RUCHA PROMOTERS AND DEVELOPERS PRIVATE LIMITED ,PUNE vs. DCIT CC 6(1), MUMBAI, MUMBAI

At the very outset, Ld. AR made statement at bar to the effect that he do not want to press ground no. 1, therefore considering the submissions of the Ld. AR ground no. 1 stands dismissed as not pressed .

As regards Ground No. 2, this ground raised by the assessee relates to challenging the order of Ld. CIT(A) in 3 Rucha Promoters & Developers Pvt Ltd , Mumbai upholding and confirming the addition made by AO u/s 69C of the Act .

In this regard, Ld. AR reiterated the same arguments as were raised by him before the revenue authorities and also relied upon his written submissions. The contents of which are reproduced here in below: 1. As far as the merits of the addition are concerned, it is humbly submitted that the addition springs out of a statement of a person who was handling only the human resources related work for the assessee company. 2. In this regard, it needs to be mentioned that during the course of Search, certain loose sheets were found from the drawer of Ms. Manjusha Bhagwat Patil. As per her, the seized papers contain a list of the employees to whom bonus payments are made in cash. This statement formed the primary basis of the addition. 3. The assessee humbly submits that the addition has been made in the hands of the assessee simply based on statement of Ms. Manjusha Bhagwat Patil. However, no further evidence is produced or even relied on to show that the person making this statement (Ms. Manjusha Bhagwat Patil) had herself paid the cash or even seen / overseen the payment of cash bonus to employees. Admittedly, she is not responsible for the payments, nor has she actually made any payments to the said employees. Therefore, to this extent, her statement cannot be relied on because that merely amounts to a presumption. 4. It is further submitted that in the present case, on a bare perusal of the list of persons as per the seized papers, it is evident that only against a few persons, the description in the second column is mentioned as cash. In all the other cases their employee codes are mentioned. The appellant therefore submits, that a payment of cash cannot be assumed in respect of the 4 Rucha Promoters & Developers Pvt Ltd , Mumbai employees against whose names of the employee codes are mentioned. 5. Now coming to the actual allegation as regards payment of cash, in the humble submission of the appellant before stating that the bonus was paid in cash, it was incumbent upon the assessing officer to first ascertain if any bonus was paid at all. The appellant has been consistently saying that no bonus payments have been made to the employees for the relevant period since it was covered under the grip of COVID-19 pandemic. It therefore follows that the addition cannot be made in the hands of the assessee, unless there is irrebuttable evidence as regards the payment of cash. The simplest way was to directly ask the employees even if on a sample basis, whether any bonus payment was made at all, and the answer would have made things crystal clear. The Appellant therefore submits that an addition cannot be made in the hands of the assessee merely because of the failure on the part of the assessing officer to conduct the necessary enquiry in the present case. An assessee cannot be held responsible for not being able to prove the negative. 6. It is further submitted, that in the present case on a perusal of the paper (Ref. Pg. 81 of PB) based on which addition is made in the hands of the assessee, it is evident that there is no mention of cash in the said paper. Therefore, even on this count, the addition deserves to be deleted since the same springs out of assumption. 7. Last, but not the least, it is humbly submitted that the assessing officer has made the addition under section 69C of the act in the present case. Now, in order to make an addition under the said section, the onus is on the revenue/assessing officer to prove that the expenditure was actually incurred and for which no explanation is given by the assessee as regards its source. It therefore follows, that, in the absence of discharging this onus, no addition could have been made under section 69C of the act in respect of the said allegation of bonus payment in cash, in the hands of the Assessee.

Without prejudice to any of the above, it is also submitted that the very same addition in respect of incurring the very same expenditure has already been made in the hands of Mr. Prashant Nilawar, the director of the company based on his statement recorded during search though the same was retracted later (Ref. Assessment order in the case of Prashant Nilawar at pgs. 87 to 105 of PB). It is therefore submitted that the very same disallowance / addition cannot be made in the hands of the assessee as well since this would amount to double taxation which is impermissible in law. 9. It is therefore submitted that on the basis of the above submissions, the addition deserves to be deleted and it is prayed accordingly. 5. On the other hand, Ld. DR relied upon the orders passed by the revenue authorities

I have heard the counsels for both the parties and perused the material placed on record, judgements cited before me and also the orders passed by the revenue authorities

From the records, I noticed that as per revenue during the course of search proceedings certain loose sheets were found from the drawer of Ms. Manjusha Bhagwat Patil which contains the details of bonus paid to the employees of Rucha Group in cash. In her statement Ms. Manjusha Bhagwat Patil confirmed that these details are of bonus paid in cash. So in nutshell on the basis of the statement and loose sheets the AO made additions u/s 69C of the Act.

Now the sole question for determination before me is with regard to the veracity, relevancy and admissibility of the said statement of Ms. Manjusha Bhagwat Patil and loose papers found during the course of search.

In this regard, after having evaluating the facts of the present case and series of circumstances put together I noticed that he who has not brought on record any other evidence to show that the person making the statement i.e Ms. Manjusha Bhagwat Patil had herself made payment of bonus in cash or cash was paid in her presence. As on the bare perusal of the page 81 of paper book, based on which additions have been made, it is clearly evident from the face of it that there is no mention of cash paid in the said paper sheet rather respective employees codes mentioned there for payment of cash, can you be assumed in respect of the employees against whose names, employees code are mentioned .

Even otherwise, since AO performs the job of investigator, therefore it was incumbent upon the AO to first as certain that if any bonus at all has been paid or not. More particularly when assessee has been consistently saying that no bonus payment was made to employees for the relevant period, since it was covered under the grip of Covid-19 pandemic.

In my view, no addition can be made unless there irrebuttable evidence as regards the payment of bonus in cash and addition cannot be made merely because of the failure on the part of AO to conduct necessary enquiries and to bring on record cogent, convincing and admissible evidence.

Even otherwise, the AO has made addition u/s 69C of the Act in the present case. In my view, in order to make additions under the said section the initial burden is upon the revenue/AO to prove that expenditure was actually incurred only thereafter assessee can be put to prove the source with regard to such expenditure. In the facts of the present case, AO has miserably failed to discharge its burden and nothing has been brought on record to prove the actual incurring of any expenditure. Therefore, on this reason also no addition could have been made u/s 69C of the Act.

Hence considering the totality of the facts and circumstances and legal proposition as discussed by me above, in my considered view, the AO has failed to discharge its burden and to bring on record the cogent, convincing and relevant documentary evidences to make addition u/s 69C of the Act. Therefore I direct the AO to delete the same. It is ordered accordingly.

In the result the appeal filed by the assessee stands allowed.

अपीलाथ / The Appellant 2. थ / The Respondent. 3. संबंिधत आयकर आयु / The CIT(A) 4. आयकर आयु(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मुबई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, सािपत ित ////

उप/सहायक पंजीकार ( Asst.