TMI Blog2022 (3) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... nd during the course of the survey. We also find from the various statements furnished by the assessee that out of the total cash deposits made by the assessee in his bank accounts during the relevant previous year, cash deposits have been made out of receipts from customers towards sales/ booking advances and the remaining cash deposits have been made out of the cash withdrawals from bank accounts themselves. Find no infirmity in the finding given by the ld. CIT(A) for deleting the addition made by the AO on account of unexplained cash deposits u/s 68. Additional surrendered income not shown by the assessee in ITR - HELD THAT:- We find that in the instant cases, the ld. AO based upon the material gathered during the course of the survey, has made separate additions and therefore, merely on the basis of the admission of the assessee, without having any other corroborative material on record, no addition could have been made. Accordingly, we find no infirmity in the findings of the CIT(A) in deleting the additions on this count for all the three assessment years. Reopening of assessment u/s 147 - As argued AO was not having/recorded any reason to believe that any inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made addition only because the sum of receipts made in such diaries was lesser than the sum of the payments so noted. We find that on the basis of the financial statements for the year under consideration, as furnished by the appellant, there is no case of excess or unexplained payment over the explained sources of receipts - In our opinion, the addition so made by the AO has no substance and the same has rightly been deleted unexplained payment over the explained sources of receipts. In such view of matter, in our opinion, the addition so made by the AO has no substance and the same has rightly been by the ld. CIT(A). Enhancement of income made by the CIT(A) - HELD THAT:- We find that the assessee is in the business of real estate development and in such business, without finding any instance of receipt of any on-money, suppression of sales cannot be estimated. We note that neither the ld. AO nor the ld. CIT(A) could bring on record any specific instance in which the sales were not found recorded or fully recorded in the books of account of the assessee. We find that in the instant case, the assessee himself while furnishing his returns of income, has declared additional inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the form of cash and as also, closing balances of creditors before the AO. Such details were also furnished before us during the course of the appellate proceedings. We also find merit in the contention of the appellant that since for the earlier years, he had opted for presumptive taxation under section 44D of the Act and therefore, he was not statutorily required to maintain any books of account but, mere non-maintenance of books of account for earlier years cannot, ipso facto, result into non-acceptance of claim of the appellant as regard to existence of the opening balance of creditors. The provisions of section 68, although not invoked properly by the AO without examining any books of account, also require the AO to examine each and every credit entry independently and any ad-hoc lump-sum addition, by taking a certain percentage of the total creditors, is neither warranted nor permissible Assessment order passed u/s 144 of the Act passed by the AO without serving any valid notice under s.143(2) - HELD THAT:- We find ourselves in agreement with the findings of the ld. CIT(A) that during the course of the assessment proceedings as well as the first appellate proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Assessing officer on account of surrendered income which was not shown by the assessee in ITR. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of ₹ 20,18,30,178/- made by the Assessing officer on account of excess expenditure over income. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of ₹ 1,25,79,722/- made by the Assessing officer on account of disallowance out of various expenses claimed by the assessee. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of ₹ 9,10,11,278/- made by the Assessing officer on account of bogus sundry creditors and advances against properties. 2.3 Grounds of appeal raised by the Revenue for AY 2013-14 in IT(SS)A No.66/Ind/2021: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of ₹ 1,40,04,961/- made by the Assessing officer on account of surrendered income which was not shown by the assessee in ITR. 2. On the facts and in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the turnover at ₹ 6,00,00,000/- merely on guess work, surmises and conjectures, without giving any specific finding as regard to any defect or discrepancy in the regular books of account maintained by the appellant and without considering the material fact that neither during the course of the survey under s.133A nor during the course of assessment proceedings, any evidence as regard to suppression of any sales effected by the appellant was found. 1d). That, without prejudice to the above, the estimation of net profit at the flat rate of 15% by the learned CIT(A) is quite excessive and arbitrary considering the nature of trade and net profit already shown and accepted by the Revenue in the appellant s own case for earlier assessment years. 2. That, the appellant further craves leave to add, alter or amend the foregoing ground of appeal as and when considered necessary. 2.6 Grounds of appeal raised by the Assessee for AY 2013-14 in IT(SS)A No.330/Ind/2020: 1. That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred in upholding the impugned Assessment Order passed by the AO under s. 144 of the Act without servici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The assessee furnished his returns of income u/s. 139(1)/139(4) of the Act for the assessment years under consideration. The assessee also claimed to have furnished copies of his audited financial statements along with the returns of income filed for A.Ys. 2012-13 2013-14. Subsequently, for the A.Y. 2011-12, notice u/s. 148 of the Act on 15-12-2014 and for the A.Ys. 2012-13 2013-14, notices u/s. 143(2) of the Act on 05-09-2014 were issued and served upon the assessee. In response to the notice u/s. 148 for A.Y. 2011-12, the assessee instead of filing the fresh return, filed a letter before the AO requesting to consider the original return as the return furnished in compliance to the notice issued u/s.148 of the Act. According to the Learned Assessing Officer (in short Ld.AO) notices under s.142(1) were issued to the assessee for the assessment years under consideration and in response to such notices, the assessee failed to make any compliance. Finally, the Assessing Officer framed the assessments for the relevant assessment years u/s. 144 of the Act by passing three separate Orders dated 18.03.2016, 18.03.2015 18.03.2016 respectively for A.Ys. 2011-12, 2012-13 and 2013-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit amount of ₹ 2,85,38,400/- was added to the total income of the assessee u/s. 68 of the Act. 7.3 Aggrieved assessee preferred an appeal for the assessment year under consideration before the ld. CIT(A) making detailed submissions along with the documentary evidences. The ld. CIT(A) after considering the Ld.AO s remand reports submitted by the AO as well as the rejoinders of the assessee thereon, documentary evidences and other materials placed on record, arrived at a conclusion that the assessee had duly explained source of each and every cash deposit made by him in his bank accounts through various statements and documentary evidences and during the remand proceedings, the AO could not find any specific defect or discrepancy in the explanation of the assessee or any of the documentary evidences so furnished by him. Accordingly, the ld. CIT(A) deleted the entire addition of ₹ 2,85,38,400/- made by the AO on account of unexplained cash deposits. The ld. CIT(A) has given his findings on the issue from para (7.3) at page no. 56 to para (7.15) at page no. 64 of his Order. 