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Income Tax Officer (Central) Versus Sri Venkateshwara Builders & Developers

2016 (5) TMI 877 - ITAT MUMBAI

Additions made on the basis of papers found in the course of search - Held that:- The finding of the learned CIT(A) that the additions of ₹ 54,63,230/- for A.Y. 2006-07 and ₹ 9,17,200/- for A.Y. 2007- 08, in the case of hand are factually unsustainable since the said scored out entries on the right side of the diary are not in the handwriting of Shri Narendra Jain (partner of the appellant firm) who has disowned knowledge of their context and that they were recorded by Shri Kartik, a .....

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ing that the additions of ₹ 54,63,230/- in A.Y. 2006-07 and ₹ 9,17,230/- in A.Y. 2007-08 are unwarranted and unjustified

Allowance of telescopic benefit - Held that:- As find from the record that the learned CIT(A) after factually examining the claims of the assessee, and the findings of the AO has correctly upheld the AO’s action in treating the proportionate sale proceeds of ₹ 36,81,818/-, including ₹ 26.40 lakhs said to have been received from Shri Nazar, as .....

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to controvert the above findings of the learned CIT(A), and with which we concur. In this factual matrix of the case, as discussed above, we find no reason to interfere with or deviate from the factual findings recorded by the learned CIT(A) and therefore uphold his order allowing telescoping of ₹ 26.40 lakhs in this year on account of income of ₹ 26.40 lakhs admitted by the assessee in A.Y. 2007-08 on account of sale consideration received from Shri Nazar. - ITA Nos. 1720 & 1721/Mu .....

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facts of the case, briefly, are as under: - 2.1 A search and seizure action under section 132 of the Income Tax Act, 1961 (in short 'the Act') was carried out at the premises of the Venkatesh Group on 21.02.2007. The assessee firm is in the business of civil construction. Subsequently, notices under section 153A/148 of the Act were issued on 04.11.2008 and served on the assessee calling for returns of income to be filed for the concerned years. For A.Y. 2006-07 the assessee filed the ret .....

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ed as filed in response to the said notice under section 148 of the Act. The assessment was subsequently completed under section 143(3) r.w.s. 147 of the Act vide order dated 31.12.2008 wherein the income of the assessee was determined at ₹ 28,53,431/-. 2.2 Aggrieved by the orders of assessment for assessment years 2006-07 and 2007-08 dated 31.12.2008, the assessee preferred appeals before the CIT(A)-1, Thane. The learned CIT(A) disposed off both the appeals for assessment years 2006-07 an .....

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erred in allowing relief of R.s.54,63,230/- to the assessee. 02. On the facts & circumstances of the case the Ld. CIT(A)-I, Thane failed to appreciate the fact that the entries in the diary which undisputedly belong to Shri Narendra Jain, partner and was be utilized for recording sale transactions of land at Kellambakkam cannot represents any unreal or fictitious transactions but are real monetary transactions. 03. On the facts & circumstances of the case the Ld. CIT(A)-I, Thane failed .....

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the case the Ld. CIT(A)-I, Thane erred in directing to allow telescopic benefit to the extent of ₹ 26.40 Lacs in A.Y. 2007-2008, as this will reduce income of A.Y. 2007-2008 below returned income which is contrary to the provisions of law. 06. On the facts & circumstances of the case the Ld. CIT(A)-I, Thane erred in directing for allowing telescopic benefit of ₹ 26.40 Lacs in A.Y. 2007-2008 without bringing any evidence on record. 07. The Appellant craves leave to add, after dele .....

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d for recording sale transactions of land at Kellambakkam cannot represents any unreal or fictitious transactions but are real monetary transactions. 03. On the facts & circumstances of the case the Ld. CIT(A)-I, Thane failed to appreciate the fact that Shri Narendra Jain, partner had admitted to striking out the three entries himself, thereby confirming that he was well aware about the transactions contained therein. 04. On the facts & circumstances of the case the Ld. CIT(A)-I, Thane f .....

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ground raised by Revenue on this issue (supra), the Revenue assails the impugned orders of the learned CIT(A) in deleting the additions on account of cash receipts on sale of Kellambakkam land of ₹ 54,63,230/- for A.Y. 2006-07 and ₹ 9,17,200/- for A.Y. 2007-08. It is contended that the learned CIT(A) failed to appreciate the fact that the entries in the diary which undisputedly belonged to Shri Narendra Jain, partner in the assessee firm, was utilized for recording sale transactions .....

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ontained therein. The learned D.R. for Revenue was heard and placed strong reliance on the grounds raised and supported the findings of the AO in making the aforesaid additions in respect of undisclosed cash receipts of ₹ 54,63,230/- and ₹ 9,17,200/- on sale of Kellambakkam land in assessment years 2006-07 and 2007-08 respectively. 6.2 Per contra, the learned A.R. for the assessee supported the findings of the learned CIT(A) in the impugned orders deleting the additions of ₹ 54 .....

