TMI Blog2023 (12) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... l belonged to the assessee company which is incriminating nature, in the case in hand the additions have been made based on the incriminating materials found during the search, therefore, the orders relied by the assessee are not applicable and we find no merit in Ground No. 1 of the Assessee, accordingly, Ground No. 1 of the Assessee is dismissed. Interest paid on post dated cheques - AO made addition regarding the interest paid on post dated cheques outside the books of accounts in cash - CIT(A) partly confirming the addition - HELD THAT:- Since, we have already upheld action of the A.O. in invoking the provisions of Section 153C of the Act, we find no merit in the submission of the Assessee. Further, considering the fact that the Ld. CIT(A) has elaborately considered the seized material and gave a factual finding which has not been controverted by the assessee even on merits, we find no error or infirmity in the order of CIT(A). Disallowance of additional payment - AO disallowed u/s 37 on account of additional payment for purchase of land - CIT(A) gave a direction to quantify the disallowance made by the A.O. and as per the directions while giving appeal effect, confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endering the assessment also as bad in law and vold ab- initio. 2. That on the facts and circumstances of the case and in law, the CIT(A) erred in holding to quote, 'that seized documents definitely proved that interest is paid on PDC' in view of the fact:- i. that there is no specific reference of any seized material belonging to the appellant on the basis of which above finding was given, and ii. that no enquiries were made from any of the alleged recipients of the interest and none was confronted with relevant document(s). 2.1 That the finding of the CIT(A) is based on mere surmises and conjectures without proof and corroboration by independent evidence. 2.2 That without prejudice the CIT(A) erred in upholding the addition of interest for the period for which PDC's were extended. 2.3 That without prejudice the CIT(A) erred in not quantifying the addition and instead giving ambiguous directions to compute the interest after six months from the date of sale. 3. That on the facts and circumstances of the case and in law the CIT(A) erred in not accepting the appellant's contention that Additional Payments having not been clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained/confirmed following additions/disallowances:- i) Addition on account of interest paid on PDCs of Rs. 27,94,457/- ii) Disallowance u/s 40A(3) of Rs. 65,000/-. iii) Addition on account of disallowance made as per explanation to Section 37(1) in respect of additional payment of Rs. 1,05,000/-. 4. As against the deletion of the addition by the CIT(A) the Department filed an Appeal in ITA No. 2739/Del/2013 which was dismissed by the Tribunal on 07/11/2019 due to low tax effect. Aggrieved by the order of the CIT(A) in sustaining the additions/disallowances the Assessee preferred the present Appeal on the grounds mentioned above. 5. In Ground No. 1, the assessee contended that the CIT(A) erred in rejecting the Assessee s contention that the assumption of jurisdiction by Assessing Officer for making assessment u/s 153C of the Act was bad on facts and in law, thereby rendering the assessment also as bad in law and void ab- initio. 6. The Ld. Counsel for the assessee submitted that the assessment was completed u/s 153C of the Act as no search was carried out on the assessee, the A.O. relied upon various seized documents found during the course of search on BPTP Group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 4 Page 32, A-1, BO- 1 36 Document relate to the issue of Additional Payment made duly recorded in books. Not relate to year under consideration. Not incriminating 5 Page 57, A-1,B0-1 38 Not incriminating document. Not relate to year under consideration. Not incriminating 6 Page 12, A-1,BO- 3 53 Copies of cheque. Not incriminating seized document Not incriminating 7 Page 13,A-1, BO- 3 54 Copies of cheque. Not incriminating seized document Not incriminating 9. On the contrary, on perusal of order of the CIT(A), regarding Findings on seized material , it is found that the Ld. CIT(A) has referred the seized materials at page No. 7 to 14 of the order. Apart from the same, there is a specific finding of the CIT(A) that the analysis of the seized documents reveals that the