TMI Blog2020 (12) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... om whom the land was purchased were duly examined by the ld. CIT(A). The allegation of the Assessing Officer that the books of account must have been prepared after the search operation is without any basis. It is common practice during search proceedings that the revenue seizes the books of account along with incriminating documents and even if the books of account are not seized, copies of the same are taken. In either situation, it would be impossible for the assessee to fabricate/fudge /doctor the entries in the books of account. Since the investment has been found duly recorded in the regular books of account, provisions of section 69 of the Act do not apply and, therefore, we decline to interfere with the findings of the ld. CIT(A). Ground No. 2 is, accordingly, dismissed. Unexplained cash payments - HELD THAT:- DR could not point out any factual error in the findings of the ld. CIT(A) and since the documentary evidences examined and verified by the first appellate authority show that the impugned transaction related to F.Y 2006 07 and, in our considered opinion, the same cannot be considered in the block period relating to the present search assessments. As no factua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase of agricultural land - HELD THAT:- As the said cash payment has been found to be reflected in the cashbook which has been mentioned and verified by the first appellate authority and no factual errorhas been pointed out. In our considered opinion, once the transaction is found to be recorded in the regular books of account, provisions of section 69 of the Act do not apply and the ld. CIT(A) has rightly deleted the addition. Addition u/s 68 - identity, genuineness of the transaction, and capacity of the lender/depositor - HELD THAT:- The identity cannot be questioned because one of the applicants is assessed at the very same circle as the appellant and the other applicant is also a taxpayer, which is evident from the tax returns. Genuineness of the transaction cannot be doubted with as the transactions have been made through banking channels, duly recorded in the regular books of account. In so far as the capacity is concerned, the assessee s onus is to explain the capacity, prime facie,and which on the given facts of the case in hand, as discussed elsewhere, we are of the view that the assessee has successfully explained the capacity of the investor company. Merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 deserve to be dismissed, as both the appeals are hit by the CBDT Circular No. 17/2019 dated 08.08.2019. 4. A perusal of the grievance of the revenue shows that the tax effect would be less than ₹ 50 lakhs, therefore, these appealsare not maintainable and dismissed in light of the CBDT Circular [supra]. 5. In the result, both the appeals of the Revenue in ITA No. 6085/DEL/2019 for AY 2013 14 and 4880/DEL/2019 stand dismissed. 6. The common grievance in all the appeals filed by the revenue relates to the admission of additional evidences. 7. Before us, the ld. DR vehemently stated that the ld. CIT(A) has admitted the additional evidences without following Rule 46A of the Income tax Rules 1962, and therefore, the order of the CIT(A) deserves to be quashed, since it is in violation of principles of natural justice. 8. On the other hand, the ld. counsel for the assessee stated that the proceedings u/s 153A of the Act started on 16.09.2016 and the first questionnaire dated 27.10.2016 and assessment orders have been framed in the month of December, 2016. It is the say of the ld.Counsel for the assessee that since voluminous documents were seized by the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances received through RTGS/cheque payments but no explanation was given in so far as cash receipts found in the loose sheets and proceeded to make addition of ₹ 43,39,80,220/-. 16. As mentioned elsewhere, the assessee filed some new evidences before the ld. CIT(A). The fresh evidences were transmitted to the Assessing Officer and the Assessing Officer submitted his enquiry report vide letter dated 09.01.2019. The enquiry report reads as under: Addition on account of cash received During the course of assessment proceedings it was noticed from the incriminating documents seized from the premise of assessee that a details oj cash receipts were given on page no. 15 of Annexure LP-J. The some was scanned in the assessment order passed on 30/]2/20!6. During the course oj assessment proceedings the, assessee was required to explain the total cash receipt of ₹ 43,39,30,220/- mentions.: in the said paper along 'with supporting documents and to reconcile the same regular books of account and has also required to explain why amount of Rs may not be upheld as unexplained cash receipts and not be added in the total income due assessee. compliance the assessee