TMI Blog2018 (6) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... other premises for office and this was only premises for use of office, has not been addressed by the authorities below. In our considered opinion, the assessee being a professional artist is entitled to have a proper office and storage space. Hence, in our considered opinion, this issue needs to be remitted to the file of the assessing officer. The assessing officer is directed to consider the issue afresh Addition on the basis of loose papers - unexplained cash payments - Held that:- As it is seen that the same is a scribbling for a real estate property of 5100 ft. total price this has been mentioned as ₹ 7 cr 65. There is also mention of cash ₹ 3.35 and cheque of ₹ 2.15. In this regard, the assessee’s case is that the said paper was only a proposal and was later on cancelled with the same party. The assessee entered into a new agreement for 2995.70 ft. for ₹ 4.65 crore. Assessee has duly submitted confirmation of payment and agreement for the new project. The cancellation of the cheques given for the earlier project have also been shown and conformed - The above said document cannot be said to be a conclusive proof of cash payment of ₹ 3.5 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income Tax (Appeal) erred in confirming the addition of ₹ 4,80,000/- made by the Ld. AO, being alleged unaccounted/ undisclosed income in respect rent received in cash from Shivani Oil and Gas Exploration. It is submitted that Ld. AO has made such addition on the basis of loose paper marked as Annexure A-l page no. 127 found in premises of Mr. Chand Mishra. It is submitted that no such rent receipts have been received in cash by the appellant. It is further submitted that neither evidences whatsoever have been found by the Income Tax Search team nor any loose papers have been found during search proceedings which indicates that your appellant has received such ₹ 4,80,000/- out of books and therefore assumption and presumptions of receipt of alleged undisclosed Income of ₹ 4,80,000/- is unreasonable and unlawful. Without prejudice, we would like to state that appellant follows Cash system of accounting and therefore, such receipts can be taxed only on the basis of evidence of receipt of such cash. It is further submitted that no evidence regarding receipt of cash has been found by search party as well as by the Ld. AO hence, adding of same on assumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -, being cost of the flat. It is submitted that the Hon'ble Commissioner of Income Tax (Appeal) ad Ld AO while determining the notional rent has erred in relying in the case of Smt. Radhadevi Dalmiya Vs. CIT 125 ITR 134 wherein hon'ble ITAT had adjudged that fair return of about 7% on the investment in properties can be taken into account for determining Annual ratable value. It is further submitted that consequential to the above act of determining the notional rent, Hon'ble Commissioner of Income Tax (Appeal) erred in confirming the action Ld. AO who erred in making disallowance of depreciation of ₹ 18,43,347/- as claimed by your appellant in respect of said office on the pretext that the same was not used for the office purpose for the year under consideration. It is to state that such assumptions and presumptions were made by the learned assessing officer without verifying the facts. It is therefore prayed to your honour to delete such addition made on arbitrary basis and allow the depreciation claim in respect of such office. It is therefore prayed to give necessary direction in this regard. 3. The grounds of appeal raised in Revenues appeal read as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) is justified in deleting the addition of ₹ 1,20,00,000/- being undisclosed income received during the wedding ceremonies without appreciating the fact that the addition has been made on the basis of statement of assessee's personal secretary Shri Chand Mishra, who handled and managed her entire business I endorsement and which is corroborated by other evidences seized during the course of search? Assessee's appeal: 4. Apropos ground no.1 - addition of ₹ 4,80,000/- being undisclosed income in respect of rent received in cash from Shivani Oil and Gas Exploration: 4.1 On this issue the assessing officer made the addition by observing as under: On verification of the Annexure A-l page no, 127 of the loose papers seized from Navkaran Office on 21-03-2011, it is seen that the assessee was charging an amount of ₹ 55,000/- as gross rental per month from M/s.Sivani Oil Gas Exploration Services in respect of Sky Garden, Oberoi property and as per the scribbling on the back side, it is evident that along with ₹ 55,000/- in cheque on which TDS was being deducted by the payee, the assessee was also receiving ₹ 60,000/- per month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Sky Gardents, which is quite an another property and the cash rental so found also pertains to A.Y.2010- 11 2011-12. The loose paper seized in respect of Navakaran office pertains to A.Y.2009-10 A.Y.2010-11, which the assessee has merged her explanation with that of Oberoi Sky Garden cash rental receipts. Therefore, the explanation of the assessee is not accepted. Therefore, the cash rental receipts to the tune of ₹ 4,80,000/- is added to the income of the assessee under the head income from house property for A.Y.2011-12 and is taxed accordingly. 5. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) confirmed the addition. 