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TMI Blog2023 (4) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... acted upon when the vendees had also taken both constructive and physical delivery of plots allotted to them. Thus, the lenders have exercised their option to acquire the plots of land instead of accepting the amount of interest originally agreed to be taken from the assessee. This fact itself shows that the original loan agreements, at this juncture, were effectively converted into an agreement to sell/purchase of plots, and hence accrual of any interest does not arise at all. It is a fact that as per the terms of the Amendatory Loan cum Purchase Agreement, on exercise of the option to purchase the residential plot, the loan agreements and Amendatory Loan cum Purchase Agreement shall be deemed to be an agreement to sell and purchase of the residential plots. Under the loan agreements, Amendatory Loan cum Purchase Agreement and Extension Agreements, PDCs were given to the lender/customer in respect of principal amount and interest amount. Since the lenders/customers never treated the agreement as loan agreement but always wanted to purchase the plot, as such, PDC s were never encashed. Had it been a case of loan instead of advance then obviously the allottees of the land, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of any material found either from the premises of the assessee or from the premises of investors that assessee has paid any unaccounted interest, as there can be none, since the investors were allotted the plot of land as was stipulated in the Amendatory Loan cum Purchase Agreement and Extension Agreements. We decline to interfere with the order of ld. CIT(A) pertaining to the interest chargeable in case of SEH Realtors Pvt. Ltd. and unaccounted interest payment on account of Jaipur Project. With regard to NH8 Project, since the plots have been duly allotted as per the modified agreements and in the absence of any material found and seized/impounded suggesting interest payment in cash/unaccounted, we hold that no interest can be taxed on notional basis. Addition on account of Cash Receipts - AO held that the following seized documents show that the actual deal size was Rs. 150 crores out of which only Rs. 105 crores were recorded, and the deal entailed cash payments/receipts which were not recorded in the books of accounts - HELD THAT:- As relying upon certain email communications between some persons related to the assessee company and other entities, AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, but on the insistence of the AO the assessee could be able to produce 4 persons. As it appears, the Assessing Officer has not made any effort to ensure the attendance of the other 5 persons. AO has been conferred with adequate power under the statute to not only conduct necessary inquiry, but even enforce attendance of witness. In the facts of the present appeal, the AO has failed to exercise such statutory power. On the other hand, he has put the entire burden on the assessee to prove the source of cash seized. When the assessee has furnished explanation regarding the source of cash seized, the AO was duty-bound to make proper inquiry to take the issue to its logical end. Since, the departmental authorities have failed to undertake necessary inquiry to ascertain the veracity of assessee s claim regarding source of cash seized, the assessee cannot be faulted for not providing the required details and proving the source, identity of the persons from whom the amount has been received on account of advance bookings of the plots. The onus having been discharged by the assessee, it was for the revenue to disprove the contentions of the assessee. The assessee cannot be faulted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the notice u/s 148 of the Income Tax Act, 1961, the assessee company had filed a copy of its return of income for the assessment year 2006-07 on 08.04.2013. The assessee company had declared its total income of Rs.34,15,23,969/- for the assessment year 2006-07. In the present case, assessment was completed u/s 143(3) of the Income Tax Act, 1961 on 31.12.2008. The total income of the assessee company was assessed at Rs.34,70,03,060/- against the returned total income of Rs.34,15,23,969/-. 4. The documents pertain to loan transactions between the assessee and four lenders group and related to two projects namely, NH8 Deal and Jaipur Project. 5. During the F.Y. 2005-06 the four lenders group viz. Shahi Exports group, Span India group, Dhingra group, Harman Singh Dhingra group together with Smt. Heminder Kumari entered into a finance deal with Vatika Ltd. Each member of the consortium vide their companies entered into various separate Loan agreements with Vatika group in 2005/2006 in the following manner: 6. The salient feature of all the agreements is as under: The guarantor guarantees the repayment of the loan amount by the borrower under the terms of loan agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buy-back price was not determined as charging of interest @ 24% clause was available in the agreement. Based on this statement, the AO held that the prime intention of the lender in the above mentioned deal was to get the loan alongwith committed amount of interest, instead of plots. 8. Further, the Lender and the borrower group concerns entered into guarantee agreements dated 31.03.2006 to secure the rights of the lender and the obligations of the borrower assumed under the above mentioned amendatory loan cum purchase agreement. The salient features of the guarantee agreements are as under: The guarantor guarantees the due performance of various obligations of the borrower (Vatika Ltd.) to the lender under the loan agreement and the amendatory loan cum purchase agreement. In the event of default of the borrower the guarantor guarantees the payment of loan and interest. The guarantor has furnished collateral security of immovable property towards guarantee . 9. Later, another agreement has been made on 31.12.2006 extending the loan-cum-purchase agreement. As per this agreement, the date of repayment of loan along with interest is, extended upto 30.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07.2008 from Sh. Anupam Nagalia to Sh. Ravi Chand which show that the NH8 deal between Vatika group and the consortium is regarded as loan/ICD by the Vatika group. The details of the loans, guarantors and the mortgage is as under: S. No. Name of the Party Amount (Rs. Crs) Guarantee Land mortgage(Acres) 1 U K Paints 5.50 Buzz Estates 5.74 2 S E H Realtors 10.00 Wonder Developers 11.20 3 Span India 5.50 Buzz Estate 6.04 4 Sohan Dhingra 2.00 Wonder Developers 2.86 23.00 25.84 13. The details of sale consideration by the lenders is as under: Intending Seller Total Sale consideration (Amount) Agreed date for payment of the entire sales consideration Rate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 3,00,00,000 UKPI LINCOLN 08.03.2011 2,40,60,000 SOHAN SINGH LINCOLN 08.03.2011 9,66,00,000 Vatika Ltd. 28.04.2011 25,00,000 SOHAN SINGH LINCOLN 01.04.2011 15,00,000 Vatika Ltd. 28.04.2011 5,00,000 SOHAN SINGH LINCOLN 31.05.2011 1,00,00,000 UKPI LINCOLN 31.05.2011 1,10,00,000 Vatika Ltd. 02.06.2011 1,50,00,000 SOHAN SINGH LINCOLN 02.06.2011 1,50,00,000 Vatika Ltd. 06.06.2011 1,00,00,000 SPAN INDIA LINCOLN 06.06.2011 1,00,00,000 08.06.2011 1,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 529417/- 7529417/- 4. Sohan Singh Dhingra (HUF) 13.09.2005 20000000/- 22737970/- 2737970/- 5. Heminder Kumari 13.09.2005 20000000/- 22737970/- 2737970/- Total 250000000/ 34224625/- Jaipur Deal 17. During the F.Y. 2005-06 the four lenders group viz. Shahi