TMI Blog2021 (1) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the statement given u/s 132(4) - HELD THAT:- Impugned addition made by the Ld. A.O was purely based on the statement given u/s 132(4) of the Act and there was no reference to any incriminating material found during the course of search which could support the impugned addition, we thus delete the addition of ₹ 25,00,000/- for Assessment Year 2013-14 and ₹ 3,00,00,000/- for Assessment Year 2014-15 and set aside the finding of both the lower authorities and accordingly allow Ground No.3 raised in assessee s appeal. Undisclosed investment u/s 69B of the Act based on the Departmental Valuation Officer Report - HELD THAT:- Assessee has maintained regular books of accounts which are not found to be incomplete or unreliable and also have not been rejected by the Ld. A.O and secondly Valuation was done of the incomplete project which has been valued not on the basis of local price but on the basis of Delhi rates which are universally accepted on higher side. Therefore since no defects were pointed out in the books of accounts regularly maintained by the assessee and are duly audited and no incriminating material was found in the search to show that unaccounted inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnored the rate of ₹ 20,00,000/ - per acre mentioned in the other two draft agreements. Ld. A.O has also ignored the actual registered sale deed showing the purchase of land in question at a price in between ₹ 40,00,000/ - and ₹ 45,00,000/-per hectare. Ld. A.O has failed to bring on record any other documentary evidence to support the fair market value of 1.12 crores adopted by him. In these facts and circumstances of the case we find no justification in the action of the Ld. A.O in making the addition for undisclosed investment merely on the basis of unsigned draft agreements which also have not been given equal weightage and the Ld. A.O. has merely picked those documents showing higher purchase consideration which ID our view is not justified. Thus the Ld. CIT(Al has rightly deleted the addition. Addition on account of disallowance u/s 40(A) - HELD THAT:- Genuineness of the payment were not doubted and there is no iota of evidence to show that the assessee wanted to evade any tax liability and more so the transactions have been carried out before the Registering authority of State Government and impugned cash payments are part of the consideration appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO was justified in making addition even when the assessment proceedings were not pending and no incriminating material was found during the course of search. 2. That on the facts and in the circumstances of the case of the assessee the Ld Commissioner of Income Tax (A). was not justified in holding that the AO was justified in making addition of ₹ 12,00,000/- treating the unsecured loans received by the assessee as unexplained. 3. That the assessee craves leave to add, alter, delete or modify any ground( s) of appeal during or before the hearing of appeal. IT(SS)A No.185/Ind/2018 Assessment Year 2013-14 1. That on the facts and in the circumstances of the case of the assessee the Ld Commissioner of Income Tax (A), was not justified in holding that the AO was justified in making addition of ₹ 25,00,000/- said to be income declared by the assessee u/s 132(4). 2. That the assessee craves leave to add, alter, delete or modify any ground ( s) of appeal during or before the hearing of appeal. IT(SS)A No.186/Ind/2018 Assessment Year 2014-15 1.That on the facts and in the circumstances of the case of the assessee the Ld Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. (2) On the facts and in the circumstances of the case, the ld. CIT(A) erred in Directing the Assessing Officer to provide deduction/set off of the addition made u/s 69B of the Income Tax Act,1961 in view of the spirit of section 115BHE of the Income Tax Act 1961. (3) On the facts and in the circumstances of the Case, the Id. CIT(A) erred in deleting the addition of ₹ 1,43,910/- made by the Assessing Officer on account of unexplained cash u/s 69A of the Income Tax Act, 1961. (4) The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal. 4. In the case of M/s Signature Infrastructure assessee has raised following grounds of appeal:- IT(SS)A No.187/Ind/2018 Assessment Year 2013-14 1.That on the facts and in the circumstances of the case of the assessee the Ld Commissioner of Income Tax (A), was not justified in holding that the AO was justified in making addition of ₹ 50,00,000/- said to be income declared by the assessee u/s 132(4). 2.That the assessee craves leave to add, alter, delete or modify any ground( s) of appeal during or before the hearing of appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Group wherein search was conducted u/s 132(4) of the Act on 29.01.2014 and the issues raised in various grounds and facts involved are mostly common, we have heard these appeals together. Since there is no objection by both the parties, all these appeals are being disposed off by this common order for the sake of convenience and brevity. As submitted by Ld. Counsel for the assessee and also by Ld. Departmental Representative M/s Signature Builders is the lead case. 8. Cross appeals have been filed for Assessment Years 2012-13 to 2014-15. 9. Brief facts of the case as culled out from the records are that the appellant is a partnership firm incorporated on 17.11.2009 and is part of the Signature Group of Bhopal engaged in the business of builders developers. Search and seizure operations u/s 132 of the I.T. Act, 1961 was conducted on the business premises of the assessee group and its associate concerns as well as on the residential premises of the partners and persons related to these concerns on 29.01.2014. Consequently, notice u/s 153A of the I.T. Act was issued to the assessee to file the returns of income. In response to the notice the assessee has filed returns of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total income assessed Rs. 5,80,55,405/- A.Y. 2014-15 Income shown in the return Rs 47,85,080/- Add: Unexplained cash u/s 69A Rs. 1,43,910/- Interest of Income tax Rs. 68,665/- Admission of undisclosed income u/s 132(4) Rs. 3,00,00,000/- Undisclosed investment u/s 69B as per DVO s report Rs. 4,38,32,956/- Unexplained unsecured loans Rs. 15,00,000/- income assessed Rs. 8,03,30,611/- 11. Against this impugned assessment order passed u/s 153A r.w.s 143(3)/143(3), the assessee has preferred appeals before Ld. CIT(A) and partly succeded. 12. Now both the assessee(s) and Revenue are in appeals against the finding of Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Number, identity details, details of bank account, Income Tax Return and salary certificate. The copy of bank statement provided at page 159 of paper book shows that assessee is receiving salary of ₹ 21,666/- per month but assessee has been unsuccessful to provide the details of other credit entries. In this situation we are of the considered view that the assessee has failed to discharge its onus to prove the identity and creditworthiness of the cash creditor. In these given facts and circumstances of the case we find no reason to interfere in the finding of Ld. CIT(A) confirming the addition for unexplained loan of ₹ 12,00,000/- received from Rimsha Maheshwari. Thus Ground No.2 of the assessee s appeal for Assessment Year 2012-13 stands dismissed. 16. Ground No.3 of the assessee s appeal for Assessment Year 2012-13 is general in nature which needs no adjudication. 17. Now we take up Ground No.3 raised for Assessment Years 2013-14 and 2014-15 in the case of Signature Builders vide ITA No.185 186/Ind/2018 through which common issue has been raised by the assessee contending that Ld. CIT(A) was not justified in confirming the addition made by the Ld. A.O for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several incriminating documents were confronted for which the assessee was unable to explain. On the sole ground of the declaration in the statement the addition has been made. The ld. CIT(A) upheld these additions relying on the evidence and holding that the declaration made u/s 132(4) is binding on the assessee. 21. Now the assessee is in appeal before the Tribunal. 