TMI Blog2022 (2) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to delete the addition Unexplained property purchased - search proceedings - HELD THAT:- We find the assessee had stated categorically before the AO that these are rough calculation for purchase of property which did not materialize. It is an admitted fact that no such document or papers pertaining to purchase of any property was found either during the course of search or post search enquiries. Apart from the noting in the seized papers, the revenue has no other evidence of purchase of any property by the assessee. No post search enquiry or investigation was conducted by the AO to find out if at all any property has been purchased - no document/paper relating to the so called property was either found during the course of search or post search enquiry and no independent evidence was either found during the course of search or collected subsequent to the search, therefore, in the light of the above decisions, the assessee in our opinion cannot be fastened with the liability. We, therefore, set-aside the order of the ld. CIT(A) on this issue and direct the AO to delete the addition. Ground of appeal No.4 is accordingly allowed. Addition u/s 69A - HELD THAT:- So far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d veracity of the MOU. ii. The AO shall also summon and record the statement of Mr. O.P. Gulati in whose name receipts were found and which are related the MOU. iii. In case the above persons do not respond to the summons issued by the AO, the onus shall be on the assessee to produce them before the AO. If the assessee fails to produce them and they do not respond to the summons then the AO may take adverse view. AO shall decide the issue in the light of our above observation and in accordance with law after giving due opportunity of being heard to the assessee. Non-granting of credit received from Mr. Abhay Salwan and R.A. Financial Services while computing the peak cash balance - HELD THAT:- We find it is the contention of the ld. Counsel for the assessee that benefit of ₹ 50 lakhs as per receipt dated 01.01.2012 seized during the search and received back from Mr. Abhay Salwan and R.A. Financial Services should be given for computing the peak cash balance, Similarly, it is also his submission that the Assessing Officer has not given the benefit of ₹ 50 lakhs as per seized documents dated 15.12.2011 seized during the course of search relating to L.V. Rust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were heard together and are being disposed of by this common order. ITA.No.9147/Del./2019 A.Y. 2011-12 [Assessee] : 2. Facts of the case, in brief are that the assessee is an individual and derived income from salary, house property, income from business and income from other sources. He filed his return of income on 15.09.2011 declaring total income of ₹ 61,93,010/-. A search under section 132 of the I.T. Act was conducted on 28.02.2017 at the residential premises of the assessee at House No. 128, Sector-16, Faridabad, Haryana from where certain papers/documents belonging to the assessee were found and seized. The jurisdiction of the assessee was transferred from Pr.ClT-5, Delhi to PCIT, Central Circle-4, Delhi vide order under section 127(1) dated 30.11.2017. In response to notice under section 153A of the I.T. Act, the assessee filed return of income declaring total income of ₹ 61,93,010/-. The A.O. issued notice under section 143(2) and subsequently notice under section 142(1) along with questionnaire. In response to the same, the assessee appeared before the A.O. and filed the requisite details from time to time. The A.O. thereafter completed the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58(2) r.w.s. 70, 71 of Income Tax Act, 1961. 8. Because the action is being challenged on facts and law for making an addition of ₹ 40,00,000/- as unexplained money while treating the witness (assessee) u/s. 118 of Indian Evidence Act, 1872, as the assessee involved in the transaction resultingly an unreasonable finding without even calling and summoning the person involved namely RA Financial Services and Om Shanti Educational Society. 9. Because the action is being challenged on facts and law for making an addition of ₹ 3,207/- by invoking the provisions u/s 69C by making presumption on presumption while law is settled that the presumption is supplied by Statute namely Income Tax Act, 1961, Schedule VII List 1 Entry 82 it is presumption of income and not presumption on presumption. 10. Alternatively and without prejudice to above, the action for not allowing telescoping of addition on account of u/s. 69A, u/s. 69C commission expenses against addition on account of bogus purchases of group concerns is challenged on facts and law as both additions cannot be made simultaneously. 11. For any consequential relief and/or legal claim arising ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for safe custody, whenever he used to go out of station for either business purpose or some personal purpose. So, ₹ 10,00,000/- were given to Mamaji. Similarly an amount of ₹ 1,00,000/- (i.e., 2 entries of ₹ 50,000/- each were kept with Mamaji and Mataji) and the other entry relate to an amount of ₹ 1,00,000/- received back by the assessee from Mataji. Therefore, the amount of ₹ 1,00,000/- which assessee has given to them was received back. Alternatively, it was argued that if any addition on this account is to be made then assessee is entitled to telescoping against addition made on account of Bogus purchases which is treated as undisclosed income of assessee. It was further submitted that if telescoping of income is not allowed, it will amount to double addition. 8.2. However, the A.O. was not satisfied with the arguments advanced by the assessee and made addition of ₹ 12 lakhs to the total income of the assessee. 8.3. In appeal, the Ld. CIT(A) deleted the addition of ₹ 2 lakhs and sustained the addition of ₹ 10 lakhs by observing as under : 4.6. As far as amount of ₹ 2,00,000/- given to Mamaji on 07.08.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- is confirmed, subject to the above mentioned remarks. 8.4. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 8.5. The Learned Counsel for the Assessee reiterated the same arguments as made before the AO and Ld. CIT(A). He submitted that Mamaji and Mataji were living with the assessee and assessee used to handover business cash to them for safe custody, whenever he used to go out of station for either business purpose or some personal purpose. Referring to Page-267 of the PB, Learned Counsel for the Assessee drew the attention of the Bench to the details of cash in hand as on 07.07.2010 in various proprietorship firms and companies which are as under : Sr. No. Particulars Amount PB Pg 1. Blossom Landeal Pvt. Ltd., 8,001.00 268 2. LV Rustore Applications Pvt. Ltd., FBD 4,51,455.07 269 3. LV Rustore Applications Pvt. Ltd., - DL 17,392.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the I.T. Act, 1961 on the basis of entries dated 07.07.2010 and 07.08.2010 found as per Page-14 of Annexure-A1. We find the Ld. CIT(A) deleted the addition of ₹ 2 lakhs and sustained the addition of ₹ 10 lakhs the reasoning of which has already been reproduced in the preceding paragraph. It is the submission of the Learned Counsel for the Assessee that since the cash available with the assessee in various proprietorship concerns and companies in which he is a Director is ₹ 12,80,198/- which is more than the figure of ₹ 12 lakhs, therefore, no addition should be made. Alternatively, it is the contention of the Learned Counsel for the Assessee that addition on account of bogus purchases, if any, made in the hands of the assessee and other related concerns should be set-off against this amount. 10.1. We find some force in the arguments of the assessee. We find the assessee before the AO had categorically stated that Mamaji Mataji were staying with the assessee and he used to handover business cash to them for safe custody whenever he used to go out of station for either business purposes or personal work. The assessee has also given the availability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by Vishnu i.e. the assessee. He therefore was of the opinion that the assessee is the owner of such amount of ₹ 11,00,000/-. Since, the assessee could not explain the source of amount of ₹ 11,00,000/- to his satisfaction nor could he show that these entries are recorded in his books of account, the A.O. made addition of ₹ 11,00,000/- to the total income of the assessee u/s 69A of the I.T. Act, 1961. 12.3. In appeal, the Ld. CIT(A) upheld the action of the A.O. on the ground that there is a clear entry in the seized material to the effect that Shri Vishnu Kumar Garg paid ₹ 11 lakhs. He, however, accepted the arguments of the Learned Counsel for the Assessee regarding the benefit of telescoping. The relevant observation of the Ld. CIT(A) at para 4.7 of his order reads as under:- 4.7. The third addition is ₹ 11,00,000/-. This addition has been made because there were following entries on page no.14 of Annexure-A1 seized from premise no.128, Sec. 16, Faridabad :- - 16,30,000 cash - 75,000 Registree - 6,05,000 bhaiyaa ne -11,00,000/- Vishnu 4.8 Before the AO, the appellant stated that the entries are ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .-Tribu.], 2. ACIT vs., Satyapal Wassan [2007] 295 ITR (AT) 352 (Jab.-Tribu.]. 3. S.P. Goyals DCIT [2002] 82 ITD 85 (TM) (Mum.Tribu). 4. CIT vs Shri Praveen Juneja 99 CCH 0115 (Del. ITAT) 12.6. He submitted that a perusal of the above decisions would show that even when entries in the books of account were held to be authentic and correct, then, independent evidence was required to prove that entries were in fact correct. He submitted that in the assessee s case the impugned note were merely rough notings in some loose sheets and absolutely incomplete. Therefore, in the absence of any documentary evidence found during the course of search that assessee has in fact purchased the property, no addition should be made. 13. The Ld. D.R. on the other hand heavily relied on the order of the Ld. CIT(A) and submitted that Ld. CIT(A) has given justifiable reasons while sustaining the addition. Therefore, the same should be upheld. 14. We have considered the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty as reflected in the annexures to the Panchnamas. If the assessee had so much of undisclosed income, such income should have been reflected in some investment in one form or the other. But, no such investment or asset was found during the course of search and therefore the action of the AO in making the addition of the loose sheets without any matching assets found on search cannot be held to be justified. The action of the CIT(A) in deleting the addition was wholly justified. 14.4. The Jabalpur Bench of the Tribunal in the case of ACIT vs Satyapal Wasaan (2007) 295 ITR (AT) (Jab Trib.) has held that a document found during the course of a search must be a speaking one and without any second interpretation, must reflect all the details about the transaction of the assessee in the relevant assessment year. Any gap in various components as mentioned in section 4 of the I.T. Act must be filled up by the AO through investigation and correlation with other material found either during the course of the search or on investigation. Unless the document is clear and unambiguous, it is only a dumb document and no charge can be levied on the basis of a dumb document. We find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dependent evidence was either found during the course of search or collected subsequent to the search, therefore, in the light of the above decisions, the assessee in our opinion cannot be fastened with the liability. We, therefore, set-aside the order of the ld. CIT(A) on this issue and direct the AO to delete the addition. Ground of appeal No.4 is accordingly allowed. 15. Ground of appeal number.5 relates to the order of the Ld. CIT(A) in confirming the addition of ₹ 14 lakhs made by the A.O. under section 69A of the I.T. Act, 1961. 15.1. Facts of the case, in brief, are that during the course of assessment proceedings, the A.O. asked the assessee to explain the entries dated 26.04.2010 mentioned in Page-14 of Annexure-A1 seized from the premises of the assessee which are as under : - 14,00,000 - 6,55,000 - 8,45,000 Balance - 5,00,000 cash recd 14/9/10 - 26/4/10 7,00,000/- mukut bhaiya (lan) - 3,45,000 balance. 