TMI Blog2021 (2) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search, and further in absence of any direct or corroborative material even during the assessment, except for the statement of son, who was not a party to the transaction; and whose statement has no evidentiary value for this transaction; and further the fact that cross-examination was not granted; the addition has no legs to stand. The Ld. CIT(A) was justified in deleting the addition . Deduction u/s. 80IB(10) - As the issue of deduction u/s.80IB(10) of the Act, which has already been settled earlier by this Tribunal for various preceeding Assessment Years in the case of assessee; and that no incriminating material was found in the case of the assessee, claim of deduction u/s.80IB(10) of the Act cannot be denied in present proceedings u/s. 153A r/w. Section 143(3). Disallowance u/s 14A - HELD THAT:- It is an established fact in the instant case that no interest disallowance u/s.14A of the Act is called for in the years under dispute before us as the assessee had sufficient interest free funds in the form of Share Capital and accumulated Reserve and Surplus to cover the investment in equity shares. However as regards the disallowance as per limb (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen hence his tesdtimony did not inspite confidence. Interestingly, Ld AO added the difference between the transaction value and stamp value i.e. ₹ 104 lakhs less ₹ 67 lakhs. Further in respect of Shri Arjun Patidar he denied on-money. The addition is merely based on a guess work of the ld AO that the buyer would have paid on-money. Considering the entirety of the facts and detailed finding of fact by Ld.CIT(A) in light of settled judicial precedence, we find no infirmity in the finding of Ld.CIT(A) and thus addition made by the Ld.AO cannot sustain. Addition on the basis of valuation report given by Departmental Valuation Office - CIT-A deleted the addition - HELD THAT:- We respectfully following the judgment of Khushal Chand Nirmal Kumar [ 2003 (4) TMI 61 - MADHYA PRADESH HIGH COURT] AND Nishi Mehra [ 2015 (3) TMI 156 - DELHI HIGH COURT] and also considering the facts of the case that there is a huge difference in Valuation by the Registered Valuer and that of the DVO, both being appointed by the department, the addition after giving deduction for self-supervision, self-procurement of materials and the deduction for rate difference in PWD and DPAR rates an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If such report is available, why the department has never brought the same on record. Similarly, the statement recorded on oath of Shri Verghese Joseph and Smt. Malti Gaur has never been brought on record. In the absence of the same, the reliance of the Department on these evidence is uncalled for - a search was conducted at the premises of the assessee. No discrepancy was found in the work done. Rather the department got the valuation done by the Registered Valuer and later by the DVO. The department on one hand contended that work done was more as disclosed in the books; but on the other hand, they are doubting the expenditure towards work done. The stand of the department is contradictory and inconsistent. We therefore in absence of any concrete evidence placed before us the Revenue authorities and also since Learned Departmental Representative being unable to disprove the evidences filed by the assessee to support of genuineness of expenditure, find no merits in the action of Ld AO making disallowance of expenditure. Thus no interference is called for in the finding of Ld.CIT(A) Addition of unaccounted receipts under LPS 1/2 page no. 68 - addition based on loose paper foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty levied by the Ld. CIT(A) vide his order dated 22.07.2019. Also, assessee s appeal ITA 923/ Ind/ 2019 is the penalty appeal u/s. 271AAB(1)(c) for A.Y. 2014-15 against the penalty levied by the Ld. CIT(A) vide his order dated 09.08.2019. 2. Briefly stated facts as culled out from the records are that the assessee company is engaged in the business of real estate developer and builder. On 06.08.2013, a survey u/s. 133A was carried out at the premises and Buidling Projects run by the assessee-company. Subsequently, a search u/s. 132 was also carried on 29-31 January 2014 at the business place of assessee company and residential premises of Directors. Various books of accounts and documents were seized. 3. After the search and survey operation, notice u/s. 153A was issued for filing of return. Returns of income were thereafter filed by the assessee as under: A.Y. PB Date of filing return u/s. 139(1) Total Income Date of filing return u/s. 153A Total income in Return u/s. 153A Addl Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of disallowance claimed u/s 80IB (10) of income Tax Act. 1961. 4. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 1,29,271/- made by the A.O. on accounts of disallowance of expenses u/s 14A r. w. r. 8D of the income Tax Rules. IT(SS)A 84/Ind/2019 A.Y. 2009-10 1. On the fact and in the Circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of ₹ 4,96,677/- made by the A.O. on account of unaccounted payments to Rajeev Soni. 2. On the fact and in the Circumstances of the case the Ld. CIT (A) has erred in deleting of ₹ 67,51,000/- made by the A.O. on account of unexplained expenditure. 3. On the fact and in the Circumstances of the case the Ld. CIT (A) has erred in deleting the addition o ₹ 3,56,08,183/- made by the A.O. on account of disallowance of deduction claimed u/s 80IB (10) of income Tax Act, 1961. 4. On the fact and in the Circumstances of the Ld. CIT(A) gas erred in deleting the addition of ₹ 25,36,515/- made by the A.O. on account of disallowance of expenses u/s 14A r.w.r. 8D of the Income Tax Rules. IT(SS)A 86/Ind/2019 A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Circumstance of the case the Ld. CIT (A) has erred in deleting the addition of ₹ 4,18,74,359/- made by the A.O. on account of investment not fully disclosed in books of account. Reliance is placed on the decision of Hon ble M.P. High Court in the case of CIT vs Abeeson Hotels Pvt. (2004) 191 CTR MP 263. 2. On the fact and in the Circumstances of the case the Ld. CIT (A) has erred in deleting the addition of ₹ 68,50,000/- made by the A.O. on account of unaccounted receipts. 3. On the fact and in the Circumstances of the case the Ld. CIT (A) has erred in deleting the addition of ₹ 54,62,000/- made by the A.O. on account of unexplained investment. 4. On the fact and in the Circumstance of the case the Ld. CIT (A) has erred in deleting the addition of ₹ 51,000/- made by the A.O. on account of disallowance u/s 40A (3) of Income Tax Act, 1961. 5. On the fact and in the Circumstance of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 1,81,00,000/- made by the A.O. on account of unexplained expenditure. 6. On the fact and in the Circumstance of case the Ld. CIT (A) has erred in deleting the addition of ₹ 4,00,00,000/- m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the A.O. 0n account of unaccounted expenditure. 6. On the fact Circumstances of the case the Ld. CIT (A) has erred in deleting the addition of ₹ 8,50,000/- made by the A.O. on account of unaccounted receipts. 7. On the fact and in the Circumstances of the case the Ld. CIT (A) has erred in deleting the addition of ₹ 60,000/- made by the A.O. on account of disallowance u/s 40A(3). 8. On the fact and in the Circumstances of the case Ld. CIT (A) has erred in deleting the addition of ₹ 1,34,78,580/- made by the A.O. on account of unexplained expenditure. 9. On the fact and in the Circumstances of the case the Ld.CIT (A) has erred in deleting the addition of ₹ 5,96,000/- made by the A.O. on account of unaccounted payments. 10. On the fact and in the Circumstances of the case the Ld. CIT (A) has erred in deleting the addition of ₹ 4,00,000/- made by the A.O. on account of unexplained expenditure. 11. On the fact and in the Circumstances of the case the Ld. CIT (A) has erred in deleting the addition of ₹ 1,00,000/- made by the A.O. on account of unexplained expenditure. 12. On the fact and in the Circumstances of the case the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14 1. The order passed u/s. 153A/ 143(3) by lower authorities is illegal, invalid, and untenable in law. The same be kindly cancelled 2. On the facts and in the circumstances of the case, the ld. CIT(A) was not justified in making any enhancement of ₹ 2.00 crore and in adjusting the same against the increase in excess profit on the sale of Aakriti High land plots at ₹ 4,34,08,100/-. 3. On the facts and in the circumstances of the case, the ld. CIT(A) was not justified in adopting the plot sale value of Aakriti High land at ₹ 43,40,81,000/- of booking value in place of registered value of ₹ 1,33,27,660/-. 4. On the facts and in the circumstances of the case, the ld. CIT(A) was not justified in not accepting the alternative proposal of the appellant that it may be held that the appellant got 5% or 7.50% excess money on the sale of 5% or 7.50% plots of Aakriti High Land. 5. The appellant carves leave, to add, to alter and/ or to modify the grounds of appeal on or before the date of hearing. IT(SS)A 91/ Ind/ 2019 A.Y. 2014-15 1. The order passed u/s. 143(3) by lower authorities is illegal, invalid, and untenable in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on record any instance of refusal of seller to accept payment by cheque. The Ld. Assessing Officer therefore made the addition of ₹ 75,00,000 making disallowance u/s. 40A(3) of the Income-tax Act, 1961. 9. Against this addition the assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A) placed reliance on the judgement of Hon ble Apex Court in the case of Attar Singh Gurmukh Singh v. ITO [1991]191ITR 667 and deleted the addition. Relevant extract is reproduced below:- 4.2.9 Thus considering the facts and affidavits of the sellers it is evidently clear the transactions were made at a place where the seller/s did not have a bank account, thus, the case of assessee falls within the exception of Clause (g) (j) (k) of rule 6DD of the Rules. Therefore, on the facts, the case of assessee being within the purview of Rule 6DD (j) of the Rules, no addition under Section 40A(3) of the Act was justified. Thus, judiciously following the above cited case laws, I am of the considered opinion that the AO was not justified in disallowing payment made to sellers u/s 40A(3) of the IT Act, when the case of appellant in covered under exception provided in Rule 6DD (j) as held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014-15 12.11.2014 PB 257 Return filed after search. Thus, the assessment for A.Y. 2008-09 was already concluded assessment and therefore, it was a non-abated assessment. He therefore relying on various judgments submitted that the scope of the proceedings u/s. 153A would be limited to only those incriminating material which were found during the course of search. He submitted that in respect of present addition, no incriminating document was found during the search. The transaction for purchase of land was duly recorded in the books of the assessee. Thus, the addition itself was without any basis and liable to be deleted. He relied on following cases: i. CIT vs Continental Warehousing Corporation 58 taxmann.com 78 (Bom.) ii. Om Shakthy Agencies (Madras) P Ltd. 157 ITD 1062 (Trib. Chennai) iii. Parag M. Sanghvi 63 taxmann.com 118 (Trib. Mumbai) iv. CIT vs Kabul Chawla 380 ITR 573 (Del.) v. CIT vs Lata Jain (Del HC) 12. As regards disallowance u/s. 40A(3), Learned counsel for the assessee submitted that during the current A.Y., assessee made payment of ₹ 75,00,000 in cash for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n village Silaiya, which at that time was not served by any bank. In support of his contention an affidavit was also filed, which is placed at PB 337-339. Even in the remand proceedings, the affidavits were confronted to the Ld. AO, who did not deny the same in the remand proceedings. Thus, the expenditure which is covered under Rule 6DD(g) is allowable. Further Learned counsel has submitted that the expenditure is genuine and is not doubted by the department. He relied on Gurdas Garg vs CIT in TS-5374-HC-2015(P H) to contend that the conditions mentioned in Rule 6DD are not exhaustive and are only illustrative. In a case of business expediency, the expenditure is allowable. He further relied on the judgment of Indore Bench of Tribunal in the case of Tirupati Construction vs DCIT, ITA 522/ Ind/ 2014, where vide order dated 14.07.2016, it was held as under: Thus, we find that the assessee has made payment of purchase under exceptional circumstances out of business expediency and also filed all the relevant documents and evidence in support of the same before both the lower authorities and the lower authorities have not brought any material on record by verifying the same that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The bank accounts of the farmers have been analysed , which are awash with cash deposits around the time sale of lands. They have explained that the cash deposits are out of on money received by them from the assessee. (iv) The contents of the ledger named New Land of Phanda as scanned above stand proven as most of the persons named therein have attended in compliance to summons issued by this office and have confirmed of having received cash. (v) The assessee has been confronted with the statements of the sellers and copies of the same have been supplied to it. The assessee has not been able to refute the facts contained in these statements . 