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TMI Blog2021 (4) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... 131/- per sq.ft but the Ld. A.O failed to record the basis for adopting 500/- 900/- and 1300/- for Assessment Year 2009-10, 2011-12 and 2013-14 and the same is purely an estimate. Even the Ld. A.O has failed to take any valuation report from Departmental Valuation Officer to support the rate adopted by him. No incriminating material was found from the premises of M/s N.R. Finance Pvt. Ltd and similarly no evidence was gathered in the case of M/s N.R. Company to show that any consideration over and above the disclosed sale consideration in the books of accounts has been received. It is not in dispute that the sales recorded in the books of assessee are duly supported by registered sale deed signed by both the buyers and sellers and stating the consideration paid/received before the registering authority and transaction has taken place through proper banking channel. Ld. A.O has not rejected the books of accounts u/s 145(2) of the Act. Revenue has failed to prove that both the assessee(s) ever entered into any transaction of any nature with Mr. Kamal Goyal. Even in the affidavit given by Mr. Kamal Goyal he has not stated anything about the assessee(s) except that some plot of land of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessee(s). In these given facts and circumstances of the case and also under the provisions of I.T. Act which provides co-terminus power to Ld. CIT(A) as are there with the Ld. A.O, we are of the considered view that the alleged additional evidence cannot be categorized as additional evidence for the issue raised in the instant appeals. We accordingly dismiss the additional ground raised by the revenue in the case of M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 and 2013-14. Excess development charges claimed by the assessee - HELD THAT:- From perusal of the finding of Ld. CIT(A) we find no inconsistency since sale consideration received from sale of extra land to M/s N.R. Finance Pvt. Ltd is already included in the gross sales shown by the assessee and the profit arising there from has been offered to tax. This fact is duly verifiable from the development charges paid to M/s N.R. Finance Pvt. Ltd for Assessment Year 2009-10 to Assessment Year 2013-14. We thus confirm the finding of Ld. CIT(A) and dismiss Ground No.3 raised by the revenue for Assessment Year 2013-14 in the case of M/s N.R. Company. Cross Objections filed by the assessee namely M/s N.R. Finance Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O during assessment proceedings. The appellant reserves the right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal. ITA No.1043/Ind/2016 Assessment Year 2013-14 "On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition of ₹ 13,31,01,675/- made by the AO on account of estimation of sale consideration on the basis of seized documents LPS-A3 found from the premises of the broker, Shri Kamal Goyal without appreciating the facts and evidences brought into light by the AO during assessment proceedings. The appellant reserves the right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal." 4. On 10.10.2018 when the instant appeals came up for hearing Ld. Departmental Representative requested to provide an opportunity to file additional grounds and the same was accepted by us. Following additional grounds were filed commonly for Assessment Year 2012-13 and 2013-14 pertaining to the assessee namely M/s N.R. Finance Pvt. Ltd :- 1. Whether on the facts & circumstances of the case the Ld. CIT(A) has erred in holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) has erred in deleting the addition of ₹ 1,89,47,147/- without considering the seized documents page no.64,66 and 68 of LPS-A3 from the premise of the broker who sold the plots in the area developed by assessee and the fact that there is huge difference in guideline value and sale consideration shown by the assessee which supports that the sale price was suppressed in books. 2. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in holding that no opportunity was provided to assessee for cross examination even when in statement of the partner, recorded u/s 131 of the Act, the details of seized documents were provided to him as such sufficient opportunity was provided to assessee firm and the assessee firm never asked for cross examinations during the course of assessment proceedings. 3. The appellant craves leave to add to, deduct from, or otherwise amend the above ground of appeal. ITA No.206/Ind/2018 Assessment Year 2011-12 1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of ₹ 3,41,02,145/- without considering the seized documents page no.64,66 and 68 of LPS-A3 from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under mentioned in books. 2. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in holding that no opportunity was provided to assessee for cross examination even when in statement of the partner, recorded u/s 131 of the Act, the details of seized documents were provided to him as such sufficient opportunity was provided to assessee firm and the assessee firm never asked for cross examinations during the course of assessment proceedings. 3. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in law by deleting the addition of ₹ 15,67,401/- made under the head excess development charged claimed without considering that the assessee remained fail to explain the reason of excess payment. 4. The appellant craves leave to add to, deduct from, or otherwise amend the above ground of appeal 7. From perusal of the grounds raised by the Revenue for both the assessee(s), we find that only following three issues needs to be adjudicated:- (i) Whether the Ld. CIT(A) erred in deleting the additions which were made by Ld. A.O applying the estimated rate per sq. feet on sale of plot of lands based upon the seized documents b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial complexes and development of residential colony and plots. The appellant is one of the companies of M/s Appolo Group of Indore which was searched u/s 132 of the Act on 29.01.2012. The assessee company entered into an agreement for development of land owned by M/s N.R. Company and others at Gram Bicholi Hapsi in the name and style of N.R. Estate vide agreement dated 04.04.2007. Subsequently vide another agreement dated 05.02.2008 terms and conditions of the development agreement were changed and in consideration of relinquishing the part of development charges assessee agreed to acquire plots of land spread over financial year 2008-09 to 2012-13. Search action were also carried out u/s 132 of the Act on 29.01.2012 at the premises of Mr. Kamal Goyal, Indore who is a broker and deals in real estate transactions for various builders and developers. Along with the loose papers, diary LPS A3 was also seized and on page 64, 66 and 68 of this diary there are some details of plots sold in 'N.R. Estates' and the rate of sale per sq. feet was ranging from ₹ 1115 to ₹ 1131/- per sq. feet. Ld. A.O based on the information appearing in the seized document was of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have an business relation with the broker Shri Kamal Go al and no lots were sold through him. The Ld. AO did not dispute such fact but alleged that the brokerage might have been paid in cash to the said broker. Such allegation is totally based on presumption and highlights the fact that any material seized from Shri Kamal Goyal premises cannot be taken into consideration for appellant's case. Moreover, the Ld. AO himself disbelieved his presumption where no addition was made in the form of imaginary brokerage he assumed to have been paid in cash. The main premise of the allegation of the Ld. AO was that the rates of the plot numbers mentio.ned in the diary range from ₹ 1150/- to ₹ 1131/- per Sq. ft. but on the contrary the appellant has sold within range ₹ 325/- to ₹ 350/- per Sq. ft. Such allegations did not hold good as it was submitted that lot numbers mentioned in the seized diar did not belonged to the appellant. The appellant submitted the development agreement to establish the fact that its share of plots is distinct from the plot numbers mentioned in the diary seized. Further, without prejudice to the above-mentioned contention, it was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged addition is nothing but a "dumb document" as department failed to link the same with another corroborative evidence and therefore it has no evidentiary value in the eyes of law. The following is the summary of judicial pronouncements in support to our contentions and may kindly be considered by your honours:- S.No. Citation Proposition 1 CIT vs Kabul Chawla 380 ITR 573 (Del) Since no incriminating material was unearthed during the search, no additions could have been made to the income of assessees. 2 Shri Kamal Kishore Kotwani Vs. CIT I.T.(SS) ANo. 186/Ind/2016 dtd 04.07.18 (Hon'ble Bench of ITAT Indore) 3 CITVs S.M. Agrawal 293 ITR 043(Del) No addition on the basis of document can be made until contents of it are proved against the person and the same is nothing but dumb document 4 CIT vs. Ved Prakash Choudhary 305 ITR 245 (Del) 5 Cit vs. Kantilal Prabhudas Patel 296 ITR 568 MP 6 ACIT vs Narottam Mishra (2018) 32 ITJ 510 (Indore) No addition on the basis of document recovered from third party without any corroborative evidences. 