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Facts
The assessee was found with Rs. 22,50,000/- in cash, which was subsequently requisitioned. The cash was allegedly collected from the sale of property floors. The assessee's statements regarding the source and recipients of this cash varied significantly.
Held
The Tribunal held that the assessee's claim that Rs. 20,00,000/- was received for furniture and fittings was not corroborated by any evidence. The addition of Rs. 20,00,000/- was upheld, but Rs. 2,50,000/- was deleted considering the assessee as a regular taxpayer. The addition of Rs. 1,93,000/- was also upheld.
Key Issues
Whether the cash found with the assessee and the alleged amounts received from buyers for property sales are genuine or represent income from undisclosed sources. Whether the expenditure of Rs. 1,93,361/- is non-genuine.
Sections Cited
132A, 131, 68, 115BBE
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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD, JUDICIAL & SHRI AVDHESH KUMAR MISHRA
A.Y. 2020-21 Mukesh Bharija, Vs. JCIT(OSD), C-29,Ganesh Nagar, Central Circle-26, Tilak Nagar, New Delhi ARA Building, PAN: APIPB4949L Jhandewala Extn. New Delhi (Appellant) (Respondent) Appellant by Sh. Anil Chopra, CA Respondent by Sh. Amit Katoch, Sr. DR Date of Hearing 09/04/2025 Date of Pronouncement 18/06/2025 ORDER
PER AVDHESH KUMAR MISHRA, AM
This appeal of the assesseefor the Assessment Year (AY) 2020-21 is directed against the order dated 29.12.2023of the Commissioner of Income Tax (Appeals)-29, New Delhi [CIT(A)].
The assessee has raised following grounds of appeal:
1. That Ld. CIT(A) has erred in not considering the documents produced in the proceedings of the case and has erred in passing biased with pre set mind ignoring the facts and circumstances of the case.
2. That Ld. CIT(A) has erred on the facts and in the circumstances of the case and in law, in sustaining additions made amounting Rs. 1,93,361 /- on alleged ground of purchases made by the assessee for the construction of floors.
3. That Ld. CIT(A) has erred in sustaining the additions made amounting Rs. 22,50,000 /- on account of cash generated from clients of the Mukesh Bharija, New Delhi assesse ignoring the documents produced substantiating the source of cash.
4. That appellant has not got opportunity of being heard in the course of assessment proceedings for the sake of natural justice as adjournment sought was ignored.
5. That the appellant craves to leave to add, alter, modify, amend or delete any of the ground of appeal of hearing and all above grounds are without prejudice to each other.”
3. The relevant facts giving rise to this appeal are that the assessee was intercepted by the police authorities, who found cash amounting Rs. 22,50,000/- from the possession of the assessee. Later, the said cash was requisitioned by the Income Tax Department under section 132A of the Income Tax Act, 1961 (Act). Subsequently, the statement of the appellant- assessee was recorded under section 131 of the Act, wherein he admitted that he was engaged in the real estate business and presently he along with other partners; namely, Shri Pawandeep Singh, Shri Shyam Sunder Gangwani, Shri Chandeep Singh Chandhok and Shri Gurjeet Singh had constructed a building on plot no. 13/14, AB, Tilak Nagar, New Delhi, which consisted of eight floors of 100 Sq. Yards each. The appellant-assessee further admitted in his statement that the said cash had been collected by his one of the employees namely Sh. Sanjay alias Rohit Kumar from different parties to whom they had sold the said property situated at 13/14,AB, Tilak Nagar, New Delhi. The details of persons who paid the said cash were namely: (i) Kartik LuthraRs. 10,00,000/-, Mukesh Bharija, New Delhi (ii) Saurabh Suman Rs. 3,00,000/-, (iii) Sonu KhuranaRs. 9,00,000/- and (iv) Assessee’s moneyRs. 50,000/-. However, the assessee was not consistent onbreakup of receipt of said cash, which also got evident from the following paras of the assessment order: “6. During the statement recorded on oath Sh. Mukesh Bharija u/s 131 6. of the Income Tax Act, 1961, he has clearly admitted that he had accepted the payments received in cash in lieu of the flats sold having address as 13/14 AB, Tilak Nagar, New Delhi. Sh. Mukesh Bharija in his submission dated 09/07/2019 has submitted some sale and purchase agreements highlighting the cash payments received of Rs.22,00,000/-. As per these sale purchase agreements submitted by the assessee on 09/07/2019, Sh. Mukesh Bharija has received cash of Rs.22,00,000/- for the respective flats in the property having address as 13/14, AB, Tilak Nagar, New Delhi from the individuals as mentioned in the table below:
