9911796707
TMI Blog2024 (7) TMI 1368X X X X Extracts X X X X X X X X Extracts X X X X ..... hanical manner. Regarding non generating and mentioning the DIN on the approval granted by ACIT we have given the elaborated finding on the issue of DIN in para above and the same is mutatis mutandis applied here also. The other arguments raised by the assessee is regarding satisfaction note being not proper, assessment based on surmises conjecture and cross examination etc. and also the principal of natural justice, are interlink interconnected to the addition made by AO, which is challenged in ground No. 2 of appeal, therefore the same are being dealt with while adjudicating the ground No. 2 of the appeal and for the sake of brevity the same are not being adjudicating here. Unaccounted money by the assessee on sales of flats at Royal Imperia Apartment - material placed on record, it is apparent that during the course of search at Shri Upendra Kumar Soni a document was found seized - HELD THAT:- Addition so made the AO relied on the document found from the possession of Shri Upendra Kumar Soni and also on some extracted statement, though in such statement he nowhere admitted to pass on/receiving any cash amount by the appellant. We found that there is a noting of cash over the sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 27.12.2019 passed u/s. 143(3) r.w.s. 153B(1)(b) of the Act by the ACIT, Central Circle-Kota. 2. Brief facts of the case are that the assessee is a partnership firm. The business of the assessee is construction of building and real estate. The Appellant firm has three partners named as Shri Om Prakash Sharma, Shri Ajay Khatri, and Shri Sanjay Khatri. The assessee filed its return of income of Rs. 6,27,310/- on 30.10.2018 u/s 139(1) of IT Act. The Appellant entered into a joint development agreement with M/s URS Gehna through its partner Shri Upendra Soni, for construction of building project named Royal Imperia . As per this development agreement, M/s URS Gehna is landowner and Appellant is builder who would construct the project at its own cost on the basis of sharing of the units in the constructed building. The sharing of the units in the constructed building in between the assessee and M/s URS Gehna has been specified in development agreement, which is at PB page 268-272 and 283-292. For the year under consideration, there was no sale of flats and only advance money was received by the Appellant against the booking of the flats in the project Royal Imperia. Appellant book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact also establishes that the assessee firm might have given some authorization to Shri Upendra Kumar Soni to sell flats and receive the money on behalf of the assessee firm. 2.1 Aggrieved by the order of the AO, the assessee filed an appeal u/s 246A before the Commissioner of Income Tax, Appeals-2, Udaipur. The assessee has challenged the legality of assessment order and factual findings of the AO on various grounds. The appeal filed by the assessee was dismissed by Ld. CIT(A) on following footings: - i) Rejected the ground of invalidity of assessment on for the reason of non-mentioning of DIN in the assessment order dated 27.12.2019 for the reason that the DIN issued for demand notice was communicated to appellant on 28.12.2019 and also replying the judgement of Hon ble Supreme Court. (para 4.8 of the order of ld. CIT (A) at page 8 to 10 of the order). ii) Rejected the ground of non-obtaining the approval as required u/s 153D by holding that the same was validly obtained. (para 4.8 of the order of ld.CIT (A) at page 10 of the order). iii) Rejected the ground of no satisfaction note of search person on the ground that where the AO of searched person and other person are same, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 for the year under consideration is without bearing DIN (document identification number) on the said impugned order and the same is in gross violation to the CBDT Circular no. 19/2019 [F.No. 225/95/2019-ITA.II] DATED 14.08.2019. It was also argued that as per this circular any communication which is not in conformity with Para-2 and Para- 3 above circular, shall be treated as invalid and shall be deemed to have never been issued. It is also submitted that it has not been mentioned in the assessment order that the assessment order has been issued manually in exceptional circumstances and approval of the Chief Commissioner/Director General of the Income tax was obtained before issue of manual communication. It was also argued that though the A.O. issued an intimation letter dated 19.02.2021 for the year under consideration, to inform about the DIN of order passed u/s 143(3) of the Act wherein the date of order is mentioned as 31.12.2019, however, there is no order passed by the department on 31.12.2019 for AY 2018-19 u/s 143(3) in the case of assessee but it was passed on 27-12-2019. Therefore, the said intimation letter issued by the Ld. AO is beyond time limit of 15 working day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of