9911796707
TMI Blog2025 (1) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of the CIT (A) and CIT (A) merely deleted the addition made in the hands of the assessee, however he remitted the issue back to the file of AO to redo the assessment after making proper verification. Therefore, there is no prejudice caused to the Revenue with the findings of ld. CIT (A). Accordingly, the grounds of appeal filed by the revenue are dismissed. - Shri S. Rifaur Rahman, Accountant Member And Shri Sudhir Kumar, Judicial Member For the Assessee : Shri Sanjay K. Agarwal, CA, Ms. Apoorva Bhardwaj, CA For the Revenue : Shri Dharam Veer Singh, CIT DR ORDER PER S.RIFAUR RAHMAN,AM: The assessee has filed appeals against the order of the Learned Commissioner of Income Tax (Appeals)-XXXVI, New Delhi [ Ld. CIT(A) , for short] dated 07.09.2018 12.09.2018 for the Assessment Years 2012-13 2013-14 respectively. 2. Both the appeals are interconnected having common issues. Both the appeals are heard together and disposed off by this common order. LEAD APPEAL ITA NO.7888/Del/ 2018 (AY 2012-13) 3. Brief facts of the case are, a search and seizure operation under section 132 of the Income-tax Act, 1961 (for short the Act ) was conducted in the case of Earth Infrastructure Limited, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p and Sh Pawan Sharma alias Shiv Murti alias Aditya Sharma alias SM) came together and mutually agreed among themselves that a new company will be incorporated (i.e. Murlidhar Infracon Private Limited) for the purpose and they will hold the share capital of the company in the profit sharing ratio. 4. There was an understanding in between Murlidhar and Sh.Pawan Sharma alias Shivmurti. As per the understanding, land pooling and consolidation of land was the responsibility of Sh. Pawan Sharma alias Shivmurti due to his vast experience and Development of the same was to be done by Murlidhar, a company of the Earth Group. 5. As per initial arrangement the share in capital of Murlidhar was to be 60 % of the Earth Group and 40 % of the Sh. Aditya Sharma son of Pawan Sharma alias Shivmurti (SM). Investment was also to be done by Earth Group and SM alias ShPawan Sharmal Aditya Sharma in the same ratio (i.e. 60:40). Land was to be consolidated in the name of M/s Murlidhar Infracon (P) Limited, whose capital was held by both in the Profit sharing ratio (i.e. 60:40). 6. Since land pooling and consolidation of land was the responsibility of Sh. Pawan Sharma alias Shivmurti (SM), so the role at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as SM admitted in talks with the Promoters of the Earth Group that Cash component infect never existed and the value of the Properties is as per the Registries only. 4. By relying on the other response, the AO proceeded to make the addition of Rs. 5,21,34,953/- with the following observation :- 8. The assessee in its reply has furnished copies of agreements with 3 parties as shown above alongwith details of cheque payments made to them and has also stated that it has never dealt with any purchase of sale of land and therefore denied that the documents belong to it. The reply of the assessee alongwith documents submitted by it has been considered vis- -vis reply of M/s. Murlidhar Infracon Pvt. Ltd. for the A.Y. 2012-13 and the seized documents as per Annexure A-79. The reply of the assessee is not acceptable in view of the fact that as per the documents seized as per the said annexure the name of the assessee company i.e. Payment Paid by Shivmurti is clearly mentioned against the cash/cheque payments made to various farmers and to Earth and its name is repeatedly appearing on other pages of the said annexure as well as is displayed in the table at Page No.2 above. The assessee has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,23,34,35,84 88 of Annexure A-79 seized during the course of search u/s 132 carried out on Earth Infrastructure Ltd. in their premises at B-100, Industrial Area, Naraina, Delhi stating that the appellant company M/s Shiv Murti Developers Pvt. Ltd. made cash payments to the tune of Rs. 5,21,34,953/- on land deals during the period from 01.04.2011 to 31.03.2012. In this regard the pertinent facts borne on record which are completely ignored by Ld. AO are as under: a. That the assessee company is maintaining regular books of accounts which are duly audited under the Companies Act'1956 by independent chartered accountant and accounts are audited on yearly basis and no defect has been found by Ld AO in books of accounts maintained by assessee company. b. That the alleged documents was not seized from the possession of the appellant company as such no presumption can be drawn Sec 292C of the Income Tax Act 1961 that the document so seized from the third party may belong to appellant. c. That in all the seized materials i.e. Page No. 20,23,34.35.84 88 of Annexure A-79 referred to in reasons recorded (Copy enclosed at Page No. 2-7 of Paper Book - 