AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 754
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....n filed by the Revenue, and a corresponding cross-objection has been filed by the Assessee. Since the issues involved in the cross appeals filed by both parties and objection raised by assessee in the C.Os. are arising from the search action carried out by the Department on 04.08.2006, all these Appeals are taken together and decided through common order. 2. The brief facts of the case are that the assessee is engaged in the business of real estate dealings and financing activities. The assessee belongs to Radhe Group, Ahmedabad. During the A.Y. under consideration, assessee was running three proprietary concerns in his name which were (i) Abhyudaya Finance, (ii) Radhe Finance and (iii) Radhe Organiser. A search under Section 132 of the Act was carried out in case of assessee/Radhe Group on 4th August, 2006. The search was finally concluded by drawing final panchnama in the name of Assessee on 29th September, 2006. The Assessee had filed return of income for the year under consideration on 24th May, 2007 in response to notice under Section 153A of the Act, dated 4th May, 2007. 3. The Assessee had filed Settlement Application before Hon'ble Settlement Commission on 28th Ma....
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....posed of main SCA of the Assessee. 6. The Hon'ble High Court set aside the order passed by the Settlement Commission u/s 245HA dated 04.10.2007 to a limited extent. As per the above order of the Hon'ble High Court, proceedings before the Settlement Commission revived for A.Y. 2001-02, 2002-03, 2003-04, 2005-06 and 2007-08 in ITSC, hence proceedings for A.Y. 2004-05 & 2006-07 were affected. Hence, assessment for AYs 2004-05 & 2006-07 have been completed by the Assessing Officer vide order dated 03.11.2017 u/s 153A(1)(b) r.ws. 143(3). Further, the Settlement Commission passed order dated 16.11.2017 vide which application dated 28.05.2007 filed by the assessee was declared invalid u/s 245D(2C), hence assessment proceedings for A.Y. 2001-02, 2002-03, 2003- 04, 2005-06 & 2007-08 got revived before the Assessing Officer. Following this, the assessment proceedings were resumed and the assessments for all relevant years were completed u/s 153A r.w.s. 245HA of the Act. 7. Aggrieved by the assessment orders for the aforesaid assessment years, the assessee filed appeals before the Ld. CIT(A), who partly allowed the same. While the assessee is now in appeal before the Tribunal ch....
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....lowance u/s 40A(3) was upheld even when income was estimated in respect of unaccounted receipts 7. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,27,00,000/- made on account of unexplained expenditure incurred for the land situated at Jamnagar, Palanpur and Surat treating the same as application of fund against undisclosed income even though no documents evidencing such application was pointed out by the assessee. 8. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in law and on facts in deleting the addition of Rs 23,00,000/- made on account of unexplained expenditure incurred through Nimish B Panchal for the land situated at Anand for SICCL treating the same as application of fund against undisclosed income even though no documents evidencing such application was pointed out by the assessee. 9. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in law and on facts in deleting the addition made on account of Unexplained expenditure of Rs. 3 lacs incurred for the land located at Ahmedabad a....
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....erred in estimating income from project @ 20% without appreciating that actual profitability from alleged project ranges from 6% to 11% which is evident from seized material found during the course of search. Addition in any case cannot exceed the actual profit earned by the appellant from alleged project. 5. In law and in the facts and in the circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding addition of alleged unaccounted interest income for Rs. 29,24,000 without appreciating the fact that loose papers found during the course of search is dumb document. No noting has been found which actually proves that Appellant has in fact received such interest income." CO NO. 5/Ahd/2020 - By assessee 11. The grounds of cross-objections read as under :- "1. On the facts and in the circumstances of the case, the CIT(A) ought to have deleted addition of Rs. 2,27,00,000 made on account of unexplained expenditure incurred for land situated at Jamnagar, Palanpur and Surat on merits of the case, as such addition was based upon letter found during the course of search at appellant's premises but no evidence of actual payment was found. ....
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....ration Ltd. (SICCL). SICCL launched a scheme of Sahara City Homes at various cities of India, which includes Ahmedabad, Jamnagar, Bhavnagar, Porbandar, Rajkot, Palanpur, Surat, Anand, and Baroda. Land transactions of these schemes were executed/tried to be executed through Shri Ashish P. Patel of Radhe Group of Builders, Ahmedabad and his close associates from F.Y.2002-03 onwards. All of these cities are in Gujarat except Amrawati, which is in Maharashtra. It has been observed that Shri Ashish Patel the main person of Radhe group of builders was instrumental in the land transactions of Sahara city Homes at Ahmedabad, Jamnagar, Bhavnagar and Rajkot. The land at Sahara City Homes scheme at Porbandar had been purchased through Shri Nimish B. Panchal, who had been later on proved as benami of Shri Ashish P. Patel. The land at Sahara City Homes scheme at Anand had been finally purchased through M/s. Harsiddhi Land Agency, though initially, it has been tried to be purchased through Shri Nimish B. Panchal. Land at Palanpur and Surat could not be finally purchased, though some money had been passed on for these schemes to Shri Ashish P. Patel. Land at Amrawati (Maharashtra) could again not....
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....e premises of M/s Rana Developers, Raipur, M/s Devi Durga Construction, M/s LR Construction, M/s Anjani Construction of Baroda as well as at the sites of Sahara City Homes at all even cities of Gujarat, i.e. Ahmedabad, Jamnagar, Bhavnagar, Rajkot, Porbandar brought on record that no land development had been actually carried out at any of the places, and bogus bills had been issued for the land development exp., cash has been withdrawn from the accounts of these concerns and handed back to Shri Ashish P. Patel. Confession in the form of statements on oath and duly notarized affidavit had been given by Shri A. Srinivasan, the main person who represents/controls the work of M/s Rana Projects, M/s Devi Durga Construction, M/s LR Construction and M/s Anjani Construction from Baroda. When these evidences were confronted with Shri Ashish P. Patel during the course of search proceedings and post search enquiry, he admitted that approx. Rs. 62 crores, received from Sahara, were shown as bogus land development expenditure and actually no development work had taken place on any of the sites of Sahara Cities as claimed in his ROI. Different concerns, which issued the bogus bills in this regar....
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....essing Officer made addition of Rs. 26.86 Crores being the 98.5% of Rs. 27.26 Crores paid as banakhat and development expenses. 12.6 Aggrieved by the order of the Assessing Officer, the Assessee filed appeal before the Ld. CIT(A) who modified the order of the Assessing Officer determining the amount earned at Rs. 12.00 crores. For the sake of ready reference, the ratio of decision of Ld. CIT(A) on this issue is reproduced as under:- "5.5 I have carefully considered the Assessment Order and the submission filed by the Appellant. The brief facts of the case are that Sahara Industrial Commercial Corporation Limited (SICCL) had carried out various land transactions for their projects through Appellant from AY 2003-04. As per detailed discussion made in Assessment Order, it is found that Appellant has received various amounts from SICCL through account payee cheques/drafts which are shown as receipts in Profit & Loss Account. The Appellant has claimed various expenditure including payment made to farmers through account payee cheques, land development expenditure, land commission, brokerage expenses, land filling expenses, etc.. During the year under consideration, Appellant....
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.... the project. 5.7 During the course of appellate hearing, ARs of the Appellant have first discussed the role of Appellant for projects with SICCL and contended that he was only working as agent, facilitator and aggregator of the land and for such work, Appellant was required to acquire and aggregate the land, clear all litigations and to provide basic infrastructure such as land levelling, approach road, etc. It was contended by Appellant that for this project, Appellant will first execute agreement to sell with farmer, second agreement to sell with Appellant and Sahara and final sale deed will be between farmer, Sahara and Appellant being a conforming party and in such process, Appellant would receive funds from Sahara. To support such contention, Appellant has submitted copy of MOU of land acquired in the vicinity of Rajkot and all other agreements to sell and sale deed at paper book page No. 115 to 139. The Appellant at para 2.6 of his written submission as reproduced herein has referred to various statements recorded during the course of search and post-search enquiry to prove his claim that his role with SICCL was of broker/facilitator. The ARs of the Appellant have a....