22. Ld. Counsel for the assessee submitted that no addition was warranted as the surrender has not been made with reference to any loose paper seized during the course of search and was accordingly not in accordance with the provisions of section 132(4) of the Act. The AO has failed to bring on record any specific instance of the assessee having earned any undisclosed income or having made any unexplained investment which could justify the addition under reference. The sole basis for making the addition is the statement made by one of the partners. The Ld. A.O. has made various additions for the documents found. Thus, all the loose papers and the investments have been considered by the A.O. and accordingly he has made the additions under various heads. After making the additions on the basis of various papers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us and carefully gone through the decisions relied by Ld. Counsel for the assessee. Through Ground No.3 raised for Assessment Years 2013-14 2014-15 assessee has challenged the finding of Ld. CIT(A) confirming the addition of ₹ 25,00,000/- and ₹ 3,00,00,000/- made by the Ld. AO for Assessment Years 2013-14 2014-15 respectively for the amount declared by the assessee u/s 132(4) of the Act contending that the same is without corroborating with any incriminating material found during the course of search. 26. We observe that the search was conducted on Signature Group including the assessee on 29.1.2014. Certain loose papers were seized. Additional income of ₹ 3,25,00,000/- (₹ 25,00,000/- + ₹ 3,00,00,000/-) was offered for Assessment Years 2013-14 and 2014- 15 respectively. However in the return of income filed post search u/s 153A of the Act such additional income of ₹ 25,00,000/- and ₹ 3,00,00,000/- was not offered in the return of income. During the assessment proceedings it was submitted that various loose papers and documents narrated by the Ld. A.O found during the course of search does not pertain to the assessee. Since ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised person of M/s Signature group which is as follows; S.No Concern/F.Y 2012-13 2013-14 Total 1 Signature Infrastructure 50 300 350 2 Signature Builders 25 300 325 3 Signature Builders and Colonisers 25 300 325 4 Signature Developers 100 100 Total 1100 5 Om Builders 275 275 6 Om Construction 50 750 800 7 Sainath Infrastructure P Ltd 25 25 Total 1100 8 Ultimate Builders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2014. On 02.02.2014, Mr. Vipin Chouhan who is the partner of the assessee firm gave a statement before the search team wherein he made surrender of ₹ 2,25,00,000/- on behalf of the appellant firm and agreed to offer it to tax. In the very same statement he also made surrender on behalf of another firm M/s. Virasha Infrastructure in the capacity of a partner. In the very same statement he also made surrender on behalf of other companies of Signature Group. Ld. A.O during the course of assessment proceedings observed that the assessee has not offered surrendered income of ₹ 2,25,00,000/- for tax and confronted the assessee. During the assessment proceedings u/s 143(3) of the Act, assessee made the retraction by submitting that no such undisclosed income was earned and therefore no such income was required to be offered to tax. However, Ld. A.O giving reference to the statement of Mr. Vipin Chouhan, partner of Ultimate Builders and also giving reference to the seized documents found during the search at Signature Group made addition for undisclosed income. When the matter came up before Ld. CIT(A) addition was confirmed. However the basis of addition was accepted to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is fond to be in possession or control of any books of account, documents, money, bullion, jewellery to other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. 1 Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. 16. The above sub Section 4 of Section 132 of the Act starts with reference to authorised officer , which means that the Officer who is authorised to conduct search on the assessee. In the instant case it is stated before us that the authorised officer of the assessee and that of the other concerns of Signature Group are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reference been given to the incriminating material, we find that in the assessment order Ld. A.O has referred to various seized documents but none of them is directly related to the assessee. These seized documents are of the Signature Group and Ld. A.O has only mentioned the details of the seized document without uttering a word about their nexus with the business transaction carried out by the assessee or by pointing out assessee s connection with the seized document in name or otherwise. Thus it can be safely concluded that the addition made by the Ld. A.O was not on the basis on the incriminating material found during the course of search but only on the basis of statement of Mr. Vipin Chouhan given on 02.02.2014. 22. Recently the Co-ordinate Bench in the case of ACIT(1) VS. Sudeep Maheshwari (supra) in which the undersigned was also a co-author while adjudicating the issue that whether addition can be made merely on the basis of statement given during the course of search without correlating the statement with incriminating material , we have decided the issue observing as follows:- 6. It is the case of the assessee that during the course of search seizure, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue is dismissed. 23. Hon ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.), held that merely on the basis of admission, the assessee could not have been subject to additions, unless and until some corroborative evidence is found in support of such admission. 24. Hon'ble Jharkhand High Court Shree Ganesh Trading Co. V/s Commissioner of Income-tax, Tax Case No.8 of 1999 order dated 03.01.2013 held as under; 4. We considered the submissions of the learned counsel for the parties and perused the reasons given in the impugned orders as well as reasons given in the case of Kailashben Manharlal Chokshi (supra). 5. It appears from the statement of facts that there was a search in the business premises of the petitioner s firm as well as in the residential premises of its partner, Shri Sheo Kumar Kejriwal, on 24th September, 1987. During the course of search, the statement of Shri Sheo Kumar Kejriwal had been recorded under section 132(4) of the Income Tax Act and in the statement, he stated that he was partner in the Ganesh Trading Company, i.e. the present assessee-firm in his individual status and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s contention by which the assessee has retracted from his admission. None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the undisclosed income as admitted by the assessee in his statement under section 134(2) in fact situation where during the course of search, there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from the assessee, in that situation what had prompted the assessee to make declaration of undisclosed income of ₹ 20 lacs. Mere reading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self-incriminating. Therefore, we are of the considered opinion that in the present case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of ₹ 20 lacs. 7. In view of the above reasons, without answering the question about retrospective operation of the proviso to section 134(4), we are holding that the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in the appeal by the assessee is allowed. 31. From perusal of the above finding of this Tribunal in the case of M/s Ultimate Builders (supra), we find that the common issue raised in Ground No.3 of M/s Signature Builders is identical to the issue raised and adjudicated in the case of M/s Ultimate Builders (supra). We therefore respectfully following the same and also in view of the identical fact that impugned addition of ₹ 25,00,000/- and ₹ 3,00,00,000/- made by the Ld. A.O was purely based on the statement given u/s 132(4) of the Act and there was no reference to any incriminating material found during the course of search which could support the impugned addition, we thus delete the addition of ₹ 25,00,000/- for Assessment Year 2013-14 and ₹ 3,00,00,000/- for Assessment Year 2014-15 and set aside the finding of both the lower authorities and accordingly allow Ground No.3 raised in assessee s appeal for Assessment Years 2013-14 and 2014-15 raised in ITA No.185-186/Ind/2018. 