THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 1, MANGALURU vs. M/S. PROPERTY INFRATECH INDIA PRIVATE LIMITED, MANGALURU

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ITA 2356/BANG/2019Status: DisposedITAT Bangalore24 August 2020AY 2016-1774 pages

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Cases cited in this judgment

Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.

Common Cause v. Union of India
77 Taxmann.com 245 · 2017 · SC
254 citing
Vishakapatnam in Smt. Bommana Swarna Rekha v. A. CIT
147 Taxmann 59 · 2005
70 citing
ACIT v. Ravi Agricultural Industries
117 ITD 338 · 2009 · ITAT
37 citing

Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI A. K. GARODIA & SHRI PAVAN KUMAR GADALE

For Appellant: Smt. Sheetal Borkar, Advocates

For Respondent: Shri A. Sreenivasa Rao, CIT (DR) &, Shri. Tshering Ongda, Manjeet Singh, Addl. CITs (DR)

Hearing: 23.06.2020Pronounced: 24.08.2020

O R D E R Per Bench: Out of this bunch of twenty-four appeals, there are nine appeals of the revenue in the cases of various connected assesses and the remaining fifteen appeals are filed by three different but connected assesses for various Assessment years as noted above and these are directed against separate respective orders of CIT (A) – 2 Panaji. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 4 of 74 2. Oral arguments were raised by both sides on issue basis and therefore, we will decide these appeals on issue basis and for this purpose, we will first take note of the issues involved in these Fifteen (Seven by Shree M. N. Rajendra Kumar for A. Ys. 2011 – 12 to 2017 – 18 and four each by Shree Subhakar Dombayya Kotian for A. Ys. 2011 – 12 and 2013 – 14 to 2015 - 16 and Shree Mohammad Ameer for A. Ys. 2014 – 15 to 2017 – 18) appeals of the assesses and the same is as per the following Chart:-

Issue No. Issue Description 1 Alleged Undisclosed Investment in ULWE PLOTS No. Amount 2254 2 to 4 13,06,250/- 2258 2 to 5 39,18,750/- Total Amount 52,25,000/-

Issue No. Issue Description 2 Alleged Investment in Om Sai Riddhi Siddhi Developers No. Amount 2255 2 to 4 37,50,000/- 2256 2 to 4 127,74,562/- 2257 2 to 4 6,25,000/- 2260 2 11,25,000/- 2261 2 383,23,687/- 2262 2 18,75,000/- Total Amount 584,73,249/-

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 9 of 74 by presenting these arguments on issue basis to help the bench in dictation of the order because in that situation, no argument will escape the notice of the bench at the time of dictation of the order and it was made clear that the written submission should be without enclosing any new document and without including any argument on the basis of any new document and without including any new argument. The learned AR of the assessee was allowed time to file written submissions up to 29.06.2020 with a copy to the learned DR of the revenue to facilitate reply by him if he so desires and learned DR of the revenue was allowed time to file the reply, if any, up to 06.07.2020 and it was made clear that his reply should contain the summary of the arguments advanced by him orally which was very brief that in respect of the appeals of the assessee, he supports the orders of both the lower authorities and in respect of the appeals of the revenue, he supports the assessment order and it was made clear that he can submit reply to the arguments made by the learned AR of the assessee in his written submissions and he also should file the written submission without enclosing any new document and without including any argument on the basis of any new document and without including any new argument. . Accordingly, learned AR of the assessee has filed the written submissions with a copy to the learned DR of the revenue as admitted by learned DR of the revenue in his letter dated 02.07.2020 filed by him to seek extra time to file reply and this letter is being reproduced by us after reproducing the written submissions filed by the learned AR of the assessee. But learned DR of the revenue sought time for the reply vide letters dated 02.07.2020, 29.07.2020 and 12.08.2020. On earlier two dates i.e. in response to the request for allowing time as per letter dated 02.07.2020 and 29.07.2020, time was allowed by the bench but in spite of this, as per letter dated 12.08.2020, the learned DR of the revenue is submitting that he will file written submissions in the case of Shree Walter Neronha, within 3 days and filed it on 18.08.2020 but for remaining appeals, he submitted that Excel sheet was not brought on record based on which the addition was made and the same is in the hard disk seized at Mumbai and this hard disk can be opened only in the presence of the assessee or assessee’s AR in order to furnish the same before the tribunal and therefore, the assessee should be directed to ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 10 of 74 extend cooperation to the department to facilitate the production of a cloned copy with a certified copy to ITAT. It is also submitted by him in this letter that further time should be granted to furnish detailed submissions and case may be heard after the full submission is made by the department. As per this last request of the learned DR of the revenue, it appears that he is making this request with this mistaken understanding that hearing of these appeals is not yet over. This submission in this request is also peculiar that some relevant documents are not available with the AO and to obtain those documents, help of the assessee is required and therefore, the assessee should be directed to provide such help and then only, written submissions can be filed by him and thereafter, the appeals should be heard. We fail to understand that if those documents are not with the AO then how in absence those documents, addition was made by the AO which is stated to be on the basis of such seized documents and if addition made by the AO is not based on those documents then how the same is relevant for deciding these appeals. In our considered opinion, as per this last letter of the learned DR of the revenue, it seems that the DR is either confused or he wants to delay the order unnecessarily. Learned DR was only required to file reply to the written submissions filed by the learned AR of the assessee and he was not supposed to bring on record any other material which is not already on record of the tribunal. Hence, we draw this inference that the learned DR of the revenue has nothing to submit in writing in addition to his oral arguments and in reply to the written submissions of the learned AR of the assessee. We will reproduce the letters filed by the learned DR of the revenue seeking time to file written submissions and will also reproduce the written submissions filed by him in respect of one appeal i.e. in the case of Shree Walter Neronha, and will consider those written submissions and we will also consider the oral arguments advanced by both sides and written submissions filed by the learned AR of the assessee and will decide all these appeals without waiting any more for the written submissions of the learned DR of the revenue in respect of the remaining appeals. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 11 of 74 5. We first reproduce the written submissions filed by learned AR of the assessee. The same are as under:-

