TMI Blog2022 (9) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the ld. CIT(A) giving relief to the assessee on this count. Therefore, the finding of the ld. CIT(A) in deleting the additions so made by the AO is confirmed. Accordingly, the ground No. 1 raised by the Revenue on this issue raised for the Assessment Years 2010-11 to A.Y.2012-13 under appeal are hereby dismissed. Unaccounted cash expenditure u/s. 69C - Addition on the basis of some jottings found made in a diary seized during the course of search from the residence one of the partners of the assessee firm - HELD THAT:- We are of the considered view that the impugned addition for unaccounted cash expenditure has rightly been deleted by the Ld. CIT(A) as they were merely based on the rough jottings on the alleged seized loose papers which do not convey either receipt/ payment, mode thereof, nature of transaction etc.. Undisputedly, neither during the course of the assessment proceedings nor during the course of submission of remand report before the ld. CIT(A), the AO was able to bring any single cogent material or evidence on record to justify the addition made on the basis of uncorroborated jottings in the diary. Therefore, the alleged seized loose papers are only Dumb do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere found noted in such agreement by issuing summons u/s. 131 or letters u/s. 133(6) to such persons. ld. CIT(A),of his Order, had given a finding that upon verification from online land revenue records, it was found by him that no such joint venture actually executed for construction of duplex bungalows and the lands bearing khasra were still owned by Shri Sushil Kumar Bajpai, Shri Vaibhav Sharma and Shri Upendra Singh. We are thus in agreement with the findings of the ld. CIT(A) to the effect that the onus of proof lies upon him who affirms and not upon him who denies. We find that the Ld.AO grossly failed to bring on record any cogent material to establish the execution of the proposed Joint Venture Agreement and has merely ventured into making the impugned addition in the hands of the assessee. In such circumstances, we find sufficient force in the contention of the ld. counsel for the assessee that the said loose papers inventorized are not legally admissible documents and therefore, the same could not have been used against the assessee. Thus, considering the facts and circumstances of the case, we do not find any infirmity in the findings of the ld. CIT(A) in deleting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of hostel building in a completed assessment year without having recourse to any incriminating material found during the course of the search. Such fact has also been fairly admitted by the ld. CIT (DR). Therefore, in light of the findings of the decision of Hon'ble Delhi High Court in case of CIT vs. Kabul Chawla[ 2015 (9) TMI 80 - DELHI HIGH COURT] we are of the considered view that proceedings initiated u/s 153A of the Act for A.Y. 2009-10 being non-abated and completed assessments deserved to be quashed since no incriminating material was found during the course of search thereby warranting initiation of proceedings u/s 153A of the Act for these years. - IT(SS)A No.149 to 151/Ind/2019, 44 to 47/Ind/2020, 22/Ind/2020, 41 to 43/Ind/2020, 35 & 36/Ind/2021 - - - Dated:- 11-2-2022 - SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER Appellant by Shri Arpit Gaur, CA Respondent by Shri P.K. Mitra, CIT-DR ORDER PER BENCH The above captioned ten appeals in the cases of three assesses filed at the instance of the Revenue and three appeals filed by two Assessees are directed against the Orders of the Ld. Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,55,00,000/- made by the A.O. on account of unaccounted payments made to partner Shri K.L. Sharma. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,65,00,000/- made by the A.O. on account of unaccounted cash payments made to partners Smt. Sunita Maheshwari and Shri S.K. Maheshwari. 2.3 Grounds of appeal raised by the Revenue for AY 2012-13 in IT(SS)A No.151/Ind/2019, in the case of M/s. K.L. Sharma Sunita Maheshwari: 1 On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 67,42,257/- and Rs. 8,384/- made by the A.O. on account of undisclosed investment u/s 69B of the Income Tax Act, 1961 on the basis of the report of the D.V.O. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 37,00,000/- made by the A.O. on account of unaccounted payments made to partner Shri K.L. Sharma. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,00,00,000/- made by the A.O. on account of unaccounted cash payments made to partners Smt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted interest received. 2.8 Grounds of appeal raised by the Revenue for AY 2010-11 in IT(SS)A No.41/Ind/2020, in the case of Smt. Sunita Maheshwari: 1 On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,70,00,000/- made by AO for A.Y. 2010-11 on account of unaccounted cash receipts. 2.9 Grounds of appeal raised by the Revenue for AY 2012-13 in IT(SS)A No.42/Ind/2020, in the case of Smt. Sunita Maheshwari: 1 On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,00,00,000/- made by AO for A.Y. 2012-13 on account of unaccounted cash receipts. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,00,00,000/- made by AO for A.Y. 2012-13 on account of unaccounted loans given in cash. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 5,50,000/- made by AO for A.Y. 2012-13 on account of unaccounted interest received. 2.10 Grounds of appeal raised by the Revenue for AY 2013-14 in IT(SS)A No.43/Ind/2020, in the case of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth on facts and in law, in confirming the addition of Rs.8,00,000/- made by the AO in the appellant's income by invoking provisions of section 68 of the Act without considering and appreciating the material fact that the appellant had genuinely obtained advance against sale of house from Shri Pushpraj Singh and without properly considering and appreciating the written submissions made by the appellant. 4. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary. 2.13 Grounds of appeal raised by the Assessee for AY 2014-15 in IT(SS)A No.36/Ind/2021, in the case of Shri Vijay Maheshwari: 1 That, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.20,30,000/- out of the total additions of Rs.30,30,000/- made by the AO in the appellant s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 2. That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in assuming the jurisdiction over the case of the appellant and in issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings were commenced and according to the assessee, during the course of such proceedings, it had furnished copies of its audited financial statements for the previous years relevant to the assessment years under consideration. Subsequently, notices under s.142(1) were issued to the assessee from time to time by the AO. In response to the notices so issued, the assessee furnished its written replies along with the documentary evidences. Finally, the Assessing Officer framed the assessments for the relevant assessment years u/s. 153A r.w.s. 143(3) of the Act by passing a common Order dated 21.12.2016 making certain additions in the income shown by the assessee. 4. Aggrieved assessee preferred separate appeals for all the assessment years under consideration before Ld. CIT(A). The ld. CIT(A), vide his common Order dated 20.05.2019 adjudicated the appeals of the assessee firm thereby giving partial relief. 