32. In the result assessee s appeal for 2012-13 (ITA No.184/Ind/2018) is dismissed and appeal for Assessment Year 2013-14 and Assessment Year 2014-15 (ITA No.185 186/Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Declared by the Assessee Examined by valuation cell 2010-11 2011-12 2,05,72,030/- 3,05,54,517/- 2011-12 2012-13 5,52,89,531/- 8,26,38,090/- 2012-13 2013-14 11,19,18,795/- 16,76,76,950/- 2013-14 2014-15 15,05,33,868/- 22,43,66,824/- 2014-15 2015-16 15,91,35,825/- 23,52,43,301/- 2015-16 (31.01.2016) 2016-17 6,20,29,565/- 9,25,62,317/- Total 55,95,79,614/- 83,30,42,000/- 36. Copy of the valuation report supplied to the assessee for comments. The assessee was also required to show cause as to why the difference should not be added as undisclosed investment in the hands of assessee for relevant assessment years. 37. The assessee gave detailed reply challenging the correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction/completion and applying of any common formula/rate to determine the cost would not be able to ascertain the actual cost incurred. Accordingly it is requested that the valuers report may kindly be ignored . 38. The reply of the assessee was considered by the Ld. A.O which was not found acceptable based on the following reasons; i. The reference made on the DVO is as per the law. Further, the DVO is the Govt. Authority to determine the cost of investment. The method followed by the DVO for valuation is the most scientific method and the valuation has been done by him as per the prescribed procedure rates laid down by Central Public Works Department. ii. During the course of assessment proceedings the assessee has not submitted any material evidence, which substantiate his claim. The assessee has also not submitted construction account before the assessing officer. iii. The year wise difference in investment in construction of building as per the DVO s report and as declared by the assessee is as under:- A.Y Declared by the assessee Examined by valuation cell Difference (In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission of undisclosed income during search, in the earlier para of this order, the set off of these additions are given in respect of additions made on account of unexplained investment in construction of the project at ₹ 5,57,58,155/- and ₹ 7,38,32,956/- for A.Y 2013-14 and 2014-15 respectively. Thus, the net addition on account of unexplained investment in construction of the project for A.Y 2013-14 and 2014-15 works out to ₹ 5,32,58,155/- (₹ 5,57,58,155/- (-) ₹ 25,00,000/-) and ₹ 4,38,32,956/- (₹ 7,38,32,956/- (-) ₹ 3,00,00,000/-).Therefore the amount shown in below mentioned table is added to the total income of the assessee on account of undisclosed investment u/s 69B of the Act for A.Y 2011-12 to 2014-15. A.Y Undisclosed investment (In Rs.) 2011-12 99,82,487/- 2012-13 2,73,48,559/- 2013-14 5,32,58,155/- 2014-15 4,38,32,956/- Total 13,44,22,157/- 40. Aggrieved assessee preferred appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it was submitted that the rates adopted by the ld. DVO was unrealistic and very high. 3.After considering the various objections raised by the assessee and analysing the different case laws, the Ld. CIT(A) allowed the assessee s appeal. 41. Now the revenue is in appeal before the Tribunal. 42. Ld. Departmental Representative vehemently argued and strongly supported the finding of Ld. A.O contending that the impugned addition for undisclosed investment has been rightly made by the Ld. A.O on the basis of Departmental Valuation Officer who has rightly carried out the valuation as per the guidelines provided under respective rules. 43. Ld. Counsel for the assessee relied on the detailed finding of Ld. CIT(A) and also made following written submission:- In the course of the assessment proceedings all the information as required by the AO from time to time was furnished. The assessee is in the business of real estate, builders and developers. The assessee during the relevant period was developing a residential complex in the name of Signature Residency. The expense incurred on the purchase of land and construction expenses on the project were the business expenses of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing grounds: a. The assessee has maintained regular books of accounts which are not found to be incomplete or unreliable. The books of accounts are not rejected. Accordingly addition cannot be made on the basis of DVO Report. b. Even if reliance was placed on the report of DVO, set off of the corresponding expenses should have been given which would have resulted in NIL addition. c. No additions could have been made without considering the submissions of the assessee and without providing the assessee with an opportunity to cross examine the DVO specially when the assessee has made a specific request for the same. d. No exact valuation could have been done till the completion of the project. Further, the DVO has not given the valuation on actual detailed measurement basis. e. Valuation should have been done taking the local prices in consideration in place of Delhi rates which are universally accepted to be on a higher side. (i) Reference in this regards may be made to the decision of the Delhi High Court in the case of CIT v Ambience Hotel Resorts Ltd (2012) 83 CCH 0021 (Delhi HC). (ii) Reference may also be made to the judgment of the Hon ble Madras Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. If we add on account of unexplained income in the investment, that will give rise to the cost of the construction and the result will remain the same i.e. zero . After considering the submissions made by the assessee and the papers filed during the course of the appeal the ld. CIT(A) allowed the appeal. In view of the above, it is humbly submitted that the order of the ld. CIT(A) is correct in deleting the said addition. Thus, the addition deleted by ld. CIT(A) is correct and may please be upheld. 44. We have heard rival contentions and perused the records placed before us and carefully gone through the orders of Ld. CIT(A) as well as the submissions and various case laws relied and referred to by Ld. Counsel for the assessee. Revenue s sole grievance through Ground No.1 raised in its appeal for Assessment Year 2012-13 to 2014-15 is with regard to the finding of Ld. CIT(A) deleting the addition on account of undisclosed investment u/s 69B of the Act which was made by the Ld. A.O towards the difference in cost of investment in the projects Signature Residency shown in the books of accounts vis-a-vis estimated by the Departmental Valuation Officer calculated at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of books i.e. over and above the amount invested as shown in the books. 46. The issue before us can be summarised in a question that whether the Ld. A.O was justified to make addition for undisclosed investment in construction of building projects solely on the basis of Departmental Valuation Report without rejecting the books of accounts and without brining on record any material evidence to prove such unaccounted investments in the case of the assessee who was subjected to search u/s 132 of the Act. 47. We observe that Ld. CIT has dealt with the issue in detail examining the facts and also referring to various judgments squarely applicable on the instant issue raised before us by the revenue authorities. The relevant extract of Ld. CIT(A) finding is reproduced below:- 5.8 As far as merit of this issue is concerned AO made addition of ₹ 99,82,487/-, ₹ 2,73,48,559/-, ₹ 5,32,58,155/- and ₹ 4,38,32,956/- in the year A.Y 2011-12 to 2014-15 towards difference in cost of investment in the project Signature Residency shown in the books vis-a-vis estimated by ova. This is an undisputed fact that the impunged addition was made solely on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account furnished by the assessee were never rejected by the Department. 7. In the case on hand, it is beyond any cavil that the books of account furnished by the assessee were never rejected. No explanation was called for from the assessee stating that there was concealment or understatement of amount in the books of account. The initial burden cast on the Department to prove that there was understatement or concealment of income has not been discharged and, therefore, the Assessing Officer is not empowered to refer the matter to the Departmental Valuation Officer or rely on such report. 