 1.80 crores and not to Mr. Patronis. It was also pointed out that unsecured loans had been taken from Mr Patronis for which interest was paid @15% p.a. B.18. It is seen from the assessment order in para 6.1. that the AO has referred to the statement of Sh. Dheeraj Pradeep Vohra, recorded on 09.11.2019. He has referred to Ques. No. 20 as regards loose paper content and Ques. No. 11 as regards acceptance of cash payment for sale consideration of flat. In fact the Ques. No. 11 reproduced by....
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....g dealt in cash. B.22. As regards FIR filed by Shri Vicky Bhagwan Wadhwani, the appellant has pointed out that during the course of assessment proceedings for AY 2019-20, a detailed reply has been given to the AO vide appellant's letter dated 27.03.2023. The appellant has given a detailed sequence of events of pending litigation with Shri. Amit Bhagwan Wadhwani & his group (Shri Amit Bhagwan Wadhwani and Shri Vicky Bhagwan Bhagwani are directors of Sai Estate Consultants Chembur P Ltd). The appellant has brought out details of litigation under Negotiable Instruments Act for the dishonoured cheques given by Wadhwani for purchase of flat, recovery suits before Hon'ble Bombay HC etc. It is also noted that M/s. Sai Estate Consultants has denied in response to notice u/s. 133(6) that they have accrued / received any commission income. The appellant has also stated that sales of flats has been cancelled after due notice in public domain. The appellant has contended that the actual commission paid was @0.75% on Sale Value of the Flat to broker Mr. Ramesh Soni who marketed "Ek Jyot Sanman" project. The appellant also contended that 5% commission is much on the higher side and vind....
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....okerage payment rate mentioned in the loose paper as discussed supra in this order. A part of said loose paper, the assessing officer has not brought any relevant material on record to substantiate that assessee has actually received on money as worked out by the assessing officer. Even the assessing officer has failed to controvert the submission of the assessee supported with relevant document as discussed in this order that the said receipt of Rs. 10,00,000/- from Tina Agarwal Rs. 15,50,000/- from Narayan Chand Rajput and Rs. 25,00,000/- from Smita U Parekh were in fact actually received by the assessee through banking channel in its current accounts maintained with IDBI Bank as against the observation of the assessing officer that the same was received in cash. The assessee has also furnished the actual copy of sale agreement and corresponding stamp duty value of the flat showing that assessee has sold all the flats more than the stamp duty value. We have also considered the relevant submission of the assessee which is reproduced as under: "B.12. Appellant's submissions: The appellant's submissions have been reproduced in toto while discussing AY 2017-18....
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.... showing the probable Sale Value & the probable brokerage payable to him. Page No. 39 is the nothing but the said chart of probable sale value & probable brokerage amounts payable to Mr. Amit Wadhwani when the deal about sale of flats by him are materialized. Facts regarding Loose Paper No. 40 & 41 (based on which addition of Rs. 50,00,000/- made in the Assessment Year 2017-18) * The impugned statement contained in Page Nos. 40 & 41 was prepared for management information purpose. * Mr. Dheeraj Pradeep Vohra was trying to reconcile the Bank Balance as on 15.09.2016 with amounts received from customers during the period from the last week of August, 2016 to 15.09.2016. This exercise was undertaken with a view to find out cash flow for the payments to be made for various purposes. * The amounts & the names reflected in the statement against particular dates coincides with the amounts reflected in the bank statements already filed with the Assessing Officer. ....... 14.3.2. Spectrum of Your Appellant : a. It was absolutely incorrect on the part of the Assessing Officer to observe that Your Appellant fai....
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.... This exercise was undertaken with a view to find out cash flow for the payments to be made for various purposes. * These Loose Papers do not have any title nor do they in any way suggest that there were cash dealings between the parties. * The amounts & the names reflected in the statement against particular dates coincide with the amounts reflected in the bank statements already filed with the Assessing Officer. d. As regards Assessing officer's observation in Point 14.3.1(e) above, it is very surprising to note that the Assessing Officer has cast the onus upon Your Appellant to establish that Your Appellant did not receive any money in cash. The plethora of Judgment discussed hereinbelow in para 11.5, it has been unequivocally held that it is the onus of the revenue to prove the fact that the Assessee was in receipt of Cash Consideration. It is also pertinent to note that during the course of Search no Cash, Any Money, Bullion, Jewellery or Other Valuable Articles were found. ..... 14.3.3.1. As regards addition of alleged cash receipt of Rs. 54,00,000/- from Mrs. Tina Agarwal & Shravan Agarwal d. Your Appellant's rebuttal * ....
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....Account of Mrs. Tina Agarwal for receipt of Sale Consideration towards Sale of Flat 09 3 Copy of Bank Statement Highlighting the Receipts of Consideration towards sale of Flat 10 14.3.3.2. As regards addition of alleged cash receipt of Rs. 65,00,000/- from Mr. Narayan Chand Rajput & Manmati Narayan Rajput d. Your Appellant's rebuttal During the course of Assessment Proceedings Your Appellant has submitted that they have sold Flat No. 1201 on 05.11.2018 to Mr. Narayan Chand Rajput & Mrs. Manmati Chand Rajput for a Consideration of Rs. 1,44,00,000/- in their Project "Ek Jyot Sanman". To prove this fact, they have submitted following documents before the learned Assessing Officer. 1. Copy of Sale Agreement 2. Copy of Ledger Account 3. Copy of Bank Statement highlighting the receipts * Unfortunately, while making the addition on the ground that Your Appellant has allegedly received cash from Mrs. Manmati Chand Rajput & Mr. Narayan Chand Rajput, the Assessing officer conveniently ignored the basic principles of Law of Evidence. For making addition U/s 69A of the Act it was his onus to prove that Your Appell....
