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2020 (3) TMI 1137

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..... d. As we have noted above, the payment of ₹ 3.89 Crores also corroborates with the books of accounts of M/s. U-Turn Housing Pvt. Ltd. The statement of Shri Nikhil Tripathi cannot be held as reliable piece of evidence against the assessee company in view of various discrepancies and lack of corroboration as we have discussed above. Further, there is no material on record which can form the basis to hold that the assessee company has received ₹ 3.26 crores in cash from M/s U-Turn Housing Pvt. Ltd. which has not been accounted for in its books of accounts during the financial year 2006-07. Addition made by the Assessing officer to this effect is hereby directed to be deleted. - Decided in favour of assessee. - ITA No. 109/JP/2017 - Dated:- 14-3-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Sh. Mohit Khandelwal (Adv.) For the Revenue : Sh. Varindar Mehta (CIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-1, Jaipur dated 30.12.2016. 2. At the outset, it is noted that the appeal of the assessee was heard by the Co-ordinate Bench and vide common order dated 07.02.2018 in ITA No. 4 .....

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..... that the AO was justified in making addition of ₹ 3.26 crores u/s 68 of the Act and hence the same is hereby sustained. It is noted that filing of additional evidence by the ld.AR of the assessee has no relevance as the same has already been taken into consideration in the case of the assessee for the Assessment Year 2007-08. In this view of the matter and facts and circumstances of the case, we concur with the findings of the ld. CIT(A) for the Assessment Year 2007-08 and do not find merit in admitting the additional evidence filed by the assessee. Hence, the additional evidence filed by the assessee for the Assessment Year 2007-08 is not admitted. Thus Ground No. 1 of the assessee is dismissed. 3.5 As regards Ground No. 2, 3 and 4, we have heard the rival contentions and perused the materials available on record. It is not imperative to repeat the same facts as similar issue has been decided against the assessee in assessee s own case for the Assessment Year 2006-07. We further noted that in this case the ld. CIT(A) has rightly confirmed the action of the AO as the assessee could not advance any contrary material/ evidence as to the addition confirmed by the ld. CIT(A). In .....

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..... ns which were duly supplied to the assessee. 5. As per the Assessing officer, the assessee has entered into a memorandum of understanding (MOU) dated 22.03.2006 with M/s U- Turn Housing Pvt. Ltd. for sale of its land situated at Sanganer - Diggi, Malpura Road in the revenue villages of Panwalia, Manpur Tillawala, Jaisinghpura, Roopwas falling in Sanganer Tehsil of Jaipur. Further, as per copy of account furnished by M/s U-Turn Housing Pvt. Ltd., it was found that cash payment of ₹ 3,26,00,000/- was made to assessee against purchase of land on the following dates: S.No. Date Amount (Rs.) 1. 01.04.2006 25,00,000 2. 10.04.2006 1,00,00,000 3. 15.04.2006 50,00,000 4. 24.04.2006 37,00,000 5. 30.04.2006 16,00,000 7. 17.05.2006 40,00,000 8. 28.05.2006 40,00,000 9. 14.08.2006 8,00,000 Total 3,26,00,000 6. The Assessing officer, however, found that no such receipts have been declared by the assessee in its books of accounts. In order to examine M/s U.Turn Housing Pvt. Ltd., commission u/s 131(1)(d) was issued to ADIT (Inv.), Special Cell, New Delhi wherein Shri Nikhil Tripathi, Director of M/s U-Turn Housing Pvt. Ltd. was examined on 13.03.2014 and his statement was recorded. The Asses .....

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..... 8377; 3,26,00,000/- was treated as assessee s unexplained cash credit, by invoking provisions of section 68 of the Act, which is not shown in the books of accounts and the same was added to income of the assessee for the impugned assessment year. The assessment was accordingly completed at an income of ₹ 5,16,08,880/- vide order passed u/s 147 read with 143(3) dated 20.03.2015. 9. Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A) who has since sustained the said additions and against the said findings, the assessee company is in appeal before us. 10. During the course of hearing, the ld. AR submitted that the impugned order passed by the Assessing Officer and further confirmed by the learned CIT(A) vide its impugned order dated 30.12.2016 is ex-facie illegal, unjust and is against the settled preposition of law. The ld. AR submitted that the said assessment order has been passed under Section 68 of the Act which deals with the unexplained cash credit in the books of the accounts of the assessee. It is submitted that in the instant case, the essential condition stipulated under Section 68 of the Act have not been fulfilled. It is submitted that as .....