Exports group, Span India group, Dhingra group, Harman Singh Dhingra group together entered into another finance deal with Vatika Ltd. 18. In this deal Rs.50 crores was advanced by the lender parties to Vatika Landbase Pvt. Ltd. in the F.Y. 2005-06 in the following manner: S. No. Name off the Company/Group Amount 1 U.K. Paints Pvt. Ltd. (Dhingra group) 13,00,00,000/ - 2 SEH Realtors Pvt. Ltd. (Shahi Exports group) 20,00,00,000/ - 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanskar Buildtech Pvt. Ltd. , Nakshatra Buildcon Pvt. Ltd. are the confirming parties Land under the so-called sale was not identified and measured. (Refer paras under the pareamble part Whereas and clause d e of the agreement). Residential Plots agreed to be sold and purchased have not been developed as on date and even the requisite permission to develop and sell the plots have not been taken by the seller or the confirming parties. The price for the land was taken to be @ 3400 per sq. yards. The above rate of 3400 per sq. yard is stated to be escalation free and inclusive of external development charges, internal development charges and. the license fees. An option as given to the buyer (lender group concern) to re-sell the plots/land to the seller (Vatika group concern) at a predetermined price. The lender could sue the borrower for specific performance for its obligation to buy-back. The date for re-sell was kept within two years of sale The re-purchase price was predetermined @ 5100/- per sq. yards. Corporate guarantees in the form of Collateral securities were given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an) 7 ORRIS Infrastructure 4,00,00,000.00 29.05.2010 31.07.2010 yes Due for renewal 24. The revenue held that from the above document it can be seen that amount of Rs.43 Crores due from Vatika Ltd. as on 23.06.2010 has been categorized as ICD by the Dhingra group. It was further held that this Rs.43 Crores due from Vatika is in respect to Jaipur deal which clearly shows that this is accrued amount from Rs.13 Crores advanced by U.K. Paints India Pvt. Ltd. to Vatika Landbase Pvt. Ltd. The revenue held that this corroborates the finding that the amount advanced by Dhingra group to Vatika group were loan and that the plots agreed to be sold under the ostensible agreement for sale, were mere security for this loan. The revenue also relied on the statement of Sh. Navin Choudhary, CFO of the Dhingra Group that the amount advanced to M/s Vatika Ltd. is a loan. 25. Based on the seized material, the loan agreements, Jaipur plots buy-back deal, the revenue held that there has been suppression of amounts and camouflaging of the transactions. For the sake of ready ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of the transaction. Regarding the above Jaipur Deal statement of Sh. Harish Ahuja (Shahi Exports group) was also recorded on oath on 16.01.2013. relevant excerpt of his statement is reproduced below: - Q. 2 Did you (or your group) enter into any deal with M/s Vatika Group regarding land at Vatika Infotech City Jaipur? If yes, please produce a copy of all such agreements/addendums to these agreements and also any communications exchanged between these groups regarding these transactions. Ans. Yes, we have entered in agreements for land at M/s Vatika Infotech City, Jaipur. We will provide the copies of the same in two days. Similar agreements were entered with M/s Span group and M/s Dhingra group with Vatika group. Q.3 Please describe the Jaipur deal entered into between Shahi Group Vatika group. Ans. The agreement to purchase land was entered into May 2005, valuing Rs. 20 Crores. On April 2006 we paid Rs.85 lacs (approx.)(for PLC charges. On April 2010, we sold the same land to M/s Vatika on May 2010 for a total consideration of Rs.29,99,82,000/- (Rs. Twenty nine Crores, ninety nine lacs Eighty two thousand). Q.7 Please explain (point- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of loan and its repayment along with interest @25%p.a. Another fact which is known from the above document is that the original agreement signed between Vatika Landbase Ltd. and S E H Realtors Pvt. Ltd. was for 50 crores but it was then modified for 20 crores. Then there is another document which corroborates the above evidence and also establish that his deal was actually loan taken by Vatika group from the Consortium at a particular rate of interest. This document has been extracted from Annexure A-56 (hard disc) seized during the course of search at Vatika Triangle, Sushant Lok-I, M G Road, Gurgaon on 16.01.2013. The navigation path for its extraction is Drive\Vatika Landbase\Audit 2007-08\Scanned ICDs Agreement 01.04.07 to 31.03.08xls. From the heading of the above excel sheet which reads Summary of inter Corporate Deposits for Jaipur Project it is amply clear that the table on the above document is regarding loan raised by Vatika Ltd. for the Jaipur Project. When the table on this document is perused it is clear that this document is regarding the loan taken by Vatika Ltd. totaling 50 crores from the lender parties for its Jaipur Project during the F.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one to camouflage the transaction and suppress the real amounts involved in the deal. Following fund flow shows the flow of funds to the lenders from the borrower Vatika Ltd. through other concern of the Vatika group: Date of Receipt Amount (Rs.) Receiving Company Paying Company Immediate Source Date Ultimate Source AMOUNT PAYING COMPANY DATE AMOUNT (RS.) PAYING COMPANY 19.05.2010 11,27,86,417 SEH ESPO 19.05.2010 11,28,00,000 FAMOUS DWELLERS 19.05.2010 11,28,00,000 VATIKA LTD. 11.06.2010 8,31,53,221 ADVANTAGE VINCENT 11.06.2010 8,32,00,000 VATIKA LTD. 17.06.2010 6,42,81,361 SEH ESPO 17.06.2010 6,40,00,000 ASPIRE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NOTE: SEH -SEH Realtors Pvt. Ltd. ADVANTAGE - Advantage Fashions Pvt. Ltd. UKPI- U.K. Paints India Pvt. Ltd. UTTAM-Uttam Enterprises Pvt. Ltd. ESPO- ESPO Developers Pvt. Ltd. VINCENT-Vincent Builders and Developers Pvt. Ltd. FAMOUS-Famous Dwellers Pvt. Ltd. ASPIRE-Aspire Promoters Pvt. Ltd. VATIKA- Vatika Ltd. It is abundantly clear from the above fund flow that out of Rs.75,03,12,000/ - paid by ESPO and Vincent to the Consortium more than 99% of the fund was provided/sourced from Vatika Ltd. only. It is therefore amply clear that the so called cash/fund deficit Vatika Ltd only provided requisite funds to M/s ESPO Developers Pvt. Ltd. and M/s Vincent Builders and Developers Pvt. Ltd. to purchase the plots from the Consortium. It is thus established that this transactions is thus a colourable device adopted by the parties to camouflage the nature of the transaction as well as suppress the actual amounts paid/ received by citing market situation for reduced price. During the course of assessment proceedings, the agreements entered into by the lender groups with M/s Vatika Ltd were called for. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85,82,900 3 Advantage Fashions Pvt. Ltd. 25.04.2006 37,72,300 4 Uttam Enterprises Pvt. Ltd. 25.04.2006 4,35,700 TOTAL 1,86,77, 000/- The above transaction was however camouflaged as sale-purchase of property transaction wherein the lenders show the loans given by them as advance to purchase of property and the borrower shown the transactions as sale of property. The above said loan along with interest was repaid in the F.Y.201011 when the lenders and borrower declared to have received / paid the re-purchase consideration. The following was the repayment (considering the installment payment plan) as evidenced above: S. No. Name of the company Amount (Rs.) 1 S E H Realtors Pvt. Ltd. 71,08,32,530.59 2 Advantage Fashions Pvt. Ltd. 52,39,60,975.46 3 U. K. Paints India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 351.48 2,98,86,000 3,97,42,351.00 TOTAL 1,76,74,14,997.25 75,03,12,000 101,71,02,996.76 In view of the above, the total interest expenditure liability of M/s Vatika Ltd. in Jaipur deal during the Financial 2005-06 comes to Rs. 19.38 crores. It is therefore clear that the assessee has not fully disclosed its interest expenditure in its books of accounts. An amount of Rs.22.80 crore (Rs.3.42 crore + Rs.19.38 crore) has been incurred by the M/s Vatika Ltd. as interest expenditure in these two deals during the financial year 2005-06 relevant to Assessment Year 2006-07from out of books and thus remains unaccounted. 