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 20 of 74 Gist of our submission From the assessment order, it is clear that the loose sheets of digital i) evidence relied upon by the A.O was found in the office premise of the SCDCC bank and therefore the documents were not in the possession and control of the assessee. No attempt has been made by the A.O to find out the actual ownership of these loose sheets and hence the documents cited are unreliable. The addition has been made purely on assumptions and presumptions ii) based on certain digital evidence found in third party premise, without any corroborative evidence. Hi) It is settled principle that digital evidence cannot be the basis of addition, without any corroborative evidence to support the same. It is also settled principle that additions cannot be made merely on the basis of loose sheets, without any corroborative evidence Additions cannot be made, merely based on disclosure statement, unless iv) there are corroborative evidences. Confessions extracted during search should be supported by collection of evidence of income Absence of corresponding entries in the accounts/ confirmation of v) opposite party make the addition untenable. No attempt has been made to make any verification on the veracity of the loose sheets Burden of proof is on Revenue / Assessing Officer who is making vi) allegations of on money transactions, which has not been discharged The A.O had admitted that the project is carried out by the company, vii) Global Star Realtors Pvt. Ltd. As can be seen from the assessment order, the projects have been carried out by an agreement between Global Star Realtors and Property Infra Tech Pvt. Ltd. (PIPL). As such, the alleged cash component cannot be taxed in the hands of the directors. Alleged incriminating material found during survey proceedings, that too viii) in the premise of a third party, cannot be used in search assessment proceedings. ISSUE No. 5 Mr. M. N. Rajendra Kumar A.Y. 2013-14 ; Cash payment made to the retiring partner Mr. Jayantilal Jain to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 21 of 74 19. Mr. Jayantilal Jain was the erstwhile partner of Om Sai Siddhi Riddhi Developers (OSSRD). Upon his retirement, his share was transferred to the assessee.

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 24 of 74 It is settled principle that digital evidence cannot be the basis of iii) addition, without any corroborative evidence to support the same. It is also settled principle that additions cannot be made merely on the basis of loose sheets, without any corroborative evidence Additions cannot be made, merely based on disclosure statement, unless iv) there are corroborative evidences. Confessions extracted during search should be supported by collection of evidence of income Absence of corresponding entries in the accounts/ confirmation of v) opposite party make the addition untenable. No attempt has been made to make any verification on the veracity of the loose sheets Burden of proof is on Revenue / Assessing Officer who is making vi) allegations of on money transactions, which has not been discharged The A.O had admitted that the project is carried out by Smart vii) Builders & Developers and therefore, the alleged cash component cannot be taxed in the hands of the assessee. Alleged incriminating material found during survey proceedings, that too viii) in the premise of a third party, cannot be used in search assessment proceedings. ISSUE No. 8 — Revenue Appeal Mr. M. N. Rajendra Kumar A.Y 2016-17 ; Investment in Jewellery 24. During search proceedings, certain jewellery was found and since the assessee was not able to explain the source at that time, an amount of Rs 98,00,000 was disclosed as undisclosed investment in jewellery. However, during assessment proceedings, the assessee was able to explain certain jewellery as belonging to wife and daughter and the balance amount shown in the wealth tax return of the assessee. However, the A.O disregarded the explanation and added the same only because it was disclosed at the time of search action. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 25 of 74 25. The CIT(A) considered the submissions and after considering the amount of jewellery allowed as per CBDT instruction for each member of the family and after considering the jewellery disclosed in the wealth tax return of the assessee accepted the explanation offered and deleted the addition.

“May it please Your Honours In the present case filed by the department, the Grounds of Appeal as raised by the revenue has been broadly categorised into the following headings: (1) Whether in the facts and circumstances and in law of the case, the Ld.CIT(A) erred in deleting addition of Rs.1.83 crores made u/s 69A and failed to appreciate the fact that the addition was made on the basis of the declaration by the assessee in the statement recorded u/s 132(4) of the I.T.Act in respect of financial business and also based on the documents found and seized and further failed to appreciate the fact that the assessee could not substantiate the reasons for retraction of the statement rendered by him u/s 132(4) . Submission: The Ld.CIT(A) perused all the records and statements submitted by the assessee and the assessment records and case laws relied on by the assessee and the A.O. On perusal of the same, the Ld.CIT(A) concluded that there is no merit in making additions only based on the statement recorded during the search and loose sheets found when the statement is retracted, and details in the paper are not deciphered, confronted and details written therein established. In view of the above the Ld.CIT(A) deleted the addition made u/s 69A of the Act and on the basis of statement recorded u/s 132(4) of the I.T.Act. The action of the Ld.CIT(A) is not accepted. The A.O. has sent the detailed facts and other statements recorded at the time of search and other case laws and chronological sequence of the events. I am submitting the same for kind consideration of the same and dismissal of the Ld.CIT(A) order. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 42 of 74 Conclusion : In view of the submissions made above, examination of submissions made by the department, the order of the Ld.CIT(A), Panaji is erroneous and bad in law. The Ld.CIT(A) order may be dismissed. Prayer : In the wake of the above submissions, it is humbly prayed to dismiss the order of the Ld.CIT(A) and any other order as may please your honours.” Office of the Commissioner of Income Tax (ITAT)-3 Income tax Appellate Tribunal-3, No.51, Behind Jal Bhavan, Ist Cross, 4th 'T' Block East, Tilak Nagar, Jayanagar, Bangalore-560 041. Dated: 12-08-2020 F.No.CIT (DR)/ITAT-3/ BNG/2020-21 To The Assistant Registrar, Income Tax Appellate Tribunal, BENGALURU. Madam, Sub: Filing of Written Submission ITAT-C Bench Bangalore in the case of Shri. M.N. Rajender Kumar Group Search related cases - Reg.

98.

