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TMI Blog2019 (4) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years 2009-10 and 2010-11. 2. The first appellate authority has disposed off the appeals of A.Ys 2007-08, 2008-09 and 2010-11 by a consolidated order and has decided the appeal for A.Y 2009-10 by a separate order. 3. Since common issues are involved in all the seven appeals and were heard together, they are being disposed off by this common order for the sake of convenience and brevity. ASSESSEE'S APPEALS 4. In assessee's appeals, the ld. AR argued only on two issues. Therefore, all the other issues raised in grounds of appeal go into oblivion. The first issue being on account of unaccounted cash receipts which is there in A.Ys 2007-08 to 2010-11 and in A.Y 2011-12, the addition is in respect of unexplained money on account of gold coins found during the course of search. The ld. AR did not press this ground for the smallness of the amount involved and, therefore, the same is dismissed out right. 5. The issues raised by the Revenue shall be considered separately. 6. The representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, only the amount received which is shown under the column 'Deposits' can be considered as the unaccounted receipts of the assessee. In fact, the deposits column in the bank pass book reflect the credit entries and the withdrawals column reflect the debit entries. 9. However, we find that the entry on 1.10.2007 relating to Shri S. Bhatnagar ₹ 4,80,750/- is under the column 'Withdrawals' and the same has been added to the income of the assessee. Similar debit entries which have been added by the Assessing Officer are : 09.10.2007 ₹ 19,250/- 08.10.2007 ₹ 12,50,000/- 17.10.2007 ₹ 42,452/- 26.10.2007 ₹ 67,500/- 29.10.2007 ₹ 20,44,967/- 29.11.2007 ₹ 7,78,5000/- 10. We have only mentioned the sample entries to show that the additions on account of these debit entries is not justified since these debit entries are nothing but unaccounted receipts transferred to Head Office. Similar entries need to be examined and verified to arrive at the correct figure of unaccounted receipts from business. 11. We, therefore, restore this issue to the file of the Assessing Officer to examine the debit entries and if the same are in the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 18. As a result, the appeals of the assessee for A.Ys 2007-08 to 2010-11 are allowed for statistical purposes and appeal for A.Y 2011-12 is dismissed. REVENUE'S APPEALS 19. The common grievance in both the appeals relates to the deletion of disallowance made u/s 14A of the Act r.w.r 8D of the Rules. 20. In assessment year 2009-10, disallowance is of ₹ 44,97,650/- and in assessment year 2010-11, the disallowance is of ₹ 80,04,260/- 21. The undisputed facts is that in the impugned assessment years, the assessee has not earned any exempt income. 22. The ld. DR strongly supported the disallowances made by the Assessing Officer and strongly relied upon the decision of the Hon'ble Supreme Court in the case of Rajendra Prasad 115 ITR 519 and Maxopp Investment Ltd 91 Taxmann 154. It is the say of the ld. DR that even if there is no exempt income earned during the year under consideration, the disallowance u/s 14A is imminent and the ld. CIT(A) grossly erred in delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No. 2 in assessment year 2009-10 relates to the deletion of addition of ₹ 8 crores. 26. During the course of assessment proceedings and on the basis of information received from Investigation Directorate, New Delhi, the Assessing Officer came to know that the assessee company has taken accommodation entries totalling to ₹ 8 crores from Shri S.K. Jain group of companies during the F.Y. 2008-09 relevant to assessment year 2009-10, the details of which are as under: SI. No. From company name Name of the issuing bank Cheque/RT GS/PO No. Cheque date Amount(Rs.) (i) (ii) (iii) (iv) (v) (vi) 1 Virgin Capital Services Pvt Ltd. AXIS Bank 098315 03.11.2008 1,50,00,000 2 -do- -do- 098314 -do- 1,00,00,000 3 VIP Leasing & Finance Pvt Ltd -do- 014018 -do- 50,00,000 4 -do- -do- 014025 -do- 1,00,00,000 5 -do- -do- 014026 04.11.2008 1,00,00,000 6 Humtum Marketing Pvt Ltd. -do- 094582 -do- 1,00,00,000 7 VIP Leasing & Finance Pvt Ltd -do- 006622 21.11.2008 2,00,00,000 TOTAL 8,00,00,000 27. The Assessing Officer called for necessary details from the assessee to establish the genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the Assessing Officer was not justified in making the addition of ₹ 8 crores as unexplained cash credit u/s 68 of the Act. 31. Aggrieved, the Revenue is before us. 32. The ld. DR strongly supported the findings of the Assessing Officer and placed strong reliance on the decision of the Hon'ble High Court of Delhi in the case of NDR Promoters Pvt. Ltd in ITA No. 49/2018 and the judgment of the Hon'ble Supreme Court in the case of NRA Iron and Steel Pvt Ltd in Civil Appeal No. 29855 of 2018. It is the say of the ld. DR that the assessee has grossly failed in discharging the initial onus cast upon it u/s 68 of the Act. 33. We have heard the rival submissions and have given thoughtful consideration to the orders of the authorities below and have carefully considered the judicial decisions relied upon. At the outset, we have to say that the 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. 34. The companies, namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Assessing Officer's order. 39. In his statement, Shri Vinod Kumar Chauhan categorically stated that the diary and loose papers pertaining to Vamshi Retreats belong to Azad Singh as these are his personal papers and who is one of the employees being Executive [Market] of the assessee company. 40. Summons u/s 131 of the Act was issued by the INV Wing to Shri Azad Singh to appear before the INV Wing. On enquiry, it came to the notice of the Assessing Officer that Shri Azad Singh was no more working with the assessee company. The assessee was asked to provide address of Shri Azad Singh. The address was provided but summons u/s 131 could not be served upon him. 41. The assessee was asked to explain the transactions appearing in the impounded documents and reconcile the same with its books of account. On receiving no plausible reply, addition of ₹ 1,84,82,000/- was made. 42. There was one more impounded document in respect of a property and measuring 647.50 sq yard which was purchased for a total consideration of ₹ 1.07 crores. The share holders of this plot were Shri Jagjit, Shri Titu, Shri Akash, Shri Rakesh Pankaj and Shri Pawan. The assessee was asked to exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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. 46. 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. Considering the facts of the case in totality, we do not find any error or infirmity in the findings of the ld. CIT(A). This ground is accordingly dismissed. 47. In the result the appeal for assessment year 2009-10 is partly allowed and the appeal for as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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