20. In respect to the instant year, Ld. AO found that the assessee had purchased 1.89 acres of agricultural land at Village Phanda, from Shri Bhairu Singh. The registry for same was done on 27-082007 for ₹ 9,50,000/- and the payment was made through DD No. 005309. During the assessment, Ld. Assessing officer recorded the statement of Shri Prakash S/o. Shri Bhairu Singh on 05-022016 on behalf of his father Shri Bhairu Singh. Shri Prakash admitted that his father had received ₹ 23,00,000/- in cash from the assessee as sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1986] 19 ITD 102 (Delhi) vi. CIT v. Biju Patnaik [1991] 190 ITR 396 (Ori.) . It is unknown why statement of seller himself was not taken, but of his son was taken. Son s statement would not have any evidentiary value in the transaction where he was not a party to the transaction. He contended that the disposition of making onmoney payment is merely a bald allegation which is not corroborated. Statement of third person, which is not corroborated by any evidence, has no evidentiary value and in support of this contention on following decisions:- i. ACT vs Prabhat Oil Mills 52 TTJ 533 (Ahd); ii. Chironjilal Steel Rolling Mills vs CIT 84 ITR 222 (P H). iii. CBI vs V.C. Shukla 1998 SCC 410; iv. Ashwini Kumar 39 ITR 183 (Del.); v. Satnam Singh Chhabra 74 TTJ 976 (Luck.); vi. Ashadevi 101 TTJ 332 (Ahd.); vii. ACIT vs Kamla Prasad Singh 3 ITR (Trib.) 533 (Pat.); viii. Sheth Akshya Pushpavandan 130 TTJ 42 (Ahd.); ix. Balram Jakhar 98 TTJ 924 (Asr.); x. Common Cause (SC), following V.C. Shukla (supra) 24. We have considered the rival submissions and gone through the orders of the Ld. Lower authorities and the evidences on record. Through Ground no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keeping in view the above discussion and judiciously following the decision of Hon ble Supreme court in the case of Krishinchand Chellaram (super), the AO was not justified in making addition of ₹ 23,00,000/-. Thus, addition made by the AO amounting to ₹ 23,00,000/- is Deleted. Therefore, appeal on this ground is Allowed. 25. We therefore find that in absence of any incriminating material found during the course of search, and further in absence of any direct or corroborative material even during the assessment, except for the statement of son, who was not a party to the transaction; and whose statement has no evidentiary value for this transaction; and further the fact that cross-examination was not granted; the addition has no legs to stand. The Ld. CIT(A) was justified in deleting the addition. No interference is thus called for . The ground No.2 of Revenue s appeal for AY 2008-09 dismissed. 26. The next common ground of appeal relates to deduction u/s. 80IB(10); whereby in Ground No. 3 of A.Y. 2008-09; Ground No. 3 of A.Y. 2009-10; Ground No. 10 of A.Y. 2011-12, the revenue has challenged the deletion of addition in respect of section 80IB(10) amounting to & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose plots at an agreed price, it had to be concluded that the assessee had merely acted as a contractor and not a developers and therefore, it is not eligible for deduction under section 80IB(10) of the Income-tax Act, 1961. 29.7 Further the measurement report scanned above has established that the total built-up area of the constructed units has exceeded the celling of 1500 sq ft in case of both the units separately. Thus, the assessee has violated the mandatory statutory condition for eligibility to claim deduction under section 80IB(10) as the total built-up area of the two units which are part of Flamingo Project and on the profit of which deduction has been claimed. 28. Aggrieved assessee filed appeal before the ld CIT(A). Ld. CIT(A) considering the facts and the submissions, deleted the addition at para 4.4.8 to 4.4.12 at pg. 58-63 of his order. Relevant finding is extracted below: 4.4.11 Nevertheless, the building permission as well as the completed certificate was granted for the entire project and not for any individual bungalow flat. Registration of plots/unfinished units/structure is not permitted by the sub-registrar when the permission is granted for the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilder and developer and not a contractor of the customer, and the view has been upheld by all the Courts including the ITAT, Indore. Hon ble ITAT, Indore vide ITA No. 472 473/Ind/2015 AY 2007-08 2010-11 in the case of appellant has allowed claim of deduction u/s 80IB(10) of the IT Act. The appellant has carried only the eligible business during the year under consideration. The Assessing Officer after reading few line of sale deed has mis-interpreted entire facts of the case. Thus, in the light of plethora of judgments cited above and decision of Hon ble ITAT, Indore in the case of appellant and others, the appellant is eligible for deduction u/s 80IB(10) of the I.T. Act and was acting as a developers and builder and not mere a contractor. Similar view has also been up held in the case of appellant for AY 2007-08 AY 2010-11 by Hon ble ITAT, Indore vide ITAT No. 472 473/Ind/2015 dated 08.01.2019. Therefore, the disallowance made by the AO amounting to ₹ 1,60,73,981/- is Deleted. The appeal on these grounds is Allowed. 29. Now the Revenue is in appeal before the Tribunal. Ld. Departmental Representative relied upon the assessment order and submitted that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch, time limit for initiating regular assessment lapsed. Return on income filed on 30.09.2011 (PB 146); time limit for notice u/s. 143(2) lapsed on 30.09.2012. He therefore contended that during search, no incriminating material was found, and the claim which was already claimed and allowed in appeal upto the level of Tribunal was again agitated by the department in the proceedings u/s. 153A. Ld. Counsel for the assessee contended that so far as the issue of developer vs contractor is concerned the issue was already decided by the Hon ble ITAT in ITA No. 472 473/ Ind/ 2015, vide order dated 08.01.2019. He further contended that it is a regular practice in construction industry to do the registry at the structure level or of the plot and thereafter do the construction under an agreement. This is done to facilitate the buyer to avail loan facility from the banks. He relied on Paras Housing Pvt Ltd. 22 ITJ 273 (Trib. Indore) where it was held:- 7. As per the prevailing practice in the market normally all the prospective buyers purchase flat/ bungalow, are interested to avail housing loan facility from different financial institutions/ banks. The financial in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the orders of the lower authorities and the facts and evidences on record. Revenue has challenged the finding of Ld.CIT(A) allowing the claim of assessee of deduction u/s. 80IB(10) of the Act at ₹ 1,60,73,981; ₹ 3,56,08,183; and ₹ 2,68,13,834 raising Ground No. 3 of A.Y. 2008-09, Ground No. 3 of A.Y. 2009-10 and Ground No. 10 of A.Y. 2011-12 repectively. At the first instance, we observe that learned Assessing office has not referred to any incriminating material found during the course of search u/s.132 of the Act to establish disallowance of deduction u/s. 80IB(10). Further, we find that the claim of deduction u/s. 80IB(10) was already a subject matter of regular assessments in preceding years.. In the A.Y. 2004-05 to 2007-08 the deduction was impugned before this Tribunal and the same was decided in favor of assessee and copy of order is placed at PB 438447. Further, in A.Y. 2007-08, the issue of deduction was disallowed again in proceedings u/s. 147. The matter again travelled before this Tribunal and in ITA No. 472 473/ Ind/ 2015, vide order dated 08.01.2019 deduction u/s.80IB(10) of the Act was allowed. The order has been placed in the assessee s pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection of the A.O. This objection is also not sustainable. Hence, same is rejected. In view of the above discussion, we do not see any infirmity in the finding of the Ld. CIT(A). Same is hereby upheld. 33. Further, we find that the valuation was done by private valuer in the absence of the assessee or any authorised and responsible person/ employee of the assessee on 31.01.2014. It is pertinent to note that the District Valuation Officer had already taken the measurement on 18.02.2013 and found the same to be in order. The report of the DVO is placed in assessee s paper book at PB 452A-452B. It cannot therefore be said merely on this report of private valuer, in the absence of the assessee and that too measuring only two houses; that the built-up area is exceeding 1500 sqfts. Merely on such report the deduction u/s. 80IB(10) cannot be disallowed. 34. We therefore conclude that the issue of deduction u/s.80IB(10) of the Act, which has already been settled earlier by this Tribunal for various preceeding Assessment Years in the case of assessee; and that no incriminating material was found in the case of the assessee, claim of deduction u/s.80IB(10) of the Act cannot be denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heminvest Limited Vs. CIT (2015) 378 ITR 33 (Del) . 38. The department is in appeal against the order of ld CIT(A). The Ld. CIT(DR) relied on order of the Ld. Assessing Officer and contended that the disallowance u/s. 14A r/w rule 8D is justified. He contended that since equity shares have been issued by the sister companies, the dividend is therefore exempt, and thus, expenditure for earning dividend income has rightly been disallowed. 39. On the other hand, the ld Counsel for the assessee defended the order of the ld CIT(A). He contended that in respect of disallowance u/s. 14A, no incriminating material was found during the course of search. He further submitted that it is a settled proposition of law that if no exempt income has been earned, no disallowance u/s. 14A could be done. He relied on following cases:- i. Ravi Seeds and Research Pvt. Ltd vs ACIT in ITA Nos. 976 and 978 /Ind/2016 as reported on [2018] 33 ITJ 416 (Trib. Indore) ii. Cheminvest Ltd 61 taxmann.com 118 (Del.). iii. Shivam Motors P Ltd 55 taxmann.com 262 (All.); iv. CIT vs Corrtech Energy Pvt Ltd. 45 taxmann.com 116 (Guj.); v. CIT vs Lakhani Marketing 49 taxmann.com 257 (P H). vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on the decision of Hon ble Gujarat High Court in the case of CIT V/s UTI Bank (2013)32 taxman. Com 370 (Guj) which laid down that Where the assessee had sufficient interest free funds to meet its tax free investment yielding exempt income, it could be presumed that such investments were made from interest free found and not from loan funds, and thus no disallowance under section 14A being warranted. Further reliance has been placed by the Ld. ARs on the decision of Hon ble Bombay High Court in the case of CIT V/s Reliance Utilities Power Ltd. (2009) 313 ITR 340 (Bom.) wherein it was held that:- If there be interest-free funds available to an assessee to meet its investment and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. Further reliance has been placed by the Ld. ARs on the decision of Hon ble Bombay High Court in the case of CIT V/s HDFC Bank Ltd. (2014) 366 ITR 505 (Bom.) wherein it was held that:- where assessee s capital, profit reserves, surplus and current account deposit were higher than the investment in tax-free securities, it would have to be presume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of the total income. 4.5.4 After carefully analyzing the facts of the aforesaid cases, I am of the considered view that the issue relating to disallowance made u/s 14A of the I.T. Act in respect of the aforesaid appeals is covered in favour of the appellant by a catena of decisions of various courts wherein it has been held that in the absence of exempt income, disallowance u/s. 14A could not be made. The relevant case laws are as under:- a. CIT V/s. Winsome Textile Industries Ltd. (2009) 319 ITR 204 (P H) b. CIT V/s. Larketing Incl. (2014) 272 CTR 265 (P H HC) c. CIT V/s. Hero Cycles (2009) 323 ITR 518 (P H HC) d. CIT V/s. M/s. Shivam Motors (P) Ltd. (2014) 89 CCH 59 (All.) e. CIT V/s. Holcim India Pvt. Ltd. (2014) 90 CCH 81 (Del.); f. CIT V/s. Corrtech Energy (P) Ltd. (2014) 223 Taxman 130 (Guj.); g. Cheminvest Limited V/s. CIT (2015) 378 ITR 33 (Del.) h. Redington India Ltd. V/s Addl. CIT (2016) 97 CCH 219 (Mad.) i. PCIT V/s. IL FS Energy Developments Co. Ltd. (2017) 84 taxman.com 186(Del.) 4.5.5 Reference may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussion, I agree with the argument of the Ld. ARs that on this logic that no disallowance can be made u/s 14A of the Act when no exempted income claimed;. On this count, disallowance u/s 14A of the Act made in by the AO needs to be deleted being unsustainable on facts and in law. 4.5.6 Continuing with this cue, the Ld. ARs have further extended the same agreement of no exempt income leading to no disallowance u/s. 14A of the Act referring to another facts of the same agreement by saying that disallowance u/s.14A of the Act can be made only to the extent of exempt income earned during the year. In support, Ld. ARs have placed heavy reliance on the Judgment of the Hon ble Supreme Court in the case of Maxopp Investment Ltd. Vs. CIT reported in (2018) 91 taxmann.com 154 wherein principally affirming the ratio of Hon ble Punjab Haryana High Court in the case of PCIT V/s. State Bank of Patiala (2017) 391 ITR 218 (P H) restricting the disallowance to the extent of exempt income, it was held that- we rate from the facts in the state Bank of Patiala cases that the AO, while passing the assessment order, had already restricted the disallowance to the amount which was cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23,19,25,600 4,27,15,103 39,02,74,444 2012-13 25,30,75,600 7,40,00,071 49,40,65,000 2013-14 24,45,16,000 8,65,10,734 55,74,89,000 2014-15 24,45,16,000 14,54,74,836 1,16,58,50,000 The above chart clearly demonstrates that sufficient interest free funds were available for making investment in shares of sister companies. Ld Counsel for the assessee relied on following cases to contend that disallowance u/s. 14A is not called for as sufficient interest free funds were available: (i) CIT V/s UTI Bank (2013)32 taxman. Com 370 (Guj) (ii) CIT V/s Reliance Utilities Power Ltd. (2009) 313 ITR 340 (Bom.) (iii) CIT V/s HDFC Bank Ltd. (2014) 366 ITR 505 (Bom.) (iv) PCIT V/s India Gelatine Chemicals Ltd. (2016) 66 taxman.com 356 (Guj.) 44. It is an established fact in the instant case that no interest disallowance u/s.14A of the Act is called for in the years under dispute before us as the assessee had sufficient interest free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 2011-12 5,96,000 2012-13 5,96,000 2013-14 5,96,000 2014-15 5,96,000 48. Against this order, the assessee preferred an appeal before the Ld. CIT(A). Ld. CIT(A) deleted the addition giving findings on pg. 29 para 4.2.2 to 4.2.6. 