DCIT 13(1)(2), MUMBAI vs. PEBBLE BAY DEVELOPERS P.LTD, MUMBAI

PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 27/06/2017 passed by the Learned Commissioner of Income-tax (Appeals)-21, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2008-09, raising following grounds:

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disallowance on account of unexplained cash transactions is not disallowance on account of unexplained cash transactions is not disallowance on account of unexplained cash transactions is not applicable in this case as the assessee has not claimed any applicable in this case as the assessee has not claimed any applicable in this case as the assessee has not claimed any expenses in the instant year contrary to the fact that the expenses in the instant year contrary to the fact that the expenses in the instant year contrary to the fact that the Directors of the KBPLA (Sister concern of the assessee company) Directors of the KBPLA (Sister concern of the assessee compa Directors of the KBPLA (Sister concern of the assessee compa while deposing before the Hon'ble Court of the XIX Addl. City Civil while deposing before the Hon'ble Court of the XIX Addl. City Civil while deposing before the Hon'ble Court of the XIX Addl. City Civil & Sessions Judge, Bangalore City have failed to give satisfactory & Sessions Judge, Bangalore City have failed to give satisfactory & Sessions Judge, Bangalore City have failed to give satisfactory explanation regarding the case expenses incurred by the assessee explanation regarding the case expenses incurred by the assessee explanation regarding the case expenses incurred by the assessee company to vacate the land from encroachers. company to vacate the land from encroachers. facts and in the circumstances of the case and in law, the 2. On the facts and in the circumstances of the case and in law, the On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO u/s 69C Ld. CIT(A) erred in deleting the addition made by the AO u/s 69C Ld. CIT(A) erred in deleting the addition made by the AO u/s 69C of Rs. 25,58,00,000/ of Rs. 25,58,00,000/- without appreciating the fact that the without appreciating the fact that the Hon'ble Court of the XIX Addl. City Civil & Sessions Judge, Hon'ble Court of the XIX Addl. City Civil & Sessions Judge, Hon'ble Court of the XIX Addl. City Civil & Sessions Judge, Bangalore c Bangalore city pronounced the judgement against the assessee ity pronounced the judgement against the assessee company in a suit filed by the KPBL for reimbursement expenses company in a suit filed by the KPBL for reimbursement expenses company in a suit filed by the KPBL for reimbursement expenses incurred by it and its sister concern i.e. the assessee company incurred by it and its sister concern i.e. the assessee company incurred by it and its sister concern i.e. the assessee company who acquired the land from M/s L.K. who acquired the land from M/s L.K. Trust for failure in proving Trust for failure in proving evidence of th evidence of the said transaction in its pass books, cash books and e said transaction in its pass books, cash books and books of accounts to support the claim. books of accounts to support the claim.

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hutment removal expenses of hutment removal expenses of M/s Kanyakumari Builders Private limited M/s Kanyakumari Builders Private limited (KBPL) i.e. a sister concern of assessee against M/s LK Trust, from whom the (KBPL) i.e. a sister concern of assessee against M/s LK Trust, from whom the (KBPL) i.e. a sister concern of assessee against M/s LK Trust, from whom the assessee purchased a plot of land at Banglore. assessee purchased a plot of land at Banglore. After following due process of After following due process of law, the Ld. Assessing Officer Assessing Officer (AO) completed the completed the reassessment on 30/03/2016 under section 147 read with section 143(3) of the Act, wherein 30/03/2016 under section 147 read with section 143(3) of the 30/03/2016 under section 147 read with section 143(3) of the he made addition of ₹25,58,00, 25,58,00,000/- as unexplained expenditure incurred by as unexplained expenditure incurred by the assessee or on behalf of the assessee or on behalf of the assessee towards obtaining vacant possession towards obtaining vacant possession from the dwellers/hutme from the dwellers/hutments in plot to property purchased purchased , which was situated at Nagashetty Hali Village, Banglore. Before the Ld. CIT(A), the lore. Before the Ld. CIT(A), the assessee challenged reopening of the assessment as well as addition on merit. assessee challenged reopening of the assessment as well as addition assessee challenged reopening of the assessment as well as addition The Ld. CIT(A) upheld the validity of the reassessment The Ld. CIT(A) upheld the validity of the reassessment, however deleted the , however deleted the addition on merit. Aggrieved, the addition on merit. Aggrieved, the Revenue has preferred this appeal has preferred this appeal before Income-tax Appellate Tribunal (ITAT) [in short ‘the Tribunal’], tax Appellate Tribunal (ITAT) [in short ‘the Tribunal’], raising the tax Appellate Tribunal (ITAT) [in short ‘the Tribunal’], grounds as reproduced above. s reproduced above.

2.1 During the course of hearing, the assessee moved During the course of hearing, the assessee moved an application under an application under Rule 27 of the ITAT Rules Rules, 1963 on the issue of validity of reassessment , 1963 on the issue of validity of reassessment [i.e. which was decided against the assessee which was decided against the assessee by the Ld CIT(A)] by the Ld CIT(A)]. The assessee challenged validity of the reassessment challenged validity of the reassessment before the Ld. CIT(A) before the Ld. CIT(A) on various

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grounds including (a) the the notice issued by the Assessing Officer was time notice issued by the Assessing Officer was time- barred having been issued after six years from the end of the relevant having been issued after six years from the end of the relevant having been issued after six years from the end of the relevant assessment year; (b) the reassessment is invalid since the the reassessment is invalid since the the reassessment is invalid since the actual reasons recorded were not provided to the ass provided to the assessee; (c) improper sanction and c) improper sanction and satisfaction of the sanctioning authority as per section 151 of the Act; (d) satisfaction of the sanctioning authority as per section 151 of the satisfaction of the sanctioning authority as per section 151 of the reasons were recorded based on incorrect facts recorded based on incorrect facts and particularly the whole and particularly the whole basis of the reassessment did not exist basis of the reassessment did not exist; (e) reasons recorded by the Ass e) reasons recorded by the Assessing Officer are vague, without application of mind and at the most mere reasons Officer are vague, without application of mind and at the most mere reasons Officer are vague, without application of mind and at the most mere reasons to suspect and not reason to believe; to suspect and not reason to believe; (f) the reassessment is initiated on the the reassessment is initiated on the assumption of escapement of income; escapement of income; (g) reopening is on the mere borrowed reopening is on the mere borrowed satisfaction of the investigation wing without any application of mind. investigation wing without any application of mind. investigation wing without any application of mind.

2.2 It was contended that the Ld. CIT(A) It was contended that the Ld. CIT(A) was convinced on the merit of the convinced on the merit of the case and accordingly granted relief in the appeal however he upheld the case and accordingly granted relief in the appeal however he upheld the case and accordingly granted relief in the appeal however he upheld the reopening of the assessment. Against the said order of t reopening of the assessment. Against the said order of the Ld. CIT(A), the he Ld. CIT(A), the Revenue is in further appeal before the is in further appeal before the Tribunal. The Ld. counsel The Ld. counsel submitted that since the assessee was granted complete relief on merit by the Ld. CIT(A), that since the assessee was granted complete relief on merit by the Ld. CIT(A), that since the assessee was granted complete relief on merit by the Ld. CIT(A), therefore no appeal was preferred by the assessee before the Tribunal against therefore no appeal was preferred by the assessee before the therefore no appeal was preferred by the assessee before the the order of the Ld. CIT(A), however the assessee filed the application under order of the Ld. CIT(A), however the assessee filed the application under order of the Ld. CIT(A), however the assessee filed the application under

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Rule 27 seeking the indulgence of the 27 seeking the indulgence of the Tribunal in adjudicating on the djudicating on the jurisdiction of the Assessing Officer to pass the impugned assessment order. of the Assessing Officer to pass the impugned assessment order. of the Assessing Officer to pass the impugned assessment order. The Ld. counsel of the assessee re of the assessee referred to application under application under Rule 27 of the ITAT Rules and submitted that the assessee is entitled to support the order and submitted that the assessee is entitled to support the order and submitted that the assessee is entitled to support the order passed by the Ld. CIT(A) on any of the grounds decided against the assessee. It passed by the Ld. CIT(A) on any of the grounds decided against the assessee. It passed by the Ld. CIT(A) on any of the grounds decided against the assessee. It was submitted that in the present case the Ld. CIT(A) rej was submitted that in the present case the Ld. CIT(A) rejected the grounds of ected the grounds of reassessment without giving any specific reassessment without giving any specific reasons and without considering the and without considering the submission filed by the assessee. submission filed by the assessee. It was submitted that since the ground of ince the ground of validity of the reassessment has been decided against the assessee, the validity of the reassessment has been decided against the assessee validity of the reassessment has been decided against the assessee assessee is eligible to challenge the same under challenge the same under Rule 27 of the IT 27 of the IT Rules. In support of the contention support of the contention, the Ld. Counsel, relied on the decision of the relied on the decision of the Hon’ble Gujrat High Court in the case of High Court in the case of PCIT v. Sun pharmaceutical Sun pharmaceutical industries Ltd (2018) 408 ITR 517 (Gujarat) industries Ltd (2018) 408 ITR 517 (Gujarat) and decision of Hon’ble nd decision of Hon’ble Madras High Court in the case of Madras High Court in the case of CIT v. Sundaram & company (1964) 52 Sundaram & company (1964) 52 ITR 763 (Madras).

2.3 In view of above, the In view of above, the Ld. Counsel of the assessee submitted that petition of the assessee submitted that petition filed by the assessee under rule 27 of ITAT to filed by the assessee under rule 27 of ITAT to Rules might be admit might be admitted.

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“Rule 27: The respondent, though he may not have appealed, may The respondent, though he may not have support the order appealed against on any of the grounds decided against support the order appealed against on any of the grounds decided against support the order appealed against on any of the grounds decided against him.” 4.1 We find that appeal has been decided on merit in favour of the assessee We find that appeal has been decided on merit in favour of the assessee We find that appeal has been decided on merit in favour of the assessee and thus no resultant tax liability on the assessee, therefore no appeal or cross and thus no resultant tax liability on the assessee, therefore no appeal or cross and thus no resultant tax liability on the assessee, therefore no appeal or cross objection has been preferred by the assessee. But the issue of validity of the tion has been preferred by the assessee. But the issue of validity of the tion has been preferred by the assessee. But the issue of validity of the reassessment has been decided against the assessee and therefore the reassessment has been decided against the assessee and therefore the reassessment has been decided against the assessee and therefore the assessee is eligible to support the order appealed against on the ground of assessee is eligible to support the order appealed against assessee is eligible to support the order appealed against validity of reassessment decided agai validity of reassessment decided against it. In the case of nst it. In the case of PCIT vs. sun pharmaceutical industries Ltd (supra) pharmaceutical industries Ltd (supra), the ITAT allowed application under allowed application under Rule 27 of the ITAT Rules Rules to the assessee for challenging the reopening of the to the assessee for challenging the reopening of the assessment by the assessee assessment by the assessee, which was affirmed by the Hon’ble High , which was affirmed by the Hon’ble High Court.

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Similarly in the case of CIT Vs Sundaram & Co Similarly in the case of CIT Vs Sundaram & Co. (supra), the , the Tribunal quashed the reassessment proceeding, which were challenged by way of an application the reassessment proceeding, which were challenged by way of an application the reassessment proceeding, which were challenged by way of an application under Rule 27 of the IT 27 of the ITAT Rules and same was affirmed by the and same was affirmed by the Hon’ble High Court.

4.2 In view of above discussion, we admit the application of the asse above discussion, we admit the application of the asse above discussion, we admit the application of the assessee under rule 27 of the ITAT under rule 27 of the ITAT Rules for challenging the validity of the for challenging the validity of the reassessment.

(i) The notice issued by the Assessing Officer was time otice issued by the Assessing Officer was time-barred having otice issued by the Assessing Officer was time been issued after six years from the end of the relevant assessment been issued after six years from the end of the relevant assessment been issued after six years from the end of the relevant assessment year;

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6.1 the Ld. Counsel of the assessee submitted that there is no dispute that l of the assessee submitted that there is no dispute that l of the assessee submitted that there is no dispute that notices under section 148 of the notices under section 148 of the Act is dated 31/03/2015, which was sent by which was sent by the speed post, however same was received by the assessee only on however same was received by the assessee only on however same was received by the assessee only on 09/04/2015,. The Ld. Coun Counsel of the assessee submitted that a copy of the of the assessee submitted that a copy of the dispatch register or evidence having hand dispatch register or evidence having handing over the said notice to the postal over the said notice to the postal authorities on 31/03/2015 orities on 31/03/2015 , had not been provided to the assessee and on the had not been provided to the assessee and on the contrary as per the postal certificate the article was picked up and delivered contrary as per the postal certificate the article was picked up and delivered contrary as per the postal certificate the article was picked up and delivered on 09/04/2015 (refer PB: 79). on 09/04/2015 (refer PB: 79). Relying on the judgement of the Hon’ble elying on the judgement of the Hon’ble jurisdictional High Court in the case of jurisdictional High Court in the case of Harjeet Surajprakash Surajprakash Girotra Vs UOI WP 513 of 2109, the Ld. Ld. Counsel submitted that notice u/s 148 of the Act u/s 148 of the Act is time-barred and hence the and hence the reassessment is unsustainable.

6.2 The Ld. DR on the other hand submitted thatduring appellate on the other hand submitted thatduring appellate on the other hand submitted thatduring appellate proceeding the Ld. CIT(A) duly provided copy of the documents to the proceeding the Ld. CIT(A) duly provided copy of the documents to the proceeding the Ld. CIT(A) duly provided copy of the documents to the Authorized Representative Authorized Representative of the assessee, including the dispatch register of of the assessee, including the dispatch register of the Assessing Officer, from which it is evident tha the Assessing Officer, from which it is evident that notice under section 148 of t notice under section 148 of the Act was provided to the postal authorities on 31/03/2015. Regarding the was provided to the postal authorities on 31/03/2015. Regarding the was provided to the postal authorities on 31/03/2015. Regarding the postal certificate, he submitted that postal certificate, he submitted that same has been issued by the Post Office been issued by the Post Office,

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who delivered the notice to the assessee and not the Post Office who re delivered the notice to the assessee and not the Post Office who re delivered the notice to the assessee and not the Post Office who received the notice for delivery from the the notice for delivery from the Income-tax Department.

6.3 We have heard rival submission of the parties on the issue in dispute We have heard rival submission of the parties on the issue in dispute We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The learne and perused the relevant material on record. The learned Coun Counsel of assessee contended that no evidence of handing over no evidence of handing over of the article to the postal of the article to the postal authorities on 31/03/2015 were provided to the assessee. However, we find authorities on 31/03/2015 were provided to the assessee. However authorities on 31/03/2015 were provided to the assessee. However that the Ld. CIT(A) has duly noted the fact that dispatch register maintained in that the Ld. CIT(A) has duly noted the fact that dispatch register maintained in that the Ld. CIT(A) has duly noted the fact that dispatch register maintained in the office of the Assessing Officer office of the Assessing Officer, which was produced before him was produced before him. The Ld CIT(A) noted that it transpired that said notice under section 148 of the it transpired that said notice under section 148 of the Act it transpired that said notice under section 148 of the appearing at Serial No. 239 of the register was duly handed over to the postal No. 239 of the register was duly handed over to the postal No. 239 of the register was duly handed over to the postal authorities on 31/03/2015 authorities on 31/03/2015. In view of specific finding by the Ld CIT(A) ecific finding by the Ld CIT(A), the grievance of the assessee that no such evidence assessee that no such evidence was provided provided to the assessee is ill founded and baseless. is ill founded and baseless. It is the assessee who is asserting asserting that said notice has not been provided to the Postal has not been provided to the Postal Authorities on 31/03/2015, therefore Authorities on 31/03/2015, therefore, the burden of proof lies on the assessee burden of proof lies on the assessee. It was open to the assessee to obtain such the assessee to obtain such evidences from the Assessing Officer invoking Right to Information Act from the Assessing Officer invoking Right to Information Act from the Assessing Officer invoking Right to Information Act, 2005. Further, as regard to the contention of the assessee of certificate of the as regard to the contention of the assessee of certificate of the as regard to the contention of the assessee of certificate of the Postal Authority placed on paperbook page placed on paperbook page 79, it is found that the said said certificate has

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been issued by the ‘Santacruz West Post Office Santacruz West Post Office’ Mumbai 400054, which reads Mumbai 400054, which reads as under:

“Santacruz west post office Mumbai 400054 TO WHOMSOEVER IT MAY CONCERNED THE SPEED POST ARTICLE TO WHOMSOEVER IT MAY CONCERNED THE SPEED POST ARTICLE TO WHOMSOEVER IT MAY CONCERNED THE SPEED POST ARTICLE NO. EM1966639731N WAS RECEIVED AND DELIVERED ON DATED NO. EM1966639731N WAS RECEIVED AND DELIVERED NO. EM1966639731N WAS RECEIVED AND DELIVERED 09/04/2015 BY THE POSTMAN OF SANTACRUZ WEST POST OFFICE” 09/04/2015 BY THE POSTMAN OF SANTACRUZ WEST POST OFFICE” 09/04/2015 BY THE POSTMAN OF SANTACRUZ WEST POST OFFICE” 6.4 The Ld. Counsel did not rebut the submission of the l did not rebut the submission of the Ld. DR that the l did not rebut the submission of the certificate has been issued by the Post Office, who had delivered the notice to certificate has been issued by the Post Office, who had delivered the notice to certificate has been issued by the Post Office, who had delivered the notice to the assessee and not the Post Office, who had collected the said notice from the assessee and not the Post Office, who had collected the said notice from the assessee and not the Post Office, who had collected the said notice from the Income-tax Department Department. The Ld. CIT(A) has also referred to . The Ld. CIT(A) has also referred to the dispatch register and relevant entry dated 31/03/2015 of notice issued to the assessee, nd relevant entry dated 31/03/2015 of notice issued to the assessee, nd relevant entry dated 31/03/2015 of notice issued to the assessee, where postal authorities had put of their stamp. where postal authorities had put of their stamp.

6.5 In the circumstances, we reject the contention of the assessee that In the circumstances, we reject the contention of the assessee that In the circumstances, we reject the contention of the assessee that notice was not issued within the six year notice was not issued within the six years from the end end of the relevant assessment year.

(ii) The reassessment is invalid since the actual reasons recorded were he reassessment is invalid since the actual reasons recorded were he reassessment is invalid since the actual reasons recorded were not provided to the assessee; not provided to the assessee

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only a mere reproduction of the same production of the same has been provided by way of by way of a letter dated 29/12/2015. According to the dated 29/12/2015. According to the Ld. Counsel, reasons recorded have been recorded have been undisputedly issued to the assessee beyond 31/03/2015 and therefore same to the assessee beyond 31/03/2015 and therefore same to the assessee beyond 31/03/2015 and therefore same are beyond the timeline ne prescribed for reopening the assessment. The learne for reopening the assessment. The learned Counsel submitted that assessment has been framed without supplying the l submitted that assessment has been framed without supplying the l submitted that assessment has been framed without supplying the reasons within six years from the end of the relevant assessment year, reasons within six years from the end of the relevant assessment year, reasons within six years from the end of the relevant assessment year, therefore, same deserve to be same deserve to be quashed. In support of his contention the . In support of his contention the Ld. Counsel relied on the decision of the Hon’ble Delhi High Court in the case of relied on the decision of the Hon’ble Delhi High Court in the case of relied on the decision of the Hon’ble Delhi High Court in the case of Haryana Acrylic mgg Co. Vs CIT (2009) 308 ITR 38 (Delhi). Haryana Acrylic mgg Co. Vs CIT (2009) 308 ITR 38 (Delhi). Haryana Acrylic mgg Co. Vs CIT (2009) 308 ITR 38 (Delhi).

