9911796707
TMI Blog2024 (7) TMI 1368X X X X Extracts X X X X X X X X Extracts X X X X ..... gh its partner Shri Upendra Soni, for construction of building project named 'Royal Imperia'. As per this development agreement, M/s URS Gehna is landowner and Appellant is builder who would construct the project at its own cost on the basis of sharing of the units in the constructed building. The sharing of the units in the constructed building in between the assessee and M/s URS Gehna has been specified in development agreement, which is at PB page 268-272 and 283-292. For the year under consideration, there was no sale of flats and only advance money was received by the Appellant against the booking of the flats in the project Royal Imperia. Appellant booked its sales of Rs. 1,45,13,735/- by adopting percentage of completion method. The books of account of the appellant firm were audited by Chartered Accountant u/s 44AB of IT Act. The copy of the audit report and audited financial statements were filed by the assessee in Paper Book at page no 54-72. The department carried out search at the premises of Resonance Group, Kota and Shri Upendra Kumar Soni u/s 132 of the Act on 07.09.2017, where certain documents were seized. According to the AO documents seized vide Annexure AS Exhib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground of invalidity of assessment on for the reason of non-mentioning of DIN in the assessment order dated 27.12.2019 for the reason that the DIN issued for demand notice was communicated to appellant on 28.12.2019 and also replying the judgement of Hon'ble Supreme Court. (para 4.8 of the order of ld. CIT (A) at page 8 to 10 of the order). ii) Rejected the ground of non-obtaining the approval as required u/s 153D by holding that the same was validly obtained. (para 4.8 of the order of ld.CIT (A) at page 10 of the order). iii) Rejected the ground of no satisfaction note of search person on the ground that where the AO of searched person and other person are same, then requirement of two satisfaction note are not necessary and one satisfaction note is sufficient. (para 5.6 (i) of the order of ld.CIT (A) at page 18 to 23 of the order). iv) holding that the satisfaction note recorded by the AO of the assessee is reasonable and nexus of the documents found is established with the appellant. (para 5.6 (ii) of the order of ld.CIT (A) at page 23 to 24 of the order). v) holding that the procedure of section 153C was properly followed. (para 5.6 (iii) of the order of ld. CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order that the assessment order has been issued manually in exceptional circumstances and approval of the Chief Commissioner/Director General of the Income tax was obtained before issue of manual communication. It was also argued that though the A.O. issued an intimation letter dated 19.02.2021 for the year under consideration, to inform about the DIN of order passed u/s 143(3) of the Act wherein the date of order is mentioned as 31.12.2019, however, there is no order passed by the department on 31.12.2019 for AY 2018-19 u/s 143(3) in the case of assessee but it was passed on 27-12-2019. Therefore, the said intimation letter issued by the Ld. AO is beyond time limit of 15 working days specified by CBDT Circular and also not with reference to impugned assessment order dated 27.12.2019 passed without DIN. It was also submitted that in the remand report the reference of communication letter dated 28.12.2019 has been given but this communication is with reference to demand notice u/s 156 of IT Act. The Ld. AR submitted that separate DIN is required for each communication so the same cannot be considered as issued for assessment order passed u/s 143(3) dated 27-12-2019 as the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter of Addl CIT. 4.1.3 The Ld. AR of the assessee also argued in detail as regard issue of Satisfaction note recorded by the A.O. for initiating the proceedings u/s 153C of the Act against the assessee, issue of addition on surmises and conjectures and violation of principle of natural justice by not providing the opportunity of cross examination of Shri Upendra Kumar Soni. 4.2 On the other hand the Ld. D/R vehemently relied on the finding of Ld CIT (A) and argued that the AO has issued communication under DIN vide letter dated 28-12-2019 and communication issued for demand Notice u/s 156 is in reference to the assessment order passed by the AO 27-12-2019. Ld. D/R further argued that, the approval by the Additional Commissioner given u/s 153D of IT Act was after due application of mind and the fact of giving approval is duly mention in the body of assessment order itself, therefore there is nothing on record to presume that the approval is given in mechanical manner. It was also argued that before initiation