5. Now, aggrieved by the relief granted by the ld. CIT(A) to the assessee, the revenue is in appeal before this Tribunal for the assessment years under consideration. However, against the additions confirmed by the ld. CIT(A), the assessee has not preferred any appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment Order. The AO further held that as the case was barring by time, in the interest of revenue, without receiving any comment from the DVO and without disposing off the objections of the assessee on the DVO s report, passed the Assessment Order. Accordingly, the AO, by invoking the provisions of s.69B of the Act, held that the assessee firm had made undisclosed investment of Rs.4,20,93,398/- and Rs.1,19,909/- u/s.69B of the Act during A.Y. 2009-10 to A.Y. 2015-16 respectively in two projects Regal Mohini and Abhinav Homes Phase-III. in the ratio of amount of investments declared by the assessee in its books of account. The amounts of additions involved in the revenue appeals before us for the years under consideration are given as under: Assessment Year Regal Mohini project Abhinav Homes Phase-III project 2010-11 1,33,43,800 36,343 2011-12 1,17,52,082 23,756 2012-13 67,42,257 8,384 7.3 Aggrieved with the Order of Assessment, the assessee firm pref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been adopted. The ld. CIT(A) referred to some judicial authorities holding that there is a difference of 20-25% between CPWD rates and State PWD rates and that the DVO report is not binding upon the AO because it is merely an opinion of an expert and is an estimate. Further, the ld. CIT(A) observed that the case laws relied upon by the AO are not applicable to the case of the assessee and that the AO failed to appreciate the vital fact that the assessee firm is a member of Regal Homes group which is engaged in the business of real estate for the last many years and has carried out several projects. Thus, they have economies of scale for material and labour obtained in wholesale which saves them atleast 20-25% of the cost as compared to an ordinary contractor. Finally, the ld. CIT(A) allowed a margin of 30% (25% for difference in CPWD PWD rates and 5% for selfsupervision) and prepared a comparative picture of investment shown by the assessee and that estimated by the DVO for both the projects. Accordingly, the ld. CIT(A) deleted the entire additions so made by the AO by holding that the assessee had already shown more than 70% of the estimate by the DVO and the additions be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO to refer a case of an unexplained expenditure falling u/s. 69C. Decision of Hon ble Supreme Court in the case of Amiya Bala Paul (2003) 130 TAXMAN 511 (SC) - 4 Objections filed against the DVO report In response to the show-cause notice issued by the AO, the assessee filed its detailed objections challenging the valuation made by the DVO. Such objections have also been reproduced by the AO in the Assessment Order. Para (11.3) Page 19-24 of AO s Order - 5 The objections against DVO Report remained uncontroverted The objections of the assessee were sent to the DVO for his comments. However, as per the AO, no comments were received from the DVO. Accordingly, the AO by taking a shelter of time barring matter, placed his complete reliance on the DVO s report and proceeded for making the addition. Para (11.4) Page 24 of AO s Order - 6 Mistakes in the DVO s Report i) DVO adopted P.A.R. rates of CPWD. CPWD rates are applicable only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port based on DPAR-2007 after applying cost index on above DPAR as base 100 and interestingly, the DVO had applied same rate for cost of construction of the projects even though the investment is spread over many years and more than 75% of construction was complete between 2008-09 to 2012-13. 8 Books, bills, vouchers etc. maintained. Duly audited. The assessee had maintained regular books of account which were subjected to audit and the Auditors had not made any adverse remarks about any discrepancy or undervaluation in the projects of the assessee firm. 97-103 106-108 111-113 9 Books along with bills duly produced before AO DVO The assessee firm had duly produced the necessary bills, vouchers, records etc. both before the AO DVO but, neither the DVO nor AO pointed out any specific defect or discrepancy in the records. Hence, no addition can be made. ITO vs. Dreamland Enterprises 80 Taxman 143 (ITAT Ahd) - 10 Books of Account not reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to assessee None of the cases referred to by the AO in the assessment order are relevant for the assessee s case and are entirely on different set of facts. 30-31 17 Onus of the Revenue The burden is upon the revenue to establish that the actual consideration was more than that disclosed by the assessee. Decision of Hon ble Supreme Court in the case of K.P. Varghese 131 ITR 594. - 8.1 Before us, the ld. counsel for the assessee firm primarily contended that the additions have been made by the AO solely on the basis of the Report of the DVO and that the AO, neither at the time of making a reference to the DVO nor at the time of making the impugned additions, had made any reference to any incriminating material found during the course of the search. The ld. Counsel of the assessee also stressed that the assessee had filed its detailed objections challenging the valuation made by the DVO but, these objections remained uncontroverted by the AO or the DVO. The assessee firm further pointed out various mistakes committed by the DVO while making valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81,50,500/- which was close to the amount of actual cost of construction incurred and shown by the assessee in its audited books of account. The Ld. Counsel vehemently argued that DVO prepared the valuation report by applying CPWD rates completely ignoring the fact that duplex units were constructed near Bhopal, Madhya Pradesh and therefore, valuation ought to have been made using the local PWD rates instead of CPWD rates. 8.4 The Ld. Counsel for the assessee also argued that addition on account of undisclosed investment in construction of project was made by the Ld. Assessing Officer solely on the basis of valuation report of the DVO more so when no incriminating material was unearthed during the course of search and seizure action which itself makes the addition unsustainable. The ld. Counsel of the assessee vehemently submitted that addition made solely on the basis of DVO report is not sustainable for which he relied upon the decision of this Tribunal in the case of M/s. Golden Realities Ors. vs. ACIT (2021) 42 ITJ 544 (Indore Trib.). 9.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) that in the instant cases, PWD rates ought to have been adopted by the DVO instead of adopting CPWD rates as the subjected properties were not constructed in any metro city. We find that the case of the assessee is covered by various judicial authorities, some of which are listed as under: i) CIT vs. Raj Kumar 182 ITR 436 All HC ii) CIT vs. Prem Kumar Murdiya 296 ITR 508 Raj HC iii) ITO vs. Nilesh Maheshwari (2011) 53 DTR 43 ITAT Jaipur iv) Rajeev Mewara 35 SOT 001 Indore Trib. v) ITO vs Prakash Chand Soni 94 TTJ 0631 Indore Trib. vi) Shri Jagmohan Jaiswal (2008) 10 ITJ 187 Indore Trib. vii) Kalpana Surana (2016) 28 ITJ 277 Indore Trib. viii) Biswa Mitra Singh vs Dy. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious heads out of which Rs.1,30,00,000/- was paid through cheques and the remaining amount of Rs.3,04,78,000/- was paid in cash. The AO further observed that against some entries, dates were also mentioned which ranged from Jan 2010 to March 2010 and thus, as per AO, the transactions pertained to F.Y. 2009-10. The AO also scanned the relevant pages 2 to 12 of LPS-12 at page no. 4 to 6 of the assessment order. As per the AO, the assessee was asked to explain these papers and to reconcile the same with its books but, the assessee did not submit any explanation. However, as per the assessee, vide its letter dated 18.11.2016 (placed at page no. 134 of the Paper Book) it had duly furnished copies of ledger accounts of persons appearing in its books of account. Further, as per the AO, the assessee was also issued a showcause notice dated 21.11.2016 [placed at Page no. 130 131 of the Paper Book] which remained uncomplied. However, as per the assessee, it had duly submitted its reply before the AO [placed at PB Page No. 135]. In its reply, the assessee firm categorically stated that the said diary was not related to it. The AO, from pages 2 to 12 of LPS-12, noted that the names mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s represent receipt/ payment or balance and also very basic details such as date of payment/ receipt, mode of payment/ receipt, place of payment/ receipt, correct amount whether in lakhs or in thousand or in hundred etc. Thus, according to the ld. CIT(A), in absence of any cogent evidence having direct nexus with the impugned transactions, the said pages of diary cannot be used against the assessee. Accordingly, the ld. CIT(A) observed that the absence of vital details made the impugned loose papers as deaf and dumb document . The ld. CIT(A) further noted that not a single transaction mentioned in the diary related with suppliers/ contractors was found in the books of account of the assessee. The ld. CIT(A) observed that the AO, on the one hand, at para (8.3)(i), stated that these amounts were made to different firms/ suppliers but on the other hand, at para (8.3)(iv), the AO stated that the said amounts were paid to Shri K.L. Sharma. The ld. CIT(A) also noted that the AO did not find any major discrepancy in books of account and therefore, the books were not rejected. Finally, the ld. CIT(A) deleted the addition of Rs.3,04,78,000/- made by the AO for A.Y. 2010-11. 