15.2. The assessee explained that the entry relating to dated 26.04.2010 pertains to property relating to Mukut Bhaiya who is the elder brother of the assessee. However, the A.O. was not satisfied with the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the A.O. in the instant case made addition of ₹ 14 lakhs on the basis of entries found in the seized documents at page-14 of Annexure-A1 wherein an amount of ₹ 14 lakhs was mentioned. We find the Ld. CIT(A) sustained the addition on the ground that assessee could not explain the source of ₹ 14 lakhs nor proved that the entries are recorded in the books of account. It is the submission of the Learned Counsel for the Assessee that these are rough calculations and estimations for purchase of property which did not materialize and, therefore, no addition should be made in the absence of any corroborative evidence. It is his alternative contention that telescoping benefit should be granted to the assessee. 18.1. We do not find any merit in the arguments of the Learned Counsel for the Assessee that no property has been purchased and the entries are mere calculations and estimations. A perusal of the entries in the seized document, which has been reproduced at Para 15.1 of this order clearly mentions ₹ 5,00,000/- cash r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing loan. The page 125 126 of the seized Annexure A-5 (Pg. 1-2) contain details of Loan. When Abhay Salwan did not make any payment of interest to assessee for period w.e.f 01.01.2009 to 11.10.2010, then assessee demanded from Abhay Salwan to recover the principal amount interest amount. After that Abhay Salwan made repayment of ₹ 25 Lakh on 11.10.2010 which has been adjusted against principal of ₹ 75 Lakh. The same is mentioned on page 126 of the seized Annexure A-5. However, the interest for the above said period balance ₹ 50 Lakh (Principal) was still recoverable from Abhay Salwan, the same is mentioned on page 125 of the seized Annexure A-5. Similarly, Interest amounting ₹ 6 Lakh on principal loan ₹ 25 Lakh was still recoverable as mentioned on page 125 of the seized Annexure A-5. 20.2. However, the A.O. was not satisfied with the explanation given by the assessee and held that the documents at Page Nos.125 and 126 of Annexure-A10 clearly mentions that assessee had received interest @ 1.5% during the year under consideration. The Assessee failed to prove that it had not received any interest during the year on the loan given in January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case the Department is settling the whole case on presumption on presumption and that too on circumstances which are a very weak recourse of one of the form of secondary evidence. 21.1. The Learned Counsel for the Assessee further submitted that the presumption of A.O. regarding interest received on loan amounting ₹ 11,25,000/- is wrong because he overlooked the written pleadings of assessee dt. 30.11.2018 (PB Pages 68-78) and dt. 19.12.2018 (PB Pages 84-94) that assessee had given loan ₹ 50 Lakh in cash in Jan 2009 and ₹ 25 Lakh in June 2009 @ 1.5% p.m. to Abhay Salwan and group. When the money was given, it was desired by Abhay Salwan as an interest bearing loan. When Abhay Salwan did not make any payment of interest to assessee for period w.e.f 01.01.2009 to 11.10.2010, then the assessee demanded the money from Abhay Salwan to recover the principal amount interest amount. After that Abhay Salwan made repayment of ₹ 25 Lakh on dt. 11.10.2010 which has been adjusted against principal of ₹ 75 Lakh. The same is mentioned on pg.126 of the seized Annexure A-5 (supra). However, the interest for the above said period and balance ₹ 50 Lakh (Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognized until collection is made. The recognition of revenue on accrual basis presupposes the satisfaction of two conditions i.e., (i) The revenue is measurable and (ii) The revenue is collectable with certainty. In support of the above proposition, the Learned Counsel for the Assessee relied upon the following decisions: 1. Order of ITAT, Delhi Bench in the case of Red Fort Shahjahan Properties Pvt. Ltd., vide ITA.No.742/Del./2020 dated 20.08.2020 for the A.Y. 2016-17. 2. CIT vs., Goyal M.G. Gases (P) Ltd., 303 ITR 159 (Del.HC). 3. CIT vs., Godhra Electricity Co. 225 ITR 746 (SC). 4. Andhra Bank vs., CIT 225 ITR 447 (SC). 5. CIT vs., Excel Industries Ltd., Others. 358 ITR 295 (SC). 21.6. The Learned Counsel for the Assessee further submitted that Shri Abhay Salwan to whom loan was given on interest is a proclaimed offender and absconding and the matter is subjudice before Hon'ble Allahabad High Court in pursuant to order dt.20.07.2015 [ PB Page-117 Civil Misc. Writ Petition filed before Hon'ble Allahabad High Court is at PB Pages 198-238 ] . Resultantly, the ambit of re-convertibility of statutory levies are like a general lien of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hay Salwan is not traceable and is a proclaimed person [PB Pages 318-409 and at Page-327] wherein it is held as under :- Intimation to this regard be sent to SHO concerned PO Staff. File after doing the needful be consigned to the record room with a red ink note on the index of the file that the accused Brij Bhushan Tyagi Abhay Salzoan have been declared proclaimed persons in this case and proceeding against above named accused will be initiated as and when accused will be arrested and appeared before the court and till then file be not destroyed. 21.9. He accordingly submitted that Shri Abhay Salwan is not traceable, is absconding, is a proclaimed person and has not repaid any of his debts/liabilities. The said fact is verifiable from Police stations, Banks and Various Courts of Faridabad that the said person is defaulter of many persons not traceable since year 2014. He accordingly submitted that when Shri Abhay Salwan is a defaulter and not traceable to even Police, how it can be said that assessee has received interest from such person. So, it is only AO's presumption that assessee has recovered such huge interest amount from Shri Abhay Salwan even thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest. According to the A.O. as per the provisions of Section 132 (4A) of the I.T. act, 1961 it is presumed that any content or document found during the course of search operation are true. It is also the observation of the A.O. that documents at Page Nos.125 and 126 of Annexure-A10 clearly mention that assessee had received interest @ 1.5% during the year under consideration and the assessee failed to prove that he had not received any interest during the year. It is the submission of the Learned Counsel for the Assessee that A.O. overlooked the seized documents at Page number.125 which contains signature of 04 persons namely the assessee, Abhay Salwan, Rattan Prakash Mishra and Dinesh Gupta, where Mr. Dinesh Gupta and Mr. Rattan Prakash Mishra have signed as witnesses, the assessee has signed as Payer and Abhay Salwan has signed as Payee. It is also his contention that a perusal of the seized documents at page no.125 of Annexure-A5 clearly shows that interest for the above said period and balance of ₹ 50 lakhs was still recoverable from Abhay Salwan. Therefore, once the assessee has proved that he has not received any interest from Abhay Salwan during the year, no additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of CIT vs Goyal M G Gases P Ltd. 303 ITR 159 has held that when the realization of even the principal amount of loan was in jeopardy, there could not be any accrual of income by way of interest, even as per the mercantile system of accounting. 