8. 'The above said view of this court is fortified by the following decisions: (i) In Sarqam Cinema v. CIT {2010/328 ITR 513[2011]197 Taxman 203, the Supreme Court has held as under (page 514) : In the present case, we find that the Tribunal decided the matter rightly in favour of the assessee inasmuch as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being rejected. In the present case, a categorical finding is recorded by the Tribunal that the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t found during course of search - Held, yes - Whether, in instant case, since nothing was found during search in assessee's premises with regard to investment in house, Tribunal was justified in deleting additions made by Assessing Officer on account of unexplained investment in construction - Held, yes CIT Vs. Manoj Jain287 ITR 285(Delhi)- section 158BC of the Income-tax Act, 1961 - Block assessment in search cases - procedure for - Tribunal having found as a fact that search on assessee's premises did not lead to seizure of any incriminating evidence to Suggest that any income had not been or would not have been disclosed for tax purpose, deleted addition made by Assessing Officer on basis of report of valuation Officer in regard to twO of properties purchased by assessee - Whether in view of clear finding of fact by Tribunal no substantial question of law arose for consideration - Held, yes (5) (IT Vs. Sadhna Gupta352 ITR 595 (DelhiJ- section 69B of the Income-tax Act, 1961 - Undisclosed investments llnvestment in property] - Assessment year 2007-08 _ Whether, where there was no other material to indicate that any extra consideration had passed from assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) held that the addition had been made on the basis of the valuation report without there being any other material to indicate that any extra consideration had passed in respect of the said purchase of property. Thereafter, the revenue, being aggrieved by the order passed by the CIT(Appeals),preferred an appeal before the Tribunal which has been dismissed by the Tribunal by confirming the deletion made by the CIT (Appeals). 4. The only point to be considered is whether the valuation rendered by the DVO is to be taken into account or not. It has been argued by the learned Counsel for the revenue that the assessing officer was justified in referring the matter to the DVO for an opinion with regard to the fair market value of the property and once that opinion has been rendered, the some has to be taken into account and if mot were to be so, the addition of ₹ 2,81,83,000/- would be fully justified. Consequently, it was submitted by the learned counsel for the revenue that the Tribunal had erred in deleting the addition. On the other hand the learned counsel for the respondent referred to a Division Bench decision of this Court in the case of CIT v, Puneet S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld, no [Para 5) 1. Revenue in this appeal under Section 260A of the Income Tax Act, 1961 ( Act for short) impugns order dated 25.06.2010, passed by the Income Tax Appellate Tribunal in the case of M/s Labsa Construction Pvt Ltd.' on the ground of perversity. The appeal pertains to the Assessment Year, 1999-2000. (incorrectly mentioned in the impugned order as assessment year 2006-07). 2. Property in question bearing No.C-20, NDSF, South Ex., Part-II, New Delhi had two sellers. The respondent/assessee- Lahsa Construction Pvt. Ltd. had sold 50 shale of the property in favour of Mrs. Madhu Arora, whereas the second group of owners consisting of four individuals had sold 50 of the property in favour of Mrs. Madhu Arora and her husband Mr. Om Prakash Arora. 3. It is stated by the counsel for the respondent that Revenue had accepted the order of the Tribunal in the case of said four individual as addition was mad' solely on the report of the Departmental Valuation Officer,. This statement is not controverted or' accepted by the counsel for the Revenue as he has no information.. 4. The Departmental Valuation Officer had opined that the value of the property at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown by the assessee. At no stage of the assessment proceedings does the assessing officer appear to have mentioned that the books of accounts are defective or that the cost of construction as shown in the books of account is not the true cost of construction. Thus, while making the reference to the valuation officer, the assessing officer has not recorded any defect in the books of account nor has he rejected the same. Except for the difference in the estimated cost determined by the Valuation Officer and the actual cost as shown by the assessee, the assessing officer has not brought any material on record to establish that the assessee had made any unaccounted investment in the construction of the building in question and that books of account do not reflect the correct cost of construction. Under the circumstances, there was no occasion for the assessing officer to make a reference to the Valuation Officer. As held by the Supreme Court in the case of Sargam Cinema (supra) unless the books of accounts are rejected, the assessing officer cannot make a reference to Valuation Officer. The reference made to the Valuation Officer, not being in consonance with the provision of law, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined from DVO cannot form a foundation ipso facto for making addition towards alleged suppression of cost of investment. Neither DVO nor AO has pointed out that certain expenditure on certain items/construction was incurred which was not recorded in the books maintained by the assessee. Hence, additions made by AO is not sustainable in law being based merely on valuation report received from OVO. ii) The A.O. has not mentioned any reason in the assessment order or in the reference to the valuation, that he had any incriminating material which led to form his belief that the appellant had under slated the cost of construction referred for valuation. It is very relevant to understand that the appellant was subjected to search and seizure ac1ion u/s 132 of the Act which apparently did not yield to seizure of any incriminating papers/documents suggesting unaccounted investment in the project Signature Residency . Lack of any incriminating material/evidence regarding under reporting of cost of construction being pointed out by the A.O .. in spite of search and seizure ac1ion addition simply made on the basis 01 OVO's report is even more unjustified and unwarranted. iii) Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant purchased material on wholesale basis which brings 'economy of scale' into construction cost which as per appellant would result into savings upto 25. AO has acknowledged this aspect but did not provide any relief while making addition. Appellant has also argued about savings in cost of construction for other reasons as well i.e. self-supervision. consultancy charges etc. however. AO failed to allow any benefit to the assessee on any of the count which is not justified. I am of the view that as a consequence of such under reporting, the AO is required to reject the books of accounts of the assesse. In the case of the appellant the AO has neither rejected the books of accounts before making a reference to DVO for valuation of property nor he did after receipt of valuation report from DVO. Apart from the case laws referred in para 5.8 of this order. it is pertinent to refer to the decision of ITO v Is Dreamland enterprises 80 Taxmen 143 (ITAT Ahd)wherein it was held that when the cost of construction declared by the assessee was supported by regular books of accounts and vouchers, correctness of which was not disturbed by the AO or DVO by bringing any specific mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration would be PWO rates and holding difference between CPWO rates and PWO rates at 20. Similarly, in the case of ITO v/s Nilesh Maheshwari (2011) 53 DTR 43 (ITAT Jaipur) held alter relying on the decision of Tek Chand v/s ITO 51 TTJ (JPR) 607 that there is variation in local PWD rates and CPWD rate by margin of 20. It has been held in the case of CIT v/s lahsa Construction (P) Ltd (2013) 357 ITR 671 (delhi) that no addition can be made solely on the basis of valuation report of OVO. Ld AR also placed reliance on the decision of CIT v/s VS Pralap Singh Amro Singh (1993) 200 ITR 788 (Raj) that addition to income could not be made on the basis of the report of the Valuation Officer. 