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TMI Blog2022 (7) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... return U/s 139(1) which was increased while filing return in response to notice u/s 153A was on account of arithmetical mistake. Therefore, on perusal of various judicial pronouncements as discussed above, we are of the opinion that the assessee is entitled to such enhancement. With respect to eligibility of the assessee to claim deduction u/s 80IB of the Income Tax Act 1961, we find that the issue for our adjudication is now well settled as the same has been decided in favour of the assessee by the Co ordinate Bench of the Tribunal, Nagpur Bench, in assessee s own case [ 2015 (11) TMI 1872 - ITAT NAGPUR] allowing the appeals of assessee and dismissed the Revenue s appeal there by allowing the claim made by the assessee under section 80IB. Thus respectfully following the order of the Tribunal rendered in assessee s own case for the assessment year cited supra, we have no hesitation in upholding the order passed by the learned CIT(A) by dismissing these grounds raised by the Revenue in its. Disallowance of additional depreciation on windmill - whether or not the CIT(A) was correct in granting relief under section 32(1)(iia) of the Act when the same is prospective effecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer. Thus, this ground of revenue is dismissed. Proportionate disallowance of expenditure merely on the basis of declaration made by sister concern - CIT-A deleted the addition - HELD THAT:- The verification of expenses relates to AY 2010-11 and not to the year under consideration. The learned CIT(A) has given a very detailed reasoning and reversed the order of the Assessing Officer which are reproduced above. Consequently, in view of the detailed reasoning given by the learned CIT(A) which in our opinion is in accordance with law and we find no infirmity to take a view other than the view taken by the learned CIT(A). Keeping this in view, we uphold the order of the learned CIT (A) by dismissing ground raised by the Revenue. Payments towards purchase of flat in their Apartments - HELD THAT:- As noticed that in both these additions the party to whom the alleged payment in cash was made is common M/s Ashed Properties and Investments Private Limited. In this regard it is brought to our notice by the Ld AR that AO has not brought on record any confirmation of payment of cash from the builder M/s Ashed properties because director of the M/s Ashed Properties in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances, therefore, as a matter of convenience and brevity these appeals were clubbed and heard together and are being disposed off by way of this consolidated order. We now proceed to deal with issues chronologically raised by both the parties on merits. 3. The first issue we prefer to deal with is, which was raised by the revenue that, whether or not the learned CIT(A) was justified in deleting the disallowance under section 80IB(3(ii) of the Income Tax Act, 1961 (for short the Act ). This issue is raised by the Revenue in its appeal being ITANo.436/Nag./2016 (grounds no.1 to 5), ITAno.437/Nag./ 2016 (grounds no.1 to 5), ITAno.438/Nag./2016 (grounds no.1 to 5), ITAno.511/Nag./ 2016 (grounds no.1 to 3) and ITA no. 512/Nag./2016 (grounds no 1 to 3). 4. Facts in brief: The assessee, in the present appeal filed by the Revenue being ITANo.436/Nag./2016, is a proprietor of M/s. Rajlakshmi Minerals, engaged in the business of manufacturing and production of various grades or iron ore at Hospet. The assessee filed its original return of income on 31st October 2005, declaring total income at Rs. 7,92,17,850. The assessee claimed deduction under section 80IB of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction u/s 80IB in the return filed in response to notice u/s 153A as compared to original return filed u/s 139(1), which is legally incorrect. He also submitted that Ld CIT(A) has ignored this aspect, in as much as the deduction needs to be restricted to the deduction claimed in the original return filed u/s 139(1). Ld CITDR has relied upon the flowing decisions on this objection:- i) Jai Steel (India) Vs ACIT (2013) 26 Taxmann.com 523 (Rajasthan) ii) Suncity Alloys Pvt. Ltd. Vs ACIT (2009) 124 TTJ 674 (Jodhpur) iii) Charchit Agarwal Vs ACIT (2009) 34 SOT 348 (Delhi) 8. Before us, the learned Counsel for the assessee submitted that the issue relating to claim made under section 80IB of the Act has been decided by the Tribunal in assessee s own case for the assessment year 2005 06, 2006 07 and 2007 08 respectively. Therefore, relying upon the order of the learned CIT(A), the learned Counsel prayed that the order of the learned CIT(A) be upheld, wherein the Ld CIT(A) has observed as under:- 7.3 I have perused the assessment order, grounds of appeal and appellant's submission. I find that the claim of deduction u/s 80IB of Rs 1,39,09,067/- was earlier disallowed v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conditions stipulated u/s 80IB have been complied and eligibility stands determined in the initial year deduction cannot be disallowed in the subsequent years. The issue of initial year of the industrial unit was subject to litigation in the case of assessee herself and I find that the claim of the appellant has been duly accepted by the appellate authorities. There being no contrary evidence, I hold that the initial assessment year of the new industrial unit set up is AY 2002-03. 