TMI Blog2019 (7) TMI 1880X X X X Extracts X X X X X X X X Extracts X X X X ..... - PARTHA SARTHI CHOUDARY, MEMBER (J) AND DR. MITHA LAL MEENA, MEMBER (A) For Appellant/Petitioner/Plaintiff: P.K. Mishra For Respondents/Defendant: R.B. Doshi ORDER Dr. Mitha Lal Meena, Member (A) 1. These appeals by the Revenue are directed against the consolidated order dt. 19th May, 2014 of the CIT(A), Raipur [hereinafter referred to as the CIT(A) ], in respect of the asst. y₹ 2008-09, 2009-10 and 2010-11 wherein, the grounds of appeal, reads as under: Asst. yr. 2008-09 1. Whether in law and on facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition under s. 69 of the IT Act, 1961 of ₹ 10,06,43,050 on account of undisclosed investment in land made by the AO on the basis of seized material? 2. The order of the learned CIT(A) is erroneous both in law and on facts. 3. Any other ground that may be adduced at the time of hearing. Asst yr. 2009-10 1. Whether in law and on facts and circumstances of the case, the learned CIT(A) has erred in deleting the addition under s. 69 of the IT Act, 1961 of ₹ 2,59,57,040 on account of undisclosed investment in land mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn in the name of M/s. Aarti Colonizer Company (In short, ACC ) wherein the closing stock is reflected at ₹ 15,53,99,615 which was taken from the tally data in pen drive. The assessee was required to explain why the entries in the balance sheet be not taken as correct reflection of accounts. He also referred to the tally data maintained in the computer with xls file showing the details of purchase under the heading Aarti Infrastructure . The details of purchase of land as appearing in the excel file were reproduced in the query letter which were also reproduced in assessment order and referred to as table 1 therein and as per these details, the land at Dunda was purchased for ₹ 9,79,79,700. Thereafter, he referred to a screenshot of a journal entry which shows that the value of land is ₹ 9,79,79,700 against which the amount recorded in regular books was ₹ 2,33,86,759 thereby giving a difference of ₹ 7,45,92,941. This screenshot is also stated to be taken from tally data in pen drive. He thereafter referred to the details of purchase of another land admeasuring 32.68 acres consisting of 27 different pieces of land purchased on different dates. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises and for this, the accountant of the firm used to teach him MS Word, accounting, excel etc. and for this purpose, they used to take raw data, some data relating to Shri Rajesh Atlani's business and some relating to other family member's business. After making entries or making files, they used to check those data and all such work was mostly done in pen drive but some data was also kept in laptop. It was also explained by the assessee that some loose documents which were the printout of those data were also kept by them. Due to these reasons, most of the documents found and seized were not related to the assessee firm and it represented practice work by Ajay Atlani, which he had done on the basis of entries in regular books of account. The assessee further explained that although some books were exact copy of the books maintained by the assessee, some entries were made in wrong periods, name of some books were changed etc. The assessee thereafter explained some of the specific loose papers and the contents of pen drive and pointed out that how the data contained in the pen drive or in the printout is fake. The explanation of the assessee has been discussed on page Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not rebut the appellant's contention that nothing over and above the amount recorded in the registered deeds was paid by bringing necessary details. In this connection it is relevant to consider the observations of the Hon'ble Tribunal, Hyderabad Bench 'A' in the case of Sahitya Housing (P.) Ltd. vs. Dy. CIT (supra), where the Hon'ble Tribunal has held that the AO shall have the basis for assuming the unexplained credit in the case of the assessee and it is not possible to assess the income of the assessee in the absence of any evidence on arbitrary basis. The unsubstantiated material found in the pen drive cannot be considered in the hands of the assessee as a conclusive evidence so as to make additions towards un-explained credit. Undisputedly, no other material suggesting payment of higher amounts was recovered during search. It is trite law that burden is on the Revenue to prove that the price had been under stated and no addition is possible without any inquiry. In this case, there is no cogent material to support the conclusion that the appellant has actually paid higher amount than that recorded in the registered documents and the AO did not conduct any i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded investment. Such extensive papers having been found during search, learned CIT(A) was not justified in, deleting the addition. He then referred to the chart on page Nos. 4 and 5 of the assessment order and argued that in respect of each land, three figures are contained in the last 3 columns which clearly goes to indicate that the 1st column is in respect of actual consideration, the 2nd in respect of the disclosed value and the 3rd being the undisclosed part of investment. Here also he argued that it is not the case of the assessee that these lands were not purchased by it. In that view of the matter, the assessee should have explained the entries and in absence of any explanation, addition was bound to be made. He thereafter referred to the screenshot of the balance sheet as on 31st March, 2010 which is forming part of the questionnaire issued by the AO and in this balance sheet also, higher value of land is reflected. He also referred to the journal entry, screenshot whereof is placed in the query letter which supports the contention that the value of the land was higher than what is recorded in the books of the assessee. He argued that in support of the contention that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above cases, it has been held that to invoke s. 