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TMI Blog2024 (5) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the ITAT declined to interfere with the order of CIT(A) in deleting the addition. We may allude to the order of ITAT, wherein, while affirming the deletion of additions carried out by CIT(A) towards unexplained share application money under Section 68 held that CIT (A) has duly satisfied himself as the assessee and the parties could provide documents relating to identity, genuineness and creditworthiness of the amounts received along with confirmations, address, cheque number and PAN. Hence, we decline to interfere with the order of the ld. CIT (A). Finance received from M/s Arha Buildcon Pvt. Ltd., the ITAT, in our view, has correctly delved into the facts to come to the conclusion that there have been direct finance arrangements between M/s Arha Buildcon Pvt. Ltd. and the respondent-assessee. ITAT had rendered a finding of fact with respect to the statement and held it to be factually incorrect observing that the bank statement of the assessee reflects the amounts received and paid with regard to M/s Arha Buildcon Pvt. Ltd. Receipt from each of 48 flats concerning Bhagwanti CGHS ITAT has made a categorical finding that the addition was made on theoretical premise on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,86,000/- by M/s Sargam Estate Pvt. Ltd. Instead of enquiring, the source of application money, the AO brought to tax the amount of share application money refunded to the assessee by M/s Sargam Estate Pvt. Ltd. Hence, the addition made has been rightly deleted by the ld. CIT (A). Unexplained advertisement expenditure , ITAT again concurred with the findings rendered by the CIT(A) in deleting the additions as the total expenditure debited on account of advertisement was Rs. 3.19 Cr. as against Rs. 2.85 Cr. alleged by the Assessing Officer. Undisclosed investment in the stock of jewellery ITAT held that since there is a panchnama drawn in the case of M/s GTM Jewellery Mart Pvt. Ltd., stock inventory was made in the said company and keeping in view the fact that M/s GTM Jewellery Mart Pvt. Ltd. is a separate assessable entity, keeping in view the fact that the difference is due to difference in price but not in quantity, we hold that the addition cannot be made in the hands of the assessee in the instant year. Thus ITAT has minutely examined and marshaled the facts. It cannot be gainsaid that the proposed substantial questions of law are merely based on the findings of fact by the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition on account of bogus share capital to Rs. 3,34,50,000/-. 6. However, the Revenue and the respondent-assessee both preferred their respective appeals before the ITAT against the order of the CIT(A). Vide order dated 04.02.2021, the ITAT deleted the additions made by the AO in entirety. 7. The Revenue, therefore, has preferred the instant appeals and has proposed the following substantial questions of law for our consideration:- A. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon'ble ITAT is justified in deleting the addition on account of bogus share application money without considering the facts on record, the overwhelming material gathered by the Assessing Officer, admission of the Director Sh. Tushar Kumar regarding receipt of the accommodation entries by the Respondent and the chronic failure of the assessee to establish the genuineness and creditworthiness of the alleged share applicants? B. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon'ble ITAT is justified in holding the share application money received from M/s Arha Buildcon Pvt. Ltd. was genuine, in view of the field enquirie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, the ITAT declined to interfere with the order of CIT(A) in deleting the addition of Rs. 2 crores. 14. In this context, we may allude to the order of ITAT, wherein, in paragraph no. 23, while affirming the deletion of additions carried out by CIT(A) towards unexplained share application money under Section 68 of the Act, it has been held as under:- 20. We have gone through the statement and also the ledger account and the bank accounts of the various parties from whom the amounts have been received. In the case of the Bic Consultants Pvt. Ltd. while the amount of Rs. 7 lacs has been received on 31.12.2005, the same has been refunded on 17.11.2007. In the case of Chinpurni Credit Leasing Pvt. Ltd., the amount received was Rs. 15 lacs on 02.01.2006, the amount repaid on 15.09.2006 was to the tune of Rs. 12.5 lacs and Rs. 2.5 lacs on 19.09.2006. In the case of CVH Sea Life