TMI Blog2018 (9) TMI 2069X X X X Extracts X X X X X X X X Extracts X X X X ..... zed material at ₹ 22.3 Crores. During the course of hearing DR could not explain as to how the entries in seized material can be taken into account for making an addition on account of cash payment of ₹ 5 Crores to the seller in the light of the fact that the entries found in the seized material do not co-relate with the payments recorded in the books of accounts. As carefully examined the orders of CIT(A) and we find that CIT(A) has made detailed analysis of the entries found in the seized material and the entries recorded in the books of accounts and he has rightly concluded where the entries with regard to payment through cheque do not co-relate with the entries recorded in the books of accounts, no cognizance of the entries recorded with regard to the entries relating to cash payment in the seized material can be taken. We therefore are of the view that CIT(A) has rightly adjudicated the issue. No defect has been pointed out by the learned DR. We therefore confirm the order of the CIT(A) deleting the additions in both the years. Addition of interest payment outside the books of accounts - additions on account of cash payment to the sellers of the land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot for paying taxes but the extra burden on the cost of the assessee who is the developers as the reduced cost will enhance the profit margin of the assessee. b. the cost for the assessee works out to 22.30 Crores as it has to pay 19.30 Crores to sellers of the land and has to repay the advance of 7. 3 Crores given M/s Somayaji Holdings for purchase of the same piece of land before the assessee came into buy the land. 6. The learned CIT(A) has erred in holding that the assessing officer has not proved that the amounts of ₹ 5 Crores supposedly paid in cash withdrawn from any bank accounts. Such a finding was not needed as the case of the assessing officer is that the assessee met the said payments out of unaccounted income and there were no cash balances available in the books for the assessee to make the said payments in cash on those dates mentioned in the seized documents and details available in email correspondences. 7. The learned CIT(A) has erred in not appreciating the fact in the hard disk contains soft copy of the books of account and other details whirr; proves that there is cash payment of E 5,00,00,000/-. In the light of contents given below: To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash was paid by the appellant on various dates to the land owners. Before the AO, assessee company has admitted the payment of ₹ 22,30,00,000/- to M/s. T. V. Aleyas Engineers Pvt. Ltd., and M/s. Somoyaji Estate Ltd., for getting the land. Though there was a proposal to pay ₹ 17,30,00,000/- by cheque and blanace of ₹ 5 crores by cash, but ultimately the entire payment was made by cheque and nothing was paid in cash. The AO, having relied upon the communications by emails, noting and other records, came to the conclusion that assessee company has made payment of ₹ 5 crores in cash and he accordingly brought it to tax in two assessment years viz., in assessment year 2010-11 - ₹ 1,55,00,000/- and in assessment year 2011-12 - ₹ 3,45,00,000/-. 3. Assessee preferred an appeal before the CIT(A) and placed relevant documents including confirmation from M/s. T. V. Aleyas Engineers Pvt. Ltd., towards receipt of ₹ 19.3 crore from appellant dated 31.03.2014 and also the agreement between M/s. Somayaji and the assessee and the statements on oath given by Mr. PMA Razak and M/s. T. V. Aleyas and guidance value of the property. Besides, detailed submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in the premises of the appellant. The initial JDA entered by the appellant was way back in 05.05.2006 and thereafter, the supplementary agreements were entered into subsequently over a period of almost 5 years till 31.03.2011 and then came the confirmation deed dated 30.06.2011. There are multiple agreements between the parties for the reason that the project approvals could not materialize as originally planned and the appellant could not presumably pay the consideration as originally agreed which resulted in variation of the amount of consideration. This is quite evident from the agreements between the parties for instance, in the first agreement dated 05.05.2006, the total consideration mentioned is only ₹ 4.7. Thereafter, in agreement dated nil but the year mentioned as 2008, the consideration is ₹ 22.3 crores and subsequently, in the confirmation deed dated 30.06.2011, the consideration stated is ₹ 19.3 crores. 4.1. Main contention of the appellant is that the loose papers found during the course of search are mere estimates and are not the noting of actual transactions which were effected between the parties. Further, it is submitted that even in sw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . I have explained in detail with the help of a table in Para 4.11 below as to how the figures on the loose sheet are not matching with the actual transactions reflected in the bank statements. 