5.11 As far as case laws relied upon by the A.O. are concerned, on perusal it is seen that none of the case laws relied upon by the A.O. are applicable to the facts of this case. The case laws referred by AO are as under:- a. CIT v omprakash Bagaria (HUF) 2871TR 523 (MP) In this case the AD issued a commission under s. 131(1)(d) to District Valuation Officer on 23rd AugS, 1996, to determine the cost of construction of the building for the purpose of making on estimate of the investment re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 47,42,629/- . The addition mode was restricted to ₹ 9 lokh and too was, directed to be spread over 0 period of 5 years by the CIT(A) and the ITAT both. This was challenged by the deportment before the High court and the court held that ''The valuation is not a mathematical precision and there is bound to be difference between one valuer to another valuer and it is, only a pure question of fact CIT vs, P. Mohonokala (2007) 210 CTR (SC) 20 : (2007) 291 1TR 278 (SC), referred to by the High Court held that whenever there is a concurrent factual finding by the authorities below, the some should be accepted and no interference should be called for by the High Court Thus it would be seen that the issue before the High court was, entirely different 5.12 In view of the above discussion, I do not find any merit in the addition 01 ₹ 99,82.487/-, ₹ 2,73.48,559/-, ₹ 5,32,58,155/- and as. 4,38,32,956/- in A.Y 2011-12 to 2014.15 merely made on the basis of Valuation Report which is nothing but an estimate of valuation of 'cost of investment' and DVO's report cannot be taken as a conclusive proof of undisclosed investment made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Ground No.2 of Revenue s appeal for Assessment Years 2012-13, 2013-14 and 2014-15 in case of M/s. Signature Builders the revenue has challenged the finding of Ld. CIT(A) allowing the assessee s claim of set off income against the additions made u/s 69B of the Act. During the course of assessment proceedings when the Ld. A.O initiated to make addition u/s 69B of the Act for the unexplained investment in the construction of residential projects it was submitted before the Ld. A.O that provision of section 69C specifically mentions that in case of unexplained expenditure found during the course of assessment and if the assessee is unable to explain the source shall be deemed to be the income of the assessee and the assessee shall not be entitled to claim of deduction under any head of income. However in Section 69B of the Act there is no such provision which implies that in case the addition is made u/s 69B, the assessee is entitled to claim adjustment of such expenses. It was also submitted that the addition made on the count that the appellant had shown lower amount of cost of construction, would ultimately result into squaring off the whole addition since on one side the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court and various other High Courts to substantiate that the addition under consideration is required to be made u/s 69B In this regards it may be mentioned that in case the Aa has formed an opinion that the assessee has incurred some unaccounted investment on the construction he was duty bound to adjust the construction expenses and should have increased the expenses by a similar amount which would nullify the effect of addition if any. It may be mentioned that provisions of section 69C specifically mentions that in case of unexplained expenditure found during the course of assessment will be deemed to be the income of the assessee and the assessee shall not be entitled to claim the same as deduction under any head of income. However in section 69B there is no such provision and which implies that in case addition is made u/s 69B, the assessee is entitled to claim adjustment of such expenses. The addition made on the count that the appellant had shown lower amount of cost of construction, would ultimately result into squaring off the whole addition since on one side the addition is made and on the other side the deduction is to be allowed as business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer the expenditure may be deemed to be the income of the assessee. The proviso to the section provides that such expenditure will not be allowed as deduction under any head of income. Similarly provision of section 69 and 69B provide that where the assessee is found to have made any investment, the source of which is not explained to the satisfaction of the Assessing Officer the value of unexplained portion of the investment may be deemed to be the income of the assessee. It is interesting to note here that the proviso regarding allowance of such addition as deduction which is provided in section 69C does not find place in section 69 and 69B. In case of builders/developers/contractors the expense incurred on account and thus is an expense. Thus provisions of section 69C would be applicable to such cases and if the assessee is found to have incurred any unexplained expense the same will be deemed to be the income of the assessee the assessee would not be entitled to claim any deduction of the unexplained expense. However the law does not provide any power to the AO to make a reference to the DVO for determination of unexplained expense and in such case the report o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Departmental Representative. In the result the common Ground No.2 raised by the Revenue for Assessment Years 2012-13 to 2014-15 is dismissed. 55. As regards Ground No.3 of Revenue s appeal in the case of M/s. Signature Builders for Assessment Year 2012-13 the finding of Ld. CIT(A) deleting the addition of undisclosed investment at ₹ 10,00,000/- in purchase of land is under challenge. Brief facts relating to this issue are that the assessee had purchased land from Smt. Kamla Devi Sahu vide registered purchase agreement dated 24.02.2010 for total purchase consideration of ₹ 30,00,000/-. During post search enquiries it was observed by the Department that there was cash deposit of ₹ 24,00,000/- and ₹ 10,00,000/- in the bank account of the seller during F.Y 2009-10 and F.Y 2010- 11 respectively. The department had issued summons to the seller who had not responded to the summons and have not appeared before the AO and accordingly no explanation of the source of cash deposit in the account of the seller could be obtained. Under the circumstances the cash deposited in her account was presumed to be cash payment made by the assessee for the simple reason that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as appellate proceedings strongly opposed the addition made by the AO on account of cash deposit in third party account i.e. Smt Kamla Devi Sahu. On perusal of written submission filed by the assessee before AO it has been claimed that the land purchased from Smt Kamla Devi Sahu is adjoining to slum cluster and has been encroached by the slum dwellers therefore, the assessee was not in possession of the said land. The appellant has also filed a suit in the court in order to get the encroachment removed and provide effective possession of the land. The assessee also requested AO to get the status of the land verified. The appellant has also taken an alternate plea that no over and above payment to the registered value was paid and the cash has been deposited in the account of Smt Kamla Devi Sahu so the same may be verified from her. Further, appellant stated that no summons were issued to the account holder. Otherwise also on merits It is seen that the addition is made on the basis of cash found deposited in the bank account of the seller near about the dates on which the property has been purchased by the assessee/payments have been made. Summon were issued to the seller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the presumption however strong cannot substitute evidence. Similar were the findings of Hon'ble Calcutta High Court in the case of CIT v/s Emerald commercial Ltd Anr 250 ITR 539( cal), In view of the above discussion additions made by the AO does not hold ground. Thus, addition of Rs, 24,00,000/- in AY 2011-12 and Rs, 10,00,000/- in AY 2012-13 made by the AO on account of unexplained investment in purchase of land is hereby deleted. The appeals on this ground are allowed. 