TMI Blog2020 (3) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... s of land. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove discussion and looking to the totality of facts and circumstances of the case, it is held 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14.03.2014. In response to the notice, the assessee filed its return of income and also requested for copy of the reasons 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 8. The submission so filed was considered by the Assessing officer but not found acceptable to him. As per the Assessing Officer, Sh. Nikhil Tripathi in his statement has categorically denied to have signed any such Cancellation agreement/Ikrarnama 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. Further, the AO stated that in the books of accounts of M/s U-Turn Housing Pvt. Ltd, it has shown cash payment of ₹ 3,26,00,000/- to the assessee and the assessee has not accounted for said payment in its books of accounts. Therefore, cash payment of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- 5. 30.04.2006 16,00,000/- 6. 17.05.2006 40,00,000/- 7. 28.05.2006 40,00,000/- 8. 14.08.2006 8,00,000/- Total 3,26,00,000/- In this regard, it was submitted that the aforementioned entries do not even match with the Books of Accounts of M/s. U-Turn Housing Pvt. Ltd. as no such entries are mentioned in the Ledger Account of M/s U-Turn Housing Pvt. Ltd. In such circumstances, the Department has failed to mention the source of such computation which is mentioned in the impugned assessment order. It is submitted that such assessment order has been passed solely on the basis of the statement of Shri Nikhil Tripathi and not on the basis of any entry in the books of accounts. It was also submitted that the aforementioned table also suffers from an arithmetic error as the cumulative total of the aforementioned amount would be ₹ 3,16,00,000/- and not ₹ 3,26,00,000/- as mentioned in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same by any of the parties. In this regard, it was submitted that it is evident from the aforementioned documents that M/s. U-Turn Housing Pvt. Ltd. had merely paid a sum of ₹ 5.69 Crores to the assessee in the financial year 2006-07 and no further amount has been paid. However, the Assessing Officer ignored these original documents and relied on the testimony of Shri Nikhil Tripathi. It was further submitted that Shri Nikhil Tripathi has himself accepted the existence of the MOU dated 14.07.2007 in its application filed before the learned C.M.M, Patiala House Court, New Delhi on 05.12.2013 and the said MOU also finds its mention in the order dated 11.05.2015 passed by the Learned C.M.M in deciding such application. It was further submitted that the existence of MOU dated 14.07.2007 also find mention in the suit filed by the assessee company before the ADJ-19, Jaipur and decree has been issued by ld. ADJ, Jaipur vide order dated 20.11.2015 16. The ld. AR further submitted that the learned Assessing Officer has not collected or examined the bank statement of M/s. U-Turn Housing Pvt. Ltd. to check the availability of the amount claim to have been paid to the assessee. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has been done merely on the basis of the statement given by Shri Nikhil Tripathi under Section 131 of the Act. Further, the Report itself mentions that the entire re-assessment has been done on the basis of the presumptions. It has been stated that Further, a specific modus operandi is in circulation amongst the real state sector entities that part payment is paid in cash and part in cheques. Further, the transactions cannot be void itself. One has made payment to the other, then it is ought to be understood that the other has received it. Also, whatever is paid according to the intention of the party paying: whatever is received is received according to the intention of the party receiving. It was submitted that the Hon'ble Supreme Court in the case of Central Bureau of Investigation vs. V.C. Shukla Ors (SC)-1998-3-63 referring to section 34 of the India Evidence Act 1871 observed that the statement made therein shall not along be sufficient evidence to charge any person with liability . 19. The ld. AR further submitted that it is settled preposition of law that while considering the explanation of the assessee, it is incumbent on the Assessing authority to enqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further submitted that in order to assess a person u/s 68 of the Act, there must be running books of account available on record. However, in the instant case, no return has been filed by M/s. U-Turn Housing Pvt. Ltd. after the Assessment Year 2007-08 and the name of the company has been strike off by the ROC and a certified copy of the company master data of M/s. U-Turn Housing Pvt. Ltd. is annexed. 