TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1368
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....after giving effect to CIT(A) Order, as against the income reported by the appellant of Rs. 3,22,06,675/-, on the facts and circumstances of the case. 3. The Hon'ble CIT(A) has erred in not holding that the order of assessment was passed beyond the limitation period prescribed under the act and hence the assessment is barred by limitation and consequently the assessment order, demand notice and other notices are liable to be quashed on the facts and circumstance of the case. 4. The Hon'ble CIT(A) has erred in not holding that the statutory notice u/s.143(2) of the act is not in compliance with notification F.No. 225/157/2017/ITA II dated 23.06.2017 which is mandatory format prescribed the CDBT. 5. The Hon'ble CIT(A) has erred in not holding that centralisation of the appellant's case from regular circle to Central Circle is without jurisdiction on the facts and circumstances of the case and the assessment order passed by the present assessing officer is without jurisdiction on the facts and circumstances of the case. 6. The Hon'ble CIT(A) has erred in not holding the assessing officer is not justified in passing the Order as the assessing officer....
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.... based on some dumb notings & loose sheets. 17. The Hon'ble CIT(A) is not justified in confirming the addition of Rs. 28,00,00,000/- under section 69A of the act which was based on some dumb notings & loose sheets. 18. The Hon'ble CIT(A) is not justified in confirming the addition of Rs. 9,26,00,000/- under section 69A of the act which was based on some dumb notings & loose sheets. 19. The Hon'ble CIT(A) is not justified in confirming the addition of Rs. 3,28,00,000/- under section 69A of the act which was based on some dumb notings & loose sheets. 20. The Hon'ble CIT(A) is not justified in confirming the addition of Rs. 6,51,53,000/- under section 69A of the act which was based on some dumb notings & loose sheets. 21. The Hon'ble CIT(A) is not justified in confirming the addition of Rs. 4,50,00,000/- under section 69A of the act which was based on some dumb notings & loose sheets. 22. The Hon'ble CIT(A) is not justified in confirming the addition of Rs. 1,85,00,000/- under section 69 of the act which was based on some dumb notings & loose sheets. 23. The Hon'ble CIT(A) is not justified in confirming the addition of Rs.....
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....ment is against principles of natural justice in so far as the learned assessing officer did not provide an opportunity for cross examination of the persons whose statements have been relied upon by the learned Assessing Officer. 30. The Hon'ble CIT(A) has erred by not holding that the Order of Assessment is against principles of natural justice in so far as the learned assessing officer did not even provide a proposition notice before making such huge addition. 31. Hold that the learned assessing has not followed the due procedure u/s.153D of the act while passing the impugned assessment order. 32. The learned Commissioner of Income-tax [Appeals] and the learned assessing officer were not justified in relying upon certain judicial precedents which are not applied in right perspective to the facts of the case of the appellant and further the learned authorities failed to properly appreciate and apply the ratio of the decisions and judicial precedents relied upon by the appellant to the facts of the present case and consequently passed a perverse order, on the facts and circumstances of the case. 33. Without prejudice, to the right to seek waiver ....
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....sessee on 15.10.2018 for the relevant preceding assessment Years and duly served and assessee was given time to file return of income within 30 days from the date of receipt of the notice. The assessee had already filed return of income on 28.07.2018 u/s 139(1) declaring income of Rs. 3,06,46,680/- for the Assessment Year 2018-19. Subsequently, notice under section 143(2) of the Act was issued on 29.11.2018 requiring the assessee to produce / cause to be produced any documents / accounts and any other evidence on which it may rely in support of the return of income filed by him for the Assessment Year 2018-19. The same was duly served. Further, notice under section 129 of the Act was also issued to the assessee. Further, other statutory notices were issued to the assessee. The assessee sought time for filing certain details. The assessee did not comply with the earlier notices. Therefore, for non-compliance of the notice after numerous opportunities, finally penalty notice under section 274 r.w.s. 274A(1)(a) of the Act was issued to the assessee on 28.11.2019. Thereafter, the assessee filed submissions on 03.12.2019 and 11.12.2019. The AO completed the assessments making additions ....
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....- 1. ADDITION OF RS. 41,03,600/- UNDER SECTION 69A OF THE ACT: The assessee's HUF has income bearing agricultural lands, which it has been owning for over four decades. This fact is already on the records of the revenue. It is a fact that the HUF has not been filing income tax returns, but that is for the reason that it has only agricultural income and no taxable income. The assessee has placed before the ITAT the details of land holdings of the assessee and his family members, who are all members of the Kempegowda HUF. It is clear from the statements furnished that the total holdings as on date is about 174 acres, held in different names. Further it is also on record of the department that three members of the HUF, i.e. the assessee, his brother DK Suresh and his mother Gowramma, who were assessed to tax had declared agricultural income over about Rs. 15 lakhs each, year after year from A.Y 2015-16 and Rs. 10 to 12 Lakhs before that. These can be easily verified from the records of the department. It is the plea of the assessee that the Hon'ble ITAT, set aside this issue to the file of the AO, to reconsider the same in the light of these facts, for the limited pu....
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....sion Bench of The Jurisdictional Karnataka High Court, upholding the order of a Single Judge in a Writ Petition filed by Sri. Sunil Kumar Sharma, the employer of Sri. Rajendran, has, in a Writ Appeal, held the materials found and seized from Rajendran's residence have no evidentiary value and cannot be relied upon to make any addition in an income tax assessment. This decision of the Division Bench has been approved by the Supreme Court, when the SLP filed by the Revenue was dismissed. 3. ADDITION OF RS. 6,61,26,000/- UNDER SECTION 69A OF THE ACT. The Apartment where the cash was found and seized belongs to one Sunil Kumar Sharma. Mr. Sunil Kumar Sharma, who runs a transport company M/s Sharma Transports has owned up to the same in his statement to the Income Tax Department and states that the said cash is reflected in his books of accounts. Mr Sunil Kumar Sharma is not a man of straw, but a man of substantial means and the same can be verified from his Tax Records with the Revenue. No man will accept ownership of cash in an Income Tax Proceeding, without being the actual owner of the same, in view of the fact that it exposes that person to payment of Taxes, Inter....
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...., who has owned up the cash found and seized, is not a man of straw, but a man of substantial means and the same can be verified from his Tax Records with the Revenue. No man will accept ownership of cash in an Income Tax Proceeding, without being the actual owner of the same, in view of the fact that it exposes that person to payment of Taxes, Interest, Penalty and also to Prosecution Proceedings. The CIT(A) supports this view of the AO by holding that the retraction is made for self serving purposes. This view taken by the CIT(A) defies all logic as these two persons were in no affected either by their original statements or by the subsequent retraction, for the CIT(A) to take a view that the retraction was self serving in nature. Sri. Anjaneya, whose statements u/s 132(4) are relied upon by the AO, has retracted the same and the AO refuses to give any weightage to the retraction, holding the same to be an afterthought. In fact when the assessee asked for cross examination of the Sri. Anjaneya, the same was refused on the ground that it would serve no purpose as he had already retracted his statements. A Division Bench of The Jurisdictional Karnataka High Court, upholdin....
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....mption u/s 292C is that the property is purchased by the person who is shown as the purchaser in the document evidencing purchase. The assessing officer without considering the fact has proceeded to bring it to tax in the hands of the assessee without any further reasoning. The assessee states that the onus of proving that whether an amount is in the ambit of taxing is on the income tax department and it is wrong to place the onus of proving negative on the assessee. Reliance is placed on the parity of reasoning in the below mentioned judgements: a. Commissioner of Income-Tax vs Nipani Tobacco Stores. 145 ITR 128. b. Hemant Mansukhlal Pandya, Mumbai vs DCIT (IT) 3(3)(2). ITA No. 4679/Mum/2016. In both the above judgements, it has been held that it is incorrect to place the onus of proving the negative on the assessee. Hence, with respect to the facts and circumstances of our case the assessing has erred in placing the onus on the assessee and making an addition for not proving the negative. This is incorrect and the entire addition has to be deleted for the advancement of substantial cause of justice. Further the addition which is made by invokin....
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....ureau of investigation Vs. V C Shukla. However, the Hon'ble CIT(A) has decided not to agree to the findings of the Hon'ble jurisdictional High Court of Karnataka. The Hon'ble CIT(A) has placed reliance on the decision in the case of Sinhgad Technical Education Society wherein the court has held that the VC Shukla case is not applicable to documents where section 292C is applicable. In the present case, the documents do not belong to the assessee and nor were they found in the premises of the Assessee and accordingly section 292C is not applicable to the Assessee's case. The Hon'ble CIT(A) has misplaced reliance of several case laws which are not relevant to the Assessee's case. Further the addition which is made by invoking jurisdiction u/s 69A of the Act is unsustainable in law. The addition is made on unsubstantiated entries in some loose sheets and does not represent any money found and hence does not come under the purview of Section 69A of the Act. 8. ADDITIONOF RS. 43,18,00,000/- UNDER SECTION 69A OF THE ACT. It is now a settled position in law that notings or entries in loose sheets cannot be the basis for making additions to income, in the absence....
