TaxTMI 
TaxTMI 
2025 (4) TMI 2092
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.... or profession and income from other sources. Pursuant to search action notice u/s 153A of the Act was issued to the assessee on 05.07.2018 which was duly served. In response to notice issued u/s 153A, the assessee furnished his return of income on 11.08.2018, declaring total income of Rs. 41,08,200/-. Earlier the assessee had filed his return of income u/s 139 of the Act on 05.11.2014 at the total income of Rs. 41,08,200/- and assessed u/s 143(3) at the total income of Rs. 82,99,020/- and after appeal effect u/s 250 total income of the assessee was Rs. 60,86,646/-. Effectively there is no difference between ITR filed under section 153A and 139 of the Act. 2.1 Ld. AO noted that during the course of search action u/s 132 of Act at the residence of Shr. R.K. Verma, a paper was found and seized as Page No.56 of Exhibit-17 of Annexure-AS. As per seized document page no. 93 Shri R. K. Verma has made a payment of Rs. 16,50,00,000/- in FY 2013-14 and 2014-15. In the paper it was also mentioned that the amount is given without interest and will not be taken back by Shri R. K. Verma. The paper had entry of payment made by Shri Ram Kishan Verma to the assessee Shri Ajay Bakliwal of Rs. 10....
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....his income during search but not included in his return filed u/s 153A therefore a show cause notice was given to the assessee vide notice dated 14.12.2019. The assessee replied on 19.12.2019 stating that the amount of Rs. 15,00,00,000/- is fully accounted for and is mentioned as an unsecured loan in the books of Nav Bharat Nirman Co. JV for the AY 201415 and Rs. 1,50,00,000/-is fully accounted for and is mentioned as unsecured loan in the books of unsecured loan in the books of Nav Bharat Nirman Co. JV for the AY 2015-16, and Rs. 2,00,00,000/- is in his personal books of accounts for AY 2015-16. Ld. AO considered the submission of the assessee but not found satisfactory. The assessee has offered this income during search in statement recorded u/s 132(4) in presence of independent witnesses and the same has been confirmed by Shri R K Verma in statement u/s 132(4). Both the persons were at different locations and said the same thing and now the assessee is retracting from his statement. This is an afterthought of the assessee to save himself from taxation. Further it is also noticed that the assessee has not paid any interest on the unsecured loans of Rs. 18,50,00,000/- in any of....
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....the assessee's premises, and it is related to agreement with Newaji Estate P limited. Further as per the agreement assessee agreed to purchase 53,475 sqr ft land at B-1 Parvatipuram, Kota at the rate of Rs. 400 per square for a total consideration of Rs. 2,13,90,000/-. And Rs. 51,11,111/-was paid as first instalment. These figures exactly match with the loose paper noting. And assessee has not denied the fact that the paper is not related to M/s Newaji Estate P Ltd (In his submission he mentioned the name of this firm). As per these loose papers noting payment of Rs. 2,00,00,000/- and Rs. 65,99,000/-was made in cash and these payment is not recorded in his books of accounts. Therefore, the payment of Rs. 2,65,99,000/- in cash as mentioned in the loose paper is added to the total income of the assessee treated as investment from undisclosed sources u/s 69 and tax is charged as provisions of section 115BBE of the IT Act. 3. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: Validity of order passed 143(3)/153A of the Act.....
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...., the assessee. On the basis of these seized documents, it is conclusively proved that there were incriminating documents seized even from the possession of the assessee also. It is observed that the statement recorded u/s 132(4) is corroborated by statement recorded u/s 132(4) of another party involved in the transaction i. e. Sh. R. K. Verma who paid the amount of Rs. 16,50,00,000/- to the assessee. The statement is further corroborated by the seized document in the search from the possession of the assessee as well as the other partner. These seized documents show that the amount paid is related to dissolution dispute settlement payment made by Sh. R. K. Verma to the assessee. This amount was not to be repaid unless agreed by the assessee as per the seized pages. On the basis of these evidences, it is evident that there was incriminating material found during the search at the premises of the assessee. The incriminating material from the premises of Mr. R. K. Verma was confronted with the assessee during the search and the assessee admitted the transaction. Mr. R. K. Verma also admitted this transaction. Hence, finding of incriminating material is not in disput....
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....hat once a statement is recorded during search, it is open to the assessing officer to rely and proceed on the basis that such statement is correct and represents the true state of affairs and the burden is on the deponent to demonstrate by letting cogent convincing and material evidence that the statement was incorrect. Therefore, the statement made under oath during search and survey proceedings has a strong evidentiary value and is binding on a person, who makes it. The incriminating documents is related to the business partner Shri Ajay Bakliwal the incriminating transactions recorded in the seized documents also related to him and his business partner with Shri R.K. Verma in respect of JV. Hon'ble High Court Of Madras in the case of SRS Mining Vs. Union of India [2022] 141 taxmann.com 272 (Madras) held that material collected pursuant to search jointly conducted against three persons and a firm was required to be dealt with under section 153A, and not under section 153C. In the present case also, the material collected pursuant to search jointly conducted against these two persons who were partners of JV was required to be dealt with under sectio....
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.... natural justice. In this case, notice u/s 153A was issued to the assessee on 05.07.2018. In response to this notice the assessee has submitted his ITR for the A.Y. 2014-15 on 11.08.2018. Notice u/s 143(2) of the IT Act, 1961 was issued to the assessee on 11.09.2018. Thereafter, notice u/s 142(1) of the IT Act, 1961 along with detailed questionnaires were issued to the assessee on 30.11.2018 fixing the case for hearing on 18.12.2018. Further due to change of incumbent, fresh notice u/s 142(1) of the IT Act, 1961 was issued to the assessee on 29.08.2019. Another notice u/s 142(1) of the Act was issued on 14.12.2019 fixing the case for hearing on 16.12.2019. The assessee replied on 19.12.2019. The reply of the assessee was duly considered before passing assessment order. It is not that the AO has passed order without considering the reply furnished. There is no evidence that the appellant requested further time and the AO has not granted. Therefore, no prejiudice is caused to the assessee because of less time provided by the AO. The appellant has not furnished any evidence that he requested for adjournement and the adjournment was not granted. In t....
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....ectively have shown by him as unsecured loan in the books of his another JV concern Nav Bharat Nirman Co. [JV). In reply to Q.No.15 Sh. Ajay Kumar Bakliwal specifically admitted that above amount of Rs. 16,50,00,000/- was not unsecured loan rather sum received in lieu of resolution of dispute between him and Sh. Ram Kishan Verma and to dissolve their Joint Venture concern (Vinamra Enterprises and Nav Bharat Nirman Co.). He further admitted that this was his income of relevant assessment year which he had not shown in his Income Tax Return. This income was in addition to his regular income. The unsecured loan shownby Sh. Ajay Kumar Bakliwal in his books of concern was not genuine butbogus. Therefore, he admitted the above amount of Rs. 16,50,00,000/- as undisclosed income of relevant assessment year and offered the same for taxation, Statement of Sh. Ajay Bakliwal, Prop. M/s Nav Bharat Nirman Company, was recorded during the course of search action on 07.09.2017. Apart from above Rs. 16,50,00,000/- Sh. Ajay Kumar Bakliwal had received around Rs. 2,00,00,000/- from Sh. Ram Kishan Verma and the same was shown by him as unsecured loan in his books of F.Y. 2014-15 and ....
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....lling his return of income. The arguments put forth by the assessee with regard to this addition are discussed and decided as under- 6.7.1 The assessment is correctly made u/s 153A The appellant argued that the document related to transaction Rs. 16,50,00,000 found from the other person. The AO has argued in the remand report in this regard that this should be considered under the light of the facts that Shri Ajay Bakliwal and Shri R.K. Verma were business partner. They formed a JV in the name of "VINAMRA ENTERPRISES & NAV BHARAT NIRMAN CO. Both or either of them can have documents and information with them related to their business. Both the persons searched. In the common search the document can be found from any of the partner. They never denied the formation of JV. They both accepted it in statements. The Documents were seized from one partner Shri R.K.Verma was the documents having the transactions of payment given to Shri Ajay Bakliwal to put out the dispute arose in respect of JV. Both the partner never denied the existence of dispute even they both accepted it with acceptance of settlement to put out the dispute and execution of transacti....