23.5. We find the Hon ble Supreme Court in the case of CIT vs. Godhra Electricity Co. (1997) 225 ITR 746 (SC) has held that if income does not result at all, there cannot be any tax and that if an income has not materialized, then merely an entry made about a hypothetical income by following book keeping methods, the liability to tax cannot be attracted. 23.6. We find the Hon ble Supreme Court in the case of Andhra Bank vs., CIT (1997) 225 ITR 447 (SC) has held that there cannot be a tax if no income resulted, despite the entry in the book keeping. The case deals with s. 148. Assessee changed method of accounting from A.Y. 1960 onwards. But during A.Y. 1963-64, the A.O. objected the change and reopened assessments for A.Y. 1960 onwards. The Hon ble Apex court held that this amounts to change of opinion and re-assessment is not valid. 23.7. We find the Hon ble Supreme Court in the case of CIT vs. Excel Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is further stated that he has neither any interest in Om Shanti Education Society nor do have any shareholding or investment in the said society. 25.2. However, the A.O. was not satisfied with the arguments advanced by the assessee and made addition of ₹ 40 lakhs on the ground that assessee did not furnish any evidence in respect of its claim that this money was actually further given to Omshanti Educational Society. According to him, merely submitting that the amount was received on behalf of the Society without furnishing any evidence of giving it further to the Society cannot be accepted. He accordingly made addition of ₹ 40 lakhs to the total income of the assessee under section 69A of the I.T. Act, 1961. 25.3. In appeal, the Ld. CIT(A) upheld the action of the A.O. by observing as under : 5.4. It is not in dispute that the cash was received by the appellant. It is onus of the appellant to prove that the cash was received as an agent of someone else (M/s. Omshanti Educational Society). The appellant failed to discharge this onus before the A.O. as well as before the undersigned. I find no infirmity in action of the A.O. in making this additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention submitted that if any addition on this account is to be made, then assessee is entitled to telescoping against addition made on account of bogus purchases in the hands of assessee, L V Rustore Applications Pvt. Ltd. R R Carwell Pvt. Ltd. as undisclosed income of assessee. He submitted that if telescoping of income is not given, then there will be double addition in as much as both the undisclosed income and the investment made out of such income are both brought to tax which is contrary to the basic principles of assessment. Therefore, undisclosed income and the undisclosed investment are to be set-off against each other, thus, giving benefit of telescoping to the assessee. In support of this contention, the Learned Counsel for the Assessee relied upon the following decisions : (1) CIT vs Sonal Construction (2013) 359 ITR 0532 (Del) (supra). (2) AnantharanVeerasinghaiah Co. Vs CIT (1980) 123 ITR 0457 (SC) (supra). 27. The Ld. D.R. on the other hand heavily relied on the order of the A.O. She submitted that assessee could not substantiate with evidence that it had received money on behalf of Omshanti Educational Society from R.A. Financial Services and han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash Mishra, President of Omshanti Educational Society through Shri Vishnu Garg. We find from PDF Page- 81 (PB Pages 172 and 173) that R.A. Financial Services vide letter dated 17.08.2011 addressed to Shri Rattan Prakash Mishra, President Omshanti Educational Society has written as under : R.A. FINANCIAL SERVICES SOLUTION TO FINANCIAL MATTERS F-13, 2nd Floor, Sector-10, Faridabad Ph.9971797798 Email : abhaysalwan@gmail.com 17th August, 2011 To Mr. Rattan Prakash Mishra, President, Om Shanti Educational Society, H.No.1365, Sector-17, Faridabad. Sub: Re-Reply to your Letter Dated 09.08.2011 in context with my Letter Dated 5.08.2011. Dear Mr. Mishra, 1. This has reference to the letter dated 9th August 2011 regarding the re reminders and reminder letters for the MOU agreement dated 6th Sep 2010 between RPS Education Foundation, Om Shanti Educational Society and R.A. Financial Services. At the outset, it is stated that each and every allegation of breach and or non performance of-any of the terms and conditions of MOU dated 06.09.2010 are wrong, false and have been totally concocted. 2. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he account of Shyam College of Education run by Omshanti Educational Society in Syndicate Bank, Chawla Colony, Ballabgarh. 5. It is therefore preposterously wrong to allege that any amount is outstanding towards the undersigned or R.A. Financial Services. You have no right to allege or say that the MOU dated 06.09.2010 has in any way been violated by the undersigned thereby giving you any scope to treat the MOU as cancelled or rescinded. In these premises each and every allegation and statement of facts contained in the letter under reply is totally false and the symbol of falsity stated therein is to your knowledge. 6. It is highly incongruent on your part to suppress the factum of receipt of the amount of ₹ 40,00,000 (Rs. Forty Lacs only) which has, been paid by the undersigned on behalf of R.A. Financial Services to your authorised arid nominated person. 