TMI Blog2016 (10) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of such condition shall be taken as date of contract for sale within the meaning of Circular No. 704 dated 28.04.1995 with reference to section 2(42A) and the amounts paid by the transferee till the fulfillment of such condition would remain as advance only, but not as part for sale consideration for the purpose of reckoning the capital gains. In the search proceedings, it surfaced that the assessee was in receipt of the cash component of ₹ 740.90 lacs only towards the share sale consideration , the said receipt cannot be taxed / treated separately under any other head other than ‘capital gains’. We hold that the character of the receipt does not change pursuant to the search. Infact the search proceedings had rather sanctified the nature and character of such receipt to be part of share sale consideration. Accordingly, we hold that since it is a part of the transaction pertaining to sale of the shares, the cash component of ₹ 7,40,90,000/- cannot be treated separately and has to be treated as capital gain arising on sale of such shares and as such the contention of the revenue to treat the same as otherwise cannot be upheld in any manner even in Asst Year 2010-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the other treating it as land filling charges, thereby erroneously making addition on both the counts. It is pertinent from such documents that the value of 2486.20 Cottahs couldn’t have become ₹ 36,09,98,700/- for 2950.56 Cottahs from March 2008 to December 2008. As far as the contention of assessee to treat the (pg 31 of SG/8) as land filling charges, it appears to be credible since revenue’s action in that regard is merely on assumption. Even otherwise, the revenue failed to bring any evidence on record to prove its finding. Hence the ld AO’s action in such respect is rejected and do not find any justifiable reason to interfere with the finding of the ld CITA. unexplained investment on the basis of seized document - whether the presumption u/s 292C shall be treated as mandatory under the law or whether it shall be treated as a rebuttable presumption? - Held that:- Even after presumption applied to the facts u/s 292C of the Act, there is no adequate material to conclude that the transactions in the seized documents are the transactions of the assessee which remained undisclosed. The other aspects of the matter is that the presumption u/s 292C of the Act is rebuttab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee Group promoted and owned largely with his family members by Mr. Surya Prakash Bagla. The assessee through its associate concern is engaged mainly in the business of Real Estate Civil Construction. Consequent to search u/s 132 of the Act, notice u/s 153A of the Act was issued for Asst Years 2003-04 to 2008-09 and assessments framed u/s 153A of the Act thereon and for the Asst Year 2009-10, being the year of search, assessment was framed u/s 143(3) of the Act. The assessee s appeal is mainly containing the validity of the search and the grounds of appeal in all the years can be summarized as follows : 1. For that in view of the facts and in the circumstances, the assessment order made by the AO was wholly bad, illegal and void abinitio both on points of law and in view of the facts and in the circumstances the ld CIT(A) was wholly unjustified in confirming the action of the AO as far as legal issues were concerned and the Ld. CIT(A) was wholly unjustified in holding that there was no legal infirmity in the assessment order of the AO and in view of the facts and in the circumstances it may kindly be held that the assessment order made by AO was wholly bad, illegal and vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h receipt of ₹ 6,00,90,000/- as Capital Gain from sale of shares, rather, he has taken it as undisclosed income from other sources in A.Y.2010-11. 3. Ground No. 3 - The Ld. CIT(A) has erred in holding that capital gain arising on the 100% sale of shares of M/s. Graphitech is taxable in 2010-11 and not in the year in which MOU (contract for Sale) i.e. /F.Y. 2005-06 relevant for A.Y.2006-07 was signed and that the order of Ld. CIT(A) is in contravention to the circular No. 704 dated 28/04/1995 of CBDT. 4. Ground No. 4 -The Ld. CIT (A) erred in directing A.O. to take the consideration as 14,01,00,000/- for sale of shares of Graphitech as against sale value of ₹ 6,51,00,000/- mentioned in MOU (sale contract) 5. Ground No. 5 - The Ld. CIT (A) has further erred in holding that the sale consideration for the sale of shares is to be taken as ₹ 14,01,00,000/- and the date of sale as 25/05/2009. A.Y 2007-08 : (Department s appeal ITA No. 35/K/2012) 1. Ground No. 1 - The Ld. CIT (A) erred in holding that ₹ 14,00,00,000/- received in cash by Sri Bagla against the sale shares of Graphitech Tech India Ltd. is taxable in A.Y. 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares in M/s Graphitech India Ltd, a company incorporated under the Companies Act, 1956. One Mr. Surya Prakash Bagla (assessee herein) is its director. M/s Graphitech India Ltd has long term lease on a piece of land measuring about 60 cottahs and there was no legal impediment to construct commercial building on the said land. There was a Memorandum Of Understanding (MOU) on 4.8.2005 between Saltee Infotech Pvt Ltd represented by its Director Mr. Surya Prakash Bagla and one Mr. Vivek Kathotia, with a recital that the shareholders of M/s Graphitech India Ltd went to transfer their 100% holding in M/s Graphitech India Ltd to Mr. Vivek Kathotia for a consideration of ₹ 16,51,00,000/-. In the said MOU there was a recital to the effect that all the original share certificates and transfer deed shall be deposited with Mr. B. K. Jain Advocate in trust and the same shall be handed over to the transferee on making their full and final payment of the consideration amount. Further, vide clause 4 in liabilities and responsibilities of the transferor, it was stipulated that the transferor at his cost and efforts, shall be responsible to get building plans which shall be prepared by the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of such letters and a decree for perpetual injunction restraining the transferee from demanding delivery of possession of the shares and from giving effect to the MOU dated 04.08.2005. In the said suit it was pleaded that pursuant to the MOU the original share certificates were deposited with Advocate Shri B. K. Jain and subsequently all the steps were taken to see that the terms of MOU are implemented, but inspite of various corrections made from time to time to the building plan got prepared by the transferee, the same could not be accomplished and Bidhannagar Municipality refused to approve the plan as such, the transferee ultimately decided to abandon the project and with mutual consent, the contract was rescinded but to the surprise of the transferor, a letter was received from Mr. B. K. Jain, Advocate, wherein the rescinding of contract was disputed and delivery of shares was insisted. In those circumstances, the declaratory suit came to be filed. 4.1.3. The transferee also filed another suit in T.S. No. 222 of 2007 before the Civil Judge (Sr. Division), 2nd Court at Barasat disputing the recession of contract and praying for specific performance thereof. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es shall be treated as the date of transfer, provided it is followed up by actual delivery of shares and the transfer deeds. In view of this circular, the date of contract for sale assumes importance. According to the revenue, the date of contract for sale is the date of MOU whereas, according to the assessee, the date of subsequent compromise by way of which the condition as to the approvals by different authorities was got rid of. Further according to the Revenue, the sale consideration is the entire ₹ 16.51 Cr whereas the Assessee claims it to be only 14.01 Cr as reduced in the compromise decree by way of adjustment. 