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....osed income by claiming bogus expenditure. On this basis Appellant has argued that expenditure debited in books of account which were considered to be bogus by AO are eventually incurred for the purpose of the transaction because cash generated from such expenditure are ultimately used for making various payments related to land acquisition and Appellant not deriving any benefits, no adverse action is warranted in the hands of Appellant on account of alleged bogus expenses considering the role of Appellant being facilitator and entitled to only fixed percentage of profit on completion of the project. It was thus argued that Appellant has disclosed remuneration/commission in land dealing transactions in his statement recorded during the course of search and due taxes were paid on such income hence there is no need for making separate addition either under Section 37 of the Act or 69A/69C of the Act. The ARs of the Appellant have further contended that seized material found during the course of search need to be read as a whole and when seized material itself contains details of cash withdrawal and cash payment made by Appellant for and on behalf of SICCL, the AO cannot tax entire ca....
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....ajkot Porbandar Grand Total Credit Amount Received 19 54 62 500 17 14 00 000 23 33 00 000 16 77 00 000 12 24 00 000 89 02 62 500 Total Credit 19 54 62 500 17 14 00 000 23 33 00 000 16 77 00 000 12 24 00 000 89 02 62 500 Debit Expenses Paid Paid to farmers-cheque 4 75 00 000 4 50 00 000 6 30 00 000 4 77 00 000 1 50 00 000 21 82 00 000 Paid by cash from Rana/devi etc. cash - 9 97 00 000 7 70 00 000 17 67 00 000 Advocate - - 1 00 000 1 00 000 Paid to farmers- cash 7 63 00 000 7 00 00 000 - 5 78 00 000 - 20 41 00 000 Paid to S. lal 5 00 00 000 3 70 00 000 2 61 00 000 4 00 00 000 - 15 31 00 000 R.D.B. - - 1 35 00 000 - - 1 35 00 000 63C - 11 00.000 - - 11 00 000 Brokerage 5 00 000 3 50 000 57 00 000 5 00 000 5 00 000 75 50 000 Raju Joshi Cash ....
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.... be disallowed under Section 69C or not? (iv) Whether profit from land transactions with SICCL are required to be estimated or not once AO has already treated land development expenditure as bogus and separate addition is made and if profit is required to be estimated from such transactions, whether such income need to be taxed in AY 2004-05 or in AY 2006-07 being the year in which Appellant has offered additional income before Hon'ble Settlement Commission or in AY 2007-08 as claimed in present submission and what should be reasonable rate of profit on such transactions? 5.11 Before adjudicating the issue relating to present addition made by AO it is relevant to consider the plea of Appellant that he has acted as facilitator or aggregator for land transactions for SICCL or not. During the course of search various memorandum of understanding (MoU) made with SICCL were found and one of the MoU relating to land situated in the vicinity of Rajkot was submitted by Appellant in his paper book and perusal of such MoU which is entered into prior to sale deed in favour of SICCL, it is found that SICCL was interested in purchasing 100 to 150 acres of land for developin....
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.... During the course of search and post-search proceedings, various statements of Appellant were recorded and for the sake of clarity relevant Question and Answer are reproduced herein below which should clearly establish that Appellant has played the role of broker/facilitator. (A) Excerpts from the Appellant's statement recorded under section 132(4) of the Act on 29/09/2006 Q.2 You have engaged into deals of land transactions for more than 100 Acres at each of the five Cities of Gujarat i.e. Ahmedabad, Jamnagar, Bhavnagar, Porbandar, and Rajkot. You have played the role of confirming party in these deals. Kindly clarify this role. A.2 I have played the role of broker (facilitator) with and for Sahara India Commercial Corporation Ltd. Whatever amount has been extended to me in these land deals from Sahara, I was required to give the same to the farmers and Shri Sunderlalji, Shri Sunderlalji is/was at the post of Advisor in Sahara Group of Companies, He gave these roles to me and wherever cash amount was required, he made me available the same. Q.4 Kindly look at the page No. 13 to 18 of the folder titled as Shara Correspondences which const....
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....he parentage profit in the margin 15% to 20% of total receipts and have rejected the proposal of Rs. 50,000/- per acre. This claim made by me was finally accepted by Subrato Roy and SaharaGorup. In this regard I would like to confirm that purchase of lands for Shara Cities at Palanpur, Surat, Anand and Amravati could not be materialized through me. However in case of Anand they have purchased the land through some one else. I would rely on this letter to claim that my profit was not more than this percentage and the bogus claims made in my returns in the form of land development expense and banakhat expense were distributed amounts Shri Sundarla of Sahara, original land owners by myself and brokers etc. It is observed that Appellant has credited funds received from SICCL as revenue receipt and expenditure incurred on various lands are claimed as an expenditure does not mean that Appellant has carried out trading transaction as incriminating material found during the course of search, correspondence made with SICCL and statement of Appellant recorded during the course of search clearly prove that Appellant was a facilitator in these land transactions hence income is require....
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....though the Assessing Officer has referred to three loose papers pertaining to Ahmedabad, Rajkot and Bhavnagar but, has failed to appreciate the correct nature of the transaction. For the sake of clarity, though these loose papers are reproduced at page 36, 38 and 40 of Assessment Order same are reproduced herein below. Ahmedabad Total Received 23,33,00,000 - Paid to farmers - 6,30.00,000 - Paid to farmers cash - 9,97,00,000 cash withdrawal from Rana/Devi etc. a/c. for S.L. Paid to s.lal - 2,61,00,000 cash withdrawal from Rana/devi a/c. for S.L. - R.D.B. - 1,35,00,000 - 63(c) 11,00,000 Brokerage - 42,00,000 Survey & title - 8,50,000 - Misc. - 31,50,000 Brokerage cash 15,00,000 Raju Joshi 2,02,00,000 Road/ Misc, work pending 1,50,00,000 Cash paid to farmers Kanjibhai & family 2.00 ....
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....are used for making payment in cash to farmers, S. Lal of Sahara and for various other land related expenditure. These facts clearly prove that though Appellant has claimed bogus expenditure in form of land development expenditure, cash generated from such expenditure are ultimately used for the purpose of acquiring land for SICCL and this cash is not retained by Appellant or used for any other purpose. This fact is further substantiated by Appellant in following tabular chart as reproduced at para 3.4 of his submission. Sr. No. Particular 5 Amount (Rs.) 1 Land Banakhat and Development expense as per the Profit & Loss account of: ________________ __________________ A.Y. 2003-04 14.61 crores A.Y. 2004-05 27.26 crores A.Y. 2005-06 12.24 crores Total 54.12 crores 2 98.5% of alleged expense 53.31 crores 3 Payment as per the seized material made out of cash withdrawal from bank account of Rana, Devi Durgaeic ____________ _______ ______________________ - 12.63 crores Page no. 113 of Annexure A-33 (7,00,0( ),000 + 37,00,00,000) 10.70 crores Page no. 52 of Annexure A-1 (99....
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.... 9.97 Crores has been given to the farmers in cash on behalf of Sahara after withdrawing the same from the accounts of Rana and Devi Durga Rs. 2.61 crores has been withdrawn from the accounts of Rana and Devi Durga and has been given in cash to Shri Sunderlalji Rs. 1.35 Crores has been given to R.D.B. Industries Rs. 11 lakhs has been given to Collector as Donation (This amount has not been given as gratification, but as official Rs. 42 lakhs as brokerage Rs. 8.50 lakhs as survey and title clearance and Rs. 31.50 lakhs has been spent on Misc. head. Rs. 15 lakhs have been given in cash as brokerage to Rajubhai. In this account Rs. 2.02 crores remain as balance with me against which Road construction and another petty works are pending which require expense of Rs. 52 lakhs and there is possibility of profit of Rs. 1.50 Corores to me. This paper contains names farmers also. Every cash payment has been made to the farmers by hands of employees of Sahara Group. Rana, Devi Durga, LR and Anjani used to give the leveling bills and we used to extend the cheque in this regards on that behalf Sahara and these Companies used to make available cash to Shri Sunderlalji and this entire arrangement....
