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TMI Blog2017 (4) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... sh. Most of the individuals are Faculty Members who took teaching assignments for students enrolled by M/sBright Professional Pvt. Ltd.. Sh. Vikas Kapoor, the assessee is one of the Faculty Members associated with M/sBright Group. AO further observed that M/ Bright Professionals Pvt. Ltd. have also paid cash to the assessee being one of the faculty member during the F.Y. 2007-08 (A.Y. 2008-09) of Rs. 20,70,000/-. On the basis of report forwarded by the Investigation Wing of the Deptt. about the payment of cash to the appellant Of Rs. 20,70,000/- the Assessing Officer recorded reasons u/s 147 of the -I.T. Act, and thereafter the notice was issued u/s 148 to the assessee on 26.2.2008 and in response thereto the Assessee filed the reply stating that the return of income filed u/s.139(1) of the I.T. Act, 1961 may be treated as the return. Accordingly, notices u/s. 143(2/142(1) of the I.T. Act, 1961 alongwith questionnaire dated 11.9.2015, were issued to the assesse. Information as called for was supplied and the case was discussed. To verify the correctness of the claim of payment made to Sh. Vikas Kapoor by M/sBright Professional Pvt. Ltd. and the cash receipts of the assessee as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2008-09; copy of letter dated 1.9.2016 sent to the appellant by the CIT(A)-23, New Delhi seeking certain clarification; copy of letter dated 31.12.2013 sent by the CIT, Delhi (Central-I), New Delhi to Income Tax Settlement Commission, thereby furnishing Rule 9 report in the case of M/sBright Professional P Ltd; copy of ITR filed by the assessee for the assessment year 2008-09; copy of computation of income, income and expenditure a/c, balance sheet filed by the assessee forming part of his ITR for the assessment year 2008-09; copy of the statement recorded by Syed Rashid Masood on 8.1.2016 one of the Director of M/s Bright Professional Pvt. Ltd., in the case of Sh. Vikas Kapoor; copy of statement recorded by Sh. Sanjeev Kumar Gupta on 8.1.2016 one of the Director of M/sBright Professional Pvt. Ltd., in the case of Sh. Vikas Kapoor; Copy of examination of proceedings u/s. 131 of the Income Tax Act, 1961, of sh. Syed Rashid Masood and Sh. Sanjeev Kumar Gupta in the case of Sh. Vikas Kapoor and Copy of statement recorded u/s. 132(4) of the Income Tax Act on 25.11.2010 of Sh. Rashid Masood one of the Director of M/s Bright Professional Pvt. Ltd. Ld. Counsel of the assessee al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, the concerned Assessing Officer was further apprised the following information I documents, available with him: i. That the addition made on the identical reasons recorded in the preceding year i.e. AY. 2007*08 have already been deleted by the Ld. CIT(A)-23 after taking into consideration all the facts explained, documents produced, filed and placed upon records. i. That since the addition made in the preceding year have already been considered and deleted as such by the Ld. CIT(A), therefore, no further additions if any be required to be made in the hands of the appellant in the AY. 2008-09 in terms of Rule of Consistency required to be followed on the identical issue, as has been held by the various Courts even by the Apex Court. iii. That the Assessing Officer was further apprised about the Statement of Sh. Rashid Masood, one of the Director of MIs Bright Professionals Pvt Ltd. recorded on 25.11.2010 uls 132(4) of the Income Tax Act 1961. Wherein he explained the names of their faculty members in which the name of the appellant is not appearing. It further appears in the said Statement in response to the Questions No. 14,15,16,17,19,20,21,22,23,24 & 25, put to him, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny proper records with us. No TOS is deducted, no regular books of accounts were maintained reflecting therein the said receipts / payments thereof. That the Assessing Officer without taking into consideration all the information furnished, documents produced and available with him, make the further addition of Rs. 13,63,080/- in the hands of the appellant while finalizing the assessment proceedings. That the appellant being aggrieved filed an appeal before the Ld. CIT(A), who has upheld the additions made by the Assessing Officer on the ground that since the unaccounted receipts and expenses have been taken into consideration by the ITSC u/s 245C(1) of the Act, for the Assessment Year 2004-05 to 2010-11 in the case of M/s Bright Professionals Pvt. Ltd., therefore, opined while passing the appellate order that since the results declared in the Rule-9 report filed by the Deptt. and adjudicated u/s 2450(4) of the Act, by the ITSC, therefore, no interference if any is required while adjudicating the appeal of the appellant filed for the Assessment Year 2008-09. That now the following question of law is arises, which needs adjudication by this Hon'ble Tribunal: 1. Whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of proper