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TMI Blog2015 (11) TMI 1773X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 153A(a) vide notice dated 21-08-2009 the assessee filed his return of income on 02-08-2010 declaring income of Rs. 1,57,59,977/-. 3. During the course of assessment proceedings the AO noted that certain loose papers were seized from the business premises of the assessee during the search action u/s. 132. As per page 2 of Bundle No. 1 containing 14 pages there were certain notings regarding Try Developers as under: The assessee offered undisclosed profit of Rs. 1.02 crores in the hands of M/s. Suryakant Kakade and Associates for A.Y. 2006-07 which has been accepted by the AO, therefore, we are not dealing with this issue. 4. So far as the main issue is concerned as per grounds of appeal the facts in brief are that during the course of assessment proceedings the AO noted from the details furnished that the assessee has credited an amount of Rs. 2.30 crores in his books and claimed that the same as advance received for booking of shops/flats in a proposed scheme located at Kothrud from the following persons: 5. He further noted that the ADIT (Investigation) Unit-II, Pune had conducted certain enquiries in respect of 4 persons mentioned at Sl. No. 3 and 8 to 10 of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny flat or shop even after 5 years. These persons have also not been returned their advances. This also casts doubt on the genuineness of the credits. In view of the above and after recording the statements of these 4 persons the AO wrote a letter to the assessee on 23-12-2010 proposing addition of the entire amount of Rs. 2.30 crores as unexplained cash credit u/s. 68. Copies of the statements recorded of the 4 persons were also given to the assessee. Since there was no reply from the assessee the AO held that the credit worthiness of the creditors and the genuineness of the transactions have not been proved in respect of the credit of Rs. 2.30 crores. He accordingly made addition of Rs. 2.30 crores u/s. 68 of the I.T. Act to the total income of the assessee. 8. In appeal the Ld. CIT(A) deleted an amount of Rs. 7 lakhs being advance received from Shri Vithabai Haribhau More and Smt. Sangita Chandrashekhar More. However, he sustained the balance amount of Rs. 2,23,00,000/- on the ground that the assessee was unable to discharge his onus in proving the genuineness of the transactions and capacity of the so-called creditors to advance such large amount of money. 9. Aggrieved with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 187 ITR 688 and the decision of Hon'ble Bombay High court in the case of Ahmedabad Electricity Company reported in 199 ITR 351 he submitted that the additional ground raised by the assessee should be admitted for adjudication. 11.1 The Ld. Departmental Representative on the other hand strongly opposed the admission of the additional ground. He submitted that during the course of search certain loose papers were found containing 14 pages in bundle No. 1 for which the assessee had to declare additional income in respect of Try Developers. Therefore, it cannot be said that no incriminating documents were found during the course of search. He accordingly submitted that the additional ground filed by the assessee should be dismissed. 12. After hearing both the sides and considering the fact that the additional ground raised by the assessee is purely a legal one for which no fresh facts are required to be investigated, the additional ground raised by the assessee is admitted for adjudication. 13. The Ld. Counsel for the assessee submitted that the search took place in the instant case on 11-02-2009. Prior to the search the, assessee had filed his original return of income on 26-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the addition made by the AO and sustained by the CIT(A) should be deleted. 15. The Ld. Counsel for the assessee also relied on the decision of the Tribunal in the case of M/s. Bhandari Construction Company v. DCIT vide ITA No. 22/PN/2014 and the decision of the Tribunal in the case of M/s. Kakade Construction Company v. ACIT vide ITA Nos. 99 and 100/PN/2013 order dated 30-04-2013 for A.Yrs. 2005-06 & 2006-07 to the above proposition. 16. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that the assessee has received advance for sale of shops/flats from persons who do not have any known source of income other than the agricultural income which remained unsubstantiated. The assessee has not discharged the onus cast on him by proving the genuineness of the transaction and the credit worthiness of the customers. Even till today, the assessee has not handed over the shops/flats to the socalled buyers who have paid the huge advances since long. All these things point out that the transactions are bogus and not genuine. The ADIT had conducted enquiries in the case of 4 persons out of the 13 persons where he had found that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (Supra) and Murali Agro Products Ltd. (Supra) the AO could not have made any addition u/s. 68 of the I.T. Act in respect of advance from customers towards sale of flats/shops. Although the decision of the Hon'ble Bombay High Court in the case of Murali Agro Products Ltd. (Supra) passed on 29-10-2010 was available at the time of completion of the assessment u/s. 143(3) r.w.s. 153A (passed on 31-12-2010) the same was neither brought to the notice of the AO nor before the CIT(A) for which the AO/CIT(A) have not considered the same. Similarly, the decision in the case of Continental Warehousing Corporation (Supra) was passed after the order of the CIT(A). Thus, the lower authorities have no occasion to consider the above 2 decisions and apply their mind which are being relied on by the Ld. Counsel for the assessee before us for the first time to the proposition that the AO could not have made any addition u/s. 68 of the I.T. Act, 1961 in absence of any incriminating material found during the course of search. Under the aforementioned circumstances, we deem it proper to restore the issue to the file of the AO with a direction to decide the