7.5 The appellant has also furnished documentary evidence in support of the claim that the unit is a small scale industry (SSI) for which the SSI Registration has been granted by DIC and which has been submitted before the AO. The learned AO has in Para 1 on Page No 19 of his order stated that the value of old plant machinery was Rs.75,21,481/- Lacs as on 01/04/2001 addition of new machinery was Rs. 39,24,183/-Lacs in FY 2001-02 i.e the ratio of old to new plant machinery was 64:34 and so the conditions mentioned in section 80IB (l)(ii) rw explanation 2 has not been fulfilled. I agree with the contention of the AR of the appellant that value of plant machinery carried over from one year to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd and hence the decision of the Apex court is squarely applicable. The Hon'ble ITAT has also' held that the assessee is an SSI unit, production was started prior to, 31/3/2002 and the assessee is eligible far deduction u/s 8018. The cases laws relied an by the A.O. are distinguishable on facts. 7.7 On examination of the facts of the case, documents produced before me, item manufactured the manufacturing process and the explanation of the appellant, I am of the considered opinion that the assessee is engaged in manufacturing and production of various grades of iron are and therefore entitled to, deduction u/s.8018. Further the aforesaid issues have already been decided in favour of the assessee by Hon'ble ITAT Nagpur bench for AY 2005-06 (ITA No 15/2012), AY 2006-07 (ITA No 80/2012), AY 2007-08 (ITA No 06/2012). Following the aforesaid orders, I hold that the appellant is entitled to deduction u/s.80IB of the Act. The AO is directed to allow the claim of Rs.4,97,80,842/-. This ground of appeal is accordingly allowed. 9. Having carefully considered the rival contentions, perusing the orders of the authorities below and the material placed on record. 10. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t para 7.3 (AY 2006-07) mentioning that The claim was enhanced to Rs. 4,97,80,842/- by the assessee due to arithmetical error in calculating deduction at 25% of the profit of the eligible business. However, Ld AO has not pointed out any mistake in the enhancement claim or has bring out anything contrary to the claim, except only has pointed out the fact that claim has been enhanced. Ld AO has examined the issue in its entirety and has rejected the claim of assessee for deduction under Sec 80IB. Admittedly, it is an undisputed fact that the enhancement of the deduction claimed in return U/s 139(1) which was increased while filing return in response to notice u/s 153A was on account of arithmetical mistake. Therefore, on perusal of various judicial pronouncements as discussed above, we are of the opinion that the assessee is entitled to such enhancement. 13. With respect to eligibility of the assessee to claim deduction u/s 80IB of the Income Tax Act 1961, we find that the issue for our adjudication is now well settled as the same has been decided in favour of the assessee by the Co ordinate Bench of the Tribunal, Nagpur Bench, in assessee s own case in ITA no. 114/Nag./2009 (AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery i.e., the windmill have not been used in manufacturing or production of any article or thing and considering the written submissions made by the assessee on the issue which has been reproduced by the Assessing Officer in his assessment order at Page 8 9, did not agree with the contention of the assessee and disallowed the claim of additional depreciation by relying upon the decision of the Hon ble Supreme Court in Lucky Minerals Pvt. Ltd., 244 ITR 830 (SC). 