7 CIT vs. Anil Bhalla 322 ITR 191(Del) 8 Cit vs Vatika Landbase P Ltd 383 ITR 320 (Del) 9 DCIT vs Shri Mahes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o during assessment proceedings. We note that as per the scheme of the Act, the Ld. CIT(A) enjoyss plenary &, co-terminus powers as that of AO while deciding the appeal before him. The appel1ate proceeding before the Let CIT(A) is akin to continuation of assessment proceedings. The Let CIT(A) after giving notice to assessee has power to even enhance the assessment made by AO. As per rule 46A of Income-tax Rules, the Ld. CIT(A) has to give opportunity to AO before admitting Additional Evidences. We note that the Ld. CIT(A) has based his decision on the materials produced before the AO. However, in addition to it has gone through the financial result of similar companies located at Orissa and which are engaged in the same activity as that of the assessee company. The annual reports of three companies i) M/s. Tata Sponge Iron Ltd., (ii) M/s. Orissa Sponge Iron & Steel Ltd. and (iii) M/s. MSP Steel & power Ltd. have been looked into by the Id CIT(A) and compared the consumption of iron ore with that of assessee company which is as under: Financial Year Tata Spouge Iron Ltd. Orissa Sponge Iron & Steel Ltd. MS? Steel & Power Ltd. Rungta Mines Ltd. (Assessee) 2006-07 L59 1.51 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dore and certain other persons including the residential premises of a broker named Kamal Goyal, certain documents were found and according to the said document and in particular a diary seized from residential premises of the broker Kamal Goyal, it was revealed that the rates of Plots in the colony 'NR Estate' were in the range of ₹ 1150 to ₹ 1311 per Sq Ft. As according to the information these were the rates quoted to the customers by said broker Kamal Goyal , the DCIT, taking cognizance of the information available from the diary seized from broker Kamal Goyal worked out year wise estimated average rates and forwarded the information to the AO . Based on the said information and the estimation of average rates as worked out by DCIT (Central), Indore, AO assumed that the rates at which the assessee has sold plots to various buyers are not actual rates and the sale of plots might have been effected at higher rates. The AO, therefore, proposed to treat the difference between the estimated rates as computed by DCIT (Central), Indore on the basis of the information gathered by him from the broker's diary and the actual rates as per the books of accounts of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e summons dated 23/11/2015 issued by AO requiring the assessee to show cause against proposed addition of the difference between the rates as per broker's diary and the actual rates as per the books of the assessee, it was submitted that the assessee has no business connection with said broker Kamal Goyal and the material / information contained in his diary could not be used against the assessee for any making allegation of sales at higher rates . In support of its contention that assessee has no connection with said broker Kamal Goyal , assessee submitted details of brokers who had worked for assessee along with details of the brokerage paid to them . The assessee also submitted a detailed list of the plots sold by it during the year under consideration along with respective Plot Nos. , their respective areas, dates of sales, sale price etc. Refuting the proposal of AO to make addition on the basis of guideline value for stamp duty purposes, the assessee submitted that no such addition could be made as the provisions of section 50C were not applicable to the present case. b) Reply dated 03-10-2015 ---- The assessee reiterated the fact that it has no connection with Kamal Goyal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at none of the transactions matched with the information collected from broker's diary . By bringing on record the mismatch between the names , the dates of transactions , plot areas etc. as collected from broker's dairy and the actual transactions effected by assessee , the assessee successfully demolished the allegations of the AO and also brought on record the facts that the information available in the broker's diary could not be said to be reliable evidence for making any addition in the hands of assessee and no addition could be made solely on the basis of information contained in the broker's diary . iii) The assessee t submits that ignoring the submissions made by assessee and ignoring the factual position that none of the transactions alleged in the