4.3 Page No. 5 of the assessment order is another loose sheet which contains, according to the AO the payments made by the employees of the appellant co., allegedly by cash. If the said loose paper is analyzed, there are two sets of payments by the employees having about 9 transactions totaling to ₹ 3,05,00,000/-. With reference to this loose shee,t, the employees of the appellant co. 11/1r Arun Nayak and Mr Pradeep were examined during the search/ assessment proceedings and they did not accept that they ever made any cash payment to the landowners. The AO even during the remand proceedings could not prove that the cash was withdrawn from the bank account by the appellant for such alleged payments to the land owners. The AO also did not confirm that the appellant had any other source to make the payment in cash. Further, the transactions relating to Mr Arun Nayak totalling to ₹ 1,55,00,000/- are dated 8/1/2010 to 15/1/2910, whereas, loose sheet reproduced by the AO on page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2008 ₹ 1,00,00,000/- 06.12.2010 ₹ 50,00,000/- 10.02.2011 ₹ 1,00,00,000/- 30.03.2011 ₹ 9,30,00,000/- 18.05.2011 ₹ 1,00,00,000/- 16.09.2011 ₹ 25,00,000/- 12.10.2011 ₹ 25,00,000/- 11.07.2012 ₹ 40,00,000/- Total ₹ 15,50,00,000/- 4.6. Thus, as on 03.12.2012, when the payment of ₹ 3.00 crore was made to M/s Somayaji, as on that date the actual payment made to M/s T.V. Aleyas is ₹ 15.5 crores which does not match with the paper found. Further, an amount of 5 written as CS does not specify as to whether the cash is paid or payable etc. It also does not bear any date for any of the transactions. When the cheque payments on the loose sheet are not matching with the actual payment figures, it is difficult to accept that CS means cash paid by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t page 4 of the assessment order contains an entry towards payment of income tax on cash payment of ₹ 150 lakhs and whether this income tax has been paid by the appellant to validate the payment of ₹ 5,00,00,000/- in cash. In remand report, the AO submits that the loose sheet in question is a sheet prepared to workout the cost of land to the appellant. He further clarifies that the appellant has mentioned income tax due of ₹ 150 lakhs as an additional burden on the appellant as the amount of ₹ 5,00,00,000/-would not be reflected in the books of the appellant and as a consequence of which the cost of land would get reduced in the books by ₹ 5 crore and profitability of the appellant increase by ₹ 5 crore. This interpretation of the AO goes to show that appellant would withdraw the cash of ₹ 5 crore from his bank and pay the same to the owners of the land. However, the AO has not been able to prove that any such amount was withdrawn in cash by the appellant. The bank statements produced before me for the relevant period do not show any cash withdrawals to the tune of ₹ 5 crores or any such higher amount. 4.10. In the remand report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000.00 4 8/7/2008 8/7/2008 Axis Bank Ltd.: Mangalore 028756 1,00,00,000.00 5 6/1/2010 18/1/2010 Axis Bank Ltd.: Mangalore 279222 1,00,00,000.00 6 4/12/2010 6/12/2010 Axis Bank Ltd.: Bangalore 652709 25,00,000.00 7 4/12/2010 6/12/2010 Axis Bank Ltd.: Bangalore 652710 25,00,000.00 8 9/2/2011 10/2/2011 Axis Bank Ltd.: Bangalore 683908 25,00,000.00 9 9/2/2011 10/2/2011 Axis Bank Ltd.: Bangalore 683909 25,00,000.00 10 9/2/2011 10/2/2011 Axis Bank Ltd.: Bangalor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Not available ABN AMRO Bank, Mangalore 102308 30,00,000.00 2 5/5/2006 Not available ABN AMRO Bank, Mangalore 102313 10,00,000.00 3 9/5/2006 Not available ABN AMR() Bank, Mangalore 102312 10,00,000.00 4 27/3/2012 30/3/2012 SBI Commercial Branch 828250 2,00,00,000.00 5 30/11/2012 3/12/2012 SBI Commercial Branch 028835 50,00,000.00 TOTAL 3,00,00,000.00 Annexure II Interest paid by Somayaji Holdings Pvt. Ltd. Sl. No. Date Bank Name Ch. No. Amount 1 31/12/2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though ₹ 22.3.5 crores_has been, paid to TVAEPL, the actual payment made for the JDA is only ₹ 22.05 crore as ₹ 30 lakhs excess paid by the appellant to TVAEPL has been shown receivable in the books of the appellant and_payable in the books of TVAEPL. 4.14. Thus, from the above analysis, it is quite clear that the total consideration paid by the appellant to and on behalf of TVAEPL (including the payment made to M/s Somayaji Holdings Pvt. Ltd. of ₹ 3 crore plus interest of ₹ 2.75 crore) is ₹ 22.05 crore. In case, if it is presumed that ₹ 5 crores were paid in cash in addition to the payments made in cheques, the cost of the land would go up to ₹ 27.05 crore. This figure is not found in any of the argeements found during the course of search or on the loose sheets as well. The contention of the AO that the total consideration was ₹ 22.3 crore which is evident from a supplementary JDA entered in 2008, is the highest figure of consideration found in the seized material or loose papers which includes the cash of ₹ 5 Crore. 