TaxTMI 
TaxTMI 
2025 (2) TMI 1830
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....n the case of the assessee. In response to the notice u/s 153A(a) of the Act issued on 07.10.2019, the assessee filed its return of income on 09.10.2019 declaring total income at Rs. 58,20,920/- which was the income returned earlier. Statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the assessee filed the requisite details from time to time as called for by the Assessing Officer. 3. During the course of assessment proceedings, the Assessing Officer noted that search action u/s 132 of the Act was conducted in the case of the assessee as a part of search action in Goel Ganga Group on 10.01.2019. During the course of search action various incriminating documents in the form of loose papers were found and seized from the office premises of the assessee. When these documents were correlated with entries found in other documents and registered deeds, it became evident that the assessee firm was involved in accepting on-money in cash for booking/selling of flats/shops. The Assessing Officer narrated the findings of the search action which is as under: "3.1 Findings during search action: ..... The f....
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....e Act, the assessee has not offered the on-money in income tax return filed. He, therefore, asked the assessee to explain as to why the addition should not be made on account of on-money and also why it should not be extrapolated for the remaining flats / shops. 5. The assessee in response to such notice submitted that it has not accepted any on-money against the sale of its units in the said project. It was submitted that the documents on the basis of which it has been alleged that on-money is being accepted by the assessee are merely booking forms made by the sales representatives of the assessee at various times representing various negotiations entered into with the customers. Such draft booking forms cannot be equated with evidence of acceptance of on-money by the assessee. Further, no such document evidencing any such on-money was found. It was submitted that the booking forms which were purported to be represented the amounts taken by the assessee in cash also contain calculations of GST, stamp duty, etc. which do not fit within the contours of any logical act if the same would have been accepted in cash. It was also argued that no valuables or any cash was found during t....
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....q ft. as per page no. 3 of seized bundle no. 6 and agreement amount mentioned here is Rs. 44,30,000/-. On a rough paper found in the file, it is written page no. 5A of seized bundle no. 6, on this basic cost written is Rs. 42,75,000/- which is cash component over and above of the agreement to sale value which has been taken in cash. (V) In sale of Flat No. A-102 of Ganga Florentina, as per page no. 03 of seized bundle no.7, the agreement cost has been mentioned here is Rs. 84,77,000/- and as per page no. 8 of the seized bundle no. 7, the agreement cost is written as Rs. 74,77,000/- only. As per page no. 61 of the seized bundle no. 7, it is the copy of index 2, the agreement cost here written is Rs. 74,77,000/- The difference of Rs. 10,00,000/- is the cash component which is over amount of Rs. 74,77,000/-. (VI) In sale of Flat No. A-001 of Ganga Florentina, as per page no. 02 of seized bundle no.4, the agreement cost has been mentioned here is Rs. 1,06,89,725/- and as per page no. 6 of the seized bundle no. 4, the agreement cost is written as Rs. 98,89,725/- only. As per page no. 62 of the seized bundle no. 4, it is the copy of index 2, the agreement cost here writ....
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.... found from his premises and the consideration worked out on it. His only contention is that those forms were only draft booking form. But once it is proved that the document was in possession of Assessee then, in terms of provisions of Section 132(4a) r.w.s. 292C of the income tax Act, a presumption arises that the contents of the impounded/seized documents are true. Thus, the presumption that the Assessee has received on-money cannot be denied. The presumptions u/s. 292C are that the document belongs to the persons from whose possession and control it was found. The second presumption is that the contents of such documents are true. The following case laws are relied in support of above proposition: (i) Surendra M. Khandhar [2009] 224 CTR 409 (Bombay): The Hon'ble Bombay High Court has held that "Where Xerox copy of document seized from Assessee was not denied the same showed advancement of certain sums to one 'C' and two signatories of said document were also not denied by Assessee and as the document was seized from Assessee's control, presumption under section 132(4A) and 292C was clearly applicable" (ii) CIT Vs. Naresh Kumar Aggarwal....
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....and 2 flats (total 13 shops and 222 flats were sold by Assessee till 31/03/2019) were found which mean Assessee would have accepted the on-money in sale of other shops and flats also. The probability of acceptance of on-money on other shops and flats sold by Assessee cannot be ruled out, as it is not possible that Assessee would accept the on-money in one shop and can't accept in the neighbour shop. 6.2 Further, the modus operandi of acceptance of on-money is already discussed in earlier paras which is produced below for sake of convenience: "The customers, who are interested in giving on money in cash are given two booking forms. One booking form for consideration in cheque, which is actual form and kept permanently in the file of the customer. The other booking form is filled for cash component and is temporarily kept in the file of the customer. Entire portion of cash is received prior to execution of sale deed. After sale deed is executed, the second booking form is removed from the file of the customer and destroyed. During the course of search action, cash booking forms were seized with respect to few customers only and with respect to other cus....