4.2. The assssee offered capital gains for sale of shares in Asst Year 2010-11 on the basis of transfer of shares that happened pursuant to decree and revised MOU dated 25.5.2009. The assessee also offered the sums of ₹ 7,40,90,000/- in the revised return for Asst Year 2010- 11 under the head income from other sources being the cash component received on sale of shares. But during the course of assessment proceedings, the assessee pleaded before the ld AO to treat the sums of ₹ 7,40,90,000/- as part of share sale consideration and assess capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for sale consideration. According to him, sale consideration remained the same although the transaction but the liability of the transferor for compensation only intervened. He, therefore, argued that the date of MOU is the date of contract for sale and the sale consideration is the entire amount of ₹ 16,51,00,000/-. On this premise, Ld. Counsel argued that the sale consideration of shares of the assessee is ₹ 16.51 cr. and following the CBDT circular 704 dated 28.04.1995, such date (i.e the date of MOU dt 4.8.2005) will be treated as the date of transfer, since, it is only pursuant to the terms of the MOU, the delivery took place. He placed reliance on a decision reported in AJAY GULIYA vs. ASSISTANT COMMISSIONER OF INCOME TAX (2012) 209 TAXMAN 0295 (Del) wherein it was observed that,- The reasoning of the Tribunal is premised upon the fact that capital assets were transferred on a particular date the assessee passed on the execution of the agreement. There is no material on the record or in the agreement suggesting that even if the entire consideration or part is not paid the title to the shares will revert to the seller. In that sense the controlling expressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld. AR in his rejoinder drew our attention to Circular relied upon by the ld AO which is placed at page 257 of paper book No. 2 and pointed out that even as per the Board s Circular, taxability of shares arise only in the year of transfer of share certificates. The ld AR took us to pg 48 of PB No. 2 which is the MOU dt. 4.8.2005 and in the consideration part of such MOU at Clause 5 it has been categorically mentioned that share transfer deed were to be deposited with Mr. B. K. Jain (Advocate) in trust and were transferred to transferee (i.e. Vivek Kathotia) only on full and final payment of consideration. The ld AR further took us to the letter written by the assessee to the Solicitor Mr. B. K. Jain (Paper Book No.2 page 48) which shows that the Solicitor was holding such share certificates only in trust in terms of the MOU dt. 4.8.2005 and the shares were never transferred to Mr. Vivek Kathotia and/ or his assignees/ associates as mentioned in MOU. The ld AR further took us to ROC returns for Asst Years 2006-07 2007-08 as well as for Asst Year 2010-11 which are placed at pages 151 to 245 of the Paper Book No.2 and contended that since the share certificates have been tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pollution Control Board, Water and Sewerage etc, and till the permissions are granted, neither of the parties will be in a position to perform or demand performance of contract from other party. By way of stipulation in the MOU by way of Clause 13 thereof, viz, if the Transferor fails to get plan sanctioned then the transferor shall refund the entire amount received from Transferee within one month, the parties adopted a mechanism in the MOU that till the transferor gets the required permissions and clearances, the amounts paid by the transferee would remain as advance only, and it is only on the accomplishment of this pre requisite condition, further steps would be taken. This intention is very clear from the MOU itself. 4.7.2. It is not in dispute that, for one reason or the other, permissions were not granted by the authorities and there was litigation. By the date of filing of the title suit No 222/2007 by the transferee seeking specific performance, transferee claims to have paid a sum of ₹ 13,91,90,000/- from time to time, and only a sum of ₹ 2,59,10,000/- was due and as such the transferee demanded the delivery of shares following by filing of such suit. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular No. 704 dated 28.04.1995 with reference to section 2(42A) says that in cases of transactions taking place directly between the parties and not through stock exchanges, the date of contract for sale as declared by the parties shall be treated as the date of transfer, provided it is followed up by actual delivery of shares and the transfer deeds. In this case according to the assessee, date of contract for sale is the date of compromise and compromise decree i.e 25.5.2009. For the reasons set forth in the preceding paragraphs, we find that the date of MOU cannot be taken as the date of contract for sale because unless and until the condition in Cl 13 is fulfilled the understanding does not assume the character of agreement for sale, and it is only on that event the amount becomes the part consideration. Till such time it is only an advance amount only, not liable for tax under the head of capital gains. 4.7.5. Next question that arises is as to what exactly the sale consideration was, whether it was ₹ 16,51,00,000/- as contemplated in the MOU or ₹ 14,01,00,000/- as adjusted in Cl 12 (a) read with Cl 11 of the Terms of Settlement reached by parties and taken cog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be refunded and the agreement shall be abandoned, and it is only on the accomplishment of such condition any further steps would be taken, in such situation the controlling expression of transfer is non conclusive as to the true nature of the transaction till the condition is fulfilled and then the date of fulfillment of such condition shall be taken as date of contract for sale within the meaning of Circular No. 704 dated 28.04.1995 with reference to section 2(42A) and the amounts paid by the transferee till the fulfillment of such condition would remain as advance only, but not as part for sale consideration for the purpose of reckoning the capital gains. Further, in the absence of any express contract between the parties, any liability of the parties in the form of costs etc due to some intervening circumstances, would not in any manner detract from the chargeability of total sale consideration. At best those costs would be expenses relating to the sale or purchase as the case may be, which in any case, would be eligible for deduction while computing capital gains. 4.7.8. As regards the handing over of the share scripts to the Solicitor Mr. B. K. Jain, it is seen that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of the shares, the cash component of ₹ 7,40,90,000/- cannot be treated separately and has to be treated as capital gain arising on sale of such shares and as such the contention of the revenue to treat the same as otherwise cannot be upheld in any manner even in Asst Year 2010-11. In any case, the said receipt cannot be taxed in Asst Years 2006-07 and 2007-08 separately. 4.7.9. As discussed earlier, transfer having taken place only in Financial Year 2009-10 relevant to Asst Year 2010-11, when executed transfer deeds along with share certificates were handed over Mr. Kathotia and when transfer pursuant to order of Court was completed, the entire capital gain is taxable in Asst Year 2010-11 only and cash components in this regard received earlier cannot be taxed in the Asst Years 2006-07 and 2007-08. 