TaxTMI 
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2024 (8) TMI 1621
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....Seleno Group, wherein search & seizure u/s 132 of the Act was conducted concurrently on 24.10.2017 in their business and residential premises. The assessees in present case are key persons and Directors in the aforesaid groups, known as Shri Sanjay Agrawal, Shri Mukesh Agrawal & Shri Rajesh Agrawal. Since the issues involved herein are common, interconnected and inextricably interwoven, therefore, for the sake of convenience and brevity, all the aforesaid matter are taken up for adjudication under this common order. 3. ITA No. 108/RPR/2020 has been taken up for adjudication first as the lead case, our decision therein shall have a direct bearing on the issues in the other cases and, therefore, the outcome of the lead case shall be utilized to decide the remaining matters by applying the same mutatis mutandis. 4. Ground of appeal raised by the department in ITA No. 108/RPR/2020 is extracted as under: 1. "On the facts and int he circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 2,10,00,000/- made by the Assessing Officer on account of unexplained investment u/s 69 of the Income Tax Act, 1961. 4.1 The brief facts of the case are that the assessee is ....
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.....00 crores as consideration of sale, he, therefore, with his conviction had made the addition on the basis of terms and conditions in para 3 of the "Sauda-Ikrarnama", according to which the assessee was to pay Rs. 70 lac per month starting from January, 2018, therefore, the amount for 3 months i.e., January to March' 2018, in aggregate Rs. 2.10 crore was added as unexplained investment u/s 69 of the Act. 4.2 Aggrieved with the aforesaid addition by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A). Wherein, after deliberations Ld. CIT(A) decided the issue by deleting the addition, under the following observations: 4. After taking into consideration the AO's findings and appellant's oral and written submission made in the course of hearing as well as the facts of the case the issues involved in appeal are discussed and decided as under :- 4.1 Ground No. 1 to 3 (revised):- Through these grounds of appeal the appellant has challenged the addition of Rs. 2,10,00,000/- on account of unexplained investment u/s 69 of the Act. During the course of search an agreement for sale was found and seized which is also scanned page no 3 & 4 of the assessment order. The AO ....
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....r the bank loan/ bank CC of 'Seleno Steels Group', are given as under: Sl. No. From (NR Ispat Group) To (Seleno Steels Group) Loan given (in the month of Oct, 17) Loan received/repaid (in the month of April, 18) 1. Sanjay Agrawal S/o Nand Kishore Agrawal Rajesh Agrawal HUE, (Ramnivas Agrawal 44,08,000 On 5-10-17 Ch. N0. 782700 44,08,000 On 24-4-18 2. Sanjay Agrawal S/o Nand Kishore Agrawal Ramnivas Agrawal HUF 58,16,000 On 5-10-17 Ch. N0. 782701 58,16,000 On 24-4-18 3. Sanjay Agrawal S/o Nand Kishore Agrawal Smt. Rukmani Devi Agrawal 24,00,000 On 5-10-17 Ch. N0. 782702 24,00,000 On 23-4-18 4. NR Ferro & Power P Ltd Abha Devi Agrawal 3,00,00,000 On 16-10-17 Ch. N0. 005996 1,14,21,715 On 24-4-18 5. NR Ferro & Power Ltd Abha Devi Agrawal 1,50,00,000 On 15-5-18 6. NR Ferro & Power Ltd Abha Devi Agrawal 9,07,844 On 17-5-18 7. NR Ferro & Power P) Ltd Abha Devi Agrawal 19,39,431 On 18-5-18 8. NR Ferro & Power Ltd Abha Devi Agrawal 7,31,010 On 22-5-18 9. Rajesh Agrawal S/o Nand Kishore Agrawal Smt. Mamta Devi Agrawal 1,68,16,000 On 4-10-17 Ch. N0. 143822 82,24,000 On 23-4-18 10. Rajesh Agrawal S/o Nand Kishore A....
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....cres of Adiwasi land has not been given/ transferred to the assessee Group, which fact is clearly verifiable from the audited balance sheet of M/s. Seleno Steels Ltd as on 31-3-17, 31-3-18 & 31-3-19 and also from the balance sheet of the assessee as on 31-3-18 & 31-3-19. Further, all the pending statutory dues/ liability, pending returns/ statements and any amount dues, related to income-tax, sales tax, excise, GST, water tax and all other statutory dues till 15-9-17 to be borne by the seller group, but none of the terms & conditions has been fulfilled/ complied with by the seller Group; and thus, no act/ work done by the seller group (i.e., Seleno Steels Ltd) which is in consonance with the terms & conditions mentioned in the alleged 'Sauda Inkrarnama'. Thereafter, on 1-10-17, it was agreed between both the parties that shares of M/s. Seleno Steels Ltd would be transferred to the family members of the assessee-Group at total sales consideration of Rs. 12.50 crores, which is also evident from the statement recorded on 24-10-17 to 26-10-17 u/s132(4) of the assessee-Sanjay Agrawal. Thereafter, on being asked question about the payments made to M/s. Seleno Steels Ltd, in Ans. ....
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....997 shares of M/s. Seleno Steels Ltd. The details of shares of M/s. Seleno Steels Ltd purchased by family members of 'NR Ispat Group' from the family members & associates of 'Seleno Steels Group' on 25-4-18 are as under: Sl. No. Name of buyer (NR Ispat Group) Name of seller (Seleno Steels Group) Date of transfer of shares Number of shares transferred Sales consideration of shares transferred (Rs.) 1. NR Ferro & Power P Ltd Abha Devi Agrawal 25-4-18 3,75,000 shares @ Rs. 93 per share 3,48,75,000 2. 25-4-18 15,000 shares @ Rs. 93 per share 13,95,000 3. 25-4-18 53,000 shares @Rs.93 per share 49,29,000 4. NR Ferro & Power P Ltd Economy Infra. (P) Ltd 25-4-18 53,571 shares @ Rs. 93 per share 49,82,103 5. NR Ferro & Power P Ltd Sector Infra. (P) Ltd 25-4-18 64,285 shares @ Rs. 93 per share 59,78,505 6. Rajesh Agrawal S/o Nand Kishore A Smt. Mamta Devi Agrawal 25-4-18 2, 10,200 shares @Rs. 93 per share 1,95,48,600 7. Rajesh Agrawal S/o Nand Kishore Mukesh Agrawal & Family, HUF 25-4-18 17,600 shares @ Rs. 93 per share 16,36,800 8. Vijay Agrawal Shri Rajesh Ag S/o Ramnivas Ag 25-4-18 84,400 shares @ Rs. 93....
