9911796707
TMI Blog2016 (11) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the issue under consideration in favour of the assessee. Addition on account of investment in construction of house when the addition is supported by the finding of the DVO - Held that:- AO as well as DVO both failed to list out the items considered as loose furniture found at the time of inspection of the house of the assessee and no valuation of such loose furniture was made by the DVO, therefore there is no justification to made estimated addition on this account just merely on the presumptive finding of the DVO which is not supported by any evidence more so when the investment shown by the assessee is duly supported by the bills and vouchers. We have given a careful consideration to the matter and of the view that the ld CIT(A) has elaborately gone through the contentions and has rightly arrived at the conclusion that there is no basis for the adhoc estimation of ₹ 20,00,000. Hence, we confirm the following findings of the ld CIT(A). - Decided in favour of the assessee. Addition on account of advance given to Gulam Farooq Ansari - Held that:- Assessee had produced the re-casted audited cash book after incorporating all entries before the AO. There were sufficie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting the addition of ₹ 6,32,650/- made by the A.O. on account of sale of plot considering as business income. 2. Whether on the facts and in the circumstances of the case the CIT (A) was right in deleting the addition of ₹ 20,00,000/- made by the AO on account of investment in Construction of house when the addition is supported by the findings of the DVO. 3. Whether on the facts and in the circumstances of the case the CIT (A) was right in deleting the addition of ₹ 1,50,00,000/- made by A.O. on account of advance given to Gulam Farooq Ansari which was accepted by the assessee during the search that this amount was paid out of books. 4. Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of ₹ 20,46,604/- out of ₹ 50,26,604/- made by the A.O. on account of deemed dividend income u/s 2(22)(e) of the I.T. Act and accepting additional evidence without giving opportunity to A.O. 2. Firstly we will take up Revenue s appeal: The 1st ground of the Revenue s appeal is against deleting the addition of ₹ 6,32,650/- made by the Assessing Officer on account of sale of plot. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated to sale of plot mentioned above as income under the head business or profession . Since the income was assessed under the head business or profession of the assessee no benefit of indexation was given and the income from sale of plots assessed by the AO was as underITA Sr. No. Description of plots Sale Value Purchase Cost Profit 1 Plot No. 293, Shree Ram Vihar 13,01,000 6,68,350 6,32,650 Total 6,32,650 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had deleted the addition made by the Assessing Officer by giving the following findings:- I have considered the assessee s submission and also taken a note of judicial pronouncements relied upon by the AO and appellant. I have also carefully perused the records available before me and factual matrix of the case. I found that the assessee is not showing this plot as Stock-in-Trade in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- 2.5 We have heard the rival contentions and perused the materials available on record. We find from the records that the assessee since inception had disclosed the purchase of lands under the head 'Investment' and the assessee had also disclosed these plots under the same head up to date of sale of plots in the balance sheet. The assessee had also shown certain stocks in land under the head 'Inventories' during the year. It proves that assessee's intention was clear at the time of acquiring these plots for the purpose of investment. Therefore, we do not find any reason to interfere in the order of Id. CIT(A) which is sustained. Thus the solitary ground of the Revenue is dismissed. After going through rival submissions and findings of Hon'ble ITAT, in assessee's own case and in the case of wife of the assessee Smt. Renu Agarwal, it is seen that though the appellant is engaged in real estate business but no activity was conducted on the plot of land which were later sold off, therefore, the profit on the sale of the plot of land Plot No. 293, Shree Ram Vihar has been correctly shown as long term capital gains. The AO is directed to com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view to get better price will not be considered as an adventure in the nature of trade to give any business profit. iii) In the following cases it is held that : where the purchase of any article or of any capital investment like shares, securities or land is made without the intention to re-sell at a profit, a re-sale under changed circumstance would only be a realization of capital and would not stamp the transaction with a business character : CIT Vs. PKN 60 ITR 65 (SC) CIT Vs. Gordhan Das Trikambhai Patel 118 ITR 81 CIT Vs. Trivedi 172 ITR 95 The issue is covered by decision of Hon ble ITAT in the case of assessee Ashok Kumar Agarwal in ITA No. 920/JP/2007 dated 21/11/2008 and in case of Renu Agarwal wife of assessee in ITA No 125/JP/2013. The facts of this case are similar to the facts of the assessee s case. In view of above, the assessee prays your honor that addition made by Ld. A.O. is bad in law, unjustifiable and unreasonable deserves to be deleted and kindly upheld the findings of ld CIT(A) in this regard and dismiss the appeal filed by the revenue. 