ITO, JAIPUR vs. RADAHA GOVIND BUILD ESTATE PVT. LTD., JAIPUR

2 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M. These are the appeals and cross appeal filed by the Revenue and the assessee arise against the combined order of the ld. CIT(A)-I, Jaipur dated 31/03/2017 for the A.Y. 2008-09 and 2010-11 respectively.

3. Since, common issues have been involved in these appeals, therefore, these appeals were clubbed and heard together and for the sake of convenience, a common order is being passed.

4. Firstly, we take Revenue’s appeal being for the A.Y. 2008-09 wherein the Revenue has raised solitary ground of appeal which reads as under: “Whether on the facts and in the circumstances of the case and in law the Ld. CIT (A) was justified in deleting the addition of Rs.3,62,32,413/- made by the AO on the basis of loose paper, impounded during survey u/s 133A without appreciating facts and circumstances of the case. “

S.No. Name of director Amt. Received Page No. of who have sold annexure 1 Shri Giriraj Agarwal Rs.2,58,09,703/- Page No.16 Annexure-A 2 Shri Giriraj Agarwal Rs.4,23,10,000/- Page No.21 Annexure-A 3 Sh. Ramesh Rs.7,68,09,950/- Page No.21 Dangayach Annexure-A The net profit of Rs.3,62,32,413/- has been calculated by applying net profit rate @ 25% on these transactions as admitted by the directors of the 4 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. assessee company Sh Ramesh Dangayach in his statement recorded during the course of survey proceedings. Accordingly the AO worked out the net profit at Rs.3,62,32,413/- on the sale of plot of Rs.14,49,29,653/- and finally assessment u/s 147/143(3) was completed on 04-03-2016 by the A.O. by making an addition of Rs. 3,62,32,413/-.

“a) During the course of appellate proceeding’s, it was submitted that the amounts noted on the papers have been considered as sale of land in respect of any transaction in land, it is well understood and accepted fact that if any such transaction takes place, there are bound to exist certain documents and other evidences which corroborate the execution of such transaction. For example – Registered Sale deeds, purchase deeds, relevant entries in the bank statement showing payments towards purchase of land and receipt consequent to sale of land, the entries in revenue records, names of sellers from whom purchases were made and names of buyers to whom sales were made and many other things. Further as is evident, the land stated purchased was agricultural land and whereas the alleged sale is of residential plots, which can only be done after getting the conversion of land use involving approval of competent authorities and no such record/evidence/documents were referred to by the Ld. A.O. before arriving at the conclusion that the assessee has made in sale of said land. Further no effort has been made to verify the facts of ownership from the land revenue authorities as the sole allegation depends upon the ownership of land under reference alleged as purchased and sold by assessee company. These are some of the evidences, which only can prove the transaction of sale and purchase of land having taken place. It is evident and must be appreciated that apart from those papers, not a single document of such nature was found during the course of survey nor brought on record which could substantiate the transactions in land which have been alleged to have taken place on the basis of rough scribbling on the impounded paper wherein the assessee company is a party either as a buyer or as a seller.

6 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. In the absence of these evidences, any transaction recorded in whatsoever manner on an abandoned piece of paper cannot lead to an assumption that any transaction in land could have taken place. Moreover, merely on the basis of presumption, no adverse action can be taken against the assessee. In such a set of circumstances, the Assessing Officer is duty bound to bring on record evidences which substantiate the contents of the seized paper. In the absence of such corroborative evidences, the seized paper is nothing but a very feeble and weak piece of evidence or it can be said that it is equivalent to no evidence. It is well settled proposition and in fact, the basic principle of Income-Tax law that it only the ‘income’ of a person that can be taxed and that income has to be ‘real’ not presumptive. b) The assessee company demonstrated with the help of supporting/corroborative evidences that out of the amount Rs. 14,49,29,653/- a sum of Rs. 11,81,44,975/- (Rs. 7,68,09,975 plus Rs. 4,13,35,000) relates to estimated sales amount of booking already considered and included in earlier years income. The facts and submissions are verifiable from the assessment order for the A.Y. 2007-08 and director’s assessment orders. A statement having year-wise particulars/details of the said amount with reference to seized papers and copy of ledger accounts of the buyers of plot of land are also enclosed herewith. (c) This ground of appeal relates to assessing an income @ 25% on the alleged sale amount Rs. 4,23,10,000/- and Rs. 2,58,09,703/-. In this connection it is submitted that the amount Rs. 4,23,10,000/- is noted on seized page No.10 bearing date 21-11-2006 and notings on the said page have been considered/taken into account in the A.Y. 2007-08. The year-wise particulars/details of the receipts Rs. 2,58,09,703/- are enclosed. From the said particulars it is verifiable that during assessment year under appeal no amount was received by the assessee company. Complete documentary evidences for verification the said facts are enclosed. From said details/documents it is verifiable that the said amount was received in the A.Y(s). 2005-06, 2006-07 and 2007-08. Thus the impugned addition made on this account in the A.Y. 2008-09 is wrong and bad in law. (d) This ground of appeal is against estimation of profit rate @ 25% on the alleged sale of Rs. 14,49,29,653/-. In this connection it is submitted that on the facts and circumstances of the case and verifiable from the record that the amount(s) paid by the various customers are only advances against sale and in the year under appeal no sale(s) was made by the appellant company.