69B, the burden is on the Revenue to prove that the real investment exceeds the investment shown in the books of accounts of the assessee. He thereafter argued that since the language of s. 69 and s. 69B is almost identical, the law laid down in the context of s. 69B will apply in the case of an addition under s. 69 also. 6.1. As regards to the addition of ₹ 7,32,98,821, he argued that this addition has been made on the basis of journal entry dt. 4th Sept., 2007 and the details of the land given in table 1 of the assessment order, which is a print out of the data contained in the pen drive. Other than this, there is no other basis of this addition. In context of the journal entry dt. 4th Sept., 2007, he argued that the screen shot of the journal entry is placed at page No. 67 of paper book-1, which is the query letter issued by the AO; that the journal entry is just an entry in respect of introduction of capital asset into the partnership firm and the journal entry by itself does not prove that the assessee made any payment of the amount recorded in the journal entry; that there was no evidence that the amount covered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her argued that during asst. y₹ 2008-09, 2009-10 and 2010-11, there was absolutely no sales made by the assessee as is also mentioned in para 3 of the assessment order. He submitted that ever since inception of the firm and till the end of financial year 2009-10, no business had been commenced by the assessee firm and therefore there was no source of revenue at all for the assessee and in that view of the matter, it cannot be perceived that the assessee could earn any undisclosed income out of which alleged undisclosed investment would have been made. In support of this argument, he relied upon P L a/c of the three years under appeal (APB-2, pp. 309, 311 and 337). A perusal of the P L a/c shows that there were absolutely no sales made during the three years. He thereafter argued that the word used in s. 69 is may which gives discretion to the AO either to bring to tax an amount or not. He argued that even if the - explanation of assessee is not found satisfactory, a further question should arise for consideration as to whether in the facts of the case, addition is required to be made or not.. He argued that in view of no sales having been made in the three years and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresentative of the assessee tried to drive home the point that in absence of any corroborative material whatsoever found during the search or brought on record during assessment, addition could not have been made only on the basis of the chart which was found during search. He again argued and relied upon the two decisions of Hon'ble Delhi High Court rendered in the context of s. 69B wherein it was held that for invoking s. 69B, initial burden is on the AO to establish that any unaccounted payment was made. He argued that the chart found during search is not an evidence of payment and therefore, s. 69 could not have been invoked. He further argued that the AO has not made enquiry from even a single vendor whereas the list contains various vendors. He argued that before the AO affidavit of two vendors were filed, copy whereof was submitted before us during the hearing asserting that against the land sold by them to appellant, whatever consideration is mentioned in the sale deed, nothing over and above that was received by them and that the land has been sold for the, price mentioned in the sale deed. He argued that the AO did not conduct any cross examination or verification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drive are fake. Copy of the order of Tribunal-has been placed by the assessee at page Nos. 350 to 376 of paper book-2. Learned Authorised Representative of the assessee took us through Tribunal's order, at page No. 365 of the paper book-2 and pointed out that the above referred explanation has been reproduced at page No. 16 of the Tribunal's order. Thereafter he took us through page No. 370 of the paper book wherein Hon'ble Tribunal observed that apart from the contents of pen drive, no corroborative evidence, entry in any records, documents etc. was found during search and observing so, learned CIT(A) deleted the addition! In these facts, this Bench of Tribunal affirmed the order of CIT(A). The learned Authorised Representative therefore argued that the matter in dispute stands resolved by this Bench of Tribunal in the above case wherein it has been accepted that the entries in the pen drive found from the residence of Shri Kishore Atlani are fake and therefore he requested that similar view may kindly be followed in the present appeals also. 6.2.3. He submitted before us a chart giving details of the explanation submitted before the AO explaining that how the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th. We observe that the addition of ₹ 7,32,98,821 has been made by the AO on the basis of the screenshot of journal entry dt. 4th Sept., 2007 taken from the tally data in the pen drive and the printout of the details of land which has been reproduced by the AO on page Nos. 2 and 3 of the assessment order as table 1. Other than these two materials, there is no other basis for making addition, which is undisputed fact as per record also accepted by the learned CIT Departmental Representative. The AO has made addition invoking s. 69. As held in CIT vs. Naresh Khattar (HUF) (supra) and CIT vs. Dinesh Jain HUF (supra), the initial burden is on the Revenue to establish that there is any investment, which has not been recorded in books and in respect which the assessee is not able to give satisfactory explanation to the AO. As rightly contended by learned Authorised Representative of the assessee, neither the journal entry nor the details of land were reproduced in table 1 on page Nos. 2 and 3 of the assessment order to establish that any investment was made by the assessee firm. The journal entry dt. 4th Sept., 2007 is only an accounting entry passed for introducing the land as cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of assessee firm. As rightly contended by