issue afresh and in accordance with law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verifications were carried out with Blue Pearl Properties Pvt. Ltd. Mumbai by the DDIT (Investigation), Pune. In response to summons u/s. 131 of the I.T. Act, 1961 Shri Suraj Pankaj Bhayani, one of the directors of the company had attended the office of the DDIT. His statement was recorded u/s. 131 of the I.T. Act on 29-10-2009. In his statement Shri Bhayani has claimed that the company has neither purchased any immovable property like plot, land, shops etc. nor made any agreement to purchase for the same so far. However, he had admitted to have given an advance of Rs. 1,25,000/- to Shri Suryakant Kakade by two Demand Drafts of Rs. 1 lakh and Rs. 25,000/- respectively on 31-01-2004 for booking of premises. However, no agreement of purchase for the said transaction has been made till today. The claim made by Shri Suryakant Kakade that he has made agreement to sell shops and handed over the possession of the same during F.Y. 2006-07 and received advance of Rs. 1,03,61,773/- in instalments on various dates during the period from 12-02-2007 to 13-03-2007 was brought to the notice of Shri Suraj Pankaj Bhiyani. However, Shri Bhayani had categorically stated that neither he nor his compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounted for in the books of Shri Suryakant Kakade and subsequently transferred to his capital account in Suryakant Kakade and Associates. The AO noted that all the amounts are received in cash and therefore the genuineness of the transactions are not established. The assessee has not furnished the complete names and addresses of these 88 persons. He has also not furnished any details to establish their credit worthiness. Under these circumstances the amount of Rs. 2,84,50,000/- was treated by the AO assessee's income u/s. 68 of the I.T. Act. 27. So far as addition of the amount of Rs. 1,19,18,773/- is concerned the Ld. CIT(A) confirmed the addition by observing as under: "11.7 I have given careful consideration to all the facts before me. I have also perused carefully the copies of the registered agreements between M/s. Suryakant Kakade & Associates and M/s. Blue Pearl Properties Private Limited dated 31/01/2004, and between and M/s. Suryakant Kakade & Associates and M/s. Automatic IT Services Private Limited dated 16/08/2005, copies of which have been submitted by the appellant. The appellant's claim vide it's letter dated 29/12/2010 before the AO was that M/s. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Narayan Rane on whose instructions the appellant claims to have acted. There is no independent evidence or third party evidence whatsoever to prove the genuineness of the transaction. As such. considering the legal position discussed at length in para 10.5 supra, I am of the considered view that the appellant has totally failed to discharge his onus of proving the genuineness of the credit. Accordingly, the appellant's explanation with regard to the said amount is hereby rejected and, consequently, this ground of appeal is hereby dismissed." 28. So far as addition of Rs. 2,84,50,000/- is concerned the Ld. CIT(A) upheld the addition made by the AO by observing as under: "10.6 I have given careful consideration to all the facts before me and the supporting evidence adduced by the appellant in the light of the legal position outlined in para 10.5 (supra). The AO has recorded that the appellant failed to furnish the complete names and addresses of the 88 persons (as per the appellant, the amounts were received from only 33 persons though through 88 individual transactions) and any evidence regarding their creditworthiness. As against this, the appellant claimed during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any interest u/s. 234B and 234C of the I.T. Act, 1961 and hence the same may please be deleted. 4. The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal." 30. The Assessee has also filed 2 additional grounds, which read as under: "1. Since during the course of search and seizure action carried on u/s. 132 of the I.T. Act, 1961 on 11/02/2009 at the business and residential premises of the appellant, no incriminating material of whatsoever nature was found in respect of shop booking advances of Rs. 2,84,50,000.00 recorded by the appellant in his regular books of accounts maintained prior to the date of search and the same being accepted as genuine by the learned Assessing Officer during scrutiny assessment proceedings u/s. 143(3) of the I.T. Act, 1961, prior to the date of search, the addition of Rs. 2,84,50,000.00 made by the learned Assessing Officer in the impugned assessment framed u/s. 143(3) r.w.s.153A of the I.T. Act. 1961 is bad in law, without jurisdiction and hence the same may please be deleted." 2. Since during the course of search and seizu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght. I am not sure whether taxes have been paid on these receipts. I will have to consult my consultant to precisely answer whether the income has been offered to tax or not. Q.8. From page No. 2, it also appears that cash of Rs. 2,31,00,000/- has been deposited against booking. Please furnish the list from whom the cash has been received. Ans. Cash received has been accounted for in the books. Right now I do not have the list of persons from whom cash has been received. I shall furnish the same within a couple of days." 34. He submitted that no incriminating material whatsoever was found during the course of search and till today the amounts are outstanding. Referring to page 34 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the balance sheet as on 31-03-2007 where an amount of Rs. 10,10,000/- has been shown against booking of Kakade Plaza and another amount of Rs. 2,74,40,000/- is shown against booking of proposed scheme 106/109, Kothrud under the head "current liabilities". Referring page 59 of the paper book he drew the attention of the Bench to the list of such creditors who had given such booking advance for the proposed scheme 106/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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