6. We have heard the rival contentions of both the parties and perused the material available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -13. Therefore, the cumulative amount shown by the assessee and his wife in the said construction of house was ₹ 3,67,52,526/-. On examination of this Account, the AO observed that the assessee has also debited amount against lift, DG Set, AC and other plant machinery and loose furniture and fittings under this amount. The assessee was asked to segregate and give complete break up. In compliance, assessee provided a ledger showing head wise details of construction. From the detail filed, it is observed that, the assessee and his wife has shown ₹ 2,31,09,884/- under civil construction, sanitary electricity, ₹ 1,13,44,374/- under furniture, ₹ 4,63,534/- under others and ₹ 18,34,744/- under plant and machinery. To order to ascertain the actual value of investment in construction of house, the AO referred the matter to District Valuation Officer (herein referred as DVO) for the valuation of the cost of construction of house. The DVO vide No. DVO/ITD/JPR/IT-10/2012-13/227 dated 06-03-2013, submitted his report wherein the construction cost of above said house was valued at ₹ 3,09,67,958/- as against ₹ 2,31,09,884/- declared by the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The DVO in his comments on the objection raised by the assessee has stated that the investment of ₹ 28,52,501/- on loose furniture appears to be on much lower side and the AO may ascertain at his own level the investment against loose furniture. The AO asked the assessee to give justification of investment shown in fixed furniture and in loose furniture included in the furniture account which appears to be on lower side. In this regard, the assessee contended that in first year and second year the amount under the head furniture was ₹ 76,74,944/-. The investment in sofa, dining table other loose furniture could be made only in the third year or fourth year after completion of the civil work and not in the first and second year i.e. during the continuation of civil structure of the house. The assessee contended that even if the benefit of ₹ 76,24,944/- being amount invested in first two year on wooden work is allowed as part of construction then the investment as per books comes to ₹ 3,07,34,828/- which is very close to the valuation made by the DVO at ₹ 3,09,67,958/- and therefore, no addition on this Account should be made. However, after considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery 18,34,744 Total 3,67,52,526 The copy of ledger account of construction in the books of accounts of Shri Ashok Agarwal and Smt. Renu Agarwal are at PB Page 131-173. During the course of search the department recorded the statement of assessee on 22.09.2010 (Copy at PB Page 3-20) and in reply of question No. 20 of the statement he answered that total investment in the construction up to date of search was made ₹ 3.50 crore against the investment in books of accounts of the assessee was much more, therefore there was no material with the department in form of any documents or statement of the assessee group that the assessee made some undisclosed investment in construction of house. d) The DVO estimated the construction cost at ₹ 3,09,67,958 (PB pg 186-203) and compared this figure with ₹ 2,31,09,884/- shown by the assessee for civil construction, sanitary and electric expenses. The assessee explained the ld AO that he and his wife have shown ₹ 1,13,44,374/- under the head bifurcated by him Furniture . The year wise detail of expenses under Furniture was submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ques. Thus the learned AO has not justified in referring the property to DVO for estimation of cost without pointing out defect in accounts. Reliance is placed on following decisions of Rajasthan High Court. A) CIT Vs Lakhpat Film Exchange 173 CTR 94 (Raj) B) CIT Vs Prtapsingh Amrosingh, Rajendra Singh 200 ITR 788 (Raj) C) CIT Vs Hotel Joshi 242 ITR 478 (Raj). Thus the ld. AO was not justified in making the reference to valuation office u/s 142A of Income Tax Act, 1961 for the estimation of cost of construction more so when the cost of construction was verifiable from books of accounts of the assessee group. f) The valuer estimated the cost of construction ₹ 3,09,67,957/-. The DVO mentioned that the assessee has shown construction cost at ₹ 2,31,09,884/- whereas the assessee and his wife has shown ₹ 2,31,09,884/- under the head construction and ₹ 84,91,873/- under the head Furniture which includes the cost of wood, ply etc used in Doors, Windows, False Ceiling etc totaling to ₹ 3,16,01757/-. The assessee vide letter dated 15.03.2013 pointed out certain defects in the valuation report which are summarized as under: - i) The DVO made th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing at the rate of 5000/- per sq. mt for 730 sq mt area total ₹ 36,50,000/- without seeing the copy of bill given to the DVO. The assessee has purchased the marble for ₹ 10,65,812/- Therefore, the DVO has estimated the cost of imported marble at ₹ 36,50,000/- as against 10,65,812/- . Further, the deduction has not been given for the cost of flooring already included in basic plinth area rate. v) The cost of special sanitary fittings and fixtures estimated at ₹ 18,30,000/- without giving any details of the items and basis of estimation. This is wild estimation. The copy of bills produced before him was completely ignored. Further, the DVO has already added 12% of plinth area rate for sanitary items and further 10% of plinth area rate for good finish, therefore, the further addition should not be made. vi) The cost of special electrical fittings and fixtures have been estimated at ₹ 18,30,000/- without giving any details of the items and basis of estimation. This is wild estimation. The copy of bills produced before him was completely ignored. Further, the DVO has already added 12.5% of plinth area rate for sanitary items and further 10% of plinth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sand (bajari) is from Banas, which