AG-8 VENTURES LTD.,BHOPAL vs. ACIT, CENTRAL-1, BHOPAL

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

76. Against this addition, the assessee preferred an appeal before the Ld. CIT(A). Ld. CIT(A) deleted the addition at page 96 to 98 holding as under:

“4.4.2 I have consideration the facts of the case, evidence on record and findings of the AO. This is an undisputed fact that appellant has entered into an agreement with M/s. Aashirwad Sky Heights Tower Pvt. Ltd. The AO has alleged that appellant has paid sum of Rs. 21,00,000/- towards security deposit as per agreement. However, appellant has contended that all the payments were made through cheque to the tune of Rs. 89 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

4,80,00,000/- and no transaction was made in cash. Appellant has also brought to may notice that statement of Shri Mahendra Singh Namdeo was also recorded wherein, he has admitted that the all the payments of Rs. 4,80,00,000/- were received thought cheque and the balance amount is still outstanding. After considering the facts interalia plea raised by the appellant it can be safely held that the AO has no cogent/corroborative evidence on record which could prove that any such exchange of cash actually took place. Further, neither the appellant or its director nor Shri Mahendra Singh Namdeo has ever stated/admitted that a sum of Rs. 21,00,000/- was received from appellant company towards the security deposit. The entire adition has been made on assumption and presumption basis which is neither justified nor correct in the eyes of law. It is a settled facts that presumption how strong may cannot take place of evidence. 4.4.3 Nevertheless, the AO has grossly erred in making addition simply of the basis of guess work, assumption and presumption. It is well settled that no disallowance can be made as a leap in the dark. The AO has is not entitled to make a guess without evidence. The assessment of any particular year cannot be based on mere suspicion or bare guess, but on a legitimate material from which a reasonable inference of any expenditure being of the disallowable nature could be drawn and that the initial burden of finding such material is on the AO as held by Hon’ble High Court Orissa in the case of Bansidhar Onkaramall Vs. CIT (1953) 23 ITR 353 (Orissa). Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s. CIT (1954) 26 ITR 775 (SC) has hold that although strict rules of evidence Act do not apply to income tax proceeding, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expessed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). Also, once the assessee has discharged its onus of IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. proving that the parties under consideration are genuine, now the ball lies in the court of AO to prove that the claim of appellant is false and incorrect. Further, Shri Mahendra Singh Namdeo has never stated that a sum of Rs. 21,00,000/- was received in cash from appellant against the security deposit. Thus, in view of the above, the AO was not justified in making addition without bringing any clinching evidence on record which could prove any such exchange of cash took place. Thus, keeping in view the various case laws cited above, the addition made by the AO amounting to Rs. 21,00,000/- is Deleted being made on assumption and presumption basis. Therefore appeal on this ground is Allowed.”

Ld. Counsel for the revenue contended that during search, the Joint Development Agreement was found, which clearly stated that a payment of Rs. 21,00,000 was made in cash. The addition is therefore justified. Ld. Counsel for the assessee, on the other hand submitted that no cash payment of Rs. 21,00,000 was made as stated in the agreement. A payment of Rs. 4,80,00,000 was made upto the date of search, which was made by banking channel. This fact was also confirmed by Shri Mahendra Singh Namdeo of Aashirvad Sky Heights Tower Pvt Ltd. in his statement recorded u/s. 131 on 29.05.2014. Shri Mahendra Singh Namdeo denied cash receipt from assessee company, and also the cash payment was denied by assessee company. Ld. Counsel contended that the IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. writing in the agreement was not corroborated. He therefore relied on the order of Ld. CIT(A).

Aashirwad Sky Heights Tower Pvt. Ltd. The Ld. AO has alleged that assessee has paid sum of Rs. 21,00,000/- towards security deposit as per agreement. However, assessee has contended that all the payments were made through cheque to the tune of Rs. 4,80,00,000/- and no transaction was made in cash. Assessee has also brought to our notice that statement of Shri Mahendra Singh Namdeo was also recorded wherein, he has admitted that the all the payments of Rs. 4,80,00,000/- were received through cheque and the balance amount is still outstanding. We find that although the agreement raises suspicion that cash payment was made by assessee company of Rs. 21,00,000; but this suspicion is not confirmed by the department by providing any evidence on record.

Both the parties to the transaction denied this cash payment. In the books of M/s. Aashirvad Sky Heights Tower Pvt Ltd, this amount is IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. not shown to have been received. On being asked, it was informed that no action was taken in the case of M/s. Aashirvad Sky Heights Tower Pvt Ltd. The addition therefore lacks merits. We therefore dismiss this ground of appeal of the department.

79. We now take up Ground No. 4 of A.Y. 2011-12 (Rs.

3,10,00,000) and Ground No. 3 of A.Y. 2012-13 (Rs. 54,62,000) of revenue’s appeal relating to Loose paper LPS A-28 page 75 dealing with unaccounted investment in shares of M/s. Maa Bhagwati Sugar Mills Ltd (MBSM).

Total Sale Consideration 575.62 Less Paid till 20.03.11 350 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Cash 310 Cheque due 40 Balance due in cheque 171 Balance must have been paid in ‘B’ 54.620 (Not accounted) Pls confirm?

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Further, at PB 188, in the Balance sheet of 31.03.2012, investment in MBSM was reflected at Rs. 21.72 crores. He also referred to PB 232, which was the balance sheet of 31.03.2013, where the investment in MBSM was reflected at Rs. 21.72 crores. Ld. Counsel for the assessee submitted that although this loose paper was found from the premises of the assessee company, the printed document referred to the cheque payments, which were duly recorded in the books. However, at the bottom of the page, some handwritten rough noting was made. He submitted that who made the rough noting and for what purpose the same was made was unknown and was never enquired by the department during and after search. Further, no enquiry was made from Shri Bharat Bhusan Patel regarding alleged cash payment. During search, Shri IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. Hemant Kumar Soni was asked about the alleged document and he stated that no cash payment was made. So far as the MOU was concerned, it was contended that neither the parties, nor the witness have signed it. The document had no value, as it was a mere type written document. Who made it and for what purposes it was made is unknown. It was found from the residence of one employee Shri Yashovardhan Jain. The MOU stated only the proposed payments through post dated cheques. It does not say that any excess amount was paid by the assessee company. It was further contended that MSBM was in losses, as stated before the search party and later during assessment. The construction of building was also going on. Thus, there was no reason for making any excessive payment. It was contended lastly, that no excessive payment was made, and the amount recorded in the books was already higher than the amount mentioned in the loose sheet. Thus, the allegation of unexplained expenditure was baseless.

Similarly on 31.03.2012, the investment was reflected at Rs. 21.72 crores; and thus there was an increase of Rs. 1.25 crores. This loose paper mentions the consideration of Rs. 5.75 crores. The figure in the loose paper is substantially lower than that recorded in the books. The transaction mentioned in the loose paper does not correlate with the accounted transaction; moreover, the accounted transaction is at a higher value. It seems that there was some rough noting on this loose paper by some unknown person, which Ld. AO has interpreted as unaccounted payment. Had the maker of the loose paper and the purpose for which it was made been enquired, the transaction therein could have been deciphered. No effort was made by the Ld. AO in this regard. A transaction which is already at Rs. 11.20 crores in F.Y. 2010-11 and Rs. 1.25 crores in F.Y. 2012- 13, how can such transaction be compared with the loose jotting IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. which states the transaction at Rs. 5.75 crores, moreover when it is unknown as to who wrote it and for what purposes. In so far as the MOU is concerned, we agree with the contention of the Ld. Counsel for the assessee that the document is unsigned by any of the parties, and not even signed by the witnesses. The document is a mere typewritten document, not even found from the office of company. This MOU stated only the proposed payments through post dated cheques and does not state about any excess amount paid by assessee company. No inquiry what-soever was brought on record to have been conducted from Shri Bharat Bhushan Patel.

Relevant extract of finding of Ld.CIT(A) deleting the impugned addition reads as follows:-

“4.5.3 I have considered the factual matrix of the case, written submission filed and assessment order. During the course of search page no. 75 of LPS- A-28 was found and seized from office premises of appellant which is also scanned on page no 61 of assessment order. The impounded paper i.e. page no75 of LPS-A-28 is a MOU for purchase of share of M/s Maa Bhagwati Sugar Mills Ltd and is a document which contain some rough nothings/jottings in the bottom of the page. Appellant during appellate proceedings submitted that no over and above consideration was paid in addition to what is disclosed in books of account. The impuged loose paper found in possession is an undated, unsigned and only represents rough working/jottings/scribbling. After considering the entire factual matrix and 99 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. evidence/material on record inter alia written submissions filed. I reach to conclusion that impunged addition was made on the basis of assumption and presumption which neither sustainable on facts nor in law. The AO has reached to conclusion that appellant has made unexplained investment of Rs. 3,10,00,000/- in purchase of shares of M/s Maa Bhagwati Sugar Mills Ltd. Appellant during appellate proceedings has strongly contented that appellant never paid any amount over and above that is mentioned in audited books of account. This document has been scanned on page 61 of assessment order. On a plain and cursory look would make it amply clear that this paper is relating to “some working on investment in shares of M/s Maa Bhagwati Sugar Mills Ltd”. The AO has alleged that sum of Rs. 3,10,00,000/- was paid in cash by the appellant to Bharat Bhushan Patel and Others. On the contrary appellant submitted that the presumption made by the AO is without any incriminating material on record which could prove that sum of Rs. 3,10,00,000/- was paid over and above the consideration as mentioned in books of account. Appellant has argued that the rough workings as mentioned in the bottom of loose paper cannot be made basis of addition, until and unless any cogent or incriminating document is found in support of transaction. Further, the AO has neither examination Bhart Bhushan Patel nor his brother or family member regarding the impunged loose paper and the entire addition has been made on sheer presumption and assumption basis. Further, the AO has also failed to bring on record any cogent evidence, creating direct nexus of receipt of Rs. 3,10,00,000/- by the appellant. Therefore, in absence of any cogent evidence having direct nexus with the impunged transaction, the said impunged paper i.e. page no 75 of LPS-A-28 cannot be used against the assessee. 4.5.4 This is settled legal position that any ‘dumb document’ cannot be used as an evidence to draw an adverse inference against the assessee.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

4.5.5 The AO has made allegation against the assessee that the has received that he has received Rs. 3,10,00,000/- to Shri Bharat Bhushan patel and other as mentioned on loose papers 75 of LPS-A- 28 in cash. In absenceof any admission any entire by Shri Bharat Bhushan patel and other or any incriminating documents/paper to establish that assessee has paid sum of Rs. 3,10,00,000/-. In cash, the impunged addition is not sustainable in the eyes of laws. The appellant has also stated that the AO by making a general observation has stated that previous promoters has paid some consideration in cash to the seller party. Appellant has brought to my notice that another loose paper (another MOU, undated and unsigned) was found in possession of Shri Yashovardhan Jain i.e. page no. 64 which states that appellant shall pay sum of Rs. 1,41,00,000/- towards purchase of share of Maa Bhagwati Sugars Mill Ltd. has been accepted as true by the AO without any thorough examination.Thus, the only inference which can be drawn from this is that the seized loose paper is nothing but represent rough workings/jottings/scribbling. It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal maxim “affairmanti non neganti incumbit probation” means burden of proof lies upon him who affirm and not upon him who denies. Similarly as per doctrine of common law “incumbit probation qui digit non qui negat” i.e. burden lies upon one who alleges and not upon one who deny the existence of the fact. The loose paper i.e. page 75 of LPD-A-28 is rough working/jotting. The AO has filed to discharge his onus of proof especially when addition has been made under “deeming fiction”. In view of this lacune on the part of AO, impunged addition is legally not sustainable. As held in the case of CIT v/s KP Varghese 131 ITR 574 (SC) by Hob’ble Apex Court in absence of IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. evidence that actually assessee paid more amount than declared in regarded deed, no addition can be made. In the case of Bansal Strips (P) Ltd. & Ors Vs. ACIT (2006) 99 ITD 177 (Del) it has been held that:- “If an income not admitted by assessee is to be assessee in the hands of the assessee. The burden to establish the such income is chargeable to tax is on the AO. In the absence of adequate material as to nature and ownership of the transactions, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totally various figures jotted down on loosed documents”. 4.5.7 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have examined beneficial i.e. Shri Bharat Bhushan patel and order who were actually involved in the impugned transaction Secondly, the AO should have done independent enquiry regarding the impugned transaction. Thirdly, the loose paper or rather say it as dumb documents should be a speaking one having direct nexus with the assessee, which was not in the case of appellant. Fourthly, the AO being of considered opinon that vash of Rs. 3,10,00,000/- was paid by the appellant company for purchasing shares of M/s Maa Bhagwati Sugar Mill Ltd. Should have rejected books of account of the appellant which was also not done. Fifthly, it is settled legal pronouncement that presumption how strong may, cannot take place of evidence. Last but not the least, neither the beneficery nor any of the partner of appellant has ever stated that such transaction actually occurred. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justifies in making addition of Rs. 3,10,00,000/- being on sheer assenting and presumption basis.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Thus, the addition made by the AO amounting to Rs. 3,10,00,000/- is Deleted. Therefore appeal on this ground is Allowed.” 86. In the given set of facts and circumstances of the case and settled judicial precedents followed by Ld.CIT(A), we are of the view that Ld. CIT(A) was justified in holding that this document was not sufficient to make addition for unaccounted investment, against the assessee company. Thus no interference is called for in the finding of Ld.CIT(A) .In the result, Revenue’s Ground no. 4 and Ground no.3 for A.Y. 2011-12 and A.Y. 2012-13 respectively are dismissed.

3,16,00,000); and Ground No. 5 (Rs. 1,81,00,000) and Ground No. 6 (Rs. 4,00,00,000) for A.Y. 2012-13 of the Department’s appeal.

Ground No. 5 for A.Y. 2011-12 and A.Y. 2012-13 relate to unexplained investment as per LPS 1/3 pg. 99 to 103 found from the residence of Shri Yashovardhan Jain, General Manager Finance of assessee company. Further Ground No. 6 for A.Y. 2012-13 relate to alleged commission payment in respect to the same loose paper.

Since all these issues are interconnected these grounds are adjudicated together.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Thus, as per this agreement, difference amount of Rs. 4,97,08,000 has to be paid by the assessee company to the first party for the said land. Further, Ld. AO referred to LPS 1/2 page no. 67 which was ledger of ‘Munna Agrawal – Highland Land’ for the period IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. 01.04.2011 to 07.06.2013. This ledger allegedly contained date wise entries of cash payment to Munna Agrawal at Rs. 1,52,00,000 .