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..... Ledger Account of M/s U-Turn Housing Pvt. Ltd. for the assessment year 2007-08, it is evident that the cash entries mentioned in such ledger have not been actually paid to the assessee but to some other person and the entry itself state that the payment was been made to "Chandra Mohan for advance payment of Bharatpur Land" dated 19.05.2006 for the payment of ₹ 4,00,000/-, Entry dated 25.05.2006 for the payment of ₹ 40,00,000/-, Entry dated 09.06.2006 for the payment of ₹ 10,00,000/-, Entry Dated 16.06.2006 for the payment of ₹ 10,00,000/- and Entry dated 24.07.2006 for the payment of ₹ 4,00,000/-). It is submitted that the assessee has no link with any person named as Mr. Chandra Mohan and further, no project was undertaken by the Assessee in Bharatpur. Thus, it is evident that the said entries have been wrongly made by M/s U-Turn Housing Pvt. Ltd. in its ledger account pertaining to the assessee and the same cannot be added in the income of the assessee. 14. The ld. AR further submitted that the income of the assessee cannot be re-assessed merely on the basis of some entries in the accounts of M/s U-Turn Housing Pvt. Ltd., if any, unless the .....

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..... mount from its Bank Account on several occasions in order to pay cash to the assessee Company. However, they have not produced any Bank Statement to show such withdrawal made by them. It was submitted that in compliance of the directions of the Bench dated 22.03.2019, the Department has presented the Petty Cash Book Register of M/s. U-Turn Housing Pvt. Ltd. during the period between 01.04.2006 to 30.04.2006 as per which only the cash amount of ₹ 37,10,000/- has been received by M/s. U-Turn Housing Pvt. Ltd. in that month. However, it has been claimed by M/s. U-Turn Housing Pvt. Ltd. that they have paid an amount of ₹ 2,28,00,000/- to the assessee Company during that month. Thus, M/s. U-Turn Housing Pvt. Ltd. was not having such huge amount with it in that month and has merely made the false claim of paying the same to the assessee Company. It is also pertinent to mention here that the Department was duty bound to file the Bank Statement of M/s. U-Turn Housing Pvt. Ltd. during the period between 01.04.2006 to 30.04.2006 in order to establish the inflow and outflow of such huge amount from M/s. U-Turn Housing Pvt. Ltd. However, the Department has failed to produce any suc .....

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..... ials or it cannot undertake a half-hearted enquiry. When looking at the facts, the Court has every right to scrutinize the situation and find out as to whether enquiry was made reasonably with the prudence of a reasonable man. Reliance is placed on the case of Hindustan Tea Trading Co Ltd vs. CIT, 263 ITR 289. However in the instant case, the learned Assessing Officer acted contrary to the said principle. 20. The ld. AR further placed reliance on the case of Commissioner of Income Tax vs. S.C. Sethi, 2006 SCC Online Raj. 329, wherein in the similar set of circumstances, the Hon'ble Rajasthan High Court has held the assessment cannot be done solely on the basis of the loose papers received from the premise of third party. It was submitted that the assessee has also sought for cross examination of Shri Nikhil Tripathi but the same was rejected. 21. The ld. AR further submitted that the only document on which the department has relied to justify the said assessment is the list of cash payments given by Shri Nikhil Tripathi to the Department during his statement. It is submitted that the said list can neither be called as books of accounts nor can it be the basis of assessment bein .....