is about 80-100 Km from Jaipur. The stones are locally available from nearby hills. The bricks are also producing in Jaipur. The cement is local production of Rajasthan. The labour in Rajasthan is very cheap in comparison of Delhi or other metro cities. Like using of Ballies, phanta etc. in shuttering RCC in foundation, beams, columns slabs, which are the basic structural components, are also of inferior quality hence lowering the comparative rates in private buildings. Similarly in private buildings, many specifications are been truncated or curtailed off, like for the RCC the curing man charges are kept apart in PAR-CPWD, where as in private construction it is mostly either done by flooding, or by gunny bags or by self supervision by owner only. There are many similar instances, due to which there will be the considerable difference in PAR-CPWD, actual cost. In summary, in private constructions, outer finishes are more important, compare to the internal (structural) works. The local PWD is in the field knows the local specifications more, hence the local PWD rates could be taken up easily for scaling the cost of constructions in priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jaipur. Hon ble Rajasthan High Court and Hon ble ITAT Jaipur Bench have held in several cases that the cost of construction in Rajasthan should be determined on the basis of Rajasthan PWD Rates as per Raj. BSR The reliance is placed on the following decisions:- (i) Commissioner of Income Tax Vs. Dinesh Talwar (2003) 181 CTR (Raj) 472: (2004) 265 ITR 344 (Raj), the assessee, who is an individual, constructed a house property in Malviya Nagar, Jaipur during the accountant period relevant to asst. yr. 1990-91. The Department referred the matter to the Valuation Officer for working out the cost of construction of the property. While valuing, the Departmental Valuation Officer has applied the rate of CPWD for the purpose of valuation. The Tribunal has valued the property adopting the rate of PWD. Hon ble High Court held that Tribunal having applied State PWD rates for working out the cost of construction of the house property in question instead of CPWD rates, same being a finding of fact, no interference is called for. xii) Further, the DVO has not followed instruction No 8 of 2006 issued by Chief Engineer (Valuation), Income Tax Department Northern Region, 3, Tolstoy Marg: R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plea that cost of fans, electric fittings fixtures are not debited to the building account by the assessee. This is incorrect approach. The assessee should have been asked to furnish the total expenditure year wise on this count and these should have been included in the year wise declared cost for the purpose of estimating value of investment in construction. These electrical fittings fixtures are part of the building and logically to be debited to the building account. If for any reason the assessee fails to include this type of expenditure related to building, the V.O should after due examination of the account include this expenditure as part of the investment in the building and accordingly estimate the value of investment. In the case of assessee, the fixed plant machinery, such as lift, DG set, Air conditioners etc, have not been valued by the DVO, in spite of the fact, that the assessee has showing investment and furnished the details and vouchers before the DVO. Further, the cost of sanitary fittings and special electrical items has been taken extra even when the PAR rate was increased by 12% for sanitary installation and 12.5% for electric installation. This c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those vouchers to DVO, and no any specific defect in the vouchers has been pointed out by the DVO, which also proved that the DVO was replying on the estimations instead to exercising to work out the real expenditure incurred on construction from the bills and vouchers. i) As regard to objection of the DVO on investment in furniture at lower side this is to submit that it is common practice that the loose furniture is always purchased after completion of house. Any prudent person cannot buy sofa, dining table etc. at the construction stage of the house. The year wise investment by the assessee and his wife in the head Furniture was as under:- S. No. Name of Assessee FY 08-09 FY 09-10 FY 10-11 FY 11-12 Total 1 Ashok Agarwal 7,24,443 23,57,527 10,65,712 3,16,680 44,64,362 2 Renu Agarwal 6,42,488 39,00,486 23,37,038 0 68,80,012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegation of investment at lower side cannot be made merely on surmises, conjectures and guess. Under section 69 the onus is on department to show the investment. k) The sewerage connection charges are included in Development charges deposited in JDA. The electric line was passing through the House therefore, there was no further cost required to be borne for electric line. The transformer is not installed and this fact may be verified by physical inspection. The DVO added 2.25% merely on assumption and presumption. The assessee has bills for all the cost incurred in electric connection, sewerage connection etc. (which have been included in the copy of vouchers given to you) l) The DVO has not pointed out any warranty or assurance of quality taken by the assessee. The construction was made by employing local labours and contractors. The material was purchased by the assessee himself. The construction was not carried out through the established builder therefore, the addition 1% against the quality assurance is on presumption more so when he has already added 10% of PAR for good quality. m) The DVO has not accepted the valuation made by the Registered Valuer. The Registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve substantiated his estimate with actual evidence. Hon ble Rajasthan High