26. Thus holding the AO treated an amount of Rs.22.80 Cr. as Unaccounted Interest Expenditure . 27. Aggrieved the assessee filed appeal before the ld. CIT(A). 28. The adjudication of the ld. CIT(A) on the issue of NH8 deal and Jaipur deal is as under: NH8 Transactions 29. The ld. CIT(A) considered the material details of the search conducted u/s 132 and survey executed u/s 133A and the seized/impounded material pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @18% is not paid back by 14.02.2006, it would be assumed that the borrower intends to avail of the loan for the full period of 5 months @100% interest. (vi) The Borrower confirms that its Board of Directors has sanctioned this agreement. (vii) To secure the repayment, the Borrower has handed over Post Dated Cheques (PDCs) to each lender towards repayment of principal and also PDCs towards interest computed @100%, with an assurance to honor the same. (viii) To further secure the loan, the Borrower has handed over a Promissory Note also. Moreover, vide a separate Guarantee agreement , certain other properties belonging to Mark Buildtech P. Ltd. (the confirming party ) were also set out as collateral security for ensuring performance by the Borrower. (ix) Any subsequent agreement/understanding on the variation/modification/amendment to the loan agreement shall be only by way of a written document, which shall form part of this Loan agreement. 4.3.2.12 Subsequently, on 31.03.2006, the Borrower and the Lender entered into another agreement in pursuance of the Loan agreement. The agreement was called a Amendatory loan-cumpurchase agreement , which carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the lenders was allotted an area of 9375 sq yards vide letter of Vatika Ltd. dated 12.04.2010 (i.e., A.Y. 2011-12), and the individual plots were allotted vide allotment letters dated 27.08.2010. 4.3.2.15 Subsequently, the lenders entered into an Agreement to Sell in the AY 2011-12 with another company of the Vatika Group, viz., Lincoln Developers P. Ltd., for sale of the allotted plots at a registered sale consideration of Rs. 16,000/- per square yard. The plots were never registered in the name of the lenders at any point of time. 33. The ld. CIT(A) held that, based on the recitals that the original agreements of May/June 2005 were undisputedly pure loan agreements. It was called a Loan Agreement . The parties are called Lenders and Borrowers. Of course, the nomenclature is not determinative of the nature of an agreement. But the recital also show clearly that the amount was meant to be a loan agreement only, initially on interest of 100% p.a., which was later revised by mutual agreement to 24% p.a. (compounded quarterly). There is no indication therein of any purchase of the land. Thus the agreement was a loan transaction simpliciter. 34. The rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the AY 2011-12, upon the exercise of option to purchase by the lender and plot allotment thereafter, that the agreement has stood converted to a purchase agreement. It is pertinent to note that the Amendatory agreement does not provide that opting for purchase will have retrospective effect; rather, the principal and accrued interest @24% p.a. (compounded quarterly) on the date of exercising of option will be adjusted towards the sale consideration as agreed. I am therefore of the firm view that the original loan amounts continued as a loan amount till the A.Y. 2010-11, and interest @ 24% p.a.(compounded quarterly) accrued in the hands of the lenders till (and including) the A.Y. 2010-11, as per terms of agreement, the loan amount plus accrued interest thereon was to be adjusted towards consideration payable. 4.3.2.18 I, therefore, agree with the conclusions of the A.O. that the transaction was a loan simpliciter till the date of allotment of plots, when admittedly the appellant gave constructive delivery of the plots (upon the lender exercising its right to purchase), and that this conclusion could be drawn only upon examination of the agreements unearthed during the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEH Realtors P. Ltd. and Sohan Singh Dhingra (HUF), to the extent that it relates to the Gurgaon deal, shows that the A.O. has employed an identical description of the agreement between each of these four parties with Vatika, and has arrived at an identical conclusion in each case. However, after going through the agreements entered into by SEH Realtors P. Ltd. with Vatika, I find that the description of the agreement by the A.O. for the transaction with SEH Realtors P Ltd is completely different from the recitals of actual document entered into by the appellant with the other parties. This is a very crucial issue, as it is the content of the agreement entered into between two parties that would throw light on the actual nature of the transaction intended between them. It would appear that the A.O. has relied upon the contract between UK Paints P. Ltd and Vatika, instead of the contract between SEH Realtors P Ltd. and Vatika. Be that is it may, it is then the duty of the CIT(A) to make up for the deficiencies in the assessment Order; in this case, to analyze the agreements between SEH Realtors P Ltd. and Vatika, and to see whether the seized material/statements relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated cheques (PDCs) of Rs. 10,58,17,000/- (net of TDS on interest). Demand Promissory Notes were also provided to secure the payment of the loan with interest, and b. PURCHASE AGREEMENT : The sum of Rs. 10,00,00,000/- so given by SEH Realtors P. Ltd. has been paid as sale consideration for the sale of commercial / housing / residential/institutional/medical/entertainment plots being fully developed 4% of 193.6 sq. yds. of commercial plots, 20% of 968 s.yds of housing plots and 31% of 1500.40 sq. Yds. of residential plots exclusively to the appellant. It was agreed that the seller (the appellant) will grant, sell, transfer and convey these plots to the purchaser (SEH Realtors P Ltd.) not later that 11.08.2006. The Seller explicitly agreed that any reduction of the agreed area will constitute breach of contract. However, in the event of larger availability of developed land after completion of development, SEH Realtors P Ltd. undertook to pay additional sale consideration on a pro-rata basis. c. The Seller (appellant) undertook to purchase back the plots, at the option of the purchaser, within a period of two years from the date of the agreement, at the prevailing mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unchanged. 4.3.2.23 Thereafter, the parties have entered into successive Extension Agreements for six months each, each such agreement being similar in content about the terms and conditions as the first Extension agreement dated 31.3.2016. Only the figure in the PDC representing interest has changed. The last such extension agreement is dated 31.12.2008. 