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....hown in registered deed. Considering the same, the on-money portion is determined as below: Sr No Shop no Consideration as per registered deed Date of registry % of on-money 1 7, 7A 54,00,000 31/03/2017 43,20,000 Therefore, for year under consideration, the addition of Rs. 43,20,000/- is made in Assessee's case on account of on-money not recorded in books of accounts." 10. The Assessing Officer accordingly determined the total income at Rs. 1,01,40,920/- by making addition of Rs. 43,20,000/- on account of extrapolation of on-money received being 80% of the consideration as per the registered sale deed. 11. Before the Ld. CIT(A) it was submitted that no corroborative evidence relating to receipt of any on-money by the assessee was found during the course of search. It was submitted that the entire addition was merely based on interpretation of notings on the draft bookings and the statement of sales manager adopted by the Assessing Officer which was clearly denied by the partner of the assessee. It was submitted that making an addition by stating that certain percentage of agreement value would have been accepted by the assessee on each a....
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.... in the files of the customers during the course of search action in respect of Shop No.D-08, Shop No.D-10A, Shop No.D-A and Shop No.D-09. Similarly, he also analyzed the two booking forms in respect of flat No.A-102 and A-001 of Ganga Florentina. He accordingly held that the addition made by the Assessing Officer was on the basis of on-money received by the assessee which is not recorded in the books of account. So far as the issue of extrapolation is concerned, the Ld. CIT(A) also upheld the same. The relevant observations of Ld. CIT(A) read as under: "5.10 I have considered the facts of the case, assessment order, the submissions made by the appellant along with the judicial pronouncements relied upon by the appellant. During the course of search/survey proceedings, the search/survey team had collected the evidence and impounded the various incriminating documents as under. i) During the course of survey action, statements of Shri Shirish Bhanudas Ranpise, Sales Manager was recorded u/s 131 of the Income-tax Act, 1961 and agreed by the sales team. In his statement, Shri Shirish Bhanudas Ranpise accepted that cash component was accepted in booking of flats. In r....
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....lable area. However, the agreements were being executed on very low rate. Please make comments in details on the treatment given to difference amount of actual amount received and agreement value, along with the position of the other projects. Please also state in detail about the process of documentation and the documentation on record in respect of the final negotiated price on which the actual sale has taken place. Ans. I would like to submit that all the negotiations of the actual sale price and the price as per agreements is decided by the directors and the customers and being a head of sales and marketing 1 have to play my role accordingly blow I am showing you the file of Shri Rameshkumar Chhatraram Choudhary to explain the documentation record in respect of final sale consideration negotiated and executed. The actual final negotiated price is Rs 10200 per sq ft of salable area (696 sq. ft) out of which the agreement has been executed @ Rs. 3700 per sq ft and the balance amount @ Rs 6500 per sq ft of salable area is the cash component received over and above the agreement value. There are two booking forms in this file one is showing the rate @ Rs. 3700 on which the....
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....lained in detail at above para. (b) In sale of Shop No. D-10A of Ganga Florentina, the carpet area of the shop is 209.40 sq ft. as per page no. 1 of seized bundle no 9 and agreement amount mentioned here is Rs. 38,65,500/- On the same page, amount of Rs. 25,25,250/- is written which is cash component over and above of the agreement to sale value which has been taken in cash. (c) In sale of Shop No. D-A of Ganga Florentina, the saleable area of the shop is 598.65 sq ft. as per page no. 6 of seized bundle no. 5 and agreement amount mentioned here is Rs. 46,37,000/-. On page no. 4 of seized bundle no.5, amount of agreement is Rs. 46,37,000/- and in pencil, it is written as 5670/- which is cash component over and above of the agreement to sale value which has been taken in cash. The total amount comes to Rs. 33,94,345/- (d) In sale of Shop No. D-09 of Ganga Florentina, the saleable area of the shop is 475 sq ft. as per page no. 3 of seized bundle no. 6 and agreement amount mentioned here is Rs. 44,30,000/-. On a rough paper found in the file, it is written page no. 5A of seized bundle no. 6, on this basic cost written is Rs. 42,75,000/- which is cash componen....