broker's diary could be corelated with the assessee's actual transactions, learned AO has arrived at the conclusion that the assessee might have sold the plots at higher rates and has made an addition in the hands of the assessee on the basis of estimated rate of sale of ₹ 1300/- per Sq. Ft. . It is important to note that no attempt has been made by AO to bring any positive, cogent or concrete evidence to prove that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate the information from the broker's diary with that of assessee's transaction of sale of Plot before making allegation of receipt of unaccounted money in sale of Plots. As a matter of fact the assessee had himself provided all details of the transaction of sale of plots effected by assessee during period under consideration which contained details of Plot Nos. , date of sales, names of parties in whose favor the documents were registered and the sale consideration received by assessee but the AO even did not summon the respective buyers to verify the facts . The assessee , therefore, submitted that in absence of any nexus between the information contained in broker's diary and the assessee's transaction, no addition on the basis of such vague, uncertain and uncorroborated information could be made in the hands of the assessee. The assessee submitted that in case of a transaction of sale / purchase of immovable property which is required to be compulsorily registered, the parties to transaction are , seller, buyer and two independent witnesses. Surprisingly , the AO rested his conclusion only on notings of broker's diary without even making attempt to verify the facts from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any corroborative evidence and accordingly deleted . c) CIT Vs. SM Agrawal reported in (2007) 293 ITR 43 (Del), addition deleted for want of relevant or admissible evidence as also for want of opportunity of cross examination . d) CIT Vs. DK Gupta reported in (2009) 308 ITR 230 in absence of corroborative or direct evidence , the addition based on presumption that notings or jottings had materialized into transactions giving rise to undisclosed income deleted . vi) The assessee also submitted that the legal position that suspicion cannot take the place of proof and that no assessment can be made on the basis of surmises and conjectures is also settled by number of decisions some of which are as under a) Umacharan Shaw & Brother v/s CIT (1959) 37 ITR 271 b) CIT V/s Ravikumar (2007) 294 ITR 78 (P&H) . c) CIT V/s Anupam Kapoor (2008) 299 ITR 179 . vii) The assessee further submitted that as stated herein above , the allegation of the AO is that the sales of plots effected by the assessee are at higher rates than the rates which are reflected in books of accounts . In this respect the appellant desires to submit before this Hon'ble authority that the plots have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered , the oral evidence loses its credibility . In the instant case there is not even an oral evidence ( because broker's reply relied upon by AO cannot be equated with statement). A reference in this respect may also be on following decisions . a) Decision of Delhi High Court in case of CIT v/s Rajeev Mehta reported in (2008) 171 Taxmann 198 at 200 b) Paramjeet singh v/s ITO (2010) 195 Taxmann 273 (P&H) .= 323 ITR 588 . c) CIT V/s Mahesh Kumar (2011) 196 Taxmann 415 (Del) . In the said judgment their Lordships' have also held that the primary burden of proof regarding understatement or concealment is upon the revenue. d) In case of Smt. Sunita Dhadda Vs. DCIT reported in 148 TTJ 719 (ITAT) . e) In case of Smt. K. Narasamma Vs. ITO reported in 32 ITD 494 (Hyd-ITAT) . viii) The assessee further submits that apart from the above legal issues regarding admissibility of the evidence, another important issue is regarding burden of proof. In the instant case since the allegation regarding understatement of consideration has been made by department, the burden of proof is upon the department i.e revenue and unless the AO brings on record some definite positive or cogent ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of CIT Vs. Balchand Ajit Kumar reported in 7ITJ 324(MP) , b) In case of Man Mohan Sadani Vs. CIT reported in 11 ITJ 587 MP, c) In case of . Sharda Real Estate Private Limited Vs. ACIT reported in 21 ITJ 20(ITAT , Indore ) , d) In case of CIT Vs. Sharda Real Estate Private Limited reported in 23 ITJ 233 (MP) e) In case of DCIT Vs. HVAC Systems (P. ) Ltd. reported in 44 SOT 81 (URO- Banglore) , f) In case of ITO Vs. Ankur Garg reported in 42 ITR (Tri ) 475 (Agra) . 