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TMI Blog2017 (11) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... corroborative evidence to demonstrate that the assessee has actually received cash payment of ₹ 2,50,000 for hosting an event in Sidney, the addition, in our view, is unsustainable. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised. Addition on account of cash receipts - addition as per the document found and seized from the computer of Ms. Sandhya Ramchandra - Held that:- Undisputedly, the aforesaid seized documents was not found from the possession of the assessee but from a third party. It is also a fact that apart from this seized material, there is no other corroborative material on record to demonstrate that the cash payment mentioned in the seized material was actually made to the assessee. On the contrary, the assessee when was confronted with the seized material had categorically denied of having received the cash payment. Further, an affidavit was also filed on behalf of Matrix India Entertainment Pvt. Ltd., stating that no cash payment was made to the assessee. In fact, Ms. Sandhya Ramchandra, in her statement also could not state anything about cash payment as it was prior to her employment. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. It is also a matter of record that Ms. Sandhya Ramchandra, from whose computer some of the seized materials were found was never questioned on this issue. Therefore, in the absence of any direct and clinching evidence indicating incurring of cash expenditure for purchasing the house, addition cannot be made on mere presumption and surmises. Addition made on estimation / extrapolation - Held that:- In the absence of any direct evidence demonstrating that the assessee had received cash payment from Matrix, as shown in the evaluation sheet, no addition can be made merely on presumption and surmises and on estimate basis. For making the addition on account of cash component, it was the duty of the Assessing Officer to bring on record corroborative evidence to establish the fact that the entries made in the evaluation sheet were correct. Therefore, in the absence of any evidence brought on record, the addition was rightly deleted by the learned Commissioner (Appeals). The decisions relied upon by the learned Authorised Representative also support the aforesaid view. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer in the remand report found that the document / letter on the basis of which addition of ₹ 2,00,000 was made was not found in the course of search on assessee but was found from the computer of Ms. Sandhya Ramchandra, who happened to be employee of Matrix. She also found that the so called document is nothing but a quotation of an assignment at Sidney for assessee as hostess prepared by the ex employee of Matrix. From the verification of passport of the assessee, it was found that she did not attend the event at Sidney for which she was supposed to receive the appearance fee. Further, the learned Commissioner (Appeals) also found that when the facts relating to receipt of fee of ₹ 2,00,000 was confronted to the assessee, she flatly denied of having either hosted the event or received the amount in question. She also referred to the Affidavit filed on behalf of Matrix stating that they have not received any cash on behalf of the assessee. Thus, on the basis of aforesaid evidences, the learned Commissioner (Appeals) deleted the addition. 6. Learned Departmental Representative submitted, documents found / seized during the search operation prima f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized material was actually received by the assessee. On the contrary, the passport submitted by the assessee clearly established the fact that neither she had travelled to Sidney in relevant period nor hosted the ICC event for which she was supposed to receive cash payment. It is further relevant to observe, even Ms. Sandhya Ramchandra, from whose computer such print out was taken had stated before the Departmental Authorities that she was not aware of the fact mentioned in the said Annexure as it was for a period prior to her appointment in Matrix. In these circumstances, simply relying upon a untested / unverified document and without any other corroborative evidence to demonstrate that the assessee has actually received cash payment of ₹ 2,50,000 for hosting an event in Sidney, the addition, in our view, is unsustainable. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised. 9. In ground no.2, the Revenue has challenged the deletion of addition of ₹ 30,80,000 on account of cash receipts. 10. Brief facts are, during the assessment proceedings, the Assessing Officer found that as per Page no.D 59, D 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicating cash payment to the assessee, the addition made by the Assessing Officer was justified. 