7.4 Aggrieved with the Order of the ld. CIT(A), the revenue is in appeal before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he effect that any sum is credited in the books of account is sine-qua-non for triggering the provisions of s.68 of the Act. 2.04 In the instant case, it is an established fact that the learned AO has not perused the books of account of the assessee. In such eventuality, any addition made by the learned AO by invoking the provisions of s.68 of the Act in the assessee s income cannot be sustained on this legal count alone. For such proposition, reliance is placed on the following judicial pronouncements: i) Ms. Mayawati vs. DCIT (2008) 113 TTJ (Del.) 178 ii) Anand Ram Ratiani vs. CIT [1997] 223 ITR 544 (Gau.) iii) CIT vs. Bhaichand N. Gandhi [1982] 11 Taxman 59 (Bom.) 3.01 That, during the relevant previous year, the assessee was engaged in the business of real estate developers under the proprietorship concern named and styled as M/s. Royal Colonizers, Builders Developers . 3.02 That, the impugned addition of ₹ 2,85,38,400/- so made by the learned AO in the assessee s income on account of unexplained cash credit is not maintainable for the reason that the said addition is made by the learned AO merely on the basis of the ITS genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Bank of India, Mhow Saving 881610110002276 4 Axis Bank, Gawli Palasia Branch, Mhow Saving 650010100003124 5 Bank of Baroda, Mhow Saving 9180100001270 6 ICICI Bank, Mhow Saving 103601500227 7 Axis Bank, Gawli Palasia Branch, Mhow Current 650010200000329 8 HDFC Bank, Pithampur Saving 12911530004964 9 ICICI Bank, Mhow Current 103605000085 10 State Bank of India, Town Hall Branch, Mhow Saving 53016697919 11 State Bank of India, Plawdon Road Mhow Savi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 Your Honours, on a perusal of the aforesaid statements and copies of registered sale deeds, it shall be observed that the sources of cash deposits aggregating to ₹ 2,72,14,700/- so made by the assessee in the subject bank accounts are fully explained and the same deserve to be accepted at the end of Your Honours. 6.01 Your Honours, to summarize, the various documentary evidences, as referred to herein above, were duly furnished before the ld. CIT(A) and which are also placed in the Paper Book, as per details given as under: i) Statements showing details of cash deposits aggregating to ₹ 2,72,14,700/- made by the assessee on various dates during the relevant previous year in the aforesaid bank accounts maintained by the assessee and the corresponding cash inflows immediately before the making of cash deposits, as Annexure A- 4.01 to A-4.11 [PB Page No. 36 to 48]; ii) Copies of the relevant bank statements for the relevant previous year, as Annexure A-4.12 to A-4.23 [PB Page No. 49 to 120]; iii) Statement showing the details of the buyers from whom such advances were received by him during the relevant previous year and their corresponding de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 30,41,000/- which works out to be 12.89% of the turnover. The ld. CIT(A) observed that in respect of any assessee carrying out business, the entire deposits made in his bank accounts cannot be regarded as the income of the assessee. The ld. CIT(A) also noted that the AO making the remand report could not dispute the genuineness of the documents furnished by the assessee. 8.02 The ld. CIT(A) after considering the remand report submitted by the AO as well as the rejoinder of the assessee thereon, arrived at a conclusion that the assessee had duly explained each and every cash deposit made by him in his bank accounts through various statements and documentary evidences and the AO could neither find any defect or discrepancy in the explanation of the assessee or any of the documentary evidences so furnished by him. Accordingly, the ld. CIT(A) deleted the entire addition of ₹ 2,85,38,400/- made by the AO on account of unexplained cash deposits. The action of the ld. CIT(A) in deleting of the impugned addition has been challenged by the Revenue before this Hon ble Bench. 9.00 Your Honours, considering the entire facts and circumstances of the case, it would be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 109 to 112 of Remand Report PB 8 2ND Rejoinder of the assessee dated 20-08-2020 for the A.Y. 2011-12 127 to 133 of Remand Report PB 8.1 We have heard rival contentions and perused the records placed before us. We notice that in the instant case, the AO has made the addition of ₹ 2,85,38,400/- on the basis of Individual Transaction Statement (ITS) generated from the system of the Department revealing that during the relevant year, the appellant had made total deposits of ₹ 2,85,38,400/- in cash in his various bank accounts, whereas no sales or advances received were shown in the return. Finally, the AO held that the appellant was deliberately avoiding to furnish details and therefore, the entire amount of cash deposited in banks at ₹ 2,85,38,400/- was held to be undisclosed income of the appellant u/s. 68 of the Act. 8.2 We find that except having the information through ITS as regard to the deposit Ld.AO was not having any adverse material or information on his record. It is an undisputed fact that the appellant is carrying out the business of real estate. The AO hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank accounts during the relevant previous year. From page no. 49 to 120, the assessee has furnished the copies of his bank statements. From page no. 121 to 124, the assessee has furnished the details of the registered sale deeds executed by him whereas the copies of the registered sale deeds have been filed by him from page no. 547 to 566 of his Paper Book for the assessment year under consideration. Further, we find that the assessee has filed the copy of statement showing details of sales made in the common Paper Book at page no. 85 to 86. 8.5 We note that find that the documents furnished before us by the assessee in the Paper Book were also filed by him before the ld. CIT(A) and ld. CIT(A) had called remand report from the concerning AO under Rule 46A of the Income-Tax Rules 1962 and Ld. AO making the remand report could not dispute the genuineness of the documents furnished by the appellant but has only questioned the date of receipts from customers for the reason that such dates were not found mentioned in the sale deeds subsequently executed by the assessee in favour of the concerning customers. The AO has also objected the contention of the appellant on the pretext th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Net-Profit shown by the appellant in his return of income, merely on the basis of making of deposits in bank accounts, no addition can be sustained specially in a circumstance when the appellant has fully explained the sources of each and every deposits made in his bank accounts and has also substantiated such sources with the documentary evidences. 