TMI Blog2016 (6) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue Addition on account of payment made to Sh. Jagdeep Singh from undisclosed sources - assessee contended that it was prevented by sufficient cause from producing the copy of statemtent of Shri Jagdeep Singh due to paucity of time since the assessment proceedings were taken up in November 2009 and the records were not traceable, thus the assessee requested the C IT(A) to admit the statement of Shri Jagdeep Singh recorded u/s 131 of the Act as an additional evidence - Held that:- Revenue's appeal is without any merit and deserves to be rejected. There was no violation of Rule 46A of the I.T Rules, by the C IT(A). According to Ld. C IT(A), the assessee was prevented by sufficient cause from producing the statement of Shri Jagdeep Singh, recorded u/s 131 of the Act before the Assessing officer. At the same time, the C IT(A) has afforded an opportunity of being heard to the Assessing officer. The submissions together with the additional evidence submitted by the assessee were sent to the Assessing officer by CIT(A) for comments and after receiving the comments of the Assessing officer, the CITa has adjudicated the issue in accordance with law. CIT(A) has correctly observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO in the assessment order that the expenses were not found recorded in the books of accounts. 3. Briefly stated the facts of the case are that assessee relates to Shri N.K. Shamra Group of cases, Zirakpur. A search and seizure operation u/s 132 of the Income-tax Act, 1961 (in short 'the Act') Act was conducted on 16.10.2007. Notice u/s 153A of the was issued to the assessee on 6.6.2008. Subsequentl y, statutory notices were also issued to the assessee which were served upon the assessee. During the course of search at the residential premises of the directors of the assessee company, documents numbering 96 97 of Annexure A-1 dated 18.11.2005 containing details of purchases of jewellery set of ₹ 1,34,000/- (weight 158.880 gms) were siezed. The bill No. 3311 dated 18.11.2005 was issued by the Talwar Sons, jeweller SCT 14-015, Sector 22-D, Chandigarh in the name of M/s N.K. Enterprises (P) Ltd Village Lohgarh, Zirakpur. Similarly documents No. 95 of Annexure A-1 dated 18.11.2005 containing details for purchases of five diamond rings of ₹ 1700/- was seized. The Bill No. 823 dated 18.11.2005 was issued by M/s Talwer Sons, jeweller in the name of M/s N.K. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flow statement. I have already held in the case of the individual in this group of cases that the cash flow statement prepared by the appellant is based upon the bank deposits and withdrawals as well as various real estate transactions of purchases/sales/expenses and therefore could not be rejected on the ground that the same was an afterthought or created afresh. The said cash flow statement is reflective of the events which are cross verifiable in terms of bank withdrawals/deposits an purchases/sales of immovable properties in the form of register deeds, The stance of the Assessing Officer that the same is not verifiable at this stage is hollow and devoid of any logic. , The purchase of jewellery which obviously should normally be in the hands of individual stands recorded in the personal cash book of Sh. N.K. Sharma and therefore no separate addition in the hands of company which has similar name could be made. The addition made is therefore directed to be deleted. 5. We have heard the rival submissions. From the above findings of the CIT(A), it is clear that jewellery in dispute was found recorded in the perosnal cash book of Shri N.K. Sharma and therefore, the Ld. C IT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and genuineness of the additional evidence admitted by the Ld. CIT(A) though 7. Ground No. 2 of the appeal relates to deletion of addition of ₹ 1 crore made by the Assessing officer on account of payment made to Shri Jagdeep Singh form undisclosed sources. Vide ground No.3 of the appeal the Revenue has also challenged the action of the CIT(A) in deleting the addition by admitting additional evidence at the appellate stage. We will dispose off both the grounds of appeal, together in succeeding paragraphs. 