7.1 The learned DR on the other hand submitted that DR on the other hand submitted that firstly the assessee firstly the assessee has not substantiated that the reasons communicated to the assessee are any substantiated that the reasons communicated to the assessee are any substantiated that the reasons communicated to the assessee are any way different then reasons reasons actually recorded by the Assessing Officer. actually recorded by the Assessing Officer. According to him, it hardly makes difference if the Assessing Officer provide a According to him, it hardly makes difference if the Assessing Officer provide a According to him, it hardly makes difference if the Assessing Officer provide a photocopy of the reasons or reproduce photocopy of the reasons or reproduce them in a letter unless it is proved that them in a letter unless it is proved that no reasons were recorded no reasons were recorded or different reasons are recorded or different reasons are recorded. The Ld. DR submitted that it is the presumption of the Ld it is the presumption of the Ld. Counsel of the assessee only Counsel of the assessee only and no such objections were raised immediately after providing the reasons. and no such objections were raised immediately after providing th and no such objections were raised immediately after providing th

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7.2 Further, he submitted that Further, he submitted that the law only prescribe for issue of notice the law only prescribe for issue of notice under section 148 of the Act of the Act prior to expiry of six years from prior to expiry of six years from the end of the relevant assessment year and relevant assessment year and subsequently, reasons can be provided to the reasons can be provided to the assessee only after filing return of income er filing return of income after responding after responding to notice under section 148 of the Act as laid down by Hon’ble Supreme Court in the case of as laid down by Hon’ble Supreme Court in the case of as laid down by Hon’ble Supreme Court in the case of GKN Driveshaft (India) Ltd. v. ITO (2003) 259 ITR 19 (SC). GKN Driveshaft (India) Ltd. v. ITO (2003) 259 ITR 19 (SC). GKN Driveshaft (India) Ltd. v. ITO (2003) 259 ITR 19 (SC).

7.3 We have heard rival submission of the parties on the We have heard rival submission of the parties on the We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. and perused the relevant material on record. The Ld. Counsel has not been Counsel has not been able to substantiate that reasons provided able to substantiate that reasons provided to the assessee are different in to the assessee are different in any manner from the actual reason recorded by the Assessing Officer and no such manner from the actual reason recorded by the Assessing Officer and no such manner from the actual reason recorded by the Assessing Officer and no such objection was ever raised before the Assessing Officer and thus raising the was ever raised before the Assessing Officer and thus raising the was ever raised before the Assessing Officer and thus raising the issue that reason supplied to the assessee is different then, actual reasons is issue that reason supplied to the assessee is different then issue that reason supplied to the assessee is different then only imagination of the asses only imagination of the assessee, which is unsubstantiated and , which is unsubstantiated and accordingly rejected. As regarding objection o As regarding objection of providing reasons beyond ex sons beyond expiry of six years is concerned, we find that u , we find that under section 149 of the Act 149 of the Act during relevant period, it is prescribed prescribed that notice under section 148 of the that notice under section 148 of the Act could have been issued prior to expiry of six year from the been issued prior to expiry of six year from the end of the relevant assessment e relevant assessment year. In the instant case relevant assessment year is 2008-09 and therefore year. In the instant case relevant assessment year is 2008 year. In the instant case relevant assessment year is 2008

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notice under section 148 of the notice under section 148 of the Act could have been issued before could have been issued before 31/03/2015, and which has been issued , and which has been issued on 31.03.2015 as held by us in earlier on 31.03.2015 as held by us in earlier part of this order. As far as providing of reasons recorde As far as providing of reasons recorded to the assessee, is d to the assessee, is concerned, the Hon’ble Supreme Court in the case of GKN Hon’ble Supreme Court in the case of GKN Driveshaft Private Driveshaft Private Limited (supra) held as under: held as under:

“We see no justifiable reason to interfere with the order under We see no justifiable reason to interfere with the order under We see no justifiable reason to interfere with the order under challenge. However, challenge. However, we clarify that when a notice under Section 148 Section 148 of the Income tax Act is issued, the proper course of action for the notice the Income tax Act is issued, the proper course of action for the notice the Income tax Act is issued, the proper course of action for the notices is to file return and if he so desires, to seek reasons for issuing notices. is to file return and if he so desires, to seek reasons for issuing notices. is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable e assessing officer is bound to furnish reasons within a reasonable e assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notices receipt of reasons, the notices is entitled to file objections to is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the issuance of notice and the assessing officer is bound to dispose of the issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the same by passing a speaking order. In the instant case, as the reasons instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to have been disclosed in these proceedings, the assessing officer has to have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking Order before dispose of the objections, if filed, by passing a speaking Order before dispose of the objections, if filed, by passing a speaking Order before proceeding with the assessment in respect of the abovesaid five proceeding with the assessment in respect of the abovesaid five proceeding with the assessment in respect of the abovesaid five assessment years. assessment years.” 7.4 Thus, the assessee could have sought the reasons recorded only after Thus, the assessee could have sought the reasons recorded only after Thus, the assessee could have sought the reasons recorded only after filing the return of income. The Assessing Officer has noted in the impugned filing the return of income. The Assessing Officer has noted in the filing the return of income. The Assessing Officer has noted in the assessment order that assessee by assessment order that assessee by way of a letter dated 24 letter dated 24thApril 2015 requested to treat the return of to treat the return of income filed on 30/09/2008 income filed on 30/09/2008, which was revised on 12/05/2009 revised on 12/05/2009, as return of income in response to notice dated income in response to notice dated u/s

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148 dated 31/03/ 2015. The 2015. The Ld. Assessing Officer has further noted that further noted that assessee subsequently requested for reasons for reopening & same were assessee subsequently requested for reasons for reopening & assessee subsequently requested for reasons for reopening & provided to the assessee by letter dated 29/12/2015. In the circumstances, provided to the assessee by letter dated 29/12/2015. In the circumstances, provided to the assessee by letter dated 29/12/2015. In the circumstances, the contention of the Ld. Ld. Counsel of the assessee that copy of the reasons l of the assessee that copy of the reasons recorded should have been provided to the assessee prior to the expiry of the recorded should have been provided to the assessee prior to the recorded should have been provided to the assessee prior to the six years from the end of the relevant assessment year six years from the end of the relevant assessment year is not in accordance with provisions of the law, with provisions of the law, thus same is rejected. Regarding the supply of rejected. Regarding the supply of reasons recorded, the Hon’ble Delhi High Court in the case of the Hon’ble Delhi High Court in the case of the Hon’ble Delhi High Court in the case of Haryana Acrylic Mfg Co (supra) held as under:

“22. This argument suffers from several infirmities. First of all, the 22. This argument suffers from several infirmities. First of all, the 22. This argument suffers from several infirmities. First of all, the respondents cannot be permitted to gloss over the fact that the reasons respondents cannot be permitted to gloss over the fact that the reasons respondents cannot be permitted to gloss over the fact that the reasons which were supplied to the petitioner were different from the reasons which were supplied to the petitioner were different from the reasons which were supplied to the petitioner were different from the reasons purportedly recorded in the said form on whi purportedly recorded in the said form on which they now seek to rely. If the ch they now seek to rely. If the reasons in the said form were the ‘actual’ reasons, why were they not reasons in the said form were the ‘actual’ reasons, why were they not reasons in the said form were the ‘actual’ reasons, why were they not communicated to the petitioner? Why was nothing said about these communicated to the petitioner? Why was nothing said about these communicated to the petitioner? Why was nothing said about these reasons (noted in the form) when the petitioner filed its objections to the reasons (noted in the form) when the petitioner filed its objections to the reasons (noted in the form) when the petitioner filed its objections to the reasons which were supplied to it? It must be remembered that in its h were supplied to it? It must be remembered that in its h were supplied to it? It must be remembered that in its objections, the petitioner took the specific plea that in the absence of any objections, the petitioner took the specific plea that in the absence of any objections, the petitioner took the specific plea that in the absence of any allegation that the petitioner had failed to disclose fully and truly all allegation that the petitioner had failed to disclose fully and truly all allegation that the petitioner had failed to disclose fully and truly all material facts necessary for assessment, the Ass material facts necessary for assessment, the Assessing Officer had no essing Officer had no jurisdiction to issue the notice under section 148 and initiate action under jurisdiction to issue the notice under section 148 and initiate action under jurisdiction to issue the notice under section 148 and initiate action under section 147 after four years from the end of the relevant assessment year. section 147 after four years from the end of the relevant assessment year. section 147 after four years from the end of the relevant assessment year. Despite this precise objection, there is no mention of the reasons noted in Despite this precise objection, there is no mention of the reasons noted in Despite this precise objection, there is no mention of the reasons noted in

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the said form in the impugned order dated 2 id form in the impugned order dated 2-3-2005. If the respondents 2005. If the respondents had regarded the reasons noted in the said form to be the ‘actual’ reasons, had regarded the reasons noted in the said form to be the ‘actual’ reasons, had regarded the reasons noted in the said form to be the ‘actual’ reasons, it would have been very easy for the Assessing Officer to have countered it would have been very easy for the Assessing Officer to have countered it would have been very easy for the Assessing Officer to have countered this objection by simply referring to the this objection by simply referring to the reasons noted in the form and reasons noted in the form and saying that the allegation of failure to disclose is very much there. It is saying that the allegation of failure to disclose is very much there. It is saying that the allegation of failure to disclose is very much there. It is obvious that the reasons noted in the said form were never regarded as the obvious that the reasons noted in the said form were never regarded as the obvious that the reasons noted in the said form were never regarded as the reasons for initiating action under section 147 of the said Act. Thus, the reasons for initiating action under section 147 of the said Act. Thus, the reasons for initiating action under section 147 of the said Act. Thus, the respondents cannot now be permitted to fall back on those purported respondents cannot now be permitted to fall back on those purported respondents cannot now be permitted to fall back on those purported reasons noted in the said form. 23. Secondly, let us assume for the sake of reasons noted in the said form. 23. Secondly, let us assume for the sake of reasons noted in the said form. 23. Secondly, let us assume for the sake of argument that the ‘actual’ reasons were those as noted in the said form. argument that the ‘actual’ reasons were those as noted in the said form. argument that the ‘actual’ reasons were those as noted in the said form. Then why did the Assessing Officer comm Then why did the Assessing Officer communicate a different set of reasons unicate a different set of reasons to the petitioner? Did he think that the supplying of reasons and the to the petitioner? Did he think that the supplying of reasons and the to the petitioner? Did he think that the supplying of reasons and the inviting of objections were mere charades? Did he think that it was a mere inviting of objections were mere charades? Did he think that it was a mere inviting of objections were mere charades? Did he think that it was a mere pretence or a formality which had to be gotten over with? At this point, it pretence or a formality which had to be gotten over with? At this point, it pretence or a formality which had to be gotten over with? At this point, it would be well to remember that the Supreme Court in GKN Driveshafts would be well to remember that the Supreme Court in GKN Driveshafts would be well to remember that the Supreme Court in GKN Driveshafts (India) Ltd.’s case had specifically directed that when a notice under (India) Ltd.’s case had specifically directed that when a notice under (India) Ltd.’s case had specifically directed that when a notice under section 148 of the said Act is issued and the noticee files a return and seeks section 148 of the said Act is issued and the noticee files a return and seeks section 148 of the said Act is issued and the noticee files a return and seeks reasons for the issuance of the notice reasons for the issuance of the notice, the Assessing Officer is bound to , the Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of the reasons, the furnish reasons within a reasonable time. On receipt of the reasons, the furnish reasons within a reasonable time. On receipt of the reasons, the noticee is entitled to file objections to the issuance of notice and the noticee is entitled to file objections to the issuance of notice and the noticee is entitled to file objections to the issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking Assessing Officer is bound to dispose of the same by passing a speaking Assessing Officer is bound to dispose of the same by passing a speaking order. These are specific directions given by the Supreme Court in all cases der. These are specific directions given by the Supreme Court in all cases der. These are specific directions given by the Supreme Court in all cases where notices under section 148 of the said Act are issued. Surely, the where notices under section 148 of the said Act are issued. Surely, the where notices under section 148 of the said Act are issued. Surely, the Assessing Officer could not have construed these specific directions to be a Assessing Officer could not have construed these specific directions to be a Assessing Officer could not have construed these specific directions to be a mere empty formalities or dead l mere empty formalities or dead letters? There is a strong logic and purpose etters? There is a strong logic and purpose behind the directions issued by the Supreme Court and that is to prevent behind the directions issued by the Supreme Court and that is to prevent behind the directions issued by the Supreme Court and that is to prevent high-handedness on the part of Assessing Officers and to temper any action handedness on the part of Assessing Officers and to temper any action handedness on the part of Assessing Officers and to temper any action contemplated under section 147 of the said Act by reason and sub contemplated under section 147 of the said Act by reason and sub contemplated under section 147 of the said Act by reason and substance. In fact, even section 148 (2) stipulates that the Assessing Officer shall, before fact, even section 148 (2) stipulates that the Assessing Officer shall, before fact, even section 148 (2) stipulates that the Assessing Officer shall, before

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issuing any notice under the said section, record his reasons for doing so. issuing any notice under the said section, record his reasons for doing so. issuing any notice under the said section, record his reasons for doing so. The Supreme Court has only carried forward this mandatory requirement The Supreme Court has only carried forward this mandatory requirement The Supreme Court has only carried forward this mandatory requirement by directing that th by directing that the reasons which are recorded be communicated to the e reasons which are recorded be communicated to the assessee within a reasonable period of time so that at that stage itself the assessee within a reasonable period of time so that at that stage itself the assessee within a reasonable period of time so that at that stage itself the assessee may point out any objections that he may have with regard to the assessee may point out any objections that he may have with regard to the assessee may point out any objections that he may have with regard to the initiation of action under section 147 of the said Ac initiation of action under section 147 of the said Act. The requirement of t. The requirement of recording the reasons, communicating the same to the assessee, enabling recording the reasons, communicating the same to the assessee, enabling recording the reasons, communicating the same to the assessee, enabling the assessee to file objections and the requirement of passing a speaking the assessee to file objections and the requirement of passing a speaking the assessee to file objections and the requirement of passing a speaking order are all designed to ensure that the Assessing Officer does not reopen order are all designed to ensure that the Assessing Officer does not reopen order are all designed to ensure that the Assessing Officer does not reopen assessments which have been finalized on his mere whim or fancy and that which have been finalized on his mere whim or fancy and that which have been finalized on his mere whim or fancy and that he does so only on the basis of lawful reasons. These steps are also designed he does so only on the basis of lawful reasons. These steps are also designed he does so only on the basis of lawful reasons. These steps are also designed to ensure complete transparency and adherence to the principles of to ensure complete transparency and adherence to the principles of to ensure complete transparency and adherence to the principles of natural justice. Thus, a deviation from these dire natural justice. Thus, a deviation from these directions would entail the ctions would entail the nullifying of the proceedings. Assuming as we have done that the ‘actual’ nullifying of the proceedings. Assuming as we have done that the ‘actual’ nullifying of the proceedings. Assuming as we have done that the ‘actual’ reasons were those as noted in the said form, it is obvious that the reasons reasons were those as noted in the said form, it is obvious that the reasons reasons were those as noted in the said form, it is obvious that the reasons were never communicated to the petitioner and it is only for the first time were never communicated to the petitioner and it is only for the first time were never communicated to the petitioner and it is only for the first time in the course of the present writ petition that those ‘reasons’ have surfaced. e course of the present writ petition that those ‘reasons’ have surfaced. e course of the present writ petition that those ‘reasons’ have surfaced. Therefore, if he proceeded on the assumption that the ‘actual’ reasons were Therefore, if he proceeded on the assumption that the ‘actual’ reasons were Therefore, if he proceeded on the assumption that the ‘actual’ reasons were those as noted in the said form, the proper course of action as directed by those as noted in the said form, the proper course of action as directed by those as noted in the said form, the proper course of action as directed by the Supreme Court in GKN Drive the Supreme Court in GKN Driveshafts (India) Ltd.’s case, has not been shafts (India) Ltd.’s case, has not been followed. It would mean that the reasons which were supplied to the followed. It would mean that the reasons which were supplied to the followed. It would mean that the reasons which were supplied to the petitioner were not the actual reasons and the objections which were taken petitioner were not the actual reasons and the objections which were taken petitioner were not the actual reasons and the objections which were taken by the petitioner were not to the actual reasons and the speaking order by the petitioner were not to the actual reasons and the speaking order by the petitioner were not to the actual reasons and the speaking order dated 2-3-2005 which was passed was also neither on the basis of the 2005 which was passed was also neither on the basis of the 2005 which was passed was also neither on the basis of the actual reasons nor the objections to the actual reasons. The entire process actual reasons nor the objections to the actual reasons. The entire process actual reasons nor the objections to the actual reasons. The entire process would be a sham and would amount to making a mockery of the law as would be a sham and would amount to making a mockery of the law as would be a sham and would amount to making a mockery of the law as settled by the Supreme Court. Therefore, for settled by the Supreme Court. Therefore, for this reason also, the notice this reason also, the notice under section 148 as well as all proceedings subsequent thereto as also the under section 148 as well as all proceedings subsequent thereto as also the under section 148 as well as all proceedings subsequent thereto as also the order dated 2- -3-2005 are liable to be quashed.”