S. Name of the person Address Amount Address of No. received in respective cash property 1. Sh. Kartik Taneja C-123, Gandhi 9,00,000 1st Floor, S/o. Sh. C.P.Taneja Nagar, Hari Naver, Back Side, Delhi 13/14 AB 2. Sh. Sanjay S/o. Sh. E-2, Manasa Ram Tilak Nagar, New Subhash Chand Park, Delhi Delhi 3. Sh. Sahil S/o Sh. B-68, Ganesh Shyam Nagar, Tilak Nagar, Delhi 4. Sh. Rajesh Kumar H. No. 38 3,00,000 3rd Floor, S/o Sh. Bhagwan Mandoli Front Side, Dass 13/14 AB Tilak Nagar, New Delhi 5. Sh. Tarvinder Kaur R/o B-68, 10,00,000 Upper Ganesh Nagar, Tilak Ground, Nagar, Delhi-110018 Backside, 3 Mukesh Bharija, New Delhi 6. Sh. Tarandeep R/o 35, Partap 13/14 AB Singh Nagar, Hari Nagar, Tilak Delhi Nagar, New Delhi 7. Mandeep Singh R/o 24/94 B, Tilak Nagar, Delhi-110018 8. Jankesh R/o C-109, Ganesh Nagar, Tilak Nagar, Delhi-110018
7. However, it is seen that the individuals from whom Sh. Mukesh Bharija had claimed to have received Cash as mentioned in the submissions dated 09/07/2019 were different from the individuals admitted by Sh. Mukesh Bharija in the first statement recorded u/s 131(1A) of the I.T. Act, 1961 on 09/05/2019. Sh. Mukesh Bharija was confronted with the above-mentioned facts and his statement was recorded on oath regarding the same. Based on the statement recorded on oath u/s 131(1A) of the Income Tax Act, 1961 of Sh. Mukesh Bharija, Sh. Vishal Sethi, Sh. Amit Khurana and evidences in the form of cash receipt of Rs.10 lakhs which was admitted by Sh. Mukesh Bharija during the statement and after post requisition investigations, it is apparent that huge cash has been received by Sh. Mukesh Bharija and his partners in the sale of above mentioned eight floors in the property having address as 13/14 AB, Tilak Nagar, New Delhi and it is clear that Sh. Mukesh Bharija and his partners have been involved in cash transactions which are not entered in their books of account. It is also possible that during post requisition/action, Sh. Mukesh Bharija might have cancelled some of the earlier BAYANA agreements and might have entered into sale transactions with new buyers. But this does not discount the factthat Sh. Mukesh Bharija would not have taken the cash component involved in sale of these floors from the new buyers as the market rate of these flats is much higher as compared to the sale consideration shown in the registered sale deeds of these flats. Further it also beyond doubt that the cash of Rs.22,50,000/- found in the possession of Sh. Mukesh Bharija on 09/05/2019 was the part of the unaccounted cash received as on money against the sale of the flats in the above-mentioned property. 4
8. Another fact which comes to light after post requisition investigations is that the total estimated sale consideration of eight floors of property having address is 13/14 AB, Tilak Nagar, New Delhi as admitted by Sh. Mukesh Bharija during this statement on oath on 09/05/2019 is approximately Rs.3.77 Crores out of which approximately Rs. 1.47 Crores was the cash component involved in these transactions. So in any scenario, if the buyers of the flats change also, the market rate (and the cash component involved in the deals) would largely remain the same. Further, the market rates are also corroborated by the copy of Bayana Agreement submitted by Sh. Mukesh Bharija himself in this office, which were allegedly cancelled. The details of percentage of share of Sh. Mukesh Bharija and his four partners (as per registry) in the above-mentioned property and cash component which must have been received against the sale of eight floors of the property by Sh. Mukesh Bharija and his partners are as per the table shown below:
