TMI Blog2011 (11) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... nd against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 40,54,325/- 3. In the facts and circumstances of the case and in law the ld. CIT (A) has erred in enhancing the assessment by way of a further addition of ₹ 60,75,000/- under section 69 as alleged unexplained investment. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the enhancement of ₹ 60,75,000/-. 2.2 Brief facts of the case as contained in the order of the ld CIT(A) are as under:- The assessee is a land developer and in consequent to search and seizure operation carried out on 16.11.07, notice u/s 153A was issued in response to which return declaring income of ₹ 4,88,999/- was filed. During the course of search operation various incriminating documents regarding investment in immovable property by way of sale-purchase agreement and construction activity were found and seized. A.O. noticed that for purchase of land for different schemes, the appellant used to prepare two types of agreement. First agreement was the real agreement made in the name of Sh. Ranj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has not able to give evidence / receipt for advance booking of plots in Govind Vatika Project. Thus assessee has given sketchy cash flow for summary without any evidence / support documents that advance have been received of booking of plots. No confirmation has been filed from persons who have booked plots in this scheme. Thus explanation offered is unacceptable and without any basis. Thus I have no other option but to treat the amount of ₹ 40,54,325/- as unexplained cash credit us/ 68 for assessee has failed to explained of sources of funds. Thus addition of ₹ 40,54,325/- is being made as unexplained cash credits to the total income of the assessee. 2.6 Before the ld CIT(A), the assessee first tried to explain the modus operandi of the business. The assessee enters into agreement to purchase the land from the farmers and he pays certain amount. The assessee then starts marking plots and starts receiving the advance. Money so received in advance is paid to the farmer and land is formally transferred in the name of the society. The assessee submitted the list of plot holders alongwith their addresses and submitted that the AO could have made enquiries for veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidence for the same are not presently traceable. It is mentioned that these details were also not furnished before undersigned, even after lapse of about 9 months from date of filing of appeal. 2.7 Another argument taken by the appellant that there was no cash credit in the books of accounts and accordingly addition so made by the A.O. u/s 68 deserves to be deleted, has been gone through by the undersigned. Considering the facts and the legal position on the issue, the undersigned vide order-sheet entry dated 16.8.10 has asked the A.R. to show cause as to why this addition so made by the A.O. be changed to be made u/s 69 of the Income tax Act, 1961 as unexplained investment in purchase of land, as this purchase of land was not recorded in the books of account and opportunity was given to put up his case. The A.R. of the appellant vide his written submission dated 11.10.10 has replied that provisions of section 69 are also not applicable because nature and source of the investment is fully explained without giving any details as to how the nature and source of the investment is explained. As already discussed, he has completely failed to explain the source of investment. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ika project, which has been developed in A.Y. 2004-5, as per the appellant; hence purchase of this land of 6 bigha 15 biswa and consequent payment thereof, has been obviously made in period relevant to A.Y. 2004-05. As the facts and circumstances for this issue of enhancement of ₹ 60.75 lakhs are same, as discussed in the earlier paragraphs regarding purchase of land for ₹ 40.54 lakhs, it is held that investment of ₹ 60.75 lakhs in purchase of 6 bigha 15 biswa land at village Hathoj for Govind Vatika project developed on 13 bigha 1.5 biswa land is unexplained and accordingly is held to be added u/s 69 of I.T.Act. This will lead to enhancement by ₹ 60.75 lakhs. 