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....case also, the material collected pursuant to search jointly conducted against these two persons who were partners of JV was required to be dealt with under section 153A. It is not the case of the assessee that the seized document is not pertaining to him. It is not the case of the assessee that he was not partner of the JV with Mr. R. K. Verma. It is not the case of the assessee that the seized documents were not confronted with him during the search or after the search. The assessee got reasonable opportunity to explain the document. In these facts, the argument of the assessee that the seized document was not found from the possession of the assessee are not fond to be relevant. In view of the above discussion, it is held that the assessment was not required to be made u/s 153C and it is correctly made u/s 153A of the Income Tax Act. 6.7.2 The addition is based on Evidence The appellant argued that during the assessment proceedings, the assessee has discharged the burden by filing the evidences in support of retraction made by the assessee is also does not prove any purpose The AO in the remand report stated that the acceptances of bo....
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....t of Rs. 7,75,00,000/- received during the period 11.04.2013 to 17.12.2013 has shown in his books as receipt against work. During the F.Y. 201314 NavBharat Nirman Co. the proprietorship concern of Sh. Ajay Kumar Bakliwal had constructed House and Commercial Complex under Affordable Housing Scheme, Kansua for Vinamra Enterprises and Nav Bharat Nirman Co.[JV]. The amount of Rs. 7,75,00,000/- is not disputed by the assessee which is part of the total receipt of Rs. 25,75,00,000/- from Sh. Ram Kishan Verma. This amount is part of the books of accounts of the assessee. Therefore, the amount as accepted in the statement is corroborated by the books of accounts of the assessee. Therefore, it cannot be said that the addition is based only on the basis of the statement recorded u/s 132(4) of the Income Tax act. The statement is corroborated by the seized documents which are found from the premise of the assessee and from the premise of the business partner Sh. R. K. Verma in a common search. The admission so made by the assessee is further corroborated by the books of accounts of the assessee. The assessee cannot be allowed to accept part of the transaction and deny the remaining p....
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....f the assessee in the Navbahart Nirman Co. JV. However, it is observed that this transaction is not separate. Only the route of receiving the amount is made indirect. This amount is received as loan. Similar loan of Rs. 2,00,000/- was received by the assessee which is offered for taxation by the assessee in the return filed in response to the notice issued u/s 153A accepting that the amount is not required to be returned. Similar is the fact of the transaction of Rs. 16,50,000/-. Hence, the artificial distinction made by the assessee is not found to be acceptable. The amount as accepted in the statement is corroborated by the books of accounts of the assessee. The addition is based on the basis of seized documents, corroborated by the books of accounts and the statement recorded u/s 132(4) of the Income Tax act. The statement is corroborated by the seized documents which are found from the premise of the assessee and from the premise of the business partner Sh. R. K. Verma in a common search. The admission so made by the assessee is further corroborated by the books of accounts of the assessee. In view of above facts, the argument of the assessee in this regard are not fou....
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....that the transactions as per the seized paper and as admitted in the statement recorded u/s 132(4) were correct. In the seized paper also it was mentioned that the loan is not to be repaid unless both parties agree. This is further confirmed from the statement recorded u/s 132(4) of Sh. R. K. Verma and the assessee. The transaction of loan between unrelated parties without any consideration is therefore required to be taxed as per provisions of Income Tax Act. This issue is discussed under different paragraph where the receipt is treated as income from other sources. It is also noted by the AO in the remand report that the entries in seized document page No. 56 are the incriminating transactions in respect of settlement amount of Rs. 20,00,00,000/- and the interest on it which was paid by Sh R K Verma. This was truly explained by him and accepted by Shri Ajay Bakliwal in statements u/s 132(4). It was not mere acceptance but duly explained with the seized documents. He explained that Rs. 7,75,00,000/- received from 11.04.2023 to 17.12.2013, was shown as work receipt in his concern Nav Bharat Nirman Co.(JV). The rest of the transactions not explained and not verifie....
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....eized documents are now being explained. Hence, the affidavit is only assertion without any supporting documents. In the absence of any supporting documents, the retraction is not found to be valid retraction, and the same is rejected. On the issue of retraction of statement recorded during search Hon'ble High Court Of Madras in the case of Thiru. A.J. Ramesh Kumar v. Deputy Commissioner of Income-tax [2022] 139 taxmann.com 190 (Madras) noted as under - x x x x In this case also, affidavit of Sh. R K Verma filed by the appellant in support of his retraction is perused and the same is no....
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....y an afterthought. Search proceedings were conducted in presence of two independent witnesses and statement were also recorded in their presence. The statement recorded under oath cannot be brushed on the allegation of pressure in these facts and circumstances. On the issue of retraction Hon'ble High Court of Kerala in the case of CIT vs. O. Abdul Razak [2012] 20 taxmann.com 48 (ker.) held as under:- x x x x In this case also on retraction being filed by assessee, there was a burden cast on assessee to prove retraction or rather disprove admissions made. The assessee failed to prov....
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.....t. rest of the evidence and the probability of the case. It is not a requirement that independent corroboration should cover all aspects. As per the guiding principles of Hon'ble Supreme Court, the statement recorded u/s 132(4) is correlated with rest of the evidence and it is found and admitted by the assessee that as per page no. 56 of Exhibit-17 of Annexure - AS there was transaction of Rs. 7,75,00,000/- received from 11.04.2013 to 17.12.2013, was shown as work receipt in his concern Nav Bharat Nirman Co.(JV). This fact is not disputed by the assessee even after retraction. The assessee has therefore accepting part of the incriminating document and denying the transactions which are not explained. As held by the Hon'ble Supreme Court it is not a requirement that independent corroboration should cover all aspects. The remaining transactions are admitted by the assessee in the statement recorded u/s 132(4) as payment received for settlement of dispute. The assessee is now not accepting the remaining transactions. On these facts, the probability of the case establish that all the transactions as recorded on the seized paper are true and the retraction is only afte....
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....he has signed this affidavit. The statement recorded under oath is sought to be retracted by an affidavit after a period of almost one year. The reason for such delay is not explained with evidences. The new documents or evidences have been relied upon for retraction. Hence, the retraction letter is not found to be acceptable evidence. In the retraction letter it is reiterated that the amount received from Sh. R. K. Verma is in fact loan in the books of Joint Venture M/s Navbharat Nirman Company. In the statement recorded u/s 132(4) it was admitted to be contribution on behalf of Sh. Ajay Bakliwal in the JV. The facts remains same as these were in the search proceedings while the statement was being recorded. The assessee is trying to twist the explanation. However, the facts remains that as per the seized document and as per the statement recorded u/s 132(4) the amount was not required to be returned. What is the fact at present. The amount is still not returned. Hence, the appellant has got the amount of Rs. 16,50,000/- from Sh. R. K. Verma without any consideration. This amount is not offered for taxation in the return of income filed. Therefore, the retraction....
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.... There is no directed question. Therefore, the allegation made by the assessee, that he was under pressure is not found to be true as the statement was found to be as per exclusive knowledge of the assessee. Admission Is Based On "Special Knowledge is held to be valid in the case of Kantilal C. Shah V Acit [2011] 14 taxmann.com 108 [AHD.-TRIB] A makes a statement relating to facts within his special knowledge and assessment is based on such statement, he should not have any grievance. In case of retraction-time is the essence-retraction after long gap is unacceptable. Retraction which is general in nature, as against the statement which fact based, need to be supported by strong and convincing evidence. It should be clearly demonstrated that earlier statement was obtained under coercion and was fatually incorrect i.r.o each item of admission. The statement was recorded in the presence of two independent witnesses. The appellant has not furnished evidence from these witnesses about the coercion or undue pressure. In these facts allegation of high handedness in search to get unjustified confirmation and coerced surrender is not found to be proved and hence,....