8.8 Thus, we find that by furnishing the various documentary evidences, the appellant has satisfactorily explained each and every cash deposit made by him in his bank accounts, Ld.AO could neither find any specific defect or discrepancy in the explanation of the appellant or any of the documentary evidences so furnished by him and also during the course of the survey proceaedings carried out in the assessee s premises, no incriminating material for the year under consideration was found and even the learned AO has not made reference of any of the materials found during the course of the survey. 8.9 We also find from the various statements furnished by the assessee that out of the total cash deposits of ₹ 2,72,14,700/- made by the assessee in his bank accounts during the relevant previous year, cash deposits aggregating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- and ₹ 2,25,00,000/- respectively for A.Y. 2011-12, A.Y. 2012-13 and A.Y. 2013-14. After survey, the assessee furnished his returns of income for the aforesaid three assessment years by showing taxable income of ₹ 30,41,000/-, ₹ 64,37,450/- and ₹ 2,27,12,840/- respectively for the A.Y. 2011-12, A.Y. 2012-13 and A.Y. 2013-14. According to the AO, the aforesaid admitted income of ₹ 30,00,000/-, ₹ 60,00,000/- and ₹ 2,25,00,000/- respectively for A.Y. 2011-12, A.Y. 2012-13 and A.Y. 2013-14 were taxable separately over and above that already shown by the assessee in his returns of income. Accordingly, Ld.AO made separate additions of ₹ 30,00,000/-, ₹ 50,00,000/- and ₹ 1,40,04,961/- in the hands of the assessee on account of surrendered income not shown in ITR respectively for A.Y. 2011-12, A.Y. 2012-13 and A.Y. 2013-14. 9.3 Aggrieved with the Orders of Assessment, the assessee preferred separate appeals for the assessment years under consideration before the ld. CIT(A). The ld. CIT(A) observed that the assessee had already shown net profit at the reasonable rate of 12.89% of his turnover for A.Y. 2011-12. Further, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee, while giving his statement, in reply to Question No. 40, admitted an aggregate taxable income of ₹ 3,20,00,000/- for the various assessment years commencing from A.Y. 2010-11 to A.Y. 2013-14. A copy of the Statement of the assessee recorded during the course of the Survey is placed at PB Page No. 547 to 566. The assessee, through his subsequent letter dated 11-01-2013, submitted before the ld. DDIT (Inv.)-II, Indore, furnished a tentative year-wise break-up of the aforesaid income of ₹ 3,20,00,000/-. A copy of such letter along with a copy of statement containing break-up of the income of ₹ 3,20,00,000/- is placed at PB Page No. 567 to 569. On a perusal of such statement, it would be observed that out of the total admitted income of ₹ 3,20,00,000/-, the assessee has admitted an income of ₹ 30,00,000/- for the assessment year under consideration. It shall not be out of place to mention here that since for the assessment year under consideration, no incriminating material or document was found or impounded by the Survey Party, the aforesaid additional income of ₹ 30,00,000/- was admitted by the assessee as his regular business income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he document Page No. 1 Copy of Statement of the assessee recorded during the course of the Survey u/s. 133A of the Act on 21-09-2012 547 to 566 2 A copy of letter dated 11-01-2013 along with a copy of statement containing break-up of the income of ₹ 3,20,00,000/- submitted by the assessee before the ld. DDIT (Inv.)-II, Indore 567 to 569 3 Xerox copy of Acknowledgment evidencing furnishing of Return of Income u/s. 139 for A.Y. 2011-12 along with Computation of Total Income 21 to 23 10. We have heard rival contentions and perused the records placed before us. We observe that in the letter of break-up of additional income submitted by the assessee before the DDIT (Inv.)-II, Indore, as placed at page no. 567 to 569 of the Paper Book for A.Y. 2011-12, the assessee had admitted additional income aggregating to sum of ₹ 3,20,00,000/- for four assessment years viz. from A.Y. 2010-11 to A.Y. 2013-14, out of which income amounting to ₹ 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having/recorded any reason to believe that any income chargeable to tax had escaped assessment. The assessee has also challenged the Notice u/s. 148 on the ground that he was not made aware of the purpose of the Notice whether it was for assessment or reassessment or re-computation of the income/loss/depreciation. The assessee further agitated that the assessment order framed by the AO is invalid inasmuch before passing of the assessment order, no notice u/s. 143(2) was served upon him. Since both these grounds are interconnected, the same are being dealt with here simultaneously. 11.2 Briefly stated facts of the issue, as culled out from the records, are that in the case of the assessee, a survey u/s. 133A of the Act was conducted on 21.09.2012. According to the AO, during the course of the survey, incriminating documents were found and impounded showing that the assessee had suppressed his income. The AO noted that the assessee had voluntarily surrendered an income of ₹ 3.20 Crores as his undisclosed income vide letter dated 11.01.2013 for various assessment years which includes an income of ₹ 30,00,000/- for the assessment year under consideration. The AO had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case, the assessee had not furnished any valid return u/s. 148 and therefore, there was absolutely no necessity for the AO to issue any notice u/s. 143(2) of the Act. Accordingly, the ld. CIT(A) dismissed both the legal grounds of the assessee. The ld. CIT(A) has given his findings at para (4.2) to para (4.2.3) at page no. 53 54 of his Order. 11.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 11.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 11.6 Per Contra, Learned Counsel for the assessee has filed written synopsis placed on record.Key Papers filed in the Paper Book on which the assessee wish to place reliance: S. No. Description of the document Page No. Remarks 1 Xerox copy of Acknowledgment evidencing furnishing of Return of Income u/s. 139 for A.Y. 2011-12 21 - 2 Xerox copy of letter dated 29-02-2016 filed by the assessee before the AO for treating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed in the notice under s.148, there was absolutely no necessity for the ld. AO to issue any notice under s.143(2) of the Act to the assessee. Accordingly, we uphold the findings of the ld. CIT(A) on these grounds and consequently, legal ground nos. 1 and 2 of the assessee for the A.Y. 2011-12 are hereby dismissed. 13. Ground No. 2 of the Revenue for A.Y. 2012-13; Ground Nos. 1(a) to 1(d) of the Assessee for A.Y. 2012-13; and Ground Nos. 2(a) to 2(d) of the Assessee for A.Y. 2013-14 13.1 Through the ground No. 2 for A.Y. 2012-13, the revenue has challenged the action of the ld. CIT(A) in deleting the addition of ₹ 20,18,30,178/- on account of excess expenditure over income. Further, through Ground Nos. 1(a) to 1(d) for A.Y. 2012-13 and Ground Nos. 2(a) to 2(d), the assessee has challenged the action of the ld. CIT(A) in rejecting the books of account and estimating the turnover and net profit of the assessee thereby making enhancement, u/s.251, in the income of the assessee by a sum of ₹ 25,88,306/- and ₹ 11,96,353/- respectively for A.Y. 2012-13 and A.Y. 2013-14. Since all these grounds are emanating from the same issue, the same are being dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at ₹ 16,00,00,000/- as against the same shown by the assessee at ₹ 10,16,39,194/- and estimating a net profit @15% thereon. The ld. CIT(A) has dealt with the issue of enhancement at para (9) of his Order for A.Y. 2012- 13 and at para (10) of his Order for A.Y. 2013-14. 