49. Against this finding the department is in appeal. The Ld. CIT(DR) relied on the order of assessment and submitted that the Ld. AO was justified in making the addition which was based on non corroborated loose paper. On the other hand, Ld. Counsel for the assessee relied on the finding of the Ld. CIT(A). 50. We have considered the facts of the case, considered the rival submissions and gone through the orders of the lower authorities. Revenue is aggrieved with the finding of Ld.CIT(A) deleting addition made by the Ld.AO on the basis of loose papers LPS A-14 ,Page 38 found during the course of serach We observe that although the loose paper was found from the premises of the assessee-company, but this document was undated, handwritten document. It was unknown as to whose handwriting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a dumb documents. Further, in numerous other case laws Coordinate Benches and Hon ble courts (as referred in the finding of Ld CIT(A) extracted above) have consistently upheld the view that no addition could be made in the hands of the assessee on the basis of the dumb loose papers seized during search, in absence of any corroborative material. Some of the case laws are as under:- I. M M Financiers (P.) Ltd. Vs. DCIT (2007) 107 TTJ (Chennai) 2000 Held that no addition could be made in the hands of assessee on the basis of the dumb loose slips seized from his residence, in the absence of any corroborative material to show payment of any undisclosed consideration by the assessee towards purchase of land . II. Monga Metals (P) Ltd. Vs. ACIT 67 TTJ 247 (All. Trib) Holding that Revenue has to discharge its burden of proof that the figures appearing in the loose papers founds from assessee s possession constitute undisclosed income, [in the present case, loose papers were not even seized from assessee s possession]. III. Pooja Bhatt Vs. ACIT (2007) 73 ITD 205 (Mum. Trib) Held that where documents seized during search was merely a rough noting and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Remarks by A.O. Late Shri Laxmi Narayan S/o.Shri Champalal PB 614-639 Vill. Salaiya Total 2.538 hectre land i.e. 6.268 acres S.No.1 P.No.99 26.04.2008 12500000 12500000 6,48,000.00 Shri Laxminarayan S/o. Shri Champalal attended the office on 05-05-2014 and statement recorded . In his statement (sic- remarks of AO are incomplete) Smt. Ayodhya Bai Patidar W/o. Shri Kailash Narayan 3.Smt. Ramkuwar w/o. Shri Harinaryan Patidar 4.Shri Krishna Patidar w/o. Shri Thakur Prasad PB 337-372 Vill. Salaiya Total 1.60 hect i.e. 3.95 acres S.No.2 P. No .99 27.12.2008 6700000 10400000 37,00,000.0 Shri Thakur prasad attended the office on 26-02-2015and statement recorded . In his statement (sic- remarks of AO are incomplete) Shri Arjun S/o. Shri Hariprasad PB 640-656 Vill. Chhan ,Vikas Khand, Fanda Distt. Huzur total 1.75 acres S. No.3 P.No.111 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly as ₹ 67,19,000/- was paid for purchase of land from different sellers without even bringing a single iota of positive evidence on record. Hence, the addition made by the AO was based on mere guess work, conjuctures and surmises which has no place in tax jurisprudence. In sum substance, action of the AO is neither sustainable on facts nor in law, being based on Third party statement or sellers. 4.3.7 It is a settled legal principal that addition cannot be simply made on the basis of third party statement and without giving any opportunity of cross examination. The following judicial pronouncement supports the case of appellant:- CIT v. J.M.D. Communications P. LTD (2010) 320 ITR 17 (ST) (SC) (ITA NO 106 OF 2007 DT 16-1-2009 (Delhi)(HC). Persons who was issued the bills has given the statements that he was carrying on the business of issuing bogus accommodation bills on commission basis with the assessee, and this was not put to the assessee for rebuttal or cross-examination, High Court held no substantial question of law. On SLP by revenue the Court held that if the AO wants to use some statements made before him, then on request by the assessee, is bound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the A.O. Cross- examination is the sine qua non of due process of taking evidence and no advance inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence both oral and documentary, so that he can prepare to meet the case against him. Decision of Hon ble Gujarat High Court in the case DCIT Vs. Mahendra Ambala Patel Tax wherein the Hon ble Court held as under: Though the AO has placed reliance upon the statements of Shri Manoj Vadodaria and Shri G.C. Patel for the purpose of taxing the amount in the hands of the assessee, despite specific request being made by the assessee for cross-examining both the said persons, the AO has not permitted the assessee to cross-examine them. In the circumstances, no relince could be placed upon the statements of the said persons as the respondent assessee had no opportunity to cross-examine them. The statements made by the aforesaid persons would have no evidentiary value and as such, would not be admissible in evidence. Decision of the Hon ble Gujarat High Court in the case of CIT Vs. Kantibhai Revidas Patel Tax wherein i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n whose market rate is to be determined possessing the same or more or less similar advantageous features. This is the view taken by the Supreme Court in the case of Jawajee Nagnatham v. The Revenue Devisional officer [1994] 2 JT (SC) 604; AIR 1994 SCW 2852. The submission on behalf of the petitioners based upon the rates of properties maintained by the State Government for the purposes of checking evasion of stamp duty on transfer deeds cannot, therefore be accepted. 4.3.9 I find it important to quote decision of Hon ble jurisdictional ITAT, Indore in the case of Shri Parshwanath Construction vs ITO in appeal no ITA/379/Ind/2013 dated 18.07.2014 wherein it has been held that the only admissible evidence regarding the terms of such contract/agreement, available before us, is the registered deed itself, therefore, the oral evidence loses its credibility in view of section 92 of Indian Evidence Act. further Hon ble Supreme Court in the case of Morarka PropaertiesP Ltd. vs Biharilal Murarka Ors AIR 1978 SC 300 it has been held that in the face of the documentary evidence on record, the oral evidence is not entitled to any weight. Similar view was also taken in the case of Paramj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted by the ld AO was not relating to incriminating material found during the search. Further, Ld. AO denied cross-examination of the parties, before using the statement against the assessee. Further, in case of Smt. Ayodhya Patidar, it is unknown as to why statement of the sellers were not taken, but statement of Shri Thakur Prasad Patidar, who was husband of one of the sellers was taken. In the case of Shri Arjun Patidar, he also denied of having paid on-money . In the case of Shri Laxmi Narayan Patidar, his statement seems to have been made under some confusion. An amount of ₹ 6,48,000 as alleged was paid to him, but it was paid in respect of another land 0.106 acres purchased from him. This fact would be clear from his statement itself, where in reply to Question 9 and 10 he has stated this fact. Further, it was contended that the ld AO has stated that the bank accounts of the sellers were available, but the same was never brought on record. In the Department s paper book also, the same was not made available. Further, it was contended that a statement of third person was not binding in the case of assessee. 60. We have considered the rival submissions and the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid on-money. 61. Considering the entirety of the facts and detailed finding of fact by Ld.CIT(A) in light of settled judicial precedence, we find no infirmity in the finding of Ld.CIT(A) and thus addition made by the Ld.AO cannot sustain. Ground No. 2 of Department s appeal for A.Y. 2009-10 stands dismissed. 62. Now we discuss the common ground of the department relating to addition made the Assessing office on the basis of valuation report given by Departmental Valuation Officer (in short DVO). The same issue is taken up by the Revenue in Ground No. 1 for A.Y. 2011-12 (₹ 43,38,292); Ground No. 1 for A.Y. 2012-13 (₹ 4,18,74,359); Ground No. 1 for A.Y. 2013-14 (₹ 6,17,61,538) and Ground No. 2 for A.Y. 2014-15 (₹ 11,78,40,913). 63. The facts relating the common grounds of appeal are that during the course of search on 31.01.2014, valuation of the investment in the property was got done from the registered valuer by the Investigation Wing. Later on, during assessment u/s. 153A r/w. Section 143(3), report of DVO was also called for. Based on the report of the DVO dated 22.03.2016, ld. AO held that undisclosed investment was made in the construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70,56,890 TOTAL 5,50,01,000 7,72,29,737 2,22,28,737 Aakriti Natures Cure Center , vill. Phanda , Bhopal F.Yr. A.Yr. As per Assesse (Rs.) As per DVO (Rs.) Addition (Rs.) 2010-11 2011-12 46,27,000 53,62,539 7,35,539 2011-12 2012-13 2,64,16,000 3,04,23,551 40,07,551 2012-13 2013-14 2,39,31,000 2,67,84,611 28,53,611 2013-14 2014-15 2,87,13,000 3,11,32,155 24,18,155 TOTAL 8,36,87,000 9,37,02,856 1,00,14,856 Sprout (School Building), E-8, Extention, Bawadiya Kalan, Bhopal F.Yr. A.Yr. Declared by assessee E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by DVO as well as valuation aspect, but AO has totally failed to consider the same. He has mechanically adopted the estimate of value of construction provided by DVO. One should not lose sight of the fact that at the end of the day, cost derived by DVO in his report is nothing but an estimate which is bound of have amount of estimation, guess work opinion involved and estimate cannot be exact . After all it is an estimate done by an expert it is a popular maxim to err is human . It is evident from the very fact that, appellant has raised various discrepancies in the DVO s report. However, AO did not find it appropriate to invite counter comments of DVO on objections raised by the assessee. Although, it is a settled legal position that valuation report submitted by DVO is not binding upon AO, but in the present case AO has adopted and used the valuation report as if it is binding on him. Appellant has pointed out several glaring mistakes and omissions in valuation report, on which AO has maintained a conspicuous silence which is unbecoming of a quasijudicial authority. d. It is important to note that DVO has prepared his report based on DPAR- 2007 after applying cost index ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imated by the DVO. Hence, on this count, I am of the view that addition made merely on the basis of DVO s report is not sustainable. f. The valuation report of DVO is not binding on the AO because it is merely an opinion of an expert. In the context of the controversy in issue, it may also be germane to notice the expression used by legislature i.e. estimate . Thus, resort can be made to the said provision by the AO for the purpose of estimating the value of any investment, bullion, jewellery or any valuable article etc. However, this is settled legal position that addition cannot be made solely on the basis of valuation report which is only give an estimate as held by various High Court, discussed earlier. g. It is apparent from record that assessing officer has not brought any material on record to establish that the assessee had made any unaccounted investment in construction of the building in question and that books of accounts do not reflect the correct cost of construction. It is evident that only reason for making the addition u/s 69B of the Act is that there is a difference in the cost of construction as estimated by the valuation officer and as shown by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce can be made u/s 131(1)(d), the appeal was pending before the High Court. During the pendency of the appeal before the High Court the Finance Act 2004 made amendment in section 142A providing the AO with power to make a reference to the DVO for estimating the value of investment and the amendment was made effective with retrospective effect from 15.11.72. The proviso to the section provided that the amended section will not apply to assessment which has become final and conclusive on or before 30.09.2004. In these circumstances the court held that as the appeal is pending before it, the assessment has not become final and conclusive and hence the amended section 142A of the act will be applicable as it has been amended w.e.f. 15.11.72 and accordingly the reference made to the DVO was a valid reference. Thus the issue for decision before the Court in that case was whether amended provisions of section 142A made in 2004 can be made applicable to cases in which assessments are already completed. Thus it would be seen that the said judgment has no applicability to the case of the assessee. b. Shakti Tourist Home v CIT 308 ITR 228 (kerala): the citation mentioned in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 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 the different projects of the assessee company. Thus, the addition amounting to ₹ 43,38,292/- is Deleted. Therefore, appeal on this ground is Allowed. Similar findings were given for subsequent assessment years. 