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....; x x In this case, facts are similar or more against the appellant. The statement recorded u/s 132(4) cannot be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence. In the present case, the statement is not retracted within reasonable time, no evidence of filing complaint to superior authorities have been furnished, there is no supporting affidavit to disprove that the statement recorded u/s 132(4) was not correct. In fact, the statement recorded u/s 132(4) is still proved on the facts of the case. It is notable that Hon'ble Supreme Court of India in the case of Roshan....
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....statement given by the assessee. It is a fact that statement had been recorded in presence of independent witness. Therefore, mere fact that the assessee retracted statement at later point of time could not make said statement unacceptable. The burden lay on assessee to show that admission made by him in his statement was wrong and such retraction had to be supported by a strong evidence showing that earlier statement was recorded under duress and coercion. The assessee in the present case has not furnished any evidence of duress and coercion though alleged in the letter claimed to be furnished as retraction letter. The assessee failed to show that admission made by him in his statement was wrong. Therefore, the retraction letter furnished by the assessee is found to be unacceptable and considered as an afterthought only. In view of above discussion, the addition made by the AO on account of Rs. 16.5 Crore received from Sh. R. K Verma which is based on the admission of the assessee in the statement recorded u/s 132(4) based on seized documents and further corroborated by the statement of Sh. R. K. Verma, partner of Joint Venture is found to be justified a....
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....t without affording him an opportunity to verify the entries from his bank account/books of accounts. The facts of the case are evident. Sh. R. K. Verma has given the amount to M/s Nav Bharat Nirman Co. (JV) as a contribution on behalf of Sh. Ajay Bakliwal as agreed between them. In essence, the amount given by Sh. R. K. Verma was as per directions of Sh. Ajay Bakliwal, the assessee. The assessee has received some of the amount in his account, some account in the account of the JV as contribution on behalf of him. Hence, the assessee is the rela beneficiary. This fact is proved from the seized documents and the statements recorded u/s 132(4). Hence, the argument in this regard are not found to be acceptable. It is stated that the return for AY 2014-15 filed by M/s Nav Bharat Nirman Co. (JV) was selected for acrutiny for verification of large unsecured loan taken during the year. This assessment was completed us 143(3) by the ITO, Ward-1(1), Kota on 24.06.2016 and the loan was accepted as genuine. The assessee's submission is that the addition in his hands is incorrect and the same, if at all it was warranted, should have been made in the hands of the ....
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....; x x The Hon'ble Punjab & Haryana High Court in the case of Dalmia Dadri Cement Ltd. v. CIT [1973] 90 ITR 297, after referring to the decision of Hon'ble Supreme Court in the case of McMillan & Co. (supra) held that if a mistake has been committed by the Assessing Officer in the Assessment order, which has been discovered by him during the pendency of appeal before the AAC, then the ITO alone was not entitled to rectify the error but the AAC has also the jurisdiction to rectify the mistake in the assessment order. In the present case also, it is noticed that the addition made by the AO is sustainable but not found to be proper u/s 41(1). Hence, the addition is being made u/s 56(2)(vii) of the Income Tax Act. High Court Of Madras in the case of Dr. K. Nedunchezhian Vs. Deputy Commissioner of Income-tax [2006] 153 Taxman 183 (Madras)/[2005] 274 ITR ....
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.... arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the CIT (A) by the appellant. In view of the said provisions, the CIT (A) has power to decide any matter arising out of the proceedings but the said power has to be exercised after giving reasonable opportunity to the assessee to show cause against such enhancement or reduction. In the present case, the appellant has been provided reasonable opportunity of showing cause against the change being made. Therefore, no prejudice is caused to the assessee as reasonable opportunity has been provided. In view of the above discussion, the objection raised by the appellant with regard to powers of the CIT(A) are not found to be acceptable. It is argued that from the cash book and bank account of the assessee, it is evident that he has not received any amount during the year, as alleged. All these evidences show that the receipt of the impugned amount was in the hands of AOP and not the assessee. The arguments of the appellant are not acceptable considering the facts of the case. It is established fact that the apparent is n....
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....ideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; 62 [(b) any immovable property.- (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property: for a consideration which is less than the stamp duty value of the (ii) property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property:] (c) any property, other than immovable property,- (i) without consideration, the aggregate fair market value of ....
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.... (i) jewellery, (iv) archaeological collections: (v) drawings, (vi) paintings; (vi) sculptures; 67 (vii) any work of art, for] (xi) bullion; (ix) "relative" means- [(e) (i) in case of an individual- (A) spouse of the individual; (B) brother or sister of the individual; (C) brother or sister of the spouse of the individual; (D) brother or sister of either of the parents of the individual; (E) any lineal ascendant or descendant of the individual; (F) any lineal ascendant or descendant of the spouse of the individual; (G) spouse of the person referred to in items (B) to (F); and (ii) in case of a Hindu undivided family, any member thereof;] "stamp duty value" means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property:] (1) 71 where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, vila) on or aft....
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....sons for getting entry of cheque amount in their bank account in the name of gift without paying tax. Therefore, to curb the bogus transactions this provision was introduced. The genuine gifts by relatives are still out of the per view of the section as per the provision to the section. Hence, the transaction should not be confused as gift. Genuine gifts are already excluded from this provision. This is a case where sum of money is received by the assessee without consideration. It is argued that the contents of Page-56 of Exhibit 17 of Annexure-AS are discussed. All the amounts stated to be paid by Shri Verma have a date of payment against them and after each payment made, the amount outstanding thereafter is mentioned. No such date is mentioned against this amount of Rs. 15 crore, which seems to have been inserted after this document had reached finality. Therefore, no cognizance to the reply of Shri Verma to Q. No. 33 in respect of this amount can be given. It is being reflected in Page- 93, but then here, Shri Verma has stated that the impugned amount has been transferred to M/s NavBharat Nirman Co.(JV) and it will be taken back, So, the addition suggested/proposed by ....
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.... gift as contemplated u/s 56(2)(vii). Shri Verma, was forced to pay the amount as a consideration for amicable settlement of the dispute. He did not want to be involved in legal warfare, and he chose to settle the dispute out of court and offered certain amount. Had there been no dispute, he would not have given the impugned amount. So, it is under compulsion that the money was paid. It can not be considered as an amount given without any consideration. It is a price paid for settling a dispute by Shri R.K.Verma. So, there exists a quid-pro-quo in this transaction. In a legal context, it refers to a situation where one party provides something of value to another party in exchange for something in return. The amount has not been received without consideration. It is claimed that the assessee did not receive this amount without consideration. However, what was the consideration which was paid is not proved by the assessee. If the consideration paid is proved with documentary evidences, then such consideration is allowable as deduction out of total amount received. However, no such documentary evidence is provided. In the absence of any evidence, it can be presumed that eith....
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....ts are out of books the payment on account of expenses shall also be out of the books. In such circumstances the only way to determine income is application of NP rate. Therefore in the case of the assessee the following facts emerge, (1)The receipts of Rs. 15.00 Cr. in A Y 2014-2015 and Rs. 1,50 Cr. in A Y 2015-16 are business receipts of the assessee (i) The expenses incurred against these receipt is not recorded in the regular books of account and hence out of books (i) The Income on these receipts may kindly be determined by application of NP rate (iv) The NP rate of 3.7% disclosed by the assessee on regular receipt may be made applicable on these receipts also It is submitted that in various judicial pronouncements by Hon'ble Courts, it has been held that the Statute provides only for levy of tax on income and not on gross receipts. It is common knowledge that expenditure under various heads are incurred during the course of business and the net income is arrived at after deducting the expenditure from the Gross income. The leamed AO cannot proceed to treat the Gross receipts as what is chargeable to tax under the Income Tax Act....