24. It was further submitted that the addition of ₹ 3.26,00,000/- is based on conjunction, surmises and presumption and the addition is bound to be deleted as per the decision of the Hon'ble Tribunal in the case of Jaya S. Shetty vs. ACIT 1999 69 ITD 336 Mum. It was further submitted that Shri Nikhil Tripathi is a third party and list given by him cannot be relied upon. The Hon'ble Bombay High Court in the case of Astt. Cit vs Omprakash Co. (2004) 87 TTJ Mumbai 183 stated that the Department is not empowered to make any addition on the basis of seized papers found from the residence of the third party unless such papers are made available to be assessee . 25. The ld. AR finally submitted that the income of the assessee company has been wrongly reassessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company cannot be accepted. It was accordingly submitted that the AO was justified in making the addition of ₹ 3.26 crores u/s 68 of the Act and the findings so recorded by the AO should be confirmed. He accordingly supported order of the lower authorities. 29. We have heard the rival contentions and perused the material available on record. The case of the Revenue is that the assessee company has received a sum of ₹ 3.26 crores in cash from M/s U-Turn Housing Pvt. Ltd. during the F.Y 2006-07 relevant to impugned assessment year and the same is not shown in its books of accounts, accordingly, by invoking provisions of section 68 of the Act, the said amount has been brought to tax as unexplained cash credit in the hands of the assessee company. Firstly, we refer to the provisions of section 68 of the Act which has been invoked by the Assessing officer and the same reads as under:- 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In such a scenario, it may be treated as unaccounted receipts in the hands of the assessee, however, as far as the provisions of section 68 of the Act are concerned, the same can be invoked only where such receipts are accounted for in the books of accounts and explanation regarding nature and source of such receipts is either not forthcoming or not found satisfactory. Therefore, as far as invoking the provisions of section 68 is concerned, in absence of the requisite requirements so specified therein, the said provisions cannot be invoked to bring such unaccounted receipts to tax as income in the hands of the assessee. 31. Having said that, let s look at the basis and the evidence on record on the basis of which the Assessing officer has arrived at the finding that sum of ₹ 3.26 Crores has been received by the assessee during the financial year 2006-07 and has not been accounted for in its books of accounts and therefore is in nature of unaccounted receipts which are not disclosed to the Revenue authorities and consequentially, it should be subject to taxation. 32. Firstly, we find that the Assessing officer has relied on the statement of Sh. Nikhil T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Shri Nikhil Tripathi and the copy of account of the assessee in the books of accounts of M/s U-Turn Housing Pvt. Ltd are the two pieces of document which have been relied upon by the Assessing officer while arriving at the finding that sum of ₹ 3.26 Crores has been received by the assessee during the financial year 2006-07 and which has not been accounted for in its books of accounts. 36. At the same time, we find that the Assessing officer has not accepted the submission of the assessee company that the earlier MOU dated 22.03.2006 was cancelled due to non-fulfillment of certain conditions as evidenced by the cancellation agreement dated 14.10.2007 and a fresh MOU was entered into between the two companies on 14.07.2007 which talks about receipt of ₹ 5.69 crores by the assessee company as part of the earlier MOU and which shall be adjusted against the total consideration of ₹ 9.14 crores as agreed between the parties as per fresh MOU. It was further submitted that out of ₹ 5.69 crores, the assessee has received a sum of ₹ 3,89,00,000/- during the F.Y 2006-07, which was accounted for in its books of accounts and is duly supported by confirma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 131 of the Act. Further, no enquiry or investigation has been carried by the Assessing officer even though these entries are apparent on the face of assessee s ledger account. Therefore, as far as these payments relating to Bharatpur land are concerned, the same cannot be related to the assessee company and have been wrongly debited in the accounts of the assessee company in the books of M/s U-Turn Housing Pvt. Ltd. for the reasons best known to such company and which have not been enquired or investigated by the Assessing officer. Therefore, the statement of Shri Nikhil Tripathi that the said payments made to the assessee company matches with the entries in the books of accounts of M/s U-Turn Housing Pvt. Ltd. doesn t stand the test of corroboration to the extent of aforesaid payments. 