4.7.10. As a result, we hold as follows : Asst year Appeal No. Ground Nos. Result 2006-07 34/K/12 1 to 5 Dismissed 2007-08 35/K/12 1 to 5 Dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant were only estimate of the expenses and the actual expenses having been already recorded in the books of accounts, the Ld. CIT(A) failed to appreciate the facts that the alleged amount cannot be unexplained expenditure and in view of the facts and in the circumstances in may kindly be held accordingly. Addl. Ground No.2 - For that in view of the facts and in the circumstances and without prejudice to the legality of addition so made/ confirmed by the Ld. CIT(A) treating the same as alleged unexplained expenditure. A.O. and the Ld. CIT(A) erred in appreciating the facts that the amount of ₹ 28,12,000/- pertaining to the seized document No. SSG/1 at page 9 has been added by the AO twice and as such, such amount having been considered twice by AO, the appellant's income has been increased by such amount wrongly and in view of the facts and in the circumstances it may kindly be held accordingly. Addl. Ground No.3 -For that in view of the facts and in the circumstances and without prejudice to the Ground No. 1 above, treating ₹ 3,03,65,126/- as unexplained expenditure, the AO and Ld. CIT(A) failed to appreciate the facts that the amount consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the land development cost as contained in the seized material was only partly recorded in the books of account. It was argued before the ld AO that the land development cost @ ₹ 5,000/- per cottah as mentioned in the seized material was only an estimate whereas the actual expenses are recorded in the books of account. The ld AO did not accept the explanation. He was of the opinion that when all other expenses were correctly recorded in the seized material, the land development expenses as recorded therein cannot be treated as estimate. The ld AO noted that the seized material contained land development expenses of ₹ 5,07,50,375/- out of which sum of ₹ 2,03,85,249/- only was recorded in the books of account. The ld AO treated the difference of ₹ 3,03,65,126/- as undisclosed receipt of the assessee which was assessable as his undisclosed income in A.Y 2008-09. The ld AO also found that the seized material shows receipt of cut money of ₹ 46,34,960/- and ₹ 27,92,230/- which was assessable in the case of the assessee as his undisclosed income in Asst Year 2008-09. The ld AO has mentioned in the assessment order that the assessee had already admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 Ankit Plantation 22,85,000/- 26 Dewan Export 26,59,970/- 29 30 Marine Park (Statement started page 30 and B/F 26,70,967 and end page 29) 31,43,788/- 5,07,50,375/- 5.2.1. The cut money receipt as per page 12 of the SSG/1 had already been admitted by the assessee as undisclosed receipt. 5.2.2. Further there was also a receipt of cut money of ₹ 27,92,230/- from M/s Puskar Niwas as per page 5 of SSG/1. Therefore, total cut money receipt by the assessee was ₹ 74,27,109/- [Rs.46,34,960/- (page-12) + Rs,27,92,230/- (page 5) of SSG/1]. Page No. Name As per seized records As per books Difference 1 2 Saltee Citizone (Continuous Serials 1- 66) 3,718,000 845,672 2,872,328 3 Saltee Buildcon (Land Development accounted for) 345,455 302 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,078,250 1,581,720 29 30 Marine Park (Statement started page 30 and B/F 26,70,967 and end page 29) 3,143,788 - 3,143,788 50,750,375 20,385,249 30,365,126 The difference is treated as the undisclosed income of the assessee. Therefore, the sum of ₹ 3,03,65,126/- on account of Land Development Cost receipt and ₹ 74,27,109/- on account of Cut Money receipt totaling to ₹ 3,77,92,236/- is added as assessee s undisclosed income for Asst Year 2008-09. It was further observed that Page 54 of SSG/1 shows some undisclosed expenditure of ₹ 1,25,000/- and ₹ 3,05,272/- on account of legal expenses and land development costs, which have been accepted as undisclosed. [Undisclosed income for Asst Year 2008-09 - ₹ 3,77,92,235/-] [Undisclosed expenditure for Asst Year 2006-07 - ₹ 4,30,272/-] 5.3. The ld CITA in his order had observed the following:- I have perused the assessment order wherein the AO has discussed the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally been received by the appellant as charges for the services rendered by him. In view of the above, the AO made total addition of ₹ 3,77,92,235/- (Rs. 3,03,65,126/- plus ₹ 74,27,109/-) on account of undisclosed receipts in A.Y 2008-09. The Ld. A.R has argued that the seized documents were recovered from the custody and possession of the company Saltee Construction Co. Pvt. Ltd. and also the AO has brought no material or evidence on record to show that such seized documents were in the handwriting of the appellant or his accountant. Under the circumstances no addition could be made in the case of the appellant. The Ld. A.R contended that the land development cost as contained in the seized documents merely represented estimates, and, that the actual expenses incurred which was much lesser, was recorded in the books of account. It was also argued that the land development cost was incurred by the group companies who were the actual owners of the land and such expenditure was also accounted for by them in their regular books of account. Consequently, the excess expenditure, if any, on account of land development cost cannot be treated as undisclosed expenditure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed receipt of the appellant is confirmed. However once the cut money of ₹ 27,92,230/- is assessed as undisclosed receipt, then consequential effect has to be given in as much as such receipt has to be considered as being available for use towards any unexplained expenditure made by the appellant. I have considered the submission made on behalf of the appellant that the land development cost, which is mentioned on an average basis @ ₹ 5000/- per cottah in the seized document, cannot be the same for all kinds of land and as such it should be considered as estimate only. However, the appellant on his part has failed to adduce any separate evidence in this regard. In this factual background, I am of the considered view that the difference of ₹ 3,03,65,126/- has to be treated unexplained expenditure incurred by the appellant on behalf of the group companies, and consequently the sum of ₹ 3,03,65,126/- is confirmed as unexplained expenditure. Similarly, the addition of ₹ 4,30,272/- in A.Y 2006-07 which was made on account of undisclosed expenses as contained on page 54 of the seized document SSG/1 is also confirmed for the same reason. However th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses booked by respective companies to their books of account. (v) The assessee then referred to Additional Ground No. 2 of C.O and Additional Ground No.2 of assessee s appeal being addition of ₹ 1,16,00,000/-. The ld AR drew our attention to the fact that such transaction pertains to Marine Park Ltd. details of which are at page 611 of the Paper Book (Volume 4). The ld AR then submitted that the land development expenses as per books has been considered at Nil by ld AO, whereas the same is ₹ 1,16,56,247/-. As such there could not be any addition on such account. 5.4.1. The ld AR then referred to Additional Ground No.3 of C.O and Additional Ground No.3 of assessee s appeal being addition of ₹ 28,12,000/-. The ld AR drew our attention to the fact that such transaction pertains to Cozy Enclave (P) Ltd. details of which are at page 441 of Paper Book (Volume 4). Page 9 of SSG/1 reflects that the ld AO had added the brought forward amount of land development expenses ₹ 28,12,303/- twice and hence the same amounted to double addition. 5.4.2. As regards the ld CITA s action in allowing the set off of the expenses so incurred by assessee and / or its asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee at the assessment stage and as such we do not find much merit in the matter and since the nature of ₹ 46,34,960/- (comprised in ₹ 46,34,960/- + 27,92,330/- = ₹ 74,27,290/-) is same i.e. cut money and since assessee has already accepted ₹ 27,92,330/, ₹ 46,34,960/- is also treated as undisclosed receipt only and hence the same treated accordingly as undisclosed receipt only. 5.7.1. As regards the sum of ₹ 3,03,65,126/- pertaining to pages 1 30 of SSG-1, we find assessee s contention is that the same is an estimate of expenses. On a perusal of the document , we find that there is a much variation of such sums as reflected in seized documents and such sum is not merely ₹ 5,000/- per Cottah. The assessee s contention in such seized documents pages 1-30 of SSG/1 cannot be accepted. However, the ld AR has successfully pointed out that in some documents such amount has been mentioned whereas nothing has mentioned in the books of account and hence it has to be necessarily followed that such sums are expenses incurred by the assessee and the actual expenses have been booked in the respective companies. Moreover, we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 34/K/12 7 Dismissed 145/K/12 5 Dismissed 2008-09 36/K/12 2 Dismissed 3 Dismissed 4 Dismissed 147/K/12 5 Dismissed Addl. Ground 1 Allowed for statistical purposes Addl. Ground 2 Allowed for statistical purposes Addl. Ground 3 Allowed for statistical purposes 6. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG/3 A.Y 2007-08: C.O. 146/Kol/2012 Ground No. 5 -For that in view of the facts and circumstances the Ld. CIT(A) erred in confirming the action of the AO in treating ₹ 18,00,000/- as undisclosed expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipts by cash as well as by cheque. The ld AO has noted in the assessment order that the assessee admitted such undisclosed expenses of ₹ 18,00,000/-, ₹ 37,25,000/- ₹ 16,20,000/- in Asst Years 2007-08, 2008-09 2009-10 during the assessment proceedings and has also included them in the cash flow statement. The ld AO thus made addition of ₹ 18,00,000/-, ₹ 37,25,000/- ₹ 16,20,000/- in Asst Years 2007-08, 2008-09 2009-10 on account of undisclosed expenditure. The ld AO found that page 26 of the seized document SSG/3 contains undisclosed expenditure of ₹ 17,63,664/- ₹ 36,53,564/- incurred in respect of projects at EN-62 and DN-18. The ld AO further found that page 27 contains detail of payments by cash as well as by cheque the cash component being ₹ 6,51,288/-. Similarly, page 29 to 32 contain net loss of ₹ 7,77,878/- on book fair organized by the assessee. The ld AO concluded that undisclosed expenses of ₹ 7,77,878/- was embedded in such loss. The ld AO found, on the other hand, that page 3 of the seized document SSG/3 is account statement of Mackintosh Burn Limited reflecting unaccounted receipt of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 10,00,000/- in A.Y 2009-10 on account of undisclosed receipt is confirmed. The undisclosed expenses of ₹ 18,00,000/-, ₹ 37,25,000/- and ₹ 16,20,000/- are admitted by the appellant and also included in his statement of cash flow. As regards other expenses of ₹ 17,63,994/-, ₹ 36,53,564/-, ₹ 6,51,288/- and ₹ 7,77,878/- the appellant has brought no material on record to rebut the findings of the AO that these are the undisclosed expenses of the appellant. I therefore uphold the order of the AO that all these expenses are to be treated as unexplained expenses of the appellant. However, I find merit in the argument that such undisclosed expenses are to be considered as being made out of undisclosed receipts as shown by the appellant and also accepted by the AO. The cash flow statement had been filed before the AO in respect of the unaccounted income which mainly comprised of cash received on different dates from the Fort Group in connection with sale of shares. The cash flow statement was forwarded to me by the AO along with his remand report. I find from its perusal that the appellant had sufficient cash balance available with him fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) None of such seized papers were seized from the custody and or possession of the assessee and all such seized documents were seized only from the possession of Saltee Construction Co. Pvt. Ltd. as will be apparent from Panchanama B and hence the entire action of the ld AO in making such additions during different assessment years as under is wholly bad, illegal, unjustified and uncalled for and in view of the facts and circumstances accordingly prayed for deletion of the same. 6.4. In response to this, the ld DR argued that such documents having SSG/3 were found in the premises owned / controlled by assessee and / or its associated concern and hence it is necessarily to be presumed that such document pertains to assessee only. The ld DR vehemently argued that the said sum be treated as undisclosed expenditure only as per the finding given by ld AO in its order. 6.5. We have heard the rival submissions and perused the materials available on record including the paper books submitted in that regard. We have gone through the material placed i.e. SSG/3 particular pages as follows : Pgs 3 8 ₹ 18,00,000/- A.Y 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in view of the facts and circumstances the Ld. CIT(A) erred in confirming the action of the AO in treating ₹ 6,00,000/- on the basis of alleged seized document SSG-6 and in view of the facts and in the circumstances the action of Ld. CIT (A) in such regard is without appreciating the facts in the matter properly and in view of the facts and in the circumstances it may kindly be held accordingly. This ground is without prejudice to the fact that the appellant has shown the same as application of the income offered by it and hence it may kindly be considered accordingly. A.Y 2009-10 IT(SS) 37/Kol/2012 Ground No. 4 - The Ld. CIT(A) has erred in directing the A.O. to consider the unexplained expenditure of ₹ 6,00,000/- as per seized document SSG/6 against the accounted cash receipt in A.Y. 2006-07 2007-08. 7.1. The brief facts of this issue are that the ld AO found that page 13 of the seized documents SSG/6 contains detail of expenses totaling to ₹ 6,00,000/- on purchase of tickets and TV, and also cash payments of ₹ 3,55,080/-. It was contended before the ld AO that the seized document was not related to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Hence, we concur with the order of the ld CITA in allowing sums as part of cash flow and as such the revenue s ground fails on such account. As a result, we hold as follows : Asst year Appeal No. Ground Nos. Result 2009-10 148/K/12 9 Dismissed 37/K/12 4 Dismissed Hence these grounds are disposed accordingly. 8. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG / 8 READ WITH SSG / 44 A.Y 2006-07 C.O. 145/Kol/2012 Ground No. 6 - For that in view of the facts and circumstances the Ld. CIT(A) erred in confirming the action of the AO in treating ₹ 10,00,000/- as undisclosed expenditure on the basis of alleged seized document SSG-8 and such action of the Ld. CIT(A) in confirming the action of the AO is without appreciating the facts and in view of the facts and in the circumstances the addition so made is liable to be quashed I cancelled/ set aside. A.Y 2008-09 C.O. 147/Kol/2012 Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd No.5 - The Ld. CIT(A) has erred in deleting the addition of ₹ 27,03,31,000/- as undisclosed investment for purchase of Land of 2950.56 cottoh in Phase-1, Phase-2, Mohammadpur, Jamalpura. The Ld. CIT(A) has erred in not appreciating the pages 31,32,37 of the seized document-SSG/44 (correct SSG/8) Ground No.6 - The Ld. CIT(A) has erred in directing the A.O. to consider the unexplained expenditure of ₹ 1,67,000/- (as per seized document SS/8) against accounted cash receipt of the assessee. 