……..Mukesh Bharija 36.83 Lacs”
3.1 Since, the names of persons stated by the assessee in his statement at the time of interception/requisition of said cash and investigations carried out later were different. Therefore, the Assessing officer (AO) was not convinced with the explanation offered by the assessee. Consequentially, the AO taxed the said cash seized from the possession of the assessee as under: “21. The reply of the assessee has been duly considered but found not tenable in view of the fact that during the course of statements of the partners, it has come to the notice of the undersigned that the Receipt/Part-Payment slip produced by the assessee before the DDIT(Inv.), Unit-5(4), New Delhi for corroborating the facts that the payment was received from Kartik Luthra does not bear the name of Sh. Kartik Luthra. Further, it is not signed by any of its partners except Pawandeep Singh, who during his course of statement also denied that it was not signed by him. The signatures of Sis. Pawandeep Singh mentioned in Receipt/Part-Payment slip does not match with his 5 Mukesh Bharija, New Delhi signature mentioned in the purchase deed. Thus, it appears that the contentions of Sh. Pawandeep Singh that the signature mentioned in the Receipt/Part-Payment Slip were not done by him. Further, all the partners have denied to have received any cash component during the sale proceeds of the above said flats. The receipt was actually signed by Sh. Mukesh Bharija only and not by the other partners. Furthermore, in his statement dated 03.12.2020, in reply to Q.12 he has submitted that he has not received any cash from Sh. Kartik Luthra and the cash of Rs. 9,00,000/- was received from Sh. Kartik Taneja. Thus, in the absence of any concrete documentary evidence the theory produced before DDIT(Inv.), Unit -5(4), New Delhi for receipt of cash of Rs. 10,00,000/- from Sh. Kartik Luthra appears fabricated and concocted.
Further, with regard to receipt of cash from Sh. Vishal Sethi, who in his statement has submitted that he has given Rs. 10,00,000/-to Sh. Mukesh Bharija. In response, the assessee has submitted that "I am engaged in the business of services related to construction of residential flats in the name of M/s Bharija Enterprises. During the relevant period I have sold unfurnished residential floors which has been jointly procured and constructed with other co-owners. The details of the properties so procured and sold has been duly furnished in the statement titled "Statement reflecting entries above Rs 50,000 effect of the same in Income Tax Return" (page No 174-176). However, the income there from is booked under head Capital Gains in Income Tax Return. 1, along with other joint owners, have also been meeting the requirement of the buyers of the unfurnished residential floors so sold for furnishing the floors on behalf of buyers as per their specifications We had offered the services for the installation and fitting to the buyer of water tank, Water Filter, Water level Indicator, Water Booster pump, TV, Fridge, Almirah, Sofa Sets, Curtains, PoP Work, Switch boards, Gysers, ACs, Electric Fitting light led lights, cabinet, Chimney Gas Stove, Fitting for Gas line, Bath fittings etc. in the floors. We had given quotation of the different fitting to the buyers of different products and quality. The buyer would show his preference and accordingly price is fixed for the product and the price for the services for the installation of the products is quoted separately. We would buy product on the behalf of the buyers of residential flats for which he would give advance on account of reimbursement of expenses. We are entitled to services charges proportionate amount of receipts from the joint receipts would form part of the business receipts for the years in which services are 6 Mukesh Bharija, New Delhi completed. We would engage our labour to get the things installed at their flats. Income there from is shown under head Income from Business or Profession."