39. Further, we find that there are various entries totaling to ₹ 1.49 crores as reflected in the assessee s aforesaid ledger account wherein the common thread is the narration against each of these entries stating that the cheque no. encashed through Sh. R. K. Gupta and paid to Rajasthan Land Developers Pvt Ltd. In its submission dated 19.03.2014 filed before the Assessing Officer, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt doesn t tally with the date and amount of cash payment as recorded by the Assessing officer in the assessment order as apparent from following comparative table: As per assessment order As per ledger account S. No. Date Amount (Rs.) Date Amount (Rs.) 1. 01.04.2006 25,00,000/- 22.04.2006 20,00,000/- 2. 10.04.2006 1,00,00,000/- 22.05.2006 40,00,000/- 3. 15.04.2006 50,00,000/- 11.06.2006 20,00,000/- 4. 24.04.2006 37,00,000/- 17.06.2006 12,00,000/- 5. 30.04.2006 16,00,000/- 23.06.2006 15,00,000/- 6. 17.05.2006 40,00,000/- 27.07.2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Tripathi which lacks necessary corroboration and cannot be relied upon. 42. Further, on perusal of the aforesaid ledger account of the assessee in the books of M/s U-Turn Housing Pvt. Ltd., we find that there are various entries totaling to ₹ 3.39 crores wherein cheque payments have been shown to have been made to the assessee company during the financial year 2006-07 and cheque payment of ₹ 50 lacs during the financial year 2005-06 totalling to ₹ 3.89 crores, whole of which has been accounted for in the books of assessee company during the financial year 2006-07. The same payment of ₹ 3.89 crores has also been confirmed by Shri Nikhil Tripathi in the confirmation submitted before the AO which has apparently not being considered by the AO while framing the assessment apparently for the reason that such confirmation has been obtained and submitted by the assessee company and blind reliance on the statement of Shri Nikhil Tripathi which fails the necessary corroboration test as we have noted above. 43. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accounts and the other signatory to the MOU denies entering into such an MOU, what should be the course of action to be adopted by the Assessing officer. To our mind, once the payment of ₹ 5.69 crores is duly accounted for in books of accounts of both parties and such payment has been made through banking channel and reflected in respective bank accounts, there cannot be any dispute that such payment has changed hands. Only question that remains is whether there is any payment over and above the aforesaid payment of ₹ 5.69 crores in terms of earlier MOU. In such a scenario, certain basic due diligence was required in the matter where the matter relating to forged signatures could have been referred to the forensic expert and his report should be called upon. Further, necessary enquiry could have been conducted with the Notary Public who has authenticated the execution and signing of second MOU dated 14.07.2007 and cancellation agreement of even date where the earlier MOU dated 22.03.2006 was cancelled by both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 application before the learned C.M.M, Patiala House Court, New Delhi on 05.12.2013 for removing the embargo on the execution of lease deed by JDA on the assessee s land situated at Sanganer and in the said application, he has stated about the initial MOU dated 22.03.2006 and subsequent MOU dated 14.07.2007 and ld C.M.M has taken cognizance of the second MOU i.e, MOU dated 14.07.2007 and denied to lift the embargo vide his order dated 11.05.2015 and his findings read as under: In view of the arguments addressed on behalf of the parties and perusal of the record, I am of the opinion that in the present case offence alleged against the accused persons is serious in nature wherein the land was put for sale even prior to acquisition of ownership rights from M/s Rajasthan Land Developers Private Limited. As per the 2nd MOU, the applicant acquired the rights over the land in the year 2007 whereas the applicant had invited applications for allotment of land way back in the year 2006. Even M/s Rajasthan Land Devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 forged on a particular document and the contents and existence of such documents are challenged, as Courts have held from time to time, the matter is best suited to be referred to the domain experts such as handwriting experts or forensic experts who have the requisite expertise and experience in the manner and the Assessing officer cannot arrogate to himself the power to determine the authencity and existence of the document and that too, without referring to any reliable material. 49. Having said that, we now look at the contents of the MOU dated 14.07.2007. The MOU talks about selling of marketing rights by the assessee company to M/s. U-Turn Housing Pvt. Ltd. in respect of 72,000 sq yards of land which shall include the booking of plots and receiving the payment from prospective customers at the rate of ₹ 1270 per sq yard for a total consideration of ₹ 9.14 crores. Further, on perusal of the MOU, we find that both the parties have agreed therein that the amount to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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