TMI Blog2021 (1) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that very period, and demonstrated that the rates at which they entered into an agreement are higher than the jantri rate as well as the rates at which transactions have taken place. Similarly, with regard to new tenure land is concerned, they have demonstrated that unless Government gives permission for change of character of the land i.e. unless the land is made freehold, it cannot be transacted. For getting the land freehold i.e. new tenure land, the land owners are required to pay premium amount to the Government of Gujarat. Once the alleged premium/fee is paid only then this land could be transacted. At the time of hearing, it was brought to our notice that the land at Vastral had not been purchased even till today; because it has not been converted into new tenure land. Thus, the transaction in this land was subject to clearance from the Government i.e. conversion of old tenure land to new tenure land. If that be so, how an assessee could be presumed to pay cash over and above the amounts stated in the alleged agreement. An agreement even itself will not be enforceable in the eyes of law unless character of the land is changed viz. it is being converted into new ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter inferring that director has deposed that he has received money from the assessee in cash which was deposited in the bank account, and cheques were issued to the assessee, there is no such disclosure by the Lalit k. Rathod qua the assessee. Therefore, taking into consideration all the material facts and circumstances, there is no justification to add this amount as unexplained cash credit in the hands of the assessee. - Decided in favour of assessee. - IT(SS)A No. 264 to 267/Ahd/2016 With Cross Objection Nos.39 to 42/Ahd/2018 AND ITA No.2326/Ahd/2016 With CO No.43/Ahd/2018, [In IT(SS)A.No.268 to 271/Ahd/2016] - - - Dated:- 17-12-2020 - WITH Cross Objection Nos.200 to 203/Ahd/2016 AND ITA No.2327/Ahd/2016 With CO No.204/Ahd/2016, IT(SS)A No.204/Ahd/2016 Shri Rajpal Yadav, Vice-President And Shri Amarjit Singh, Accountant Member For the Assessee : Smt.Nupur Shah, AR For the Revenue : Shri Subhash Bains, CIT-DR ORDER PER RAJPAL YADAV, VICE-PRESIDENT: The ld.CIT(A) has decided ten appeals of the assessees by way of common impugned order dated 14.6.2016 for the assessment years 2008-09 to 2012-13. Dissatisfied with orders of the ld.CIT(A), Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order. This table reads as under: Assessment Year Additions by the A.O. Reference to Seized Material Uday D. Bhatt Galaxy Developers 2008-09 ₹ 2,35,00000 A2 - Page - 88, 77 76. A2 - Page - 88, 77 76./ 2009-10 ₹ 796,00,000 A2 - Page - 76, 75, 6, 10, 9, 80, 81 83. A99 - Page - 2, 4. A2 - Page - 76, 75, 6, 10, 9, 80, 82, 81 83. A99 - Page - 2, 4. 2010-11 ₹ 1,41,75,000 A2 - Page - 69, 66, 59 54. A2 - Page - 69, 66, 59 54. 2011-12 ₹ 6,74,440,70 A2 - Page - 49, 37, 35, 34/41, 32, 40, 29, 28, 22, 21, 20. A2 - Page - 49, 37, 35, 34, 41, 32, 40, 29, 28, 22, 21, 20. 2012-13 ₹ 6,97,25,646 Difference figure as per AO Differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ummarized the role of MRK . According to the ld.CIT-DR Shri MRK has performed various roles viz. purchase of land, acquisition of land, executing documents for payments to farmers and their relatives to clear bana chittis and court cases, to take possession from Ganotias and settlement with other persons of the area. 9. On the other hand, the ld.counsel for the assessee relied upon order of the ld.CIT(A). She further submitted that the AO has been harping upon two pieces of evidences. First piece of evidence is Annexure A/2 and Annexure-A/89. These documents were seized from the premises of MRK and these pages were in hand writing of Shri MRK . The settled position of the law is that whenever any paper is found from the premises of any person during any investigation or search, then the first duty to explain contents of papers is upon the person from whose premises they were found. Similarly presumption of truth attached to the papers found during the course of search under section 132A also applicable qua person from whose premises those paper were found and in whose writing these papers were found. 