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....lat No. 401 in Your Appellant Project. * Unfortunately, while making the addition on the ground that Your Appellant has allegedly received cash from Mrs. Smita U Parikh, the Assessing officer conveniently ignored the basic principles of Law of Evidence. For making addition U/s 69A of the Act it was his onus to prove that Your Appellant did receive cash of Rs. 25,00,000/- from Mrs. Smita U Parikh. * The Assessing Officer did not make any enquiry with Mrs. Smita U Parikh as to the fact that whether she has paid any cash to Your Appellant during the Financial Year 2018-19. * The Assessing Officer simply shifted the Onus to Your Appellant to prove that Your Appellant did not receive any cash from Mrs. Smita U Parikh. * Your Appellant specifically requested Assessing Officer to issue summons to all the parties from whom the Appellant allegedly received cash during the Financial Year 2018-19. * Unfortunately, the Assessing Officer while making this addition, did not make any enquiry & did not bring any cogent & corroborative evidence on record to prove the fact that Your Appellant has received cash of Rs. 25,00,000/- from Mrs. S....
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....g Officer did not make any enquiry with Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain to the fact that whether they paid any cash to Your Appellant during the Financial Year 2018-19. The Assessing Officer simply shifted the Onus to Your Appellant to prove that Your Appellant did not receive any cash from Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain. * Your Appellant specifically requested Assessing Officer to issue summons to all the parties from whom the Appellant allegedly received cash during the Financial Year 2018-19. * Unfortunately, the Assessing Officer while making this addition, did not make any enquiry & did not bring any cogent & corroborative evidence on record to prove the fact that Your Appellant has received cash of Rs. 50,00,000/- from Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain. * Now, Your Appellant is enclosing herewith following documents submitted before Assessing Officer in the Course of Assessment Proceedings: Sr No Particulars Annexure 1 Copy of Index Il for sale of Flat No 1101 Mr. Chetan Mohanlal Barola Jain and Barkha Chetan Jain. 17 ..... 14.3.3.5. As regar....
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.... on record to prove the fact that Your Appellant has received cash of Rs. 99,00,000/- from M/s. Patronis. * Now, Your Appellant is enclosing herewith following documents submitted before Assessing Officer in the Course of Assessment Proceedings: Sr No Particulars Annexure 1 Copy of Ledger Confirmation from M/s Patronis 19 ..... 15.1. Ground No. 3 15.2. Summarized Facts as regards this Ground * There was a search conducted in case of "M/s RPS Infra Project & others group", during Search and Seizure action u/s 132 of the Act in the case of Shri.Tarun Vohra certain loose papers were found from Your Appellant's Office at Mumbai. One of the Loose Paper namely Page No. 39 consist of probable brokerage working payable to one of the brokers namely Mr. Amit Wadhwan who came to Your Appellant with the proposal of selling flats in the project "Ek Jyot Sanman" of Your Appellant at certain predetermined consideration. * The Project of Your Appellant "Ek Jyot Sanman" was marketed by a broker Mr. Ramesh Soni to whom Your Appellant has paid brokerage @0.75% on Sale Value of the Flat, upon entering into the Agreement with the buye....
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....IT (A) had mentioned the detailed submission given by the assessee as reproduced at para 15.4.2 at page 90 to 101 of the order of ld. CIT (A) and also stated the nature of dispute between assessee and M/s. Sai Estate Consultant relating to amount due to the assessee on selling of shops/flats in the project named Ekjyot Sukriti and cheques issued by them to the assessee were dishonored therefore assessee filed a criminal complaint u/s 138 of the Negotiable Instrument Act. The assessee had also filed recovery suits on 9th June 2022 and 30th august 2022 before the Hon'ble Bombay High Court. The assessee also submitted in the aforesaid submission mentioned in the order of the Ld.(CIA)that in retaliation said party had filed counter complaint against the assessee. 13. The proceedings u/s 153C of the Act was initiated in the case of the assessee firms on the basis of three loose paper no. 39 to 41 found and seized from this search action in the care of RPS Group and Shri Tarun Vohra one of the partner of the assessee firm. The AO has taken the loose paper 39 as the basis for computing most of the additions. In respect of loose paper no. 39, the assessee explained that Shri Amit Wadhwa....
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....loose paper the AO had computed consideration for sale of flat to Mr. Patronis of Flat No. 801 of Rs. 2,30,00,000/- as against Rs. 1,31,00,000/- as per agreement value and treated the amount of Rs. 99,00,000/- as unexplained money u/s 69 of the Act. But actually the assessee had not sold any flat to the said persons and no material on record was brought to demonstrate that flat was sold to Mr. Patronis. The AO has not brought any material on record to controvert these material facts. In respect of Smit U Parekh, as per the supporting material i.e. copy of agreement, ledger account, bank statement the assessee had sold flat no. 401 for Rs. 1.40 crore. The amount Rs. 25 lakh in fact received through banking channel in the current account of the assessee maintained with IDBI Bank. Similarly, in the case of Chetan Mohanlal Barola Jain and Barkha Chetan Jain merely on the basis of rate of brokerage mentioned in the loose paper the AO concluded that assessee had sold flat no. 1101 for Rs. 2 crore as against actual sale consideration of Rs. 1.50 crore reflected in the registered sale agreement. Even the said broker M/s. Sai Estate Consultan....