Court in the case of CIT Vs Hotels Joshi 242 ITR 478 has held that the Tribunal has justified in holding that the valuation made by Registered Valuer to be adopted. In this case, the assessee maintained accounts for the construction, supported by vouchers, and most of the payments were made through account payee cheques. Further, there is no any strong reason to disagree with the construction cost reflected by the accounts. Further, the construction cost reflected by books of account is supported by valuation report of the registered valuer. The DVO report is crippling with several serious defects as pointed out above. p) In last para of the assessment order the ld. AO after considering the above submissions of the assessee and accepting the reply of the assessee partially and opined that the cost of loose furniture shown by the assessee is at lower side. Even the DVO has observed that cost of loose furniture shown by the assessee is on lower side, therefore to cover up all possible leakage on this account as addition of ₹ 20,00,000/- is made on account of undisclosed expenditure in construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bad in law, unjustifiable and unreasonable deserves to be deleted and kindly to upheld the findings of ld CIT(A) in this regard and dismiss the appeal filed by the revenue. 11. We have heard the rival contentions of both the parties and perused the material available on the record. The DVO in his comments on the objections raised by the assessee has stated that the investment of ₹ 28,52,501 in loose furniture appears to be on much lower side and the AO may ascertain at his own level the investment in loose furniture. Therefore, the disputes relates to and is limited to the amount of investment in the loose furniture. The AO held that the cost of loose furniture shown by the assessee is at lower side. Even the DVO has observed that cost of loose furniture shown by the assessee is on lower side, therefore to cover up all possible leakage on this account as addition of ₹ 20,00,000/- is made on account of undisclosed expenditure in construction of house/furniture in the hands of shri Ashok Agarwal. As per the ld AR, before arriving at this conclusion, the ld. AO as well as DVO both failed to list out the items considered as loose furniture found at the time of inspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpletion of civil work and by no stretch of imagination, it cannot be assumed that the expenses in first two years (when the civil work was going on) in wooden items were towards loose furniture like sofa etc. * The assessee and his wife Smt. Renu Agrawal had incurred expenditure of ₹ 76,24,944/- in FY 2008-2009 and FY 2009-10 towards ply, wood, and other wooden items whereas the construction was completed in FY 2010-11. Therefore, the contention of assessee, that in the first year and second year of the construction when the civil work was going on, the expenses towards ply wood and under wooden items were part of construction expenses, can be accepted. * Further, the appellant has contended that the DVO has estimated the marble flooring excessive ignoring the evidence submitted by him. The appellant has submitted that the DVO estimated the cost of marble flooring at the rate of 5000/- per sq. mt for 730 sq. mt area total ₹ 36,50,000/- more so when the copy of bill was given to the DVO. The assessee has purchased the marble for ₹ 10,65,812/- The appellant contended that, the DVO has estimated the cost of imported marble excessively at ₹ 36,50,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding was not constructed under selfsupervision but under supervision of outside agencies. Books of account have been prepared by assessee and no payment has been shown to be paid or payable to any outside agencies. Merely by stating that building has been constructed in a beautiful manner and without any outside help such building cannot have been constructed cannot be basis for drawing inference that the building was not constructed under selfsupervision. In view of the facts and circumstances discussed, it is seen that the AO is not justified in making an adhoc addition of ₹ 20,00,000/- which cannot be sustained in the light of factual inconsistencies mentioned above and also in view of judicial pronouncement of Hon ble Jurisdictional High Court, therefore same is deleted. Assessee gets a relief of ₹ 20,00,000/-. This ground of appeal of the assessee stands allowed. In view of the above facts and circumstances, we uphold the order of the ld. CIT(A) and the ground taken by the Revenue is dismissed. 12. The 3rd ground of the revenue s appeal is against deleting the addition of ₹ 1,50,00,000/- made by the Assessing Officer on account of advance giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective persons/concerns. The AO mentioned that the claim that the cash payment to Sh. Gulam Farooq Ansari was made out of cash available from books of Account was made for the first time during the assessment proceeding and no such explanation was given by the assessee on various occasions i.e. on the date of search 22/23.09.2010 and even on 12.10.2010 i.e. during revocation of PO at office of the assessee group. The AO held that the entire story is concocted and the assessee has taken shelter of books of account. Otherwise also the reliability of books of account of all persons is also questionable because than entries have been made subsequent to the search and not during the course of regular business. The Assessee is not only required to make entries in books of account during the regular course of business on regular basis and also expected to draw balance at regular interval to lend reliability to the books of Account which in this case is obviously has not been done. From the perusal of the books of account and P L Account for all the years