of assessment proceeding, the due satisfaction was recorded by A.O. and the addition is based on the document found & seized during search from the premises of Shri Upendra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has argued the case and filed the elaborate written submission. The brief of the arguments raised by Ld. A/R are as under: - 5.1.1 At the outset, the A/R of the assessee relied on the decision of decision of ITAT Jaipur Bench in the case of M/s Moti Developers (ITA No. 102 to 104/JP/2017 order dated 03.07.2017 and contended that on the identical facts, the similar issue has already been decided by Hon'ble ITAT, Jaipur Bench in the aforementioned case. The findings of Hon'ble ITAT in this case are in Para 3.5 of the order. The Ld. A/R submitted that the fact of the case of the assessee's are identical to facts of above referred case and also submitted the comparison of facts of the case of the assessee viz a viz cash of Moti Developers, which are as under: - S. No. Facts of case of Moti developers Facts of case of Appellant 1. The Appellant (Moti developers) having a land at Janta Colony and entered into a development agreement with Ashirwad Buildtech Private Limited for construction of flats. The Appellant (Shrishti Associate) entered into a development agreement with the land owner M/s URS Gehna. 2. The assessment proceeding u/s 153C was initiated on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant is established. It was also contended that certain documents were found from the possession and control of Shri Upendra Kumar Soni and seized as per Annexure AS page 1 to 83 of Exhibit 5. The AO found the page 83 of the impugned Annexure as incrimination and he provided the copy of this page only to the assessee for confrontation. On this page in column No 1 description of floor is mentioned. In column no 2 Total amount against each floor in totality is mentioned. In column No 3 cash amounts against each floor in totality is mentioned. In column No 4 cheque amounts against each floor in totality is mentioned. In column No 5 & 6 Total Received and balance against each floor in totality is mentioned respectively. The Ld. AR submitted that the name of the assessee is not mentioned over the impugned seized paper page 83. There is division of flats/units in between the assessee and URS Gehna in the constructed building as per the development agreement and details of the flats/units belonging to the assessee is not mentioned over this seized paper. Further the dates of the receipts of the amount by cheque as well as Cash is also not mentioned, therefore year of the receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worked out. 18 22,51,200 2,00,000 0.00 14,00,000 8,51,200 In column Cash received, amount of Rs. 2,00,000 is shown and in colu cheque 0 is shown, whereas in column of Total figure 14,00,000/- is mentioned, Accordingly, the balance is also wrongly worked out. 19 23,24,750 7,50,000 5,00,000 7,00,000 16,24,750 In column Cash received, amount of Rs. 7,50,000 is shown and in cheque received amount of Rs. 5,00,000/- is mentioned. The sum of both the receipts comes Rs. 12,50,000/-, whereas in column of Total figure Rs. 7,00,000/- is mentioned, Accordingly, the balance is also wrongly worked out. 20 23,24,750 0.00 0.00 7,50,000 15,74,750 In column Cash and cheque received, amount 0 is shown. The sum of both the receipts comes 0, whereas in column of Total figure Rs. 7,50,000/- is mentioned. Accordingly, the balance is also wrongly worked out. ii) In some of the cases the Actual sales consideration is more than to consideration mentioned in the sheet S. No. of Sheet Total consideration as mention in the sheet Consideration as per sales deed 9 22,51,200 25,12,386 11 43,79,450 49,50,550 13 22,51,200 27,89,760 57 43,79,450 49,50,550 iii) In the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Balance should be 19,26,400/- as against Rs. 33,26,400/- shown in the sheet. Similarly, entry at S. No. 18, for Flat No 905D, (APB page 80) Total amount stated at Rs. 22,51,200/- cash received stated Rs. 2,00,000/- Cheque Received shown at Rs. 0.00 and Total of these two Cash and cheque shown at Rs. 14,00,000 and outstanding Balance is shown at Rs. 8,51,200/-. Had the cash of Rs. 2,00,000/- is correctly mentioned then the figure in total amount would be 2,00,000/- and figure in Balance should be 20,51,200/- as against Rs. 8,51,200/- shown in the sheet. Similarly, entry at S. No. 19, for Flat No 906E, (APB page 80) Total amount stated at Rs. 23,24,750/- cash received stated Rs. 7,50,000/- Cheque Received shown at Rs. 5,00,000/- and Total of these two Cash and cheque shown at Rs. 7,00,000 and outstanding Balance is shown at Rs. 16,24,750/-. Had the cash of Rs. 7,50,000/- is correctly mentioned then the figure in total amount would be 12,50,000/- as