65. Against this order of the Ld. CIT(A), the department is in appeal. The Ld. CIT(DR) during the course of hearing, submitted that during the search and post search inquiries, valuation report was obtained from the Valuation Officer. The report of the Valuation Officer clearly demonstrates that the cost of construction shown by the assessee was below the actual expenses incurred in construction of the properties. The difference in the value shall therefore be treated as undisclosed expenditure and shall be added. 66. On the contrary, the Ld. Counsel for the assessee submitted that:- Submissions: WHY REFERENCE NOT JUSTIFIED? 1. Reference to DVO in 153A proceedings not tenable; moreover as no incriminating document showing unaccounted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the manner provided under that sub-section. It also provides that the Valuation Officer shall furnish the valuation report within sixty days of receipt of such reference. These amendments will take effect from lst April, 2017. It is submitted that prior to this amendment, no reference was possible during the course of search. Thus, in the present case, the reference to valuation officer was illegal. IN ANY CASE, FOLLOWING DEDUCTIONS SHALL BE GIVEN 5. No deduction for self-supervision by ld AO. Same should have been given. Ld CIT(A) gave 5% deduction for self-supervision. 6. Lower deduction for self-procurement of materials. 7. DPAR Rates 2007 vs MP PWD rates. CIT vs Raj kumar 182 ITR 436 (All.) PB 780 CIT vs Smt. Prem Kumari Murdia (Raj.) PB 782 8. Chart (PB 761-763) explaines the details of rate and amount of extra items adopted by DVO, which are not covered in DPAR 2007. 9. In case of incomplete construction, DVO has taken very high value. 10. Estimational 15% difference is reasonable. The valuation by department itself at two different points yielde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Natures cure center 8.37 NA. NA 756 9.37 5. Sprout (School Building) School Building 1.05 NA NA 1847 3.64 68. The drastic difference as above is unexplained. To demonstrate, during search, Aakriti High Lands, Village Phanda was valued at ₹ 3.83 crores, whereas during assessment, it was valued at ₹ 62.49 crores. The assessee itself has shown the cost at ₹ 57.01 crores. It is not understandable as to why the DVO adopted different approach at the time of search and when the valuation was referred to DVO during the assessment proceedings. Now in this background, how the report of DVO during assessment can be accepted at the face value. Further, it has been held by the jurisdictional High Court in CIT vs Khushal Chand Nirmal Kumar 263 ITR 77 (M.P.) that since no incriminating material was found during the course of search, reference to DVO could not have been made. Further, in CIT v. Nishi Mehra' [2015] 56 taxmann.com 89 (Delhi) it was categoric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stered Valuer and that of the DVO, both being appointed by the department, the addition after giving deduction for self-supervision, self-procurement of materials and the deduction for rate difference in PWD and DPAR rates and that no incriminating material was found during the course of search to show any unaccounted expenditure, find no reason to interfere in the finding of Ld. CIT(A) and thus dismiss Revenue s Ground No. 1 for A.Y. 2011-12, Ground No. 1 for A.Y. 2012-13, Ground No. 1 for A.Y. 2013-14 and Ground No. 2 for A.Y. 2014-15 . 70. Now we take up Ground No. 2 for A.Y. 2011-12 of the department s appeal dealing with unaccounted receipts of ₹ 5,00,000 covered in LPS A-2. 71. The facts of the case are that during the course of search a document marked as LPS A-2 pg. 29 was found which was allegedly a memorandum account of one customer Shri Rajkumar Gupta. As per this page, it was mentioned that the consideration for flat was ₹ 16,00,000. The paper also mentioned the date, installment amount and mode of payment. An amount of ₹ 5,00,000 was mentioned to be received in cash, and thus total amount received was shown at ₹ 16,00,000. Ld. CIT(A) delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents were made through cheque to the tune of ₹ 4,80,00,000/- and no transaction was made in cash. Appellant has also brought to may notice that statement of Shri Mahendra Singh Namdeo was also recorded wherein, he has admitted that the all the payments of ₹ 4,80,00,000/- were received thought cheque and the balance amount is still outstanding. After considering the facts interalia plea raised by the appellant it can be safely held that the AO has no cogent/corroborative evidence on record which could prove that any such exchange of cash actually took place. Further, neither the appellant or its director nor Shri Mahendra Singh Namdeo has ever stated/admitted that a sum of ₹ 21,00,000/- was received from appellant company towards the security deposit. The entire adition has been made on assumption and presumption basis which is neither justified nor correct in the eyes of law. It is a settled facts that presumption how strong may cannot take place of evidence. 4.4.3 Nevertheless, the AO has grossly erred in making addition simply of the basis of guess work, assumption and presumption. It is well settled that no disallowance can be made as a leap in the dark. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2014. Shri Mahendra Singh Namdeo denied cash receipt from assessee company, and also the cash payment was denied by assessee company. Ld. Counsel contended that the writing in the agreement was not corroborated. He therefore relied on the order of Ld. CIT(A). 78. We have considered the facts of the case, the orders of the Ld. Lower authorities and the evidence on record. It is an undisputed fact that appellant has entered into an agreement with M/s. Aashirwad Sky Heights Tower Pvt. Ltd. The Ld. AO has alleged that assessee has paid sum of ₹ 21,00,000/- towards security deposit as per agreement. However, assessee has contended that all the payments were made through cheque to the tune of ₹ 4,80,00,000/- and no transaction was made in cash. Assessee has also brought to our notice that statement of Shri Mahendra Singh Namdeo was also recorded wherein, he has admitted that the all the payments of ₹ 4,80,00,000/- were received through cheque and the balance amount is still outstanding. We find that although the agreement raises suspicion that cash payment was made by assessee company of ₹ 21,00,000; but this suspicion is not confirmed by the department by pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000 in A.Y. 2011-12 and ₹ 54,62,000 in A.Y. 2012-13. 82. Against this addition, assessee preferred an appeal before the Ld. CIT(A). Ld. CIT(A) deleted the addition at page 101-112, vide para 4.5.3 onwards: Similar finding was given by Ld.CIT(A) dealing with the same issue for A.Y. 2012-13 deleting the addition of ₹ 54,62,000. 83. Against this order, the revenue is in appeal. At the outset, Ld. CIT(DR) referred to the Loose paper LPS A-28 page no. 75 and contended that it clearly mentions that ₹ 310 lakhs is paid in cash till 20/3/11. Further, against balance ₹ 54.62 lakhs as mentioned at the end of the page, it is mentioned Balance must have been paid in B (Not accounted) . This document is clinching document to establish on-money payment. He further stated that the MOU found also stated that certain documents would be destroyed later on. He therefore submitted that the addition for unexplained investment as done by the Ld. AO be confirmed. 84. On the contrary, Ld. Counsel for the assessee submitted that it is uncontroverted that assessee company purchased the shares of Maa Bhagwati Sugar Mills (in short MBSM ) from Bharat Bhushan Patel and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly examining the contents of the document, alongwith the books of accounts, we find that this document is nothing but a dumb document. The investment in shares of MBSM was recorded in the Balance Sheet at ₹ 9.27 crores on 31.03.2010. On 31.03.2011, the investment was reflected at ₹ 20.47 crores. Thus there was an increase of ₹ 11.20 crores. Similarly on 31.03.2012, the investment was reflected at ₹ 21.72 crores; and thus there was an increase of ₹ 1.25 crores. This loose paper mentions the consideration of ₹ 5.75 crores. The figure in the loose paper is substantially lower than that recorded in the books. The transaction mentioned in the loose paper does not correlate with the accounted transaction; moreover, the accounted transaction is at a higher value. It seems that there was some rough noting on this loose paper by some unknown person, which Ld. AO has interpreted as unaccounted payment. Had the maker of the loose paper and the purpose for which it was made been enquired, the transaction therein could have been deciphered. No effort was made by the Ld. AO in this regard. A transaction which is already at ₹ 11.20 crores in F.Y. 2010-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged that sum of ₹ 3,10,00,000/- was paid in cash by the appellant to Bharat Bhushan Patel and Others. On the contrary appellant submitted that the presumption made by the AO is without any incriminating material on record which could prove that sum of ₹ 3,10,00,000/- was paid over and above the consideration as mentioned in books of account. Appellant has argued that the rough workings as mentioned in the bottom of loose paper cannot be made basis of addition, until and unless any cogent or incriminating document is found in support of transaction. Further, the AO has neither examination Bhart Bhushan Patel nor his brother or family member regarding the impunged loose paper and the entire addition has been made on sheer presumption and assumption basis. Further, the AO has also failed to bring on record any cogent evidence, creating direct nexus of receipt of ₹ 3,10,00,000/- by the appellant. Therefore, in absence of any cogent evidence having direct nexus with the impunged transaction, the said impunged paper i.e. page no 75 of LPS-A-28 cannot be used against the assessee. 4.5.4 This is settled legal position that any dumb document cannot be used as an ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material as to nature and ownership of the transactions, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totally various figures jotted down on loosed documents . 4.5.7 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have examined beneficial i.e. Shri Bharat Bhushan patel and order who were actually involved in the impugned transaction Secondly, the AO should have done independent enquiry regarding the impugned transaction. Thirdly, the loose paper or rather say it as dumb documents should be a speaking one having direct nexus with the assessee, which was not in the case of appellant. Fourthly, the AO being of considered opinon that vash of ₹ 3,10,00,000/- was paid by the appellant company for purchasing shares of M/s Maa Bhagwati Sugar Mill Ltd. Should have rejected books of account of the appellant which was also not done. Fifthly, it is settled legal pronouncement that presumption how strong may, cannot take place of evidence. Last but not the least, neither the beneficery nor any of the partner of appellant has ever stated that such transaction actually occurred. My ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otalling to ₹ 16,94,16,000. Thus, as per this agreement, difference amount of ₹ 4,97,08,000 has to be paid by the assessee company to the first party for the said land. Further, Ld. AO referred to LPS 1/2 page no. 67 which was ledger of Munna Agrawal Highland Land for the period 01.04.2011 to 07.06.2013. This ledger allegedly contained date wise entries of cash payment to Munna Agrawal at ₹ 1,52,00,000 . Further LPS 1/2 page no. 65 was ledger account of Pradeep Agrawal. As per this ledger cash payment of ₹ 75,00,000 was paid to him. LPS 1/2 page 56 was also reffered by Ld. AO. As per this loose sheet it was mentioned Month wise Amount paid . Total amount payable was ₹ 225 + 470.03 = 695.03 . Month-woie amount paid for Feb 12 to June 13 was ₹ 377.00 lakhs. Ld. AO further referred to LPS 1/2, page 55 which contained details of Agreement revised area 31.20 acres dated 07.06.2013. Ld. AO further referred to BS-1/2 page no. 7 which was a page of diary on which certain hand written notings have been made. Ld. AO therefore alleged that unaccounted payment was made by the assessee company to M/s. Citi Infraventures Pvt Ltd. through their Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vardhan Jain. Secondly, the AO should have examined Shri Pradeep Agarwal and Shri Munna Agarwal before making any addition to the income of the appellant. Thirdly, the AO should have brough some independent evidence suggesting exchange of cash of ₹ 4,97,00,000/-. Fourthly, the impubged loose paper 55, 56, 65 67 of LPS1/3 were found in possession of Shri Yashovardhan Jain and not in possession of appellant. Fifthly, none of the loose paper under consideration is signed by the appellant or any of its authorized representative. Sixthly, the impunged loose paper should be speaking one without having any second interepration, which is not in the case of appellant. Seventhly, the AO has also relied upon the statement of farmers/sellers, who during appellant proceedings had filed affidavits stating that no cash was received from appellant company against the sale of their land. One of the seller has stated that he was under pressure and therefore, has accepted cash receipt of ₹ 5,00,000/- from appellant before the AO. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed documents . 