13. Learned Authorised Representative submitted, the seized materials on the basis of which addition was made were not found in the search conducted in assessee s premises. He submitted, apart from the documents seized from the laptop of Ms. Sandhya Ramchandra, there was no other proof to corroborate facts mentioned in the seized documents. He submitted, in an Affidavit filed on behalf of Matrix, it has been categorically stated that no cash payment was ever made to the assessee. Learned Authorised Representative submitted, Ms. Sandhya Ramchandra, from whose computer the document was found had also stated that she was not aware of the facts mentioned in the said documents as at that time she was not employee of Matrix. Strongly refuting allegation of the Assessing Officer that Ms. Sandhya Ramchandra, was an employee of the assessee, the learned Authorised Representative submitted at no point of time she was employee of the assessee, but, she was an employee of Matrix. Thus, the learned Authorised Representative submitted, on the basis of untested / unverified materials which are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount of ₹ 2,80,000 as income in the impugned assessment year deleted the addition. 18. We have heard rival contentions and perused the material available on record. As discussed by the learned Commissioner (Appeals), the assessee had received amount of ₹ 2,80,000 in cheque and has accounted for in her books of account. She has also offered it as income in the impugned assessment year. The aforesaid factual finding of the learned Commissioner (Appeals) has not been controverted by the learned Departmental Representative. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue. Ground raised is dismissed. 19. In ground no.4, the Revenue has challenged deletion of addition of ₹ 6,86,000 on account of various expenditure. 20. Brief facts are, during the assessment proceedings, the Assessing Officer found that as per Page no.D 64 of Annexure D, Matrix India Entertainment Pvt. Ltd., has incurred cash expenditure of ₹ 6,86,000 on behalf of the assessee stating that such expenditure being neither part of books of account of the assessee nor reimbursed to Matrix has to be treated as unexplained expenditure and accordingly adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 55,00,000 apart from the amounts paid in cheque towards house purchase. In this context, he referred to four receipts marked as E 12 and E 15 , evidencing cash payment of ₹ 50,00,000. He also referred to Page no.E 16, which is a letter for payment of ₹ 2,00,000 for interior designing. Alleging that the assessee could not reconcile the transactions shown in the seized documents with her books of account. The Assessing Officer added back an amount of ₹ 57,00,000 as unexplained expenditure on house purchase. 26. In appeal proceedings, the learned Commissioner (Appeals) after verifying the facts and material on record found that in post search proceedings when the assessee was confronted with the seized material she had categorically denied of making any cash payment. It was stated by her that entire sale consideration was paid by her in cheque and duly reflected in the books of account. She also stated that neither her signature is there in the cash receipt nor her name is mentioned. The receipts were not addressed to her. She also found that cash receipts for the amount of ₹ 45,00,000 have been prepared by one Shri Vijay Kandhari and is self gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f unexplained expenditure. 30. Brief facts are, from Page no.E 17 and E 18 of Annexure E found from the computer of Ms. Sandhya Ramchandra, the Assessing Officer was of the view that the assessee has made cash payment of ₹ 1,43,928, for interior decoration. Accordingly, he added the amount to the income of the assessee. 31. In appeal proceedings, the learned Commissioner (Appeals) deleted the addition on the ground that, except the seized material found from third party, there are a no other corroborative evidence indicating payment of ₹ 1,43,928 by the assessee. Accordingly, she deleted the addition. However, she was of the view that the issue has to be dealt with in case of Matrix. 32. We have heard rival contentions and perused the material available on record. It is evident, except the print out taken from the computer of Ms. Sandhya Ramchandra, there are no other evidence brought on record to corroborate the fact mentioned in the seized material. As it appears, the Assessing Officer has not made any enquiry with the concerned person supposed to have received the amount to found out the correctness of the seized document. Therefore, in the absence of any co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ya Ramchandra, in the statement recorded from her expressed her unawareness with regard to the facts mentioned in the said documents as she was not an employee of Matrix at the relevant time. He submitted, even an affidavit has been filed on behalf of Matrix denying any cash payment to the assessee. The assessee in a statement recorded has completely denied of having received any cash payment from Matrix. Therefore, the learned Authorised Representative submitted, without any evidence brought on record, the addition cannot be made on loose sheet / dumb documents, that too on the basis of estimation / extrapolation. In support of his contention, the learned Authorised Representative relied upon the following decisions: (i) Common Cause v. Union Of India, 77 taxmann.com 245 (SC); (ii) CIT v. Jayaben Ratilal Sarothiya, 222 taxman 64 (Guj.); (iii) Uday C. Thmhankan v. DCIT, 174 TTJ 151 (Mum.); and (iv) Dr. M.K.E. Menon, 248 ITR 310 (Bom.). 38. We have heard rival contentions and perused the material available on record in the light of the decisions relied upon. Undisputedly, on the basis of evaluation sheet found from the computer of Ms. Sandhya Ramchandra, the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the entries found in the seized document the Assessing Officer added an amount of ₹ 2,00,000 being 80% of the total amount mentioned in the seized document at the hands of the assessee and the balance amount at the hands of M/s. Matrix, assessee s agent. The assessee challenged the addition before the CIT(A). 