4.3.2.24 On 03.02.2011, the appellant has entered into an Agreement to Sell with Lincoln Developers P. Ltd. to sell these plots total admeasuring 17045 sq. yds. to the latter, for a total consideration of Rs.27,27,20,000/-, i.e. @Rs. 16000 per sq. yd., free of all encumbrances, and including EDC/IDC/municipal and other charges. 4.3.2.25 It can be seen from the discussion above, that the key agreement between the parties is the first agreement dt. 12.8.2005, called a loan-cum-purchase agreement. All subsequent agreements are merely extension agreements on the same lines, with one difference, viz. the replacement of PDCs representing interest on the sum of Rs.10,00,00,000/- the manifest agreement is called an loancum-purchase agreement , indicating it is both a loan and a purchase agreement . However, the nom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the transaction was not really a purchase transaction but one of loan, on which interest has been received/receivable. The details of the assessment order have been discussed in the preceding paras of this order. To my mind, none of the other evidence referred to by the A.O., either individually or collectively, can be said to indicate that this specific transaction between SEH Realtors P. Ltd. and Vatika was actually a loan transaction. The fact that certain agreements between Vatika and other parties have been found in a folder called ICD exceptions in the computer of Vatika/U.K. Paints cannot be held against the appellant. Even otherwise, placing an agreement in a folder which is named in a particular way, does not detract from the true nature of the transaction as evidenced from the language of the agreement. On the contrary, the A.O. has referred to an inter-office memo dated 20.04.2011 issued by Sh. Manmohan Mehra, V.P. (Corporate Affairs) of Vatika group where it is clearly mentioned that the Vatika group is planning to repurchase the plots sold to the Shahi group (i.e. SEH Realtors P Ltd.). It also mentions therein that the purchase price by Lincoln Developers is Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the parties in respect of the so-called NH8 Gurgaon transaction. Clearly, as per the extension agreements, no actual payment of interest took place of the various years. Yet the plots were allocated by the appellant to the lenders, without any other agreement overriding the terms of interest of the extension agreements. It can only be concluded that the terms of the extension agreement have been adhered to before the plots were allocated. In other words, accrued interest as per the agreement would have been paid before the plots were allotted. This interest payment is not reflected on the books of the appellant. The only conclusion that can be drawn is that the appellant has paid the entire accrued interest till the date of allotment of plots to the lender, as agreed, but outside its books in cash. This constitutes unaccounted expenditure to be assessed u/s 69C of the Income Tax Act, 1961. In fact, there is no contemporaneous documentation found during search or adduced later by the appellant before the search team or the A.O. to show that the exhaustive terms of the earlier loan agreements and the repeated extensions and PDCs were explicitly overridden so as to free the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in installments, in part payment. Unless and until the complete sale consideration, along with the other expenses are not received, by the company, the sale deed in respect of the said land is not executed in favour of the intending receiver. Similarly, the possession of the said land is being given to the intending purchaser only after the receipt of full sale consideration and incidental expenses . Thus it the event that the appellant has not actually paid the interest due, it has to be held that plots have been allotted in lieu of the original loan amount plus accrued interest thereon; in other words, the appellant has under-reported the sale consideration (by an amount equivalent to the accrued interest discussed at para 4.3.2.27 above) that accrued to it as a result of these agreements. This a real income, to be taxed under the specific provisions of Section 5 of the Income tax Act, 1961. 4.3.2.29 As discussed in para 4.3.2.25 above, the conclusion that is drawn is that the accrued interest has been paid in A.Y.2011-12. Accordingly, the addition would have to be deleted for A.Y.2006-07 (and the assessed income would be correspondingly enhanced for A.Y. 2011-12. This enha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the addition are as under: The parties executed documents of agreement to sale in respect of certain properties owned by Vatika at Jaipur. As per these agreements, a specific right was granted to the buyers that the plots, which were subject matter of the sale agreement, may be sold back by them to Vatika at a pre-determined sale consideration. Additional payments of Rs.1,87,77,000/- was made by these parties for preferential plots allotted, as per existing agreement between the parties proves that the transactions were for purchase of plots but not a financial transactions in the nature of loan. The agreements for sale have been entered by these parties with Vatika the seller , on various dates in the month of May and June, 2005. Sanskar Buildtech P. Ltd. and Nakshatra Buildcon P. Ltd., who are the owners of the property, were the confirming parties to these agreements. The parties made full and complete payments of the cost of the plots including preferential location charges. The assessee has the exclusive rights of development of these properties. Corporate guarantee agreements have also been entered into between parties. The Seller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. Vatika Landbase Pvt. Ltd. 13.09.2005 (1) 48 to 142 (2) 11 to 5 (1) A43 (2) A4 (1) Vatika Triangle (2) 19, DDA Commercial Complex, Zamrudpur, Kailash Colony, New Delhi on 16.09.2011 ii. Guarantee Agreement: Lender and Borrower group concerns have simultaneously entered with a guarantee agreement to secure the right of lender of the such guarantee agreement is detailed as under: Lender Guarantor Date of the agreement Page No. Annexure No. Seized from U.K. Paints India Pvt. Ltd. Mark Buildtech Pvt. Ltd. 13.09.2005 141 134 to A43 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon iii. Personal Guarantee agreement:- Lender and Shri Anil Bhalla (promoter of Borrower group) entered simultaneously in a personal guarantee agreement to secure the right of the lender and obligation of the borrower. One of such agreement is detailed as under:-3 Lender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2006 136 to 132 A41 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon U.K. Paints India Pvt. Ltd. Buzz Estates Pvt. Ltd. 31.03.2006 (1) 92 to 88 (2) 131 to 125 (1) A41 (2) A43 Vatika Triangle Sushant Lok-1, M.G. Road, Gurgaon Heminder Kumari Wonder Developers Pvt. Ltd. 31.03.2006 45 to 41 A41 Vatika Sushant M.G. Gurgaon Triangle Lok-1, Road, Span India Pvt. Ltd. Buzz Estates Pvt. Ltd. 31.03.2006 28 to 23 A41 Vatika Sushant M.G. Gurgaon Triangle Lok-1, Road, vi. Extension Agreement to amendatory loan cum purchase agreement by which the date of loan and interest payable is extended upto 30.06.2007. The details of such agreement are as under:- Lender Borrower Date of the agreement Page No. Annexure No. Seized from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gurgaon U.K. Paints India Pvt. Ltd. Vatika Ltd. Buzz Estates Pvt. Ltd. as confirming party 30.06.2007 80 to 77 A41 Vatika Triangle, Sushant Lok-1, M.G.Road, Gurgaon Span India Pvt. Ltd. Vatika Ltd. Buzz Estates Pvt. Ltd. as confirming party 29.06.2007 17 to 14 A41 Vatika Triangle, Sushant Lok-1, M.G.Road, Gurgaon The following were some of the features of this extension agreement/MOU: Lender Extended period of loan and the right of the lender group concern to exercise the option of purchasing the land, upto Extended period of the right o the lender group concern to re-sell the land so purchased to the seller (borrower group) SEH Realtors Pvt. Ltd. 31.12.2007 31.12.2008 Sohan Singh Dhingra (HUF) 31.12.2007 31.12.2008 U.K. Paints India Pvt. Ltd. 31.12.2007 31.12.