61. From perusal of the above finding of Ld. CIT(A) and examining the facts placed before us, we observe that the addition was made on the basis of cash deposits in the bank account of seller who do not response to the summons of the department nor ever appeared before the Ld. A.O so as to explain the cash deposits in her account. Under these circumstances we find no justification in the observation of the Ld. A.O that the cash deposit of ₹ 10,00,000/- in the account of seller on 10.8.2010 is in connection with the land sold vide Registry deed in favour of the assessee on 24.02.2010 was paid by the assessee. In these given facts the deposit of cash in the account of the seller cannot be conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther supporting evidence is required. The AO had not brought on record any observation that the claim of the assessee of having a cash balance of ₹ 4,06,672/- as per the books of account seized and as per the books of account produced before the AO is incorrect. In fact appellant has furnished books of accounts before AO which were duly verified by him. Therefore the addition made by the AO on this account to the tune of ₹ 1,43,910/- is directed to be deleted. The appeal on this ground is allowed. 66. From perusal of the finding of Ld. CIT(A) we find that Ld. CIT(A) has rightly appreciated the facts and deleted the addition of ₹ 1,43,910/- which thus calls for no interference and thus Ground No.4 of Revenue stands dismissed. 66A. Thus in the case of Signature Builders, assessee s appeal for Assessment Year 2012-13 is dismissed and that of Assessment Years 2013-14 2014-15 are allowed whereas Revenue s appeal for Assessment Years 2012-13 to 2014-15 stands dismissed. 67. Now we take up the appeals in the case of M/s Signature Infrastructure. The assessee(s) appeal pertains to Assessment Year 2013- 14 2014-15 vide IT(SS) No. 187 188/Ind/2018 and that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was purely on the basis of statement given during the course of search. Nowhere in the assessment order the Ld. A.O has brought on record any incriminating material or loose paper seized during the course of search having its nexus with the addition made on the basis of statement. We further observe that in one of the group concern M/s Ultimate Builders ITA No.134/Ind/2019 order dated 9.8.2019 similar issue came for adjudication and this Tribunal on the basis of the facts of the case as well as relying on the judicial pronouncements deleted the addition since the same were made without referring to the incriminating material found during the course of search. The finding of this Tribunal in the case of M/s Ultimate Builders has been reproduced in the preceding paras while dealing with the similar issue raised in the case of M/s Signature Builders. Since the issue and facts remains the same Ld. Departmental Representative did not controvert this fact that the impugned addition was not based on incriminating material found during the course of search and is just on the basis of the statement given u/s 132(4) of the Act. We in the case of M/s Signature Builders have held in para 21 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mr. Motilal who was the seller of the land was recorded who stated that he has sold the land under consideration to Mr. Thakur Prasad @₹ 1 crore per acre. Based on this statement show cause was issued to the assessee proposing an addition of ₹ 3,48,30,000/- as unexplained investment in purchase of the land(₹ 6.40 crore 2.92 crore). Detailed submissions were made before the AO on the proposed addition which were found not acceptable and the addition was made by the AO after making the following observation: i. The seller has specifically confirmed the sale at ₹ 1 Crore per acre. ii. The contention of the assessee that the seller has never had any interaction with them is not relevant as the land has been purchased by the assessee from the sellers and the payments are made by the assessee directly to the seller iii. The assessee s contention regarding not providing the details of utilisation of the sale proceeds is not relevant as the seller has specifically confirmed the sale rate of ₹ 1 crore per acre. 75. A specific request was made for supplying a copy of the statement of the seller and for providing an opportunity to cross examine the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acre (Pg.14 of ld. CIT(A) order). Thus, it is very clear that the land was sold for ₹ 2.8 crores and not ₹ 6.4 crores. Thus, the addition was made on the wrong assumption of facts. The ld. A.O. has not been able to bring on record any evidence to show that the land in question was purchased for more than the consideration shown in the registered document. There is no evidence found during the course of search which show that the assessee has paid any extra amount. Under these circumstances the ld. CIT(A) was right in deleting the addition. 80. We have heard rival contentions and perused the record placed before us and carefully gone through the submission filed by the assessee. Revenue has challenged the action of Ld. CIT(A) deleting the addition of ₹ 3,36,13,000/- made by the Ld. A.O on account of unexplained investment u/s 69 of the Act. We find that during the course of post search investigation it was found that the assessee firm purchased land totalling to 2.59 hectare (6.40 acres) at Village Bagli from Shri Motilal S/o Shri Kaluram Rajpal resident of Village Katara vide 3 registries dated 19.7.11, 23.1.2012 and 31.5.2012 for a total consideration of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee also filed a rejoinder to the remand report on 29.6.2018 which reads as follows:- The AO was also issued directions to provide the assessee with an opportunity to cross examine Shri. Motilal Rajput. The AO had provided the assessee with an opportunity to cross examine the said person on 20.06.2018 and have submitted her report on the cross examination along with copy of the statement of Mr. Motilal recorded during the course of cross examination. The said person in his initial statements recorded on 09.06.14 during post search proceedings have stated that he has sold the land under consideration to the assessee for Rs. l,OO,OO,000/-(per acre) total sale value ₹ 6.40 croee and have invested the sale proceeds in purchase of 10 acres of land in Obedullaganj, 15 acre in Sultanpur and 6 acre in Jhagaria and the balance amount was stated by him to have been used by him in repayments of loans earlier taken. In a separate reply made during the initial statement of 09.06.14 the cost of these investments was mentioned as ₹ 60 lac, ₹ 40 Lac ₹ 180 Lac respectively. The total value of investments recorded in the statement was ₹ 280 lakh. Accordingly after g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 2012- 13 observing as follows:- 5.4 Submission filed by appellant along with the details / material brought on record have been duly considered. Due consideration has been given to the findings arrived at in the assessment order and the remand report. It is seen that the addition is made solely on the basis of statement of Mr. Motilal recorded during post search enquiry. It is seen that during search no paper was found/seized which could indicate that the assessee has purchased the land under consideration for a consideration other than what is mentioned in the registered purchase deed. No evidence of the assessee having made any payment in excess of the amount recorded in the books/registered purchase deed was found. The assessee had purchased the land under consideration for a total purchase consideration of ₹ 2,91 ,62,000/- as against its market value of ₹ 3,05,99,000/- fixed by collector of stamps for the purpose of payment of stamp duty and the difference between the two values is less than 5. 5.5 During post search enquiries statement of the seller Mr. Motilal was recorded on 09.06.14 who stated that he has sold 6.40 acre of land @ Rs. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land at Village Bagli by the assessee. Since there is no inconsistency in the finding of Ld. CIT(A) we uphold the same and dismiss Revenue s Ground No.1 for Assessment Year 2012-13. 