10. Other piece of evidence is alleged admission of MRK that the cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s i.e. MRK and HVT and also accepted their stand that amounts narrated on these pages of A/2 and A/89 are their internal accrual and rotation of funds. Thus, the ld.counsel for the assessee contends that if in their assessment it was accepted as a fact that it was their internal accrual and rotation of funds, then how a different treatment can be given to these very documents while assessing the income of these two assessees. She also pointed out that peak amount worked out by the Settlement Commission is far less than the ultimate amount assessed on the strength of these pages in the hands of these assessees. She took us through the finding of the ld.CIT(A) in this regard and also made reference to the peak working noticed by the CIT(A) in the impugned order, which is available in the PB also. 13. In her third fold of contention, she contended that if a comparative study is being made of non-agriculture land purchased by Galaxy Developers during the period 2007 to 2009 with help of these persons qua the land transaction taken place in these areas i.e. Vastral Gam, then it would reveal that rates mentioned by the assessee in the sale deed were far more than then prevailing r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition Land) can take place only after the Government of Gujarat grant the permission for sale of land and as per the provisions of Land Revenue Law, the Government of Gujarat grants the permission for sale of New Tenure Agriculture Land (New Condition Land) only after determining the premium payable for converting the land to Old Tenure Agriculture land (Old condition Land) for making it sellable and the land owner or the proposed purchaser of the New Tenure (New Condition) land pays the premium amount to the Government of Gujarat. Once the rate per square meter as per the Banakhat in respect of new tenure land has been taken into consideration, which is in the range of ₹ 530/- to ₹ 540/- per sq. mtr + 80% of the Jantri rate prevailing on 1-4-2008 is taken into consideration, which is required to be paid by appellant firm M/s. Galaxy Developers as premium amount to the Government of Gujarat, if the permission is granted by the Government of Gujarat, then the cost of land to be paid by the appellant firm M/s. Galaxy Developers in respect of said different survey Nos land at Vastral, which are new tenure Agriculture land( New condition Land), will work substantially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider / appreciate the fact that in the present case once the appellant firm has already submitted the comparative sales instances from the land revenue records of the Government of Gujarat of the adjacent and vicinity area in respect of the Non-agricultural land, agricultural land and of the other survey Nos whose documents have been registered in the same year with the Sub-Registrar in order to substantiate the contention of the appellant firm that the said Non-agricultural land purchased by the appellant firm Galaxy Developers and the Banakhat agreement entered into by appellant firm M/s. Galaxy Developers in respect of New Tenure ( . New Condition) Agricultural land by the said appellant firm has been at the prevailing market rate which is not below Circle Rate ( Jantri Value ) and looking to the facts of the said New Tenure ( Condition) agriculture land belonging to the Government of Gujarat, not permissible for the sale of land / transfer of land by the seller to the buyer without granting the permission by the Government of Gujarat that too subject to premium to be paid for converting the said New Tenure (New condition) agricultural land, the question of making the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11 ₹ 1,41,75,000 A2 - Page - 69, 66, 59 54. A2 - Page - 69, 66, 59 54. 2011-12 ₹ 6,74,440,70 A2 - Page - 49, 37, 35, 34/41, 32, 40, 29, 28, 22, 21, 20. A2 - Page - 49, 37, 35, 34, 41, 32, 40, 29, 28, 22, 21, 20. 