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TMI Blog2021 (10) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... truck by the assessee with the prospective buyer and which is in unit of per sq Feet and for the purpose of calculation of saleable area, ingredients of space utilized in the construction of common area, roads, clubs, gardens, staircases and parking etc. are apportioned in the number of unit. Resultantly, a customer is required to pay 30% more than the carpet area bought by him. AO wrongly estimated rate per square feet, by comparing the rates adopted in the adjoining township, Silver Mansion , is a project of Jhaveri Group, totally disjoint with the assessee company. Similarly, some enquires conducted in the cases of Shikharji, Ajitnath Reality Pvt. Ltd. and Padmaprabhu Infrastructure Pvt. Ltd. were irrelevant as is evident from the computation of income of the assessee. Even otherwise, the issue of M/s Shikharji is before the Settlement Commission and therefore, the comparing the case of Shikarji with that of assessee is unjustified. AO failed to pinpoint a single mistake in the books of accounts maintained by the assessee. He could not pin-point any enquiry made in the assessee s case from which adverse inference could be drawn. He did not conduct any enquiry in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Rajpal Yadav Hon'ble Vice President And Shri Manish Borad, Accountant Member For the Appellant : Shri Rajib Jain, CIT-DR For the Respondent : S/Shri C.P. Rawka Venus Rawka, CAs ORDER PER MANISH BORAD: The above captioned appeals at the instance of Revenue are directed against the common order of Ld. Commissioner of Income Tax(Appeals)-III, [in short CIT(A) ], Indore dated 28.09.2016 passed in common assessment order u/s 153A/143(3) dated 26.3.2015. In these appeals, the Revenue has raised the grounds of appeals as under: Grounds of appeal in IT(SS)A No.259/Ind/2016 (A.Y. 2010-11) 1. On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of ₹ 7,46,83,600/- on account of undisclosed receipts of on-money received from sale of flats without appreciating the facts and evidences brought into light by the A.O. during assessment proceeding. Grounds of appeal in IT(SS)A No.260/Ind/2016 (A.Y. 2011-12) 1. On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition made by the AO of ₹ 12,03,50,000/- on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted that the assessee co. did not show correct receipts in the books of account and formed the view that the rate of the constructed housing units in the assessee s projects cannot be less than ₹ 1500/- per sq. ft. i.e. the rate at which developed plots were sold in Silver Mansion and Silver Mansion Extension projects. The Assessing Officer, referring to the summons issued to some Shri Ramesh Chandra Gupta, Garima Chelani and Kokila Chelani, took the average sale price as per books of account to be ₹ 1100 per sq. ft. and estimated that ₹ 400 per sq. ft. was suppressed and computed the on-money at ₹ 7,46,83,600/-, ₹ 12,03,50,000/-, ₹ 49,58,74,800/- and ₹ 39,10,91,600/- for the assessment years 2010-11 to 2013-14, respectively. 3. Being aggrieved, the assessee filed appeals for all the assessment years under consideration before the ld. CIT(A) and the ld. CIT(A), having gone through facts and circumstances of the case in the light of judicial pronouncements as noted in the impugned order, deleted the additions made by the Assessing Officer. 4. Being aggrieved, the Revenue is in appeals before this Tribunal for all the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer passed assessment order whereby he made the following additions:- A.Y. Amount 2010-11 ₹ 7,46,83,600/- 2011-12 ₹ 12,03,50,000/- 2012-13 ₹ 63,22,72,745/- 2013-14 ₹ 63,82,56,646/- 7. We find that the ld. CIT(A) having gone through the facts and submissions thereof in the light of the judicial pronouncements deleted the additions observing as under: 5.1 I have gone through the assessment order and the submissions made by the appellant. The appellate company has constructed and sold residential units and commercial space in the Silver Spring Township spread over 139 acres situated at the Bypass, A.B. Road, Indore. During the search and seizure action on the Jhaveri Group certain incriminating documents regarding the receipt of on money were found and seized in respect of the projects Silver Mansion and Silver Mansion Extension developed by the Jhaveries showing the sale of plots in the said two projects @ & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39,10,91,600 2,97,54,99,998 4,05,74,99,997 1,08,19,99,996 The appellant company was started by the Jhaveris on 27/09/2005. In November, 2005 Fire Capital Fund of Mauritius invested in the appellant company and acquired 49% shares. Therefore, it is evident that the appellant company does not wholly belong to the Jhaveri Group. The second point to be considered is that the appellant company has developed the project Silver Spring Township which has multiple housing options of 2, 3, 4 and 5 bedroom units, 3 types of Villas, Town Houses, Terrace Cottages, Duplexes and Commercial units. On the other hand all the projects of the Jhaveri Group are in respect of development of land and sale of plots. The Assessing Officer has relied on the evidences found and seized in respect of the Silver Mansion and Silver Mansion Extension projects and the post search enquiries conducted in respect of various projects of the Jhaveri Group which are for development of land and sale of plots. In the appeal proceedings the appellant pointed out that the Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sq. ft Mid-rise apartments 41.5 lacs 2523820/- 2089 sq. ft. Built Up Area Terrace Cottage 61 lacs 3807050/- 3386 Sq. Ft. Built Up Town House 60 lacs 2655618/- Plot 1635 sq. ft. and Built Up 2539 sq. ft. Flats 1700/- per sq. ft. 1208/- per sq. ft. - Financial Year 2011-12 Product Name Sale Value Guideline Value Size Villa Ruby 1.10 - 1.35 crore 7010997/- Plot 4500 sq. ft. and Built Up 4456 sq. ft. Villa Pearl 85 lacs 4306618/- Plot 2700 sq. ft. and Built Up 2893 sq. ft Mid-rise apartments 50 lacs 2912100/- 2089 sq. ft. Built Up Area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Jain (HUF) 211 Taxman 23 (Del) and CIT vs. Jaipal Aggarwal 212 Taxman 1 (Del), ITAT Mumbai in the case of ACIT vs. JP Morgan India Pvt. Ltd. 46 SOT 250(Mumbai), held that the addition made by the AO based on the loose paper, which is not a conclusive evidence and therefore, the same is not sufficient for making the addition. The Tribunal also held that no addition can be made on the basis of dumb document/notebook/loose slips in absence of any other material to show that the assessee has made investment in land. The relevant observations and findings of the Tribunal in this case read as under:- 17 We have heard the arguments of both the padies, perused the record and have gone through the orders of the authorities below. In this case, the addition was made by the AO based on the loose paper and the same, in our view, 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 padies. /t is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the revenue on this issue. 