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....neya and Mr. Rajendran. The assessing officer has not even shown these seized materials to the said Mr. Anjaneya and Mr. Rajendran and neither of them have given any statements relating to the above referred seized materials in their statements. These two persons have also retracted the sworn statements given by them u/s 132(4) and hence these statements which stand retracted also do not have any evidentiary value. 9. ADDITION OF RS. 28,00,00,000/- UNDER SECTION 69A OF THE ACT. The fact that these notings are in the handwriting of the assessee does not in any way alter the fact these entries do not represent any transactions of the assessee, but are certain estimates of requirements of the party officials and workers in the course of carrying out their official party work. The AO and the CIT(A) chose not to accept the explanations given by the assessee as accepting the same would not enable to make an addition to the income of the assessee. The entries in these loose sheets cannot be relied upon to make any additions to the income of the assessee. The AO has not brought on record even one single corroborative evidence in support of this addition. The asse....
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....a High Court in the case of Sri. Sunil Kumar Sharmain WA No's 830 to 834 supra. Further the addition which is made by invoking jurisdiction u/s 69A of the Act is unsustainable in law. The addition is made on unsubstantiated entries in some loose sheets and does not represent any money found and hence does not come under the purview of Section 69A of the Act.The addition is made out on basis of loose sheets of documents, which does not come under the ambit of 'books of entry' or as 'evidence' under the Indian Evidence Act. Reliance is placed on following decisions: * CBI Vs. V.C. Shukla (1998) 3 SCC 410 * Common Cause and others Vs. Union of India (2017) 11 SCC 731 * DCIT, Circle - 1(4) Vs. Sunil Kumar Sharma, W.A.NO. 830/2022 AND W.A.NO. 831/2022 (Karnataka High Court) Further, the assessing officer and the Hon'ble CIT(A) have stated the loose sheets found are backed by the statement made by Mr. Anjaneya and Mr. Rajendran. The assessing officer has not even shown these seized materials to the said Mr. Anjaneya and Mr. Rajendran and neither of them have given any statements relating to the above referred seized materials in their statemen....
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....cle - 1(4) Vs. Sunil Kumar Sharma, W.A.NO. 830/2022 AND W.A.NO. 831/2022 (Karnataka High Court) Further, the assessing officer and the Hon'ble CIT(A) have stated the loose sheets found are backed by the statement made by Mr. Anjaneya and Mr. Rajendran. The assessing officer has not even shown these seized materials to the said Mr. Anjaneya and Mr. Rajendran and neither of them have given any statements relating to the above referred seized materials in their statements. These two persons have also retracted the sworn statements given by them u/s 132(4) and hence these statements which stand retracted also do not have any evidentiary value. 12. ADDITION OF RS. 6,51,53,000/- UNDER SECTION 69A OF THE ACT. The fact that these notings are in the handwriting of the assessee does not in any way alter the fact these entries do not represent any transactions of the assessee. These are some dumb notings made in some discussions having no financial implications in the hands of the assessee. The AO and the CIT(A) chose not to accept the explanations given by the assessee as accepting the same would not enable to make an addition to the income of the assessee. The ent....
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....ve evidence in support of this addition. The assessee relies upon the decision of the Division Bench of The Jurisdictional Karnataka High Court in the case of Sri. Sunil Kumar Sharma in WA No's 830 to 834 supra. Further the addition which is made by invoking jurisdiction u/s 69A of the Act is unsustainable in law. The addition is made on unsubstantiated entries in some loose sheets and does not represent any money found and hence does not come under the purview of Section 69A of the Act. The addition is made out on basis of loose sheets of documents, which does not come under the ambit of 'books of entry' or as 'evidence' under the Indian Evidence Act. Reliance is placed on following decisions: * CBI Vs. V.C. Shukla (1998) 3 SCC 410 * Common Cause and others Vs. Union of India (2017) 11 SCC 731 * DCIT, Circle - 1(4) Vs. Sunil Kumar Sharma, W.A.NO. 830/2022 AND W.A.NO. 831/2022 (Karnataka High Court) Further, the assessing officer and the Hon'ble CIT(A) have stated the loose sheets found are backed by the statement made by Mr. Anjaneya and Mr. Rajendran. The assessing officer has not even shown these seized materials to the said ....
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....ot come under the purview of Section 69A of the Act. The addition is made out on basis of loose sheets of documents, which does not Evidence Act. Reliance is placed on following decisions: * CBI Vs. V.C. Shukla (1998) 3 SCC 410 * Common Cause and others Vs. Union of India (2017) 11 SCC 731 * DCIT, Circle - 1(4) Vs. Sunil Kumar Sharma, W.A.NO. 830/2022 AND W.A.NO. 831/2022 (Karnataka High Court) The AO has also not adduced any corroborative evidence from the Jeweller, to support the addition. As regards additions made based on entries in loose papers/loose sheets/diaryentires and dumb documents, the assessee wishes to place reliance on the following decisions to submit that no addition can be made on dumb documents in the form of loose sheets/slips/diaries etc: (i) CBI vs V.C. Shukla (1998) 3 SCC 410 (ii) Common Cause v. UOI [2017] 394 ITR 220 (SC) (iii) DCIT v. Sunil Kumar Sharma [2024] 159 taxmann.com 179 (Karnataka) (iv) Sri Tarun Kumar Goyal v. ACIT ITA No.456/Hyd/20 dt. 20.04.2021: (v) ITO v. Ramachandra Setty and Sons [2024] 163 taxmann.com 666 (Bangalore - Trib.) (vi) Sri Devara....
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....o the assessee at New Delhi. The AO has made addition u/s 69A of the Act, holding the same to be unexplained. Both the AO and the ld.CIT(A), have come to the conclusion that the assessee has not placed on record, any proof, about his claim that the DK Kempegowda HUF, of which he is a member, is having over 100 acres of agricultural land and that the cash of Rs. 41,03,600/- belongs to the HUF. They also note the admitted fact that the HUF has also not filed any income tax return disclosing agricultural income. They further relied on the sworn statements recorded u/s 132(4) from one Sri Anjaneya and one Sri. Rajendra, about the cash transactions of the assessee at New Delhi and also the materials which were found and seized from Sri. Rajendran's premises during search u/s 132, of the Act to support the addition made in the hands of the assessee. The assessee submitted that the assessee's HUF has income bearing agricultural lands, which it has been owning for over four decades. This fact is already on the records of the revenue. The HUF has not been filing income tax returns as it has only agricultural income, which is not taxable and has no taxable income. The assessee has placed bef....
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....ch is an important fact which leads to the conclusion that the cash seized belongs to the Assessee. Further the sworn statements recorded u/s 132(4) of the Act from Sri Anjaneya and Sri. Rajendran about the cash transactions of the assessee at New Delhi and also the materials which were found and seized from Rajendra's premises during search u/s 132, support the addition of the same in the hands of the assessee. The assessee's contention is that the Apartment where the cash was found and seized belongs to one M/s Zeus Constructions Pvt Ltd. Mr. Sachin Narayan, the Managing Director of Zeus constructions Pvt Ltd has owned up to the same in his statement given u/s 132(4) of the Act and states that the said cash is reflected in his books of accounts. Mr Sachin Narayan is not a man of straw, but a man of substantial means and the same can be verified from his Tax Records with the Revenue. No person will accept ownership of cash in an Income Tax Proceeding, without being the actual owner of the same, in view of the fact that it exposes that person to payment of Taxes, Interest, Penalty and also to Prosecution Proceedings. The legal presumption u/s 292C is that the cash found in a premis....
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....oes not belong to him but more importantly it also exposes him to Prosecution Proceedings. Under these circumstances one cannot come to a conclusion that Sri Sachin Narayan has accepted ownership of the cash, without being the owner thereof, either as a mere after thought or otherwise. 7.2.3 We agree with the assessee that the legal presumption u/s 292C is that the cash found in a premises is presumed to belong to the owner of the premises. In this case the premises where the cash is found and seized does not belong to the assessee. It belongs to one Ms Zeus Constructions Pvt Ltd, whose Director, Sri Sachin Narayan has admitted to ownership of the entire cash found and seized therein. The Revenue has not brought any compelling evidence on record to support its stand that the cash found and seized belongs to the assessee. 7.2.4 The Presumption u/s 292C is proved to be correct by the statement u/s 132(4) given by the owner of the premises, which makes it clear that the same does not belong to the assessee and supports the view that no addition can be made on this account. The fact that the keys to the apartment were in the possession of Sri. Anjaneya is not a conclusive evidenc....