8.1. The brief facts of this issue are that the ld AO found that the seized documents SSG/8 contain money receipts of ₹ 10,00,000/-, ₹ 50,000/- and ₹ 1,67,000/- which was admitted by the assessee as his undisclosed expenses in Asst Years 2006-07, 2008-09 and 2009-10; and, has also been declared in his statement of cash flow. The ld AO thus made additions of ₹ 10,00,000/-, ₹ 50,000 and ₹ 1,67,000/- as undisclosed expenses in Asst Years 2006-07, 2008~09 and 2009- 10. The ld AO has also referred to page 31 of SSG/8 which contains details under the head ACCOUNT AS ON 15TH DECEMBER, 2008 . The ld AO felt that the figures on page 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. [Also refer pages -31, 32, 37 of SSG-44]. From the lower part of the table appearing in page - 31 of SSG-8, it appears that a total amount of ₹ 37.64 crores had been received by the assessee out of which ₹ 70 lakhs had been claimed to have paid and ₹ 36.09 crores had been spent on land a/c. leaving balance of ₹ 85 lakhs. The assessee admitted undisclosed expenditure to the tune of ₹ 36,09,987/- vide letter dt. 11.11.2008. The assessee was asked to substantiate the same. The assessee submitted vide letter dated 14.12.2010:- In the last hearing, your goodself had asked us to substantiate the land filing charges vis-a-vis the regular books of accounts. In this connection, it is submitted that this page is an account given by the contractor for. .land filing expenses purported to have been .incurred by him as on 15.12.2008. The figure of ₹ 3609.987 represent 36,09,987/-. This is the amount purported to have been incurred by him. Our clients had advanced ₹ 37,64,000/- as mentioned in the seized document itself which was more than the contractor's own bill. As such, ₹ 70,000/- was returned by him as per his statement in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO. I have also considered the submissions of the appellant and the material on record. The AO has mentioned in the assessment order that the seized documents SSG/8 contain money receipts of ₹ 10,00,000/-, ₹ 50,000 and ₹ 1,67,000/- which was admitted by the appellant as his undisclosed expenses in A.Ys 2006-07, 2008-09 and 2009-10; and has also been included in his statement of cash flow. The AO has thus made additions of ₹ 10,00,000/-, ₹ 50,000 and ₹ 1,67,000/- as undisclosed expenses in A.Ys 2006-07, 2008-09 and 2009-10. I uphold the order of the AO that these expenses are to be treated as part of the cash flow statement and the AO is directed to consider the net of expenses, if any, for the purposes of addition. The AO has referred to page - 31 of SSG/8 which contains details under the head Account as on 15th December, 2008 . I find merit in the argument that while interpreting the seized document, the AO has made too many presumptions and assumptions without any basis. For, the AO has simply presumed that the seized document contains details regarding purchase of land. The seized document has mentioned Account as on 15th Dece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by him as on 15.12.2008. The figure of 3609.987 actually represented ₹ 36,09,987/- the amount that was incurred by the contractor towards land filling charges. As advance of ₹ 37,64,000/- was already given to the contractor, he had returned ₹ 70,000/- and the balance of ₹ 84,013/- was pending. As the land filing expenses of ₹ 36,09,987/- was not recorded in the regular books of account of the group companies, the same was admitted as undisclosed income and was also included in the statement of cash flow. But, the explanation as made by the appellant was rejected by AO more on presumptions than on factual ground. The decision of the AO is not based on proper findings. While interpreting the seized document at page 31 of SSG/ 8, the AO has made too many presumptions which are totally arbitrary and without any basis. The observations of the AO are not based on any material fact or documentary evidence. As assessment has to be made by the AO on the basis of the material and evidence available on record. But, in the present, case the order of the AO is based more on presumptions than on factual ground. The AO has only created hypothetical situation by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of land which is nowhere mentioned on the seized document. The seized document has simply mentioned ACCOUNT AS ON 15TH DECEMBER, 2008 . It has nowhere mentioned that the account relates to purchase of land. (v) The ld AR contended that the observation made by the ld AO was factually incorrect. The use of words like appears or apparently clearly suggests that the ld AO was himself not sure about the facts. It was explained before the ld AO that the seized document was related to land filling charges for existing land that was owned by the group companies for which investment of ₹ 11 crores was also shown in their regular books of account. The seized document actually contained account given by the contractor for land filling expenses purported to have been incurred by him as on 15.12.2008. The figure of 3609.987 actually represented ₹ 36,09,987/-, the amount that was incurred by the contractor towards land filling charges. As advance of ₹ 37,64,000/- was already given to the contractor, he had returned ₹ 70,000/- and the balance of ₹ 84,013/- was pending. As the land filling expenses of ₹ 36,09,987/- was not recorded in the regular b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only mere presumption by the ld AO . This also clearly shows that said figure of 3609.987 is only land filling charges of ₹ 36,09,987/- and it has to be considered accordingly. 8.4. In response to this, the ld DR argued that such page 31 of SSG/8 represented the land purchased by assessee which was never reflected in books of account of the assessee , failed to prove such presumption of the ld AO. The ld DR also submitted that since assessee was engaged in real estate and such document read with pg 31 33 of SSG/44 proved that assessee has made such purchases in his group Companies, as such the same was undisclosed expenses of assessee. 8.5. We have heard the rival submissions and perused the materials available on record including the paper book of the assessee filed in that regard. We have gone through the material placed particularly the following seized documents along with other document was placed in paper book as well as order of the lower authorities :-. SSG/8 Pgs 21 22 Rs.10,00,000/- Pg 19 ₹ 50,000/- SSG/8 Pg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terfere with the finding of the ld CITA. As regards the revenue s ground in treating ₹ 10,00,000/-, ₹ 50,000/-, ₹ 1,67,000/- ₹ 36,09,987/- out of available cash , we find merit in the fact that that ld AO himself has allowed such set off in the assessment order, so revenue cannot be allowed to change its stand now. Even otherwise, the revenue is not in possession of any evidence nor it has furnished any such fact on record that the sums expended were other than out of sum earned / received as cash by the assessee. Hence, we concur with the order of the ld CITA in allowing sums as part of cash flow and as such the revenue s ground fails on such account. As a result, we hold as follows: Asst year Appeal No. Ground Nos. Result 2006-07 145/K/12 6 Dismissed 34/K/12 8 Dismissed 2008-09 147/K/12 7 Dismissed 36/K/12 6 Dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -9 to 39 and in view of the facts and in the circumstances the action of Ld. CIT (A) in such regard is without appreciating the facts in the matter properly and in view of the facts and in the circumstances it may kindly be held accordingly. This ground is without prejudice to the fact that the appellant has shown the same as application of the income offered by it and hence it may kindly be considered accordingly. A.Y 2006-07 IT(SS) 34/Kol/2012 Ground No. 9 - The Ld. CIT(A) is erred in directing the A.O. to consider the unexplained expenditure of ₹ 3,60,500/- as unexplained expenditure as per seized document SSG-9-39 against the undisclosed cash receipt and that the order of the Ld. CIT(A) is against the provision of section 69C of the Act. Ground No. 10 - The Ld. CIT(A) is erred in directing the A.O. to consider the unexplained expenditure of ₹ 8,61,581/- added on the basis of seized document SSG/9-39 against the undisclosed cash receipt and that the order is against the 69C of the Act. A.Y 2007-08 IT(SS) 35/Kol/2012 Ground No.8 - The Ld. CIT(A) is erred in directing the A.O. to consider the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yanand Thakur, BSR Constructions Company, Sankar, S. R. Construction etc. the assessee vide Annexure J to letter dt. 11.11.2010 admitted undisclosed expenditure on account of labour payment amounting to ₹ 23,25,056/-. However, in respect of labour payment on the project DN-9, the assessee claimed that the payments were made by Saltee Infotex and not related to us. However, during the assessment proceedings u/s 153A, M/s Saltee Infotex denied the payment of such expenses. Since these diaries are found from the possession of Sri Surya Prakash Bagla and his group companies, the same is presumed to