7 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. In view of the above facts and circumstances of the case the estimation of profit on sales advances is grossly wrong and bad in law. Further it is evident and verifiable from the assessment order under appeal that estimation of 25% rate of profit by the Ld. Assessing Officer is based on the statement of Shri Ramesh Dangayach a director of the company recorded on 18-11-2009 u/s 131 of the I.T. Act, 1961 during the course of survey u/s 133A of the I.T. Act, 1961. It is also verifiable from the record that the said rate of profit is applied only on the basis of above said statement of Mr. Ramesh Dangayach, without any further efforts to verify/support the alleged sale transactions with supporting cogent material, corroboratory documentary evidence tenable in the eyes of law. As now it is a settled position of law that section 133A does not empower any A.O. to examine any person on Oath, so statement recorded under section 133A has no evidentiary value and not a conclusive piece of evidence. Thus on the basis of admission made and or such statement cannot be a basis of addition in view of the scope and ambit of the materials collected during the course of survey action under section 133A, being not having any evidentiary value in the eyes of law. It is further held by hon’ble Courts that on the basis of the statement given by one of the partners of the assessee-firm that the disclosed income was assessable as lawful income of the assessee CIT Vs. Khadar Khan Sen (2012) 210 Taxman 248 (SC). In view of the above facts and circumstances of the case the addition made on account of alleged profit @ 25% on the alleged sales is wrong and without any effort to verify/support the alleged sale transactions with the supporting co-gent-martial documentary evidence tenable in the eyes of law. Thus impugned addition on this account is made by the Ld. A.O. is arbitrary based on surmises and conjunctures deserves to be deleted. Further it is submitted when these papers are not found at the premises of the assessee company, when the name of the companies is not appearing on these papers, when the writer of these papers is not examined it is not understandable that how and why the Learned Assessing Officer has made additions on the basis of these papers. It is also submitted that there is no number of plot or of the colony of which the alleged sale of plots has been taken and profit has been estimated. The ld AR has relied on the following case laws: (i) DCIT Vs. Rajendra Kumar Sancheti (ITAT Jaipur) 42 Taxworld 152 dated 27.03.2009

8 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. Addition cannot be made on the basis of seized paper which is not prepared by the assessee and which appears to be a deaf and dumb document. (ii) Mahaan Foods Ltd. Vs. DCIT (ITAT Delhi) (2009) 27 DTR 185 In the absence of any other evidence found during the course of search or brought on record by the Assessing Officer to show that the expenditure found noted on seized documents was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee. No inference could be drawn against the assessee much less any inference of unexplained expenses on the basis of a dumb document found at the residence of its director as there is no proof to show that the amount mentioned in the said document was paid by the company. (iii) Moolchand Kumawat & Sons Vs. DCIT (Ajmer) ITAT Jaipur Bench 42 Taxworld 241 in M.A. No. 93/JP/2008 arising out ITSSA No. 24/JP/2005 order dated 20.02.2009 Addition cannot be made on the basis of dumb document or on the basis of entries found recorded on a paper seized during search without conducting any enquiry from the concerned party. (iv) It was held in the following cases that addition could not be made on the basis of uncorroborated noting on loose sheets and papers. (a) S. Goyal Vs. DCIT (2002) 77 TTJ 1 (Mum) (b) Chandra Mohan Mehta Vs. ACIT (1999) 65 TTJ 327 (Pune) (c) Bansal Strips Pvt. Ltd. Vs. ACIT (2006) 100 TTJ 665 (Del) (d) Kishan Chand Sobhraj Mal (1991) 42 TTJ 423 (JP)”

9 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. has dealt with the issue at page No. 104 to 106 of his impugned order at para (v) to (vii) and the same reproduced herenbelow:-

“(v) I have duly considered the submissions of the appellant, assessment order and the material placed on record. It has already been stated earlier in this order that statement recorded u/s 133A of the Act without any corroborating evidence has no evidentiary value. It is noted from the impounded pg No.16 that Shri Girraj Agarwal booked land and has received payment of Rs. 2,58,09,703/- till 12-07-2007. Further, as pper page No.21, Shri Girraj Agarwal and Shri Ramesh Dangayach have booked 377200 and 69287 square yards of land for a total consideration of Rs. 4,23,10,000/- and Rs. 7,68,09,975/- respectively meaning thereby that 107007 square yards of land was booked by both of them for a total consideration of Rs. 11,91,19,975/. (vi) It is noted that as per page No.10 of the impounded documents till 21-11-2006, Shri Girraj Agarwal has booked 37000 square yards of land for a consideration of Rs.4,13,35,000/-. It appears that the transactions recorded on page No.10 is a part of the transactions recorded on page No.21 and page No.10 has already been considered in the case of the appellant for A.Y. 2007-08 and thus there cannot be any justification for including the entire amount of Rs. 4,23,10,000/- in the year under consideration. At the most, the diference of Rs. 975000 (42310000 – 41335000) can be considered for the year under consideration. Further, page No. 16 of the impounded documents pertained to payments amounting to Rs. 2,58,09,703/- received from the customers through Shri Girraj Agarwal as on 12-07-2007 which is nothing but out of the plots booked by Shri Girraj Agarwal for Rs. 4,23,10,000/- as mentioned on page No. 21 of the impounded documents.