2.10 Before us, the ld.AR has explained the modus operandi of the business and such modus operandi will be applicable for all the projects. The submissions are as under:- 1.5 The assessee appellant elaborately explained Modus Operandi as well as his Business Model to the ld AO as well as CIT(A). The ld. AO nowhere in his assessment order has rejected the business model nor has he found the business model explained to be false. The ld CIT(A) has also erred in confirming the action of the ld AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Name of Scheme Total Plot Area as per Map (in Sq.Yards) PB No. Total Plot area sold (in Sq.Yards) PB No. Govind Vatika 25788.10 282 25788.40 253-259 Gokul Vihar 15144.80 283 15039.20 260-264 Mangalam Residency 16953.20 284 16953.28 265-269 Subham Vihar 33020.00 285 33169.80 270-278 Brij Vihar 8274.60 286 8274.60 279-280 1.7 The ld AO as well as the CIT(A) could not properly appreciate the Modus Operandi. Both the lower authorities insisted for specific evidences as if it was a case where regular books of accounts were maintained. Admittedly the income is from undisclosed business and therefore evidences will be of the nature and quality of that of the unaccounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale Amount(Rs.) 1,52,30,801 187-190 Less: Cost of Land (Rs. ) 1,04,82,000/- 187-190 Development cost 41,26,096/- 187-190 Profit 6,22,705/- 187-190 Profit % on Cost 5.94 Area in Sq. Yards 25788 Area of Plots Sold 24302 Area of Plots given to Farmers(Seller) as Complimentary 1486 1.10 Govind Vatika was the first project of the assessee appellant. As per seized documents, the assessee appellant has purchased the land for the project as under: Annexure/Page No. Details of the Property Name of Seller Purchase Consideration (Rs. In Lacs) PB Page A-2/152-154 6 Bigha 15 Biswa Land Village-Hathoj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madanlal, the payment schedule agreed by as under: Rs.21000 as advance Rs.500000 on 15/03/2003 Remaining amount in 4 instalments of 12 months as under: Ist - 10/06/2003 Iind- 01/09/2003 IIIrd - 15/11/2003 Ivth - 01/02/2004 1.13 Against the above, the actual payments were made to Madan Lal as under: Actual Date of payments Amount (Rs. In Lacs) Seized Document Annexure/ Page PB 9-2-03 .21 A-7/20 30-37 15-3-03 5.00 A-7/20 30-37 14-5-03 5.00 A-7/25 30-37 5-8-03 6.50 A-7/24 30-37 27-9-03 3.50 A-7/23 30-37 22-10-03 3.00 A-7/26 30-37 3-12-03 4.29 A-7/27 30-37 8-12-03 2.50 A-7/28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A-20/Page 2,6,7,8 Bulk Sale 181-184 A-23/Page 28 Bulk Sale 185 On occasions he also received money for bulk booking of plots from the persons who are in this business. The amount so received was used by him for making subsequent payments to the seller of land as per receipts seized during search. Thus, the assessee appellant was able to do the business without investing his own capital. 1.17 The complete cash account for receipts and payment regarding Govind Vatika Project prepared with the help of seized documents for evidencing the above business model is at PB Page187-190. The said date wise account confirm the following: (i) Payment for acquiring the land have been made in a staggered way over a period as against the fact of lump sum payment taken by the lower authorities for making/confirming the additions. (ii) The entire funding for acquiring the land is by receiving the booking amount and thus no capital of the assessee appellant is involved. (iii) The profit of Govind Vatika Project is ₹ 6,22,705/- as declared by the assessee appellant in his retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page no. 4 of Assessment year 2006-07 he has mentioned As the purchase of this land was not account for in the books of accounts and consequently this payment was also unaccounted, A.O. added the same. Whereas he himself has mentioned on page no.7 of his order for A.Y.2005-06 that appellant has not maintained any books of accounts for this project and for that matter for other projects also. The appellant has categorically admitted before both the lower authorities that no regular books of accounts has been maintained by him inspite of that The Ld. CIT(A) was confused that books of accounts were maintained or not because at one place he has mentioned that regular books of accounts were not maintained and on other place he has mentioned that the purchase of land and amounts so paid was not shown in the regular books of accounts. NAME AND ADDRESS OF PLOT HOLDERS:- The Ld.CIT(A) on page no.5 of his order