8. The facts relating to this issue are that the Assessing officer made the addition of ₹ 1 crore on account of alleged payment to one Shri Jagdeep Singh by Shri Yadwinder Sharma on behalf of the assessee company. The Assessing officer relied on the affidavit of Shri Yadwinder Sharma filed on 27.3.2009 in the Court of Additional Civil Judge (Senior Division) Dera Bassi in the case of Sh Jagdeep Singh S/o Sh. Narindaer Singh Vs. Sh. Jagdish Arora and others. The affidavit submitted by Shri Yadwinder Sharma reads as under:- I, Yadwinder Sharma, aged about 35 years s/o Sh. Vishwanath Sharma R/o village Lohgarh, N.A.C. Zirakpur, Tehsil Dera Bassi, Distt. S.A.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Ex. P-3 and 4 and I also identify the signatures of my brother N.K Sharma the other director in the company on Ex. P-3 and P4 and Ex. P-3 and P4 are correct as per Ihe original filed before the income tax department Ex. P-5 is income tax return and Ex. P-6 is also income tax return filed on line by our aforesaid company which is also correct as per the original. Ex.P-7 is the entry of cash book for the month of April 2005 which is also correct as per the original. On the basis of above affidavit of Shri Yadwinder Sharma, the Assessing officer took the view that no transaction by cheque was made between Sh. Jagdeep Singh and Yadwinder Sharma. He further observed that from paras 6 7 of the affidavit, it is clear that ₹ 1 crore was paid to Shri Jagdeep Singh in cash in the last week of April 2005 and returned in cash in first week of May 2005. The Assessing officer further noted that Shri Yadwinder Sharma also enclosed with the affidavit a copy of cash book for 9.4.2005 showing cash in hand of ₹ 92,95,344/- to prove the availability of cash. According to the Assessing officer, if Shri Yadwinder Sharma had given money through cheque then he would have enclosed copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support the case of Sh. Jagdeep Singh and no actual either in cash or in cheque had been made at all. Further it is pertinent to appreciate that the Assessing Officer during the course of assessment proceedings had recorded the statement of Sh. Jagdeep Singh with reference to this issue wherein Sh. Jagdeep Singh clearly stated that no amount was actually borrowed from the appellate company as the entire deal for the purchase of land when into civil dispute before the court. The specific question and answer on the issue as recorded by the Assessing Officer u/s 131 is reproduced as under:- Q.6. A complaint has been received against you from Sh. Jagdish Arora in which he has stated that you have received a sum of ₹ 1 crore cash in month of April, 2005 from Sh. Yadwinder Sharma, which was returned by you in the month of May, 2005, what do you want to say in this regard? Ans. Yes I had received a cheque of ₹ 1 crore from Mr. Yadwinder Sharma bearing cheque No. 133950 drawn on HDFC Bank, Zirakpur dated 25/4/2005 from M/s N.K. Sharma Enterprises (P) Ltd. Actually Sh. N.K. Sharma is my very close friend and we have the family relations with each other. The cheque as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing officer. The submissions together with the additional evidence submitted by the assessee were sent to the Assessing officer by CIT(A) for comments and after receiving the comments of the Assessing officer, the CITa has adjudicated the issue in accordance with law. Accordingly, ground No.3 of the appeal is rejected. 11. As regards ground No.2 of the appeal, the Ld. C IT(A) has correctly observed that the issue whether any amount was paid on behalf of the company to Shri Jagdeep Singh has to be considered in the context of the pending civil litigation between Shri Jagdeep Singh and Shri Jagdish Arora. It is apparent from the records that Shri Jagadish Arora had filed a suit before the Additional Civil Judge, Derabassi to seek forfeiture of the amount which he had received from Shri Jagdeep Singh to the tune of ₹ 50 lakhs in respect of a deal they had entered into for purchase of land worth ₹ 3.75 crores. The contention of the assessee was that Shri Jagdeep Singh in his attempt to satisfy the Court regarding his capability of having sufficient resources to honour his part of the commitment in the deal to purchase the property sought the help of his family f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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