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....bhai8, Rajubhai of Bhavnagar. The details of Jamnagar land are there in Page no. 113 of Annexure A/33. Total amount received is Rs. 17.14 Crores, paid to farmers by cheque Rs. 4.50 Crores, paid to farmers in cash Rs. 7.00 Crores after withdrawing the same from Devi Durga and Rana. Rs. 3.70 Crores has been paid in cash to Shri Sunderlalji of Sahara after withdrawing the same from the accounts of Devi Durga and Rana. Brokers of Rs. 3.50 lakhs, survey, Advocates and Misc. Exps. Of Rs. 16.50 lakhs and pending work of court cases, title clearance, possession and other misc. exps. Of Rs. 34 lakhs. The balance estimated profit remains with me of Rs. 1.40 Crores. The details of Porbandar land transaction can be found in Page No. 102 of Annexure A/27. The same are like this. Amount of Rs. 12.24 Crore has been received as total payment out this Rs. 1.50 Crores has been paid by cheque to the farmers. Rs. 7.70 Crores has been paid to the farmers after withdrawing the same from the accounts of Rana and Devi Durga. Advocate fees of Rs. 1 lakhs, brokerage of Rs. 5 lakhs and misc. exps. of Rs. 19 lakhs have also been made and after the same, total balance of Rs. 2.79 Crores remains agains....
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....cash payment to the farmers, Mr. Sunderlal of SICCL and other persons", which also support the contention of Appellant that cash were used for the business/land transaction for SICCL. The Assessing Officer even at para 16.7.7 of his order has observed as under: 16.7.7 From the above income expenditure details of the assessee for the three land projects, it is clear that assessee has booked huge amount of land development and filling expenses for each of the project, payment for which have been made to Devi Durga Construction and other bogus billing concerns (including Rana Pro Int. Ltd. another associated concern of Mr. A Shrinivasan) Moreover comparison of the above details with the seized material also shows that the total of unaccounted cash payments made to various persons almost matches with the land development and filling expenses booked by the assessee thereby establishing a direct nexus between the two - On the basis of this discussion it is emanating that AO has considered expenditure debited in Books of Account as bogus expenditure after considering notings mentioned in loose paper but could not take note of other notings mentioned in very same loose pa....
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....ciples of income tax law to take note of only the income part reflected in the seized material, excluding the expenditure part reflected in the same seized material, provided the expenditure part is allowable as business expenditure. In our view the findings of the Tribunal, both of facts and law, do not suffer from any perversity. We may add that no documents or material was produced before us on behalf of the revenue, despite several opportunities, to show any perversity in the decision of the Tribunal. We therefore, do not think any substantial question of law arises out of the aforesaid decision of the Tribunal." (iii) Decision of Hon'ble Hyderabad Tribunal in case of Prabhudaval Agarwal V. ACIT [2007] 11 SOT 50 (HYD.) (URO) wherein it was held as under: "11. When the assessee has no right to demand interest from the purchaser, mere unilateral calculation or computation of interest does not enable the assessee to recover any amount from the purchaser. Therefore, in our opinion, the alleged computation of interest said to have been made by the assessee in the seized paper P-95 does not empower him to recover any interest from the purchaser Shri Amir Singh. ....
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....the assessee has received on-money of Rs. 60,00,000. The seized paper P-95 does not suggest anything about the receipt of on-money. Moreover, no addition could be made on surmises and suspicion. As rightly pointed by the learned representative for the assessee, the entire seized paper should be taken into consideration or rejected in toto. Part of the particulars cannot be considered as held by the Gujarat High Court in the case of Glass Lines Equipments Co. Ltd. (supra). It is not permissible for the Revenue to accept a part of the paper and ignore the rest of the seized document." Considering these facts it is observed that Appellant has received funds from SICCL towards acquisition of land, issued cheques towards bogus land development and land filling expenditure, cash received from such transactions are ultimately used for acquisition of land only hence cash generated from such transactions cannot alone be considered as undisclosed income under Section 69A of the Act without considering its application being unaccounted business expenditure. The sources of unaccounted expenditure as mentioned in loose paper are incurred out of cash received against cheque issued from ....
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....ned investment (Suppressed sales) - Assessee was a partnership firm carrying on business as wholesale cloth merchants Consequent upon search conducted in case of assessee, certain additions were made such as undisclosed income, unexplained investments and gross profit on suppressed sales Tribunal held that when books of accounts were rejected and gross profit rate was applied on suppressed sales, no separate additions were required It thus deleted other additions - Whether, on facts, finding recorded by Tribunal could not be regarded as perverse and, thus, no substantial question of law arose therefrom - Held, yes [Paras 23 and 24] [In favour of assesseel (iii) Hon'ble Rajasthan High Court in case of Malpani House of Stones Vs. CIT [2017] 88 taxmann.com 546 Section 145 of the Income-tax Act, 1961 - Method of accounting - Rejection of accounts - Where assessee's books of account were rejected and its income were assessed on basis of estimation, it would not be appropriate to simultaneously rely on books of account which had been rejected for purpose of adding undisclosed income by rejecting some of purchases [In favour of assessee) (iv) Hon'ble....
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....on of Appellant cannot be accepted, as Appellant has entered into separate MoU for each place and receipt from all the three places were received in current year. When Appellant himself is claiming that he is working as facilitator for SICCL and such contention is found to be correct in preceding paras, income is required to be taxed when cheques are received from SICCL and more particularly substantial land acquisition work relating to these places were already completed in this year. With regard to project at Rajkot, Appellant has claimed that as per seized material there was obligation to incur certain expenditure but these were very meagre in comparison of total receipts of Rs. 16.77 crores. It is observed that search in the case of Appellant was carried out on 29th September, 2006 and Appellant has not referred any loose paper being found during the course of search which can prove that any work has been carried out in AY 2007-08. Even Appellant himself in his settlement application filed before Hon'ble Settlement Commission has offered additional income on gross receipts from SICCL in AY 2006-07 which alone prove that there is no basis in argument of Appellant for taxing ....
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....hich is reproduced at page No. 50 of Assessment Order, reply to Question No. 3 of his statement dated 29th September, 2006 as reproduced at para 2.6 of his submission wherein he has stated that average profit from project SICCL is 12%. However, this contention of Appellant cannot be accepted in view of letter dated 4th May, 2004 addressed to Mr. Subroto Roy of SICCL which was forming part of seized material being page No. 1 to 6 of Annexure - A/6 and reproduced by AO at para 16.8.2 of his order, which clearly states that Appellant enters into deal only if there is minimum margin of 15 to 20% and it is usual practice of real estate business. This letter is with reference to transactions of land carried out on behalf of SICCL and has direct bearing on income earned by Appellant hence such letter cannot be ignored. It is relevant to refer to answer to Question No. 4 recorded in statement of Appellant on 6lh November, 2006 wherein it is stated as under: Q.4 Kindly explain the contents of the Pages 1 to 6 of Annexure A/6 seized from Chinubhai Chambers on 4/8/2006. A.4 This is a letter written by my to Shri Subrato Roy, in which I have claimed the parentage profit in th....
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....The Assessing Officer treated 98.5% of land development expenditure as bogus and applied provisions of Section 37(1), 69A and 69C of the Income Tax Act. The assessee's concerns namely Devi Durga Construction, LR Construction and Anjani Construction have admitted of having issued bogus bills. Further, during the search and seizure, loose papers have been found and sized which have been reproduced in the assessment order but not considered reflect payment of cash to different farmers on account of the land acquisition for SICCL. The entire events reveal that SICCL pays cheque to the assessee which is routed through assessee's proprietary concerns, cash has been withdrawn and paid to farmers and utilized for other expenses. The seized material itself shows that the assessee has acquired 104 acres of land in Ahmedabad, 106 acres in Rajkot, 102 acres in Bhavnagar, 108 acres in Jamnagar and 102 acres in Porbandar. The assessee received monies from SICCL and a part has been paid to farmers in cheque and the remaining part has been paid in cash to farmers by withdrawal of the cash from his proprietary concerns. The assessee has acted as a facilitator and offered 12.5% of gross receipt befo....