As per the chart of issues in Para 2 above, the bench has noted that the Issue No. 1 is alleged investment of Rs. 52.25 Lacs in ULWE Plots in A. Y. 2011 – 12 and out of this amount, 75% addition is made by the AO in the hands of Sri M. N. Rajendra Kumar and 25% addition is made by the AO in the hands of Sri S. D. Kotian. As per the assessment order for A. Y. 2011 – 12 in the case of Sri S. D. Kotian, in Para 2, it is noted by the AO that the assessee Sri S. D. Kotian is a partner in the firm M/s Om Sai Riddhi Siddhi along with Sri M N Rajendra Kumar and this firm is engaged in the development of Real Estate Projects. In Para 3.1 of the same assessment order, it is noted by the AO that various incriminating materials including digital evidences seized/impounded at the residence of the partner Mr. M N Rajendra Kumar in Mumbai reveals that the firm M/s Om Sai Riddhi Siddhi had purchased three sets of plots for the construction of residential complexes in Navi Mumbai. It is also noted that the real estate projects Exotica, Nakshatra and Paradise sit on these particular pieces of lands. Thereafter, in the same para of this assessment order, the AO has alleged that Evidences conclusively prove that Mr. M N Rajendra Kumar also paid cash for purchase of these lands and as per the seized material, land investment in three project is shown as Rs. 262 Lacs and when the evidence was posed to Mr. M N Rajendra Kumar, he accepted that the cash was indeed paid for the projects. On page 7 of the same assessment order, the AO has further noted that as per the Pen Drive, total investment is clearly written as 3.62 Crores and thereafter, the AO noted that on this account, only Rs. 209.75 lacs is reflected in the books of account of the firm as investment in ULWE Property and thereafter, for the difference of Rs. 52.25 lacs between these two figures Rs. 262 Lacs and Rs. 209.75 lacs, the AO came to the conclusion that this amount is brought to tax as unexplained investment in A. Y. 2011 – 12 and ultimately, he added 25% of Rs. 52.25 Lacs i.e. Rs. 13,06,250/- in the hands of Sri S. D. Kotian and balance 75% Rs. 39,18,750/- in the hands of Sri M N Rajendra Kumar. In ITA 2254/B/2019 filed by Mr. S. D. Kotian and in ITA 2258/B/2019 filed by Mr. M N Rajendra Kumar, only issue raised is about this addition of Rs. 13,06,250/- and Rs. 39,18,750/-. In the written submissions filed by the learned AR of the assessee about this issue, although various to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 47 of 74 arguments are raised but this argument itself is conclusive in the facts of the present case that since the AO has admitted that land purchases were made by the firm, the alleged cash component cannot be taxed in the hands of the partners and therefore, we first consider the acceptability of this argument and other arguments will be considered in case the assessee does not succeed on this argument. We have noted that as noted by the AO in the assessment order as noted above, the investment in lands in question is reflected in the books of account of the firm. It proves that the owner of these lands in question is the firm and not the partners of the firm. This is also not a finding of the AO that the cash component is paid by the partners out of their own funds by giving a break up of how much is from own source of which partner. Only this much is noted by the AO tin Para 3.1 page 4 of the assessment order that Mr. M N Rajendra Kumar has accepted that cash was indeed paid for the projects and thereafter on page 7 of the assessment order, the AO has noted that submission was made before him vide letter dated 18.12.2018 of which relevant portion is reproduced by him in which the assessee has stated that actual investment in this regard is as per the regular books of accounts maintained by the firm and he has not invested any cash as alleged in the notice and request was made that the assessee can obtain confirmation from the vendor and the assessee also requested for the opportunity for cross examination of the vendor but the AO jumped to the conclusion on this basis that the assessee has not produced any material to show that the admission made by the assessee was incorrect in any way other than denying the payments stating that he was under stress. In our considered opinion, even the so called admission as noted by the AO in para 3.1 of the assessment order is this much only that cash payment was indeed made. Even if we accept this admission as sacrosanct, the said cash payment can be added in the hands of the firm and not in the hands of the partners without bringing cogent material on record to show that such cash payment was made by the partners out of their own funds by giving a break up of how much is from own source of which partner. Under these facts, in our considered opinion, addition might have been made in the hands of the firm and not in the hands of the partners and we delete the addition made by the AO in the hands of the partners. We could have directed the AO to make addition in the hands of the firm but by now, to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 48 of 74 it has become time barred because more than 8 years have elapsed after the end of the relevant assessment year 2011 – 12. This addition is deleted and Issue No. 1 is decided in favour of the assessee.

99.

Second issue in the appeals of the assesses as per Para 2 above is about alleged investment in Om Sai Riddhi Siddhi Developers in A, Ys. 2013 – 14 to 2015 – 16 and connected issue is issue No. 2 in the appeal of the revenue as per Para 3 above being deletion of the protective addition of Rs. 510,98,250/- in A. Y. 2014 - 15. It appears that in other two years i.e. 2013 – 14 and 2015 – 16, no appeal is filed by the revenue because of low tax effect because in these two years, total alleged investment was only Rs. 150 Lacs and Rs. 25 Lacs respectively. This issue is raised by the assessee in A. Y. 2013 – 14 to 2015 – 16 in both the cases i.e. Mr. S. D. Kotian and Mr. M N Rajencdra Kumar. On Page 17 of the assessment order for A. Y. 2013 – 14 in the case of Mr. S. D. Kotian, it is noted by the AO that total investment in the lands of M/s Om Sai Riddhi Siddhi Developers is Rs. 685,98,250/-. Year wise break up of this alleged cash investment is also noted by the AO on the same page being Rs. 150 Lacs in A. Y. 2013 – 14, Rs. 510,98,250/- in A. Y. 2014 – 15 and Rs. 25 Lacs in A. Y. 2015 – 16. The AO has noted on page 18 of the same assessment order that the partners have admitted the investment in their individual hands and the same is assessed therein in the ratio of 25% in the hands of Mr. S. D. Kotian and 75% in the hands of Mr. M N Rajendra Kumar in each of these three years. Although the AO has referred to several seized materials including digital evidence in this regard but ultimately, the AO has proceeded on the basis of statements which were retracted later on but the retraction was not accepted by the AO. Arguments about this issue are made by the learned AR of the assessee by considering it as Issue No. 3 in the written submissions filed by him before the tribunal as reproduced above. On this issue also, although various arguments are raised by the learned AR of the assessee but this argument itself is conclusive in the facts of the present case that since the AO has admitted that land purchases were made by the firm, the alleged cash component cannot be taxed in the hands of the partners and therefore, we first consider the acceptability of this argument and other arguments will be to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 49 of 74 considered if the assessee does not succeed on this argument. We find that this is admitted position that the lands in question are owned by the firm M/s Om Sai Riddhi Siddhi Developers and the AO also has made protective addition in the hands of the said firm after making substantive addition in the hands of these two individuals who are partners in the firm with share of 25% Mr. S. D. Kotian and 75% Mr. M N Rajendra Kumar. Since protective addition is made by the AO in the hands of the firm also, this argument is not decisive and therefore, we examine the acceptability of other arguments. This is one of the arguments that this addition is made on surmises and assumptions based on the excel sheet in the pen drive of MR. Sanjay without bringing any corroborative evidence on record. Reliance was placed on the tribunal order rendered in the case of Anil Jaggi vs. ACIT as reported in 168 ITD 612 (Mumbai), copy on pages 1 to 14 of Case Law Compendium. Para 14 of this tribunal order is relevant and the same reads as under:-