has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt mentioned in the paper to the Ins: penny. Therefore, it is obvious that the company has prepared the documents according to the amount mentioned in the said paper and got tallied to the last penny otherwise the payments received in different period and different mode may not tally with a paper whose authenticity was also challenged by the assessee company. Therefore, in view of the above discussion and submission filed Iv the assessee the consent ion of the assessee is not acceptable as the paper which was found from she premises of the assessee pertains to assessee and details of cash received as and money mentioned on if paper which the then A.0. has rightly disallowed and added to the income of assessee. 17. After considering the detailed submissions made by the assessee and the enquiry report submitted by the Assessing Officer, the ld CIT(A) observed that the Assessing Officer has simply treated the figures mentioned in the alleged seized documents as cash received by the appellant company, which is not accounted for in the regular books of accounts, whereas the case of the appellant is that all the receipts of sale/advances received by it are accounted for in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer formed a belief that the assessee has made payments amounting to ₹ 7,08,23,250/- for the purchase of land. The assessee was asked to explain the transactions along with supporting documents. 26. In its reply, the assessee stated that the impugned document is a handwritten page having some calculations under the heading Krishna developers and promoters andsome other calculation related to New net worth of KPD Infrastructure Pvt. Ltd where the amount of ₹ 7,08,23,250/- is related to Khasara Nos. 915, 945 and 946, being some properties purchase at Haridwar. 27. The reply of the assessee did not find any favour with the Assessing Officer who was of the opinion that the assessee has not furnished any supporting evidences and proceeded to make addition of ₹ 7,08,23,250/- as unexplained investment. 28. Before the ld. CIT(A), the assessee furnished some evidences which were sent to the Assessing Officer and Assessing Officer has submitted his enquiry report dated 09.0.2019 which reads as under: 29. After considering the detailed submissions made by the assessee and Enquiry Report submitted by the Assessing Officer, the ld. CIT(A) observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cash. The assessee was asked to explain the investment made in cash with supporting documents and reconcile the same in the regular books of account. 38. On receiving no plausible reply, the Assessing Officer made addition of ₹ 7,02,38,672/- u/s 69 of the Act. 39. Before the ld. CIT(A), the assessee filed detailed reply along with evidences which were sent to the Assessing Officer and the Assessing Officer submitted enquiry report vide letter dated 09.01.2019 which is as under: 40. After considering the detailed submissions made by the assessee and enquiry report submitted by the Assessing Officer, the ld. CIT(A) found that the bone of contention is the payment of ₹ 7,02,38,672/- in cash for Haridwar account. The ld. CIT(A) further found that the appellant has contended that the transaction in the seized documents related to F.Y 2005 06, which is beyond the block period under consideration. 41. On perusal of the documents filed by the assessee, the ld. CIT(A) found that the appellant company has entered into purchase of agricultural land at Haridwar through one Shri Ved Prakash in the year 2005. The CIT(A) further found the Affidavit of Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture totalling ₹ 3,28,27,680/- out of which ₹ 1,54,09,440/- pertains to the year under consideration. Accordingly, the assessee was asked to explain the transaction and reconcile the same with its books of account. 52. In its reply, the assessee explained that the seized documents referred to contain figures of comparison for expenditure made on maintenance charges, in the month of June 2012, 2013 and 2014 in respect of KDP Project. It was explained that Greenwell Mark Buildwell Pvt Ltd takes maintenance charges from residents but in actual, the appellant provides maintenance charges and, therefore, the amount is transferred from Greenwell Mark Buildwell Pvt Ltd for which the appellant raises bill. 53. Reply of the assessee was rubbished by the Assessing Officer. According to the Assessing Officer, the assessee has made the expenditure outside the books of account and the same are not recorded in the books of account and accordingly made addition of ₹ 1,54,09,440/-. 