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....n/firm/company nor any of the director from either group i.e. purchaser or seller group has ever admitted that the agreement under consideration was materialised and payment of Rs. 2.10 crores was made by the purchaser to the seller and that too in cash. Thus, it can safely be held that no such transaction actually took place and the entire addition has been made on sheer presumption and assumption basis. The seller in his statement recorded on oath has also denied to have any information about these transactions even does not have any knowledge of any such agreement. The appellant in his statement has admitted that the agreement was prepared unilaterally and without sharing any information to the seller party. The draft agreement was prepared for negotiations. On the other hand the AO failed to establish how the said transactions materialised. The AO in support of his findings has stated that possession of the impunged company has taken by appellant on 15.09.2017 and for this reason one of the director Shri Vijay Agrawal and his nephew Shri Ankit Agrawal were present at the time of search in the factory premises. The reasoning of the AO does not holds ground for this very basic re....
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....endent corroborative evidence having nexus that the alleged cash payment by the appellant. Absence of these vital details is making the loose papers under consideration as "deaf & dumb document". The onus was solely on the AO to fill such vital gaps by bringing positive evidence on record and prove the allegation about alleged "unaccounted cash payment" by the assessee, which he utterly failed to do so. CBI vs VC Shulda 3 SCC 410 The Hon'ble Supreme Court has held that loose sheets of paper cannot be termed as 'book' within the meaning of s. 34 of evidence Act. It has also been held therein by the Hon'ble Supreme Court that even correct and authentic entries in books of account cannot, without independent evidence of their trustworthiness, fix a liability upon a person. The Hon'ble Supreme Court also observed that even assuming that the entries in loose sheets are admissible under s. 9 of the Evidence Act to support an inference about correctness of the entries still those entries would not be sufficient without supportive independent evidence. Rakesh Goyal vs. ACIT (2004) 87 TTJ (Del) 151 The findings of Hon'ble Tribunal was as under: - "20.1 Afte....
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....g money. Thus, in our opinion, this is a dumb document. " Hon'ble High Court confirmed the findings of the Tribunal and relevant findings was as under: - "12. It is well settled that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or handwriting of that person, on such document by itself cannot prove the contents of the document. These are the findings off act recorded by both the authorities i.e. CIT(A) and the Tribunal. "15. Similarly, in the present case, as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of CIT(A) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration". Jayantilal Patel vs. ACIT & Ors (1998) 233 ITR 588 (Raj) Held that - "During search at the residence of Dr. Tomar, the Department official found a slip containing some figures. This piece of paper claimed to have been recovered at the time of search....
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....eyed person or some other person. Moreover, no entries are supported by any corroborative evidence; such loose papers cannot be called even the documents as they are simply the rough papers to be thrown in the waste paper basket. In this connection, the assessee relies upon the court decisions. CIT vs. Chandra Chemouse P. Ltd. (2008) 298 ITR 98 (Raj.): it is held that- (i) Additions can be made only when evidence is available as a result of search or a requisition of books of accounts or documents and other material. However, additions cannot be made on the basis of inferences. (ii) No facts were available to AO after search and inference of AO did not fall within the scope of Section 158BB. (iii) Deletion of additions made by Tribunal of assumed undeclared payments made for purchase of property was on basis of facts. Ashwani Kumar V. ITO (1991) 39 ITD 183 (Del) and Daya Chand V. CIT (2001) 250 ITR 327 (Del) and S.P. Goel V. DCIT (2002) 82 ITD 85 (Mum.): Nine out of 19 slips found were without any name or amount and therefore were dumb documents and no adverse inference could be drawn. Common Cause (A Registered Society) Vs. Union of India - 30 ITJ 197 (SC). In this....
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....ents were made. In fact, the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. They have been shown in abbreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to. " 19. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus; "37. In Beni v. Bisan Dayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of bu....
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....nd in search to prove that details/figures mentioned in notings on page 1 17 to 119 of A/ I represent 'on money' payments by the assessee]. (iv) Atual Kumar Jain vs. DCIT (2000) 64 TTJ (Del. Trib) 786 - Held that additions based on chit of paper, surmises, conjectures etc could not be sustained in the absence of any corroborative evidence supporting it. [Similarly in present case, neither either parties have admitted payment/receipt of 'on money' nor any corroborative evidence was seized to support the findings of the AO]. (v) SK Gupta vs. DCIT (1999) 63 TTJ (Del. Trib) 532 Held that "that additions made on the basis of torn papers and loose sheets cannot be sustained as same do not indicate that any transaction ever took place and does not contain any information in relation to the nature and party to the transaction in question. " (vi) Jagdamba Rice Mills vs. ACIT (2000) 67 TU (Chd) 838 Held that "No addition can be made on dump documents". It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal maxim "affairmanti non neganti incumbit probation " means burden of p....
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....wever strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lai Girdharilal v/s CIT (1954) 26 ITR 736 (SC). 4.1.7 In view of the above discussion, material evidences on record and case laws cited, firstly, the loose papers or rather say it as dumb document should be a speaking one having direct nexus with the cash payment, which was not in the case of appellant. Secondly, the loose papers are undated and unsigned. Thirdly, no independent incriminating material was found suggesting alleged cash payment. Fourthly, neither the appellant nor the seller group has admitted of any such cash transaction. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justified in making additions simply on guess work and solely on the basis of some dumb diary. Thus, the additions made by the AO amounting to Rs. 2,10,00,000 are Deleted. Therefore, appeal on these grounds is Allowed. 4.2 Ground No. 4(revised): - Through this ground of appeal, the appellant has taken a plea that no proper approval was taken u/s 153D of the Act. on peru....