13.5 Aggrieved with the Order of the ld. CIT(A) deleting the addition of ₹ 20,18,30,178/-, the revenue is in appeal before us whereas for making the enhancement by estimating the turnover and net profit, the assessee has raised above grounds before us. 13.7 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 13.8 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: REGARDING EXCESS EXPENDITURE OVER INCOME AS PER SEIZED DIARIES BI-13 BI-16 AT ₹ 20,18,30,178/- D. Key Points of Assessee s Submission and Relevant Pages of the Paper Book: In this context, it is submitted as under : 1.00 That, a Survey under the provisions of section 133A of the Income- Tax Act, 1961, was carried out in the residential premises of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts. The fact remained that these two diaries were only a part of many voluminous records maintained by the assessee during the course of carrying out his regular business of development of plots and buildings. It is submitted that, these diaries were used to be maintained by only one of the many clerical staff members of the assessee and the notings in these diaries were restricted to only those transactions which were in the knowledge of that clerk. It is submitted that, in these diaries, many of the transactions relating to the receipts as well as payments of funds through cheques/cash were not noted as these transactions were carried out by some other clerk and were not in the specific knowledge of the clerk who maintained these diaries. 3.03 Your Honours, the learned AO, at Para (8) of his Order, has given an affirmative finding that from two red colour diaries, in the form of manual ledgers, income and expenditure on day to day basis were found and on the basis of the transactions noted in these diaries, a summary was prepared which shows year wise total receipts and payments made by the assessee during the course of his business. The learned AO, further in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made in the impounded diaries, in an excel sheet. A copy of the excel sheets, containing the details of the day to day working of impounded diaries, is placed at PB Page No. 80 to 97. 4.00 Your Honours, before proceeding further to explain the sources of expenditure of ₹ 51,25,35,428/-, as against the total receipts of ₹ 31,39,30,725/-, it would be apt to note that all the transactions which have been jotted down in the said diaries BI-13 BI-16 are duly recorded in the books of account which have been completed by the assessee after the date of survey. Thus, in other words, none of the transactions noted in the said diaries represent any undisclosed income of the assessee but, these represents, although, partially the regular business transactions carried out by the assessee. It is submitted that, after the date of survey, the assessee had completed his books of accounts and had also drawn financial statements. These financial statements were duly furnished by the assessee, electronically, along with the return of income for the relevant assessment year. A copy of such financial statements are placed at page no. 22 to 43 of our paper book. 5.00 Your Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made by the learned AO. 5.02 Your Honours, the sources of aggregate cash payments, made by the assessee, as per the subject two diaries are explained in a summarized form as under: A.Y. Cash Payments towards purchase of Lands/to contractors / for other development expenses Cash deposited in Bank Accounts Payment towards imprest account Total Cash Payments Cash receipts from various Customers, either as Sales/Advance receipts against sale of properties Withdrawals from Banks Receipts from Imprest Account Total Cash Receipts Cash Surplus/(Deficiency) [1] [2] [3] [4] [5] =[2+3+4] [6] [7] [8] [9] =[6+7+8] [10] = [9]-[5] 2012-13 10,90,76,738 37,50,000 1,70,49,250 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial year 2011-12 [refer PB Page No.39]. Further, the veracity of the claim of the assessee, as regard to receipt of cash from various customers against sale of properties were duly verified by the ld. CIT(A), from the relevant abstracts of the copies of the Registered Sale Deeds, executed subsequently, by the assessee, which were submitted before the ld. CIT(A) in a separate Volume - 4, marked as Registered Sale Deeds . It is further submitted that the authenticity of the claim of the assessee, as regard to receipt of advances from various customers, can very well be verified by Your Honours from the copy of the Audited Financial Statements of the assessee for the financial year 2011-12 [refer PB Page No.40], in Schedule-7 of Advance Against Sale of Properties at ₹ 30,19,88,287/- has been reflected. It shall be appreciated that even the ld. AO, in the body of impugned assessment order at Para (10) has given a finding that the assessee had shown sundry creditors and advances against properties, to the extent of ₹ 30,33,70,927/-, which inter alia includes the above stated amount of advances received from customers at ₹ 30,19,88,287/-. 6.00 Your H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remand report. In the instant case, the AO also carried out remand proceedings and in pursuance thereof, the assessee furnished his replies from time to time along with necessary documentary evidences. The reply letters so filed by the assessee before the AO are placed at page no. 52 to 56 of our Paper Book prepared separately in respect of Remand Proceedings. Further, the AO has submitted his remand reports before the ld. CIT(A) on two occasions. The Remand Reports dated 21-06-2019 and 28-07-2020 have been respectively placed at page no. 11 to 20 and 113 to 121 of our separate Paper Book for Remand Proceedings. In response to the aforesaid Remand Reports, the assessee had also filed his rejoinders vide his two letters dated 12-07-2019 and 20-08-2020 which are also placed at page no. 42 to 45 and 134 to 146 respectively in our separate Paper Book for Remand Proceedings. 8.01 The ld. CIT(A) has dealt with the subject issue at Para (7.1) at page no. 64 to Para (7.3.4) at page no. 72 of his Order. The ld. CIT(A) noted that the sole ground taken by the AO for making the addition is that on the basis of summaries prepared from the notings made in the two diaries inventorized as B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Further, as regard to the contention of the assessee that he had received advances from various customers which were utilized for making the payments, the AO has merely stated that the notices u/s. 133(6) were issued to the purchaser of the plots, but, in most of the cases, the replies were not received. As per the ld. CIT(A), the AO also commented that in some cases, original letters had got unserved and in some cases, where the replies have been received the dates of payments were not mentioned and the AO further commented that the assessee had shown turnover of ₹ 4,66,88,800/- only in his financial statements whereas the various receipts found noted in the said diaries were to the extent of ₹ 11,44,90,355/- and therefore, the same cannot be said to be fully reconciled, especially in a circumstance when the assessee himself is claiming that the diaries so found were not his complete records. 