2021 (2) TMI 1209 - AT - Income Tax

Assessment u/s 153A - Disallowance u/s. 40A(3) - AO found during assessment proceedings u/s. 153A that the appellant made cash payments to some sellers for purchase of land - HELD THAT:- Respectfully following the judgment in the case of Gurdas Garg [2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT] and Tirupati Construction [2016 (9) TMI 436 - ITAT INDORE] hold that having regard to business expediency, the payment in cash for purchase of land through registered deed was allowable. Thus, considering the facts and the circumstances of the case, the expenditure was allowable as Learned AO could not have questioned the allowability of expenditure without any incriminating document in the assessment u/s. 153A; the payment was covered under Rule 6DD(g); and that the payment was a genuine expenditure and was made under business expediency. The order of the Ld. CIT(A) is therefore sustained on this issue. Thus Ground No.1 of Revenue’s Appeal for Assessment Year 2008-09 is dismissed.

Addition on ‘on-money’ payment - In absence of any incriminating material found during the course of search, and further in absence of any direct or corroborative material even during the assessment, except for the statement of son, who was not a party to the transaction; and whose statement has no evidentiary value for this transaction; and further the fact that cross-examination was not granted; the addition has no legs to stand. The Ld. CIT(A) was justified in deleting the addition .

Deduction u/s. 80IB(10) - As the issue of deduction u/s.80IB(10) of the Act, which has already been settled earlier by this Tribunal for various preceeding Assessment Years in the case of assessee; and that no incriminating material was found in the case of the assessee, claim of deduction u/s.80IB(10) of the Act cannot be denied in present proceedings u/s. 153A r/w. Section 143(3).

Disallowance u/s 14A - HELD THAT:- It is an established fact in the instant case that no interest disallowance u/s.14A of the Act is called for in the years under dispute before us as the assessee had sufficient interest free funds in the form of Share Capital and accumulated Reserve and Surplus to cover the investment in equity shares. However as regards the disallowance as per limb (iii) of Rule 8D of IT Rules, we direct the Assessing officer to sustain the disallowance to the extent of dividend income earned during the year or 0.5% of average investment in equity shares at the end of each assessment year in question before us, whichever is less.

Addition based on loose paper found during the course of search - CIT-A deleted the addition - HELD THAT:- Additions made on the basis of torn papers and loose sheets cannot be sustained as same do not indicate that any transaction ever took place and does not contain any information in relation to the nature and party to the transaction in question - See V. S K Gupta Vs. DCIT[1998 (2) TMI 164 - ITAT DELHI-C] - thus the alleged document is dumb in nature and no nexus is established by the ld AO find no reason to interfere in the finding of Ld.CIT(A) which needs to be confirmed.

Addition in respect of LPS A-13 relating to “on-money” in respect of 21 registries found from the office assessee-company and 6 registries found from the site office of Aakriti Aqua City - CIT-A deleted the addition - HELD THAT:- The fact that the amount was deposited in the bank statement of the sellers is unproved by the Ld AO. If the bank statements as alleged by the ld AO were there, why the same were not brought on record; why a copy of same was not provided to assessee; or why the same were not even brought on record in the Department’s paper book before us. We have gone through the statement of Shri Laxmi Narayan also. It seems that he gave the statement about on-money in confusion, as another land was purchased for a consideration of ₹ 6,48,000/-, the same amount which is alleged to have been paid as on-money. Further, in respect of Smt. Ayodhya Patidar, Smt. Krishna Patidar and other, it is unknown as to why statement of sellers were not recorded, but a statement of third person, who was not a party to the trasaction was recorded. Infact Thakur Prasad Patidar made different statements on different occasions. In his first statement, at PB 362 in question 6 he stated that he was not aware of the consideration. In his second statement, he stated at PB 367 question 11 that the consideration was ₹ 67 lakhs, thus there was no on-money. In his third statement, he stated that the consideration was ₹ 85 lakhs and thus there was on-money of ₹ 17 lakhs. Since his statements changed now and then hence his tesdtimony did not inspite confidence. Interestingly, Ld AO added the difference between the transaction value and stamp value i.e. ₹ 104 lakhs less ₹ 67 lakhs. Further in respect of Shri Arjun Patidar he denied on-money. The addition is merely based on a guess work of the ld AO that the buyer “would have paid” on-money.

Considering the entirety of the facts and detailed finding of fact by Ld.CIT(A) in light of settled judicial precedence, we find no infirmity in the finding of Ld.CIT(A) and thus addition made by the Ld.AO cannot sustain.