4.7.5 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor the payer has ever admitted about payment of ₹ 5,96,000/-. In absence of any corroborative evidence to prove that there was exchange of money by CASH/Cheques/Kind, AO has no locus to assume that appellant has paid ₹ 5,96,000/-. It is settle law that AO connot make any addition merely on basis of suspicion, however stong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.7.6 In view of the above discussion, material evidences on record and case laws cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In respect of commission payment , he further referred to Annexure A of the agreement and submitted that the fact of commission payment of ₹ 4 crores was clearly mentioned in the agreement. He therefore submitted that the order of the Ld. AO may kindly be restored and addition so made may be confirmed. 92. Per Contra Ld. Counsel for the assessee, on the contrary, submitted that the impunged MOU contains details of agreement signed between M/s City Infraventures Pvt. Ltd. and AG8 Ventures Limited on 09.02.2012 for assigning rights to purchase 13.314 hectare (32.89 acres) of land at village Phanda kalan, Bhopal. According to the agreement the total consideration to be paid by the M/s City Infraventures P Ltd. to the farmers/bhuswamis was ₹ 11,97,08,000/- out of which sum of ₹ 2.30 crores have already been paid. The agreed sale rate for the assessee company was finalised at ₹ 51.51 lacs per acres and the total cost for the assessee company would come out at ₹ 16,94,16,000/-. He submitted that although, the assessee wanted to acquire the land for its project and therefore entered into an agreement with M/s. Citi Infraventures Ltd, yet later the land was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.09.2012 (PB 973-993) 1,75,20,000 1.On 28.04.2014 no cash received.. On 26.02.2016 stated that cash of ₹ 5 lac received. (PB 999) 2. Affidavit on 11.05.2018 that no cash was received. (PB 994) Ld. Counsel for the assessee submitted that none of the sellers accepted to have received any amount in cash. In respect of two sellers, who had accepted to have received cash, they subsequently filed affidavit stating that no such cash was received. Further, in respect of the allegation regarding payments to Shri KBL Agarwal against purchase of land at village Phanda, Bhopal, Ld. Counsel referred to the copy of ledger account of Shri Kunj Behari Lal Agarwal and copy of registered deed for land at village Phanda, Bhopal. He submitted that assessee company purchased 9 acres of land from Shri KBL Agarwal for a total sale consideration of ₹ 3,67,59,000/-. All the payments were made through different cheques. This transaction was recorded in books. This transaction was different. Further, referring to LPS 1/2 page nos. 55, 56, 65 67 it was submitted that the maker of these documents was not known. It was not enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding that payment to Munna Agrawal is payment to Pradeep Agrawal. No evidence has been produce to establish that Munna Agrawal is the alias name of Pradeep Agrawal. Infact this fact was denied by Pradeep Agrawal in his statement. In respect of on-money received by the farmers, the farmers have already denied to have receive onmoney. In respect of Shri Deep Singh, his statement was recorded on multiple occasions. On 05.02.2016, he stated that he received on money of ₹ 10 lakhs. Further, on 08.02.2016 and 12.02.2016 he stated that no cash was received. Later, in his statement on 26.02.2016, he stated on money of ₹ 3,64,000 received. He further denied the same by filing affidavit. How his statement can be relied. In respect of Smt. Karkuwar Bai and others. Statement were recorded on 04.02.2015 and 08.02.2016, whereby the sellers denied on-money; and further reaffirmed the fact by filing affidavit. In respect of Shri Suresh, he denied on money receipt and thereafter reaffirmed the fact in affidavit. Also, in respect of Shri Rajmal, his statement was not recorded. Lastly, in respect of Shri Govind Singh, his statement was recorded on two occasions. On 28.04.2014, he denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission filed by the appellant inter alia the evidence furnished. Let me first summarise the basis on which additions have been made by the Assessing Officer. The AO has solely relied upon statement recorded of sellers Shri Narayn Singh and Shri Jai Ram Singh. The addition made by the AO are purely hypothetical and without any independent corroborative evidence. The AO has consistently harped on the statements of sellers. This is an admitted fact that statements of 21 were recorded. This is also an admitted fact these statements were recorded behind the back of appellant. No opportunity of cross-examination was allowed to the assessee though specifically asked for the assessee. It has been held by hon ble High Court in the case of DCIT V/s Mahendra AMbbalal Patel CIT V/s Kantilalbhai Ravidas Patel that statement has no evidentiary value if opportunity of cross-examination is not allowed. Besides this, apparently the AO did not independently verified the facts about the genuineness of the said party as well as the impunged purchase transaction. It is not understandable as to how independently and impartially, the AO could reach to the final conclusion that on money amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooling System (P) Ltd. [2014] 47 TAXMANN 20 (Delhi High Court)- Where Assessing officer made addition to assessee s income on basis of statement recorded by director company in course of survey to effect that said amount represented non-existent transaction, since statement so made did not have any evidentiary value and, moreover, Assessing Officer had not even rejected assessee s books of account while treating transaction in question to be bogus, impugned addition deserved to be deleted Hon ble Gujarat High Court in the case of Pr. Comm. Of Income Tax I vs. Chartered Speed Pvt. Ltd. and also Hon ble Gujarat High Court in the case of CIT Vs. Indrajit Singh Suri (2013) 33 TAXMANN 281 (Guj.)- where additions were mad on basis of statement of persons who were not allowed to be cross examined by assessee, additions were not sustainable. Radha Madhav Ind. (P) Ltd. Vs. Commissioner of Central Excise, Raipur (2015) 54 TAXMANN 404 (New Delhi CESTAT)- Non-supply of documents and not allowing cross-examination of said witnesses would violate principles of natural justice CIT v. Eastern Commercial Enterprises (1994) 210 ITR 103 (Cal.) (HC)- The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition. Hon ble Bombay High Court in the case of Mrs. Nirmal Laxminarayan Grover v. Appropriate Authority, 223 ITR 572. The relevant portion of the judgment is extracted below: However, as regards the contention raised on behalf of the petitioner that the market rate fixed for the area in question at the relevant time in the land rates fixed by the Nagpur Municipal Corporation, Nagpur, as well as by the stamp authority for the purposes of levy of stamp duty on registration of the documents was ₹ 1,500 per sq. meter, i.e., ₹ 145 per sq. ft. and therefore, the rate of ₹ 225 per sq. ft. agreed to between the parties for purchase of the suit land was more than the market rate for such land, it may be seen that the rates of properties maintained by the above authority or officers for the purposes of checking evasion to stamp duty upon transfer deeds are not pursuant to the provision in any statute, relating even to stamp duty. At any rate it cannot be a basis for determination of the market value for acquisition of for compulsory purchase of any land where the usual test is of a prudent buyer and a prudent seller determined by the evidence of sale transaction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reasons best known to them stated that on money was paid ₹ 30,00,000. This statement was not corroborated by bringing any material on record. Further, Ld. AO did not grant opportunity of cross-examination of these persons. He therefore contended that the mere statement of third persons, therefore, cannot be relied on for making the addition. 101. We have considered the rival submissions, the order of the Ld. Lower authorities and the evidences on record. We find that Ld. CIT(A) was justified in deleting the addition. At the first instance, no incriminating material was found during the course of search. The addition in search cases, shall be limited to incriminating material found during the course of search. The transaction for purchase of land was duly recorded in the books. It was only in the statement recorded later on, after the search, the fact of on-money was stated. Secondly, cross-examination of the sellers was not granted by the Ld. AO. The statement of the sellers cannot be relied as crossexamination was not granted. Thirdly, there is no corroborative material, brought on record, except the statement of the sellers. In these circumstances, we find merit in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of M/s. Maa Mahima Traders, Bhopal, Ld. AO referred to Inspectors report and contended that no such party resided at the given address. Instead the house was residential house and it was locked everytime Inspector visited. As enquired from the neighbours, some students resided there on rent, and they used to come during late evening and leave the premises early in the morning. Lastly, in respect of M/s. S.K. Contrator, Bhopal, Ld AO again referred to Inspector s report and stated that no such party resided at the address. The premises was occupied by one family for last 7-8 years. The statement of owner of the premises Smt. Malti Gaur was also recorded, and denied to have known M/s. S.K. Contractors. Ld. AO therefore made the addition treating the expenditure as bogus. 105. Against this addition, an appeal was preferred by the assessee before the Ld. CIT(A). Ld. CIT(A) deleted the addition at page nos. 169 to 171 of his order, holding as under: 4.9.5 I have considered the facts of the case, various case, law replied upon by the appellant and findings of the AO. The appellant during the year FY 2010-11 has purchased send material of ₹ 39,33,900/- from M/s Maa Mahima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gitimate material from which a reasonable inference of any expenditure being of the disallowable nature could be drawn and that the initial burned of finding such material is on the AO as held by Hon ble High Court Orissa in the case of Bansidhar Onkarmall Vs. CIT (1953) 23 ITR 353 (Orissa). Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. V/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). Also, once the assessee has discharged its onus of proving that the parties under consideration are genuine, now the ball lies in the court of AO to prove that the claim of appellant is false and incorrect. Further, the AO has neither done any independent enquiry even when PAN No, TIN No, bank account statement of these parties were provided to AO. Thus, in view of the above, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - 60083427 TDS deducted TDS not applicable 11474 TDS certificate and copies of a/c of S.K. Contractor in the books of the appellant for A.y₹ 2011-12 to 2013-14 are enclosed. Evidences to prove transaction PB 1060-1154 PB 1155-1196 PB 1444-1509 Ld. Counsel for the assessee submitted that the transactions with the above parties were duly recorded in the books. The payments were made by cheques. The same were duly reflected in the bank accounts of the assessee and also in the bank accounts of those parties. He stated that for the expenditure, the assessee had given following evidences: (a) Address (as available with assessee) (b) PAN (all were income-tax assessees and their address on record of Income-tax department was same) (c) Telephone Nos. (d) Nature of expenditure (e) VAT Registration No. (f) Payments were sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the assessee. Thirdly, we notice that a search was conducted at the premises of the assessee. No discrepancy was found in the work done. Rather the department got the valuation done by the Registered Valuer and later by the DVO. The department on one hand contended that work done was more as disclosed in the books; but on the other hand, they are doubting the expenditure towards work done. The stand of the department is contradictory and inconsistent. We therefore in absence of any concrete evidence placed before us the Revenue authorities and also since Learned Departmental Representative being unable to disprove the evidences filed by the assessee to support of genuineness of expenditure, find no merits in the action of Ld AO making disallowance of expenditure. Thus no interference is called for in the finding of Ld.CIT(A) . In the result, Ground no. 8 for A.Y. 2011-12; Ground No. 10 for A.Y. 2012-13; and Ground No. 12 for A.Y. 2013-14 of the Revenue s appeals are dismissed. 