Further LPS 1/2 page no. 65 was ledger account of Pradeep Agrawal. As per this ledger cash payment of Rs. 75,00,000 was paid to him. LPS 1/2 page 56 was also reffered by Ld. AO. As per this loose sheet it was mentioned ‘Month wise Amount paid’. Total amount payable was “Rs. 225 + 470.03 = 695.03”. Month-woie amount paid for Feb 12 to June 13 was Rs. 377.00 lakhs. Ld. AO further referred to LPS 1/2, page 55 which contained details of “Agreement revised area – 31.20 acres” dated 07.06.2013. Ld. AO further referred to BS-1/2 page no. 7 which was a page of diary on which certain hand written notings have been made. Ld. AO therefore alleged that unaccounted payment was made by the assessee company to M/s. Citi Infraventures Pvt Ltd. through their Directors Shri Pradeep Agrawal and to Shri Kunal Agrawal. He therefore added Rs. 3,16,00,000 in A.Y. 2011-12 and Rs. 1,81,00,000 in A.Y. 2012-13. Further, Ld. AO noted that in the Annexure A to the agreement, it was mentioned that “both side commission paid by AG8 (4 crores) from 1 Feb. 2012. Agreement Amt IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. (9 crore) Intt. Will be charge 3% Per month”. Ld. AO further added commission Rs. 4 crores on the basis of said noting which is covered in Ground no. 6 for A.Y. 2012-13.

4.6.9 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor Shri Pradeep Agarwal or any of the farmer/seller has ever admitted about payment of Rs. 4,97,00,000/- by the appellant in cash. On the contrary, not only from the five farmers/bhuswamis whose names as mentioned on page no 99 of LPS- 1/3 but from various other farmers/bhuswamis, appellant has directly purchase agricultural land in village Phanda Kalan, Bhopal. The payment made for purchase of lands are duly recorded in books of account and through cheques. In absence of any corroborative evidence to prove that there was any exchange of money by CASH, AO has no locus to assume that appellant has paid sum of Rs. 4,97,00,000/- to M/s Citi Infraventures P.Ltd. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.610 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have provided opportunity of cross examination of Shri Yashovardhan Jain. Secondly, the AO should have examined Shri Pradeep Agarwal and Shri Munna Agarwal before making any addition to the income of the appellant. Thirdly, the AO should have brough some independent evidence suggesting exchange of cash of Rs. 4,97,00,000/-. Fourthly, the impubged loose paper 55, 56, 65 & 67 of LPS- 1/3 were found in possession of Shri Yashovardhan Jain and not in possession of appellant. Fifthly, none of the loose paper under consideration is signed by the appellant or any of its authorized representative. Sixthly, the impunged loose paper should be speaking one without having any second interepration, which is not in the case of appellant. Seventhly, the AO has also relied upon the statement of farmers/sellers, who during appellant proceedings had filed affidavits stating that no cash was received from appellant company against the sale of their land. One of the seller has stated that he was under pressure and therefore, has accepted cash receipt of Rs. 5,00,000/- from appellant before the AO. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justifies in making addition of Rs. 3,16,00,000/- being on sheer assenting and presumption basis. Thus, the addition made by the AO amounting to Rs. 3,16,00,000/- is Deleted. Therefore appeal on this ground is Allowed.”

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Similar findings were given for deleting the addition of Rs.

1,81,00,000 for A.Y. 2012-13.

The AO has made allegation against the assessee that the has made payment of Rs. 5,96,000/- towards Part B and salary of drive. In absence of any admission by Shri Rajeev Soni or order directors of appellant company or any incriminating document/paper to establish that assessee has made payment of Rs. 5,96,000/- It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal maxim “affairmanti non neganti incumbit probation” means burden of proof lies upon him who affirm and not upon him who denies. Similarly as per doctrine of common law “incumbit probation qui digit non qui negat” i.e. burden lies upon one who alleges and not upon one who deny the existence of the fact. It is important to note that Shri Rajeev Soni was appointed director of M/s Aakriti Dwelling Pvt. Ltd. on 28.06.2008 and not on 26.06.2008 as alleged by the AO. Further, the loose paper i.e. page no 38 of LPS-A-14 is rough working/jotting. The AO has filed to discharge his onus of proof especially when addition has been made under “deeming fiction”. In view of this lacune on the part of AO, impunged addition is legally not sustainable. As held in the case of CIT v/s KP Varghese 131 ITR 574 (SC) by Hob’ble Apex Court in absence of evidence that actually assessee paid more amount than declared in IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. regarded deed, no addition can be made. In the case of Bansal Strips (P) Ltd. & Ors Vs. ACIT (2006) 99 ITD 177 (Del) it has been held that:- “If an income not admitted by assessee is to be assessee in the hands of the assessee. The burden to establish the such income is chargeable to tax is on the AO. In the absence of adequate material as to nature and ownership of the transactions, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totally various figures jotted down on loosed documents”. 4.7.5 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor the payer has ever admitted about payment of Rs. 5,96,000/-. In absence of any corroborative evidence to prove that there was exchange of money by CASH/Cheques/Kind, AO has no locus to assume that appellant has paid Rs. 5,96,000/-. It is settle law that AO connot make any addition merely on basis of suspicion, however stong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.7.6 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have provided completed details of beneficiaries who has received commission of Rs. 4,00,00,000/- from appellant. Secondly, the AO should have done independent enquiry regarding the impunged transaction. Thirdly, no corroborative evidence was IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. found during serach suggesting payment of commission of Rs. 4,00,00,000/- by the appellant. Fourthly, the nothing/scribbling on loose paper should be a speaking one having direct nexus with the assessee and transaction mentioned therein, which was not in the case of appellant. Fifthly, the AO being of considered opinon that cash Rs. 4,00,00,000/- was paid by the appellant company toward commission for purchasing lands, should have rejected books of account of the appellant which was also not done. Sixthly, the AO failed to bring on record vital details such as date of payment, name of beneficiary. Commission paid against which land, mode of payment of commission etc. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justifies in making addition of Rs. 4,00,00,000/- being on sheer assenting and presumption basis. Thus, the addition made by the AO amounting to Rs. 4,00,00,000/- is Deleted. Therefore appeal on this ground is Allowed.”

per Annexure A of the document, it was clear that the assessee company purchased 32.89 acres of land @ 51.51 lac/ acre from M/s. Citi Infra ventures Ltd. The amount payable to the farmers was Rs. 11,97,08,000 and therefore excess amount of Rs. 110 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. 4,97,00,000 was paid in excess by the assessee-company. Further, he referred to LPS 1/2 page no. 55, 56, 65, and 67 and further BS- 1/2 page no. 7 and contended that the documents further gave the details of payments made to Shri Munna Agrawal alias Shri Pradeep Agrawal, and Shri KBL Agrawal. He therefore submitted that sufficient evidences were found during the course of search to establish the payment of Rs. 4.97 crores as on-money to M/s. Citi Infraventures Pvt Ltd. In respect of commission payment , he further referred to Annexure A of the agreement and submitted that the fact of commission payment of Rs. 4 crores was clearly mentioned in the agreement. He therefore submitted that the order of the Ld. AO may kindly be restored and addition so made may be confirmed.

Citi Infraventures Ltd, yet later the land was purchase directly from different farmers subsequently. Therefore, this agreement was later not registered. The farmers were examined on oath and they accepted that the transaction was done with assessee company.

Further statement of Shri Pradeep Agrawal and Shri Kunj Bihari Lal Agrawal of M/s. Citi Infraventures Ltd. was also recorded by the Ld. AO. In their statement also, they accepted that this transaction was directly done by assessee-company with the farmers. Further in respect of the allegation of received on certain amount in cash by the farmers, Ld. Counsel for the assessee tried to summarise the allegeation of cash received in the following chart:-

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. Name of farmer Khasara no Date of Sale Summary of Statement and details registry consideration recorded of land/Area Shri Deep Singh 346/1 & 16.02.201 2,43,44,000 1. On 05.02.2016 S/o Late Shri 348 7.10 2 Recived cash of Rs. 10 lac. Gurubk Singh acres (PB 867- (PB 880-885) 877) 2. On 08.02.2016 No Cash received (PB 886- 888) 3. on 12.02.2016 No Cash received (PB 889- 891) 4. on 26.02.2016 Shri Dinesh S/o Deep Singh that cash of Rs. 3,64,000/- was received.(PB 892-894) Affidavit – PB 879 No cash received - Smt. Harkuwar 359 & 16.06.201 1,66,72,000 1. On 04.02.2016 & Bai w/o Shri 350/2 2 08.02.2016 – No cash Gurubaksh received. (PB 949-966) - Shri Bhagwan 6.52 acres (PB 924- 2. Affidavit from Bhagwan Singh S/o Shri 948) Singh and Soram Bai Gurubaksh (PB.967-968) that no cash - Smt Soram bai received from sale of land. and Smt - Sugan Bai d/o Gurubaksh Shri Suresh s/o 362/21 01.11.201 1,20,00,000 1. On 05.02.2016 that no Shri Ram Singh 3 acres 2 cash received. (PB 1025- IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

1029) (PB 1004- 2. Affidavit – PB 1030, No 1024) cash received. Shri Rajmal s/o 362/1/2/ 24.05.201 1,90,00,000 No recorded. Shri Shambhulal & 375 2 6 acres (PB 898- 919) Shri Govind 362/1/1 13.09.201 1,75,20,000 1.On 28.04.2014 no cash Singh s/o Shri 4.38 acres 2 received. Shambhulal 2. On 26.02.2016 stated (PB 973- that cash of Rs. 5 lac 993) received. (PB 999) 2. Affidavit on 11.05.2018 that no cash was received. (PB 994)

Ld. Counsel for the assessee submitted that none of the sellers accepted to have received any amount in cash. In respect of two sellers, who had accepted to have received cash, they subsequently filed affidavit stating that no such cash was received. Further, in respect of the allegation regarding payments to Shri KBL Agarwal against purchase of land at village Phanda, Bhopal, Ld. Counsel referred to the copy of ledger account of Shri Kunj Behari Lal Agarwal and copy of registered deed for land at village Phanda, Bhopal. He submitted that assessee company purchased 9 acres of IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. land from Shri KBL Agarwal for a total sale consideration of Rs. 3,67,59,000/-. All the payments were made through different cheques. This transaction was recorded in books. This transaction was different. Further, referring to LPS 1/2 page nos. 55, 56, 65 & 67 it was submitted that the maker of these documents was not known. It was not enquired as to who had written it. The same were even not found from the premises of assessee company. Further, Ld. Counsel for the assessee submitted that no commission as mentioned in the Annexure A was paid. It was unknown as to who wrote it, and why such scrubbling was made. Further, Ld. AO did not enquire as to when such commission, if any was paid, and to whom such commission was made. Merely on a rough scrubbling this addition of huge amount of Rs. 4 crores was made. Ld. Counsel therefore relied on the order of Ld. CIT(A) and contended that the same may be confirmed.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. In respect of Shri Suresh, he denied on money receipt and thereafter reaffirmed the fact in affidavit. Also, in respect of Shri Rajmal, his statement was not recorded. Lastly, in respect of Shri Govind Singh, his statement was recorded on two occasions. On 28.04.2014, he denied to have received on-money. Later, on 26.02.2016, he accepted receipt of on-money of Rs. 5 lakhs.

However, subsequently, he retracted receipt of on-moeny by filing affidavit. In these circumstances, all the sellers have either not accepted to have received any on-money or the same was later retracted. In these given facts and circumstance we do not find any infirmity in the finding of Ld. CIT(A) on the issue under consideration deleting the addition of Rs.3,16,00,000/- and Rs.1,81,00,000/- and the same stands confirmed.

Also, the notings in the agreement are mere rough scrubbings. Who wrote it, and commission, if any, was paid to whom was never IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. enquired upon. We therefore confirm the order of Ld. CIT(A) on this ground also.

4,00,00,000) for A.Y. 2012-13 of the Department’s appeal are hereby dismissed.

“4.8.5 Due consideration is given to the submission filed by the appellant inter alia the evidence furnished. Let me first summarise the basis on which additions have been made by the Assessing Officer. The AO has solely relied upon statement recorded of sellers Shri Narayn Singh and Shri Jai Ram Singh. The addition made by the AO are purely hypothetical and without any independent corroborative evidence. The AO has consistently harped on the statements of sellers. This is an admitted fact that statements of 21 were recorded. This is also an admitted fact these statements were recorded behind the back of appellant. No opportunity of cross-examination was allowed to the assessee though specifically asked for the assessee. It has been held by hon’ble High Court in the case of DCIT V/s Mahendra AMbbalal Patel & CIT V/s Kantilalbhai Ravidas Patel that statement has no evidentiary value if opportunity of cross-examination is not allowed. Besides this, apparently the AO did not independently verified the facts about the genuineness of the said party as well as the impunged purchase transaction. It is not understandable as to how independently and impartially, the AO could reach to the final conclusion that on money amounting totaling to Rs. 30,00,000/- was paid for purchased of land from different sellers without even bringing a single iota of positive evidence on record except the 120 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. statement of farmers which was also recorded behind the back of assessee. Hence, the addition made by the AO was based on mere guess work, conjuctures and surmises, which has no place in tax jurisprudence. In sum & substance, action of the AO is neither sustainable on facts nor in law, being based on statement of sellers. 4.8.7 It is a settled legal principal that addition cannot be simply made on the basis of third party statement and without giving any opportunity of cross examination. The following judicial pronouncement supports the case of appellant. • CIT v. J.M.D. Communications P. LTD (2010) 320 ITR 17 (ST) (SC) (ITA NO 106 OF 2007 DT 16-1-2009(Delhi)(HC). Person who has issued the bills has given the statement that he was carrying on the business of issuing bogus accommodation bills on commission basis with the assessee, and this was not put to the assessee for rebuttal or cross-examination, High Court held no substantial question of law. On SLP by revenue the court held that it the AO wants to use some statement made before him, then on request by the assessee, is bound to put the deponent for cross examination. • Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC)

Though the proceedings under the income tax Act are not governed by the strict rules of evidence, the department is should to afford an opportunity to controvert and cross examine on which the department places its reliance. Opportunity of cross examination must be given. The consequence of breach of natural justice is that either the addition is void or matter may have to be to be remanded to lower authorities. • Hon’ble Delhi High Court in the case of Basudev Garg Vs. Commissioner of Customs. • Hon’ble Delhi High Court in the case of CIT Vs. Ashwani Gupta, 322 ITR 396 (Del) 121 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. • Hon’ble ITAT, Delhi in the case of DCIT Vs. Heminder Kumar in Date of order 29.08.2014. • Hon’ble Rajasthan High Court in the case of Commissioner of Income- Tax-I, Jaipur Vs. A.L. Lalpuria Construaction (P) Ltd. • Hon’ble Calcutta High Court in the case of Commissioner of Income-Tax Vs. Eastern Commercial Enterprises (1994) 210 ITR 103 (Cal.)(HC) • Commissioner of Income-Tax Vs. Surise Tooling System (P) Ltd. [2014] 47 TAXMANN 20 (Delhi High Court)- “Where Assessing officer made addition to assessee’s income on basis of statement recorded by director company in course of survey to effect that said amount represented non-existent transaction, since statement so made did not have any evidentiary value and, moreover, Assessing Officer had not even rejected assessee’s books of account while treating transaction in question to be bogus, impugned addition deserved to be deleted”

• Hon’ble Gujarat High Court in the case of Pr. Comm. Of Income Tax –I vs. Chartered Speed Pvt. Ltd. and also Hon’ble Gujarat High Court in the case of CIT Vs. Indrajit Singh Suri (2013) 33 TAXMANN 281 (Guj.)- “where additions were mad on basis of statement of persons who were not allowed to be cross examined by assessee, additions were not sustainable.”

