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2019 (4) TMI 1475 - AT - Income TaxAddition based on unaccounted cash receipts - entries in the loose sheets and the diary - HELD THAT - To sum up, the on money received by the assessee is the unaccounted income of the assessee as per the notings in the diary bank pass book and loose sheet subject to verification of duplicate entries, arithmetical error in totalling and the amount transferred to the Head office being debit entries, wrongly added as income of the assessee. With the above directions, the common ground relating to addition on account of unaccounted cash receipts is allowed for statistical purposes. Disallowance made u/s 14A of the Act r.w.r 8D - assessee has not earned any exempt income - HELD THAT - The assessee company has not earned any exempt income. MAXOPP INVESTMENT LTD. VERSUS COMMISSIONER OF INCOME TAX, NEW DELHI AND PRINCIPAL COMMISSIONER OF INCOME TAX-I VS. D.B. CORP LTD. 2018 (3) TMI 805 - SUPREME COURT OF INDIA . Addition u/s 68 - business transaction relates to booking of flats and subsequent cancellation - HELD THAT - Assessing Officer has not considered the transaction in true perspective and simply relied upon the report of the Inv Wing, New Delhi. The facts show that the transaction of ₹ 8 crores is not that of loan simpliciter. It is a business transaction and should have been considered from that angle. The companies, namely Virgin Capital Services Pvt Ltd, VIP Leasing and Finance Pvt Ltd and Humtum Marketing Pvt Ltd have tendered money for booking flats in the projects of the assessee company. It appears that the Assessing Officer has not examined the transaction of booking flats by these companies. It also appears that after booking the flats in the projects of the assessee company, bookings were cancelled and subsequently, the money was refunded to these companies. Though the first appellate authority has deleted the addition but at the same time, he has also not gone into the details of booking of flats and subsequent cancellation. Hundreds of flats/houses were booked in the projects of the assessee company and several of them were cancelled subsequently and no adverse inference has been drawn in so far as such bookings and cancellations are concerned. Therefore, there is no reason why the booking transactions with the three companies are singled out. Restore this issue to the file of the Assessing Officer. AO is directed to examine the booking details of these companies and verify the flats booked by these companies in the projects of the assessee company, examine the cancellation of the bookings and whether the booking amount has been refunded by the assessee company and if satisfied with the verification, issue may be decided afresh. Accordingly, Ground No. 2 in assessment year 2009-10 is allowed for statistical purposes. Survey action u/s 133A - diary titled Vamshi Retreats alongwith some loose papers was impounded - HELD THAT - There is no dispute that in the statement itself, Shri Vinod Kumar Chauhan, Deputy Manager marketing of the assessee company has categorically stated that the impounded diary and other documents belonged to Shri Azad Singh. If at the time of enquiry Shri Azad Singh was no more an employee of the assessee company, it cannot be considered adversely against the assessee company. In our considered opinion, the Revenue should ask Shri Azad Singh about the contents of the diary and make necessary enquiry from Shri Azad Singh only. In respect of the other property in the impounded sheet itself, the name of the joint owners alongwith their profit share is mentioned. It is not the case of the Revenue that the assessee has executed any project on the said piece of land mentioned in the impounded document. Moreover, there is no dispute that the assessee company is executing huge projects and would not go for such small projects comprising of six flats only. The loose sheets may have been found from the premises of the assessee company, but since the joint owners names are mentioned in the loose sheet with respective profit share ratio, no adverse inference can be drawn against the assessee company.
Issues Involved:
1. Unaccounted cash receipts and unexplained money. 2. Disallowance under Section 14A of the Income Tax Act. 3. Addition of ?8 crores as unexplained cash credit under Section 68. 4. Additions based on impounded documents during survey. Issue-Wise Detailed Analysis: 1. Unaccounted Cash Receipts and Unexplained Money: The appeals by the assessee for A.Ys 2007-08 to 2010-11 and 2011-12 primarily revolved around unaccounted cash receipts and unexplained money. The search and seizure operation on 13.05.2010 led to the discovery of certain documents and a blue diary, indicating unaccounted receipts. The Assessing Officer made additions based on these entries. The assessee contended that there were duplicate entries and arithmetical errors in the totalling. The tribunal found that only the amounts shown under the 'Deposits' column in the diary should be considered as unaccounted receipts. It restored the issue to the Assessing Officer for verification of debit entries and correction of arithmetical errors. Additionally, the tribunal directed the consideration of unaccounted expenditure noted in the loose sheets, allowing only net receipts to be added to the income. The tribunal dismissed the contention that the receipts should be taxed in the respective A.Ys based on the method of accounting followed by the assessee. The appeals for A.Ys 2007-08 to 2010-11 were allowed for statistical purposes, and the appeal for A.Y 2011-12 was dismissed. 2. Disallowance under Section 14A of the Income Tax Act: The revenue's appeals for A.Ys 2009-10 and 2010-11 concerned the deletion of disallowance made under Section 14A r.w.r 8D. The assessee had not earned any exempt income during the impugned assessment years. The tribunal relied on the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd and Oil Industry Development Board, which held that in the absence of any exempt income, disallowance under Section 14A is not permissible. The tribunal declined to interfere with the findings of the CIT(A), dismissing the revenue's appeals on this ground. 3. Addition of ?8 Crores as Unexplained Cash Credit under Section 68: The Assessing Officer made an addition of ?8 crores based on information from the Investigation Directorate, alleging that the assessee had taken accommodation entries from certain companies. The assessee contended that the amounts were received as booking advances for its projects, which were later refunded upon cancellation. The CIT(A) deleted the addition, finding that the transactions were business-related and not loans. The tribunal restored the issue to the Assessing Officer for verification of the booking details and subsequent cancellations, directing a fresh decision based on the verification. 4. Additions Based on Impounded Documents During Survey: During a survey, a diary and loose papers were impounded, indicating transactions not recorded in the assessee's books. The Assessing Officer made additions based on these documents. The assessee argued that the documents belonged to an employee, Azad Singh, and not to the company. The CIT(A) deleted the additions, accepting the assessee's contention. The tribunal upheld the CIT(A)'s decision, noting that the documents mentioned names of individuals not related to the assessee company and that the Revenue should have made necessary enquiries from Azad Singh. Conclusion: The appeals of the assessee for A.Ys 2007-08 to 2010-11 were allowed for statistical purposes, and the appeal for A.Y 2011-12 was dismissed. The revenue's appeal for A.Y 2009-10 was partly allowed for statistical purposes, and the appeal for A.Y 2010-11 was dismissed. The order was pronounced in the open court on 22.04.2019.
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