109. The next common ground of the revenue, Ground No. 9 for A.Y. 2011-12 and Ground No. 12 for A.Y. 2012-13 relates to addition for on-money received on Highland Project, amounting to ₹ 1,56, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in compliance has filed chart showing sale of plots of project highland along with affidavit of Shri Hemant Soni. The details filed by the appellant are as under:- A.Y. Total sales of plots of Highland Peroject as per appellant On-money @ 7.5% on sale of Plots as per appellant Onmoney recd @ 7.5% as per appellant (sic Profit on same @ 5%) 2011-12 NIL 0 0 2012-13 NIL 0 0 2013-14 434081000 32556075 1627804 Thus, from the above it is very crystal clear that appellant company has not sold any plot in AY 2011-12, therefore, no on money would have been received by the appellant in AY 2011-12. Further the addition made by the AO was on presumption basis because once the assessee has clearly narrated in his statement given on oath that he has received on money on sale of project then the AO has no locus to assume that on money was received on entire project. In view of the above discussion, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, Ld. AO added amount as under: Sl. No. Name of customer Cash Transaction Date of Transaction LPS/ Page no. 1. Shalini Jain 4,00,000/- 29.03.2012 A-2/33 2. Smt. Nirmala Chandra 20,00,000/- 30.09.2011 A-2/21 3. Smt. Sadhana Tiwari 16,00,000/- 4,00,000/- 3,50,000/- Total: 23,50,000/- 02.09.2011 09.09.2011 21.09.2011 A-2/17 4. Shri Vinod Semwal Archana Semwal 4,00,000/- 3,00,000/- 6,00,000/- 5,00,000/- 3,00,000/- Total ₹ 21,00,000 15.09.2011 19.09.2011 29.09.2011 30.09.2011 24.03.2012 A-2/13 116. Against this addition, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) after considering the evidences and the law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.5 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor the payer has ever admitted about payment of ₹ 68,50,000/- On the contrary the advance received by the appellant was either due to cancellation or the same is duly reflected in books of account. In absence of any corroborative evidence to prove that there was any exchange of money by CASH, AO has no locus to assume that appellant has received ₹ 68,50,000/-. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. Further, Ld. Counsel for the assessee submitted that these all LPS are some computer generated sheets and are unsigned. The maker of the document is unknown and for what purpose same were made are unknown. Had the Ld. AO any doubt as to the amount received from the customers, he could have enquired the facts from the customers. Ld. AO did not do so. Further, the assessee submitted that the amount received from Smt Shalini Jain was a booking advance. Therefore, even if the amount is treated as unaccounted, it can be taxed in the year in which the income is booked on mercantile basis. He therefore relied on the order of Ld. CIT(A) and contended that the order of Ld. CIT(A) be confirmed. 118. We have considered the rival submissions, facts of the case and the arguments of the parties. We find that the assessee is correct in contending that in respect of amount received from Smt. Nirmala Chandra, Smt. Sadhana Tiwari and Shri Vinod Semwal and Smt. Archana Semwal; the amount received, if any was refunded as the booking was cancelled. We therefore have no doubt in confirming the order of the Ld. CIT(A) and dismissing the ground of revenue in respect of these three parties. So far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition. However, the fact can very well be verified from the ledger account that entire amount was paid by cheque. Further, the affidavit of the sellers support this fact. No addition is therefore called for. We therefore confirm the order of Ld. CIT(A) on this ground and dismissed Ground No. 4 of department s appeal for A.Y. 2012-13. 123. Now we take up common Grounds being Ground No. 8 of Department s appeal for A.Y. 2012-13 (₹ 1,16,60,000) and Ground No. 10 of Department s appeal for A.Y. 2013-14 (₹ 4,00,000). These grounds relate to addition on account of unexplained expenditure as per Loose papers LPS 1/2 page no. 69-71. 124. The facts relating to these grounds of appeal are that during the course of search and seizure, at the residential premises of Shri Yashovardhan Jain, General Manager (Finance) of the assessee company, a loose paper titled as New Land at Phanda was found. The same was marked as LPS 1/2 page no. 69 to 71. This was a computer generated ledger noting whereby certain amount was stated to be paid and received. Ld. AO noted that on being confronted, Shri Hemant Soni could not explain the entries contained therein. Further, some persons name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Yashovardhan Jain, General Manager (Finance) of the assessee company. However, no enquiry was ever brought on record as to who was the maker of the document, for what purposes it was made. The entries in the document were incomplete. It was unknown to whom cash was paid. The entries in any case could not be corroborated by bringing any material on record. It is also unknown as to why Ld. AO adopted a pick and choose method and added some entries while not making addition on other entries. In any case, in respect of on-money payment for purchase of land at Phanda, Ld. AO has already made addition in respect of 27 registries found and the same shall be dealt by us in subsequent paras. In respect to the purchase of land, separate discussion is made in respect of the statements of the parties. The entire approach of making addition based on this document seems to be uncalled for. We therefore are in full agreement with the following finding of Ld. CIT(A) (relevant extract): 4.9.2 I have consideration the plea raised by the appellant and findings of the AO. It is seen that loose paper i.e. page no. 69 to 71 of LPS-1/2 was found in possession of Shri Yashovardhan Jain. The im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir Affidavit, dully retracting their earlier statements recorded by the AO, wherein they have denied receipt of any cash over and above the amount as mentioned in registered sale deed. This has been held by the Hon ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise Kolkata in Civil Appeal No. 248 of 2006 that in absence of cross-examination of parties, the assessment proceedings to be quashed. My findings are based on the findings given in above mentioned paras. Thus, keeping in view the above discussion and judiciously following the decision of Hon ble Supreme Court in the case of kishanchand Chellaram (supra) Andaman Timber Industries Vs. Commissioner of Central Excise Kolkata (supra), the AO was not justified in making addition of ₹ 1,16,60,000/- on deemed fiction and without giving opportunity of cross examination to the appellant. Thus, the addition made by the AO amounting to ₹ 1,16,60,000/- is Deleted. Therefore appeal on this ground is Allowed.. We therefore dismiss ground no. 8 of Department s appeal for A.Y. 2012-13 and Ground No. 10 for A.Y. 2013-14. 129. The next ground of appeal is Ground No. 9 for A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. 9 23-03-2012 PB 1413- 1421 7100000 8100000 900000 Statement recorded by Rajmal s/o. Shankarlal on 05-02-2016 that he received 900000 in cash ₹ 51000 as advance and ₹ 849000 at the time of registry. 42,15,000 131. Ld. AO relied on the statements of the parties and contended that on-money was paid by the assessee-company. He therefore made addition of ₹ 1,77,65,000 in respect of on-money. 132. Against this addition, assessee preferred an appeal before the Ld. CIT(A). Ld. CIT(A) deleted the addition, observing as under at page 191 onwards of his order:- 4.10.3 Due consideration is given to the submission filed by the appellant inter alia the evidence furnished. Let me first summaries the basis on which additions have been made by the AO. The AO ha solely relied upon statements recorded of seller or POA holder. The addition made by the AO are purely hypothetical and without any independent corroborative to the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behind the back of appellant and no meaningful opportunity of cross examination was provided. Therefore, appeal on this ground is Allowed. 133. Against this findings, the revenue is in appeal. Ld. Counsel for the revenue submitted that there were sufficient evidences in the form of statement of the sellers to make addition for on-money payments. He further submitted that the cash received by the sellers were deposited in the bank accounts, and hence the payment of on-money was corroborated. He therefore relying on the Assessment order contended that the addition as made by Ld. AO shall be confirmed. 134. On the contrary, Ld. Counsel for the assessee submitted that the addition is uncalled for. At the outset, he submitted that the addition made is ₹ 1,77,65,000; but the total of the on-money as per the chart came to ₹ 42,15,000. Hence the balance addition has no legs to stand. Now in respect of the addition of ₹ 42,15,000, he submitted that during the year the assessee purchased land from four sellers. In respect of first seller Smt. Rajeshwari w/o Shri Anamd Rai (addition ₹ 28,34,000), 2 acres of land was purchased. Statement allegedly of one Shri Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Ld. AO contended that the bank statements were given by the sellers to show that amount was deposited in their bank. No such bank statements were ever brought on record. The same is not filed in the Department s paper book also. It was therefore contended that such bank statement, if any, cannot be relied on. 135. We have considered the rival submissions, evidences on recorded and orders of the Ld. Lower authorities. At the outset, it is noted that the Ld. AO made addition of ₹ 1,77,65,000. However, the basis for making such addition is not clear. The total of addition as per the Ld. AO himself shall comes to ₹ 42,15,000. Thus balance addition is baseless. Now in respect of addition for onmoney, we notice that during the course of search, 27 registries were found. The transactions mentioned therein were duly recorded in the books. No evidence showing on-money was found. Thus, in the proceedings u/s. 153A r/w section 143(3), no addition can be made in respect of on-money payment. The addition therefore is not sustainable. In any case, we observe that the addition is not justified. In respect of purchase of land from Smt. Rajeshwari, statement of Shri Mukesh P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: 4.12.3 I have considered the facts of the case, written submission filed by the appellant and finding of the AO. During the course of survey page no. 42 of LPS-16 was impunged from business premises of appellant. This impunged loose paper is an unsigned copy of ledger account of M/s VPS Consultants P. Ltd. M/s VPS Consultant has booked a flat in the name of his direct Shri Vishu Gupta at project Aster Royal of appellant company on 20.04.2011 for a total sale price of ₹ 51,00,000/-. Shri Vishnu Gupta is a financial consultancy to the appellant company from past many years. When the consultancy work got completed M/s VSP Consultants P. Ltd a company of Shri Vishu Gupta raised bill of ₹ 62,92,160/- on the assessee company for consultancy services being provided by Shri Vishnu Gupta. Further, Shri Vishnu Gupta issued two cheques of ₹ 1,00,000/- and ₹ 5,00,000/- to the appellant company for purchased of flat as mentioned above, the same fact is also narrated account of Shri Vishnu Gupta in the books of appellant. Thereafter, sum of ₹ 11,00,000/- was received by the appellant from Shri Vishun Gupta on 28.12.2011 out of which ₹ 6,00,000 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT v/s KP Varghese 131 ITR 547 (SC) has held that in absence of evidence that actually assesse paid more amount than declared in registered deed, no addition can be made. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). It is also very important to point out that neither the seller nor the buyer has ever admitted that sum of ₹ 5,00,000/- was paid/received. Thus, in view of the above discussion, I find no merit in the addition made by the AO on the basis of assumption and presumption and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered the rival submissions, and gone through the order of Ld. Lower authorities. During the course of survey at the premises of the assessee-company, page no. 42 of LPS-16 was found from business premises of appellant. This impunged loose paper is an unsigned copy of ledger account of M/s VPS Consultants P. Ltd. On consideration of the facts on record, it is clear that M/s VPS Consultants P Ltd. has booked a flat in the name of his Director Shri Vishu Gupta at project Aster Royal of appellant company on 20.04.2011 for a total sale price of ₹ 51,00,000/-. Shri Vishnu Gupta was a financial consultant to the appellant company from past many years. When the consultancy work got completed M/s VSP Consultants P. Ltd a company of Shri Vishu Gupta raised bill of ₹ 51,00,000 plus service tax totalling to ₹ 62,92,160/- on the assessee company for consultancy services being provided by Shri Vishnu Gupta. The payment of consultancy fees was made later on by banking channel. Since huge consultacy fees was due to Shri Vishnu Gupta during the period, instead of insisting on the payment, a credit in advance used to be given, anticipating the professional fees. So far that amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account. On the contractry appellant has strongly contended that no opportunity of cross examination was given by the AO to the appellant and no person/employee is allowed to take any document to his house. I find force in the contentions of the appellant that no proper and meaningful opportunity of cross examination was provided to the appellant. This is also as admitted fact that statement of Shri Yashovardhan jain was recorded behind the back of the appellant. No opportunity of cross-examination was ever allowed to the assessee. This has been held by the Hon ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise Kolkata in Civil Appeal No. 248 of 2006 that in absence of cross-examination of parties, the assessment proceedings to be quashed. Further, the Hon ble Gujarat High Court in the case of Praful Chunilal Patel Vs. Makwana [236 ITR 832 (Guj )] and JCIT Ors. Vs. George Willimson (Assam) Ltd. [258 ITR 126 (Guj)] has held that statement of third party cannot be relied upon without having any corroborative evidence. Similarly, Hon ble Supreme Court in the case of kishanchand Chellaram V/s. CIT 125 ITR 713 (SC) bhas held that adve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide para 4.13 of this order of this order. Nevertheless, It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.3.6 In view of the above discussion, material evidence on record and case laws cited, firstly, the AO ought to have provided opportunity of cross examination of Shri Yashovardhan Jain. Secondly, no incriminating material was found during the course of search suggesting receipt of case as per impunged loose paper. Thirdly, the AO should have brought some independent evidence suggesting exchange of cash of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his document contained certain entries against particular dates mentioning Cash Bhopal . How Ld. AO alleged the same to be cash receipt could not be comprehended. Whether this represents cash receipt or payment or cash balance is also not clear. The document can at best be said to be a dumb document in absence of any enquiry by the Ld. AO. We find that once such document was found from the premises of one employee, Ld AO ought to have enquired as to the contents of the documents. Ld. AO merely choose to make his own conclusions. Going by the verison of the Ld. AO himself, it cannot be known as to cash was received from whom and for what purposes. We therefore are in full agreement with the finding of Ld CIT(A) deleting the addition holding the said document as a dumb document. 