7. Under the circumstances you are hereby inform to withdraw your letter dated and refrain from shuttle cocking such type of obnoxious communications in future. Needless to add that you have no right to either resile from the terms and conditions of the MOU dated 06.09.2010 or treat it as cancelled on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in possession of R.A. Educational Trust which is in in lawful possession under a valid arrangement. Any attempt, to dislodge the working of R.A. Educational Tryst would on the other hand be an act of trespass and or interference in the legal and peaceful possession of the said R.A. Educational Trust. Rest of the contentions in your reply are nothing but old rhymes enchanted earlier in your communication under reply which have since been appropriately dealt with and replied. It is needless to emphasize that R.A. Educational Trust is running Savitri Polytechnic For Women in the premises which is too well known to you and such activity is going on since January 2011, Coincidently the said institution was inaugurated by your goodself and the members of your family. It is therefore too late in the day for you to resile from the factual matrix. For R.A. Financial Services Sd/- Authorised Signatory cc. Mr. Vishnu Garg, H.No.128, Sector-16, Faridabd. Mr. Dinesh Gupta, H.No.326, Sector-10, Faridabad. 28.3. Since these letters were found and seized during the course of search and the letters clearly and categorically mention that an amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout prejudice to above, the prayer is to allow the claim/relief in accordance with the provision of section 58(2) r.w.s. 70, 71 of Income Tax Act, 1961. 6. For any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee. 31.1. The assessee has also raised the following additional ground : ii) Because the action is being challenged on facts law for making additions in assessment proceedings u/s 153A wherein the seized documents Pg. 125 126 of Annexure A-5 relating to assessee were found from the premises of third parties i.e., LV Rustore Appliations Pvt. Ltd., R.R Carwell Pvt. Ltd., Blossom Landeal Pvt Ltd., Elvi Bardahl India Pvt. Ltd., 17/6, Hanspal Industrial Complex, Mathura Road, Faridabad, therefore the additions on the basis of the said documents can only be made u/s 153C of the Act not u/s 153A of the Act. 31.2. However, the Learned Counsel for the Assessee did not press the additional ground, for which, the Ld. D.R. has no objection. Accordingly, the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.11.2012 to 31.03.2013) as income from other sources which is disputed since hypothetical income cannot be put to charge and alternatively without prejudice, the prayer is to allow the claim/relief in accordance with the provision of section 58(2) r.w.s. 70,71 of Income Tax Act 1961. 6. Because the action is being challenged on facts and law for making the addition of ₹ 13,50,000/- on the invoking of provision u/s 132(4A) (presumption) which is being disputed since treated as income from other sources since hypothetical income cannot be put to charge and alternatively without prejudice, the prayer is to allow the claim/relief in accordance with the provision of section 58(2) r.w.s. 70,71 of Income Tax Act 1961. 7. Because the action is being challenged on facts and law for making disallowance of interest for ₹ 3,04,832/- which is a deduction allowable while computing chargeable income u/s 22 to 24. 8. For any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said MOU declined to sign the said MOU and however the document was kept as a matter of abundant caution to determine the acceptance of acknowledged debt by Mr Abhay Salwan. Moreover, the same is not having any seal of Gyaneshwar Education Trust nor the document is notarized hence the same is not enforceable in accordance with the procedure of law... 44. However, the A.O. was not satisfied with the explanation given by the assessee on the reasoning that during assessment proceedings in case of the assessee for AY 2012-13, it was concluded that the basic premise of the assessee that ₹ 75,00,000/- was given to Shri Abhay Salwan in Year 2009 was false because such amount of ₹ 75,00,000/- was found to have been given to Shri Rattan Prakash Mishra in Year 2009. The AO also reasoned that the version of the assessee that the assessee, in order to protect the principal amount of ₹ 50,00,000/- (out of ₹ 75,00,000/-, ₹ 25,00,000/- was returned to the assessee in September 2011) and interest thereon, decided to create the MOU with Shri Abhay Salwan for ₹ 3.5 Cr on 12.11.2012, did not appeal to human logic on several accounts. The AO reasoned that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,00,000/- as a loan in cash for a period of one year i.e. from 12th November, 2012 to 11th November, 2013. It is an evidence. Of course, it is a rebuttable evidence. However, the appellant produced no evidence to rebut the same. Therefore, this plea is rejected. The AO has rejected the theory of earlier loan of ₹ 75,00,000/- ( ₹ 50,00,000/- in Jan, 2009 and ₹ 25,00,000/- in June, 2009 and re-payment of ₹ 25,00,000/- on 11.10.2010) to Shri Abhay Salwan because the seized papers clearly showed that it was given to Shri Rattan Prakash Mishra. During the present appellate proceedings, the AR could not show that any material was submitted before the AO to rebut this finding. Therefore, this theory is also rejected. 22.8. As far as benefit of ₹ 1,00,00,000/- which was extended by way of four receipts of ₹ 25,00,000/- each is concerned, the two receipts out of captioned four receipts have stated that the amounts mentioned therein were advanced on 15.12.2011 for a period of one year. Rest of the two receipts stated that the amount mentioned therein were advanced on 01.01.2012 for a period of one year. Although, the AR claimed that it was the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr Abhay Salwan. He submitted that the MOU is not having any seal of Gyaneshwar Education Trust nor the document is notarized hence the same is not enforceable in accordance with the procedure of law. 47.2. He submitted that the two MOUs dated 12.11.2012 and 28.09.2013 are not supported by any book entries which could reveal that actual cash has been paid. He submitted that the above MOUs are only made up documents to protect the assessee s interest on account of assuring the amount to be received from Mr. Abhay Salwan. The ld. Counsel for the assessee submitted that the assessee does not have any source to pay such huge amount of ₹ 5 Crores to Mr. Abhay Salwan as per the second MOU. Referring to various pages of the paper book, he submitted that in fact the principal loan given to Mr. Abhay Salwan in 2009-10, the interest on it and interest on interest all together comes to ₹ 5 Crores which can be verified from the details given before the AO and the AO has not found the same to be incorrect or untrue. Referring to various decisions, he submitted that when assessee is denying the making of any payment, then the burden is on the Revenue to bring cogent evidence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to be mortgaged by Mr. Abhay Salwan as mentioned in the MOU was already mortgaged to the bank and property documents were never handed over to the assessee, then it is against human probability that the assessee would have given such huge money especially when he is denying the same from the beginning. 