TMI Blog2022 (6) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout basis. Considering the totality of facts and circumstances, we are of the view that the ld. CIT(A) has passed a well-reasoned order and no new facts or circumstances have been brought before us by the ld DR in order to controvert or rebut the factual findings so recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from the findings so recorded by the ld. CIT(A) qua this issue and we uphold the same. Receipt of on-money pertaining to land transaction - HELD THAT:- AO has stated that the agreement of the land are of July 2014 and Jan 2015 and therefore it is unbelievable that cash received on sale of this land was still lying with at the residential premises of the assessee after more than one and half years. In this connection, the ld. AR has stated that cash was received subsequently after the agreement to sale. In fact the purchaser first paid the cheque and thereafter paid the cash. The assessee has specifically stated that the cash was received few days back as the cash was to be paid before the registry and registry was to be done after 11th August 2016. Thus there is no basis with the AO to hold that amount was received more than one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Coordinate Bench has held that loose sheet of paper torn out of a diary could not be construed as books for the purpose of section 68 and further held that addition could not be made simply on the basis of certain notings on loose sheets of a diary without any corroborative evidence in the form of extra cash, jewellery or investment outside the books. - Decided against revenue. - ITA No. 85/JP/2021 - - - Dated:- 31-3-2022 - Shri Sandeep Gosain, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Revenue : Shri Sanjay Dhariwal (CIT-DR) For the Assessee : Shri P.C. Parwal (CA) ORDER PER: SANDEEP GOSAIN, J.M. This is an appeal filed by the revenue against the order of ld. CIT(A)- 4, Jaipur dated 28/05/2021 for the A.Y. 2017-18 in the matter of order passed U/s 143(3) read with Section 153B(1)(b) of the Income Tax Act, 1961 (in short, the Act), wherein following grounds have been taken. 1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) is justified in deleting the addition of Rs.17.30 lakhs inspite of the fact that the assessee has made surrender of this amount in his statement recorded as per law and had attri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Fire Arcor Infrastructure Private Limited Vs. CIT Central Circle, 2(1), Nagpur ITA No. 30 of 2018 dt. 23.07.2019. The Ld. Commissioner of Income Tax(Appeals) should have herself cured/got cured/rectified this defect as she herself was fully competent as per law. 2.4 As per order of Hon'ble Supreme Court, in the case oil Kapurchand Shrimal V. CIT 131 ITR 451(SC), it is not merely a discretion but duty of the first appeal authority to remove all procedural defects such as lack of necessary inquiries by the assessing officer or failure in granting cross-examination to the taxpayer, by exercising specific powers granted to first appeal authority under section 250(4) of IT Act 1961. 2.5 The ld. Commissioner of Income Tax (Appeals) has committed a grave error of law in not getting carried out inquiries/getting cross examination done even though the ld. CIT(A) felt that they were necessary. It was duty of the ld. Commissioner of Income Tax (Appeals) to get the needful done as per powers available to her within the meaning of provisions of Section 250(4) of the Income Tax Act, 1961. In this connection, reliance is placed upon order of Hon ble Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), the Revenue is in further appeal before the ITAT on the grounds mentioned above. 5. Ground No.1 of the appeal raised by the department relates to challenging the order of the ld. CIT(A) in deleting the addition of Rs. 17.30 lacs. In this regard, the ld. CIT-DR has vehemently supported the order of the A.O. and has submitted that the ld. CIT(A) has erred in deleting the addition so made in spite of the fact that the assessee had made surrender of this amount in his statement recorded as per law and had attributed it to hitherto undisclosed receipts. He has submitted that as per the statement of the assessee, he himself had disclosed unaccounted receipts of Rs. 1.30 lacs in his own hands for the year under consideration. However, on perusal of the return filed by the assessee, it was noticed that the same had not been disclosed in the return of income filed by the assessee in compliance to notice U/s 153A of the Act. He has further submitted that the statement of the assessee was recorded U/s 132(4) of the Act in which he had not mentioned that his books were incomplete. The ld. CIT-DR has further submitted that there was no proof that the cash found during search was link ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or all these reasons the books of accounts for the FY 2015-16 could not be completed. After receipt of the photocopies of the papers and patient registers seized during search the assessee completed the books of accounts. As per these books of accounts (PB86-120), cash in hands of various family members as on