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7.6 In the above case, the assessee filed objection against the reasons In the above case, the assessee filed objection against the reasons In the above case, the assessee filed objection against the reasons recorded, which were duly disp recorded, which were duly disposed of by the Assessing Officer. But in the of by the Assessing Officer. But in the present case, the assessee , the assessee did not file any objection before the Assessing objection before the Assessing Officer challenging the copy of reasons provided Officer challenging the copy of reasons provided as not the actual reasons. s not the actual reasons. The Ld. CIT(A) in para 4.9 of the impugned order has held that no The Ld. CIT(A) in para 4.9 of the impugned order has held th The Ld. CIT(A) in para 4.9 of the impugned order has held th objections were filed before the Assessing Officer till completion of the objections were filed before the Assessing Officer till completion of the objections were filed before the Assessing Officer till completion of the assessment order i.e. 31/3/2016 and therefore Assessing Officer has assessment order i.e. 31/3/2016 and therefore Assessing Officer has assessment order i.e. 31/3/2016 and therefore Assessing Officer has completed the assessment following due procedure of law. For ready completed the assessment following due procedure of law. For ready completed the assessment following due procedure of law. For ready reference said finding of the Ld. CIT(A) finding of the Ld. CIT(A) is reproduced as under: is reproduced as under:

4.9. It is further noted that the reasons recorded were furnished to the 4.9. It is further noted that the reasons recorded were furnished to the 4.9. It is further noted that the reasons recorded were furnished to the appellant on 29.12.2015. The assessment order has been passed on appellant on 29.12.2015. The assessment order has been passed on appellant on 29.12.2015. The assessment order has been passed on 30.3.2016. The appellant had ample time but did not file any objections. 30.3.2016. The appellant had ample time but did not file any objections. 30.3.2016. The appellant had ample time but did not file any objections. No evidence of filing evidence of filing any objection is produced in the appellate any objection is produced in the appellate proceedings. Thus, due procedure has been followed by the assessing Thus, due procedure has been followed by the assessing Thus, due procedure has been followed by the assessing officer. In the light of these facts and discussion earlier, I do not find officer. In the light of these facts and discussion earlier, I do not find officer. In the light of these facts and discussion earlier, I do not find merits in the contention of the appellant. The Grounds of Appeal No. 'A' to merits in the contention of the appellant. The Grounds of Appeal No. merits in the contention of the appellant. The Grounds of Appeal No. 'C' is thus, dismissed and the reopening of the assessment is upheld.” 'C' is thus, dismissed and the reopening of the assessment is upheld. 'C' is thus, dismissed and the reopening of the assessment is upheld. 7.7 Moreover in the case, the Moreover in the case, the assessee has not represented that actual has not represented that actual reasons recorded are different from the reasons to believe communicated to reasons recorded are different from the reasons to believe communicated to reasons recorded are different from the reasons to believe communicated to the assessee by way of letter of the Assessing Officer. the assessee by way of letter of the Assessing Officer. In view of above, the In view of above, the reliance placed by the Ld Coun reliance placed by the Ld Counsel of the assessee on the decision of t l of the assessee on the decision of the

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Hon’ble Delhi High Court in the case of Haryana Acrylic Mfg Ltd (supra) is of Hon’ble Delhi High Court in the case of Haryana Acrylic Mfg Ltd (supra) is of Hon’ble Delhi High Court in the case of Haryana Acrylic Mfg Ltd (supra) is of no assistance to the assessee. no assistance to the assessee.

(iii) Improper sanction and satisfaction of the sanctioning authority as mproper sanction and satisfaction of the sanctioning authority as mproper sanction and satisfaction of the sanctioning authority as per section 151 of the Act; per section 151 of the

8.1 The Ld. DR on the other hand objected that the assessee is making wild DR on the other hand objected that the assessee is making wild DR on the other hand objected that the assessee is making wild allegations despite providing evidence by the Ld. CIT(A) to the Authorized allegations despite providing evidence by the Ld. CIT(A) to the allegations despite providing evidence by the Ld. CIT(A) to the Representative of the assessee, and now assessee cannot of the assessee, and now assessee cannot shift its burden to shift its burden to

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the Tribunal for providing the evidence which were already provided to the ribunal for providing the evidence which were already provided to the ribunal for providing the evidence which were already provided to the assessee during first appellate first appellate proceedings.

8.2 We have heard rival submission of the parties on the issue in dispute We have heard rival submission of the parties on the issue in dispute We have heard rival submission of the parties on the issue in dispute and perused the relevant material on rec the relevant material on record. It is evident from the para 4.2 of ord. It is evident from the para 4.2 of impugned order of the Ld. CIT(A) that impugned order of the Ld. CIT(A) that he provided the document in support of provided the document in support of the approval/sanction for notice under section 148 of the Act as prescribed the approval/sanction for notice under section 148 of the the approval/sanction for notice under section 148 of the under the provisions of section 151 of the under the provisions of section 151 of the Act, to the author to the authorized representative of the assessee. representative of the assessee. The allegation of no proper approval of The allegation of no proper approval of reasons recorded, are only ba are only based on presumption and surmises sed on presumption and surmises. In the circumstances, we reject the contention of the learne circumstances, we reject the contention of the learned Coun Counsel of the assessee that no proper sanction/approval that no proper sanction/approval was granted for the reasons recorded by the the reasons recorded by the Assessing Officer.

(iv) Reasons were recorded based on were recorded based on incorrect facts and particularly the incorrect facts and particularly the whole basis of the reassessment did not exist; whole basis of the reassessment did not exist;

“d. Reasons recorded based on incorrect facts: Reasons recorded based on incorrect facts:

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i. The Appellant further submits, that the reasons recorded by the AO are The Appellant further submits, that the reasons recorded by the AO are The Appellant further submits, that the reasons recorded by the AO are based on erroneous and incorrect facts. The same could be manifested from based on erroneous and incorrect facts. The same could be manifested from based on erroneous and incorrect facts. The same could be manifested from the following: the following: 1. According to the AO as stated in his reasons, the project between, g to the AO as stated in his reasons, the project between, g to the AO as stated in his reasons, the project between, Kanyakumari Builders P. Ltd. (KBPL) and L K Trust was transferred to Kanyakumari Builders P. Ltd. (KBPL) and L K Trust was transferred to Kanyakumari Builders P. Ltd. (KBPL) and L K Trust was transferred to Pebblebay Developers, the Appellant. However, the transaction only Pebblebay Developers, the Appellant. However, the transaction only Pebblebay Developers, the Appellant. However, the transaction only pertained to land and no project as such was in existence at pertained to land and no project as such was in existence at pertained to land and no project as such was in existence at the time of the said transfer and consequently there is no question of transfer of any said transfer and consequently there is no question of transfer of any said transfer and consequently there is no question of transfer of any project. 2. The AO has further alleged that certain expenditure was incurred by KBPL The AO has further alleged that certain expenditure was incurred by KBPL The AO has further alleged that certain expenditure was incurred by KBPL in cash towards vacation / evictment of the hutments in cash towards vacation / evictment of the hutments in cash towards vacation / evictment of the hutments existing on the land which was ori which was originally sold to it by LK Trust. Firstly, the allegation of cash Firstly, the allegation of cash expenditure in the case of KBPL has itself not been proved by the AO or expenditure in the case of KBPL has itself not been proved by the AO or expenditure in the case of KBPL has itself not been proved by the AO or established on facts by him. established on facts by him. Secondly, even the payments made by the Secondly, even the payments made by the Appellant / KBPL are through Account Payee Cheques Appellant / KBPL are through Account Payee Cheques Appellant / KBPL are through Account Payee Cheques / Bank Drafts to one Mr. Anand whose identity is not in doubt and who had undertaken the work Mr. Anand whose identity is not in doubt and who had undertaken the work Mr. Anand whose identity is not in doubt and who had undertaken the work of clearing hutments which is evidenced by his Confirmation and clearing hutments which is evidenced by his Confirmation and clearing hutments which is evidenced by his Confirmation and other related evidences. (Ref. Copy of Appellant's Letter dated related evidences. (Ref. Copy of Appellant's Letter dated related evidences. (Ref. Copy of Appellant's Letter dated 29.03.2016 at pg.155 to 180 of PB, pg.155 to 180 of PB, Bank Statements of the Appellant at pg. 91 to 98 of PB Bank Statements of the Appellant at pg. 91 to 98 of PB reflecting the impugned payments, reflecting the impugned payments, Copy of Confirmation of Mr. Anand at Copy of Confirmation of Mr. Anand at pg.156 of PB, Copy of Aadhar Card of Mr. Anand at pg. 157 of PB, Copy of pg.156 of PB, Copy of Aadhar Card of Mr. Anand at pg. 157 of PB, Copy of pg.156 of PB, Copy of Aadhar Card of Mr. Anand at pg. 157 of PB, Copy of Ledger Account of L.K Trust in the Appellant's books at Account of L.K Trust in the Appellant's books at Account of L.K Trust in the Appellant's books at pg. 158 to 161 of PB and Sample Copy of Cheques / Drafts at pg. 170 to 180 of and Sample Copy of Cheques / Drafts at pg. 170 to 180 of and Sample Copy of Cheques / Drafts at pg. 170 to 180 of PB.). As such the whole assumption of the AO of incurring of cash whole assumption of the AO of incurring of cash whole assumption of the AO of incurring of cash expenditure by the Appellant is totally erroneous. Appellant is totally erroneous. 3. Lastly, the AO has also incorrectly stated in the reasons tha Lastly, the AO has also incorrectly stated in the reasons tha Lastly, the AO has also incorrectly stated in the reasons that the alleged cash expenditure incurred by KBPL is claimed as cost by cash expenditure incurred by KBPL is claimed as cost by cash expenditure incurred by KBPL is claimed as cost by the Appellant which is factually incorrect. In this regard it is which is factually incorrect. In this regard it is relevant to note that the relevant to note that the impugned amounts paid to Anand were recorded in the Balance sheet as impugned amounts paid to Anand were recorded in the Balance sheet as impugned amounts paid to Anand were recorded in the Balance sheet as

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advances reflected in the advances reflected in the Balance Sheet as on 31.03.2007 & 31.03.2008 Sheet as on 31.03.2007 & 31.03.2008 which were written off in the which were written off in the Financial Year ending 31.03.2009 & Financial Year ending 31.03.2009 & 31.03.2010. However, in the 31.03.2010. However, in the computation of income for AY 2009 computation of income for AY 2009-10 & 2010- 11 the said amounts were added back (Ref. Schedule 7 of the Annual Report 11 the said amounts were added back (Ref. Schedule 7 of the Annual Report 11 the said amounts were added back (Ref. Schedule 7 of the Annual Report for the year ended 31.03.2010 at pg. 58 of PB & Computation of Income for or the year ended 31.03.2010 at pg. 58 of PB & Computation of Income for or the year ended 31.03.2010 at pg. 58 of PB & Computation of Income for AY 2009-10 & AY 2010 10 & AY 2010-11 at pg.37 to 77 of PB). As such the assumption of such the assumption of claiming the said amount as cost is also claiming the said amount as cost is also factually incorrect. factually incorrect. 4. It also needs mention that even as per the order It also needs mention that even as per the order of the Hon'ble City of the Hon'ble City Civil and Sessions Judge (which has been used as a basis for re-opening) it has been Sessions Judge (which has been used as a basis for re Sessions Judge (which has been used as a basis for re held that no cash expenditure is incurred by held that no cash expenditure is incurred by even KBPL. As a natural even KBPL. As a natural consequence, therefore, there is no question of holding that cash consequence, therefore, there is no question of holding that cash consequence, therefore, there is no question of holding that cash expenditure is expenditure is incurred by the Assessee [Ref. order of the Hon'ble Sessions incurred by the Assessee [Ref. order of the Hon'ble Sessions Judge and particularly, pg. 244 of PB for issues before the Court, pg.252, Judge and particularly, pg. 244 of PB for issues before the Court, pg.252, Judge and particularly, pg. 244 of PB for issues before the Court, pg.252, 253, 255 of PB wherein it is accepted that cheque payment was made to one 253, 255 of PB wherein it is accepted that cheque payment was made to one 253, 255 of PB wherein it is accepted that cheque payment was made to one Mr. Anand who in turn paid cash to the slum dw Mr. Anand who in turn paid cash to the slum dwellers, and pgs. ellers, and pgs. 278, 279 of PB wherein the issues as regards cash expenditure are decided against PB wherein the issues as regards cash expenditure are decided against PB wherein the issues as regards cash expenditure are decided against KBPL]. ii. In view of the above it is evident that reasons and consequently the entire In view of the above it is evident that reasons and consequently the In view of the above it is evident that reasons and consequently the re-assessment is based on incorrect facts and as such is bad assessment is based on incorrect facts and as such is bad in law and assessment is based on incorrect facts and as such is bad deserves to be quashed. The Appellant relies on the serves to be quashed. The Appellant relies on the following judgement in following judgement in support of its contention: support of its contention:

Hindustan Dorr Oliver Ltd. vs P. K. Kedia Hindustan Dorr Oliver Ltd. vs P. K. Kedia - (2008) 305 ITR 0282 (2008) 305 ITR 0282 (Bom)

"…..7. Considering the above discussion as the notice itself is not "…..7. Considering the above discussion as the notice itself is not "…..7. Considering the above discussion as the notice itself is not based on any material andlor on non ial andlor on non-existing material, the formation of opinion or 'reasons formation of opinion or 'reasons to believe' is based on no to believe' is based on no material, must be quashed and set aside." material, must be quashed and set aside."

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9.1 The Ld. DR vehemently opposed the above submission of the DR vehemently opposed the above submission of the DR vehemently opposed the above submission of the Ld. counsel of the assessee. He submitted that at t of the assessee. He submitted that at the stage of recording reasons, he stage of recording reasons, the Assessing Officer has has to record reasons to believe that income escaped the that income escaped the assessment on the basis of the material before him and he is not required to on the basis of the material before him and he is not required to on the basis of the material before him and he is not required to establish the facts at the stage of recording reasons. establish the facts at the stage of recording reasons.

9.2 We have heard rival submission of the parties on the issue in dispute heard rival submission of the parties on the issue in dispute heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The first grievance of the and perused the relevant material on record. The first grievance of the and perused the relevant material on record. The first grievance of the assessee is that the allegations of the cash expenditure has not been proved by assessee is that the allegations of the cash expenditure has not been proved by assessee is that the allegations of the cash expenditure has not been proved by the Assessing Officer or establish the Assessing Officer or established on facts. The second grievance is that the cts. The second grievance is that the allegation of cash expenditure incurred by KBPL has been claimed as cost by cash expenditure incurred by KBPL has been claimed as cost by cash expenditure incurred by KBPL has been claimed as cost by the assessee, is not factually correct. is not factually correct. We find that the assessee assessee is challenging factual correctness of the reasons recorded. We may like to mention that factual correctness of the reasons recorded. We may like to m factual correctness of the reasons recorded. We may like to m Hon’ble Supreme Court in the case of Hon’ble Supreme Court in the case of Raymond Woollen Woollen Mills Ltd (1999) 236 ITR 34 (SC) has has held that sufficiency or correctness of the that sufficiency or correctness of the information/material is not required to be seen at the stage of recording of is not required to be seen at the stage of recording of is not required to be seen at the stage of recording of the reasons. Further, in the deci the reasons. Further, in the decision relied upon by the assessee in the case of sion relied upon by the assessee in the case of Hindustan Dorr Oliver Ltd Hindustan Dorr Oliver Ltd. (supra), reasons were based on nonexistence based on nonexistence material, whereas in the case , whereas in the case correctness of the facts has been has been challenged,

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therefore the decision relied upon by the assessee is therefore the decision relied upon by the assessee is distinguishable distinguishable on facts. Further, in case of Export Credit Guarantee Corporation of India Ltd. v. Export Credit Guarantee Corporation of India Ltd. v. Export Credit Guarantee Corporation of India Ltd. v. Addl. CIT (2013) 30 taxmann.com 211 (Bom) Addl. CIT (2013) 30 taxmann.com 211 (Bom) Hon’ble Bombay High Court ble Bombay High Court held that facts are not required to established at the stage of rec are not required to established at the stage of rec are not required to established at the stage of recording of reasons. Accordingly, we reject the contention of the we reject the contention of the Ld. counsel Ld. counsel of the assessee to quash the reassessment in view of the above arguments. the reassessment in view of the above arguments. the reassessment in view of the above arguments.

(v) Reasons recorded by the Assessing Officer are vague, without recorded by the Assessing Officer are vague, without recorded by the Assessing Officer are vague, without application of mind and at the most mere reasons to suspect and no application of mind and at the most mere reasons to suspect and not application of mind and at the most mere reasons to suspect and no reason to believe;

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Counsel in view of above above discussion the reasons recorded are vague without discussion the reasons recorded are vague without application of the mind and nothing more than a suspicion. application of the mind and nothing more than a suspicion.

10.1 The Ld. DR on the other hand submitted that DR on the other hand submitted that reasons have been reasons have been recorded on the basis of the decision of the Hon’ble recorded on the basis of the decision of the Hon’ble Court of Additional city ourt of Additional city Civil and Sessions Judge and Sessions Judge, wherein it is held that M/s KBPL made claim for that M/s KBPL made claim for reimbursement of expenses from LK trust and deta reimbursement of expenses from LK trust and detail of cash expenses il of cash expenses amounting to ₹25,58,00, ,58,00,000/- was submitted. In our opinion, the reasons was submitted. In our opinion, the reasons recorded are based on relevant material wherein amount of income escaped recorded are based on relevant material wherein amount of income escaped recorded are based on relevant material wherein amount of income escaped has been clearly identified. The contentions of the has been clearly identified. The contentions of the Ld. Counse sel of the assessee that reasons recorded being recorded being vague, based on suspicion as well as based on suspicion as well as the AO has not applied his mind while recording the reasons ind while recording the reasons, are baseless are baseless and without any supporting evidence, therefore same are rejected. any supporting evidence, therefore same are rejected.

(vi) The reassessment is initiated on the assumption he reassessment is initiated on the assumption & & escapement of income;

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assumption and presumption by the Assessing Officer. and presumption by the Assessing Officer. The Ld. The Ld. DR vehemently opposed this contention of the opposed this contention of the Ld. Counsel of the assessee.

11.1 We have heard rival submission of the parties. We find th We have heard rival submission of the parties. We find th We have heard rival submission of the parties. We find that ultimately it is the assessee, who became owner of the land and is the assessee, who became owner of the land and before the Hon’ble before the Hon’ble Additional City Civil & Session Additional City Civil & Session Judge also held that most of the expenses have that most of the expenses have been ultimately incurred from the books of account of the assessee. We find been ultimately incurred from the books of account of the assessee. We find been ultimately incurred from the books of account of the assessee. We find that the expenses on eviction eviction of hutments are connected with the land owned connected with the land owned by the assessee, therefore, the refore, the Ld. Assessing Officer is justified in forming Assessing Officer is justified in forming reasons to believe that to believe that said expenditure has been incurred by the assessee. expenditure has been incurred by the assessee. We do not find any assumption by the Assessing Officer We do not find any assumption by the Assessing Officer and reasons are based and reasons are based on the finding of Hon’ble on the finding of Hon’ble Sessions Judge, therefore we reject the contention of therefore we reject the contention of the Ld. counsel of the assessee. of the assessee.