• Radha Madhav Ind. (P) Ltd. Vs. Commissioner of Central Excise, Raipur (2015) 54 TAXMANN 404 (New Delhi – CESTAT)- “Non-supply of documents and not allowing cross-examination of said witnesses would violate principles of natural justice” • CIT v. Eastern Commercial Enterprises (1994) 210 ITR 103 (Cal.) (HC)- IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

“The assessee in entitled to cross-examine the person who was examined by the A.O. Cross- examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplies the contents of all such evidence both oral and documentary, so that he can prepare to meet the case against him. • Decision of Hon’ble Gujarat High Court in the case DCIT vs. Mehendra Ambalal Patel Tax wherein the Hon’ble High Court held as under: “Though the AO has placed reliance upon the statements of Shri Monoj vadodaria and Shri G.C. Patel for the purpose of taxing the amount in the hands of the assessee, despite request being made by the assessee for Cross-examining both the said persons, the AO has not permitted the assessee to Cross-examining them. In the circumstances, no reliance could be placed upon the statements of the said persons as the respondent assessee had no opportunity to cross-examine them. The statements made by the aforesaid persons would have no evidentiary value and as such, would not be admissible in evidence.”

• Decision of Hon’ble Gujarat High Court in the case CIT Vs. Kantibhai Revidas Patel Tax wherein it was held as under: “The Ld. AO had used this statement without allowing cross examination of vikas A. shah which is against the principle of natural justice.” 4.8.8 The AO further presumed that appellant has paid consideration over and above the registered value. Hon’ble Rajasthan high Court in the case of CIT vs. Bhanwarlal Morwatiya (2008) 215 CTR 489 (Raj) has held as under:- “Apart from the fact, that even if, it were to be assumed that the price of the land was different than the one recited in the sale deed unless it is IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. established on record by the department, that as a matter of fact the consideration as alleged by the department did pass to the seller from the purchase it cannot be said that the department had any right to make an addition. If the case of the appellant stands in a much better footing in as much as there is no iota evidence found in course of search that the appellant had paid more money than what was stated in the purchase document. In the case of the appellant the exercise carried out by the assessing officer is without the authority of law and therefore the same cannot be a basis for addition. Hon’ble Bombay High Court in the case of Mrs. Nirmal Laxminarayan Grover v. Appropriate Authority, 223 ITR 572. The relevant portion of the judgment is extracted below: “However, as regards the contention raised on behalf of the petitioner that the market rate fixed for the area in question at the relevant time in the land rates fixed by the Nagpur Municipal Corporation, Nagpur, as well as by the stamp authority for the purposes of levy of stamp duty on registration of the documents was Rs. 1,500 per sq. meter, i.e., Rs. 145 per sq. ft. and therefore, the rate of Rs. 225 per sq. ft. agreed to between the parties for purchase of the suit land was more than the market rate for such land, it may be seen that the rates of properties maintained by the above authority or officers for the purposes of checking evasion to stamp duty upon transfer deeds are not pursuant to the provision in any statute, relating even to stamp duty. At any rate it cannot be a basis for determination of the market value for acquisition of for compulsory purchase of any land where the usual test is of a prudent buyer and a prudent seller determined by the evidence of sale transaction, if available in the vicinity, of the land in question whose market rate is to be determined possessing the same or more or less similar advantageous features. This is the view taken by the Supreme Court in the case of Jawajee Nagnatham v. The Revenue Devisional officer [1994] 2 JT (SC) 604; AIR 1994 SCW 2852. The submission on behalf of the petitioners IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. based upon the rates of properties maintained by the Sated Government for the purposes of checking evasion of stamp duty on transfer deeds cannot, therefore be accepted. 4.8.9 In view of the above, firstly, the AO ought to have given opportunity of cross examination to the appellant. Secondly, the AO should have brought evidence having direct nexus with the alleged on money payment of Rs. 30,00,000/-. Thirdly, the additions made by the AO are on assumption and presumption basis. Fourthly, the loose papers were found in possession of Shri Yashovardhan Jain and not from appellant. Fifthly, the statements were recorded by the then ADIT who was not appropriate jurisdictional officer. My findings are based on the findings given in above mentioned paras. Thus, keeping in view the above discussion and judiciously following the decision of Hon’ble Supreme Court in the case of Krishinchand Chellaram (supra), the AO was not justified in making addition of Rs. 30,00,000/-. Thus, addition made by the AO amounting to Rs. 30,00,000/- is Deleted being on the basis of statement recorded behind the back of appellant and no meaningful opportunity of cross examination was provided. Therefore, appeal on this ground is Allowed.”

He therefore contended that the mere statement of third persons, therefore, cannot be relied on for making the addition.

Secondly, cross-examination of the sellers was not granted by the IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. Ld. AO. The statement of the sellers cannot be relied as cross- examination was not granted. Thirdly, there is no corroborative material, brought on record, except the statement of the sellers. In these circumstances, we find merit in the finding of Ld CIT(A) which is duly supported by various decision squarely applicable on the instant issue and thus hold that the addition cannot be sustained.

This Ground no. 7 of the Department’s appeal for A.Y. 2011-12 is therefore dismissed.

Name & Address of party A.Y A.Y A.Y 2011-12 2012-13 2013-14 Lake City Suppliers Pvt Ltd, 0 0 60,083,427 Flamingo 21, Aakriti Eco city, Bhopal Maa Mahima Traders, C-171, 39,33,900 70,08,192 38,66,301 Rajat vihar, Hoshangabad Road, Bhopal S.K. Contractor, E-6-J-222, 39,88,975 0 0 Asha Niketan, Arera Colony, Bhopal Year wise total 79,22,875 70,08,192 6,39,49,728

104. Ld. AO referred to the post search inquiries conducted against the aforesaid parties and concluded that the whereabouts of these parties could not be ascertained. In respect of M/s. Lakecity Suppliers Pvt Ltd., Ld. AO stated that it is a non-descript entity, and had no real economic existence. In the assessment order, Ld. AO referred to the visit by Inspector and he stated that as per the Inspector’s report, no such party was found at the address of the aforesaid party. The neighbours informed that, premises was on rent and it was informed that a family resides at the premises. Also, Ld. AO referred to the statement of Shri Verghese Joseph, owner of the premises, to contend that the same was not given on rent to M/s. Lake City Suppliers Pvt Ltd. In respect of M/s. Maa Mahima Traders, Bhopal, Ld. AO referred to Inspectors report and IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. contended that no such party resided at the given address. Instead the house was residential house and it was locked everytime Inspector visited. As enquired from the neighbours, some students resided there on rent, and they used to come during late evening and leave the premises early in the morning. Lastly, in respect of M/s. S.K. Contrator, Bhopal, Ld AO again referred to Inspector’s report and stated that no such party resided at the address. The premises was occupied by one family for last 7-8 years. The statement of owner of the premises Smt. Malti Gaur was also recorded, and denied to have known M/s. S.K. Contractors. Ld. AO therefore made the addition treating the expenditure as bogus.

105. Against this addition, an appeal was preferred by the assessee before the Ld. CIT(A). Ld. CIT(A) deleted the addition at page nos.

169 to 171 of his order, holding as under:

“4.9.5 I have considered the facts of the case, various case, law replied upon by the appellant and findings of the AO. The appellant during the year FY 2010-11 has purchased send material of Rs. 39,33,900/- from M/s Maa Mahima Traders and plaster work was done by M/s SK Contractor of Rs. 39,88,975/-. The AO during assessment proceedings deputed Inspector of Income Tax in order to unearthing correct facts regarding that transaction made with these parties. The Inspector of Income Tax visited the address of IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. these parties as provided by the appellant, however, was not able to trace either of them. Therefore the AO required assessee to explain the transaction and produce these sellers for examination on oath. The AO has alleged that appellant failed to prove genuineness as well as during appellant proceedings has filed copies of bills and vouchers, supporting ledger account, part bank account statement of these parties, PAN No, TIN No, TDS certificate, name and address and mobile No of these parties. 4.9.6 It is important to mention here that the AO in para 25.6 (i) of assessment order has stated that “none of the three parties have responded to the summons issued by this office for verification of the transaction with the assessee company.” This statement of AO prime-facia shows that the summons were served upon these parties, however, they deliberately did not responded for whatever reason. Thus, the AO has continuously harped upon the fact that the assessee failed to produce the impugned parties for examination on oath. Hon’ble Supreme Court in the case of LIC of India v/s CIT (1996) 216 ITR 410 (SC) has held that the law does not compel a man to perform. In the present case, it was impossible for assessee to produce the parties who are not willing to appear before the AO. Law does not expect a man to do impossible. I find it suitable and appropriate to quote decision of Hon’ble Bombay High Court in the case of CIT vs. Nikunj Exirnp Enterprieses (P) Ltd. [2013] 216 Taxman 171 (Bom.) which is very similar to the case of appellant wherein it has held that where sales supported the purchases and payment was made through banks, merely because suppliers has not appeared before AO, the purchase could not be treated as bogus. 4.9.7 Nevertheless, the AO has grossly erred in making addition simply of the basis of guess work, assumption and presumption. It is well settled that no disallowance can be made as a leap in the dark. The AO is not entitled to make a guess without evidence. The assessment of any particular year cannot be based on mere suspicion or bare guess, but on a legitimate IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. material from which a reasonable inference of any expenditure being of the disallowable nature could be drawn and that the initial burned of finding such material is on the AO as held by Hon’ble High Court Orissa in the case of Bansidhar Onkarmall Vs. CIT (1953) 23 ITR 353 (Orissa). Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. V/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). Also, once the assessee has discharged its onus of proving that the parties under consideration are genuine, now the ball lies in the court of AO to prove that the claim of appellant is false and incorrect. Further, the AO has neither done any independent enquiry even when PAN No, TIN No, bank account statement of these parties were provided to AO. Thus, in view of the above, the AO was not justified in disallowing payments to various parties simply on the basis of assumption, presumption and surmise basis. The AO ought to have brought on record any clinching evidence which could prove that the payments were brought on record made against bough bills and vouchers. Thus, keeping in view the various case laws cited above, the addition made by the AO amounting to Rs. 79,22,875/- is Deleted. Therefore, appeal on this ground is Allowed.”

Similar findings were given in A.Y. 2012-13 and A.Y. 2013-14.

The addition made by the Ld. AO may therefore be confirmed.

M/s. Maa Mahima Traders M/s. S.K. Contractor Lake City Suppliers Pvt. Ltd Prop: Tularam Chouhan Prop: Zakir Hussain Flamingo-21, Aakriti Eco City, C-171,Rajat Vihar, Hoshanagabad E-6, J-298, Asha Niketan , Arera Bhopl. Road, Bhopal Colony, Bhopal R.N. Sahu & Praveen Misra Contact No. 9630707251 Contact No. 9507516087 Contact No. ,998103138 PAN : - AAUPH9884R PANo.AACCL2144H PAN: -AIHPC0618D TIN - 23924008615 TIN. 23839046908 TIN - 23273606568 Purchase of 50% shares of the company is proved by seized paper Nature of Sand supplier Plaster work and other job work. Building material supplier transaction (mainly Iron & Cement) Assmt. year 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14 Addition 3933900 7008192 3866301 3988975 - - - - 60083427 TDS deducted TDS not applicable 11474 TDS certificate and copies of a/c of S.K. Contractor in the books of the appellant for A.yrs.2011-12 to 2013-14 are enclosed. Evidences to prove PB 1060-1154 PB 1155-1196 PB 1444-1509 transaction Ld. Counsel for the assessee submitted that the transactions with the above parties were duly recorded in the books. The payments were made by cheques. The same were duly reflected in the bank IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. accounts of the assessee and also in the bank accounts of those parties. He stated that for the expenditure, the assessee had given following evidences:

(a) Address (as available with assessee) (b) PAN (all were income-tax assessees and their address on record of Income-tax department was same) (c) Telephone Nos. (d) Nature of expenditure (e) VAT Registration No. (f) Payments were subjected to TDS (g) All payments were through banking channels. (h) TDS Certificates (i) Bank accounts of parties and of assessee. (j) Ledger of assessee in their books and cross-accounts.

He further submitted that Ld. AO’s reliance on the Inspector’s report and the statement u/s. 131 is bad in law, as the same were never brought on record. Copy of the same were not provided and no opportunity of cross-examination was granted. He therefore, submitted that these evidences cannot be relied on. He further referred to the statement of Shri Hemant Soni, CMD of the company, as recorded during search, and later the affidavit filed by him and contended that it has been submitted time and again that the expenditure is genuine. He further submitted that the fact that IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. construction was done, has been verified and accepted by the department during search and no discrepancy has been found in the same. He therefore submitted that these grounds of the department may be dismissed.

No discrepancy was found in the work done. Rather the department got the valuation done by the Registered Valuer and later by the DVO. The department on one hand contended that work done was more as disclosed in the books; but on the other hand, they are doubting the expenditure towards work done. The stand of the department is contradictory and inconsistent. We therefore in absence of any concrete evidence placed before us the Revenue authorities and also since Learned Departmental Representative being unable to disprove the evidences filed by the assessee to support of genuineness of expenditure, find no merits in the action of Ld AO making disallowance of expenditure. Thus no interference IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. is called for in the finding of Ld.CIT(A) . In the result, Ground no. 8 for A.Y. 2011-12; Ground No. 10 for A.Y. 2012-13; and Ground No. 12 for A.Y. 2013-14 of the Revenue’s appeals are dismissed.