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....or AYs 2018-19 & 2019-20, the addition of 'on-money' income of Rs. 2,05,37,760/- and Rs. 3,24,37,208/-(1,72,95,354 +1,19,34,192 + 32,07,662], respectively made in the hands of the appellant is also upheld. The ground No. 1of appeal is, therefore, dismissed." 13. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds: 1. On facts and circumstances prevailing in the case and as per provisions and scheme of the Act it be held that the First Appellate Authority erred in upholding the addition of Rs. 43,20,000/- made by the Learned Assessing Officer ('Ld. AO') as on-money received by the Appellant. The addition sustained is unwarranted, unjustified, and contrary to the provisions and Scheme of the Act. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. 2. Without prejudice to Ground No. 1 and on facts and circumstances prevailing in the case and as per provisions and scheme of the Act, it be held that if any addition needs to be sustained then that should only be restricted to the Incriminating material found during the course of search....
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....d therefore deserves to be deleted. It be held that the Appellant be granted just and proper relief in this respect. 3. Without prejudice to Ground. No. 1 and 2 and on facts and circumstances prevailing in the case and as per provisions and scheme of the Act, it be held that in case additions are sustained on estimation basis, then the addition should be restricted only to the Gross Profit that might have been earned by the Appellant on such on-money. The addition made by the First Appellate Authority be reduced. The Appellant be granted just and proper relief in this respect. 4. Without prejudice to Ground No. 1, 2 and 3 and on facts and circumstances prevailing in the case and as per provisions and scheme of the Act, it be held that the addition made by Ld. AO and sustained by the First Appellate Authority is on a very high side. The same should be substantially reduced. The Appellant be granted just and proper relief in this respect. 5. The Appellant craves leave to alter, delete, modify, add or amend any ground of appeal. ITA No.877/PUN/2024 (A.Y.2019-20) 1. On facts and circumstances prevailing in the case and as per provisions and ....
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....cts and circumstances prevailing in the case and as per provisions and scheme of the Act, it be held that the addition sustained by the First Appellate Authority on account of unexplained expenditure under section 69C of the Act is unwanted, unjustified, and contrary to the provisions and scheme of the Act. The addition so made be deleted. The Appellant be granted just and proper relief in this respect. 7. The Appellant craves leave to alter, delete, modify, add and or amend any ground of appeal. 15. The Ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(A) in confirming the addition made by the Assessing Officer. He submitted that the assessee was involved in the development of 'Ganga Florentina' located at S.No.36(P) & 28(P), Mohammedwadi Rd, Mohammed Wadi, Pune. Referring to the following table, he submitted that the project has the following flats and shops having the following date of completion: Sr. No. Phase Wing BHK No. of flats / shops Completion date 1 I A 3 BKH 62 26.07.2017 2 I B 2 BKH 60 29.07.2017 3 II C 2 BKH 60 17.10.2018 4 II C 4 BKH 1 17.10.....
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....d was found. The entire addition was made on the basis of some rough notings and the statements of some of the employees recorded u/s 131 of the Act. Referring to the statement of Shri Annuj Umesh Goel recorded u/s 132(4) of the Act, he submitted that Mr. Goel had flatly denied the receipt of any on-money. However, no question was put to him on this issue. 19. Referring to the chart showing the papers relied on by the Assessing Officer and certain details with regard to the same, the Ld. Counsel for the assessee drew the attention of the Bench to the Annexure-2 which reads as under: Sr No Page No. Bundle No. Type of paper Customer name Written by Statement by Scheme to which the unit pertains 1 72 1 Rough scribbling No name written Mr. Piyush Alimchandani Mr. Shirish Ranpise Page does not mention any specific flat 2 13 10 Draft booking form Rameshkumar Chaudhary Shubhangi Mr. Shirish Ranpise Ganga Fernhill 3 2 8 Final Booking Form Dinesh/Pramod Advance Shirish No specific statement Ganga Florentina 4 25 8 Chart Multiple Name mentioned No name written No specific s....
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....the gross profit element can be added and the entire amount cannot be added. 22. Referring to the decisions of Hon'ble Allahabad High Court in the cases of Dr. Roop vs. CIT (2012) 20 taxmann.com 205 (All) and Dr. V.S. Chauhan vs. DIT (Inv) (2011) 12 taxmann.com 230 (All), the Ld. Counsel for the assessee submitted that the Hon'ble High Court in the said cases has held that the exercise of power u/s 131(1A) is contemplated in a situation anterior to exercise of power under section 132. 23. Referring to the decision of Delhi Bench of the Tribunal in the case of Pradeep Kumar Sharma vs. DCIT (2021) 132 taxmann.com 41 (Delhi-Trib) and Bangalore Bench of the Tribunal in the case of DCIT vs. H. Omkarappa (HUF) vide ITA No.1634/Bang/2019, the Ld. Counsel for the assessee submitted that the Tribunal in the said cases has held that the additions could not be made merely on the basis of statement recorded u/s 131 of the Act when no corroborative material is unearthed during search. 24. Referring to the decision of Pune Bench of the Tribunal in the case of Chander Mohan Mehta vs. ACIT (1999) 71 ITD 245 (Pune) and Mumbai Bench of the Tribunal in the case of DCIT vs. Kanakia Hospitalit....