be the expenses of Sri Surya Prakash Bagla and not disclosed in the regular basis. The year wise total of labour payment on DN-9 is as under : - F.Y 2004-05(A.Y 2005-06) F.Y 2005-06 (A.Y 2006-07) SSG/10 (R. K. Narayan) Rs.30,000/- Rs.37,000/- SSG/16 (Bablu Mondal) Rs.90,000/- Rs.95,000/- SSG/32 ( S. R. Construction) Rs.14,00,000/- Rs.6,79, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,000/-, ₹ 1,45,000/-, ₹ 3,80,500/-, ₹ 3,70,500/-, ₹ 6,94,299/-, ₹ 6,28,500/- and ₹ 86,257/- in AY 2003-04, 2004-05, 2005-06, 2006-07, 2007- 08, 2008-:09 and 2009-10 which was admitted by the appellant as his undisclosed expenses; and, has also been included in his statement of cash flow. I find from the perusal of the cash flow statement that two expenses of ₹ 5,000/- each booked in AY 2006-07 actually pertain to AY 2005-06 as they were incurred on 05-03-2005 and 25-03-2005. Consequently, the correct figures of undisclosed expenses pertaining to AY 2005-06 and 2006-07 should be ₹ 3,90,500/- and ₹ 3,60,500/- (instead of ₹ 3,80,500/- and Rs,3,70,500/- as mentioned in the assessment order). It was contended that undisclosed expenses were incurred out of undisclosed receipts already declared to the department, and so, consequential relief should be allowed. Since the expenses of ₹ 20,000/-, ₹ 1,45,000/-, ₹ 3,90,500/- pertain to AY 2003-04, 2004-05 and 2005- 06 when there was no undisclosed receipts, these additions are confirmed. However, as the undisclosed expenses of ₹ 3,60,500/-, ₹ 6,94,299/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its stand now. Even otherwise, the revenue is not in possession of any evidence nor it has furnished any such fact on record that the sums expended were other than out of sum earned / received as cash by the assessee. Hence, we concur with the order of the ld CITA in allowing sums as part of cash flow and as such the revenue s ground fails on such account which amounts to disputing its own earlier action and which is not permissible as per law. As a result, we hold as follows: Asst year Appeal No. Ground Nos. Result 2006-07 145/K/12 7 Dismissed 34/K/12 9 10 Dismissed 2007-08 146/K/12 6 Dismissed 35/K/12 8 Dismissed 2008-09 147/K/12 8 Dismissed 36/K/12 7 Dismissed 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47,000/- in Asst Year 2008-09 and ₹ 1,30,00,000/- in Asst Year 2009-10 on account of undisclosed investment. 10.2. The ld AO further noted that page 4 of SSG/42 contains detail of expenditure incurred upto 20.3.2008 in Jessore Road Project. The ld AO has mentioned in the assessment order that the assessee has admitted undisclosed expenses of ₹ 12,64,383/- which was included in the statement of cash flow. However, the same was determined by reducing sum of ₹ 38,00,000/- on the ground that the same had already been considered as undisclosed income under the seized document SSG/3. The ld AO observed that the entries in SSG/3 did not match and consequently no set off for ₹ 38,00,000/- could be allowed. The ld AO thus held that sum of ₹ 50,64,383/- had to be treated as undisclosed expenses of the assessee. The ld AO further noted that page 23 to 37 shows undisclosed expenses of ₹ 45,456/- which was admitted by the assessee. The ld AO further noted that pages 23 to 37 shows undisclosed expenses of ₹ 45,456/- which was admitted by the assessee, and, has also been included in the .statement of cash flow. The ld AO thus made addition of ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. The AO has mentioned in the assessment order that page 4 of the seized documents SSG/42 contain detail of expenses of ₹ 12,64,383/-, and, that page 23 to 37 record expenses of ₹ 45,456/- which was admitted by the .appellant as undisclosed expenses in AY 2007-08 and 2008-09, and, was also included in the statement of cash flow. The AO has also noted that expenses of ₹ 12,64,383/- was arrived at by reducing ₹ 38,00,000/- on the ground that it was already considered in SSG/3. The appellant has produced no evidence to substantiate his claim. I am therefore unable to accept the argument that ₹ 38,00,000/- had already been considered under SSG/3. However, as undisclosed expenses are to be considered against undisclosed income, the AO is directed to treat the undisclosed expenses of ₹ 50,64,383/- (Rs.12,64,383/- plus ₹ 38,00,000/-) and ₹ 45,456/- as part of the cash flow statement, and then, consider the net of expenses, if any, for the purposes of the addition. It was argued before me that the seized document SSG/42 was not seized from the possession or custody of the appellant; and further, there was no material on record to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions that the account pertains to Kishanji. In this factual background, the AO had no legal sanction or authority to presume that the period seized document relates to the appellant without bringing any corroborative material or evidence on record. Also, there is no material to show that the seized document actually represents detail of investment. It is only the presumption of the AO that the figures written on page 4 of SSG/42 are in lakhs of rupees. The conclusion of the AO that the appellant has made undisclosed investment of ₹ 7,19,47,000/- is not supported by any material or evidence on record; on the contrary, it is based only on the imagination of the AO. The decisions made by the AO are not based on proper findings. The AO has made his conclusions more from his presumptions and assumptions than from material facts. In view of the above, I am of the opinion that the addition of ₹ 7,19,47,000/- (comprising ₹ 5,89,47,000/- in A.Y 2008-09 and ₹ 1,30,00,000/- In A.Y 2009-10) on account of undisclosed investment is neither sustainable in law nor on facts; and so, the same is directed to be deleted. 10.4. The ld AR argued the following :- (i) He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Rajesh Kr. Kankaria in ITA No. 70/ Kol/2009 dt. 25.6.2010 . (vi) He concluded by stating that page 6 is rather a dumb document and addition in such respect by treating the same as unexplained expenditure is bad in law. (vii) As regards the ld CITA s action in allowing the set off of the expenses so incurred by assessee and / or its associates, it was submitted by the ld AR that there is no dispute in the fact that assessee had received cash on account of transaction with Fort to the tune of ₹ 7,40,90,000/- and also other receipts which was available with assessee and the expenses were out of such sums only and hence the ld CITA was fully justified in allowing such set off. He also submitted that on a perusal of assessment order itself , it can be observed that the ld AO himself has allowed such set off and now the revenue is disputing such action which amounts to disputing its own earlier action and which is not permissible as per law. 10.5. In response to this, the ld DR argued that the assessee is accepting one part of the said documents SSG/42 as its own and denying the ownership and content of another part i.e. page 6 of SSG/42 which is an anomaly by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve proof' gives an artificial probative effect by the law to certain facts. No evidence is allowed to be produced with a view to combating that effect. In this sense, this is an irrebuttable presumption. The words in sub-section (4A) of section 132 are may be presumed . The presumption under sub-section (4A), therefore, is a rebuttable presumption. The finding recorded by the High Court in the impugned judgement that the presumption under sub-section (4A) is a irrebuttable presumption in so far as it relates to the passing of an order under sub-section (5) of section 132 and rebuttable presumption for the purpose of framing a regular assessment is not correct. There is nothing either in section 132 or any other provisions of the Act which could warrant such an inference or finding. 