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....no question of allowing the same. If the expenditure is made out of unexplained sources, the expenditure so made needs to be taxed u/s 69C of the Income Tax Act as unexplained expenses. The assessee has not explained in which category he is falling. No evidences in support of the expenses are made available. Hence, the claims made by the assessee are not found to be acceptable. Without prejudice to the above, the assessee has also received Rs. 3,50,00,000/- from Sh. R. K. Verma. This amount is part of the gross amount received by the assessee. However, this amount was received by the assessee directly. This amount has been offered for taxation during the AY 2017-18 voluntarily by filing return u/s 153A without claiming any expenditure. If any genuine expenditure was incurred by the assessee, the assessee would have certainly claimed it against the receipt. In the absence of any genuine expenditure incurred, the assessee has offered this amount for taxation without claiming any expenditure. This further confirms the fact that no genuine expenditure was made by the assessee for getting the amount of Rs. 18,50,000/- from Sh. Ram Kishan Verma. Therefore, no expenditure is allo....
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....e duly shown and confronted with the assessee during the search itself. The assessee has replied to the questions raised in the statement recorded u/s 132(4) after considering the seized material and statement recorded of Sh. R. K. Verma. Hence, the assessee has got ample opportunity to present his case before the AO with regard to statement of Sh. R. K. Verma and the seized documents from the premises of the assessee and from the premises of Sh. R. K. Verma. On these facts, no prejudice is caused to the assessee. The assessee has got opportunity to defend himself as per principles of natural justice. Hence, the arguments in this regard are not found to be acceptable. 6.7.9 The addition made by AO can be sustained on the basis of page 56 The AO in the remand report stated that amount of Rs. 15.00 crores is mentioned on page no. 56 and Shri R K Verma submitted on the basis of transaction recorded on page no. 56 that amount of Rs. 15.00 crores was given for settle dispute and dues with the assessee and same has been confirmed by the assessee in his statement recorded u/s 132(4) of the Act. It is worth to mention that date of transaction of Rs. 15.00 crores on page 5....
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....ven to Shri Ajay Bakliwal under. As per the intent of the seized document having recorded the payment of Rs. 16.50 crore by cheques, "This amount can be considered as contribution by Shri Ajay Bakliwal......... Here the amount of Rs. 16.50 crore was made contributed from RK Verma to the books of accounts of Nav Bharat Nirman Co. (JV) on behalf of Shri Ajay Bakliwal in the form of Loans. Shri R K Verma has discharged only his obligation to make payment to Shri Ajay Bakliwal under settlement of dispute. It was not direct advancing of loan to Nav Bharat Nirman Co. (JV), it was the payment of obligation to Shri Ajay Bakliwal indeed, which was contributed on behalf of Shri Ajay Bakliwal by Sh. R K Verma in accordance of accommodation entries in the form of loan The assessee arguing on the application of fund by Nav Bharat Nirman Co. (JV). The AO stated that it was the receipt of settlement payment which was subject matter of addition. Once received in the form of bogus loan then it may be applied anywhere by the receiver, it has nothing to with the taxation at the stage of receipt. On these facts the argument of the appellant are not found to be acceptable. Th....
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....ay Bakliwal on which no tax has been paid and would have never offered for taxation had the income tax search action not been carried out in his case. The assessee stated before the AO that the document seized does not belong to him and related to M/s Milenium Buildhome Pvt Ltd. The AO also noted that in the case of M/s Milenium Buildhome Pvt Ltd, the assessee is saying that the document pages are rough and dump. In his reply the assessee has admitted that an agreement was executed with Newaji State P Ltd to purchase a land in Parvatipuram Kota at the rate of Rs. 400 per sqr ft and paid Rs. 51,11,111/- as first instalment. The reply of the assessee is considered but not found satisfactory. The document was seized from the assessee's premise and it is related to agreement with Newaji Estate P limited. Further as per the agreement assessee agreed to purchase 53,475 sqr ft land at B-1 Parvatipuram, Kota at the rate of Rs. 400 per square for a total consideration of Rs. 2,13,90,000/-. And Rs. 51,11,111/- was paid as first instalment. These figures exactly match with the loose paper noting. The assessee has not denied the fact. As per these loose papers noting paym....
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....of unaccounted money which was given by the Director as 'on money' on behalf of the Company. The unaccounted cash was belonging to the assessee. The unaccounted money which was earned by the assessee was not offered for taxation by the assessee. The AO has made addition u/s 69 of the Act. The section read as under- "Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." In the present case, as per the seized paper, there is detail of Payment to M/s Nevaji Estate Pvt Ltd. The payment details are written date wise as per the seized paper page no. 6 and 7 reproduced by the AO in the assessment order. Accordingly as per the seized paper, the assessee has made investment in the name of company whi....
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....htly made addition in the hands of the assessee. -Is such cash transactions are in the knowledge of other shareholders and management of the Company? For establishing the fact that unaccounted transaction was pertaining to the Company, the assessee was required to establish that these unaccounted are in the knowledge of other shareholders and management of the Company. No such evidence is furnished by the assessee. In these facts, the transaction is considered of the assessee only. The AO also noted that in the case of M/s Milenium Buildhome Pvt Ltd, the assessee is saying that the document pages are rough and dump. The assessee is Director of the Company. If he is believing that the cash transaction was done by unaccounted income of the Company, the same should have been claimed in the assessment of the Company. However, the assessee as Director of the Company is saying that these papers are meaning less and in the capacity of individual is saying these transactions are belonging to the Company. The contradictory stand is not acceptable looking to the transactions of 'On Money proved beyond doubt as per seized documents. 7.3.2 These Papers P....
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.... Rs 2,13,90,000.00 the M/s Millenium Build Home P limited made payments as per agreement as under A Rs. 11,11,111.00 on 17.09.2012 by cheque drawn on PNB B Rs. 10,00,000.00 on 21.09.2012 by cheque drawn on PNB C Rs. 30,00,000.00 on 31.10.2012 by cheque drawn on PNB Rs. 51,11,111.00 Balance amount of Rs. 1,62,78,889.00 (Rs. 2,13,90,000/- Rs. 51,11,111/-) was to be paid later on up to October 2013 or alternately 10 (Ten), 2 BHK flats to be given, It is submitted that except the amount of Rs, 51,11,111/- which has been by cheque drawn on PNB Kota no further amount has been paid either by cash or cheque(s) During the year under consideration no flat was given as none was constructed. Thus no addition is called for on the account of the agreement between M/s Millenium build Home Pvt. Limited and NevajiEstate Pvt. Limited or wrt the seized papers as annexure 8 It is further submitted that only in FY 2019-20 relating to A Y 2020-21, 2(two) flats have been hand over to Mis Newaji estate P limited and 8(eight) flats are yet to be given. M/s Millenium build home P limited has not been able to construct the flats as per time sched....
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..... 2,65,99,000/- which was paid. Hence, the addition made by the AO is found to be reasoned and justified as per seized documents. The claim of the assessee is found to be incorrect that all the contents of page No. 6 to 9 of exhibit 8 stand accounted for in the books of M/s Millenium Build Home Pas the cash transaction is not recorded in the books of accounts of the assessee or in the books of accounts of the Company. In view of above discussion, the arguments of the appellant are not found to be acceptable. The various decisions relied upon by the appellant are distinguishable on the peculiar facts of the case of the assessee and hence not found to be applicable on the facts of the case of the assessee. The addition made by the AO of Rs. 2,65,99,000/- is found to be justified and confirmed. This ground of appeal is treated as dismissed. Validity of determined income of Rs. 18,26,85,650/- 8.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discusse....