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....0/- 7.3.1 During the course of search cash of Rs. 6,61,26,000/- was found and seized at Flat No. 201-B-5, Safdarjang Enclave, a residential premises belonging to the legal heir of late. Suresh Sharma, at New Delhi. The warrant of authorization was in the name of H. S. Anjaneya. Suresh Kumar Sharma had died long before the search and the premises was admittedly under the control of his brother Sunil Kumar Sharma. The AO and the ld. CIT(A) concur on the addition for the following reasons: * Sunil Kumar Sharma has in his statement said that the bedroom in which the cash was found was the bedroom in which the assessee would sleep, whenever he stayed in the apartment and he has no idea about the contents of the said room. * The keys to the said room were with Sri. Anjaneya. * Sunil Kumar Sharma changed his statement within 21 days of giving the original statement and claimed ownership of the cash found and seized, which is clearly an afterthought. * Sri. Anjaneya had in sworn statement u/s 132(4) had confirmed that the cash belonged to the assessee. He had also confirmed about how that money was received by him and stored in that bedroom, where it ....
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....of, either as a mere after thought or otherwise. We agree with the assessee that the legal presumption u/s 292C is that the cash found in a premises is presumed to belong to the owner of the premises. In this case the premises where the cash is found and seized does not belong to the assessee. It belongs to one Late Suresh Kumar Sharma, whose brother, Sri Sunil Kumar Sharma has admitted the ownership of the entire cash found and seized therein. The presumption u/s 292C is proved to be correct by the statement u/s 132(4) given by the owner of the premises, which makes it clear that the same does not belong to the assessee and supports the view that no addition can be made on this account. The fact that the keys to the apartment were in the possession of Sri. Anjaneya is not a conclusive evidence to even presume that the cash belongs to the assessee and not to Sri. Sunil Kumar Sharma. It is also a fact that both Sri. Anjaneya and Sri. Rajendran, whose statements u/s 132(4) are relied upon by the AO, to make the addition, were retracted by them, though the AO and the ld. CIT(A) did not give any importance to the fact of retraction and dismiss the act of retraction as an afterthought. ....
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....AO and the ld. CIT(A) concur on the addition as Sri. Anjaneya had in sworn statement u/s 132(4) confirmed that the cash belonged to the assessee. The Statements of Sri. Sachin Narayan, who has owned up the ownership of the cash found, is an afterthought and hence not believable. The assessee submitted that Mr Sachin Narayan, who has owned up the cash found and seized, is not a man of straw, but a man of substantial means and the same can be verified from his Tax Records with the Revenue. No man will accept ownership of cash in an Income Tax Proceeding, without being the actual owner of the same, in view of the fact that it exposes that person to payment of Taxes, Interest, Penalty and also to Prosecution Proceedings. The Revenue has not brought any compelling evidence on record to support its stand that the cash found and seized belongs to the assessee. The ld. CIT(A) supports this view of the AO by holding that the retraction is made for self serving purposes. This view taken by the ld. CIT(A) defies all logic as these two persons were no affected either by their original statements or by the subsequent retraction, for the ld. CIT(A) to take a view that the retraction was self ser....
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....his addition. 8. Additions arising out of Documents found and seized during the Search Operations 8.1 Unexplained investment towards Late MRs. Vishalakshi Devi Property Rs. 4,00,00,000/- 8.1.1 During the course of search an agreement dated 28/06/2017, which was entered into between one Mrs. Vishalakshi Devi and Sri. Shashikumar Shivanna was found and seized, wherein Sri. Shashikumar Shivanna had agreed to purchase a property from Vishalakshmi Devi for a consideration of Rs. 5,00,00,000/-. As per the said agreement, Smt. Vishalakshi Devi was paid a sum of Rs. 1,00,00,000/- by Cheque and the balance of Rs. 4,00,00,000/- by cash. Sri. Shashi Kumar Shivanna happens to the co brother of the assessee. The AO has made an addition of Rs. 4,00,00,000/- u/s 69B of the Act, in the hands of the assessee, holding that the cash amount of Rs. 4,00,00,000/- is paid by the assessee. It is also on record that Sri. Sachin Narayan has admitted to the payment of Rs. 4,00,00,000/- by cash. The AO's conclusion which has been upheld by the ld. CIT(A) is that, Sachin Narayan has not made the payment of Rs. 4 crores to Vishalakshi Devi. His owning up to having done so is false and an afterthought. ....
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....Shivkumar. The AO observed that the entire transaction was negotiated and completed by Sri N. Chandrashekhar Shukapuri in the name of Shahshikumar and also the entire payments were arranged and delivered by Sri Sachin Narayan and N. Chandrashekhar. It is a fact that Mr. Sachin Narayan has made the payment of Rs. 1,00,00,000/- by Cheque and the same is not in dispute. It is also not in dispute that he made this payment at the request of the assessee. What is in dispute is whether the sum of Rs. 4,00,00,000/- which is by cash is paid by the assessee or by Sachin Narayan. The assessee denies having made the payment, whereas Sachin Narayan, accepts having made the payment and the same is also apparently recorded in his books of accounts, as per the statement given by him u/s 132(4) of the Act. It is not the case of the Revenue that the books of Sachin Narayan do not reflect this payment. The actual beneficiary of the land is Shashi Kumar Shivanna 8.1.4 The Revenue relies upon statement recorded from the Parties to the transaction and one Chandrashekar Shukhapuri who state that payments were arranged by the assessee. The Revenue has drawn an inference that the words 'arranged by the ....
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....ar to tax the AOP as it was the correct person which ought to have been taxed. In the present case, the Revenue has not brought any cooroborative evidence to prove that the additions made actually represent the income of the assessee, despite the fact that these transactions have been owned by others. The presumption u/s 292C of the Act also works in favour of the assessee. The Revenue has also taxed these persons on a protective basis, which also goes to show that the Revenue is not sure that the transaction has not been done by those persons. It is also fact that proceedings u/s 153C of the Act were initiated in the case of Sunil Kumar Sharma & Sachin Narayan. Therefore, this case laws relied by the revenue authorities are not applicable to the facts of the present case. Considering the totality of the facts and circumstances we delete this addition. 8.2 Unexplained investment made by Mr. Chandrashekhar Sukhapuri on behalf of the Assessee Rs. 50,00,000/- with respect to immovable property at Kogilu:- 8.2.1 During the course of search a document which evidenced purchase of a property by one Sri. H. P. Kantharaju was found and the same evidenced payment of Rs. 50,00,000/- in ....
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....ving the negative on the assessee. Hence, with respect to the facts and circumstances of our case the assessing officer has erred in placing the onus on the assessee and making an addition for not proving the negative. This is incorrect and the entire addition has to be deleted for the advancement of substantial cause of justice. Further the addition which is made by invoking jurisdiction u/s 69A of the Act is unsustainable in law. The addition is made on unsubstantiated entries in some loose sheets and does not represent any property which is registered in the name of the assessee and not accounted for and hence does not come under the purview of Section 69A of the Act. 8.2.3 From the above submissions from both sides we noted that the assessee has denied making the payments. The Statement recorded u/s 132(4) from Chandrashekar Shukhapuri does not implicate the assessee. There is no statement to the effect that payment is made by the assessee. It only shows that the amount was given to him by one Lokesh, PA of the assessee. The assessee has in his reply stated that Kantharju, who was his cousin, was a bachelor and used to utilize the services of the personal staff of the assess....
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.... the assessee. It is evident from the diary entries that amounts totalling to Rs. 2,30,00,000/-, belonging to the assessee, were dealt with by Sri Rajendran, Sri Anjaneya and other persons and the entries were to be considered as a record of these transactions. Further the statements recorded u/s 132(4) from Sri. Rajendra and Sri. Anjaneya reveal that these transactions were carried out at the behest of the assessee and it was thus clear that the assessee was answerable for the same and in the absence of any satisfactory explanation forthcoming from him, these are added u/s 69A of the Act, to his income. The fact that the statements u/s 132(4) given by both Rajendran and Anjaneya, stood retracted by both of them, is of no consequence as the retraction is self serving in nature and is done as an afterthought. (ii) The ld. Counsel submitted that Sri. Rajendran aged about 72 yrs old, whose statements u/s 132(4) are relied upon by the AO, has retracted these statements vide affidavit dated 17.08.2017 submitted to the income tax department on 12.03.2018 placed at paper book page No. 1101 to 1103 and the AO refuses to give any weightage to the retraction, holding the same to be ....
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....8,00,000/- (i) The addition of Rs. 43,18,00,00/- which are based on material seized from the residence of the assessee marked as ANN/DKS/PS/LS/S-1 and statement recorded u/s 131 of the Act are necessary as the material found and seized are not merely loose sheets as the entries therein are relating to parties with whom the assessee has transactions which are on record. The AO has established various corroborative evidences in support of the addition. Further the entries found in the diaries maintained by Rajendran also support these additions. The Assessee is wrong in stating that the additions are made based on suspicion, surmise and conjectures as the entries relied upon to make the additions are all made are not merely loose sheets, as claimed by the assessee, but reflect true state of affairs. (ii) The ld. Counsel submitted that it is now a settled position in law that notings or entries in loose sheets cannot be the basis for making additions to income, in the absence of corroborative evidence to support the same. The AO has not brought on record even one single corroborative evidence in support of this addition. The assessing officer has relied on the entrie....