covered by block assessment never ever such huge payment in cash have been made through books of account, so it was otherwise also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f cash. The assessee produced the re-casted cash book before the Auditors, who found no mistake. During the course of assessment proceedings also, the assessee produced these audited cash book which were examined by AO and no any specific instance of any discrepancies was brought to notice. It is admitted fact that the cash payment of ₹ 1.50 crore to Ansari was recorded in the audited books of account of assessee and his group person/concerns. In case of unavailability of disclosed cash, the payment could have been recorded in cash book only by inflating the inflow of cash or by deflating the outflow of cash. No any such instance was pointed out by the AO after examination of audited books of account. The AO has also not rejected the books of account of assessee group. Further, assessee has also reconciled the cash balance as per the seized cash book and audited cash book with vouchers. The reconciled statement can be referred at PB page 402 and reconciled chart showing entry to entry explanation was filed with letter dated 17/03/2015. The cash position of seized cash book vis a vis audited cash book was as under:- Name As Per Seized cash b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's claim by specifically pointing out the incorporation of new unwarranted entry in the recasted/ completed/audited cash book by the assessee. It is a settled position of Law that after the conduct of search operation U/S 132 of the Act, books of account can be prepared on the basis of bank statement and seized documents and when no defect has been pointed out by the AO in the re- casted books of account, the entries made in the said re-casted books of accounts should be accepted. The ratio laid down by Hon'ble ITAT Jaipur Bench in the case of Shri Tarachand Jain ITSSA No.103/JP/2002 dated. 4.4.2003 (Supra) and Shri Rajendra Kedia (Supra) are squarely applicable here in this case also. Now, the question arises whether merely on the basis of search statement can addition is made?. The admission once made can certainly be retracted, if the circumstances permit, and it can also be shown to have been made under some mistake or to be otherwise incorrect. But, the onus would be on the maker of that admission. On perusal of assessment order, it is also seen that the AO has not brought any evidence showing generation of undisclosed income of the assessee for utilization in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income. However, after examination of books of accounts it was found that the advance given to Ansari brothers has not been recorded in the books of accounts and this mistake resulted the huge cash balance as per the books as on the date of search. The advance of ₹ 1.5 crore was given for purchases of agriculture land on Delhi road. The deal was not materialized and the advance was received back. At the time of completing of books of accounts the transaction was recorded in the books of respective person/concern of the assessee group. d) The Audited Books of account were examined in detail by the ld AO with reference to seized books of account, vouchers, bank statement, copy of registered sale deeds and other seized material. The assessee has also explained to the AO:- (i) Vide letter dated 23/01/2013, and further reply vide letter dated 27/03/2013 the assessee explained that reasons for not surrendering ₹ 1,50,00,000/- in return filed by him. It was categorically stated that at the time of search books of account were not complete and the payment was not recorded in the books found at the time of search. However, the entry for payment was passed in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al recorded at the time of search and second that the entry of payment to Ansari was not found recorded in the books of accounts at the time of search. Except to this there is no material with department to prove that the payment was made out of undisclosed income of the assessee. The assessee group was having sufficient cash balance as on the date of search which was not physically found to the search party, therefore no addition can be made on this account by presuming that this payment was made out of undisclosed income. f) The para to para comments on the findings given by the AO for making the additions is as under: - i) In Para 8.7(a) the ld. AO held that at the time of search this transaction was admitted by the assessee as made out of books and the same was reiterated in the statement recorded on 12.10.10 at his office. In this regard this is to submit that at the time of search the assessee was under mental pressure and the books of accounts of the assessee was not complete hence as on the date of search this payment was not recorded in books of accounts of the assessee therefore during the course of search the search party pressurized the assessee to surrendered thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on object and purpose of provisions. In case of Durgesh Oil Mills, 273 ITR 305 (All.), the Hon'ble Allahabad High Court has held that it is well settled that the circular issued by the Central Board of Direct Taxes is binding on authorities. Therefore, merely on the basis of statement addition cannot be made without demonstrating the documentary evidence in support of the admission in the search statement. Further, it is often argued by the Department that in the confessional statements during the course of search, there is a mention that there was no pressure and the statement was given voluntarily without any threat. In this connection, the Bombay Tribunal in Deepchand Co. v. Asstt. CIT (1995) [IT Appeal Nos. 1231 to 1234 (Bom.) of 1993, dated 27-7-1994] has observed thus: 'The