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TMI Blog2025 (1) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, 23, 34, 35, 84 and 88 of Annexure A-79 revealed that assessee had made cash payment to the tune of Rs. 5,21,34,953/- and payments by cheque to the tune of Rs. 4,47,00,000/- to various farmers (land owners) and Earth Infrastructure Limited for purchase of certain land at Najafgrh, Delhi during the period from 01.04.2011 to 31.03.2012. The relevant extract of the above payments were produced in assessment order at page 2. In order to verify the source of the aforesaid payments, the summons under section 131 of the Act were issued to the assessee. During the course of investigation, the same was returned unserved. After verification of the records with the department, he observed that the opening cash and bank balance for the assessment year 2012-13 in which the assessee had made payments aggregating to Rs. 9,68,34,953/- was nil. He observed that the source of the above payments made by the assessee were not found established, therefore, there is sufficient reason to believe that income to the tune of Rs. 9,68,34,953/- has escaped assessment. After recording the reasons and approval under section 151(1) of the Act, he issued notice under section 148 and served on the assessee but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s handled and done by Sh.Pawan Sharma alias Shivmurti (SM) as per the initial understanding, Sh Pawan Sharma had come to EIL Management with papers relating to Advances / Biyanas allegedly done by him with selling parties. But the Promoters of Earth Group smelled siphoning off funds by Sh Pawan Sharma alias SM in the dealing either in individual capacity or in connivance with the prospective sellers, point blank refused into or even recognize any such deal at such exorbitant rates. In turn Sh Pawan Sharma alias SM turned up later on and submitted that all deals were renegotiated and Murlidhar had to pay only the renegotiated prices as per the Registries. However, the payments through ATS and Receipts shown to Murlidhar were requested to be ignored, but cheque payments were requested by him to be considered. 8. However, when asked to contribute his share of 40% as agreed, Sh. Aditya Sharma / Pawan Sharma alias Shiv Murti requested that presently he is short of liquidity and accordingly would contribute not more than 20% /30% in the deal. As a consequence, on 03rd November, 2012 and 12th December, 2012 Murlidhar increased its share to 70% and 80% respectively and Sh. Pawan Sharma a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly reflected as "Payment Paid by Shivmurti" against such payments on various pages of the seized documents. Therefore, denial of the assessee of not having made any payments in respect of land deals just on the pretext that the documents belong to M/s Murlidhar Infracon Pvt Ltd is not acceptable. Further, on perusal of the sale deed agreement submitted by the assessee company in three cases, as mentioned above, it is seen that M/s Murlidhar Infracon P Ltd (vendee) has been represented by its Director Sh Aditya Sharma S/o Sh Pawan Sharma and he has also signed these sale deed agreements for Murlidhar Infracon Pvt Ltd. It may be mentioned that Sh Pawan Sharma is Director of the assessee company. Therefore, the submission made by M/s Murlidhar Infracon P Ltd during the assessment proceedings in its case (reproduced supra) that there was an agreement between the management of ElL and Shiv Murti for purchase and development of Land is found to be acceptable and hence role and involvement of the assessee company in purchase of lands in respect of which cash and cheque payments have been made cannot be ruled out. Moreover, assessment u/s 153A r.w.s 153C in the case of M/s Murlidhar Inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is fact further stands verified from copy of assessment order dated 31.03.2016 u/s 153C of M/s Murlidhar Infracon Pvt. Ltd. where the Ld AO has made an addition of Rs. 1,82,82,953/- (Copy enclosed at Page No. 58-62 of Paper Book) only the cash portion as appearing in the seized documents and the amounts of cheques has been ignored, the reasons is that the same stands verified from the books of accounts. It is further submitted that if the payment by cheques have travelled from bank account of M/s Murlidhar Infracon Pvt. Ltd. then the presumption automatically drawn that the payments have, been made by them by cheques which tally with their books of accounts the presumption the payment in cash should have been made by them and the document only belong to M/s Murlidhar Infracon Pvt. Ltd. and not to appellant company. e. That from the perusal of sample copy of conveyance deed for purchase of land executed in favor of M/s Murlidhar Infracon Pvt. Ltd. enclosed at Page No. 11 to 34 of Paper Book-2 and chart showing cheque payments stated in this conveyance deed enclosed at Page No. 35 of Paper Book - 2, your honor will appreciate that cheque payments stated in seized material has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the headline of seized documents shows "PAYMENT PAID BY SHIVMURTI". There is no basis with Ld. AO to read "SHIVMURTI" written on seized documents as "Shivmurti Developers Private Limited" or Ld. AO has not assigned any reason in reasons recorded what made him to read "SHIVMURTI" as "Shivmurti Developers Private Limited". The word Shivmurti may represent to any proprietorship/partnership concern also. j. That there is no statement available from M/s Earth Infrastructure from whose possession material were seized or any other person mentioned in the seized material stating that the cash and cheque payment mentioned in seized material have been made by the appellant company or the transactions recorded therein belongs to the appellant company. On the basis of judgment at S.M Aggarwal, 293 ITR 43 (DEL) where held that "only the person competent to give evidence on the truthfulness of the contents of the documents is the writer, therefore only Earth Infrastructure Limited is liable to explain the documents and appellant cannot be made liable for documents seized from third party in the absence of any corroborative evidence". k. That Ld. AO is going by the form of the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of recital or operative portion or the covenants cannot bring about a fair and proper construction of a document. The reasons for making addition as stated by Ld. AO in assessment order reads as under: "The reply of the assessee is not acceptable in view of the fact that as per the documents seized as per said Annexure the name of the assessee company i.e. "PAYMENT PAID BY SHIVMURTI" is clearly mentioned against cash/cheque payments made to various farmers and to Earth and its name repeatedly appearing on other pages of the said annexure as well as is displayed on the