10.4 Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not convey whether these are payments or receipts. Barring few instances of cheques or cash, the jottings do not contain any mode of payment/ receipt. Further, there is no clarity whether these jottings are in thousands, lakhs or crores. - 6 Desired details furnished in response to Show cause notice of AO The AO issued a show-cause notice dated 21.09.2016 requiring to furnish details of creditors along with their ledgers whose names were appearing in page no. 2 to 12 of LPS-12 which were duly furnished vide letters on 18.11.2016 16.12.2016. No discrepancy was noticed by the AO. 134 7 The names of creditors in LPS are very common The AO, on the sole basis that the names of maximum creditors in the books were getting tallied with those listed in the loose paper, reached to a conclusion that the diary pertains to the assessee firm. It is notable that these creditors/ suppliers are very common and renowned suppliers and therefore, their names could appear in almost all other concerns of the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch diary by issuing summons u/s. 131 or letters u/s. 133(6) to such persons. - 14 Rough Jottings made in the diary The jottings made in the diary are only rough jottings which do not convey either receipt/ payment, mode thereof, nature of transaction etc.. Thus, the said diary could only be termed as a dumb document. 15 Source also noted on the same page Without prejudice, on a simple perusal of the loose papers, the sources of all the payments are getting reflected on the very same pages. For e.g. Page 2 has total of 80.85 and then from such figure, 80 has been reduced thereby leaving a balance of 0.85 and so on at further pages too. Thus, the allegation of AO for unexplained expenditure is getting self-explained from the loose paper itself. Any loose paper ought to be read in its entirety. - 11. Before us, the ld. counsel of the assessee firm contended that the impugned addition made solely on the basis of a diary which was found and seized from the residence of two partners o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) CIT vs. Maulikumar K Shah (2008) 307 ITR 137 Guj HC iv) Pr. CIT vs. Shri Pukhraj Soni (2019) 34 ITJ 489 MP HC v) M/s. Vetrivel Minerals and others vs. ACIT (2021) 42 ITJ 55 Mad HC vi) CIT vs. S M Agarwal (2007) 293 ITR 43 Del HC vii) Jayantilal Patel vs. ACIT Ors. (1998) 233 ITR 588 Raj HC viii) Bansal Strips Pvt. Ltd vs. ACIT (2006) 99 ITD 177 Del HC ix) CIT vs. Atam Valves (P) Ltd 332 ITR 468 P H HC x) ACIT vs. Satyapal Wassan (2007) 295 ITR 352 Jabalpur Trib. xi) ACIT vs. Narottam Mishra (2018) 32 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary pertains to the assessee firm. However, the AO despite giving a finding that certain jottings were containing transactions of cheques, could not bring on record any single instance to establish any correlation with the transactions of the assessee firm. We note that the AO had not conducted any independent enquiry from the persons whose names were found noted in such diary by issuing summons u/s. 131 or letters u/s. 133(6) to such persons. If according to the AO, the assessee firm had made the payment to certain persons, then it was incumbent upon him to make necessary enquiries from such payees. 12.3 We note that the AO neither during the course of the assessment proceedings nor during the course of submission of his Remand Report before the ld. CIT(A) could bring any corroborative evidence to justify his action for making the impugned addition in the hands of the assessee firm. Now, what remains to be adjudicated in the light of judicial pronouncements is that whether the Ld. A.O was justified in making the addition merely on the basis of the seized diary found during the course of search without establishing any nexus thereof with the assessee firm or placing any corrob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure and source of receipts as well as nature and reason of payments and have failed to prove evidentiary value of loose papers and electronic documents within the legal parameters. The Commission has also observed that Department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis of these documents. 24. Since it is not disputed that for entries relied on in these loose papers and electronic data were not regularly kept during course of business, such entries were discussed in the order dated 11.11.2016passed in Sahara's case by the Settlement Commission and the documents have not been relied upon by the Commission against assessee, and thus such documents have no evidentiary value against third parties. On the basis of the materials which have been placed on record, we are of the considered opinion that no case is made out to direct investigation against any of the persons named in the Birla's documents or in the documents A-8, A-9 and A- 10 etc. of Sahara. 27. Considering the aforesaid principles which have been laid down, we are of the opinion that the materials in question are not good enough to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the 'transaction particularly the vendor has not examined. In every transaction there is a circle concerning two parties. It is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely on the basis of presumption and some corroborated notings additions cannot be made. In our opinion, the deletion of addition by the CIT(A) is Justified and no interference is called for in the order of the CIT(A).The following cases support the action of the CIT(A): 1. CIT Vs. Anil Bhalla [2010) 322 ITR 191 (Del.)- wherein held that the notings recorded on the loose sheet of paper do not represent any expenditure incurred by the assessee director and that the entries related to the company in as much as the assessee could explain from the books of the company that these projects were undertaken by it, and upheld the deletion of the impugned addition under s. 69C,findings arrived at by the Tribunal are pure findings of facts and the same do not warrant any interference. 2. ACIT Vs. J.P. Morgan India (P) Ltd. [2011] 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ld. CIT(A) deleting the addition of Rs.3,04,78,000/- made in the assessee s income for A.Y. 201011. Accordingly, the ground No. 2 of the Revenue for A.Y. 201011 is dismissed. 