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.... made by the AO, as held by different judicial forums. (vii) The Ld. CIT (A) erred in confirming the addition of Rs. 2,65,99,000/- made by the AO in the hands of the appellant on the basis of Page 6 & 7 of Exhibit-8, notwithstanding the fact that these papers belonged to the company M/s Millenium Buildhome Pvt. Ltd., and this fact was stated by at the time of search, in his statements recorded u/s 132(4). (viii) The Appellant craves leave to take additional grounds of appeal before or at the time of hearing of the appeal and/or modify any of the above grounds." 5. The counsel representing the assessee filed written submission to support the various grounds so raised. The written submission filed by him is reproduced herein under : The appellant respectfully begs to submit following facts and details for your honor's kind consideration in support of grounds of appeal already filed : Brief facts of the case : Briefly stated the facts of the case are that a search was conducted on 07.09.2017, in the Resonance group of Coaching, Kota, belonging to Shri Ram Kishan Verma. The residence cum business premises of the assessee was also covered ....
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....cision of Kerala High Court in the case of CIT vs. St.Francis Clay Décor Tiles. In this case, the Court never said that statement recorded u/s 132(4) constitutes an incriminating material. The common question raised in the above appeal was : (a) Whether on the facts and in the circumstances of the case, is not the Tribunal erroneous in holding that addition in pursuance to notice issued under Section 153A can be made only if incriminating material is found and seized in case where there is also abatement of regular assessment proceedings, and are not, such an approach and the resultant conclusion perverse and uncalled for ? (b) Whether on the facts and in the circumstances of the case and when the Assessing Officer is empowered to assess and reassess income for six prior period assessment years notwithstanding the provisions in sections 139, 147, 148, 149, 151 and 153 is not the above approach of the Tribunal one putting an artificial cap on section 153A ?" The Hon'ble Court decided the issues observing as under- 22. Therefore, we set aside the order passed by the Tribunal in the above appeals and remand the cases to the Tribunal to re-con....
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....stinguishable. As regards applicability of section 153C for making the impugned addition, the assessee relies on the decision of ITAT, Delhi in the case of Trilok Chand Choudhary vs. ACIT in ITA No.5870/Del./2017 decided on 20.08.2019. The Hon'ble Tribunal has observed- 5.5 We also find that during relevant period, i.e., FY: 2014-15, for using any material found from the premises of the third party during the course of the search in assessment proceeding of the assessee, the Assessing Officer of the third party was required to record satisfaction as the material belong to the assessee in terms of section 153C of the Act and then was required to proceed as per the provisions of section 153C of the Act. In the instant case, it is evident that addition in dispute has been made in the assessment completed under section 153A of the Act. The assessee raised this issue before the Ld. CIT(A), however, the Ld.CIT(A) rejected the arguments of the assessee observing as under: 6.3 Another argument of the appellant, if understood correctly, is that in reference to the document under consideration, the AO ought to have initiated proceedings u/s 153C and that in no case....
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....me Tax Act based on material found during search on third party without following the mandate of section 153C of the Income Tax Act is unsustainable in law. The Tribunal held - Undisputedly, the document on the basis of which addition has been made was not recovered from the search upon assessee but from the premises of M/s. Zoom Developers Pvt. Ltd. In such circumstances, assessment should have been framed under section 153C of the Act following the proper procedure as per section 153C of the Act. Having not followed the mandate of section 153C of the Act, Revenue has committed fatal error and on this account assessment is liable to be quashed. In the case of DCIT Vs. Smt. Shivani Mahajan, No.5585/Del/2015 (pronounced on 19.03.2019) an identical question was raised before the Tribunal as under: "9. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the facts of the case and the rival submissions, we find that in these appeals, the following question arise for our consideration (i) Whether any material found in the search of any person other than the assessee in appeal can be considered in the ....
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.... shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person." On the basis of the above facts and the legal position, the assessment may kindly be quashed. Ground No.3 The impugned assessment order passed/s 143(3) r.w.s.153A of the Income tax Act, 1961 is void-ab-initio and is jurisdictionally flawed as the said assessment order is based on invalid illegal purported approval u/s 153D by the Addl.CIT (Central), Range-Udaipur, there being no application of mind on the part of authority granting approval. - Not pressed Ground No.4 & 5 The Ld. CI....
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....being against settlement of dispute, will not be taken back and if he surrenders this amount, he will stand to gain by paying only 30% tax on the disputed amount by using the sworn statements of Shri Verma, to his advantage. The assessee under misrepresentation from the search team, surrendered the impugned amount. Later, Shri Verma, filed an affidavit that the statements w.r.t. Rs. 16.5 crores being paid against settlement of dispute was given under stress, duress and pressure. The assessee too, filed an affidavit, retracting the surrender made, and therefore, the very basis of making the addition in the hands of the assessee, vanished. It may be mentioned that the statements of the assessee recorded by the Authorized officer u/s 132(4) were retracted by him by filing a detailed affidavit. Cogent and sufficient material was placed on record for retraction. So, no reliance can be placed on such statements for making an addition. It has been held by the Hon'ble Andhra Pradesh High Court in case of Commissioner of Income Tax vs. Naresh Kumar Agarwal that if the disclosure made by the assessee u/s 132(4) has been retracted by him, any addition made by placing reliance on the ....
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....-93 which has been made a part of the order by the AO, vouches the fact that the money has been advanced by Shri R.K.Verma to Navbharat Nirman Co.(JV) as a loan. The assessment of Navbharat Nirman Co.(JV) for AY 2014-15 had been completed u/s 143(3) and the said loan has been accepted as genuine. The CIT(A) has held that the AO has relied on page-56 for making the addition. The AO did not any attempt to reconcile the paper found (page-56) with the books of Shri Ram Kishan Verma, whose assessment was completed by him, as well. The lower authorities simply relied on the statements of the assessee recorded u/s 132(4). The impugned typewritten paper showed payments of Rs. 10.75 crores only. It also shows an entry of Rs. 15 crores inserted by pen in this chart. Later, during the assessment proceedings Shri Verma and the assessee filed affidavits retracting the surrender made by them on the basis of this paper. The AO, relying on the statements of the assessee recorded under section 132(4), and ignoring the retraction made by him, added the amount holding it to be remission of liability u/s 41(1), in the hands of the assessee. The assessee filed detailed submissions before the CIT(A) agi....
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....ta for construction of flats under the Affordable Housing Policy, 2009. The AOP had deposited the first installment of the premium payable to UIT, Kota against the award of the above contract. For payment of the second installment along with interest, it was in dire need of funds, for which it approached Shri R.K.Verma, who transferred an amount of Rs. 15,00,00,000/- vide cheque No. 418311 dated 15.02.2014 to the AOP, which was deposited by it into it's current account with PNB, Kota. Out of this loan amount, the premium to UIT was paid. Again, in the FY 2014-15, a sum of Rs. 1,50,00,000/- was advanced by Shri R.K.Verma to M/s Nav Bharat Nirman Co. (JV) through three cheques of Rs. 50,00,000/- each for meeting of its financial requirements, on the request of the latter. Hence the total amount of Rs. 16,50,00,000/- was received by M/s Nav Bharat Nirman Co. (JV) and the same has been accordingly shown in it's books and is reflected in it's balance sheets filed for the A.Y. 2014-15 & 2015-16 respectively. The above facts stand corroborated by Page-93 seized from Shri R.K.Verma and reproduced by the AO in his assessment order. The return for AY 2014-15 filed by M/s Nav Bharat Nirman Co....
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....n lieu of settlement of dispute, as deposed by him earlier in his statements recorded u/s 132(4). Page-93 itself negates the fact of the assessee receiving the impugned amount, as compensation or otherwise. The assessee, too, filed a detailed affidavit stating the reasons why such a confession was made by him earlier. The Ld.AO rejected the so assumed retraction made by the assessee on account of delay in filing the same, blindly relying on the decision of Hon'ble Rajasthan High Court in the case of Ravi Mathur vs. CIT, quoting certain lines going in favour of the Revenue. He had not taken pains to read and comprehend the entire decision, which also says ...........whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence, which we have observed hereinbefore. The CIT(A) followed suit. Before the CIT(A), the assessee pleaded that what the AO is holding to be retraction, is not as a matter of fact, a retraction. He stated that the addition in his hands is incorrect and the same, if at all it was warranted, should have been made in the hand....