54. Before the ld. CIT(A), detailed submissions were filed and it was explained that the appellant company was maintaining flats for which purpose it incurred expenditure and to ensure pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 60. Before us, the ld .DR strongly supported the findings of the Assessing Officer and the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 61. We have carefully perused the factual findings given by the first appellate authority and no factual error has been pointed out before us by the ld.DR in the findings of the ld. CIT(A). Whereas the findings of the ld. CIT(A) clearly show that he has examined all the entries in the books of account of the appellant as well as Greenwell Mark Buildwell Pvt Ltd. Since the entries are duly recorded in the regular books of account, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 1 is dismissed. GROUND NO. 2 62. Ground No. 2 relates to the deletion of addition of ₹ 89 lakhs. 63. During search proceedings, one of the incriminating documents was page 14 of Annexure LP01 which is as under: 64. On perusing the aforementioned document, the Assessing Officer came to the conclusion that the assessee has received commission amounting to ₹ 89 lakhs and accordingly, the assessee was asked to explain the said transaction wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the trial balances, last six pages were missing. The CIT(A) further rubbished the contention of the Assessing Officer that the assessee is maintaining two parallel sets of books of account. Convinced with the reply of the assessee, the ld.CIT(A) deleted the impugned addition. 76. Before us, the ld. DR strongly supported the Assessing Officer and the ld. counsel for the assessee reiterated what has been stated before the ld. CIT(A). 77. We have carefully perused the orders of the authorities below qua the issue. It is true that the only basis for making addition was the difference in figures in two trial balances found at the time of search proceedings. The Assessing Officer has alleged that the assessee is maintaining two parallel set of books of accounts. But the entire assessment order is silent about any such parallel set of books of account found and seized during the course of search proceedings. 78. Further, trial balance is prepared from the books of account and it is always that the trial balance figures frequently change at the close of the accounting year, as necessary adjustments entries are passed at the close of the accounting year. There may be differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- 83. The assessee was asked to explain the transactions and reconcile the same with its regular books of accounts. 84. In its reply the assessee submitted that payments have been made by cheque and cash to the aforementioned five parties which are duly recorded in the regular books of accounts. The assessee also filed ledger account and registry of land. 85. The Assessing Officer dismissed the submissions of the assessee stating that the assessee has not explained the source of the above payments and has not filed any satisfactory reply regarding these payments and accordingly, made an addition of ₹ 1.75 crores which was paid in cash. 86. Before the ld. CIT(A), the assessee vehemently stated that the seized documents were copy of ledger accounts of five parties. It was strongly contended that all the transactions were duly recorded in the regular books of accounts which were also placed before the AO. 87. After considering the submissions made by the assessee and the remand report of the Assessing Officer, the CIT(A) observed that the seized documents related to transactions of purchase of land at Noor Nagar, District Ghaziabad from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by CIT(A) Additions made vide Order u/s 153A and sustained by CIT(A) Additions made vide Order u/s 143(3) and sustained bv CIT(A) 1 Unexplained share capital u/s 68 21135000 0 1346000 00 5490000 351445490 2 Addition on the basis of mere statement u/s 132(4) 100000000 100000000 3 Enhancement ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly erred in stating that the summons served u/s 131 of the Act were not duly replied. The ld. counsel drew our attention to the relevant exhibits in paper book and pointed out that both the companies have furnished the details as called for by the Assessing Officer along with their sources. 99. The ld. counsel further pointed out that the directors of the share applicant companies are related to the directors of the appellant company and, in fact, the director of Nivedan Agencies Private Limited are the same persons who are directors of the appellant company. The ld. counsel further stated that the assessment of Optimum Iron Works Pvt Ltd was framed in the very same circle where the appellant has been assessed. Therefore, the Assessing Officer could have very easily verified whatever he wanted to verify. 100. The ld. counsel drew our attention to the relevant documentary evidences brought on record in the form of paper book. Relying upon various judicial decisions ld. counsel stated that the appellant has successfully discharged the initial burden cast upon itu/s 68 of the Act and the additions deserve to be deleted. 