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....ther submitted the case law relied by the revenue is on different footings and wrongly not considered the judgements relied by the assessee. Item no.9 - Unexplained money based on material seized from residence of the Assessee Rs. 28,00,00,000/-. (i) The assessee has admitted that the entries in the loose sheets which are found and seized are in his handwriting marked as DKS/ST/LS/01. The assessee has not been able to explain these entries satisfactorily that these do not represent his undisclosed income and is duty bound to answer the same properly. The explanations given by the assessee are not consistent, but contradictory and are entirely unsatisfactory. The AO has established various corroborative evidences in support of the addition. (ii) The ld. Counsel for the assessee submitted that the fact that these notings are in the handwriting of the assessee does not in any way alter the fact these entries do not represent any transactions of the assessee, but are certain estimates of requirements of the party officials and workers in the course of carrying out their official party work. The AO and the ld.CIT(A) chose not to accept the explanations given b....
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....d nor signed. The assessing officer assumed that these random numbers in the loose sheet relates to the cash paid by assessee towards some expenses and that too amount in crores arbitrarily and without any factual basis or corroborative evidence. It is now a settled position in law that notings or entries in loose sheets cannot be the basis for making additions to income, in the absence of corroborative evidence to support the same. The AO has not brought on record even one single corroborative evidence in support of this addition. The assessing officer has relied on the entries in some loose sheets which are found during the course of search proceedings. The author of these entries is not known and it is an admitted fact that the same is not in the handwriting of the assessee and are also undated. The assessee was asked to provide details about the said transaction, but since the assessee has no knowledge of the transaction and all these loose sheets of paper do not reflect any of the financial transactions of the assessee. HE was not able to provide fetails Therefore, these loose sheets of paper which are not written by the assessee cannot be considered as evidence having financi....
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.... wrong in stating that the additions are made based on suspicion, surmise and conjectures as the entries relied upon to make the additions are all made are not merely loose sheets, as claimed by the assessee, but reflect true state of affairs. Assessee is known to be involved in transporting of cash as per statements u/s 132(4) of the Act given by Anjaneya and Rajendran. (ii) The ld. Counsel for the assessee submitted that the loose sheet contained names of some people, mobile numbers and some other random numbers. The sheet is neither dated nor signed. The AO assumed that these random numbers in the loose sheet relates to the cash paid by assessee towards some expenses and that too amount in crores arbitrarily and without any factual basis or corroborative evidence. It is now a settled position in law that notings or entries in loose sheets cannot be the basis for making additions to income, in the absence of corroborative evidence to support the same. The AO has not brought on record even one single corroborative evidence in support of this addition. The assessing officer has relied on the entries in some loose sheets which are found during the course of search proceedin....
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....00/- (i) The assessee has admitted that the entries in the loose sheets which are found and seized marked as Ann/DKS/PS/LS/S-7 PAGE No. 164 and 165 are in his handwriting. The assessee has not been able to explain these entries satisfactorily that these do not represent his undisclosed income and is duty bound to answer the same properly. The explanations given by the assessee are not consistent, but contradictory and are entirely unsatisfactory. The AO has established various corroborative evidences in support of the addition. Assessee is known to be involved in transporting of cash as per statements u/s 132(4) of the Act given by Anjaneya and Rajendran. (ii) The ld. Counsel for the assessee submitted the fact that these notings are in the handwriting of the assessee does not in any way alter the fact these entries do not represent any transactions of the assessee. These are only some dumb notings made during some discussions having no financial implications in the hands of the assessee. The AO and the ld. CIT(A) chose not to accept the explanations given by the assessee as accepting the same would not enable to make an addition to the income of the assessee. The....
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.... the assessee are not consistent, but contradictory and are entirely unsatisfactory. The AO has established various corroborative evidences in support of the addition. Assessee is known to be involved in transporting of cash as per statements u/s 132(4) given by Anjaneya and Rajendran. (ii) The ld. Counsel for the assessee submitted the fact that these notings are in the handwriting of the assessee does not in any way alter the fact these entries do not represent any transactions of the assessee. These are only some dumb notings made during some discussions having no financial implications in the hands of the assessee. The AO and the CIT(A) chose not to accept the explanations given by the assessee as accepting the same would not enable to make an addition to the income of the assessee. The entries in these loose sheets cannot be relied upon to make any additions to the income of the assessee. The AO has not brought on record even one single corroborative evidence in support of this addition. (iii) During the course of hearing the Learned AR has relied on the Judgement of the Division Bench of The Jurisdictional Karnataka High Court in Writ Appeal No. 830 to 834 o....
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....ssessee has admitted to paying Rs. 1.26 crores in cheque, which includes 1.25 crores towards value of jewellery and 0.01 crore towards taxes. The assessee has therefore paid the balance amount of Rs. 1.85 crores in cash. The assessee's wife has acquired all the items shown in the list and hence it is to be presumed that the balance amount due is paid by cash. There is no proof that all items listed are not purchased. Hence it is clear that the assessee has paid 1.85 crores by cash and the same is an unexplained investment u/s 69A of the Act. (ii) The ld. Counsel for the assessee submitted that the note has details of various jewellery items along with the price for the same being a budget. In the next sheet details of the actual amount paid has been written along with difference from the actual and budgeted. The assumption that the assessee has actually purchased all the items in the estimate and paid the difference amount by cash is absolutely baseless. Not a single item of jewellery which is in the estimate and not paid for by cheque was found and inventoried in the search proceedings. It is not the case of the Revenue that Jewellery, physically found and valued, exceede....
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....ation between the appellant and Sri Rajendran is incorrect. The call/message record details obtained from the phones of Sri Rajendran which are seized and maeked as A/RAJ/8 show that there are incoming messages from the Mobile Number of the appellant which has been stored as DKmin in the phone of Shri Rajendran. Further communication between Shri Rajendran and Shri Sunil Kumar Sharma regarding Shri Rawat strengthen the statement of Shri Rajendran. Certain entries in diary which was seized contain entries of the words - 'kg', tyre, box, file, drum and so on. On directions he used to go to Chandni Chowk Delhi and would meet with certain persons, after showing specific Rs. 10 note he would collect the said amount of money. He would then keep the money at B5, 201, 4th floor Safdarjung Enclave, New Delhi. The AO has examined the issue in detail and decoded the coded words used. The ld. CIT(A) has relied on various judgements which are directly applicable to the assessee in the context of Income Tax proceedings. During the course of serach of the residential premises of the assessee various loose sheets found and seized. In the assessment order the AO has established the money trail and ....
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....g of the appellant contains a number of related parties of the appellant, Sachin, GAT, PA, Chandru, Vijay Shah, Mulgund, Ravi S, Rajnish, C M Lingppa, Yogish and so on and that the appellant has not been able to justify why presumption u/s 292C of the Act should not be invoked. Further in respect of information in loose sheet numbered 88 and 88A in the folder marked as ANN/DKS/PS/LS/01 in para 8.7 of the AO's order the information was called from his wife of the appellant Smt. Usha Shivkumar but she was unable to explain the source of balance cash payments for purchase of jewellery for Rs. 3.10 crores. The AO had accepted the cheque payment of Rs. 1,26,25,000. The assessee was unable to explain the source of cash payment of Rs. 1.85 crores even during the appellant proceedings also.\ 11. Our Decision on items (7) to (14) enumerated above: (i) We have considered the facts and circumstances as well as the underlying reasons which prompted the AO to make the above additions in the assessment order passed by him. We have also considered the reasons given by the ld. CIT(A) which made him to arrive at the decision of confirming the additions and also strengthening the same in....
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....evidence and it is to be shown further by some independent evidence that the entries represent honest and real transactions and that monies were paid in accordance with those entries." 39. A conspectus of the above decisions makes it evident that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets which we have already found to be not admissible in evidence under Section 34) are admissible under Section 9 of the Act to support an inference about the formers' correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. ....... 12. When applied to the fact of the case of the present assessee the loose sheets, slips, diary entries etc, even if considered as being part of books of account maintained by the assessee, the entries therein cannot be relied upon to com....
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....e'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 particulars and therefore, ought not to be made basis of an addition. Similar other judicial precedents ACIT Vs. Layer Exports P Ltd., (2017) [184 TTJ 469] (Mumbai) and ITO Vs. Kranti Impex Pvt Ltd., ITA No.1229/Mum/2013, dt.28-02-2018 (dealing with a seized document seized not either bearing the taxpayer's name or signature). Shri Neeraj Goyal Vs. ACIT, ITA No.5951/Del/2017, dt.21-03-2018, (Del) (2012) 23 t....