17. The learned CIT(A) reversing the order of the Assessing Officer allowed the claim of addition depreciation holding that the decision of the Hon'ble Supreme Court in Lucky Minerals Pvt. Ltd. (supra) by the Assessing Officer is distinguishable on facts. He held that the Assessing Officer has not brought any reason to deviate and not followed the order of the Tribunal. The learned CIT(A) further held that the generation of electricity by installation of windmill amounts to manufacturing or article or thing coupled with the fact that the activity of screening, crushing, etc., is also held to be production by the Hon'ble Supreme Court in Sesa Goa Ltd. and the Co ordinate Bench decision of the Tribunal rendered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is in the business of wind power energy. This fact is not disputed either by the Commissioner of Income Tax or the Tribunal. Therefore, the question as framed that the windmills have no connection with the business activity of the assessee is factually incorrect. In view of the fact that Madras, Gujarat and Karnataka High Courts have taken a view that additional depreciation on windmills acquired and installed prior to 31.03.2002 is available under Section 32(l)(iia) of the Act. All that is required for allowing additional depreciation is that the assessee must be engaged in the manufacture or production of any article or thing, and such an assessee would on the setting up of a new machinery or plant would be entitled to additional depreciation on the new plant and or machinery under Section 32(l)(iia) of the Act. There is no requirement in Section 32(1) (iia) of the Act that additional depreciation on the new plant or machinery would be available only if the plant or machinery has some nexus/connection with the article or thing being manufactured by the respondent-assessee. To accept the Revenue's contention would require reading words into Section 32(l)(iia) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, as relied upon by the assessee, reversed the order passed by the Assessing Officer for assessment year 2006-07 by observing as under: 8.2 1 have perused the assessment order, grounds of appeal and appellant's submission. I find that there is a mention in the Tax Audit Report that the expenditure claimed by the assessee Rs.12,382/- being penalty of overloading of trucks. The assessee explained in the assessment proceedings regarding the nature of expenditure and such explanation is reproduced by the AO in Para 9 of his order. On careful perusal of the details of explanation I find that it is a compounding fees charged by the RTO for overloading of trucks. I find merit in the argument of the AR of the appellant that had the overloading being an activity of violation of law, the RTO would never allow such trucks to ply on road. The RTO is invariably levying such compounding fees while allowing the trucks to operate on road and it is not in violation or contravention of any law. The expenditure is incurred to carry out the business activity. The nomenclature used in the Tax Audit Report cannot be the reason for disallowance but the nature of the expenditure is to be seen. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(3) and there was no disallowance of the expenditure in the order u/s.143(3) earlier . In view of this, we are of the considered opinion that amount paid to RTO is in the nature of compounding fee, which is necessary for smooth functioning of the business of the assessee and, therefore, the deduction is allowable. After considering the facts of the case and various judicial pronouncements relied upon by the learned Counsel for the assessee, we are of the view that the disallowance made by the Assessing Officer is not in accordance with law. Consequently, we do not find any reason to interfere with the order of the learned CIT (A) on this ground, which we uphold the order of CIT(A). Thus, grounds, ITAno.436/Nag./2016 (ground no.6) and ITAno.437/Nag./2016 (ground no.8), raised by the Revenue are dismissed. 29. The Next issue raised by the revenue is with regard to deletion of addition by CIT(A) of Rs. 15,00,000/- being cash paid for interior works. The ground no 4 of ITA 511/Nag/2016. 30. On this issue Ld CITDR has reiterated the findings of the Ld AO, which describes that during the search proceedings at the office premises of M/s R.B. Seth Sriram Narsinghdas, Kariganur, Hos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reproduced as under:- 9.2 I have carefully perused the seized document, assessment order and the submissions made before me. I find that the Page No. 15 is part of the seized documents Page No. 14 to 19 of Annexure B-l/24. The AO has held that the impugned documents are in relation to the payments made to M/s. Edgar Demello Architects d that the payment of Rs. 15 lacs is made in cash to Edgar. However, I find that an Architect to supervise and check the interior work being carried out in the flats of assessee at Indira Nagar and at Hospet. M/s. Wismaya are the interior contractors and executing the work at the residence belonging to assessee and her husband Shri Ajay Saraf. The impugned documents are the certificates from the Architects regarding the interior work carried out and the amount paid and due to M/s Wismaya. The AO has made attempt to correlate the payments shown to have been made by cheque mentioned in the statement with the copy of account of M/s Edgar. The AO has himself pointed out that the advance received in cheque is mentioned at Rs.23 lacs in the seized document however, the cheque payments as per