8.04 The ld. CIT(A), after considering all the facts and circumstances of the case, was of the view that the assessee could said to be able to establish that the said diaries, impounded and inventorized as BI-13 and BI-16, during the course of the survey proceedings carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nking channels, there is bound to arise a distorted result by placing reliance on the partial records. The ld. CIT(A) noted that the AO has not controverted that the bank accounts through which the payments were made were not disclosed by the assessee in his financial statements. As regard the remaining cash payments of ₹ 12,98,75,988/- made by the assessee during the relevant previous year, as per the jottings made in the said diaries, the ld. CIT(A) observed that the assessee has claimed to have received a sum of ₹ 8,08,16,355/- from his various customers against sale of properties either as advance or full payment. The ld. CIT(A) further noted that in support of such assertion, the assessee has furnished various documentary evidences giving the names and addresses of the customers from whom the sum was received. The assessee has also furnished the status of such advances and as per the ld. CIT(A), in most of the cases, the sale deeds against the advances received have already been executed by the assessee in favour of the concerning customers. The ld. CIT(A) also found that it is not the case of the AO that any of the customers to whom a letter u/s. 133(6) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd as also, genuineness of the transaction. As per the ld. CIT(A), in the cases of credits relating to sales proceeds, the onus of an assessee is relatively lighter to establish the creditworthiness of the transactions as all such transactions takes place on quid-pro-quo basis only. Thus, As per the ld. CIT(A), the assessee could be able to establish that the sum of ₹ 8,08,16,355/- was received by him out of realization from customers. Further, the ld. CIT(A) noted that by way of furnishing the date wise details of cash withdrawals made by the assessee from his various bank accounts along with the copies of the bank statements, the assessee could said to able to substantiate his claim of meeting the sources of payments noted down in the diaries out of the cash so withdrawn. Upon going through the impounded diaries, the ld. CIT(A) found that the claim of the assessee to the effect that in such diaries, on payment sides, some jottings were made which were not pertaining to payments made to any outsiders, but were only pertaining to the transactions taken in-house i.e. between the clerk/cashier recording the transactions and the assessee or his wife. Thus, as per the ld. CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of ₹ 20,18,30,178/- was rightly deleted by the ld. CIT(A) and therefore, the action of the ld. CIT(A) deserves to be upheld by this Hon ble Bench and the Revenue s Ground on this issue deserves to be dismissed. E. Key Papers filed in the Paper Book on which the assessee wish to place reliance: S. No. Description of the document Page No. 1 A copy of the day-to-day summary of excel sheets, containing the details of the day to day working of impounded diaries viz BI-13 BI-16 80-97 2 A consolidated statement of transactions noted in BI-13 BI-16, which in its turn, is based upon the day to day working of the diary in the excel sheets 98-100 3 Statement showing day wise details of cash deposits made in various bank accounts 101-104 4 Statement showing day wise details of cash withdrawals from various bank accounts 105-110 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n estimation of turnover at an arbitrary figure of ₹ 6,00,00,000/- as against the same shown by the assessee at ₹ 4,66,88,800/- in his audited financial statements for the relevant assessment year. 3.00 Your Honours, it is submitted that the assessee had not been found to have suppressed his revenue and further, all the trading transactions were fully and truly recorded in his regular books of account and therefore, no estimation of either income or turnover is warranted. It is submitted that during the relevant previous year, the assessee has shown sales turnover of ₹ 4,66,88,800/- and on such turnover of ₹ 4,66,88,800/-, he had already declared total business income of ₹ 64,11,694/- which works out to be at 13.79% and therefore, no further enhancement in the rate of net profit was warranted. 4.00 Without prejudice to the above, the estimation of net profit at the flat rate of 15% by the ld. CIT(A) is quite excessive and arbitrary considering the nature of trade and net profit already shown and accepted by the Revenue in the assessee s own case for earlier assessment years. It is submitted that the assessee had shown a net profit of 9.33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h exercise, he found that as against the total receipts of ₹ 31,45,77,945/- as determined by the AO, the actual receipts as per these diaries, in two assessment years, were to the extent of ₹ 31,39,30,725/- only. Likewise, according to the appellant, the total amount of the payments as per these two diaries, in two assessment years, worked out to be at ₹ 51,25,35,428/- only as against the same worked out by the AO at ₹ 51,64,08,123/-. In support of such assertion, before us, the appellant has furnished a detailed paper book containing 228 pages. We find that in such Paper Book, the assesse has filed various details and statements such as the statements showing the date wise and diary wise working of transactions jotted down in the diaries, in two assessment years (placed at paper book page no. 80 to 100), a consolidated as well as year wise statements showing summary of transactions noted in both the diaries, statement of day wise details of cash deposits made in various bank accounts (placed at paper book page no. 101 to 104) as well as cash withdrawals made from various bank accounts (placed at paper book page no.105 to 110). The assesse has also furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e received a sum of ₹ 8,08,16,355/- from various customers against sale of properties, either as advance or upon execution of final sales. In support of such assertion statements of advances received shown in the said two diaries are placed at page no. 111 to 116 of the paper book. In such statements, various details such as the name of the customer, the name of the project, the amount of receipt through the mode of cash, the amount of receipt through the mode of cheque are furnished. The details as regard to the execution of the registered sale deeds against the advances so received are also furnished. Ld.AR further submitted that during the relevant year, a sum of ₹ 1,47,55,000/- was withdrawn by him from his various bank accounts as per the date wise details furnished in the paper book at page no. 105 to 110. In support, the appellant also furnished copy of the relevant bank statements. Thus, according to Ld.AR, although the said diaries were not containing the complete records of all the financial transactions carried out by him during the relevant previous year, but, even if such diaries are considered to be complete records then also there would result a deficienc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3 We observe that the same contention along with the documentary evidences were also furnished by the assessee before the ld. CIT(A) and in turn, the ld. CIT(A) forwarded the same to the AO for verification and her counter comments. In the first remand report dated 21.06.2019, the Ld.AO did not make any specific comment on the written submissions and various documentary evidences furnished by the appellant before the ld. CIT(A). However, upon