Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2020 (3) TMI 1137

..... have agreed therein that the amount to the tune of ₹ 5.69 Crores has already been paid by M/s. U-Turn Housing Pvt. Ltd. prior to entering into such fresh MOU and the same shall be adjusted against the total consideration of ₹ 9.14 crores. The Court of ld. ADJ Jaipur has also taken cognizance of receipt of ₹ 5.69 crores by the assessee company. The said assertion in the MOU has also been confirmed separately by way of annual confirmation statement submitted before the AO duly signed by Shri Nikhil Tripathi and it is not the case of the Revenue that his signature on such confirmation was forged. Further, credit notes are issued by M/s. U-Turn Housing Pvt. Ltd. again signed by Shri Nikhil Tripathi drawing reference to MOU dated 14.07.2007 and stating that sum has been credited in account of the assessee company against sale proceeds of specified plots 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 w .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 39;ble ADJ has held as under:- (vi) Thus it is evident from the above that the issue of genuineness or otherwise of the MOU dated 14-07-2007 was not before the Court of Hon'ble ADJ and the MOU dated 22-03-2006 was not placed before the Hon'ble Court, according to which balance payment of ₹ 13.10 crore was required to be paid to before 04-06-2006, out of the sale consideration of ₹ 15,87,50,000/-. Moreover, the above order was passed ex-parte in the absence of the respondents U Turn and Shri Nikhil Tripathi. Thus the contention of the A.R. is not correct and thus hereby rejected. (vii) It may be mentioned that the appellant has failed to controvert the findings of the AO as stated in the assessment order and the remand report. Therefore, in view of the above 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 Ye .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... before us wherein the limited issue under consideration relates to Ground No. 3 of the assessee s appeal which reads as under: On the facts and circumstances of the case learned CIT Appeals was not justified while confirming addition of ₹ 3,26,00,000/- u/s 68 as unexplained cash credit of Income Tax Act, 1961. 4. Briefly stated, the facts of the case are that the assessee company is engaged in the business of real estate and has filed its return of income declaring total income of ₹ 1,90,08,880/- on 31.10.2007. The return was processed u/s 143(1) on 30.10.2008. Thereafter, basis certain information received by the Assessing officer, the case of the assessee was reopened after seeking requisite approval and notice u/s 148 was issued 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, Jaisingh .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ssee has sold the land 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. 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 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 the table. 13. It was further submitted that even from the perusal of the 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... i. 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. Further, M/s. U-Turn Housing Pvt. Ltd. has claimed that it has withdrew the amount 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 Regis .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ues. 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 enquire into the same. It cannot overlook one or the other materials 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... urn 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 in contradiction of the documents available on 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 P .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 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 credited may be charged to income-tax as the income of the assessee 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... king 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 Tripathi, Director of M/s U-Turn Housing Pvt. Ltd. which was recorded u/s 131 of the Act by the ADIT (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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ing 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 confirmation signed by Shri Nikhil Tripathi on behalf of M/s U-Turn Housing Pvt. Ltd. and basis the same, the assessee has sold the land 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 h .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 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, the assessee has denied knowing or having any linkage with Sh. R. K. Gupta or having authorized him to act on its behalf. Therefore, where the 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 authorise .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 0,000/- 23.06.2006 15,00,000/- 6. 17.05.2006 40,00,000/- 27.07.2006 13,00,000/- 7. 28.05.2006 40,00,000/- 22.08.2006 15,00,000/- 8. 14.08.2006 8,00,000/- 10.09.2006 10,00,000/- 9. - 11.09.2006 10,00,000/- 10. - 3.10.2006 10,00,000/- 11. - 7.10.2006 12,00,000/- Total 3,26,00,000/- 1,77,00,000/- 41. As can be seen from above, there are not just vast difference in the date and amount of payment in two tables but even the total amount varies significantly from ₹ 3.26 crores as recorded in the assessment order to ₹ 1.77 crores as per the ledger account of the assessee in books of M/s U-Turn Housing Pvt. Ltd. and apparently, both these details of payments are claimed to be emerging from the books of accounts of M/s U-Turn Housing Pvt. Ltd. However, we find that the first set of data is emerging from a statement signed by Sh. Nikhil Tripathi and apparently handed 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... assessee company and M/s U-Turn Housing Pvt. Ltd. wherein both the entities have come together and agreed on terms and conditions including relevant obligations and payment of consideration wherein there is a clear mention of ₹ 5.69 crores which have been paid by M/s U-Turn Housing Pvt. Ltd. to the assessee company prior to entering into such MOU as part of earlier MOU which was cancelled and which shall be adjusted against the revised consideration of ₹ 9.14 Crores. In this regard, we refer to para no. 3 of the MOU dated 14.07.2007 wherein it has been stated as under: That both the parties entered into an MOU earlier to this MOU (which is the present MOU) on 23.02.2006 and in pursuance of the earlier MOU dated 23.02.2006 party of the second part has already made a payment of ₹ 5,69,00,000/- (Rupees Five Crore Sixty Nine Lac only) to the party of 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 (whic .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... iled in the ADJ Court, Patiala House, New Delhi, a copy of which is available as part of assessment records submitted before us and available at Department s paper book pages 51 to 75 and the relevant contents thereof reads as under:- The documents recovered from the office of the accused company also included one Memorandum of Understanding dt. 14.07.07, (in original) executed between Rajasthan Land Developers Pvt. Ltd through its director Mr. Prabhu Lal Chopra and M/s U-Turn Housing Pvt. Ltd trough its director Nikhil Tripathi. In the said MOU M/s Rajasthan Land Developers Pvt. Ltd had agreed. to sell the marketing rights to M/s U-Turn Housing Pvt. Ltd in respect of 72,000 Sq. Yards of land out of the total land of 10.63 Acres situated in Villages Jaisinghpura & Manpura Tilawala, Tehsil Sanaganer, Jaipur. In the said MOU, it is mentioned that NOC and proceedings 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 tota .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... t forward to substantiate the plea of the applicant. The applicant has not come up with any plan to justify as to how he will compensate the investors who left off after allotment of the available land since he has allotted the land more than what was available with him. Even M/s Rajasthan Land Developers Private Limited is not willing for sale of the entire land as it has offered the land only to the extent of 42,000 sqyads for which it has received the payment from the applicant. In these circumstances, I do not find that lifting of embargo would actually benefit the investors/victims and as such the application being devoid of any merit is dismissed. 47. Further, we note that the existence of MOU dated 14.07.2007 and payment of ₹ 5.69 crores also find mention in the suit filed by the assessee company before the ADJ-19, Jaipur which has been taken cognizance 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 approp .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... e Revenue that his signature on such confirmation was forged. Further, credit notes are issued by M/s. U-Turn Housing Pvt. Ltd. again signed by Shri Nikhil Tripathi drawing reference to MOU dated 14.07.2007 and stating that sum has been credited in account of the assessee company against sale proceeds of specified plots of land. Further, 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. 50. In light of aforesaid discussions and in the entirety of facts and circumstances of case, we are of the considered view that 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. Therefore, the addition made by the Assessing officer to this effect is hereby directed to be deleted. In the result, ground no. .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||