responsibility placed on designated authority under section 153D of the Act. He submitted that Hon ble Supreme Court in SLP (Civil) Dairy No. 44989/2023 vide order dated 28/11/2023, dismissed the SLP Appeal filed by the Department of Revenue against the order dated 15/03/2023 in ITA No. 43/2022 passed by the Hon ble Orissa High Court in the above case. He further argued that on the approval granted by Additional Commissioner of Income Tax DIN was not generated and mentioned on the approval letter of Addl CIT. 4.1.3 The Ld. AR of the assessee also argued in detail as regard issue of Satisfaction note recorded by the A.O. for initiating the proceedings u/s 153C of the Act against the assessee, issue of addition on surmises and conjectures and violation of principle of natural justice by not providing the opportunity of cross examination of Shri Upendra Kumar Soni. 4.2 On the other hand the Ld. D/R vehemently relied on the finding of Ld CIT (A) and argued that the AO has issued communication under DIN vide letter dated 28-12-2019 and communication issued for demand Notice u/s 156 is in reference to the assessment order passed by the AO 27-12-2019. Ld. D/R further argued that, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition made by AO, which is challenged in ground No. 2 of appeal, therefore the same are being dealt with while adjudicating the ground No. 2 of the appeal and for the sake of brevity the same are not being adjudicating here. 5. In Ground No. 2 of the appeal is regarding the addition of Rs. 3,96,05,000/- made by AO and confirmed by ld. CIT (A) on the ground of receiving the unaccounted money by the assessee on sales of flats at Royal Imperia Apartment. 5.1 Before us, the Ld. A/R of the assessee has argued the case and filed the elaborate written submission. The brief of the arguments raised by Ld. A/R are as under: - 5.1.1 At the outset, the A/R of the assessee relied on the decision of decision of ITAT Jaipur Bench in the case of M/s Moti Developers (ITA No. 102 to 104/JP/2017 order dated 03.07.2017 and contended that on the identical facts, the similar issue has already been decided by Hon ble ITAT, Jaipur Bench in the aforementioned case. The findings of Hon ble ITAT in this case are in Para 3.5 of the order. The Ld. A/R submitted that the fact of the case of the assessee s are identical to facts of above referred case and also submitted the comparison of facts of the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee wherein he said that he has 60% share in on money sales. At the direction of ld CIT(A) AO fixed the date of cross examination and on that date neither assessee nor Shri Upendra Kumar Soni present. 9. The Ld. A.O. made the addition of 40% of cash receipts in the hands of M/s Moti Developers. The Ld. A.O. made the addition of part of the cash receipts in the hands of Appellant. 5.1.2 It was also contended that, no nexus of the document with appellant is established. It was also contended that certain documents were found from the possession and control of Shri Upendra Kumar Soni and seized as per Annexure AS page 1 to 83 of Exhibit 5. The AO found the page 83 of the impugned Annexure as incrimination and he provided the copy of this page only to the assessee for confrontation. On this page in column No 1 description of floor is mentioned. In column no 2 Total amount against each floor in totality is mentioned. In column No 3 cash amounts against each floor in totality is mentioned. In column No 4 cheque amounts against each floor in totality is mentioned. In column No 5 6 Total Received and balance against each floor in totality is mentioned respectively. The Ld. AR subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these sheets. i) Amount under the column Total received mention wrong: - S. No. of Sheet Total amount as per sheet Cash received as per sheet Cheque received as per sheet Total received as mentioned in sheet Balance as per sheet Remarks 17 33,26,400 14,00,000 0.00 0.00 33,26,400 In column Cash received, amount of Rs. 14,00,000 is shown, whereas in column of Total figure 0 is mentioned, Accordingly, the balance is also wrongly worked out. 18 22,51,200 2,00,000 0.00 14,00,000 8,51,200 In column Cash received, amount of Rs. 2,00,000 is shown and in colu cheque 0 is shown, whereas in column of Total figure 14,00,000/- is mentioned, Accordingly, the balance is also wrongly worked out. 19 23,24,750 7,50,000 5,00,000 7,00,000 16,24,750 In column Cash received, amount of Rs. 7,50,000 is shown and in cheque received amount of Rs. 5,00,000/- is mentioned. The sum of both the receipts comes Rs. 12,50,000/-, whereas in column of Total figure Rs. 7,00,000/- is mentioned, Accordingly, the balance is also wrongly worked out. 20 23,24,750 0.00 0.00 7,50,000 15,74,750 In column Cash and cheque received, amount 0 is shown. The sum of both the receipts comes 0, whereas in column of Total figure R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shown at Rs. 0.00 and Total of these two Cash and cheque shown at Rs. 0.00 and outstanding Balance is shown at Rs. 