This theory produced before DDIT(Inv.), Unit -5(4), New Delhi also appears fabricated and concocted even though Sh. Vishal Sethi in his statement has admitted to make payment of cash of Rs.10,00,000/- to Sh. Mukesh Bharija in view of the fact that while seeking the source of payment Sh. Vishal Sethi failed to submit the same before DDIT(Inv.), Unit -5(4), New Delhi. Further, the purpose of payment was also not mentioned by Sh. Vishal Sethi as to whether this payment was made for any improvement in property or for furnishing the flat as stated by the assessee in his reply dated 20.08.2021. The assessee in his reply also submitted that he and his partners used to meet the specific requirements of the buyers of the flat so sold is also not proved as during their statements all the partners have denied to have received any part of cash from Sh. Vishal Sethi or any other buyer for any purpose. Further, Sh. Vishal Sethi in his statement has never mentioned the name of any of his partners as well. The assessee also did not submit any such bill for purchase of goods for any such specific requirement or any other documentary evidence that he or any of his partners was involved in meeting the specific requirement of Sh. Vishal Sethi, Sh. Kartik Luthra or any other buyer. Furthermore, in his statement dated 03.12.2020, in reply to Q.26 he has submitted that he has not received any cash from Sh. Vishal Sethi. Thus, this reply of the assessee also cannot be considered. 24. …………… 25. ………….. 26. ………… 27. ………… 28. Before discussing the reply of the assessee, let's go through the whole story once again. On 09.05.2021, the assessee was caught with a cash of Rs. 22,50,000/- by SST, Delhi Police. The statement of the assessee was recorded u/s 131(1A) wherein the assessee has submitted that he has received cash of Rs. 10,00,000/- from Sh. Kartik Luthra, Rs. 9,00,000/- from Sh. Vishal Sethi and Rs. 3,00,000/- from Sh. Saurabh Suman and assessee also submitted a fabricated document in the form of Receipt/Part-Payment Slip as discussed in Para-21 above. He also submitted that he and his partners have sold 7 Mukesh Bharija, New Delhi the entire property by developing 8 floors at a total consideration of 3.77 Crores out of which a cash component of Rs. 1.47 lacs was received by him and his partners for which no evidence was submitted by him. Again, in statement dated 10.05.2019 the assessee has submitted that he will provide all the sale agreements by 14.0 .2019. Whereas the sale deeds were executed in the name of different buyers and much after the cash was detained from the assessee. In post search enquiry vide statement dated 19.11.2019 he retracted from his first statement given on 09.05.2019 wherein he has submitted that the cash of Rs. 9,00,000/- was received from Sh. Kartik Taneja & others, Rs. 3,00,000/- was received from Sh. Rajesh Kumar and Rs. 10,00,000/- was received from Sh. Tarvinder Kaur and others and Rs. 50,000/- was available with him as cash in hand from past taxed receipts. He also submitted bayana agreements in support of his claim. These agreements were duly signed by Sh. Mukesh Bharija and his partners. During the course of assessment proceedings, it has been come to the notice of the undersigned that these bayana agreements proved fabricated in view of the following:
1. 1. On enquiry by DDIT(nv.), Unit-5/4), New Delhi none of the person was found at the given address.
2. These bayana agreements were neither executed on stamp paper nor were these notarized by any notary.
3. All the partners in their statement denied to have received any cash from these buyers. They submitted that they signed these agreements to help their partner.
4. Finally, and most importantly none of sale deed was executed in the name of these buyers.
Again, vide his statement dated 03/12/2020 the assessee again emphasized that the cash cash of Rs. 9,00,000/- was received from Sh. Kartik Taneja & others, Rs. 3,00,000/- was received from Sh. Rajesh Kumar and Rs. 10,00,000/- was received from Sh. Tarvinder Kaur and others and further submitted that these agreements were cancelled and the bayana was forfeited by me as their loan could not be sanctioned. He even failed to submit date of cancellation of these agreements and also failed to produce any cancellation document. He again submitted that each flat was sold by me at 24-25 lacs and no cash component was received by me from these sale considerations. During the course of assessment proceedings, he again changed his submission that the 8 Mukesh Bharija, New Delhi cash of Rs. 10,00,000/- was received from each of Sh. Kartik Luthra and Sh. Vishal Sethi for fulfilment of their specific requirement. However, he failed to produce the documentary evidence for the same this time also. Again, in response to this office show cause dated 09/09/2021 with regard to receipt of cash from Sh. Kartik Luthra and Sh. Vishal Sethi, the assessee submitted that the whole of consideration was received vide banking channels only for sale of immovable property.
From the above, it is clear that the assessee is repeatedly changed his statement and produced falsified documents before the tax authorities. The assessee has nothing in support of his claim that the amount of Rs.22,50,000/- detained from him is from which source. In his statement he has admitted amount of Rs. 50,000/- as cash in hand available with him in mentioned in his books of account. However, in general course of business nobody carries the cash in hand. He also failed to submit any evidence before the undersigned that the cash of Rs. 50,000/- lying in his books as on 01.04.2019 was the same amount which was with him at the time of detainment i.e. on 09.05.2019. With regard to cash of Rs. 22,00,000/- he has changed his statement every time. Thus, the amount of Rs. 22,50,000/- detained from him by the Static Surveillance Team is being treated as income of the assessee from undisclosed sources and added to the total income of the assessee u/s 68 r.w.s. 115BBE of the Income Tax Act, 1961.” 3.2 Further, the AO also held expenditure of Rs.1,93,361/- as non- genuine expenditure and taxed the same. Aggrieved, the assessee filed appeal before the Ld. CIT(A) but did not get any relief.