10 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. Therefore, in view of the above discussion, at the most, only a sum of Rs. 7,68,09,975/- (page No.21) on account of booking made by Shri Ramesh Dangayach and Rs. 975000/- can be considered as the sale of plots by the appellant company and not Rs. 14,49,29,653/- as taken by the AO. (vii) Further, there cannot be any justification for applying net profit rate of 25% on the total booking amount solely on the basis of statement of Shri Ramesh Dangayach as the AO has not brought on record any material to indicate that sale of 107007 square yards of land has taken place during the year under consideration. Thus, the addition made by the AO cannot be sustained in view of the decision of Hon’ble Apex Court in the case of CIT vs. S. Khader Sen (Supra) and Hon’ble Rajasthan High Court in the case of CIT vs. Roshan Lal (Supra). The amount shown in the documents under consideration amounting to Rs. 77784975/- (76809975 + 975000) is the total amount of booking and the net profit rate cannot be applied on the amount of booking without executing the sale deed or without giving the possession of the plots to the customers during the year under consideration. The AO has not brought on record any evidence that the appellant company has neither executed any sale deed or handed o0ver the possession of the plots to the customers during the year under consideration. Even, the appellant has not declared any sale in its books of accounts for the year under consideration. It has already been discussed in the earlier part of this order that the appellant has suppressed its sale over the number of years and the AO has already been directed to initiate proceedings u/s 147 of the Act for making appropriate additions in a number of years. Therefore, in view of the above discussion, it is held that the addition of Rs. 3,62,32,413/- made by the AO is without any justification and thus cannot be sustained, hence, hereby deleted.”

11 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd.

15 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. we uphold the findings of the ld. CIT(A) on this ground and thus the appeal of the Revenue for the assessment year 2008-09 is dismissed.

2. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 2,16,45,000/- made by the AO on the basis of loose paper no. 36 without appreciating facts and circumstances of the case?

3. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 6,38,183/- made by the AO on the basis of loose paper no. 46 without appreciating facts and circumstances of the case?

4. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 6,50,000/- made by the AO on the basis of loose paper no. 47 without appreciating facts and circumstances of the case?

5. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 24,50,000/- made by the AO on the basis of loose papers no. 48 to 49 without appreciating facts and circumstances of the case?

6. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 1,94,733/-

16 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. made by the AO on the basis of loose paper no. 54 without appreciating facts and circumstances of the case? 7. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 2,19,03,529/- and Rs. 16,35,800/- made by the AO on the basis of loose papers no. 65 to 66 without appreciating facts and circumstances of the case? 8. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 24,59,897/- made by the AO on the basis of loose papers no. 67 and 69 without appreciating facts and circumstances of the case? 9. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 1,17,500/- made by the AO on the basis of loose paper no. 68 without appreciating facts and circumstances of the case? 10. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 17,500/- made by the AO on the basis of loose paper no. 69 without appreciating facts and circumstances of the case? 11. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) was justified in deleting the addition of Rs. 2,57,19,000/- made by the AO on the basis of loose paper no. 71 without appreciating facts and circumstances of the case? Grounds of assessee’s appeal: “1. That the Ld. CIT (A) is wrong and has erred in law in directing in impugned appeal order that the AO is hereby directed to initiate proceedings u/s 147 of the Act in case of Radha Govind Estate (a Firm) for A.Y. 2006-07 and for A.Y. 2006-07, 2007-08 and 2008-09 in the case of appellant company in view of undisclosed investments for which findings are given in appeal order in as much as:- (a) CIT (A) has exceeded his jurisdiction in giving direction u/s 150 (1) for another assessee in appeal order while deciding the appeal of assessee.

17 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. (b) Without prejudice to (a) above the directions given therein by CIT (A) u/s 150 (1) for A.Y. 2006-07 are clearly against the provisions of Section 150 (2) of the Act, and (c) In further directing u/s 150 (1) to A.O. to initiate proceedings u/s 147 of the Act in case of appellant company for A.Y. 2011- 12 to 2014-15 for alleged significant suppression in sales without any cogent material or evidence.

2. That the Ld. CIT (A) is wrong and has erred in law in confirming various arbitrary and illegal additions made by A.O. in the income of appellant company without any cogent material or evidence simply on the basis of some undated rough, deaf and dumb papers or projections found in course of survey u/s 133A in case of appellant company allegedly on account of – (i) various expenses incurred for stamps, advertisement, leveling of land etc amounting to Rs. 2,08,002/- on the basis of impounded page No. 25 – 28. (ii) Profit on sales collection amounting to Rs. 6,57,000/- on the basis of impounded page No. 45. (iii) Pertaining to sales of Rs. 82,10,000/- on the basis of impounded Page No. 50 by holding that the same are not recorded in books of accounts of appellant as against addition of Rs. 20,52,500/- made by A.O. (iv) Various expenses incurred and on account of estimated profits on land transactions at Green city of Rs. 9,40,000/- & Rs. 2,30,000/- on the basis of impounded page 60 & 61.] (v) Earning of profit of Rs. 1,60,000/- in some land transactions on the basis of impounded Page No. 62. (vi) Holding on the basis that notings on impounded Page No. 46 are in respect to resale of plots and thereby confirming the profit thereby amounting to Rs. 22,50,489/- as against addition of Rs. 9,98,529/- made by A.O.] (vii) Addition of Rs. 1,23,00,000/- u/s 40 (a) (ia) holding that appellant company failed to deduct TDS while crediting the account of contractor i.e. Devi Infra Developers P. Ltd.

18 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. (viii) Addition of Rs. 2,24,50,065/- u/s 68 of I. T. Act out of amount of Rs. 2,78,85,733/- shown in Balance Sheet of company as advance payment received for which value has still to be given pertaining to booking/sale of plots holding that appellant failed to discharge the onus casted upon it u/s 68 of the Act to prove identity of the payer, genuineness of the transactions and creditworthiness of the payer.