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....he amount shown in the said agreement, it was just an eyewash, to evade taxes on the undisclosed payments made towards the alleged investment in the plant purchased. Such over and above payment is nothing, but payments made in cash by the sellers to the buyers which qualifies to be termed as unexplained investment under the provisions of section 69 of the Act. Based on aforesaid submissions, it was the request of Ld. CIT(A) that the Ld. AO has rightly made the addition which deserves to be sustained and the decision of Ld. CIT(A) which was under misinterpretation of the facts is liable to be set aside. 6. In rebuttal to the submissions of the CIT DR, Ld. AR on behalf of the assessee have furnished a detailed written submission, which is extracted hereunder for the sake of clarity: Before the Hon'ble Income Tax Appellate Tribunal. Raipur Bench. Raipur Assessee: Sanjay Agrawal Raigarh-496001 (CG), PAN-ACIPA2389J ITA No. 108/Rpr/2020 AY 18-19 (D) CO No. 1/Rpr/2021 AY 18-19 (A) Written submission-I (on merits) 1.1. Search & seizure operation u/s 132 has been conducted upon the assessee on 24.10.17 along with group concern M/s. NR Ispat & Power (P) Ltd, Raigarh & oth....
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....t & Power; 1.8. in fact, it was kept ready unilaterally (without there being having knowledge of the persons i.e., Mr. Rajesh & Mr. Mukesh Agrawal, the impugned sellers mentioned in the 'SaudaIkrarnama'), in the month of Aug, 2017 by the assessee-Sanjay Agrawal, for negotiations/ talking about the deal of taking over possession of 'plant' of M/s. Seleno Steels Ltd (now M/s. NRVS Steels Ltd) from Mr. Rajesh & Mr. Mukesh Agrawal, the erstwhile directors of Ws.Seleno Steels; that the 'Sauda-lkrarnama' was one sided typed to negotiate the deal with Mr. Rajesh & Mr. Mukesh Agrawal, without there being having knowledge of them; that this was only a offer/ proposal, unilaterally proposed 'Sauda Ikrarnam' which was prepared for making the impugned deal with the impugned persons; 1.9. while it was not done so on the vary basis/ dotted lines of the terms & conditions mentioned in this unilaterally prepared 'Sauda Ikrarnam' which was not even knowledge of the said persons; 1.10. that this fact, is self evident since it is undated, unsigned and un-witnessed, that it is neither signed by the assessee nor signed by the alleged two persons because thi....
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....sked with regard to sale of my shares of Seleno Steel Ltd to NR group. A specific question was asked at serial No. 53 about above "Sauda Ekrarnama". In reply to it, I have categorically denied above "Sauda Ekrarnama". Please also refer following replies: I. Reply to query No. 57 II. Reply to query No. 58 III. Reply to query No. 60 On the other hand, in following replies, I have categorically sated that sale of shares is for Rs. 12.50 cores. Please see following replies: i. Reply to query No. 46 ii. Reply to query No. 54 Submitted that in the spontaneous reply u/s 132(4) during search operation, in the statement I had categorically denied the execution of above statement which I confirm. Negotiations were going on between the assessee and Shri Sanjay Agrawal of NR group to sell the shares of Seleno Steel Ltd to them from 3-4 months before the search operation but because of plant becoming obsolete due to low capacity and old technology coupled with ascertainment of heavy burden due to liabilities of taxation, financial institution; plant requiring immediate updation, etc. the negotiation was prolonged. Your Honor kindly appreciate that no such amount as mentioned....
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....see-Group (i.e., the purchaser party) as well as M/s. Seleno Steels Group (i.e., the seller party); in fact, this amount of Rs. 6,08,48,000 was given by the purchaser group to the seller group in the month of Oct 2017 (i.e., on 4-10-17, 5-10-17 & 16-10-17 etc.) as loans and advances to pay/ clear the bank loan and this amount has been returned/ repaid by M/s. Seleno Group (i.e., the seller party) to the assessee-Group (i.e., the purchaser party) in the month of April, 2018 (i.e., on 23-4-18, 24-4-18, 15-5-18, 17-5-18, 18-518, 22-5-18) which is clearly verifiable from the bank statements, books of account and confirmation of account of the respective parties; 1.15. Details of payments (i.e., loans & advances) made by 'NR Ispat Group' to 'Seleno Steels Group' to pay/ clear the bank loan/ bank CC of 'Seleno Steels Group', are given as under: Sl. No. From (NR Ispat Group) To (Seleno Steels Group) Loan given (in the month of Oct, 17) Loan received/repaid (in the month of April, 18) 1. Sanjay Agrawal S/o Nand Kishore Agrawal Rajesh Agrawal HUE, (Ramnivas Agrawal 44,08,000 On 5-10-17 Ch. N0. 782700 44,08,000 On 24-4-18 2. Sanjay Agrawal S/o Na....
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....ve material evidence has been brought on record by the Id AO to substantiate his baseless contention; that the alleged person Mr. Rajesh, erstwhile director of M/s. Seleno Steels has clearly stated/replied before the Id AO (in response to summons issued to him) in its reply that he has not received any alleged cash amount on the basis of so-called "Sauda Ikrarnama" which was not even within knowledge of him; that he only said that shares of M/s. Seleno Steels Ltd has been sold at Rs. 12.50 crores to the assessee-Group as per their meeting held which is certainly not on the basis of the so-called "Sauda Ikrarnama"; 1.18. that the alleged piece of paper i.e., undated, unsigned and un-witnessed 'Sauda Ikrarnama' is a 'dumb document' in the manner that it was prepared for offering for 32.50 acres of general land & 2.50 acres of adiwasi land to be handed over to the purchaser Group (i.e., NR Group), which has not been done, it means, not materialized not honored, and, this fact is very evident from the audited balance sheet of M/s. Seleno Steels Ltd as on 31-3-18 and thus, this very condition of the alleged piece of paper (i.e., undated, unsigned and un-witnessed) has ....
