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TMI Blog2024 (7) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... uce Company Ltd [ 1971 (9) TMI 64 - SUPREME COURT] that addition by ignoring the retracted statement without considering material brought on record during assessment proceedings, the action of Ld. AO cannot be held justifiable. CIT(A) on the issue of unaccounted business receipts have taken a note that since the amount of Rs. 7.00 Crores is part of sales proceeds of the assessee and due taxes have already been paid, thus, the utilization of such amount for making payment / investment with SBIL group as per MOU, taxing the impugned amount again as unaccounted income would lead to double taxation which is against the settled principle of law as laid down under various judicial pronouncements. CIT(A) also deliberated on the issue of incomplete books of assessee as examined and observed that the cash found from the office premises and residence of the assessee during the search was duly reconciled with the completed books of accounts, such facts were submitted before the Ld. AO also, who accepted the same and on such position of cash balance no negative inference was drawn. The cash sales of the assessee was also supported by the GST returns thus cannot be termed as an afterthought. Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of incriminating material, acceptance of retraction by the key person of the assessee - Conclusions of the Ld AO are incomprehensible, wherein he is blowing hot and cold together as per convenience to enforce the additions, brushing aside all the substantial evidence (GST returns, sale bills, branch sale records, transactions in bank statements etc.) without depicting any cogent reason to suspect the same. Ld. AO kept himself confined up to the words stated in the statement u/s 132(4), without adverting to the retractions afterwards, whereas he was under abundant obligation to consider all the relevant facts, evidence / documents placed during the post search proceedings or during the assessment proceedings, so as to check the veracity of such statements before reaching at any logical conclusion. It is the trite law that the statement alone cannot, on a standalone basis, constitute incriminating material to empower the Assessing Officer (AO) to frame an assessment under Section 153A. Under such facts and circumstances, we are unable to persuade ourselves to subscribe to the findings of the Ld AO, wherein he attempted to contradict with the explanations and facts furnished by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional grounds raised therein. To this effect, written applications have been submitted by the Ld. AR for our consideration, which are extracted as under: 4. Apropos, aforesaid requests of the assessee refraining themselves from pressing of grounds of cross objection and additional ground thereto, when confronted to Ld. CIT DR, he did not raise any objection. Considering the request of the assessee and no resistance by the department, the permission was granted as requested. Accordingly, the grounds of cross objection and additional ground thereto are dismissed as not pressed. Resultantly, CO Nos. 5, 6 7/RPR/2023 filed by the aforesaid assessee s, are dismissed as not pressed. 5. Adverting to the adjudication of appeals of the revenue, which are observed to be assailed for common, identical and interconnected controversies involved, therefore, to deliberate upon such analogous issues, we are taking the case of M/s Brandavan Food Products in ITA No. 82/RPR/2023, as the lead case and our decision in the said case shall apply, mutatis mutandis in the remaining two matters. 6. The facts of the case, which are elaborately explained by the Ld. CIT(A) in his order and again reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh in hand balance of Rs. 8.72 crores as on date of search 10.10.2019 without deducting payments of Rs. 7 crores made to SBIL during the month of August and September, 2019. Likewise, M/s RKAAHPL have cash in hand balance of Rs. 35.01 as on 10.10.2019 without deducting payments of Rs. 33 crores made to SBIL during the month of August and September, 2019. Further, he claimed that he is managing partner in the appellant firm and the remaining amount of Rs. 20 crores paid to SBIL by him as he is a person of high networth and regular filer of return of income. Total income of Rs. 12 crores has been shown in the return of income filed for A.Y. and as a person of resources and in order to meet the obligation, he made cash payment of Rs. 20 crore to M/s .SBIL. He further submitted that after reconciliation of records, he would be able to tell about the exact nature and source of the cash investment of Rs. 20 crore and however, the above amount would be offered for taxation either in his or firm's hand. He, in addition to earlier submission dated 20.02.2020, further submitted before the ADIT(Inv)-2, Goa vide letter dated 20.03.2020 that since he is an individual person and is not maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following reasons (para 10 of the assessment