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....ajkot, Bhavnagar, Porbandar etc. 12.15 As per the terms and conditions agreed upon by the Assessee with Sahara, Sahara would pay consideration for purchase of land at different stages of the transaction, which in turn, would be paid by the Assessee to the farmers. 12.16 All the documents i.e. MOU, the first agreement to sell between the Assessee and farmers, second Agreement to sell between the Assessee and Sahara and final Conveyance deeds were registered documents. During the entire process the Assessee had received amounts towards such transaction which was required to be paid to farmers, land developers etc. as per the direction and instruction given by Sahara people. 12.17 In the light of the above analysis of facts, it clearly emerges that the relationship between Sahara and Assessee was that of principal and agent and not on principal to principal basis. In fact not a single piece of land has been purchased in his name by entering into Direct Sale Deed out of land pertaining to Sahara. 12.18 The fact that the Assessee only played the role of the mediator / arranger / facilitator in this entire transaction has been confirmed by the Assessee in the statement record....
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....11 lakhs has been given to Collector as Donation (This amount has not been given as gratification, but as official Rs. 42 lakhs as brokerage Rs. 8.50 lakhs as survey and title clearance and Rs. 31.50 lakhs has been spent on Misc. head. Rs. 15 lakhs have been given in cash as brokerage to Rajubhai. In this account Rs. 2.02 crores remain as balance with me against which Road construction and another petty works are pending which require expense of Rs. 52 lakhs and there is possibility of profit of Rs. 1.50 Crores to me. This paper contains names farmers also. Every cash payment has been made to the farmers by hands of employees of Sahara Group. Rana, Devi Durga, LR and Anjani used to give the levelling bills and we used to extend the cheque in this regards on that behalf Sahara and these Companies used to make available cash to Shri Sunderlalji and this entire arrangement was made by Shri Sunjderlalji of Sahara. Mr. Rana, the main person of Rana and other concerns, was acquainted to me by Shri Sunderlalji at Delhi and he told me that whenever you need cash, for the works of Sahara, you take the same from these concerns after giving the cheques, the fund of which you receive from Saha....
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....o Shri Sunderlalji of Sahara after withdrawing the same from the accounts of Devi Durga and Rana. Brokers of Rs. 3.50 lakhs, survey, Advocates and Misc. Exps. Of Rs. 16.50 lakhs and pending work of court cases, title clearance, possession and other misc. exps. Of Rs. 34 lakhs. The balance estimated profit remains with me of Rs. 1.40 Crores. The details of Porbandar land transaction can be found in Page No. 102 of Annexure A/27. The same are like this. Amount of Rs. 12.24 Crore has been received as total payment out this Rs. 1.50 Crores has been paid by cheque to the farmers. Rs. 7.70 Crores has been paid to the farmers after withdrawing the same from the accounts of Rana and Devi Durga. Advocate fees of Rs. 1 lakhs, brokerage of Rs. 5 lakhs and misc. exps. of Rs. 19 lakhs have also been made and after the same, total balance of Rs. 2.79 Crores remains against which pending work of Rs. 1.20 Crores for 10 Acres of land yet to be brought on behalf of Sahara and after deducting the pending work of title, possession and other misc. expenses of Rs. 19 lakhs, the balance of Rs. 1.40 Crores is my expected profit. In this way, there is possibility of Rs. 7.04 Crores of pro....
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....anation -5 as explained by you and whatever income-tax liability shall arise on this income, I will pay the same. This is my promise. I am also given you a post dated cheque of Rs. 50 lakhs to be encased on 6/11/2006 and promise to pay the balance liability along with my return of income. Q.6 Kindly give the complete address of the farmers to whom you have made the cash payments. A.6 He detailed address of these farmers can be traced from the seized material in which the sales deeds of the concerned lands have been seized. Still, if the Department needs identification, I will make available the same. Third Party to whom cash payment is made is Shri Rajubhai Joshi and his address is at Bank of India Colony, B/h H.L. College, Navrangpura, Ahmedabad. Q.8 During the search operation on 4/8/2006, at 7 seven schemes of Sahara City Homes, Photography and videography of the sites was taken and the statement of number of persons were also taken from the same it was proved that no land development etc of the above sites has taken place. You have also accepted the same in this statement that all the four concerns, allegedly engaged in land development activity i.e. ....
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....rely on this letter to claim that my profit was not more than this percentage and the bogus claims made in my returns in the form of land development expense and banakhat expense were distributed amounts Shri Sundarlal of Sahara, original land owners by myself and brokers etc. Q.5 Kindly refer page 38 & 39 in which payment of lands for Sahara City of Porbandar& Jamnagar are given. As per information found during search & post search inquiry, total receipts for Porbandar land is Rs. 12,60,77,500/-. However in Page No. 39 it is 14,40,21,250/-. Similarly for Jamnagar land as per details the amount received is Rs. 17,14,23,000/-. However as per Page No. 38 it is Rs. 18,03,95,000/-. Explain the reason for difference. A-5 From the seized material, I shall show your that I have given some deductions to Sahara Group and received less amount as against the understanding of not giving balance amount to Shri Sunderlalji of Sahara. From the seized material itself it can be seen that some amount is due to be received by me in case of each land of Sahara City for which I have worked. Q. 6 Kindly refer Page 76 & 77 of Annexure A/6 and explain as to whether the receipts ....
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....d by cheques to the Collector Office of Ahmedabad. Rs. 42 lakhs has been paid through cheques brokerage to Space Management & others. Another cash payment as brokerage is Rs. 15 lakhs to Shri Raju Joshi, Bank of India Colony, Ahmedabad. The balance of Rs. 2.02 Crores was lying with me as on 16/1/2006 with the liability of road construction & misc. works, still against this is pending. Q.9 Please refer Page No. 53 & 54 and explain the same which were seized from Chunibhai Chambers on 29/9/06. A.9 These page of 53 & 54 of A/1 contain the details of date-wise payments made to Shri Sunderlalji of Sahara in cash on various dates like in Page 53 Rs. 1.30 lakhs have been paid on 24/12/2002 in ash at Ahmedabad City. Similarly other entries are given in Page No. 54. Thus till 15/12/2003 1 have given to Shri Sunderlalji Rs. 12,26,69,750/- in cash after withdrawing the same from Rana & Devi & L.R. In the bottom of this page No. 54 cheque payment of Rs. 1,35,41,970/- given to R.D.B Industries and Rs. 13,47,48/,090/- given to Rana Projects through cheque in the grab of payment of Rs. 8.26 Crores to Devi Durga in the garb of Bhavnagar land levelling is given in detail.....
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.... be received Rs. 8.73 Crores and stamp fee & registration fee has been directly given to the stamp office. In Page No. 153 requirement of fund for Rajkot, Jamnagar & Bhavnagar is written. According to which balance amount to be paid to farmers and stamp /registration directly to be given by Sahara is written. Q.16 Please explain the contents of A/13 seized from Chunibhai Chambers on 29/9/06 A.16 This file contains MOU between Nimish B Panchal & Sahara as well as difference proposals given to Sahara. Xerox copy of the draft received and title report / opinion by Advocate. This file pertains to Anand project of Township to be developed by Sahara. However, the purchase of land could not be materialized through me (Nimish B. Panchal is working for me and I have owned up all of this accounts which he has done on my behalf). Rs. 75 lakhs received in this regard is still lying with me as liability. Q.17 Kindly refer Annexure A/27 seized from Chunibhai Chambers on 29/9/06 and explain the contends of this folder. A.17 This folder contains the correspondences between Nimish B Panchal & Sahara City, Porbandar. I have already owned up the accounts of Shri. N....