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....hase deal has been made at Rs. 12.50 crores which has been duly accounted, instead of Rs. 25 crores. 1.22. thereafter, on being asked question about the payments made to M/s. Seleno Steels Ltd, in Ans. to Que. No. 14, the assessee said that total Rs. 4,26,24,000 has been paid and Rs. 8.25 crores approx. is balance to be paid, which means, that total sales consideration would be Rs. 12.50 crores approx., as per the statement recorded u/s 132(4) on 24-10-17. 1.23. thereafter, in Ans. to Que. No. 19, the assessee again said that the purchase deal has been made at Rs. 12.50 crores to purchase the plant of M/s. Seleno Steels Ltd, and the alleged Ikrarnama is a draft one it may be prepared by any staff at initial stage of dealing; 1.24. that Shri Rajesh Agrawal (Seleno Group-the seller party) whose statement was also recorded on oath u/s 132(4) on 24-10-17 to 26-10-17 in the factory premises who also said in Ans. to Que. No. 54 that final deal has been made with Shri Sanjay Agrawal to sell the shares of Ws.Seleno Steels Ltd at sales consideration of Rs. 12.50 croeres; and also agreed by both the parties that all the statutory liabilities, like, income tax, sales tax, excise, GST, w....
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....he bank loans of M/s. Seleno Steels Ltd., and thus, total payment of Rs. 6,08,48,000 has been given as loans & advances to the seller group to repay the bank loan, and it was mutually agreed that after repaying the bank loan by the seller group, shares of M/s. Seleno Steels Ltd would be transferred at a total sales consideration of Rs. 12.50 crores which inter alia includes the income tax liability to be raised in future, as expected by both the parties, for the AY 10-11, and thus, in these terms & conditions, the alleged deal has been finalized between both the parties as mutually agreed upon. 1.28. thereafter, in March, 2018, the purchaser party has repaid the bank loans in the name of M/s. Seleno Steels Ltd and thereafter, in April, 2018, on 25-4-18 (i.e., in the AY 19-20), 12,71,997 shares of M/s. Seleno Steels Ltd has been transferred @ Rs. 93/- per share to the members of the assessee-Group (i.e., the purchaser group) and Rs. 11,82,95,721 has been paid as 'sales consideration' of 12,71,997 shares of M/s. Seleno Steels Ltd in the AY 19-20, which also evident from the financial statements of M/s. Seleno Steels Ltd (now, M/s. NRVS Steels Ltd). 1.29. details of shares....
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.... (P) Ltd 25-4-18 1,200 shares @ Rs. 93 per share 1,11,600 22. Sanjay Agrawal Rajesh Vanijya (P) Ltd 25-4-18 2,800 shares @Rs.93 per share 2,60,400 23. Sanjay Agrawal Star Trafin (P) Ltd 25-4-18 1,400 shares @ Rs. 93 per share 1,30,200 24. Sanjay Agrawal Alexcy Tracon (P) Ltd 25-4-18 5,120 shares @ Rs. 93 per share 4,76,160 25. Sanjay Agrawal Shreevar Overseas Ltd 25-4-18 6,000 shares @ Rs. 93 per share 5,58,000 26. Sanjay Agrawal Sonal Tie-up (P) Ltd 25-4-18 2,880 shares @ Rs. 93 per share 2,67,840 27. Sanjay Agrawal Trident Lamipack (P)Ltd 25-4-18 5,600 shares @ Rs. 93 per share 5,20,800 Total 12,71,997 shares @ Rs. 93 per share 11,82,95,721 1.30. now, income-tax liability of Rs. 6.2245 crores & Rs. 3.2469 crores of M/s. Seleno Steels Ltd for the AY 10-11, which was more or less existed as expected as on 1-10-17 by both the parties, for which, case was already reopened u/s 148 in the month of Mar, 2017 i.e., more than 7 months before the alleged deal of purchase, that burden to pay or to settle the liability is only in the hands of the assessee-group as agreed upon by both the parties as on 1-10-17 on handing over possession of the Plant....
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....the owner of the alleged unidentified land; and in the absence of the most important factor, i.e., land to be bought being not identify, no details of the owners of the land; the alleged 'agreement to sell' does not lend credence to the rest of the matter, and it is a kind of "dumb documents". 1.34. the assessee has not ultimately bought/ purchased the said unidentified land (i.e., 32.50 acres general land & 2.50 acres Adiwasi land) as per 'agreement to sell' and in that situation, it is highly improper to adopt the sale consideration on the basis of this proposal, draft, unsigned, undated, un-witnessed 'agreement to sell', which has not been acted upon, means, the alleged land of 32.50 acres & 2.50 acres as mentioned in the alleged 'agreement to sell' has not been transacted/ purchased by the assessee at all, means, both the parties i.e., seller & purchaser of the alleged 'agreement to sell' have not been acted upon on such 'draft agreement', and thus, it has not been materialized; 1.35. there is no evidence has been found during the course of search with regard to any unaccounted cash payment involved in the purchase of aforemen....