table in the page No. 2 above. The assessee has not given any justification with regard to the facts that its name is repeatedly reflected as "PAYMENT PAID BY SHIVMURTI'' against such payments on various pages of seized documents. Therefore, denial of assessee of not having made any payment in respect of land deals just on the pretext that document belong to Murlidhar Infracon Pvt. Ltd. is not acceptable. Further, on perusal of said sale deed agreement submitted by the assessee company in three cases as mentioned above, it is seen that M/s Murlidhar Infracon Pvt. Ltd. (Vendee) has been represented by its director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhar Infracon Pvt. Ltd. that Mr. Pawan Sharma finally admitted in talks with the promoters of Earth Group that cash component in fact never existed and the value of the properties is as per registries only and all the registries were in the name of M/s Murlidhar Infrcon Pvt. Ltd. only. It is not the case of Ld AO that any of the registry is in the name of appellant company. m. It is not the case of Ld. AO whereby he had found any undisclosed source of income of the appellant to suggest any such large payment. Further the evidence available also does not suggest any such payment being made by appellant company whose net worth is only Rs. 11,64,675 on 31.03.2011 & Rs. 6,89,943 as on 31.03.2012. In view of the facts stated herein before, your honour will appreciate that the allegation of Ld AO that the cash payment of Rs. 5,21,34,953/- mentioned in seized material has been made by appellant for purchase of land is based on his own presumption and not supported by any supporting evidence. Further, the corroborative evidence stated herein before and produced during the course of assessment proceeding also does not suggest that the seized material or cash payment stated therein belon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments recovered from residential premises of 'S' could not be made basis for making addition in assessment framed in case of assessee without providing assessee an opportunity to cross-examine 'S' and also without bringing on record any positive material that assessee had received extra money from customers outside books of account - Held, yes - Whether therefore, impugned addition made to income of assessee was not Justi fied and deserved to be deleted. Yes. 4. TS Venkatesan, 74 ITD 298 (Cal) In the absence of corroborative material, addition of undisclosed income could not be made simply on the basis of entries on loose papers recovered from third party and certain general statement of said party. 5. Doon Valley Roller Flour Mills P. Ltd., 31 ITD 238 (Del) Whether mere fact that certain books of account were found lying in compound of one of its shareholders, was not sufficient to link those books with assessee, especially when assessee did not admit ownership of those books, and in such circumstances, presumption could not he raised against assessee. 6. CIT v. S.M. Aggarwal, (2007) 293 ITR 43/162 Taxman 3 (Delhi), "no adverse inference can be drawn unless the author of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remand report and affidavit, ld. CIT (A) deleted the substantive addition in the hands of the assessee and directed to initiate the proceedings in respect of correct entity by observing as under :- "Having considered the facts of the case, the affidavit filed supra is considered. The appellant has not undertaken any such transaction as there is no substantive evidence on record to establish. The appellant produced evidence in the form of conveyance deed for purchase of land executed in favour of Murlidhar Infracon Pvt. Ltd. during the year under consideration which contains cheque details which are also stated in seized material as well as issued from bank account of Murlidhar Infracon Pvt. Ltd. The AO concluded that appellant company M/s Shiv Murti Developers Pvt. Ltd. made cash payments to the tune of Rs. 5,21,34,953/- and by cheques to the tune of Rs. 4,47,00,000/- to various farmers (land owners) and M/s Earth Infrastructure Limited for purchase of land at Najafgarh from 01.04.2011 to 31.03.2012 but this imputation is not supported by any corroborative evidence. There is no detail of such lands having been purchased. I he appellant cate&,9rically denied having purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that ld. CIT(A) also found that the information found in the seized documents are genuine. In this regard, he brought to our notice page 193 of the paper book which is the sale deed entered by Murlidhar Infracon Pvt. Ltd. with Palak Properties Pvt. limited and he brought to our notice page 197 of the paper book wherein certain payments were made during 2011-12 and submitted that a payment of Rs. 22 lakhs vide cheque no.575073 was made on 21.11.2011 which is before incorporation of Murlidhar Infracon Pvt. Ltd.. Similarly, he brought to our notice page 204 which is another sale deed with Murlidhar Infracon Pvt. Ltd.. In this case also, similar payment was made before incorporation of Murlidhar Infracon Pvt. Ltd.. By bringing the above agreement, he submitted that cheque payments were matching with the seized document, therefore, cash payment also to be presumed as true. Further, he submitted that the affidavit filed by the assessee before the ld. CIT(A) should be remitted to the AO and submitted that as per para 5 of the abovesaid affidavit, the facts mentioned are wrong and incorrect. By referring to the findings of the ld. CIT(A), he submitted that factual incorrect fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee and he submitted that absolutely no prejudice caused to the Revenue and ld. CIT (A) only gave direction to the AO to redo the assessment properly under section 150 of the Act. 11. Considered the rival submissions and material placed on record. We observed that the assessee is a private limited company engaged in the business of commission agent and as per records, the assessee has only one bank account maintained with HDFC Bank, Old Rajender Nagar, New Delhi. Subsequent to search conducted in the case of Earth Infrastructure Ltd., Delhi, certain documents were found and seized which included documents identified as Annexure A-79 whereby certain cash payments and payments by cheque were found which were made to various farmers during the period 01.04.2011 to 31.03.2012. We observed from the record that the AO initiated the proceeding under section 153C of the Act in the case of Murlidhar Infracon Pvt. Ltd. and made the addition of Rs. 1,82,82,953/- on account of cash payments out of the total cash payment of Rs. 5,21,34,953/- pertaining to the period beginning from the date of incorporation of Murlidhar Infracon Pvt. Ltd. on protective basis. However, in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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