148. Therefore, Ground No. 2 for A.Y. 2013-14 of the Department s appeal deserves to be rejected. 149. The next Ground of Appeal is Ground No. 3 of Department s appeal for A.Y. 2013-14 amounting to ₹ 1,04,88,000 relating to unexplained money marked as LPS 1/2 page 54. 150. The facts of the present ground are that during the course of search at the residence of Shri Yashovardhan Jain, a compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mere dumb document and no addition can be made on same. We are in agreement with the Ld. CIT(A) that this dumb document cannot be a basis for making addition in the hands of the assessee. We therefore dismiss Ground No. 3 of the Department s appeal for A.Y. 2013-14. 154. The next common grounds are Ground No. 4 Department s appeal for A.Y. 2013-14 (₹ 1,28,64,700) and Ground No. 3 of Department s appeal for A.Y. 2014-15 (₹ 5,40,06,795) which relate to unaccounted receipts. Further, Ground No. 5 of Department s appeal for A.Y. 2013-14 (₹ 55,24,697) and Ground No. 4 of Department s appeal for A.Y. 2014-15 (₹ 7,12,72,179) relate to unaccounted investments. This all grounds are related to document LPS 1/2 page no. 14 to 23 found during the course of search. 155. The common facts related to these grounds of appeal are that during the course of search at the residence of Shri Yashovardhan Jain, loose sheet LPS 1/2 page no. 14 to 23 were found and seized. This sheet was a computer generated sheet. The columns therein were Sr. No., date, name, narration, Dr., Cr. And remark. There were 477 entries in the sheet. The column date was empty. However, against cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,700/- and payment of ₹ 55,24,697/- by the appellant. Therefore, in absence of any cogent evidence having direct nexus with the impunged transaction, the said impunged papers i.e. page nos 14 to 23 of LPS-1/2 found from possession of Shri Yashovardhan Jain cannot be used against the assessee. These loose papers are rough jotting/scribbling and rough jottings without direct nexus with the assessee cannot be used against him. The AO has made allegation against the assessee that the has received that he has received ₹ 1,28,64,700/- and ₹ 55,24,697/- was paid as per details mentioned on loose paper 14 to 23 of LPS-1/2. In absence of any of the person as mentioned on imunged loose paper, Shri Yashovardhan Jain or either of the director of appellant company or any incriminating document/paper to establish that assessee has received sum of ₹ 1,28,64,700/- and has made payment of ₹ 55,24,697/-. In fact these loose papers were found from possession Shri Yashwardhan Jain in his statements stated his these papers are of his one of the client, whose books were written by him. It is settled legal position that onus of proof is on the person who makes any alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in presumption certain facts without having anything to corroborative. Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). 4.4.6 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have done independent enquiries from whose as alleged the appellant has received such amounts. Secondly, Shri Yashovrdhan Jain should have been examined and should have been loose papers. Thirdly, the loose paper or rather say it as dumb document should be a speaking one having direct nexus with the assessee, which was not in the case of appellant. Forthly, no incriminating material was found during the course of search relating to the impunged receipts. Fifthly, the loose p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Paper book. He tried to compare Annexure 1 (Page 1 to 9 found during the survey) and LPS page 14-23 to demonstrate that the entires therein are same, except 2-3 zeros. He further submitted that analysis of the said document clearly demonstrates that the document is dumb document. The approach of adding 2 or 3 zeros in some cases and adding on zeros in some cases is totally ad-hoc. He further submitted that the classification of Dr. and Cr. is also totally ad-hoc. Salary has been written on receipt side. Further, in most entries dates are not mentioned, particulars are not mentioned, work is not mentioned. Ld. AO simplisiter added the figures mentioned in the sheet without corroborating any single entry therein. He therefore contended that the addition is uncalled for. 159. We have considered the rival submissions, order of the Ld. Lower authorities and the evidences on records. On going through the paper found during the course of survey u/s. 133A which is at page 201 to 215 of the Written submission filed by the assessee and the LPS 1/2 page 14-23 as placed at PB 1593-1611; we find that the document found during the survey was a handwritten document. There was no classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 60,000. 162. The facts related to this ground of appeal are that asssessee company purchased an agricultural land from one farmer Smt. Resham Bai, at Gram Phanda. The land was purchased for ₹ 36,60,000. Out of the total consideration, an amount of ₹ 60,000/- only was made in cash. Ld. AO held that although the transaction is recorded in the books, yet the expenditure of ₹ 60,000 was in contravention of section 40A(3) and therefore same shall be disallowed. 163. Against this addition, assessee preferred an appeal before Ld. CIT(A). Ld. CIT(A) held that the payment was made in cash as demanded by the sellers. He held that the payment was made on business expendiency and applied the judgment of Tribunal Indore, in the case of Tirupati Construction vide ITA No. 522/Ind/2014 dated 14.07.2016. 164. Against this the department is in appeal. Ld. Counsel for the revenue submitted that the payment is clearly in contravention of section 40A(3) and therefore same was to be disallowed. Ld. Counsel for the assessee however submitted that the transaction was genuine and was duly recorded in the books. Further, he contended that cash was required to be paid in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt extract):- 4.7.2 I have considered the factual matrix of the case, written submission filed and assessment order. During the course of search page no. 51 of LPS were found from residential premises of Shri Yashovardhan Jain, employee of the appellant company. The impunged document is title as urgent payment required. On perusal of this loose paper, prime- facts it can be seen that it is relating to some requirement of founds. During the course of serach statement of Shri Yashwardhan Jain was also recorded on oath wherein he was also confronted with these loose paper belongs to M/s AG8 Ventures Ltd. On the contrary appellant has strongly contented that on opportunity of cross examination was given by the AO to the appellant. I find force in the contentions of the appellant that no proper and meningfull opportunity of cross examination was provided to the appellant. This is also an admitted fact that statement of Shri Yashvardhan Jain was recorded behind the back of the appellant. No opportunity of cross-examination was ever allowed to the assessee. This has been held by the Hon ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot justified in presuming certain facts without having anything to corroborative. Hon ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.7.5 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have provided opportunity of cross examination of Shri Yashovardhan Jain. Secondly, the AO should have examined the person whose names are mentioned on the loose paper. Thirdly, the AO should have brough some independent evidence suggesting exchange of cash of ₹ 1,34,78,580/-. Fourthly, the impubged loose paper 51 of LPS-1/2 were found in possession of Shri Yashovardhan Jain and not in possession of appellant. Fifthly, the loose paper under consideration is sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgent payments could be made. There is no evidence on record that the money was received or that the payment was made. The rough notings on this document were never enquired by the Ld. AO. Once the rough noting in this document is not corroborated, how it can be used against the assessee. Even it was never enquired into, as to who created this document and for what purposes it was made. This document, as such is a mere dumb document. Out of the 5 entries, 4 entries are without any date. Further, the entry only speaks of some amount to be returned upto 10.03.13. It is not clear whether this amount was to be returned to the assessee or by the assessee. Whether this amount was returned subsequently or not. Same has not been enquired into. We therefore do not find any infirmity in the findings of Ld. CIT(A) in treating this document as a dumb document. Ld. CIT(A) was justified in deleting the addition. 172. In the result this ground of appeal of the department is dismissed. 173. Now we take up Ground No. 11 of the Department s appeal for A.Y. 2013-14 amounting to ₹ 1,00,000 in respect of LPS A-13 relating to on-money in respect of 21 registries found from the office assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /o. Vikram Singh Phanda Kalan 2.416 hectre 5.79 acres 24.07.2012 2,70,12,000 PB 1747-1790 3,08,04,000 4,50,000 Shri Abhjeet Singh S/O. of Late Shri late Shri Gendkuwar recorded statement on 26.02.2015 that he received ₹ 4,50,000 in cash A-18 01 to 17 Shri Govind singh S/o. Sh. Shambulal Phanda Kalan 1.779 hectre 4.40 acres 13.09.2012 1,75,20,000 PB 973-1003 2,12,76,000 5,00,000 Shri Govind Singh statement recorded on 26.02.2016 that he received ₹ 5,00,000 in cash Total Amount 13,50,000 Ld. AO relied on the statements of the parties and contended that on-money was paid by the assessee-company. He therefore made addition of ₹ 1,00,000 in respect of on-money. 175. Against this addition, assessee preferred an appeal before the Ld. CIT(A). Ld. CIT(A) deleted the addition as per the finding given at pages 183 to 189 of his order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere through banking channels. Thus, no addition for on-money payment can be made in these proceedings u/s. 153A r/w section 143(3). 178. We have considered the rival submissions, orders of the Ld. Lower Authorities and the evidences on record. We find that the very basis of the addition is some statements recorded of the sellers. However, insipte of being asked for, Ld. AO did not provide an opportunity to cross-examine the sellers. Thus, the statements of the sellers cannot be relied on. Further, the statements are not corroborated by bringing any material on record. A mere statement of third person cannot bind the assessee, unless it is corroborated by any evidence on record. Further, Ld. AO relied on the bank statements of the sellers. However, bank statement of not even a single seller was ever brought on record to establish that cash was deposited in their bank accounts. Even in the Paper book filed by the Department, same has not been filed. Thus, no reliance can be placed on same. In respect of Smt. Bindabai, we cannot rely on statement of her husband who was not a party to the transaction. Further, there were contradictions in his statements also as pointed by the Ld. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of Djakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong court in the case of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). It is also very important to point out that neither the seller nor the buyer has ever admitted that sum of ₹ 10,00,000/- was paid/received. Thus, in view of the above discussion, I find no merit in the addition made by the AO on the basis of assumption and presumption and without any corroborative evidence on record having direct nexus paper sum of ₹ 10,00,000/- represent rough jottings/scribbling made by some preson/employee. 4.12.5 In view of the above, the addition made by the AO is no account of assumption and presumption basis and in absence of nay congent evidence having cirect nexus of receipt of ₹ 10,00,000/-. It is also important to mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to Cash found of ₹ 14,77,100 at the premises of assessee company. 186. The facts relating to the present addition are that during the course of search and seizure operation at the premises of assesseecompany, inter-alia, cash of ₹ 14,77,100 was found and seized. Ld. AO treated the said cash as unaccounted and made addition in the hands of the assessee. 187. Against this addition, assessee preferred an appeal before the Ld. CIT(A). Ld. CIT(A) deleted the addition at page 52 of his order, holding as under:- 4.2.2 I have considered the facts of the case, material evidence on record and findings of the AO. During the course of search cash amounting to ₹ 14,77,100/- was found in possession of appellant and ₹ 9,00,000/- from possession of Shri Hemant Soni as claimed by the appellant. Initially, at the time of search Shri Hemant Soni was unable to explain the source of cash and also failed to furnish any documentary evidence in support of his claim. However, at the later stage the appellant has filed detailed explanation regarding the source and acquisition of the impunged cash. Appellant in support has filed copies of cash book from 01.01.