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....1998 SUPREME COURT 1406, 1998 AIR SCW 1298] Without prejudice to the above facts, the document clearly states that Shri Ram Kishan Verma has transferred the money to M/s Nav Bharat Nirman Co. (JV) - whose proprietor is Ajay Bakliwal. It also states he will not take the amount back, without mutual consent. It is a well established law that a seized document has to be read as a whole and cannot be broken into parts as per the convenience or sweet will of the Assessing Officer. The Ld.AO has ignored the words transferred the money to M/s Nav Bharat Nirman Co. (JV) and has chosen the words whose proprietor is Ajay Bakliwal to saddle the tax liability on the assessee. Further, he has chosen the words he will not take the amount back and ignored the words without mutual consent to consider it as remission of liability. The clause involves two negatives. It is a rule of interpretation that two negatives in a same clause tend to resolve to an affirmative. So, the proper interpretation of the sentence is that he will take the amount back with mutual consent. As regard reading of a document as a whole, reliance is placed on the following case laws: Glass Lines Equipments Co....
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....asis of presumption raised by section 132(4A), in the hands of the assessee, where in the books of another firm, certain figures were found showing the purchase made by the assessee. In Asst. CIT v Kishore Lal Balwani Rai [2007] 17 SOT 380 (Chd.), it has been held that though the diary seized enable the revenue to presume that its contents are true, such presumptions is available only against the person to whom it belongs and this is a rebuttable Presumption. Presumption u/s 132(4A) is not available, when the seized papers is recovered from third party and not from the assessee. Sheth Akshay Pushpavadan v Dy. CIT [2010] 130 TTJ 42 (Ahd. UO) As such, the addition sustained by the CIT(A) was arbitrary, illogical and irrational. Reliance by the CIT(A) on the statement of Ajay Bakliwal recorded u/s 132(4) At the outset, it may be mentioned that the statements of the assessee recorded by the Authorized officer u/s 132(4) were retracted by him by filing a detailed affidavit. Cogent and sufficient material was placed on record for retraction. So, no reliance can be placed on such statements for making an addition. It has been held by the Hon'bl....
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.... Bharat Nirman Co. (JV) has been completed u/s 143(3) by the erstwhile ITO, Ward-1(1), Kota now ITO, Ward-2(1), Kota examining this issue which was one of the reasons for taking up the case for scrutiny, and the unsecured loan has been accepted as genuine and no adverse inference in this regard has been drawn. The relevant query letter and the reply thereto are being filed as an evidence in support thereof. (6) That M/s Nav Bharat Nirman Co. (JV) has used the loan amount for its business purpose to deposit the premium payable to UIT, Kota, as is evident from its bank statement. (7) That the statement of the assessee u/s 132(4) made the sole basis by the AO for making the addition has been retracted by the assessee and hence reliance on the same for making the addition is misplaced. (8) That in lieu of premium amount, UIT, Kota will provide to M/s Nav Bharat Nirman Co. (JV) the following plots on the completion of the project :- (i) Plot No. B-2 at Jhalawar Road, Opp. City Mall, Kota. (ii) Plot No. 12 & 13 at Rajeev Gandhi Extension on which M/s Nav Bharat Nirman Co. (JV) has started Multi-Storeyed Flats. (iii) Plot No. 1, Karnes....
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....e Tax Act. The assessee had pleaded before the CIT(A) that the Act does not permit such an action to be taken by the CIT(A), but the CIT(A) The powers of the Commissioner (Appeals) are mentioned in Section 251. Sub-section-(1) states - In disposing of an appeal, the Commissioner (Appeals) shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. The power to change the section under which an addition has been made, has not been conferred by the statute. This issue is outside the scope of the power conferred on the CIT(A). For this proposition, the assessee relies on a recent judgement of ITAT, Chennai in the case of Sekar Jayalakshmi vs. ITO, in I.T.A. No.20/Chny/2021. The Hon'ble Bench has held as under - I am of the considered view that law does not permit for such change of provision of law. As per section 250 of the Act, the ld. CIT(A) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the ld. CIT(A). As per section 251(1)(a) of the Act, in appeal against an order of assessment, he may confirm, reduce, en....
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....es any sum of money, without consideration. The paper which has been relied upon by the CIT(A) for confirming the addition clearly states that the amount has been transferred to Navbharat Nirnan Company(JV) So, when there is no receipt of any amount in the hands of the assessee, how can he be saddled with tax liability on account of receipt of gift. Before we dwell upon to present our submission as to why the amount should not be taxed u/s 56(2)(vii), it would be pertinent to trace back the history of introduction of the above section in the Income Tax Act. (i) The Government, with an objective to impose taxes on gifts, introduced the Gift Tax Act, 1958 w.e.f. 01-04-1958. Under this Act, tax was leviable on the donor of gift under certain specific circumstances. However, by the Finance (No. 2) Act, 1998, the Act was made inapplicable to gifts made on or after 1.10.1998. (ii) The period from October 1998 till March 2004 was without any tax on gifts. However, the gift tax was reintroduced in a new form and the provisions in respect there to, were included in the Income tax law vide Finance (No. 2) Act, 2004, w.e.f. 1.4.2005. The remarkable difference being ....
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....uch means, may legally be forced to actually repay the same, if the lender proceeds to do so no person would like to adopt such risky medium unless both entities are very closely related and controlled by same group. The Finance Minister has also emphasized on the fact of a loophole existing due to abolition of the Gift-tax Act, 1958, and, thereafter, words 'money laundering' have been used in his speech, hence, the intention is only to prevent money laundering by way of bogus gifts. The Hon'ble Finance Minister has made this intention clear by referring to the Gift tax Act, 1958, and by adding exception for gift received from relatives on the occasion of marriage etc. It is also noteworthy that like gift tax, the basic exemption limit has also been prescribed in the section and various exceptions provided in section 56(2)(v) of the Act which were also existing in the like fashion in the erstwhile Gift-tax Act, 1958, and this fact also leads to a conclusion that only bogus gifts are also brought to tax under this provision.... Thus, in view of above discussion, we are of the view that this provision applies to the transactions where undisclosed/unaccounted Income of a perso....
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....hased) for inadequate consideration was reintroduced by Finance Act, 2013 with certain safeguards. The underlying assumption behind section 56(2)(vii) seems to be that the actual consideration for a property cannot be less than its circle rate/ stamp duty value and in case the apparent consideration paid is less than the stamp duty value, the difference amount appears to have been paid in cash outside the books of accounts by the transferee. Such amount is thus deemed to be income of the Individual or HUF assessee as provided under this section viz. section 56(2)(vii). However, this clause was of limited applicability as the provision of section 56(2)(vii) were applicable only to individual and HUF. Again, in the Explanatory Memorandum to Finance Bill, 2010, the objects behind done- based transactions have been explained as under: "The provisions of section 56(2)(vii) were introduced as a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts, particularly after abolition of the Gift-Tax Act." The provision of Section 56(2)(vii) was introduced in the Income Tax Act to curb the practice of individuals and entities receiving gifts in or....
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....that the impugned amount has been transferred to M/s NavBharat Nirman Co.(JV) and it will be taken back (Issue already discussed supra). Moreover, this page was never confronted either to the assessee or Shri Verma, during the course of search or assessment. So, the addition sustained by CIT(A) u/s 56(2)(vii) does not get supported either by Shri Verma's statements or by evidence found during search. Even if your honour wishes to place reliance on Shri Verma's statements, Shri Verma never said that he has gifted this money to the assessee. He said that the amount has been paid to resolve the dispute, and thus, it is clear that the payment has not been made voluntarily but under compulsion, so it is not a gift as contemplated u/s 56(2)(vii). Here, Shri Verma, was forced to pay the amount as a consideration for amicable settlement of the dispute. He did not want to be involved in legal warfare, and he chose to settle the dispute out of court and offered certain amount. Had there been no dispute, he would not have given the impugned amount. So, it is under compulsion that the money was paid. It can not be considered as an amount given without any consideration. A gift on the ....