against 7,00,000/- mentioned in the sheet and figure in Balance should be 10,74,750/- as against Rs. 16,24,750/- shown in the sheet. Similarly, entry at S. No. 20, for Flat No 906E, (APB page 80) Total amount stated at Rs. 23,24,750/- c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant. The attention was drawn by Ld. AR towards the following relevant questions and answers of the statements of Upendra Kumar Soni recorded u/s 132(4) of the Act as under: - Answer to Q. No PB Page What has been stated 68 86 Pg 80-83 relates to booking of Royal Imperia; some of flats cancelled as detailed at page 67. (copy not given to assessee) 72 39 Booking rights are with the appellant M/s Sirsthi Associates 74 89-90 Total on money received Rs. 72.07 lacs pertain to M/s URS Gehna 78 92 Total cash received 8,19,19,000/- and Shri Upendra Kumar Soni stated that he will provide the list of refund made. 5.1.5 It is contended that addition was made without any corroborative documentary evidence on record. It was submitted that in the impugned statement, Shri Upendra Kumar Soni has nowhere mentioned the alleged fact and finding of the A.O. that Appellant is also having share in alleged cash money claimed to be received by him whereas as per the answer of Q. No. 78, Shri Upendra Kumar Soni has said that he returned back the advance money on account of cancellation and on-money of Rs. 72.07 lacs belong to M/e URS Gehna. The law of natural justice and fair play d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. Regarding the applicability of section 34 of the Evidence Act and fastening of the liability to third parties on the basis of entries made in the books of account, documents, etc. of the third parties the reliance was placed on the decision of Hon'ble Supreme Court of India in the case of CBI v. V. C. Shukla & Ors. -AIR 998 SC 1406 /JT 1998 (2) SC 172 ) (popularly referred to as Jain Hawala case) and decision in the case of Common Cause (a registered society) and others v/s UOI 2017-TIOL-27-SC Misc (popularly referred as Sahara Diary case). It was also submitted that assessment proceedings before A.O. are quasi-judicial in nature, therefore, the A.O. has to act independently and not merely to rely on some non-corroborative evidence or reference made by some other authority and on this issue the reliance was placed on the decision of (i) C.D. Singh V ITO 77 TTJ (All) 282 and (ii) Kirti Lal Kalidas & Co. Vs DCTT 67 ITD 573, in which reliance has been placed on 48 ITR 34 (SC) 70 ITR 772 (AP) and 77 ITR 6 (SC). It was also argued that document found from the possession of Shri Upendra Soni cannot be considered as found from the possession of Appellant and thus cannot be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the AO of the third person to initiate proceedings as material before him belongs/pertains to third person. In the present case, on the bare perusal of the said satisfaction note, the AO has failed to establish the nexus of the said figure of Rs. 3,96,05,000/- with the only seized incrimination document page 83 of AS-5. There is no clarity in the said satisfaction note about the date or year to which alleged cash receipts belong. In the satisfaction note at page 12 of the Satisfaction Note (APB page 84) in para 3 held the alleged receipts are pertaining to A.Y. 2017-18 and addition is required to be made in the hands of assessee for AY 2017-18, while in the assessment order for no reason and without having any corroborative evidence the same added in the assessment for the A.Y. 2018-19 and not in AY 2017-18. The AO made a general satisfaction note which is not enough to initiate the proceedings u/s 153C of the Act. The said satisfaction note is not speaking. In support of his contention the Ld. AR placed reliance on judgement of Hon'ble High Court of Bombay in the case of Singhad Technical Educational Society v/s. CIT [2015] 63 taxmann.com 14 (Bombay), which was confirmed by Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JP/ 2015 order dated 3/10/2016. It was also argued that the statement recorded u/s 132(4) of the Act are binding only on the person who makes it not to third person. The Ld. A/R also submitted that the addition was made without allowing the assessee cross examination of Shri Upendra Kumar Soni. The AO did not establish the nexus of the statement recorded in the case of Upendra Kumar Soni with Appellant. Secondly, it is also to be appreciated that it is trite law that no addition/adverse inference against the Appellant can be drawn on the basis of statement of any third party unless an opportunity of cross examination has been granted to him. The ld. CIT(A) held that in the remand report proceeding neither the Appellant assessee nor Shri Upendra Kumar Soni attended the office of the AO on the date specified in the communication sent to assessee for cross examination. The ld. CIT(A) failed to appreciate that the AO has not provided to the appellant the copy of complete statements of Shri Upendra Kumar Soni recorded by Investigation Wing and copy of seized documents page 1 to 83 of Exhibit 5 of AS to enable the appellant to make effective cross examine of Shri Upendra Kumar Soni. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the witnesses is a clear case of violation of principles of natural justice. The ld. AR further relied upon the decision of Hon'ble Supreme Court in the case of Kerala V.K.T. Shaduli Grocery Dealer (1977) 2 SCC 777 in this regard. 5.1.9 The Ld. AR submitted that the assessment is based on surmises and conjectures, without having any material or on irrelevant material and thus arbitrary, whimsical, capricious and perverse. The department has carried out intensive search operations over Shri Upendra Soni and during the course of such search no evidence or material was found to show that the alleged unaccounted cash was passed over to the appellant or belongs to Appellant. Rather from the statement of Shri Upendra Kumar Soni it reveals that he received some cash which was later on refunded back by him. He never, said that the cash was passed on the Appellant and no evidence of whatsoever nature was found in this regard. The Ld. A/R submitted that pursuant to search action, statement of Upendra Kumar Soni was recorded u/s 132(4) of I.T. Act where he stated that he received cash of Rs. 72.07 lakh on account of URS Gehna, which were not recorded in his books of accounts and he further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing advance is sourced from real estate business, then also only reasonable profit element on the said booking advance/receipts can be attributed as additional income in the hands of the Appellant. It is also submitted, that if the entire cash receipt is considered as income of the Appellant, then the resulted Net Profit would be 74% of sales which could not be possible in the trade of the Appellant. In support of this argument The ld A/R placed reliance on various decisions including the decisions of Jaipur ITAT in the case of (i) Kedia Real Estate LLP ITA No. 127/JP/2019 order dated 03.06.2019, (ii) Deputy Commissioner of Income Tax Vs Pahar Ganj Grih Nirman Sahakari Samiti Ltd & Others 2005 (10) TMI 237 ITAT Jaipur Other Citation TTJ 099, 549 order dated Oct 21, 2005 (iii) Kayakalp Herbal Private Limited ITA No. 633/JP/2016 order dated 25.04.2017 and (iv) Jadau Jewellers & Manufacturing Private Limited ITA No. 446/JP/2016 order dated 28.02.2017. 5.2 On the other hand the Ld. D/R relied on the finding of CIT (A) and argued that the addition was backed with the documents found and seized during search at Shri Upendra Kumar Soni and thus the addition is duly warranted in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant on account of on money in sale of flats/units in "Royal Imperia" project. No any inquiry, if any conducted, from the assessee by the Investigation Wing was brought on records by the AO. No any statement of the assessee, if any, recorded by the Investigation Wing or by the AO was brought on record by the AO. The search team recorded the statement of Shri Upendra Kumar Soni u/s 132(4) of the Act. The AO has not provided copy of complete set of the statement of Shri Upendra Kumar Soni to the assessee, which was specifically demanded by the Appellant (Copy at APB page 133-135), however, the AO provided the extract of statement of Shri Upendra Kumar Soni containing question and answer to question no 68-79 copy placed at APB page 86-92. In the statement brought on record by the AO, Shri Upendra Kumar Soni has no where stated that part of the cash receipt shown in above said seized page 83 was passed over to the Appellant or belongs to the Appellant. Rather he said that he has returned back the cash amount to the purchasers of the unit on cancellation of booking. In answer to question no 68, Shri Upendra Kumar Soni stated that seized Pg 80-83 relates to booking of Royal Imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges of excel sheet as appears from the copy of Extracts of statement provided by the AO to the appellant. Further the basis of bifurcation of cheque receipts as well as cash receipts in these papers of excel sheet in between the units owned by GRS Gehna and Appellant has not been disclosed or correlated with other material which if any, the AO had. 5.3.2 Otherwise also, these papers of the excel sheet is not reliable and cannot be used as evidence against the assessee as during the course of hearing the Ld. A.R pointed out the several serious discrepancies and inconsistencies in these pages of excel sheet, which proves that these sheets are not correct and does not have the actual picture of