3. That the Ld. CIT (A) has erred in law in giving finding on the basis of impounded papers found in course of survey that the appellant made huge unexplained investment in purchase of land in A.Y. 2006- 07 to 2008-09 amounting to Rs. 9,40,93,125/- and suppression of sales of Rs. 4,03,97,685/- in A.Y. 2010-11 and 2013-14 which finding is wrong, without any cogent material or evidence and by misappreciation of rough notings/ projections in impounded papers. The Ld. CIT (A) on the basis of above unsubstantiated finding is wrong and has erred in law in making an addition of Rs. 1,14,36,034/- in income of appellant company for alleged suppression of sales in the year under consideration as against no addition made by A.O.

.”

16. Firstly, we taken up Revenue’s appeal in for the A.Y. 2010-11 wherein ground No. 1 of the Revenue’s appeal relates to challenging the order of the ld. CIT(A) in deleting the addition of Rs. 1,48,52,496/- made by the AO on the basis of loose papers no. 23 to 30. In this regard, the ld. CIT-DR has vehemently supported the order of the A.O.

17. On the contrary, the ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the Bench and the same is reproduced below:

19 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. “The Ld. A.O. alleged that these papers contains details of calculation of profit and shown total collection from sale of land. The Ld. A.O. alleged that total collection from sale of land appears on papers at Rs. 5,94,09,987/- on which profits is taken at Rs. 1,48,52,496/- being 25% of sale of land and so made addition of Rs. 1,48,52,496/- as income of assessee company.

In this connection it is submitted that the transactions are recorded in books of accounts of company in F.Y. 2009-10. The assessee in the books of accounts declared sales of Rs. 2,31,57,185/- and received advance from customers amounting to Rs. 2,78,85,753/- i.e. total Rs. 5,10,42,398/- against sale of land. Some of the transactions noted in papers did not materialize or finalized in subsequent year. Thus transactions of purchase of land and sales of plots are recorded in books of accounts and these papers are rough papers containing notings projections and estimates. The profit @ 25% shown in paper is also estimated working and actual profit earned on actual purchase/sale is worked out as per books of accounts. The addition of alleged profit is thus wrong and without any effort to verify the transactions from books of accounts and is not supported with cogent material and evidence which deserves to be deleted.”

20 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. company has brought these documents from his residence to the business premises of the appellant company and it has been stated by Shri Ramesh Dangayach during the course of survey u/s 133A of the Act that these documents pertained to the residential scheme of the appellant company at village Nimeda and in fact, on the basis of these documents only, Shri Ramesh Dangayach has made a disclosure of Rs. 3,55,31,259/- in the name of the appellant company for the AY 2009-10. Therefore, this contention of the appellant has no weight and thus is hereby rejected.

(ii) I have duly considered the assessment order, submissions of the appellant and the material placed on record. It appears that these calculations are relating to 25% share in sale proceeds, cost of acquisition and other expenses and there was final liability of Rs. 7,48,200/-. I fail to understand that how working of 25% share could be treated as 25% profit. It is noted that the AO has relied heavily on the statement of Shri Ramesh Dangayach, Director of the appellant company without bringing on record any corroborative material. Therefore, the addition of Rs. 1,48,52,496/- made by the AO cannot be sustained in view of the decision of Hon'ble Apex Court in the case of CIT vs S. Khader Sen (Supra) and Hon'ble Rajasthan High Court in the case of CIT vs. Roshan Lal (Supra) and hence hereby deleted.”

22 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. submitted that this is a dumb paper containing some rough estimation/calculations. The sales collection assumed by the A.O. from this paper and thereby estimating 25% profit therefrom is wrong and unsubstantiated and against the factual position, the addition of Rs. 2,16,45,000/- is without any basis. The estimated sales collection almost matches with sale collection of plots recorded in books of accounts of company and correct profit has been shown therein. Thus, according to the ld. AR, the addition is thus wrong and unwarranted.

23 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd.

3.9.2 Determination:

On this page, some calculations are appearing therein, I fail to understand how the AO has treated figure of 26.00 appearing on the said paper as sale consideration amounting to Rs. 26,00,000/-. Further, the AO has made an addition of Rs. 6,50,000/- being 25% of Rs. 26 Lac without bringing on record any material for such addition and the same cannot be sustained in view of 25 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. the decision of Hon'ble Apex Court in the case of CIT vs S. Khader Sen (Supra) and Hon'ble Rajasthan High Court in the case of CIT vs. Roshan Lal (Supra). Therefore, the addition made by the AO is hereby deleted.”

26 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. 24,50,000/- and Rs. 1,94,733/- made by the A.O. on the basis of loose paper No. 48, 49 and 54.

27 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. not find any reason to interfere or deviate from the findings so recorded by the ld. CIT(A) qua this issue and we uphold the same and consequently, these grounds raised by the Revenue stand dismissed.

28 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. said addition simply by taking estimated working on a rough sheet as payment made which is wrong and baseless. The addition made deserves to be deleted.

“3.17.2 Determination:

It appears that these papers pertained to development expenses of Rs. 2,10,05,225/- for residential land admeasuring 117340.52 square yards and Rs. 8,98,304/- and Rs. 16,35,800/(14,67,323 + 1,68,477) for commercial development. The appellant has claimed that it has made provision for development expenses in its books of accounts at Rs. 4,00,95,045/- on the basis of demand notice issued by the JDA, however, no payment was made in the instant year under consideration. The AO has not brought on record any material which may even indicate that these payments were made to the JDA during the year under consideration, hence the addition of Rs. 2,19,03,529/- and Rs. 16,35,800/- made by the AO cannot be sustained, hence deleted.”

