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TMI Blog2021 (10) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal in IT(SS)A No.260/Ind/2016 (A.Y. 2011-12) 1. "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 12,03,50,000/- on account of undisclosed receipts of 'on-money' received from sale of flats without appreciating the facts and evidences brought into light by the A.O. during assessment proceeding." Grounds of appeal in IT(SS)A No.261/Ind/2016 (A.Y. 2012-13) 1. "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 49,58,74,800/- on account of undisclosed receipts of 'onmoney' received from sale of flats without appreciating the facts and evidences brought into light by the A.O. during assessment proceeding." 2. Grounds of appeal in ITA No.1330/Ind/2016 (A.Y. 2013-14) 1. "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 39,10,91,600/- on account of undisclosed receipts of 'onmoney' received from sale of flats without appreciating the facts and evidences brought into light by the A.O. during assessment proceeding." 2. The only issue involved in the present appeals re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Assessing Officer. 4. Being aggrieved, the Revenue is in appeals before this Tribunal for all the present assessment years. 5. The ld. CIT-DR relied upon the order of the Assessing Officer. Per contra, the ld. counsel for the assessee referred and relied on the findings of Ld. CIT(A) and submitted that the additions based on the documents found during search were not related to assessee company as all the group concerns of Jhaveri Group are engaged in the business of development of land and sale thereof after plotting, whereas, the assessee company has not sold a single inch of land. It's main and core business is to construct residential and commercial units. The seizure made in other cases has no bearing whatsoever in the assessee's case. Learned Counsel for the assessee also submitted that the Assessing Officer referred to the summons issued to some Shri Ramesh Chandra Gupta, Garima Chelani and Kokila Chelani. However, the assessee has no business transactions with these persons. Further, no single incriminating document pertaining to assessee was found/seized from the said premises. The operation under section 132 was simultaneously carried out in the project off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Silver Mansion Extension' and the post search enquiries conducted in respect of the following projects:- (i) 'Shikharji' project developed by another member of the Jhaveri Group, Smt. Kokila Jhaveri. (ii) M/s Ajitnath Reality Pvt. Ltd. (iii) M/s Padmaprabhu Infrastructure Pvt. Ltd. In the post search enquiries conducted in the above cases some of the purchasers of the plots admitted that they have paid on money for purchase of the plots. The Assessing Officer held that on the basis of evidences seized in respect of 'Silver Mansion' and 'Silver Mansion Extension' projects and the post search evidences gather regarding acceptance of on money by the Jhaveri Group in its various projects, the assessee company has not shown correct receipts in its books of accounts. The Assessing Officer took the view that the rate of the constructed housing units in the assessee's project cannot be less than Rs. 1500/- per sq. ft., the rate at which developed plots have been sold in 'Silver Mansion' and 'Silver Mansion Extension' projects. The Assessing Officer took the average sale price as per the books of accounts to be Rs. 1100/- per sq. ft. and estimated that Rs. 400/- per sq. ft. has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndore. The details are as under :- Financial Year 2009-10 Product Name Sale Value Guideline Value Size Villa Ruby 1.00 to 1.21 Crore 5770445/- Plot 4500 sq. ft. and Built Up 4456 sq. ft. Villa Pearl 66.5 lacs 3547998/- Plot 2700 sq. ft. and Built Up 2893 sq. ft Mid-rise apartments 41.5 lacs 2329680/- 2089 sq. ft. Built Up Area Terrace Cottage 61 lacs 3514200/- 3386 Sq. Ft. Built Up (1667 Sq. Ft. sold out) Town House 55 lacs 2579650/- Plot 1635 sq. ft. and Built Up 2539 sq. ft. Flats Rs. 1700/- per sq. ft. Rs. 1115 per sq. ft. - Financial Year 2010-11 Product Name Sale Value Guideline Value Size Villa Ruby 1.00 - 1.21 Crore 5979553/- Plot 4500 sq. ft. and Built Up 4456 sq. ft. Villa Pearl 66.5 lacs 3673463/- Plot 2700 sq. ft. and Built Up 2893 sq. ft Mid-rise apartments 41.5 lacs 2523820/- 2089 sq. ft. Built Up Area Terrace Cottage 61 lacs 3807050/- 3386 Sq. Ft. Built Up Town House 60 lacs 2655618/- Plot 1635 sq. ft. and Built Up 2539 sq. ft. Flats 1700/- per sq. ft. 1208/- per sq. ft. - Financial Year 2011-12 Product Name Sale Value Guideline Value Size Villa Ruby 1.10 - 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvations and findings of the Tribunal in this case read as under:- 17 We have heard the arguments of both the padies, perused the record and have gone through the orders of the authorities below. In this case, the addition was made by the AO based on the loose paper and the same, in our view, cannot be considered as conclusive evidence. As held by the CIT(A) in the impugned order "except relying , the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the 'transaction particularly the vendor has not examined. In every transaction there is a circle concerning two padies. /t is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely on the basis of presumption and some corroborated notings additions cannot be made." In our opinion, the deletion of addition by the CIT(A) is justified and no interference is called for in the order of the CIT(A). The following cases suppod the action of the CIT(A): 1. CIT Vs. Anil Bhalla [2010) 322 ITR 191 (Del.) - wherein held that the notings recorded on the loose sheet of paper do not represent any expenditure incurred by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT held that when the seized papers have being not corroborated by any independent evidence it cannot be considered as a reliable