33,26,400/-. Had the cash of Rs. 14,00,000/- is correctly mentioned then the figure in total amount would be 14,00,000/- and figure in Balance should be 19,26,400/- as against Rs. 33,26,400/- shown in the sheet. Similarly, entry at S. No. 18, for Flat No 905D, (APB page 80) Total amount stated at Rs. 22,51,200/- cash received stated Rs. 2,00,000/- Cheque Received shown at Rs. 0.00 and Total of these two Cash and cheque shown at Rs. 14,00,000 and outstanding Balance is shown at Rs. 8,51,200/-. Had the cash of Rs. 2,00,000/- is correctly mentioned then the figure in total amount would be 2,00,000/- and figure in Balance should be 20,51,200/- as against Rs. 8,51,200/- shown in the sheet. Similarly, entry at S. No. 19, for Flat No 906E, (APB page 80) Total amount stated at Rs. 23,24,750/- cash received stated Rs. 7,50,000/- Cheque Received shown at Rs. 5,00,000/- and Total of these two Cash and cheque shown at Rs. 7,00,000 and outstanding Balance is shown at Rs. 16,24,750/-. Had the cash of Rs. 7,50,000/- is correctly mentioned then the figure in total amount would be 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of URS Gehna. As regard cash amount he stated that he already returned to the purchaser. Shri Upendra Kumar Soni has nowhere stated that he has passed over part of the cash or on money to the assessee or part of the cash amount belongs to the Appellant. The attention was drawn by Ld. AR towards the following relevant questions and answers of the statements of Upendra Kumar Soni recorded u/s 132(4) of the Act as under: - Answer to Q. No PB Page What has been stated 68 86 Pg 80-83 relates to booking of Royal Imperia; some of flats cancelled as detailed at page 67. (copy not given to assessee) 72 39 Booking rights are with the appellant M/s Sirsthi Associates 74 89-90 Total on money received Rs. 72.07 lacs pertain to M/s URS Gehna 78 92 Total cash received 8,19,19,000/- and Shri Upendra Kumar Soni stated that he will provide the list of refund made. 5.1.5 It is contended that addition was made without any corroborative documentary evidence on record. It was submitted that in the impugned statement, Shri Upendra Kumar Soni has nowhere mentioned the alleged fact and finding of the A.O. that Appellant is also having share in alleged cash money claimed to be received by him whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepared by Shri Upendra Soni for his own purpose, which is best known to him. Shri Upendra Soni never said to have passed over any cash to the Appellant. No documents were found to show that any cash was passed over to the appellant. Regarding the applicability of section 34 of the Evidence Act and fastening of the liability to third parties on the basis of entries made in the books of account, documents, etc. of the third parties the reliance was placed on the decision of Hon ble Supreme Court of India in the case of CBI v. V. C. Shukla Ors. AIR 998 SC 1406 /JT 1998 (2) SC 172 ) (popularly referred to as Jain Hawala case) and decision in the case of Common Cause (a registered society) and others v/s UOI 2017-TIOL-27-SC Misc (popularly referred as Sahara Diary case). It was also submitted that assessment proceedings before A.O. are quasi-judicial in nature, therefore, the A.O. has to act independently and not merely to rely on some non-corroborative evidence or reference made by some other authority and on this issue the reliance was placed on the decision of (i) C.D. Singh V ITO 77 TTJ (All) 282 and (ii) Kirti Lal Kalidas Co. Vs DCTT 67 ITD 573, in which reliance has been placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self must display the reasons or basis for the conclusion that the AO is satisfied that the seized documents belong to a person other than searched person. The AO must reach a clear conclusion that good ground exists for the AO of the third person to initiate proceedings as material before him belongs/pertains to third person. In the present case, on the bare perusal of the said satisfaction note, the AO has failed to establish the nexus of the said figure of Rs. 3,96,05,000/- with the only seized incrimination document page 83 of AS-5. There is no clarity in the said satisfaction note about the date or year to which alleged cash receipts belong. In the satisfaction note at page 12 of the Satisfaction Note (APB page 84) in para 3 held the alleged receipts are pertaining to A.Y. 2017-18 and addition is required to be made in the hands of assessee for AY 2017-18, while in the assessment order for no reason and without having any corroborative evidence the same added in the assessment for the A.Y. 2018-19 and not in AY 2017-18. The AO made a general satisfaction note which is not enough to initiate the proceedings u/s 153C of the Act. The said satisfaction note is not speaking. In sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2012 (xiii) Hon ble ITAT Jaipur Bench in the case of Ashok Kumar Lakhyani vs DCIT ITA No 30/JP/2018 order dated 24/07/2018 and Hon ble ITAT Jaipur Bench in the case of DCIT Vs Ashok Kumar Agarwal in ITA No 847/JP/ 2015 order