seized documents definitely p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies of BPTP and some seized paper could not be related to specific company. Therefore, it is proper to apply this formula for all companies under the common management of BPTP Group, head by Shri Kabul Chawla. All these companies are closely linked. Some companies purchase land and transfer the same to M/s BPTP Ltd, or Countrywide Promoters (P) Ltd. for Housing or commercial projects are ultimately developed and sold by M/s BPTP Ltd and Countrywide Promoters Ltd. or in stray case by some other companies. Assessing Officer has applied the case of Eusuf Ali for applying interest on PDCs for all companies of BPTP Group for all Assessment Year under consideration. Ld AR has tried to differentiate the above cited case on facts. In my view, as interest payment on extension of period of PDCs are established on numerous seized documents. A trend is established for the group as the overall management is controlled by one person Sh. Kabul Chawla and activities of all companies are interrelated. If it is not possible to work out the extension of PDCs in each case then A.O. is directed to recomputed interest on PDCs after six months from date of issue of PDCs i.e. date of sale, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel has not made any submission on the merit of the case. 13. Per contra, the Ld. Departmental Representative relied on the findings of the Lower Authorities 14. The Ld. CIT(A) while partly confirming the addition made by the A.O., gave elaborate findings on the seized materials and arrived at the conclusion in following manners:- 6.3 I have considered the findings of Assessing officers, written submission of Ld. AR on this issue. Copy of seized material on which A.O. has relied are part of Assessment order. The contents of seized material referred in Assessment Order are very relevant for deciding the issue. The details of contents and A.O. view and Ld AR's argument are as under:- (i) First seized material on which A.O. has relied is Page 65 of Annexure A 12 party BO III seized from B-1/ A-5, Mohan Nagar Indl co-operative Estate, New Delhi. A.O. has stated that total amount of PDCs are Rs. 188 crores and mentioned that interest @ 15% is paid on PDCs Ld AR during appellate proceedings has stated that definitely this page contains details of PDCS which the company keeps record to manage funds availability for clearing the PDCs. Nowhere on this paper, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphasized that this paper is only at the best estimate for including interest component in sale consideration. 1 have considered contents of this paper, finding of AO and argument of Ld Ar. As this paper does not contain any details of PDCs issued to seller to seller. Therefore, it cannot be concluded that interest of Rs. 5,05,84,042 was paid. In view of the above, this paper only gives some suspicion that interest might be paid on the balance. (iii) 3 rd seized paper relied in Assessment Order is Page 68,69 70 of Annexure A-l of party BO-1 (officer of BPTP Group, 16, Barakhamba Road, Cannaught place,' New Delhi. A.O. has mentioned that post dated cheques amounting to more than Rs. 109 crores were pending as per these seized paper. A.O. has correlated sale of land to various seized document and different persons as under:- S. No. Name of the seller Area of Land Amt. of sale consideration Amt of additional payment Reference of seized material 1 Smt. Rajwati 5.56 acres Rs. 2,25,75,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, on this ground he contended that also there is no relevance of this paper on this issue. (v) Page No. 1, Annexure A-1, Party BO-III This page is receipt of cash interest signed by seller of land namely, Ballu Alias Balram, Gyasi Ram and Chander singh and Chhotu Ram of Rs. 85.850, Rs. 3,43,500, Rs. 3,43,500 and Rs. 3,43,500 respectively duly signed by Balram, Chhotu Ram, Chander Singh and Gyasi Ram in lieu of extension of due date PDC for 3 months from 25.11.2006 to 25.02.2007. Earlier PDCs details are as under: Rs. DATED Cheque No. Ballu Ram Rs. 2,89, 375 25.11.2006 194267 Gyasi Ram Rs.1,59,791 25.11.2006 883467 Chotu Ram Rs. 1,59,791 25.11.2006 883468 Chander Singh Rs. 1,59,791 25.11.2006 883488 The interest paid is of Rs. 11,16.350/- A.O. has held that interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptable as the receiver has signed, the voucher evidencing the payment of interest. Ld AR has explain that land