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....006, balance of 1.74 Crores lies with me with over all liability of misc. expenses of approx. Rs. 34 lakhs.. (C) Statement recorded on 8/11/2006. Q.19 Please refer Annexure A/35 seized from Chunibhai Chambers on 29/9/06 and explain the contents of the same. A.19 This Annexure contains details of purchase of land at Sahara City, Bhavnagar in the form of correspondences In Page No. 39, a letter from Sahara to me is written in which they have sent a Draft of Rs. 5 lakhs for getting permission u/s 54 at Sahara City Bhavnagar. This amount is in addition to another receipts and is yet written as advance in my books is Sahara sundry creditors. Similar treatment has been given to Rs. 5 lakh received from Rajkot land as is reflected in Page - 51. Page No. 61 gives exhaustive details of receipts and payments relating to Sahara City, Bhavnagar. I have received Rs. 19,54,62,500/- from Sahara by cheque and paid Rs. 4.75 Cores to the land owners by cheque. Cash payment of Rs. 7.63 Crores is made to the land owners. Rs. 5 crores to Shri Sunderlal of Sahara after withdrawing the cash amount from the bank accounts of M/s Rana Projects, Devi Durga Construction & O....
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....a Construction, Rana Projects and others where from you have received profit which has been disclosed s undisclosed income by you. A.22 I have received around Rs. 89 Crores from Sahara for purchase of land at Ahmedabad, Bhavnagar, Rajkot, Jamnagar & Porbandar. This entire amount has been received by cheque in my bank accounts at Global Trust Bank, Central Bank of India, Bank of Rajasthan, HDFC Bank, Bank of Punjab and Oriental Bank of Commerce & other bank accounts. I have given to the agricultural land owners by cheque amount Rs. 22 Crores. Further remaining Rs. 67 Crores at my bank accounts I have transferred the funds of Rs. 52.30 Crores to the accounts of Rana Projects International Ltd, Devi Durga Construction and L.R. Construction by cheque getting cash to give the same to the original land owners, to Shri Sunderlalji of Sahara & to others. This was all done by me as per the instruction given to Shri Sunderlalji of Sahara. As per seized Annexure A-1, A-27, A-33 & A-42 which pertains to the transactions of land Ahmedabad, Porbandar, Jamnagar, Bhavnagar & Rajkot. I have given cash of Rs. 54 Crores approximately to farmers, Sunderlalji & others. As per....
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....round Rs. 2.5 Crores is yet to be received from Sahara for various works to be done or for work already completed. If I fulfil the pending liabilities or commitments already pending then I will adjust the same and unless I don't receive this amount of Rs. 2.5 Crores from Sahara I am not going to fulfil any of the pending works. 12.19 The Revenue has also relied on the decision of the Gujarat High court in the case of CIT Vs Hynoup Food & Oil Ind. (P) Ltd.- 150 Taxman 194. We have gone through the facts of that case and observe that the facts in the case of Hynoup Food & Oil Ind. (P) Ltd are clearly distinguishable from the facts of the present case, for the reason that in the case of the assessee the income is estimated on the receipts which was not the case in the of CIT Vs Hynoup Food & Oil Ind. (P) Ltd., Once the income of the assessee is estimated and there being no specific claim of any expenses, there is no scope of making further disallowance and hence the provision of the section 40A(3) or 37(1) cannot be applied. The Ld. AR also pointed out that the payment were made to the above parties only at the instance of Sahara who in turn collected the cash for the purposes ....
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....ccepted as your profit from the above mentioned deals ? A. This matter I want to clarify as to whatever cash payments J have made so far, the same has been made by the people of Sahara or in accordance to the instructions received from Sahara and on behalf of Sahara. I also want to state that I do not know that Shri Nilesh T. Patel has made the cash payments as I have made, but I want to state that in the entire land dealings of 5 Cities of Rs. 88.05 Crores received, on average I have received the profit of 12.5% and according to my calculation, this amount comes at Rs. 11 Crores (Eleven). In this matter I also want to state that I computed my profit in the month of April because according to my perception, the entire works are getting completed in the current year only and my profit also comes in the current year. This amount of Rs. 11 Crores includes Rs. 9.78 Crores which is due to be given to Devi Durga and others as per my books of accounts. This amount is my income which is invested in my business assets. Balance amount of Rs. 1.22 Crores is given as Advance of Expense or another investments. Thus I disclose total amount of Rs. 11 Crores and one (Rs.11,00,00,001} as m....
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....appearing the seized data in estimating the profit which both the lower authorities have failed. The assessee, though claimed to have been earned profit to the tune of 6 to 11% and offered 12.5% before the Settlement Commission, the correct evaluation of the earning of the profit on the bogus bills has not been taken into consideration. The Ld. CIT(A) estimated profit earned by the assessee @ 20%. We have gone through the facts of the case, the role of the assessee with regard to SICCL, the statement recorded along-with the submission made before the lower authorities. The estimation of profit by the A.O. @20% relying on the letter sent to Sahara India wherein it was mentioned that the profit margin should be ranging between 15% to 20%. Hence, keeping in view the order of the Assessing Officer, entire bogus bills and the receipts have to be considered to determine the correct profit. Keeping in view the entire facts, we determine 20% of Rs 26,86,00,000/- as profit of the assessee for the year. The Assessing Officer shall recompute the net profit keeping in view the quantum of bogus bills raised. Unexplained Expenditure - Jamnagar, Palanpur, Surat - Addition of Rs. 2.27 Crores: ....
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....ayments Difference 1 Jamnagar - 24 24 2 Palanpur 100 128 28 3 Surat 50 225 175 Total 227 13.5 It is an undisputable fact that the said payments have not been recorded in the books of accounts, hence shall be treated as unexplained expenditure u/s 69C of the Act. The Ld. CIT(A) held that if any undisclosed income is determined, application of such amount need to be given for such alleged unaccounted payment. The Ld. CIT(A) held that there is substantial force in the contention of the Appellant as both unaccounted income and payment cannot be taxed. It is settled legal law that higher of unaccounted income or expenditure being application of income can be taxed. Reliance is being placed on the judgments in the following cases:- (i) Reliable Surface Coatings v. A CIT [2012] 20 taxmann.com 268 (Ahd.) (ii) Shri Champaklal P. Bhimani v/s ACIT, Ahmedabad- ITA No.2891& 2832/Ahd/2003, dated 02.03.2010 (iii) ITO Vs. Agro Sales Corporation- ITA No.2294/Ahd/2006 -Ahmedabad ITAT, dated 23.12.2009 (iv) M/s National Steel & Agro Industries Ltd. ACIT and vice versa in ITA Nos. 4558 to 4561/Mum/2008 for ....
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.... to the farmers to the tune of Rs. 98 lacs during the month of November. As no further instruction has been received from you, Bahna Chatas with the farmers as well as the advertisement in the newspaper are pending. Farmers are also panicking for want of clarity regarding further payment. We feel that the payment is not made to farmers upto the 20th of January, it would be difficult to get co-operation from the farmers. We request to kindly look into the matter at the earliest. Thanking you, Yours faithfully, Sd/- (Nimish Panchal) 14.1 This letter makes clear that Shri Nimish Panchal made payment of Rs. 98 lacs during November 2003. The Assessee explained that Annexure A-13 seized from Chunibhai Chambers on 29.09.2006 contains MoU between Nimish B. Panchal & Sahara as well as different proposals given to Sahara. Xerox copy of the draft received and title report / opinion by Advocate. The seized material pertains to Anand project of Township to be developed by Sahara. However, the purchase of land could not be materialized and Nimish B. Panchal is working for him. The assessee submitted that he has paid Rs. 75 lakhs to Mr. Nimish. Henc....
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....as with the payment receipts carrying revenue stamps duly affixed on them. Further, at page no. 43 carries the signature of Sh. Ashish P Patel also. Copies of page no. 43 to 48 of annexure A-27 were also found during the course of search on 04.08.2006 on the assessee at his residence located at 2, Vitthalbhai Patel Colony, Navrangpura, Ahmedabad and the same were seized as page no. 06 to 11 of annexure A-1. On enquiry, assessee submitted that the amount was paid for the bungalow of 6505 sq. yrds. which has been originally purchased by the assessee. Page No. 45 reflects payment of Rs. 51.76 lakhs. Based on the seized material and after due verification the Assessing Officer made addition of Rs. 50 lakhs being the amount paid in cash for acquisition of the property. Ld. CIT(A) affirmed the action of the Assessing Officer in principle. For the sake of ready reference, the relevant part of the order of the Ld. CIT(A) is reproduced hereunder:- "11.3 I have carefully considered the Assessment Order and the submission filed by the Appellant. The brief facts of the case are that Assessing Officer has referred to page No. 42 to 48 seized as Annexure - A/27 containing copies of sale....