17. We have heard rival contentions and perused the records placed before us and carefully gone through the written submissions filed by both the parties. The first common issue relates to the addition made for the alleged undisclosed sales receipts on the sale of plots in the project 'N.R. Estate'. To keep the facts straight and concise we find that M/s N.R. Company owned a piece of land and was plotted under the scheme named as 'N.R. Estate'. M/s N.R. Company approached M/s N.R. Finance Pvt. Ltd to develop the 'N.R. Estate' against the consideration of giving some plots. Plots of lands of 'N.R. Estate' were sold both by M/s N.R. Company and M/s N.R. Finance Pvt. Ltd. Sale consideration were duly disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sales/income observing as follows:- 3.2 I have gone through the assessment order, the written and verbal submission made by the appellant. The Assessing Officer has relied on Page Nos. 64, 66 and 68 of LPS A-3, Page No. 29 of LPS A-5 and Page No. 5 of LPS A-16 found and seized from the premises of Shri Kamal Goyal, a broker. In Para 9.6 of the assessment order it is stated that on the perusal of various pages and the seized dairy it can be seen that it contains details of the transactions in respect of the plots of 'N.R. Estates' in which the rates were reflected at ₹ 1150/- to 1131/- per sq. ft. However, the assessee had recorded the sales at ₹ 325/- to ₹ 350/- per sq. ft. 3.2.1 Looking at the huge difference in the two rates, the Assessing Officer issued a show cause notice to the assessee as to why the amount estimated as per LPS-A-3, should not be considered as the sale price of the plots for arriving u at the actual sales consideration of plots. The show cause notice dated 23.01.2015, is being reproduced as under: "1. During the course of search proceedings, various documents were found and seized from the residential premises of Shri K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons: i) The assessee has stated that it does not know any person named Shri Kamal Goyal and further no brokerage has been paid to him as per books of accounts of the assessee company. However, the fact that Shri Kamal Goyal is a broker is not in dispute. The rates at which plots were sold in the project developed by the assessee company were higher than the rates at which the transactions were recorded in the books of the assessee. Since the assessee could not record the full brokerage in respect of sale of plots in the books of account, it might have paid the brokerage in cash. As regards the brokerage in respect of the sale value reflected 'in' the books which has not been paid, it would be sufficient to state that the assessee has reflected very thin margin on sale of plots and for this reason also the brokerage might have not been reflected. The l.li/ assessee has reflected purchase of plot at ₹ 269.64 per sq. ft. and has reflected sales of ₹ 270/- to ₹ 560/- per sq. Ft. in all the five years viz A.Ys. 2009-10 to 2013-14. Most of the sales have been shown in the range of ₹ 270/- to ₹ 325/- and only three sale are at ₹ 560/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment order on top of the reproduction of seized document it is typed that 'Shri Nanak has sold a plot to some Sanjeev Gang. Shri Nanak Ram Kalra is a partner in N.R. Company'. The appellant has submitted with documentary proof that the plot G 12A was first time sold to Mrs. Shweta Kedia in March 2013. The sale consideration is shown at ₹ 14,49,900/- for the 4833 sq. ft. plot which works out to ₹ 300 per sq. ft. 3.3.3 Page No. 66 of LPS A-3 bearing the date 15.05.2012 is m respect of Plot No.D20. On the left hand side of the said page it is written - N R Estate, D20, 4000 sq. And 1275/-. On the right hand side it is written that it is sold by Kothari and purchased by AL. The appellant has submitted withG documentary proof that the plot D20 was first time sold to Mrs. Sharda Jain in March 2013. The sale consideration is shown at ₹ 15,53,175/ - for the 4779 sq. ft. plot which works out to ₹ 325 per sq. ft. 3.3.4 Page No. 68 of LPS A-3 bearing the date 27.05.2012 is in respect of plot no. S-385, Silicon and plot G 12A of N R Estate. The project Silicon is not connected with the appellant's business. Regarding the plot G-12A of N R Estat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew, cannot be considered as conclusive evidence. As held by the CIT(A) in the impugned order "except relying, the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the 'transaction particularly the vendor has not examined. In every transaction there is a circle concerning two parties. It is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely on the basis of presumption and some corroborated notings additions