47.8. Alternatively without prejudice to the above, he submitted that the AO has not given the benefit in calculation of peak cash credit relating to loan given by L V Rustore Applications P Ltd. to Abhay Salwan amounting ₹ 50 Lakh in AY 2012-13 received back from him during the year and interest on loan given to Abhay Salwan for which separate addition of ₹ 5,25,000/- in AY 2012-13 ₹ 11,25,000/- in AY 2013-14 has been made. The peak cash credit after giving benefit of amount of L V Rustore Applications Pvt. Ltd. interest amount be reduced by ₹ 66,50,000/-. 47.9. He accordingly submitted that the addition sustained by the ld. CIT(A) should be deleted. 48. The Ld. DR on the other hand, heavily relied on the orders of the AO and the Ld. CIT(A). She submitted that the addition was made by the AO on the basis of seized documents page no.36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is only one initial of Mr. Abhay Salwan, which is not stamped or notarized. Further, it does not contain the signature of the assessee or any witness. It is his submission that Mr. Abhay Salwan is fraud and was only buying time to pay the principle as well as interest. It is the submission of the ld. Counsel for the assessee that there is no corroborative evidence regarding the amount of ₹ 3.5 Crores given by the assessee to Mr. Abhay Salwan and that the AO has not examined the available persons to the MOU such as the witness Mr. Sanjay Gupta or the notary since the other persons in the MOU are declared as proclaimed persons. It is also his submission that although the AO summoned and recorded statement of Mr. O.P. Gulati, he has not asked any question to Mr. Gulati on the issue of the MOU although receipts in the name of Mr. Gulati were found and related to the same MOU. 49.1. We find some force in the argument the ld. counsel for the assessee that proper justice has not been done while making such huge addition without examining the various persons to the MOU to find out the truth. We find a somewhat identical issue had come up before the Hon ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, it was of the view that under the provisions of Section 132(4A) of the Act, there was a presumption about the correctness of the contents of the MOUs but relying upon the decision of the Karnataka High Court in Commissioner of Income Tax vs. P.R. Metrani (HUF), [2001] 251 ITR 244, it was held that the presumption was rebuttable. It was further held that the Assessee had been able to successfully rebut the presumption. 7. Learned counsel for the Revenue reiterated the view expressed by the Assessing Officer. Unfortunately, we are not in agreement with that view. 8. The facts of the case make it very clear that there were two MOUs entered into by the Assessee with Ravi Talwar and Madhu Talwar in respect of the purchase of agricultural land. The two MOUs did record that the purchase consideration shall be ₹ 123.30 lacs. The purchaser having paid to the vendor the sum of ₹ 25,00,000 part of the said purchase consideration as a deposit and shall pay the residual of said purchase consideration to the vendor on or before 30th April, 1999 when the purchase will be completed. 9. Notwithstanding this, the Assessee as well as Ravi Talwar and Madhu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the transfer of money, but the Tribunal rightly held that those were independent transactions and had nothing to do with the MOUs, which were the subject matter of discussion. Even if there was something wrong with some other transactions entered into, that would not give rise to an adverse inference in so far as the subject MOUs are concerned. 14. In our opinion, no substantial question of law arises. 15. Dismissed. 49.2. We find the SLP filed by the Revenue was dismissed by Hon ble Supreme Court vide order dated 09.01.2009 as reported in (2010) 3 taxmann.com 785 (SC) 50. In the instant case, we find it is peculiar case where the assessee is denying to have made any payment as per the MOU and the second party in the MOU is absconding and is a proclaimed person. However, it is also a fact that the MOUs were found from the premises of the assessee and therefore the onus is on the assessee to prove that the assessee has not paid the amount as mentioned in the first and second MOU and that these MOUs are only for securing the payments made earlier with interest and interest on interest. 50.1. In our opinion, the matter requires a revisit to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stical purposes. 52. Ground no.5 relates to the addition of ₹ 41,86,000/- made by the Assessing Officer and sustained by the Ld. CIT(A). 53. After hearing both the sides, we find the Assessing Officer made the addition of ₹ 41,86,000/- being interest @ 2.6% of cash loan of ₹ 3.5 Crores given by Gyaneshwar Education Trust for the period 12.11.2012 to 11.11.2013 on the basis of MOU seized at the time of search. We find the Ld. CIT(A) sustained the addition by observing as under:- 22.9 Vide ground No. 4, the appellant has contested the addition of ₹ 41,86,000/-. This addition has been made because the AO has calculated the interest on the above stated cash loan of ₹ 3,50,00,000/- to M/s. Gyaneshwar Educational Trust. 22.10 Before the AO, as well as during the present appellate proceedings, the appellant contested that no interest was ever received. Other contentions extended are same as raised in support of ground No. 3, adjudicated above. 