ledger account to M/s. Edgar is Rs. 22 lacs. Further, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue authorities. We have observed that, this issue was not explained by the assessee during the assessment proceedings before the Ld AO, however ground raised for this disallowance was duly defended by the assessee to the CIT(A) during the appellate proceedings and Ld CIT(A) has discussed the same and decided the same according to the facts of the case. Ld CIT(A) has examined the facts and concluded that Thus I find that the total bill amount mentioned in the seized document has been paid to M/s Wishmaya by account payee cheque and duly accounted in books. After this observation of the Ld CIT(A), which is sustainable, there is no scope for any further adjudication on the issue, we therefore do not see any modification necessary in the verdict of the Ld CIT(A) and accordingly refrain ourselves to interfere with this issue. Therefore this ground of the revenue is dismissed. 34. The next issue which we need to decide is, whether or not the learned CIT(A) was correct in deleting the addition of Rs. 27.00 lakh made by the Assessing Officer on account of income from house property. The grounds, raised by the Revenue in its appeal beingITAno.438/Nag./2016 (ground no. 8-10). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The annual letting value as per khata Extract of Bangalore Mahanagar Palika dated 01/06/11 submitted by the appellant to AD on 08/03/2013 is Rs 46,687/-(Kindly refer Page No 4 of Paper Book). Thus, the annual value u/s 23(1)(a) for 9 months comes to Rs 35,015/-. After deduction of corporation tax of Rs 12,512/- and deduction u/s 24 not allowed by AD, the taxable income works out to Rs. 15752/-. The Hon'ble ITAT Mumbai Bench in Park Paper Ind (P) Ltd 25 SOT 406, Veena Munganahalli ITA No 251.6 (201.2) Dr. Balkrishna Naik-1. SOT 01.77 and Ahmedabad Bench in .Jayshri Gautam bhai Desai Vs ITa - 40 CCH 224 held that Municipal valuation should be the annual letting value in case of self-occupied property. 37. The learned CIT(A) after hearing both the parties has observed as under:- 2. I have carefully considered the submission of the AR of the appellant, Statement of Facts, order of the AO and material on record. The AO found that the assessee has failed to offer annual value as per Section 22 of the Income Tax Act on the property which is other than the self occupied property. I find that the assessee owns two residential properties. During the course of assessment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of expenditure. This ground is taken by the Revenue in its appeal being ITAno.511/Nag./2016 and 512/Nag./2016 vide ground no. 6 and 4 respectively. 40. Ld CITDR, drew our attention to the observations of the Assessing Officer on the proportionate disallowance of expenditure for the assessment year 2008 09, which are as under: I have no doubt in my mind that the entire expenditure claimed under the specific four heads discussed above is not fully genuine in the light of the above discussion. In order to be fair to the assessee and since the offer of additional income of Rs. 15 crores has been accepted in the case of M/s RBSSN for AY 2010-11 , the expenses in the case of assessee for this year are also disallowed to the extent of some proportion, which the admitted bogus expenditure of Rs. 15 crores been to the total expenditure under the four specific heads for AY 2010-11. Such a working gives a percentage of 12.26765 %, which, according to the assessee, is the percentage of bogus expenditure for that year. The said percentage is applied to the expenses claimed this year, also taking into consideration all the facts and circumstances of the case. However the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) on 28-9-2010 was by Shri Ajay Saraf and the income so surrendered has been included in the return of income of M/s. RBSSN filed for AY 2010-11 and tax paid thereon. There is no statement of the assessee confronting any seized material, as regards any surrender or any acceptance regarding inflation in the expenditure. The AO stated that the nature of the business and the nature of expenditure of the assessee being the same as that of M/s RBSSN in every assessment year, therefore on the basis of presumption that the expenditure claimed by assessee also are non genuine, the addition is made. I am of the considered opinion that the addition cannot be made in such a manner. The onus to prove the genuineness of the expenditure and its reasonability is on the assessee and whether the assessee has discharged such onus in the present case before me needs to be examined. I find that the books of accounts of the assessee are duly audited and no defect has been pointed out by the AO in any such books of accounts which are maintained by the assessee. The assessee has filed the details of expenditure and also produced vouchers and bills with