cannot be made." In our opinion, the deletion of addition by the CIT(A) is justified and no interference is called for in the order of the CIT(A). The following cases support the action of the CIT(A): 1. CIT Vs. Anil Bhalla [2010) 322 ITR 191 (Del.) - wherein held that the notings recorded on the loose sheet of paper do not represent any expenditure incurred by the assessee director and that the entries related to the company in as much as the assessee could explain from the books of the company that these projects were undertaken by it, and upheld the deletion of the impugned addition under s. 69C, findings arrived at by the Tribunal are pure fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese kind of documents/papers are liable to be ignored and addition made on the basis of such document is not sustainable and in accordance with law. 3.4.5 In CIT v / s Kulwant Rai (2007) 291 ITR 36 (Del) the ruling of the Supreme Court in Dhakeshwari Cotton Mills Ltd v CIT (1954) 26 ITR 775 (SC) was relied upon. The Supreme Court held that even though Income Tax Authorities including the Assessing Officer has unfettered discretion and not strictly bound by the rules and pleadings as well as materials on record and is legitimately entitled to act on the material which may not be accepted as evidence, nevertheless such discretion does not entitle them to make a pure guess and base an assessment entirely upon it without reference to any material or evidence at all. Given the above state of law the Delhi High Court stated that it has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO. 3.4.6 ITAT, Hyderabad in ITA 329/Hyd/2012 dated 04.01.2014 in the case of DCIT vs. Shri Babu Rao where in Para 26 to 29 held thus:- "26. It is clear from the above provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the loose paper, the AO has not brought on record any corroborative• material or evidence to show that the inference made by him is correct. The CIT(A) after taking the totality of the circumstances into consideration came to the conclusion that the addition made by the AO is not justified and the argument put forth by the assessee is supported by documentary evidence. This was not a case where relevant evidence had been ignored by the CIT(A) and their relevant evidence has been taken into consideration. The only test that was required to be applied was whether on the facts found and the state of evidence on record, the conclusion arrived at by the CIT(A) was one which could be arrived by a reasonable person properly informed in law. Applying this test, it could not be said that the decision recorded by the CIT(A) one which could not have been arrived at by a reasonable person properly informed in law considering the state of evidence on record. Hence, in our considered opinion, the CIT(A) has reached a correct conclusion in deleting the addition made by the AO on the basis of loose sheets". 3.4.7 The Hon'ble ITAT Jabalpur in the case of ACIT vs. Satyapal (2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MP) has held that the addition cannot be made on guess work or estimates. 4. Turning to the factual matrix of the present case, if we logically analyze the contents of the documents seized from the premises of the broker, Shri Kamal Goyal and its reliability in the light of the documentary evidences submitted by the appellant regarding the actual registered sale documents in respect of plot nos. G-12A and D-20 of N R Estate, the sale price mentioned in the seized documents 64, 66 and 68 of LPS-A3 cannot be made the basis of the estimate made in the appellant's case. It is seen that . the plot nos. G-12A and D-20 have been sold for the first time in March- 2013 and at rates of ₹ 300 per sq. ft. and ₹ 325 per sq. ft. respectively. Further, on both page nos. 64 and 68 the plot no. mentioned is G-12A but the rates written on page nos. 64 and 68 are 1211 and 1311. In view of these facts the Assessing Officer was not correct in estimating the sales of the appellant on the basis of the notings on page nos. 64, 66 and 68 of LPS-A3 seized from the premises of Shri Kamal Goyal. 4.1 On careful consideration of entire material placed before me, inter alia the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced as under:- "During the course of summon proceeding as issued U/s 131 of the Income Tax Act, you have shown certain papers as found and seized during the course of search in my residential and business premises wherein certain details were recorded in connection with the sale and purchase of plots in NR Estates. In this respect I have to submit as under:- 1} I have seen all the papers as shown by you at the time of hearing which was seized during the course of search in my possession. 