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Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI MAHAVIR PRASAD
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the Revenue is preferred against the order of the CIT(A)-2, Faridabad dated 26.11.2013 pertaining to A.Y 2007-08.
The substantive grievances of the Revenue read as under:
“1. That the Id. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,25,00,000/- made by the Assessing Officer on account of unexplained advance.
2. That the Id. CIT(A) has erred in law and on facts of the case in deleting the addition of Rs. 7,60,17,148/- made by the Assessing Officer on account of unaccounted cash receipts on sale of properties.”
The representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules.
Briefly stated, the facts of the case are that the assessee is engaged in the business of call centre and real estate. For the year under consideration, return declaring an income of Rs.91.28 lakhs was filed on 07.11.2007. Return was selected for scrutiny assessment under CASS and accordingly, statutory notices were issued and served upon the assessee.
During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has given an advance of Rs.1.25 crores to Shri Anil Hoble. The assessee was asked to explain the purpose of such advance. Vide reply dated 24.12.2009, the assessee stated that the advance was given to Shri Anil Hoble for a project at Goa but the same could not be worked out and finally, the amount was refunded in F.Y. 2009–10. The Assessing Officer was of the opinion that the assessee has not been able to prove that it was an advance given for business purposes and, accordingly, added an amount of Rs. 1.25 crores to the income of the assessee.
Before the ld. CIT(A), it was strongly contended that since the assessee has not claimed any deduction from its income, the question of its disallowance does not arise.
The ld. CIT(A) found the contention of the assessee to be correct and deleted the addition.
In our considered view, an advance is a debit entry in the books of accounts and the same goes with balance sheet of the assessee and not charged to the profit and loss account. Since nothing has been charged to the profit and loss account, we do not find any logic in the impugned addition and the ld. CIT(A) has rightly deleted it, which calls for no interference. Ground 1 is, accordingly, dismissed.
Facts relating to the second ground show that a survey operation was conducted at the premises of the collaborators of the assessee, namely, Shri Jaspal Singh and Shri Kamaljit Singh. Report was received by the Assessing Officer from the office of the JCIT, Range – 6, Mohali.
During the course of survey, it was noted that Shri Jaspal Singh and Shri Kamaljit Singh had received an amount of Rs. 20.30 crores from M/s Paras Buildtech [P] Ltd. as part of their revenue share as per the collaboration agreement.
In the survey proceedings, one paper was found and impounded which contained month-wise details of cash received by the two brothers from Paras Buildtech India [P] Ltd. Financial year wise break- up of the amount received by the two brothers is as under:
Shri Jaspal Singh Shri Kamaljit Amount Amount Singh Amount received in cash F.Y. received by received by cheques cheques 2006-07 1.3 crores 1.7 crores 2 crores 2007-08 3.7 crores 3.3 crores 9.75 crores 2008-09 4.55 crores 5.75 crores … Total 9.55 crores 10.75 crores 11.75 crores
As per the collaboration agreement, the ratio was 52: 48. The Assessing Officer implied that Rs.12.73 crores would be taxable in the hands of the assessee. The Assessing Officer further carried out an analysis of the impounded document as under:
Local Area R Total Total sale Total Sal Total Rec Sale Difference Site no. of Cheque Amount. Amount Balance Amount as in total sale Rate Site Rate received receivabl per Cheque ( amount and per Sq in Cash & e as on B*C) cheque ft Cheque Dec.08 receipt i.e till (in lacs) cash Dec.08 (in receipt (E- lacs) H)
A B C D • E F G H I 4 1551 8850 U450 17758950 169.72 7.80 13726350 4032600 1276 3000 7250 9251000 54-23 38.28 3828000 5423000 6 2095 7000 7500 15712500 106.53 50.60 14665000 1047500 8 * 9 2095 7000 7500 15712500 150.86 6.27 14665000 1047500 10 2095 8400 12000 25140000 37-00 214.40 7542000 175980 00 12 2091- 6400 12820 26806620 261.30 6.69 13382400 13424220