10.6.2. In our considered opinion, this is the judgement which made the introduction of Section 292C of the Act with retrospective effect necessary as a matter of clarification. Nevertheless, the limited conclusion is that the language of section 132(4A) of the Act and of section 292C of the Act use the common expression may be presumed . Consequently the opinion of the Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him are not recorded under any name as Kishanji . In our opinion, the information about the undisclosed expenditure, the assessee is based on inadequate or irrelevant material. Under the circumstances this ground of appeal is dismissed. As regards the revenue s ground in treating ₹ 50,64,383/- out of available cash, we find merit in the fact that that the ld AO himself has allowed such set off in the assessment order, so revenue cannot be allowed to change its stand now. Even otherwise, the revenue is not in possession of any evidence nor it has furnished any such fact on record that the sums expended were other than out of sum earned / received as cash by the assessee. Hence, we concur with the order of the ld CITA in allowing sums as part of cash flow and as such the revenue s ground fails on such account. As a result, we hold as follows: Asst year Appeal No. Ground Nos. Result 2007-08 146/K/12 7 Dismissed 35/K/12 9 Dismissed 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to show that there was no takeover of the company or that no transaction was actually made. The ld AO then concluded by stating that the figure of ₹ 5 crores written against the assessee is treated as undisclosed investment made by him in cash in A.Y 2009-10. The order of ld AO is reproduced as under :- Page 43 of SSG/45 is a statement is a receipt and payment account for the period July 2006 to September 2006, where some receipt and payment has been shown in cash and cheque. The assessee vide Cash flow statement of undisclosed transactions being Annexure X of letter dated 11.11.2010 and vide Annexure U being breakup of undisclosed income admitted ₹ 79,83,640/- as undisclosed expenditure of A.Y 2007-08. For the remaining amount, the assessee explained it to be part of regular books of various companies mentioned therein. The assessee produced bank statement of various companies including their audited final accounts and copy of IT returns, Cash flow statements. It was submitted that cash for land purchases were done by withdrawals of cash from bank itself and wherever the assessee could not link the cash expenditures with bank withdrawals, necessary disclosure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn on ABN Amro Bank to M/s Shree Adyama Nirman Pvt. Ltd., a company mentioned in the above referred documents and it is shown as advance against properly in the balance sheet of Shree Adyama Nirman Pvt. Ltd. During the F.Y 2006-07, Shree Adyama Nirman Pvt. Ltd., of Embassy 1-B, 4, Shakespeare Sarani of Assurances II, Kolkata 17.5.2006 for ₹ 6,00,000/-, 20.5.2006 for ₹ 10 lakhs, 21.7.2006 ₹ 10 lakhs [all payments made to Prasant Dey and Amal Chakraborty] and on 7.9.2000 for ₹ 5,16,327/- to Dum Dum Municipality for Development fees Mutation fees. All the money as above had been received from M/s Saltee Infrastructure on 5.9.2007 is also perfect match cheque portion of ₹ 1.04 crores written against SPB in this page 40 of SSG/45. The assessee has not provided any details regarding this company nor any evidence to prove that the company was not taken over and no transactions were made. Therefore, the figure of ₹ 5 Crores written against the assessee is treated undisclosed investment of the assessee in cash for A.Y 2009-10. [Undisclosed expenditure for A.Y 2007-08 ₹ 79,82,640/-] [Undisclosed expenditure for A.Y 2008-09 ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deal having not materialized, there was no question of receipt or payment of any consideration. Hence, the addition based on the presumptions and assumptions of the AO that the appellant acquired or sold the 5 companies in AY 2008-09 cannot be sustained. It was also argued that when 1 was written against RAM, 2 against SPB and 2 against KEJ, there was no basis for the AO to presume that the entire consideration was received or paid by SPB alone, The Ld A/R has further argued that the AO ha mentioned in the assessment order that the appellant had received ₹ 14.04 crore in cash and ₹ 8.71 crore by cheque. But then, the AO has not been able to substantiate or corroborate the receipt of the cheque with reference to the books of account or the bank statement of the appellant. I find from the assessment order that the AO has made addition of ₹ 5 crores, with reference to the seized document at page 40 of SSG/45 on the ground that the appellant along with other persons had taken over a company. The AO has noted in the assessment order that no evidence was produced before him to show that there was no take-over of the company or to show that no transaction was ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be deleted. 11.4. The ld AR submitted that the assessee has already admitted undisclosed expenses of ₹ 79,82,640/- as contained on page 43 of the seized documents SSG/45. But, as these expenses have already been included in the statement of cash flow, no addition can be made on this ground. It was argued that the ld AO was therefore not justified in making addition of ₹ 79,82,640/- in Asst Year 2007-08. 11.4.1. The Ld. A.R further submitted that the ld AO was totally confused in so far as the interpretation of the seized document at page 40 of SSG/45 was concerned. On the other hand, the ld AO has stated that the assessee along with three other persons had received sum of ₹ 22.75 crores. And, subsequently, he has concluded that the assessee along with other persons had taken over a company by investing sum of ₹ 8.71 Crores. The ld AO has also made many observations which are totally irrelevant to the facts of the case. The ld AO has mentioned in the assessment order that no evidence was produced before him to show that there was no takeover of the company or that no transaction was actually made. But then, what material the ld AO had brought on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies. Since the company proposed to be acquired and which ultimately was not acquired and might be having such liabilities in their books of account but it does not prove in anyway that such company which such liabilities were accounted for had been actually acquired by assessee. Moreover and even otherwise there being no date nor any year, under no circumstances, it could be presumed as that relating to Asst Year 2008-09. The ld AO even never examined such companies before coming to such wild conclusion. Moreover, the ld AO has brought no evidence on record to prove that any company was acquired or sold by your assessee. 11.4.5. In any case without prejudice and even otherwise, SPB could never mean Surya Prakash Bagla only and as stated above it might mean Shri Shree Prakash Bagla and any other person with such abbreviation also. Moreover, it will be seen from the paper seized in the name of SPB it is only ₹ 2/- which the ld AO has presumed to be ₹ 2 Crores whereas another 2 appears in the name of KEJ and Re.1/- in the name of RAM and hence the assessee fails to understand as to how the entire 1 + 2 + 2 could be treated as unaccounted expenditure of SPB. Under no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground Nos. Result 2007-08 146/K/12 8 Dismissed 35/K/12 10 Dismissed 2008-09 36/K/12 10 Dismissed 12. ADDITION MADE BASED ON SEIZED DOCUMENT MARKED SSG / 48 A.Y 2008-09 C.O. 147/Kol/2012 Ground No.9 - For that in view of the facts and circumstances the Ld. CIT(A) was wholly unjustified in confirming the addition of ₹ 1 ,85,08,949/- on the basis of SSG-48 and in view of the facts and in the circumstances it may kindly be held accordingly. This ground is being taken without prejudice to the fact of the AO bad been directed to delete the addition on the basis of the rotation statement. IT(SS) 36/Kol/2012 Ground No. 11 - The CIT(A) has erred in directing the A.O. to consider the unexplained expenditure of ₹ 1,85,08,949/- against un accounted cash receipt of ₹ 7,40,90,000/- in the A.Y.2006-07, the addition was made on the basis of seized document SSG/48. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed expenditure of A.Y 2009-10. For the remaining account, assessee explained it to be part of regular books of various companies mentioned therein. The assessee produced bank statement of various companies, including their audited final accounts and copy of IT returns, cash flow statements. It was submitted that cash for land purchases were done by withdrawals of cash from bank itself and wherever the assessee could not link the cash expenditures with bank withdrawals, necessary disclosures have been made. SSG/48, page 1 is also an account given by broker for land purchased by our Clients at different locations. The right side shows amount received by the broker and the left side shows the amount expended by the broker and the bottom side below the tabular firm represents amount due to be paid by our Clients against land purchase and amount expended by the broker. The receipt side inter-alia shows Cash received by broker of ₹ 6,91,20,440/-. This figure has been reconciled from the account of various companies and as evident from workings of Annexure S2 of letter dt. 11.11.2010, a sum of ₹ 5,87,30,000/- was withdrawn from Bank account of four companies on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self since he could not furnish details regarding other persons and whether the transactions were recorded in their regular books. [Undisclosed income for A.Y 2008-09 ₹ 5,91,83,092/-] [Undisclosed expenditure for A.Y 2008-09 ₹ 1,85,08,949/-] [Undisclosed expenditure for A.Y 2008-09 ₹ 2,57,984/-] 12.3. The ld CITA observed as follows:- I have perused the assessment order and considered the submissions of the appellant, and also, the material on record. The AO has mentioned in the assessment order that page 1 and 21 of the seized documents SSG/48 contain detail of undisclosed expenses of ₹ 1,85,08,949/- and ₹ 2,57,984/- which was admitted by the appellant as undisclosed expenses in A.Y 2008-09 and 2009-10, and, was also included in the statement of cash flow. I uphold the order of the AO that the expenses of ₹ 1,85,08,949/- and ₹ 2,57,984/- was to be considered in the case of the appellant as undisclosed expenses. However, as undisclosed expenses are to be considered against undisclosed income, the AO is directed to treat the undisclosed expenses of ₹ 1,85,08,949/- and Rs. ₹ 2,57,984/- as part of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to verify the nature of entries as made in the seized document. The AO has blindly interpreted the seized document without ascertaining the facts or verifying the nature of the entries in the seized document. Even in course of the remand proceedings, the AO has failed to bring positive material on record to substantiate his finding that profit was made on sale of land held by the companies. The AO has simply presumed that there was sale of land resulting in profit of ₹ 5,91,83,392/-. The decision of the AO is not based on proper findings. The explanation submitted by the appellant has been summarily rejected by the AO more on presumption than in factual ground. There is positive material on record in the form of the profit loss account and balance sheet of the concerned companies for the year ending 31.3.2008, 31.3.2009 and 31.3.2010 to show that no sale of land was actually made by the companies. All the three companies mentioned in the seized document still continue to hold such land as per their respective audited accounts and so the entire presumption of sale of land by the AO carries no force. The conclusion of the AO that profit was made on sale of land is contrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction with Fort to the tune of ₹ 7,40,90,000/- and also other receipts which was available with assessee and the expenses were out of such sums only and hence the ld CITA was fully justified in allowing such set off. The ld AR also submitted that on a perusal of assessment order itself , it can be observed that the ld AO himself has allowed such set off and now the revenue is disputing such action which amounts to disputing its own earlier action and which is not permissible as per law. 12.5. In response to this, the ld DR relied heavily on the order of AO and urged to sustain the addition arising out of page 43 and page 45 of SSG/45. 12.6. We have heard the rival submissions and perused the materials available on record including the paper book submitted by the assessee in this regard. As regards page 43 of the seized document , since ld AR stated that the same is not pressed, the said addition of ₹ 2,57,984/- is sustained and ground raised in CO of assessee is dismissed as not pressed. Hence we do not find any infirmity in the order of the ld CITA in this regard. 12.6.1. As regards page 48, we find that factually there is no change in the shareholding o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of the wife of the appellant as undisclosed investment of the appellant and such action of the Ld. CIT(A) in confirming the action of the AO is without appreciating the fact that the said bank account stood in the name of the wife of the appellant and if any addition were to be made such addition have been made in the hands of the wife of the appellant only. However, the Ld. CIT(A) without appreciating the fact sustained the addition so made and such action of the Ld. CIT(A) is liable to be quashed / cancelled / set aside. A.Y 2007-08 CO. 146/Kol/2012 Ground No. 4 - For that in view of the facts and circumstances the Ld. ClT(A) erred in confirming the action of the AO in treating ₹ 85,863/- being the sum credited in the bank account of the wife of the appellant as undisclosed investment of the appellant and such action of the Ld. CIT(A) in confirming the action of the AO is without appreciating the fact that the said bank account stood in the name of the wife of the appellant and if any addition were to be made such addition have been made in the hands of the wife of the appellant only. However, the Ld. CIT(A) without appreciating the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment of the appellant and such action of the Ld. CJT(A) in confirming the action of the AO is without appreciating the fact that the said bank account stood in the name of the wife of the appellant and if any addition were to be made such addition have been made in the hands of the wife of the appellant only. However, the Ld. CIT(A) without appreciating the fact sustained the addition so made and such action of the Ld. CIT(A) is liable to be quashed /cancelled/set aside. This ground without prejudice to the fact that the appellant has shown the same as application of the income offered by it and hence it may be kindly be considered accordingly. Ground No.7 - For that in view of the facts and circumstances the Ld. CIT(A) erred in confirming lhe action of the AO in treating ₹ 17,56,785/- as undisclosed investment of the appellant without appreciating the fact that such jewellery had not been found either in the possession of the appellant or from the premises of the appellant hence such action of the AO is without appreciating the fact that such jewellery belonged to the other persons and hence the action of the Ld. ClT(A) in confirming the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -, ₹ 3,74,170/-, ₹ 67,411/- ₹ 17,56,785/- out of available cash , we find merit in the fact that that the ld AO himself has allowed such set off in the assessment order so revenue cannot be allowed to change its stand now. Even otherwise, the revenue is not in possession of any evidence nor it has furnished any such fact on record that the sums expended were other than out of sum earned / received as cash by the assessee. Hence, we concur with the order of ld CITA in allowing sums as part of cash flow and as such the revenue s grounds in respective years fails on such account. As a result, we hold as follows: Asst year Appeal No. Ground Nos. Result 2006-07 34/K/12 6 Dismissed 145/K/12 4 Dismissed 2007-08 35/K/12 6 Dismissed 146/K/12 4 Dismissed 2008-09 36/K/12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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