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....veals that such payment is made which is not accounted in books of account hence addition made by AO for Rs. 50 lacs need to be upheld subject to observation made herein below. 11.5 However, undisclosed income i.e. Rs. 12 crores determined in the case of Appellant in preceding para is higher than unexplained payment found during the course of search hence considering decisions referred supra separate addition for unaccounted payment for Rs. 50 lacs is not required hence addition made by AO is deleted. It is observed that if at a subsequent stage it is held that undisclosed income in the case of Appellant is required to be reduced in comparison with income determined herein above, application needs to be given to extent of undisclosed income. Subject to this observation, this ground of appeal is allowed." 16.1 The Ld. CIT(A) confirmed the addition in principle and allowed it to be telescoped with that of the monies earned of Rs. 12 crores. 16.2 Since telescoping of income to the expenditure is an accepted principle, we decline to interfere in the order of the Ld. CIT(A) on this issue. Amounts received for land transactions at Surat, Palanpur, Amravati and Anand - R....
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.... Palanpur 100 128 28 3 Surat. 50 225 175 4 Amravati 50 54 4 Total 275 505 230 During the course of Appellate Proceedings, Appellant has reiterated the argument as were discussed in earlier grounds and contended that he has only acted as facilitator in land aggregation between SICCL and land owners. He was entitled to fixed percentage of receipt of its income received either in the form of cheque or cash from SICCL. The Appellant has stated that while making addition of unaccounted payments for above referred four lands, AO has already given credit of receipts of Rs. 2.75 crore and only net unaccounted payment is considered as undisclosed payment hence separate addition of Rs. 2.75 crore is not required to be made. On careful consideration of entire facts and after referring the finding given at Ground No. 2 herein above, it was held that Appellant has acted as facilitator for SICCL for various lands. The land dealings for four lands being Anand, Palanpur, Surat, Amravati were not materialized. In the profess of carrying out land transactions, Appellant used to receive funds from SICCL against expenditure already....
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....ned expenditure. Since telescoping of income to the expenditure is an accepted principle, the same shall be set off against the income offered. Unexplained Expenditure - Interest payment - Rs. 7 lakhs :- 18 This addition is based on the seized material, page No. 51 and 77 of Annexure- A/1, which contains details of interest paid to R. Dalal and S. Salot. The assessee himself in his statement has explained that such loose papers are pertaining to loan of earlier year and settled in current year hence the Assessing Officer held that the interest payment reflected need to be held as unaccounted expenditure as assessee has not proved that such entries are already recorded in books of account. The assessee claimed that loose paper nowhere suggests that jotting belongs to assessee but this contention of assessee was not accepted by the Revenue Authorities as loose paper is found during the course of search at assessee's premises and even assessee himself in his statement has admitted that such loose paper pertain loan taken in earlier year. Since the admission of the assessee has not been found to be contradictory to the facts, the addition of Rs. 7 lacs is hereby confirmed bein....
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.... assessee on this ground is thus dismissed. CO No. 5/Ahd/2020 - AY 2004-05 - By assessee 21. All the issues raised by the assessee in the CO have been dealt with in IT(SS)A Nos. 429/Ahd/2019 and 460/Ahd/2019. In the result, the appeals of the Revenue, Assessee and Cross-objection filed by the assessee for AY 2004-05 are partly allowed. AY 2006-07 IT(SS)A No. 472/Ahd/2019 - Revenue's Appeal 22. Grounds of appeal raised by the Revenue are as follows :- "1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in law and on facts in restricting the addition to 2,52,15,500/- as against addition of Rs 9,94,00,000/- made on account of unaccounted income earned through the land transactions of SICCL 2. The Ld.CIT(A) has erred in holding that such disallowance was not warranted when income was estimated, without appreciating that the income of the assessee is required to be computed as per the provisions of the Act and when bogus claim of deduction u/s 37 exceeds the income estimated, the disallowance u/s 37 should prevail. 3. The Ld.CIT(A) has erred in not appreciating the fact that not disallowing the expenditu....
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....d to be deleted. 3. In law and in the facts and in the circumstances of the appellant's case, even if income from project of SICCL is required to be estimated then it should be restricted to 12.5% of gross receipt as accepted by the appellant in his settlement application as well as his statement dated 29th February, 2006. 4. In law and in the facts and in the circumstances of the appellant's case, the Ld. CIT(A) has erred in estimating income from project @ 20% without appreciating that actual profitability from alleged project ranges from 6% to 11% which is evident from seized material found during the course of search. Addition in any case cannot exceed the actual profit earned by the appellant from alleged project. 5. In law and in the facts and in the circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding addition u/s 14A at Rs. 2,16,134/- when no such addition was required to be made. The same shall be deleted." CO NO. 7/Ahd/2020 - By assessee 24 The grounds of cross-objections read as under :- "On the facts and in the circumstances of the case, the CIT(A) ought to have deleted addition of Rs. 10,00,0....
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....e total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s. 158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec. 153A and sec. 153B1 specifically states that the provisions of Chapter-XIV-B, under which sec. 158BB falls, would not be applied where a search was initiated u/s. 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee and that if the interpretation of the ld. CIT(A) were to hold it will not ....
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....he facts and in the circumstances of the case, the CIT(A) erred in directing the AO to make addition of interest income of Rs. 24,14,000 based upon loose paper found during the course of search and inventoried as page No. 80 of Annexure A/1 without appreciating the fact that such loose paper is rough noting and jotting and even noting pertaining to interest income nowhere proves that such interest income is actually received by appellant 2.1 On the facts and in the circumstances of the case, the CIT(A) ought to have appreciated that loose paper referred by itself contained noting that outstanding amount is not received by appellant till the date of noting. 3. On the facts and in the circumstances of the case, the CIT(A) erred in upholding addition of Rs. 13,50,000 based upon ad hoc disclosure made in Settlement Application which was subsequently rejected and such disclosure was made only to cover any discrepancies." Ground No. 5 - Revenue's Appeal - Disallowance u/s 14A - Rs. 2,00,461/- 31. Owing to the low quantum, Ld. AR submitted that the issue is not being pressed. Hence, appeal of the assessee on this issue is allowed. Ground No. 6 - Revenue's appeal....
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....ous loans and advances amounting to Rs. 30.09 crores from his proprietary concerns on which no interest has been received. The A.O. has applied interest rate of 12% on such advances and made addition of interest income. On the other hand, the assessee has contended that he has claimed interest expenditure of Rs. 6,81,590/- in year under consideration and borrowed funds were used for the purpose of his business. The A.O. has not proved that borrowed funds were used for giving interest-free advances and not made any disallowance of interest expenditure under Section 36(1) (iii) of the Act hence the A.O. cannot make addition of hypothetical income in present Assessment Order. 32.5 Even otherwise, on merits of the case, it is observed that AO has made addition of interest income of Rs. 3.61 crores only on the ground that assessee has given interestfree advances to various parties. It is not the case of the A.O. that there is diversion of borrowed funds for giving such advances or net interest paid during the year is not allowable as deduction under Section 36(1)(iii) of the Act. The assessee has claimed only very meagre amount of Rs. 6.81 lacs in current year which itself demonstrat....