“Q30. इन �ोजे�ट म� �या आपक� क�पनी �वारा on money (on accounted receipt) भी �लये जाते है। य�द हो थो इसके बारे म� जानकार� द�।

मेर� क�पनी के अंतग�त �व�भ�न �ोजे�ट चल रह� है। इसम� से कुछ residential है। एवं चुक� ये �ोजे�ट ब�क �व�भ�न �ल�डं�स ब�क �वारा supported अतः customers �वारा इसनका पूण� भुगतान चैक �वारा ह� करता है। इसम� �कसी तरह क� on money क�पनी को �ा�त नह�ं होती है । मेर� क�पनी का एक �ोजे�ट आ���त हाई लै�ड भी �नमा�णाधीन है। 136 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

िजसमे �लाट एवं आवासीय इकाइय� का �नमा�ण हो रहा है। मै यह भी जानकार� देना चाहता हूँ। �क इस �ोजे�ट �क से इकाइय� �क �व�भ�न ब�को �वारा supported है। इसम� भी �कसी तरह क� on money नह�ं ल� जाती है। मै यह जानकार� देना चाहता हूँ �क हाई लै�ड �ोजे�ट �क �लाट (भू- ख�ड) के �व�य के समय बहुत थोड़ा सा on money �ा�त होती जो कभी कम तथा कभी �यादा होता है ओर मेर� समझसे यह 5% से 10% के बीच होना चाइये यह 5% से 10% �लाट �क वा�त�वक �ब�� मू�य का होता है” Based on this categorical admission and the discrepencies found during the course of search, Ld. AO added 10% of the total sale proceeds of Highland Proceeds of Highland project as on-money receipts. The addition, inter-alia was made as under: -

A.Y Total sales On-Money @ value of Plots of 10% of sales Highland Project 2011-12 15,64,32,831 1,56,43,283 2012-13 26,77,17,714 2,67,71,771

4.10.2 I have consideration the facts of the case, written submission filed by the appellant and finding of the AO. During the course of search statement of Shri Hemant Soni was recorded on oath wherein he has stated that on money of 5-10% was received on Sale of Plots of project Highland. The relevant extract of statement of Shri Hemant Soni is as under:- From the above the above statement it is very clear that Shri Hemant Soni has only admitted on money on sale of plots and not for sale of flats/duplex of project Highland. However, the AO erred in presuming that on money @ 10% has been received on entire project. Now the main question which arise from the above finding is that whether any Plot was sold in FY 2010-11 relevant AY 2011-12 in project High Land. In this regard , appellant was required to file chart showing sale of plots of project Highland. Appellant in compliance has filed chart showing sale of plots of project highland along with affidavit of Shri Hemant Soni. The details filed by the appellant are as under:-

A.Y. Total sales of On-money @ Onmoney recd plots of 7.5% on sale of @ 7.5% as per Highland Plots as per appellant (sic appellant Peroject as per – Profit on appellant same @ 5%) 2011-12 NIL 0 0 2012-13 NIL 0 0 2013-14 434081000 32556075 1627804 Thus, from the above it is very crystal clear that appellant company has not sold any plot in AY 2011-12, therefore, no on money would have been received by the appellant in AY 2011-12. Further the addition made by the AO was on 138 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. presumption basis because once the assessee has clearly narrated in his statement given on oath that he has received on money on sale of project then the AO has no locus to assume that on money was received on entire project. In view of the above discussion, the AO was no justified in making addition simply on guess work and presumption. It is settled legal principal that presumption how strong may cannot take place of evidence. Thus, the addition made by the AO amounting Rs. 1,56,43,283/- is Deleted, firstly, on account that no plot was sold by the appellant company during the year under consideration and secondly that the addition were made on presumption basis. Therefore, appeal on this ground is Allowed .”

are that certain loose papers marked as LPS A-2 were found during the course of search from the office premises of the assessee company. These loose papers purportedly covered details of amount received from the customers against the sale of units to them. In these loose sheets, certain amounts were mentioned to be received in cash. On verification for the same with the books of accounts, Ld. AO noticed that the cash receipts were not recorded in the books. He therefore added the cash receipts from the customers. In the current year, Ld. AO added amount as under: 140 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. Sl. No. Name of Cash Date of LPS/ Page customer Transaction Transaction no.

1. Shalini Jain 4,00,000/- 29.03.2012 A-2/33

2. Smt. Nirmala 20,00,000/- 30.09.2011 A-2/21 Chandra

3. Smt. 16,00,000/- 02.09.2011 A-2/17 Sadhana 4,00,000/- 09.09.2011 Tiwari 3,50,000/- 21.09.2011 Total: 23,50,000/-

4. Shri Vinod 4,00,000/- 15.09.2011 A-2/13 Semwal & 3,00,000/- 19.09.2011 Archana 6,00,000/- 29.09.2011 Semwal 5,00,000/- 30.09.2011 3,00,000/- 24.03.2012 Total Rs. 21,00,000

116. Against this addition, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) after considering the evidences and the law, deleted the addition on page 90 to 101, holding as under:

The AO has made allegation against the assessee that the has received that he has received Rs. 68,50,000/- from various customer as mentioned on loose papers 13,17,21 & 33 of LPS-A-2 in cash. In absence of any admission by either of the customer/payer or any incriminating documents/paper to establish that assessee has received sum of Rs. 68,50,000/-. The assessee IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. has filed copy of ledger ledger account of these customer wherein it is seen that appellants has received advance from Smt Nirmala Chnadra, Smt Sadhana Tiwari Shri Vinod Semwal & Semwal of Rs. 50,000/- each through cheque and the same has been returned through cheque onlyt. The advance received from Smt. Shalini Jain of Rs. 28,00,000/- is still outstanding in books of account. Thus, the only inference which can be drawn from this is that the seized loose paper is nothing but represent rough workings/jottings/scribbling. It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal maxim “affairmanti non neganti incumbit probation” means burden of proof lies upon him who affirm and not upon him who denies. Similarly as per doctrine of common law “incumbit probation qui digit non qui negat” i.e. burden lies upon one who alleges and not upon one who deny the existence of the fact. The loose paper i.e. page13,17,21 & 33 of LPS-A-2 is rough working/jotting. The AO has filed to discharge his onus of proof especially when addition has been made under “deeming fiction”. In view of this lacune on the part of AO, impunged addition is legally not sustainable. As held in the case of CIT v/s KP Varghese 131 ITR 574 (SC) by Hob’ble Apex Court in absence of evidence that actually assessee paid more amount than declared in regarded deed, no addition can be made. In the case of Bansal Strips (P) Ltd. & Ors Vs. ACIT (2006) 99 ITD 177 (Del) it has been held that:- “If an income not admitted by assessee is to be assessee in the hands of the assessee. The burden to establish the such income is chargeable to tax is on the AO. In the absence of adequate material as to nature and ownership of the transactions, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totally various figures jotted down on loosed documents”. 4.3.5 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor the payer has ever IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. admitted about payment of Rs. 68,50,000/- On the contrary the advance received by the appellant was either due to cancellation or the same is duly reflected in books of account. In absence of any corroborative evidence to prove that there was any exchange of money by CASH, AO has no locus to assume that appellant has received Rs. 68,50,000/-. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.3.6 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have examined the customer in question from whom as alleged the impugned cash has been received. Secondly, the AO should have done independent enquiry regarding the impugned transaction. Thirdly, the loose paper or rather say it as dumb document should be a speaking one having direct nexus with the assessee and transaction mentioned therein, which was not in the case of appellant. Thirdly, the AO did not reject books of account of the appellant. Fourthly, neither the customer nor any of the partner of appellant has ever stated that such transaction actually occurred. Last but not the least, the impugned loose papers were not found in possession of the appellant. My findings on the said issue under consideration are based on the various conculsions drawn by me which have been discussed in the above paras. Therefore, the AO was not justified in making addition of Rs. 68,50,000/- being on sheer IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. assumption and presumption basis. Thus, the addition made by the AO amounting to Rs. 68,50,000/- is Deleted. Therefore appeal on this ground is Allowed.” 117. Against these findings of Ld. CIT(A), the revenue is in appeal.

Ld. Counsel for the revenue relied on the order of Ld. AO and submitted that the loose sheets were found from the office of assessee company. Cash receipts were duly recorded in the loose sheets, which could not be verified from the books. Thus the addition ought to have been confirmed. On the contrary, Ld. Counsel for the assessee submitted that in respect of alleged amount received from Smt. Nirmal Chandra, Rs. 20,00,000; the booking had already been cancelled and the amount was refunded to her. The books showing the cancellation are at PB 1339-1340.

Thus in any case, since the booking had been cancelled and the amount refunded, no income in fact arose to the assessee. Similarly in case of Smt. Sadhana Tiwari, Rs. 23,50,000; the booking was cancelled. Cancellation is at PB 1333-1334. Further in case of Shri Vinod Semwal & Smt. Archana Semwal, Rs. 21,00,000; the booking had been cancelled and amount refunded PB 1336-1337. It was therefore submitted that in these cases, since the income was not booked from these parties and the entire amount was refunded, in 144 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. any case, no addition could be made. Further, Ld. Counsel for the assessee submitted that these all LPS are some computer generated sheets and are unsigned. The maker of the document is unknown and for what purpose same were made are unknown. Had the Ld. AO any doubt as to the amount received from the customers, he could have enquired the facts from the customers. Ld. AO did not do so. Further, the assessee submitted that the amount received from Smt Shalini Jain was a booking advance. Therefore, even if the amount is treated as unaccounted, it can be taxed in the year in which the income is booked on mercantile basis. He therefore relied on the order of Ld. CIT(A) and contended that the order of Ld. CIT(A) be confirmed.

Nirmala Chandra, Smt. Sadhana Tiwari and Shri Vinod Semwal and Smt. Archana Semwal; the amount received, if any was refunded as the booking was cancelled. We therefore have no doubt in confirming the order of the Ld. CIT(A) and dismissing the ground of IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. revenue in respect of these three parties. So far as the amount of Rs. 4,00,000/- alleged to be received from Smt. Shalini Jain, we find that in the loose sheet found from the office premises of the assessee, Rs. 4,00,000 it was clearly mentioned as received in cash.

Analysis of the paper established that the assessee has received this amount from Smt. Shalini Jain. This amount of Rs. 4,00,000 ought to be treated as unaccounted receipt of the assessee. We therefore confirm the addition of Rs. 4,00,000 as done by the Ld. AO, and to this extent the order of Ld. CIT(A) is reversed. However, we notice that assessee have not booked income from sale of this unit in the current A.Y. We therefore remand this issue to the file of Ld. AO to verify as to when the income from sale of unit has been booked in the case of Smt. Shalini Jain and add the amount in the hands of assessee in that year.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Out of this amount Rs. 51,000 was paid by cash as per the sale deed. He took us to Paper Book page 1343, whereby in the sale deed Rs. 51,000 was paid by cash. Ld. Counsel for the assessee, on the other hand, stated that entire amount of Rs. 2,57,40,000 was paid by cheque. The same is clear from the ledger in the books of assessee at PB 1363-1365. Ld. Counsel submitted that although it was mentioned that Rs. 51,000 would be paid in cash in the sale deed, but no amount was paid in cash. Ld. Counsel further referred to the affidavit of the sellers placed at PB 1369 and contended that since there was no non-compliance of the section 40A(3), no disallowance was called for.

4,00,000). These grounds relate to addition on account of unexplained expenditure as per Loose papers LPS 1/2 page no. 69- 71.

The same was marked as LPS 1/2 page no. 69 to 71. This was a computer generated ledger noting whereby certain amount was stated to be paid and received. Ld. AO noted that on being confronted, Shri Hemant Soni could not explain the entries 148 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. contained therein. Further, some persons named therein were identified and called and their statements on oath had been recorded. They had accepted on-money. Ld. AO on the basis of same, held that the same represents on-money paid by the assessee in respect of purchase of land at Phanda. He therefore added Rs. 1,16,40,000 in A.Y. 2012-13 and Rs. 4,00,000 in A.Y. 2013-14.

Similar findings were given in A.Y. 2013-14.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. He therefore relied on the detailed findings of the Ld. AO in this regard.

4.9.2 I have consideration the plea raised by the appellant and findings of the AO. It is seen that loose paper i.e. page no. 69 to 71 of LPS-1/2 was found in possession of Shri Yashovardhan Jain. The impounded paper i.e. page no. 69 to 71 of LPS-1/2, contain details of cash payment for purchase of new land of Phanda, is a document which is not signed by appellant or its authorized representative and contain some rough nothing/jottings. Appellant during appellate proceedings submitted that the AO relied upon the statement given by Shri Yashovardhan Jain and other sellers. The Sellers who has given statement under presume as retracted and has fuiled affidavit stating that no cash has been received from the appellant compant. This is admitted fact that statements of 21 sellers were recorded. This is also an admitted fact these statements were recorded behind the back of appellant. No opportunity of cross-examination was allowed to the assessee though specifically asked for by the assessee. It has been held by hon’ble Gujrat High Court in the case of DCIT V/s Mahendra Ambala Patel & CIT V/s Kantilalbhai Ravidas patel that statement has no evidentiary value if opportunity of cross-examination is not allowed. Besides this, genuineness of impunged loose paper. It was Shri Yashovardhan Jain who has to prove that hoe the transaction mentioned in the loose papers were executed. It is not understandable as to how independently and impartially, the AO could reach to final conclusion that on money amount totaling to Rs. 1,16,60,000/- was paid for purchase of land from different sellers without even bringing a single iota of positive avidence on record. Hence, the addition made by the AO was based on mere guses work, conjuctures and surmises which was no place in tax jurisprudence. In sum & substance, action of the AO is neither sustainable on facts nor in law, being based on either Third party IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. statement or statement sellers who lateron retracted from their statements by staing that statements given before AO were given under pressure.

4.9.6 In view of the above, firstly, the AO ought to have given opportunity of cross examination to the appellant. Secondly, the AO should have brought evidence having direct nexus with the alleged on money payment of Rs.

1,16,60,000/- for purchase of land. Thirdly, the addition made by the AO are on assumption and presumption basis. Futher, the loose papers were found in possession of Shri Yashovrdhan Jain and not from appellant.

Fifthly, statements of sellers/owners of lands were recorded, the appellant has filed copies of their Affidavit, dully retracting their earlier statements recorded by the AO, wherein they have denied receipt of any cash over and above the amount as mentioned in registered sale deed. This has been held by the Hon’ble Supreme Court in the case of Andaman Timber Industries

Vs. Commissioner of Central Excise Kolkata in Civil Appeal No. 248 of 2006 that in absence of cross-examination of parties, the assessment proceedings to be quashed. My findings are based on the findings given in above mentioned paras. Thus, keeping in view the above discussion and judiciously following the decision of Hon’ble Supreme Court in the case of kishanchand Chellaram (supra) & Andaman Timber Industries Vs.

Commissioner of Central Excise Kolkata (supra), the AO was not justified in making addition of Rs. 1,16,60,000/- on deemed fiction and without giving opportunity of cross examination to the appellant. Thus, the IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. addition made by the AO amounting to Rs. 1,16,60,000/- is Deleted.

Therefore appeal on this ground is Allowed..

We therefore dismiss ground no. 8 of Department’s appeal for A.Y. 2012-13 and Ground No. 10 for A.Y. 2013-14.

Name of farmers Land Serial Date of Regd. Market Addition Remarks situated No. sale sale value made by at and consider A.O. Area P .No. ation towards of Rs. unexplaine assmt. Rs. d order expenditure Amt. (Rs.