15 980 5500 10500 10290000 98.20 4-70 5390000 4900000 17 1312 3000' 7250 9512000 55-76 39-36 3936000 5576000 18 1310 3770 10230 13401300 133-96 4938700 8462600 *19 0 0 0 20 1884 5500 7000 13188000 128.17 3-71 10362000 2826000 22A&B 936 3060 10200 9547200 92.24 3-23 2864160 6683040 *23 0 - 0 0 24 1116 5000 10O50 11215800 "110.18 1-9*4 558x1000 5635800 O.OQ 25 2059 4000 10000 20590000 205.90 8236000 12354000 26 1067 6170 10290 10979430 106.16 3-59. 6583390 4396040 28 860 7840 9800 8428000 65.00 19.28 6742400 1685600 30 623 5500 11000 6853000 :: 29.25 3426500 3426500 38.2j) *33 : 0 0 0 36 894 6000 10500 9387000 54-63 39-24 5364000 4023000 37 982 8960 10960 10762720 103.20 4.40 8798720 1964000 *38 0 0 0 40 934 7600 10860 10143240 98.89 2.51 7098400 3044840 42 734 5500 10500 7707000 75-12 1-95 4037000 3670000 F.F 0 0 0 922 6250 6250 5762500 57-63 0.00 5762500 0 : 6 - 7 977 7000 8280 8089560 77-55 3-37 6839000 125056c 9 5000 6250 11106250 106.62 4-44 8885000 222125c 1 in 10' 1777 5000 6250 11106250 106.62 4-44 • 8885000 222125c 12 1777 5760 9600 17059200 164.01 6-59 10235520 682368c 15 1764 *778 9380 16546320 103.77 61.61 13723920 282240c 0 16 677 5600 5416000 ' 52.26 1.90 3791200 162480c 8000 17 714 5880 5712000 57-12 4198320 151368c 8000 0.00 18 c 1055 6250 6250 6593750 63-53 2.41 6593750 1516 6250 6250 9475000 94-75 9475000 c 21 0.00 2599 6360 85OO 22091500 220.92 16529640 556186c 22 0.00 24 1247 4500 7500 9352500 92.98 0.55 5611500 3741000 ,26&27 2109 8180 8180 17251620 163.83 8.62 17251620 0 28 1036 2500 7044800 32.17 38.28 2590000 4454800 6800 30 1054 5550 8770 9243580 92.44 5849700 3393880 0.00 *31 0 0 0 32 617 5200 9500 5861500 52.53 6.09 3208400 2653100 33 904 5420 9500 8588000 83-43 2.45 4899680 3688320 S.F 0 0 0 1 397 7500 7500 2977500 28.28 1.50 2977500 0 2 311 3000 7300 2270300 21-37 i-33 933000 1337300 3 273 4280 8550 2334150 23.20 0.14 1168440 1165710 5 1260 6760 7950 10017000 • 97-38 ’ 2.79 8517600 1499400 910 5380 7700 7007000 68.17 1.90 4895800 2111200 8 • 9 —234 6200 8bob 1872000 17-95 0.77 1450800 421200 10 415 3200 7500 3112500 27.85 1328000 1784500 3-28 ‘ * ■ \ b 0 0 Aiichor 37262 1610 3350 124827700 709.92 537-99 59991820 64835880 Pyper 60000 1330 2370 142200000 944.80 476.60 79800000 6240O0O0 Movie 34090 2100 .3499 118974100 1116.60 . ' . ,74-57 71589000 47385100 Hotel 64080 3190 3500 224280000 2000.00 242.80 20441520 19864800 0 * 0 0 0 Total cash receipt 345939910
From an analysis of the above document, the Assessing Officer formed a belief that M/s Paras Buildtech Pvt Ltd has been receiving only a part payment in cheque from the buyers of the showroom/ commercial sites and remaining part of the sale consideration has been received in cash. Applying the ratio of collaboration agreement, which was 58:42, the Assessing Officer came to the conclusion that M/s Paras Buildtech Pvt Ltd has received Rs. 20,06,45,148/- in cash. Since the assessee was recognising revenue on PoCM basis and 38% of the work has been shown to be completed, the Assessing Officer added 38% of the alleged cash receipts of Rs. 20,06,45,148/- and made an addition of Rs. 7,60,17,156/-.
The assessee agitated the addition before the ld. CIT(A) and strongly contended that the entire addition made by the Assessing Officer is on presumptions, surmises and conjectures, without any concrete evidence to show that the assessee has actually received some cash.
After considering the facts and submissions, the ld. CIT(A) observed that “I have gone through the assessment order and found that there is no reference in terms of Annexure or page number on this document. It seems that the Assessing Officer has derived it from somewhere, as this document, per se, is not available.”
Referring to the statement of Shri Kamaljit Singh, the ld. CIT(A) found that Shri Kamalji Singh has specifically mentioned in his reply that whatever payment is received from M/s Paras Buildtech Pvt Ltd has been deposited in the bank account and no payment except whatever in the bank account has been received.