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....rubachhan Singh J. Juneja (2008) 171 Taxman 406 (Guj) iii) Jyotichand Bhaichand Saraf & Son (P.) Ltd. vs. DCIT (2012) 26 taxmann.com 239 (Pune) iv) Kush Corporation vs. ACIT vide ITA No.357/Sur/2022 v) CIT vs. Balchand Ajit Kumar (2004) 135 Taxman 180 (MP) vi) Madanlal Narendrakumar (HUF) vs. ACIT (2003) 131 TAXMAN 41 (Indore) (Mag.) 28. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) be deleted. 29. The Ld. DR on the other hand strongly supported the order of the Ld. CIT(A) sustaining the addition made by the Assessing Officer. He submitted that the evidences were gathered during the course of search showing that the assessee was indulging in receipt of on-money. The statement of the sales person Shri Shirish Bhanudas Ranpise was confronted to the director of the assessee firm and he has simply denied, which is only a bald denial. The assessee firm has never denied the evidences those were gathered. Referring to the decision of the Hon'ble Bombay High Court in the case of Harish Textile Engrs. Ltd. vs. DCIT (2015) 379 ITR 160 (Bom) he submitted that the extrapolation on the basis of ....
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....n loose papers were found and seized from the office premises of the assessee. When these documents were correlated with entries found in other documents and registered deed, it was noted that the assessee firm has involved in accepting on-money in cash for booking/selling of flats/shops. Further in the statement recorded u/s 131 of Shri Shirish Bhanudas Ranpise, sales manager, he had admitted that the cash component was accepted in the bookings of flats / shops. Since the assessee did not offer any income on account of such on-money received, the Assessing Officer in the order passed u/s 153A r.w.s. 143(3) made addition of Rs. 43,20,000/- being the on-money received on the basis of extrapolation. While doing so, the Assessing Officer assumed that the assessee was accepting the on-money to the tune of 80% of the total consideration as mentioned in the registered sale deed. He, however, did not make any addition on account of on-money received on the basis of any seized documents relatable for this year. 33. We find the Ld. CIT(A) sustained the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submissi....
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....ors LLP on 12/01/2019. Statement commenced on 12/01/2019 at 08:30 PM. OATH ADMINISTERED "I swear in the name of God that I will speak truth, only truth and nothing but the truth. I further confirm that I have been made aware of the consequences of making a false statement under oath" Before Me Deponent Sd/- (Authorized Officer) Sd/- (Annuj Umesh Goel) Q.1 Please identify yourself. Ans. My name is Annuj Umesh Goel s/o Shri late Umesh Sitaram Goel age 36 years R/o 701 & 702, Konark A Plus, Sopan Baug, Ghorpadi, Pune Sd/- (Authorized Officer) Sd/- (Annuj Umesh Goel) 411001. My educational qualification is B.Com. My contact no. is 9922992255. I would also like to state that I am well versed in Hindi and English and I am comfortable in giving the statement in English language. Q.2 Please confirm that oath has been administered to you and you are reminded that this statement is being recorded on oath and you have been made aware about the consequences of giving false statement on oath including penalties u/s 179 of IPC, sec 180 of IPC, sec 181 of IPC and sec 277A of the Income Tax....
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....ou and your firms/company/proprietary concerns. Ans. I am providing details of all bank account maintained by me and my brother Ankit Umesh Goel and all my firms as annexure 'B' to this statement. Q.8 Please provide trial balance of all your firms in which you have substantial interest as on 10/01/2019. Sd/- (Authorized Officer) Sd/- (Annuj Umesh Goel) Ans. I am providing you consolidated trial balance of all the firms in which I and my brother Shri Ankit Umesh Goel have substantial interest as annexure 'C' to this statement. As per this trial balance, total cash in hand is Rs. 1,18,73,957/-. Q.9 As per the trial balance submitted by you, it is showing cash balance position of Rs. 1,18,73,957/- but cash found at this business premise i.e. 5, San Mahu Commercial Complex, Bund Garden Road, Pune 411001 is Rs. 23,03,495/- only. Please explain the difference of Rs. 95,70,462/-. Ans. Rs. 25,09,860/- has been found at my residence i.e. 701 & 702, Konark A Plus, Sopan Baug, Ghorpadi, Pune 411001. Remaining amount of Rs. 70,60,602/-, I need to reconcile and will offer you explanation within one week's time. ....