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....king in real estate sector and at the relevant point of time, the regulatory function in this sector were not able to curb generation or utilization of black money. It is all the more important to note that assessee was also involved in shroff business that means business involving activity like advancement of money for interest earnings. Most of the times, such activities involve huge amount of cash transactions and only a small portion of the same could be taxed as the same was deposited in the bank account. Further, on verification of the seized material, number of pages were seen where words like "cash", "hawala" etc were written. It shows that assessee deposited cash which was earned and no taxes were paid on the same. Such vague submission at the fag end of the assessment proceedings itself can not save assessee from the provisions of the law. 8.4 Hence, assessee's reply is considered but not found acceptable. Further, the assessee neither attended this office in response to the summons u/s. 131 of the Act dtd: 12.11.2018 & 19.11.2018 and merely filed adjournment letter, assessee did not produce details as called for in the summons within stipulated time. Therefo....
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.... his deposit of the aforesaid amount in his bank account. Thereafter, it was immaterial whether the assessee had withdrawn the said amount and applied subsequently for his own use by re-depositing the same in his bank account. As rightly observed by the Commissioner (Appeals), once the source of cash deposit in bank account is explained, subsequent withdrawal is not required to be explained. In the facts and circumstances of the case, Commissioner (Appeals) has not committed any error in restricting the addition to the extent of Rs. 7,95,160 on account of unaccounted income. The restriction of addition by the Commissioner (Appeals) is confirmed by the Tribunal by observing that the Assessing Officer did not find any discrepancy between cash withdrawal from the bank and cash available in the cash book on a particular date. The assessee had not claimed any expenditure on account of interest payment. The appellant had filed the confirmation of the persons from whom loans were taken Sic-taleen. The assessee neither paid interest nor earned any income on account of interest on advance. This aspect has not been doubted by the Assessing Officer. There is no limit in cash withdraw....
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....com 308 (Jaipur Trib.) 6. We have considered the rival submissions as well as the relevant material on record. We note that the only issue in this ground is whether the Ld. CIT(A) is justified in not allowing set off of cash considered unexplained by him against the cash withdrawal of Rs. 4,72,000/-made from M/s Vijay Industries between 05.04.2014 to 20.04.2015. We note that no document is found in search to come to a conclusion that the amount withdrawn by the assessee from M/s Vijay Industries has been utilized elsewhere. There is no law which prohibits an assessee to keep cash in hand and therefore only because assessee has not given explanation as to why the cash was withdrawn, when he has withdrawn the cash earlier also cannot be aground to reject the explanation of assessee. In various cases referred above, it has been held that where no evidence is brought on record that cash withdrawal has been utilized elsewhere, such cash should be considered as available with the assessee. Considering all these facts, we direct the AO to delete the addition of Rs. 4,28,830/- made by him. (iv) Delhi ITAT in the case of Muon Computing (P) Ltd. v. ITO ITA No. 7606/Del/2019....
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....e cash disclosed in the books of accounts has been invested somewhere else, then on mere surmise assessee's explanation cannot be discarded. If assessee's have genuine sources of income which are received through banking channels, out of which cash has been withdrawn and have been disclosed in the income tax return and in the balance sheet as cash-in-hand, then I am unable to apprehend how the provision of section 69A is applicable. Because the section can only be invoked where in any financial year the assessee is found to be the owner of any money, etc., which has not been recorded in the books of account and assessee offers no explanation. Here in these cases, Assessee's cash in hand duly stands recorded and source has been explained from the income deposited in the bank account and withdrawal, then in my opinion deeming provision of section 69A cannot be invoked. The reasoning given by the AO and Ld. CIT (A) is vague and based on surmise as to what a prudent person should have done. Once assessee has explained that being of senior citizen they have maintained such liquidity of cash out of their own disclosed income with them for certain contingencies, then without any m....
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....s are reversed. 34.3 We find that the action of the A.O. in making the addition is on assumption without bringing any corroborative evidence to substantiate and prove that the cash withdrawn by the assessee was utilised and invested elsewhere. The assessee had submitted necessary evidences in the assessment proceedings to prove the source of cash deposit in the bank accounts. The assessee has also provided entire bank statements reflecting withdrawal of cash prior to the deposit in the bank accounts. Further no defects have been along with cash book forming part of audited financial statements. In fact, it is also seen that assessment under section 143(3) r.w.s. 153A was completed prior to this assessment order wherein A.O. has accepted various cash transactions including cash deposits as genuine cash deposits. 34.4 We also find that CIT(A) has observed that, that there is no negative cash balance and cash deposited in bank accounts are mainly from cash withdrawals forming part of regular books of account. Since the Assessing Officer has been unable to bring on record any instances of unaccounted receipts which has not been subjected to tax and also not been able to controver....
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....submission, it is clear that the assessee intentionally does not want to explain the page wise seized documents during the course of search action as mentioned above and hence the entries on page-49, 78, 80 & 84 of Annexure A-1 seized at 2, Vithalbhai Patel Colony, Nr. Sardar Patel Colony, Navrangpura, Ahmedabad on 04.08 2006. Therefore, as per column 4 of the table mentioned Rs. 4.81.37.000/- remains unexplained and added to the total income of the assessee for A.Y. 2003-04 Penalty proceedings u/s 271(1)(c) of the Act for A Y 2003-04 are initiated for concealment of income. 35.2 The above loose papers in the table(supra) have been reproduced at page No. 26 to 31 of the Assessment Order of A.Y. 2003-04. 35.3 Out of the addition made of Rs. 4,69,81,000/- in the assessment order. CIT(A) deleted the addition of Rs. 4,45,67,000/- and sustained addition of Rs. 24,14,000/-. The assessee has filed C.O. on the addition confirmed by the CIT(A) of Rs. 24,14,000/-. 35.4 We have gone through the facts of the case and observe that the Assessee has furnished relevant explanation along with documentary evidences, details of which are listed above in the course of assessment proceedings a....
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....ansaction has not been executed and AO has not brought anything on record to prove that such transaction was actually materialised. When loose paper found during the course of search does not provide actual trail of the transaction or proves that Appellant has earned such profit, such loose paper is a dumb document and addition cannot be made based upon such loose paper. 35.6A. We may like to state that similar type of scribbling or notings or jottings were found and seized during the course of search for which addition is made by the A.O. in other A.Y. which are before us. It would be relevant now to discuss about admissibility of the notings/jottings/scribblings in the loose paper for which the Courts have consistently held that the onus is on the revenue to establish that the addition that is made is within the taxing provision. The addition cannot be made on the basis of assumption, surmises and conjectures and without corroborating the same. In the absence of the corroborative evidence and merely on the basis of notings found in the loose paper it is not open for the Revenue to make addition based on any scribblings or jottings found in the loose paper. Various Courts from ....
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.... Pad' containing payment of wages to various persons. The slips were written by Manoj Jain, an employee of the assessee, who was confronted with the slips, apart from questioning of the Director. It was held by the Tribunal that even though explanation of the assessee that the loose papers did not relate to payment of wages during the year in question may not be accepted, in absence of any other material, the loose sheets by itself were not enough to make addition as per estimate of the A.O. It was observed by the Tribunal (as quoted):- "Now the question is regarding estimating the income on the basis of these loose slips. In our opinion, the Assessing Officer is not justified in estimating the sales on the basis of loose slips without substantiating that the assessee has actually made the sales to that extent of estimation made by the Assessing Officer and having no iota of evidence in the form of sale bills or bank account or movable and immovable property which represent earning of unaccounted income by the assessee. As such, the Id. CIT (A) to that extent is justified in holding that estimation of sales on the basis of loose slips represented payment of wages is no....
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.... be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts; (vi) The Court has to be on guard while ordering investigation against any important Constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence it is not admissible in evidence. Relying on the judgment of the apex court in case of Common Cause (supra), the Hon'ble Bench of ITAT, Ahmedabad in case of Nishant Construction (P.). Ltd. υ. ACIT ITA No. 1502/AHD/2015], held that in the absence of any corroborative evidence, loose sheet can at the most be termed as "dumb document" which did not contain full details about the dates, and its contents were not corroborated by any material and could not relied upon and made the basis of addition. (v) The Delhi ITAT in case of Shri Neeraj Goe....
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....Income Tax, Central Circle-3(2), Hyderabad Goyal456/Hyd/20 dated 20.04.2021: 13. Lastly comes the crucial issue as to whether the impugned seized material / 'Excel' sheet (not mentioning the assessee's names) forms a dumb document or not. We make it clear that the department has failed to corroborate the impugned seized document indicating assessee's alleged on money payment over and above the sale price itself. All it has done is to rely on their father's name only. It is nowhere clear as to whether it is an alleged document forming part of the books of account maintained in the regular course of business either by the vendor or vendee side. All it contains therefore is rough notings and jottings only. This tribunal co-ordinate bench's decision Nishan Constructions Vs. ACIT ITA No.1502/Ahd/2015; after considering the hon'ble apex court's landmark decision in Common Cause, Vs. Union of India (2017) 77 taxmann.com 245 (SC) and CBI Vs. V.C. Shukla (1998) 3 SCC 410 (SC) holds that such loose sheets deserves to be treated as a dumb documents only since not revealing full details about the dates containing lack of further particular s and therefore, ....
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....he Ld. CIT(A) as they were merely based on the rough jottings on the alleged seized loose papers which do not convey either receipt/ payment, mode thereof, nature of transaction etc.. Undisputedly, neither during the course of the assessment proceedings nor during the course of submission of remand report before the Id. CIT(A), the AO was able to bring any single cogent material or evidence on record to justify the addition made on the basis of uncorroborated jottings in the diary. Therefore, the alleged seized loose papers are only Dumb documents and no addition could have been made on such dumb documents. We therefore, do not find any reason to interfere in the findings of the ld. CIT(A) deleting the addition made in the assessee's income for A.Y. 201011. Accordingly, the ground No. 2 of the Revenue for A.Y. 201011 is dismissed. 12.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We observe th....
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....uresh Kumar Maheshwari. Accordingly, the Ground Nos. 3 & 4 of the Revenue for A.Y. 2010-11 and Ground Nos. 2 & 3 for A.Y. 2011-12 and A.Y. 2012-13 are hereby dismissed. 51. In the result, all the captioned appeals at the instance of revenue are dismissed." (x) Smt. Harmohinder Kaur v. Deputy Commissioner of Income-tax, Central Circle-II, Jalandhar [2021] 124 taxmann.com 68 (Amritsar - Trib.): Section 69A, read with section 292C, of the Income-tax Act, 1961-Unexplained money (Presumptive addition) - Assessment year 2009. 10- Assessee sold a property and derived long-term capital gain -During search, diary of a third party was seized from residence of assessee - This diary had notings which showed an amount of Rs. 1.15 crores as sale consideration Assessing Officer observed that in registered sale deed, total consideration was shown at Rs. 29.50 lakhs - By making presumption as per section 292C, he considered sale consideration shown in diary as actual consideration and made additions accordingly - There was nothing on record to suggest that assessee had underestimated value of property and violated circle rate as prescribed by government - Even diary admit....
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....her sources u/s 69A-Assessee was found in possession of loose slips addition as made on assumption and presumption. HELD assessee challenged THAT:-As in the case at hand, it abundantly clear that the appellant was neither found to be owner of any money, Bullion or Jewellery etc., nor there was any value of such assets recorded in the books of account of the Assessee and further the explanation offered relating to the alleged amount supported by the statement of Mrs. Balwant Kaur as proves that no such amount was carried by the appellant to the office of Sub Registrar on 30.08.2010. Accordingly, the addition confirmed by the CIT(A) based on assumption and presumption u/s 69A of the act, without support of any cogent material evidence on record to establish that any disputed cash was found in the custody of the appellant and therefore, in our view, the addition confirmed by the CIT(A) is unjustified, unwarranted and illegal. The same is deleted. Thus ground nos. 3 and 4 are allowed." (xiv) Hon'ble Supreme Court Decision in J.J. Enterprises vs. Commissioner of Income-tax [2002] 122 Taxman 124 (SC) "Head Note: Section 4 of the Income-tax Act, 196....
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....paper, the action of the AO in making the addition was on assumption and presumption basis without bringing any corroborative evidence was purely on suspicious basis. Accordingly, we hold that the CIT(A) was correct in deleting the addition and therefore we direct the A.O. to delete addition of Rs 66,00,000/-. 35.9 Regarding the addition of Rs. 5,30,000/- Rs. 1,57,51,000/- and Rs. 2,41,00,000/, we have gone through the loose papers and observed that the jottings in the loose papers are rough and tentative in nature and do not convey any conclusive finding from which decisive conclusion could be reached. Also, the A.O. has also not brought any corroborative material or evidence so as to prove that the jottings made in the loose papers has indeed taken place and represents actual transactions. Notwithstanding to the above the A.O. has not carried out any independent inquiry for coming to the conclusion that transaction has taken place. It is beyond our comprehension to believe that such type of scribblings in absence of corroborative evidence and independent inquiry leads to an addition particularly when the details about the parties, entities, nature, etc is missing. We have alre....
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....002 for Rs. 241 00 and this amount is considered as Rs. 2.41 crore by AO and held as unexplained in the hands of Appellant. As loose paper itself states that amount of Rs. 2.41 crores is not advanced during the year or received during the year. Such amount cannot be subject matter of addition in current year. On this ground, addition made by AO for Rs. 2.41 crore is deleted. On perusal of page No. 84 referred supra, there are notings on left side which also suggest how opening balance as on 1st April, 2002 for Rs. 2.41 crores is arrived. This noting is completely ignored by Assessing Officer. The first entry on this page states that amount as on 1st April, 1998 was Rs. 1, 14,620, on 1st April, 1997 was Rs. 1,02,000 and in this figure interest is added till 31st March, 2002 to arrive at figure of Rs. 2,00,470. In this figure. Rs. 27,000 to Aditya is added which makes balance at Rs 2,27,470 and at last it was stated that amount to be considered at Rs. 2,41,000 and this figure is carried forward as opening balance as 241.00. As stated herein above, addition of Rs. 2,41,00,000 cannot be made as it represents opening balance and outstanding amount is carried forward since 1997 ....
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....r AY 2004-05, AO has made addition of Rs. 18.86 lacs out of figure of Rs. 51.20 lacs and this figure of Rs. 18.86 lacs is forming part of addition of Rs. 29.24 lacs hence remaining figure of Rs. 32,34,000 is required to be considered as undisclosed income of Appellant in year under consideration. It is observed that Appellant has offered additional income of Rs 13.50 lacs in settlement petition filed before Hon'ble Settlement Commission and same is added to total income in present Assessment Order and credit of Rs. 5,30,000 is already given in preceding para hence balance credit of Rs. 8.20 lacs is given against undisclosed interest income of Rs. 32.34 lacs. Thus, addition for undisclosed income for year under consideration is worked out at Rs. 24,14,000/-. 35.11 Accordingly, having regard to the facts of the case and for the reason that the addition is made simply on loose papers which are nothing but rough noting and jottings, the CIT(A) has rightly deleted the addition and accordingly we direct the A.O. to delete the addition of Rs. 5,30,000/- Rs. 1,57,51,000/- and Rs. 2,41,00,000/-. 36. In respect of the addition confirmed of Rs. 24,14,000/- by the CIT(A) for which th....
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....atter has been revived by the Assessing Officer for assessment under Section 153A of the Act. Since the assessment has been conducted under section 153A, the rigors of provisions of Section 153A would be applicable. It was submitted that since there was no material evidence or seized material pertaining to the addition of Rs. 15,00,000/-, the action of the Assessing Officer making the addition simply by the virtue that the assessee has offered same before the Hon'ble ITSC cannot be sustained. 17.3 On the other hand, Ld. DR argued that assessee is the best judge of his affairs and the factum of his offering the amount of Rs. 15,00,000/- as additional income before the Settlement Commission proves without any doubt that the assessee has earned Rs. 15,00,000/- as undisclosed income. It was argued that the ratio of statement recorded u/s 132(4) would be applicable as the statement given before the ITSC becomes statutory and binding in nature. 17.4 Rebutting the arguments of the Ld. DR, the assessee argued that the validity of statement recorded u/s 132(4) cannot be equated with the statement given before the ITSC. 17.5 Heard both the parties and perused the m....