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....hary (2008) (Del HC) dt.19-2-08 305 ITR 245 Gian Gupta (2014) (Del HC) dt.8-5-14 369 ITR 428 Naresh Khattar (HUF) (2003) (Del HC) dt.28-l-03 261 ITR 664 Dinesh Jain (Huf) (2013) (Del HC) dt.28-9-12 352 ITR 629 Manoj Mittal (2016) (Chd-Trib) dt.20-7-16 ITA No. 393/Chd/2013 Raj at Agarwal (2012) (Jai-Trib) dt.9-l-12 144 TTJ 753 Sharad Chaudhary (2014) (Del-Trib) dt.25-7-14 165 TTJ 145 Smt Renu Agarwal (2017) (Jai-Trib) dt.14-2-l_7 185 TTJ 9 S Narayan Reddy (2014) (Hyd-Trib) dt.29-11-13 62 SOT 149 RP Import & Export PLtd (2015) (Chd-Trib) dt. 12-12-14 38 ITR(T) 436 Ms Priyanka Chopra (2018) (Mum-Trib) cit. 1-6-18 171 ITD 437 2.1. the allegations made by the revenue is not supported by actual cash passing hands; no material has been referred which would conclusively show that huge amounts in cash are transferred from one side to another; when the seller has been examined & he clearly denied about any cash receipts; no material evidence brought on record to substantiate the claim of the Revenue that extra cash has actually changed hands; there being no evidence to support the Revenue's case that a huge figure, changed hands between the parties....
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.... addition could be sustained." 2.2. since the assessee had not signed the alleged 'Sauda Ikrarnama' found & seized, no liability can be attributed qua that agreement towards the assessee since he is not party to the agreement till he had signed the same, the mere fact that this agreement was found in the possession of the assessee does not lead us anywhere, more so, the alleged seller of the alleged 'Sauda Ikrarnama' has clearly denied the alleged cash components in the statement recorded u/s 132(4) on 24-10-17 before the search team as well as in the reply given before the Id AO during the assessment proceedings in response to the notice issued on 16-10-19, addition is not justified on that count, as held in Kulwant Rai (2007) 291 ITR 36 (Del HC) dt. 13-2-07, wherein held as under: "2. During the course of search one agreement to sell marked as AD-46 was seized from the premises of the assessee which was in respect of land situated at Daulatabad Road, Shivana, Gurgaon. In this agreement it has been mentioned that an earnest money of Rs. 34,01,784 will be paid by the transferee to transferor at the time of signing of this agreement and the balance consideratio....
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.... by the AO is based on surmises and guess work and on this point Dhakeswari Cotton Mills (1954) (SC), may be referred to, in which it is held: "In making an assessment u/s 23(3), the ITO is not fettered by technical rules of evidence and pleadings, and he is entitled to act on material which May not be accepted as evidence in a Court of law, but the ITO is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment u/s 23(3)." 2.3. when the alleged 'Sauda Ikrarnama' found was only projections, an undated, unsigned and untested printout from the computer of an employee without linking the same with any actual transaction cannot constitute evidence detected as a result of the search which in turn would result in an addition of the undisclosed income; that in the absence of corroborative material, the additions made on the basis of sketchy documents which were unproved, cannot be sustained in law; in Vatika Landbase (P) Ltd (2016) 383 ITR 320 (Del HC) dt.26-2-16, held as under: "26. With regard to issue of the alleged undisclosed receipt on sa....
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....the foot note on sheet No. 3 indicated that "it is presumed that the building will be completed and fully let out in the month of Nov 2002." In the note it was observed that on the basis of-sheet No. 4 that "anticipated sale proceeds of seven floors has been worked out at Rs. 47 crores." All these indicated that these were only projections and were not sale figures. It is submitted that an undated. unsigned and untested printout from the computer of an employee without linking the same with any actual transaction cannot constitute evidence detected as a result of the search which in turn would result in an addition of the undisclosed income u/s 158B(b). 36. Mr. Agarwal pointed out that neither Mr. Sunil Awasthi nor any of the buyers were examined as although a request made was on behalf of the assessee. Once the assessee gave an explanation for the documents seized, the burden shifted to the Revenue to show the basis on which it could be said that the flats were sold at Rs. 3,250 per sq.ft. Relying on Ved Prakash Choudhary (2008) (Del HC), it was urged that in the absence of corroborative material, the additions made on the basis of sketchy documents which were unproved c....
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....Mills (2000) (Del HC), during the course of search and seizure proceedings, certain slips were found, which, the AO concluded, contained details of payments beyond those which were made by cheques and drafts and were duly reflected in the books of account. The assessee's stand before the Tribunal was that the documents were 'dumb documents' which did not contain full details about the dates of payment and its contents were not corroborated by any material and could not be relied upon and made the basis of addition." 45. As pointed out in SM Aggarwal (Del HC), the said document can at best be termed as a 'dumb' document which in the absence of independent corroboration could not possibly have been relied upon as a substantive piece of evidence to determine the actual rates at which the flats were sold. Further as pointed out in DK Gupta, merely because there are notings of offers on slips of paper, it did not mean that those transactions actually took place. 46. In the present case, there was again no material on the basis of which the AO could have applied a standard rate of Rs. 4,800 per sqft for all the floors of VT. It was also not open to the AO to draw ....
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....l has duly appreciated the evidence on record and has recorded findings of fact on which it has based its conclusion, and that in the absence of any perversity shown in the findings recorded by the Tribunal, there is no warrant for interference by this Court. ...the ld counsel placed reliance upon PV Kalyanasundaram (2007) (SC), wherein, held that the fact as to the actual Sale price of the property, the implication of the contradictory statements made by the vendor or whether reliance may be placed on the loose sheets recovered in the course of the raid are all ques of facts and accordingly dismissed the appeal. 6. ...The facts as emerging from the record reveal that an agreement to sell came to be found during the course of search at the premises of the Prajapatis. Such agreement to sell was executed between the 3 Prajapati brothers and the assessee, namely, Vivek Patel. As per the statement of Somabhai Ambalal Prajapati recorded u/s 132(4), the entire consideration in terms of the agreement to sell had been paid by a person/ representative of the assessee. However, a perusal of the record of the case shows that no further details have been stated by Somabhai as to who wa....