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....counted transactions has been carried on by the assessee. 13.18 In the case of CIT v. M/S Khosla Ice & General Mills 2013 (1) TMI 451 - Punjab & Haryana High Court, the Hon'ble Court held that assessee rightly contended that the impugned document was a non- speaking document in as much as it does not contain any intelligible narration in support of the inference drawn by the Assessing Officer that it reflected unaccounted transactions carried out by the assessee outside the regular books of account. When a dumb document, is to be made the basis to fasten tax liability on the assessee, the burden is on the AO to establish with corroborative evidence that the nature of entries contained therein reflect income and also that such income was in the control of the assessee. Thus, AO has to establish, with necessary corroborative evidence, that various entries contained in the seized document reflect unaccounted transactions effected by the assessee. Considering the entirety of circumstances, in the absence of any material to support the nature and ownership of the entries found in the seized document, no addition is permissible in the hands of the assessee as undisclosed inc....
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....hat assessee has unaccounted transactions. In the present case, the assessee categorically denied unaccounted transactions. The AO cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong, cannot take place the material in place of evidence brought on record. The AO should act in a judicial manner, proceed in a judicial spirit and come to the judicial conclusions. The AO is required to act fairly as a reasonable person, not arbitrarily and capriciously. The assessment u/s 153C of the Act should have been supported by adequate material and it should stand on its own leg. This notebook or loose sheets found during the course of search is only circumstantial evidence and not full proof evidence to sustain the addition. No addition can be made in the absence of any corroborative material. If it is circumstantial evidence in the form of loose sheets and notebook, it is not sufficient to come to the conclusion that there is conclusive evidence to hold that assessee has any unaccounted transactions. The notes in the diary/loose sheets are required to be supported by corroborative material. Since there was no examination or crossexamination of pe....
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....cast upon the AO to establish with necessary corroborative evidence that the entries relied upon to make additions to income are unaccounted transactions actually carried out by the assessee. In the absence of these necessary ingredients, the additions were deleted. 15. It is seen from the facts of this assessee's case; the AO has not established the veracity of the loose sheets/ slips/ diary entries etc. with necessary corroborative evidence. He has also not recorded statements from the persons who are alleged to have paid monies to the assessee, confirming the said payments and also purpose of these payments. The AO has also not recorded any statements from persons who are supposed to have received monies from the assessee, confirming such receipts and the purpose of these receipts. Mobile No.s are also there in some above noted case but the AO has not confirmed from them. In these circumstances, the additions made by relying on loose sheets/ loose slip/ diary entries etc need to be necessarily deleted. This decision is also squarely applicable to the facts of the assessee's case and is in favour of the assessee: (ix) Sri Devaraj Urs Educational Trust for Backward Cla....
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....elied on by the ld. DR cannot be applied to the facts of the assessee's case." 247. Being so, in our opinion the seized material relied by the assessing officer for sustaining addition is not speaking one in itself and also not speaking in conjunction with some other evidence with authorities found during the course of search or post search investigation. Thus, the well settled legal position is that a non-speaking document without any corroborative material, evidence on record and finding that such document has not materialised into transactions giving rise to income of the assessee which had not been disclosed in the regular books of accounts of the assessee has to be disregarded for the purpose of assessment to be framed pursuant to search and seizure action. In these cases, moreover these documents are relied upon by the AO without confronting them for cross examination. In our opinion, these documents cannot bring assessee into tax net by merely pressing to service the provision of Sec 132(4A) r.w.s Sec 292C of the IT act, which creates deeming fiction on the assessee subject to search wherein it may be presumed that any such document found during the course of se....
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....ose of these receipts/payments. In these circumstances, the additions made by relying on loose sheets need to be deleted. 18. All these decisions relied by ld. Counsel noted supra are also squarely applicable to the facts of the assessee's case and are in favour of the assessee 19. On the issue of the Statutory presumption under section 292C of the Act, the assessee has submitted as under: (a) The AO has invoked the statutory presumption available in section 292C of the Act in holding that the contents of the material in question belongs to the assessee and that the transactions inferred therefrom are undisclosed income of the assessee. In this regard, it is most respectfully submitted that the reliance placed by the AO on this statutory presumption is totally ill-founded. (b) There can be no presumption drawn that the entries in the seized materials represents income or expenditure of the assessee. The provisions of section 292C of the Act relied upon by the AO merely enables the AO to consider the notings as true and correct and it does not enable the AO to make further presumptions that the notings represents any income of the assessee. 20. The Assesse....
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....inst the assessee on the basis of scribbled figures appearing on the document in question. This is how two fact finding bodies chose to deal with that document. In our view, even without proper explanation from the assessee, when the mandate of law is that authorities may presume certain facts under Section 292C of the Act to come to a conclusion in favour of Revenue, the nature of information contained in or revealed by such document would have to be examined to link such document to undisclosed income of the assessee. Both the Commissioner and the Tribunal found no linking factor. Both these authorities rejected the reasoning of the Assessing Officer on this basis of which the latter came to his finding that the figures appearing on the said document could be computed to arrive at undisclosed income of the assessee. The findings of the Statutory Appellate Authorities cannot be held to be perverse or based on no evidence in this case. The Statutory Appellate Authorities had examined the said document and found that the same could not be connected with assessee's transactions for the relevant assessment year. 21. In the case of this assessee, even though the Revenue is of th....
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.... are no such unearthed assets only points to the truth that there are no such incomes in the first place. Thus, there is no corroboration of any undisclosed income even by way of any unexplained asset in the hands of the assessee. 24. This decision is also squarely applicable to the facts of the assessee's case and is in favour of the assessee 25. Considering the decisions of the Hon'ble Supreme Court and the Jurisdictional Karnataka High Court which are binding in nature and considering the decisions of the other High Courts which have a persuasive value and the decisions of the Coordinate benches of this Tribunal, with which we agree and have no reason to differ from, we delete all the additions made in Items No.(7) to (14) above as these are all made without any corroborative evidence, which is absolutely necessary make an addition to the income of the assessee. 26. As regards the addition made in item no (14) above which pertains to unaccounted Jewellery, we find that the AO has not brought any evidence from the Jeweller to support the addition. There is also no finding that the jewellery which was inventoried during the search, also had items which the assessee states....
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....ther the Notice under section 153C of the Income-tax Act, 1961 is valid herein? As regards Question No. 1: Upon reading the material provided and the order of the learned Single Judge delivered on 12-8-2022, it is evident that the income that has escaped assessment and notices under section 153C of the Income-tax Act, 1961, were solely issued based on loose sheets and documents which are termed as 'diaries' found during the search. The applicability of section 69A of the Act arises only when the principles laid down under section 68 of the Act are satisfied. section 68 states that there must be books of accounts or any books with credit entry. The said Act reads thus: "Section 68: Where any sum is found credited in the books of an assessee maintained for any previous Years and the assessee offers no explanations about nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year." The language of the Law is vague and subjective, thus making us rely on an Apex court decision in th....
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.... the aforesaid section, and of no others. Section 34 of the Act reads as under:- "34. Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability." 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It ....
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....ith the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of "books of accounts" and has held that such entries in loose papers/sheets are irrelevant and not admissible under section 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of entries in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held that even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The following extract be....
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....hey would not be admissible under section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept'. 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) "37. In Beni v. Bisan Dayal [AIR 1925 Nagpur 445] it was observed tat entries in book s 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 an din 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. ....
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....ssessee has to be found to be the owner of any money, bullion, jewellery or any article or thing and such money, bullion, jewellery or any article or thing and is not recorded in the books of accounts maintained by him for any source of income, and the assessee offers no explanation about the source for such money, bullion, jewellery or any article or thing or the explanation offered is not found to be satisfactory. In this case there is no finding that the assessee is the owner of any such money, bullion, jewellery or any article or thing. The additions are all made based on loose slips/ loose sheets/ diary entries, which do not reveal that the assessee is the owner of any such money, bullion, jewellery or any article or thing. We concur with the assessee that these additions cannot be made u/s 69A of the Act and the additions fail on this ground also as provisions of section 69A are not attracted in any of these additions. The Co-ordinate bench of Tribunal has taken view in the case of ACIT vs Layer Exportt (P) ltd reported in (2017) taxman. Com 620 (Mumbai- Trib) in which it has been held as under:- 33. In entirety of the matter, we are of the view that an addition in a....