11.2 In support of the contention that reasons have been recorded on the f the contention that reasons have been recorded on the f the contention that reasons have been recorded on the basis of the borrowed satisfaction, the argument of the basis of the borrowed satisfaction, the argument of the Ld. counsel Ld. counsel filed in the form of written submission form of written submission are reproduced as under:

i. From a bare reading of the reasons as recorded by the AO, it is evident From a bare reading of the reasons as recorded by the AO, it is evi From a bare reading of the reasons as recorded by the AO, it is evi that the notice issued by the AO is based on some purported that the notice issued by the AO is based on some purported that the notice issued by the AO is based on some purported information received from the investigation wing (ref. reasons at information received from the investigation wing (ref. reasons at information received from the investigation wing (ref. reasons at pgs.81 to 82 of PB). However, as explained in the earlier paragraphs, pgs.81 to 82 of PB). However, as explained in the earlier paragraphs, pgs.81 to 82 of PB). However, as explained in the earlier paragraphs,

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in the reasons as well as in the order there is nothing in the reasons as well as in the order there is nothing which evidences any income chargeable to tax much less any income escaping any income chargeable to tax much less any income escaping any income chargeable to tax much less any income escaping assessment from tax. assessment from tax. ii. The above manner in which the reasons were simply recorded for The above manner in which the reasons were simply recorded for The above manner in which the reasons were simply recorded for issuing notice us 148 merely relying on some information from the issuing notice us 148 merely relying on some information from the issuing notice us 148 merely relying on some information from the investigation wing and thereaf investigation wing and thereafter making additions clearly manifests ter making additions clearly manifests lack of application of mind by the AO while recording reasons and lack of application of mind by the AO while recording reasons and lack of application of mind by the AO while recording reasons and issuing notice w/s 148 of the Act. Such an assessment is wholly issuing notice w/s 148 of the Act. Such an assessment is wholly issuing notice w/s 148 of the Act. Such an assessment is wholly arbitrary and totally illegal and therefore deserves to be quashed. The arbitrary and totally illegal and therefore deserves to be quashed. The arbitrary and totally illegal and therefore deserves to be quashed. The Assessee relies Assessee relies on the following judgements in support of its on the following judgements in support of its contention that re contention that re-assessment cannot be simply based upon certain assessment cannot be simply based upon certain information received from the investigation wing in the absence of information received from the investigation wing in the absence of information received from the investigation wing in the absence of corroborative details and without any application of mind thereto: corroborative details and without any application of mind thereto: corroborative details and without any application of mind thereto:

CIT W SUREN INTERNATIONAL PT LTD EN INTERNATIONAL PT LTD - (2013) 85 CCH 0040 (Delhi) (2013) 85 CCH 0040 (Delhi)

Held as follows at para 14 Held as follows at para 14-

"..In the first instance, we do not find the reasons as recorded by the "..In the first instance, we do not find the reasons as recorded by the "..In the first instance, we do not find the reasons as recorded by the Assessing Officer to be reasons in law, at all. A bare perusal of the table of Assessing Officer to be reasons in law, at all. A bare perusal of the table of Assessing Officer to be reasons in law, at all. A bare perusal of the table of alleged accommodation en alleged accommodation entries included in the reasons as recorded, tries included in the reasons as recorded, discloses that the same entries have been repeated six times. This is discloses that the same entries have been repeated six times. This is discloses that the same entries have been repeated six times. This is clearly indicative of the callous manner in which the reasons for initiating clearly indicative of the callous manner in which the reasons for initiating clearly indicative of the callous manner in which the reasons for initiating reassessment proceedings are recorded and we are unable to reassessment proceedings are recorded and we are unable to reassessment proceedings are recorded and we are unable to ance that any belief based on such statements can ever be arrived countenance that any belief based on such statements can ever be arrived ance that any belief based on such statements can ever be arrived at. The reasons have been recorded without any application of mind and at. The reasons have been recorded without any application of mind and at. The reasons have been recorded without any application of mind and thus no belief that income has thus no belief that income has escaped assessment can be stated to have escaped assessment can be stated to have been formed based on such reasons as recorded." been formed based on such reasons as recorded."

CIT w/s SFIL Stock Broking Lid. CIT w/s SFIL Stock Broking Lid. - (2010)325 ITR 285(Del) (2010)325 ITR 285(Del)

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Held dismissing the appeal of the Dept. as follows at para 10.: Held dismissing the appeal of the Dept. as follows at para 10.: Held dismissing the appeal of the Dept. as follows at para 10.:

". From the above, it is clear that the A0 referred to the information and ". From the above, it is clear that the A0 referred to the information and ". From the above, it is clear that the A0 referred to the information and the two directions as 'reasons' on the basis of which he the two directions as 'reasons' on the basis of which he was proceeding to was proceeding to issue notice unders. 148. We are afraid that these cannot be the reasons issue notice unders. 148. We are afraid that these cannot be the reasons issue notice unders. 148. We are afraid that these cannot be the reasons for proceeding under s. 147/1 for proceeding under s. 147/1-18 of the said Act. The first part is only an the said Act. The first part is only an information and the second information and the second and the third parts of the beginning para of and the third parts of the beginning para of the so-called rea called reasons are mere directions. From the so-called reasons, it is called reasons, it is not at all discernible as to whether the AO had applied his mind to the discernible as to whether the AO had applied his mind to the discernible as to whether the AO had applied his mind to the information and independently arrived at a belief that, on the basis of the information and independently arrived at a belief that, on the basis information and independently arrived at a belief that, on the basis material which he had before him, income had esc material which he had before him, income had escaped aped assessment. Consequently, we find that the Tribunal has arrived at the correct Consequently, we find that the Tribunal has arrived at Consequently, we find that the Tribunal has arrived at conclusion on facts. The law is well settled. There is no substantial conclusion on facts. The law is well settled. There is no conclusion on facts. The law is well settled. There is no question of law which arises for our consideration... question of law which arises for our consideration...

R 0051 (Delhi) SIGNATURE HOTELS (P) LTD. ws ITO SIGNATURE HOTELS (P) LTD. ws ITO - (2011) 338 ITR 0051 (Delhi)

(A case where the Hon'ble High Court quashed the re-assessment (A case where the Hon'ble High Court quashed the re (A case where the Hon'ble High Court quashed the re proceedings on the ground that the reasons were recorded simply proceedings on the ground that the reasons were recorded simply proceedings on the ground that the reasons were recorded simply

on the basis of information from investigation wing stating that the on the basis of information from investigation wing stating that the on the basis of information from investigation wing stating that the Assessee is a beneficiary of accommodation e Assessee is a beneficiary of accommodation entry and that the same were ntry and that the same were recorded without any application of mind whatsoever). recorded without any application of mind whatsoever).

Held as follows: Held as follows:

"14. The first sentence of the reasons states that information had been "14. The first sentence of the reasons states that information had been "14. The first sentence of the reasons states that information had been received from Director of IT (lnv.) that the petitioner had introduced received from Director of IT (lnv.) that the petitioner had introduced received from Director of IT (lnv.) that the petitioner had introduced money amountin money amounting to Rs.5 lacs during financial year2002 g to Rs.5 lacs during financial year2002-03 as per the details given in Annexure. The said Annexure, reproduced above, relates details given in Annexure. The said Annexure, reproduced above, relates details given in Annexure. The said Annexure, reproduced above, relates to a cheque received by the petitioner on 9th Oct., 2002 from Swetu Stone to a cheque received by the petitioner on 9th Oct., 2002 from Swetu Stone to a cheque received by the petitioner on 9th Oct., 2002 from Swetu Stone

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PV from the bank and the account PV from the bank and the account number mentioned there number mentioned therein. The last sentence records that as per sentence records that as per the information, the amount received was the information, the amount received was nothing but an accommodation entry and the assessee was the nothing but an accommodation entry and the assessee was the nothing but an accommodation entry and the assessee was the beneficiary.

SARTHAK SECURITIES CO. (P) LTD. » ITO SARTHAK SECURITIES CO. (P) LTD. » ITO - (2010) 329 TR 0110 (2010) 329 TR 0110 (Delhi)

".. In the case at hand, as is evincible, the AO was aware of the existence of ".. In the case at hand, as is evincible, the AO was aware of the existence of ".. In the case at hand, as is evincible, the AO was aware of the existence of four companies with whom the assessee had entered companies with whom the assessee had entered into transaction. into transaction. Both the orders clearly exposit that the AO was made aware of the Both the orders clearly exposit that the AO was made aware of the Both the orders clearly exposit that the AO was made aware of the situation by the Investigation Wing and there is situation by the Investigation Wing and there is no mention that these no mention that these companies are fictitious companies. Neither companies are fictitious companies. Neither the reasons the reasons in the initial notice nor the communication providing notice nor the communication providing reasons remotely indicate reasons remotely indicate independent application of mind. True it independent application of mind. True it is, at that stage, it is not is, at that stage, it is not

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necessary to have the established fact of necessary to have the established fact of escapement of income but what escapement of income but what is necessary is that there is rele is necessary is that there is relevant material on which a reasonable material on which a reasonable person could have formed the person could have formed the requisite belief. To elaborate, the conclusive requisite belief. To elaborate, the conclusive proof is not germane proof is not germane at this stage but the formation of belief must be on at this stage but the formation of belief must be on the base or foundation or platform of prudence which a reasonable foundation or platform of prudence which a reasonable foundation or platform of prudence which a reasonable person is required to apply. As is manifest from the perusal of the supply required to apply. As is manifest from the perusal of the supply required to apply. As is manifest from the perusal of the supply of reasons and the order of rejection of objections, the names of the reasons and the order of rejection of objections, the names of the reasons and the order of rejection of objections, the names of the companies were available with the authority. Their existence is not companies were available with the authority. Their existence is not companies were available with the authority. Their existence is not nies were used as disputed. What is mentioned is that these compa disputed. What is mentioned is that these companies were used as conduits. In that view of the matter, the principle laid down in Lovely conduits. In that view of the matter, the principle laid down in Lovely conduits. In that view of the matter, the principle laid down in Lovely Exports (P) Lid. (supra) gets squarely attracted. The same has not been Exports (P) Lid. (supra) gets squarely attracted. The same has not been Exports (P) Lid. (supra) gets squarely attracted. The same has not been referred to while passing the order of rejection. The assessee in his referred to while passing the order of rejection. The assessee in his referred to while passing the order of rejection. The assessee in his objections had clearly s objections had clearly stated that the companies had bank accounts and tated that the companies had bank accounts and payments were made to the assessee company through banking channel. payments were made to the assessee company through banking channel. payments were made to the assessee company through banking channel. The identity of the companies was not disputed. Under these The identity of the companies was not disputed. Under these The identity of the companies was not disputed. Under these circumstances, it would not be appropriate circumstances, it would not be appropriate to require the assessee to go to require the assessee to go through the entire gamut of proceedings. It is totally unwarranted... the entire gamut of proceedings. It is totally unwarranted... the entire gamut of proceedings. It is totally unwarranted...

ITO W M/s Comero Leasing & Financial ITO W M/s Comero Leasing & Financial - [ITA No.4281 / Del / 2010 [ITA No.4281 / Del / 2010 vide order dated 14.08.2014 vide order dated 14.08.2014]

... In the appeal before us, the contention of the assessee is that the ... In the appeal before us, the contention of the assessee is that the ... In the appeal before us, the contention of the assessee is that the Assessing Officer issued the Assessing Officer issued the notice under Section 148 mechanically simply notice under Section 148 mechanically simply on the basis of information alleged to have been received from the on the basis of information alleged to have been received from the on the basis of information alleged to have been received from the Investigation Wing without application of mind. On the facts of the case, Investigation Wing without application of mind. On the facts of the case, Investigation Wing without application of mind. On the facts of the case, we find this contention of the learned counsel to be correct and moreover, we find this contention of the learned counsel to be correct and more we find this contention of the learned counsel to be correct and more on identical facts, Hon'ble Jurisdictional High Court in the case of Suren on identical facts, Hon'ble Jurisdictional High Court in the case of Suren on identical facts, Hon'ble Jurisdictional High Court in the case of Suren International P.Ltd. (supra) held that the reasons recorded without any International P.Ltd. (supra) held that the reasons recorded without any International P.Ltd. (supra) held that the reasons recorded without any application of mind cannot be said to be a proper belief with regard to application of mind cannot be said to be a proper belief with regard to application of mind cannot be said to be a proper belief with regard to escapement of income. escapement of income. We, therefore, respectfully following the decision fore, respectfully following the decision

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of Hon'ble Jurisdictional High Court in the case of Suren International P. Jurisdictional High Court in the case of Suren International P. Jurisdictional High Court in the case of Suren International P. Lid. (supra), uphold the order oflearned CIT(A) and dismiss the appeal Lid. (supra), uphold the order oflearned CIT(A) and dismiss the appeal Lid. (supra), uphold the order oflearned CIT(A) and dismiss the appeal filed by the Revenue. filed by the Revenue.

ACIT v/s Shri Devesh Kumar ACIT v/s Shri Devesh Kumar - IL.T. 4, No 2069/0.42010 vide order 2069/0.42010 vide order dated 31.10.2014) dated 31.10.2014)

"19. in the light of aforesaid discussion we are inclined to hold that in the "19. in the light of aforesaid discussion we are inclined to hold that in the "19. in the light of aforesaid discussion we are inclined to hold that in the extant case the AO proceeded to initiate proceedings us 147 of the Act and extant case the AO proceeded to initiate proceedings us 147 of the Act and extant case the AO proceeded to initiate proceedings us 147 of the Act and to issue notice ws 148 of the Act on the basis of information received from to issue notice ws 148 of the Act on the basis of information to issue notice ws 148 of the Act on the basis of information Investigation Wing of the department in the form of a CD prepared by Investigation Wing of the department in the form of a CD prepared by Investigation Wing of the department in the form of a CD prepared by Shri Sanjay Shah and Shri Vishesh Prakash, ITOs of Unit V. New Delhi. Shri Sanjay Shah and Shri Vishesh Prakash, ITOs of Unit V. New Delhi. Shri Sanjay Shah and Shri Vishesh Prakash, ITOs of Unit V. New Delhi. Subsequently, the A0 reproduced details gathered from the CD and Subsequently, the A0 reproduced details gathered from the CD and Subsequently, the A0 reproduced details gathered from the CD and without application of independent mi without application of independent mind, held that the assessee was nd, held that the assessee was beneficiary of accommodation entries amounting to Rs. 4,51,000. In the beneficiary of accommodation entries amounting to Rs. 4,51,000. In the beneficiary of accommodation entries amounting to Rs. 4,51,000. In the main part of reason to believe, there is no mentioning of nature of main part of reason to believe, there is no mentioning of nature of main part of reason to believe, there is no mentioning of nature of transaction to establish and fortify the fact that the impugned transaction to establish and fortify the fact that the impugned transaction to establish and fortify the fact that the impugned transactions were in t transactions were in the nature of accommodation entries. We also he nature of accommodation entries. We also observe that there is no mentioning of date therein and it can safely be observe that there is no mentioning of date therein and it can safely be observe that there is no mentioning of date therein and it can safely be presumed that the AO had not examined the assessment record of the presumed that the AO had not examined the assessment record of the presumed that the AO had not examined the assessment record of the assessee which was processed us 143(1)(a) of the Act on 15.3.2005 for assessee which was processed us 143(1)(a) of the Act on 15.3.2005 for assessee which was processed us 143(1)(a) of the Act on 15.3.2005 for forming a belief that the income of the assessee had escaped assessment. rming a belief that the income of the assessee had escaped assessment. rming a belief that the income of the assessee had escaped assessment.

iii. Further admittedly, the re Further admittedly, the re-assessment is issued on the borrowed assessment is issued on the borrowed satisfaction of the Investigation wing and not the objective satisfaction of the Investigation wing and not the satisfaction of the Investigation wing and not the

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satisfaction of the AO himself. Such a reassessment is entirely vitiated satisfaction of the AO himself. Such a reassessment is entirely vitiated satisfaction of the AO himself. Such a reassessment is entirely vitiated and deserves to be quashed irrespective of whether the original and deserves to be quashed irrespective of whether the original and deserves to be quashed irrespective of whether the original assessment is under section 143 (1) or 143 (3) [Ref. PCIT W Shodiman assessment is under section 143 (1) or 143 (3) [Ref. PCIT W Shodiman assessment is under section 143 (1) or 143 (3) [Ref. PCIT W Shodiman Investments Pvt. Ltd. Investments Pvt. Ltd. - (2018) 93 Taxmann.com 153 (Bombay)l. As nn.com 153 (Bombay)l. As such it is respectfully submitted that even on this count the assessment such it is respectfully submitted that even on this count the assessment such it is respectfully submitted that even on this count the assessment deserves to be quashed.” deserves to be quashed.”

11.3 We find that the Ld. CIT(A) has rejected the contention of the assessee find that the Ld. CIT(A) has rejected the contention of the assessee find that the Ld. CIT(A) has rejected the contention of the assessee observing as under:

4.3. The Assessing officer has 4.3. The Assessing officer has referred to the information received referred to the information received regarding the transaction between M/s. Kanyakumari Builder Pvt. Ltd. regarding the transaction between M/s. Kanyakumari Builder Pvt. Ltd. regarding the transaction between M/s. Kanyakumari Builder Pvt. Ltd. and L. K. Trust and consequent litigation. The statement made before the Trust and consequent litigation. The statement made before the Trust and consequent litigation. The statement made before the Hon'ble Court of the XIX Addl. City Civil and Session Judge at Bangalore Hon'ble Court of the XIX Addl. City Civil and Session Judge at Bangalore Hon'ble Court of the XIX Addl. City Civil and Session Judge at Bangalore City clearly constitutes an admissible evidence. The Hon ble Court had constitutes an admissible evidence. The Hon ble Court had constitutes an admissible evidence. The Hon ble Court had held that M/s. Kanyakumari Builder Pvt. Ltd. had failed to produce bank Kanyakumari Builder Pvt. Ltd. had failed to produce bank passbook / cheque book / cash book and books of account to support the passbook / cheque book / cash book and books of account to support the passbook / cheque book / cash book and books of account to support the claim. In the light of light of these finding the Assessing Officer recorded that the sing Officer recorded that the cash expenditure of Rs.25,58,00,000/ expenditure of Rs.25,58,00,000/- incurred by M/s. Kanyakumari incurred by M/s. Kanyakumari Builder Prt. Ltd: towards obtaining vacant possession from the dweller / Builder Prt. Ltd: towards obtaining vacant possession from the dweller / Builder Prt. Ltd: towards obtaining vacant possession from the dweller / hutments in FY 2007 hutments in FY 2007-09 remains unexplained and attracts the provisions 09 remains unexplained and attracts the provisions of section 69C of the IT.Act, 1961. The Assessing Officer has categorically of the IT.Act, 1961. The Assessing Officer has categorically recorded that the Assessee has under reported its income to the tune of recorded that the Assessee has under reported its income to the tune of recorded that the Assessee has under reported its income to the tune of Rs.25,58,00,000/ Rs.25,58,00,000/- Accordingly, notice u/s.148 has been issued , notice u/s.148 has been issued..

4.4. It is therefore seen that there is tangible material forming &-live 4.4. It is therefore seen that there is tangible material 4.4. It is therefore seen that there is tangible material nexus with formation of belief that income has escaped assessment. It is nexus with formation of belief that income has escaped assessment. It is nexus with formation of belief that income has escaped assessment. It is trite law that for reopening the assessment, the A.O. has to merely form trite law that for reopening the assessment, the A.O. has to merely form trite law that for reopening the assessment, the A.O. has to merely form reason to believe that income has escaped assessment. The reassessment reason to believe that income has escaped assessment. The reassessment reason to believe that income has escaped assessment. The reassessment

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proceedings allows the a proceedings allows the appellant to rebut the reasons for reopening of the ppellant to rebut the reasons for reopening of the assessment. The only question to be seen is whether there is relevant The only question to be seen is whether there is relevant The only question to be seen is whether there is relevant material on which a reasonable person could have formed requisite belief. material on which a reasonable person could have formed requisite belief. material on which a reasonable person could have formed requisite belief. Whether those facts stated in material are true or not, is not the concern Whether those facts stated in material are true or not, is Whether those facts stated in material are true or not, is at this stage. This is so because the formation of belief by the Assessing at this stage. This is so because the formation of belief by the Assessing at this stage. This is so because the formation of belief by the Assessing officer is within his subjective satisfaction officer is within his subjective satisfaction - refer Supreme Court's decision refer Supreme Court's decision in the case of ITO vs. Lakhmani Mewaldas (1976) 103 ITR 437 (SC), Phool in the case of ITO vs. Lakhmani Mewaldas (1976) 103 ITR 437 (SC), Phool in the case of ITO vs. Lakhmani Mewaldas (1976) 103 ITR 437 (SC), Phool Chand Bajrangl Chand Bajranglal vs. ITO (1993) 203 ITR 456 (SC), ITO vs. Select al vs. ITO (1993) 203 ITR 456 (SC), ITO vs. Select Pvt. Ltd. (1996) 217 ITR 597, 599 (SC) and Dalurband Coal Company Dalurband Coal Company Pvt. Ltd. (1996) 217 ITR 597, 599 (SC) and Central Province Manganese Ore Company Ltd. Vs. ITO (1991) ITR 662, Central Province Manganese Ore Company Ltd. Vs. ITO (1991) ITR 662, Central Province Manganese Ore Company Ltd. Vs. ITO (1991) ITR 662, 666 (SC).