reference to the claim of expenditure. All the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppression of receipts or inflation or deflation of any expenditure, variation in valuation of closing stock. The statement of Mr. Ajay Saraf was also perused by me and I find that the surrender was with reference toAssmt. Year 2010-11 and there was no discussion about the assessee's case in his statement. The surrender of Rs.15 Cr. was made by Mr. Ajay Saraf under peculiar circumstances as submitted by the assessee before the AO as well as before me. Just because a surrender is made by third party in a particular asstt.year cannot be reason to saddle the assessee with the addition to the total income. It is clear that in making the assessment under sub section 3 of Section 143 of the Act, the AO is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than mere suspicion in support of any disallowance of expenditure. In this peculiar fact the AO was not justified in estimating the disallowance to be made as apart from general suspicion there is no material or fact on record to hold that the assessee has claimed bogus expenditure or has inflated/overbooked the expenditure to reduce the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment has not contested the same in appeal before the Hon ble ITAT; and (c) The assessee has discharged the primary onus and initial burden of proving that all expenses incurred and claimed by her are genuine . The learned Counsel thus prayed that the order of the learned CIT(A) be upheld. 44. On the other hand, the learned Departmental Representative vehemently supported the order of the Assessing Officer. 45. We have carefully considered the rival contentions, perused the orders of the authorities below and the material placed on record. We find that the Assessing Officer has made proportionate disallowance of expenditure in the case of assessee merely on the basis of declaration made by M/s RBSSN, sister concern of the assessee in AY 2010-11 on account of inflated / overbooked expenditure under four heads. The verification of expenses relates to AY 2010-11 and not to the year under consideration. The learned CIT(A) has given a very detailed reasoning and reversed the order of the Assessing Officer which are reproduced above. Consequently, in view of the detailed reasoning given by the learned CIT(A) which in our opinion is in accordance with law and we find no infirmity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to scrutiny of the AO in regular assessment u/s 143(3) of the Act, such document cannot be said to be containing the incriminating information . 1.2 No incriminating evidence was found during the course of search and hence the AO had no jurisdiction to assess uls 153A and hence the order passed is bad in law. The Hon'ble Delhi HC in Pr. CIT v. Lata Jain reported in 3841TR 543 Pr.CIT V. Meeta Gutgutia Prop. Ferns N Petals- 395 ITR 526 held that in absence of any incriminating material found as a result of search, assumption of jurisdiction was also not in accordance with law. The SLP-1812112018 filed by the department in the case of Smt Meeta Gutgutia has been dismissed by Hon'ble Supreme Court. Further It is a well settled law now that the additions uls 153A in case of unabated assessments can be made only on the basis of any incriminating evidence found during search. The Hon'ble Bombay High Court in Deepak Kumar Agarwal-ITA No 1709,1780 12014 relying on CIT v/s Cont. Warehousing Corporation 3741TR 645 held that no additions can be made in assessments which have become final, if no incriminating material is found during search. 2.0 Ground No 2 to 4: The AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the noting made are merely rough jottings which have no evidentiary value. It is mentioned therein that Rs 6,47,375/- paid by cheque but no such payment has been made by cheque. The total consideration as per books and agreement including cash of Rs 50,00,000/would amount to Rs 1,99,68,987/-which does not tally with the figure of Rs 1,82,92,500/- mentioned in the loose chit. Thus, the figures mentioned in the impugned undated document were mere rough discussion figures. c) The Ld. CIT(A) in Para 8.2 of his order accepted that there is merit in the submission of the assessee that the noting made on the loose paper are merely discussion figures and thus on the face of it this noting is incapable of any interpretation as they do not constitute any coherent recording from which a clear and unambiguous inference relating to unaccounted payment made by the assessee can be unmistakably concluded. Having accepted this fact, the Ld. CIT(A) erred in confirming the addition made by AD. d) Nowhere in loose chit it is mentioned that Rs 50 Lacs was actually paid and that too in cash. The Ld. CIT (A) also in Para 6.2 of his order accepted that the loose chit is undated and the presumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s