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.... at pages 94-112 of the assessee's Paper Book-I. 34. The case law relied on by assessee of co-ordinate bench of Delhi Tribunal in the case of Atul Kumar Jain v. Dy. CIT [1999] 64 TTJ (Delhi) 786 (Copy enclosed at pages 334-357 of assessee's Paper Book) had an occasion to examine the meaning word "document" and its evidentiary value for the purposes of sections 132, 132A and 132(4A) of the Act. At Para 6.4 to 6.6 of the order, the Delhi Tribunal observed as under:- '6.4 We find that the AO has made out the case for making such addition based exclusively on the said piece of paper found and seized during the course of search. It is, therefore, to be examined whether the said paper found and seized is a document having evidentiary value to prove the fact of the transaction. The word "document" has been defined in s. 32 of the Indian Evidence Act to mean - any matter expressed or described upon any substance by means of letters, figures, or marks or more than one of those means, intended to be used or which may be used for the purpose of recording that matter. The word "document" has also been similarly defined in the General Clauses Act. The meaning of th....
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....he basis for assessing the undisclosed income of the assessee. Admittedly, the said loose papers are not in the form of pro-notes or duly executed documents or books of account or certificates or money receipts which can prove conclusively the factum of any undisclosed income earned by the assessee or any unaccounted investments or expenditure made by him. Additions cannot be made simply on the basis of rough scribbling made by some unidentified person on few loose sheets of papers. 35. Our attention was further drawn to the decision of the Kolkata Tribunal in the case of Asstt. CIT v. Sri Radheshyam Poddar [1992] 41 ITD 449 (Cal) (Copy enclosed at pages 368-372 of assessee's Paper Book) wherein it was held that no addition can be made simply on the basis of an unsigned piece of paper. Held as under (at para 5 of the order):- "After hearing the rival submissions we are of the opinion that the assessee should succeed in this regard. It is no doubt true that as per the provisions of section 132(4A)(ii), when any document is seized pursuant to search it may be presumed that the contents of such documents are true. We have examined a copy of MOU filed before us in....
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....e manner and in consonance with justice. We say so on the basis of judgment of Hon'ble Supreme Court in the case of R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 at p. 575." 36. Further in the case of Pioneer Publicity Corpn. v. Dy. CIT [2000] 67 TTJ 471, (Copy enclosed at pages 373-437 of Paper Book) the Delhi Tribunal held that "no addition could be made simply on the basis of a noting on a visiting card found during search directing certain payment to bearer of card when there was nothing to establish that the assessee paid the amount to the said person. The Department had not made any enquiry from the person named. In the card about the amount given and as such, no addition could be made in the hands of the assessee." 37. Again in the case of Ashwani Kumar v. ITO [1991] 39 ITD 183 (Delhi), the Delhi Tribunal observed as under (Copy enclosed at pages 303-315 of assessee's Paper Book):- "Then for presuming that the contents of the books of account or document are true the document must be a speaking one. In this case the slip, said to have been recovered by the revenue, does not contain any narration in respect of the various figures noted th....
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....ch in the case of assessee. Thus, the impugned addition was made by the AO on grossly inadequate material or rather no material at all and as such, deserves to be deleted. Hence, we are of the view that an assessment carried out in pursuance of search, no addition can be made simply on the basis of uncorroborated noting in loose papers found during search because the addition on account of alleged on-money receipts made simply on the basis of uncorroborated noting and scribbling on loose sheets of papers made by some unidentified person and having no evidentiary value, is unsustainable and bad-in-law. As such, the same is deleted. This issue of the assessee's appeal is allowed and that of the Revenue is dismissed. In the above judgemt it has been held that an addition in assessments carried out pursuant to search action u/s 132 of the Act has to be related to cogent and positive materials found during search which prove conclusively that the assessee has either earned an income or made an investment which has not been recorded in his regular books of account or that his case is covered under any of the deeming provisions contained in sections 68, 69, 69A to 69D of the Act. H....
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....ly held that not allowing cross examination of those witnesses, whose statements are relied upon to frame the assessment, is a serious flaw & makes the assessment a nullity in as much as it amounted to violation of principles of natural justice because of which the assessee is adversely affected. The Apex Court went onto hold that in view of the fact that cross examination of the witnesses being not afforded, the testimony of these witnesses stand discredited. In view of the decision of the Apex Court in Andaman Timbers the statements of both Anjaneya and Rajendran stand discredited and have no value and cannot be relied upon to make any addition. Thus all those additions, the AO has made on the basis of the statements of these two persons, have to be necessarily be deleted on this count also. 32. We also notice that the AO & the Learned CIT A have relied on two decisions of the Apex Court, namely (a) Sumati Dayal case reported in 80 taxmann 89(SC) (1995) & CIT vs Durga Prasad More reported in 82 ITR 540(SC), to support the additions for the reason that what is apparent is not real & surrounding circumstances have to be considered while framing the assessment. These decisions wo....
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....ed and also stated that it has already been paid. 4. Meanwhile on 29.07.2005, DCPL had relinquished 58,400 sq ft of land of CTS 2 by way of relinquishment deed to BBMP. It is to be noted as per this relinquishment deed that DCPL was the only signatory for the said deed whereas Sh D K Shivakumar was not a signatory. 5. On 9.9.2005, DCPL had entered into a sale deed and purchased land of 44,866 sq ft of CTS - 1 from Bhagyanagar Metals Pvt Ltd. This land is adjacent and is contiguous to that of CTS 2. 6. It was found from the books of accounts of DCPL that Sh D K Shivakumar and Sh D K Kempegowda had advanced Rs 42,54,93,887/- either directly by themselves or by any of advances paid by other parties to M/s Davanam Constructions Pvt Ltd initially and subsequently transferred to their accounts for the purchase of CTS 1,2 and 1297 by DCPL in the FY 2003-04 to 20O5-06. The details of source for the sale consideration as submitted by DCPL is as under: 7. Similar to CTS 2, DCPL also submitted that it had entered another unregistered movement to sell 30,958 sq ft of land of CTS 1 to Sh D K Shivakumar for the consideration of Rs 3,80,78,340/- and 4486 sq ft ....
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....CTS 1 and 2 on 15.03.2017 has been converted from fixed asset to stock in trade by DCPL in its books of accounts. 12. During the FY 2016-17 and 2017-18, the extent of land as mentioned below and by virtue of agreement dt 12.10.2005 entered by M/s Davanam Constructions Pvt Ltd, Sobha Developers Ltd and Sh D K Shivakumar and D K Kempegowda, the proportionate super built up area was also transferred to Sh. DK Shivakumar and Sh. DK Suresh (in the capacity of L/h D K Kempegowda) i. On 31.3.2017, 1. 18316.35 sqft of CTS -2 was transferred to Sh. DK Suresh ii. 582 sq ft of CTS -1 was transferred to Sh DK Suresh iii. 4020 sqft of CTS -1 was transferred to Dk Shivakumar On 12.4.2017, i. 1223.68 sq ft of CTS -1 was transferred to DK Shivakumar ii. 38,465 sq ft of CTS -2 was transferred to DK Shivakumar Details filed by the assessee as per his election affidavit in 2008 and 2013 10.2 Further. it is noticed from the election affidavits filed by Sh D K Shivakumar for the Karnataka Assembly Elections 2008 and 2013 that Sh D K Shivakumar had disclosed details & non-agricultural land to include extent of land at CTS 1....
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....ansferred 55% of balance land held by him as on the date of agreement, to the extent of 1,39,708 sq ft, 76,839 sq ft of CTS 2 land was transferred to M/s Sobha Developers Pvt Ltd. On 21.2.2008, 31,919 sq ft of CT5 1 was relinquished to BBMP by way of a relinquishment deed signed by DCPL only. On this, the proportion of area of 14,363 sq ft of CTS 1, pertaining to its own share and 17,555 sq ft of CTS-1 from the share belonging to M/s Sobha Developers Pvt Ltd to BBMP. On 2.1.2013, 41,908 sq ft of CTS 2 to BDA was relinquished by way of relinquishment deed signed by DCPL and Sh DK Shivakumar which is to be considered on behalf of DCPL for 13,313 sq ft, Sh D K Shivakumar of 5995 sq ft and M/s Sobha Developers Pvt Ltd of 23,599 sq ft on account of their respective holdings in CTS 2 as on 2.1.2013, considering the sale deed dt 12.02.2005 (whereby 1,57,841 sq ft of CTS-2 was sold to Sh D K Shivakumar) and also development agreement dt 12.10.2005. On 31.3.2017, an extent of land of 18316 sq ft of CTS 2 and 582 sq ft of CTS 1 was transferred to Sh D K Suresh. On 31.3.2017, 4020 sq ft of CTS 1 was transferred to Sh D K Shivakumar. On 12.4.2017, a....