dated 3/10/2016. It was also argued that the statement recorded u/s 132(4) of the Act are binding only on the person who makes it not to third person. The Ld. A/R also submitted that the addition was made without allowing the assessee cross examination of Shri Upendra Kumar Soni. The AO did not establish the nexus of the statement recorded in the case of Upendra Kumar Soni with Appellant. Secondly, it is also to be appreciated that it is trite law that no addition/adverse inference against the Appellant can be drawn on the basis of statement of any third party unless an opportunity of cross examination has been granted to him. The ld. CIT(A) held that in the remand report proceeding neither the Appellant assessee nor Shri Upendra Kumar Soni attended the office of the AO on the date specified in the communication sent to assessee for cross examination. The ld. CIT(A) failed to appreciate that the AO has not provided to the appellant the copy of complete statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that now allowing the petitioner-assessee to have access to the alleged incriminating material i.e. the statement of witnesses, who have deposed against it, and further not permitting it to cross examine the witnesses is a clear case of violation of principles of natural justice. The ld. AR further relied upon the decision of Hon ble Supreme Court in the case of Kerala V.K.T. Shaduli Grocery Dealer (1977) 2 SCC 777 in this regard. 5.1.9 The Ld. AR submitted that the assessment is based on surmises and conjectures, without having any material or on irrelevant material and thus arbitrary, whimsical, capricious and perverse. The department has carried out intensive search operations over Shri Upendra Soni and during the course of such search no evidence or material was found to show that the alleged unaccounted cash was passed over to the appellant or belongs to Appellant. Rather from the statement of Shri Upendra Kumar Soni it reveals that he received some cash which was later on refunded back by him. He never, said that the cash was passed on the Appellant and no evidence of whatsoever nature was found in this regard. The Ld. A/R submitted that pursuant to search action, stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in alternate, without prejudice to his core submission that the appellant has not received any cash as booking advance, submitted that booking advance is not an income at all, in any case, if the said booking advance is sourced from real estate business, then also only reasonable profit element on the said booking advance/receipts can be attributed as additional income in the hands of the Appellant. It is also submitted, that if the entire cash receipt is considered as income of the Appellant, then the resulted Net Profit would be 74% of sales which could not be possible in the trade of the Appellant. In support of this argument The ld A/R placed reliance on various decisions including the decisions of Jaipur ITAT in the case of (i) Kedia Real Estate LLP ITA No. 127/JP/2019 order dated 03.06.2019, (ii) Deputy Commissioner of Income Tax Vs Pahar Ganj Grih Nirman Sahakari Samiti Ltd Others 2005 (10) TMI 237 ITAT Jaipur Other Citation TTJ 099, 549 order dated Oct 21, 2005 (iii) Kayakalp Herbal Private Limited ITA No. 633/JP/2016 order dated 25.04.2017 and (iv) Jadau Jewellers Manufacturing Private Limited ITA No. 446/JP/2016 order dated 28.02.2017. 5.2 On the other hand the Ld. D/R re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pendra Kumar Soni to explain the entries of this seized paper with corroborative evidence. The AO has not brought to notice any other seized paper showing the cash receipts of Rs. 3,96,05,000/- by the appellant on account of on money in sale of flats/units in Royal Imperia project. No any inquiry, if any conducted, from the assessee by the Investigation Wing was brought on records by the AO. No any statement of the assessee, if any, recorded by the Investigation Wing or by the AO was brought on record by the AO. The search team recorded the statement of Shri Upendra Kumar Soni u/s 132(4) of the Act. The AO has not provided copy of complete set of the statement of Shri Upendra Kumar Soni to the assessee, which was specifically demanded by the Appellant (Copy at APB page 133-135), however, the AO provided the extract of statement of Shri Upendra Kumar Soni containing question and answer to question no 68-79 copy placed at APB page 86-92. In the statement brought on record by the AO, Shri Upendra Kumar Soni has no where stated that part of the cash receipt shown in above said seized page 83 was passed over to the Appellant or belongs to the Appellant. Rather he said that he has return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of receipt of these pages of excel sheet with the AO has not been disclosed by lower authorities. Further, the search team has not put any question to Shri Upendra Kumar Soni on these pages of excel sheet as appears from the copy of Extracts of statement provided by the AO to the appellant. Further the basis of bifurcation