“14. We shall now take up the case of the assessee on merits and deliberate on the validity of the addition of Rs. 2.23 crore made by the A.O on the ground that the assessee had made a payment of "on money" for purchase of flats from M/s Lakeview developers. We have perused the facts of the case and the material available on record on the basis of which the addition of Rs. 2.23 crore had been made in the hands of the assessee. We have further deliberated on the material placed on record and the contentions of the ld. A.R to drive home his contention that no payment of any "on money" was made by the assessee for purchase of flats from M/s Lakeview Developers. We find that the genesis of the conclusion of the A.O that the assessee had paid "on money" of Rs. 2.23 crore for purchase of property under consideration is based on the contents of the pen drive which was seized from the residence of an ex-employee of Hiranandani group. We have perused the print out of the pen drive (Page 42 of APB) and find ourselves to be in agreement with the view of the ld A.R that though against the heading "Amount of on money paid" the name, address and PAN No. of the assessee is mentioned along with the details of the property purchased by him, viz. Flat no.2501 in "Somerset" building from Lakeview Developers (a Hiranandani group concern), however, the same would not conclusively prove suppression of investment and payment of "on money" by the assessee for purchase of the property under consideration. We find that the information as emerges from the print out of the pen drive falls short of certain material facts, viz. date and mode of receipt of „on money‟, who had paid the money, to whom the money was paid, date of agreement and who to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 50 of 74 had prepared the details, as a result whereof the adverse inferences as regards payment of "on money" by the assessee for purchase of the property under consideration remain uncorroborated. We further find that what was the source from where the information was received in the pen drive also remains a mystery till date. We find that Sh. Niranjan Hiranandani in the course of his cross-examination had clearly stated that neither he was aware of the person who had made the entry in the pen drive, nor had with him any evidence that the assessee had paid any cash towards purchase of flat. We have deliberated on the fact that Sh. Niranjan Hiranandani in his statement recorded on oath in the course of the Search & seizure proceedings had confirmed that the amounts aggregating to Rs. 475.60 crore recorded in the pen drive were the on-money received on sale of flats, which was offered as additional income under Sec. 132(4) and thereafter offered as such for tax in the petition filed before the Settlement commission. We are of the considered view that there is substantial force in the contention of the ld. A.R that mere admission of the amounts recorded in the pen drive as the additional income by Sh. Niranjan Hiranandani, falling short of any such material which would inextricably evidence payment of "on money" by the assessee would not lead to drawing of adverse inferences as regards the investment made by the assessee for purchase of the property under consideration. We rather hold a strong conviction that the very fact that the consideration paid by the assessee for purchase of the property under consideration when pitted against the „market value‟ fixed by the stamp valuation authority is found to be substantially high, further fortifies the veracity of the claim of the assessee that his investment made towards purchase of the property under consideration was well in order. We are of the considered view that though the material acted upon by the department for drawing of adverse inferences as regards payment of "on money" by the assessee formed a strong basis for doubting the investment made by the assessee for purchase of the property under consideration, but the same falling short of clinching material which would have irrefutably evidenced the said fact, thus, does not inspire much of confidence as regards the way they have been construed by the lower authorities for drawing of adverse inferences in the hands of the assessee. We thus are of a strong conviction that as the material relied upon by the lower authorities does not corroborate the adverse inferences drawn as regards the investment made by the assessee, therefore, the same cannot conclusively form a basis for concluding that the assessee had made payment of "on money" for purchase of the property under consideration. We thus in the backdrop of our aforesaid observations are of the considered view that the adverse inferences drawn by the A.O as regards payment of "on money" of Rs. 2.23 crore by the assessee for purchase of Flat No. 2501 from M/s Lakeview Developers are based on of premature observations of the A.O, which in the absence of any clinching evidence cannot be sustained. We thus are unable to subscribe to to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 51 of 74 the view of the lower authorities and set aside the order of the CIT(A) sustaining the addition of Rs. 2.23 crores in the hands of the assessee.”

100.

