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2016 (1) TMI 610 - ITAT PUNE

2016 (1) TMI 610 - ITAT PUNE - TMI - Unexplained cash receipts - Search action u/s.132(1) - assessment proceedings u/s.153A r.w.s 143(3) - addition on the basis of Red Executive Diary and a loose paper bundle - CIT(A) deleted the addition on the ground that the amount received from Mr. Gulab Maharu Badgujar & Mrs. Badgujar are the liability of the firm and it is not the income of the assessee - Held that:- Answer to the relevant queries raised by the AO establish the existence of a partnership f .....

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basis. There is no estoppel against statute. What is otherwise not taxable cannot become taxable because of admission of the assessee. Thus in view of the detailed reasoning given by the Ld.CIT(A) we find no infirmity in his order deleting the addition of ₹ 19 lakhs in the hands of the assessee - Decided in favour of assessee

Addition on account of unexplained expenditure - as per AO there are certain payments as per the SMSs which were not recorded in the books of account - CI .....

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ned payment is made on 21-10-2010 and that too by the assessee. 30. So far as the other amount of ₹ 3,37,500/- is concerned the CIT(A) deleted the same on the ground that the same has been claimed to be paid to Shri Dwarka Prasad Agarwal, an employee of Suyojit Infrastructure Pvt. Ltd. for making payment to departmental labour. Since the assessee was a director of Suyojit Infrastructure Pvt. Ltd. and such entries were already recorded in the books of account of the company, therefore, addi .....

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ted 05-06-2013 of the CIT(A)-I, Nashik relating to Assessment Years 2006-07, 2007-08 & 2011-12 respectively. Since common grounds have been taken by the Revenue in all these appeals, therefore, these were heard together and are being disposed of by this common order. ITA No.1683/PN/2013 (A.Y. 2006-07) : 2. Facts of the case, in brief, are that the assessee is an individual and an Architect by profession. He also derives other income, i.e. remuneration from companies in which he is a Director .....

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ive Diary as per Annexure-8 and a loose paper bundle marked as Annexure A/7 was found from the residential premises of the assessee. As per the above documents, the assessee has received cash receipts amounting to ₹ 19,00,000/- from Mr. Gulab & Mrs. Yogita Badgujar during the relevant assessment year, the details of the said cash receipts found & seized are as under : Sr. No. Page No. Of Ann. A/7 Date Name Amount (Rs. In lacs) 1 12 03-03-2006 Mr. Gulab & Mrs. Yogita Badgujar 9. .....

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r M/s. Suyojit Baug. It was submitted that the amount of ₹ 19 lakhs is towards part payment of total consideration of ₹ 2,16,00,000/- of the agreed amount of the proposed sale of shops. It was submitted that the said amount has been shown as liability in the books of the firm. A copy of the partnership deed was also filed. 5. However, the AO did not accept the explanation offered by the assessee and treated the said amount as unexplained cash receipts and added the same to the income .....

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ional income of ₹ 2.98 crores on account of such amount received from Badgujar family from time to time out of which ₹ 19,00,000/- were received during the year under consideration. The AO accordingly made addition of ₹ 19 lakhs to the total income of the assessee. 6. Similar additions were made during A.Y. 2007-08 amounting to ₹ 2,02,00,000/- and A.Y. 2011-12 amounting to ₹ 67 lakhs. 7. Before CIT(A) it was argued that the amount of ₹ 2.98 crores was wrongly .....

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jit Baug, i.e. a partnership firm to which it relates. It was further submitted that the said amount was received by the assessee on behalf of M/s. Suyojit Baug and not in his individual capacity. 8. It was argued that a memorandum of understanding (MOU) was entered on 30-08-2006 between M/s. Suyojit Baug, a partnership firm, through its partner M/s. Suyojit Infrastructure Pvt. Ltd. as one part and M/s. Gulab Maharu Badgujar (HUF) as other part of the agreement in respect of proposed sale of Sho .....

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M/s. Suyojit Infrastructure Pvt. Ltd. and the company M/s. M/s. Suyojit Infrastructure Pvt. Ltd. in turn is the partner in the said partnership firm M/s. Suyojig Baug. The said advance received from M/s. Gulab Maharu Badgujar HUF was accounted in the books of account of M/s. Suyojit Baug, the partnership firm. It was also explained to the AO that said amount of advance received from Gulab Maharu Badgujar (HUF) during the impugned year is not an income of M/s. Suyojit Baug as well as the assessee .....

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of account of M/s. Suyojit Baug. The A.O. has erred in rejecting the contention of the appellant just on the ground that the said firm has not filed any income-tax return and the same was not registered under the Partnership Act, 1932 when the existence of the firm is not in dispute. The appellant has also placed on record the copy of agreement dated 30/08/2006 entered into with Mr. Badgujar on behalf of the appellant. The said firm is also evidenced by the Partnership Deed dated 6th September, .....