for A.Y.2004-05 has stated that the claim of appellant that he has submitted the name and address of the prospective plot holders and Ld.AO could have made verification from them is irrelevant and misplaced. The Appellant has submitted the list of plot holders of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plot owners furnished by the assessee ( APB page no. 253 to 281), it can be seen that only the plot no; name of the plot owner; address and size of the plot are given. Many of the addresses are incomplete. In the list for Brij Vihar on pg. 279 of the paper book for address only Jaipur is written. On the remaining pages related to other projects there are dozens of addresses which are incomplete and from which the person cannot be located. No details are provided as to how much payment was received from the plot owners and when. Without these details how can the A.O make any verification from these plot owners? It is the responsibility of the assessee to give date wise details of the payments received from these parties and also their confirmations about the same. It is only then can it be said that the assessee has discharged his onus and the onus has shifted to the A.O. It may be highlighted here that before the A.O the assessee vide his letter dated 09.12.2009 has clearly mentioned that supporting details of the advances and the evidence for the same are not presently traceable. Such evidences were not produced even before Ld. CIT(A). In this regard, it is submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this initial burden and therefore the unexplained investment has been rightly added by the CIT(A) u/s 69. iv). In his submissions, the assessee has also claimed that the advances received from prospective plot owners are reflected in the diaries seized during the search operations. It may be noted that during the assessment and first appeal proceedings the assessee made this general statement only but never explained which entries in the diaries were related to which payments for land. The assessee has furnished the copies of such diaries in the paper book at pg. 38 to 185. From these diaries, it can be seen that many of the pages are blank. On some of the pages names of the persons and amounts are mentioned but no dates are given. The assessee has not linked the entries on these pages with the cash flow summary submitted by him to the A.O and CIT(A) to explain the source of money invested in the land. In many cases the names appearing in the diary are different from the name of plot owner shown in the list submitted by the assessee. For example, on page 138 of APB for plot no. 26 the name is G.Y.Meena but on page 254 of APB the plot owner is Sunita Meena. Similarly for plot n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is claimed to be received, therefore the source of investment in the land remains unexplained. 2.13 We have heard both the parties. The action u/s 132 of the Act i.e. search operations were carried on 16-11-2007. The case was centralized with Central Circle on 31-12-2007. Notice u/s 153A was issued on 15-02-2008. The assessee filed return of income on 06-02- 2009. We are not aware as to when the copies of seized documents and copies of statements were provided to the assessee. After filing of return, the case was fixed for hearing on 6-11-2009. The assessee has filed replies vide letters dated 18-11-09, 01-12-09 and 05-12-09. Section 153A, notices were issued for the assessment years 2004-05 to 2007-08 and all the assessments were to be barred by limitation by 31-12-2009. All assessments were to be completed within 15 months as the effective hearings were started on 18-11-2009. 2.14 Pages no. 187 to 190 contain the details of amounts received from the persons in lieu of plots booked in Govind Vatika Project. In these details, the ld.AR has referred to seized exhibit number in respect of receipts of amounts to show that receipts were verifiable from seized record. The pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art at pages 187 to 189 are:- 11-01-2004 ₹ 51,000 03-02-2004 ₹ 5,50,000 19-03-2004 ₹ 1,00,000 06-04-2004 ₹ 3,00,000 10-04-2004 ₹ 1,09,000 14-04-2004 ₹ 11,000 All the above entries except of ₹ 11,000/- are available at seized exhibit A-19 page 2 and copy of such page is available at page 179 of paper book. However, the total mentioned at A-19 page 2 is 11,21,000/- and such total is the same as of all the entries mentioned above. It means that no separate entry of ₹ 11,000/- is there but this amount is included. Page 2 of Exhibit A-19 also contains the receipt from Shri Devender and these are the same as contained in all the receipts of Govind Vatika Project. The entries are only for Govind Vatika Project while cash flow statement is for the projects for the financial year and hence there will be difference It is noted that cash in hand as on 31-03-2005 and 31-03- 2006 is more than of ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment expenses. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 3,77,455/-. 3.2 The AO in his assessment order has estimated the profit in the project at ₹ 19,98,070/- and since such project yielded profit in three assessment years from 2003-04 to 2005-06 and accordingly profit to be taxed for the year under reference was taken at ₹ 6,66,023/- which represented 1/3rd of ₹ 19,98,070/-. The findings of the AO are as under:- The assessee is not maintaining regular books of accounts. The assessee has not produced any evidence for verification of profit as computed as above and has not declared in the return of income. Assessee has taken minimum development expenses ₹ 169 per Sq. Yard and has given bifurcation is as under:- S.No. Particulars Rate per Sq. Yard 1. Roads Internal 30 2. Road Approach 10 3. Tree Guards / Tree 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2005-06, the assessee raised the following submissions as mentioned by the ld CIT(A) in para 3.2 and 3.3 of appellate order. These are reproduced as under:- 3.2 Before me, it was submitted that details of development expenses were furnished before the A.O. The A.O. has disallowed 1/3rd of the expenses only on the basis of report of Inspector. On perusal of the report of the Inspector, it is seen that he has mentioned about the name of Govind Vatika only and not of other scheme. The report consists of 15 lines only. It was claimed by the A.R. that this scheme alongwith other schemes are being developed in Hathoj at Kalwar Road where more than 50 different schemes are developed. The report does not mention anything specific about the location, which leads to doubt about the Inspector really having visited site. No opportunity of crossexamination was accorded before relying on the report. It was submitted that disallowance may be deleted. 3.3 Alternatively, it was submitted that in any case, the A.O. has added the profit from Govind Vatika project in the return of income and the A.O. should have added only the excess profit estimated by him. The total profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses is upheld. 3.5 However, I agree with the alternative submission of the A.R. that when profit of Govind Vatika project has been computed by the A.O. at ₹ 19,98,070/- which has been divided into 3 years at ₹ 6,66,023/-, the addition should be made only after reducing the profit shown by the appellant from this project in the return of income. In A.Y. 2005-06, the appellant has shown undisclosed income from all the schemes at ₹ 5,67,060/- in the return of income, which includes undisclosed income from Govind Vatika project of ₹ 1,32,628/-. Thus the amount required to be added comes to ₹ 5,33,395/- in A.Y. 2005-06 and addition to the aforesaid extent is upheld. 3.6 Before us, the ld.AR has submitted as under:- 4.5 The basis for disallowance made by the ld AO is a report of the Inspector. Perusal of the report of the inspector does not inspire any confidence about his actually visiting the sites. The report mentions the name of Govind Vatika only and not of any other scheme surrounding to Govind Vatika or adjacent to it to support the visit of inspector ,if done, at correct location. The report is consisted of 15 lines only. Please note tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is most reasonable looking to development. 4.10 The ld CIT(A) at page 9 of his order(A.Y. 2005- 06) has upheld the addition made by the ld AO on the ground that the assessee appellant has shown the development cost purely on estimated basis. He completely ignored the fact that the assessee appellant has not maintained any books of account for his undisclosed business. In such cases, expenses are always taken on estimated basis. The ld CIT(A) has not disputed the reasonableness of expenses incurred. 