2.1} I act as a property broker and engaged in the business c purchase and sale of plots houses etc. 2,2} That in broking business entire transactions were executed through brokers only and we are not in touch with the actual buyer and seller. 2.3} That in most of the transactions three brokers involved for execution of a deal, one broker represent the seller party, one represent the buyer and third one who know both the brokers and therefore brokerage as received distributed amongst the three brokers. 3.1} That on Page No 64, detail of Plot No G-12A of 4800 Sq Fts which was sold at ₹ 1211/- Per Sq Fts was recorded. That on right side name of the broker of seller and buyer wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 30/06/2016 wherein it is held that the revenue was not justified in making addition at the time of reassessment without having given the assessee an opportunity to cross examine the deponent on the statement relied upon by the ACIT. Forget about denial of cross examination, the Revenue did not even provide the material on the basis of which the Department short to conclude that the loan was bogus transaction. This not having been done, the denial of such opportunity goes to the root of the matter and strikes at the very foundation of the reassessment. Further reliance is placed on the decision of Hon'ble M. P. High Court in the case of Prakash Chandra Nahta V / s CIT 201 ITR 134. 2.11 The Assessing Officer has primarily relied upon the notings on page nos. 64, 66 and 68 of the diary seized from Shri Kamal Goyal. As discussed above, the additions made on basis of the said notings have been deleted in the case of M/s N.R. Finance Pvt. Ltd. Further, the statement of Shri Kamal Goyal cannot be relied upon as the Assessing Officer has not provided the opportunity of cross examination to the appellant and it goes against the principles of natural justice. It is seen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the registering authority and transaction has taken place through proper banking channel. Ld. A.O has not rejected the books of accounts u/s 145(2) of the Act. 25. We further observe that revenue has failed to prove that both the assessee(s) ever entered into any transaction of any nature with Mr. Kamal Goyal. Even in the affidavit given by Mr. Kamal Goyal he has not stated anything about the assessee(s) except that some plot of land of 'N.R. Estate' was sold and it is also pertinent to note that even after specific request assessee was not offered any opportunity to cross examine Mr. Kamal Goyal which itself defies the principal of natural justice. 26. We observe that the contents of the seized diary showing few transactions of sale of plot at 'N.R. Estate' are totally different with the actual transaction which took place for plot numbers mentioned in the seized diary. Besides the mismatching of dates and names even the actual plot size do not tally. This fact is more clear from the following chart showing relevant information about the mismatch of details available in the diary vis-à-vis the actual sales dates. As per Diary As per Sale Proceed/Sale Deed & agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown by the assessee was not sustainable as the rates mentioned in the seized documents did not represent any completed or materialized transaction. Moreover, the Assessing Officer did not make any enquiry from the said employee or from the buyers of flats in respect of actual price paid by them". 29. The Hon'ble M.P. High Court in the case of CIT vs. Kantilal Prabhudas Patel (2008) 296 ITR 568 (MP) has also held that the addition cannot be made on guess work or estimates. 30. The Hon'ble Madras High Court in the case of N. Ramanna Reddy Vs. JCTO reported in (1971) 28 STC 683 where it is held :-- that if the taxing authority intends to bring to tax the turnover of dealer, which, according to him , has escaped assessment by reason of deliberate attempt on the part of dealer to avoid net of taxation , then it is fundamental that the dealer so called upon should be given a just and fair trial and indeed a fair opportunity to explain himself with all material on which he could support his case . The essential element in sales are seller, buyer, the goods (here the Plots) and the consideration for sale or purchase of goods and unless a nexus is established between two such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s confirmed and the respective grounds of Revenue challenging the deletion of additions at ₹ 2,72,71,700/- and ₹ 13,31,01,675/- for Assessment Year 2012-13 and Assessment Year 2013-14 in the case of M/s N.R. Finance Pvt. Ltd and challenging the deletion of addition of ₹ 1,89,47,147/-, ₹ 3,41,02,145/-, ₹ 21,11,75,397/- and ₹ 33,72,67,720/- for Assessment Years 2009-10, 2011-12, 2012-13 and 2013-14 respectively in the case of M/s N.R. Company are dismissed. 