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..... record. It is submitted that the assessee company cannot be made to suffer for the wrong committed by any other person and the impugned order passed by the Assessing officer deserve to be quashed and set aside. 26. Per contra, the ld. CIT DR submitted that statement of Sh. Nikhil Tripathi, Director of M/s U-Turn Housing Pvt. Ltd. was recorded on oath u/s 131 wherein he has confirmed the cash payment of ₹ 3.26 crores to the assessee company. It was further submitted that in the ledger account of the assessee in the books of M/s U-Turn Housing Pvt. Ltd., payment of ₹ 3.26 crores in cash to the assessee company is appearing and the assessee company has not brought on record any reasons as to why M/s U-Turn Housing Pvt. Ltd. would show cash payment of ₹ 3.26 crores in its audited books of accounts if no such payments were actually made by it. 27. Regarding the contention of the ld AR that MOU dated 14.07.2007 and cancellation agreement whereby the earlier MOU dated 22.03.2006 was cancelled were recovered in original from possession of Shri Nikhil Tripathi, referring to the order of the ld CIT(A), the ld CIT DR submitted that the assessee company has taken a similar pl .....

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..... of that previous year: Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. 30. As apparent from a reading of the aforesaid provisions, where a sum is found credited in the books of accounts of the assessee maintained for any previous year and the assessee offers either no explanation about the nature and source thereof or the explanation offered by him is not satisf .....

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..... T (Investigation) Special Cell, New Delhi. Even during the course of hearing, our reference was drawn by the ld CIT DR to question no. 7 and his response thereto, which has also been referred to by the ld CIT(A) in his order, accordingly, we deem it appropriate to reproduce the same as under:- Q. No. 7: I am also showing you a copy of document titled 'Detail of payments made to Rajasthan Land Developers Pvt. Ltd. Jaipur during the period wef 01/03/2006 to 31/03/2007' which has been filed by your company before the ITO, Ward-2(2), Jaipur u/s 133(6) of the I.T. Act, 1961. Please state whether you accept that this document has been filed by your company and if so why it does not match with your books of accounts? Ans: I confirm that the said document has been filed by UTHPL before the ITO, Ward-2(2), Jaipur u/s 133(6) of the I.T. Act, 1961. The total payment of ₹ 9.83 Crore made to M/s RLDPL matches with our books of accounts. However, the dates as per book of accounts and the said statement differs because UTHPL has accounted for the entire cash and part payment by bearer cheque paid to RLDPL in the FY 2006-07. We again confirm that payment by cash/ bearer cheque during .....

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..... d as per MOU dated 14.07.2007 and issued the possession and allotment letter along with site plan to the allottee /nominee names provided by U-Turn Housing Pvt. Ltd., which was again not taken into consideration by the Assessing officer for the reason that Sh. Nikhil Tripathi in his statement has categorically denied to have signed any such cancellation agreement dated 14.07.2007 wherein in response to question No. 4, he has denied the said document has been executed by him on behalf of U-Turn Housing Pvt. Ltd. as his signatures were forged. 37. Firstly, if we look at the copy of account/ledger account of the assessee in the books of M/s U-Turn Housing Pvt. Ltd. for the period 1.4.2006 to 31.03.2007 which is available as part of assessment records, it shows opening balance of ₹ 2.45 crores and closing balance of ₹ 9.83 crores. Therefore, mere looking at the closing balance of ₹ 9.83 crores in the assessee s ledger account, one may tend to believe that the same corroborates the statement made by Sh. Nikhil Tripathi wherein he has stated that M/s U-Turn Housing Pvt. Ltd. has paid a sum of ₹ 9.83 crores to the assessee company. However, on a closer reading of t .....

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..... Revenue is relying on the statement of Sh. Nikhil Tripathi and in turn, entries in the books of accounts of M/s U-Turn Housing Pvt. Ltd. and the entries on the face of it suggest that certain cheques have been encashed through Sh. R. K. Gupta and there is denial by the assessee company regarding knowing or have authorised Sh R. K Gupta, than it was incumbent on the part of the Assessing Officer to have enquired the matter further from Sh. Nikhil Tripathi about such transaction and Sh. R. K. Gupta and his linkage/relationship with M/s U-Turn Housing Pvt. Ltd. or the assessee company and should have recorded his statement as well as statement of Sh R.K. Gupta in order to build chain of events as to the involvement of Sh. R. K Gupta, on whose behalf he has encashed the cheques and how the payment have been made to the assessee company. However, we again find that there is nothing on record in terms of any question asked in this regard from Sh. Nikhil Tripathi while recording his statement or any summons issued and statement of Sh. R K Gupta being recorded by the Assessing officer or any separate inquiry or investigation so carried out by the AO either directly or through issue of sum .....