obtained. No addition can be made merely on the basis of statement made by third party even if he happens to be the spouse of the assessee. Reliance is placed on following Case Laws: The Hon'ble Gujarat HC in the case of CIT vs. Umang H. Thakkar Tax Appeal No. 1971/2009 dated 18.10.2011 held The tribunal rightly deleted the additions made on the basis of rough jottings made on loose papers which were not in the handwriting of the assessee and on the basis of statement of third party, even if the person concerned was the father of the assessee . The Hon'ble ITAT, Bangalore Bench in Arun Kumar Bhansali vs. DCIT {20061 10 SOT 46 (Bang.) held that while computing the undisclosed income of the assessee, AO should take cognizance of such correct income as depicted in the books of account as well as in the seized material and it should not adopt a figure merely as per admission of the assessee. In the assessee's case, no corroborative evidence was found and seized, therefore, the CIT (A) was justified in deleting the addition which was merely based on the statement recorded when the assessee was tired and frustrated on account of continuing search for 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contents are intelligible, comprehensible and speaking either by itself or in correlation with other material or upon further investigation. Unless such is the case, mere jottings recorded on seized documents which are capable of several/various interpretations, lack evidentiary value and is not sufficient enough to fasten tax liability on the assessee. Moreover, the assessee had discharged its primary onus of explaining the contents of loose papers found during search and as such the presumption stands rebutted. The AO has made the addition merely on the basis of suspicion without bringing on record any corroborative evidence to show that any cash was paid and the same was paid during the year under consideration, hence the impugned document cannot be considered incriminating evidence on the basis of which addition can be made. 3.3 No incriminating evidence was found during the course of search and hence the AD had no jurisdiction to assess u/s 153A and hence the order passed is bad in law. The Hon'ble Delhi HC in Pr. CIT v. Lata .lain reported in 384 ITR 543 Pr.CIT V. Meeta Gutgutia Prop. Ferns N Petals-395 ITR 526 held that in absence of any incriminating material fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also not disputed. The addition needs to be deleted as: a) The entire consideration for purchase has been paid through banking channels and duly accounted in the books prior to search without any involvement of cash. The Ld. CIT (A) also accepted this fact on Page no 26 of his order. Having accepted this fact, the Ld. CIT(A) erred in confirming the addition made by AO by ignoring the documentary evidence available on record. b) The loose chit is unnumbered, undated and the noting made are merely rough jottings which have no evidentiary value. Nowhere in the impugned document it is mentioned that Rs 2cr was actually paid and that too in cash. The presumption made by AO that cash was paid on 14/10/2008 is without any sound evidence and there is no corroborative evidence of actual cash outgo during the year under consideration. The additions have been made only on presumption. The Ld. Cit (A) also accepted this fact on Page No 25 26 of his order. c) The sale deed has been executed at the value adopted and assessed by the stamp valuation authority as fair market value and hence there cannot be any on money payment as no prudent person would pay more than the market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l statement was given in exhaustive conditions. The recording of statement (Kindly refer Page No.41-49 of Paper Book) started late in night and continued till 1.30AM of next day and he was under tremendous mental physical pressure because of the continuous ongoing search. There was no occasion to read the statements I verify records at that time. Such statements have no evidentiary value. g) The assessee never accepted of any cash payment made by her and hence the question of her making any retraction does not arise. Even otherwise, the assessee had retracted by hot including the said cash payment accepted by Mr. Ajay Saraf as undisclosed income in the return filed u/s 153A and hence the AO should have brought some corroborative evidence on record to prove the existence of undisclosed income. g) No addition can be made on the basis of statement made by third party even if he happens to be the spouse of the ssessee. Reliance is placed on following Case Laws: The Hon 'ble Gujarat HC in the case of CIT vs. Umang H. Thakkar Tax Appeal No.1971/2009 dated 18.10.2011 held The tribunal rightly deleted the additions made on the basis of rough jottings made on loos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. The addition