4.15 From the above analysis of the agreements entered into between the parties, the loose s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove. As the maximum sale consideration shown in the series of agreements is ₹ 22.3 crore, the actual payment made of ₹ 22.05 comes close to the said figure of s.22. crore as per the agreement entered in 2008. Therefore, saying that the appellant paid ₹ 5 crore in addition to ₹ 22.05 crore which takes the total consideration to ₹ 27.05 crore would not be correct from the facts and circumstances of appellant s case supported by the evidences found during the course of search. Therefore, addition of ₹ 5 crore as payment in cash from undisclosed sources in the hands of the appellant for A.Y. 2010-11 and 2011-12 cannot be sustained. Accordingly, the addition made by the AO for the assessment year in appeal amounting to ₹ 1,55,00,000/- is hereby deleted. Ground (a) and (b) are allowed. 4. Aggrieved with the order of the CIT(A), the Revenue is in appeal before the Tribunal and placed the heavy reliance upon the assessment order. Whereas, the learned Counsel for the assessee has invited our attention to the seized materials and the entries found therein and the order of the CIT(A) in which he has made a detailed analysis with regard to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade at 22.05 crores with regard to which CIT(A) has observed that this figure comes closer to the figure shown in the seized material at ₹ 22.3 Crores. 6. During the course of hearing, the learned DR could not explain as to how the entries in seized material can be taken into account for making an addition on account of cash payment of ₹ 5 Crores to the seller in the light of the fact that the entries found in the seized material do not co-relate with the payments recorded in the books of accounts. 7. We have carefully examined the orders of CIT(A) and we find that CIT(A) has made detailed analysis of the entries found in the seized material and the entries recorded in the books of accounts and he has rightly concluded where the entries with regard to payment through cheque do not co-relate with the entries recorded in the books of accounts, no cognizance of the entries recorded with regard to the entries relating to cash payment in the seized material can be taken. We therefore are of the view that CIT(A) has rightly ajudicated the issue. No defect has been pointed out by the learned DR. We therefore confirm the order of the CIT(A) deleting the additions in both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that the appellant did not pay the interest to TVAEPL and therefore, requested the AO not to make an addition on the interest. The AO overruled the submissions of the 9pliellant stating that appellant is following mercantile system of accounting and presumed that the same has been paid in cash as the payment of interest was not recorded in the books of accounts. 4.20. While making this addition, the AO has relied upon the loose sheet at page no.17 of the assessment order which is same as loose sheet on page 4 of the assessment order. Page no 4 of the assessment order contains a loose sheet in which certain cheque as well as cash transactions are stated. The cheque transactions are available on the bank statements. The authenticity of the loose papers can be verified by comparing the cheque transactions written thereon with the bank statements. On verification of the loose sheets, it is found that the data on the said loose sheet do not match with the data in the bank statements. Thus when the data of cheque transactions is not matching with bank statements, the authenticity of cash transactions mentioned on the loose sheet becomes doubtful. I have already held in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in undisclosed assets etc cannot be considered as conclusive evidence for making addition. Such loose sheets need to be corroborated with independent evidence. 4.24. In view of the above, I hold that the working of the interest done on the loose sheet was merely an estimate as claimed by the Director of the appellant. As no other evidence is available on record to prove that the interest worked on the loose sheet was actually paid in cash, the addition made by the AO totally relying upon the loose sheet cannot be sustained. Therefore, the addition of ₹ 1,09,05,000/- made u/s. 69C of the I.T. Act stands deleted. The second issue of ground (a) and (b) stands allowed. 10. During the course of hearing, the learned DR could not point out the defects in the order of the CIT(A). We, however, carefully examined the same and we find that CIT(A) has deleted the addition on account of interest paid outside the books of accounts and we find that the addition was deleted having noted that the loose sheets on the basis of which inference was drawn by the AO for interest on delayed payments itself is not reliable piece of evidence and the entries found with regard to the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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