22.11 The provisions u/s 132(4A)/292C are very clear. The presumption is that content of any seized material are to be taken as true. The MOU clearly stated that the appellant had given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not find any infirmity in the order of the Ld. CIT(A) on this issue in absence of any satisfactory explanation even before us. Accordingly, the order of the ld. CIT(A) on this issue is upheld and the ground raised by the assessee is dismissed. 58. Ground No.8 being general in nature is dismissed. ITA No.9448/Del/2019 (Revenue s Appeal) for AY 2013-14. 59. The Revenue has raised the following grounds of appeal : 1. The order of Ld. CIT (A) is not correct in law and facts. 2. Whether the facts and circumstances of the case, the Ld. CIT (A) has erred in allowing telescoping effect of ₹ 2,39,25,000/- on account of bogus purchases made in the hand of other entity of Group to the assessee's case. 3. Whether the facts and circumstances of the case, the Ld. CIT (A) has erred in allowing the benefit of cash generated due to the additions of bogus purchases in the hands of other entity of Group to the assessee s case. 4. Whether the facts and circumstances of the case, the Ld. CIT (A) has erred in allowing the cash generated due to out of books transactions of bogus purchases is to be treated at par with other out of books cash generati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the Act for the impugned year. 3. Because the action is being challenge on facts and law for invoking the jurisdiction u/s 69A r.w.s. 115BBE as unexplained money for ₹ 3,59,64,000/- while assuming the presumption for addition bereft of material facts containing material particulars in the case proceedings. 4. Alternatively without prejudice to above, the action for not giving benefit of ₹ 3,50,00,000/- (as per MOU dt. 12.11.2012 seized during search) received back from Gyaneshwar trust in peak cash balance. 5. Because the action is being challenged on facts law for charging interest of ₹ 91,50,000/- (Period 28.09.2013 to 31.03.2014) as income from other sources which is disputed since hypothetical income cannot be put to charge and alternatively without prejudice, the prayer is to allow the claim/relief in accordance with the provision of section 58(2) r.w.s. 70,71 of Income Tax Act 1961. 6. Because the action is being challenged on facts and law for making the addition of ₹ 67,03,666/- on the invoking of provision u/s 132(4A) (presumption) which is being disputed since treated as income from other sources since hypothetica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bhay Salwan on behalf of Gyaneshwar Educational Trust and was found in the custody of the assessee. During assessment proceedings, the assessee was asked to explain the source of ₹ 5 Cr and to show cause as to why the amount ₹ 5 Cr not to be treated as unaccounted money and be added back to total income of the assessee during the year under consideration. 69. The assessee in his reply dated 30.11.2018 submitted that Pg. No. 13 14 of the Annexure A-10 were seized from premises 17/6, Hanspal Industrial Complex, Mathura Road. Faridabad. It is an MOU dt. 28.09.2013 executed between Gyaneshwar Educational Trust assessee. It was submitted that during the year Abhay Salwan has not made any payment of whatsoever kind relatable to principal, interest interest on interest. However it is most relevant to state that Abhay Salwan again offered to furnish an undertaking in the form of another MOU with Gayneshwar Education Trust for ₹ 5 Crs acknowledged outstanding debt upto 15.09.2013 towards earlier given loan and interest amount interest on interest for the period w.e.f 15.12.2011/01.01.2012 to 15.09.2013. However, Abhay Salwan was unable to either repay the prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount Received Amount Paid Narration 30.09.2010 2,25,000 Interest received on unsecured cash loan of ₹ 25 lakh given to Mishraji in Year 2009 for period from 01.04.2010 to 30.09.2010 30.09.2010 3,75,000 interest income for prior period on loan of ₹ 25 lakh given to Mishraji in Year 2009 for period from 01.04.2010 to 30.09.2010 19.10.2010 18,00,000 Received on behalf of Om Shanti education society from RA financial services 30.10.2010 22,00,000 Received on behalf of Om Shanti education society from RA financial services 11.11.2010 25,00,000 Received back principle amount of ₹ 25,00,000 given to Mishra in 2009 31.03.2011 9,00,000 Interest income on cash loan of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Abhay Salwan cash loan of ₹ 25,00,000/- given to RA Financial Services for period from 1.1 1.2012 to 31.12.2012 01.01.2013 50,00,000 Received back principle amount of ₹ 25,00,000/- given to Abhay Salwan and ₹ 25,00,000/- given to RA Financial Services 31.3.2013 41,86,000 Interest income from cash loan of 3.5 Cr given to Gyaneshwar Trust on 12.11.2012 for period from 12.11.2012 to 31.03.2013 94,86,000 Cash in hand as on 31.03.2014 AY 2014-15 31.8.2013 45,50,000 Interest income from cash loan of 3.5 Cr given to Gyaneshwar Trust on 12.11.2012 for period from 01.04.2013 to 31.08.2013 1,40,36,000 Total cash in hand as on 28.09.2013 73. He observed that on 28.09.2013, the assessee had a pea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan of ₹ 3.5 Cr. 29.9 Although, the AR claimed that the amount of ₹ 3.5 Cr became the amount of ₹ 5 Cr by including the due interest (because the interest was never paid). However, the appellant used rate of interest @ 3% per month and used compounding every month. However, the rate of interest as per seized MOU dated 12.11.20121 was only 2.6 % per month and the agreement was supposed to be in force upto 11.11.2013. The appellant produced no material evidence in support of this claim that the (earlier) MOU dated 12.11.2012 was rescinded. Therefore, in absence of any evidence showing contrary, it will be presumed that the loan of ₹ 3.5 Cr would be returned' on 11.11.2013. Therefore, it is difficult to accept this plea. As far as the other plea (generation of cash out of bogus purchases) is concerned, it has been dealt with in para 4.6(supra). The observations/remarks made therein are applicable to this addition, mutus mutandi. 75. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 76. After hearing both sides, we find this ground is identical to ground of appeal no.3 in ITA No.9149/Del/2019 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82. In ground No.6, the assessee has challenged the order of the ld. CIT(A) in sustaining the addition of ₹ 67,03,666/- again on interest income. 