13. Ground Nos. 3 4 of the Revenue for A.Y. 2010-11 and Ground Nos. 2 3 for A.Y. 2011-12 A.Y. 2012-13 13.1 Through the ground no. 3 for A.Y. 2010-11 and ground no. 2 for A.Y. 2011-12 A.Y. 2012-13, the revenue has challenged the action of the ld. CIT(A) in deleting the additions of Rs.1,50,00,000/-, Rs.1,55,00,000/- and Rs.37,00,000/- respectively for A.Y. 2010-11, A.Y. 2011-12 and A.Y. 2012-13, made by the AO on account of unaccounted cash payments to Partner Shri K.L. Sharma on the basis of jottings made in a diary seized during the course of search from the residence of Smt. Sunita Maheshwari, one of the partners of the assessee firm. Likewise, on the basis of jottings made in the said diary, through the ground no. 4 for A.Y. 2010-11 and ground no. 3 for A.Y. 2011-12 A.Y. 2012-13, the revenue has challenged the action of the ld. CIT(A) in deleting the additions of Rs.1,50,00,000/-, Rs.1,65,00,000/- and Rs.1,00,00,000/- respectively for A.Y. 2010-11, A.Y. 2011-12 and A.Y. 2012-13, ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te-wise transactions in cheque and cash under the heading SM which denotes Sunita Maheshwari. Further, the AO noted that the pages were duly signed by Shri K.L. Sharma and Shri Suresh Maheshwari which clearly establishes that these pages contain details of transactions between Shri K.L. Sharma, Shri Suresh Maheshwari and the assessee firm. Finally, the AO made an addition of Rs.4,02,00,000/- in the assessee s income as unaccounted payments to partner Shri K.L. Sharma in four assessment years i.e. Rs.1,50,00,000/- in A.Y. 2010-11; Rs.1,55,00,000/- in A.Y. 2011-12; Rs.37,00,000/- in A.Y. 2012-13; and Rs.60,00,000/- in A.Y. 2013-14. The AO also made an addition of Rs.4,55,00,000/- in the assessee s income as unaccounted payments to partners Smt. Sunita/ Shri Suresh Maheshwari in four assessment years i.e. Rs.1,50,00,000/- in A.Y. 2010-11; Rs.1,65,00,000/- in A.Y. 2011-12; Rs.1,00,00,000/- in A.Y. 2012-13; and Rs.40,00,000/- in A.Y. 2013-14. 13.3 Aggrieved with the Order of Assessment, the assessee firm preferred separate appeals for the subject assessment years before the ld. CIT(A). During the course of the first appellate proceedings, the assessee firm made detailed written sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h synopsis is being reproduced as under: E. Key Points of Assessee s Submission and Relevant Pages of Paper Book: S. No. Marginal Notes Submission in Brief Relevant Pages of PB 1 The AO failed to establish any nexus of the subject incriminating material with the assessee. The AO has not brought on record any corroborative material to establish that the subject incriminating material, found and seized from the premises of a partner, was actually pertaining to the assessee firm. Further, even in the Remand Report dated 01-05-2019, the AO did not bring any cogent and corroborative evidence on record to establish that the payments were infact made by the assessee firm. 46 47 (Remand Report of the AO) 2 Diary seized from premises of Shri SK/ Sunita Maheshwari The said diary was found and seized from the premises of Shri S.K. Maheshwari/ Smt. Sunita Maheshwari who were not the partners in the assessee firm only but were also engaged in real estate b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ames of all the partners ought to have been found therein. - 9 No cogent material or evidence brought on record The AO failed to bring on record any single corroborative material or evidence which could prove that the said diary was pertaining to the assessee firm. - 10 No independent enquiry by AO The AO, except solely relying upon the uncorroborated jottings made in the diary, had not conducted any independent enquiry to establish that the said jottings actually pertained to the transactions of the assessee firm. - 11 Personal Unaccounted Income of Shri K.L. Sharma Shri K.L. Sharma had admitted the amounts of Rs.4,02,00,000/- as jotted down in the diary as his unaccounted income derived from his independent business and had filed an application before ITSC on 09-02-2017. 138-143 12 Amount already taxed would lead to Double addition Once Shri K.L. Sharma had accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ottings were undated and unsigned. Moreover, some jottings do not contain vital details such as mode of payment/receipt, date of payment/receipt etc. Thus, these jottings do not convey any clear interpretation of nature of transaction between the assessee and Smt. Sunita/ Shri Suresh Maheshwari. - 5 Mode of payments/ receipts unclear Transactions do not convey whether these are payments or receipts. The jottings do not contain any mode of payment/ receipt. Further, there is no clarity whether these jottings are in thousands, lakhs or crores. - 6 No evidence found for on-money receipts/ unaccounted cash income During the course of entire search, not even a single piece of evidence was found which could suggest any receipt of on-money by the assessee or any of its partners. When the assessee is not found to have generated unaccounted income/ receipts, how the unaccounted payments in cash would be made by the assessee firm. - 7 No addition of on-money/ una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the subject diary, found and seized from the premises of a partner, were actually pertaining to the transactions carried out by the assessee firm. The assessee firm further stressed upon the fact that Shri J.C. Sharma was also one of the partners of assessee firm having a substantial share in profit of 30%, but, on none of the pages from 1 to 20, the name of Shri J.C. Sharma was appearing. The ld. Counsel for the assessee argued that if at all the diary was pertaining to firm, the names of all the partners ought to have been found therein. The assessee firm also contended that the jottings made in the diary were unclear regarding the nature of transaction, whether a receipt or payment, mode of receipt or payment, whether the jottings were in hundreds, thousands or lakhs. As per the assessee, the AO did not make any independent enquiry. It was also contended that during the course of entire search, not even a single incriminating material was found which could suggest any receipt of on-money by the assessee or any of its partners and when the assessee was not found to have generated any unaccounted income/ receipts, then how the unaccounted cash payments would have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. We find that the AO neither during the course of the assessment proceedings nor during the course of submission of his Remand Report before the ld. CIT(A) could bring any corroborative evidence to justify his action for making the impugned addition in the hands of the assessee firm. 15.4 In view of our detailed findings made above, we are of the considered opinion that the jottings made in the diary are only rough jottings which do not convey either receipt/ payment, mode thereof, nature of transaction, amount of transaction whether in hundreds, thousands or lakhs etc.. Thus, the said diary could only be termed as a dumb document. Since we have already discussed at length the various judicial authorities while giving our findings in respect of Ground No. 2 of the Revenue for the A.Y. 2010-11, the same are not being discussed here again. Thus, considering the facts and circumstances of the case, we do not find any infirmity in the findings of the ld. CIT(A) in deleting the additions of Rs.1,50,00,000/-, Rs.1,55,00,000/- and Rs.37,00,000/- respectively for A.Y. 2010-11, A.Y. 2011-12 and A.Y. 2012-13, made by the AO on account of unaccounted cash payments to Partner Shri K.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration before Ld. CIT(A). The ld. CIT(A), vide his common Order dated 05.12.2019 adjudicated the appeals of the assessee thereby giving partial relief. Against the additions confirmed by the ld. CIT(A), the assessee is not under appeal before us. 18. Now, aggrieved by the relief granted by the ld. CIT(A) to the assessee, the revenue is in appeal before this Tribunal for the assessment years under consideration. 19. Ground No. 1 of the Revenue for A.Y. 2009-10 20.1 Through this ground of appeal, the revenue has challenged the action of the ld. CIT(A) in deleting the addition of Rs.1,50,00,000/- made by the AO for A.Y. 2009-10 on account of unaccounted cash payments to Shri Sushil Kumar Bajpai. 20.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of search at the residential premises of Smt. Sunita Maheshwari, page nos. 33 to 39 of LPS-3 were seized. From such loose papers, the AO noted that it was a signed agreement dated 16.03.2009 between Shri Sushil Kumar Bajpai (as first party) and Shri K.L. Sharma, Shri Suresh Maheshwari (i.e. the assessee) Shri Arvind Jain (as second party). The AO further noted that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven as per the agreement and further, only Rs.75 lacs were given through cheque and the assessee accepted cash payment of Rs.11 lacs only. Thus, the AO made an addition of Rs.50,00,000/- in the assessee s income as unaccounted cash payment for the A.Y. 2009-10. Further, the AO also by making a reference to the clause (34) of the agreement dated 16-03-2009, noted that Rs.1,00,00,000/- was given earlier to Shri Sushil Kumar Bajpai by the assessee which would be repaid from the advances, bookings etc. to the assessee. The AO concluded that Rs.1,00,00,000/- was given by the assessee out of his undisclosed income and accordingly, the AO made an addition of Rs.1,00,00,000/- in the assessee s income for A.Y. 2009-10. Thus, in aggregate, the AO made an addition of Rs.1,50,00,000/- in the assessee s income for A.Y. 2009-10 on account of unaccounted cash payments to Shri Sushil Kumar Bajpai. 