the date of search worked out at Rs.1,74,77,081/- as under:- (Amount in Rs.) Name of concern Cash balance as on 31.03.2016 Cash balance as on 21.07.2016 Dr. Shiv Gautam (Personal) 22,70,840/- 40,27,440/- Dr. Anita Gautam 8,01,624/- 19,87,324/- Rajyashree Gautam 1,53,305/- 1,53,305/- Gautam Hospital and Research Centre 20,52,991/- 72,85,822/- Rajyashree Diagnostics and Fitness Centre 12,68,890/- 24,91,438/- Dr.Manaswi Gautam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which patient register maintained in normal course was seized. The assessee offered the cash found on adhoc basis since the cash book was not complete due to reasons mentioned in point no. 1 of the submission. In fact the entries in the cash book are fully verifiable from the patient register found in search. The AO has not found any defect therein. Due to preconceived mind AO has treated the incomplete cash book which was later completed by the assessee on receipt of seized patients register as manipulation of the cash book. At the same time AO has accepted the cash book for assessing the income. Thus, the allegation of manipulation by AO is without basis. 5. It may be pointed out that similar addition on the basis of the statement made in case of the assessee and other family members for FY 2015-16 and 2016-17 has been deleted by CIT(A). In view of above, order of Ld. CIT(A) be upheld by dismissing the ground of department. 7. We have considered the rival contentions and carefully perused the material placed on record. From perusal of the record, we observed that the ld. CIT(A) has dealt with the issue in para 4.4 by holding as under: 4.4 I have considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search would result in double taxation. In fact the AO has neither disbelieved the income shown by the appellant from the private practice nor rejected the books of accounts. The contention of the AO that there is no proof that the cash found in search was linked with private practice of the appellant is not justified since Dr. Shiv Gautam and his Accountant had categorically submitted that the books of accounts were incomplete and after incorporating the entries from the patient register and seized documents, which were not found incorrect by the AO, the correct professional income was worked out and declared in the Return of Income. Since as per the books of accounts, the appellant group had sufficient cash in hand and that Dr. Shiv Gautam on behalf of the appellant had surrendered the cash from professional income for the FY 2015-16 and 2016-17, on adhoc basis, therefore no adverse inference is required to be drawn on this account. Thus as the professional income worked out was more than the cash balance, hence in my opinion taxing the same would result into double taxation. Therefore, the AO is not justified in making the aforesaid addition of Rs. 17,30,300/- as unaccounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertained. During the course of assessment proceedings, the AO vide letter dated 30.11.2018 required the assessee to explain why the amount of Rs.17,30,300/- should not be added to the income as surrendered in search. In response to the same assessee vide letter dated 15.12.2018, which are page Nos. 7 to 11 of the paper book reproduced at Pg 3-7 of the assessment order explained that the cash offered in statement was on ad hoc basis without considering the cash balance as per books as the same were incomplete. After receipt of photocopy of paper and patient register seized during search books were completed. On this basis cash balance as on the date of search in the hands of various family members works out to Rs.1,74,77,081/-. The assessee also stated the amount offered during the search has already been incorporated as professional income in books of accounts and therefore, amount of Rs.17,30,300/- should not be added again. The AO, however, held that the assessee in the statement has disclosed unaccounted receipt of Rs.17,30,300/- in his hands but the same was not disclosed in the return. The assessee has manipulated the cash book in order to justify the cash found in search. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncomplete and therefore, he is not in a position to provide the same. Further, in reply to Q. No.9 he stated that after the end of FY 2015-16 his health was not good and also he was busy in his LLB second year examination. Thereafter, the computer data was crashed and for all these reasons the books of accounts for the FY 2015-16 could not be completed. After receipt of the photocopies of the papers and patient registers seized during search the assessee completed the books of accounts. As per these books of accounts which are at page Nos. 86 to 120 of the paper book, cash in hands of various family members as on the date of search worked out at Rs.1,74,77,081/- are as under:- (Amount in Rs.) Name of concern Cash balance as on 31.03.2016 Cash balance as on 21.07.2016 Dr. Shiv Gautam (Personal) 22,70,840/- 40,27,440/- Dr. Anita Gautam 8,01,624/- 19,87,324/- Rajyashree Gautam 1,53,305/- 1,53,305/- Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash balance found in search has resulted into double taxation. Hence, separate