4.5. The action u/s 147 is possible despite complete disclosure of material 4.5. The action u/s 147 is possible despite complete disclosu 4.5. The action u/s 147 is possible despite complete disclosu facts if there is any escapement of income in the assessment proceedings - facts if there is any escapement of income in the assessment proceedings facts if there is any escapement of income in the assessment proceedings refer Praful Chunilal Patel, Vasant Chunilal Patel vs. ACIT (1999) 236 ITR refer Praful Chunilal Patel, Vasant Chunilal Patel vs. ACIT (1999) 236 ITR refer Praful Chunilal Patel, Vasant Chunilal Patel vs. ACIT (1999) 236 ITR 832, 840 (Guj), Stock Exchange Vs. ACIT (1997) 227 ITR 906 (Gui) and 832, 840 (Guj), Stock Exchange Vs. ACIT (1997) 227 ITR 906 (Gui) and 832, 840 (Guj), Stock Exchange Vs. ACIT (1997) 227 ITR 906 (Gui) and ITO vs. Lakhmani Mewal ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC).

4.6. In the present case, the return was merely processed u/s 143(1). An 4.6. In the present case, the return was merely processed u/s 143(1). An 4.6. In the present case, the return was merely processed u/s 143(1). An intimation us 143(1) cannot be treated as an order of assessment. There intimation us 143(1) cannot be treated as an order of assessment. There intimation us 143(1) cannot be treated as an order of assessment. There is no question of change. of opinion when none is expressed. The assessing is no question of change. of opinion when none is expressed. The assessing is no question of change. of opinion when none is expressed. The assessing Officer can form reasons to believe that income has escaped assessment r can form reasons to believe that income has escaped assessment r can form reasons to believe that income has escaped assessment by examining the very return/ documents accompanying the return. Refer by examining the very return/ documents accompanying the return. Refer by examining the very return/ documents accompanying the return. Refer Indulata Rangwala vs. DCIT (2016) 286 CT (Del) 474, CIT vs. Rajesh Indulata Rangwala vs. DCIT (2016) 286 CT (Del) 474, CIT vs. Rajesh Indulata Rangwala vs. DCIT (2016) 286 CT (Del) 474, CIT vs. Rajesh Shaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 (SC) Shaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 (SC), DCIT vs. Zuari , DCIT vs. Zuari Estate Development & Investment Co. Ltd. (2015) 373 IT 661 (SC). Estate Development & Investment Co. Ltd. (2015) 373 IT 661 (SC). Estate Development & Investment Co. Ltd. (2015) 373 IT 661 (SC).

4.7. When no finding either positive or negative is arrived at during the 4.7. When no finding either positive or negative is arrived at during the 4.7. When no finding either positive or negative is arrived at during the course of original assessment proceedings, there is no question of change course of original assessment proceedings, there is no question of change course of original assessment proceedings, there is no question of change of opinion - refer refer- A.L.A. Firm vs. CIT 102 ITR 622 (Madras), Ess Kay Firm vs. CIT 102 ITR 622 (Madras), Ess Kay

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Engineering Company (P) Ltd. vs. CIT 247 ITR 818 (SC) and EMA India Engineering Company (P) Ltd. vs. CIT 247 ITR 818 (SC) and EMA India Engineering Company (P) Ltd. vs. CIT 247 ITR 818 (SC) and EMA India Ltd. vs. ACIT (30 DTR 82) (Allahabad). Ltd. vs. ACIT (30 DTR 82) (Allahabad).

4.8. When an income liable to tax has escaped assessment in the original 4.8. When an income liable to tax has escaped assessment in the original 4.8. When an income liable to tax has escaped assessment in the original assessment proceedings due to ov assessment proceedings due to oversight and inadvertence or a mistake ersight and inadvertence or a mistake committed by the original Assessing Officer, subsequently, while verifying committed by the original Assessing Officer, subsequently, while verifying committed by the original Assessing Officer, subsequently, while verifying the records, Assessing Officer can start reassessment proceedings for the records, Assessing Officer can start reassessment proceedings for the records, Assessing Officer can start reassessment proceedings for escapement of income. Further, there is a legal proposition accepted by escapement of income. Further, there is a legal proposition accepted by escapement of income. Further, there is a legal proposition accepted by various courts that reassessment proceedings is permissible even if the arious courts that reassessment proceedings is permissible even if the arious courts that reassessment proceedings is permissible even if the information is obtained after proper investigation from the materials on information is obtained after proper investigation from the materials on information is obtained after proper investigation from the materials on record or from any enquiry or research into facts or law. There is a record or from any enquiry or research into facts or law. There is a record or from any enquiry or research into facts or law. There is a plethora of judgments that such information of judgments that such information need not be from external need not be from external source – refer CIT & anr. vs. Rinku Chakraborty 56 DTR 227 (Kar) and CIT & anr. vs. Rinku Chakraborty 56 DTR 227 (Kar) and Kalyanji Mavji and Company Vs. CIT 102 ITR 287 (SC). It is also pertinent Kalyanji Mavji and Company Vs. CIT 102 ITR 287 (SC). It is also pertinent Kalyanji Mavji and Company Vs. CIT 102 ITR 287 (SC). It is also pertinent to mention that for reopening of completed assessment u/s 148, tangible to mention that for reopening of completed assessment u/s 148, tangible to mention that for reopening of completed assessment u/s 148, tangible material need not be from outside the return of income. It can be obtained not be from outside the return of income. It can be obtained not be from outside the return of income. It can be obtained from the return of income or evidences on record itself. The reference may from the return of income or evidences on record itself. The reference may from the return of income or evidences on record itself. The reference may be had of ACIT v be had of ACIT vs. Kanga & Co. (2010) - TIOL 464 ITAT Mumbai. It is also TIOL 464 ITAT Mumbai. It is also relevant to mention that information obtained i relevant to mention that information obtained in assessment proceedings n assessment proceedings of subsequent year, can also be utilized for reopening of the complete of subsequent year, can also be utilized for reopening of the complete of subsequent year, can also be utilized for reopening of the complete assessment - refer Raymond Woolens Mills Ltd. vs. ITO and other 236 ITR refer Raymond Woolens Mills Ltd. vs. ITO and other 236 ITR refer Raymond Woolens Mills Ltd. vs. ITO and other 236 ITR 34 (SC) and Revathy 34 (SC) and Revathy C.P. Equipment Ltd. vs. DCIT and Ors. 241 ITR 856 C.P. Equipment Ltd. vs. DCIT and Ors. 241 ITR 856 (Mad).

4.9. It is further noted that the reasons recorded were furnished to the further noted that the reasons recorded were furnished to the further noted that the reasons recorded were furnished to the appellant on 29.12.2015. The assessment order has been passed on appellant on 29.12.2015. The assessment order has been passed on appellant on 29.12.2015. The assessment order has been passed on 30.3.2016. The appellant had ample time but did not file any objections. 30.3.2016. The appellant had ample time but did not file any objections. 30.3.2016. The appellant had ample time but did not file any objections. No evidence of filing any objection is produced in the a evidence of filing any objection is produced in the a evidence of filing any objection is produced in the appellate proceedings. Thus, due procedure has been followed by the assessing Thus, due procedure has been followed by the assessing Thus, due procedure has been followed by the assessing officer. In the light of these facts and discussion earlier, I do not find officer. In the light of these facts and discussion earlier, I do not find officer. In the light of these facts and discussion earlier, I do not find

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merits in the contention of the appellant. The Grounds of Appeal No. 'A' to merits in the contention of the appellant. The Grounds of Appeal No. 'A' to merits in the contention of the appellant. The Grounds of Appeal No. 'A' to 'C' is thus, dismissed and t 'C' is thus, dismissed and the reopening of the assessment is upheld. he reopening of the assessment is upheld.” 11.4 In view of the decision of the Hon’ble Supreme Court in the case of view of the decision of the Hon’ble Supreme Court in the case of view of the decision of the Hon’ble Supreme Court in the case of Rajesh Jhaveri Stockbrokers Stockbrokers Private Limited (2007) 291 ITR 500 (SC) (2007) 291 ITR 500 (SC) for reopening, there must be a relevant material on the basis of which there must be a relevant material on the basis of which there must be a relevant material on the basis of which reasonable person can form requisite belief that in reasonable person can form requisite belief that income escaped the come escaped the assessment. Thus, prime requirement is relevant material which prime requirement is relevant material which should be prime requirement is relevant material which before the Assessing Officer. In the present case, a copy of the order of the before the Assessing Officer. In the present case, a copy of the orde before the Assessing Officer. In the present case, a copy of the orde Hon’ble City Sessions Judge Judge was before the Assessing Officer, e the Assessing Officer, wherein cash payment has been shown to have been shown to have been made in relation to the property made in relation to the property owned by the assessee. Thus . Thus, order of Hon’ble City Sessions Judge is definitely a relevant material on the basis of which reasonable person can form the a relevant material on the basis of which reasonable person can form a relevant material on the basis of which reasonable person can form belief. In our opinion, the contention of the belief. In our opinion, the contention of the Ld. Counsel of the assessee of the l of the assessee of the borrowed satisfaction, are baseless and therefore same are rejected. are baseless and therefore same are rejected. are baseless and therefore same are rejected.

11.5 In view of the above detailed discussion, In view of the above detailed discussion, the objections raised by the the objections raised by the assessee under rule 27 of assessee under rule 27 of the ITAT Rules are rejected.

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(i) Residential Residential plot of land admeasuring 11 acres 20 guntas situated land admeasuring 11 acres 20 guntas situated at Banglore, , was owned by M/s LK Trust, who agreed to s LK Trust, who agreed to engage M/s Kanyakumari builders Private Limited (KBPL) i.e. the sister M/s Kanyakumari builders Private Limited (KBPL) i.e. the sister M/s Kanyakumari builders Private Limited (KBPL) i.e. the sister concern of the assessee concern of the assessee, vide joint development agreement (JDA) vide joint development agreement (JDA) dated 1/2/2006 for development of said land dated 1/2/2006 for development of said land. . This JDA was duly registered on 18/02/2006. registered on 18/02/2006. Illegal hutments and slums were egal hutments and slums were in

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existence on on a small part of said plot of land (approx. 2 acres (approx. 2 acres and 4 guntas) and approx. and approx. 475 families were residing. 475 families were residing. (ii) As per the Article VI Article VI, clause 6.1 of JDA, the owner owner LK trust was required to required to remove those huts/temporary sheds and put the heds and put the developer in developer in vacant possession of the said plot of land for development development. Since illegal hutment could not be vacated by the LK . Since illegal hutment could not be vacated by the LK Trust, therefore the work of , therefore the work of vacating those vacating those hutments was entrusted to entrusted to the KBPL after mutual agreement. In the In the ‘plaint’ filed before the Hon’ble fore the Hon’ble City Sessions Judge, the KBPL submitted that , the KBPL submitted that this task of moving the hutment was a stupendous and required this task of moving the hutment was a stupendous and required this task of moving the hutment was a stupendous and required outsourcing, negotiation with the dweller/occupants. It was outsourcing, negotiation with the dweller/occupants. It was outsourcing, negotiation with the dweller/occupants. It was claimed that KBPL had to expend their claimed that KBPL had to expend their own money from the own money from the beginning since LK trust did not pay the amount for beginning since LK trust did not pay the amount for beginning since LK trust did not pay the amount for commencement. It was submitted in the commencement. It was submitted in the ‘plaint’ ’ that the dwellers were not ready to vacate and hand over the were not ready to vacate and hand over the possession possession and they even threatened to obstruct or stop progress of the development even threatened to obstruct or stop progress of the development even threatened to obstruct or stop progress of the development work, therefore, the fore, the KBPL found no other alternative option but to KBPL found no other alternative option but to rehabilitate them in a nearby area and also pay heavy amount. rehabilitate them in a nearby area and also pay heavy amount. rehabilitate them in a nearby area and also pay heavy amount. The dwellers had reposed confidence with one person namely The dwellers had reposed confidence with one person namely The dwellers had reposed confidence with one person namely

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M/s Anand who in turn dispersed payments to respective M/s Anand who in turn dispersed payments to respective M/s Anand who in turn dispersed payments to respective occupants and obtained r occupants and obtained receipts and affidavits and affidavits from them. The KBPL sought alternative place in Kogilu village, Banglore KBPL sought alternative place in Kogilu village, Banglore KBPL sought alternative place in Kogilu village, Banglore Nothtaluke and by the end of No Nothtaluke and by the end of Nov. 2007, most of the area of most of the area of 2 acres 4 guntas acres 4 guntas (i.e. which was occupied unauthorizedly ied unauthorizedly) was cleared, leveled and su leveled and surrendered, however disbursement of the however disbursement of the money to some of the reluctant occupants/dwellers was made money to some of the reluctant occupants/dwellers was made money to some of the reluctant occupants/dwellers was made on/upto 18/02/2008. The KBPL claim 18/02/2008. The KBPL claimed to have maintained a to have maintained a detailed running account in its ordinary course of its business detailed running account in its ordinary course of its business detailed running account in its ordinary course of its business showing the actual cost incurred towards obtaining vacant showing the actual cost incurred towards obtain showing the actual cost incurred towards obtain possession from the dweller/hutments. It was claimed that M/s possession from the dweller/hutments. It was claimed that M/s possession from the dweller/hutments. It was claimed that M/s KBPL spent totally KBPL spent totally ₹36,36,72,564/- for obtaining vacant for obtaining vacant possession of land however LK possession of land however LK Trust made only part payment of made only part payment of ₹10 crores on 27/01/2007. In the 10 crores on 27/01/2007. In the ‘plaint’ it was claimed that LK it was claimed that LK Trust assured to make balance payment of assured to make balance payment of ₹26,36,72, 26,36,72,564/- but it did not make the payment and therefore s ake the payment and therefore suit of the recovery was of the recovery was filed. (iii) On the other hand, in reply to the On the other hand, in reply to the ‘plaint’ of KBPL, the LK Trust of KBPL, the LK Trust denied that the amounts denied that the amounts were paid to Mr paid to Mr. Anand and he

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unacknowledged receipt of the amount unacknowledged receipt of the amount. The LK trust denied other . The LK trust denied other averments and made counterclaims. averments and made counterclaims. (iv) On the basis of the rival pleadings of the KBPL and LK trust, On the basis of the rival pleadings of the KBPL and LK trust, On the basis of the rival pleadings of the KBPL and LK trust, Hon’ble Sessions Sessions Court concluded that claim of expense concluded that claim of expenses by the KBPL was not not substantiated.

14.1 Based on the observation of the Hon’ble Based on the observation of the Hon’ble Sessions Court Court and documents including cash vouchers filed before the Hon’ble including cash vouchers filed before the Hon’ble Court, which , which shown that expenditure was incurred for removal of hutments, the assessment in the case incurred for removal of hutments, the assessment in the case incurred for removal of hutments, the assessment in the case of KBPL was reopened and the Ass of KBPL was reopened and the Assessing Officer of KBPL passed on the essing Officer of KBPL passed on the information regarding the decision of the Hon’ble information regarding the decision of the Hon’ble Sessions Sessions Court to the Assessing Officer of the assessee. On Assessing Officer of the assessee. On the basis of said information of said information, the assessment in the case of the assessee was reopened. assessment in the case of the assessee was reopened.

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assessee company (i.e. Purchaser), who continued with the services of Mr e. Purchaser), who continued with the services of Mr. e. Purchaser), who continued with the services of Mr Anand for removal of removal of huts and paid ₹23,36,11,240/- on various dates by on various dates by draft/cheques. It was submitted the total amount spent on removal of the huts draft/cheques. It was submitted the total amount spent on removal of the draft/cheques. It was submitted the total amount spent on removal of the was of ₹26,43,81,240/- - during the financial year 2007-08 and 2008 08 and 2008-09. A copy of account of said said expenditure was submitted before the Assessing itted before the Assessing Officer. Further it was claimed that such expenses have not been debited to Officer. Further it was claimed that such expenses have not been debited to Officer. Further it was claimed that such expenses have not been debited to profit and loss account and same profit and loss account and same had been accounted as receivable from M/ accounted as receivable from M/s. LK Trust. The assessee denied of giving any cash payment for removal of . The assessee denied of giving any cash payment for removal of . The assessee denied of giving any cash payment for removal of hutments and cash vouchers vouchers were collected from Mr. Anand for making Anand for making further claim to LK Trust Trust. The assessee provided address of Mr . The assessee provided address of Mr. Anand and submitted that summon summon might be issued to him for verification of the claim of might be issued to him for verification of the claim of the assessee.