the specific insistence by the ld. CIT(A), the AO vide her second remand report dated 28.07.2020 submitted her comments admitting that various documentary evidences by the appellant such as date wise details of jottings made in the diaries, date wise details of cash deposits and cash withdrawals, details of amounts received against sale/booking of properties, copies of registered sale deeds, bank statements etc. were filed. We also find that the Ld.AO did not controvert the assertion made by the appellant that the said diaries do not entirely pertain to the assessment year under consideration but pertain to two assessment years viz. A.Y. 2012-13 (under appeal) and A.Y. 2013-14. We further find that the AO also did not rebut the assertion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the diaries. In our view, if only one side of a transaction i.e. making of the payment through banking channels, is recorded without recording the making of deposits in bank through banking channels, there is bound to arise a distorted result by placing reliance on the partial records. The AO has not controverted that the bank accounts through which the payments were made were not disclosed by the appellant in his financial statements. Now, as regard the remaining cash payments of ₹ 12,98,75,988/- made by the appellant, during the relevant previous year, as per the jottings made in the said diaries, the appellant has claimed to have received a sum of ₹ 8,08,16,355/- from his various customers against sale of properties either as advance or full payment. We find that in support of such assertion, the appellant has furnished various documentary evidences giving the names and addresses of the customers from whom the sum was received. The appellant has also furnished the status of such advances and we find that in most of the cases, the sale deeds against the advances received have already been executed by the appellant in favour of the concerning customers. We also find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the customer and as also, genuineness of the transaction. In my considered view, in the cases of credits relating to sales proceeds, the onus of an assessee is relatively lighter to establish the creditworthiness of the transactions as all such transactions takes place on quid-pro-quo basis only. Thus, in our considered opinion, the appellant could be able to establish that the sum of ₹ 8,08,16,355/- was received by him out of realization from customers. Further, we also find that by way of furnishing the date wise details of cash withdrawals made by the appellant from his various bank accounts along with the copies of the bank statements, the appellant could said to able to substantiate his claim of meeting the sources of payments noted down in the diaries out of the cash so withdrawn. Upon going through the impounded diaries, the claim of the appellant to the effect that in such diaries, on payment sides, some jottings were made which were not pertaining to payments made to any outsiders, but were only pertaining to the transactions taken in-house i.e. between the clerk/cashier recording the transactions and the appellant or his wife. Thus, in our considered view, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g notices of enhancement, enhanced the income of the assessee for A.Y. 2012-13 by ₹ 25,88,306/- and for A.Y. 2013-14, by ₹ 11,96,353/-. We find that for A.Y. 2012-13, the assessee has shown his turnover at ₹ 4,66,88,800/- in his books of account and on such turnover, the assessee has shown taxable business income of ₹ 64,11,694/-. As against the same, for A.Y. 2012-13, the ld. CIT(A) has estimated the turnover at ₹ 6,00,00,000/- and estimated the taxable net profit at the rate of 15% i.e. at ₹ 90,00,000/- which has resulted into an enhancement of income of the assessee for A.Y. 2012-13 by ₹ 25,88,306/-. Likewise, for A.Y. 2013-14, the assessee has shown his turnover at ₹ 10,16,39,194/- in his books of account and on such turnover, the assessee has shown taxable business income of ₹ 2,28,03,647/-. As against the same, for A.Y. 2013-14, the ld. CIT(A) has estimated the turnover at ₹ 16,00,00,000/- and estimated the taxable net profit at the rate of 15% i.e. at ₹ 2,40,00,000/- which has resulted into an enhancement of income of the assessee for A.Y. 2013-14 by ₹ 11,96,353/-. 14.7 We have duly considered the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of 30% of the total expenditure of ₹ 4,19,32,408/- claimed by the appellant in his Profit Loss Account under the various heads for the A.Y. 2012-13. Likewise, the AO also made an addition of ₹ 1,08,26,047/- for A.Y. 2013-14 by making an ad-hoc disallowance of 20% of the various expenditure claimed by the assessee in his Profit Loss Account under the various heads and full disallowance in respect of expenses as claimed by the assessee in his Profit Loss Account under the heads of rent, advertisement, commission and donation. 15.2 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the assessment year under consideration before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences. The ld. CIT(A) after considering the remand reports submitted by the AO as well as the rejoinders of the assessee thereon, held that since he was inclined to reject the books of account of the assessee and also inclined to estimate the turnover as well as net profit of the assessee, no separate disallowance of expenses would be warranted in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to incur expenditure on procurement of material required for such development at ₹ 2,22,60,112/- and as also to incur expenditure to labour contractors for getting the labour work executed at ₹ 70,13,230/-. A copy of statement showing the date wise and description wise details of material expenditure amounting to ₹ 2,22,60,112/-, and as also, a copy of statement showing details of payments made to labour contractors at ₹ 70,13,230/- are placed at PB Page No. 117 to 124. (iii) The assessee was required to incur various establishment expenses, aggregating to a sum of ₹ 88,35,927/-, towards salary to staff, office rent, power, electricity, audit fees, insurance, stationery and printing, telephone expenses, vehicle running and maintenance, tour and travelling etc., as per details given in Scheduel 14 of the Audited Financial Statements. Copies of statements/ledger accounts showing details of such expenses are placed at PB Page No 125 to 154. (iv) Out of the aforesaid establishment expenses of ₹ 88,35,927/-, expenses amounting to ₹ 1,52,243/- and ₹ 2,37,950/- were claimed by the assessee on account of Service Tax and Valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.02 It is submitted that most of the payments have been made by the assessee through account payee cheques only. 3.03 The assessee has maintained complete details in respect of each and every expenditure incurred by him in respect of the subject expenses. It is further submitted that the assessee is also ready to produce the entire books of account along with the relevant bills, vouchers etc. in respect of the expenses so claimed, if so directed by Your Honor in this regard. 