2012-13 ₹ 6,97,25,646 Difference figure as per AO Difference figure as per AO Thus it can be seen that on the basis of identical seized material identical additions are made by the AO. In my view .substantive additions made in the case of two assessees is not justified 14. It is an undisputed fact that during the course of search, incriminating material was seized from the residential/office premises of MRK. The main seized material relied upon by the A.O. are A/2 and A/89. This seized bunch was written by MRK and it contained in flow and out flow of money both in cheque as well as cash. During the course of search on 21/0.7/2011 MRK submitted vide Question No. 14 to Question No. 20 that such transactions b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e about credit entries that the figures noted against the names are being the amount received from respective named persons and also do you have any proof/evidence to substantiate about debit entries that the figures noted against the names are the amounts spent or given to named persons? A.11 No, I do not have any proof/evidence in respect of credit entries noted against the named persons that the amount has been received from the named persons noted in Annexure A/2 and A/89 and similarly, I do not have any proof/evidence in respect of debit entries noted against the named persons in Annexure A/2 A/89 that the amount has been spent/given to the named persons. The credit debit entries in the Annexure A/2 A/89 are the rotation of cash funds of myself and Shri Haribhai Thakkar, as an internal rotation in our group. (Emphasis added) As per Evidence Act, the transactions contained in A/2 and A/89, found from the premises of MRK and are written by MRK, If MRK ascertains that s.uch cash transactions belong to a third person, then the onus is on MRK to prove it by providing some evidences. Perusal of cross examination shows that MRK has not been able to substantiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RK and Shri Haribhai Thakkar have filed an application before the Settlement Commission on 11/03/2014. This application was admitted by Hon'ble Settlement Commission, Mumbai vide order u/s. 245D(1) dated 14/03/2014 and treated the said admission of application as. valid. While rendering the order u/s. 245D(2C) dated 06/05/2014 Subsequently, On 11.03.2014, Mr. Maheshsingh Rajendrasingh Khushwah and Haribhai Thakkar filed applications before the Hon'ble Settlement Commission u/s.245C(l) of the Act and the same was admitted by the Hon'ble Settlement Commission, Additional Bench, Mumbai vide order u/s. 245D(1) dated 14.03.2014 and treated the said admission of the application as valid while rendering the order u/s. 245D(2C) of the Act dated 06.05.2014. The Authorized Representative Mr. Dhiren Shah, CA who is also the Authorized Representative of Mr. Maheshsingh Rajendrasingh Khushwah and Mr. Haribhai Thakkar in respect of the settlement application filed by them before the Hon'ble Settlement Commission has placed on record the copy of the settlement application filed by Mr. Maheshsingh Rajendrasinh Khushwah and Mr. Haribhai V. Thakkar along with statement of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kkar and Shri Mahesh R. Kushwaha is self explanatory, detailed and speaking. However, the undersigned has no capacity to offer any comments on the order of Hon'ble Settlement Commission. Further the undersigned rely upon conclusions as well as additions made by the Assessing Officer in the case of M/s. Galaxy Developers and Shri Uday D. Bhatt for A.Y. 2008-09 to A.Y. 2012-13. 3. Further, it is clear from the order of Hon'ble Settlement Commission that Shri Harilal Valjibhai Thakkar and Shri Mahesh R. Kushwaha are brokers/ agents and real investments have been made by M/s. Galaxy Developer and Shri Uday D. Bhatt. *** *** *** *** *** *** *** *** 20 I have perused the final order of Settlement Commission, AO comments and rejoinder made in this regard. Before we drawn some inference from the order of Hon'ble Settlement Commission it is appropriate to reproduce the findings of the Hon'ble Settlement Commission order contained in para 14 and 14.1. The para are reproduced as under: 14. We have carefully gone through the submissions of the applicant, the report of the CIT under Rule 9, the rejoinder of the applicants and the rival arguments of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hon'ble Settlement Commission has upheld the applicants' claim that the money paid after the date of registration were paid to settle the disputes and such payments, do not reflect on-money. Further, Hon'ble Settlement Commission has accepted the peak income offered on the basis of peak credit, the copy of which is placed on page no. 348 to 417 of the paper-book B'. This working of peak credit was verified by the A.O./Pr. CIT (Central), Ahmedabad. Subject to certain corrections which were