order):- 10. Conclusion The submission made by the assessee cannot be accepted on the following grounds: - (1) As per tally data of the group companies which was seized during the course of search proceedings at the office premises of RK Associates Group shows that the cash balance as on 10.10.2019 in the two group entities as under: Brandavan Food Products Rs. 7,79,31,476/- RK Associates and Hoteliers Pvt Ltd Rs. 30,88,71,831/- In the tally data the amount of cash balance is shown as above. In the tally data or in the books of accounts the payments of Rs. 60 crore has not been entered. That the payment of Rs. 60 crore was not entered in the books of accounts and also the availability of the cash balance of Rs. 30.88 crore signifies that there was no payment made from the regular books of accounts and the amount paid was unaccounted. (2) The total agreed price of the resort, as stated by Shri Saurabh Gupta was Rs. 140 Crores for the incomplete hotel project, out of which Rs. 60 Crores was paid in cash in September 2019 whereas an amount of Rs. 50 Crores was paid through banking channels. The relevant portion of the statement is repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project and RK Associates group agreed to SBTIL construction the project for Rs. 140 crores and the agreed deal was thus for Rs. 140 crores. It was decided the entire interiors will be done by RK Associates group after bringing in a suitable brand. Because of this only the sale deed was forecasted to be registered today and cash amount of Rs. 60 crores was paid upfront by RK Associates group. These transactions have been recorded by me in the page no 17 shown by you. I have been made aware of entire negotiation and the transaction and I am also aware of the amount and mode of payment of the agreed consideration, an amount of Rs. 60 crores was agreed to be paid in cash and has been paid by RK Associates group in cash. I came to know about the cash transaction telephonically by both parties. However I am not aware as to how the payment was actually made. However, I can confirm that this amount has been paid based on the information received by me and it is after all the payments having been made that the sale deed was supposed to be signed today, for which I had travelled to Goa along with Mr. Rahul Agrawal and Mr. Sharan Bihari Agrawal The statement of Saurabh Gupta is reinforced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be kept aside, later he retracted from statement with the explanation that he misunderstood the meaning of these terms. In fact, he stated that it was surplus cash and not the suppressed sales. Ans: Sir, I have approximately 400 Crores turnover combined in bath M/s Brandavan Food Products and RK Associates and Hoteliers Pvt Ltd. Out of the total turnover approximately 50 to 55% of my receipts are in cash and the remaining is through banking channels. I operate restaurants of approximately 20 units in the name of Comesum in main stations like Nizamuddin, Agra, Mathurs Gwalior Jhansi etc. The receipts from these restaurants and through catering in super-fast trains are mainly in cash. The cash generated in these places are made into cash packets and given at panty as the train when we operate. For ex Samta Express runs though Nizamuddin to Vizag. The restaurants operated by us in this route give thin cash packet to the pantry manager in the train who is our employee. Such manager delivers the packet to our office at 17, Okhla Phase l, new Delhi. Each day the total cash collected at our office is entered in books. It is at this point I had instructed to suppress these cash receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In the case of the assessee there are incriminating documents seized during the course of search which shows that the amount of Rs .60 crore was paid in cash out of unaccounted business income. That the amount of Rs. 60 crore was paid in cash was also confirm by the statement of Shri Saurabh Gupta. Further the tally data seized during the course of search shows that the payment made in cash has not been entered in the books of accounts till the date of search, although the payment of Rs .60 crore was made in cash in the month of September itself. (6) The tally data of the group companies was seized during the course of search proceedings at the office premises of R K Associates Group which shows that the cash balance as on 10.10.2019 in the two group entities as under: Brandavan Food Products Rs. 7,79,31,476/- RK Associates and Hoteliers Pvt Ltd Rs. 30,88,71,831/- Contrary to the above balances as appearing in the tally data as on 10.10.2019 it is an admitted fact admitted by Rahul Agrawal as well as Vishal Saxena and Sameer Biyani that the cash had exchanged hands in the month of September 2019. Therefore, stating that the cash paid to SBTIL was out of the cash balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounted business income, the assessee preferred an appeal before the Ld. CIT(A), wherein various issues raised were discussed at length. The legal contentions raised by the assessee before the first appellate