ACIT, MEERUT vs. SHRI SACHIN UPADHAYA, DEHRADUN

ORDER PER SAKTIJIT DEY, JM: Captioned appeal by the Revenue and cross objection by the assessee arise out of order dated 24.03.2011 of learned

C.O. No.220/Del/2011 AY: 2007-08 Commissioner of Income Tax (Appeals), Meerut, for the assessment year 2007-08.

3.1 Briefly the facts are, the assessee is a resident individual.

Pursuant to a search and seizure operation conducted under section 132 of the Income-tax Act, 1961 (in short ‘the Act’) in case of M/s. Prateek Resorts and Builders Pvt. Ltd., proceedings under section 153C of the Act was initiated against the assessee. In pursuance to the notice issued under section 153C of the Act, the assessee filed his return of income on 04.11.2009 declaring total income of Rs.1,65,47,190/-. As alleged by the Assessing Officer, in course of assessment proceeding, though, various information/details were called from the assessee, however, the assessee did not comply. Thus, ultimately, the Assessing Officer proceeded to complete the assessment by invoking the provisions of section 144 of the Act, to the best of his judgment. While doing so, the Assessing Officer made a number of 2 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 additions/disallowances, which resulted in determination of total income at Rs.12,27,65,430/-. Contesting the additions/disallowances made by the Assessing Officer, the assessee preferred appeal before the first appellate authority. In course of proceeding before the first appellate authority, the assessee furnished various additional evidences to substantiate its claim that the additions made are unsustainable. The submissions made by the assessee and the additional evidences furnished were forwarded to the Assessing Officer for factual verification and comments. After considering the report of the Assessing Officer, submissions of the assessee and facts and materials on record, learned Commissioner (Appeals) granted substantial relief to the assessee by deleting the additions made by the Assessing Officer.

3.2 We have heard the parties and perused the materials on record. As could be seen from the facts on record, though, at the assessment stage the assessee, for whatever may the reason, did not furnish various information and details called for, however, in course of proceeding before the first appellate authority, the assessee furnished additional evidences while contesting the additions made by the Assessing Officer. It is a fact on record that 3 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 the additional evidences furnished by the assessee were forwarded to the Assessing Officer with a direction to furnish a report. It is observed, after verifying the additional evidences furnished by the assessee, the Assessing Officer did furnish a remand report. Thus, the aforesaid facts clearly reveal that learned Commissioner (Appeals) has fully complied with the provisions of Rule 46A by providing a fair opportunity to the Assessing Officer to examine the additional evidences and have his say on the issues disputed in the appeal.

3.3 That being the factual position emerging on record, in our view, the ground raised by the Revenue is wholly misconceived.

Accordingly, we dismiss the ground.

4.1 Briefly the facts are, in course of search operation conducted in the residence of Sh. Mukesh Joshi at Noida, a receipt dated 13.07.2006 issued by one Sh. Sardar Raja Singh was seized which indicated that the assessee has paid an amount of Rs.1 Crore. Alleging that the assessee could not furnish any satisfactory explanation with regard to the source of payments, 4 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 the Assessing Officer added it back to the income of the assessee.

Before the first appellate authority, the assessee submitted that the amount was paid by the assessee on behalf of Sh. Mukesh Joshi to Sh. Sardar Raja Singh and/or M/s. Guru Ram Dass Educational Trust out of his ICICI Bank Account through two cheques of Rs.75 lakhs and Rs. 25 lakhs. It was submitted that the amount was paid for purchase of agricultural land at Dehradun by the assessee along with Sh. Mukesh Joshi.

4.2 After considering the submissions of the assessee in the context of evidences furnished, learned Commissioner (Appeals) found that the payment was made out of the bank account of the assessee, which had sufficient balance on the date of issuance of cheques. Therefore, he deleted the addition.

4.3 We have considered rival submissions and perused the materials on record. As could be seen from the facts on record, the assessee clearly established source of the payment as mentioned in the receipts seized from the premise of Sh. Mukesh Joshi to have originated from his bank account. The fact that the amount was paid through two cheques issued from assessee’s bank account stands established through proper documentary evidence. In the remand report the Assessing Officer has not been 5 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 able to dislodge the claim of the assessee. No contrary material has been brought on record by the Revenue to rebut the factual finding of learned Commissioner (Appeals) that the payments were made out of bank account of the assessee and the account had sufficient balance.

4.4 In view of the aforesaid, we do not find any infirmity in the decision of learned Commissioner (Appeals). This ground is dismissed.

5.1 Briefly the facts are, in course of search and seizure operation conducted in case of Sh. Mukesh Joshi and others, a register was found and seized containing details of election expenses with name of persons and amount paid to them between the period 12.12.2006 and 13.01.2007. Alleging that the assessee failed to explain the purpose, nature and source of such payment, the Assessing Officer added back the amount of Rs.6,53,400/-.