6. Against this order assessee, the assessee is in appeal before us. 7. We have heard both the counsel and perused the records. We find that the assessee s submissions on this issue are same as considered by us in assessee's own case for assessment year 2010-2011 vide order dated 16.01.2018. In the said order, the issue has been dealt with as under: 10. In this regard, we note that the assessee has submitted as under: It is submitted that Ld. A.O. has made such addition on the basis of loose paper marked a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t find any infirmity in the order of authorities below and confirm the same. 9. Another issue raised is that the ld. Commissioner of Income Tax (Appeals) erred in confirming the addition made by the assessing officer of ₹ 14 lacs being notional rent for Penthouse at flat nos. 901 and 904 of Navkaran Building. On this issue the assessing officer has made the addition by observing as under: In the return of wealth filed, the assessee had claimed the penthouse at 9* Floor in Navkaran apartments as exempt as an office, being used for the business purpose. However, during the course of search, it was noticed that the flat No.403 was used as office rather than 901. In this regard, statement on oath of one of the assessee's employee Ms.Deepika Prakash was recorded u/s.!32(4) of the I T Act on 24-01-2011, wherein she stated in reply to Q.5 that; As per my knowledge the flat was purchased by Ms. Priyanka Chopra in 2008. The flat was since then never utilized for business or residence purpose. Hence the fiat is vacant since it was purchased. On further verification it is noticed that the said penthouse is of two different units and separate agreements are made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by holding as under: 11.1 I have carefully perused the assessment order and the written submission of the appellant. The flat was vacant throughout the entire year but had been apparently let out in the earlier years. Therefore as per the provisions of the Act it attracts the view of notional rent. It is seen that the AO has correctly calculated the notional rent at the rate of 7% of ₹ 2,00,00,000/- being the cost of the flat. Such view is based on the Hon'ble Tribunal decision in the case of Smt. Radhadevi Dalmiya Vs. CIT -125 ITR 134. Again, since the flat was lying vacant and not utilized and used for any business purpose the depreciation claimed has also been correctly disallowed by the AO. The AO has very clearly shown in the assessment order as to how the view of notional rent is attracted and as to how depreciation is not allowable on such notional rent. 11. Against this order, the assessee is in appeal before us. 12. We have heard both the counsel and perused the records. Upon careful consideration we note that this addition has been made by the assessing officer on the basis of a statement of the assessee employee that the said flat was vacant. Apart fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiated that cheques issued to Mr. Goldie Ahuja for ₹ 29 lacs and ₹ 50 lacs was also cancelled as the proposal was not accepted by the assessee due to the involvement of cash component as proposed by the broker Mr. Goldie Ahuja. Rather since the assessee preferred to carry out all payments through cheque she went in for a smaller property at 2995.79 sq. feet by paying the full amount of ₹ 4.65 crores in cheque. 15. It was further explained as per loose papers found at assessee's premises numbered as page nos.109-113 of the same Annexure A-l which contains the details of allotment of premises by M/s Arjun Realtors Pvt Ltd which was agreed upon by the assessee for ₹ 4.65 cores having an area of 2995.79 sq. ft only which is much less than the area of 5100 sq, ft. offered earlier. The assessee has substantiated this fact by submitting the agreement aggregating to ₹ 4.65 crores showing the details of payments through cheque which are recorded in the books of accounts of the assessee. 16. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) deleted the addition holding as under: It is seen that the Assessing Officer had r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been shown and conformed. The sole basis of this addition is the above said document found. In our considered opinion, the above said document cannot be said to be a conclusive proof of cash payment of ₹ 3.5 crores. The assessee's plea that the same is a proposal which was not carried through cannot be brushed aside in light of the confirmation from the parties involved. It is also on record that the assessee never purchased estate property of 5100 sq. ft. from the said builder. Hence, the claim that it was a proposal later on not carried through and cancelled is having sufficient cogency. In similar circumstances, the Hon ble Apex Court in the case of CIT vs. P. V. Kalyanasundaram [2007] 294 ITR 49 (S.C.) had affirmed the deletion of similar addition. Accordingly, in light of the aforesaid discussion and precedent, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals). Hence, we affirm the same. Apropos ground no. 2: 19. The assessing officer made addition in this regard by observing as under: 19.2 Purchase of Sawantwadi property In respect of the property purchased at Sawantwadi, during the course of search, Axis B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's mother she had submitted that assessee has infact entered into two agreement of ₹ 40 lakhs and ₹ 1.10 crores (as against ₹ 125 lakhs mentioned in seized papers) respectively towards purchase of property of Sawantwadi and payments in relation to such agreement are made in cheques. Details of cheques paid are as under: Date Cheque No. Name of the Bank Amount (Rs) 30-10-2010 102727 Axis Bank Lokhandwala 5,00,000 02-11-2010 102726 Axis Bank Lokhandwala 5,00,000 15-11-2010 RTGS Axis Bank Lokhandwala 35,00,000 14-12-2010 102740 Axis Bank Lokhandwala 20,00,000 14-12-2010 113201 Axis Bank Lokhandwala 15,00,000 15-12-2010 103058 HSBC Bank Chembur 35,00,000 08-01-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AXIS Bank Rs.20,00,000 14-12-2010 Cheque No. 113201 Rs.15,00,000 Total (Agreement Value) Rs.40,00,000 In this regard, the assessee has filed the ledger copy of the payments made for purchase of the above said property, which are follows: Date Name of the Payee Amount (Rs.) 02-11-2010 Ashok Chopra 5,00,000 02-11-2010 Ashok Chopra 5,00,000 15-12-2010 Ashok Chopra 1,65,000 18-12-2010 Ashok Chopra 15,00,000 18-12-2010 Ashok Chopra 20,00,000 16-03-2011 Ashok Chopra 1,83,875 Total 48,48,875 Date Name of the Payee Amount (Rs.) 16-12-2010 Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-2010 -Do- 10,00,000 A-2 24 22-12-2010 -Do- 20,00,000 In reply to the above said payments, the assessee vide her representative's .letter dated 17-12-2012 had submitted as under: Cheques dated 30-10-2010 No. 102726 of ₹ 5,00,000 in favour of Mr.Manual Fernandes Cheques dated 30-10-2010 No.102727 of ₹ 5,00,000 in favour of Mr. Salestin Augustine Alrneida It is submitted that the said cheques are duly recorded in the books of account and ledger account. It is submitted that page nos. 40, 41 42 are one and the same. Further ₹ 5 lacs was paid in cash which is fanning part of ₹ 7 lacs cash admitted by Mrs. Madhu Chopra as undisclosed income in case of transaction for acquisition of Sawant Property in the clarificatory statement filed before your honour. In respect ofRs.32 lacs it is submitted that out of total 32 lacs, ₹ 30 lacs is the amount paid to Plaza Hotels Pvt Ltd., on behalf of Manuel Fernandes. Further, ₹ 2 lacs was paid in cash which is forming pan of ₹ 7 lacs cash admitted by Mrs. Madhu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion is not accepted for the following reasons: i) The undisclosed income of ₹ 54 lakhs was offered in the case of Mrs. Madhu Chopra, therefore, its application cannot be given in the assessee's case. ii) Further, the application of ₹ 54 lakhs was given in the case of Mrs. Madhu Chopra in respect of cash found during the course of search of ₹ 21 lakhs, unexplained jewellery of ₹ 1,80,110/- and the balance of ₹ 31,19,890/- in the protective addition'made on account of purchase of sawantwadi property as an application. (Addition of ₹ 1,06,00,000) 20. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) deleted the addition. On some aspects of the addition made by the assessing officer, she referred to assessee's explanation and accepted the same. She further noted that assessing officer has made the addition without considering the page wise submission of the assessing. What are these page wise submission have not been brought on record by the learned CIT-A. She has also referred to Hon ble Apex Court decision in the case of P. V. Kalyanasundaram (supra). However, we find that this Hon ble Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant has accepted that such cash payment is made out of cash receipts received on the sale of Gurgaon property for ₹ 54 lakhs and same has mother Smt. Madhu Chopra for A.Y.2011-12. Further appellant's mother has already of Mrs. Madhu Chopra and therefore, taxing the application of the funds tantamounts to submission/Therefore the explanation of the Appellant is accepted and the ground of appeal is allowed. 23. Against the above order, the Revenue is in appeal before us. 24. The main grievance of the Revenue is that the ld. Commissioner of Income Tax (Appeals) should not have allowed telescoping of the income with the declaration of undisclosed income by her mother. Here we find that the Revenue's plea is not sustainable. Throughout the search assessment it has been noted that assessee's mother has been handling all the affairs of the assessee. When the Revenue can make additions in the hands of the assessee, on the basis of that it was so stated and accepted by the assessee's mother, there is no reason why such telescoping cannot be granted. Accordingly, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order and the appellants' submission and accordingly the explanation of the appellant is accepted. The ground of appeal is therefore allowed. 27. Against this order, the Revenue is in appeal before us. 28. We have heard both the counsel and perused the records. We find that this addition has solely been made on the basis of a statement obtained from the secretary of the assessee. There is no corroborative material whatsoever. A mere statement by the secretary cannot be said to be a conclusive proof of undisclosed income earned. Hence, we are of the considered opinion that the ld. Commissioner of Income Tax (Appeals) has correctly accepted the assessee s submission in this regard and deleted the addition. Hence, we accept the ld. Commissioner of Income Tax (Appeals) s finding and affirm her order. 29. In the result, both the appeals are partly allowed for statistical purposes. ITA No. 4569/Mum/2015 30. This is an appeal by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) dated 11.05.2015 and pertains to the assessment year 2011-12. 31. The grounds of appeal read as under: Whether on the facts and in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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