The ld. CIT(A) further observed that the Assessing Officer has made the addition by taking coded document i.e., loose sheet impounded at page 30 of Annexure A –1 as basis. The ld. CIT(A) further observed as under:
“13.7 One of the pieces of evidence used by the AO was the statement of i Shri Kamaljeet Singh recorded on 12.12.2009 u/s 133A of the IT Act. In this regard, I agree with the submission of the appellant that the AO relied on an answer of Shri - Ka.maljeet. Singh as per which cash of not more than. Rs. 1 crore was received from the appellant. However, other questions/ answers were ignored by the Assessing Officer . One such answer of Shri Jaspal Singh was that whatever was received from Paras Build Tech was deposited in their Bank account. On a scrutiny of Bank account of Shri Jaspal Singh, the AO could find cash deposit Rs. 27,8.0-
,000/- unexplained, for which a show cause notice was given to the appellant on 29.12.2009. The appellant was able to provide requisite information/affidavit explaining the aforesaid cash deposits in the bank account. However, the AO totally disregarded the information /evidences provided by the appellant. In addition to the aforesaid facts regarding the evidentiary value of statements of 2 brothers used by the AO while making assessment, there are a number of prominent judicial pronouncements as per which statement recorded during the course of survey operations u/s 133A of the IT Act does not have evidentiary value .In the case of CIT Vs S. Khader Khan Sons (2008) 300 ITR 157(Mad) it was held as under:
"Section 133A does not empower any ITO to examine any person on oath. In contradistinction to the power under section 133A, section 132(4) enables the authorized officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A is not given an evidentiary value. The statement obtained under section 133A would not automatically bind upon the assessee."
This judgment was later on affirmed by the Hon'ble Supreme Court (352 ITR 480) (SC) 2012
13.8 As regards, scrutiny of Bank account of Shri Jaspal Singh, the assessing officer found that Rs. 2,56,08,650/- was deposited in cash In the s.aid account. Out of this amount, the assessing Officer vide order sheet •entry dated 29.12/2009 acknowledged that only cash deposits to the tune of Rs. 27,80,000/- remained unexplained, for which a show cause notice was given to the appellant. Furthermore, the same was explained by the appellant by filing requisite documents/affidavits, and the AO did-not give any reasons for rejecting the same. Hence, this evidence, could not have been used by the AO.”
On the issue of loose sheets, observations of the ld. CIT(A) is worth mentioning which is as under:
“13.9 Coming to the loosesheets impounded during the course of survey operations in the premises of Shri Jaspal Singh and Shri Kamaljeet Singh, the- AO used loose sheet no. 30 of Annexure A-l for making the addition. As pointed out by the appellant, documents with such frequent and large / extensive mistakes of facts and figures relating to sold / unsold units, the area sold, the rates agreed to be charged (as per BBAs) could not have been prepared by it. Statements with so many mistakes could not have served any body's purpose. It could not have served the purpose of the appellant because it did not give correct factual picture. It could not have satisfied the land owners also, if they were also entitled for cash element of sale consideration. The mistakes would have appeared more convincing, had this been to the detriment of land owners but in this case, as per the loose sheets, the mistakes were to the detriment of the appellant. On this issue, I tend to agree with the appellant that the evidences used by the AO to make addition were factually incorrect/ unreliable, not impounded from the appellant's premises, disowned by the appellant and thus cannot be relied upon for the purpose of making any addition.
The ld. CIT(A) finally came to the conclusion that the addition of Rs. 7,60,17,148/- made by the Assessing Officer on this issue is unjustified and without any basis and hence stands deleted.
Before us, the ld. DR strongly supported the findings of the Assessing Officer and read the relevant observations made by the Assessing Officer.
Per contra the ld. AR reiterated what has been stated before the lower authorities.
Facts on record show that field enquiries were conducted by the Assessing Officer by issuing notice u/s 133(6) to various buyers. None of the buyers confirmed that they have paid anything to the assessee over and above the amount stated in the Builder – Buyer Agreement.
Field enquiry made by the Assessing Officer is conclusive evidence that no cash was exchanged between the buyer and the seller. The entire addition has been made on the basis of arithmetical calculation found in the loose sheet of paper.
In our considered opinion, in such cases, the onus is always on the revenue to bring demonstrative evidences on record to show that cash has changed hands from the buyer to the seller because the sale consideration of the seller is coming from payments made by the buyer and if the buyer categorically stated that they have not paid anything in cash, which enquiry was made by the Assessing Officer himself, the findings of the ld. CIT(A) cannot be faulted with. We, therefore, decline to interfere with the findings of the ld. CIT(A). This ground is also dismissed.
In the result the appeal of the Revenue in is dismissed.
The order is pronounced in the open court on 03.08.2021.