transactions. We have examined these papers of excel sheet with reference to the mistakes in figures pointed out by ld AR and found the mistakes in these papers of excel sheet there. We concur with the argument of ld AR in this regard. On being specifically asked by the Bench the Ld. AR filed copy of some registered sale deed which supports the contention of ld AR that in many cases the actual sale was not to those persons whose names are written in these papers of excel sheet. For Flat No GF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld. A/R in these excel sheet. This, proves that the AO made a general satisfaction note which is not reasonable and not enough to initiate the proceedings against the assessee. The said satisfaction note is not speaking, not backed with corroborative material and also not for the year under consideration. 5.3.4 We find that the in support of the addition so made the A.O. relied on the document found from the possession of Shri Upendra Kumar Soni and also on some extracted statement, though in such statement he nowhere admitted to pass on/receiving any cash amount by the appellant. However, we found that there is a noting of cash amounting to Rs. 8,19,19,000/- over the seized page 83 seized from the possession of Shri Upendra Kumar Soni and to this effect the AO neither examined to Shri Upendra Kumar Soni nor provided his cross examination to the assessee. The CIT (A), directed to Ld. A.O. to provide the cross examination of Shri Upendra Kumar Soni to the assessee, which is basic principle of natural justice and it is not a mere formality. The AO issued request letter dated 09-01-2024 to Shri Upendra Kumar Soni to appear in his office on 16-01- 2024 at 11.30 AM. The copy of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them". 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the adjudicating authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers. witnesses at the price which is mentioned in the price list itself could be the subject-matter of cross-examination. Therefore, it was not for the adjudicating authority to presuppose as to what could be the subject-matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came up before this court in CCE v. Andaman Timber Industries Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which cash was claimed to be received etc. were not addressed properly and he rejected the demand of short payment of GST and this issue was decided in favor of Appellant. This order of the GST authorities also supports the contention of the appellant that no addition should be made in the hands of the appellant. 5.3.6 Further, Jaipur Bench of ITAT has also decided the similar issue in the case of Moti Developers ITA Nos. 101, 102, 103 & 104 vide order dated 17-07-2017. ITAT Jaipur Bench deleted the similar addition so made by Ld. A.O. The Findings of Hon'ble ITAT Jaipur in para 3.5 is as under: "3.5 We have heard the rival contentions and perused the materials available on record. The assessee is partnership firm and derives income carried out on 31-10-2012 at various premises of Motisons Group and the members of Motisons Group of "which the assessee is one of the members. In this case, the assessee filed its regular return u/s 139(1) for the various years under appeal as under:- XXXXX It is also noted that the assessee firm entered into a development agreement with Ashirwad Buildtech Pvt. Ltd (developer) (Copy of development agreement at PB Page 114 to 120) in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by cheques only in project in collaboration of Ashirwad Buildtech Pvt Ltd. No document from any searched premises was seized which could show that assessee had received any cash on the project in collaboration with M/s. Ashirwad Buildtech Pvt Ltd. The developer M/s Ashirwad Buildtech Pvt Ltd and its director Shri Virendra Kumar Ghuwalewala approached Hon'ble Settlement Commission by filing application u/s 245C of Income Tax Act on 28-02-2014 wherein 60% of cash received by him has been declared as income on account of sale of flats by Ashirwad Buildtech Pvt Ltd after adjusting the expenses from the unaccounted receipts. We have taken into consideration various case laws relied on by both the parties. It is pertinent to note that nowhere the name of the assessee is mentioned in the seized material and also in-the statement recorded u/s 132(4) of the Act during the search operation. The Director of the Ashirwad Buildtech surrendered the amount of Rs. 4.00 crores in various projects as cash sale proceeds received by him on the basis of seized material. No seized materials mentions assessee's name. It is also noted from the records that the Director of Ashirwad Buildtech (P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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