2) two types of payments have been men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciate that none of the payments made by appellant company for purchase of any land. Further, none of the cheque payment appeared in seized material is made by appellant company. That the reference of cheques given in the seized document where name of the bank i.e. Punjab National Bank or cheque number given have not been issued by the appellant company since from the beginning the appellant company has never had/operated any bank account with Punjab National Bank. Moreover the cheque number mentioned in the seized paper have never been issued by the appellant company and that the same stands verified from the copy of bank statements of appellant company and books of accounts maintained by it. Further it was also not a case that Ld AO who has found any other bank account held by the appellant company except that is recorded in books of accounts. h. That the appellant company has not purchased any land during the year under consideration or in earlier or subsequent years as evident from Audited Balance Sheet as on 31.03.2012 (enclosed on Page No. 4-20 of Paper Book). Further it is not a case that Ld AO who has ever claimed that the assessee company is found in possession of any land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring course of search at residence of assessee's husband, a piece of paper without any name, date or signature was found - Assessing Officer treating part of transactions mentioned in loose paper as relating to assessee, made certain additions as unexplained expenditure and as unexplained investment by assessee - Whether loose paper found and seized had to be read in toto and it could not be read as partly belonging to husband of assessee and partly belonging to assessee - Held, yes-Whether onus was on Assessing Officer to prove that transactions as stated in said loose paper, which was not found from possession of assessee, related to assessee-Held, yes - Whether since Assessing Officer had not brought out any cogent evidence or material on record which might prove that part of items stated in paper, represented transactions entered into by assessee impugned additions were to be deleted - Held, yes. Further Hon'ble High Court of Calcutta in the case of Kultar Singh v. Mukhtiar Singh , (1964) 7 SCR 790 and Jagannath Deb Roy v. Byomkesh Roy , AIR 1973 Cal 397 that One of the well established rule of construction is that the document must be read as a whole. A piecemeal readi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the reasons recorded u/s 148(2) and nothing more . Hence, no adverse inference can be drawn on the basis of submission of M/s Murlidhar Infracon Pvt. Ltd. during their assessment proceedings which is neither part of reasons recorded nor supported by any tangible evidence. Further, the same was not confronted to the appellant company before using the same against the appellant. As such, no adverse view should be taken based on such evidence as held.by hon'ble apex court in the case of Kishan Chand Chela Rant , 125 ITR 713. Without prejudice to above, at Point 12 of said letter dated 21.03,2016 by M/s Murlidhar Infracon Pvt. Ltd. they have stated as under: Point 12 : Letter of Pawan Sharma Alias SM also admitted in person, during talks that although at the stage of Biana, in some cases he had paid cash to negotiate, but with clear understanding with the farmer(s)that when the cheque payment will be made the same is to he returned; and he acted accordingly. As time elapsed, Mr. Pawan Sharma Alias SM 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 the Registries only . As per the submission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve in the absence of any corroborative evidence to make any addition as done by Lo AO. Further we place reliance on following judgments wherein evidentiary value of seized material for making addition has been decided: 1. DK Gupta , 174 Taxmann 476 (Del) held that there was no corroborative or direct evidence to presume that notings/jottings recorded in said two diaries had materialized into transactions giving rise to income which had not been disclosed in regular books of account-Tribunal, therefore, upheld order of Commissioner (Appeals) . 2. Amarjit Singh Bakshi , 86 ITD 13 (Del) (TM) Whether where document in question was not recovered from assessee's possession but was recovered from N's possession, and assessee was not allowed any opportunity of cross-examination and, further, N's testimony was not found credible at all, it could not be said that there was any iota of evidence to support revenue's case that a huge figure over and above figure booked in records and accounts changed hands between parties and, therefore, no addition could be made based on such document in hands of assessee - Held, yes 3. Jindal Stainless Ltd. , 120 ITD 301 (Del) Whether document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be presumed that the amount mentioned in the sale deed was not correct . 