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,93,257 PB 64 2010-11 31.03.2010 11,59,956 PB 90 2011-12 31.03.2011 16,70,448 PB 165 2012-13 31.03.2012 5,10,000 PB 190 2013-14 31.03.2013 42,96,000 PB 233 2014-15 31.03.2014 17,83,000 PB 278 He therefore submitted that assessee company used to maintain a sufficient cash balance. The cash in hand on the date of search was therefore acceptable. 190. We have considered the rival submissions and the orders of the Ld. Lower authorities. On a careful consideration of the facts, we find that the cash in hand, as on the date of search is duly explained. As per the cash chart submitted by the assessee for transactions between 01.01.2014 to 31.01.2014, the cash in hand on 31.01.2014 comes to ₹ 75,01,959. The cash receipts and payments between 01.01.2014 to 31.01.2014 have not been doubted by the department. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.5.6 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have done independent enquiries from whose as alleged the appellant has received such amounts. Secondly, the AO should have done independen enqury transaction. Thirdly, the loose paper or rather say it as dumb documents should be a speaking one having direct nexus with the assessee, which was not in the case of appellant. Thirdly, the AO did not reject books of account of the appellant. Fourthly, neither the customer nor any of the partner of appellant has ever stated that such transaction actually occurred. Last but not the least, the impunged loose papers were not found in possession of the appellant. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justifies in making addition of ₹ 10,00,000/- being on sheer assumption and presumption basis. Thus, the addition made by the AO amounting to ₹ 10,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made by the AO are on assumption and presumption basis. Futher, the loose papers were found in possession of Shri Yashovrdhan Jain and not from appellant. Fifthly, statements were recorded by the then ADIT who was not appropriate jurisdictional officer. Sixthly, all the sellers except Smt Binda Bai filed affidavits stating that all the payments made for purchase of land are duly recorded in books of account. Most importantly, Shri Chand Singh vide their affidavits which are on record has stated that the statement given before the Income Tax authorities was given under pressur. My findings are based on the findings given in above mentioned paras. Thus, keeping in view the above discussion and judiciously following the decision of Hon ble Supreme court in the case of Kishanchand Chellaram (supra), the AO was not justified in making addition of Rs. ₹ 5,00,000/- ( (correctly ₹ 36,00,000/-). Thus, addition made by the AO amounting to ₹ 5,00,000/- is deleted being on the basis of statement recorded behind the back of appellant and no meaningful opportunity of cross examination was provided. Therefore, appeal on this ground is Allowed. 199. Against this, the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for A.Y. 2013-14 (₹ 4,34,08,100) and Ground No. 2 and 3 of the assessee s appeal for A.Y. 2014-15 (₹ 28,00,00,000) relating to addition on account of retraction of the surrender made during the course of search u/s. 132. 205. The facts relating to this ground of appeal are that during the course of search and seizure operations at the premises of the assessee-company between 29th Jan. 2014 to 1st Feb. 2014, statement on oath u/s. 132(4) of the Act was recorded of the Chairman and Manging Director of the assessee company Mr.Hemant Soni on multiple occasions. On 1st Feb. 2014, he accepted surrender of income of ₹ 50 crores in the group. Further, on 4th Feb. 2014, he gave the break-up of this 50 crores; and in the assessee company he accepted a surrender of ₹ 30 crores; ₹ 2 crores in the A.Y. 2013-14 and ₹ 28 crores in the A.Y. 2014-15. Later on, certain corrospondances took place between the department and the assessee-company. Thereafter on 30.05.2014, statement of Shri Hemant Soni was again recorded, whereby he was asked about the surrender made during the search. He replied that voluminous documents were seized from the premises, and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement recorded during the course of search that on-money received on sale of plots at Highland project was 510%. Since he enhanced the addition to ₹ 4,34,08,100/- i.e. more than ₹ 2 crores surrendered during search, he stated that making addition of ₹ 2 crores again would amount to double addition and therefore did not make separate addition for surrender. 207. Against this addition/ enhancement, the assessee is in appeal before us. In the A.Y. 2013-14, by various grounds of appeal, assessee is challenging the addition on account of on-money received on sale of plots of Highland project and further, the enhancement of ₹ 2.00 crores and adjusting the same against the increase in excess profits on the sale of plots at Highland project. In the A.Y. 2014-15, by various grounds, the assessee is challenging the enhancement of income and sustaining the addition of ₹ 28 crores on account of surrender during search. Since both these issues are interconnected, same are taken up together and adjudicated together. 208. During the course of hearing, Ld. Counsel for the assessee submitted that the search and seizure operation started on 29th Jan. 2014 and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cited below: 1. Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC) Held that (a) An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. b). Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. In present case also the addition was on basis of voluntary disclosure u/s 132(4), which was later on retracted by the assessee. 2. CIT vs. Chandrakumar Jethmal Kochar [2015] taxmann.com 292 (Gujarat) Merely on basis of admission that few benami concerns were being run by assessee, assessee could not be subjected to addition when assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such admission In present case also, the addition was based on admission which was later on retracted. Dept could not furnish any incriminating document or otherwise to support the admission. Hence, addition is unjustified. 3. CIT vs. Ramanbhai B Patel (Gujarat high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arg [2016] 72 taxmann.com 355 (Gujarat) It was held that where assessee retracted from disclosure made in statement under section 132(4) which was not accepted by revenue, and if no undisclosed income was found during search, revenue could not make addition on bare suspicion and presumption Present case also, the addition is on bare suspicion and presumption, which the department could not support through corroborative evidence. 10. Basant Bansal v ACIT (2015) 63 taxmann.com 199 (Jaipur Trib.) Held that neither any worthwhile incriminating material, information, and evidence was discovered as a result of impugned multiple search operations nor the additions sustained are based on any such material. The sole basis of additions is the disclosure which we have held to be involuntary. Consequently the additions do not conform to the mandate of sec. 153A. The addition in our case was solely on the basis of statement of surrender by brother/ brother-in-law of the assessee and not a single reference for any incriminating document is made. 11. CIT v. Balaj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to be conclusion. Same as above 17. Kalishaben Manharlal Chokshi Vs. CIT (2008) 220 CTR (Guj) 138 : (2010) 328 ITR 411 : (2008) 174 TAXMAN 466 : (2008) 14 DTR 257 Addition on the basis of retracted statement u/s 132(4) - statement retracted by assessee after two months on the ground that it was recorded under coercion and duress cannot be basis of addition. In our case, the statement was duly retracted on 30.11.11, at the earliest occasion, as assessee came to know about it and thus cannot be the basis of addition 18 Shree Ganesh Trading Co. v. CIT [2013] taxmann.com 170 (Jharkhand) Held that the statement recorded u/s. 132(4) without corroborative evidence could not fasten liability In our case also, since the undisclosed income could not be connected to any incriminating document, they cannot be the basis of addition. 19. Smt. Ranjnaben Mansukhlal Shah v. ACIT [2004] 2 881 (RAJKOT) Held that AO could not make addition only on basis of disclosure statement without corroboration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has fully and truly disclosed all the foreign as well as Indian income in the return filed. 25. Rajesh Jain V. DCIT [2006] 100 TTJ 929 (Delhi) Confessional statement should be corroborated with some material evidence to show that assessment was just and fair. Similarly, the confession was not corroborated with any evidence, hence addition is unjustified. 26. Jyotichand Bhaichand Saraf Sons P. Ltd. V. DCIT [2013] 86 DTR (Pune) 289 It was held that no addition can be made merely on the basis of statement recorded u/s 132(4) in absence of corroborative evidence. Same as above 27. CIT vs S. Ajit Kumar 300 ITR 152 (Mad.) Where no material was found during search in respect of amount allegedly paid by assessee to a builder, material found in course of survey in premises of builder could not be used in block assessment of assessee to make addition In present case also, there was no incriminating material or document was found from search premises. 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see therefore submitted that no such addition of on-money receipts, which was purely based on mere statement of Mr.Hemant Soni was called for. He alternatively submitted that in any case, if the on-money receipts are assessed, then those entire receipts cannot be taxed and a reasonable profit rate be applied on same. He relied on the judgment of CIT vs Balchandra Ajit Kumar 186 CTR 419 (M.P.). 212. On the contrary, Ld. Departmental Representative strongly relied on the order of the Ld. Lower authorities. Further, at the residence of Shri Yashovardhan Jain, who was the General Manager (Finance) of the assessee company, various documents, ledger and other records were found. Shri Jain and Shri Hemant Soni were unable to explain these documents. Shri Hemant Soni was the head of the company; and since he was unable to explain the transactions, he made a declaration, suo-moto regarding the undisclosed income of the company. The contention of duress is baseless. Decalaration of Shri Hemant Soni was binding on the assessee-company. Ld. Counsel for the revenue further contended that the surrender was made on 01.02.2014 and lateron, the declaration was reitereated on 04.02.2014 and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of ACIT vs Shri Sudeep Maheshwari, ITA 524/ Ind/ 2013, vide order dated 13.02.2019, this Tribunal observed as under:- 6. It is the case of the assessee that during the course of search seizure, no incriminating material or undisclosed income or investments were found. It is stated that the assessee was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared ₹ 3 crores in personal name. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going through the above judgments it is judicially settled that an addition made on the basis of mere surrender of income during the course of serach without referring to any of the incriminating documents is not binding on the assessee and the same cannot be used against the assessee as an evidence. 219. Now we proceed to examine the facts of the instant case in the light of above stated principle. In the instant case during the course of search various documents and other material were found and seized. Assessee accepted to surrender ₹ 2 crores for Assessment Year 2013-14 and ₹ 28 crores for Assessment Year 2014-15 on behalf of the various group concerns and the individuals connected there to. During the course of assessment proceedings Ld. A.O made various additions based on the incriminating material seized during the course of search. Along with these additions Ld. A.O also made addition for the income surrendered during the course of search. It is not in dispute that various incriminating material found during the course of search were duly considered by the Ld. A.O and necessary additions were made based on them which were challenged before Ld. CIT(A) and befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and further Ld. CIT(A) was not justified in enhancing this addition. We therefore delete the addition of ₹ 4,34,08,100/- in A.Y. 2013-14 and ₹ 28,00,00,000/- in A.Y. 2014-15. Thus, these grounds of the assessee are allowed. 222. Now we take up the penalty appeals filed at the instance of assessee. 223. Assessee s appeal ITA 922/Ind/2019 is the penalty appeal u/s. 271(1)(c) for A.Y. 2013-14 (₹ 8,52,700/-) and assessee s appeal ITA 923/ Ind/ 2019 is the penalty appeal u/s. 271AAB(1)(c) for A.Y. 2014-15 (₹ 16,80,00,000). The penalty has been levied by the Ld. CIT(A) in respect of the enhancement done by the Ld. CIT(A) in relation to the amount surrendered during the course of search. 224. We find that since the very basis of levying the penalty u/s. 271(1)(c) of the Act and 271AAB(1)(c) of the Act i.e. the addition already stands deleted by us as held by us in preceeding paras, there remains no legs for the impugned penalties to stand for and the same are therefore deleted. Accordingly Assessee s appeal ITA 922/Ind/2019 relating to the penalty leived u/s. 271(1)(c) for A.Y. 2013-14 and assessee s appeal ITA 923/ Ind/ 2019 for the penalty levied u/s. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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