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....not enter any agreement to sell for the land at CTS 1297 and entire land in CTS 1 and 2 belongs to you and your father. Whereas it is noted from the sale agreement dr 10.10.2004 and 9.9.2005 that these are for purchase of 3,50,757 and 30,958 sq ft only of CTS 2 and CTS 1 respectively from M/s Davanam Constructions Pvt Ltd for the consideration of Rs 25,51,75,718/- and Rs 3,80,78,340/- respectively. Further, you had mentioned in your election affidavit filed during Karnataka Assembly Elections 2008 and 2013 you are the agreement holder for the land of CTS 1297 of 117821 sq ft and shown as purchase cost of Rs 8,59,63,514/- wrt the sole agreement. 2) In this regard, please show cause as to why file provisions of Section 45 should not be invoked in your case as the land measuring 4020 sq ft in CTS-1 in FY 2016- 17 and 39688 sq ft of CTS 1 and 2 in FY 2017-18 along with the right of proportionate super built up area by virtue of agreement dt 12.10.2005 and 4.4.2014 has been transferred to you by M/s Davanam Constructions Pvt Ltd in lieu of you surrendering your rights over the purchase of land of CTS 1297 of 117821 sq ft which was acquired by making the payment of Rs 8,59,63,51....
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.... agreement being the land owner for 21 per cent of land in both CTS 1 & 2. The assessee had also submitted that he was also the party to the relinquishment date dated 29.07.2005 even though he was not a signatory. Subsequently, the assessee had received TDR which was offered to tax in the subsequent Years. This stand of the assessee clearly proves that the assessee had relinquished 18,133 sq ft of land at CTS 2. The balance land available with him as on 12.02.2005 was 1,39,708 sq ft only. The assessee has also submitted that the DCPL had reflected sum of Rs. 12,54,93,887/- initially as advance received from the assessee and his father and subsequently the entire consideration of Rs. 42,54,93,887/- has been declared as sale of land in its financials which shows that entire immovable property referred cs CTS 1 & 2 had been transferred to him. This is factually incorrect. DCPL in its books of accounts had shown the advances from D K Shivakumar, D K Kempegowda, M/s Sobha Developers Pvt Ltd and various other parties which were subsequently transferred to Shri D K Shivakumar and Shri D K Kempegowda at the time of recognizing the sales of 79% of land at CTS 2 an....
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....eed consideration of Rs. 33,57,55,167/-. Further, it also leads to the fact that the assessee and his father had made advance of Rs. 8,97,38,720/- (Rs. 8,14,73,221/- + Rs. 82,65,499/-) for the purchase of CTS 1297 which was also recognized in the books of accounts of DCPL in their respective accounts on 17.09.2004. This also proves the fact that the assessee and his father had interest in CTS 1297. By considering total amount of Rs. 33,57,55,167/- for CTS 1 & 2 and Rs. 8,97,38,720/- for CTS 1297 which works out to Rs. 42,54,93,887/- was the total advance paid by the assessee and his father. Here, the point of dispute is that the assessee claims the entire consideration of Rs. 42,54,93,887/- was made to DCPL for the purchase of entire CTS 1 & 2 and not for CTS1297 cannot be accepted for the reason that the agreements dated 10.10.2004 and 09.09.2005 clearly shows that in these agreements the assessee and his father had agreed to purchase only 79% of the CTS 1 & 2 whereas the balance of Rs. 8,97,38,720/- had been considered by DCPL in Its books of accounts for the advance for the land at CTS1297 and the same was also recognized by DCPL as sale of CTS1297 in the FY 2004-05. This clearl....
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....2005 in which even the 21% in the said property was agreed to be sold to him and his brother and the consideration for the same was received through banking channels in 2003 & 2004. Further the assessee has submitted that the memorandum of settlement also states that the DCPL is only the title holder and the same will be transferred to the assessee, assessee's brother and the developer M/s Sobha Ltd. This claim of the assessee is in contrary to the terms of the agreement dated 10.10.2004 and 09.09.2005 which clearly states that Shri D K Shivakumar and Shri D K Kempegowda had entered an unregistered agreement for the purchase of proportionate area of 79% of CTS & 2 only. The claim of assessee that the balance 21% was agreed to sell to him or his father as per clause 5 the said memorandum of settlement was not existing in the said agreements dt 10.10.2004 and 9.9.2005 which again proves that Sh D K Shivakumar and D K Kempegowda was not intended to purchase entire CTS 1 and 7 in 2004 and 2005 as claimed later in 2017. The assessee has contended that he was not signatory in the Development Agreement entered by DCPL and M/s Pacific Heights for the development of land at CTS....
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....4.2014 is an unregistered document whereas the registered Development Agreement dated 12.10.2005 vide schedule in page no 97 and 98 clearly mentions that both land at CTS 1 & 2 were put jointly by DCPL and Shri D K Shivakumar for the development by M/s Sobha Developers Pvt Ltd. It is also a fact that the CTS 1 land is in the corner and 31,919 sq ft out of 44,866 sq ft was relinquished to BBMP on 21.02.008, that is, after the development agreement was entered by DCPL and Shri D K Shivakumar. After this relinquishment, it is only 12,947 sq ft left. By virtue of Development Agreement dated 12.10.2005, 55% of possession ie 7121 sq ft has been handed over to M/s Sobha Developers Pvt Ltd and it is left with and the balance 5,827 sq ft of CTS 1 was also transferred to Shri D K Shivakumar and D K Suresh in 2016- 17 and 2017-18. Further, the claim of the assessee that CTS 1 is not a part of joint development cannot be accepted for the reason that the land at CTS 1 is also mentioned in the Schedule of property put for development by the developer. Later the supplementary development agreement dt 4.4.2014 which is an unregistered document. This document cannot take away the transfer that has ....
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....hat in pursuant of memorandum of settlement deed he had received 38,465 sq ft of CTS 2 cannot be accepted. Further, the assessee also claimed that 5243 sq ft of CTS 1 on 31.03.2017 and 12.04.2017 in pursuant to that of agreement entered dated 09.09.2005. This claim of the assessee also cannot accepted for the reason that Sh D K Shivakumar and D K Kempegowda had rights over 129774 sq ft of land in CTS 1297 which was relinquished and In exchange 62606 sq ft of land at CTS 1 and 2 was received by both Sh D K Shivakumar and D K Suresh(L/H of Late D K Kempegowda). The same is brought to tax under section 45(1) of Income Tax Act 1961. Since the total area relinquished by Sh D K Shivakumar and D K Kempegowda had rights over 1,29,774 sq ft of land in CTS 1297 is more than land area received in exchange in CTS 1 and 2, the entire land of 62,606 sq ft of land is considered as the land exchanged for computation of LTCG in the hands of both assessees. The claim of assessee that CTS 1 4020 sq ft in AY 2017-18 and 1223 sq ft in AY 2018-19 was transferred wrt to sale agreement dt 9.9.2005 was not accepted. The main contention of the assessee is that the assessee had received onl....
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....ayan BapujiDhgotra [2004) 8 SCC 614, para 10. An agreement of sale which fulfilled the ingredients of Section 53A was not required to be executed through a registered instrument. This position was changed by the Registration and Other Related Laws (Amendment) Act, 2001. Amendments were made simultaneously in Section 53A of the Transfer of Property Act and Sections 17 and 49 of the Indian Registration Act. By the aforesaid amendment, the words "the contract, though required to be registered, has not been registered, or" in Section 53A of the 1882 Act have been omitted. Simultaneously, Sections 17 and 49 of the 1908 Act have been amended, clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of 1882 Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. Section 17(IA) and Section 49 of the Registration Act, 1908 Act, as amended, read thus:............... " The Hon'ble Supreme Court has relied on....
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....stment documents are created just to avoid the Stamp duty and huge implications income and lokayuktha prospective and applicability of Benami Transactions (Prohibition) Act. As seen in Note 4 in page 34 of the above seized material it is seen that, a suggestion has been made by on Kusuma Muniraju, advocate to partition and settlement deed in order to transfer 152621 sq ft to Mr. DK Shivakumar in pursuance of agreement dated 10.10.2004. It has been further mentioned that to call it a "settlement, there should be a dispute/case pending before the court of Ian' and now arbitration route is adopted for out of court settlement.' Further, in Part IV of the above document comments are made on Income Tax Matters. Here, the terms of settlement of dispute have been mentioned. The terms of settlement are as follows: DCPL shall transfer to Mr. DK Shivakumar its rights in entirety over the undivided share in land and developed area as per JDA with Sobha in respect of Sobha Global Malls to DKS. Mr.DK Shivakumar shall transfer / relinquish his rights in property in CTS 1297 and CTS 1 Khatha 19/11 Two important points emerge from a reading of this section of the....
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....e instant case, the assessee Mr. DK Shivakumar has entered into a Memorandum of Settlement and as per the recital of this Memorandum of Settlement, it Is clearly seen that the intention has been to evade taxes. Probing imo available documents in this case and looking at the scenario and circumstance in all its entirety and after thoroughly analyzing all pieces of evidences, books of accounts and other available details, brings one to the irrefutable conclusion that this document that is termed as Memorandum of Settlement dated 15.3.2017 is self-serving in nature and is in the nature of an afterthought. In the Instant case on perusal of the finer details of the unregistered agreement to Sale dated 10.10.2004 and 9.9.2005 entered into by the assessee Mr. DK Shivakumar with DCPL and also by Mr. DK Kempegowda with DCPL, sale deed dated 21.2.2005, analysis of how these entries are recorded in the books of DCPL, the terms and conditions of the Agreement dated 12.10.2005 between Sobha Developers Ltd with the three parties DCPL, Mr. DK Shivakumar and Mr, DK Kempegowda followed by the unregistered supplementary JDA dated 4.4.2014, the relinquishment deeds signed with BBMP and BDA, ....