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the fund of Validate tabulated as under: - Date of receipt Amount Receiving Company Paying Company Lincoln Ultimate Source Date Amount Paying Company 04.02.2011 9,09,12,000 SEH Lincoln 03.02.2011 9,09,12,000 Vatika Ltd. 07.02.2011 9,09,12,000 SEH Lincoln 07.02.2011 9,09,12,000 Vatika Ltd. 09.02.2011 9,09,12,000 SEH Lincoln 09.02.2011 9,09,12,000 Vatika Ltd. 14.02.2011 7,50,00,000 UKPI Lincoln 14.02.2011 7,50,00,000 Vatika Ltd. 21.02.2011 7,25,00,000 UKPI Lincoln ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO concluded on the basis of these documents in page 16 17 of assessment order A.Y. 2007-08 that Vatika Group has camouflaged the agreement as sale and purchase agreement which was basically a loan agreement. Similar findings is given by the AO in various assessment years that the assessee has camouflaged the loan transactions into sale and purchase transactions. The assessee has paid unaccounted payment of interest to lender group at the rate of 24% per annum from assessment year 2006-07 to 2011-12. Findings of CIT(A) in this issue: CIT(A) passed common order for A.Y. 2007-08 to 2013-14. CIT(A) has confirmed the action of the Assessing Officer in NH-8 deal treating the agreement as loan agreement simplicitor and has given final finding in para 4.4.1.18. In case of agreement with SEH Realtors Pvt. Ltd. has held it to be a purchase agreement where as with other lenders, initial agreement was loan agreement and subsequent agreement was loan cum purchase agreement. The CIT(A) has analyzed the agreement with SEH Realtors Pvt. Ltd. and held the agreement to be purchase agreement as date of initial agreement is different from other agreements and dominant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarantee agreement. 2. Personal guarantee of Sh. Anil Bhalla promotes of the company was offered by personal guarantee agreement. In the event of failure of payment of loan guarantor agrees for the repayment of loan and interest. 3. PDCs was given for the principal and interest. 4. There was provision of compulsory buy back by lender at the option of investor . In view of the above securities the advance given is fully secured not in terms of guarantee of immovable properties personal guarantee but also liquid security in form of post dated cheques. Such security cannot be given in case of purchase transaction. In spite of fully secured advances along with interest, the property was bought back by Vatika Group either at principal values or at much lesser value compared to principal interest till buy back, which clearly established that it was never a purchase transaction. Further, the fund used for buy back is belonging to assessee i.e. M/s Vatika Ltd. as discussed in the assessment order. Still further, there is no registration of property in the name of lender. Therefore, entire transaction of option of purchase and buy back is nothing but colourab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nhancement has been given namely total interest payable from date of advance of loan by lenders was paid at the time of buy back. From there exact amount of interest can be computed. Another contention of Ld. AR s that there is no incriminating document found from A s premise therefore, for unabated assessment no addition can be made u/s 153A. Ld. CIT(A) conclude in Para 4.4.1.18 that the seized loan agreement constitute the primary evidence on the basis of which the addition emanates. This holds goods for all agreements for NH- 8 Jaipur deal. CIT(A) has given the finding in respect of SEH Realtors Jaipur deal that there was no incriminating material because he has treated the agreement as purchase agreement. If these agreement is treated as loan agreement as discussed in subsequent para, then these loan agreements become primary basis for making addition of unaccounted income hence incriminating material to assess such unaccounted income. Other evidences found during search i.e. emails, statement etc only supporting evidences therefore, origin of the addition is based on seized documents, hence the theory of non availability seized documents for addition made u/s 153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ika Ltd. by lenders lenders have acquired the plots but registration was done. 5. In both the Cases, there was provision of Compulsory purchase by borrower i.e. M/s Vatika Ltd. at the option of lenders. 6. Buy back price is at much lesser rate than principal plus interest. Mostly buy back price at the principal only. When the amount advanced alongwith interest in covered by So many guarantees as discussed above, why buy back prices was less then principals interest without any dispute? This action of lenders borrower cannot be explained by the principle of human probability. I rely on the decision of Sumati Dayal vs. CIT(1995) 80 Taxmann 89 (SC)/214 ITR 801 (SC ). In fact CIT(A) has upheld the addition in case of other lenders in NH-8 deals mainly on the above ground that buy back price is much less then principal plus interest [Para 4. 4.1.28 of CIT(A) order]. In view of the above CIT(A) ought to have upheld the unaccounted interest paid to by M/s Vatika Ltd. in case of M/s SEH Realtors Pvt. Ltd. too. Issue of Jaipur deals: Facts are Similar to the facts, of NH-8 deals except the first agreement that is loan agreement. In these cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese statements reproduced in the assessment order. Therefore 'M' is accepted as interest calculation written in the seized documents . Further during the search proceeding on 16.01.2013 at the residence of Sh. Naveen Choudhary, CFO of U. K. Paints group of these Jottings specially when M / Material has been used in the documents Seized on 16-9-2011 Sh. Naveen Choudhary has sent brief for the opinion for making disclosure to Sh. C.S. Agarwal (Annexure A-6 from hard disc of laptop of Sh. Naveen Choudhary). Sh. C.S. Agrawal has advised U. K. Paints group (K.S. Dhingra / G. S. Dhingra) to Surrender the cash loan of 2.75 crores interest Coded as material in Seized annexure, which is part of seized document. AA-1 AA-2. In fact hard dire contains the disclosure on the basis of contains in Annexure AA-1 AA-II amounting the Rs.7,95,45,530/- in the hand of Sh. K. S. Dhingra. CIT(A) after analyzing the entire evidence found during search of seizure operation has a funding tired, the addition of unaccounted, interest paid the U. K. Paints to be calculated @ 36% per annum after deducting the interest shown in the of accounts, b) addition of unaccounted Cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paints group for surrendering the amount of Rs.7,95,45,530/- on the basis seized document AA-I AA-2 from earlier search. Therefore, in present search also incriminating evidences in form of subsequent correspondences on the basis of earlier Seized comments. AA 1 AA-2 of U. K Paints group seized 24.11.2011 was found. Therefore in present search also, evidences in form of incriminating materials was found. Hence earlier seized documents AA-1 AA-2 Corroborates the unaccounted interest Payment on ICDs. CIT(A) has given same funding in para 4.6.16 of this order. In view of the above, since the addition of unaccounted interest on ICDs