29 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. 8,98,304/- and Rs. 16,35,800/(14,67,323 + 1,68,477) for commercial development. The assessee had claimed that it has made provision for development expenses in its books of accounts at Rs. 4,00,95,045/- on the basis of demand notice issued by the JDA, however, no payment was made in the instant year under consideration. The AO has not brought on record any material which may even indicate that these payments were made to the JDA during the year under consideration. Considering the totality of facts and circumstances, we do not find any reason to interfere or deviate from the findings so recorded by the ld. CIT(A) qua this issue and we uphold the same and consequently, this ground raised by the Revenue stands dismissed.

32 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. CIT(A) has dealt with the issue in para 3.20.2 of his order and the same is reproduced below: “3.20.2 Determination:

In the assessment order it was stated by the AO that a sum of Rs. 70,000/- was received by the appellant from Shri Krishan Kumarji for sale of shop No. 19, however, in the remand report, it was stated by AO that the amount of Rs. 70,000/- was paid to Shri Krishan Kumarji by the appellant in cash on 07/10/2009. Thus, it appears that the AO itself is not sure about the nature of transaction and thus there cannot be any question of treating the same as sale and estimating profit thereof at Rs. 17,500/- being 25% of Rs. 70,000/- in view of the decision of Hon'ble Apex Court in the case of CIT vs S. Khader Sen (Supra) and Hon'ble Rajasthan High Court in the case of CIT vs. Roshan Lal (Supra). Hence, the addition of Rs. 17,500/- made by the AO is hereby deleted.”

33 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. and we uphold the same and consequently, this ground raised by the Revenue stands dismissed.

34 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. The AO has made an addition of Rs. 2,57,19,000/- on the basis of page no. 71 stating that net profit was calculated thereof after deducting the expenses. I could not find out what were the figures whose difference was Rs. 2,57,19,000/-. These notings are nothing but some scribbling which are not making any sense. It may be mentioned that the AO has made the huge addition without application of mind. Thus, the addition of Rs. 2,57,19,000/- made by the AO cannot be sustained and hence hereby deleted.”

56. Ground No. 2 (i) to (viii) of the appeal relates to challenging the order of the ld. CIT(A) in confirming the various additions made on account of loose papers found during the course of survey U/s 133A of the Act. In this regard, the ld. AR has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the Bench and the same is reproduced below:

“(2) The ground No. 2(i) of appeal relates to objecting the addition of Rs. 2,08,002/- on the basis of impounded page – 25 to 28. The pages contains rough untallied notings of registration and other expenses on purchase of land by company. These expenses on actual basis are recorded in books of accounts of the company which almost are matching. The details are submitted herewith. The Ld. A.O. simply taking into consideration the papers without verifying anything from books of accounts simply made addition treating the expenses having

36 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. been incurred out of undisclosed sources and made addition. The addition sustained is wrong and bad in law and is hereby deleted. (3) The ground No. 2(ii) of appeal relates to objecting to the addition of Rs. 6,57,000/- on the basis of page No. 45 (undated). This paper is with noting of estimate on which some figures mentioned which is a dumb paper. The paper has no connection with business of the company. The assumption of Ld. A.O. that notings are sales and estimated net profit is baseless and unsubstantiated. The addition is wrong and uncalled for. (4) The ground No. 2(iii) of appeal relates to objecting to the addition of Rs. 20,52,000/- on the basis of page No. 50 (undated). This paper also contains some figures and notings, names etc. which is a rough dumb paper. The Ld. A.O. wrongly assumed that it pertains to sales of Rs. 82,10,00/- and made addition of profit @ 25% thereon. The actual sale transactions are recorded in books of account of company. The presumption is only a guess work, surmises and conjectures which is baseless and unsubstantiated. The addition sustained is wrong and bad in law and is hereby deleted. (5) The ground No. 2(iv) of appeal relates to objecting the addition of Rs. 9,40,000/- & 2,30,000/- on the basis of page No. 60 (undated). The paper contains some figures and notings appearing of some project Green city which is at Agra Road. The assessee company has no connection with said project and paper is a rough stray paper. The assumption of Ld. A.O. that it relates to expenses incurred for various purposes is baseless and unsubstantiated. The addition sustained is wrong and bad in law and is hereby deleted. (6) The ground No. 2(v) of appeal relates to objecting the addition of Rs. 1,60,000/- on the basis of page No. 62 (undated). The paper contains some figures and notings which is some rough calculations and a dumb paper. The Ld. A.O. wrongly presumed that amount of Rs. 1,60,000/- as profit noted thereon. The assumption is without any basis and unsubstantiated. The addition sustained is wrong and bad in law and is hereby deleted.