Smt. Rajshwari Deepdi S.No.6 26-07- 325100 3251000 2900000 Mukesh S/o. Anand Patwari 2011 0 patidar Rawat Halka P. No . s/o.shri IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. Smt. Sonali Total 101 PB 1376- shivcharan W/o/Shri Mohit 0.81 1392 patidar power Kumar & hectre of attorney smt.Shano devi 2. 00 holder w/o. Hari acres recorded the Prakash Saxena statement that vill. Rapadia he received the. Huzur, Rs. 28,34000 Bhopal through in cash against power of two land attorney holder Mukesh Patidr /s. Shri /shivcharan Patidar Deep Singh Vikash Sl. No. 16-02- 243440 24344000 364000 Statement Khand 7 2012 00 recorded on Vill.. Phanda Phanda P.NO. 26-02-2015 . kalan Distt. 2.876he 101 PB 867- 7.10 acres Huzur, Bhopal cre 897 agri.land Rs. 7.10 3480000 per acres acre sold to AG8 ventures ltd Shri Lakhan Gram Sl.No. 14.03.20 257400 25740000 51000 Shri singh S/o. shri Phanda 8 12 00 Lakhansinghs/ Kamla Singh Kalan P.No. o. Kamal singh Smt. Shanti Bai 2.108 102 PB 1393- admitted that W/o. Kamal hectre 1412 he received singh 5.20 Rs.51000 in acres cash . statement recorded o 26- 02-2015 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. Smt. Mathri Bai Vill. Sl. No. 23-03- 710000 8100000 900000 Statement w/o Shankarlal Phand 9 2012 0 recorded by shri premnarayn kalan Rajmal s/o. shri Rajmal both The. PB 1413- Shankarlal on were s/o. Huzur, 1421 05-02-2016 Shankarlal Bhopal that he 0.810 received hectre 900000 in cash Rs. 51000 as advance and Rs. 849000 at the time of registry. 42,15,000

4.10.3 Due consideration is given to the submission filed by the appellant inter alia the evidence furnished. Let me first summaries the basis on which additions have been made by the AO. The AO ha solely relied upon statements recorded of seller or POA holder. The addition made by the AO are purely hypothetical and without any independent corroborative to the IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. appellant. The AO also did not provide opportunity of cross examination to the appellant. The AO has consistently harped on the statements of sellers. This is an admitted fact that statement of 21 were recorded behind the back of appellant. No opportunity of cross-examination was allowed to the assessee though specifically asked for by the assessee. It has been held by hon’ble Gujrat High Court in the case of DCIT V/s Mahendra AMbbalal Patel & CIT V/s Kantilalbhai Ravidas Patel that statement has no evidentiary value if opportunity of cross-examination is not allowed. Besides this, apparently the AO did not independently verified the facts about the genuineness of the said party as well as the impunged purchase transaction. It is not understandable as to how independently and impartially, the AO could reach to the final conclusion that on money amounting totaling to Rs. 1,77,65,000/- (correctly Rs. 42,15,000/-)was paid for purchase of land from different sellers without even bringing a single iota of positive evidence on record except the statement of farmers or POA holder which was also recorded behind the back of assessee. Hence, the addition made by the AO was based on mere guess work, conjuctures and surmises,which has no place in tax jurisprudence. In sum & substance, action of the AO is neither sustainable on facts nor in law, being based on Third party statement or sellers. 4.10.8 In view of the above, firstly, the AO ought to have given opportunity of cross examination to the appellant. Secondly, the AO should have brought evidence having direct nexus with the alleged on money payment of Rs. 1,77,65,000/- (correctly Rs. 42,15,000/-). Thirdly, the addition made by the AO are on assumption and presumption basis. Futher, the loose papers were found in possession of Shri Yashovrdhan Jain and not from appellant. Fifthly, statements were recorded by the then ADIT who was not appropriate jurisdictional officer. My findings are based on the findings given in above mentioned paras. Thus, keeping in view the above discussion and judiciously following the decision of Hon’ble Supreme court in the case IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. of Kishanchand Chellaram (supra), the AO was not justified in making addition of Rs. 1,77,65,000/- (correctly Rs. 42,15,000/-). Thus, addition made by the AO amounting to Rs. 1,77,65,000/- is deleted being on the basis of statement recorded behind the back of appellant and no meaningful opportunity of cross examination was provided. Therefore, appeal on this ground is Allowed.”

per the chart came to Rs. 42,15,000. Hence the balance addition has no legs to stand. Now in respect of the addition of Rs. 42,15,000, he submitted that during the year the assessee IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. purchased land from four sellers. In respect of first seller Smt.

Rajeshwari w/o Shri Anamd Rai (addition Rs. 28,34,000), 2 acres of land was purchased. Statement allegedly of one Shri Mukesh Patidar was recorded. Ld. Counsel for the assessee took us to PB 1385 and submitted that it is unknown that it was statement of Shri Mukesh Patidar or Shri Arjun Patidar as the same is not clear from the statement itself. Further, he submitted that in either case, neither Shri Mukesh Patidar nor Shri Arjun Patidar had any relation with the transaction. Why ld AO choose not to record statement of seller herself is unknown. Further, the fact of payment of on-money was not corroborated. In respect of the second seller Shri Deep Singh (addition Rs. 3,64,000), Ld. Counsel for the assessee submitted that 7.10 acres of land was purchased by the asssessee for Rs. 2,43,44,000. All the payments were made by cheque. No incriminating material was found during the course of search to show on-money. Subsequently, his statement was recorded. He stated total consideration as correct i.e. Rs. 2,43,44,000; but stated amount received in cash Rs. 3,64,000 as on-money. Thus, the statement itself was contradictory. Further, IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. the said statement was not corroborated by producing any bank account as alleged by ld AO. In respect of third seller Shri Lakhan Singh and Smt. Shanti Bai (addition Rs. 51,000), Ld. Counsel contended that 5.20 acres of land was purchased from them. There was no on-money payment and all the payment was by cheque and duly recorded in the books. No evidence was found during the course of search to show on-money. Subsequently, the statement of the seller was recorded. The statement as available at Page 110 - 112 of the Assessment Order does not refer to any on-money payment. How the Ld. AO arrived at this figure is unknown.

Further, an affidavit of the seller was also filed to establish that there was no on-money. In respect of the fourth seller Smt Mathri Bai w/o Shri Shankarlal, Shri Rajmal and others (addition Rs. 9,00,000), it was submitted that 2 acres of land was purchased by the assessee for Rs. 71 lakhs. All the payments were by cheque and the transaction was duly recorded in the books. No evidence was found during the course of search to show any on-money.

Subsequently, statement of only one seller, Shri Rajmal was recorded. In his statement, he wrongly mentioned that Rs. 9,00,000 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. was received in cash as on-money. However, later-on he filed an affidavit denying to have received any on-money. Ld Counsel lastly submitted that the Ld. AO contended that the bank statements were given by the sellers to show that amount was deposited in their bank. No such bank statements were ever brought on record.

The same is not filed in the Department’s paper book also. It was therefore contended that such bank statement, if any, cannot be relied on.

In respect of Smt. Matri Bai, Shri Rajmal and others, the confession of on-money was later retracted by the seller himself. It is a settled law that the statement of third parties, which are not corroborated cannot bind the assessee. No corroborative evidence has been brought on record to show on-money. Ld. AO stated that amount was deposited in the bank by the sellers; but why such bank statements were not brought on record and confronted to the assessee. At this stage also, no such bank statements were produced. We therefore are fully in agreement with the findings of IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. Ld. CIT(A) and therefore confirm the order of Ld. CIT(A). In the result, Ground No. 9 of the Department’s appeal for A.Y. 2012-13 is hereby dismissed.

This document was a computer generated document and related to purchase of one flat “AR 01 302 DL”. As per the Ld. AO, a consultancy fees of Rs. 10 lakhs was credited by the assessee company in the memorandum ledger relating Shri Vishnu Gupta, who acted though his company, M/s. VSP Consultants P Ltd. Further, on 17.09.2011, it has been mentioned that Rs. 5,00,000 in cash “Has been paid”. Thus, ld AO contended that assessee company has received Rs. 15,00,000 from Shri Vishnu Gupta IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. acting though his company M/s. VSP Consultants P Ltd. He therefore added Rs. 15,00,000 in the hands of the assessee.

“4.12.3 I have considered the facts of the case, written submission filed by the appellant and finding of the AO. During the course of survey page no. 42 of LPS-16 was impunged from business premises of appellant. This impunged loose paper is an unsigned copy of ledger account of M/s VPS Consultants P. Ltd. M/s VPS Consultant has booked a flat in the name of his direct Shri Vishu Gupta at project Aster Royal of appellant company on 20.04.2011 for a total sale price of Rs. 51,00,000/-. Shri Vishnu Gupta is a financial consultancy to the appellant company from past many years. When the consultancy work got completed M/s VSP Consultants P. Ltd a company of Shri Vishu Gupta raised bill of Rs. 62,92,160/- on the assessee company for consultancy services being provided by Shri Vishnu Gupta. Further, Shri Vishnu Gupta issued two cheques of Rs. 1,00,000/- and Rs. 5,00,000/- to the appellant company for purchased of flat as mentioned above, the same fact is also narrated account of Shri Vishnu Gupta in the books of appellant. Thereafter, sum of Rs. 11,00,000/- was received by the appellant from Shri Vishun Gupta on 28.12.2011 out of which Rs. 6,00,000 was returned back through RTGS on 28.12.2011. Further, sum of Rs. 6,00,000/- & 5,00,000/- were also returned on 24.07.2013. Thus, the entire receipt from Shri Vishnu Gupta were return back by appellant as the fact at project Aster Royal was purchase by Shri Vishnu Gupta. Appellant during appellant proceedings has strongly contended that cash amounting to Rs.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

5,00,000/- was neither received nor paid by the appellant to M/s VSP Consultants P. Ltd. Appellant has also submitted that the AO has only relied upon the impunged unsigned rough paper found during the course of survey, without having any corroborative evidence on record showing payment/receipt of chash of Rs. 5,00,000/-. Appelant in support has placed reliance on the decion of Hon’ble Supreme Court in the case of CBI vs VC Shukla (1980) 3 SCC 410 wherein it has been held that loose cannot be considered as books. 4.12.4 On considering the entire factual matrix of the issue, inter-alia submissions filed by the appellant I reach to a conculsion that the additions made by the AO are on presumptive belief that sum of Rs. 5,00,000/- was received by appellant from M/s VSP Consultants P. Ltd. As discussed above, all the amount received by the appellant from Shri Vishnu Gupta was retuned back by appellant because the flat was not purchased by Shri Vishnu Gupta. Therefore, no prudent will pay huge sum of Rs. 5,00,000/- for no reason to the appellant company. A bill was raised by M/s VSP Consultants P Ltd. for consultancy services provided by team to the appellant of Rs. 51,00,000/- on 14.02.2004 for total agreegate professional consultancy charges of Rs. 62,92,160/-. The appellant has paid entire amount of consultancy charges to Shri VPS Consultants P. Ltd. throught cheques. 4.12.5 It is important to mention here that flat which was earlier proposed to be purchased by Shri Vishnu Gupta was lateron purchased by his wife Smt Sunita Gupta. All the payments were made through cheques on different dates, therefore, on cash was also paid by Smt Sunita Gupta. Thus, the only inference which can be drawn on this impunged loose paper is that, the AO has made addition under deemed fiction and without having any corroborative evidence on record which could establish that there was exchange of cash for purchase of flat by Shri Vishnu Gupta/ M/s VPS Consultants P. Ltd. Hon’ble Supreme Court in the case of CIT v/s KP IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Varghese 131 ITR 547 (SC) has held that in absence of evidence that actually assesse paid more amount than declared in registered deed, no addition can be made. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). It is also very important to point out that neither the seller nor the buyer has ever admitted that sum of Rs. 5,00,000/- was paid/received. Thus, in view of the above discussion, I find no merit in the addition made by the AO on the basis of assumption and presumption and without any corroborative evidence on record having direct nexus with the impunged recipt/payment. Further as per the impunged loose paper or rather say dum document sum of Rs. 10,00,000/- represents recipts and sum of Rs. 5,00,000/- represents payment, however, the AO has treated the payment to be recipt. 4.12.6 In view of the above, the addition made by the AO on account of assumption and presumption basis and in absence of any congent evidence amounting to Rs. 15,00,000/- is Deleted. Therefore, appeal on this ground is Allowed.”

Vishnu Gupta on 28.12.2011 out of which Rs. 6,00,000 was returned back through RTGS on 28.12.2011. Further sum of Rs. 6,00,000 and Rs. 5,00,000 were also returned on 24.07.2013.

Thus, the entire receipt from Sh. Vishnu Gupta were returned back IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. by assessee as the flat at project Aster Royal was not purchased by Shri Vishnu Gupta. These tansactions were through banking channels; further there was no on-money receipt from Shri Vishnu Gupta. The booking of flat infact got cancelled and therefore this amount was returned back. It was submitted that, later on the flat was purchased by wife of Shri Vishnu Gupta, and the payment for same was made by cheques. There was no evidence to establish any cash receipts from Shri Vishnu Gupta.