83. After hearing both the sides, we find the AO on the basis of MOU entered into by the assessee with M/s Gyaneshwar Educational Trust on 12.11.2012, according to which the assessee had given a sum of ₹ 3.5 Crores to Gyaneshwar Education Trust on 12.11.2012 as loan on interest @ 2.6% per month for one year made addition of ₹ 6,70,3666/- on account of interest received, which has been upheld by the Ld. CIT(A). 84. We find the above issue is identical to the ground of appeal No.5 decided in the preceding paragraph. Following the similar reasoning, we restore this issue to the file of the AO for fresh adjudication in the light of our directions given therein. The ground raised by the assessee is accordingly allowed for statistical purposes. 85. In grounds of appeal no.7, the assessee has challenged the order of the Ld. CIT(A) in sustaining the addition of ₹ 5,47,261/- on account of disallowance of housing loan interest. 86. After hearing both the sides, we find this ground is identical to ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no incriminating material/document found during the course of search u/s 132 of the Act for the impugned year. 3. Because the action is being challenged on facts law for charging interest of ₹ 90,00,000/- (Period 01.04.2014 to 30.09.2014) as income from other sources which is disputed since hypothetical income cannot be put to charge and against the principle of law (Godhara Electricity Co. Ltd v CIT (1997) 225 ITR 746(SC)). 4. Because the action is being challenged on facts and law for making an addition of ₹ 90,00,000/-, wherein the evidence and the fact is that the payee Abhay Salwan being a proclaimed offender and absconding is matter of Judicial Review before the Hon'ble Allahabad High Court, yet wrongly invoking the jurisdiction of presumption u/s 132(4A) and alternatively without prejudice, the prayer is to allow the claim/relief in accordance with the provision of section 58(2) r.w.s. 70, 71 of Income Tax Act 1961. 5. Because the action is being challenged on facts and law for making disallowance of interest for ₹ 5,06,563/- which is a deduction allowable while computing chargeable income u/s 22 to 24. 6. Because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve ground is identical to ground of appeal no. 7 in ITA No.9149/Del/2019. We have already decided this issue and the ground raised by the assessee has been dismissed. Following similar reasoning, this ground by the assessee is dismissed. 97. In ground no.6, the assessee has challenged the order of Ld. CIT(A) in confirming the addition of ₹ 30,00,00/- made by the AO being unsecured loan from M/s Giantmaker Developers Pvt. Ltd. and M/s NBS Engineers India Pvt. Ltd. 98. The facts of the case, in brief, are that the AO during the course of assessment proceedings observed from the details of unsecured loan that the assessee has shown unsecured loan of ₹ 10,00,000/- received on 09.04.2014 and Rs.l5,00,000/- on 11.04.2014 from M/s Giantmaker Developers P Ltd and ₹ 5,00,000/- received on 05.05.2014 from NBS Engineers India P Ltd during the year under consideration. The assessee was asked to provide ITR, Bank statement of the party and Confirmation of the party who provided unsecured loan during the year in order to prove identity, credit worthiness and genuineness of the transaction. But the assessee failed to provide any of the above mentioned documents. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re repayments of the loan taken by Shri Abhay Salwan. The appellant that these are companies of Shri Abhay Salwan and the addition has already been made in the hands of appellant when this amount was extended as a loan, in cash. In other words, It was claim of the appellant that the cash of ₹ 50,00,000/- { ₹ 25,00,000/- each paid to Shri Abhay Salwan/ M/s. R A Financial } has already been taxed(added) and the same money has come back. The AO did not accept this plea and added the amount. 39.4. Before undersigned, the AR argued that the fact of this money being received from Shri Abhay Salwan was evident from the entries reflecting re-payments under consideration which are written in juxtaposition of an entry reflecting receipt of ₹ 10 Lakhs on 07.05.2014 from Shri Abhay Salwan. The AR informed that this re-payment of Rs. TO Lakhs received from Shri Abhay Salwan was received in group company M/s. Blossom Landeal Pvt. Ltd. and has been taxed in AY 2015-16. 39.5 It is noted that these additions have been made u/s 68. It is not the case of appellant that he was able to discharge initial onus of proving identity and creditworthiness of the lender and genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RTGS SBN Construction Blossom Landeal Pvt Ltd. Blossom has given cheque dt. 06.05.2014 to Vishnu Kumar Garg 5. 05.05.2014 10,00,000 RTGS NBS Engineers India P Ltd. L V Rustore Applications Pvt Ltd. 6. 14.09.2012 10,00,000 Cheque Giantmaker Developers Pvt Ltd. L V Rustore Applications Pvt Ltd. 7. 23.11.2012 15,00,000 Cheque Giantmaker Developers Pvt Ltd. L V Rustore Applications Pvt Ltd. Total 75,00,000 102. He submitted that the assessee has received back ₹ 75 Lakh from Abhay Salwan, ₹ 25 Lakh in A.Y. 2013- 14 ₹ 50 Lakh in A.Y. 2015-16. When assessee received back the principal amount ₹ 50 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettled position of law that for allowing any cash credit as genuine, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the identity and creditworthiness of the loan creditor and genuineness of the transactions. However, the assessee in the instant case has not discharged the onus. The submission of the ld. counsel for the assessee that these are in fact recovery of principal amount also needs to be established by the assessee. Considering the totality of facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case and decide the issue as per fact and law. We hold and direct accordingly. The ground raised by the assessee is accordingly allowed for statistical purposes. 106. Ground No.7 being general in nature is dismissed. ITA.No.9152/Del./2019 A.Y. 2016-17 : 107. The grounds raised by the assessee are as under : 1. Because the action is being challenged on facts and law for making disallowance of interest for ₹ 2,39,785/- which is a deduction allowable while c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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