4.11 The CIT(A) has observed that the report of the inspector was shown to the AR of the appellant and he was confronted with the facts mentioned in the report. However, no opportunity of cross examination was afforded to the assessee appellant before relying on the report of the inspector. Even otherwise, any report which, on the face of it, is unreliable cannot be made basis of disallowance even if the content of which might have been shown to the AR of the assessee appellant. 3.7 The ld DR in his written submissions has mentioned that he is relying on the order of the ld CIT(A). 3.8 We have heard both the parties. It is true that development expenses are not verifiable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pite of specific submissions made in this regard during appellate proceedings. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be provided in various grounds of appeal for additions under section 69 for unexplained investments. 4.2 The above referred ground of appeal has not been raised before the ld CIT(A) for the assessment year 2004-05 and therefore, the ld CIT(A) has not recorded any finding. The written submissions filed before the ld CIT(A) available at pages 333 to 358 contain the arguments on the above issue at pages 344 to 353 and were made part of arguments for addition on account of alleged explained cash credit for assessment years 2003-04 to 2006-07. The additions agitated were:- 2003-04 ₹ 5,21,000 2004-05 ₹ 40,54,235 2005-06 ₹ 40,51,000 2005-06 ₹ 1,24,00,000 2006-07 ₹ 1,10,00,000 According to the assessee, total assets found were explained except to the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- 6.2 The AO while making addition observed as under:- (a). The assessee as per seized [Annexure A-1 page-1 to 7 ] has paid ₹ 10,21,000/- to the seller of land Sh. Sohan, Sh. Mohan and Sh. Radhey Ji Yadav for Gokul Vihar project at Vill. Minawala Land @ 15,50,000/- per Bhiga on 15.10.2004 further amount of ₹ 40,00,000/- was paid on 15.11.2004 and other amount of ₹ 40,00,000/- was given on 15.12.2004 and final payment of ₹ 33,79,000/- on 15.01.2005 for acquiring this land for the Gokul Vihar Project. Thus total payment of ₹ 1,24,00,000/- has been made for Gokul Vihar Project. Assessee was asked as per Order Sheet to explain the sources of fund of ₹ 1,24,00,000/- The evidence in this regard are not presently traceable. On occasions I also receive money for bulk booking of plots from the persons who are in this business. The amount so received is used by me for making subsequent payment to the farmers (sellers of land) as provided in the initial agreement with them for my buying the land. Thus I am able to do the business without investing any capital of mine. The assessee explanation has been carefully considered but not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Even in the appeal proceedings before the undersigned to attempt has been made to explain the source of fund, by giving specific details at specific amount received from specific person. Only names and address of the plot holders was given before the A.O., without giving any details of the amount received from each of the contended plot holders as well as the date of receipt of those amounts. It is quite clear that firstly this purchase of land is not recorded in the books of account and thus is unaccounted and secondly the onus lies on the appellant to give details of source of investment of ₹ 12400000/- for the purchase of land with sufficient evidence. Accordingly, the contention now taken by the A.R. of the appellant that he has given the name and address of the plot holders and A.O. could have made verification is devoid of any merit. 2.7 Another argument taken by the appellant that there was no cash credit in the books of accounts and accordingly addition so made by the A.O. u/s 68 deserves to be deleted has been gone through by the undersigned. Considering the facts and the legal position on the issue, the undersigned vide order-sheet entry dated 16.8.10 has asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were received from bulk purchasers before the amount was paid as per agreement. A sum of ₹ 21,000/- was paid on 09-02-2003 and ₹ 5,00,000/- was paid on 4-03-2003 and a sum of ₹ 5,11,000/- was mentioned in the agreement. In the case of 'Govind Vatka Project' , a sum of ₹ 21,000/- was paid before the date of agreement and a sum of ₹ 10,00,000/- was paid on 15-10-2004. The assessee has also filed the cash flow statement also. Looking to the modus operandi of the business of the assessee which is verifiable from the execution of the project of 'Govind Vatka Project', we hold that the investment for purchasing the land is out of the funds received from bulk and retail purchasers and hence no addition is required to be made on this account. Hence, the addition of ₹ 1,24,00,000/- confirmed by the ld CIT(A) is deleted. 