Ltd., the amount received has been refunded by 24.09.2007. Similarly, in the case of E-Dynamics Solution Pvt. Ltd., the amount of Rs. 5 lacs which was received on 03.01.2006 has been refunded on 19.09.2006. In the case of Enpol Pvt. Ltd., out of the amount received of Rs. 15 lacs an amount of Rs. 7 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aph no. 52, wherein, it was held that the details of payments and receipts with respect to M/s Arha Buildcon Pvt. Ltd. were not furnished by the assessee, is culled out as under:- the assessee was not above to provide any details of cheques that was issued by the assessee and how many of these cheques have actually not been presented for payment or whether any real payments were ever made . 17. The ITAT had rendered a finding of fact with respect to the above statement and held it to be factually incorrect observing that the bank statement of the assessee reflects the amounts received and paid with regard to M/s Arha Buildcon Pvt. Ltd. The relevant extract from the order of the ITAT reads as under:- M/s Arha Buildcon Pvt. Ltd. 18. The assessee has received amounts varying from Rs. 5 lacs to Rs. 67 lacs from various periods from 07.12.2005 to 25.02.2006 and an amounts have been refunded from 27.04.2006 to 19.05.2006 of amounts varying from Rs. 5 lacs to 30 lacs. There has been an agreement between Arha Buildcon and the assessee regarding booking of 60 flats in the project GTM Forest at Dehradun. This shows that there have been direct finance arrangements between the M/s Arha Buildco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a separate legal entity and is a registered society under the Haryana cooperative society Act. The scope of its activities, objectives is governed by its Memorandum and Articles of the association and nothing else. The society takes its decisions through its governing body which are given such powers through General Body. It is also to be noted that all the legal, financial documents relating to the society, the minutes of its meetings, its members, its accounts etc. are kept with the society and no one else. The mere fact that some of the documents information pertaining to its members were found at the premises of Mr. Tushar Kumar/GTM did not make it a concern of Mr. Tushar Kumar/GTM. From the above it is clear that the society is an independent legal entity and is not a benami concern of Mr. Tushar Kumar/GTM. 32. Adverting to the evidences as to whether the assessee has received Rs. 4 lacs from each of 48 flats. We do not find any such reference or evidence gathered, collected or investigated by the revenue. The addition made was on theoretical premise on the basis of presumptions. Even the statement recorded from the members of the society did not point to any amount paid to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration. 23. Accordingly, the appeals stand dismissed and are disposed of alongwith the pending application(s), if any. ITA 11/2022 and ITA 12/2022 1. These appeals are filed at the instance of the Revenue, against the order of the ITAT dated 10.02.2021, whereby, appeal of the revenue being ITA No. 3783/Del/2010 was dismissed and appeal of the assessee being ITA No. 3578/Del/2010 was allowed for AY 2007-08. 2. On account of similitude of facts and legal questions, both the appeals are being decided by this common judgment. 3. For the relevant AY, an assessment order came to be passed on 31.12.2008, whereby, the AO made the following additions:- a. Addition of Rs. 6,84,50,134/- on account of the cash component of the consideration paid by the respondent-assessee for the GTM Forest and Hills Project, Dehradun. b. Addition of Rs. 90,34,300/- on account of cash component of the consideration paid by the respondent-assessee for the GTM Kashipur-II project. c. Addition of Rs. 1,25,00,000/- was made in the hands of the respondent-assessee on substantive basis on account of investigation material which revealed that Tushar Kumar had received cash amounting to Rs. 1,25,00,000/- on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was purchased by M/s Sargam Estates Pvt. Ltd. the cheque payments were made by the assessee company on its behalf and this fact was later confirmed from the fact that M/s Sargam Estates was acquired by the assessee company? C. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon'ble ITAT is justified in deleting the addition of Rs. 1,25,00,000/- towards undisclosed cash receipts on sale of flats ignoring the documents seized during search in GTM Group and impounded survey u/s 133A in Haryana Citizen Co-operative Housing Society also ignoring the provisions of section 132 (4A) and 292-C of the Income Tax Act? D. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon'ble ITAT is justified in deleting the undisclosed expenditure of Rs. 1,80,00,000/- for acquiring certain rights in wings CGHS Ltd. ignoring the provisions of Section 132 (4A) and 292-C of the Income Tax Act? E. Whether on facts and in the circumstances of the case and also on the prevailing law, Hon'ble ITAT is justified in holding that the addition of Rs. 4,27,22,971/- on account of unaccounted stock of jewellery cannot be made in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion between the respondent-assessee and the Haryana CGHS. It is submitted that ITAT s finding that there is no link between the Haryana CGHS and the respondent-assessee is contrary to the record that documents like application forms, correspondence between members and society, letterheads, copies of cheques paid by the members were found in the possession of the respondent-assessee. 11. Fourthly, the Revenue has assailed the finding of the ITAT on the ground that the deletion of Rs. 1,80,00,000/- on account of the consideration paid by the respondent-assessee to one Ajay Jain for taking control over Wings CGHS is totally erroneous. It is submitted that the ITAT has failed to appreciate that ownership of a co-operative society cannot be transferred as such and therefore, the respondent-assessee had devised an MoU with Ajay Jain for taking control over Wings CGHS. 12. Fifthly, it was canvassed before us that the ITAT erred in confirming the CIT(A)'s deletion of Rs. 34,78,000/- made on account of unexplained investment in the shares of M/s. Sargam Estate Pvt. Ltd. It was submitted that neither the CIT(A) nor the ITAT considered that during assessment proceedings, the respondent-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been paid in cash. Had Rs. 3.01 Cr. been paid in cash, the total cost of purchase paid in cheque as per the four sale deed should be Rs. 17,47,71,637/- whereas in reality the total amount of Rs. 20,30,27,000/- has been paid in cheque. Hence, there is no scope to treat the amount as paid in cash to be brought under unexplained investment u/s 69. Regarding the addition made by the AO of Rs. 3,84,00,000/-, we find no material to come to such a conclusion. The AO has merely subtracted the amount of Rs. 27,14,20,134/- mentioned in the seized material which are the estimates of cost of lands and cost of sale value area, average rate, car parking and mall from Rs. 20,30,27,000/- paid by the assessee in cheque to the farmers for purchase of the land. There was no material to corroborate such an addition, the Assessing Officer merely went back the Annexure A 21 page no. 1 to make such addition. Hence, the action of the Assessing Officer cannot be supported. The appeal of the assessee on this ground is allowed and appeal of the revenue is dismissed. 18. With respect to the second contention relating to the addition made by the AO on account of unexplained investment in Kashipur land for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee company or to the Director of the assessee company. Even the cheque entries were not proved to be encashed in the bank account of the assessee or the Director. The presence of share certificate, application forms and correspondence at the premises of Shri Tushar Kumar and Shri Mohan Vohra swerved the Assessing Officer to make the addition. The society clearly submitted before the AO that he was neither a member nor office bearer of the society. He was a work supervisor for few contractors of HCC GHS and also to other societies. No link with the society has been found as per the statement of the society. The allegation of the revenue that the HCCGH society is a benami of the assessee company cannot be held to be a valid statement as the society is a separate distinct entity and registered with Registrar of Cooperative Societies, Chandigarh. There was no proof that the society has given money in cash to the company or is Director. In the absence of any material depicting or indicating payment of cash to the assessee, no addition is called for. Hence, we decline to interfere with the order of the ld. CIT (A) on this ground. The appeal of the revenue on this ground is dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of share application money refunded to the assessee by M/s Sargam Estate Pvt. Ltd. Hence, the addition made has been rightly deleted by the ld. CIT (A). 