20.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions. The ld. CIT(A) noted the contention of the assessee that the agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed colony In the JVA dated 16.03.2009 , as per clause (6), a sum of Rs.1,25,00,000/- was to be paid, Rs.75,00,000/- through cheques and Rs.50,00,000/- through cash. Further, as per clause (7), second party paid Rs.11,00,000/- in cash on 23.03.2009 and balance amount of Rs.1,14,00,000/- will be paid between 01.04.2009 to 10.04.2009 which include a sum of Rs.75,00,000/- through cheques and Rs.39,00,000/- through cash. - 61 2 Only a sum of Rs.75,00,000/- actually paid through cheques and Rs.11,00,000/- through cash Under such agreement, only Rs.75,00,000/- was paid through cheques on various dates during F.Y. 2009-10 (A.Y. 2010-11). Further, a sum of Rs.11,00,000/- was paid by the assessee in cash, on behalf of all 3 partners. - - 3 Clause 34 of JVA. No such cash paid by assessee The clause reads: Factually, no cash was paid in the past by the assessee. Also gets established from the cancellation agreement which does not contain referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) to such persons. - - 10 CIT(A) verified the ownership of lands The ld. CIT(A), at first para on page no. 72 of his Order, had verified from online land revenue records that the lands were still acquired by Shri Sushil Kumar Bajpai, Shri Vaibhav Sharma Shri Upendra Singh and no such joint venture actually executed for construction of duplex bungalows. - - 11 Impugned document is not speaking one, hence ought to be considered as dumb In the JVA, anomalies are persisting and various important details are missing such as dates of execution of JV agreement (first page states 16.03.2009 and clause 7 states आज दिनांक 23.03.2009 ), signature of all partners (Shri Arvind Jain did not sign), details of alleged payment of Rs.1 crore by assessee at clause (34), not notarized etc.. - 59,61, 65 21. Before us, the ld. counsel of the assessee contended that the joint venture agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone through the judgments and decisions referred to and relied upon by both the sides. We find that the AO has made the impugned addition on the basis of one Joint Venture Agreement dated 16.03.2009 executed between some Shri Sushil Kumar Bajpai (as first party) and Shri K.L. Sharma, Shri Suresh Maheshwari Shri Arvind Jain (as second party), for constructing residential duplexes at 6.76 acre of land situated at Khasra No. 89/1/1, 89/1/3, 89/1/4, 88/2 88/3 at village Narela, Tehsil Huzur, Bhopal. Such JV agreement was found and seized as page no. 33 to 39 of LPS-3 during the course of search from the residence of the assessee. The said agreement has also been reproduced by the AO in the assessment order. Under such agreement, the second party was supposed to undertake the construction work on the lands owned by the first party. As per the terms of agreement, the second party would pay a sum of Rs.1,25,00,000/- as advance to the first party out of which a sum of Rs.75,00,000/- through cheque and Rs.50,00,000/- in cash. It was also stated in the agreement that cash of Rs.11 lacs had already been paid and the remaining amount and the remaining amount was required to be paid from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V agreement. Further, there is sufficient merit in the contention of the assessee that the AO, except solely relying upon the uncorroborated draft agreement, had not conducted any independent enquiry from the persons whose names were found noted in such agreement by issuing summons u/s. 131 or letters u/s. 133(6) to such persons. ld. CIT(A), on page no. 72 of his Order, had given a finding that upon verification from online land revenue records, it was found by him that no such joint venture actually executed for construction of duplex bungalows and the lands bearing khasra no. 88/2, 89/1/2, 89/1/3 89/1/1 were still owned by Shri Sushil Kumar Bajpai, Shri Vaibhav Sharma and Shri Upendra Singh. 22.5 We are thus in agreement with the findings of the ld. CIT(A) to the effect that the onus of proof lies upon him who affirms and not upon him who denies. We find that the Ld.AO grossly failed to bring on record any cogent material to establish the execution of the proposed Joint Venture Agreement and has merely ventured into making the impugned addition in the hands of the assessee. In such circumstances, we find sufficient force in the contention of the ld. counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sunita Maheshwari. Accordingly, the Ground No. 1 of the Revenue for A.Ys. 2010-11, 2012-13 and 2013-14 are hereby dismissed. 24. Ground No. 2 and Ground No. 3 of the Revenue for A.Y. 201213 and A.Y. 2013-14 24.1 Through the Ground No. 2, the revenue has challenged the action of the ld. CIT(A) in deleting the additions of Rs.1,00,00,000/- and Rs.3,00,00,000/- made by the AO respectively for A.Y. 2012-13 and A.Y. 2013-14, on substantive basis, on account of unaccounted cash loans given to Shri Bhav Singh Rajput. Further, through the Ground No.3, the revenue has challenged the action of the ld. CIT(A) in deleting the additions of Rs.5,50,000/- and Rs.99,00,000/- made by the AO respectively for A.Y. 2012-13 and A.Y. 2013-14, on substantive basis, on account of unaccounted interest income from cash loans given to Shri Bhav Singh Rajput. 24.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of search, page nos. 6 to 8 of LPS-13 were seized. From such loose papers, the AO noted that it was an unsigned and undated loan agreement between Shri S.K. Maheshwari (assessee) Smt. Sunita Maheshwari (as first party) and Shri Bhav Singh Rajp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO concluded that even though the seized agreement was unsigned, however it was duly executed and accordingly, the assessee had given cash loan of Rs. 4 crores to Shri Bhav Singh Rajput and charged interest @2.75% per month. Thus, the AO made additions of Rs.1,00,00,000/- and Rs.3,00,00,000/- respectively for A.Y. 201213 and A.Y. 2013-14 thereby aggregating to a sum of Rs.4,00,00,000/-, on substantive basis, in the assessee s income on account of unaccounted cash loans to Shri Bhav Singh Rajput. The AO further stated that substantive addition was made in the hands of the assessee as his name appeared in the seized cheque and the land was also transferred in his name. But, the loan agreement also bear the name of Smt. Sunita Maheshwari, hence a protective addition of Rs.4,00,00,000/- has also been made in the hands of Smt. Sunita Maheshwari. The AO, on the basis of para (3) of loan agreement regarding charging of interest @2.75% p.m., also computed amount of interest income on the aforesaid cash loans at Rs.5,50,000/- for A.Y. 2012-13 and Rs.99,00,000/- for A.Y. 2013-14 and made additions in the assessee s income for such years, on substantive basis. 