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TMI Blog2021 (6) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed? 3. Brief facts of the case are, assessee is a leading lifestyle and infrastructure company engaged in the construction and development of real estate projects. The assessee filed its original return of income for the assessment year 2009-10 on 30.09.2010 declaring total loss of Rs. 1,88,095/-. A search and seizure under section 132(1) of the Income Tax Act, 1961 (in short 'the Act'), was conducted on the assessee group on 21.03.2013. The notice under section 153C of the Act was issued and served on the assessee. Subsequently notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. Meanwhile, the assessee filed an application before the Settlement Commission on 19.02.2015 and requested the Assessing Officer to abate the ongoing assessment proceedings. In the meantime, the Settlement Commission rejected the application filed by the assessee on 4.3.2015 under technical ground. 4. The Assessing Officer observed that the evidences regarding claiming bogus purchases were found during the search. Accordingly, the Assessing Officer issued a show cause notice to the assessee vide notice dated 22.10.2014. The assessee did not reply and not represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ediaries and the like. The owners of the land were to be persuaded to port with their land. They were not interested in the money by way of cheque only. Part of the consideration they wanted in cash. The land aggregators and the person involved, wanted to have their share in the deal without the knowledge of the land owners, who otherwise would not have parted with their land. The process was to be completed at the earliest. The applicant company did not want to enter into any litigation. At the same time, acquisition of the land and for that purpose satisfying the owners and the parties in between was essential. This could have been achieved only by Payment of money that too in cash. The applicant company was advised to enter into the deal in such a fashion so that the accounted funds go out of the hands of the company through banking channels but is utilized thereafter in cash for the other purpose. With this process, the applicant has been able to acquire the desired pieces of land with peaceful possession and clear title In a hassle free manner. 2. Hence, In order to facilitate the smooth running of It's business, the assessee makes these payments in cash. In other words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s thereon. At the time of purchase of land, the farmers insist on cash payment over and above the agreement value. We cannot fund this cash requirement by withdrawls from the bank. Therefore, these companies had entered into transactions with MIs Karma Industries Ltd. I accept that there were no actual purchases from M/s. Karma Industries Ltd. And we had received back cash after getting the commission deducted by M/s Karma Industries Ltd. The cash generated was used for cash payment to the farmers for land acquisition. Q.21 I am showing you Annexure-A3(loose paper folder) containing page no.1 to 15 found and impounded on 22.03.2013 from Room No. 3, Sej Hiro Chambers, Opp. Dutta Paths House, Thikral, Although, Raigad and statement recorded of Shri Nit in Nagwekar on 21.03.2013 u/s. 133A at Room No.3, Sej Hira Chambers, Opp. Dutta Paths House, Thikrol, Alibaugh, Raigod wherein in response to Q. No.22, he has stated that Rs.6,00,77,175/- cash component has been paid in the purchase of land which is having deed value of Rs.16,94,26,160/- from F.Y.2006-07 to F.Y. 2012-13 which comes to near about 35% of the agreement values. Out of Rs.6,00,77,175/- Rs.5,95,02,175/- paid to farmers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 Nil 16. 1755, 1767, 1941 18,575 Nil 17. 1756, 1761, 1763, 1940 12,700 11,96,500 18. 306 32,800 Nil 19. 1932 7,000 Nil 20. 1754, 1680 55,000 42,45,000 Total 7,64,414 89,61,500 Further, I confirm that the amount referred in column 3 of the above table represents the amount of commission received in cheque against my PAN AGQPP5057J. I didn't receive any commission in cash. Column 4 of the above table represents the cash consideration paid for land dealings by M/s. Samira Habitats India Limited to the respective farmer l farmers in cash." "Q5. Please state the amount of commission you have got for facilitating M/s. Samira Habitats India Limited in the land dealings at Magoon. Please also state that there is any amount of cash paid by M/s Sam ira Habitats India Limited to land owners/ farmers during the purchase of land. if so, also state the quantum of payment made by MIS Samira Habitats India Limited to the concerned land owners/brokers. Ans: Sir, I confirm that I have facilitated M/s. Samira Habitats India Limited in the land dealing at Nagaon & Sahan village. The details of the gut numbers and the commission for the same are depicted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the respective farmed farmers in cash." Statement of Shri Manohar Janardan Thakur:- "Q5. Please state the amount of commission you have got for facilitating M/s Samira Habitats India Limited in the land dealings at Nogaon. Please also state that there is any amount of cash paid by M/s. Samira Habitats India Limited to land owner's farmers during the purchase of land. If so, also state the quantum of payment mode by M/s Samira Habitats India Limited to the concerned land owner's/brokers. Ans: Sir, I confirm that I have facilitated MIS Samira Habitats India Limited in the land dealings at Nagaon. The details of the gut numbers and the commission for the some are depicted as under: Sr.no. Gut no. Approx. Commission and the rate (Amount in Rs.) Approx. Value of consideration paid in cash (Amount in Rs.) 1. 