37 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. (7) The ground No. 2(vi) of appeal relates to addition of Rs. 9,98,529/- on the basis of page No. 64 (undated). The paper contains notings of figures & names etc. This is a rough paper contains notings for some prospective purchaser which appears to have not been materialized. The Ld. A.O. has wrongly assumed sales of Rs. 39,94,116/- and estimated profit @ 25% thereon at Rs. 9,98,529/-. The presumption is only a guess work, surmises and conjectures which is baseless and unsubstantiated. The addition sustained is wrong and bad in law and is hereby deleted. (8) The ground No.2 (vii) of appeal relates to objecting the addition of Rs. 1,23,00,000/- u/s 40 (a) (ia) for alleged non deduction of TDS from payments made to contractors for land development expenses and land survey expenses. This ground of appeal relates to the disallowance of expenditure of Rs.1,23,00,000/- on account of non deduction of TDS for payment made to contractor M/s. Devi Infra Developers Pvt. Ltd., Jaipur. The Ld. AR argued that the said contractor is a Pvt. Ltd. Company, a copy of return of income of the said company was filed. It is argued by the Ld. AR that once it is established that recipient contractor is a well known Pvt. Ltd. company, alleged to tax in the same Addl. CIT, Range-3, Jaipur in which appellant is assessed to tax, amounts were paid and accordingly even in the absence of submitting the declaration on prescribed form, which was not in control of the assessee, no disallowance of the development charges paid to above said contractor can be made. The Ld. AR also relied upon the following judgement of jurisdictional ITAT, Bench Jaipur in case of ACIT v. Girdhari Lal Bargoti ITA No. 757/JP/2012. In the said judgement the co-ordinate Bench has held as under: “The recipient are NBFC, therefore, no possible to not be assessed to tax, these payments were related for A.Y. 2009-10 and return for A.Y. 2009-10 already might have been filed by these NBFC by including these interests receipts as their income. Therefore, we do not find any reason to interfere in the order of the Ld. CIT(A)”. Further the hon’ble ITAT, Hyderabad Bench-B has also taken the similar view and confirmed the order of the Ld. CIT(A), who allowed the appeal observing as follows:-

38 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. “After considering the submissions of the assessee, the CIT(A) observed that there is strength in the submissions of the assessee as the recipients were well known companies and since the amounts were paid, they need not be brought u/s 40(a)(ia) of the Act. He, therefore, deleted the addition made by the AO”. The Ld. AR also places reliance on the judgement of hon’ble Apex Court in case of M/s. Hindustan Cocoola Beverage Pvt. Ltd. v. CIT 293 ITR 226 and Eli Lilly (India) Pvt. Ltd. 312 ITR 225. Thus in accordance with above settled position of law no disallowance could be made in the hands of assessee u/s 40(a)(ia) so the disallowance of Rs. 1,23,00,000/- made by Ld. A.O. by invoking provisions of section (40(a)(ia) and confirmed by CIT(A) deserves to be deleted.

58.1 Ground No. 2(i): This ground of appeal relates to objecting the addition of Rs. 2,08,002/- made on the basis of impounded page nos. 25 to 28. The ld. CIT (A) vide para 3.2 of his order discussed the issue that during the year the assessee company did not purchase the land and therefore the registration expenses could not be pertained to the year under consideration.

39 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. It is also mentioned by the ld. CIT (A) that as per details submitted by the assessee, expenditure incurred on account of registration etc. was Rs. 35,70,898/- and as per the notings on the impounded paper the expenditure amounted to Rs. 37,78,900/- and accordingly the ld. CIT (A) sustained the addition of Rs. 2,08,002/-.

58.2 We observed from perusal of the record that it is verifiable from the record that no land was purchased during the year and accordingly no registration/other expenses were required to be incurred in the year under appeal. It is argued that the AO has made the addition without verifying the details from the books of accounts. The ld. A/R submitted that the facts are also supported by the ld. CIT (A)’s order that a sum of Rs. 35,70,898/- are debited in the books of accounts. Further, it is also submitted that the notings on the impounded paper are rough notings and estimates and against the same the actual expenditure incurred were Rs. 35,70,898/- which are debited in the books of accounts. It was further submitted that the said notings cannot be considered or taken into account as being expenditure incurred by the assessee without any supporting/corroborative evidence. We have perused the impounded paper nos. 25 to 28. It is noticed that the jottings and notings in the impounded papers are rough in nature and not having any supporting documentary evidence. We are in agreement with the submission of the ld. A/R that when there was no purchase of land in the 40 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. year under appeal, then no registration expenses etc. are received to be incurred on account of registration etc by the assessee in the year under appeal. Considering the above facts and circumstances of the case, the addition of Rs 2,08,002/- sustained by the ld. CIT (A) is unwarranted and the same is directed to the deleted.

58.3 Ground No. 2(ii): This ground relates to the addition of Rs. 6,57,000/- made on the basis of impounded page no. 45 undated. The AO made the addition on the basis of notings on the impounded paper on account of sale and purchase of 266 sq. yards of land. The ld A/R argued that the land area in this case is determined as mentioned by the ld. CIT (A) at page 11 of his order and the sales are recorded in the books of account. The ld. A/R further submitted that the calculations on the paper are rough calculations made by someone to calculate the total sale consideration of 266 sq. yards of land. The paper neither bears the name of the company nor in the handwriting of any of the Directors/employees. When the sale proceeds have been recorded and accounted for in the books of account then no separate addition on this account can legally be made. It is evident and apparent from the assessment order as well as ld. CIT (A)’s order that the impugned addition is made without verifying the fact that who is the buyer and who is the seller of the said plot of land. Thus the addition is completely based on suspicion and having no legal legs. It is a settled position of law

41 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. that without any supporting legal documentary evidence, no addition can be made on the basis of deaf and dumb notings. Therefore, considering the totality of facts and circumstances as well as all the relevant facts and notings on the seized paper, we are of the considered view that the impugned addition is made without any supporting documentary evidences and no legs to stand, therefore, we direct to delete the same.

58.4 Ground No. 2(iii): This ground of appeal relates to objecting to the addition of Rs. 20,52,500/- made on the basis of impounded page no. 50 undated. This addition is made on the basis of notings on undated impounded page no.