83. Now we take up Ground.2 for Assessment Year 2012-13 which reads as follows; (2) On the facts and in the circumstances of the Case, the Id. CIT(A) erred in deleting the addition of ₹ 4,32,40,000/- made by the Assessing Officer on account of unexplained investment in purchase of land at village Bagli.. 84. Brief facts of this issue is that during the course of search four unsigned agreements were found. Out of these two agreements related to purchase of 2.40 acre of land in which sale rates were mentioned @ ₹ 20 lacs per acre and ₹ 1.12 crore per acre. The other two agreements related to purchase of 4.20 acre of land in which sale rates were mentioned @ ₹ 20 lacs per acre and ₹ 1.12 crore per acre.The assessee during the course of assessment submitted that both all the four are draft purchase agreements which were not executed and thus remained unsigned. The assessee also informed the AO that the assessee has purchased 2.19 acre of land out of the land of 2.40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue is in appeal before the Tribunal. 87. Ld. Departmental Representative vehemently argued supported the order of Ld. A.O. 88. Per contra Ld. Counsel for the assessee relied in the finding of Ld. CIT(A) and also made following written submissions; It is humbly submitted that the draft agreement were unsigned. The complete loose papers have to be considered. The Ld. AO ignored the fact that the sale deed is executed duly signed by the sellers and the purchasers in front of the witnesses. Neither the purchaser nor the seller has confirmed any variation in the sale consideration. No evidence has been found during the course of search or afterwards indicating that the assessee has made any unrecorded payment. Thus the addition made was correctly deleted by the ld. CIT(A). In this regards the assessee places reliance on the decision of Rajasthan High Court in the case of CIT v Khandelwal Shringi Co (2017) 299 CTR (Raj) 437 the head note of the judgment reported is given herein below for ready reference: Income from undisclosed sources- addition under s. 69B- Unexplained investment in purchase of land-AO made addition on the basis that the market value of 10.21 hec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,12,00,000/- per acre. The remaining 2 agreements relates to purchase of 4.20 acre land out of which in one agreement sale rate was mentioned ₹ 20,00,000/- per acre and in other 1,12,00,000/- per acre. During the course of assessment proceedings it was submitted by the assessee that the actual transaction place out of the area of khasra mentioned at 2.40 acre and 4.2 acre mentioned in the draft agreements. The assessee purchased 2.19 acre at a consideration of ₹ 1 crore vide registered sale deed dated 15.10.11 and 4.01 acre for a consideration of ₹ 1.62 crores vide registered sale deed executed on 2.11.2011. The rate per acre of 2.19 acre land purchase deal is at ₹ 45.66 lakhs and for the 4.01 acre it is ₹ 40,39,900/-. It was also stated that the seized loose papers in the form of 4 agreements were for the purpose of negotiations but the actual transaction took place at price in between the low and high price mentioned in the draft agreement. However, Ld. A.O decided to pick up the higher rate of land per acre mentioned in the draft agreement i.e. ₹ 1.12 crores per acre and applied the same in total land purchase by the assessee which resulted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed. The AO have also failed to bring on record any instance of sale having been undertaken in the same area for a near about consideration. The logic for drafting an agreement mentioning a value of ₹ 20 lacs per acre when the actual purchase has taken place at ₹ 40-45 lac per acre can only be that it was done at a negotiation stage. Thus there was no reason to disbelieve the submission of the assessee that the agreements seized were draft agreements especially when they were unsigned and no evidence of the assessee having made any excess payment has been found in search. The onus of establishing the investment was on the AO and he has failed to discharge his onus. 6.4 It is also seen that the land purchased is an investment of the assessee and even if any addition is made towards unexplained investment in purchase of land u/s 69B an corresponding adjustment will be required to be made which would be revenue neutral and having no effective addition. Reliance in this regards is placed on the following judgments: CIT V Suraj Towers (2015) 230 Taxman 306(Karnataka HC) wherein it was held by the Honble High Court that:- In terms of S. 698, excess amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely applicable on the facts of the instant case wherein Hon'ble Court had observed that the Ld. AO had made the addition on the basis of earlier agreement to sale supposedly entered into by the seller with another party which was never executed and the same cannot be taken as an evidence of the fair market value of the land in question and further since the Ld. A.O did not adduce any other evidence to show that the market value applied by him, the addition made by the Ld. A.O has been rightly deleted by the Tribunal. 92. In the instant case also the rates mentioned in the unsigned draft agreements is the basis and Ld. A.O had applied the higher rate mentioned in the seized unsigned two draft agreements i.e. 1.12 crores per acre and completely ignored the rate of ₹ 20,00,000/ - per acre mentioned in the other two draft agreements. Ld. A.O has also ignored the actual registered sale deed showing the purchase of land in question at a price in between ₹ 40,00,000/ - and ₹ 45,00,000/-per hectare. Ld. A.O has failed to bring on record any other documentary evidence to support the fair market value of 1.12 crores adopted by him. In these facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance was called for. As regards the payment of ₹ 78,00,000/-, it was submitted before the ld. AO that the payment against the said purchase was partly made by cheque as detailed hereunder: Amount Paid Ch No Date Drawn on Issued in the name of ₹ 50,000/- 6482 14.02.11 HDFC Bank Manphool Singh ₹ 2,65,000/- 25086 25.06.11 HDFC Bank Manphool Singh ₹ 10,00,000 25087 25.06.11 HDFC Bank GopalSingh ₹ 50,000/- 6491 14.02.11 HDFC Bank Gopal Singh ₹ 10,00,000 25088 25.06.11 HDFC Bank Bala Prasad ₹ 50,000/- 6486 14.02.11 HDFC Bank BalaPrasad ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. CIT, Bathinda, 63 taxman. 289 where the identity of the purchaser and the genuineness of the transaction is not in doubt disallowance u/s 40A (3) cannot be made. b. Harshila Choradia V ITO (298 ITR 349) the exemption contained under rule 6 DD are not exhaustive and that the said rule must be interpreted liberally in case where the genuineness of payment and identity of receiver is established, disallowance u/s 40A (3) is not justified. The aforesaid judgments in turn are based on the judgment of the Hon ble Supreme Court in the case of Attar Singh Gurmukh Singh v. ITO [1991] 191 1TR 667. Without prejudice to the above, it is submitted that the land purchased has been shown as stock. Thus the assessee has not made any claim of expense during the year. As the assessee has not made any claim for allowance of the expenses, there cannot be any disallowance of the same. 98. We have heard rival contentions and perused the records placed before us and carefully gone through the submissions made by the Ld. Counsel for the assessee. Through Ground No.3 revenue is aggrieved with the finding of Ld. CIT(A) deleting the addition of ₹ 98,35,000/- made by Ld. A.O on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived on the date of registration. It is further seen that the assessee has claimed that the payment made is duly recorded in the cash book seized during the search and have submitted the copy of seized cash book for verification of this fact. The AO had not disputed the correctness of this claim of the assessee. Thus once the date of payment on Sunday was evidenced from the seized cash book and the purchase deed made a specific mention earlier, the AO was not justified in making disallowance of ₹ 24,35000/- and the disallowance mode is directed to be deleted. 