TMI Blog2014 (4) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ng parties at that point of time and denial subsequently was certainly a self-serving one - The details of payments he could not confirm - paying amount to the owners by way of cash even when it is only a development agreement was not ruled out - a cash receipt was found in the course of proceedings in the assessee's premises, the assessee could have paid the amount out of its unaccounted sources and the receipt has to be believed as genuine payment of money – thus, the order of the CIT(A) upheld – Decided against Assessee. Addition made on account of low profitability – Held that:- As seen from the computation of income filed by the assessee there was no denial of rental income - The AO admitted the later figure while arriving at the income declared by the assessee whereas, according to the assessee, the gross income from the rental of the property was to be taken at Rs.1,54,65,736/-, as per the statement recorded in the course of search - Since the difference arose due to payment of municipal tax and statutory claim, the basis for making the addition by the A.O. itself was wrong - There is no other issue to be considered as the assessee has shown the profits and loss from vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment agreement with the said parties under which 57% of the share of the developed area was to go to the developers (assessee-company) and 43% of the share will go to the consenting parties viz., Mr. M. Suveer Reddy and Mr. B.L. Shankar Lal Yadav. In the course of search proceedings, cash receipt of dated 27.11.2008 acknowledging receipt of Rs.91,26,000/- and duly signed by Mr. M. Suveer Reddy and Mr. B.L. Shankar Lal Yadav was found. After obtaining the statements from the Directors of the company and from the signatories, the A.O. made the addition of the above amount of Rs.91,26,000/-. In the course of post search enquiries, Mr. Maddi Narsaiah, Managing Director of the Company in his sworn statement dated 06.10.2010 stated that he had taken the above advance cash receipt and no cash was paid to them. He stated that the above mentioned cash receipt was prepared to arrange funds but did not materialize. The statements recorded from both Mr. M. Suveer Reddy and Mr. B.L. Shankar Lal Yadav also reveals that they also stated that no cash was paid to them and they have received only an amount of Rs. 50 lakhs and Rs. 1.7 lakhs respectively through cheques as they acted as middlemen. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly paid the part amount of Rs.3,62,00,000/- as against the agreed amount of Rs.4 crores and the balance amount of Rs.1.38 crores was deferred, as in the course of survey of land, it was realized that a portion was being claimed by the railway authorities and revenue authorities as it included Government land also. Since such claims had not been anticipated, the entire deal was stuck for almost 2 years. Subsequently, after resolution of the disputes, the consenting parties started renegotiation with land owners for a lower amount and made an arrangement that a further amount of Rs.91,26,000/- only would be paid in cash, as against Rs.138 lakhs. He submitted that after convincing the landowners, the consenting parties approached the assessee and the assessee and another 4 parties initially agreed for the same. As a result of such initial consent, the consenting parties approached the assessee office with a cash receipt duly signed by them in the presence of land owners, to gain the confidence of the land owners and the developers. However, after subsequent discussions, the developers decided that no cash payments should be made as the entire land was under dispute and therefore onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been able to discharge the primary duty of showing that no such transaction had actually taken place and that the cash receipt was not given in token of completion of transaction of payment of cash. On the other hand, the seized cash receipt duly showed that there was a transaction of payment of cash of Rs.91,26,000/-. Even the appellant, while claiming that the said signed receipt was inadvertently left at its office, has stated that the Developers did not make any specific effort to return the same to the consenting parties, as it could have been used to their advantage. This itself shows that the appellant was very much aware of the evidentiary value of the said document, which is now being claimed as not acted upon. Since the explanation of the appellant is a mere averment, devoid of any evidentiary support, the addition of Rs.91,26,000/- as undisclosed income of the appellant, utilized for making unaccounted cash payment to the parties mentioned in the receipt, is upheld. The grounds raised in this regard are therefore decided against the appellant . 