In this case also, the tribunal noted that the genesis of the conclusion of the AO that the assessee had paid “On Money” of Rs. 2.23 Crore for purchase of property under consideration is based on the contents of the pen drive which was seized from the residence of an of ex-employee of Hiranandani Group. On page 15 of the same assessment order, the AO noted that the information noted by him on page 14 of the assessment order regarding cash investment of Rs. 685,98,250/- was unearthed in the digital evidence from the back up taken from Sanjay – Pen drive 2. Although the AO has referred to several printed sheets also but on page 23 of the same assessment order, the AO while dealing with the assessee’s claim about loose sheets, has observed that these loose sheets are digital evidences retrieved from computers, pen drive and lap tops. Hence, it is clear that even as per the AO, all the materials on which basis, addition was made by him is digital evidences retrieved from computers, pen drive and lap tops. Hence, in our considered opinion, in the facts of the present case, this tribunal order is applicable. The tribunal also noted in that case that Shree Niranjan Hiranandani in his statement recorded on oath in course of search proceedings has confirmed that the amounts aggregating to Rs. 475.60 Crores recorded in the pen drive were the on – money received on sale of flats which was offered as additional income u/s 132 (4) and thereafter offered as such for tax in the petition filed before settlement commission. In spite of this, the tribunal in that case held that though the material acted upon by the department formed a strong basis for doubting the investment made by the assessee for purchase of the property under consideration but the same is falling short of clinching material and deleted the addition in that case. In the facts of the present case which are similar to that case, we respectfully follow this tribunal order and hold that the adverse inference drawn by the AO as regards payment of on money for purchase of various properties in question is not sustainable and we delete the same in the hands of both the partners i.e. Mr. S. D. Kotian and Mr. M N Rajendra Kumar and also in the hands of the firm M/s Om Riddhi Siddhi Developers. Issue No. 2 in the appeals of the assessee as well as issue No. 2 in the appeals of the revenue are decided in favour of the assessee. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 52 of 74 101. Third issue in the appeals of the assesses as per Para 2 above is about alleged investment in M/s K. D. Developers. In the written submissions filed by the learned AR of the assessee, his arguments about this issue are contained in the arguments for Issue No. 3 in his submissions. This issue is raised by the assessee in A. Y. 2011 – 12 and 2012 – 13 in the case of Mr. M N Rajencdra Kumar. In Para 11.7 on Page 14 of the assessment order for A. Y. 2011 – 12 in the case of Mr. M N Rajencdra Kumar, it is noted by the AO that M/s K. D. Builders (KDB) is a partnership firm (PAN : AAIFK9762D) of Mr. M N Rajendra Kumar and Mr. Shrikant N Kotian and this firm owns a land at Liberty Gardens, Malad Mumbai. He further noted that this firm was incorporated Mr. Deepak Pandurang Pawar (DPP) and later Mr. M N Rajendra Kumar (MNR) entered the firm as partner. Then the AO noted that the Balance Sheet of MNR on 31.03.2016 shows that the amount of investment in KDB is Rs. 190.66 lacs and this is a meagre amount as compared to the actual investments made as per evidences gathered. Then he discussed about various digital evidences mainly back up taken from Sanjay Pen drive – 2and referred to a statement of the Accountant of MNR Mr. Sanjay Yaswant Katalkar (SYK) in which he stated that an agreement was signed on 28.03.2016with DPP for the Liberty Garden Project, Malad, Mumbai and the approx. value of the project is Rs. 10.19 Crores. Thereafter in Para 11.9 of the same assessment order, the AO noted that during post search proceedings, the assessee submitted copy of agreement signed on 28.03.2016 between DPP and KDB for Rs. 332,47,500/- and observed that in spite of this agreement, the evidences speak differently. In para 11.10 of the same assessment order, the AO referred to the same pen drive of Sanjay and observed that date wise payment to DPP up to 24.10.2011 was Rs. 445.37 lacs and without indicating any basis for saying so, he stated that this cash was paid by Mr. MNR over and above the agreement value of Rs. 332 Lacs. Thereafter in para 11.12 of the same assessment order, the AO talks about payment of Rs. 40 lacs to DPP and states that this payment is of personal nature and also mainly towards the land at Link Road and Wasari Hill. He has noted down date wise details of various payments to DPP. Thereafter the AO has stated about the statement of Mr. MNR u/s 132 (4) in which he accepted about these alleged investments and also noted about the retraction of the to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 53 of 74 assessee but rejected the retraction by saying that the assessee has not produced any evidence in support of retraction and made additions in these two years. In our understanding, these additions are only on the basis of statement which is later retracted also and asking for evidence in support of retraction is like asking for impossible to prove the negative. The assessee states in retraction that no payment in cash was made by him and there cannot be any evidence about non payment. On this issue also, although various arguments are raised by the learned AR of the assessee but this argument itself is conclusive in the facts of the present case that since the AO has admitted that land purchases were made by the firm KDB, the alleged cash component cannot be taxed in the hands of the partners and therefore, we first consider the acceptability of this argument and other arguments will be considered if the assessee does not succeed on this argument. We find that this is not the case of the AO that the lands in question are owned by the Mr. MNR and not the firm M/s K. D. Builders. Hence, we proceed on this basis that the owner of these lands in question is the firm and not the partners of the firm. This is also not a finding of the AO that the cash component is paid by the partners out of their own funds by giving a break up of how much is from own source of which partner. Only this much is noted by the AO tin Para 11.10 to11.12 of the same assessment order that various cash payments were made to DPP on various dates in respect of Liberty Garden Plot Work, Link Road Plot Work and Vasari Hill Plot and some personal payments without any finding that these cash payments are made by Mr. MNR out of his own sources and not out of the funds of the firm M/s KDB. In our considered opinion, even if it is accepted that some cash payments are made to DPP over and above the agreement value, the said cash payment can be added in the hands of the firm and not in the hands of the partners without bring cogent material on record to show that such cash payment was made by the partners out of their own funds by giving a break up of how much is from own source of which partner. Under these facts, in our considered opinion, addition might have been made in the hands of the firm and not in the hands of the partners and we delete the addition made by the AO in the hands of the partners Mr. MNR. We could have directed to make addition in the hands of the firm but by now, it has become time barred because more to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 54 of 74 than 7 & 8 years have elapsed after the end of the relevant assessment year 2011 – 12 and 2012 – 13. This addition is deleted and Issue No. 3 is also decided in favour of the assessee.

102.