7.1 The third ground of appeal is against addition of ₹ 40,51,000/- confirmed by ld CIT(A) on the ground that investment in land in respect of 'Brij Vihar Project' is unexplained. 7.2 Our finding is the same as given in the case of 'Govind Vatka Project' and Gokul Vihar Project and accordingly w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 2,51,872/-. 9.2 The ground of appeal no 2 of the appeal of the Revenue is as under:- 2. Whether on the facts and circumstances of the case, the ld CIT(A) (Central), Jaipur has erred in law and on facts in directing the AO to reduce the addition of of ₹ 2,64,000/- by ₹ 12,287/- in respect of the Brij Vihar Project on the ground that the assessee has shown the amount of ₹ 12,287/- even though the assessee had not shown the amount of ₹ 12,287/- in his return of income filed u/s 153A for assessment year 2005-06. 9.3 We have heard both the parties. The cost of land is ₹ 661/- per sq. yard. The assessee has shown profit at ₹ 26/- per sq. yard. The AO made addition of ₹ 5,28,000/- for this project. After making addition, the profit per sq. yard will come to ₹ 91/-per sq. yard . The ld CIT(A) has considered the profit disclosed in the return u/s 153A and directed that the same be reduced from the addition made by the AO and accordingly upheld the addition of ₹ 3,18,414/-. 9.4 Another aspect is that the assessee has shown profit on the basis of percentage completion method. The percentage completion of project is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of the ld. AO in estimating the profits of Gokul Vihar Project at 6% of total sales and thereafter confirming the addition of ₹ 3,44,744/- out of the total addition of ₹ 7,44,000/- made by the ld. AO on account of profit of Gokul Vihar Project. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 3,44,744/-. 10.2 The third ground of appeal raised by the Revenue is as under:- 3. Whether on the facts and circumstances of the case, the ld CIT(A) (Central), Jaipur has erred in law and on facts in directing the AO to reduce the addition of ₹ 7,44,000/- by ₹ 3,.99,256/- in respect of Gokul Vihar Project on the ground that the assessee has shown profit of ₹ 3,99,256/- even though the assessee had not shown the amount of ₹ 3,99,256/- in his return of income filed u/s 153A for assessment year 2005- 06. 10.3 The assessee showed a profit rate of ₹ 26/- per sq. yard. The AO made addition of ₹ 7,44,000/- and such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.1 Ground of appeal no. 2 is against payment of ₹ 1,10,00,000/- as unexplained investment. 13.2 We have accepted the contention of the assessee that he arranged funds from bulk purchasers and retail purchasers for paying the sum to the farmers. Hence, the explanation in respect of investment is to be considered satisfactory in view of the word may mentioned in Section 69 of the Act. Considering our findings for investment in Brij Vihar, Gokul Vihar and Govind Vatika, we feel that no addition is required to be made u/s 69 for payment to farmers for the Shubham Vihar Project . Hence, the addition of ₹ 1,10,00,000/-is deleted and ground of appeal no 2 of the assessee is allowed. 14.1 The third ground of appeal of the assessee for the assessment year 2006-07 is as under:- 3. In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the addition of ₹ 21,00,000/- under section 69 as alleged unexplained investment. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 21,00,000/-. 