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ned amount was received from Mr. Badgujar against the proposed sale of shop Nos. L-1 & L-2 in the building namely Suyojit Baug, the construction of which was not yet started during the year under appeal is not in dispute. In such circumstances, the amount received from Mr. Badgujar is liability in the books of account of M/s. Suyojit Baug and the same cannot be treated as income by any stretch of imagination because if the said receipt of money is treated as income during the year under appe .....

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the appellant was not connected with the said transaction in his individual capacity. The heavy reliance of the A.O. on the disclosure during the statement recorded of the appellant u/s. 132(4) of the impugned receipts as income is incorrect on the face of the transaction and also when the said statement is withdrawn by the appellant by way of an affidavit. The Ld. A.R. has correctly pointed out that there is no estoppel against the statute and what is otherwise not taxable cannot become taxable .....

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ound of appeal No.1 is allowed. 10. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 19,00,000/- made by the AO on account of unexplained cash receipts. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the incriminating document in Annexure A-8 .....

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eipts. Assessee subsequently in reply to question No.6, voluntarily surrendered ₹ 2.98 Crores as additional income for the current year 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the documents found during the search at the residential premises of the assessee, on the basis of which the alleged addition has been made were in no way connected with M/s. Suyojit Baug. The moreover the linking of the name of above .....

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in the circumstances of the case and in law, the Ld.CIT(A) has failed to appreciate that the assessee has not discharged the burden of proof cast upon him with regard to unexplained cash receipts found during the course of search. 7. The appellant craves leave to add, alter, modify, delete, and amend any of the grounds, as per the circumstances of the case. 8. The appellant prays leave to adduce such further evidence to substantiate its case, as the occasion may demand. 11. The Ld. Departmental .....

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n record. Further, the assessee in his statement recorded u/s.132(4) of the I.T. Act during the course of search in reply to specific question No.37 has accepted that cash receipts had been issued and signed by him and further accepted the same as unaccounted business receipts. Subsequently, the assessee in his reply to Question No.6 had voluntarily surrendered ₹ 2.98 crores as additional income for the current year. Since the receipts are specific and not recorded in the regular books of .....

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uyojit Infrastructure Pvt. Ltd. and others he drew the attention of the Bench to the list of inventories/books etc. found/seized during the course of search, copy of which is placed at page 11 of the paper book No.2. Referring to the copy of the audited profit and loss account of Suyojit Infrastructure Ltd. dated 30-08-2008 the Ld. Counsel for the assessee drew the attention of the Bench to the Item No.7 of notes forming part of the accounts as at 31-03-2008 at Page 28 of paper book No.2 wherein .....

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153A a copy of which is placed at pages 31 to 37 of paper book No.2 the Ld. Counsel for the assessee drew the attention of the Bench to Query No.7 wherein the AO had asked regarding the MOU dated 09-07-2006. He submitted that the above documents and the questionnaire issued by the AO clearly establish the existence of the partnership firm. 13. Referring to the decision of the Ahmedabad Bench of the Tribunal in the case of DCIT Vs. M/s. Om Developers vide ITA No.314/Ahd/2012 and other connected a .....

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367 the Ld. Counsel for the assessee submitted that the Hon ble High Court in the said decision has held that there is no estoppel against statute. What is not otherwise taxable cannot become taxable because of admission of the assessee nor there can be any waiver of the right otherwise admissible to the assessee in law. The chargeability is not depending on the admission of or waiver by the assessee. Chargeability is dependent on the charging section which needs to be strictly construed. He acc .....

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the assessee. Similarly, loose paper Bundle marked as Annexure A7 was also found. The seized documents contain the cash receipts issued by the assessee to Mr. Gulab & Mrs. Yogita Badgujar amounting to ₹ 19 lakhs for the year. It was explained by the assessee that the said amount was received by him in his capacity as director of M/s. Suyojit Infrastructure Ltd. on behalf of the partnership firm M/s. Suyojit Baug as advance against sale of Shops L1 and L2 in the proposed project of Suy .....

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business receipts amounting to ₹ 2.98 crores. However, during recording of another statement of the assessee in reply to Question No.6 the assessee submitted that all the said cash receipts shown to have been received from Shri Badgujar family belongs to Suyojit group only and the assessee has offered ₹ 2.98 crores as an additional income. 3. The receipts are specific and speaking one in as much as they are reflecting complete transaction without interpretation. They are having evide .....

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e statute and what is otherwise not taxable cannot become taxable because of the admission of the assessee. We do not find any infirmity in the order of the Ld.CIT(A). From the copy of the audited accounts of Suyojit Infrastructure Ltd. which was signed by the auditors on 30- 08-2008 the name of Suyojit Baug appears under the head associate concerns in the notes forming part of the accounts as at 31-03-2008. The details of investment in the various partnership firms by the company is also appear .....