Fourth issue in the appeals of the assesses as per Para 2 above is about alleged investment in M/s Global Star Realtors (P) Ltd. In the written submissions filed by the learned AR of the assessee, his arguments about this issue are contained in the arguments for Issue No. 4 in his submissions. This issue is raised by the assessee in A. Y. 2013 – 14 and 2014 – 15 in the case of Mr. M N Rajencdra Kumar. In Para 14 on Page 25 of the assessment order for A. Y. 2013 – 14 in the case of Mr. M N Rajencdra Kumar, it is noted by the AO that the assessee Mr. MNR is a director of M/s Global Star Realtors (P) Ltd. (GSRPL). The AO has observed that evidences in respect of cheque and cash payments were found in the office of Mr. MNR during survey u/s 133A on 27.12.2016over and above the sale consideration in respect of five pieces of land in Kodialabail village, Padavu village purchased by that company. After discussing about various entries in various digital evidences, in Para 14.2 of the same assessment order, the AO summarized the alleged cash payments of Rs. 141.90 Lacs in A. Y. 2012 – 13 and Rs. 345 Lacs in A. Y. 2013 – 14. Thereafter in Para 14.1.1 of the same assessment order, the AO observed again that these cash payments are for the land purchased for its projects by M/s Global Star Realtors Pvt. Ltd. The AO has noted about the admission by the assessee in statement recorded on 16.03.2017 and its retraction vide letter dated 28.07.2018 and 11.10.2018. Thereafter on page 34 of the same assessment order, the AO has noted about this argument of the assessee also that the cash payment if any is made by the concerned company and not by Mr. MNR personally and that the assessee Mr. MNR is not actively involved in the regular operation of the company but the AO brushed aside these arguments by stating that the company is floated by the assessee himself with 90% being the assessee and his family members. The AO made the addition in the hands of Mr. MNR without bringing any cogent material on record to establish that the alleged cash payment is made by the assessee individual out of his personal funds. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 55 of 74 103. On this issue also, although various arguments are raised by the learned AR of the assessee but this argument itself is conclusive in the facts of the present case that since the AO has admitted that land purchases were made by the company M/s GSRPL, the alleged cash component cannot be taxed in the hands of the directors or shareholders and therefore, we first consider the acceptability of this argument and other arguments will be considered if the assessee does not succeed on this argument. We find that this is not the case of the AO that the lands in question are owned by the Mr. MNR and not the company M/s GSRPL. Hence, we proceed on this basis that the owner of these lands in question is the company and not the directors of the company. This is also not a finding of the AO that the cash component is paid by the directors out of their own funds by giving a break up of how much is from own source of which director. There is no specific finding of the AO by giving reference to any cogent evidence that these cash payments are made by Mr. MNR out of his own sources and not out of the funds of the company M/s GSRPL. In our considered opinion, even if it is accepted that some cash payments are made over and above the agreement value, the said cash payment can be added in the hands of the company and not in the hands of the directors without bring cogent material on record to show that such cash payment was made by the directors out of their own funds by giving a break up of how much is from own source of which director. Under these facts, in our considered opinion, addition might have been made in the hands of the company and not in the hands of the directors and we delete the addition made by the AO in the hands of the director Mr. MNR. We could have directed the AO to make addition in the hands of the company but by now, it has become time barred in one year i.e. A. Y. 2013 – 14 because more than 6 years have elapsed after the end of the relevant assessment year 2013 – 14. For A. Y. 2014 – 15, although the reassessment of the company is not yet time barred but we do not feel it proper to give such direction to the AO because in spite of this argument made by the assessee before the AO that cash payment if any, is made by the company, the AO has not taken required steps to ensure at least protective addition in the hands of the company and therefore, providing second innings to the AO under these facts is not to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 56 of 74 proper in our humble opinion. This addition is deleted and Issue No. 4 is also decided in favour of the assessee.

104.

Issue No. 5 in the appeals of the assessee as per Para 2 above is about alleged undisclosed payment to Mr. Jayanti Lal Jain (JLJ) Rs. 191,86,765/- as per Ground No. 4 in the appeal filed by Mr. MNR for A. Y. 2013 – 14 and in the written submissions filed by the learned AR of the assessee, arguments on this issue are the arguments in respect of Issue No. 5 as per him. The main argument raised is this that file created and stored in pen drive of a third party or on the basis of loose sheets cannot be the basis of addition without any corroborative evidence to support the same. At this juncture we examine the basis adopted by the AO in respect of this addition. We find that para 14.3 of the assessment order in the case of Mr. MNR for A. Y. 2013 – 14 is relevant in this regard. In this para, the AO has noted that 25% of share of M/s Om Sai Siddhi Developers which belonged to Mr. Jayanti Lal Jain was transferred in favour of Mr. MNR and the amounts paid to JLJ was verified. He has noted that as per the Retirement Deed date 10.09.2012, Rs. 74,13,235/- was paid to JLJ but as per the evidences available which is mainly the pen drive of Sanjay, the total payment made to JLJ is Rs. 209 lacs. The difference worked out is Rs. 134, 86,765/-. It is further noted by the AO that an amount of Rs. 57 Lacs was paid to JLJ for the retirement from the Wadhgar project. Total was worked out at Rs. 191, 86,765/-. On page 38 of this assessment order, the AO noted that this fact was confronted to the assessee and reply was received by the AO and he has reproduced the relevant portion of this reply wherein, the assessee had submitted that the assessee had made no cash payment to JLJ and the assessee had discussed this issue with JLJ and JLJ has also denied about any such receipt. The assessee requested the AO to provide an opportunity to the assessee to cross examine JLJ before the AO to establish the truth. After reproducing the reply, the AO brushed aside it by stating that the assessee has not produced any evidence in this regard and in the absence of any evidence to the contrary of the allegation of the AO, this amount is brought to tax as unexplained expenditure. In our considered opinion, this stand of the AO is like asking for an impossible because the assessee’s to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 57 of 74 stand is this that he had not made any cash payment to JLJ and there cannot be an evidence for negative and the stand of the AO to require the assessee to bring evidence in support of negative is nothing but asking the assessee to do an impossible task. Moreover, the evidence relied upon by the AO is the contents of the pen drive of Sanjay, an employee of the assessee and before us, the learned AR of the assessee has placed reliance on the tribunal order rendered in the case of Anil Jaggi vs. ACIT (Supra). Para 14 of this tribunal order is relevant and the same is already reproduced in para 9 above and it is discussed in Para 10 above that this tribunal order is applicable in the facts of the present case and Issue No. 2 was decided in favour of the assessee by respectfully following this tribunal order as per Para 10 above. On the same line, for issue No. 5 also, we respectfully follow this tribunal order and decide this issue also in favour of the assessee. Accordingly, Issue No. 5 is also decided in favour of the assessee.

107.