There was no cash receipt from Shri Vishnu Gupta. In the given facts, we therefore confirm the findings of Ld CIT(A). This ground of the revenue is therefore rejected.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

144. Against this addition, assessee preferred an appeal before the Ld. CIT(A). Ld. CIT(A) deleted the addition, at page 71-92 by detailed findings as under:

“4.3.2 I have considered the factual matrix of the case, written submissions filed and assessment order. During the course of search page nos 68 & 54 of LPS- ½ were found from residential premises of Shri Yashovardhan jain, employee of the appellant company. The impunged loose paper 68 of LPS – 1/2 , scanned on page no 32 of assessment order, is a unsigned ledger account with title ‘AG8’ and loose paper 54 of LPS – 1/2 , scanned on page no 35 of assessment order, is a document containing details of ‘details collection for march 13’. The AO has alleged that both the impunged loose papers represent unaccounted receipts and pertains to the appellant company. However, appellant has strongly contended that both has been IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. held by the Hon’ble Supreme Court in the case of During the course of search statement of Shri Yashovardhan Jain was also recorded on oath wherein he was also confronted with these loose papers. Shri Yashovardhan Jain submitted that there loose papers belongs to M/s AG8 Venture Ltd. and he is unaware of fact whether these are entered in the books of account. On the contractry appellant has strongly contended that no opportunity of cross examination was given by the AO to the appellant and no person/employee is allowed to take any document to his house. I find force in the contentions of the appellant that no proper and meaningful opportunity of cross examination was provided to the appellant. This is also as admitted fact that statement of Shri Yashovardhan jain was recorded behind the back of the appellant. No opportunity of cross-examination was ever allowed to the assessee. This has been held by the Hon’ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise Kolkata in Civil Appeal No. 248 of 2006 that in absence of cross-examination of parties, the assessment proceedings to be quashed. Further, the Hon’ble Gujarat High Court in the case of Praful Chunilal Patel Vs. Makwana [236 ITR 832 (Guj )] and JCIT & Ors. Vs. George Willimson (Assam) Ltd. [258 ITR 126 (Guj)] has held that statement of third party cannot be relied upon without having any corroborative evidence. Similarly, Hon’ble Supreme Court in the case of kishanchand Chellaram V/s. CIT 125 ITR 713 (SC) bhas held that adverse inference cannot to drawn against the assessee from the statement of third parties. Similarly, Ld. AR of the assessee has relied upon decision of jurisdictional High Court in the case of CIT V/s. Indrajit Singh Suri (2013) 33 taxmann 281 (Guj.) that where additions were addition were made on the basis of statement of persons who were not allowed to be cross examined by the appellant, addition were not sustainable.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Since, the impunged loose papers 68 & 54 of LPS-1/2 were found in possession of Shri Yashovardhan Jain, the appellant cannot be blamed to be owner of the transaction. After considering the entire factual matrix and evidence/material on record inter alia written submission filed, I reach to conclusion that impunged addition was made on the basis of assumption and presumption which neither sustainable on facts nor in law. The appellant was also not given any opportunity of cross examination. Appellant during appellate proceedings has strongly contented that appellant did not receive any such cash and the impunged loose paper represent rough working by employee of other unknown person. Further, the AO has also failed to bring on record any cogent evidence, creating direct nexus of receipts of impunged cash as alleged by the AO. Therefore, in absence of any cogent evidence having direct nexus with the impunged transaction, the said impungad paper i.e. page no 68 & 54 of LPS-1/2 cannot be used against the assessee. 4.3.5 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor Shri Yashovardhan Jain has ever admitted about receipt of Rs. 1,20,00,000/- and Rs. 1,04,88,000/- by the appellant in cash. On the contrary, no incriminating document was found suggesting receipt of cash as mentioned on these impunged loose papers. In absence of any corroborative evidence to prove that there was any exchange of money by CASH, AO has no locus to assume that appellant has received sum of Rs. 1,20,00,000/- and Rs. 1,04,88,000/-. Furher, the AO has also alleged that amounts mentioned under column ‘B’ represents unaccounted receipts and assessee has also admitted onmoney in project High land. However, the AO failed to explain elaborately whether these payments are related to project Highland or some other project. Further, the onmoney received in project has already been confirmed vide para 4.13 of this order of this order. Nevertheless, It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

AO is not justified in presuming certain facts without having anything to corroborative. Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.3.6 In view of the above discussion, material evidence on record and case laws cited, firstly, the AO ought to have provided opportunity of cross examination of Shri Yashovardhan Jain. Secondly, no incriminating material was found during the course of search suggesting receipt of case as per impunged loose paper. Thirdly, the AO should have brought some independent evidence suggesting exchange of cash of Rs. 1,20,00,000/- and Rs. 1,04,88,000/-. Fourthly, none of the loose paper under 54 & 68 of LPS-1/3 were found in possession of Shri Yashovardhan Jain and not in possession of appellant. Fifthly, none of the loose paper under consideration is signed by the appellant or any of its authorized representatives. Sixthly, the impunged loose paper should be speaking ne without having any second interepration, which is not in the case of appellant. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justified in making addition of Rs. 1,20,00,000/- & Rs. 1,04,88,000/- being on sheer assumption and presumption basis. Thus, the addition made by the AO amounting to Rs. 1,20,00,000/ & Rs. 1,04,88,000/- are Deleted. Therefore appeal on this ground is Allowed.”

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

The document was found from the residence of Shri Yashovardhan Jain and if he was unable to explain the same, how it can be deemed to be the unaccounted receipts of the assessee company.

Further, the entries therein are mere dumb, only date is written and “Cash Bhopal” is written. It is not even clear whether it was cash balance, cash received or cash paid. Who received it, from whom it was received, for what purposes the cash was received, if any, was never enquired. Ld. Counsel for the assessee therefore submitted that the entries in these documents were inconclusive. He relied on IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. the order of Ld. CIT(A) and contended that the Ld. CIT(A) was justified in deleting the addition.

Whether this represents cash receipt or payment or cash balance is also not clear. The document can at best be said to be a dumb document in absence of any enquiry by the Ld. AO. We find that once such document was found from the premises of one employee, Ld AO ought to have enquired as to the contents of the documents.

Ld. AO merely choose to make his own conclusions. Going by the verison of the Ld. AO himself, it cannot be known as to cash was received from whom and for what purposes. We therefore are in full agreement with the finding of Ld CIT(A) deleting the addition holding the said document as a dumb document.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Ld. Counsel for the assessee further submitted that the name of assessee company was nowhere written on this document. This document was not found from the possession of assessee company.

Therefore, Ld. AO could not have co-related this document with the assessee company.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. relate to unaccounted investments. This all grounds are related to document LPS 1/2 page no. 14 to 23 found during the course of search.

This sheet was a computer generated sheet. The columns therein were Sr. No., date, name, narration, Dr., Cr. And remark. There were 477 entries in the sheet. The column date was empty.

However, against certain entries date were written in handwriting.

Ld. AO concluded that the entries on the debit side related to unaccounted investments and added the same. Further, entries on the Credit side related to unaccounted receipts and therefore he added the same.

“4.4.2 After considering the entire factual matrix and evidence/material on record inter alia written submissions filed, I reach to conclusion that IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. impunged addition was made on the basis of assumption and presumption which neither sustainable on facts no in law. The AO has reached to conclusion that appellant received Rs. 1,28,64,700/- as unaccounted receipts and has made payment of Rs. 55,24,697/- as unaccounted investment. Appellant during appellate proceedings has strongly contented that appellant never received/paid any such amount which are duly audited u/s 44AB of the Act. The loose papers under consideration are the same which were found durng the course of survey in August 2013. The AO found that the documents represent unaccounted cash receipt/unaccounted investment of the appellant company. However, appellant has contended that neither such amount was received by the appellant nor was paid, infact, the loose papers were found from possession of Shri Yashovardhan Jain who has left company of the appellant. Appellant has also placed reliance on the decision of Hon’ble ITAT Mumbai in the case of Straptex (India) Pvt. Ltd. 84 ITD 320 (Mum) wherein ithas been held that the presumption u/s 132(4) is applicable only against the person from whom possession the books of account or other documentary evidence were found and not against any other person. These documents have been scanned on page 38 to 48 of assessment order. On A plain and cursory look would make it amply clear that this paper is relating to “some ledger account statement various customers”. Appellant has argued that the said transaction has never taken place through appellant. Further the AO failed to establish direct nexus as to when the amount was received/paid by appellant company and from whome amounts were received and to whom amounts were paid, the AO has also failed to bring on recorded any cogent evidence, creating direct nexus of receipt of Rs. 1,28,64,700/- and payment of Rs. 55,24,697/- by the appellant. Therefore, in absence of any cogent evidence having direct nexus with the impunged transaction, the said impunged papers i.e. page nos 14 to 23 of LPS-1/2 found from possession of Shri Yashovardhan Jain cannot IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. be used against the assessee. These loose papers are rough jotting/scribbling and rough jottings without direct nexus with the assessee cannot be used against him.

The AO has made allegation against the assessee that the has received that he has received Rs. 1,28,64,700/- and Rs. 55,24,697/- was paid as per details mentioned on loose paper 14 to 23 of LPS-1/2. In absence of any of the person as mentioned on imunged loose paper, Shri Yashovardhan Jain or either of the director of appellant company or any incriminating document/paper to establish that assessee has received sum of Rs. 1,28,64,700/- and has made payment of Rs. 55,24,697/-. In fact these loose papers were found from possession Shri Yashwardhan Jain in his statements stated his these papers are of his one of the client, whose books were written by him. It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal maxim “affairmanti non neganti incumbit probation” means burden of proof lies upon him who affirms and not upon him who denies. Similarly as per doctrine of common law “incumbit probation qui digit non qui negat”. i.e. burned lies upon one who alleges and not upon one who deny the existence of fact. The AO has failed to discharge his onus of proof especially when addition has been made under “deeming fiction”. In view of this lacune on the part of AO, impuned addition is legally not sustainable. As held in the case of CIT v/s KP Varghese 131 ITR 574 (SC) by Hon’ble Apex Court in absence of evidence that actually assessee paid more amount than declared in registered deed, no addition can be made. In the case of Banasal Strip (P) Ltd. & Ors Vs. ACIT (2006) 99 ITD 177 (Del) it has been held that:- “If an income not admitted by assessee is to be assessed in the hands of the assessee, the burden to establish the income is chargeable to tax is on the AO. In the absence of adequate material as to mature and ownership of the IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. transactions, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totally various figures jotted down on loosed document” 4.4.5 This is undisputed fact that neither any incriminating material was found or seized during search proceedings nor the payers has ever admitted about receipt of Rs. 1,28,64,700/- and payment of Rs. 55,24,697/-. In addition, the AO did not make any independent enquiry about the payers of the unaccounted receipts/payment and has made all allegations on the appellant. Hon’ble Supreme Court in the case of LIC of India v/s India v/s CIT (1996) 216 ITR 410 (SC) has held that the law does not compel a man to perform the act which he cannot possibly perform. In the present case, the documents were found in possession of appellant. It is Shri Yashovrdhan Jain who has to explain the entries on these impunged loose paper and cannot put baseless allegation on the appellant. In absence of any corroborative evidence to prove that these was any exchange of money by CASH/Cheque/Kind, AO has no locus to assume that appellant has received Rs. 1,28,64,700/- and made payment of Rs. 55,24,697/-. It is steeled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presumption certain facts without having anything to corroborative. Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). 4.4.6 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have done independent enquiries IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. from whose as alleged the appellant has received such amounts. Secondly, Shri Yashovrdhan Jain should have been examined and should have been loose papers. Thirdly, the loose paper or rather say it as dumb document should be a speaking one having direct nexus with the assessee, which was not in the case of appellant. Forthly, no incriminating material was found during the course of search relating to the impunged receipts. Fifthly, the loose papers are undated and unsigned. My findings on the issue under consideration drawn by me which have been discussed in the above paras. Therefore, the AO was not justified in making addition of Rs. 1,28,64,700/- as unaccounted cash receipt and Rs. 55,24,697/- as unaccounted investment. Thus, the addition made by the AO amounting to Rs. 1,28,64,700/- & Rs. 55,24,697/- are Deleted. Therefore appeal on these grounds is Allowed.” Similar findings were given in A.Y. 2014-15 by the Ld. CIT(A).

Ld. Counsel for the revenue submitted that during the course of search at the residence of General Manager (Finance), Shri Yashovardhan Jain, these loose sheets were found marked as LPS 1/2 page 14 to 23. The loose sheets contained the details of expenses/ investments made and the details of receipts. These transactions could not be verified from the books of the assessee- company. The story of the assessee that this document was just a typed version of what was found during the course of survey is a cooked up story. Thus, the addition was clearly called for. 183 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

Copy of the said document is placed in the Written Submission as Annexure 1 at pages 201-215. It was not clear whether these are receipts or payments. In many cases, dates were not mentioned.

The figures ranged from 1 to 10,00,000. At that time, statement of Reeta Shrivastav was recorded and she said that the said document relates to some rough notings related to assessee-company. Later, the department required the assessee to get the said document typed, with increased two or three zeros as per the will of the IT authorities. Transactions were classified as payment or receipts.

The typed version of the said loose papers with some more zeros were found during search at the residential premises of Yashvardhan Jain. This was marked as LPS 1/2 page 14-23. This fact was brought to the notice of the Ld. AO and he accepted this fact during the assessment. Ld. Counsel for the assessee referred to IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. pages 2147 and 2150 of the Paper book. He tried to compare Annexure 1 (Page 1 to 9 found during the survey) and LPS ½ page 14-23 to demonstrate that the entires therein are same, except 2-3 zeros. He further submitted that analysis of the said document clearly demonstrates that the document is dumb document. The approach of adding 2 or 3 zeros in some cases and adding on zeros in some cases is totally ad-hoc. He further submitted that the classification of Dr. and Cr. is also totally ad-hoc. Salary has been written on receipt side. Further, in most entries dates are not mentioned, particulars are not mentioned, work is not mentioned.

Ld. AO simplisiter added the figures mentioned in the sheet without corroborating any single entry therein. He therefore contended that the addition is uncalled for.

Further, it was just a rough scrubbling made by one employee. The document found during the course of search at the residence of Shri Yashovardhan Jain were computer generated, containing the same entries. However, in this classification was done, and further against only a very few entries some dates were written. In many entries 2 or 3 zeros were added. As submitted by learned counsel for the assessee that it seems that Shri Yashowardhan Jain was trying to compile the jottings found during the course of survey for filing reply to the Income-tax Department explaining the entries therein. Before he could have complied the same, this half worked document was found at his premises during the search. Assessee infact brought this fact, in the knowledge of Ld. AO. But the Ld. AO merely ignored this fact Ld. AO did not consider it proper to verify any transaction out of the said sheet, but merely added the figures in the hands of the assessee. The document LPS 1/2 page 14 to 23 in our view is a mere dumb document and nothing else, considering the fact that the same is just a half worked compilation of loose sheet found during survey u/s. 133A. Most transactions are IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. undated; in many cases the parties or narration are not written.

How such a document can be made a basis for making addition, moreover when the entries therein were not corroborated by the department. We therefore are in full agreement with the findings of the Ld. CIT(A) on this issue.In the result, the Ground No. 4 and 5 of Department’s appeal for A.Y. 2013-14 and Ground No. 3 and 4 of Department’s appeal for A.Y. 2014-15 are hereby dismissed.

Resham Bai, at Gram Phanda. The land was purchased for Rs. 36,60,000. Out of the total consideration, an amount of Rs. 60,000/- only was made in cash. Ld. AO held that although the transaction is recorded in the books, yet the expenditure of Rs. 60,000 was in contravention of section 40A(3) and therefore same shall be disallowed.

166. Now we take up Ground No. 8 of Department’s appeal for A.Y. 2013-14 amounting to Rs. 1,34,78,580/- relating to unexplained expenditure as per LPS 1/2 page no. 51.