books of accounts by the appellant for the Assessment Year 2008-09. As such, the order passed is required to be quashed or alternatively the additions made of Rs. 1363080/- in the income of the appellant is deserves to be deleted and may please be deleted accordingly. All the documents relied upon by us have already been provided and placed upon records in our Paper-Book containing from Page No.1 to Page No. 226. That in support of our contention, we are relying upon the following judgments:- Details of Judgments relied upon on Borrowed Information: It has been held in the following cases, that the provision invoked by the Assessing Officer without having of his own satisfaction on the material received / possessed, the provision contained U/S 147 cannot be invoked on the borrowed information from the Investigation Wing of the Deptt. 1. Pr. Commissioner of Income Tax Vs. G.&G. Pharma India Ltd. reported as ITA 545/2015, pronounced on 08.10.2015 by the Hon'ble ITAT, New Delhi 2. ACIT Vs. Dhariya Construction Co. (2010) 328ITR 515 S.C. 3. CITv. India Terminal Connector System-Ltd. ITA No. 6430f2011. 4. Phool Chand Bajrang Lal V. Income-tax Officer (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .C Saldanna & Ors. AIR (1980) SC 326. 39. State ofGujarat Vs. Shantilal Mangaldas, AIR (1969) SCN 634. 40. Sheo Narain Jaiswal & Ors. Vs.ITO, 176ITR 35 (Pat.) 41. Anirudh Sinhji Karan Sinhji Jadeja Vs. State ofGujarat, (1995) 5 SCC 302 42. Smt. Shakuntala Devi Vs. ITO Reported as ITA 375/Del/2011 43. Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District 1, Calcutta & Anr., (1961) 41 ITR 191 (SC) 44. CIT v. Shri Ttrath Ram Ahuja (HUF), (2008) 306ITR 173 (DEL) 45. In P. C Gulati, Voluntary Liquidator, Panipat Electric Supply Co. Ltd. v. CIT, Delhi, (1972) 86ITR 501 (DEL), 46. Harish Chandra & Ors. v. CIT, (1985) 154 ITR 478 (DEL) Topandas Kundanmal v. CIT, (1978) 114 ITR 237 (GUJ) were also quoted with approval. 47: CIT, West Bengal II v. Hindustan Housing & Land Development Trust Limited, (1986) 161 ITR 524 (SC). 48. New Friends Co-operative House Building Society Ltd. v. CIT & Anr., (2010) 327 ITR 39 (P&H) 49.ITO, Calcutta & Ors. v. Lakhmani Mewal Das, (1972) 103 ITR 437 (SC) 50. Chanchal Kumar Chatterjee v. Income Tax Officer, "B" Ward, Central Salaries Circle, Calcutta & Ors., (1972) 93 ITR 130 (CAL). 51. Govinda Choudhury & Sons v. Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, (1986) 161 ITR 524 (SC) 15. New Friends Co-operative House Building Society Ltd. v. CIT & Anr., (2010) 327 ITR 39 (P&H) 16. ITO, Calcutta & Ors. v. Lakhmani Mewal Das, (1972) 103 ITR 437 (SC) 17. Chanchal Kumar Chatterjee v. Income Tax Officer, "B" Ward, Central Salaries Circle, Calcutta & Ors., (1972) 93 ITR 130 (CAL) . 18. Govinda Choudhury & Sons v. Income Tax Officer, Ward A, Berhampur & Ors., (1975) 109 ITR 370 (OR) Details of Judgments relied upon on Rule of Consistency: That in the under noted cases, it has been held, that the rule of consistency has to be followed in the subsequent years on the basis of any finding / conclusion drawn on the identical facts in the preceding years: 1. CIT Vs. Neo Polypack (P) Ltd. 245ITR 492 (Del) 2. Birumal Gaurishankar Jain & Co. Vs. Settlement Commission 195 ITR 792 (SB) Supreme Court of India. 3. Radhasoami Satsang Vs. CIT 193 ITR 321 (SC) Details of Judgments relied upon on Un-corroborated / dumped documents having possessed by the Deptt. That it has been held in the under noted cases, without having any corroborating evidence / material, any of the figures mentioned / appearing on the unsigned loose papers seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-09) of Rs. 20,70,000/-. On the basis of report forwarded by the Investigation Wing of the Deptt. about the payment of cash to the appellant Of Rs. 20,70,000/- the Assessing Officer recorded reasons u/s 147 of the I.T. Act and thereafter the notice was issued u/s. 148 of the I.T. Act and reasons recorded were objected vide letter dated 20.7.2015 and AO rejecting the same, completed the assessment at Rs. 15,21,040/- u/s. 143(3) r.w.s. 147 of the I.T. Act, 1961 vide his order dated 11.2.2016 and made the addition of Rs. 13,63,080/- on account of undisclosed income and completed the assessment, which Ld. CIT(A) in Appeal has affirmed. We further find that AO was very much aware that likewise to this year i.e. 2008-09, there was also an information available with him relating to the Financial Year 2006-07 i.e. AY 2007-08, that the assessee has received over and above from his professional charges of Rs. 4,44,000/- from M/s Bright Professionals Pvt. Ltd., which he has failed to disclosed in his books of accounts for the said year, as such on the basis of identical reasons recorded in the preceding year i.e. AY. 2007-08, the additions were made in the hands of the assessee of Rs. 4,44, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its payment thereof to their faculty members and also failed to furnish any of the documentary evidence with regard to the expenditure incurred for the purpose of running their said Institute. iv. That