5. Before us, learned Counsel reiterated the submissions made before the learned CIT(A) and also explained the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anaging Director of the Company vide question No.10 at the time of search and further a denial by the other party indicates that no payment has been made. It was further submitted that company has disclosed incomes consequent upon the search and since no payment was made, this transaction was not accepted by the assessee company. On a query by the Bench, it was informed that the agreement does not mention about the payments made by cheques but all the payments were made by cheques only which are refundable deposits. 8. We have considered the rival contentions and perused the evidence placed on record. As far as the transaction of acquiring ac.40.00 for development is concerned, the assessee did enter into an agreement with the first party comprising of 20 owners and consenting parties consisting of Mr. M. Suveer Reddy and Mr. B.L. Shankar Lal Yadav, in favour of assessee (having 55% share ) and others Mr. Kishore Kumar Tulla (20%), Mr. Ashwanth Kumar Tulla (15%), M/s. PVSM Enterprises( 5%) and Mr. M. Avinash Reddy (5%). These parties paid various amounts to the first and second parties. Mr. B.L. Shankar Lal Yadav acknowledges receipt of Rs.107 lakhs, Mr. M. Suveer Reddy receives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 50,00,000/- and M/s. PVSM Enterprises paid to Mr. B.L. Shankar Lal Yadav Rs. 50,00,000/-. Therefore, out of Rs.3,62,00,000/- paid, assessee contribution initially was only Rs.12,00,000/- but has got 55% share in the constructed area out of the devolopers share. All other payments, except by assessee are paid in the month of October, 2006 on various dates, starting from the agreement date 16.10.2006. The assessee's payments were dated 11.12.2008 of Rs.7,00,000/- to Mr. B.L. Shankar Lal Yadav and on 09.01.2007 an amount of Rs.5,00,000/- to one M. Amul Yadav, totaling to Rs.12,00,000/-. Since, there was a payment of Rs.7,00,000/- on 11.12.2008, in and around that time, this receipt given i.e., on 27.11.2008 can be accepted as part of payment consequent to negotiations. Therefore, it has to be considered that there was indeed a cash payment by the assessee company. Till 2008 there were no payments actually made from the accounts of the assessee company. However, the entries shown in the books are by way of journal entries dated 16.10.2006 to the credit of Mr. B.L. Shankar Lal Yadav of Rs.5,00,00,000/-. Surprisingly, only Rs.2,00,00,000/- paid on 16.10.2006 was initially debited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers have to pay rent at Rs.4/- per sq. feet to the owners, vide clause No.12(a) of the agreement. As admitted by the assessee, there could be re-negotiations and as part of that assessee could have paid the amounts. Since assessee admits that there was re- negotiations/settlement at that point of time, it has to be considered that assessee indeed paid the amount to the owners/consenting parties at that point of time and denial subsequently was certainly a self-serving one. Not only that even statement of Mr. B.L. Shankar Lal Yadav, even though denies receiving the cash, admits that he drew cash of Rs. 50,00,000/- from his bank account and paid to the owners out of Rs.1,07,00,000/- supposed to have received by him as deposit. The details of payments he could not confirm. Therefore, paying amount to the owners by way of cash even when it is only a development agreement was not ruled out. Considering the facts of the case and as rarely evidenced, a cash receipt was found in the course of proceedings in the assessee's premises, we are of the opinion that assessee could have paid the amount out of its unaccounted sources and the receipt has to be believed as genuine payment of money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently claimed that admission of higher of income was based on the assumption of the appellant that it would receive compensation in the course of arbitration. However, it cannot be denied that by not adhering to the disclosure of additional income of Rs.70 lakhs from infrastructure projects, the appellant indeed retracted from its admission made in the statement dated 6-7-2010. It is clear that he had not ever stated earlier that such income was disclosed in view of the arbitration compensation likely to be received, which otherwise also would have been taxable on receipt as a regular item of income. The admission of Rs. 70 lakhs on the other hand had been made as additional income, over and above the regular income/losses, and therefore, the source for the same was within the private knowledge of Shri Narsaiah and the appellant. Since the appellant admitted income in the return at a lesser figure, no infirmity can be found in the addition of Rs.22,78,665/-. The ground raised in this regard is therefore decided against the appellant. 13. Before us, Ld. Counsel referred to the statement of income and admission of Rs.70,00,000/- and reconciled the amounts as to how the A.O. has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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