In the same para, the AO discussed about another project named PREMIERO Project and noted that similarly a MOU was signed on 08.05. 2014 between the same two companies for the development and construction of a multi story apartment for Rs. 8 Crores and a supplementary agreement for MOU dated 26.10.2015 was executed to reduce the monetary consideration payable by M/s PIPL as Rs. 4 Crores instead of Rs. 8 Crores. He noted that these agreements were found and impounded in survey conducted u/s 33Aon 01.02.2017. He also noted that this is a property held in the individual name of M/s GSRL and as per the MOU, the amount is payable by M/s PIPL. As per these facts noted by the AO in the assessment order, these three projects are being developed by two companies jointly i.e. M/s PIPL and M/s GSRL and in subsequent paras, the AO discussed about various digital evidences about receipt of cash of Rs. 1099 lacs in respect of these three projects and finally on page 67 of the same assessment order, he noted year wise and project wise break up the alleged receipt of cash in respect of these three projects which shows that in A. Y. 2014 – 15, the receipt was of Rs. 207.05 Lacs including Rs. 127.35 lacs for MICASA Project and Rs. NIL for PRIMERIO Project and Rs. 80.50 Lacs for VENTURA Project. Similarly, he noted that in A. Y. 2015– 16, the receipt was of Rs. 527,96,670/- including Rs. 169.80.80 lacs for MICASA Project and Rs. 116,66,670/- for PRIMERIO Project and Rs. 241.50 Lacs for VENTURA Project. Similarly, he noted that in A. Y. 2016– 17, the receipt was of Rs. 340,00,004/- including Rs. 42.85 lacs for MICASA Project and Rs. 140,00,004/- for PRIMERIO Project and Rs. 157.15 Lacs for VENTURA Project. For A. Y. 2017 – 18, he noted that the alleged receipt is only Rs. 23,98,326/- for PRIMERIO Project. This fact is admitted by the AO also that these three projects are owned and developed by to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 59 of 74 two companies as per various MOUs and therefore, even if some on money in cash was received in respect of sale of these projects, income will be of these two companies in their agreed share but by no stretch of imagination, it can be considered as income of an individual i.e. Mr. MNR. Hence the addition made in the hands of MR. MNR is deleted for this reason alone and we do not discuss and examine other various arguments of both sides.

108.

Now we discuss and decide Issue No. 3 in two appeals of the revenue for A. Y. 2016 – 17 i.e. in the case of M/s PIPL and Mr. Rohan Monerio. In para 5.1 of the order of CIT (A) in the case of the company M/s PIPL, it is noted by CIT (A) that the AO has stated in the assessment order that the assessee company is carrying on business of builders and developers and noted that in course of survey, certain incriminating material was found and impounded in the form of loose sheets pertaining to three projects viz. MICASA, VENTURA and PREMIRO of the assessee company M/s PIPL and M/s GSRL wherein Mr. MNR is managing director. The AO also noted that as per such material, consideration over and above the agreement value of these three projects was paid by M/s PIPL and the AO added Rs. 340,00,004/- in the hands of M/s PIPL in A. Y. 2016 – 17 by alleging that this much cash was paid by M/s PIPL for these three projects. As per para 5.13 of his order, learned CIT (A) deleted this addition by holding that an opportunity of cross examination was not allowed by the AO and unless such an opportunity is given, the addition cannot be sustained. He has given a categorical finding in this para that the addition was made only on the basis of statement recorded during the search of Mr. MNR which he retracted later vide his letter dated 28.07.2018. Learned CIT (A) held that in the absence of any cogent evidence and corroboration in support of entries in loose sheets, no adverse conclusion can be drawn against the assessee and on this basis, this addition was deleted by CIT (A) and the revenue is in appeal before the tribunal. This finding of CIT (A) could not be controverted by the learned DR of the revenue. This is a settled position of law by now that in the absence of cross examination, the adverse statement cannot be a basis of addition and loose sheets alone in the absence of corroboration in support of entries in loose sheets also to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 60 of 74 cannot be a basis of addition. In the present case of M/s PIPL, the addition was made by the AO on the basis of statement of Mr. MNR and some loose sheets and the AO has not provided the opportunity of cross examination and did not bring on record any material for corroboration in support of entries in loose sheets and therefore, on this issue, we find no infirmity in the order of CIT (A) as per which CIT (A) deleted the addition in the hands of the company M/s PIPL.

109.

Now we decide the appeal of the revenue in the case of Shree Rohan Monterio. In para 5.4 of his order in the case of Shree Rohan Monterio (RM) for A. Y. 2016 – 17, it is noted by him that the AO added an amount of Rs. 580 lacs by giving a finding that Shree Rohan Monterio is M. D. of the company M/s PIPL. The AO has also noted that Mr. RM has sold Kadri Property and in addition to the agreed sale consideration of Kadri Property, cash component of Rs. 580 lacs was adjusted against cash component payable for the same three projects i.e. MICASA Project, PRIMERIO Project and PRIMERIO Project. In Para 5.15 of his order, learned CIT (A) has noted about various judicial pronouncements cited before him by the learned AR of the assessee and these judgments included the judgment of Hon’ble Karnataka High Court rendered in the case of CIT vs. IBC Knowledge Park (P) Ltd., 69 Taxman.com 108. In para 5.16 of his order, learned CIT (A) decided this issue in favour of the assessee by following these judgments included the judgment of Hon’ble Karnataka High Court rendered in the case of CIT vs. IBC Knowledge Park (P) Ltd. (Supra). In para 5.17 of his order, this finding is also given by CIT (A) that evidence found in the premises of third party cannot be imposed on the assessee without any corroborative evidence by the AO. He also observed that both the parties i.e. the searched party Mr. MNR and the assessee Mr. RM have denied having exchanged the on money and he held that loose sheets alone in the absence of corroboration in support of entries in loose sheets cannot be a basis of addition. These findings of CIT (A) could not be controverted by the learned DR of the revenue. This is a settled position of law by now that in the absence of cross examination, the adverse statement cannot be a basis of addition and loose sheets alone in the absence of corroboration in support of entries in loose sheets also cannot be a to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 61 of 74 basis of addition. In the present case of Mr. RM, the addition was made by the AO on the basis of statement of Mr. MNR and some loose sheets and the AO has not provided the opportunity of cross examination and did not bring on record any material for corroboration in support of entries in loose sheets and therefore, on this issue, we find no infirmity in the order of CIT (A) as per which CIT (A) deleted the addition in the hands of Mr. RM.

111.