18. As a result appeal in ITA No. 1756/Hyd/2012 is dismissed. Hon'ble Punjab Haryana High Court in the case of CIT vs. Atam Valves (P) Ltd. (2011) 332 ITR 468 (P H) held that when the loose papers did not relate to certain payments during the relevant period in question, then in absence of any supporting material or evidence, these loose sheets by itself were not found to be sufficient enough for making a sustainable and justified addition. ITAT Delhi E Bench in the case of Atul Kumar Jain (1999) 64 TTJ 786 (Delhi) vs. DCIT held that when the seized papers have being not corroborated by any independent evidence it cannot be considered as a reliable document or acceptable piece of evidence as a proof of investment in the house property and therefore, these 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. In CIT v/s Kulwant Rai (2007) 291 ITR 36 (Del) the ruling of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. CIT (1954) 26 ITR 775 (SC) was relied upon. The Supreme Court held that even though Income Tax Authorities includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat file containing loose sheets of papers are not books and hence entries therein are not admissible u/s. 34 of the Evidence Act, 1872. 28. In the present case, the seized material (two note books) marked as KBR/A/02 and KBR/A/04 wherein certain entries are found recording various transactions pertaining to the assessee. These entries in the notebook are unsubstantiated and on that basis the AO reached to the conclusion that the figures mentioned therein are to be read by adding 3 zeros and thereby he came to conclude that there is undisclosed income in these 6 assessment years. In our opinion, the document recovered during the course of search was a dumb document and led nowhere. The CIT(A) rightly came to the conclusion that it cannot be acted upon and deleted the addition. 29. Other 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The Hon'ble Delhi High Court in the case of CIT vs. Ved Prakash Choudhary (2008) 305 ITR 245 (Del) has held that in the absence of corroborative material, the addition made on the basis of sketchy document which was unproved cannot be sustained in law. The Hon'ble Delhi High Court in the case of CIT vs. Vivek Agrawal (2015) 231 Taxman 392 (Del) has held that unless the amounts stated the document were actually paid it cannot be presumed that the amount mentioned in the sale deed was not correct. The Hon'ble M.P. High Court in the case of CIT vs. Kantilal Prabhudas Patel (2008) 296 ITR 568 (MP) has held that the addition cannot be made on guess work or estimates. On careful consideration of the entire material placed before me, inter alia the assessment order and the submissions made in the appeal proceedings, it is seen that the Assessing Officer has simply proceeded to make additions on the basis of the documents found and seized in respect of the Silver Mansion and Silver Mansion Extens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee with the prospective buyer and which is in unit of per sq Feet and for the purpose of calculation of saleable area, ingredients of space utilized in the construction of common area, roads, clubs, gardens, staircases and parking etc. are apportioned in the number of unit. Resultantly, a customer is required to pay 30% more than the carpet area bought by him. The Assessing Officer wrongly estimated rate per square feet, by comparing the rates adopted in the adjoining township, Silver Mansion , is a project of Jhaveri Group, totally disjoint with the assessee company. The said project, deals in the sale of plot only. Therefore, the comparison made by the Assessing Officer is baseless. Further, the Assessing Officer elaborated, the seizure made, in other cases of Jhaveri Group which has no bearing in the assessee s case but the Assessing Officer without establishing the relevance by bringing any cogent material made the additions. Similarly, some enquires conducted in the cases of Shikharji, Ajitnath Reality Pvt. Ltd. and Padmaprabhu Infrastructure Pvt. Ltd. were irrelevant as is evident from the computation of income of the assessee. Even otherwise, the issue of M/s Shik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee has business transactions with these persons. Therefore, the observations are baseless. Further, so far as the Assessing Officer s observation in respect of placing a figure of ₹ 1500/- per square feet is concerned, we find that the learned Counsel for the assessee explained that M/s Silver Realities and Infrastructure Pvt. Ltd was incorporated by Shri Mukesh Jhaveri and Abhishek Jhaveri on 27.09.2005 and later on in Nov 2005, Fire Capital Fund belonging to Republic of Mauritius joined hands with Jhaveris. Resultantly, 51% shares are held by Jhaveris and 49% by Fire Capital Fund. The investment made by Fire Capital Fund is from US Investors routed through Mauritius. Therefore, the observations made by the Assessing Officer are not justified as the assessee co. does not belong to Jhaveri Group accordingly. As explained above, we find that the assessee started its projects being incorporated by Shri Mukesh Jhaveri and Abhishek Jhaveri on 27.09.2005, whereas the seized documents relating to search seizure operations u/s 132 carried out on 21.09.2012 on the business as well as residential premises of the other group concerns/projects named Silver Mansion, Silve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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