authority, objecting to the validity of assessment order passed u/s 143(3) has been deliberated upon by the Ld CIT(A), while deciding on the following grounds of appeal: 3.1 Ground No. 1, 3, 3.1 to 3.2: - Through these grounds of appeal, the appellant has challenged validity of assessment order passed u/s 143(3) on the following grounds: - (i) The order passed u/s 143(3) being bad in law and as well as on the facts, deserves to be quashed. (ii) Assessment order u/s 143(3) has been passed without affording opportunity of being heard and without issuing show cause notice. (iii) The conclusion arrived at by the AO was only on the basis of whims and fancies. The addition has been made in absence of any incriminating material supporting the conclusion of the AO and sole basis of the addition was statement recorded u/s 132(4). (iv) No specific deficiency in the audited books of account has been pointed out and addition has been made without rejecting books of account u/s 145(3). 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payment of Rs. 7 crores which was duly explained with the support of documentary evidences submitted vide submission dated 26.08.2021. However, the AO did not ask for further explanation rejecting the contents of the submission and passed order on 29.09.2021, after the lapse of more than one month from the date of last submission without issuing a show cause notice for not accepting the submission of the appellant. The action of the AO was against the instruction of CBDT and various judicial pronouncements. The appellant has placed reliance upon CBDT's instruction no 20/2015 dated 29.12.2015 and on several judicial pronouncements like SAS Fininvest LLP, WP(c) No 5087/2021 (Delhi HO, Modi care Foundation WP(c) No 5535/2021 (Delhi HC), Saawariya Impex Pvt Ltd WP(c) 5196/2021 (Delhi HC) and submitted that there was requirement to issue show cause notice duly indicating the reasons for proposed additions so as not to violate the principles of natural justice. I have found from the appellants reply dated 26.08.2021 that the appellant has clarified before the AO that there was no suppression of sales and the sales of the appellant was in accordance with the GST returns. The AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce upon various judgments such as Anand Kumar Jain (2021) SCC Online (Del) 3174, Harjeev Aggarwal ITA No 8/2004 (Del HC), Best Infrastructure Pvt Ltd 397 ITR 182 (Del HC) and Mantri Share Brokers ITA No 502/2011 (Raj HC). The appellant has further submitted that statement recorded u/s 132(4) cannot be the sole basis for making addition to the total income. For this, the appellant has placed reliance upon various decisions such as Kailashben Manharlal Choksi (2010) 328 ITR 411 (Guj), Anand Kumar Jain (2021) SCC Online (Del) 3174, Narendra Garg and Ashok Garg ITA No 1531 to 1532/2007 (Guj), , Dilbag Rai Arora ITA No. 304/2009 (All), Smt Jaya Laxmi Ammal (2017) 390 ITR 189 (Mad), S. Kadar Khan Sons (2008) 300 ITR 15 (Mad). The appellant has also placed reliance upon CBDT Circular F. No 286/2003 dated 10.03.2003 wherein, it has been emphasized that focus should be on collecting credible evidences, not on the confession of undisclosed income. In view of the above, the appellant submitted that his statement is not based upon any evidence found during the course of search and seizure proceedings and therefore, the statement cannot be categorized as incriminating material. Accordingly, thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, at room no 412 of Hotel Fortune Miramar, Goa, occupied by Shri Sourabh Gupta, certain records were found maintained in laptop in form of excel sheet titled 'payment' in the folder 'Wydham, Goa' wherein, following details relating to purchase of under -construction hotel by group from SBIL group were found: Date Occasion Towards Value Instrument 18- July TS signing Part payment of sale deed value 3 DD 27-Aug Advance 1 20-Sep In Delhi 60 07-Oct Interbank transfer 43 10-Oct Sale deed Sale of land + building 10-Oct ATS for movable assets 0.11 107.11 In his statement Shri Saurabh Gupta explained the above payment made by RKA group persons to SBIL group persons. He stated that this record had been maintained as per information gathered from the two parties i.e. seller and purchaser. He also confirmed that the total deal was finalized at Rs. 140 crores between RKA group and SBIL group for the purchase of under construction hotel. On the basis of this incriminating material, statement of Shri Rahul Agrawal, the key person of RKA group, was also recorded u/s132(4), wherein, he admitted that amount of Rs. 60 crores was paid in cash to SBIL group and same was paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awal during statement proceedings u/s 132(4). It has been held by Hon'ble Supreme Court and other courts that it is open to the assessee so that the admission made in the statement was not correct. The decision of Hon'ble Supreme Court in the case of Pullangode Rubber Produce Company Limited 91 ITR 18 (SC), Nagubai Amal vs B Sharma Rat) AIR 1956 (SC) 593 and Awad Kishore Dass AIR 1979 (SC) 861 