Before the first appellate authority, the assessee explained that undated expenses amounting to Rs.2,42,500/- cannot be related to assessment year 2007-08, hence, cannot be treated as unexplained expenditure under section 69C of the Act. As 6 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 regards, the balance amount of Rs.4,10,900/-, the assessee submitted that the said expenditure was incurred out of the cash withdrawals from the bank account. Being convinced with the submission of the assessee and evidences furnished, learned Commissioner (Appeals) deleted the addition.

5.2 Having considered rival submissions, we find that the assessee could establish that the expenditure of Rs.4,10,900/- was made out of the withdrawals made from the bank account. As regards, the balance amount of Rs.2,42,500/-, admittedly, they are undated transactions, hence, cannot be specifically related to the impugned assessment year.

5.3 In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals). This ground is dismissed.

6.1 Briefly the facts are, from the seized documents, the Assessing Officer found that the assessee had received cash of Rs.18,59,506/- from various parities. Alleging that the assessee failed to furnish the necessary details, the Assessing Officer added back the amount to the income of the assessee. Before the first appellate authority, the assessee submitted that the seized 7 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 register in which the cash transaction was noted was maintained by M/s. Prateek Resorts and Builders Pvt. Ltd., wherein, the search and seizure operation took place. The assessee submitted that the register reflects the amount paid by the said company towards advance to the assessee. It was submitted that after accounting for the money spent, the balance amount was returned back to the company. In this context, the assessee submitted that it has received an amount of Rs.10,65,200/-.

Whereas, the balance of Rs.7,94,306/- represents amount squared up by the company on rendition of account by the assessee. Being convinced with the submission of the assessee, learned Commissioner (Appeals) deleted the addition.

Since, the finding of fact recorded by learned Commissioner 8 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 (Appeals) has not been controverted by the Revenue through cogent material, we do not find any reasonable cause to interfere with the decision of learned Commissioner (Appeals). Ground raised is dismissed.

8.1 Briefly the facts are, from a day book found and seized during the search and seizure operation, the Assessing Officer noticed that it contains details of receipts and payments made in financial years 2005-06 and 2006-07, out of which an amount of Rs.38,08,500/- pertains to the impugned assessment year. Since, the amount was received by the assessee, he called upon the assessee to explain the nature of transaction and prove the source. Alleging that the assessee failed to furnish any explanation, the Assessing Officer added back the amount under section 68 of the act.

8.2 Before the first appellate authority, the assessee furnished date wise details of the transaction and submitted that substantial sum of money was withdrawn in cash from his bank account. Further explaining, the assessee submitted that the cash was withdrawn as the assessee was in the process of buying 9 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 land at Dehradun and the payment was required to be made to the land owner. After considering the submissions made by the assessee in the context of facts and materials on record, learned Commissioner (Appeals), being convinced, deleted the addition.

8.3 Having considered rival submissions, we find that learned Commissioner (Appeals) has recorded a factual finding that on examining the evidences furnished before him he has found that the receipts and payments mentioned in the seized documents have been duly recorded in normal course. Nothing has been brought on record by the Revenue to demonstrate that the factual finding recorded by learned Commissioner (Appeals) is perverse.

8.4 In view of the aforesaid, we decline to interfere with the decisions of learned Commissioner (Appeals). Ground raised is dismissed.

9.1 Briefly the facts are, based on certain seized documents, the Assessing Officer was of the view that the transactions recorded in such seized documents represent money paid towards purchase of land. Alleging that the assessee failed to explain the 10 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 source of such fund, the Assessing Officer added back to the income of the assessee. Before the first appellate authority, the assessee submitted that he along with Sh. Mukesh Joshi wanted to purchase certain agricultural land situated at Dehradun and after protracted negotiations with the concerned parties the deal could be finalized. It was submitted, the seized documents contain scribbling based on discussion made and ultimate decision taken. It was submitted that scribbling in the seized documents mentions that certain land was encumbered, hence, could not be purchased. It was submitted that total land purchased was for Rs.9,78,38,000/- and out of which the assessee group paid Rs.8,01,72,000/- and balance Rs.1,73,66,000/- was to be paid at the time of registration of the land admeasuring 21.10 bigha. The details of payments were also furnished before the first appellate authority.

9.2 After considering the submissions of the assessee in the context of evidences furnished, learned Commissioner (Appeals) found that the assessee established that the amounts mentioned in the seized documents are repeated more than once. In this regard, following observations of learned Commissioner (Appeals) would be of much relevance: 11 | P a g e

C.O. No.220/Del/2011 AY: 2007-08

“I have carefully considered the submissions made by the appellant and source of payment for purchase of land. It is crystal clear that the jottings on page 141, backside of 141 & 143 refer to and relate to purchase of the same land and in the first instance there is no justification for making addition with reference to each of the figures mentioned on the above pages aggregating to Rs.8,48,77,093/-. The appellant has clearly established that the figures on all these three pages are repeated in the succeeding pages like the amount of Rs.3.10 cr. advance on pages 141 & 143 & Rs.2,90,11,880/- on page 141 and the balance figure of Rs.21.20 lacs on page 143 aggregating to Rs.3,11,31,880/-. I am also in agreement with the A.R. that amount of Rs.2,47,33,333/- worked out with reference to backside of page 141 by assuming the rate by A.O. at Rs.106 lacs per acre as against a clearly mentioned figure of Rs.10,60,000/-. Similarly there is nothing on this page to suggest that 70% has been paid in cash. Both these datas have been assumed by the A.O. without any material on record. He has also overlooked the fact that in any event the amount of 70% written on this page does not bear any date so as to enable the A.O. to treat the same as having been paid for this year as income from undisclosed sources. On the contrary, the appellant has led evidence to show that 70% payment was made and the balance payment of 30% was required to be made. Thus in my considered view, there is no justification at all for assessment of the income from undisclosed sources in respect of the additions made based on the notings on page 141, backside of page 141 as under :