Mr. Naresh Bhantia (Paras Singh Bhantia) return of cash part 40.00 Lac Rs. 40.00 Lacs up to 10.03.13”. Ld. AO concluded that these are the details of unaccounted payments, and he added both Rs. 94,78,580 as mentioned in Sr. No. 1 to 4 and also Rs. 40 ,00,000 as mentioned in Sr. No. 5. Thus he made addition of Rs. 1,34,78,580/- IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

“4.7.2 I have considered the factual matrix of the case, written submission filed and assessment order. During the course of search page no. 51 of LPS ½ were found from residential premises of Shri Yashovardhan Jain, employee of the appellant company. The impunged document is title as ‘urgent payment required.’ On perusal of this loose paper, prime- facts it can be seen that it is relating to some requirement of founds. During the course of serach statement of Shri Yashwardhan Jain was also recorded on oath wherein he was also confronted with these loose paper belongs to M/s AG8 Ventures Ltd. On the contrary appellant has strongly contented that on opportunity of cross examination was given by the AO to the appellant. I find force in the contentions of the appellant that no proper and meningfull opportunity of cross examination was provided to the appellant. This is also an admitted fact that statement of Shri Yashvardhan Jain was recorded behind the back of the appellant. No opportunity of cross-examination was ever allowed to the assessee. This has been held by the Hon’ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise Kolkata in Civil Appeal No. 248 of 2006 that in absence of cross- examination of parties, the appellant proceedings to be quashed. Further, the Hon’ble Gujrat High Court in the case of Praful Chunilal Patel Vs. M.J. Makwana [ 236 ITR 832 (Guj.)] and JCIT & Ors. Vs. George Willimson (Assam) Ltd. [258 ITR 126 (Guj)] has held that statement of third party cannot be relied upon without having any corroborative evidence. Similarly, Hon’ble Supreme Court in the case of Kishanchand Chellaram V/s. CIT 125 ITR 713 (SC) has held that adverse inference cannot be drawn against the assessee from the statement 191 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. of third parties. Similarly, Ld. AR of the assessee has relied upon the addition decision of jurisdictional High Court in the case of CIT V/s. Indrajit Singh Suri (2013) 33 Taxmann 281 (Guj.) that where additions were made on the basis of statements of persons who were not allowed to be cross examined by the appellant, additions were not sustainable. Since, the impunged loose paper 51 of LPS-1/2 were found in possession of Shri Yashovardhan Jain, the appellant cannot be blamed to be owner and author of the said loose paper. After considering the entire factual matrix and evidence/material on record inter alia written submissions filed, I reach to conclusion that impunged addition was made on the basis of assumption and presumption which neither sustainable on facts nor I law. The appellant was also not given any opportunity of cross examination. Appellant during appellate proceedings has strongly contented that the loose paper clearly represents estimate for requirement of funds wahich may have been prepared by some unknown person/employee. Further, the AO failed to bring on record any cogent evidence having direct nexus with the impunged transaction, the said impunged paper i.e. page no 51 of LPS-1/2 cannot be used against the assessee.

4.7.5 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor the payer has ever admitted about payment of Rs. 1,34,78,580/- by the appellant. In absence of any corroborative evidence to prove that there was any exchange ot money by CASH, AO has no locus to assume that appellant has made unexplained expenditure of Rs. 1,34,78,580/-. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.7.5 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have provided opportunity of cross examination of Shri Yashovardhan Jain. Secondly, the AO should have examined the person whose names are mentioned on the loose paper. Thirdly, the AO should have brough some independent evidence suggesting exchange of cash of Rs. 1,34,78,580/-. Fourthly, the impubged loose paper 51 & of LPS-1/2 were found in possession of Shri Yashovardhan Jain and not in possession of appellant. Fifthly, the loose paper under consideration is signed by the appellant or any of its authorized representative. Sixthly, the impunged loose paper should be speaking one without having any second interepration, which is not in the case of appellant. Seventhly, the loose paper is undated, unsigned. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justifies in making addition of Rs. 1,34,78,580/- being on sheer assenting and presumption basis. Thus, the addition made by the AO amounting to Rs. 1,34,78,580/- is Deleted. Therefore appeal on this ground is Allowed.”

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

This document, as such is a mere dumb document. Out of the 5 entries, 4 entries are without any date. Further, the entry only speaks of some amount to be returned upto 10.03.13. It is not clear whether this amount was to be returned to the assessee or by the assessee. Whether this amount was returned subsequently or not.

Same has not been enquired into. We therefore do not find any IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. infirmity in the findings of Ld. CIT(A) in treating this document as a dumb document. Ld. CIT(A) was justified in deleting the addition.

173. Now we take up Ground No. 11 of the Department’s appeal for A.Y. 2013-14 amounting to Rs. 1,00,000 in respect of LPS A-13 relating to on-money in respect of 21 registries found from the office assessee-company and 6 registries found from the site office of Aakriti Aqua City.

LPS Name of farmers Situated at Registry Market Addition Remarks as per Hectre/acr amount value/colle made by A.O. e of agri. (Rs.) ctor rate A.O. land sold (Rs.) and date of registry A-19 Smt. Binda Bai Phanda 14,00,000 48,60,000 1,00,000 Shri Ramsingh 67 to w/o. Shri kalan 0.405 husband of Smt. 81 Ramsingh R/o. vill. hectre PB 1637- Binda Bai attended Kharkhedi Teh. 1.00acre 1665 on 11-04-2014 and Huzur, Bhopal 16.04.2012 recorded statement that the received Rs. 1,00,000 in cash IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. A- 20 1. Smt. Sarju Bai Phanda 8,13,08,000 8,13,08,000 2,00,000 Shri Narayan 125 to W/o. Shri Ratan 5.145 Singh and Devi 135 Singh hectre PB 1666- singh attended and 2. Shri Devi Singh 12.71acres 1707 statement recorded S/o Ratan Singh 07.05.2012 on 05/08-02-2016 3. Shri Narayan that they received Singh S/o. Shri Rs. 1,00,000 each Gurubaksh in cash A-31 1.Ram singh Phanda 3,77,00,000 3,77,00,000 1,00,000 Shri Chandra 186 to 2.Shri Chandra Kalan Singh attended 195 singh both are S/o. 1.549 PB 1708- and statement Bahgirath hectre 6.29 1746 recorded on 3.Shri Santosh acres 26.02.2015, that Kumar S/o. 14.05.2012 he received Rs. Chainsungh 1,00,000 in cash A- 19 1. Smt. Harkubai Phanda 1,66,72,000 1,66,72,000 Shri Bhagan Singh 46 to w/o. lat Shri Kalan and Smt. Soram 66 Gurubakash 1.549 PB 924- bai attended on 2. Sh. Bhagwan hectre 6.29 972 4/8-02/2016, they Singh acres admitted that all 3. Smt. Soram Bai 11.06.2012 the payments were 4.Smt. Sugan Bai received through D/o. Late cheques. Gurubakash singh A- 19 Smt. Phanda 2,70,12,000 3,08,04,000 4,50,000 Shri Abhjeet Singh 19 to Gendkuwar w/o. Kalan S/O. of Late Shri 45 Vikram Singh 2.416 PB 1747- late Shri hectre 5.79 1790 Gendkuwar acres recorded statement 24.07.2012 on 26.02.2015 that he received Rs. 4,50,000 in cash A-18 Shri Govind singh Phanda 1,75,20,000 2,12,76,000 5,00,000 Shri Govind Singh 01 to S/o. Sh. Kalan statement recorded 17 Shambulal 1.779 PB 973- on 26.02.2016 that hectre 4.40 1003 he received Rs. IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. acres 5,00,000 in cash 13.09.2012 Total 13,50,000 Amount Ld. AO relied on the statements of the parties and contended that on-money was paid by the assessee-company. He therefore made addition of Rs. 1,00,000 in respect of on-money.

4.10.8 In view of the above, firstly, the AO ought to have given opportunity of cross examination to the appellant. Secondly, the AO should have brought evidence having direct nexus with the alleged on money payment of Rs. 1,00,000/- (correctly Rs. 13,50,000/-). Thirdly, the addition made by the AO are on assumption and presumption basis. Futher, the loose papers were found in possession of Shri Yashovrdhan Jain and not from appellant. Fifthly, statements were recorded by the then ADIT who was not appropriate jurisdictional officer. Sixthly, all the sellers except Smt Binda Bai filred affidavits stating that all the payments made for purchase of land are duly recorded in books of account. Most importantly, Shri Naryan Singh, Shri Devi Singh, Shri Chandra Singh, Smt Gendhkuwar and Shri Govind vide their affidavits which are on record has stated that the statement given before the Income Tax authorities was given under pressur. My findings are based on the findings given in above mentioned paras. Thus, keeping in IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. view the above discussion and judiciously following the decision of Hon’ble Supreme court in the case of Kishanchand Chellaram (supra), the AO was not justified in making addition of Rs. 1,00,000/- (correctly Rs. 13,50,000/-). Thus, addition made by the AO amounting to Rs. 1,00,000/- is deleted being on the basis of statement recorded behind the back of appellant and no meaningful opportunity of cross examination was provided. Therefore, appeal on this ground is Allowed.

However, insipte of being asked for, Ld. AO did not provide an opportunity to cross-examine the sellers. Thus, the statements of the sellers cannot be relied on. Further, the statements are not corroborated by bringing any material on record. A mere statement of third person cannot bind the assessee, unless it is corroborated by any evidence on record. Further, Ld. AO relied on the bank statements of the sellers. However, bank statement of not even a single seller was ever brought on record to establish that cash was deposited in their bank accounts. Even in the Paper book filed by the Department, same has not been filed. Thus, no reliance can be placed on same. In respect of Smt. Bindabai, we cannot rely on statement of her husband who was not a party to the transaction.

Further, there were contradictions in his statements also as pointed by the Ld. Counsel for the assessee. In respect of Smt. Sarju Bai, IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. Shri Devisingh and Shri Narayan Singh, both of them later denied on affidavit that on-money was received. Thus their statement simplicitor cannot be relied on. Similarly, in respect of Shri Ram Singh, Shri Chandar Singh and others, Shri Chandar Singh later denied to have receied on-money in affidavit. In respect of Smt.

Gendkunwar, statement of Smt. Gendkunwar was not recorded.

Her son’s statement would not have any evidentiary value. Further, Smt. Gendkunwar filed an affidavit, stating that no on-money was received by her. Thus, considering all the facts and circumstances of the cases, we do not find any infirmity in the order of Ld. CIT(A).

In the result, this ground of the revenue is dismissed.

Ld. AO concluded that on 09.06.2012 an amount of Rs. 10 lakhs was received from Shri Vishnu Gupta against the purchase of the flat. Similarly there was another hand sticker with a noting “Pl credit Rs. 40.00 L to Aster of Mr. Gupta” dated “18.05.2013”. Ld. AO concluded that on 18.05.2013, an amount of Rs. 40 lakhs was received from Shri Vishnu Gupta against the purchase of flat. Since both these receipts were not recorded in the books, Ld. AO added Rs. 10 lakhs in A.Y. 2013-14 and Rs. 40 lakhs in A.Y. 2014-15.

It is also settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborate. Hon’ble Supreme Court in the case of Djakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of 202 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong court in the case of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). It is also very important to point out that neither the seller nor the buyer has ever admitted that sum of Rs. 10,00,000/- was paid/received. Thus, in view of the above discussion, I find no merit in the addition made by the AO on the basis of assumption and presumption and without any corroborative evidence on record having direct nexus paper sum of Rs. 10,00,000/- represent rough jottings/scribbling made by some preson/employee. 4.12.5 In view of the above, the addition made by the AO is no account of assumption and presumption basis and in absence of nay congent evidence having cirect nexus of receipt of Rs. 10,00,000/-. It is also important to mention that the flat which was proposed was not purchased by Shri Vishnu Gupta, therefore, no prudent person will pey huge sum of Rs. 10,00,000/- for no cause. Thus, the AO was not justified in treating rough jottings and scribbling as receipts of appellant, therefore, the addition amounting to Rs.10,00,000/- on this account is Deleted. Therefore, appeal on this ground is Allowed.” Similar findings were given in A.Y. 2014-15.

Ld. AO treated the said cash as unaccounted and made addition in the hands of the assessee.

“4.2.2 I have considered the facts of the case, material evidence on record and findings of the AO. During the course of search cash amounting to Rs. 14,77,100/- was found in possession of appellant and Rs. 9,00,000/- from IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. possession of Shri Hemant Soni as claimed by the appellant. Initially, at the time of search Shri Hemant Soni was unable to explain the source of cash and also failed to furnish any documentary evidence in support of his claim. However, at the later stage the appellant has filed detailed explanation regarding the source and acquisition of the impunged cash. Appellant in support has filed copies of cash book from 01.01.2014 to 30.01.2014 before the AO and during the appellate proceedings appellant has filed details of opening and closing cash balance. On perusal of chart showing cash balance it was observed that cash balance as on 01.01.2014 was Rs. 73,93,343/- and closing cash balance as on 31.01.2014 was Rs. 75,01,959/0. Thus, the assessee has discharged its onus of proving that the cash found during the search was part of cash balance as per books of accounts. Now, the onus lies on AO to contradict the say of appellant and produce some or the other documentary evidence suggesting that the cash found during the search is not recorded in books of account, which the AO failed to do. Thus, the AO has no locus of making addition on account of cash found during the course of search being fully disclosed/recorded in books of accounts. It is also very important to mention here that appellant neither pointed out any specific defect in books of account of the appellant nor has rejected books of account of the appellant. Thus, the addition made by the AO amounting to Rs. 14,77,100/- is Deleted. Therefore appeal on this ground is Allowed.”

Further, cash of Rs. 9,00,000 was found from Shri Hemant Soni, IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. CMD of the assessee-company. On being confronted, Shri Hemant Soni was unable to explain the same. Therefore, the addition of Rs. 14,77,100 was made by Ld. AO. Ld. Counsel for the revenue therefore relied on the findings of the Ld. AO.

A.Y. Balance as Cash balance PB on as per audited accounts 2008-09 31.03.2008 45,62,297 PB 37 2009-10 31.03.2009 8,93,257 PB 64 2010-11 31.03.2010 11,59,956 PB 90 2011-12 31.03.2011 16,70,448 PB 165 2012-13 31.03.2012 5,10,000 PB 190 2013-14 31.03.2013 42,96,000 PB 233 2014-15 31.03.2014 17,83,000 PB 278 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. He therefore submitted that assessee company used to maintain a sufficient cash balance. The cash in hand on the date of search was therefore acceptable.

Further, assessee has submitted a chart showing month-wise cash balance, and also the cash balance in the reported Balance Sheets over different year. This shows that assessee was maintaining sufficient cash balance round the years, and there was no abnormality in the cash balance taken on 31.01.2014. We therefore do not find any infirmity in the order of Ld CIT(A). We therefore IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. dismiss the ground no. 1 of the Department’s appeal for A.Y. 2014- 15.