are squarely applicable to the case of the appellant. Therefore, making addition ignoring the retracted statement of Shri Rahul Agrawal and without considering material brought on record during assessment proceedings, the action of the AO cannot be held justifiable. Considering the above discussion, the contentions of the appellant are found partly acceptable. d. Regarding the contention of the appellant that no specific defect has been pointed out by the AO and books of account have not been rejected u/s 145(3) of the Act while making addition on account of suppression of sales/business income, the appellant has submitted that the AO has not countered the evidences/explanation furnished by the appellant before treating the recorded amount of payments to SBIL, out of cash generated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in the books of account of the appellant While rejecting the explanation offered by the appellant for the reasons mentioned in the assessment order, the AO has not accepted the retraction from the statement by Shri Rahul Agrawal, MOU presented subsequent to search and completed books of account. On consideration of submission made before me as well as before the AO, it has been found that during search and seizure proceedings, Shri Rahul Agrawal stated that cash payment to SBIL was out of suppressed sales of the appellant and M/s RKAAHPL, but at the same time no material evidencing suppression of sales by any of the group concern including the appellant has been found during the search and seizure proceedings. Subsequently, Shri Rahul Agrawal also retracted from his statement stating that the cash payments were made out of surplus sales. The retraction made by Shri Rahul Agrawal is found to be backed by completed books of account, wherein, sufficient cash balances in form of opening cash balance of Rs. 63.94 lakhs and cash sales on various dates were available on the dates of payments. The opening balance and sales recorded in the books of account have not been disputed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial statements of the appellant. 3.3. That the Ld. AO has erred in objectively rejecting the submissions of the appellant without going into the merits of the detailed explanations, evidences and judicial pronouncements placed on record by the appellant. 10. While deliberating upon the aforesaid grounds on merit, considering the submissions of the assessee a/w the material available, Ld. CIT(A) had observed that the contentions raised by the assessee are worth accepting, and deserves to be concurred with, accordingly, he decided to delete the addition of Rs. 7.00 crores imposed by the Ld. AO. The contentions of the assessee are exhaustively dealt with by the Ld. CIT(A), the relevant observations being of vital importance for interpreting the issues in the present case, are extracted as under: 3.2.2 I have considered the facts of the case, material evidences on record, written submission filed by appellant and to the facts and findings of the AO inter alia material brought on record. After considering the facts of the case and submission of the appellant, the AO made addition of unaccounted business income of Rs. 7 crores on the following grounds:- (i) During the course of search an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of search stating that he mis-understood the meaning of suppressed sales and the cash paid was actually made out of surplus cash. The AO treated this retraction as an afterthought. (viii) MOU entered into between M/s Pacifica and the appellant, BFP and SCPL was not disclosed during search or post search proceedings. Therefore, this MOU was an afterthought arrangement to avoid the tax liability. In view of the above findings, the AO treated entire cash payment of Rs. 60 crores as unaccounted business income in the hands of following entities/persons in following manner (a) RKAAHPL - Rs. 33,00,00,000/- (b)M/s BFP (appellant) - Rs. 7,00,00,000/- (c) M/S Rahul Agrawal - Rs. 20,00,00,000/- Accordingly, amount of Rs. 7,00,00,000/- has been added to the total income of the appellant. 3.2.3 The appellant has submitted that it is engaged in the business of catering and operating COMESUM restaurant across various railway stations in India. The sale proceeds includes the collection in cash from various trains and restaurant and amount received from IRCTC in the bank account directly. The sales are entered in the regular books of account and being vouched and verified at various levels i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izure proceedings which also establishes that the cash as per the incomplete books had already been utilized for making payments to SBIL. In support of this contention the appellant has also submitted copy of cash inventory prepared at the time of search and seizure proceedings as per which cash of Rs. 20,55,220/- was found from the office premises and Rs. 79,45,600/- was found at the residence. The cash found has been duly reconciled with the completed books of account which were also submitted before the AO. The said position of cash balance has been