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td. has also asked the Managing Director of Suyojit Infrastructure Pvt. Ltd. regarding the MOU dated 09-07- 2006. The relevant queries raised by the AO are as under : 7. Pages 85 to 87 is a MOU dated 09-07-2006 (Stamp Paper No.06AA 6613165 between you and Shri Gulab M. Badgujar. As per this agreement you had agreed to transfer on rental basis of Shop No.G-44 to G-53, admeasuring 4,000 sq.ft. in Suyojit YEWS Compled for a sum of ₹ 1.20 crores, out of which sum of ₹ 15 Lacs was receive .....

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tered into MOU as per which Flat No.9 to 12 on 3rd floor and Flat No. 13 on 4th floor admeasuring 10,000 sq.ft. at Suyojit Baug were to be purchased from you for a sum of ₹ 2 crores, out of which you had received ₹ 25 Lacs from Shri Gulab M. Badgujar on 01-04-2007 and balance was to be paid in instalments. Please explain whether the above transaction of sale of ₹ 2 crores has been accounted in your regular books of accounts. If yes, furnish copy of relevant ledger account extra .....

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e of M/s. Om Developers (Supra) following the decision of the Hon ble Gujarat High Court in the case of CIT Vs. Motilal C.Patel Company reported in 173 ITR 666 has held that on-money can be subjected to tax when sale deed is actually executed. The amount would become income for the assessment year in which the sale transaction is completed. When the sale deeds were not executed during the year but were executed subsequent to the year in appeal the authorities below were not justified in taxing t .....

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DSP VR Employees Association 1998 (Supra) at para 17 of the order has observed as under : 17. The question of estoppel because of option exercised with eyes open to the subsequent modification cannot be sustained. What is not otherwise taxable cannot become taxable because of admission of the assessee. Nor there can be any waiver of the right otherwise admissible to the assessee in law. The chargeability is not dependent on the admission of or waiver by the assessee. Chargeability is dependent .....

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CIT(A) is therefore upheld. Accordingly, the grounds raised by the Revenue are dismissed. ITA Nos. 1684 and 1685/PN/2013 (A.Yrs. 2007-08 & 2011-12) : 21. Identical grounds have been taken by the Revenue in ITA No.1684/PN/2013 for A.Y. 2007-08 and for A.Y. 2011-12. Following the same reasoning the grounds raised by the Revenue on this issue are accordingly dismissed. 22. There is one more ground in ITA No.1685/PN/2013 for A.Y. 2011-12 wherein the Revenue has challenged the order of the CIT(A) .....

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ip Bhatt as well as ₹ 3,37,500/- to Shri Dwarka Prasad Agarwal are not accounted for by the assessee in his books of account. The submission of the assessee that the impugned transactions are recorded in the books of account of Suyojit Infrastructure Pvt. Ltd. were rejected by the AO on the ground that there was mismatch in the date of payment as per SMS and books of account of the said company. The AO accordingly made addition of ₹ 5,37,500/- to the total income of the assessee. 24. .....

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ng as under : 6.2 I have carefully considered the facts of the case, the assessment order and the rival submissions. On the basis of SMS, the A.O. held that the payment of ₹ 2,00,000/- made by the appellant on 21/08/2010, whereas the Ld A.R. contended that the said SMS was in the form of confirmation of the fact and in the nature of report. The Ld. A.O. has made the impugned addition without bringing on record the exact nature of payment and interest of the appellant particularly when it h .....

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ut who is the payee particularly when the appellant is a director in many companies and also actively involved in day to day transactions of other companies or concerns. Therefore, the A.O. is not justified in making the impugned addition without bringing on record that the impugned payment was made on 21/08/2010 and that too by the appellant and in absence of any material on record the impugned addition of ₹ 2,00,000/- made by the A.O. is unjustified and is directed to be deleted. This pa .....

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ch the appellant is a director. Therefore, the A.O. is also not justified in making the impugned addition without bringing on record that the impugned payment was made on 21/08/2010 and that too by the appellant and in the absence of any material on record the impugned addition of ₹ 3,37,500/- made by the A.O. is unjustified and is directed to be deleted. This part of the ground of appeal is allowed. To sum up the addition of ₹ 5,37,500/- is hereby deleted. This ground of appeal is a .....

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ransactions with business activity of the assessee. Therefore, the addition made by the AO being justified should be upheld and the order of the CIT(A) be reversed. 28. The Ld. Counsel for the assessee on the other hand reiterated the same arguments as made before the CIT(A). He submitted that the AO has not appreciated the fact that SMS was just for confirmation of fact and in the nature of reporting. He has erred in assuming that the date of SMS is the date of payment when no such assertion is .....

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O has also not pointed out any defect in the said account extract or agreement. It is undisputed fact that both the persons i.e. Mr. Dilip Bhatt & Mr. Dwarka Prasad Agarwal are not having any financial transactions with the assessee. Mr. Dilip Bhatt was having transaction with only M/s. Suyojit Infrastructure Pvt. Ltd and also Mr. Dwarka Prasad Agarwal is employee of M/s. Suyojit BOT. In such circumstances the A.O. is not justified in assessing the same in the hands of assessee when the asse .....

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