10. CIT v. Kantilal Prabhudas Patel , (2008) 296 ITR 568 (MP) and CIT v. Manish Buildwell (P) Ltd. , [2012] 204 Taxman 106/[2011] 16 taxmann.com 27 (Delhi) that the additions cannot be made on guess work or estimates. In the facts and circumstances, addition of Rs. 5,21,34,953/- made by Ld AO solely on the basis of contents of material seized from third party and not supported by any corroborative evidence is liable to be deleted and the appellant prays for the same. 6. Ld. CIT (A) remanded the matter back to AO vide letter dated 23.04.2018 and further remanded the matter vide letter dated 04.01.2018. In response, the AO submitted the relevant remand report which is reproduced by the ld.CIT(A) at pages 21 to 23 of the order and in response, assessee has submitted rejoinder to the remand report and the same is reproduced at pages 24 to 29 of the order. Further, assessee also filed an affidavit before ld. CIT (A) and the same was considered under section 250(4) of the Act and same was reproduced at pages 31 to 34 of the order. After considering the remand report and response to the remand report and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to AO after accepting the additional evidence in the form of affidavit. In this regard, he brought to our notice page 31 of the first appellate order. Ld. DR submitted that assessee has purchased agricultural land from various farmers and made several payments to them. He submitted that Murlidhar Infracon Pvt. Ltd. was incorporated only on 28.12.2011. However, several payments were made to farmers before its incorporation. By observing such payments, the AO has rightly made substantive addition in the hands of the assessee and protective addition in the hands of Murlidhar Infracon Pvt. Ltd.. He submitted that the same was reversed by ld. CIT(A) by relying on the submissions made by the assessee i.e. he deleted the substantive addition in the hands of the assessee. He brought to our notice para 7.2 of the assessment order and submitted that all the payments were made by cheques/cash before incorporation of Murlidhar Infracon Pvt. Ltd. and he submitted that ld. CIT (A) has not appreciated the above facts properly. He submitted that the payments were made before incorporation of Murlidhar Infracon Pvt. Ltd., who had made the abovesaid payments. He submitted that ld. CIT(A) also found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Prior to incorporation of Murlidhar Infracon Pvt. Ltd. whatever the payments were made to various land owners, the AO presumed that the same have been made by the assessee. In this regard, he brought to our notice para 7.2 of the assessment order and brought to our notice sub-para no.4 wherein it is recorded as under :- 4. There was an understanding in between Murlidhar and Sh. Pawan Sharma alias Shivmurti. As per the understanding, land pooling and consolidation of land was the responsibility of Sh. Pawan Sharma alias Shivmurti due to his vast experience and development of the same was to be done by Murlidhar, assessee company of the Earth Group. 10. With the above submission, he brought to our notice page 35 of the first appellate order and supported the findings of the ld. CIT(A) and no prejudice is caused to the Revenue with the findings of ld. CIT (A) that the addition has to be made in the hands of Murlidhar Infracon Pvt. Ltd.. By referring to the submissions of the ld. DR for the Revenue, he submitted that no doubt, certain payments were made before the incorporation of Murlidhar Infracon Pvt. Ltd. but these payments were not made by the assessee and he submitted that abso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the name of Murlidhar Infracon Pvt. Ltd. and the assessee is merely a commission agent and as per the balance sheet submitted before us by the assessee, there is no evidence that assessee has purchased any asset during the year nor earlier. As per the affidavit filed before the ld. CIT (A), the facts are clear that assessee has acted merely as a commission agent and all the payments relate to Murlidhar Infracon Pvt. Ltd. only. Ld. DR raised certain issues relating to certain payments made to the farmers before the incorporation of Murlidhar Infracon Pvt. Ltd.. We observed from the conveyance deeds that Murlidhar Infracon Pvt. Ltd. has accepted that they have made payments by mentioning various payments made to farmers prior to its incorporation. It clearly denotes that the directors/shareholders of Murlidhar Infracon Pvt. Ltd. must have made the arrangement to make those payments. There is no record brought on record by the Revenue that these payments were routed through bank accounts maintained by the assessee. Therefore, in absence of any cogent material, we are inclined to agree with the findings of ld. CIT (A). We do not see any reason to disturb the finding of the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