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.... a gift and there can be no applicability of the provisions of section 56(2)(vii), particularly in the hands of the assessee, when it has been shown that the assessee never received the impugned amount but it was the AOP which received it. The case of the assessee is squarely covered by the decision of ITAT Mumbai, in the case of Chandrakant H. Shah vs. ITO, [2010] 3 ITR(T) 398 (Mumbai) the head note of which is as under - Whether since amount in question had been shown in balance sheet submitted along with return of income as loan only and lenders had also confirmed same, apparently, it was a case of a loan transaction and not a case of gift, as held by Assessing Officer - Held, yes - Whether, even otherwise, since revenue authorities had not brought any material on record to support their finding that assessee was not under an obligation to repay loan, it could be concluded that impugned order was passed by them on mere presumptions and assumptions, particularly when there existed no provision in section 56(2)(v) to treat loan, which might not be repaid, as income of assessee - Held, yes - Whether, therefore, impugned addition made to assessee's income was t....
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....ium Buildhome Pvt. Ltd., which evidence that the plot of land belongs to it and not the assessee were also adduced as evidence, once again. It would be pertinent to mention that the assessment of M/s Millenium Buildhome Pvt. Ltd. for the relevant year was also completed by the AO u/s 143(3) r.w.s.153C. The Ld.AO finalised the assessment by adding the amount of on money received on booking/sale of flats built on this plot by Millenium Buildhome Pvt. Ltd., but in his wisdom, ignoring the submission and the glaring evidence, instead of adding the impugned cash payments made in acquiring the plot in the hands of M/s Millenium Buildhome Pvt. Ltd., if at all it was warranted, made the addition in the hands of the assessee. It would be pertinent to mention that the sale agreement between M/s Newaji Estate Pvt. Ltd. and Millenium Buildhome Pvt. Ltd. was executed by Smt. Usha Jain on behalf of Millenium Buildhome Pvt. Ltd. So, when there is no mention even of the name of the assessee, in any of the documents, there was absolutely no basis to tax the so called unaccounted payment in the hands of the assessee. In view of the binding decision of Hon'ble Supreme court in the case of ITO vs. Ch.....
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.... revenue relies is in relation to the transaction already reflected in the books of account. Thus, considering the decision of the apex court in the case of Abhishar Buildwell, the transaction recorded in the books cannot be termed as incriminating material and therefore, no addition is required to be made. The paper which revenue relies in the 153A proceeding was not found from the premises of the assessee and if the revenue relied on that document the proceeding in this case is required to be conducted after considering the provision of section 153C of the Act and not 153A of the Act. The transaction is duly recorded and is business transaction. The revenue has based on the statement of Shri R. K. Varma obtained the disclosure u/s. 132(4) which has been retracted not only by the assessee but even by Shri R. K. Varma. Not only that Shri R. K. Varma filed an affidavit stating the fact that Rs. 15 Cr as alleged to have been disclosed was wrong. The relevant part of the affidavit reads as under: The statement which the revenue relies were retracted by both the parties and in response to a letter issued u/s. 133(6) during the pendency of this appeal Shri R. K. Varma has confi....
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....e Increase in Unsecured Loan: As narrated in para A above, during the year under consideration the assessee has to deposit premium amount to Awarder UIT, Kota under terms of Agreement. As far as the Unsecured Loan raised during the year under consideration, the assessee accepted only on loan of Rs. 15,00,00,000/- from Ram Kishan Verma. The copy of account of Loan from Ram Kishan Verma is attached for your kind perusal. Thus, the issue which is raised by the ld. AO is already in the books of the JV and not in the books of the assessee and when the same is not in the books of the assessee how can an addition of income of loan in the JV which is duly confirmed and still outstanding can be considered as income of the assessee. There is nothing incriminating in the JV dissolution deed and since that transaction is already recorded in the books of account no addition can be made dehors any incriminating material and the issue raised is already accepted in the assessment proceeding of the JV. As regards the other addition of Rs. 2,65,99,000/- the assessee vide recording the statement submitted that transaction recorded were between M/s. Millenium Build Home P. Ltd and M/s Nevralji E....
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....r Buildwell P. Ltd. He also submitted that based on documents so found issue of notice u/s. 153A of the Act in the case of the assessee cannot be reads without authority and therefore, the contention of the assessee cannot be believed. The search was same the document found related to both the parties and therefore, the assessee cannot be say and submit that the notice be given in 153C of the Act. Shri R. K. Varma and the assessee both agreed on the disclosure and after that they have retracted and that retraction is not supported by any other evidence. Relying on the decision referred in the order of the ld. CIT(A) delivered by the Hon'ble Kerala High Court wherein the High Court held that if any statement is given it has evidentiary value and the same is based on the evidence found in search. As there is no definition of the incriminating material given in the law the statement along with the evidence is incriminating material and therefore, the addition is required to be sustained. Dissolution Deed was found in possession of the assessee and the same was filed by the ld. DR on 04.02.2025. He also filed relevant extract from the statement of the assessee and that of Shri R. K. Va....
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....by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated ....
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....rch means something which preexisted (at the premises of the searched person) and was detected. Statements recorded u/s 132(4) is material which did not pre-exist but has been generated during search. Secondly, as these statements stood retracted, they lose their relevance. The Ld. DR further referred to copy of ledger A/c of Shri R.K.Verma in the books of the assessee to establish it as an incriminating document and stated that this paper was found and seized from the premises of the assessee and the same reconciles with certain entries listed on Page-56. Your Honors, when this ledger account forms part of the books of the assessee, how can it be labeled as incriminating, is not understood. As for addition of Rs. 2,65,99,000/- made by the AO in the hands of the assessee, on the basis of Page-6 & 7 of Exh.- 8 of Ann.AS, the assessee during his statements recorded u/s 132(4) had clearly stated that Exh.- 8 of Ann.AS, relates to his company Millenium Buildhome Pvt. Ltd. The relevant page of the statement is enclosed for your honor's perusal. In reply to the SCN dated 14.12.2019, he again reiterated the same facts. It would be pertinent to mention that addition(s) on....
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....nnexure-AS (32 exhibits) were found from the premises of the assessee. Then why addition on their basis has been made by the AO in the hands of the Company. Obviously for the reason that they belonged to the Company. On similar lines, addition, if any, was required to be made in the hands of Millenium Buildhome Pvt. Ltd. Much importance was given by the AO/CIT(A) and the DR to the statements of the assessee and Shri R.K.Verma, deposing that the impugned amount (16.5 crores) was paid to settle the dispute that arose between them. The assessee and Shri Verma later retracted their statements on this aspect. I would like to draw your Honor's kind attention to the Joint venture Agreement and supplementary deed dated 25.02.2011 vide which it was made clear that the assessee had no stake in 60% of the undivided plot. So, when the terms of the JV were explicitly clear and unambiguous, there arose no question of making a claim for stake in 60% of land by the assessee. Then why would Shri Verma give compensation and the assessee take?" 10. We have heard the rival contentions and perused the material placed on record. In this appeal the assessee has raised seven grounds of appeal ....
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.... of the Act whereas while confirming that finding of the ld. AO, ld. CIT(A) has changed the section while making the addition from 41(1) to 56(2)(vii) of the Act. Records reveal that apple of discord start from the page no. 56 of Exhibit-17 of Annexure-AS. That page is duly reflected as scanned at page 3 of the assessment order. That document starts with the date 31.03.2013 along with that under the column amount decided it was written Rs. 20,00,00,000/-. The column to that side another column suggests the computation of interest @ 2.5 % and to that next column shows amount paid. In that paper on 31.01.2014 an amount of Rs. 15,00,00,000/- shows in the column of paid column. Further to that ld. AO noted that at page no. 93 Shri R. K. Varma has made payment of Rs. 16,50,00,000/- in the F. Y. 2013-14 and 2014-15. In the paper it was also mentioned that the amount is given without interest and will not be taken back by Shri R. K. Varma. We have noted the content of that page relied upon by the revenue. For that paper ld. AR of the assessee submitted that the alleged page belongs to which annexure is not clear from the assessment order. Not only that the impugned page 93 as referred ....