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....s were sold to Ajay Patel at the instance of the assessee as claimed by Somabhai Prajapati. The Tribunal has further noted that Shri Somabhai in his statement has stated that the amount received by him from the actual purchasers at the time of execution of sale deed was returned by him to the assessee; however, no material was brought on record to show that the sale consideration received by Somabhai Prajapati was paid to the assessee. The Tribunal found that according to Somabhai Prajapati while the agreement to sell was for 9 specific plots, subsequently 3 plots bearing No. 540, 487 and 497 were exchanged in place of plots bearing No. 512, 510 and 513; but no material had been brought on record to show that there was an agreement with the assessee for such exchange of plots. the Tribunal has come to the conclusion that the Revenue had failed to bring on record any reliable material to prove that the assessee had made actual investment of Rs. 3,25,51,000 Rs. 6,51,00,000 and Rs. 3,25,50,000 in the PYs relevant to AY 05-06, 06-07 and 07-08 respectively. However, to the extent of Rs. 11 lakhs, the Tribunal was of the view that the agreement was material to conclude payment of s....
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....ce of name of the addressed and addressee and it was unsigned and undated." 12. In Kulwant Rai (2007) (Del HC) interestingly the ruling of Dhakeswari Cotton Mills Ltd (1954) (SC) was relied upon. The SC held that even though IT authorities including the AO has unfettered discretion and not strictly bound by the rules and pleadings as well as materials on record and is legitimately entitled to act on the material which may not be accepted as evidence, nevertheless such discretion does not entitle them to make a pure guess and base an assessment entirely upon it without reference to any material or evidence at all. 13. Given the above state of law- and this Court has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO, the Tribunal's view which endorsed the findings of the CIT(A) is well-founded and do not call for interference." 2.6. when on the date of search on 24-10-17, the assessee has clearly stated in the statement recorded u/s 132(4) that deal of plant has been made at Rs. 12.50 crores and the alleged seller also in his statement recorded u/s 132(4) o....
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....relying upon PR Metrani (HUF) (2001) (Kar HC), it was held that the presumption was rebuttable. It was further held that the assessee had been able to successfully rebut the presumption. 8. The facts of the case make it very clear that there were 2 MOUs entered into by the assessee with Ravi Talwar and Madhu Talwar in respect of the purchase of agri-land. The 2 MOUs did record that 'the purchase consideration shall be Rs. 123.30 lakhs. The purchaser having paid to the vendor the sum of Rs. 25 lakhs part of the said purchase consideration as a deposit and shall pay the residual of said purchase consideration to the vendor on or before 30-4-99 when the purchase will be completed'. 9. Notwithstanding this, the assessee as well as Ravi Talwar and Madhu Talwar denied the money transaction. In addition, thereto, the case set up was that the agri-land had, in fact, been sold to M/s. Delhi Tent and Decorators P Ltd, by Ravi Talwar and Madhu Talwar. This was confirmed by Shri NK Mittal, one of the directors of Ws.Delhi Tent and Decorators P Ltd. Quite clearly, the MoUs did not fructify. 10. Sec 132(4A) uses the expression 'it may be presumed'. It is not obligatory on t....
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....cessary weightage to the copy of MOU. The factum of transfer of a capital asset by Mrs Jind Singh in favour of the assessee was not established. The case of the assessee is that he has not purchased any land. The alleged MOU is a document exhibiting the negotiation of the purchase of land, but it never materialized. The AO has erroneously observed that it is for the assessee to establish that land was not purchased. In our opinion, for charging the assessee with tax on account of unexplained investment, it is the AO who ought to have established that land was purchased by the assessee and he failed to disclose the source of such purchase. Instead of discharging this onus, Id AO treated a document as gospel truth and tried to put an onus upon the assessee to prove a negative fact which is not permissible in law. Ld FAA has rightly considered this aspect and deleted the addition." 6. After having heard the counsel for the parties on this issue of the deletion of the addition of Rs. l crore on account of the alleged unexplained investment, we are of the view that the CIT(A) and the Tribunal have deleted the said addition on examination of facts. In our view, no que of law arises f....
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.... the said figure represents the actual investment. There has to be something more than that. 2.9. that Dinesh Jain (Hut) (2013) 352 ITR 629 (Del HC) dt.28-9-12, held as under: "13. The error committed by the IT authorities in the present case is to jump the first step in the process of applying sec 69B- that of proving understatement of the investment and apply the measure of understatement. If anything, the language employed in sec69B is in stricter terms than the erstwhile sec 52(2). It does not even authorise the adoption of any yardstick to measure the precise extent of understatement. There can therefore, be no compromise in the application of the sec. It would seem to require the AO even to show the exact extent of understatement of the investment; it does not even give the AO the option of applying any reasonable yardstick to measure the precise extent of understatement of the investment once the fact of understatement is proved. It appears to us that the AO is not only required to prove understatement of the purchase price, but also to show the precise extent of the understatement. There is no authority given by the section to adopt some reasonable yardstick to meas....
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.... to the assessee, more so, the alleged seller of the alleged 'Sauda Ikrarnama' has clearly denied the alleged cash components in the statement recorded u/s 132(4) on 24-10-17 before the search team as well as in the reply given before the Id AO during the assessment proceedings in response to the notice issued on 16-10-19, addition is not justified on that count, as held in Manoj Mittal (Chd-Trib) ITA No. 393/Chd/2013, dt.207-16, wherein held as under: "5....search and seizure operation u/s 132, was conducted on the residential/ business premises of Mittal Group of cases on 16-1-09. The document in A-5 was found in the possession of Shri Ashok Mittal at the residence; p. 4756 being copies of agreement to sell between M/s. Sawan Land Developers (P) Ltd and a group of persons including the assessee for sale of 6 kanal, 6 and 1/6 maria at Kharar on 21-12-06 for Rs. 1,90,00,000. 10. The assessee has filed copies of the seized documents i.e., agreement to sell in the PB, which did not bear signature of the assessee. The assessee specifically pleaded before the CIT(A) that the document is un Ejgggd. The AO has also placed, copies of the seized papers i.e., agreement to sell....