document or acceptable piece of evidence as a proof of investment in the house property and therefore, these kind of documents/papers are liable to be ignored and addition made on the basis of such document is not sustainable and in accordance with law. In CIT v/s Kulwant Rai (2007) 291 ITR 36 (Del) the ruling of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. CIT (1954) 26 ITR 775 (SC) was relied upon. The Supreme Court held that even though Income Tax Authorities including the Assessing Officer has unfettered discretion and not strictly bound by the rules and pleadings as well as materials on record and is legitimately entitled to act on the material which may not be accepted as evidence, nevertheless such discretion does not entitle them to make a pure guess and base an assessment entirely upon it without reference to any material or evidence at all. Given the above state of law the Delhi High Court stated that it has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, the document recovered during the course of search was a dumb document and led nowhere. The CIT(A) rightly came to the conclusion that it cannot be acted upon and deleted the addition. 29. Other than the loose paper, the AO has not brought on record any corroborative material or evidence to show that the inference made by him is correct. The CIT(A) after taking the totality of the circumstances into consideration came to the conclusion that the addition made by the AO is not justified and the argument put forth by the assessee is supported by documentary evidence. This was not a case where relevant evidence had been ignored by the CIT(A) and their relevant evidence has been taken into consideration. The only test that was required to be applied was whether on the facts found and the state of evidence on record, the conclusion arrived at by the CIT(A) was one which could be arrived by a reasonable person properly informed in law. Applying this test, it could not be said that the decision recorded by the CIT(A) one which could not have been arrived at by a reasonable person properly informed in law considering the state of evidence on record. Hence, in our considered opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount mentioned in the sale deed was not correct. The Hon'ble M.P. High Court in the case of CIT vs. Kantilal Prabhudas Patel (2008) 296 ITR 568 (MP) has held that the addition cannot be made on guess work or estimates. On careful consideration of the entire material placed before me, inter alia the assessment order and the submissions made in the appeal proceedings, it is seen that the Assessing Officer has simply proceeded to make additions on the basis of the documents found and seized in respect of the 'Silver Mansion' and 'Silver Mansion Extension' projects and the post search enquiries conducted in respect of various projects of the Jhaveri Group. No incriminating document was found and seized during the course of the search showing the receipt of on money for the "Silver Spring Township" project of the appellant company. No effort has been made by the Assessing Officer of making any investigation or inquiry to substantiate his theory of suppression of sales. The Assessing Officer has estimated the unaccounted sale consideration @ Rs. 400/- per sq. ft. but has not brought out any corroborative material to show that the inference made by him is correct and sustainab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son made by the Assessing Officer is baseless. Further, the Assessing Officer elaborated, the seizure made, in other cases of Jhaveri Group which has no bearing in the assessee's case but the Assessing Officer without establishing the relevance by bringing any cogent material made the additions. Similarly, some enquires conducted in the cases of Shikharji, Ajitnath Reality Pvt. Ltd. and Padmaprabhu Infrastructure Pvt. Ltd. were irrelevant as is evident from the computation of income of the assessee. Even otherwise, the issue of M/s Shikharji is before the Settlement Commission and therefore, the comparing the case of Shikarji with that of assessee is unjustified. We find that the Assessing Officer failed to pinpoint a single mistake in the books of accounts maintained by the assessee. He could not pin-point any enquiry made in the assessee's case from which adverse inference could be drawn. He did not conduct any enquiry in the assessee's case which is apparent from the fact that no such details of enquiry have been incorporated in the assessment order. We find that the assessee filed complete details before the Assessing Officer in respect of sale and also the details product-wise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the observations made by the Assessing Officer are not justified as the assessee co. does not belong to Jhaveri Group accordingly. As explained above, we find that the assessee started its projects being incorporated by Shri Mukesh Jhaveri and Abhishek Jhaveri on 27.09.2005, whereas the seized documents relating to search & seizure operations u/s 132 carried out on 21.09.2012 on the business as well as residential premises of the other group concerns/projects named Silver Mansion, Silver Mansion Extension. Thus, it is clear that the assessee's projects are relating to much prior period to the period of the projects of Silver Mansion, Silver Mansion Extension as the date of search is 21.09.2012. Therefore, the observations made by the Assessing Officer are not justified as the projects of the assessee co. have nothing to do with the projects of the Silver Mansion, Silver Mansion Extension. Further, we find that the Assessing Officer made the addition of Rs. 37,07,335/- on the basis of the aforesaid seized document and the same has been owned up by Shri Mukesh Jhaveri and Shri Abhishek Jhaveri in 50:50 ratio and paid due taxes which has been accepted by the Settlement Commission v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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