accepted by the AO as no negative inference has been drawn in the assessment order. Therefore, in view of facts and evidences, it may be accepted that cash balance in the books of account was utilized for making payment to SBIL but the necessary entries in the books of account were remained to be made upto the date of search and seizure proceedings. The sales of the appellant are also supported by the GST returns which had been submitted during the course of assessment proceedings. The GST returns also support the regular generation of cash which cannot be termed as after thought. The statement of Shri Rahul Agrawal recorded on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e questioned by the AO on the basis of prudence or otherwise. The appellant has placed reliance upon decision of Hon'ble ITAT in the case of DCIT vs Deloite Haskns and Sales in ITA No 2970/Asd/2017, Hon'ble Delhi ITAT in the case of Neho Construction Ltd ITA No 3063/Del/2011. The decisions in the business interest have been taken by the appellant and MOU in this regard has been executed and terms and conditions of the same are being followed in letter and spirit. Therefore, the conclusion drawn on the issue of MOU by the AO is merely on surmise. The AO accepted the bifurcation of amount as per MOU but failed to appreciate the cash balances as have been recorded in the books of account of the appellant. During the period of search and seizure proceedings the priority was to register the property being purchased by M/S. Pacifica as the complete payment was already made, therefore, under the strenuous pressure situation Shri Rahul Agrawal could not inform the search party in respect of the MOU. The MOU was not available with Shri Rahul Agrawal or Shri Sharan Bihari Agarwal who were searched in Hotel Fortune Miramar, Goa. Therefore, MOU was presented after the search. The AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L has also been recorded on the following dates:- S. No. Date Amount 1 12.08.2019 10000000 2 31.08.2019 10000000 3 16.09.2019 10000000 4 21.09.2019 4000000 5 30.09.2019 36000000 Total 70000000 During the appellate proceedings, I have analysed the pending entries in the books of account and found that sales receipts including cash and IRCTC (through banking channels) for various dates had not been entered in the books of account. Few instances are being presented below:- Particulars Date of last entry as per seized books of account Sales as per seized books of account Date of last entry as per completed books of account Sales as per completed books of account Balance amount pending for entry Catering services (NZM- ERS) 30.06.2019 5504660 05.10.2019 8181284 2676624 Catering services (Mahabodhi Express Down) 31.08.2019 6790874 09.10.2019 9422213 2631339 Catering services (Mahabodhi Express UP) 31.08.2019 6950035 09.10.2019 8580625 1630590 Cater services (Samparkrati express down) 31.08.2019 7482413 09.10.2019 9770612 2288199 Catering services (Samparkranti Express UP) 31.08.2019 7777819 09.10.2019 10244664 2466845 Catering services (NDLS-Dibrugarh 12424) 25.07.2019 60395377 05.10.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith insignificant variation in the month of August and September, 2019:- Month Sales as per seized books of account Sales as per audited books of account Difference (2- 3) Sales as per GST Difference in audited books of account and GST return 3-5 1 2 3 4 5 6 April 104297107 105165454 (868347) 105165454 - May 148673257 149428650 (75539 ) 149428650 - June 193972844 194824990 (852146) 194824990 - Jul 100259044 101067524 808480) 101067524 - August 42856097 12656311 1 (83707014) 126563115 (4) September 3596434 117019384 (1 13422950) 1 17019385 (1) October 1st to 9th Oct - 41138704 (41138704) Total 593654782 835207816 (241553034) 794069117 (5) It has been explained that difference of appearing in the month of April to July 2019 is related to sales of Bhilai Restaurant whose books were not available in seized data. However, GST returns were filed much before the search and seizure proceedings and sales figures shown in the GST return are matching with the completed books of account. Regarding sales difference for the month of August 2019, it has been explained that train sales amounting to Rs. 8,19,64,163/-, sales amounting to Rs. 8,30,370/- of Bhilai Restaurant not available in seized da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich supports the contentions of the appellant that the payments were made out of surplus sales, not from suppression of sales. subsequent statement of Shri Rahul Agrawal has also been found to be supported by completed books of account of the above concerns and MOU dated 12.07.2019. The books of account of the appellant were incomplete on the date of search. Lateron same have been completed and pending entries have been incorporated in the books of account which is also evident from discussion made in point (i) above. I find that the retraction from the statement is backed by valid reasons and evidences. Various Hon'ble Courts have held that an assessee can correct his/her statement recorded u/s 132(4) the basis