24.3 Aggrieved with the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The loan agreement is not signed by any of the parties and not by any witness. Further, the loan agreement is undated. - 56 to 58 2 Only a sum of Rs.25,00,000/- actually paid through cheque by Smt. Sunita Maheshwari on earlier occasion which also got repaid Only a loan of Rs.25,00,000/- was given by Smt. Sunita Maheshwari to Shri Bhav Singh Rajput through account payee cheque bearing no. 469589 dated 02-05-2012 drawn on Canara Bank and the same had also got repaid by Shri Bhav Singh Rajput on 31-03-2015 vide cheque no. 52015 which got deposited in the aforesaid bank account of Smt. Sunita Maheshwari. Apart from above, no other amount was given by the assessee or his wife to Shri Bhav Singh Rajput and no interest income received. - - 3 Draft loan agreement which did not materialize The agreement was merely a draft. Since it had never got executed, it was never acted upon. - - 4 Undated Cheque of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opening para of the draft agreement that loan of Rs.2 crores was given earlier by the first party to second party and the second party was making regular payment of interest on such loan. During the course of search, no incriminating material was found which could suggest that the cash loan of Rs.2 crores was given earlier to Shri Bhav Singh Rajput. - 56 25. Before us, the ld. counsel of the assessee strongly contended that the impugned loan agreement was undated, unsigned and was just a draft agreement which did not materialize at all. The ld. counsel for the assessee vehemently argued that the agreement was neither signed by both the parties nor by any witnesses and it was neither on a stamp paper nor notarized. It was further contended that the wife of the assessee Smt. Sunita Maheshwari on an earlier occasion had given a loan of Rs.25,00,000/- to Shri Bhav Singh Rajput through banking channels which was also repaid by him. As per the assessee, except the above loan of Rs.25,00,000/-, no other amount was given by him or his wife to Shri Bhav Singh Rajput as loan. It was also contended that the undated cheque of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt namely Shri Bhav Singh Rajput. Such fact has also been conceded by the ld. CIT (DR) before us. 26.3 We find that the AO has referred to one undated cheque of Rs.75 lakhs issued by Shri Bhav Singh Rajput in favour of the assessee, which was found and seized during the course of search and the AO has alleged the same as a security cheque given by Shri Bhav Singh Rajput against the cash loan given by the assessee under such agreement. We find that the AO has proceeded on mere presumption and undisputedly, there is no material on record which could relate the aforesaid cheque of Rs.75 lakhs with the subject loan agreement. As against the same, it was contended by the assessee that such undated cheque of Rs.75,00,000/- was not related to the loan agreement and the assessee, in his statement recorded during the course of search, had categorically stated that such cheque was given for another land deal which did not get materialize. We also find that the draft affidavit referred to by the AO at page no. 31 of the Assessment Order, was not related to the said loan agreement and it was undated Joint Affidavit of Shri Bhav Singh Rajput and Shri Sunil Maheshwari in respect of some sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement, the figures written on which had been struck off, cannot be a basis of addition in this case, especially in the absence of any other incriminating or corroborating evidence of exchange of cash. 26.4.3 The Coordinate Bench of ITAT Mumbai again in the case of Shri Bharat Singh vs. ACIT [ITA Nos. 2001 3256/Del/2017 Dated 25.01.2019] held as under: We are of the opinion that no addition can be sustained only on the basis of the unsigned draft agreement to sell found from the premises of the third party and that too without any corroborative evidences. Accordingly, we set aside the order of the Ld. CIT(A) and the Assessing Officer on the issue in dispute and direct the Assessing Officer to delete the addition for alleged cash received on sale of 1st floor of the property under reference. The grounds No. 2 and 3 of the appeal are, accordingly, allowed. 26.4.4 We also find that this Tribunal in the case of ACIT vs. Shri Mohanlal Chugh and Others (2021) 42 ITJ 69 (Trib.Indore) has held as under: We also find that the Assessing Officer, except placing his reliance on the payment terms stated in the unsigned and undated agreement, could not bring any corrobora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.2 Briefly stated facts of the issue, as culled out from the records, are that the AO noted that during the course of search, page nos. 19 20 of LPS-4 were seized which contain ledger account of cash paid against loan repayments handed over to Shri Vijay Maheshwari and others between 03.01.2012 to 23.05.2013 totaling to Rs.1.62 crores. Further, page no. 21 of LPS-4 also contains month wise amounts from January, 2012 to August, 2012 totaling to Rs.300 lacs. The AO also scanned the relevant loose papers at page no. 42 to 44 of the assessment order. The AO noted that these loose papers are systematic ledger accounts and monthly sheet, the veracity of transactions contained cannot be doubted. The AO concluded that on page no. 21, cash loan of Rs.3,00,00,000/- was given by the assessee before January 2012 and schedule was fixed for repayment. Finally, the AO made an addition of Rs.3,00,00,000/- in the assessee s income for A.Y. 2012-13 on account of unaccounted cash loans given. 27.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marginal Notes Submission in Brief AO s Comments Relevant Pages of Paper Book 1 Projection of the assessee for receipts/ expenses The assessee is a builder having various projects at various sites. The assessee might have prepared the same for estimating the future receipts in some project or estimating the future expenses of some project. - 71 2 Not related to any loan Nowhere in the entire page, there is any mention of any name of payer of loan or receiver of loan. If such a huge amount is given, atleast there would be some name. Date on which the alleged loan was given is not mentioned anywhere. On what basis, the AO presumed that loan was given during the previous year relevant to A.Y. 2012-13? - 71 3 Vital details missing The very basic details such as loan beneficiary, agreement of loan, terms and conditions of loan, date of loan, mode of loan in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract of some ledger. It is not clear whether the such ledger pertains to the assessee, especially when there is no name of the assessee anywhere. Further, the narrations also do not suggest whether they have been paid by/through the assessee. Entries in such ledger are not corroborated with any other evidence found during search. - 71 28. Before us, the ld. counsel of the assessee contended that the assessee was a builder having multiple projects at various sites and generally, the builders to estimate receipts or expenses in the projects, prepare some projections. The ld. counsel for the assessee vehemently argued that the loose paper did not contain vital details such as name of the receiver of money or payer of money, date of loan, mode of giving the loan etc. It was further contended that the presumption of the AO for signature on the loose paper is actually written as 1 July . The ld. counsel for the assessee also contended that if the page no. 19 20 of LPS-4 are presumed to be related with recovery of loan, then as per accounting principles, the entries should have been appearing on the credit side and not on the debi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounting principles, the entries should have been on credit side and not on the debit side. 29.3 We find that the AO has failed to bring on record any single corroborative material or evidence from which it could be established that the cash loan of Rs.3,00,00,000/- was actually given by the assessee. We find sufficient force in the contention of the ld. counsel for the assessee that the onus was heavily lying upon the AO to establish the contents of the seized loose papers beyond all doubts and the AO has miserably failed to do so. We also find that the AO, except solely relying upon the uncorroborated loose papers, had not conducted any independent enquiry. Such fact has also been conceded by the ld. CIT (DR) before us. 29.4 In view of above discussions and our detailed findings, we consider it appropriate to hold that there is no evidentiary value of the impugned loose sheets especially in a circumstance when the AO had neither brought any corroborative material on record nor made any independent enquiry from the persons whose names were stated in the said loose papers. Thus, the said loan agreement could only be termed as a dumb document. Since we have already dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee before us. However, we are not inclined to accept the contention of the assessee that no warrant of authorization was issued in his name. We find that at para (3.0) of the Assessment Order, the AO has clearly stated that a Warrant of Authorization was issued for carrying out search operations u/s. 132 of the Act at residential premises of the assessee at A-61, Indrapuri, Bhopal on 12.08.2014 and bank locker no. 104, Central Bank of India, Narela Shankri Branch, Bhopal on 13.08.2014. Thus, the plea raised by the assessee is devoid of any merit. We, therefore, do not find any infirmity in the findings of the ld. CIT(A) in dismissing the legal ground so raised by the assessee. Accordingly, the legal ground so raised by the assessee before us is hereby dismissed. 