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....ed that the assessee gave up his right in the property at CTS 1297 in exchange for acquiring a right in the property at CTS I and II. The assessee did not have any right on 21% of the Property at CTS I and II, held by DCPL. This is proved by the fact that the statement of assets of the assessee, filed by the assessee himself with various statutory authorities, clearly shows that the assessee himself admits that he has no right in 21% of the property at CTS I and II, which is held by DCPL. There is no registered agreement in writing which confers right on 21% of the Property at CTS I and II, held by DCPL, to the assessee, as claimed by the assessee. Further the assessee and his family members do have a right in 79% of the property at CTS 1297, which is also held by DCPL. This is also proved by the fact that the statement of assets of the assessee, filed by the assessee himself with various statutory authorities, clearly shows that the assessee himself admits that he has no right in 69 % of the property at CTS 1297, and that the HUF has right in 10% of the same property, which is also held by DCPL. The MOU dated 15/03/2017, has been made with the sole purpose to avoid taxes. The cont....
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....f an exchange, then income from the same has to be taxed u/s 56/(2)(vii)(b)/56 (2) (x) of the Act, as Income from Other Sources and has accordingly quantified a sum of Rs. 104,97,55,888/- based on certain parameters and has made protective addition of the same. 39. The learned AR submitted written synopsis & relevant submissions are as under: "The assessee has not entered into any transaction of exchange with DCPL, as alleged by the AO. The AO is wrong in treating this as a transaction of exchange and the same is based only upon pure suspicion and surmise and not on any facts. The registered sale deeds only conferred transfer of title and not transfer as contemplated u/s. 2(47) of the Income tax act as the entire sale consideration was paid and possession was transferred to the assessee as at the date of sale agreement as confirmed in the registered agreement dated 12.10.2005, memorandum of settlement dated 15.03.2017 and registered sale deed dated 31.03.2017 and 12.04.2017. M/s. Davanam Constructions Private Limited had recognised the sale and had declared the entire sale consideration of Rs. 42,54,93,887/-, paid by the assessee and his father, as income in the F.Y. 20....
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.... undisputed fact that Davanam Constructions Pvt Ltd is the owner of 39688 sft. of land as well as the entire land at CTS 1297. The Title Deeds are in the name of DCPL. There is no agreement to show that the assessee had 79% right in lands at CTS1297. The question of exchange of properties between the assessee and DCPL does not arise at all and what has actually happened is that the assessee got 39688 sft. of land at CTS1 and 2 registered in his name in the A.Y. 2018-19, pursuant to the MOU dated 15/03/2017. It is a settled proposition in law that one cannot relinquish any property without having title to the same. In this case the assessee did not have any right whatsoever in CTS 1297 for him to relinquish the same thereof. Accordingly, it is evident that there was no exchange between the assessee and DCPL and that a Sale Deed was registered in favour of the assessee by DCPL in consideration against the advance received by it in 2005 from the assessee. The assessee has not given anything in exchange for the same, except the advance paid by him in 2005, which is an admitted fact. Further income, if any, arising out of this transaction has to be assessed in accordance with s....
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....ers the date of transfer of the said land on 12.04.2017 which is at beginning of F.Y. 2017-18. It can be thus concluded with evidence that as on 12.04.2017, the construction by M/s. Shobha Limited had barely commenced or more likely not commenced at all, and as such there is no question of any built up area being transferred on 12.04.2017. One cannot transfer something that does not exist as on that date and consequently no cost attributable to construction should be considered for purposes of valuing the asset acquired by the assessee, as no construction has taken place. Without prejudice to the fact that in view of the above submissions, there is no instance of transfer requiring assessment of capital gain, it is evident that the valuation adopted is erroneous and highly excessive and requires to be reduced substantially based on the facts of the case and in the interest of equity and justice." 40. The learned DR relied on the order of lower authorities and submitted that the provision of section 2(47)(i) of the Income Tax Act is squarly applicable & that the addition made by the AO in the assessment order has to be confirmed. He also argued that the decision of the H....
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....he property at CTS 1297, held by DCPL, it cannot be said that there is an exchange between the assessee and DCPL in terms of Section 2(47)(i) of the Act. The AO is not correct in coming to the conclusion that the assessee and the HUF parted with 79% share in CTS 1297 to acquire, by way of exchange, 21% of properties at CTS I and II when admittedly the assessee as well the HUF has no share in the properties in CTS 1297. No doubt the MOU between the assessee, the HUF and DCPL, dated 15/03/2017, states that Assessee and HUF had all along been in possession of the entire property at CTS I and II. But this does not mean that the possession be recognised in law as the agreements to sell clearly state that possession will be handed over at the time of registration of sale deed. The assessee can be said to be in possession of only 1,57,841 sft of land since 21/02/2005, as he has a registered sale deed registered to the said effect. The assessee cannot be said to be in possession of any extent of land in excess of 1,57,841 sft at CTS II as on the date of MOU. The assessee also cannot be said to be in possession of any extent of land in CTS I as he has not registered any portion thereof as o....
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....t is not clear from the assessment order whether this agreement is registered or not and what is the actual date of conveyance of the property to the prospective buyer. Be it as it may, we have already held that the transaction is not hit by Section 50D. The correct section to be applied is Section 50C. Hence the rate of Rs. 4000/- per sft as certified by the District Registrar is to be applied to the transaction. Further as contended by the ld. AR of the assessee, the AO was wrong in adopting Rs. 4000/- per sft towards value of building transferred, when the fact show that as on 12/04/2017, being the date of Sale Deeds, M/s Shobha Builders Ltd, had barely started construction and therefore no value is to be assigned to cost of building as there is no building which could be transferred to the assessee as on 12/04/2017. Further the Valuation Certificate issued by the District Registrar also shows that only Land is being conveyed as on 12/04/2017 and also as per Schedule shown in the Sale Deeds dated 12/04/2017, there is no transfer of building. 45. During the course of hearing it was brought to the notice of both the parties of the Judgements of the Hon'ble Apex Court in the cas....
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....t page No. 180 to 192 and assessee has offered capital gain in the year of sale in ay 2020-21 and 2021-22. The actual transfer took place after occupancy certificate issued by the BBP. We are also in agreement on this point of the ld. AR. 49. We have also in the earlier part of this order come to a conclusion that there is no exchange u/s 2(47)(i) of the Act in the impunged AY.2018-19. 50. In view of the above findings we have to determine if any income arises applying the provisions of section 50C and 56 (2)(x)(b) of the Act as these are the two sections relevant for this case. 51. The undisputed facts that emerge from the records before us are reproduced below: a. DCPL purchased 5,08,345 sft on Land at CTS II in an auction from M/s National Textile Corporation Ltd, vide Sale Deed dated 17/09/2004 for a consideration of Rs. 33,63,00,000/- (Rupees Thirty Three Crores and Sixty Three Lakhs Only), which works out to Rs. 661.56 per sft. b. DCPL purchased 44,866.80 sft on Land at CTS I from M/s. Bhagyanagar Metals Ltd, vide Sale Deed dated 09/09/2005 for a consideration of Rs. 4,74,00,000/-(Rupees Four Crores and Seventy Four Lakhs Only), which works out to R....
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....ance advance amount of Rs. 31,06,63,889/- (Rupees Thirty One Crores Six Lakhs Sixty Three Thousand Eight Hundred Eighty Nine Only) is lying to the credit of Assessee and his family. j. Thus, the total Value of Land at CTS I and CTS II, as per the value of the Registering Authority for purposes of Stamp Duty, is Rs. 30,16, 64,160/- ie. (Rs. 4,74,00,000 Plus Rs. 25,42,64,160/-), as on 21/02/2005, the date on which the balance advance amount of Rs. 31,06,63,889/- (Rupees Thirty One Crores Six Lakhs Sixty Three Thousand Eight Hundred Eighty Nine Only) is lying to the credit of assessee and his family. k. It is clear from Para 10 above that the balance advance amount of Rs. 31,06,63,889/- (Rupees Thirty One Crores Six Lakhs Sixty Three Thousand Eight Hundred Eighty Nine Only) is lying to the credit of assessee and his family is sufficient to cover the total Value of Land at CTS I and CTS II, as per the value of the Registering Authority for purposes of Stamp Duty, is Rs. 30,16,64160/-. In fact, it exceeds the value for registration purposes, by Rs. 89,99,729/- (Rupees Eighty Nine Lakhs Ninety Nine Thousand Seven Hundred Twenty Nine Only). l. The fact that the ....