41. Before the First Appellate Authority assessee submitted that the said seized document was found from a third party and in a statement recorded on oath by the AO, assessee has categorically disowned the contents of the seized document and denied having received any cash from M/s. Matrix for appearing in any event at Dubai for Wizcraft International. It was submitted, assessee has never visited Dubai in the month of June 2006. Hence, there is no question of receiving any amount in cash for appearance in the said event. In this context the assessee also relied upon the affidavit filed on behalf of M/s. Matrix stating that no cash was received on behalf of the assessee. On the basis of submissions made by the assessee, the learned CIT(A) called for a remand report and after perusing the remand report and other materials on record found that addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not seized from the assessee, that the assessee in the statement recorded on oath by the AO has completely denied of having received any cash, that the statement was prepared by some ex-employee of M/s. Matrix and the assessee is completely unaware of any such income or expenditure mentioned in the said document. Further explaining, the assessee submitted that as per the seized document remuneration is for appearance for the client Seven Heaven. However, the assessee stated, the said event did materialise through some other agent and the assessee received remuneration of ₹ 8,20,000 through cheque No.001131 on 05.10.2006 which has been duly accounted in her books of account and offered for tax. She submitted, this fact was also corroborated by the affidavit filed on behalf of M/s. Matrix that no cash payment was received by the assessee. The learned CIT(A) after considering the submissions of the assessee deleted the addition, since, the AO has not correctly verified the facts. 45. We heard the rival submissions and perused the material on record. As could be seen from the facts on record, the assessee did appear in the event for the client Seven Heaven and received re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... survey operation in the case of Ms. Sandhya Ramachandran and M/s. Matrix certain print outs were taken from the laptop/computer amongst which was an evaluation sheet, which according to the AO indicated cash payment to the assessee over and above the payments made in cheque by M/s. Matrix. On the basis of the evaluation sheet which was for the financial year 2005-06 and which suggested that the assessee in the said financial year received an amount of ₹ 2,07,00,000 through cheque and ₹ 58,00,000 through cash, the AO made addition of ₹ 58,00,000 in A.Y. 2006-07. Further, on the basis of the said seized document the AO made addition on estimate basis on account of cash payment supposed to have been received by the assessee in the subsequent assessment years. Thus, in the impugned assessment year the AO added back an amount of ₹ 52,68,388 as estimated cash income. The assessee challenged the addition before the CIT(A). Learned CIT(A), after considering the submissions of the assessee, called for a remand report from the AO. After perusing the remand report learned CIT(A) found that the basis of addition is Annexure G which is the evaluation sheet found for A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion that the assessee was receiving 28% of the amount by cash and accordingly, the AO estimated/extrapolated cash receipts for different years and added to the total income of the assessee in respective years. As the evidence in the form of Annexure G was found for the F.Y. 2005-06 only, the AO estimated cash receipts for various years for the reasons discussed in the assessment order. 52. Even, in the second remand report dated 09.03.2015 the AO had categorically stated that on the basis of the said seized document which pertained to A.Y. 2006-07, the AO has made addition on estimate basis in subsequent assessment years following his order for A.Y. 2006-07. Thus, from the aforesaid facts it is patent and obvious that the estimated addition made in the impugned assessment year is without any evidence and merely on the basis of the document which pertained to a different assessment year, i.e. A.Y. 2006-07. As far as the impugned assessment year is concerned, no incriminating material has been found by the AO indicating cash payment over and above the payments made through cheques. Moreover, the affidavit filed on behalf of Matrix also corroborate the stand of the assessee. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utedly, the seized documents on the basis of which the addition was made by the AO is a conversation between Ms. Sandhya Ramachandran and one of the clients of M/s. Matrix. Except the document containing conversation between two third parties there is no other evidence brought on record by the AO to indicate cash payment to the assessee. In fact in the course of assessment proceedings when the assessee was confronted with the seized document she flatly denied of having received any cash from Matrix. Further, an affidavit was also filed on behalf of Matrix stating that no cash was either accepted on behalf of the assessee or paid to her. Thus, when no corroborative evidence has been brought on record indicating cash payment, merely relying upon some conversation between two third parties it cannot be concluded that the assessee has received cash payment of ₹ 20,00,000. Therefore, the addition made on pure guess work, conjecture and surmises cannot be sustained. We therefore, uphold the order of the CIT(A) on this issue. Ground raised by the Department is dismissed. 