25. With regard to the sixth contention relating to the CIT(A)'s deletion of Rs. 34,65,559/- made on account of unexplained advertisement expenditure, the ITAT, after perusing the facts, again concurred with the findings rendered by the CIT(A) in deleting the additions and held as follows: 45. The ld. CIT (A) deleted the addition on the grounds that all the expenses on account of advertisement have been made by account payee cheques and duly recorded in the books of account maintained by the assessee. No cash payment has been made on this account. Relevant copies of account in this regard were produced. In the profit and loss account, the total debit of Jewellery division is Rs. 2,85,12,704/- besides in the builders divisions there is a advertisement expenditure of Rs. 3,92,29,402/- as per schedule 19 under the head Direct Expenses (Schedule 19) which has been ignored by the Assessing Officer. 46. The ld. CIT (A) further held that the expenditure on advertisement was debited in two division of jewellery and building a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut two distinct entities M/s GTM Jewellery Mart Pvt. Ltd. and M/s GTM Builders Promoters Pvt. Ltd. 9. There has not been any quantitative difference between the book stock and the physical stock in comparison with the items. 10. The difference in the value is only because of the different price taken by the valuer, the pricing existing on the date of search instead of historical cost of the goods. 11. Further, the labour charges have been added up twice in certain instances while computing the aggregate value. 12. The revenue could not repudiate the quantities tallying with the book stock during the search or even during the assessment proceedings. Reliance is being placed in the judgment of Hon ble Supreme Court in the case of CIT Vs Hindustan Zinc Ltd. 291 ITR 391. 13. The Assessing Officer also acknowledges that a separate company by the name of M/s GTM Jewellery Mart Pvt. Ltd. has been found from 26.07.2006. 14. The addition made was based on the statement of the Director of that company Shri Gautam Kumar wherein due cognizance was taken of the factum of the separation of jewellery business from that of the assessee business of building activity. 15. The panchanama of the copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2021, whereby, appeal of the Revenue being ITA No. 3780/Del/2010 is dismissed for AY 2007-08. 2. The respondent-assessee is a Director of GTM Builders and Promoters Pvt. Ltd. An assessment order dated 30.12.2008 came to be passed qua the respondent-assessee, whereby, the AO made additions on account of the following heads:- a) An addition of Rs. 12,04,311/- was made on account of the respondent-assessee's failure to explain the nature of credits in its bank accounts. b) An addition of Rs. 1,25,00,000/- was made in the hands of the respondent-assessee on substantive basis on account of investigation material which revealed that Tushar Kumar had received cash amounting to Rs. 1,25,00,000/- on account of Haryana CGHS. c) An addition of Rs. 1,80,00,000/- on account of the consideration paid by the respondent-assessee to one Ajay Jain for taking control over the housing society namely, Wings CGHS. 3. Resultantly, the assessed income shot up to Rs. 3,56,55,811. 4. Aggrieved by the order passed by the AO, the respondent-assessee preferred an appeal before the CIT(A). Vide order dated 28.05.2010, the CIT(A) allowed the respondent-assessee's appeal and deleted the additions made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being ITA No. 3782/Del/2010 is dismissed for AY 2007-08. 2. During the course of search on GTM Group of companies, certain documents relating to the respondent-assessee company were found and seized. Return of income was filed by the respondent-assessee declaring nil income. Proceedings under Section 153A of the Act were initiated against the respondent-assessee for AY 2007-08. Vide assessment order dated 30.12.2008, the AO made additions on protective basis on the ground that substantial additions were made in the hands of GTM Builders and Promoters Pvt. Ltd. on account of the following:- a. Addition of Rs. 6,84,50,134/- being income from undisclosed sources for purchase of land at Dehradun. b. Addition of Rs. 90,34,300/- being income from undisclosed sources for purchase of land at Kashipur. 3. Resultantly, the assessed income shot up to Rs. 7,74,84,430/- on protective basis. 4. Aggrieved by the order passed by the AO, the respondent-assessee preferred an appeal before the CIT(A). Vide order dated 28.05.2010, the CIT(A) partly allowed the respondent-assessee's appeal by upholding only the following addition and deleteing the rest of the additions: i. Addition to the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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