stereotyped mention at the end of the statement that whatever was stated was true and to the best of the knowledge and belief and the statement given was voluntary without any threat, force or undue influence, would not mean that the partners agreed for making additions. Putting certain expression at the end of the statement cannot be taken as true in view of the retraction. Retraction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried no enquiry thereon to verify the correctness thereof. The assessee was also not cross examined on the point of retraction nor was required to produce any documentary evidence or any other evidence. The assessee was, therefore, entitled to assume that the income tax authorities were satisfied with the affidavit as sufficient on this point. The Hon'ble Allahabad High Court in the case of Sohan Lal Gupta vs. CIT, (1958) 33 ITR 786 (All.), as was also put to the parties during the course of argument, has made elaborate discussion on the evidentiary value of the affidavit. The relevant passage from the aforesaid judgment at page 791 of the report is reproduced as under :- The most important points on which the Tribunal relied, is that mentioned at No. 2, viz., that, according to the Tribunal, the assessee had not satisfactorily established that the shares had to be sold as the purchaser of the Jaswant Sugar Mills was not willing to purchase that mill unless the shares in the Straw Board Mills Ltd. held by the family were also transferred to him at the same time. On this point, the only material available on the record is the affidavit which was filed by the assessee before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment which stood validly retracted could not have been made. We, therefore, find no factual or legal justification in sustenance of addition by Ld. CIT (A) in this regard. (c) Hon ble ITAT Jaipur Bench in its recent decision in the case of Shri Pawan Lashkary ITA No 808/JP/2011 has held that income cannot be assessed merely on the basis of statement. (d) Further Reliance is placed on the following decisions:- (i) Hon ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala Anothers (1973) 91 ITR 18 (SC) has held that admission is an extremely important piece of evidence but it can t be said that it is conclusive. It is upon to the assessee to show that it is incorrect. (ii) Hon ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni 291 ITR 172 (Raj.) has held that admission in statement during search is not conclusive proof of fact and can always be explained ii) In Para 8.7 (b) to (d) the ld. AO mentioned that the claim that the cash payment to Ansari was made out of cash available from books of accounts was made for the first time during the assessment proceedings and no such explanation was given by the assessee at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the question of execution of agreement with Shri Ansari does not arise. As regard to recording the payment in books of accounts of different persons/concerns of the group instead of a single entry in the books of accounts of the assessee this is to submit that since the payment was made out of utilizing the balance of different persons/concerns, therefore the entry was made in books of accounts of respective persons/concern and upon finalization of transactions the respective transfer/adjustments entry will made in the books of accounts of the respective person/concern. v) In para 8.7(g) the ld. AO held that reliability of books of accounts of all persons is also questionable because than entries have been made subsequent to the search and not during the course of regular business. Admittedly the books of account of assessee /family members/group concerns were not complete as on the date of search because the main accountant of the assessee group was busy in audit work of FY 2009-2010 being last date of audit was ending soon on 30.09.2010. Under these circumstances entry of various transactions executed by the assessee during the current period were yet to be recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material available on record from which it appears that at the time of search books of account were found but the same were incomplete. The assessee later on prepared the books of account, which were duly audited by the Chartered Accountant. The books alongwith the certificates were submitted before the A.O. No defect/mistake was found. The AO has not raised doubt about the genuineness of preparation his books of accounts. Therefore, we do not agree with the observations made by the AO that the books were self-prepared. The CIT (A) has discussed in his order the ratio laid down by the ITAT Jaipur in the case of Rajendra Kumar Kedia vs. DCIT, 22 Tax World 506 where it was observed that the books of account of assessee, which are not properly maintained, can be subsequently prepared and re-casted on the basis of bank statement, vouchers, and other related documents of sales and purchase, then also be relied upon for the purpose of income-tax assessment. In the instant case, the re-casted books of account were properly audited and the same were produced before the AO along with the certificates but the AO did not find any defect or mistake in the said books of account. He h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961, therefore he is not expected to make huge cash payment of ₹ 1.5 crores for purchases of land when dealing in land in his business. In this regard this is to submit that it is a technical and legal matter and by adding the probability and possibility on the issue of legal matter a payment recorded in books of accounts cannot be doubted. Further, all the cash payment made in cash for purchases of land cannot be disallowable u/s 40A(3) of Income Tax Act, 1961 and before making the disallowance the extend of banking facilities