50. The AO made the addition of Rs. 20,52,500/- on the basis of notings on the paper pertaining to sales amounting to Rs. 82,10,000/- by taking profit @ 25% thereof. However, the ld. CIT (A) during the course of appellate proceedings observed that the transactions of payment made by the assessee Company and also included a brokerage amount etc. of Rs. 4.60 lacs to one Shri B.B. Agarwal. Accordingly, the ld. CIT (A) made an addition of Rs. 82,10,000/- instead of Rs. 20,52,500/- made by the AO. We found that it is an established and accepted fact that the assessee is engaged in the business of real estate and the land area is determined vide page no. 11 of the ld. CIT (A)’s order. The sales are recorded in the books of account and the advances received from the various customers on account of sales are also shown separately. The notings on 42 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. the seized paper are rough calculations and not having any particulars about area of land purchased, sold, purchaser of land and the mode of payment. The ld. CIT (A) himself in the impugned order has accepted the fact that part of the amount are recorded in the books of accounts. It is admitted fact that in real estate transactions there must be some documentary evidence i.e. sale agreement, receipts etc. which establishes that any purchase / sale of land has taken place between the assessee and the prospective buyer. The ld. CIT (A) enhanced the addition without giving any opportunity to the assesseee and the enhancement made is completely based on surmises, conjectures and presumption. From perusal of the orders of the AO and ld. CIT (A) it is fully verifiable that the addition made is not supported by any legal corroborative documentary evidence. We also found that no evidence is produced by the revenue and accordingly the notings on the impounded papers are not supported by any other legal documentary evidences. The paper is undated and having only rough notings. We are of the considered view that as per law, no addition can be made on suspicion and without any legal supporting evidences and accordingly the addition made qua this issue is hereby directed to delete. Hence, we direct to delete the addition.

58.5 Ground No.2(iv): This ground of appeal relates to objecting the additions of Rs. 9,40,000/- and Rs. 2,30,000/- on account of alleged transactions of Green City, Agra Road, on the basis of notings on impounded

43 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. pages no. 60 and 61 undated. It is noticed that the addition has been made by the AO and sustained by the ld. CIT (A) only on the basis of notings on the impounded paper. It is evident and verifiable from the seized material and also from the assessment order that the assessee company has developed only one residential colony titled as Mahalaxmi Enclave at village Nimbaheda, Sirsi Road and no other colony or land was developed. The assessee right from the beginning submitted that no project known as Green City at Agra Road was developed by it, however, the assessee has no connection or relevance and even do not know the alleged project known as Green City, Agra Road. It is a known fact that when any transaction of sale / purchase of land takes place then it is bound to exists certain documents i.e. agreement to sell, purchaser’s name, registration of sale deed, payment receipt and other evidences which corroborates the execution of such transaction. It is by the ld. A/R that the seized papers do not bear the name of the assessee company and the transactions are not in the handwriting of any of the Directors or employees of the company and these papers are deaf and dumb documents do not bear the name(s) of sellers/purchasers, area of land, rate per sq. yard etc. and accordingly merely on the basis of some rough notings on the impounded papers, legally no addition can be made to the income of the assessee.Therefore, in our view, the impugned additions have been made on the basis of notings on the seized papers

44 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. without bringing on record any supporting and corroborative evidences. The additions are made purely on the basis of guess work, estimation which are not sustainable in law. Accordingly we find no merit in sustaining the additions accordingly we direct to delete the same.

58.6 Ground No. 2(v): This ground of appeal relates to objecting the addition of Rs. 1,60,000/- made on the basis of impounded paper no. 62 undated. The facts relating to this ground are available in the assessment order as well as in the order of ld. CIT (A) at pages 55-56. The impugned addition was made on the basis of estimated profit @ 25% as noted on the impounded paper. The AO made the addition of Rs. 5,27,500/- whereas in appeal the ld. CIT (A) sustained the addition of Rs. 1,60,000/- and the remaining addition of Rs. 3,67,500/- was deleted. We observed that the addition was made on the basis of rough notings without any supporting documentary evidences which is mandatory for real estate purchase and sale transactions. It is a settled position of law that no addition can be made on the basis of suspicion, surmises and conjectures. We noticed that the notings on the impounded papers are not supported by any other documentary evidences. The paper is undated and having only rough notings, therefore, we are of the considered view that as per law, no addition can be made on suspicion and without any legal supporting evidences and accordingly the addition confirmed by the ld. CIT (A) is deleted.

45 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. 58.7 Ground No. 2(vi): This ground of appeal relates to objecting the addition of Rs. 9,98,529/- made on the basis of impounded page no. 64 undated. The facts of the case are mentioned in para 3.16.2 of the ld. CIT (A)’s order. It is apparent and verifiable from the seized paper as well as order of the ld. CIT (A) that the addition has been made purely on the basis of assumptions and presumptions. It is submitted by the ld. A/R that the notings on the impounded paper are rough calculations and it is not known to the assessee who made the said workings as neither the name of the company is appearing in the seized paper nor the paper is in the handwriting of any Directors/employees of the asssessee. In real estate business without supporting or corroborative evidences no transactions can be made or entered. Thus the impugned addition made is based on presumption, surmises and conjectures. It is a settled position of law that no addition on the basis of surmises and conjectures can be made. We noticed that the notings on the impounded papers are not supported by any other documentary evidences. The paper is undated and having only rough notings, therefore, we are of the considered view that as per law, no addition can be made on suspicion and without any legal supporting evidences and accordingly the addition confirmed by the ld. CIT (A) is deleted.