31.1 Now, we take up the appeals filed in the case of Smt. Sunita Maheshwari for the assessment years 2009-10, 201011, 2012-13 and 2013-14. 32.2 The brief facts of the case as culled out from the records are that the assessee is an individual presently aged 56 years. The main sources of income of the assessee were from rental income from house properties and interest income. The assessee duly furnished her return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that during the course of search and post-search proceedings, it was noticed that the assessee had made huge investment in hostel building located at 208 209, Indrapuri, Sector-C, Bhopal. Accordingly, during the course of the assessment proceedings, the AO made a reference to DVO, Bhopal. The AO, as per DVO s report dated 07-11-2016, noted that the assessee had made huge investment in construction of hostel building and the same had not been declared by the assessee in her books. The AO further noted that as against the investment declared by the assessee at Rs.37,85,728/-, the DVO had assessed the same at Rs.81,40,800/-. The AO required the assessee to show-cause as to why the difference be not treated as undisclosed investment in hostel building and addition should not be made on the basis of DVO s report. In response, the assessee vide her letter dated 03-12-2016, filed her detailed objections, which have been reproduced by the AO at para (10.4) on page no. 29 of his Order. Finally, the AO, by discarding the objections of the assessee, made an addition of Rs.43,55,072/- on account of undisclosed investment in hostel building for A.Y. 2009-10 on the basis of the DVO s Report. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference in CPWD PWD rates and 5% for selfsupervision) and prepared a comparative picture of investment shown by the assessee and that estimated by the DVO. Accordingly, the ld. CIT(A) deleted the partial addition to the tune of Rs.24,42,240/- and confirmed the remaining addition of Rs.19,12,832/-. 36.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 36.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. The learned CIT(DR) also filed a Paper Book containing the judgments in favour of the Revenue on the issue of addition made in the completed year of assessment in a completed year of assessment. 36.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: E. Key Points of Assessee s Submission and Relevant Pages of Paper Book: S. No. Marginal Notes Submission in Brief AO s Comments Relevant Pages of Paper Book 1 Not based upon any incriminating material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Books along with bills duly produced before AO DVO The assessee had duly produced the necessary bills, vouchers, records etc. both before the AO DVO but, neither the DVO nor AO pointed out any specific defect or discrepancy in the records. Hence, no addition can be made. ITO vs. Dreamland Enterprises 80 Taxman 143 (ITAT Ahd) - - 7 Books of Account not rejected by the AO The AO, neither at the time of making reference to the DVO nor after receipt of the DVO s report, rejected the books of account of the assessee u/s. 145(3) of the Act before making the subject additions. - - 8 Supporting documents not provided by DVO Despite making specific request by the assessee, the necessary documents, information, methods, basis, etc., were not provided by the DVO/AO. - - 9 Independent Valuation Report obtained by the assessee The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Delhi High Court in the case of CIT vs Kabul Chawla 380 ITR 573 (Del.) and other judicial authorities on this issue. The ld. Counsel for the assessee also stressed that the assessee had filed her detailed objections challenging the valuation made by the DVO but, these objections remained uncontroverted by the AO or the DVO. The assessee firm further pointed out various mistakes committed by the DVO while making valuation of the hostel building such as adoption of CPWD rates instead of State PWD rates, etc. The assessee also contended that the DVO did not consider the important factors prevailing in her case such as experience of the assessee group in this line of business which would bring them economies of scale in the cost of material and labour. 37.2 The Ld. Counsel for the assessee argued that a valuation report was also obtained from the Government approved registered valuer and the same was filed before the AO wherein cost of construction was estimated close to the amount of actual cost of construction incurred by the assessee. The Ld. Counsel vehemently argued that DVO prepared the valuation report by applying CPWD rates completely ignoring the fact that the hostel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed much prior to the date of search with the consequence that the income shown by the assessee in her return u/s. 139 had attained finality prior to the date of the search. Thus, we find that the impugned addition of Rs.43,55,072/- made by the AO on account of unaccounted investment in construction of hostel building in a completed assessment year without having recourse to any incriminating material found during the course of the search. Such fact has also been fairly admitted by the ld. CIT (DR). Therefore, in light of the findings of the decision of Hon'ble Delhi High Court in case of CIT vs. Kabul Chawla, (2016) 2 ITJ online 869 (Delhi): (2016) 380 ITR 573: (2015) 281 CTR 45: (2015) 234 Taxman 300 and also decision of Pr. CIT vs. Meetagutgutia (2020) 8 ITJ online 273 (Delhi): (2017) 395 ITR 526, we are of the considered view that proceedings initiated u/s 153A of the Act for A.Y. 2009-10 being non-abated and completed assessments deserved to be quashed since no incriminating material was found during the course of search thereby warranting initiation of proceedings u/s 153A of the Act for these years. Thus, following the settled judicial precedence which are squarely applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid partnership firm while adjudicating the Appeal Nos. IT(SS) 149 to 151/Ind/2019 in case of M/s. K.L. Sharma Sunita Maheshwari and therefore, as a consequential result, we find no justification in the action of the AO in making the additions in the hands of the assessee on the allegation of receipts aggregating to a sum of Rs.3,10,00,000/- from the partnership firm. Accordingly, we do not find any infirmity in the findings of the ld. CIT(A) in deleting the additions of Rs.1,70,00,000/-, Rs.1,00,00,000/- and Rs.40,00,000/- respectively for A.Y. 2010-11, A.Y. 2012-13 and A.Y. 2013-14, made by the AO, on substantive basis, on account of unaccounted cash receipts from partnership firm M/s. K.L. Sharma Sunita Maheshwari. Accordingly, the Ground No. 1 of the Revenue for A.Ys. 2010-11, 2012-13 and 2013-14 are hereby dismissed. 