- vide para 6 of the order Rs.2,90,11,880/- - vide para 7 of the order Rs.2,47,33,333/-

I, therefore, direct deletion of the same. The Ground Nos. 8 & 9 are allowed. This leaves for me to consider the addition of Rs.3,11,31,880/- based on the jottings on page 143 of Annexure A-7. The A.O. in the assessment order summarises in para 8 the jottings in page143 with regard to purchase of 95.15 bighas of land against which the appellant has furnished details and explanation to show that the land agreed to be purchased by assessee group was of 92.30 bighas of land for total consideration of Rs.10,08,59,000/- mentioned on page 143. The total consideration for the same was Rs.9,78,38,000/- against which the assessee group has paid Rs.8,01,72,000/- as per the details furnished in table in para 6 of the written submissions and balance of Rs.1,73,66,000/- was to be paid at the time of registration of the said 21.10 bigha land which is also corroborated by the notings on page 143 as above and reproduced by the A.O. in para 8 of the assessment order as above. Thus, I am satisfied that 12 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 the jottings on the above pages were more or less on approximate basis just for the sake of ascertaining the rough estimate of total consideration involved while the appellant has furnished the actual amount of payments made which has been sourced out of bank account of Mr. Mukesh Joshi and GMS Builders & Developers (P) Ltd. In fact the said table also provides the particulars with regard to the amounts paid on behalf of the appellant &Mr. Mukesh Joshi. Having carefully considered the submissions made read with the material showing the source of the payments there is no reason for coming to the conclusion that the amount of Rs.3,11,31,880/- or for that matter the entire addition of Rs.8,48,77,093/- under para 6, 7 & 8 of the assessment order has been paid out of undisclosed sources. Therefore, I hold that the addition of Rs.3,11,31,880/- is uncalled for and deserves to be deleted. I accordingly delete the said addition. Ground no. 10 is thus allowed.”

9.3 A careful reading of the aforesaid observations of learned Commissioner (Appeals) would reveal that the assessee has explained each of the notings found in the seized documents and has been able to demonstrate that there are repetition of same amounts in different pages and relating to the same transaction.

It is further observed, learned Commissioner (Appeals) has very minutely examined assessee’s submissions by correlating with the evidences furnished and the notings made in the seized documents. Only after thoroughly examining the facts and materials on record, learned Commissioner (Appeals) was convinced that the additions are unsustainable. In the remand report, the Assessing Officer, except repeating the observations made in the assessment order, has not been able to dislodge

C.O. No.220/Del/2011 AY: 2007-08 either the submissions of the assessee or disprove the authenticity of the evidences furnished before the first appellate authority. Since, the finding recorded by learned Commissioner (Appeals) are purely factual finding based on facts and evidences available on record and the Revenue has failed to bring any material on record to demonstrate that factual finding recorded by learned Commissioner (Appeals) are not based on evidence or are perverse, we decline to interfere with the decision of learned Commissioner (Appeals). Ground raised is dismissed.

10.1 We have heard the parties and perused the material on record. This addition was made by the Assessing Officer under section 69 of the Act and was based on notings made on certain seized documents. As per the seized documents, the amount represents assessee’s contribution to a club. Alleging that the assessee failed to explain the source, the Assessing Officer made the addition. However, before the first appellate authority, the assessee had explained that the amounts/figures found mentioned in the seized documents are repeated in various pages.

It was submitted by the assessee that the amount paid by the 14 | P a g e

C.O. No.220/Del/2011 AY: 2007-08 assessee has been added twice over and would add upto Rs.17,82,303/- only for the assessment year under dispute. It is further seen, the assessee has received an amount of Rs.3,69,500/- from Club. Therefore, the net amount paid by the assessee works out to Rs.14,12,703/-. While explaining the source of said payment, the assessee has submitted that these were out of withdrawals from bank accounts. After examining the submissions of the assessee and evidences furnished, learned Commissioner (Appeals) has recorded a factual finding that except the loose papers no other evidence has been brought on record to justify the addition.

10.2 On the contrary, the assessee has demonstrated that the payments were made out of the withdrawals from the bank accounts. In view of the aforesaid factual finding of learned Commissioner (Appeals), we do not see any reason to interfere with the decision taken to delete the addition. Accordingly, ground raised is dismissed.

C.O. No.220/Del/2011 AY: 2007-08

Order pronounced in the open court on 28th February, 2023