33. Now we take up the additional ground raised by the revenue in the case of M/s N.R. Finance Pvt. Ltd for Assessment Years 2012- 13 and 2013-14 contending that Ld. CIT(A) erred in accepting the additional evidence in the form of registered sale deeds without giving any opportunity to the Ld. A.O as provided under Rule 46A of the I.T. rules and also not calling of Remand Report. 34. We have heard rival contentions and perused the records placed before us. We find that evidence indicated by the Ld. Departmental Representative is registered sale deeds. There is no dispute to the fact that registered sale deed is available on public domain. The transaction of purchase and sale of immoveable prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply for the same stating that the difference may be due to the reason of differences in plots size given to the developer at the time of actual possession. The assessee has admitted that the extra charges are paid beyond the agreement amounting to ₹ 15,67,401/- (₹ 12,97,925/- plus ₹ 2,69,476/-) and therefore the same are disallowed u/s. 37(1) an4 added back to the total income. 37. Aggrieved assessee preferred appeal before Ld. CIT(A) and succeeded. 38. Now the revenue is in appeal before the Tribunal. 39. Ld. Departmental Representative vehemently argued supporting the order of Ld. A.O. 40. Per contra Ld. Counsel for the assessee relied the finding of Ld. CIT(A) and also referred to the following written submissions reproduced below:- b) Disallowance of development expenses to the tune of ₹ 1567401/- With reference to the addition on account of disallowance of alleged excess claim of Development charges, it is submitted as under: a) M/s. N.R. Co. the assessee is the original land owner of the Project named and sold as "N.R.Estate". b)The assessee firm on 04/04/2007 had entered into a development agreement with M/s. N.R. Finance (a non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just like other sales to third parties, where is the question for disallowance of Development expenses when the appellant assessee has charged for the said area. n)In practical it may be a position that when the appellant assessee could not find a buyer of a plot in the open market, it had sold the plot to the Developer just like sales to other parties and accordingly credited the sales a/c and debited the account of the developer. 0)It may further be appreciated that against the total PIN area of 14,63,796 Sq. Ft. to be developed by the Developer, only 12.87,315 sq. ft. was developed by the developer up to AY 13-14 details of which are enclosed herewith. Thus there is no claim of extra development charges since development expenses have been claimed for 12,87,315 sq. ft. as per bills year wise received from the developer copy of which are enclosed herewith. TDS was also deducted accordingly. In view of the aforesaid submissions, the Departmental appeal deserves to be dismissed and oblige. 41. We have heard rival contentions and perused the records placed before us. Through Ground No.3 for Assessment Year 2013- 14 in the case of M/s N.R. Company the revenue has challenged th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill F.Y 2012-13 amount to only ₹ 20,32,41,397/-. Therefore, no excess development charges have been paid by the appellant company. 8.4 In view of the above, the addition of ₹ 15,67,401/- is deleted. Ground No.2 is allowed. 42. From perusal of the finding of Ld. CIT(A) we find no inconsistency since sale consideration received from sale of extra land to M/s N.R. Finance Pvt. Ltd is already included in the gross sales shown by the assessee and the profit arising there from has been offered to tax. This fact is duly verifiable from the development charges paid to M/s N.R. Finance Pvt. Ltd for Assessment Year 2009-10 to Assessment Year 2013-14. We thus confirm the finding of Ld. CIT(A) and dismiss Ground No.3 raised by the revenue for Assessment Year 2013-14 in the case of M/s N.R. Company. 43. Now we take up the Cross Objections filed by the assessee namely M/s N.R. Finance Pvt. Ltd for Assessment Year 2012-13 and Assessment Year 2013-14 raising the issue that no opportunity was not given to cross examine the broker Mr. Kamal Goyal about the contents appearing in the seized diary. We find that since we have already dismissed Revenue's appeal and confirmed the finding o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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