has been made by the AO on the basis of loose paper and the acceptance of cash payment by Mr Ajay Saraf spouse of appellant in his statement made during search. I have carefully seen the seized document which is an undated loose paper written by Mr. Ajay Saraf. The name of builder and area along with consideration of Rs 1,82,92,500/- is mentioned therein. The Ld AR contended that the impugned seized document was the noting of the discussion held while dealing With the builder for purchase of property. He vehemently contended that the amount of Rs 6,47,375/- by cheque mentioned in the document never materialized and the AO has also been unable to find out any such cheque payment. The observation of the AO while dealing with the aforesaid cheque payment on Page No 7 of his order and the conclusion drawn that an amount of Rs.2,39,400/- must have been paid by bp against the agreement is merely a presumption. The Ld. AR argued that the AO in his order has mentioned that the total consideration of the apartment is Rs 1,82,92,500/- and 1ince payment of Rs 1,49,68,987/- has been made by account payee cheques which is reflected in the ledger a/c drawn from books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stamp Valuation Authority. However the fact remains that the Mr. Ajay Saraf agreed for surrender of Rs. 50 Lacs as unaccounted income in his statement recorded during search. The assessee could have denied at the time of recording of statement that no cash payment is involved. The explanation now offered is an after thought and cannot be considered in view of the fact that the Mr. Ajay Saraf himself agreed of having invested Rs. 50 Lacs in cash. There was no retraction of the statement earlier given at the time of search, either during the search proceedings or in the assessment proceedings. Rather, I find that the AO has noted in Page 8 of the assessment order that the assessee accepted the cash payment in the assessment proceeding and had asked for the telescoping of the aforesaid amount of Rs. 50 Lacs against the surrender of Rs.15.00 Cr. in the Asstt. Year 2010 11. Since the disclosure was made in the subsequent year, the learned AO rightly rejected the contention of the appellant in the assessment proceeding. I have also perused the case laws on which reliance is placed and I find that they are distinguishable on facts in as much as the spouse of assessee has in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of search. The AO has reproduced the contents of the relevant portion of the statement of Mr. Ajay Saraf on Page 3 of the Assessment order. The assessee was asked to go through the contents of the impugned seized material and explain, to which the assessee confirmed that the property was purchased and that they have paid Rs. 2 Cr. in cash which is unaccounted and also offered the same as additional income. In my considered view, nothing more is required and the conclusion drawn by the AO is logical considering evidence found in search proceeding. I find that the event of payment of Rs. 2 Cr. in cash is categorically mentioned and is also confirmed by the assessee. The learned AR submitted that the statement was given under mistaken belief and furnished before me the copy of ledger account and Sale Deed wherein the transactions of payment of Rs.4,14,71,442/- is recorded by various cheques. It was further contended that the entire cost of the flat was paid by cheques on various dates and the Sale Deed was also executed at the value which is also comparable with the market value as per the stamp valuation authority. I find that all the cheque payments are made before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties because director of the M/s Ashed Properties in his statement before the department at Banglore wherein it has been stated that no cash payment has been received for purchase of said property from the assessee. It is also evident from the statement recorded u/s 132(4) of the assessee, she was not confronted with the question that whether any cash payment is made by her to the aforesaid builder. Statements of the assessee recorded u/s 132(4) on 16.11.2010 are scanned here with as under:- 51. It is further noted that the addition was made on the basis of statement of the spouse of the assessee, without any corroborative evidence or any incriminating material. In this context case laws quoted supra by the Ld AR in the case of Hon ble Guajat HC in the case of Umang H. Takkar and Arun Kumar Bhansali Vs. DCIT (Supra) are relevant. We therefore of the view that the additions made for unexplained cash payment on the assessee cannot survive and accordingly deleted. Consequently, ground of appeal of the assessee in ITAno.498/Nag./2016 (ground no. 1-4) and ITAno.499/Nag./2016 (ground no.1-4) decided in favour of the assessee. 52. Since we have upheld the order of the CIT(A) in ..... 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