1931 9,982 Nil 2. 2041, 2048 50,00 18,00,000 3. 1938, 1894 12,660 420000 4. 2073 6,438 2,20,000 5. 1893 3,360 3,70,000 6. 1720 26,654 Nil 7. 1899 66,220 7,20,000 8. 1770, 1773 70,000 Nil 9. 1992 1,09,800 Nil 10. 1774 11,000 Nil 11. 2028 10,920 Nil 12. 1934, 2077, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 11. 27 4,22,000 13,40,000 11,29,000 2008-09 12. 13 422000 13,40,000 11,29,000 2008-09 13. 14 400000 12,70,000 10,70,000 2008-09 14. 21 220000 7,00,000 5,90,000 2008-09 7442000 2,36,35,000 1,61,93,000 Further, I confirm that the amount referred in column 3 of the above table represents the amount of commission received in cheque against my PAN ACUPA654IN, Q6. After going through your information, it is clear that you Sot Rs.2,36,35,000 from M/s Samira Habitats India Limited. Please state the application of this money. Ans: Sir, I confirm that I got Rs.2,36,35,000/- from M/s. Samira Habitats India Limited, I paid to Rs.1,61,93,000/- to the concerned farmers/owners. I have constructed my own home for Rs.30,00,000, purchased one vehicle for Rs.19,00,000/- (Out of this Rs.7,00,000/- from bank loan), I have given Rs.25,00,600/- advance for a plot of land and rest of amount has been spent as household expenses. * Statement of Shri Nitin Nagwekar:- Q22. On perusal of Annexure-A submitted by you it is seen the following cash components are involved in the purchase of land. Please comment on the same. Sr. no. Financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. Though the section provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard to the available material. * In the case of BrijBhushanLalParduman Kumar v. CIT (1978) 115 ITR 524 (SC)the Hon'ble Supreme Court held that, the authority making a best judgment assessment must make an honest and fair estimate of the income of the assessee and though arbitrariness cannot be avoided in such an estimate, the same must not be capricious but should have a reasonable nexus to the available material and the circumstances of the case. 7. We would also like to point out the fact that even during the search no cash was found from the premises of the assessee meaning thereby that the cash would have been utilized for some payment. As explained above, such cash has been paid to the land owners and towards development expenses of such land. Thus, overlooking the fact that such cash so received by way of bogus bills were solely required by the assessee to conduct its business and were nothing more than business expenses and adding the same to the income of the assessee is unjust and uncoiled fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt AY as well as in the subsequent AY. Therefore, the dispute raised by the Revenue was entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was It fruitless but also that it may not hove added anything much to the public coffers." 9. In view of the above, the assessee submits that the Ld. 40 has erred in not accepting the assessee's contention. Thus, the addition mode by the AO is unjustified and deserves to be deleted." 6. After considering the detailed submissions of the assessee, the Ld CIT(A) observed that the assessee has offered 50% of the income that is Rs. 235,84,279/- of the disputed purchases before Income Tax Settlement Commission by submitting that the assessee had utilised the above said amounts in its business, the cash expenses which are unaccounted by the assessee include development expenditures in the form of leveling of land, fencing, construction of compound and roads etc., and the cash were also used for the purchase of lands from farmers, intermediaries, etc. He observed that the Settlement Commission rejected the assessee's appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in his report that the parties could not be traced. Therefore, he vehemently argued that the findings of the Assessing Officer be confirmed. Further he brought to our notice the findings of the Ld CIT(A) at Page-16 of the order and submitted that the Ld CIT(A) has not considered the fact that the parties were not traceable. Therefore, by relying on the decision of the Hon'ble Supreme Court in N.K. Proteins Ltd. v/s DCIT, [2017] 250 taxmann.com 22 (SC), he prayed that 100% of the bogus purchase be sustained. 10. On the other hand, the Ld AR submitted that the documents found during search itself discloses the fact that assessee has paid cash to the farmers and also indulged in incurring cash expenses in development of land et cetera. He submitted that the cash paid by the assessee to farmers and also the development expenditures were much more than 50% of the additions sustained by the Ld CIT(A). He prayed that at least the order of the Ld CIT(A) be sustained. 11. Considered the rival submissions and material on record. We notice that in the search proceedings it was agreed by the assessee that it has indulged in taking bogus purchase bills from various parties and the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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