emanates from Seized documents of present Search i.e. 16.01.2013 and seized documents AA-I AA-2 of earlier search Corroborates the finding of unaccounted interest payment, separate proceedings u/s 153C is not required for utilizing the seized document AA-1 AA-2 of earlier search u/s 153C. Second issue is whether for utilizing the evidences obtained during the simultaneous search in UK Paints group i.e. on 16.01.2013, the proceeding u/s 153C is required or these evidences can be used in the proceedings u/s 153A. My submissions are as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paper Sh. Naveen Choudhary has given evasive reply and wrong statement that it pertains to goods transacted when there was no goods transacted between UK Paints and vatika other borrower. Ultimately Sh. Naveen Choudhary accepted that calculation against the words Material/M is related the interest calculation for delayed interest/payment. The contents of Seized material is self-speaking and is nothing but interest calculation payable on ICD. iii. The next arguments of Id. AR is that the documents relied by the assessing officer was never confronted to the assessee and persons whose statement has been relied was never allowed cross examination. In this regard it submitted that the content of seized documents relied was confronted to the assessee and scanned copy of such documents were part of show cause and assessment order, therefore, the contents of seized documents were being apprised to the assessee. Further the statement of Sh. Naveen Choudhary has been reproduced who has given evasive reply on the contents of seized documents. Therefore, the issue of cross examination will not serve much purpose as the same is only used to corroborate the facts of the case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Group Dhingra Group entered into deal in F.Y. 2009-10 2010-11 where vatika group has agreed to sale land at sector 84 85 of Gurgaon land vide agreement to sale with Shahi group, span group Dhingra Group. The details of such agreement is as under:- Buyer /Group Total sales Consideration (Amount Rs.) Rate Yards Rs.) per sq. (Amount Total area (sq. Yards) under sale Scorpio Research Consultants Pvt. Ltd./Dhingra Group 35,00,00,000/- 8140/- 43000 H.A. Realtors Pvt. Ltd. (Shahi Exports group) 35,00,00,000/- 8140/- 43000 Positive Buildwell Pvt. Ltd. (Span India group) 35,00,00,000/- 8140/- 43000 During search operation various mails were recovered from hard disc Annexure A-66 from Vatika Triangle Shushant Lok-1 M.G. Road Gurgaon in respect of this transfer of land. Ld. AO has reproduced the contents of the following mails in the assessment order: S.NO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka 100 crores NH 8 agreement word 1997 documents. Therefore, the name of documents clearly suggests that the deal is regarding NH-8 land in respect of sector 85 86 of Gurgaon which matches with the agreements to sale. Further this attachment contains the Shahi funding, U.K. Paints funding Span group funding reproduced in the assessment order (page 68 69). Still further the area sold for each group is 37556 sq. Yard actual agreement to sale is for 40000 sq. Yard which almost matches. 5. In the attachment to mail dated 13.01.2010 total balance payment to be made in different group are as under: - Shahi Group-Rs. 33,33,31,900/- UK Paints Group Rs. 33,33,54,300/- SPAN group Rs. 30,33,29,708/-. If we add A as accounted from already paid in the group, total sale consideration comes to SHAHI Group Rs.34,83,31,900/- (Rs.1,50,00,000/- + Rs.33,33,31,900/-) A fund given already UK Paint Group Rs.36,33,54,300/- (Rs.3,00,00,000/- + Rs.33,33,54,300/-) A fund given already SPAN Group Rs. 31,33,29,708/-(Rs. 10000000/- + Rs.30,33,29,708/-) Accounted fund given already (AO page No. 67 68) The above figure almost matches with sale c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific, the addition made by AO may be restored. Sd/- (H.K. Choudhary) Commissioner of Income Tax (DR), G-Bench, ITAT, New Delhi 40. The ld. DR argued extensively on various dates detailing the entire events of all the groups involved along with the M/s Vatika Ltd. He has taken us through the seized material pertaining to U.K. Paints India Pvt. Ltd. and the agreements thereof, the agreements with Sohan Singh Dhingra, Heminder Kumari, Span India Pvt. Ltd. and also SEH Realtors Pvt. Ltd. He has argued based on the fund flow showing that the fund used in repurchase of the property from the lender in the name of M/s Lincoln Developers Pvt. Ltd. is the fund of M/s Vatika Ltd. The table has been shown at page no. 6/7 of the written submission of the ld. DR which is reproduced above. The ld. DR has also argued based on the initial agreements, advancing the money, subsequent agreements, loan-cum-purchase agreement, collateral securities, personal guarantees and the PDCs. The ld. DR has also emphasized on the compulsory buy-back from the lender at the option of the investor lender parties. The ld. DR s main argument was that in view of the securities, the advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43. Heard the arguments of both the parties and perused the material available on record. 44. We find that the learned CIT(A) while summing up in para 4.3.3.18 has held that the conclusion drawn by the AO in respect of the appellant s transactions for the Jaipur deal are erroneous and thus interest income added by the AO for AY 2006-07 to A.Y. 2011-12 in respect of the Jaipur deal was deleted. With regard to Jaipur Deal, the ld. CIT(A) held that the parties executed documents of agreement to sale in respect of certain properties owned by Vatika at Jaipur. As per these agreements, a specific right was granted to the buyers that the plots, which were subject matter of the sale agreement, may be sold back by them to Vatika at a pre-determined sale consideration and additional payments of Rs.1,87,77,000/- was made by these parties for preferential plots allotted. The terms of the existing agreement between the parties prove that the transactions were for purchase of plots and not a financial transaction in the nature of loan. It was held that the agreements for sale have been entered by these parties with Vatika the seller , on various dates in the month of May and June, 2005. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four customers, the ld. CIT(A) has held that initial agreements were loan agreements, as in such agreements there was no indication of any purchase of land. By entering into the amendatory loan cum purchase agreement, the original agreement is amended to extend the periodicity of loan with an additional amendatory clause giving an option to the lender to opt for purchase of plots. It was held that this clause only provide an option to purchase at future date, and same by itself does not convert the loan agreement to purchase agreement. It was held that subsequent extension agreements only change the date of tenure of loan and the amounts of PDCs, and all other conditions of the amendatory agreement continues in the extension agreement. It was held by the learned CIT(A) that it is only in the AY 2011-12 i.e. upon the exercise of the option to purchase the space, and allotment of plot thereafter, the loan agreement got converted into purchase agreement and till the exercise of the option, nature of agreement continued as a loan transaction till the AY 2010-11. Such findings of ld. CIT(A) are not correct on facts as he has failed to appreciate that loan agreement was subsequently mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest has been found, which itself proves that no such liability by way of interest has accrued to the assessee. Infact, neither in the assessment proceedings nor in the first appellate proceedings, any material has been brought on record to support the assumption that the assessee has incurred a liability by way of interest. There is no evidence, even, to suggest that the lenders have actually received any interest. Under these circumstances, the contention of the revenue that the assessee has paid the entire accrued interest till the date of allotment of the plots to the lenders, as agreed, but outside its books in cash is nothing but a figment imagination and based on mere suspicion and surmises. 