Addition on the basis of valuation report given by Departmental Valuation Office - CIT-A deleted the addition - HELD THAT:- We respectfully following the judgment of Khushal Chand Nirmal Kumar [2003 (4) TMI 61 - MADHYA PRADESH HIGH COURT] AND Nishi Mehra [2015 (3) TMI 156 - DELHI HIGH COURT] and also considering the facts of the case that there is a huge difference in Valuation by the Registered Valuer and that of the DVO, both being appointed by the department, the addition after giving deduction for self-supervision, self-procurement of materials and the deduction for rate difference in PWD and DPAR rates and that no incriminating material was found during the course of search to show any unaccounted expenditure, find no reason to interfere in the finding of Ld. CIT(A) and thus dismiss Revenue’s Ground.

Unaccounted receipts - HELD THAT:- CIT(DR) could not point out any evidence to prove that any amount was received in cash from the customer. The amount received as per the books tallies with the amount received as per the loose paper. The addition is uncalled for. We therefore dismiss this ground of department’s appeal.

Unexplained investment - HELD THAT:- As undisputed fact that appellant has entered into an agreement with M/s. Aashirwad Sky Heights Tower Pvt. Ltd. The Ld. AO has alleged that assessee has paid sum of ₹ 21,00,000/- towards security deposit as per agreement. However, assessee has contended that all the payments were made through cheque to the tune of ₹ 4,80,00,000/- and no transaction was made in cash. Assessee has also brought to our notice that statement of Shri Mahendra Singh Namdeo was also recorded wherein, he has admitted that the all the payments were received through cheque and the balance amount is still outstanding. We find that although the agreement raises suspicion that cash payment was made by assessee company of ₹ 21,00,000; but this suspicion is not confirmed by the department by providing any evidence on record. Both the parties to the transaction denied this cash payment. In the books of M/s. Aashirvad Sky Heights Tower Pvt Ltd, this amount is not shown to have been received. On being asked, it was informed that no action was taken in the case of M/s. Aashirvad Sky Heights Tower Pvt Ltd. The addition therefore lacks merits.

Disallowance of expenditure - HELD THAT:- At the first instance, the primary evidences in support of the transactions in the form of PAN and TIN of the parties were available, bank statements, bills etc were on record and these transactions were already recorded in the books, before the search was conducted. No evidence whatsoever has ever been stated by the department to have been found out during the course of search to show that the expenditure was bogus. Secondly, Ld. AO referred to the report of the Inspector during the assessment. However, the said Inspector’s report was never brought on record. Even in the Department’s Paper Book before us, the same has not been filed. If such report is available, why the department has never brought the same on record. Similarly, the statement recorded on oath of Shri Verghese Joseph and Smt. Malti Gaur has never been brought on record. In the absence of the same, the reliance of the Department on these evidence is uncalled for - a search was conducted at the premises of the assessee. No discrepancy was found in the work done. Rather the department got the valuation done by the Registered Valuer and later by the DVO. The department on one hand contended that work done was more as disclosed in the books; but on the other hand, they are doubting the expenditure towards work done. The stand of the department is contradictory and inconsistent. We therefore in absence of any concrete evidence placed before us the Revenue authorities and also since Learned Departmental Representative being unable to disprove the evidences filed by the assessee to support of genuineness of expenditure, find no merits in the action of Ld AO making disallowance of expenditure. Thus no interference is called for in the finding of Ld.CIT(A)

Addition of unaccounted receipts under LPS 1/2 page no. 68 - addition based on loose paper found in search - HELD THAT:- We find that a document was found with the heading “AG8 Bhopal” at the residence of Shri Yashovardhan Jain. This document contained certain entries against particular dates mentioning “Cash Bhopal”. How Ld. AO alleged the same to be cash receipt could not be comprehended. Whether this represents cash receipt or payment or cash balance is also not clear. The document can at best be said to be a dumb document in absence of any enquiry by the Ld. AO. We find that once such document was found from the premises of one employee, Ld AO ought to have enquired as to the contents of the documents. Ld. AO merely choose to make his own conclusions. Going by the verison of the Ld. AO himself, it cannot be known as to cash was received from whom and for what purposes. We therefore are in full agreement with the finding of Ld CIT(A) deleting the addition holding the said document as a dumb document.

Penalty appeal u/s. 271(1)(c) and penalty appeal u/s. 271AAB(1)(c) - HELD THAT:- As basis of levying the penalty u/s. 271(1)(c) of the Act and 271AAB(1)(c) of the Act i.e. the addition already stands deleted by us as held by us in preceeding paras, there remains no legs for the impugned penalties to stand for and the same are therefore deleted