pointed out by the A.O. before the Hon'ble Settlement Commission. The applicants had revised an earlier offer of ₹ 24.28 crores to ₹ 32 crores, which was accepted by the Hon'ble Settlement Commission. Further, I have verified the peak working which is placed on no. 348 to 417 of the Paper-book- B and have checked each and every entry of cash which is reproduced by the A.O. in the assessment order for the respective assessment year, is incorporated in such peak working and is offered for taxation by the applicants. A detailed submission is placed on record vide submission dated 04/06/2016. It is pointed out that all alleged cash payments pointed out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P75 2500000.00 364 11/08/2008 11/08/2008 A2P6 5000000.00 371 18/08/2008 18/08/2008 A2P6 2500000.00 371 20/08/2008 20/08/2008 A2P6 1000000.00 371 23/08/2008 23/08/2008 A2P6 2500000.00 371 26/08/2008 26/08/2008 A2P6 2500000.00 371 30/08/2008 30/08/2008 A2P7 2500000.00 372 01/09/2008 01/09/2008 DA99 2500000.00 372 02/09/2008 02/09/2008 DA99 2500000.00 372 03/09/2008 03/09/2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25/12/2008 17/12/2008 A89 P10 1000000.00 377 29/12/2008 20/12/2008 A89 P10 600000.00 377 TOTAL 79600000.00 - In peak working ₹ 700000/- ,as per seized annexure ₹ 600000/- A.Y. 2010-11 Date as per Peak Date as per Asst Order Vch No. Amount Paper Book No - B (Page No.) 30/04/2009 22/04/2009 A89 P18 1000000.00 381 08/06/2009 08/06/2009 A2P66 500000.00 383 28/06/2009 28/06/2009 A2P66 4300 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25/10/2010 25/10/2010- A2P29 2500000.00 406 02/11/2010 02/11/2010 A2P28 2500000.00 406 03/11/2010 03/11/2010 A2P28 1000000.00 407 07/01/2011 07/01/2011 A2P22 2000000.00 409 10/01/2011 10/01/2011 A2P22 2000000.00 409 23/01/2011 23/01/2011 A2P21 1000000.00 409 06/02/2011 06/02/2011 A2P20 5000000.00 410 11/02/2011 11/02/2011 A2P20 5000000.00 411 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vastral and Ramol which Shri MRK and Shri HVT have acquired by executing conveyance deed and holding the possession of such land for approximately ₹ 90 per sq. mtr. Shri MRK and Shri HVT agreed before the Hon'ble Settlement Commission for enhancing additional income at the rate of ₹ 250/- per sq. mtr. in respect of old tenure agricultural land, which Hon'ble Settlement Commission has accepted as a reasonable market rate of old tenure agricultural land. Thus, as final cost for new tenure land comes much higher than the enhanced cost of old tenure land (₹ 250 per sq mtr) acquired by MRK HVT there is no possibility of on money, it was forcefully contended. To summarize, I am of the view that additions solely on the basis of statements of MRK relating to cash transactions in Annxure-A-2 And Annexur-A-89 cannot be made, there are conflicting Statements of Shri MRK on different point of time. In view of the conflicting statements and also the absence of any corroborative evidence or an independent inquiry, which may link cash transactions in Annexurie-A-2 and A-89 to be belonging to the appellant, I am of the view that such cash transactions in the said A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have noticed while extracting the finding of the ld.CIT(A) in upper part of this order. Thus, quality of this evidence requires corroboration for forming a firm opinion against respondents. 16. Next aspect for appreciating the whole controversy is that author of these pages MRK and HVT went before the Settlement Commission. They have owned up of the narrations mentioned in these pages. They have specifically alleged that these are their own funds and in order to keep a track, they have noted down the rotation of these funds. They offered peak amount available in these pages for taxation in their cases. Thus, before the Settlement Commission, there were two issues viz. authenticity of the claim made by these two persons that it is their own funds, and thereafter quantification of the amount which is brought to tax. The Settlement Commission called for a report from its investigation wing as well as comments of the AO. After accepting the veracity of the claim made by these two persons working of peak was also verified. The Settlement Commission thereafter accepted the stand of the author of these pages. If that be so, then how a different inference can be drawn in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion happen. This was the positive evidence produced by the assessees for rebutting the belief formed by the AO on the basis of Annexure A/2 and A/89 and the alleged disclosure of the MRK. If we have a glance on all these factors in their totality, then it can safely be concluded that the ld.CIT(A) has rightly deleted the additions. We do not find any error in the order of the ld.CIT(A) on this point in all these appeals, and accordingly, all the appeals of the Revenue are dismissed. 