3.04 It is submitted that the entire expenses have been incurred by the assessee exclusively and necessarily for the purpose of its business only, and therefore, the same are wholely allowable under the provisions of section 37(1) of the Act. 4.00 Without prejudice to the above, it is submitted that the action of the ld. AO in making 30% ad-hoc disallowance of project development expenses, administrative expenses, financial expenses and selling distribution expense aggregating to a sum of ₹ 1,25,79,722/- is quite excessive and arbitrary. It is submitted that the assessee in his Profit Loss account has, suo motu, shown taxable net profit amounting to ₹ 64,11,694/- in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee before the AO are placed at page no. 52 to 56 of our Paper Book prepared separately in respect of Remand Proceedings. Further, the AO has submitted his remand reports before the ld. CIT(A) on two occasions. The Remand Reports dated 21-06-2019 and 28-07-2020 have been respectively placed at page no. 11 to 20 and 113 to 121 of our separate Paper Book for Remand Proceedings. In response to the aforesaid Remand Reports, the assessee had also filed his rejoinders vide his two letters dated 12-07-2019 and 20-08-2020 which are also placed at page no. 42 to 45 and 134 to 146 respectively in our separate Paper Book for Remand Proceedings. 7.01 The ld. CIT(A) noted that the AO had made a flat disallowance of 30% merely for the reason that during the course of the assessment proceedings without any cogent basis merely on the premises that the assessee could not produce the necessary documentary evidences before him in support of the claim of the expenses. However, as per the ld. CIT(A), in the instant case, the assessment was framed, ex-parte,under s.144 of the Act and according to the assessee, he was not given any sufficient opportunity of being heard. But, at the same time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 A copy of the ledger account of Bank Charges in the books of account of the assessee for the relevant previous year. 155-158 5 A copy of the statement showing details of payment of brokerage of ₹ 36,00,000/- on sale of plots 159 6 1ST Remand Report of the AO dated 21-06-2019 for the A.Y. 2012-13 11 to 20 of Remand Report PB 7 1ST Rejoinder of the assessee dated 12-07-2019 for the A.Y. 2012-13 42 to 45 of Remand Report PB 8 2ND Remand Report of the AO dated 28-07-2020 for the A.Y. 2012-13 113 to 121 of Remand Report PB 9 2ND Rejoinder of the assessee dated 20-08-2020 for the A.Y. 2012-13 134 to 146 of Remand Report PB 16.1 We have heard rival contentions and perused the records placed before us. We note that in the instant case, the ld. AO has made the disallowance merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respond and comply with the notices and did not file any details or furnished any documentary evidence to substantiate the claim of aforesaid creditors. Accordingly, the AO made an ad-hoc addition of ₹ 9,10,11,278/- @30% of the total creditors of ₹ 30,33,70,927/- for A.Y. 2012-13. Likewise, an ad-hoc addition of ₹ 4,96,06,927/- @10% of the total creditors of ₹ 49,60,69,273/- was also made by the AO for A.Y. 2013-14. 17.2 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the assessment year under consideration before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences. The ld. CIT(A) after considering the remand reports submitted by the AO as well as the rejoinders of the assessee thereon, noted that in the Statute, there is no provision which empowers an Assessing Officer to make an ad-hoc disallowance out of the creditors shown in the financial statements. Thus, the ld. CIT(A) found no substance in the ad-hoc additions of ₹ 9,10,11,278/- and ₹ 4,96,06,927/- made by the AO in the income of the assessee respectively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the customers were received by the assessee through banking channels only and details of each and every receipt of advance, have fully been maintained and recorded in the books of account of the assessee. 3.00 Your Honours, the factum of receipt of advances by the assessee from various customers was also noted by the survey party, who conducted survey under s. 133A of the Act in the assessee s case on 21- 09-2012. It is submitted that the survey party had duly found the copies of the application forms, duly filled up and signed by the various customers, who had given advances to the assessee against booking of plots in various colonies developed by the assessee. Copies of some of the application forms are placed at PB Page No.160 to 171. 3.01 Your Honours, the notings, as regard to the receipt of advances, by the assessee against sale of plots were also found made by the survey party, in the various records impounded during the course of the survey operations. It is submitted that in the impugned assessment order, the ld. AO, at Para (8), has made reference of two diaries impounded and inventorized during the course of the survey operations, as BI-13 BI-16. Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he various customers, who made booking in the assessee s various projects. Besides, in order to establish the identity of the customers and the genuineness of the transactions of booking advances, had also produced the copies of the various sales deeds, executed by the assessee, in subsequent years, in favour of various customers, from whom he had received booking advances. However, unfortunately, the ld. AO, for the reasosn best known to him, has not brought such fact on record. 6.01 Your Honours, now, in order to establish the genuineness and authenticity of the amount of advances aggregating to ₹ 30,33,70,927/- shown by the assessee in his audited books of account, we had furnished a statement showing the details of the booking advances so received, which is placed at PB Page no.172 to 226. In such statement, we have furnished all the necessary details such as the name of the customer, his address, the description of the property against which the advance was made, amount of advance and amount of consideration stipulated for sale of the property. 6.02 Your Honours, further, to support the above statement, showing the details of advances, we had also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any specific discrepancy or defect in the documents or details furnished by the assessee. The ld. CIT(A) further observed that the assessee had maintained regular books of account and the same were also audited u/s.44AB of the Act. As per the ld. CIT(A), the AO himself, while framing the assessment, has given a finding, at para (7) of the impugned Order, that the assessee was developing various colonies and was making bookings of plots. The ld. CIT(A) also found that during the course of the survey proceedings, the booking forms were found in the premises of the assessee. As per ld. CIT(A), in the line of the business of the assessee, it is an usual practice that the payments against sale of properties take place in installments and till the full and final payment is received, the possession is not handed over and sale deed is also not executed. Thus, as per ld. CIT(A), for an assessee, following the mercantile system of accounting, till the sale is recognized upon receipt of full payment and handing over of the possession, it continues to be shown in the books as advances only. 9.02 In view of the ld. CIT(A), the amount of advances would be taxable when they would partake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is a common practice in the real estate trade that a colonizer or builder enters into agreement with any customer for sale of properties, with the stipulation that the customer would make the payment of agreed sales consideration in installments. Further, only after receipt of the entire sales consideration, possession of the properties is handed over to the customer and sale deed is accordingly executed. In view of ld. CIT(A), the very fact of registration of sale deed, before a Government Authority, being