“5.5.2 The issues, submissions and facts came up before the Hon'ble Court are as 5.5.2 The issues, submissions and facts came up before the Hon'ble Court are as 5.5.2 The issues, submissions and facts came up before the Hon'ble Court are as follows: a) Shri Aditya Raheja, Director, of the Company, admitted in his cross ya Raheja, Director, of the Company, admitted in his cross ya Raheja, Director, of the Company, admitted in his cross examination that some cash vouchers do not contain the name of the payer and examination that some cash vouchers do not contain the name of the payer and examination that some cash vouchers do not contain the name of the payer and

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as per the law, the name of the payer is to be shown in the cash voucher. The as per the law, the name of the payer is to be shown in the cash voucher. The as per the law, the name of the payer is to be shown in the cash voucher. The major portion of the amount has been paid to one Anand. Since the payer is to one Anand. Since the payer is Anand, the name of the Company is not shown in the cash vourcers. Anand, the name of the Company is not shown in the cash vourcers. Anand, the name of the Company is not shown in the cash vourcers.

b) Ex. P. 29 to Ex. P. 232 cash vouchers have not been obtained on the revenue Ex. P. 29 to Ex. P. 232 cash vouchers have not been obtained on the revenue Ex. P. 29 to Ex. P. 232 cash vouchers have not been obtained on the revenue stamps.

c) The amounts were paid to many persons, but the Company has not at The amounts were paid to many persons, but the Company has not at all The amounts were paid to many persons, but the Company has not at examined any of the authors of the said documents i.e., any of the payer under examined any of the authors of the said documents i.e., any of the payer under examined any of the authors of the said documents i.e., any of the payer under said Ex. P. 29 to Ex. P. 232 cash vouchers. Ex. P. 29 to Ex. P. 232 cash vouchers.

d) Major portion of the amount for about Rs. 8.75 Crores was paid to Anand, Major portion of the amount for about Rs. 8.75 Crores was paid to Anand, Major portion of the amount for about Rs. 8.75 Crores was paid to Anand, but said Anand has not been examined before the Court but said Anand has not been examined before the Court.

e) Shri. Aditya Raheja stated that all the payments to Anand were made Shri. Aditya Raheja stated that all the payments to Anand were made Shri. Aditya Raheja stated that all the payments to Anand were made through cheques and no cash payment have been made to Anand. But the through cheques and no cash payment have been made to Anand. But the through cheques and no cash payment have been made to Anand. But the Company has not at all produced the pass book or bank statement of the Company has not at all produced the pass book or bank statement of the Company has not at all produced the pass book or bank statement of the Company to show that all these amounts were Company to show that all these amounts were debited from the account of the debited from the account of the Company and the same were paid to Anand. Company and the same were paid to Anand.

f) Shri Adity Raheja further clearly admitted in page no. 11 of his cross Shri Adity Raheja further clearly admitted in page no. 11 of his cross Shri Adity Raheja further clearly admitted in page no. 11 of his cross examination that all the payments made by them are reflected in their books of examination that all the payments made by them are reflected in their books of examination that all the payments made by them are reflected in their books of accounts and he does not know accounts and he does not know as to whether they have been mentioned and his as to whether they have been mentioned and his CA knows the same. But the Company has not at all produced the said books of CA knows the same. But the Company has not at all produced the said books of CA knows the same. But the Company has not at all produced the said books of accounts.

g) Ex.P.63 a cash voucher dated 06.12.2007 stated that the said amount was Ex.P.63 a cash voucher dated 06.12.2007 stated that the said amount was Ex.P.63 a cash voucher dated 06.12.2007 stated that the said amount was paid in advance towards the sale of the land paid in advance towards the sale of the land at Kogilu villiage. Land was at Kogilu villiage. Land was purchased from Byrappa by paying Rs. 2,25,00,000/ purchased from Byrappa by paying Rs. 2,25,00,000/- for rehabilitation of the for rehabilitation of the hutments. The Company has not at all produced the sale deed or other hutments. The Company has not at all produced the sale deed or other hutments. The Company has not at all produced the sale deed or other documents to show that land was purchased from Byrappa. documents to show that land was purchased from Byrappa.

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h) Ex.P.64 is another cas h) Ex.P.64 is another cash voucher passed by one Subramani Civil contractor on h voucher passed by one Subramani Civil contractor on 07.12.2007 wherein the Company has paid Rs. 1,53,00,000/ 07.12.2007 wherein the Company has paid Rs. 1,53,00,000/- to civil contractor to civil contractor for construction of residential units for rehabilitants at Kogilu village. However for construction of residential units for rehabilitants at Kogilu village. However for construction of residential units for rehabilitants at Kogilu village. However as stated in Ex.P. 63 & Ex.P. 64, if land as stated in Ex.P. 63 & Ex.P. 64, if land was purchased on 06.12.2007 as per Ex. was purchased on 06.12.2007 as per Ex. P. 63, the residential units cannot be constructed in a single day on 07.12.2007. P. 63, the residential units cannot be constructed in a single day on 07.12.2007. P. 63, the residential units cannot be constructed in a single day on 07.12.2007. Moreover the author of Ex.P.63 Byrappa and Ex.P.64 Subramani have not been Moreover the author of Ex.P.63 Byrappa and Ex.P.64 Subramani have not been Moreover the author of Ex.P.63 Byrappa and Ex.P.64 Subramani have not been examined before the Court. examined before the Court.

i. Total Rs. 1,05,00,000/ Total Rs. 1,05,00,000/-was paid to Lakshamma for acting site and to Lakshamma for acting site and handing over the possession of site at Nagasettihalli village by way of cash handing over the possession of site at Nagasettihalli village by way of cash handing over the possession of site at Nagasettihalli village by way of cash vouchers Ex.P. 111, Ex.P. 112 and Ex.P.113 of Rs. 72 lakhs, Rs. 8 laksh & Rs. 25 111, Ex.P. 112 and Ex.P.113 of Rs. 72 lakhs, Rs. 8 laksh & Rs. 25 111, Ex.P. 112 and Ex.P.113 of Rs. 72 lakhs, Rs. 8 laksh & Rs. 25 laksh respectively dated 05.02.2008. But it is not known which was the site and laksh respectively dated 05.02.2008. But it is not known which wa laksh respectively dated 05.02.2008. But it is not known which wa how much area she had occupied. Even Lakshamman has not been examined how much area she had occupied. Even Lakshamman has not been examined how much area she had occupied. Even Lakshamman has not been examined before the Court.

j) Ex.P. 114 is another cash voucher dated 09.02.2008 under which Rs. 25 lakhs Ex.P. 114 is another cash voucher dated 09.02.2008 under which Rs. 25 lakhs Ex.P. 114 is another cash voucher dated 09.02.2008 under which Rs. 25 lakhs was paid to one Armugaum for removal of hutments on 09.02.2008. Ex.P. 115 is was paid to one Armugaum for removal of hutments on 09.02.2008. Ex.P. 115 was paid to one Armugaum for removal of hutments on 09.02.2008. Ex.P. 115 cash voucher under which Rs. 25 lakhs was paid to one Venkatappa for removal cash voucher under which Rs. 25 lakhs was paid to one Venkatappa for removal cash voucher under which Rs. 25 lakhs was paid to one Venkatappa for removal of hutments. Under Ex.P. 116 voucher dated 09.02.2008 Rs. 40 laksh was paid to of hutments. Under Ex.P. 116 voucher dated 09.02.2008 Rs. 40 laksh was paid to of hutments. Under Ex.P. 116 voucher dated 09.02.2008 Rs. 40 laksh was paid to one Shamalamma for removal of the sign board and for rehabilitation of the one Shamalamma for removal of the sign board and for rehabilitation of the one Shamalamma for removal of the sign board and for rehabilitation of the hut dwellers. But the But the author of Ex. P. 116 was not examined. Ex.P.117 is the sh author of Ex. P. 116 was not examined. Ex.P.117 is the sh voucher dated 09.02.2008 under which Rs. 75 laksh was paid Anand towards voucher dated 09.02.2008 under which Rs. 75 laksh was paid Anand towards voucher dated 09.02.2008 under which Rs. 75 laksh was paid Anand towards the expenses incurred for vacating of hut dwellers. So also in Ex.P.119 Rs. 50 the expenses incurred for vacating of hut dwellers. So also in Ex.P.119 Rs. 50 the expenses incurred for vacating of hut dwellers. So also in Ex.P.119 Rs. 50 Lakhs was paid to Jayamma on 09.02.2008 for ev Lakhs was paid to Jayamma on 09.02.2008 for eviction of hut dwellers. These iction of hut dwellers. These cash vouchers clearly raise doubt with regard to payment made by the cash vouchers clearly raise doubt with regard to payment made by the cash vouchers clearly raise doubt with regard to payment made by the Company to these persons. Company to these persons.

k) Shri Aditya Raheja admitted that Ex.P.141 to Ex.P.210 cash vouchers do not Shri Aditya Raheja admitted that Ex.P.141 to Ex.P.210 cash vouchers do not Shri Aditya Raheja admitted that Ex.P.141 to Ex.P.210 cash vouchers do not contain voucher number and date of payment. contain voucher number and date of payment.

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I) The Company neither produced the account book of the Company nor the mpany neither produced the account book of the Company nor the mpany neither produced the account book of the Company nor the cash book. m) Shri Aditya Raheja stated in page No. 15 of his cross examination that he Shri Aditya Raheja stated in page No. 15 of his cross examination that he Shri Aditya Raheja stated in page No. 15 of his cross examination that he has collected the acknowledgement from Anand while making payment to him has collected the acknowledgement from Anand while making payment to him has collected the acknowledgement from Anand while making payment to him and he will produce the acknowle and he will produce the acknowledgment. But he has not produced the dgment. But he has not produced the acknowledgment said acknowledgment said to have been passed by Anand.” 16.1 The Assessing Officer Assessing Officer observed that cash vouchers made are mostly self made are mostly self made without any supporting in lakhs of Rupees. He pointed out that payment made without any supporting in lakhs of Rupees. He pointed out that payment made without any supporting in lakhs of Rupees. He pointed out that payment claimed to have been made by cheques by the assessee were established to be een made by cheques by the assessee were established to be een made by cheques by the assessee were established to be same as cash payment shown in vouchers filed before the Hon’ble Sessions same as cash payment shown in vouchers filed before the Hon’ble Sessions same as cash payment shown in vouchers filed before the Hon’ble Sessions Judge. The Ld. Assessing Officer held that there is no Assessing Officer held that there is no correlation in correlation in two payments as one is made by payments as one is made by way of cash and other is by way of of cash and other is by way of cheque. He also observed that the assessee has nowhere produced any document to also observed that the assessee has nowhere produced any document to also observed that the assessee has nowhere produced any document to substantiate that cash has been paid from the accounted books of the assessee substantiate that cash has been paid from the accounted books of the assessee substantiate that cash has been paid from the accounted books of the assessee and therefore he held that said that said expenditure of ₹25,58,00,000/ 000/- as unexplained expenditure in terms of section 6 enditure in terms of section 69C of the Act. The relevant finding of the . The relevant finding of the Ld. Assessing Officer is reproduced as under: Assessing Officer is reproduced as under:

“5.6 Thus, the Director has made a submission before the Hon'ble Court Thus, the Director has made a submission before the Hon'ble Court Thus, the Director has made a submission before the Hon'ble Court regarding certain expenses being incurred in cash in various years. The regarding certain expenses being incurred in cash in various years. The regarding certain expenses being incurred in cash in various years. The statement being made before the Hon'ble Court is admissible as evidence. The statement being made before the Hon'ble Court is admissible as evidence. The statement being made before the Hon'ble Court is admissible as evidence. The details of cash expenses which was submit details of cash expenses which was submitted before the Hon'ble Court on ted before the Hon'ble Court on

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which dates are mentioned sum totaled to R which dates are mentioned sum totaled to Rs.25,58,00,000/-. Further it's the . Further it's the Director of the assessee company Shri Aditya Raheja who has during the cross Director of the assessee company Shri Aditya Raheja who has during the cross Director of the assessee company Shri Aditya Raheja who has during the cross examination owned up the cash vouchers as he has duly confirmed the various examination owned up the cash vouchers as he has duly confirmed the va examination owned up the cash vouchers as he has duly confirmed the va payments made in cash. The series of these facts have already been enumerated payments made in cash. The series of these facts have already been enumerated payments made in cash. The series of these facts have already been enumerated vide para 5.5.2 above. This clearly entails to the fact that the Director of the vide para 5.5.2 above. This clearly entails to the fact that the Director of the vide para 5.5.2 above. This clearly entails to the fact that the Director of the assessee company is well aware to the fact that the payments have been assessee company is well aware to the fact that the payments have been assessee company is well aware to the fact that the payments have been incurred in cash and for which the assessee company does not have relevant for which the assessee company does not have relevant supporting.

5.7 Further from cursory look at the facts and the vouchers submitted by the Further from cursory look at the facts and the vouchers submitted by the Further from cursory look at the facts and the vouchers submitted by the assessee in the court duly mentions that all the payments have been made in assessee in the court duly mentions that all the payments have been made in assessee in the court duly mentions that all the payments have been made in cash and are in excess of R$ 20,000/ cash and are in excess of R$ 20,000/-. However even for the said cash vouchers . However even for the said cash vouchers entering into lacs of Rupees, the same do not have any supporting documents entering into lacs of Rupees, the same do not have any supporting documents entering into lacs of Rupees, the same do not have any supporting documents other than being self other than being self-made vouchers. Further the assessee, company has Further the assessee, company has claimed that it has paid a sum of Rs. 25 crores in cheque to one Mr Anand. claimed that it has paid a sum of Rs. 25 crores in cheque to one M claimed that it has paid a sum of Rs. 25 crores in cheque to one M However the total of cash payments voucher is 25.58 crores. However the total of cash payments voucher is 25.58 crores. Thus there is no Thus there is no correlation in the two payments as one is by mode of cash and the other is by correlation in the two payments as one is by mode of cash and the other is by correlation in the two payments as one is by mode of cash and the other is by way of cheque. The assessee has nowhere produced any document so as to way of cheque. The assessee has nowhere produced any document so as to way of cheque. The assessee has nowhere produced any document so as to substantiate that the substantiate that the cash has been paid from the accounted books of the cash has been paid from the accounted books of the assessee.

5.8 In light of the findings of the Hon'ble Court and in view of the above In light of the findings of the Hon'ble Court and in view of the above In light of the findings of the Hon'ble Court and in view of the above discussions, the cash expenditure of Rs. 25,58,00,000/ discussions, the cash expenditure of Rs. 25,58,00,000/- incurred by assessee incurred by assessee company towards obtaining vacant company towards obtaining vacant possession from the dweller/hutments in possession from the dweller/hutments in F.Y. 2007-08 remains unexplained and attracts the provisions of section 69C of 08 remains unexplained and attracts the provisions of section 69C of 08 remains unexplained and attracts the provisions of section 69C of the Income-tax Act, 1961. tax Act, 1961.”

16.2 On further appeal, the Ld. CIT(A) after considering submission of the further appeal, the Ld. CIT(A) after considering submission of the further appeal, the Ld. CIT(A) after considering submission of the assessee, deleted the addition obse assessee, deleted the addition observing as under:

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5.7. The entire case of the assessing officer is based on the court proceedings 5.7. The entire case of the assessing officer is based on the court proceedings 5.7. The entire case of the assessing officer is based on the court proceedings and the order of the Hon'ble Court of the XIX Addl. City Civil & Sessions Judge and the order of the Hon'ble Court of the XIX Addl. City Civil & Sessions Judge and the order of the Hon'ble Court of the XIX Addl. City Civil & Sessions Judge Banglore City. It is noted that the court order is dated 17.7.2014 in case O.S. No. Banglore City. It is noted that the court order is dated 17.7.2014 in case O.S. Banglore City. It is noted that the court order is dated 17.7.2014 in case O.S. 6741/2008. The plaintiff if M/s Kanyakumari Builders P. Ltd. and the defendant 6741/2008. The plaintiff if M/s Kanyakumari Builders P. Ltd. and the defendant 6741/2008. The plaintiff if M/s Kanyakumari Builders P. Ltd. and the defendant is M/s L K Trust. The appellant in this is M/s L K Trust. The appellant in this case is not a party in this suit. This is a case is not a party in this suit. This is a suit for recovery of money. An amount of Rs 26,36,72,564/ suit for recovery of money. An amount of Rs 26,36,72,564/- with interest is with interest is claimed. The court records court records that the plaintiff had purchased/agreed to develop that the plaintiff had purchased/agreed to develop residential project on residential project on land belonging to the defendant. There were land belonging to the defendant. There were which the defendant was to clear at its own cost. On encroachments on the land encroachments on the land which the defendant was to clear at its own cost. On failure of the defendant failure of the defendant to do so, the defendant requested the plaintiff to get the ant requested the plaintiff to get the encroachments removed. The expenses incurred by the plaintiff for the same encroachments removed. The expenses incurred by the plaintiff for the same encroachments removed. The expenses incurred by the plaintiff for the same was to be reimbursed by the defendant. The plaintiff spent several crores for eimbursed by the defendant. The plaintiff spent several crores for eimbursed by the defendant. The plaintiff spent several crores for clearing the encroachments. The plaintiff made payments to one A the encroachments. The plaintiff made payments to one A the encroachments. The plaintiff made payments to one Anandh who in turn made payments to the dwellers/owners of hutments on the land for in turn made payments to the dwellers/owners of hutments on the land for in turn made payments to the dwellers/owners of hutments on the land for vacating the land. As per the Plaintiff it had incurred R$ 36,36,72,564/- but the vacating the land. As per the Plaintiff it had incurred R$ 36,36,72,564/ vacating the land. As per the Plaintiff it had incurred R$ 36,36,72,564/ Plaintiff had paid only Rs 10 crores. Hence the suit for the balance amount had Plaintiff had paid only Rs 10 crores. Hence the suit for the balance amount had Plaintiff had paid only Rs 10 crores. Hence the suit for the balance amount had been filed. The defendant on the other hand claimed that it had given R$ 10 The defendant on the other hand claimed that it had given R$ 10 The defendant on the other hand claimed that it had given R$ 10 crores with the understanding that balance amount will be refunded. It denied crores with the understanding that balance amount will be refunded. crores with the understanding that balance amount will be refunded. having agreed to reimburse any amount incurred by the plaintiff. I disputed the having agreed to reimburse any amount incurred by the plaintiff. I disputed the having agreed to reimburse any amount incurred by the plaintiff. I disputed the incurring of the claim of expendi incurring of the claim of expenditure by the plaintiff. It also claimed that any ture by the plaintiff. It also claimed that any expenditure incurred for this purpose was to be with mutual consent. The expenditure incurred for this purpose was to be with mutual consent. The expenditure incurred for this purpose was to be with mutual consent. The Hon'ble Court finally dismissed the plaint for several reasons including that the Hon'ble Court finally dismissed the plaint for several reasons including that the Hon'ble Court finally dismissed the plaint for several reasons including that the expenditure claimed to be incurred in cash was not pr expenditure claimed to be incurred in cash was not proved and also dismissed oved and also dismissed the counter claim of the defendant for Rs 10 the counter claim of the defendant for Rs 10 crores stating that the plaintiff had crores stating that the plaintiff had spent several crores to get the land free spent several crores to get the land free from encroachments.

5.8. As noted earlier, the appellant in this case was not a party to the suit 5.8. As noted earlier, the appellant in this case was not a party to the suit 5.8. As noted earlier, the appellant in this case was not a party to the suit disposed. The assessing officer has not dealt with the submissions and The assessing officer has not dealt with the submissions and details The assessing officer has not dealt with the submissions and filed by the appellant in the assessment proceedings to show that it had not by filed by the appellant in the assessment proceedings to show that it had not by filed by the appellant in the assessment proceedings to show that it had not by

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itself incurred any cash payments, and that all payments to itself incurred any cash payments, and that all payments to Anandh was by way Anandh was by way of Demand Drafts or cheques of Demand Drafts or cheques and that such payments were reflected in its bank and that such payments were reflected in its bank accounts. Further, it is noted from the assessment accounts. Further, it is noted from the assessment case records called and case records called and perused, that the appellant had filed such details vide submission dated perused, that the appellant had filed such details vide submission dated perused, that the appellant had filed such details vide submission dated 15.1.2016 (page nos 169 to 233). These contain ledger 15.1.2016 (page nos 169 to 233). These contain ledger aceount in name of L K aceount in name of L K Trust, and copy of bank statement with Std Chartered Bank account no 237-0- Trust, and copy of bank statement with Std Chartered Bank account no 237 Trust, and copy of bank statement with Std Chartered Bank account no 237 503099-1, Santa Cruz West, Mumbai. and several specimen copies of demand 1, Santa Cruz West, Mumbai. and several specimen copies of demand 1, Santa Cruz West, Mumbai. and several specimen copies of demand drafts issued by Standard Chartered drafts issued by Standard Chartered in favour of Anandh. Vide submission filed in favour of Anandh. Vide submission filed assesse dated 29.3.2016 in the assessment proceedings, declaration by by the assesse dated 29.3.2016 in the assessment proceedings, declaration by assesse dated 29.3.2016 in the assessment proceedings, declaration by Mr Anandh Kumar confirming that he had received all payments by cheques Mr Anandh Kumar confirming that he had received all payments by cheques Mr Anandh Kumar confirming that he had received all payments by cheques /demand drafts from the appellant company and Ms Kanyakumari Builders P. /demand drafts from the appellant company and Ms Kanyakumari Builders P. /demand drafts from the appellant company and Ms Kanyakumari Builders P. Ltd. and that he was instrumental in rem Ltd. and that he was instrumental in removing the hutments on part of land at oving the hutments on part of land at Nagashetty Halli Village along with copies of bank statements, demand drafts / Nagashetty Halli Village along with copies of bank statements, demand Nagashetty Halli Village along with copies of bank statements, demand cheques and copy of ledger account was filed (pages 287 to 309). Copy of cheques and copy of ledger account was filed (pages 287 to 309). cheques and copy of ledger account was filed (pages 287 to 309). Aadhar Card of Shri Anand Kumar was also filed. The assessing officer has not Aadhar Card of Shri Anand Kumar was also filed. The assessing offi Aadhar Card of Shri Anand Kumar was also filed. The assessing offi examined these evidences nor commented on the same as to how it is concluded examined these evidences nor commented on the same as to how it is concluded examined these evidences nor commented on the same as to how it is concluded that the appellant has made the cash payments. that the appellant has made the cash payments.