during the course of assessment proceedings, the statement of Sh. Syed Rashid Masood, one of the Director was also recorded u/s 131 of the Income Tax Act 1961, on 08.01.2016. During the course of his Statement the Director admitted: a. That they have made cash payment to the appellant of Rs. 13,63,080/- during the A.Y. 2008-09 and not Rs. 20,70,000/- which were taken to be the concealed income by the Assessing Officer at the time of recording the reasons. b. He has further admitted that the said payments claimed to be made of Rs. 13,63,080/- appears in their rough day-book maintained by us. He further admitted that we are not having any records about the fee receipts from students and consequently professional charges paid to our faculty members. The same facts were confirmed by the other Director Sh. Sanjeev Kumar Gupta of M/s Bright Professionals Pvt. Ltd. in his statement recorded on 08.01.2016 uls 131 of the Act. c. That in their cross-examination on 08.01.2016, both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of search a computer printout page 5 of Annexure I was found and seized from the residential premises of the assessee. The seized paper has been shown is a part of the assessment order. On perusal of the same the AO held that Rs. 96 lacs has been given by Samta Singh to Sudhiksha Singh in cash which has not been recorded in the books of the assessee. the AO has made an addition of Rs. 96 lacs in the hands of the assessee on the basis of the document seized from the premises of the assessee. We find that the seized document does not have any signature of the assessee. However, it is a computer print which has not been used / maintained / operated by the assessee. On perusing the said seized document, it is clear that certain nothings have been made which cannot be said to be the actual transaction. This is only an unsigned /undated loose paper with the Department to substantiate its stand. No cheque transaction has taken place between the Sudhiksha Singh and the Assessee during the financial year 2008-09. The addition has been made merely on the basis of this loose paper without any corroborating evidence and on conjecture and surmises. Therefore, the presumption u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f VT. 40. Turning to the case on hand, the document recovered from the file in the computer of Mr. Awasthi, forms the basis of the addition made by the AO, which was further reduced by the CIT (A). This was in the form of a computer print out of three sheets which were unsigned and undated. The first sheet was titled 'Cash- in-flow detail for the revenue', the next was titled 'Revenue details' and the third was titled 'Vatika Triangle, Guargaon.' The notes to the documents are indicative of their being projections. Noting (i) states that "it is presumed that the building will be completed and fully let out in the month of November 2002." Another note states "Further, the sale of the building will took place over a period of nine months." Admittedly, as on the date of the search the construction was still in progress. Flats up to the fourth floor had been sold. The view taken by the ITAT that mere fact that the print out states that the flats on second and third floor have been sold, does not necessarily mean that they were sold at the rates indicated therein is definitely a plausible view to take. 41. Considering that the document was recovered from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the Revenue. 8.2 In the case of M/s Delco India Pvt. Ltd. (ITA No. 116/2016) dated 10.2.2016 - Delhi High Court has held as under:- Section 292C of the Act, inter alia, provides that where any books of accounts or other documents are found in possession or control of any person in the course of search under Section 132 or survey under Section 133A of the Act, it may be presumed that such books or documents belong to such person. Undisputedly, such presumption is rebuttable. It is not disputed that the Assessee had clearly denied having any dealing with M/s Smridhi Sponge Limited and had also filed an affidavit to that effect. The ITAT found, as a matter of fact, that the Assessee on its part had made the necessary enquiries and also provided final accounts of M/s Smridhi Sponge Limited; confirmation from the Director of M/s Smridhi Sponge Limited; details of the bank accounts; final accounts; Director" s Report; PAN Number etc. which sufficiently discharged the burden cast on the Assessee. The ITAT also found that the Assessee had provided the necessary information for the AO to make the requisite enquiries from M/s Smridhi Limited as well as M/s Galax Ex orts Pvt. Ltd. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... channel. It was not a case of A.O. that the value shown in the sale deed is not real value of the property, because the value declared in the sale deed is the market value of the property, fixed by the state government authorities for determining stamp duty purpose. Further, there is no evidence with the A.O. to show that there is a under valuation of property and provisions of section SOC of the Act is invoked while completing the assessment. The A.O. merely acted upon the statement given by the third party which was totally denied by the assessee. It is a settled position of law that unless statement is tested under cross examination, the same cannot be considered as evidence against the assessee. The A.O. used the admission of partners of purchaser firm made u/s 13 (4) of the Act in their case against the assessee, but failed to note that admission of other parties cannot be considered as conclusive evidence against the assessee, unless there is a corroborative evidence on record, because the maker of statement can bind himself, but how he bind others from his statement without there being any further evidence on record. 12. In the present case on hand. except loose sheet fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the order passed by the CIT(A) and direct the A.O. to delete the additions made towards alleged on money for the assessment years 2007- 08 & 2008-09. 18. In the result, the appeal filed by the assessee in ITA Nos. 251 &252IVizag/2012 are allowed. 8.4 In the case of K.V Lakshmi Savitri Devi vs. ACIT (2012) 148 TTJ 157, ITAT Hyderabad Benches has held as under:- "Admittedly there was no search action in the case of the assessee. It is a loose slip containing certain entries recording the payment which was found at the premises of CRK. It does not contain either date of payment or name of the person who has made the payment. According to the Department, CRK denotes C Radha Krishna Kumar and KRK denotes K. Rajani Kumari. However, no name of the assessee was found in the louse sheet. The property was purchased from P w/c CRK for a disclosed consideration of Ps. 65 lakhs bv the assessee. The property has been registered and the sale deed was executed for a consideration of Ps. 651akhs on 21st Aug., 2006 which consideration has been accepted by the State registration authorities. Further nothing was brought on record to show that there was any invoking of s. 50C while co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. As stated earlier there is no date and name of the assessee. The allegation of the Department is that the seized material denotes the payment made by the assessee to the purchaser for purchase of the property. However, no such narration or name of the assessee was found in the seized material. The Department is not able to unearth any document or material or any corroborative material to show that the assessee herein actually paid Ps. 1651akhs for purchase of the property. The Department has not brought on record the date on which the payment was made and the source from which ii is paid and/or any details of bank account from where the cash was withdrawn. Without any of these details, the Department has taken a view that the assessee has paid Ps. 1651akhs for purchase of the property. The Department cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong cannot take place of material in support of the finding from the AO. The AO should act in a judicial manner, proceed with judicial spirit and come to a judicial conclusion. The AO is required to act fairly as a reasonable person and not arbitrarily and capriciously. The assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden. 8.5 In the case of CBI vs. VC Shukla (1998) 3 SCC 410) it has been held that the loose sheets of paper cannot be considered to be books. 8.6 In the case of CIT vs. PV Kalyansundaram (294 ITR 49) it has been observed as under:- "Notings on the loose pieces o{paper on the basis of which the initial suspicion with regard to the under valuation had been raised were vague and could not be relied upon as it appeared that the total area with respect to the sale deed and that reflected in the loose sheet was discrepant. It was also observed that as per the guidelines for registration the fair value for registration on the relevant date was Rs. 244 to Rs. 400 per Sq. ft. and the sale consideration for Rs. 850/- per sq. ft. claimed by the Revenue was unrealistic and ignored the ground situation. 8.7 In the case of CIT vs. Girish Chaudhary (2008) 296 ITR 619 (Delhi) - Delhi High Court has held as under:- "That the revenue has to prove the undisclosed income beyond doubt. Further it was held that the docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/ITJ], DATED 31-12-2015 The issue of recording of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation. 2. The Hon'ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No. 3958 of 2014 dated 12-3-2014 [2014] 43 taxmann.com 446 (SC) (available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person uls 158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under section 15 C of the Act; or (b)t in the course of the assessment proceedings under section 158BC of the Act; or (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. " 3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/ pari-materia to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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