available, consideration of business expediency and exigencies and other relevant factors are also taken into consideration, therefore the assessee made payments in cash considering and keeping in mind all these factors. (vii) In para 8.7 (i) the ld. AO held that as far as disallowance of 40A(3) of Income Tax Act, 1961 of ₹ 30,54,560/- for AY 2011-12 and ₹ 17,33,000/- for AY 2010-11 is concerned, the books of accounts/cash book for these years was seized at the time of search, therefore, probably the payment in books of accounts are shown in the final books of accounts also. In this regard it is relevant to mention here that:- (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment has no positive evidence that this payment was made out of undisclosed income, therefore the addition of ₹ 1.50 crore was rightly deleted by ld CIT(A). Therefore, kindly upheld the findings of ld CIT(A) in this regard and dismiss the appeal filed by the revenue. 16. We have heard the rival contentions of both the parties and perused the material available on the record. During the course of the first appellant proceedings, the assessee has contended that no incriminating document was found during the search operation showing payment of ₹ 1.50 crore to Ghulam Farooq Ansari. Further, no document was found from assessee's premises, showing generation of undisclosed income which could be said as utilized in the payment to Ansari. The crux of the issue is whether based on the statement of the assessee recorded u/s 132(4) of the Act, an addition towards undisclosed income can be made in the hands of the appellant. Both the Revenue as well as the assessee have relied on the decision of the Hon ble Supreme Court in case of Pullangode Rubber Produce Co. Ltd vs State of Kerala (91 ITR 18) wherein the Hon ble Supreme Court has laid down the following proposition in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e available with assessee and his family members/group concern to cover the payment of ₹ 1,50,00,000/- to Ansari. During the course of the arguments, the Revenue has not brought anything further to our notice and the findings of ld CIT(A) remain uncontroverted before us. The assessee has successfully demonstrated through its explanation and documentation in terms of re-casted books of accounts that the statement made during the course of the search cannot be made the sole basis for making the addition of ₹ 1,50,00,000 in his hands as there was sufficient cash balance in the books of accounts to make the said payment and discharged its onus as laid down by the decision of Hon ble Supreme Court in case of Pullangode Rubber Produce Co (supra) and Rajasthan High Court in case of Ashok Kumar Soni (supra). We therefore do not find any infirmity in the findings of the ld CIT(A). Accordingly, we uphold the order of the ld. CIT(A) and the appeal of the Revenue in this ground is dismissed. 17. Now we take up common ground in the Revenue s appeal as well as the assessee s appeal The 4th ground of the Revenue s appeal is against deletion of addition of ₹ 20,46,604 ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee in the books of the company M/s Ashish Buildcon (P) Ltd (PB pg 282). The entry to entry explanation was also given by the assessee, for which the AO has not made any comments in his remand report. The ledger account of assessee in the books of company is like a current account showing inflow and outflow of money in mixed form for the transactions of advance given or taken from/to the assessee. From the above account, I found that first two payments by the company amounting to ₹ 15,00,000/- and ₹ 6,80,000/- were against the land deal/advance by the company. The third entry is receipt of amount by the company of ₹ 2,00,000/- from the assessee. The fourth entry dated 15/05/2010 is payment of ₹ 10,00,000/- by the company to assessee. Further, ₹ 2,00,000/- was repaid by company to the assessee on 15/04/2010 and balance payment of ₹ 8,00,000/- was towards the advance against the land. At this stage, the total advance by the company to the assessee becomes at ₹ 29,80,000/-. Subsequent to this entry, in all cases, the company received payment from the assessee first and then repaid. Therefore, if the advance amount of ₹ 29,80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the evidence available on record it is seen that no business transaction was undertaken by the company for purchase of the land as claimed by the appellant, and the Ikrarnama was drafted subsequently to evade the provisions of sec. 2(22)(e) of the Act. In view of the facts and circumstances of the case as discussed in detail above and the law applicable to these facts, the addition to the extent of ₹ 29,80,000/- u/s 2(22) (e) of the Act is confirmed. Assessee gets part relief of ₹ 20,46,604/-(being ₹ 50,26,604 - 29,80,000/-). This ground of the assessee stands as partly allowed. 19. Now the assessee as well as the Revenue is in appeals before us. The ld. AR of the assessee has submitted as under:- (a) The similar issue on the same facts and circumstances and in respect to advance from same company has been decided by Hon ble ITAT in the case of assessee for AY 2010-11 in ITA No 810/JP/2014 order dated 04-03-2016. b) During the course of assessment proceedings the assessee vide letter dated 22.03.2013 (Copy at PB Page 272-281) explained to the ld. AO as under: - The assessee received money from the company from time to time against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments on various dates are repayment by the company to the assessee of the amount paid by the assessee to the company on earlier dates. In other words, the assessee paid certain amount to the company on various dates and the company repaid these amounts to the assessee on subsequent dates. Therefore, in any case, the repayment by the company of amount dues