7.5 It is further seen that the genuineness of the payments and the identity of the sellers of the land ore established beyond any doubts and the AO has also not raised any doubt about the some. The only point for consideration is whether the payri1ent though genuine should be disallowed on account of violation of section 40A (3) of the Act and not being covered by the specific exemptions provided in section 6 DD.- It is seen that the cash payment and the purchase of land ore duly recorded in the regular books of account. Now the only issue which remains for adjudication is whether a genuine recorded transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction Inn been established as evidenced by the registered sale deeds and lastly, the test of business expediency has been met in the instant case. Further, as held by the Hon ble Rajasthan High Court in case of Harshila Chordia (supra), the consequences, which were to befall on account of non-observation of subsection (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A (3) has been brought on the statute books has been clearly satisfied in the instant case. Therefore, being a case of genuine business transaction, 110 disallowance is called for by invoking the provisions of section 40,A (3) of the Act , The appellant submitted that he had purchased the land from agriculturist, The seller refused to accept the payment by cheque, therefore, the appellant has to make the payment in cash. It has been held in the case of Gurdas Garg v /s The commissioner of Income Tax Appeals, IT Appeal No, 413 of 2014 the hon'ble High court of Punjab and Haryana held that ' The Identity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d accordingly respecting the judgments of the various Courts mentioned above the addition made of Ps. 98,35,000/- is directed to be deleted. In view of the above, Ground # 5 for A.Y 2012-13 _Allowed. 99. The above finding of Ld. CIT(A) is duly supported by judicial pronouncements referred herein above which are squarely applicable on the facts of the instant case where also the genuineness of the payment were not doubted and there is no iota of evidence to show that the assessee wanted to evade any tax liability and more so the transactions have been carried out before the Registering authority of State Government and impugned cash payments are part of the consideration appearing in the registered deed. We thus respectfully following the judicial precedents referred herein above find no inconsistency in the finding of Ld. CIT(A) deleting the disallowance u/s 40A(3) of the Act for the alleged cash payment of ₹ 98,35,000/- u/s 40A(3) of the Act and the same is upheld. Revenue s Ground No.3 for Assessment Year 2012-13 (IT(SS)A No.02/Ind/2019) is dismissed. 100. Ground No.4 is general in nature which needs no adjudication. 101. In the result appeal of the Revenue for Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remark that the confirmation letter has been signed by Shri Manish Idnani as an Authorized person for Shri Rajesh Sadhwani and no documentary evidence for such authorization has been filed. The ld. A.O. further remarked that mere filing of the confirmation does not establish the credit worthiness and the genuineness of the transaction. He therefore, made the addition of ₹ 2,45,00,000/- u/s 68 of the Act. Before the ld. CIT(A) the assessee filed complete details under Rule 46A which consisted of the following papers 1. Copy of pass port 2. Electricity bill of Dubai to prove the address 3. Copy of the PAN card bearing number BHFPS0322A 4. The amount received through Demand Draft prepared at Dubai. The advises of DD prepared in the name of the assessee and the name of the lender. 5. On the direction of the ld. CIT(A) the following papers were also filed to establish the creditworthiness of the lender: a. The lender is carrying on his business under the business name of Smart Gulf General Trading L.L.C since 09.03.1988. The copy of license issued by the Dubai authorities as filed. b. The lender is owning 49% of the shares and balance 51% of the shares h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f share capital. However the authorized capital of the company was only 1 lac and hence shares could not have been issued to the payer and the amount was credited in the loan account. It was further submitted that no agreements could be reached regarding the terms and conditions about the issue of shares and as such it was treated as an unsecured loan. It was further submitted that the genuineness of the transaction of receipt of money is not questioned by the AO, but he has raised doubt regarding the entries in the books as to whether the amount is received as share capital or as an unsecured loan. The addition made is accordingly requested to be deleted. The ld. CIT(A) after considering all the documents allowed the assessee s appeal. 108. We have heard rival contentions and perused the records placed before us and carefully gone through it. Revenue s sole grievance for 2014-15 in the case of M/s Signature Colonisers Pvt. Ltd is with regard to deletion of addition of ₹ 2,45,00,000/- by Ld. CIT(A) which was made by the Ld. A.O u/s 68 of the Act for unexplained cash credit received from Non Resident Indian Shri Rajesh Sadhwani. 109. From perusal of the record we observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wani through demand drafts. Shri Rajesh Sadhwani is a NRI having passport of Canada and is residing at Dubai haviug address Flat No 5- 1004, 381IPalm Jumeira, Premises Number 381062953 PO Box No 12741, Dubai and also having PAN No BHFPS0322A. The unsecured loan has been received through demand drafts being prepared in Dubai. The brief details of demand drafts are as under:- S.No. Demand Draft No Date of Issue Amount INR 1 00220061300139 20.06.2013 ₹ 9,00,000 2 00220061300138 20.06.2013 ₹ 9,00,000 3 00220061300136 20.06.2013 ₹ 9,00,000 4 00220061300143 20.06.2013 ₹ 9,00,000 5 00220061300142 20.06.2013 ₹ 9,00,000 6 00220061300141 20.06.2013 Rs, 9,00,000 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on different dates. Appellant has also filed copy of passport, electricity bill and PAN card of Shri Rajesh Sadhwani. The appellant during appellate proceedings furnished the details of source of income of creditor in order to prove creditworthiness of the creditor. In reply, appellant submitted that Shri Rajesh Sadhwani is carrying on his business under the name Smart Gulf General Trading LLC since 09.03.1988 in Dubai. In support a copy oflicense for doing business issued by Dubai authorities have been filed. Shri Rajesh Sadhwani is owing 49 shares of the company and remaining 51 shares were allotted to different residents of Dubai. According to law of Dubai foreign nationals can do business only when a local person is partner holding majority shares. In support the appellant filed details of share capital and financial statement of the company. Appellant has also filed copy of audited financial statement and bank account statement of Smart Gulf General Trading LLC as on 31.03.2013,31.03.2014 and 31.03.2015. on perusal of filed audited financial statement it is seen that for FY 2013-14 the net profit was 258.37Iacs, for FY 2014-15 net profit was 235.46 lacs and for FY 2015-16 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan from Shri Rajesh Sadhwani. Thus, keeping in view the documentary evidences filed by the appellant and case laws cited above, the addition made by the AO amounting to ₹ 2,45,00,000/- is Deleted. Therefore, the appeal on this ground is Allowed. 111. From perusal of the finding of Ld.CIT(A), various documentary evidences filed by the assessee to support the identity, genuineness and creditworthiness of Shri Rajesh Sadhwani which are in itself sufficient enough to satisfy that the alleged amount of ₹ 2,45,OO,OOO/- should not have been treated as unexplained cash credit and further in view of the decision of this Tribunal relied by Ld. CIT(A) in the case of Umesh Electricals Vis ACIT (supra) and Aseem Singh V/s ACIT (supra) we are satisfied with the finding of Ld. CIT(A) and of the considered view that since the assessee has furnished all the required details to prove the identity of the lender, genuineness of the transaction and creditworthiness of the lender i.e. Shri Rajesh Sadhwani there is no justification at the end of the Ld. A.O in making the addition for unexplained cash credit of ₹ 2,45,00,000/- u/s 68 of the Act. We thus confirm the finding of Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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