193. Against this addition, the assessee preferred an appeal before the Ld. CIT(A). Ld. CIT(A) deleted that addition at page no. 97 to 106 of his order, holding as under (relevant extract):-

4.5.5 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor the payer has ever admitted about payment of Rs. 10,00,000/- On the contrary the advance received by the appellant was either due to cancellation or the same is duly reflected in books of account. In absence of any corroborative evidence to IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. prove that there was any exchange of money by CASH, AO has no locus to assume that appellant has received Rs. 10,00,000/-. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborative. Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex Court In the case of Dhiraj Lal Girdharilal v/s CIT (954) 26 ITR 736 (SC). 4.5.6 In view of the above discussion, material evidences on record and case laws cited, firstly, the AO ought to have done independent enquiries from whose as alleged the appellant has received such amounts. Secondly, the AO should have done independen enqury transaction. Thirdly, the loose paper or rather say it as dumb documents should be a speaking one having direct nexus with the assessee, which was not in the case of appellant. Thirdly, the AO did not reject books of account of the appellant. Fourthly, neither the customer nor any of the partner of appellant has ever stated that such transaction actually occurred. Last but not the least, the impunged loose papers were not found in possession of the appellant. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justifies in making addition of Rs. 10,00,000/- being on sheer assumption and presumption basis. Thus, the addition made by the AO amounting to Rs. 10,00,000/- is Deleted. Therefore appeal on this ground is Allowed.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

4.7.8 In view of the above, firstly, the AO ought to have given opportunity of cross examination to the appellant. Secondly, the AO should have brought evidence having direct nexus with the alleged on money payment of Rs. 5,00,000/- (correctly Rs. 36,00,000/-). Thirdly, the addition made by the AO are on assumption and presumption basis. Futher, the loose papers were found in possession of Shri Yashovrdhan Jain and not from appellant. Fifthly, statements were recorded by the then ADIT who was not 212 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. appropriate jurisdictional officer. Sixthly, all the sellers except Smt Binda Bai filed affidavits stating that all the payments made for purchase of land are duly recorded in books of account. Most importantly, Shri Chand Singh vide their affidavits which are on record has stated that the statement given before the Income Tax authorities was given under pressur. My findings are based on the findings given in above mentioned paras. Thus, keeping in view the above discussion and judiciously following the decision of Hon’ble Supreme court in the case of Kishanchand Chellaram (supra), the AO was not justified in making addition of Rs. Rs. 5,00,000/- ( (correctly Rs. 36,00,000/-). Thus, addition made by the AO amounting to Rs. 5,00,000/- is deleted being on the basis of statement recorded behind the back of appellant and no meaningful opportunity of cross examination was provided. Therefore, appeal on this ground is Allowed.”

However, insipte of being asked for, Ld. AO did not provide an opportunity to cross-examine the sellers. Thus, the statements of IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. the sellers cannot be relied on. Further, the statements are not corroborated by bringing any material on record. A mere statement of third person cannot bind the assessee, unless it is corroborated by any evidence on record. Further, Ld. AO relied on the bank statements of the sellers. However, bank statement of not even a single seller was ever brought on record to establish that cash was deposited in their bank accounts. Even in the Paper book filed by the Department, same has not been filed. Thus, no reliance can be placed on same. In respect of Shri Ram Singh, Shri Chandar Singh and others, Shri Chandar Singh later denied to have received on- money in affidavit. In respect of Shri Prahalad Singh, Shri Manohar Singh and Shri Hukum Singh, we find that out of the three sellers, two denied to have received on-money. The third seller, Shri Hukum Singh although stated that on-money was received and that same was deposited in his bank; but no such bank statement was ever produced. The receipt of on-money was not corroborated by any evidence. Thus, considering all the facts and circumstances of the cases, we do not find any infirmity in the order of Ld. CIT(A). In the IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. result, Ground No. 7 of the Department’s appeal for A.Y. 2014-15 is dismissed.

28,00,00,000) relating to addition on account of retraction of the surrender made during the course of search u/s. 132.

Further, on 4th Feb. 2014, he gave the break-up of this 50 crores; and in the assessee company he accepted a surrender of Rs. 30 crores; Rs. 2 crores in the A.Y. 2013-14 and Rs. 28 crores in the A.Y. 2014-15. Later on, certain corrospondances took place between the department and the assessee-company. Thereafter on 30.05.2014, statement of Shri Hemant Soni was again recorded, whereby he was asked about the surrender made during the search. He replied that voluminous documents were seized from the premises, and therefore it is taking time for analysing the same.

Once the documents seized are verified from the books, he will provide the breakup of same. Subsequently, on 12.11.2014, return was filed for A.Y. 2013-14 and A.Y. 2014-15. In this return, the income surrendered earlier was not offered. Later, on during assessment, a retraction letter was also filed on 06.02.2016. Ld. IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. AO, however, disregarded the retraction, and treated Rs. 2 crores as income for A.Y. 2013-14 and treated Rs. 28 crores as income for A.Y. 2014-15. In the return of income for A.Y. 2013-14, assessee had offered income of Rs. 11,04,36,150/- in the return and the Ld. AO after making addition on various grounds, assessed the total income at Rs. 35,52,18,458/-. He therefore concluded that since the total addition made during assessment for A.Y. 2013-14 exceeded Rs. 2,00,00,000/- no separate addition needs to be made.

He therefore did not make separate addition in A.Y. 2013-14.

Similarly, in A.Y. 2014-15, against the total income offered by the assessee at Rs. 8,48,71,480/-, Ld. AO assessed the total income at Rs. 34,80,77,254/- after making various additions on difference grounds. He held that the total of additions made was Rs. 27,16,02,887/- and therefore he added Rs. 83,97,113/- separately on account surrender; thus making the total addition to Rs. 28,00,00,000/-. Thus, although the Ld. AO did not accept the retraction, the addition made by him towards income surrendered during the course of search in A.Y. 2013-14 was nil, and in A.Y. 2014-15 was Rs. 83,97,113/-.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

He relied on the statement recorded during the course of search that on-money received on sale of plots at Highland project was 5- 10%. Since he enhanced the addition to Rs. 4,34,08,100/- i.e. more than Rs. 2 crores surrendered during search, he stated that making addition of Rs. 2 crores again would amount to double addition and therefore did not make separate addition for surrender.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

2. CIT vs. Merely on basis of In present case also, the Chandrakumar admission that few addition was based on Jethmal Kochar benami concerns were admission which was later on [2015] being run by assessee, retracted. Dept could not taxmann.com 292 assessee could not be furnish any incriminating (Gujarat) subjected to addition document or otherwise to when assessee retracted support the admission. Hence, from such admission and addition is unjustified. revenue could not furnish any corroborative evidence in support of such admission 3. CIT vs. Ramanbhai Held that admission of In the present case also, the B Patel (Gujarat undisclosed income by addition was not based on any high Court) assessee is not conclusive incriminating document and if no evidence is found to the retraction filed on support the admission. A 30.11.11 is valid. retraction, though belated, is valid. 4. CIT vs. Sunil Held that a retracted In Present case, the retraction Aggarwal (2015) 64 statement u/s 132(4) was before the assessment, taxmann.com would require some and the addition was not 107(Delhi)/ (2016) corroborative material for corroborated by any evidence 237 the ld AO to make but was merely on the basis of Taxmann 512 addition on basis of such statement recorded during (Delh)/ (2015) 379 statement. search. ITR 367(Delhi) 5. CIT vs. O. Abdul Initial Burden to show Retraction itself proves that Razak 350 ITR 71 that confession was the confession was under (Ker) voluntary and not mental pressure and hence obtained by resorting to liable to be retracted. coercive means is on the department. 6. TDI Marketing P Held that since basis of Same facts as the addition Ltd. 28 SOT 215 addition was statement of was based on statement. (Del.) assessee rather than actual investment having been made, provisions of sec 69 were not attracted to such a situation. 7. M. Narayanan & It was held that when Retraction itself proves that Bros. v. ACIT, SIC, assessee had explained the confession was under Salem[2011] 13 his statement as not mental pressure and hence taxmann.com 49 correct in context of liable to be retracted. (Madras) materials produced, same 222 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd.

could not be added to assessee's income.

as it cannot be said to be conclusion. 17 Kalishaben Addition on the basis of In our case, the statement Manharlal Chokshi retracted statement u/s was duly retracted on . Vs. CIT (2008) 220 132(4) - statement 30.11.11, at the earliest CTR (Guj) 138 : retracted by assessee occasion, as assessee came to (2010) 328 ITR 411 after two months on the know about it and thus : (2008) 174 ground that it was cannot be the basis of TAXMAN 466 : recorded under coercion addition (2008) 14 DTR 257 and duress cannot be basis of addition. 18 Shree Ganesh Held that the statement In our case also, since the Trading Co. v. CIT recorded u/s. 132(4) undisclosed income could not . [2013] without corroborative be connected to any taxmann.com 170 evidence could not fasten incriminating document, they (Jharkhand) liability cannot be the basis of addition. 19 Smt. Ranjnaben Held that AO could not In present case also, the Mansukhlal Shah make addition only on addition was merely based on . v. basis of disclosure statement, hence addition is ACIT [2004] 2 881 statement without unjustified. (RAJKOT) corroboration and evidence in support of disclosure statement. 20 ACIT V. Jorawar Held that the surrender In present case also, the Singh M. Rathod was under pressure as no addition was based on . [2005] 148 Taxman such evidence or statement of brother/brother 35(Ahd.) (MAG.) asset/evidence were in law , and nothing found in movable or incriminating was found from immovable property from the search premises. the search premises, thus addition is unsustainable. 21 Naresh Kumar Held that addition in Present case also, there was Verma vs. ACIT, respect of job work no incriminating document . Central Circle, charges merely on basis hence addition is Patiala of statement was not unsustainable. [2013] 32 sustainable as no taxmann.com 280 evidence was found in (Chandigarh - possession of assessee to Trib.) support the admission. 22 DCIT, Circle 6(1), Held that when the Present case also, the Ahmedabad vs. assessee retracted the admission was retracted and . Pramukh Builders statement and no other no evidence was on record. [2008] 112 ITD 179 evidence was on record to (Ahm.) (TM) show the undisclosed 225 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. income baring statement, addition is unsustainable. 23 Arun Kumar Held that the ld AO Present case also, the addition Bhansali V. DCIT should take cognizance of merely on basis of admission . [2006] 10 SOT 46 such correct income as by brother in law and no (Bang.) (URO) depicted in books of evidence is unsustainable. accounts as well as seized material and should not adopt figures merely as per admission of assessee. 24 Shree Chand Soni Held that where the Similar case, where addition V. DCIT [2006] 101 addition was based on was merely on statement TTJ 1028 (Jodh.) statement alone and no recorded u/s 132(4) and that such income was too, without any incriminating disclosed in return filed document. The assessee has for the block period but fully and truly disclosed all admitted and no the foreign as well as Indian incriminating document income in the return filed. was found to support the impugned addition, the addition was to be deleted. 25 Rajesh Jain V. Confessional statement Similarly, the confession was DCIT [2006] 100 should be corroborated not corroborated with any . TTJ 929 (Delhi) with some material evidence, hence addition is evidence to show that unjustified. assessment was just and fair. 26 Jyotichand It was held that no Same as above Bhaichand Saraf & addition can be made . Sons P. Ltd. V. merely on the basis of DCIT [2013] 86 statement recorded u/s DTR (Pune) 289 132(4) in absence of corroborative evidence. 27 CIT vs S. Ajit Where no material was In present case also, there Kumar 300 ITR found during search in was no incriminating material . 152 (Mad.) respect of amount or document was found from allegedly paid by assessee search premises. to a builder, material found in course of survey in premises of builder could not be used in block assessment of assessee to make addition 226 IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. 28 Abdul Quyme v CIT An admission or an Similarly, in present case the (1990) 184 ITR 404 acquiescence cannot be a admission cannot be binding . (All) foundation for an without findings by the assessment. A finding in authority. this regard is a condition precedent and where no such finding is recorded, the action of the authority concerned cannot be upheld. 29 CIT vs Radhe Held that the addition by In present case also, the Associates (2013) assessee construction statement was retracted and . 37 taxmann.com firm, only on basis of hence addition is 336 (Guj.) partner's statement which unsustianble. was later retracted, was not sustainable 30 CIT vs M.P. Scrap Held that except Same as above. Traders (2015) 60 statement, there was no . taxmann.com 205 other material or (Guj.) corroborative material with Assessing Officer to justify said addition – hence addition is unjustified

211. In respect of acceptance of on-money in respect of sale of land Highland project, Ld. Counsel for the assessee contended that there was no evidence except the statement of Mr. Hemant Soni. No material has been brought on record. He further submitted that during the course of search, when asked about on-money receipt in any project, Mr. Hemant Soni stated in reply to Question 30 on 01.02.2014 that on the sale of plots in the Highland Project, we have received on-money of 5-10% above the recorded sale consideration. There was no evidence or inquiry from any customer to hold that such on-money was received. Ld. Counsel for the assessee therefore submitted that no such addition of on-money receipts, which was purely based on mere statement of Mr.Hemant Soni was called for. He alternatively submitted that in any case, if the on-money receipts are assessed, then those entire receipts cannot be taxed and a reasonable profit rate be applied on same. He IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. relied on the judgment of CIT vs Balchandra Ajit Kumar 186 CTR 419 (M.P.).

Such retraction was highly belated, and further no explaination was given regarding the discrepencies found during the course of search. He also submitted that a retraction could have been acceptable only if assessee explains the discrepencies found during the course of search.

“6. It is the case of the assessee that during the course of search & seizure, no incriminating material or undisclosed income or investments were found. It is stated that the assessee was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared Rs.3 crores in personal name. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any respectively. The A.O. failed to co-relate the disclosures made in the statement with the incriminating material gathered during the search. Therefore, no inference is called for in the finding of the Ld. CIT(A) and is hereby affirmed. Ground raised by the revenue is dismissed.”

“6. We have heard rival submissions and perused the material available on record and gone through the orders of the authorities below. We find that the addition was made on the basis of admission of assessee’s son during the course of search. It was contended before us, that all these documents were properly recorded in the regular books of accounts of the persons to which these documents actually pertained. However, we find that the assessing officer did not establish the fact that any of the documents as found and seized was not recorded in the books of accounts of the persons to which these documents actually pertained. Therefore, we find force in the contention of the assesee that without referring to any of the documents was not binding on the assessee and the same cannot be used against the assessee as an evidence and that too in search assessment proceedings. Our view is supported by ratio laid down in the following judicial pronouncement:

1. M/s. Ultimate Builders vs ACIT (ITA No. 134/Ind/2019 dated 09.08.2019)(Indore Tribunal).

submission advanced before us, we direct the assessing officer to delete the addition of Rs. 10,00,00/-.”

So there remains no dispute to the fact that there is no material to show that how the addition for Rs. 30 crores was made by Ld. A.O for undisclosed income without corroborating with any incriminating material found during search. What is the working of this Rs. 30 crores, and how it was divided in two years is baseless except the confession of Shri Hemant Soni. Ld. AO himself pointed in the assessment order that it is not possible for the authorised officer u/s. 132 to put every minute detail of the discrepancies and IT(SS)A No.83,84,86,87,90,91,109,110 & ITA, No.922 &923/Ind/2019 AG8 Ventures Ltd. documents in the statement recorded during the search proceedings. It is clear from the findings of the Ld. AO that this addition is purely based on a mere declaration and nothing else. We see that after 4 days of search, on 01.02.2014, in question no. 30, Shri Soni made a declaration that on-money of 5 to 10% was received on sale of land in Highland project. Further in the subsequent question, question no. 31, he made the surrender. So far as the surrender of Rs. 30 crores in the assessee company and the confession of receipt on Highland project are concerned, there was no basis for making this surrender. In our view only surrender of income would not bind the assessee company.

The order pronounced in the open Court on 16.02.2021.