101. Per contra, the ld. DR strongly supported the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also assessed and as mentioned elsewhere, the directors of the other applicant are directors of the appellant company, therefore, it cannot be said that the share applicant companies are strangers to the assessee. 107. Considering the facts of the case in totality, we do not find any merit in the additions made by the Assessing Officer and confirmed by the ld. CIT(A). We, accordingly, direct the Assessing Officer to delete the addition of ₹ 21,13,50,000/-. 108. In the result appeal filed by the assessee in ITA No. 4687/DEL/2019 is allowed. ITA No. 4688/DEL/2019 A Y 2013 14 109. The additions made u/s 68 of the Act in this year relates to share application money with share premium from the following three parties: (i) Nivedan Agencies - ₹ 3.5 crores (ii) Sutanuti Marketing Pvt Ltd - ₹ 5.96 crores (iii) Shanthi Gopal Vanijya Pvt. Ltd - ₹ 3.96 crores 110. The edifice of the additions made u/s 68 is that the assessee failed to discharge the burden cast upon it by provisions of Section 68 of the Act and the ld. CIT(A) concurred with findings of the Assessing Officer. 111. Before us, the ld. counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure 2-C. 117. Similarly, the appellant had taken loan from Shanti Gopal Vanijya Pvt Ltd in FY 2011-12 through RTGS and the details are at page 12 Annexure 3-A. The loan was repaid by the appellant, details are at page 13 Annexure 3-B and the same amount was invested in Shanti Gopal Vanijya as per details at Annexure3-C page 14. Since no adverse inference has been drawn in so far as these credits are concerned in FY 2011 12, these credits are self-explanatory and explain the source of investment. Considering this fact, we are of the considered view that the appellant has successfully discharged the onus cast upon itu/s 68 of the Act and do not find any merit in the impugned addition. We accordingly direct the Assessing Officer to delete the addition of ₹ 13.46 crores. 118. In the result the appeal of the assessee in ITA No. 4688/DEL/2019 is allowed. ITA No. 4311/DEL/2019 [A.Y 2014 15]. 119. Additions have been made u/s 68 of the Act in the case of share application money received along with share premium from Shanti Gopal Vanijya Pvt Ltd amounting to ₹ 54.90 lakhs. The sole basis of making the addition is that the assessee has grossly failed to com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny has also not declared the surrender income in return of income. Therefore, the amount of ₹ 10,00,00,000/- is added to the total income of the assessee as surrendered in his statement recorded u/s 132(4) of the Income Tax Act, 1961. The assessee has furnished inaccurate particulars of income, therefore, penalty proceedings u/s 271AAB are also considered separately. 124. From the above the observations of the Assessing Officer it can be seen that the Assessing Officer has made the addition only because in his statement recorded u/s 132(4) of the Act, the director has surrendered ₹ 10 crores. 125. When the matter was agitated before the CIT(A), the CIT(A)was of the opinionthat it was not ₹ 10 crores but ₹ 15 crores and therefore, enhanced the addition to ₹ 15 crores. 126. However, we find that the language of the CIT(A) is not clear as to whether ₹ 10 crores has been enhanced to ₹ 15 crores or ₹ 15 crores has been added over and above ₹ 10 crores. This can be understood from the following finding of the ld. CIT(A): In view of the above detail discussions of factual matrix of the case end judicial pronouncemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances has held as under: Addition can only made be made if there is incriminating material or surrounding circumstances reveal that there is any material to justify the addition. The person making an admission is not always mindful of it and sometime can get out of its binding purview. If the person can explain exclusive with supportive evidence/material or otherwise that the admission by him earlier is not correct or contain a wrong statement or that a true state of affairs is different from that represented therein and so the same should not be accepted upon forecasting tax liability which should rather be fixed on the basis of correct and true affairs as ascertained from the material on record. 133. In the light of the aforesaid decision all the additions made in the earlier A.Ys [supra] have been deleted by us on facts of each A.Y.This itself proves that there was nothing to surrender and surrender was without any application of mind and the facts and circumstances clearly show that that was no undisclosed income which needed to be surrendered. Considering the facts of the case in totality in the light of the factsas discussed in the appeals of the A.Ys [supra] we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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