of valid reasons. The reliance is placed on following judgments:- (i) Pullangode Rubber Produce Co Ltd Vs. State of Kerala 91 ITR 18 (SC): It has been held that an admission is an extremely important piece evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect. (ii) Nagubai Ammal Vs. B. Sharma Rao AIR 1956 SC 593: It has been held an admission is not conclusive as to the truth of the matters s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e produced only at the time of search and seizure proceedings and not during the assessment proceedings. The MOU produced subsequently should have been considered by the AO when genuineness of the MOU has not been disproved. In clause 5 of the MOU, it has been mentioned that M/S. SCPL, the appellant and M/S. RKAAHPL, in addition to the consideration to be recorded in the sale deed and to be paid by M/S Pacifica, shall also pay Rs. 20 crores, Rs. 7 crores, Rs. 33 crores aggregating to Rs. 60 crores in cash to the seller for acquiring certain business rights. The AO has taken figure of Rs. 7 crores from the MOU and submission of the appellant and treated this amount as unaccounted business income. The terms and conditions mentioned in MOU have been followed by the all three investors and they have recorded amount of cash paid as investment in Goa hotel property in the books of account. During appellate proceedings, I asked appellant to submit details regarding revenue sharing as per the MOU. The appellant submitted necessary details for the AY 2022-23. On perusal of the details, it has been found that M/S Pacifica has earned revenue from its operation which has been duly shared by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early shows that the cash had been generated to through their regular business activities of railway catering and restaurant. Cash has also been received from PAN India branches which has been incorporated in the cash book. In addition to availability of cash through cash sales the appellant had also opening cash balance of Rs. 63.94 lakhs as on 01.04.2019. The AO has not considered the completed cash book of the appellant and also not pointed out any discrepancy in the cash book. I find that the completed cash book, being supported by valid evidences is admissible for the purpose of making assessment of total income. The AO was not justified in not considering the completed cash book. I have further verified the cash book of the appellant and availability of cash on the date of cash payment to SBIL. The availability of cash and payment to SBIL on various dates is presented below:- S. No Date Cash payment to SBIL (In IRS.) Opening cash balance Remarks 1 12.08.2019 10000000 25286412 2 31.08.2019 10000000 13071571 In addition to opening balance, the appellant also received cash of 85,00,000/- on account of branch transfer and small amount of cash sales. 3 16.09.2019 10000000 21467512 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shal Exports Overseas Ltd., Tax Appeal No. 2471 of 2009 Gujarat High Court cit. 03.07.2012 (iv) Shri Vinod Bhandari vs Pr. CIT, ACIT- 2 (1), DCIT-2(1), ITAT, Indore Dt. 20/3/2020 in ITA Nos. 350/1nd/2017, 66/1nd/2017, 57/1nd/2019- 16. In view of the above discussion and considering the facts and circumstances of the case, we do not find any merit in the addition of Rs. 33,57, 039/- upheld by the Id. CIT(A) on account of excess cash. The A.O. is directed to delete the same. Above decision also supports the contentions of the appellant that addition of Rs. 7,00,00,000/- tantamount to taxation of income twice. The entire sales have been recorded in the books of account and corresponding profit thereon has been disclosed in the return of income by the appellant. Therefore, without pointing out any inconsistency or mistake in the books of account, the addition made by the AO is not justified. Accordingly, It is concluded that the retraction from statement is acceptable. Contents of MOU cannot be doubted. The books of account of the appellant have not been rejected and no deficiency has also been pointed out by the AO. The results of audited books of account have been accepted by the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Each day the total cash collected at our office is entered in the books ? b) that assessee's explanation of huge delay is an afterthought and colourable device to evade payment of due taxes since the amount of Rs 7 crores paid in cash had not been entered in the books even till date of search on 10.10.2019 even when its first instalment (as submitted by assessee before Ld. CIT(A)) was paid as early as 12.08.2019? (4A) Whether the Ld. CIT(A) erred in accepting the assessee s version as well as part retraction of statement and thereby agreeing that the cash payment was made not out of Suppressed cash sales but out of surplus cash available, ignoring the significant specifics in the statement recorded u/s 132(4), quoted on page 5 of the assessment order of key person of the assessee Shri Rahul Agrawal which clearly show that the retraction and MOU were an afterthought to evade due taxes? (4B) Whether the Ld. CIT(A) erred in accepting the assessee's version as well as part retraction of statement and thereby agreeing that the cash payment was made not out of suppressed sales but out of surplus cash available, ignoring the following significant specifics in the statement rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 7.00 crores made by the Ld. AO on account of unaccounted business income of the assessee. 