Before us, the Ld. Authorized Representative (AR) submitted that the assessee along with other partners had sold the above-mentionedproperties situated on different floors of the building constructed by them at the address 13/14, AB, Tilak Nagar, New Delhi. The sale deeds of those properties were submitted before the AO. Further, the Ld. AR submitted Mukesh Bharija, New Delhi that the additional sums aggregating to Rs.20,00,000/- received from Sh. Kartik Luthra and Sh. Vishal Sethi (Rs.10 lakhs each) were for furniture, fittings, etc. for the said properties/residentialaccommodationat the address 13/14, AB, Tilak Nagar, New Delhi. It was contended that the saidsums aggregating to Rs.20,00,000/- were the reimbursement of the said expenditure on their behalf (prospective buyers; Shri Vishal Sethi and Sh. Kartik Luthra) and there was no element of income embedded therein. It was further submitted that the assessee had signed the statement recorded by the DDIT(Inv.), Unit-5(4), New Delhi under pressure as the assessee was not in normal conditions at the time of interception/requisition. Since Mr. Vishal Sethi and Mr. Kartik Luthra had agreed to buy furnished accommodation. Hence, the sum of Rs.10,00,000/- was received from each of them for additional works as mentioned above.
4.1 In respect of the second issue, i.e., the addition of Rs.1,93,000/-, it was submitted that it pertained to the bill raised by M/s. B D Iron & Steels, and this was the only bill for Iron & Steel. The construction of the property and its sale thereof had not been doubted by the AO; hence, the expenditure incurred for the constructions sourced from partners andprospective buyerswere explained and thus, no addition on this score was uncalled for. Accordingly, the Ld. AR prayed for relief.
On the other hand, the Ld. Sr. DR vehemently argued the case and supported the orders of AO and CIT(A). 10 Mukesh Bharija, New Delhi 6. We have heard both parties at length and have perused the material available on the record.There is no dispute on sale of properties made by the assessee along with others. Further, the sum of Rs.20,00,000/- [out of requisitioned cash of Rs. 22,50,000/-] claimed to have been received from Mr. Vishal Sethi and Mr. Kartik Luthra had been stated in initial statement recorded on 09.05.2019.In the said statement recorded on 09.05.2019, the assessee admitted the name of Mr. Sonu Khurana and thereafter corrected it by taking the name of Mr. Vishal (Answer to Q. No. 29 and 30 of the statement recorded on 09.05.2019). Admittedly, the sum ofRs.20,00,000/- had been claimed to have been received in cash. Now the claim of the assessee before us is that the sums aggregating to Rs.20,00,000/- were for furniture, fixtures, fittings, etc. for the said properties byprospective buyers; Shri Vishal Sethi and Sh. Kartik Luthra. However, the said claim does not get corroborated by any documentary evidence including affidavits in this regard either by the assessee or by Shri Vishal Sethi and Sh. Kartik Luthra. Further, the assessee has also failed to bring any material on the record to establish that he has incurred expenditure on account of furniture, fixtures, fittings, etc. for the said properties on behalf of the prospective buyers; Shri Vishal Sethi and Sh. Kartik Luthra. Since no material has been brought on the record to contradict the finding of the Authorities below with respect to the taxability of Rs.20,00,000/-; therefore, we decline to interfere with the finding of the Authorities below in this regard. Consequentially, we upheld the addition of Rs.20,00,000/-. However, keeping in view the fact that the 11
In respect of the second issue, i.e., the addition of Rs.1,93,000/-, no material has been brought on the record to contradict the finding of the Authorities below; therefore, we decline to interfere with the finding of the Authorities below in this regard.
In the result, appeal of the assessee is partly allowed as above. Order pronounced in open Court on 18th June, 2025.