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were in the handwriting of their site engineer, Mr. Kartik, the details of which they are not aware and which were cancelled out, could not be made in the assessee s hands as has been rightly held by the learned CIT(A) in the impugned orders. In support of the proposition that additions made on the basis of loose sheets/papers found during search without bringing out any corroborative evidence cannot be sustained, the learned A.R. for the assessee placed reliance on the decisions of the ITAT Del .....

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tain entries based on which the AO made the impugned additions of ₹ 54,63,230/- for A.Y. 2006-07 and ₹ 9,17,200/- for A.Y. 2007-08. It is seen that in the context of the said seized diary, that a statement was recorded from Shri Narendra Jain, relevant portion of which from Q. 11 to Q.20 is extracted in the impugned order. The AO on an appreciation of the entries in the seized diary was of the view that the entries represented income of the assessee and issued a show cause notice cal .....

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ferences drawn by the AO on the entries of the seized diary were erroneous as the relevant entries on which the aforesaid additions were made, were not in the handwriting of the assessee, who denied knowledge of their context, but in the handwriting of the assessee s former employee Shri Kartik (site supervisor) who has not been examined and also since the said entries in the diary had been stuck off. 6.3.2 An appreciation of the facts on record reveal that the additions made to the assessee s i .....

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y were written by a former employee, Shri Karthik (site supervisor) and he denied any knowledge of the context of their recording. We find that the AO has rejected the assessee s explanation and concluded that these said scored out entries on the right side of the diary were of Shri Jain and accordingly brought the same to tax in the assessee s hands, i.e. ₹ 54,63,230/- in A.Y. 2006-07 and ₹ 9,17,200/- in A.Y. 2007-08, without making any efforts whatsoever to examine the said Sri Kar .....

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ble, as has been held by the various Benches of the Tribunal, inter alia, of the ITAT, Delhi Bench in the case of S.K. Gupta (supra) and of ITAT, Pune Bench in the case of Prabhat Chandra S. Jain (supra). 6.3.3 In these facts and circumstances of the case, as discussed above, we are of the considered opinion that the finding of the learned CIT(A) that the additions of ₹ 54,63,230/- for A.Y. 2006-07 and ₹ 9,17,200/- for A.Y. 2007- 08, in the case of hand are factually unsustainable si .....

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f the proposition that additions made on the basis of papers found in the course of search without bringing any corroborative evidence is not factually sustainable, we uphold the order of the learned CIT(A) in holding that the additions of ₹ 54,63,230/- in A.Y. 2006-07 and ₹ 9,17,230/- in A.Y. 2007-08 are unwarranted and unjustified. We hold as direct accordingly. Consequently, grounds 1 to 4 of Revenue appeal for A.Y. 2006-07 and grounds 1 to 4 in A.Y. 2007-08 are dismissed. 7. Grou .....

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d A.R. for the assessee in support of the impugned order of the learned CIT(A) on this issue. On an appreciation of the facts on record, it is seen that in the course of assessment proceedings the AO noticed that 18 plots had been sold by Shri Narendra Jain during the year under consideration. On being required by the AO, the assessee furnished details thereof, including the names and addresses of persons to whom plots had been sold and details of amounts received with cheque numbers. Shri Naren .....

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s to Nazar for a total consideration of ₹ 44 lakhs, out of which ₹ 5.70 lakhs was paid by Shri Nazar to the assessee and the balance ₹ 38,96,828/- was payable to assessee. Shri Narendra Jain, however, stated that ₹ 26.40 lakhs was actually received by him from Shri Nazar which was credited in the books of account of the firm on 06.04.2006. In this context, the AO recorded the statement of Shri Narendra Jain, partner in the assessee firm on 26.12.2008. On the basis of the .....

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zar sold plots for a total sum of ₹ 45 lakhs out of which ₹ 5.70 lakhs was paid to the assessee in October, 2007 and that the balance remained payable to the assessee. After affording the assessee an opportunity to cross examine Shri Nazar at 2.00 p.m. at the office of ADIT (Inv.), Chennai on 31.12.2008, the AO rejected the explanation put forth by the assessee to the show cause notice and treated the entire sum of ₹ 36,81,818/- as unexplained cash credit under section 68 of th .....

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ofit and loss account of the assessee for the year ending 31.03.2007, it constituted income of the assessee for A.Y. 2007-08 and therefore the AO ought to have deducted this amount of ₹ 26.40 lakhs while making the addition of ₹ 36,81,818/- for A.Y. 2006-07, as the same income which was offered to tax in A.Y. 2007- 08, cannot be added once again in the assessee s income for A.Y. 2006-07, since this would amount to double taxation of the same income in two different assessment years. .....

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