5.9. The cash payments have been made by Mr Anandh as confirmed by him, but 5.9. The cash payments have been made by Mr Anandh as confirmed by him, but 5.9. The cash payments have been made by Mr Anandh as confirmed by him, but the assessing officer did not verify the sam the assessing officer did not verify the same from him, in case he had any e from him, in case he had any doubts.

5.10. The appellant has rebutted the observations of the assessing officer .10. The appellant has rebutted the observations of the assessing officer which .10. The appellant has rebutted the observations of the assessing officer are in turn based on the observations in the Court Order. It has been explained are in turn based on the observations in the Court Order. It has been are in turn based on the observations in the Court Order. It has been that the name of payer is not mentioned in cash vouchers that the name of payer is not mentioned in cash vouchers since the payer was Mr Anandh. The appellant has also disputed that Shri Aditya Mr Anandh. The appellant has also disputed that Shri Aditya Raheja had owned Raheja had owned up to making payments in cash by referring to page 13 of up to making payments in cash by referring to page 13 of his cross examination his cross examination where he stated that all payments were made by where he stated that all payments were made by cheques. The appellant has cheques. The appellant has also shown that the payments to Shri Anandh shown that the payments to Shri Anandh were more than Rs 25 crores and were more than Rs 25 crores and hence the comparison to an amount of hence the comparison to an amount of ₹25.58 crores is entirely out of context ₹25.58 crores is entirely out of context

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and baseless. The claim of the Appellant to the extent of Rs.36.26 Crores and baseless. The claim of the Appellant to the extent of Rs.36.26 Crores and baseless. The claim of the Appellant to the extent of Rs.36.26 Crores (Approx.) was denied by the Hon ' (Approx.) was denied by the Hon 'ble Sessions Judge not on the basis that no ble Sessions Judge not on the basis that no payments were made by payments were made by KBPL but only on the basis that KBPL failed to produce KBPL but only on the basis that KBPL failed to produce evidences in the nature of books of accounts, bank statements, etc. before the evidences in the nature of books of accounts, bank statements, etc. before the evidences in the nature of books of accounts, bank statements, etc. before the Sessions Judge. The issue before the Hon'ble Sessions Ju Sessions Judge. The issue before the Hon'ble Sessions Judge was relating to dge was relating to claim of receivable by KBPL from LK Trust. Its observations cannot be claim of receivable by KBPL from LK Trust. Its observations cannot be claim of receivable by KBPL from LK Trust. Its observations cannot be automatically imported in the ease of income tax proceedings of the appellant. automatically imported in the ease of income tax proceedings of the appellant. automatically imported in the ease of income tax proceedings of the appellant. The order of the court dismissing the plaint for not proving that expenditure The order of the court dismissing the plaint for not proving that expenditure The order of the court dismissing the plaint for not proving that expenditure red and that the defendant was liable, does not prove nor is relevant was incurred and that the defendant was liable, does not prove nor is relevant red and that the defendant was liable, does not prove nor is relevant to concluding that the appellant itself has incurred cash expenses and further to concluding that the appellant itself has incurred cash expenses and further to concluding that the appellant itself has incurred cash expenses and further that the same are unexplained. The appellant has a point when it claims that if that the same are unexplained. The appellant has a point when it claims that if that the same are unexplained. The appellant has a point when it claims that if the order of the court is t the order of the court is to be relied upon then as per the court order the o be relied upon then as per the court order the expenditure in cash was not proved and as corollary, there cannot be any expenditure in cash was not proved and as corollary, there cannot be any expenditure in cash was not proved and as corollary, there cannot be any addition if such expenditure was not incurred. From the facts discussed, it is addition if such expenditure was not incurred. From the facts discussed, it is addition if such expenditure was not incurred. From the facts discussed, it is therefore concluded that there is no basis to invoke se therefore concluded that there is no basis to invoke section 69C in the facts of ction 69C in the facts of this case as it has not been found that there is any payments not reflected in the this case as it has not been found that there is any payments not reflected in the this case as it has not been found that there is any payments not reflected in the appellant's books and not reflected in the appellant's books and not reflected in the bank statements. All payments are by bank statements. All payments are by way of cheques/demand drafts and way of cheques/demand drafts and reflected in the bank statements. reflected in the bank statements.

5.11. The issue that arises next is that even though the payments are made by 5.11. The issue that arises next is that even though the payments are made 5.11. The issue that arises next is that even though the payments are made cheques to Shri Anandh, he has made the payments in cash and possibly all- cheques to Shri Anandh, he has made the payments in cash and possibly all cheques to Shri Anandh, he has made the payments in cash and possibly all such payments have not been spent as claimed. Thus, such expenses should not such payments have not been spent as claimed. Thus, such expenses such payments have not been spent as claimed. Thus, such expenses be allowed in the hands of be allowed in the hands of the appellant.

5.12. The appellant has categorically confirmed no deduction has been claimed 5.12. The appellant has categorically confirmed no deduction has been claimed 5.12. The appellant has categorically confirmed no deduction has been claimed either by the appellant or KBPL against their taxable incomes. It is pursuing its either by the appellant or KBPL against their taxable incomes. It is either by the appellant or KBPL against their taxable incomes. It is pursuing its remedy against L K Trust in its appeal before the Karnataka remedy against L K Trust in its appeal before the Karnataka remedy against L K Trust in its appeal before the Karnataka High Court. In the appellant's books this amount advanced to Mr Anandh is not urt. In the appellant's books this amount advanced to Mr Anandh is not urt. In the appellant's books this amount advanced to Mr Anandh is not claimed as expenditure but is shown as recoverable from L K Trust. In claimed as expenditure but is shown as recoverable from L K Trust. In claimed as expenditure but is shown as recoverable from L K Trust. In subsequent AY 2009-10 and AY 2010 10 and AY 2010-11 the advance was written off but was 11 the advance was written off but was

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added back in the computation of income. A added back in the computation of income. Assessments have been ssessments have been completed u/s 143(3) for those years. Thus, the amounts have not been u/s 143(3) for those years. Thus, the amounts have not been claimed as expense claimed as expense nor added in Work in Progress. Singe in the current year such expenses are not nor added in Work in Progress. Singe in the current year such expenses are not nor added in Work in Progress. Singe in the current year such expenses are not claimed, question does not arise of any disallowance. claimed, question does not arise of any disallowance. The assessing The assessing officer is, however, at liberty to examine such expenditure if ever claimed in future. however, at liberty to examine such expenditure if ever claimed in future. however, at liberty to examine such expenditure if ever claimed in future. 5.13. The addition made of Rs.25,58,00,000/ 5.13. The addition made of Rs.25,58,00,000/- u/s 69C of Income Tax u/s 69C of Income Tax Act, 1961, is therefore deleted and The grounds of appeal D to H are is therefore deleted and The grounds of appeal D to H are allowed as above. allowed as above.” 17. In support of the grounds raised by the In support of the grounds raised by the Revenue, the , the Ld. Departmental Representative relied on the order of the Assessing Officer and submitted that relied on the order of the Assessing Officer and submitted that relied on the order of the Assessing Officer and submitted that in view of finding of the Hon’ble in view of finding of the Hon’ble City Sessions Judge that assessee and its Judge that assessee and its sister concern failed to explai sister concern failed to explain source of the cash expenditure incurred expenditure incurred mentioned in vouchers through its books of accounts. The The onus was on the assessee to produce copy of all the cash vo assessee to produce copy of all the cash vouchers and produce Mr chers and produce Mr. Anand for verification of the claim of the assessee, instead of shifting the burden of verification of the claim of the assessee, instead of shifting th verification of the claim of the assessee, instead of shifting th producing Mr. Anand to the Assessing Officer. He submitted that primarily the to the Assessing Officer. He submitted that primarily the to the Assessing Officer. He submitted that primarily the assessee was required to substantiate whether the expenditure claimed assessee was required to substantiate whether the expenditure claimed assessee was required to substantiate whether the expenditure claimed before the Hon’ble Sessions Judge Sessions Judge by way of exhibit Ex.P -29 to Ex.P.245 was 29 to Ex.P.245 was incurred out of either the books of accounts of the assessee or its sister her the books of accounts of the assessee or its sister her the books of accounts of the assessee or its sister concern. Instead of doing so, the assessee mainly harped on argument that concern. Instead of doing so, the assessee mainly harped concern. Instead of doing so, the assessee mainly harped payments to Mr. Anand was made by way of Anand was made by way of cheque or demand or demand draft from the

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bank account of the assessee and its sister concern, bank account of the assessee and its sister concern, for which also no for which also no documentary evidences were filed before the Assessing Officer. He submitted documentary evidences were filed before the Assessing Officer. He submitted documentary evidences were filed before the Assessing Officer. He submitted that Ld. CIT(A) has deleted the addition without providing opportunity to the that Ld. CIT(A) has deleted the addition without providing opportunity to the that Ld. CIT(A) has deleted the addition without providing opportunity to the Assessing Officer on the documents filed before the Ld. CIT(A). He submitted Assessing Officer on the documents filed before the Ld. CIT(A). Assessing Officer on the documents filed before the Ld. CIT(A). that there is need to verify need to verify whether amount of expenditure expenditure in question has been credited in the bank been credited in the bank account of Mr. Anand and whether the source of the Anand and whether the source of the same has been originated from the bank account of the assessee or its sister same has been originated from the bank account of the assessee or its sister same has been originated from the bank account of the assessee or its sister concern. He submitted that it is t concern. He submitted that it is the sister concern of assessee who has filed he sister concern of assessee who has filed suit against LK Trust for recovery of expenditure on the ground that it has for recovery of expenditure on the ground that it has for recovery of expenditure on the ground that it has incurred expenditure on removal of huts and filed voucher expenditure on removal of huts and filed voucher by way of Ex.P.29 expenditure on removal of huts and filed voucher to Ex.P.245, therefore onus is on the assessee to show to Ex.P.245, therefore onus is on the assessee to show that that the expenditure reflected in those exhibits has been incurred out of books of accounts of the those exhibits has been incurred out of books of accounts of the those exhibits has been incurred out of books of accounts of the assessee or its sister concern. He submitted that no such burden has been assessee or its sister concern. He submitted that no such burden has been assessee or its sister concern. He submitted that no such burden has been discharged by the assessee even before the Ld. CIT(A) and therefore order of discharged by the assessee even before the Ld. CIT(A) and therefore order of discharged by the assessee even before the Ld. CIT(A) and therefore order of the Ld. CIT(A) need to be reversed and addition ed to be reversed and addition in question need to be in question need to be restored back to the AO. restored back to the AO.

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under section 69C of the 9C of the Act. He submitted that addition could be made in the . He submitted that addition could be made in the hands of the assessee only if the assessee offers no explanation about the hands of the assessee only if the assessee offers no explanation about the hands of the assessee only if the assessee offers no explanation about the source of such expenditure or he offers an unsatisfactory explanation about source of such expenditure or he offers an unsatisfactory explanation about source of such expenditure or he offers an unsatisfactory explanation about the source of such expenditure. He submit the source of such expenditure. He submitted that in the present case, the ted that in the present case, the books of accounts of the assessee books of accounts of the assessee have been audited and have also been audited and have also been accepted by the Ld. Assessing Officer himself as depicting true and fair view of Assessing Officer himself as depicting true and fair view of Assessing Officer himself as depicting true and fair view of the state of affairs of the assessee company the state of affairs of the assessee company. According to him, According to him, once the books of accounts are accepted as correct then there is no question of any further of accounts are accepted as correct then there is no question of any fu of accounts are accepted as correct then there is no question of any fu addition under section 6 addition under section 69C of the Act, since the source is duly explained. He since the source is duly explained. He submitted that in such circumstances the addition deserve to be deleted submitted that in such circumstances the addition deserve to be deleted submitted that in such circumstances the addition deserve to be deleted relying on the judgment of the Hon’ble Delhi High Court in the case of ent of the Hon’ble Delhi High Court in the case of ent of the Hon’ble Delhi High Court in the case of CIT Vs Radhika creation (2011) 10 taxmann.com 138 (Delhi) Radhika creation (2011) 10 taxmann.com 138 (Delhi).

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19.1 Further, he submitted that assessee has made payments to Mr Anand mitted that assessee has made payments to Mr Anand mitted that assessee has made payments to Mr Anand and who in turn vacated the said property. As such any expenditure in cash at and who in turn vacated the said property. As such any expenditure in cash at and who in turn vacated the said property. As such any expenditure in cash at all incurred was by him and not by the assessee therefore entire payments all incurred was by him and not by the assessee therefore entire payments all incurred was by him and not by the assessee therefore entire payments and transactions should be treated as should be treated as explained and therefore there herefore there is no question of any disallowance question of any disallowance.

19.2 Further it was also submitted that assessee had submitted all details Further it was also submitted that assessee had submitted all details Further it was also submitted that assessee had submitted all details before the Assessing Officer and therefore it was before the Assessing Officer and therefore it was onus of the Assessing Officer of the Assessing Officer to prove that said details were incorrect by way o to prove that said details were incorrect by way of making necessary inquiries f making necessary inquiries and investigation. He submitted tha and investigation. He submitted that the assessee cannot be penaliz t the assessee cannot be penalized for any failure on the part of the Assessing Officer in performing his duty. According failure on the part of the Assessing Officer in performing his duty. According failure on the part of the Assessing Officer in performing his duty. According to the Ld. counsel of the assessee Assessing Officer has not performed of the assessee Assessing Officer has not performed of the assessee Assessing Officer has not performed any enquiry like summoning Mr enquiry like summoning Mr. Anand, even after the entire details even after the entire details of evidence and materials/particulars of the transactions are furnished to him. As such the and materials/particulars of the transactions are furnished to him. As such the and materials/particulars of the transactions are furnished to him. As such the addition is unsustainable, since it is attributable to the failure on the part of addition is unsustainable, since it is attributable to the failure on the part of addition is unsustainable, since it is attributable to the failure on the part of the Assessing Officer to perform his part of the duty. In support of the Officer to perform his part of the duty. In support of the Officer to perform his part of the duty. In support of the contention that once the assessee furnishes all the requisite details, the AO contention that once the assessee furnishes all the requisite details, the contention that once the assessee furnishes all the requisite details, the cannot sit back with folded hands till the assessee exhaust all the evidence cannot sit back with folded hands till the assessee exhaust all the evidence cannot sit back with folded hands till the assessee exhaust all the evidence submitted in his possession and then reje submitted in his possession and then reject the claim of the assessee on ct the claim of the assessee on the

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presumption, the Ld. counsel Ld. counsel relied on the decision of the Hon’ble Calcutta relied on the decision of the Hon’ble Calcutta High Court in the case of High Court in the case of CIT v. Kamdenu Vyapar Co Ltd (2003) 263 ITR Vyapar Co Ltd (2003) 263 ITR 692 ( Calcutta).

19.3 It was also submitted by the It was also submitted by the Ld. counsel of the assessee that no of the assessee that no deduction has been claimed by the assessee in respect of the said payments to eduction has been claimed by the assessee in respect of the said payments to eduction has been claimed by the assessee in respect of the said payments to Mr. Anand for clearing the property and said amount paid by the assessee is the property and said amount paid by the assessee is the property and said amount paid by the assessee is actually recoverable from LK overable from LK Trust. As such, there was no claim for was no claim for expenditure is made, there therefore cannot be subject to disallowance disallowance.

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bay developer Private Limited. It is the KBPL, who has claimed that expenses bay developer Private Limited. It is the KBPL, who has claimed that expenses bay developer Private Limited. It is the KBPL, who has claimed that expenses of more than ₹ 36 crore have been incurred on removal of hutments. List of all 36 crore have been incurred on removal of hutments. List of all 36 crore have been incurred on removal of hutments. List of all such expenses along with vouchers were produced befo such expenses along with vouchers were produced before the Hon’ble re the Hon’ble City Sessions Judge, which have been particularly identified as Ex.P which have been particularly identified as Ex.P which have been particularly identified as Ex.P-29 to Ex.P.245. The moot question is whether those expenses have been incurred from the The moot question is whether those expenses have been incurred from the The moot question is whether those expenses have been incurred from the books of KBPL or books of the assessee. The H books of KBPL or books of the assessee. The Hon’ble City Sessions City Sessions Judge has analyzed the evidences s filed by KBPL in support of those expenses and filed by KBPL in support of those expenses and observed that KBPL failed to correlate the source of those payments either observed that KBPL failed to correlate the source of those payments either observed that KBPL failed to correlate the source of those payments either from the bank statements or from cash book. from the bank statements or from cash book. The Hon’ble City Sessions City Sessions Judge framed various issues. The first issue fram framed various issues. The first issue framed was whether the KBPL has ed was whether the KBPL has incurred an expenditure of incurred an expenditure of ₹29,66,11,240/- for clearing the for clearing the huts found in the property at the instance of LK Trust. The Hon’ble court examined three property at the instance of LK Trust. The Hon’ble court examined three property at the instance of LK Trust. The Hon’ble court examined three witnesses on behalf of the KBPL including its director Sri Aditya Raheja and witnesses on behalf of the KBPL including its director Sri Aditya Raheja and witnesses on behalf of the KBPL including its director Sri Aditya Raheja and marked documents as Ex.P rked documents as Ex.P-1 to Ex.P-245. Sri Aditya Raheja admitted during 245. Sri Aditya Raheja admitted during cross examination before the court that some cash cross examination before the court that some cash vouchers vouchers do not contain name of the payer and major portion of the payment was made to Sh. Anand. name of the payer and major portion of the payment was made to Sh name of the payer and major portion of the payment was made to Sh He also stated that payments for exp He also stated that payments for expenditure were made through the assessee enditure were made through the assessee i.e. Pebble Bay developers Private Limited, whose statement of accounts was i.e. Pebble Bay developers Private Limited, whose statement of accounts was i.e. Pebble Bay developers Private Limited, whose statement of accounts was

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filed as Ex.P-10. The relevant observation 10. The relevant observations of the Hon’ble City Sessions Judge City Sessions Judge are extracted as under:

“25. Major portion of the .amount for or portion of the .amount for about Rs.8.75 Crores was paid to Crores was paid to Anand as can be seen from Ex.P.9 and Anand as can be seen from Ex.P.9 and Ex.P.10 statement of account. But said Ex.P.10 statement of account. But said Anand has not been examined before the court. been examined before the court. No doubt, as can be No doubt, as can be seen from the order sheet, the plaintiff had made efforts to examine said Anand and he got the order sheet, the plaintiff had made efforts to examine said Anand the order sheet, the plaintiff had made efforts to examine said Anand issued summons to said Anand. But said Anand did not appear inspite of service issued summons to said Anand. But said Anand did not appear inspite of service issued summons to said Anand. But said Anand did not appear inspite of service of summons. The plaintiff also made efforts to secure the of summons. The plaintiff also made efforts to secure the presence of said presence of said Anand by getting issuing arrest warrant Anand by getting issuing arrest warrant and attachment of his property and and attachment of his property and inspite of the same, said Anand did not appear before the court and he could ame, said Anand did not appear before the court and he could ame, said Anand did not appear before the court and he could not be examined by the plaintiff. not be examined by the plaintiff.