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....und during the course of survey relating to the deal of purchase of plot No. C-166 in Tilak Nagar owned by M/s. Shah Buildcon (P) Ltd. Mr. Sanjay Suri and Mr. Rajendra Blana were the existing shareholders and directors of the company. The seller party in the draft agreement is M/s. Shah Buildcon (P) Ltd and the assessee is purchaser. As per these documents the assessee had paid a sum of Rs. 11 lakhs as advance on 30-12-06 against total consideration of Rs. 2,51,00,000. Out of balance amount, sum of Rs. 14 lakhs was to be paid by 20-1-07 and the balance amount of 2,26,00,000 has to be paid within 60 days. A perusal of the draft agreement shows that there are number of cuttings, corrections, hand written insertions etc. in the same and it is not signed by any of the parties. The deal has been finalized by transferring of shares of M/S Shah Buildcon and not by transferring of the said plot by the company. In the signed agreement subsequently submitted by the assessee during the course of assessment proceedings, the consideration mentioned/ amount paid and to be paid are same but there were certain conditions of approval of map for housing project and construction of 17,000 sqft,....
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....tly revised and payment was made as per the revised terms. Moreover, the final payments were made on 14-3-07 i.e., after 75 days in terms of signed agreement as against 60 days mentioned in the draft agreement. In view of these facts and circumstances of the case, we find that the Id CIT(A) has given a well reasoned and well founded order after dealing with each and every aspect of the issue and we are in full agreement with the findings of the CIT(A) that the addition of Rs. 1,85,00,000 made by applying the sec 69 is not justified." 2.12. when the seized 'Sauda Ikrarnama' which is undated, unsigned, un-witnessed, did not relate to cash payment of Rs. 2.10 crores during the FYI 7-18, then in absence of any other supportive corroborative material evidence, this 'Sauda Ikrarnama' by itself was not found to be enough and justified basis to make addition; the seized 'Sauda Ikrarnama' which is papers being not corroborated by any independent evidence/ material cannot be considered as a reliable document as a proof of investment in alleged plant, as held in Sharad Chaudhary (2014) 165 TTJ 145 (Del-Trib) ITA No. 933/Del/2012, dt.25-7-14, held as under: "22. T....
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....e assessee was that the same did not represent payment of wages during the year in que but were for the earlier year. However, the AO did not accept the explanation and made an addition. The CIT(A) as well as the Tribunal partly set aside the addition. It was held that even though explanation of the assessee that the loose papers did not relate to payment of-wages during the year in que 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 AO." 25. In this case the guiding ratio laid down by their Lordships is that when the loose papers did not relate to certain payment during the relevant period in que, then in absence of any other supportive material or evidence these loose sheets by itself were not found to be enough and justified basis to make addition. 26. In this case, it was also held that the seized papers being not corroborated by any independent evidence cannot be considered as a reliable document as a proof of investment in house property and accordingly, this kind of paper is liable to be ignored and addition made on the basis of this document is not sustainable. 27. In view of fo....
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....b document which cannot be a basis for making addition in regard to investment in purchase of land out of income from undisclosed sources u/s 69. We are unable to see any ambiguity, perversity or any other valid reason to interfere with the conclusion and findings of the CIT(A) in the impugned order and we uphold the same." 2.13. the alleged seller Shri Rajesh Agrawal, which is party to the alleged 'Sauda Ikrarnama' which is undated, unsigned, un-witnessed, has clearly denied the alleged cash components in the statement recorded on 24-10-17 u/s 132(4) before the search team in Ans. No. 54 and clearly recorded that the plant has been sold at Rs. 12.50 crores to Mr. Sanjay Agrawal as well as in the reply given before the Id AO during the assessment proceedings in response to the notice issued on 16-10-19, again he has stated that plant has been sold to Mr. Sanjay Agrawal at Rs. 12.50 crores only and no cash has been received in any manner in respect of the deal (assessment order, Pg. 7, 8); addition made by the Id AO merely on presumption & surmises without bringing any corroborative material evidence on record to substantiate his baseless contention, is not justified on th....
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....ition of Rs. 76 lakhs on account of unexplained investment in purchase of Plot No. 281, 10B, Gopal Pura Bye Pass, Jaipur." 2.14. the alleged 'Sauda Ikrarnama' is an unsigned, undated, un-witnessed dumb document, based on which no addition could be made without bringing on record any corroborative material evidence to substantiate the contents of such 'Sauda Ikrarnama', as held in S Narayan Reddy (2014) 62 SOT 149/(2014) 25 NYPTTJ 4872 (Hyd-Trib) ITA N0. 291/Hyd/201, dt.29-11-13, held as under: "6. During the course of search operations, an unsigned and undated letter was found in the premises of Shri Ch.Srinivas, VP of DLF. On perusal of the said letter, the AO observed that the said letter-was written by the assessee; that an amount of Rs. 32 crores was paid by the assessee to the landlords and the claimant before the date of registration and that the assessee got back the said money from DEMI Realtors after registration of lands. When confronted with the said letter, the assessee, vide detailed explanation dt.5-12-09 submitted that the said letter was never written by him; and neither he paid Rs. 32 crores in advance of the registration, nor subsequently got b....
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.... 8. It is evident from the impugned order of the CIT(A) and other material on record that the document based on which the impugned addition of Rs. 32 crores has been made by the AO is a dumb and unsigned document. The person from whose residence the said letter has been seized and, in whose handwriting, the same has been written, clarified the position that the said letter has no relation whatsoever with the assessee, and it was written by him to the dictation of his Executive Director, so as to have it issued by the assessee to DLF. That being so, in the absence of any corroborative evidence brought on record to disprove the version of Shri Srinivas, there is no scope for making any addition in the hands of the assessee. Further, the letter in question is an unsigned dumb document, based on which no addition could be made without bringing on record any corroborative evidence to substantiate the contents of such letter. In this view of the matter, the CIT(A) in our considered opinion, was justified in deleting the addition made by the AO." 2.15. that (i) no identification of 32.50 acres & 2.50 adiwasi land as mentioned in the so called 'Sauda Ikrarnama'; (ii) bank lo....
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.... settled law that suspicion, whatsoever may be strong, cannot take place of legal proof. In the absence of any adverse material against the assessee, we do not find any justification to interfere in the order of the Id CIT(A) in deleting the addition. The Depttal appeal thus, has no merit and is liable to be dismissed." 2.16. the assessee never purchased the alleged 32.50 acres of general land & 2.50 acre of adiwasi land as mentioned in the 'Sauda Ikrarnama' from the alleged seller; hence, the claim that it was a proposal later on not carried through and cancelled is having sufficient cogency; when scribbling in loose paper found on search and the same is a proposal which was not carried through cannot be brushed aside in light of the confirmation from the parties involved; as held in Ms Priyanka Chopra (2018) 171 ITD 437 (Mum-Trib), ITA No. 4601/ Mum/2015, dt.1-618, held as under: "14. ...this addition has been made on the basis of loose papers found at assessee's premises numbered as page No. 114-117 of Annex-A-l showing cash payment of Rs. 3.5 crores, out of an amount totaling to Rs. 7.65 crores on account of purchase of commercial unit of 5,100 sqft from one M/s....
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....s been mentioned as Rs. 7 cr 65. There is also mention of cash Rs. 3.35 and cheque of Rs. 2.15. In this regard, the assessee's case is that the said paper was only a proposal and was later on cancelled with the same party. The assessee entered into a new agreement for 2,995.70 sq.ft. for Rs. 4.65 crores. Assessee has duly submitted confirmation of payment and agreement for the new project. The cancellation of the cheques given for the earlier project have also been shown and confirmed. The sole basis of this addition is the above said document found. In our considered opinion, the above said document cannot be said to be a conclusive proof of cash payment of Rs. 3.5 crores. The assessee's plea that the same is a proposal which was not carried through cannot be brushed aside in light of the confirmation from the parties involved. It is also on record that the assessee never purchased estate property of 5,100 sq.ft. from the said builder. Hence, the claim that it was a proposal later on not carried through and cancelled is having sufficient cogency. In similar circumstances PV kalyanasundaram (SC) had affirmed the deletion of similar addition. Accordingly, in light of....
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....as not paid by the assessee and the same was believed by the Ld. AO, thus, no addition was made on this account. It is the submission that there was no evidence for cash payments unearthed during the search, therefore, the allegation that unaccounted cash involved in the purchase was without any basis. Ld. AR argued that the addition made was under presumptions, arbitrarily without any corroborative material evidence on record that the amount of Rs. 2.10 have changed hands. Ld. AR placed his reliance on various judgments on this aspect referred to supra. It was the contention of Ld. AR that certain conditions of the proposed unsigned agreement found during the search are not acted upon by the parties which is an admitted fact on the record accepted by the revenue, that the transaction of land was not materialized, liabilities were not settled by the sellers, advance amount of 2.50 crores was not paid by the assessee, moreover, the basis of addition that as per para 3 of the alleged document, the assessee was supposed to pay Rs. 70 lac per month for 20 months to the sellers was not seriously believed and acted upon by the revenue, as no adverse action was taken or addition on this a....
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.... acted upon, like transfer of 32.5-acre general land, 2.5 acres of Adivasi land, certain liabilities which were to be settled by the seller group, advance of Rs. 2.5 crore to be made at the time of hand over on 15.09.2017 and such position of facts have not been disputed by the revenue. Apart from, such terms and conditions, which were not pursued by the parties, the income tax liability of the seller group have been taken over by the assessee (the buyer). The statement of directors of seller group recorded on oath u/s 132(4), wherein the alleged document was confronted, and explanation was sought, Mr. Rajesh Agrawal, seller had categorically refused to have knowledge of any such document and about any action based on terms & conditions therein, he answered that the consideration was agreed at Rs. 12.50 crores only. The Ld. AO was of the opinion that the response of Shri Rajesh Agrawal and Shri Sanjay Agrawal was contradicting in nature but was unable to expose such inconsistency, he placed his belief on the particular clause mentioned in the alleged agreement that the total consideration is Rs. 25 crores, out of which Rs. 12.00 crores are to be paid by cheque and Rs. 13.00 crore t....
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....1 Since we have approved the decision of Ld. CIT(A), wherein the entire addition made by the Ld. AO has been deleted in terms of our observations hereinabove, therefore, we refrain to deal with the aforesaid legal ground raised by the assessee challenging the validity of approval granted u/s 153D of the Act in the aforesaid application u/r 27, the same thus, is left as open. 11. CO No. 01/RPR/ 2021 (arising out of ITA No. 108/RPR/2020) by the assessee: 11.1 The grounds of appeal raised by the assessee in this CO are as under: 1. On the facts and circumstances of the case and in law, the ld CIT(A) has erred in not considering the fact that search assessment made u/s 143(3) rws 153A is invalid, since approval granted u/s 153D is in mechanical & routine manner without application of mind by Jt. CIT in a hasty manner, merely a formality, an empty ritual; in absence of valid approval as mandated by law u/s 153D as per sec 153B(1)(b), the alleged search assessment u/s 143(3) rws 153A be treated as invalid and is liable to be quashed. 11.2 As the appeal of the department in ITA No. 108/RPR/2020 against the deletion of addition by the Ld. CIT(A) is rendered as dismissed, in terms of o....
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....minating material was found or seized during search proceedings nor any person has ever admitted about payment of cash of Rs. 1.05 crores by the appellant from the purchaser party. In absence of any corroborative evidence to prove that there was exchange of cash between purchaser and seller group, the AO has no locus to assume that appellant has received sum of Rs. 1,05,00,000/- in cash towards purchase of the said company. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborate. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lai Girdharilal v/s CIT (1954) 26 ITR 736 (SC). 14. In view of aforesaid observations, we ....