addition of cash surrendered in search is uncalled for. So far as observation of AO that cash book is manipulated is concerned, we may point out that while making surrender for cash found assessee did not consider the receipt from private practice for which patient register maintained in normal course was seized. In fact the entries in the cash book are fully verifiable from the patient register found in search. The AO has not found any defect therein. Due to preconceived mind AO has treated the incomplete cash book which was later completed by the assessee on receipt of seized patients register as manipulation of the cash book. At the same time AO has accepted the cash book for assessing the income. Thus, the allegation of manipulation by AO is without basis. Considering the totality of facts and circumstances, we are of the view that the ld. CIT(A) has passed a well-reasoned order and no new facts or circumstances have been brought before us by the ld DR in order to controvert or rebut the factual findings so recorded by the ld. CIT(A), therefore, we see no reason to interfere into or deviate from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been received in cash recently which was the same cash found lying in the bedroom of the appellant during the course of search. It was further contended that the registry of the land has been decided to be carried out in second or third week of August and that at that time the balance amount of Rs.10,00,000/- was to be received. (ii) Further, Smt. Rajshree Gautam in her statement recorded u/s 132(4) dt. 21.07.2016 also affirmed the statement of the appellant that the cash found in their bed room includes the amount received in land deal. (iii) It is observed that during the course of search, Page no.13 of annexure AS-1 was found which contains complete details of the cash and cheque received on sale of this land. It is observed that as per the aforesaid paper, Rs.1,97,80,000/- was received by cheque and Rs. 1,87,34,000/- in cash thereby totaling to Rs. 3,85,14,000/-. The cash amount has been added with the cheque amount which clearly shows that the cash has been received on sale of this land. (iv) However, the fact also remains that after search carried out in the case of the appellant, a survey action was carried out at the business premises of Sh. Laxman Singh and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... village Tannayabass from Rajshree Gautam for Rs. 3,85,14,000/- for developing a residential plot scheme and all the partners have paid the amount in the ratio specified in the agreement. On perusal of the agreement, it is observed that the consideration of the said land was for Rs. 3,85,14,000/-. Thus, the fact that the deal was for Rs. 3.85 crores is established by documentary evidence which has more evidentiary value than the oral statement. These documents contradict the statement of Sh. Mahendra Singh that in this deal there was no cash component. (viii) Thus there is no denying the fact that the amount of Rs.1,87,34,000/- was the cash component against the sale of the agricultural land at village Tannayabas, Jamwaramgarh by Smt. Rajshri Gautam, wife of the appellant. During search, the appellant as well as his wife admitted of cash lying in their bedroom to be out of the aforesaid cash received against the sale of land. The assessing officer, however, on the basis of the statement of the purchasers denied the claim of the appellant and added the cash of Rs. 1,77,60,000/- as being unexplained. However, while denying the claim, the assessing officer neither provided nor co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded behind the back of the assessee, but not tested by cross examination, such a statement cannot be allowed to be used to the prejudice of the assessee. It is a trite law that whenever a statement of a person is to be used in evidence against another person, such other person should be given a copy of such statement and an opportunity of cross examination. This is so stated by the honorable Supreme Court in the case of Kishan Chand Chellaram (125 ITR 713). (ix) Thus in view of the aforesaid facts and circumstances of the case, it is observed that while denying the claim, the assessing officer neither provided nor confronted the statements of the aforesaid parties/purchasers to the appellant nor issued any show cause notice in this regard. Therefore, on one hand relying upon the statements and not providing cross examination at least to find out any involvement of the person affected by such statement is a gross violation of principles of natural justice which renders such reliance, a nullity. On the contrary, the documents seized clearly indicate the cash received by the appellant against the aforesaid sale of the agricultural land. The fact that the deal was for Rs. 3.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This agricultural land measured 2.53 hectare is situated at village Tannayabas and Smt. Rajyashree Gautam, wife of the assessee is the owner of this land. Agreements regarding sale of this land was seized from the premises of the assessee which are marked as Annexure AS-1 AS-2. The summary of the various agreements in respect of the sale of this land is mentioned at page 9 to 11 of the assessment order. We also observed that one agreement has been executed on 23.07.2014 with Laxman Singh Shekhawat for the entire land of 2.53 hectare for Rs.2.55 crores and three separate agreement is executed for 0.6950, 1.1583 and 0.6765 hectare lands on the same date totaling to 2.53 hector with Sitaram Gurjar, Ashish Pareek and Gauri Shankar Agrawal for Rs.60,00,000/-, Rs.1,00,00,000/- and Rs.57,96,700/- respectively. In all these agreements Shri Mahendra Singh s/o Laxman Singh is a witness. In search when questioned about these agreements, the assessee in reply to Q. No.16 of the statement u/s 132(4) dated 21.07.2016 which are at page No. 28-30 of the paper book explained that his wife Smt. Rajyashree Gautam had entered into an agreement to sale her 2.53 hectare agricultural land at Gram Tann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Laxman Singh Shekhawat Mahendra Singh Shekhawat on 02.09.2016 which are at page No. 159-165 of the paper book where they accepted the fact of sale of agricultural land by Smt. Rajyashree Gautam vide agreement dated 23.07.2014 but denied payment of any cash to her for that land. Statement of Sitaram Gujar and Ashish Pareek was also recorded u/s 131 on 16/17.12.2016 where they stated that they know Smt. Rajyashree Gautam through Mahendra Singh Shekhawat as they have purchased the land at Jamvaramgarh but the payment was made by cheque only. During course of assessment proceedings, AO required the assessee to explain the source of cash of Rs.2,83,67,300/- found from the bedroom. The assessee explained that out of it Rs.1,77,34,000/- was received on sale of the agricultural land owned by Smt. Rajyashree Gautam. A detailed reply dated 30.11.2018 was filed. The AO, however, after reproducing the relevant extract of the statement of Shri Laxman Singh Shekhawat, Mahendra Singh Shekhawat, Sitaram Gujar and Ashish Pareek held that all these person have stated that they have not made any cash payment to the assessee or his wife against the sale of the land, registry of the land is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, it may be presumed that such books of accounts, other documents, money etc. belong to such persons and the contents of such documents are true. In the present case, not only in the statement u/s 132(4)/ 131 the assessee and his wife stated about the availability of cash to the extent of Rs.1,77,34,000/- as out of the sale proceeds of the agricultural land but in the document found at Pg 13 of Annexure AS-1 it is also noted that Rs.1,87,34,000/- is received in cash which is attributable to the sale of the agricultural land. The AO except for the statement of the interested person in this transaction has not brought any material on record to negate the statement recorded in search and the document found in search. Hence only on the basis of the statement of five interested persons as referred in the assessment order, no adverse inference should be drawn against the assessee. It may be noted that in the statement of these five interested persons, extract of which is reproduced in the assessment order, they have accepted that Smt. Rajyahree Gautam has entered into an agreement to sale her agricultural land but denied making any payment in cash. These statements were neither provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar is at page No. 125-128 of the paper book. After considering the reply filed and evidence available on record, no adverse finding was given by the AO. The AO without confronting these persons has rejected the explanation of the assessee which is against the principle of natural justice. Since the entire sale consideration of Rs.3,85,14,000/- has been considered in the hands of Rajyashree Gautam, the credit of cash found needs to be allowed as related to sale of land and found from bedroom of Rajyashree Gautam. 16. It is an undisputed fact that after search of assessee, survey was carried out at the business premises of Sh. Laxman Singh and Sh. Mahendra Singh on 02.09.2016. In survey, statement of Sh. Mahendra Singh was recorded u/s 131 of the Act and certain documents were impounded and from perusing the same the following facts came in light:- (i) At Pg No.30 to 34 of Annexure AS, Exhibit-2, a mutual arrangement cum partnership agreement was found between Sh. Mahendra Singh, Sitaram Gujar and Ashish Pareek with 15 other persons which are at page Nos. 154-158 of the paper book. In this agreement at Pg 2 it is specifically mentioned that they have purchased 2.53 hectare of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ujar 57,80,000/- 2,20,000/- 60,00,000/- Ashish Pareek 1,00,00,000/- 0 1,00,00,000/- Gauri Shankar Agarwal 40,00,000/- 17,96,700/- (15.01.2015) 57,96,700/- Total 1,97,80,000/- 19,98,700/- 2,17,96,700/- These documents contradict the statement of Sh. Mahendra Singh that in this deal there was no cash component. Hence, statement of Mahendra Singh cannot be relied upon ignoring the documentary evidence in form of mutual arrangement cum partnership agreement and Pg 13 of Annexure AS-1 which conclusively proves that the total sales consideration of this land was of Rs.3.85 crores out of which Rs.1,97,80,000/- is paid by cheque and Rs.1,87,34,000/- is received in cash. 17. We found from perusal of the assessment order that the AO has also stated that the agreement of the land are of July 2014 and Jan 2015 and therefore it is unbelievable that cash received on sale of this land was still lying with at the residential premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) qua this issue and we uphold the same. 18. With regard to Grounds No. 3 and 4 raised by the Revenue mainly relates to challenging the order of the ld. CIT(A) in deleting the addition of Rs. 10,00,000/- as the buyer of the land denied to pay any on-money in land transaction to his wife. In this regard, the ld. CIT-DR has vehemently supported the order of the ld. CIT(A). 19. On the other hand, the ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied upon the written submissions filed before the Bench and the contents of the same are reproduced as under: 1. It is submitted that Pg No.102 of AS Exhibit-2 (PB 121)contains the detail of amount which was to be received as last installment at the time of registration of agriculture land sold by Smt. Rajyashree Gautam situated at Village Tannayabas. According to this page, Rs.9,60,500/- was to be received with interest of Rs.39,500/- upto 11.08.2016 which aggregates to Rs.10,00,000/-. However, the buyer did not agree to this and as the registry of land has not been executed no such amount was received. This fact was also explained by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant. On the contrary, the AO considered it to be a cash loan given by the appellant out of books including the interest Rs.39,500/-. However, while denying the claim, the assessing officer neither provided nor confronted the statements of the aforesaid parties/ purchasers to the appellant nor issued any show cause notice in this regard. Thus, no opportunity to cross examine these parties was provided by the AO to the appellant. Denial of such an opportunity is a serious flaw rendering the order as a nullity. Therefore, in view of the elaborate discussion made in respect of the ground of appeal number 2 in the above paras, which is related to the same agricultural land, the AO is directed to delete the addition of Rs. 10,00,000/-. The Ground of Appeal No. 3 is accordingly decided in favour of the appellant. 21. Having considered the rival contentions and carefully perused the material placed on record. From perusal of the record, we observed that during the course of search, a paper was seized from the residential premises of Dr. Shiv Gautam as Pg No. 102 Annexure AS Exhibit-2 which is at page No. 121 of the paper book. It is a handwritten paper which has been writt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to the satisfaction of the AO. Noting on a paper can t be said to be an entry in the books of accounts. In this regard, we draw strength from the decision as relied by the ld. AR in the case of Aruna Sankhla Vs. DCIT ITA No.484/JP/2016 dt.01.12.2017 (Jaipur) (Trib.) wherein the Coordinate Bench at para 7.4 of its order held as under:- After considering the rival submissions and the materials available on record, we are of the considered opinion that the seized papers cannot be treated as books of account. Furthermore, only the commission income can be assessed in the hands of the assessee @ 0.10% on a total of the credits of Rs. 91,67,81,272/-. The addition u/s 68 of the Act can be made only if any sum is found credited in the books of the assessee. A book means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. A book which contains successive entries of items maybe a good memorandum book but until those entries are totaled or balanced or both as the case may be, there is no reckoning and no accounts. A book which merely contains entries of items of which no account i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notebooks and diaries and not books of accounts of the assessee. Besides, he observed that wife of the assessee has owned up the noting in the rough diary and taxed accordingly. The ld.CIT(A) has also observed that there is no documents or material evidence with the Revenue to link flow of unrecorded transactions with the assessee. Since there is no contrary material brought before us by the Revenue to convince us to take a different view, we do not find any merit in this ground of appeal. It is dismissed. We also draw strength from the decision in the case of DCIT Vs GSNR Rice Industries Pvt. Limited (2021) 90 ITR (Trib.) 114 (Chennai) wherein the Coordinate Bench of Chennai Tribunal at para 21 has held as under: 21. The Income Tax Act, 1961 has defined books and books of accounts u/s.2(12A) of the Act, as per which books and books of accounts includes, ledgers, day-books, cash books, account books and other books, whether kept in the written form or as printouts of data stored in a floppy, disk, tape or any other form of electro-magnetic data storage device. Therefore when books of accounts are clearly defined under the Act, then diary, notebook and retrieved data of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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