14.2 The finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S 4 read with section 2(31) of The Income Tax Act, 1961. Section 4 states that Income Tax shall be charged in respect of the total income of the previous year of every person. Types of persons have been defined u/s 2(31) of The Income Tax Act, 1961. Clause (i) and Clause (ii) of section 2(31) relates to individual and HUF respectively. Both are distinct and different entities. It is a well settled principal of law that income shall be charged to tax in the hands of the person to whom it belongs. Further, income of one person cannot be taxed in the hands of other person. Honorable Supreme court in the case of ITO v/s Bachu Lal Kapoor [1966] 60 ITR 74 (SC) has held that so long as HUF exists, individual members cannot be separately assessed in respect of HUF s income. In the case of CIT vs. Dredging Corporation of India Ltd. (1988) 174 ITR 682, 687 (AP) it has been held that the charge of income tax is on every person. Thus the definition of the expression person occurring in Section 2(31) is a very crucial definition because it is with reference to the category of entities specified in Section 2(31) that the liability to tax under the Income Tax Act, 1961 is determined. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of the total addition of ₹ 7,52,320 /- made by the ld. AO on account of profit of Shubham Vihar Project. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 3,91,119/-. 16.2 The ground of appeal no. 2 of the Revenue for the assessment year 2006-07 is as under:- 2. Whether on the facts and circumstances of the case, the ld CIT(A) (Central), Jaipur has erred in law and on facts in directing the AO to delete the addition of ₹ 7,52,320/- by ₹ 5,18,075/- in respect of the Shubham Vihar Project on the ground that the assessee has shown profit of ₹ 5,18,075 /-even though the assessee had not shown the amount of ₹ 5,18,075/- in his return of income filed u/s 153A for assessment year 2006- 07. 16.3 The assessee has shown profit @ of ₹ 26/- per sq. yard at ₹ 9,09,194/- in different assessment years as under:- A.Y. Profit (Rs.) 2006-07 5,18,075/- 2007-08 99,914/- 2008-09 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 23,75,000/- made by the ld. AO under section 68. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 3,75,000 /- . 19.2 The second and third grounds of appeal of the Revenue are as under:- 2. Whether on the facts and circumstances of the case, the ld CIT(A) (Central), Jaipur has erred in law and on facts in directing the AO in deleting the addition of ₹ 20,00,000/- out of total addition of ₹ 23,75,000/-which was made by the AO on account of unexplained cash credit u/s 68 as the assessee had failed to explain the source of fund for payment of ₹ 23,75,000/- to M/s. Kashera for one bigha land at Machwa. 3. Whether on the facts and circumstances of the case, the ld CIT(A) (Central), Jaipur has erred in law and on facts in directing the AO in deleting the addition of ₹ 20,00,000/- as the assessee had failed to furnish any evidence regarding cancellation of agreement regarding land at Marchwa.. 19.3 The ld CIT(A) has considered this issue in paras 4.1 to 4.3 and these are reproduced as under:- 4.1 The A. O. has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt given as advance for purchase of land, instead of u/s 68 done by the A. O. after giving opportunity for the same vide order sheet entry dated 16.08.2010 and considering the reply of the appellant as is held in appeal for A. Y. 2006-07. 19.4 The ld.AR has submitted as under:- 2.3 The assessee appellant alongwith Mr. Sharif had entered into an agreement with Mr. Kesara for the purchase of land in Machwa Tehsil, District Jaipur. Copy of agreement (Annexure- 11/Page 28 to 31) is at PB 22-25 Total consideration mutually agreed between assessee and Mr. Kesara was ₹ 23.75 lacs, out of which ₹ 3.75 lacs was paid to Mr. Kesara during the year Financial Year 2006-07. This agreement could not be materialized due to some dispute in land which came to the notice of the assessee appellant after execution of agreement. Thereafter the assessee appellant has not paid any amount to Mr. Kesara. Mr. Kesara has not returned ₹ 3.75 lacs to the assessee appellant. The land is still in the name of Mr. Kasera. Copy of Jamabandi taken from internet was submitted to the ld AO vide letter dated 01.12.2009. (PB 287) It clearly shows Mr.Kesara was the owner of the land ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 3.75 lacs stands explained. The addition of ₹ 3.75 lacs is deleted. Hence, the ground of appeal no. 3 of the assessee is allowed while ground of appeal nos 2 and 3 of the Revenue are dismissed. Assessment year 2008-09 20.1 The first ground of appeal has not been pressed as per page no. 47 of the written submission. 