was purchased in Countrywide (P) Ltd. (x) Page 71. A-9, BO-3. This paper is computer generated and having five column containing date, cheque no.. party name amount and date change It is interesting to note that the names are same as Page 36 discussed in just earlier paragraph i.e. Ram Singh and Nanak and the amount of cheque is Rs. 50 lacs and 30 lacs respectively (totaling to Rs. 80 lacs) and the remark is written as interest paid below 'date change'. The Ld AR again reiterated the stand taken before the A.O. that there is no Land transaction of the company M/s Super Belts (P) Ltd. with Mr. Ram Singh and Nauah. This explanation is contrary to the explanation given in just earlier paragraph. Therefore, the interest payment is made on Rs. 80 lacs with the remark 'date change. It mean for extension of date of PDC, interest is paid. (xi) Page 31, Annexure A-2 party BO-3. It is again a debit voucher dated 6.11.2007 for interest paid to Kishan Singh for 25,000 for November on account of Rs. 20,00,000/-. Again the interest is paid @ 15% per annum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- (2 months) Interest = 8,75.000/- 25 lacs cheque cleared on 6-2-2007 Bal. Amt. 3, 25, 00,000/-(2months) Interest = 8, 12,500/- Total Interest 5,00,000 8,75.000 A.O. has correlated these transactions with Shalimar Town Planners (P) Ltd. and has stated that these interest paid of Rs. 21.87.500/- was unaccounted in Book of a/c's. Ld AR has reiterated its stand that it is only memorandum and no interest was paid. A perusal of this paper reveals that interest is paid on PDCs for few months, as the paper talks about clearing of cheque on extended time in this paper. (xviii) Page 69, A-9 BO-III This page contains date 2/10/2006. Party name Karan Singhy and Cheque No. 502749 and Amount Rs. 1,40,00,000/- and contains the remark 2 months PDC interest cheque. Ld AR reiterated that the said cheque was replaced to Sh. Karan Singhy by 3 cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 55-56 of Annexure A-23, Party BO-III. It is an oath paper on Non Judicial stamp of Rs. 10 signed by Ramvati and Biro, daughters of late Harijivan stating that they have sold land at Khedikalan and Ramvati has received for Rs. 1.52,94,500 vide cheque no. 834868 and Rs. 4, 20,45,625 vide cheque no. 8348 72 both and dt. 12.10.2007. Biro has received Rs. 1,52,94,500 and Rs. 4.20,45.625 vide cheque no. 834869 and 839873 respectively both dt. 12.10.2007 from Shalimar Town Planners (P) Ltd. The date is extended and interest is receivable. However, no date of extension is mentioned and no interest amount is mentioned in this oath paper. 15. It is observed that the Assessee has challenged the similar addition before the Tribunal in AY 2006-07 2008-09 in ITA No. 1824 1826/Del/2013 wherein the Assessee has not pressed the said ground and the same has been dismissed by the Tribunal. Since, we have already upheld action of the A.O. in invoking the provisions of Section 153C of the Act, we find no merit in the submission of the Assessee. Further, considering the fact that the Ld. CIT(A) has elaborately considered the seized material and gave a factual finding which has not been contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale deed. This Court is of the opinion that the broad interpretation of the Explanation to Section 37(1) of the Act given by the Revenue is in the circumstances of this case not well founded. The other submission is that the such amount has to be taken as falling within the mischief of the said provision, in our opinion, is an incorrect premise. It is not every alleged violation of law, but such violation as results in a penal consequence, determined by that law, which is attracted by Section 37(1). The other interpretation would confer jurisdiction on matters beyond the Income Tax Act. The revenue authorities do not have such powers. Revenue Authority argued that this is to decide what constitutes infraction of other provisions of law. No question of law arises, therefore, on this issue 19. By respectfully following the ratio laid down by the Jurisdictional High Court in the case of Vasundhra Promoters Pvt. Ltd. (supra) and finding the parity, we allow the Ground No. 3, 3.1 3.2 and delete the addition. 20. The Ground No. 4 4.1 are regarding Disallowance of Rs. 65,000/- u/s 40A(3) of the Act. The assessee had purchased land and made part payment of Rs. 65,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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