14.1 At the outset, Ld. CIT DR vehemently supported the order of the Ld. AO. he reiterated the facts of the issue from the order of Ld. AO and Ld. CIT(A), and submitted that Ld. AO has correctly interpreted the issue under a well-reasoned and speaking order, which was not appreciated in proper perspective by the first appellate authority. Accordingly, the order of Ld. CIT(A) on this issue is liable to be set aside and the addition made by the Ld. AO deserves to be sustained. 14.2 On the contrary, Ld. AR on behalf of the assessee have submitted that the books of accounts produced by the assessee are being regularly audited, no adverse inference or any deficiency regarding the books of accounts have been pointed out by the Ld. AO, much less the books of accounts of the assessee have not been rejected u/s 145(3) of the Act, Ld. AO accepted the book results of the assessee, the sales recorded in the books of assessee and proceeds from such sales were used for payment / investment by the assessee i.e., M/s Brandavan Food Products (in short BFP ) to M/s Pacifica Hotels (Ahmedabad) P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged unaccounted business income of the assessee. The returned income of the assessee have been taken into consideration while recomputing the assessed income in the conclusion part of the assessment order. The books of the account of the assessee are not rejected u/s 145(3), even no specific defects, infirmities or mistakes were pointed out in the books of accounts of the assessee. Ld. AO had only shown his suspicion, stating that the explanations extended by the assessee is nothing, but a concocted afterthought during the post search period. The fact that the assessee i.e., M/s BFP has a cash balance of Rs. 7,79,31,476/- in its books of accounts at the time of search action on 10.10.2019 was duly noted by the Ld. AO, but had disbelieved the same, stating that as the cash has exchanged hands in the month of September 2019 itself, then how the cash balance of such a huge amount shown in the books is justified, and why the entries regarding cash payment to M/s Sir Biotech India Ltd. (in short SBIL ) were not recorded in the impounded books. Ld. AO also had placed his objection against the MOU, stating that the said document was not registered, it was not revealed during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn. The cash sales of the assessee was also supported by the GST returns thus cannot be termed as an afterthought. Ld CIT(A) also observed that the assessee has made entries in the books of accounts on the basis of bills / vouchers / statements of branches, hence, the books completed are duly supported with lawful evidence. An important aspect regarding the sales of assessee that certain sale proceeds are received from IRCTC generated in Rajdhani Express through banking channel which had also remained to be entered in the books of accounts. Such error of the assessee cannot be treated as malafide or intentional as the same was duly included in the GST return of the assessee. With such observations, Ld. CIT(A) had concluded and rightly so that there is substance in the submission of the assessee that cash payment made to SBIL were not recorded in the books of accounts which are incomplete at the time of search for genuine and practical reasons. Ld. CIT(A) also analysed the comparative data of sales from GST returns and sales recorded in the completed / audited books and found that the same are matching with very paltry and insignificant variation. Ld. CIT(A) also after perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that each day the total cash collected at our office is entered in books , the explanation of assessee that there was huge delay in completion of books was an afterthought and colourable device to evade legitimate taxes. That the retraction of Shri Rahul Agrawal and MOU brought in picture was an afterthought. That during the course of search the statement recorded u/s 132(4) of Shri Rahul Agrawal regarding suppression of sales was admitted twice, such statement was not a bland or bald one but it vividly distinguish between cash receipts and bank receipts, even it is described that how suppression of bank receipts is not possible. Ld. CIT(A) had also ignored the statement of Mr. R. K. Roongta, concerned person from accounts department, who was instructed to suppress the cash sales. It is the submission of Ld. CIT DR that all the aforesaid glaring facts were ignored by the Ld. CIT(A) and has decided the issues in favour of the assessee, which thus, are liable to be struck down and the addition made by Ld. AO merits to be restored in the interest of substantial justice. 