21.1 The second ground of appeal is that the ld CIT(A) has erred in confirming the addition of ₹ 9,58,500/- representing the cash found during the course of search 21.2 This issue has been considered by the ld CIT(A) vide paras 3.1 to 3.3 in his order and these are reproduced as under:- 3.1 A.O. noted that during the course of search, ₹ 9,58,500/- was found for which is answer to question no. 14, appellant stated that ₹ 1 lakh belongs to him and remaining amount was taken as loan from 7-8 persons for repaying loans taken earlier. On being asked to furnish the name of the persons from whom loan was taken, he stated that he does not remember. Similarly, he stated that he does not remember the names of the persons to whom the earlier loan was to be repaid. During the course of assessment proceedings, the appellant filed c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken. Accordingly, the contention in the assessment proceedings has been rightly rejected by the A.O. and he has rightly held the cash found of ₹ 9,58,500/- as unexplained. The addition is therefore sustained. 21.3 Before us the ld.AR has submitted as under:- 7.3 The above amount of cash was found and seized during the course of search operations conducted on 16/11/2007 at the residential premises of the assessee. 7.4 During the course of assessment proceedings confirmation regarding cash advance receipt of ₹ 10,00,000/- from Shri Leeladhar was submitted vide letter dated 24/11/2009 alongwith the Bank Account of Shri Leeladhar. Copy of Confirmation of Shri Leeladhar and copy of his bank account are at PB 247-248 7.5 Statements under section 131 of the Income-tax Act, 1961 of Shri Leeladhar were also recorded on 27/11/2009 in which he had accepted the fact that he had given ₹ 10,00,000 for booking of plot in a proposed scheme of appellant. (PB 249-252) 7.6 Shri Leeladhar is regularly assessed to tax and his PAN is AIAPG7560K. He has accepted having advanced the money. All these facts were known to the ld. AO as these were emerging out of his sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition merely based on statement of witnesses cannot be made. iii) CIT Vs G.Krishnan (1994) 210 ITR 707 Mad. Held that addition cannot be made merely on the basis of statement. iv) ACIT v/s Ashok Kumar Jain 32 TW 115 (ITAT Jaipur) It is open to the person who made the admission to show that it is incorrect. v) Shri Rajendra Kr. Kedia V/s DCIT 22TW,506(ITAT, Jaipur) No valid addition can be made on the basis of such invalid confessional statement; particularly when supporting corroborative documentary evidence in the form of books was forthcoming. vi) ITO Vs. Vijay Kumar Kesar 327 ITR 497(Chattisgarh High Court) Assessee has retracted from disclosure for undisclosed income made by him during the survey proceedings. The addition made on account of excess cash in stock was deleted by accepting update books of accounts prepared by the assessee. There were primary evidences on record for acceptance of cash. In view of the above, the action of the ld CIT(A) in confirming the action of ld. AO is unjustified and deserves to be quashed. 21.4 The ld DR in his written submissions has stated that he is relying on the order of ld CIT(A). 21.5 We have heard both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -06 10,63,902/- 1,94,08,770/- 2004-05 4,88,999/- 52,09,350/- 2003-04 84,755/- 12,71,780/- TOTAL 3819745 55923291 TOTAL(After Rectification) 47323291 *Income has been subsequently assessed at ₹ 24,21,060/- by rectifying the mistake u/s 154 of The Income Tax Act, 1961 on 02.02.2010. 1.24During the course of search total assets found were as under:- Asset Found Undisclosed Remarks Cash Rs.9,58,500/- NIL Note 1 Jewellery Gold 153 gms. Silver 750 gms. NIL Note 2 Cars Accent car, RJ-14-8C- 6287 NIL Note 3 Suzuki Motor Cycle One NIL Note 4 Immovable Property in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note 8: The land was purchased by assessee appellant s wife on 8/07/04. The said property has already been disclosed in the return filed by his wife for the A.Y. 2005-06 22.4 The details of disclosed income and undisclosed income Particulars 04-05 05-06 06-07 07-08 08-09 Income disclosed in returns 3,52,968 9,21,560 11,31,000 3,39,608 7,60,241 Undisclosed, other income 64,400 3,54,500 3,614 33,400 4,69,036 Undisclosed income from township 2,88,568 5,67,060 11,27,386 3,06,208 2,91,205 Scheme-wise and year wise break up of undisclosed income Scheme 04-05 05-06 06-07 07-08 08-09 Govind Vatika 2,88,568 1,32,628 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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