48. Academically, if the statement of the revenue, that the assessee has paid unaccounted interest to the lender parties is considered as correct, in the backdrop of the fact that the principal amount received is accounted by the assessee as well as by the loan parties, the payment of interest from the books would be advantageous to the assessee to reduce their taxable income and hence we are not in a considered situation to accept the presumption of the revenue. 49. Further, we f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8140/- 43000 H.A Realtors Pvt. Ltd. (Shahi Exports group) 35,00,00,000/- 8140/- 43000 Positive Buildwell Pvt. Ltd. (Span India group) 35,00,00,000/- 8140/- 43000 52. E-mail dated 02.01.2010 retrieved from the computers reads as under: From: [email protected] Date: Sat, 2 Jan 2010 18:36 05 +0530 To: [email protected] Subject: Shahi New Deal Dear Mr. Bhalla, Major highlights of the new agreement with Shahi Group 1. Total deal size 150 crs (including 30 of present loan). 2. Total area to be purchased 100 acres. 3. Total yards to be given 1,30,000 yds computed at 1300/- yds per acre. 4. Total Ch component is Rs.100 Crs (Rs.33.34 Cr. per party). 5. Total yds per entity 43,333 yds. 6. Total Net rate per yard 100 crs/1,30,000 = Rs.7,692 per yd. 7. Re-purchase price Rs.25,000/- per yds. Total re-purchases consideration Rs.325 crs. 8. Entire new land purchase and allotment of plots to be done in Sector 84 85 only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f plots That is, 37556 sq. yd. of Plots (making round Figure) SHAHI FUNDING Total Plots to be taken 37555 sq.yds @ Rs.11538.50 per sq.yd i.e. Rs.43,33,39,906.00 Funds Already given A .. Rs.1.50 Cr B .. Rs.8.50 Cr Cost of plot per sq. yd re-worked to give adjustment of B i.e. Rs.43,33,39,905.00 minus Rs.8,50,00,000/-divided by 37556 which is Rs.9275.213 (roundabout figure of Rs.9275 per sq. yd) After above adjustments, Total Plots to be taken by Shahi 37556 sq.yd @ Rs.9275/- per sq. yd i.e. Rs.34,83,31,900/- Money already given Rs. 1,50,00,000/- Balance to be given by 15.1.10 Rs.Rs.33,33,31,900/- Re-purchase agreed after 2 years 37555 sq. yd @ Rs.25000/- per sq. yd i.e. Rs.93,89,00,000/- UK PAINTS FUNDING ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be provided by three groups to Vatika group. Each party will fund approx. Rs. 43 crores. Based on above total funding rate per sq. yards is agreed to be Rs. 1538.50. Based on this rate of total funding each party of the Consortium will get 37556 sq. yards. Now 'money already given' is brought into calculations and adjustment is made in the rate per sq. yards to exclude 'B' amount already received. In the result rate per sq. Yards goes down. However the total area to be 'sold' does not gets changed. The following becomes the rate per sq. yards: Sl. No. Group Rate per sq. yards (Rs.) 1 Shahi Exports 9275 2 Dhingra (UK Paints) 9675 3 Span India 8343 All these facts clearly show that the B part of money already given is actually cash amount which is not accounted for. This is supported from the fact that the cost per sq. Yards is re-worked and it goes down with the introduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Buildwell Pvt. Limited having office at 222, Okhla Industrial Estate, Ph-III, New Delhi. The funding will be same as I already sent to you. There will be a fourth person/ agmnt., as I told you. It is for 2600 sq. yd of plots @ Rs.1153B.50 for a total investment of Rs.300,00,100./- (Three Crores and Hundred). Name is Mr. Sanjay Israni S/o GK Israni, R/o 101-A, Pearl Apartments, 3rd Cross Road, Lokhandwala Complex, Andheri (W), Mumbai-53. Rest all terms are same as other three. Rgds. Parameswaran From the above email it can be seen that Sh. Bala Parmeswaran is telling Sh. Nagalia that the agreement for this deal in the case of Span India group would be in the name of Positive Buildwell Pvt. Ltd. 57. The Assessing Officer relied on the emails and held that it established that the above deal finally entailed cash component of larger amounts. The details are as under: Email dated 20.01.2010 from Sh. Bala Parmeswaran to Sh. Anupam Nagalia with copies marked to Sh. Naveen Choudhary and Smt. Vandana Wadhwa. The subject of the email is Vatika New Funding . It may be mentioned that this email has been was found deleted and thus has been recovered from a har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43000 sq. yd @ Rs.8050/- per sq. yd i.e. Rs.34,61,50,000/- Money already given Rs.3,00,00,000/- Balance to be given by 20.1.10 Rs.31,61,50,000/- Re-purchase agreed after 2years 43000 sq.yd @ Rs.25000/- per sq.yd i.e. Rs.107,50,00,000/- SPAN FUNDING Total Plots tobe taken 43000 sq.yds @ Rs. 11538.50 per sq.yd i.e. Rs.49,61,55,500.00 Funds Already given A ..Rs. 1.00 Or B .. Rs. 12.00 Cr B+ .. Rs.3.00 Cr (To be given) Cost of plot per sq.yd re-worked after giving adjustment of B and B+ is Rs.34,61,55,500/- divided by 43000 which is Rs.8050.127 (roundabout figure of Rs.8050 per sq.yd) After above adjustments, 43000 sq.yd @ Rs.8050/- per sq.yd i.e. Total Plots to be taken by Span Rs.34,61,50,000/- Money already given Rs.1,00,00,000/- Balance tobe given by 20.1.10 Rs .33,61,50,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B portion. Further this mail shows that about Rs. 17.5 crores is the B+ portion of the total 'consideration' which is yet to be given. The reference to the part of money to be given (for which adjustment in the 'sale price' has been made) by the words B+ shows an extended portion of B only. It is therefore evident from the above calculations that the declared amounts of 'considerations' to be reflected in the above agreements will be adjusted to show only A part and other amounts which are still to be given and not the B and B+ part. The concealment of B and B+ part of the 'consideration' clearly corroborate the above mentioned email of Sh. Anupam Nagalia to Sh. Anil Bhalla highlighting the understanding of the deal with the Consortium, wherein cheque portion of the deal is Rs. 100 crores out of total deal size of Rs. 150 crores. It is worthwhile to mention that the above understanding of funding and the modus operandi was then executed between the parties. This is evident from the seized documents evidencing the Agreement for sale between Vatika group and these lender groups. These documents have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,00,00,000/- Total 27,50,00,000/- 17,50,00,000/ 45,00,00,000 59. Aggrieved with the addition of Rs.45 Cr., the assessee filed appeal before the ld. CIT(A). 60. The ld. CIT(A) deleted the addition on the grounds that these emails do not patently show any agreement or discernible consent arrived at between the buyer and the seller regarding the actual area to be purchased or the rate per yard. These emails seem to be in the nature of proposals relating to a planned purchase transaction. The figures are different in the different emails, thus indicating that the emails are more in the nature of discussions. The actual entities from the purchaser group is not identified also in these emails. 