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.... Total 4,23,00,549/- Q.14. Please identify Shri Shirish Bhanudas Ranpise? Ans. Yes, I know Shri Shirish Bhanudas Ranpise. He is working as HOD (Head of the Department), sales and marketing in my office. He has responsibility to look after sales of the Goel Ganga Developments Group. Q. 15. I am showing you statement of Shri Shirish Ranpise recorded under section 131 of the Income Tax Act 1961 on 10.01.2019. Please go through it and comment. Ans: I have thoroughly gone through the statement of Shri Shirish Ranpise recorded under section 131 of the Income tax Act 1961 on 10.01.2019 and I do not agree with the statement given by Shri Shirish Bhanudas Ranpise. There is no such procedure of my meeting with any customer as it is not possible to meet so many customers on daily basis. Q. 16. I am showing you working sheet prepared by Shri Shirish Ranpise (attached with his statement) on the basis of documents found and seized from your premises. Please confirm the same and explain the content of the same. Ans: I have gone through above said sheet. As per the procedure of my company, we do not have or follow any such method of form Boo....
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....n 133A of the Act does not empower any ITO to examine any person on oath. Therefore, the statement recorded u/s 133A of the Act has no evidentiary value and any admission made in such statement cannot be made the basis for addition. 37. We find the Hon'ble Kerala High Court in the case of Paul Mathews & Son vs. CIT (2003) 263 ITR 101 (Kar) has held that the provisions of section 133A of the Act does not empower any ITO to examine any person on oath and the statement recorded u/s 133A of the Act has no evidentiary value. 38. We find the Hon'ble Madras High Court in the case of CIT vs. P. Balasubramanian (2013) 354 ITR 116 (Mad) has held that the addition can be made on the basis of assessee's statement in survey only if it is supported by the relevant material to substantiate the same. 39. We find the Mumbai Bench of the Tribunal in the case of Smt. Madhu Gupta vs. DCIT (2006) 8 SOT 691 (Mum), has held that the statements which are not confronted to any of the partners of the assessee should not be considered as the basis for making addition. 40. However, at the same time it is also an admitted fact that certain booking forms were found containing two different figures i....
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....case, the managing partner of the assessee firm has denied to have received any such on-money and no further questions were asked either to the managing partner or to any of the customers to whom the flats / shops have been sold and who were identifiable. 44. We find in the case of CIT Vs. Naresh Kumar Aggarwala (supra), the Hon'ble Delhi High Court has held that, there was a presumption raised under section 132(4A) on seizure of fax message and it was upon assessee to rebut that presumption by offering a plausible explanation. However, as mentioned earlier, the statements of the employees in the instant case were recorded u/s 131 of the Act and not u/s 132(4A) of the Act. Further, the managing partner of the assessee firm has completely denied to have received any on-money and neither he was confronted subsequently nor any of the customers who are identifiable were examined either by the Investigation Wing during the course of search or post-search enquiries or by the Assessing Officer at the time of assessment proceedings. So far as the decision of Hon'ble Bombay High Court in the case of Harish Textile Engrs. Ltd. vs. DCIT (supra) relied on by the Ld. CIT-DR is concerned,....
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.... as Bundle Nos. 01 to 03. Bundle No. 04 is data backup of electronics devices found & seized at the said premises. Page no. 20 of Bundle no. 2 is in respect of the expenditure of Rs. 6,00,000/- in the project Ganga Florentina for flat No. D/302 & C/102. For ready reference, the page is reproduced as below. During the post search proceedings, the appellant was asked for to submit the ledger of both Flats No. D/302 and C/102. From the submission it was seen that in Flat No. D/302, there is no expense towards MSEB and in flat No. C/102, there is expense of Rs. 1,12,000/- towards MSEB which is not reconciling with the amount mentioned therein. Further, during the course of Assessment proceedings, appellant was asked to explain the same vide question no 16 of notice u/s 142(1) of Act dated 03/11/2020. During the course of assessment proceedings, no reply was furnished by appellant. Therefore, it was held that appellant is not having any documents to prove the source of payments made to MSEB and to Dhruv Mohta. Therefore, addition of Rs 6,00,000/- was made in the appellant's case u/s 69C of Act as unexplained expenditure. 14.3 As per abovementioned submission filed ....