TMI Blog2015 (11) TMI 1773X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, the AO made addition of ₹ 2.30 crores u/s. 68. CIT(A) allowed relief of only ₹ 7 lakhs and sustained addition of ₹ 2,23,00,000/-. It is the submission of the assessee that since no incriminating material was found during the course of search, therefore, in view of the decision of Continental Warehousing Corporation . [2015 (5) TMI 656 - BOMBAY HIGH COURT]and Murali Agro Products Ltd. [2010 (10) TMI 1052 - BOMBAY HIGH COURT] 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has credited an amount of ₹ 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 table and on the basis of the said enquiries it was seen that the credit worthiness of the above 4 persons was not established. He, therefore, asked the assessee to prove the genuineness of the transactions claimed in respect of the above 13 persons. It was submitted by the assessee that all the above persons are agriculturists having substantial land holding and they had sufficient agricultural income to invest the amounts. The assessee submitted 7/12 extracts and affidavits of these persons. However, the AO noted that no affidavits or 7/12 extracts of any of the persons other than the 4 persons in whose cases investigations had been made by the ADIT have been filed. None of these persons other than the said 4 persons were produced before the AO. No details of their agricultural income was furnished. He, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted an amount of ₹ 7 lakhs being advance received from Shri Vithabai Haribhau More and Smt. Sangita Chandrashekhar More. However, he sustained the balance amount of ₹ 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 such order of the CIT(A) the assessee is in appeal before us with the following grounds: 1. In the facts circumstances of the case and in law the learned CIT(A) Central has erred in confirming the addition of advances received for flat/shop of ₹ 2,23,00,000/- out of total addition of ₹ 2,30,00,000/- made by the learned assessing officer as unexplained cash credit u/s. 68 of I.T. Act on the ground by alleging that, genuineness and credit worthiness of the advances received from the flat/shop holders are not proved. The aforesaid addition being arbitrary, perverse, based on surmises, devoid of merits and being legally unsustainable the learned CIT[A] ought to have deleted the said addition. 2. The appellant denies his liability to pay any interest u/s. 234B and 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 26-10-2006 declaring total income of ₹ 28,95,310/-. The AO in the order passed u/s. 143(3) on 28-11-2008 determined the total income at ₹ 55,59,980/-. Referring to page 2 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to para 3 of the assessment order wherein the AO has mentioned that the assessee in the course of assessment proceedings filed the copies of approved plan, agreement and details of payment to landlord, addition to assets, expenses, advance received from customers, debtors and creditors. Referring to page 27 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the balance sheet filed by the assessee according to which advances from shop holders has been shown at & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 the above 4 persons do not have the capacity to advance such huge loan. Despite being given an opportunity by the AO the assessee has not produced the remaining 9 persons. Therefore, under the facts and circumstances of the case, the addition made by the AO and sustained by the CIT(A) is justified. The Ld. Departmental Representative further submitted that the cash book filed before the AO was audited, whereas cash book found from the computer of the assessee shows that there is negative cash balance on different dates which the assessee could not explain properly. Further, the loose paper bundle found from the residence/business premises of the assessee bearing Bundle No. 1 containing 14 pages contain direct evidence for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 after giving due opportunity of being heard to the assessee. The AO while deciding the issue shall keep in mind the decisions of the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (Supra) and Murali Agro Products Ltd. (Supra). Additional ground by the assessee is accordingly allowed for statistical purposes. 18. The Ld. Counsel for the assessee did not make any argument so far as ground of appeal No. 1 is concerned. He concentrated only on the additional ground. In absence of any argument by the Ld. Counsel for the assessee for ground of appeal No. 1, the same is dismissed. 19. Ground of appeal No. 2 relates to charging of interest u/s. 234B and 234C. 20. After hearing both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 company Blue Pearl Properties Pvt. Ltd. has made any agreement or paid any advance in cash to Shri Suryakant Kakade or his Associates for purchase of any shop/flat as claimed by Shri Suryakant Kakade. Shri Bhiyani also filed copies of cash book, bank book and ledger account of Blue Pearl Properties Pvt. Ltd., Mumbai for F.Y. 2006-07. On perusal of the same it was seen that no such advance of ₹ 1,03,61,773/- has been reflected in the books of accounts of the said company. The AO, therefore, asked the assessee to explain in the light of the above submission by Shri Bhayani. The assessee in response to the same submitted as under: The agreement to sale in respect of abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed 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. Suryakant Kakade Associates entered into unregistered MOU with M/s. Blue Pearl Properties Private Limited on 31/01/2004 and the said concern paid an aggregate amount of ₹ 1,25,000/- vide crossed account payee cheques as advances against booking of shops. However, at the time of finalization of registered agreement, the same was entered into with M/s. Automatic IT Service Private Limited instead of with M/s. Blue Pearl Properties Private Limited with whom the above mentioned unregistered agreement was entered into over a year ago. It is further claimed that the situation arose on account of the fact that Shri Nitish Narayan Rane is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned 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 of appellate proceedings that confirmations/affidavits, 7/12 extracts and income proof had been submitted. I have carefully perused the submissions of the appellant and the supporting evidence adduced and find the same to be grossly inadequate to establish the preponderance of probability of the genuineness of the credits. Apart from bare confirmations and copies of ledger accounts in assessee's own books, no convincing evidence has been furnished even during the appellate stage. For this year too, all the transactions are claimed to have taken place in cash. There is also absolutely no evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found in respect of shop booking advances of ₹ 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 ₹ 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 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 ₹ 1,17,96,773.00 received from M/s. Blue Pearl Properties Pvt. Ltd. (which advances were transferred to Sales account during the year ended 31/03/2007) recorded by the appellant in his regular books of accounts maintained prior to the date of search, the addition of ₹ 1,17,96,773.00 made by the learned Assessing Officer in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 ₹ 10,10,000/- has been shown against booking of Kakade Plaza and another amount of ₹ 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 106/109, Kothrud. He submitted that the AO has neither questioned the purchasers nor any enquiry was conducted by the AO. The assessee has offered the sale price and paid the tax on the profit. Referring to page 31 of the order of the CIT(A) the Ld. Counsel for the assessee drew the attention of the Bench to the following submission before the CIT(A): The appellant wish to draw your kind attention to the fact that, during the F.Y.2006/07 relevant to A.Y.2007/08 the appellant has transferred/accounts the sales of ₹ ..... 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