40. Ground No. 2 and Ground No. 3 of the Revenue for A.Y. 2012-13 and A.Y. 2013-14 40.1 Through the Ground No. 2, the revenue has challenged the action of the ld. CIT(A) in deleting the additions of Rs.1,00,00,000/- and Rs.3,00,00,000/- made by the AO respectively for A.Y. 2012-13 and A.Y. 2013-14, on protective basis, on account of unaccount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Indrapuri, Bhopal. According to the AO, the case of the assessee was centralized in the jurisdiction of DCIT (Central)-1, Bhopal by the ld. CIT, Bhopal u/s. 127 of the Act vide Order dated 22-07-2016. Further, as per AO, the reason for initiation of assessment proceedings u/s. 153C was recorded on 05-072016. Thereafter, Notices u/s. 153C of the Act were issued to the assessee and in response, the assessee furnished letters declaring same income for the assessment years under consideration as was declared by him in the returns filed u/s. 139(1) of the Act. During the course of the assessment proceedings, the assessee also furnished copies of his financial statements for the previous years relevant to the assessment years under consideration. Subsequently, Notices under s. 143(2) 142(1) were issued to the assessee from time to time by the AO. In response to the Notices so issued, the assessee furnished his written replies along with the documentary evidences. Finally, the Assessing Officer framed the assessments for the relevant assessment years u/s. 153C r.w.s. 143(3) of the Act by passing a common Order dated 15.12.2016 by making certain additions. 42. Aggrieved assessee pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee. The ld. CIT(A) then discussed the principle of section 68. Finally, the ld. CIT(A) held that the assessee failed to discharge the burden of proof by not establishing the genuineness of transaction and creditworthiness of the party. Accordingly, the ld. CIT(A) confirmed the addition of Rs.8,00,000/- in the assessee s income. 45.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 45.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. The learned CIT(DR) also filed a Paper Book containing the judgments in favour of the Revenue on the issue of addition made in the completed year of assessment in a completed year of assessment. 45.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: C. Key Points of Assessee s Submission and Relevant Pages of Paper Book: S. No. Marginal Notes Submission in Brief Relevant Pages of PB 1 No reference of any incriminating material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the impugned addition of Rs.8,00,000/-. [refer para (6.1) on page no. 10 of the assessment order] - 2 No question of belongingness arise. Decision of SC in Super Malls Pvt. Ltd. The Hon'ble Supreme Court in the case of Super Malls Pvt. Ltd. vs. PCIT (2020) 423 ITR 0281 (SC), have laid down the law that before issuing notice under Section 153C, the Assessing Officer of the searched person must be satisfied that any document seized or requisitioned belongs to a person other than the searched person. Since on the subject issue, the AO was not having any incriminating material, the question of belongingness/pertainingness of any material does not arise at all. In such eventuality, the assessment order so passed by the AO u/s. 153C of the Act deserves to be knocked down on this legal ground alone. - S. No. Marginal Notes Submission in Brief Relevant PB Page 1 Nature of transaction not a loan but advance Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the subject transaction was not that of a loan but was an advance against sale of house and Shri Pushpraj in his confirmation had clearly stated that he had given advance against sale of house. It was further contended that the assessee had duly furnished confirmation letter of Shri Pushpraj Singh containing his complete name, phone no. and address and the AO could have issued a summons u/s. 131 or notice u/s. 133(6) to Shri Pushpraj Singh to verify the claim of the assessee. However, no independent enquiry was made by the AO. 46.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. 46.2 As regard the legal ground of the assessee that the impugned addition has been made by the AO without having recourse to any incriminating material, we find that in the instant case, the assessment order has been framed by the AO in pursuance of the search operations carried out u/s. 132 of the Act on 12.08.2014. We fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y following the settled judicial precedence which are squarely applicable on the instant issue we are of the view that no addition could have been made by the AO in the assessee s income without having recourse to any incriminating material. Accordingly, we are inclined to delete the addition of Rs.8,00,000/- so made by the AO for the A.Y. 2013-14. Since we have already deleted the addition on the legal ground raised by the assessee, we do not consider it necessary to adjudicate the issue on merits. 46.5 We find that through legal ground No. 2, the assessee has contended that the AO had invoked the provisions of s.153C of the Act in the case of the assessee for the A.Y. 2013-14 without having recourse to the incriminating material belonging/ pertaining to the assessee for such assessment year and the very initiation of the assessment proceedings by the AO is illegal and void-ab-initio. We do not find any force in the plea of the assessee for the very reason that the AO had made some other additions in the hands of the assessee for the A.Y. 201314 which were based upon the incriminating material found during the course of search. Thus, we do not find any infirmity in the action o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred an appeal for the subject assessment year before the ld. CIT(A). The ld. CIT(A), vide Para (4.2) at page no. 13 14, held that the paper clearly states the amount of loan taken and repayment of loan and it was not a projection but it was an actual transaction between the assessee and Shri R.B. Singh. Finally, the ld. CIT(A) confirmed the addition made by the AO. 48.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 48.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 48.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: Key Points of Assessee s Submission and Relevant Pages of Paper Book: S. No. Marginal Notes Submission in Brief Relevant Pages of PB 1 Loose paper seized from premises of third person The subject loose paper page no. 48 of LPS-6 was seized during the course of search from the premises of Smt. Sunita Maheshwari. No presumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri asked Shri R.B. Singh to prepare a promissory note undertaking the necessary details. In such circumstances, Shri R.B. Singh prepared a draft and submitted to Shri S.K. Maheshwari. However, subsequently, Shri R.B. Singh got his funds arranged from some other source and he did not obtain the said funds from Shri S.K. Maheshwari or the assessee. The factum of the non-materialization of transaction is clearly evident from the loose paper itself which is completely unsigned, missing various important details such as mode of loan, address of payer/payee etc. In such eventuality, merely because some draft unsigned and unexecuted promissory note was found from the premises of a third person, no addition can be made in the hands of the assessee. 27 2 No enquiry by the AO The AO merely on the basis of some draft, unsigned and unexecuted promissory note, ventured into making of addition in the hands of the assessee. The AO could have made an enquiry from Shri R.B. Singh by issuing summons u/s. 131 or notice u/s. 133(6) which was not done. - 49. Before us, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not find any force in the legal plea raised by the assessee and therefore, the legal ground no. 2 of the assessee is hereby dismissed. 50.3 On merits of the issue, we find that the subject loose paper which was in the form of a promissory note written by Shri R.B. Singh was undated and unsigned. Further, we also find that the AO except relying on the subject loose paper, could not bring any cogent material on record to establish that the loan was actually given by the assessee. We also find that the AO had not conducted any independent enquiry from Shri R.B. Singh for unearthing the truth on surface. Such fact of non-conduction of any enquiry by the AO has also been conceded by the ld. CIT (DR) before us. Thus, we find that the AO merely on the basis of some rough draft, unsigned and unexecuted promissory note, ventured into making of addition in the hands of the assessee which is not permissible in the eyes of law. In such circumstances, we do not find any reason to uphold the addition made by the AO on this count. Accordingly, we set aside the findings of the ld. CIT(A) in confirming the addition made by the AO and we hereby direct the AO to delete the addition of Rs.20,30,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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