15.2 Ld. AR on the other hand placed his reliance on the order of Ld. CIT(A) and have vehemently submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al / business premises of the assessee on 10.10.2019. During the course of the search and seizure operations evidence for cash payment of unaccounted sale consideration to the tune of Rs. 60 Crore towards deal of a hotel project at GOA between SBIL and RK Associates Group was unearthed. Statement u/s 132(4) of the Key person of RK Group Shri Rahul Agarwal were recorded, wherein he admittedly confirmed the cash payment of Rs. 60.00 Crore, such transaction was further confirmed by Shri Saurabh Gupta (person deployed by broker company Hotelivate Private Limited) and Shri Vishal Saxena (Director of SBIL), who have facilitated the cash transaction. Shri Rahul Agarwal in statement u/s 132(4) had declared that the cash was generated from suppressed sale of the group entities of R K Associates Group, which subsequently was retracted and explained that under misunderstanding he mentioned supressed sales instead of surplus cash sales . Ld AO was not convinced with the explanations of the assessee; thus, he concluded the assessment with addition of Rs. 7.00 crore in the AY 2020-21 with specific observations that the assessee was unable to explain about the cash payment of Rs. 60.00 Crore whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty i.e. PHAPPL . Such conclusions of the Ld AO are incomprehensible, wherein he is blowing hot and cold together as per convenience to enforce the additions, brushing aside all the substantial evidence (GST returns, sale bills, branch sale records, transactions in bank statements etc.) without depicting any cogent reason to suspect the same. Ld. AO kept himself confined up to the words stated in the statement u/s 132(4), without adverting to the retractions afterwards, whereas he was under abundant obligation to consider all the relevant facts, evidence / documents placed during the post search proceedings or during the assessment proceedings, so as to check the veracity of such statements before reaching at any logical conclusion. It is the trite law that the statement alone cannot, on a standalone basis, constitute incriminating material to empower the Assessing Officer (AO) to frame an assessment under Section 153A. Under such facts and circumstances, we are unable to persuade ourselves to subscribe to the findings of the Ld AO, wherein he attempted to contradict with the explanations and facts furnished by the assessee, but unable to dislodge the same with any reasonable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke bills / vouchers, statements receipts from various branches located at different places within the country. Certain entries are incomplete even the bank transactions were also pending, sales up to month of August, 2019 are duly supported with GST returns. The appellant was justified in completing its books of accounts incorporating the cash payment to SBIL. (h) Contents of MOU are not countered by the Ld. AO by bringing on record any contrary material. Production of MOU after the search supports the contention of appellant that the payments were made to SBIL in accordance with the MOU. The Ld. AO was unable to place on record any material or justifiable reason while rejecting all the aforesaid material placed by assessee before the Ld. AO. (i) Ld. CIT(A) observed that I find that the AO was not correct in his approach in not considering the material placed before him by the appellant. Hence, the contentions of the appellant that the additions without rejection of books of account u/s 145(3) is not justified, are found acceptable. The decision relied upon by the appellant are also squarely applicable to it. In view of the above discussion the AO was not justified in making additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid observations and decision of the Ld. CIT(A) as well as that of the Ld. AO, we find force and justification in the decision of the first appellate authority, who had considerately deliberated upon the issues with appropriate appreciation of the facts of the case, following the prescribed provisions of the Act, guided by the settled principle of law laid down by Hon ble Courts, referred to (supra). We, thus, in absence of any further plausible, cogent or convincing explanation or contrary decision brought on record by the revenue, dislodging the aforesaid observations of the Ld CIT(A), supporting the action of Ld AO, are of the considered view that there was no infirmity in the decision of Ld. CIT(A) in deleting the addition made by Ld. AO, on account of unaccounted business income, thus, we uphold the same. Consequently, ground no. 2 to 7 of the department, dehors proving / establishing any error in the order of Ld CIT(A) are rejected in terms of our aforesaid observations. 15.9 In the result, appeal in ITA No. 82/RPR/2023 by the revenue, stands dismissed. 16. As, we have approved the decision of Ld CIT(A) in vacating the addition made by Ld. AO in the case of M/s Brandavan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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