of cheque receipts as well as cash receipts in these papers of excel sheet in between the units owned by GRS Gehna and Appellant has not been disclosed or correlated with other material which if any, the AO had. 5.3.2 Otherwise also, these papers of the excel sheet is not reliable and cannot be used as evidence against the assessee as during the course of hearing the Ld. A.R pointed out the several serious discrepancies and inconsistencies in these pages of excel sheet, which proves that these sheets are not correct and does not have the actual picture of transactions. We have examined these papers of excel sheet with reference to the mistakes in figures pointed out by ld AR and found the mistakes in these papers of excel sheet there. We concur with the argument of ld AR in this regard. On being specifically asked by the Bench the Ld. AR filed copy of som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld Sr. D/R could not explain the discrepancy in the satisfaction note, source of the relied upon excel sheet and also could not satisfactorily explained to the discrepancies as pointed out by Ld. A/R in these excel sheet. This, proves that the AO made a general satisfaction note which is not reasonable and not enough to initiate the proceedings against the assessee. The said satisfaction note is not speaking, not backed with corroborative material and also not for the year under consideration. 5.3.4 We find that the in support of the addition so made the A.O. relied on the document found from the possession of Shri Upendra Kumar Soni and also on some extracted statement, though in such statement he nowhere admitted to pass on/receiving any cash amount by the appellant. However, we found that there is a noting of cash amounting to Rs. 8,19,19,000/- over the seized page 83 seized from the possession of Shri Upendra Kumar Soni and to this effect the AO neither examined to Shri Upendra Kumar Soni nor provided his cross examination to the assessee. The CIT (A), directed to Ld. A.O. to provide the cross examination of Shri Upendra Kumar Soni to the assessee, which is basic principle of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them . 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the adjudicating authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers. witnesses at the price which is mentioned in the price list itself could be the subject-matter of cross-examination. Therefore, it was not for the adjudicating authority to presuppose as to what could be the subject-matter of the cross-ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4), wherein it has been held that investigation of the case was not made in proper manner and core issues i.e. actual receipt of cash, actual number of units against which cash was claimed to be received etc. were not addressed properly and he rejected the demand of short payment of GST and this issue was decided in favor of Appellant. This order of the GST authorities also supports the contention of the appellant that no addition should be made in the hands of the appellant. 5.3.6 Further, Jaipur Bench of ITAT has also decided the similar issue in the case of Moti Developers ITA Nos. 101, 102, 103 104 vide order dated 17-07-2017. ITAT Jaipur Bench deleted the similar addition so made by Ld. A.O. The Findings of Hon ble ITAT Jaipur in para 3.5 is as under: 3.5 We have heard the rival contentions and perused the materials available on record. The assessee is partnership firm and derives income carried out on 31-10-2012 at various premises of Motisons Group and the members of Motisons Group of which the assessee is one of the members. In this case, the assessee filed its regular return u/s 139(1) for the various years under appeal as under:- XXXXX It is also noted that the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opers has also been reproduced by AO at pg 5 of Assessment Order. Rs. 1,82,48,800/- has been recorded in the seized books of assessee which has been received by cheques only in project in collaboration of Ashirwad Buildtech Pvt Ltd. No document from any searched premises was seized which could show that assessee had received any cash on the project in collaboration with M/s. Ashirwad Buildtech Pvt Ltd. The developer M/s Ashirwad Buildtech Pvt Ltd and its director Shri Virendra Kumar Ghuwalewala approached Hon ble Settlement Commission by filing application u/s 245C of Income Tax Act on 28-02-2014 wherein 60% of cash received by him has been declared as income on account of sale of flats by Ashirwad Buildtech Pvt Ltd after adjusting the expenses from the unaccounted receipts. We have taken into consideration various case laws relied on by both the parties. It is pertinent to note that nowhere the name of the assessee is mentioned in the seized material and also in-the statement recorded u/s 132(4) of the Act during the search operation. The Director of the Ashirwad Buildtech surrendered the amount of Rs. 4.00 crores in various projects as cash sale proceeds received by him on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