Sub-Registrar of Property, establishes the identity of the transaction and as also, genuineness of the transaction. As per ld. CIT(A), in the cases of credits relating to sales proceeds, the onus of an assessee is relatively lighter to establish the creditworthiness of the transactions as all such transactions takes place on quid-pro-quo basis only. Thus, in considered opinion of ld. CIT(A), the assessee could be able to establish the receipt of advances from various customers during the year under consideration. The ld. CIT(A) noted that during the course of remand proceedings, the assessee had furnished the details of advances lying as opening balance, details of advances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page No. 1 Audited Balance Sheet of the assessee 40 2 Copies of specimen application forms, duly filled up and signed by the various customers, who had given advances to the assessee against booking of plots in various colonies developed by the assessee 160-171 3 A statement showing the details of the booking advances aggregating to ₹ 30,33,70,927/- received by the assessee 172 4 1ST Remand Report of the AO dated 21-06-2019 for the A.Y. 2012-13 11 to 20 of Remand Report PB 5 1ST Rejoinder of the assessee dated 12-07-2019 for the A.Y. 2012-13 42 to 45 of Remand Report PB 6 2ND Remand Report of the AO dated 28-07-2020 for the A.Y. 2012-13 113 to 121 of Remand Report PB 7 2ND Rejoinder of the assessee dated 20-08-2020 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant further contended that out of the total advances received during the previous year relevant to A.Y. 2012-13 and A.Y. 2013-14, a substantial sum was received through banking channels and only the balancing sum was received in cash. The appellant also agitated the making of the addition on the legal ground that since as per the AO s own version, during the course of the assessment proceedings, the appellant had not produced any books of account and therefore, the question of finding any credit entry as regard to the sundry creditors and consequently, the question of invoking the provisions of section 68 does not arise. According to the appellant, finding of some entries in the books of account are sine-qua-non for invoking the provisions of section 68 of the Act. 18.2 We find that the assessee made the same explanation before us which was made by him before the ld. CIT(A) and a copy of the written submission as well as all the documentary evidences furnished by the appellant before the ld. CIT(A) was duly forwarded by the ld. CIT(A) to the AO for her verification and counter comments. We find that the AO, in her Remand Report, has accepted the furnishing of various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tile system of accounting, till the sale is recognized upon receipt of full payment and handing over of the possession, it continues to be shown in the books as advances only. In our view, the amount of advances would be taxable when they would partake the character of revenue and when the sale is fructified and not on any earlier occasion, otherwise, the same would result into taxation of the same receipts twice which is not permissible in the law. We find that the appellant has furnished the complete details of sundry creditors and has also furnished the necessary documents in support of such details. We find that in most of the cases of advances, sale deeds have subsequently been executed in favor of the customers. In such circumstances, in our considered opinion, per se, the genuineness of the creditors cannot be disbelieved. We also find that it is not the case of the AO that any of the customers to whom a letter u/s. 133(6) of the Act was issued by her, during the course of the remand proceedings, denied the making of payments by him to the appellant or purchase of any property by him from the appellant. We find sufficient merit in the rejoinder made by the counsel of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of remand proceedings, he had furnished the details of advances lying as opening balance, details of advances received during the respective years giving break-up of advances received through banking channels and in the form of cash and as also, closing balances of creditors before the AO. Such details were also furnished before us during the course of the appellate proceedings. We find that the existence of customers is established by the execution of sale deeds in their favor and therefore, the existence of opening balance cannot be ruled out. We also find merit in the contention of the appellant that since for the earlier years, he had opted for presumptive taxation under section 44D of the Act and therefore, he was not statutorily required to maintain any books of account but, mere non-maintenance of books of account for earlier years cannot, ipso facto, result into non-acceptance of claim of the appellant as regard to existence of the opening balance of creditors. The provisions of section 68, although not invoked properly by the AO without examining any books of account, also require the AO to examine each and every credit entry independently and any ad-hoc lump-sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year was issued to the assessee and was served upon the assessee. In the body of the assessment order, the ld. AO has not brought any details as regard to the date on which the Notice under s. 143(2), alleged to be issued, was served upon the assessee. 3.00 Your Honour, the fact remained that, as per assessee, no notice was ever served upon him. Since, the very first notice issued under s. 143(2) of the Act, did not get served upon the assessee, the ld. AO was not legally competent and having jurisdiction to carry out the assessment proceedings and under such circumstances, the assessee chose not to participate in the assessment proceedings so carried out illegally. 3.01 Your Honours, in evidence of the assertion of the assessee to the effect that no Notice under s. 143(2) dated 05-09-2014, was served upon the assessee, an Affidavit, duly sworned before the Notary Public, by the assessee was duly furnished before the ld. CIT(A) which is placed at PB Page No. 55 56. 4.01 Your Honours, the Hon ble High Court of Delhi in the case of CIT vs. Lunar Diamonds Ltd. (2006) 281 ITR 001 (Del.) has dismissed the appeal of the revenue against the order of the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trib) ix) TML Drivelines Ltd. vs. DCIT, Mumbai 2018 (2) TMI 1516 (ITAT Mum) x) Virendra Dev Dixit vs. ACIT (2011) 331 ITR 483 (AllHC) xi) CIT vs. Bharat G Patel (2014) 88 CCH 0032 (GujHC) xii) Mohinder Kumar Chhabra vs. ITO (2014) 31 ITR (Trib.) 0093 (Del) xiii) Addl. Director of Income Tax (Exemptions) vs. Vodithala Education Society (2015) 144 DTR (Hyd)(Trib) 0018 xiv) Suresh Exports Pvt. Ltd. vs. DCIT (2016) 48 ITR 333 (Trib.Mum) xv) ACIT vs. Ravnet Solutions Pvt. Ltd. Anr. (2017) 49 CCH 0156 (DelTrib) xvi) Pr. CIT vs. Hindustan Candle Manufacturing Co. Pvt. Ltd. 2018 (12) TMI 468 (BomHC) xvii) DCIT vs. Cameron Singapore Pte. Ltd. 2018 (11) TMI 873 (RajHC) xviii) PCIT, Kolkata vs.Oberoi Hotels Pvt. Ltd. 2018 (6) TMI 1472 (KolHC) xix) PCIT, Mumbai vs. Shri Jawahar Hiranand Bhatia 2018 (3) TMI 1166 (BomHC) 5.00 The ld. CIT(A), at para (4.1) (4.2) on page no. 54 of his Order, has dealt with the subject issue. However, the ld. CIT(A) without giving any specific finding on the legal issue of non-issuance of notice u/s. 143(2) of the Act dismissed the legal ground of the assessee. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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