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....proved by Urban Improvement Trust Kota [ UIT ] under the affordable housing scheme 2009, work of affordable housing was started under the agreement dated 14.07.2010 in the Joint Venture. But later on due to misunderstanding they have executed a supplementary agreement on 25.02.2011 wherein the share of loss of Shri R. K. Varma was decided to share by him @ 100% but profit @ 50 % by the assessee. It was also decided with that agreement that the Shri R. K. Varma will make all the investment in this project which he has transferred for an amount of Rs. 15,00,00,000/- in this year and 1,50,00,000/- in the subsequent year. When the dissolution deed executed there is a reference of balance sheet dated 31.03.2015 of the JV in that audited balance sheet the money so given by Shri R. K. Varma appearing as payable. The purpose of dissolution was that the work of affordable housing was completed and said project upon completion was inaugurated by Shri Chief Minister of the State on 23.09.2013 and therefore, the business of joint venture was closed vide dissolution deed dated 10.04.2015 with taking over the said business with assets and liability [ including loss ] by Shri R. K. Varma. The acc....
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.... such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or (b) the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year. Explanation 1.-For the purposes of this sub-section, the expression "loss or expenditure or some benefit in respect of any such trading l....
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....nbsp; xx xx (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 but before the 1st day of April, 2017,- (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property,- (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement....
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.... property, other than an immovable property, means the value determined in accordance with the method as may be prescribed; (c) "jewellery" shall have the meaning assigned to it in the Explanation to subclause (ii) of clause (14) of section 2; (d) "property" means the following capital asset of the assessee, namely:- (i) immovable property being land or building or both; (ii) shares and securities; (iii) jewellery; (iv) archaeological collections; (v) drawings; (vi) paintings; (vii) sculptures; (viii) any work of art; or (ix) bullion; (e) "relative" means,- (i) in case of an individual- (A) spouse of the individual; (B) brother or sister of the individual; (C) brother or sister of the spouse of the individual; (D) brother or sister of either of the parents of the individual; (E) any lineal ascendant or descendant of the individual; (F) any lineal ascendant or descendant of the spouse of the individual; (G) spouse of the person referred to in items (B) to (F); and (ii) in case of a Hindu undivided family, ....
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....rst proviso and such company fails to comply with any of those conditions, then, any consideration received for issue of share that exceeds the fair market value of such share shall be deemed to be the income of that company chargeable to income-tax for the previous year in which such failure has taken place and, it shall also be deemed that the company has under reported the said income in consequence of the misreporting referred to in sub-section (8) and sub-section (9) of section 270A for the said previous year. Following third proviso shall be inserted after the second proviso in clause (viib) of sub-section (2) of section 56 by the Finance (No. 2) Act, 2024, w.e.f. 1-4-2025: Provided also that the provisions of this clause shall not apply on or after the 1st day of April, 2025. Explanation.-For the purposes of this clause,- (a) the fair market value of the shares shall be the value- (i) as may be determined in accordance with such method as may be prescribed; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of shares, of its assets, includi....
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....nn.com 722 (Rajasthan) ] holding that ; 11. Now it is a matter of record that Shirish Chandrakant Shah had retracted his statements given before the Assessing Officer. Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition. Therefore, the substantial questions of law framed by the appellant pertained to an open issue which stands concluded by the decision of the Hon'ble Supreme Court; one such decision was rendered in "M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another" [1973] 19 ITR 18. We also get support of our from the decision of the apex court in the case of PCIT Vs. Abhisar Buildwell Private Limited [ 149 taxmann.com 399 (SC) ] wherein the court held that : 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other materia....
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....not assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. Civil Appeal Nos.7738-7739/2021, 7736-7737/2021, 7732-7735/2021 and 7740-7743/2021 15. Insofar as the aforesaid Civil Appeals preferred by the assessee - M/s Kesarwani Zarda Bhandar Sahson, Allahabad are concerned, these appeals have been preferred against the impugned judgment and order dated 6-9-2016 passed in ITA Nos. 270/2014, 269/2014....
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....f the assessee. In the result ground no. 4, 5 & 6 raised by the assessee are allowed. 14. Ld. AO noted that while search proceeding carried out as per provision of 132 of Act at the residence of the assessee document inventorised at page no. 6 to 9 of Exhibit 08 was found. The detailed facts, contention and reply on the issue has already been discussed in para 2.3 herein above we deal on the brief of it that the said documents payments notes the transaction made between M/s Nevaji Estates (P) Ltd., and Millenium Buildhome Private Limited. As per the document seized, part payment have to be made in white (ek number) and part payment has to be made in black. In white Rs. 2,13,90,000/- has to be paid while as per black Rs. 4,80,00,000/- has to be paid. In ek number cost has been taken at 400 whereas as per black cost has been taken at 885. An amount of Rs. 2,00,00,000/- has been paid in black and Rs. 65,99,000/- has to be paid in black. Thus, it is inferred that an amount of Rs. 2,65,99,000/- have been paid in cash by the assessee and thereby the same was added in the hands of the assessee as per provision of section 69 of the Act. As the addition was made u/s. 69 of the A....
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.... Millenium Buildhome Private Limited who is purchaser of that property cannot be taxed in the hands of the assessee. If at all that is to be taxed same be taxed in the hands of that Millenium Buildhome Private Limited and not in the hands of the assessee when the revenue has already taken a step to tax that transaction by invoking the provision of section 153C of the Act. Based on these observation ground no. 7 raised by the assessee is allowed. 15. Since we have considered the grounds of appeal of the assessee on its merit the ground challenging the technicality of approval not proper becomes academic and therefore, the same is not decided. In the result, the appeal of the assessee is partly allowed. 16. The facts of the case in ITA no. 1277/JP/2024 is similar to the case in ITA No. 1276/JP/2024 and we have heard both the parties and persuaded the material available on record. Therefore, it is not imperative to repeat the facts, various grounds raised by the assessee and the arguments of both the parties in ITA no. 1277/JP/2024. Hence, the bench feels that the decision taken by us in ITA No.1276/JP/2025 for the Assessment Year 2014-15 shall apply mutatis mutandis in the c....
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....i Ajay Bakliwal. 6 In my regular books of accounts M/s Navbharat Nirman Company (JV) is a debtor of Rs. 16.50 Cr. Deponant Raily Verification I. Ram Kishan Verma S/o Shi: Chanda Lal ji Verma do solemnly declare on oath that what is stated above is true'and correct to the best of my Knowledge and belief. May God help me. T. OF INDIA 14-3-2021 - Raving Depo nant 1 1 , lord By ÃŽ A 1 INDIA NON JUS Mary (Central) Fbe. Dist & Ses Court V/ SURESH KUMAR GAUTAL. HOTA (Ra) ) Rega 10 -1563 14-3-2021 OF INDIA 4 AU 201665 kappay euse Document 2 The ACIT Central Circle, KOTA Dated: 24.01.2025 Subject : Calling for information u/s 133(6) of the Income Tax Act, 1961-Regarding- Reference : Your office letter No.ITBA/COM/F/17/2024-25/1072381746(1) dated 21.01.2025 Dear Sir Kindly refer to the above subject. In this regard, the requisite information is as under- 1. The nature of transaction of Rs.16,50,00,000/- (Rs.15,00,00,000/- for AY 2014-15 and Rs.1,50,00,000/- for AY 2015-16) is Unsecured loan. This loan was given by me to M/s Nav Bharat Nirman Company (IV) PAN- AABAN6092R, an AOP of Ajay Bakliwal & others, throu....