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produced the pass book of the plaintiff company or produced the pass book of the plaintiff company or M/s. Pebble Baby Developers Pvt.Ltd., to show that the Developers Pvt.Ltd., to show that the amount shown in Ex.P.10 were deducted amount shown in Ex.P.10 were deducted from the account of the plaintiff company or M/s.Pebble Baby Developers of the plaintiff company or M/s.Pebble Baby Developers of the plaintiff company or M/s.Pebble Baby Developers Pvt. Ltd.”

20.1 The Hon’ble City Sessions City Sessions Judge has recorded statement of the director Judge has recorded statement of the director of KBPL Sh Aditaya Raheja where in during cross Aditaya Raheja where in during cross-examination, he was examination, he was specifically asked to substantiate the payment from bank account or from the specifically asked to substantiate the payment from bank account or from the specifically asked to substantiate the payment from bank account or from the cash book, but he did not comply. cash book, but he did not comply.

20.2 The relevant finding of the Hon’ble The relevant finding of the Hon’ble City Sessions Judge is reproduced as Judge is reproduced as under:

“34. As stated supra, the plaintiff has mainly relied upon Ex.P.29 to Ex.P.232 to 4. As stated supra, the plaintiff has mainly relied upon Ex.P.29 to Ex.P.232 to 4. As stated supra, the plaintiff has mainly relied upon Ex.P.29 to Ex.P.232 to basis his suit: claim amount. basis his suit: claim amount.

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day on 7/12/2007. More over the author of More over the author of Ex.P.63' Byrappa and Ex.P.64 Ex.P.63' Byrappa and Ex.P.64 Subramani have not been Subramani have not been examined before the court. The plaintiff could have The plaintiff could have examined these persons in order to establish the contents examined these persons in order to establish the contents of Ex.P.63 and of Ex.P.63 and Ex.P.64. ExP-11 is another cash voucher under which Rs.72 Lakhs was paid to another cash voucher under which Rs.72 Lakhs was paid to another cash voucher under which Rs.72 Lakhs was paid to one Lakshamma being the compensation towards vacating and handing over being the compensation towards vacating and handing over being the compensation towards vacating and handing over possession of site at Nagasettihalli village, Bangalore possession of site at Nagasettihalli village, Bangalore and it is dated: 5/2/2008. and it is dated: 5/2/2008. Though Ex.P.112 is another Though Ex.P.112 is another cash voucher under which Rs.8 Lakhs was again which Rs.8 Lakhs was again paid to Lakshmamma for vacating and handing over possession of the site at Lakshmamma for vacating and handing over possession of the site at Lakshmamma for vacating and handing over possession of the site at cash voucher, another Rs.25 Lakhs Nagasettihalli village. Nagasettihalli village. Again under Ex.P.113 cash voucher, another Rs.25 Lakhs was paid to Lakshamamma. Lakshamamma. Therefore, it is clear that totally Rs.1,05,000, Rs.1,05,000,00/- was paid to Lakshamma for vacating the was paid to Lakshamma for vacating the site and handing over possession. But site and handing over possession. But it is not known which of the site and how much area she has which of the site and how much area she has occupied. occupied. Even the author of Ex.P.111Lakshmamma has not been author of Ex.P.111Lakshmamma has not been care examined before the court. examined before the court. Ex.P.114 is another v Ex.P.114 is another voucher dated: 9/2/2008 under which Rs.25 Lakhs was dated: 9/2/2008 under which Rs.25 Lakhs was paid to one Armugaum for removal of hutments on 9//2008. Armugaum for removal of hutments on 9//2008. Ex.P.115 is cash Ex.P.115 is cash voucher under which Rs.25 Lakhs was voucher under which Rs.25 Lakhs was paid to one Venkatappa for removal of paid to one Venkatappa for removal of the hutments. Under Ex.P.116 voucher dated: 9/2/2008 Rs.4 Under Ex.P.116 voucher dated: 9/2/2008 Rs.40 Lakhs was 0 Lakhs was paid to one Shamalamma for removal of the sign board and for rehabilitation of the to one Shamalamma for removal of the sign board and for rehabilitation of the to one Shamalamma for removal of the sign board and for rehabilitation of the hut dwellers. But the author of Ex.P.116 was not examined. hut dwellers. But the author of Ex.P.116 was not examined. Ex.P.117 is the cash Ex.P.117 is the cash voucher dated: 9/2/2008 under which Rs.75 Lakhs was voucher dated: 9/2/2008 under which Rs.75 Lakhs was paid Anand towards paid Anand towards the expenses incurred for vacating of hut es incurred for vacating of hut-dwellers. Ex.P.118 is another cash dwellers. Ex.P.118 is another cash voucher under which RS.50 Lakhs was paid to Madhusudhan for incurring which RS.50 Lakhs was paid to Madhusudhan for incurring which RS.50 Lakhs was paid to Madhusudhan for incurring the expenses for eviction of hut expenses for eviction of hut-dwellers . So also in Ex.P.119 Rs.50 Lakhs was paid Ex.P.119 Rs.50 Lakhs was paid to Jayamma on 9/2/2008 to Jayamma on 9/2/2008 for eviction of hut dwellers. These cash vouchers n of hut dwellers. These cash vouchers clearly raised doubt with regard to payment made by the plaintiff raised doubt with regard to payment made by the plaintiff raised doubt with regard to payment made by the plaintiff to these persons.

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defendant had filed an application under Order 11. Rules 12, 14, 15 of CPC had filed an application under Order 11. Rules 12, 14, 15 of CPC had filed an application under Order 11. Rules 12, 14, 15 of CPC directing the plaintiff to produce the IT returns and directing the plaintiff to produce the IT returns and cash books. cash books. But PW-2 has stated in page No.6 of his stated in page No.6 of his cross-examination that he does not know whether s not know whether their company has maintained the cash book and he has to company has maintained the cash book and he has to check with his C.A. check with his C.A. and he will produce the said cash book and he will produce the said cash book if available. But said application of the if available. But said application of the defendant was rejected since PW rejected since PW-1 has stated that he does not have any 1 has stated that he does not have any cash book. So far as income k. So far as income-tax returns are concerned, the application was rejected the application was rejected on the ground that they are on the ground that they are confidential documents. But it is the settled confidential documents. But it is the settled principle of law that plaintiff should stand on his own legs and he should not principle of law that plaintiff should stand on his own legs and he principle of law that plaintiff should stand on his own legs and he make use of the weakness of make use of the weakness of the other side. In order to support the entries made In order to support the entries made in cash vouchers produced at Ex.P.29 to Ex.P.232, the plaintiff could have produced at Ex.P.29 to Ex.P.232, the plaintiff could have produced at Ex.P.29 to Ex.P.232, the plaintiff could have produced the cash book and account extracts maintained produced the cash book and account extracts maintained by the plaintiff. But by the plaintiff. But the plaintiff has not done the same. the plaintiff has not done the same.

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Crores was to be refunded Crores was to be refunded after deducting expenses of eviction of slum dwellers. after deducting expenses of eviction of slum dwellers. But these cash vouchers at Ex.P.111 to Ex.P.119 are But these cash vouchers at Ex.P.111 to Ex.P.119 are dated: 5/2/2008 to dated: 5/2/2008 to 9/2/2008 i.e., they were spent after i.e., they were spent after one month from 27/1/2007 mentioned in one month from 27/1/2007 mentioned in Ex.P.11.” 20.3 Thus, it is clear that the a Thus, it is clear that the assessee claimed to have incurred ssessee claimed to have incurred of expenditure of ₹36,36,72,564/ 36,72,564/- for removal of hutments, for removal of hutments, through books of accounts of the assessee accounts of the assessee (KBPL), however, no supporting evidence by way of er, no supporting evidence by way of bank statement or cash book bank statement or cash book was produced before the Hon’ble produced before the Hon’ble Court of City Sessions Judge, accordingly, the Hon’ble court rejected the claim observing as , accordingly, the Hon’ble court rejected the claim observing as , accordingly, the Hon’ble court rejected the claim observing as under:

“57. When plaintiff has failed to establish the actual When plaintiff has failed to establish the actual expenses made by him expenses made by him and how much amount was due from the defendant, he is not entitled for and how much amount was due from the defendant, he is not entitled for and how much amount was due from the defendant, he is not entitled for interest. Therefore, the plaintiff is not entitled for the suit claim amount. interest. Therefore, the plaintiff is not entitled for the suit claim amount. interest. Therefore, the plaintiff is not entitled for the suit claim amount. Accordingly, issue Nos. 1 and 2 are held in the negative. Accordingly, issue Nos. 1 and 2 are held in the negative.” 20.4 The Assessing Officer The Assessing Officer has also noted that no supporting documents to has also noted that no supporting documents to explain the source of expenditure incurred by way of vouchers Ex.P 29 to explain the source of expenditure incurred by way of vouchers Ex.P 29 to explain the source of expenditure incurred by way of vouchers Ex.P 29 to Ex.P.245 were filed before him. Before the Ld. CIT(A) the assessee mainly Ex.P.245 were filed before him. Before the Ld. CIT(A) the assessee mainly Ex.P.245 were filed before him. Before the Ld. CIT(A) the assessee mainly submitted that assessee has discharged its burden by way of claiming that submitted that assessee has discharged its burden by way of c submitted that assessee has discharged its burden by way of c payments were made by way of bank cheque payments were made by way of bank cheques/Draft to one Mr Draft to one Mr. Anand, who has made further payments to hutments dwellere/other persons, which might has made further payments to hutments dwellere/other persons, which might has made further payments to hutments dwellere/other persons, which might

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be in cash. It is claimed that assessee had provided address of Mr. Anand to be in cash. It is claimed that assessee had provided address of Mr be in cash. It is claimed that assessee had provided address of Mr the Assessing Officer and therefore it was his duty to issue and therefore it was his duty to issue summon to him and therefore it was his duty to issue and verify the fact of payment by the assessee. The Ld. CIT(A) concurred with and verify the fact of payment by the assessee. The Ld. CIT(A) concurred with and verify the fact of payment by the assessee. The Ld. CIT(A) concurred with above arguments of the assessee and held that cash payments have been above arguments of the assessee and held that cash payments have been above arguments of the assessee and held that cash payments have been made for removal of hutments by Mr made for removal of hutments by Mr. Anand as confirmed by him but it is the by him but it is the Assessing Officer who did not verify the same from him. We are not convinced Assessing Officer who did not verify the same from him. We are not convinced Assessing Officer who did not verify the same from him. We are not convinced with the above finding of the Ld. CIT(A). We find that Mr. Anand did not with the above finding of the Ld. CIT(A). We find that Mr with the above finding of the Ld. CIT(A). We find that Mr appear even before the Hon’ble appear even before the Hon’ble City Sessions Judge despite issuing warrant Judge despite issuing warrant for his presence, and he did not confirm the cash payments before Hon’ble esence, and he did not confirm the cash payments before Hon’ble esence, and he did not confirm the cash payments before Hon’ble City Sessions Judge whether same Judge whether same were incurred through him or not. In such incurred through him or not. In such circumstances, it was onus of the assessee to produce him before the to produce him before the Assessing Officer and justify a r and justify as how much amount was received by him was received by him through bank cheque or draft and how much amount was deposited in his or draft and how much amount was deposited in his or draft and how much amount was deposited in his bank accounts and thereafter distributed to hutments devellers or other bank accounts and thereafter distributed to hutments devellers or other bank accounts and thereafter distributed to hutments devellers or other contractors. The assessee has only produced list of contractors. The assessee has only produced list of drafts or or cheques claimed to have been issued from the sued from the bank account of assessee or KBPL but whether of assessee or KBPL but whether the same has been credited into bank accounts of Mr the same has been credited into bank accounts of Mr. Anand, has not been Anand, has not been established.

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20.5 As far as invoking of section 6 s far as invoking of section 69C is concerned, if the expenditure 9C is concerned, if the expenditure incurred as recorded in Ex.P.29 to Ex.P.245 has not been incurred out of incurred as recorded in Ex.P.29 to Ex.P.245 has not been incurred out of incurred as recorded in Ex.P.29 to Ex.P.245 has not been incurred out of explained sources, then it is liable for addition under section 69C either in the explained sources, then it is liable for addition under section 69C either in the explained sources, then it is liable for addition under section 69C either in the hands of KBPL or the assessee. The claim of the assessee that no addition can hands of KBPL or the assessee. The claim of the assessee that no hands of KBPL or the assessee. The claim of the assessee that no be made in the hands of the assessee be made in the hands of the assessee as no deduction of expenditure has been s no deduction of expenditure has been claimed in the year under consideration, is devoid of merit. The issue of claimed in the year under consideration, is devoid of merit. The issue of claimed in the year under consideration, is devoid of merit. The issue of disallowance of expenditure under section 37 arises if same is claimed by the disallowance of expenditure under section 37 arises if same is claimed by the disallowance of expenditure under section 37 arises if same is claimed by the assessee as business deduction, but in the instant case the Assessing Officer siness deduction, but in the instant case the Assessing Officer siness deduction, but in the instant case the Assessing Officer has proposed addition for making payment out of unexplained sources or has proposed addition for making payment out of unexplained sources or has proposed addition for making payment out of unexplained sources or sources of which are not recorded in books of accounts of the assessee or sources of which are not recorded in books of accounts of the assessee or sources of which are not recorded in books of accounts of the assessee or KBPL. The Ld. counsel of the assessee refer of the assessee referred to page 88 of the paperbook to page 88 of the paperbook which is ledger account o which is ledger account of Mr. Anand in the books of M/s KBPL. This ledger s KBPL. This ledger account shows payment of account shows payment of ₹8,75,00,000/-. Further, in paperbook pages 89 to urther, in paperbook pages 89 to 90, ledger account of LK trust in the books of assessee has been placed on , ledger account of LK trust in the books of assessee has been placed on , ledger account of LK trust in the books of assessee has been placed on record and according to which amount of cord and according to which amount of ₹24,11,79,240/-has been written of has been written off as non-recoverable. The recoverable. The Ld. counsel has also referred to a declaration signed has also referred to a declaration signed by Mr. Ananad Kumaram confirming that he was instrumental in removing the Kumaram confirming that he was instrumental in removing the Kumaram confirming that he was instrumental in removing the hutments and received hutments and received cheques/draft from KBPL, which is placed on draft from KBPL, which is placed on paperbook pages 156. The assessee The assessee in its submission has mainly stated that in its submission has mainly stated that

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for removal of the hutments for removal of the hutments expenses have been incurred have been incurred from the books of accounts of the assessee accounts of the assessee. In our opinion, the moot question is whether the moot question is whether the expenditure recorded in Ex.P29 to Ex.P.245 has been incurred out of expenditure recorded in Ex.P29 to Ex.P.245 has been incurred out of expenditure recorded in Ex.P29 to Ex.P.245 has been incurred out of explained sources are not and it is not the question what the assessee has explained sources are not and it is not the question what the assessee has explained sources are not and it is not the question what the assessee has incurred expenditure out of its books of accounts out of its books of accounts for removal of hutments for removal of hutments. The assessee has not discharged o he assessee has not discharged onus of explaining sources of expenditure nus of explaining sources of expenditure recorded in Ex.P.29 to Ex.P.245. recorded in Ex.P.29 to Ex.P.245. In the facts and circumstances In the facts and circumstances and the interest of substantial justice, we feel it appropriate to restore this matter interest of substantial justice, we feel it appropriate to restore this matter interest of substantial justice, we feel it appropriate to restore this matter back to the file of the back to the file of the Ld. Assessing Officer for deciding a ssessing Officer for deciding afresh with the direction to the assessee to: direction to the assessee to:

(1) Produce Produce a copy of all vouchers of expenses submitted before a copy of all vouchers of expenses submitted before the Hon’ble the Hon’ble City Sessions Judge as asEx.P.1 to Ex.P.245. Judge as asEx.P.1 to Ex.P.245. (2) Produce a Produce a copy of Statement and cross objection of sh copy of Statement and cross objection of sh Aditya Raheja before Hon’ble Aditya Raheja before Hon’ble City Sessions City Sessions Judge (3) Produce Produce Sh Anand along with his bank statement , wherein along with his bank statement , wherein the alleged bank cheques / draft issued by the KBPL or the alleged bank cheques / draft issued by the KBPL or the alleged bank cheques / draft issued by the KBPL or assessee have been deposited assessee have been deposited

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(4) Produce evidence in support of source of payment incurred Produce evidence in support of source of payment incurred Produce evidence in support of source of payment incurred in relation to Ex.P. 29 to Ex.P.245 in relation to Ex.P. 29 to Ex.P.245 (5) Produce the pe Produce the persons, who have signed those cash and other d those cash and other vouchers vouchers, so that it can be ascertained from their Bank , so that it can be ascertained from their Bank accounts as who paid them whether it is KBPL or Mr. Anand. accounts as who paid them whether it is KBPL or Mr accounts as who paid them whether it is KBPL or Mr

20.6 The Assessing Officer may carry out The Assessing Officer may carry out any other enquiry which any other enquiry which he feels deem fit in the facts and and circumstances of the case. It is needless to mention It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. that the assessee shall be afforded adequate opportunity of being heard. that the assessee shall be afforded adequate opportunity of being heard.

20.7 Accordingly, the grounds raised by the Accordingly, the grounds raised by the Revenue Revenue are allowed for statistical purposes whereas the grounds raised by the ass statistical purposes whereas the grounds raised by the assessee in application essee in application under rule 27 are dismissed. under rule 27 are dismissed.

Order pronounced in the open Court in nounced in the open Court in 21/10/2022. /10/2022. Sd/- Sd/ Sd/- (PAVAN KUMAR GADALE PAVAN KUMAR GADALE) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 21/10/2022 Dragon Legal/Rahul Sharma, Sr. P.S.

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Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai