TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 1782
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.... 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, excel sheet entries, WhatsApp Chats and statements recorded ....
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....greement 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 fact was received on 29.08.2016 through banking channel from Miss Tina Agarwal along with Mr. Sharvan Agarwal in current account with IDBI Bank towards part payment of consideration for purchase of Flat No. 1001 in their ....
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....ducing 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. 2,00,00,000/- as consideration for Flat No. 1001 as against agreement value of Rs. 1,50,00,000/- on 12.12.2018 and stated that assessee has accepted cash of Rs. 50,00,000/- over and above the agreement value. Simila....
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....n 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 received. However, the AO has not agreed with the submission of the assessee and stated that assessee failed to give satisfactory explanation to explain contents of excel sheet and loose paper regarding the brokerage paid in cash therefore amount of Rs. 43,15,000/- was considered as unexplained expenditure u/s 6....
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.... 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 forged or fabricated. Hence, this contention of the appellant has no applicability to the facts of the case. 4.13. In the case of Hersh W Chadha vs DDIT, ITA no. 3088 to 3098 & 3107/Del/2005, the Hon'ble ITAT held as follows: "The tax liability in the cases of suspicious transactions, is to be assessed on the basis of the material available on record, ....
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....ntly 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 has been examined independently while deciding the appeal. Hence, the appellant should not have any grievance in this regard as each claim is examined based on its individual merit. Thus, in nutshell these arguments of the appellant are not agreed with and stand rejected. 4.19. As regards the argument that no cash was found and hence no addition could be made, I am unable to accept the s....
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....n 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 regards Rs. 15,00,000/- from Sh. Sharvan Agarwal, it is seen that the said flat is sold to Sharvan Agarwal and Tina Agarwal. The appellant has also produced ledger with Sh. Sharvan Agarwal from 01.04.2015 to 31.03.2020. The transactions in this ledger start from 29.08.2016. It is the claim of the appellant that the AO has mistaken the unsecured loans received through banking channels as cash receipts. Form the ledger it is seen that ....
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....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 the AO actually pertains to statement of Sh. Tarun Pradeep Vohra and not that of Sh. Dheeraj Pradeep Vohra. He has stated in qn. no. 11 that "the payment is made through banking and some cash may also be accepted"; yet he has clarified the same in reply to qn. 25 that he was referring to initial bookings of Rs. 11,000/- to Rs. 15,000/-.I have also perused the statement of the statement of Sh. Dheeraj Vohra recorded on 09.11.2019 wherein he is seen to ....
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....he 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 vindicates its stand that the document relied upon was merely a proposal to sell at higher prices. It is also pointed out by the appellant that Flat No. 801 (one of the property for which brokerage was taxed) was not sold to Mr Patronis. This flat was eventually sold vide agreement dated 10.05.2022 (much after search) to Mr. Manish Laxmilal Jain & Mrs. Dipika Manish Jain for a consideration of Rs. 1,80,00,000/- Consequently, I am of the view that balance of convenience lies in favour of the ....
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....0/- 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 (part of this combined order). Hence, the factual aspects, legal averments and other repeated arguments are not reproduced (although considered while deciding the dispute). Select excerpts of submission are reproduced below: "..... 10. From the loose Paper No. 39,40 & 41 the Assessing Officer came to a conclusion that Your Appellant received a sum of Rs. 50,00,000/- in the Assessment Year 2017-18 as cash consideration over & above the agreement value of the Flats & accordingly, the addition of R....
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....cile 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 failed to explain the entries contained in Page No. 39, 40 & 41. In fact, each item of alleged cash receipts was explained in detail along with the supporting evidence. Your Appellant would like to draw Your Honor's attention to Point No. 4 & 5 of Your Appellant's Letter Bearing Reference No. 2023/IT-Assess/ dated 28.03.2023 filed in response to Show Cause Notice, a copy of which is already enclosed hereinabove in Annexure No. 06. Moreover, in the Assessment Order itself the Assessing Officer has reproduced the reply filed by Your Appellant, which he has simply brushed aside witho....
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....y 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 * It was categorically established that Your Appellant has sold Flat No. 1001 to Mrs. Tina Agarwal & Mr. Shravan Agarwal & not Flat No. 1101 as mentioned in Loose Paper No. 39 on which the learned Assessing Officer has placed his reliance. Your Appellant has also explained in fact, the said Flat No. 1001 was sold for a consideration of Rs. 1,31,00,000/- to the said parties & entire consideration for purchase of said flat was paid by Mrs. Tina Agarwal. * In the Assessment Year 2017-18, it was categorically established that the sum of Rs. 15,00,000/- was received from Mr. Shravan Agarwal through Banking Channels & that too towards unsecured loans....
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.... 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 Appellant did receive cash of Rs. 70,00,000/- (Rs. 5,00,000/- + Rs. 65,00,000/-) from them. * The Assessing Officer did not make any enquiry with Mrs. Manmati Chand Rajput & Mr. Narayan Chand Rajput to the fact that whether they paid any cash to Your Appellant during the Financial Year 2016-17 & 2018-19. * The Assessing Officer simply shifted the Onus to Your Appellant to prove that Your Appellant did not receive any cash from Mrs. Manmati Chand Rajput & Mr. Narayan Chand Rajput * Your Appellant specifically requested Assessing Officer to issue summons to all the parties from whom the Appellant allegedly received cash during the Financial Year 2016-17 & 2018-19. * Unfortunately, the Assessing Officer while making this addition, did not make any enquiry & did ....
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.... 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. Smita U Parikh. * 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 sale Agreement of Flat No A-401 sold to Mrs. Smita U Parikh & Mr. Upendra Nagindas Parikh 14 2 Copy of Ledger Account of Party in the books of Your Appellant 15 3 Copy of Bank Statement highlighting receipt of Rs. 25,00,000/- from Smita U Parikh 16 d. From Page No. 41, Your Honor would observe that the sum of Rs. 25,00,000/- was received from Smita U Parikh on 01.09.2016. Accordingly, if the addition was at all required to be made on the ground of alleged cash receipts, it should have been made in the Assessment Year 2017-18 & not in the Assessment Year 2019-20. ...... 14.3.3.4 As regards addition of alleged cash receipt of Rs. 50,00,000/- from Mr. Chetan Mohanlal Barola Jai....
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....dings: 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 regards addition of alleged cash receipt of Rs. 99,00,000/- from M/s Patronis c. Your Appellant's rebuttal * During the course of Assessment Proceedings Your Appellant has submitted that the sum of Rs. 37,00,000/- taken from M/s Patronis was towards Unsecured Loan in the Financial Year 2016-17 on which Your Appellant has paid Interest @15% p.a & TDS has also been deducted on Interest payment. * It was categorically stated that Your Appellant has not sold any Flat including Flat No. 801 to M/s Patronis & therefore question of adding the sum of Rs. 99,00,000/- in the hands of Your Appellant by placing reliance on Page No. 39,40 & 41 of the loose paper does not arise. * Vide Letter bearing reference No. 2023/IT-Assess/057 dated 02.02.2023, Your Appellant has submitted details of Flats sold by them. * Unit No. 801 was sold vide Agreement Dated 10.05.2022 to Mr. Manish Laxmilal Jain & Mrs. Dipika Manish Jain for a consideration of Rs. 1,80,00,000/- copy of Index -2 enclo....
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....le Value of the Flat, upon entering into the Agreement with the buyer. * Mr. Amit Wadhwan, the Real Estate Broker carrying on his brokerage business in the name of "M/s Sai Estate Consultant", approached Your Appellant with a proposal that he has certain customers to whom he can convince to purchase flats constructed by Your Appellant at a much higher value than the normal market price. For this proposal he was expecting a Brokerage of 5% on the Sale Value of the Flats. * When Mr. Amit Wadhwan (the broker) visited office of Your Appellant with the Proposal, he has prepared a Chart 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 Wadhwan when the deal about sale of flats by him are materialised * The loose Paper 39 found during the search proceedings is just probable working & nothing can be concluded therefrom is clear from the fact, neither Flat No 1001 nor any other flat was sold to Mr. Sanjeev Agarwal as mentioned in above sheet. In the similar way neither Flat No. 801 or any other flat was sold to M/s Patronis, this its....
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....see explained that Shri Amit Wadhwani the Real Estate Broker made proposal for selling flats at a higher price and expected a brokerage of 5% on the sale value of the flats, however, the same could not be materialized as the same was merely a proposal. In respect of other loose paper, the assessee submitted that the same were prepared for management purpose to reconcile the bank balance on 15.09.2016 with a view to find out the cash flow for the payment to be made for various purposes. It was also submitted that these papers do not reflect any cash payment. The AO had made addition of Rs. 2.93 crore for making payment in cash for purchasing flats by Tina Agarwal, Sharvan Agarwal Flat No. 1101 of Rs. 54 lakh, Shri Narayan Chand Rajput and Manmati Narayan Rajput Rs. 65 lakh for Flat No. A-1201, Shri Patronis for Flat No. A-801 of Rs. 90 lakh. He also made addition of cash payment in respect of Smita U Parekh of Rs. 25 lakh and Rs. 50 lakh in respect of Chetan Mohanlal Barola Jain and Barkha Chetan Jain. The merits of these additions have been discussed in the findings of the ld. CIT (A) as elaborated supra in this order. In the case of Sh....