learned Authorised Representative of the assessee, that all the lands, except one, described in the assessment order on page Nos. 2 and 3, were purchased prior to formation of the assessee firm. We observe that in para 3 of the assessment order, the AO has himself mentioned that the assesses firm was formed on 4th Sept., 2007. As evident from different entries of land given in table, 1 in the assessment order, the date of purchase in all the cases, except in one case, falls prior to 4th Sept., 2007. In other words, the seized material itself shows that the lands were purchased prior to formation of the assessee firm, in this background also, we fail to see how any case can be made out of payment of on money by the assessee. There is yet another convincing reason that in all the three years under appeal, there were no sales affected by the assessee firm and the business of the assessee firm had not even started, which is also evidenced by the P L a/c. of the three years placed at page Nos. 309, 311 and 337, of the paper book. These P L a/cs have remained undisputed by the AO. We are inclined to agree with the argument of learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any undisclosed income from any other source, the discretion vested in the AO should have been exercised in favour of the assessee and the addition should not have been made. We also observe that the AO has not made any enquiry whatsoever from different vendors of the lands and not even from the two persons named in the journal entry, who, as per the journal entry, introduced their lands as, capital contribution in the partnership firm. In absence of any enquiry whatsoever, no addition could have been made only on the basis of inference. It is a settled position of law that for making addition under s. 69, there has to be some material establishing actual investment and therefore it is not justified to invoke the section merely on the basis of inference. 8.1.1. In view of all the above reasons, we hold that the AO was not justified in making addition of ₹ 7,32,98,821 on account of the lands described on page Nos. 2 and 3 of the assessment order. We, therefore, deem it proper to confirm the findings of learned CIT(A) on this issue and hold that he was justified in deleting the addition. 8.2. Next the addition of ₹ 2,73,44,233 comprised in the total addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment was made by the assessee. This mandatory requirement of law is missing in the present case and so the addition is not justified. 8.2.1. It is seen that the details of the lands are contained in the printout obtained from the pen drive. When complete details were available with the AO, the AO could have conducted independent enquiry from the vendors, which also does not appear to have been done. On the contrary, the assessee submitted affidavit of two vendors before the AO and the AO did not even cross-examine them to verify the facts. In absence of any cross examination of the deponents of the two affidavits, the contents of the affidavit become conclusive. 8.2.2. While considering the explanation of assessee about the entries in the pen drive being fake, made by one Shri Ajay Atlani, it is noteworthy to consider that no enquiry whatsoever appears to have been conducted either from the said Shri Ajay Atlani or from Shri Kishore Atlani, from whose residence the pen drive was found. The assessee explained the circumstances under which the entries were made in the tally data in the pen drive by Shri Ajay Atlani. All these facts and assertions have remained uncont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition made in that case on the basis of entries in the pen drive was deleted by the CIT(A) accepting the above explanation of the company. Apart from this, it was also held by the CIT(A) in that case that in absence of any corroborative material found during search, the addition was not justified. These findings of CIT(A) have been affirmed by this Bench of Tribunal in its order dt. 15th Feb., 2018. Learned Authorised Representative of the assessee submitted that it is the same pen drive which was found during search, which contained the data relating to Arti Infrastructure and Buildcon Ltd. and relating to various other assessees, including the assessee in the present appeal and this explanation of assessee has remained uncontroverted. Therefore, we find that the subject matter of dispute already stands adjudicated by this Bench of Tribunal wherein the explanation of assessee has been accepted and therefore, we do not find any reason to take a different view from the one taken by this Bench of Tribunal earlier, in the case of Aarti Infrastructure Buildcon Ltd., in IT(SS) A. No. 30/Rpr/2013 for asst. yr. 2008-09, order dt. 15th Feb., 2018 wherein the Co-ordinate Bench vide para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment never took place cannot be ruled out. Rather that seems to be more plausible as the amounts received from Suncity Project (P) Ltd., were all through banking channel and same were also returned back through banking channel by the recipients of that amount before the date of the search. In the above circumstances, we do not find any good reason to interfere with the order of the CIT(A). It is confirmed and the ground of appeal of the Revenue is dismissed. 8.2.4. The assessee has placed reliance on the decision in the case of CIT vs. Lavanya Land (P) Ltd. (supra) and Sahitya Housing (P) Ltd. (supra). In the case of Lavanya Land (P) Ltd. (supra) search under s. 132 was conducted and certain incriminating documents were seized from the residence of one person and in the statement recorded, he admitted that the amounts contained in the incriminating material were disbursed for purchase of land. Such statement was subsequently retracted by him. It was held by Hon'ble Bombay High Court that while an entry in regular books is relevant for the purpose of considering the nature and impact of a transaction, noting on slips of paper or loose sheet of papers are required to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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