to the assessee cannot be deemed as advance or loan to shareholder. The assessee relies on the findings of Ld CIT(A) in this regard. (d) The expression used in first part of section 2(22)(e) is advance or loan. The word advance has not been defined. It ordinarily means payment of cash or transfer of goods for which accounting must be rendered by the recipient at some later date. The transaction of loan involves lending and delivery by one party and receipt by another party of sum money upon express or implied agreement to repay it with or without interest. The phrase by way of advance or loan appearing in Section 2(22)(e) of the Act be construed to mean those advances or loans which a share holder enjoys for simply on account of being a person who is the beneficial owner of shares, but if such loan or advance is given to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. g) Agreement not found in search:- The ld CIT appeal held the agreement as unreliable evidence on the ground that it was dated 22.07.2009 but not found during the course of search. In this regard we submit that search party has not prepared inventory for the documents or books of accounts found at the time of search. The search party prepared an inventory only of those documents which it seized. From the inventory prepared by the search party your honor would found so. The assessee is a big colonizer and had thousands of agreement to sale and documents relating to purchase of land, conversion of land and sales of plot. None of these documents are appearing in the inventory prepared by the search party. It is also relevant to mention that the assessee s assessment for the AY 2004-05, 2005-06, 2006-07 and 2007-08 were completed u/s 143(3) of IT Act after detailed scrutiny much before the search and several agreements to sales were filed before the AO during the course of scrutiny assessments, therefore, the existence of these documents cannot be denied. Since these documents were also not included in the inventory prepared by the search party. It is the wisdom of search part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Scheme now a days. It is also relevant to mention here that at that point of time several representations were made by the various Association of the builders and private colonizers for conversion and 90B proceedings of the lands less than 10 Hectares But at that time Private Township Policy was under pronouncement by the Government. The assessee was expecting the relief by the Government for small builders in Private Township Policy which was going to be pronounced very soon but which was also delayed by Government for one or another reasons and later on the Private Township Policy was pronounced vide letter No F.3 (77)UDD/3/20102 JAIPUR, Dated: 28/06/2010. Here also no relief to the small builders was not given and the requirement of minimum land was kept 10 Hectares. Later on 23.08.2012 the assessee filed application under section 90B of land Revenue Act which was rejected by JDA. The copy of application and letter received from JDA is enclosed here with. When final outcome of the efforts came negative, the assessee sold another land to the company duly 90B proceedings completed. Therefore, in view of the above explanation the amount of ₹ 50,26,604/- cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the advance given by the company to the assessee for purchase of land is concerned, the assessee submitted a copy of agreement to sale/Ikarnama dated 6.4.2010 as per which the assessee had agreed to sell 2.602 hectares of agricultural land in Village Bamanwas, Tehsil Viratnagar, Distt Jaipur to M/s Ashish Buildcon Pvt. Ltd. for ₹ 40 lacs. As per the Ikarnama, the assessee was required to get 90B conversion formalities done before 31.3.2011. It was explained by the assessee that he was expecting the new township policy to be announced as was the case with other colonizer/builders and was under a bonafide belief that the JDA would allow the conversion of land. Unfortunately, the land under the sale agreement could not got 90B approval from the JDA and thereafter the agreement was cancelled and amount was refunded to the company. It is noted that both assessee and M/s Ashish Buildcon are engaged in the business of real estate and similar transactions have been undertaken by the assessee with M/s Ashish Buildcon Private limited in the earlier years and subsequent years as well. We are therefore of the view that these are normal business transactions where the money has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010 and ₹ 1.25 lakhs on 10.3.2010 which show that there are numbers of transactions between the assessee and company. Finally, the assessee s accounts has been squared up. The assessee and company are in real estate business. It is a general practice in the line of business that most of the land are purchased and sold on agreement to sale basis to save the stamp duty and to increase the profit on the transactions. These facts have been accepted by the AO in scrutiny assessment also in number of years. The condition laid down in the section 2(22)(e) are squarely applied in case of the assessee but only issue disputed is whether these advances were loan for business purposes or otherwise. The prima facie copy of accounts in the books of the company shows that assessee had paid much more than amount received from the company. The transactions were regular. The assessee produced the evidence before the lower authorities to justify the transaction as a business transaction on the basis of agreement to sale dated 22.7.2009. There were certain conditions as per this Ikrarnama, which could not be fulfilled by the assessee but it does not mean that assessee s loans and advances are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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