58.8 Ground No. 2 (vii): This ground relates to sustaining the addition of Rs. 1,23,00,000/- U/s 40(a)(ia) of the Act for alleged non-deduction of TDS from 46 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. payments made to contractors for land development. We observed from perusal of the record that the assessee company in case of land development expenses due TDS was deducted at the time of credit / payments made. The proof of payment of TDS is submitted. The A.O. made the addition without proper verification from books of accounts of assessee company. It is an important fact that M/s Devi Infra Developers Pvt. Ltd. to whom development expenses paid has filed its return of income including the above said development charges paid by the assessee as its income. A copy of return of income of said company is already attached. Thus even in absence of submitting the declaration on prescribed Form u/s 201(1) of the Act no disallowance of the development charges paid to the said company deserves to be made. In this regard, we draw strength from the decision of the Coordinate Bench of this Tribunal in case of ACIT Vs. Girdhari Lal Bargoti in wherein the Coordinate Bench has held as under: “The recipient are NBFC, therefore, not possible to not be assessed to tax, these payments were related for A.Y. 2009-10 and return for A.Y. 2009-10 already might have been filed by these NBFC by including these interests receipts as their income. Therefore, we do not find any reason to interfere in the order of the Ld. CIT(A)”. Considering the totality of facts and circumstances of the case, we find merit in the contention of the ld. AR and we direct to delete the addition made qua this issue.

47 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. 58.9 Ground No. 2(viii): This ground relates to confirming the addition of Rs. 2,24,50,065/- U/s 68 of the Act. We observed from perusal of the record that these advances were received from persons who booked plots from company as prospective purchaser of plots. It is submitted that when assessee company gave possession or allotment letter of plot to purchaser the same was shown as sales in books of accounts of company and till then amount received from them has been shown as advance. It is submitted that the complete copy of ledger account is submitted with the A.O. and transactions are verifiable from possession letter or allotment letter and other relevant records of company. Considering the totality of facts and circumstances of the case, we set aside this issue back to the file of the A.O. for verification with regard to the fact that the sales are recorded in books of accounts and the same had been accepted in assessments of company and decide the issue afresh after providing effective and reasonable opportunity of hearing to the assessee in accordance with law. The assessee is at liberty to file any of the documents if it desired for deciding the issue.

48 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd.

49 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. assessment order passed by the AO regarding suppression of sales as alleged by the ld. CIT (A). We noticed that the selling prices mentioned in the impounded paper referred at page no. 28 of the ld. CIT (A)’s order were only asking price and it is a known fact that out of the asking price, the discount, rebates are being asked by the buyers and allowed by the seller. We noticed that for the selling price mentioned by the ld. CIT (A), he has not brought any piece of evidence which support the working out the rate as mentioned by the ld. CIT (A). We noticed that the ld. CIT (A) has failed to make any enquiry in this regard either from the buyers or from the brokers to substantiate his finding that whether the alleged persons have booked the land at the rate mentioned in the impounded data. Without making any enquiry from the concerned persons and also not bringing any supporting documentary evidences on record, no addition on the basis of presumption and suspicion can be made to the income of the assessee. We noticed that from the relevant part of the ld. CIT (A)’s order it is apparently verifiable that the entire working has been done by the ld. CIT (A) on the basis of presumption and estimation. Further, We noticed that whatever land for colonization and for carving plots was purchased by assessee company has been recorded in its books of accounts duly audited and it is not the case of assessing officer that assessee company acquired some other lands for carving plots for sale which is not accounted for in the books of company.

50 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. The competent authority JDA approved colonization and area of plots which could be sold and assessee submitted plot-wise details of sale and price received therefore which is recorded in said books of accounts. The A.O. accepted in assessments of company, the sale price of plots and profits declared by assessee company. The copy of returns of income and computation of income alongwith final accounts and details of year-wise sale of plots and year-wise assessment orders passed by A.O. have been submitted which shows that sale of all plots and its sale price are correctly recorded in books of accounts, profits earned thereon shown correctly and same stand accepted by A.O. Thus on these facts of the case when there has been no other land or plots which could be sold and sale receipts for them could not be held as received, therefore no profit could be estimated taking the notings as receipts of sale. No enquiry from JDA has been made by A.O. that whether any other plots are approved or under approval for any other colonization scheme of assessee company except that which is recorded in books of accounts of assessee company of which plots could be sold by assessee company. No enquiry from Registrar of deed registration or from Revenue records have been made whether assessee acquired any other land of which plots could be carved or sold. In short, there is absolutely no material placed by A.O./CIT(A) so as to held that rough jottings/notings which are only estimates, proposals and rough notings prepared by some

51 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. persons for various proposals, estimates, rough workings in course of business. The revenue has not brought on record any contrary documentary evidence to rebut the claim of the assessee. We noticed that the ld. CIT (A) has taken the entire alleged amount of suppressed sale as income. It is a known fact that the gross sale consideration cannot be taken as income because to determine the profit/income, cost is to be deducted and only the profit on sales can be taken as income. As such, even otherwise the impugned enhancement made by the ld. CIT (A) is grossly wrong and bad in law.

52 ITA 468, 469 & 474/JP/2017_ ITO Vs M/s Radha Govind Build Estate P ltd. 63. In the result, appeals of the revenue stand dismissed and appeal of the assessee stands allowed partly. Order pronounced in the open court on 25th November, 2021.

Sd/- Sd/- ¼foØe flag ;kno½ ¼lanhi x®lkÃa½ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 25/11/2021 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- The I.T.O. Ward 3(5)/ Ward 3(1), Jaipur. 1. izR;FkhZ@ The Respondent- M/s Radha Govind Build Estate Pvt. Ltd., 2. Jaipur. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 468, 469 & 474/JP/2017) 6. vkns'kkuqlkj@ By order,

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