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..... ded over by him during the course of recording of his statement u/s 131 which has no corroboration when the same is compared with the entries in the ledger account of assessee in books of M/s U-Turn Housing Pvt. Ltd. Given these apparent and inherent inconsistencies on face of record, the question is whether the Assessing officer carried out any further enquiry or investigation to verify the veracity of statement given by Shri Nikhil Tripathi. We note that there is no enquiry or investigation carried out by the Assessing officer regarding these discrepancies. Further, no finding has been recorded by him which proves that at the relevant point in time, M/s U-Turn Housing Pvt. Ltd. had sufficient cash balance in its hands or the money has been collected from prospective buyers or the money has been withdrawn from its bank to pay to the assessee company. We therefore find that there are vast differences in set of two figures as claimed to be paid to be assessee company and what has been reflected in the books of accounts and even the source of such payments are not emerging from the records. We therefore find that the Assessing officer has relied blindly on the statement of Sh. Nikhil .....

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..... the first part but due to some unavoidable circumstances on the part of the second party the earlier MOU dated 23.02.2006 has been cancelled by a separate cancelled deed, executed by the mutual consent of both the parties, on dated 14.07.2007 wherein it has been agreed that both the parties will execute another MOU (which is the present MOU) with fresh understanding and with fresh terms and conditions and the said amount of ₹ 5,69,00,000/- (Rupees Five Crore Sixty Nine Lac only) which was paid by the party of the second part to the party of the first part will be adjusted against the total payment of ₹ 9,14,40,000/- (Rupees Nine Crore Fourteen Lac Forty Thousand only) which is to be made by the party of the second party to the party of the first part under this MOU. 44. The Assessing officer has not accepted the said MOU dated 14.07.2007 stating that Sh. Nikhil Tripathi in his statement has denied to have executed such MOU stating that his signature on this document was forged. The question is where the assessee company has stated that it has entered into such an MOU and the same is the basis for receipt of ₹ 5.69 crores duly accounted for in its books of account .....

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..... ngs U/s 90B of the Land Revenue Act 1956 in respect of the land had been passed by the Competent Authority and Layout plans have been submitted & approved by the Zonal Level Committee, whereas the proceedings u/s 25(2) of the Jaipur Development Act were under process and lay out plans were yet to be released. The total consideration for the above rights was fixed @ 1270 Per sq. Yards totaling to ₹ 9,14,40,000/-, out of which ₹ 5.69 Crores had already been received as per an earlier agreement Dt. 22.03.2006 (wrongly referred as 23.02.2006) in this MOU, which was cancelled on the same date i.e. 14.07.07. The remaining payment of ₹ 3.45 Crores was agreed to be paid by the U-turn Housing Pvt. Ltd. on the release of maps by the Jaipur Development Authority. It is also mentioned in the MOU that because of the reasons beyond the control of M/s Rajasthan Developers Pvt. Ltd., if the maps could not released within the six months of the execution of MOU dt. 14.07.2007, M/s U-Turn Housing Pvt. Ltd would have to make the remaining payment of ₹ 3.45 Crores, failing which the MOU shall stand cancelled. 46. Similarly, we find that Shri Nikhil Tripathi has filed an appl .....

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..... e of by the ADJ Court and decree has been issued by ld. ADJ, Jaipur vide order dated 20.11.2015 which reads as under: 48. Therefore, where the existence of fresh MOU dated 14.07.2007 has been stated to be recovered in original during the course of police investigation and also find mention in the filings before the appropriate Courts and taken cognizance of even by the Appropriate Courts, it was not correct on part of the Assessing officer to brush aside the contention of the assessee and negate the very existence of such an MOU and that too, on basis of the statement of Shri Nikhil Tripathi which as we have noted above lacks necessary corroboration even with the books of accounts of M/s. U-Turn Housing Pvt. Ltd. The statement of Shri Nikhil Tripathi may raise certain initial apprehension in the mind of the Assessing officer and rightly so, however, such apprehension cannot take the form of final finding of the Assessing officer where he decides on his own that such MOU is forged and not taken cognizance of especially in the light of investigations and filings before the Appropriate Courts. In any case, in such type of matters where the parties claim that their signatures are forge .....

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