61. The ld. CIT(A) considered the transaction with Scorpio Research Consultants Pvt. Ltd. (a UK paints group concern) as an illustration, the contents of the emails can be summarized in the table below: Sl. No. - As per Agreement to Sale As per email dated 02.01.2010 from Anupam Nagalia to Anil Bhalla As per email dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese sums are unaccounted consideration paid in respect of the Agreements to Sale. The ld. CIT(A) also held that no statement has also been recorded u/s 132(4A) or 132(1A) of the Income Tax Act, 1961 on these seized emails. 63. The ld. CIT(A) also held that in the absence of any seized material conclusively showing that the B and B+ amounts were actually paid or that any such sums were adjusted against the sale consideration, it has also to be examined if the proposals contained in the emails are actually in respect of the Agreement to Sale entered into with Scorpio Research Consultants Pvt. Ltd. on 20.01.2010. It would be noticed from the table at para 4.1.7 above that the consideration amounts mentioned in the Agreement to Sale does-;not quite match with the consideration figures in the emails (after excluding the B and B+ sums). Moreover, it would be seen that the mainstay of the A.O. s finding is that the recorded sale rate of Rs.8,050/- per sq yd is similar to the sale value that would be computed after, excluding B and B+ amounts, but including the A amount. In the case of Scorpio Research Consultants Pvt. Ltd., this means that the final sale consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h less any notice of enquiry or a show cause notice was issued to the appellant requiring it to show cause why the addition of a sum of Rs. 45,00,00,000/-, as has been made in the assessment order, being made. Therefore the addition suffers from a basic legal infirmity, inasmuch as that the appellant had not been provided any opportunity. The appellant relied on certain case laws in support of its contention that an order made in violation of principle of natural justice is a nullity in the eyes of law. It was argued that there was no basis of the conclusion that the agreed consideration was Rs. 105 crores, but actual deal size was of Rs. 150 crores. Neither the assessee nor the parties to the agreements have confirmed that finally agreed sale price was actually in excess of the amount of Rs. 8,140 per sq. yard as recorded in the agreement for sale. 68. We have considered rival submissions and perused materials on record. From the observations of the Assessing Officer in the assessment order, it is clearly evident, relying upon certain email communications between some persons related to the assessee company and other entities, the Assessing Officer has concluded that in additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not find any reason to interfere with the decision of learned Commissioner (Appeals) on this ground. ITA No. 3712/Del/ 2017 : A.Y. 2013-14 Addition u/s 69A: 71. During the course of search on 16.01.2013, cash of Rs. 3,42,93,000/- has been found from the office premises of appellant. The A.O. held that a sum of Rs. 32,93,000/- is explained and the remaining sum of Rs. 3,10,00,000/- has been treated as unexplained and addition has been made u/s 69A of the Income Tax Act, 1961. 72. The assessee submitted that this sum of Rs. 3.10 crores has been received by the appellant as in advance on 15.01.2015 against booking of property by 9 persons. The appellant submitted that these advances were received one day prior to the date of the search and therefore not entered into books of accounts of the assessee company on the day of the search. It was submitted that in the absence of booking forms provided by the Sales Department, these sums were yet to be entered in the books before the date of search. Subsequently allotment letters has also been issued in respect of 9 persons, the names and the amounts received are as under: Sl. No. Name/PAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te with documentary evidence whether the sum of Rs. 5 lakh withdrawn in the month of November 2012 was actually lying with him. Sh. Chhote Lal Statement of another party Chhote Lai S/o Lai Krishan is also being referred for analysis. From the statement of the party it is observed that the party is neither carrying his PAN Card or ITR nor remembers the PAN Card no. Further, the source of investment is explained as compensation money received on acquisition of his agricultural land.Further, when be was asked to explain the date of withdrawals he was not able to recall the same. Analysis of the bank statement of the party shows that the credit balance in the account of the party on 27.12.2012 was Rs. 1,50,052/-. The party has not furnished his bank statement for January 2013 onwards. Hence, the creditworthiness of the party could not be established. Further, it is important to note that the party was not having his copy of application form or allotment letter/receipt of the payment made it was submitted by him that it will be furnished later. But no such submission was made. Another interesting fact is that which emerges is that the party having the annual source of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cceptable as assessee has claimed to have made bookings made on 15.01.2013 that is just a day before search on 16.01.2013 but no copy of booking forms received from the above mentioned customers or the copy of receipt given to them could be seized or found on the date of search. Considering the fact that the assessee was given repeated opportunities during post search investigation to file the submissions and explanations regarding the cash found and seized from his premises but no reasonable explanation could be furnished by the assessee, the AO treated the amount of Rs.3.10 Cr. u/s 69A of the Income Tax Act, 1961. 75. The addition made by the AO has been confirmed by the ld. CIT(A) on the grounds that reasons given by the A.O. while rejecting the same has been elaborately brought out in the assessment Order and the AO has found that the explanation for the sum of Rs.3.10 crores as unsatisfactory. The ld. CIT(A) held that the onus is on the appellant not only provide a prima facie satisfactory explanation but also to lead evidence in support of its claim. 76. Heard the arguments of both the parties and perused the material available on record. 77. Having considered rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer, the assessee could be able to produce 4 persons. As it appears, the Assessing Officer has not made any effort to ensure the attendance of the other 5 persons. The Assessing Officer has been conferred with adequate power under the statute to not only conduct necessary inquiry, but even enforce attendance of witness. In the facts of the present appeal, the Assessing Officer has failed to exercise such statutory power. 78. On the other hand, he has put the entire burden on the assessee to prove the source of cash seized. When the assessee has furnished explanation regarding the source of cash seized, the Assessing Officer was duty-bound to make proper inquiry to take the issue to its logical end. Since, the departmental authorities have failed to undertake necessary inquiry to ascertain the veracity of assessee s claim regarding source of cash seized, the assessee cannot be faulted for not providing the required details and proving the source, identity of the persons from whom the amount has been received on account of advance bookings of the plots. The onus having been discharged by the assessee, it was for the revenue to disprove the contentions of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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