17. As far as cross objections filed by the assessee in appeals of the Revenue are concerned, the ld.counsel for the assessee did not press these COs.; they are in support of the CIT(A) s order except in the Asstt.Year 2010-11 in the case of Shri Uday Bhatt. She pointed out that in the Asstt.Year 2010-11, the assessee has also filed an appeal wherein he has challenged confirmation of addition of ₹ 3,40,20,000/- and ₹ 3,40,000/- which was added by the ld.AO on account of unexplained cash credit and estimated the expenses at the rate of 1% for arranging this accommodation entry. We find that in the Asstt.Year 2010-11, Shri Uday Bhatt has challenged these two additions in his appeal. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moters and directors of Sarang Chemicals on numerous occasion have given statements u/s.132(4) and 131(1) in the case of assessee's assessed in this very Range that they provide entries by cheque after receiving cash from the same party and charges commission on the same. In this way, the ld.AO has made addition of ₹ 3,40,20,000/-. Appeal to the CIT(A) did not bring any relief to the assessee. 19. The ld.counsel for the assessee at the very outset submitted that the assessee has discharged onus cast upon him by section 68 of the Act. The AO has relied upon the statement of Shri Lalit Kantilal Rathod; but neither copy of the statement was given to the assessee nor an opportunity to cross- examine was given. The assessee has specifically made a prayer before the ld.CIT(A) also. She relied upon he judgment of Hon ble Supreme Court in the case of Andaman Timber Industries Vs. Comm. Of Central Excise, Kolkata (2015) 62 taxmann.com 3 (SC) and on the strength of this decision submitted that statement of Shri Lalit Kantilal Rathod deserves to be excluded from relying upon on this issue. 20. On the other hand, the ld.DR relied upon orders of the Revenue authorities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that for proving accommodation entries cash was deposited in the bank accounts of the company held with various Cooperative Banks. In this case also the cash was deposited and unsecured loans have been paid against the receipt of cash from these persons. Q.9 Please provide the detail of the persons from whom cash was received and deposited in the bank account of M/s.Sarang Chemicals Limited held with Bhuj Mercantile Bank and to whom the cheque payments were made as recorded in the bank statement of M/s.Sarang Chemicals Limited shown to you. Ans. Sir, I will be only able to reply after seeing the books of accounts of M/s.Sarang Chemicals Ltd If you permit me 2-3 hours of time I can peruse the same and provide you the names of the persons from whom cash was received or to whom the cheques have been issued against the cash received from them which was deposited in the bank account of M/s.Sarang Chemicals Ltd. On the request of the deponent the statement is adjourned to be resumed at 5.00 PM on 21.03.2014 to state that I have stated these facts before also in my statement taken during the course of search in case of M/s.Sarang Chemicals Ltd in 2012. The above stamen is g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 23. If this statement is excluded then there is nothing with the AO. On the basis of which, he can doubt evidence submitted by the assessee in the shape of confirmation, bank statement, PAN etc. Though the AO has created a suspicion by recording half-statement, thereafter inferring that director has deposed that he has received money from the assessee in cash which was deposited in the bank account, and cheques were issued to the assessee, there is no such disclosure by the Lalit k. Rathod qua the assessee. Therefore, taking into consideration all the material facts and circumstances, there is no justification to add thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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