58. In ground No. 2 the Department has challenged the deletion of addition of ₹ 48,00,000 made on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... printout taken from the laptop of Ms. Sandhya Ramachandran contains details of certain agreement and related payments. He found that as per the seized document the assessee had received cash of ₹ 5,00,000 from Bramha Builders over and above the agreement value of ₹ 6,00,000. He also observed that Matrix has received ₹ 25,00,000 in cash from Anchor-Dyna Soap over and above the agreement value or ₹ 10,00,000. On the basis of this document the AO presumed that such cash payments were received by M/s. Matrix on behalf of the assessee and the amount was shared between the assessee and M/s. Matrix at the ratio of 80:20. Accordingly, he added back an amount of ₹ 24,00,000 at the hands of the assessee. 63. The assessee challenged the addition before the CIT(A). Before the CIT(A) it was submitted that the documents on the basis of which addition was made was not seized from the assessee but from a third party. It was also submitted, in a statement recorded the assessee had categorically denied of having received any cash from the concerned party. On the basis of the submissions made by the assessee the learned CIT(A) called for a remand report from the AO. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilders is for the period 22.07.2005 to 21.07.2006 and entry of ₹ 20,00,000/- of Anchor Dyna Soap is for the period 31.10.2005 to 31.10.2007. Hence, these entries do not pertain to F.Y. 2010-11. You are requested to take cognizance of these entries in the relevant Assessment Years. 65. Thus, as could be seen from the observations of the AO in the remand report the transaction in question as found mentioned in the seized document even does not pertain to the impugned assessment year. That being the case, learned CIT(A) was justified in deleting the addition. 66. In ground No. 4 the Department has challenged the deletion of addition of ₹ 25,28,571 on account of fees received from Multi Screen Media P. Ltd. 67. Briefly the facts are, the AO observed, during the search proceedings and post search enquiries it was found that assessee s mother is a Managing Trustee of a charitable organisation in the name and style of Relief Project India and the assessee has made contributions to the said trust. He, therefore, called upon the assessee to furnish the details of payments made to the said charitable trust by the assessee. From the details submitted by the assessee th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had charged an amount of ₹ 1,20,00,000 to another client for the same two year contract. Thus, it shows that there was no diversion of income by paying donations to Relief Project India. It was submitted, the donation by Gitanjali Gems Ltd. to Relief Project India has no connection with the assessee as it was done one year after the endorsement contract between the assessee and Gitanjali Gems Ltd. Was executed. The learned CIT(A) after considered the submissions of the assessee in the context of the facts and material on record found that as far as the amount of ₹ 11,00,000 paid by Multi Screen Media P. Ltd. is concerned, the assessee has offered the said amount of ₹ 11,00,000 in the return of income filed in pursuance to notice under section 153A of the Act and has neither claimed deduction under section 80G on the said amount nor claimed credit for the TDS of ₹ 4,28,571. She also found that the AO in the remand report has also accepted these facts. Accordingly, she held that the amount of ₹ 11,00,000 from Multi Screen Media P. Ltd. cannot be added to the income of the assessee again. As far as the amount of ₹ 11,00,000 from Gitanja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply. As alleged by the AO, the assessee failed to respond to the query raised. Therefore a statement was recorded from Ms. Sandhya Ramachandran wherein she categorically stated of not being aware of any cash transaction involving the assessee. As far as the performance at Dhaka event is concerned, she stated that the said event did not materialise. The AO observed, though, Ms. Sandhya Ramachandran denied that Dhaka performance did not materialise, it did happen in February, 2011. Therefore, he held that the facts stated in the incriminating material found during the survey are correlated. Accordingly, he added back 80% of the cash payments mentioned in the loose paper amounting to ₹ 60,00,000 to the income of the assessee. The assessee challenged the addition before the CIT(A). 72. Before the CIT(A) it was submitted that the Dhaka performance materialised through another organization, namely, M/s. ATN Records Ltd. who paid the fees amounting to ₹ 45,51,750 net of TDS, fully by cheque and it was reflected in the return of income filed for A.Y. 2011-12. Therefore, it was submitted, there is no question of receiving the amount of ₹ 60,00,000 from M/s. Matrix Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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