Issue No. 7 in the appeals of the assessee as per Para 2 above is about alleged cash receipt on sale of shares in the company M/s MA Smart Builders & Developers, Mangaluru in A. Y. 2017 – 18 Rs.105 Lacs the appeals filed by Mr. MNR. In the written submissions filed by the learned AR of the assessee, arguments on this issue are the arguments in respect of Issue No. 7. In Para 14 of the relevant assessment order, the AO has noted that the assessee Mr. MNR sold several of his interests in the commercial property developed by M/s MA Smart Developers (MASD) to Mrs. Mubeena Banu in which he is a partner. Then the AO has stated that the agreement value for this property is Rs. 354,97,500/- as per copy of agreement found and impounded during survey u/s 133A in the case of SCDCC Bank Ltd. on 27.12.2016. The AO further noted that in the copy of impounded document, an amount of Rs. 105 Lacs was written in addition to Rs. 95 Lacs which was received through Cheque. Then he referred to the statement of one Mr. Rajesh Poojary who stated that this is cash receipt in addition to cheque receipt of Rs. 95 lacs. The AO also referred to the statement of Mr. NBR in which as per the AO, he confirmed that Rs. 105 Lacs received is in the form of cash as on money and he agreed that this will be offered as additional income in A. Y. 2017 – 18. The AO reproduced the relevant portion of the statement of Mr. MNR in which, he made a declaration of this amount of Rs. 105 Lacs but from this statement, this is not clear that whether the offer of Mr. MNR was as income of the firm or his individual income but since, this is admitted position that the property in question is developed by the firm MASD, the income on account of receipt of on money, if any, to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 62 of 74 will be of that firm only and not of the partner of the firm. In our considered opinion, this addition is not sustainable for two reasons. First reason is this that when the property sold is owned by the firm, the income on account of receipt of on money, if any, will be of that firm only and not of the partner of the firm. The second reason is this that the addition was made by the AO on the basis of the statement of the supervisor and material impounded during the course of survey conducted at the head office of SCDCC Bank on 27.12.2016 without bringing on record any material for corroboration in support of entries in loose sheets or digital evidence. Hence, the receipt of on money itself is not established beyond doubt. The value as per agreement is said to be Rs. 354,97,500/- and alleged receipt is only Rs. 200 Lacs i.e. Rs. 95 Lacs by cheque and Rs. 105 lacs by cash and hence, total alleged receipt is much less that value as per the agreement. Under these facts and in view of this discussion, we decide this issue No. 7 also in favour of the assessee.

112. Issue No. 8 in the appeals of the assessee as per Para 2 above is about alleged cash receipts towards construction of Sahakari Sadan (MA Smart) of Rs. 86 lacs in A. Y. 2014 – 15, of Rs. 87.50 lacs in A. Y. 2015 – 16, of Rs. 885.67 lacs in A. Y. 2016 – 17 and Rs. 538.55 Lacs in A. Y. 2017 – 18 in the case of Shree Mohammad Ameer. Issue No. 9 in the appeals of the assessee as per Para 2 above is about alleged cash receipts towards construction of Garden City Project (Hindustan Bawa) of Rs. 113.30 lacs in A. Y. 2014 – 15, of Rs. 219 lacs in A. Y. 2015 – 16, of Rs. 142,56,200/- in A. Y. 2016 – 17 and Rs. 190 Lacs in A. Y. 2017 – 18 in the case of Shree Mohammad Ameer. Issue No. 10 in the appeals of the assessee as per Para 2 above is about alleged cash receipts towards construction of Oceanic View Project (Mamko Builders) of Rs. 157 lacs in A. Y. 2016 – 17 and Rs. 66,19,500/- in A. Y. 2017 – 18 in the case of Shree Mohammad Ameer. Issue No. 11 in the appeals of the assessee as per Para 2 above is about alleged cash receipts towards construction of Other Projects of Rs. 561,67,500/- in A. Y. 2016 – 17 in the case of Shree Mohammad Ameer. Another connected issue is issue No. 5 in the appeals of the revenue and this issue is this that as per the revenue, CIT (A) was not justified in directing the AO to restrict the addition to the extent of to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 63 of 74 only 8% of the alleged cash receipts in these four years in the case of the same assessee Mr. Mohammad Ameer. We take up these four issues in the appeals of the assessee and one issue in the appeals of the revenue together as facts and arguments are similar. Regarding Issue No. 8, para 5.3.7 of the order of CIT (A) for A. Y. 2014 – 15 in the case of Shree Mohammad Ameer is relevant because in the remaining years also, the finding and decision of CIT (A) is identical and therefore, we reproduce this para for ready reference. Similarly, regarding Issue No. 9, 10 and 11, para 5.4 to para 5.4.8 of the order of CIT (A) for A. Y. 2016 – 17 in the case of Shree Mohammad Ameer is relevant because in the remaining years also, the finding and decision of CIT (A) is identical and therefore, we reproduce these paras also for ready reference. These are as under:-

“5.3.7. I have considered the facts of the case and case laws as well as board circular relied on by the AR. The fundamental issue is that since appellant did not appear before the AO, therefore, the entire receipt of contract had to be charged to tax, in the absence of explanation by the appellant. I find that the basis for multiplying the figures by 100 and 1000 is not validly delineated. No Enquiries in this regard have been conducted. The logic for multiplying the figures, even those of cheques, is improper. Perhaps, this emanates for the statement of the accountant Shri. Makeem, in which case he should have been allowed to be cross examined. If it emanates from the statement recorded during search of the appellant, then he has in effect retracted it; AO has failed to explain why the retraction is inadmissible, specially in the face of the evidence gathered which is claimed to have zeros missing; but this conclusion is not based on valid gathering of evidence as the accountant Shri. Makeem has not been cross examined. The principles of natural justice have also been violated, in the sense that the cross examination opportunity has not been provided. Besides, receipt by cheque have been treated as being at par with receipt by cash without providing the reason thereof. Hence, there is no merit in making additions based merely on the verbal statement, which have since been in effect retracted. On the other hand, I find that, the appellant is a contractor. He is not the developer of the buildings himself. Even in his disclosure during search, he has disclosed the said "receipts", not income. Thus, the receipts on account of the project, even if unaccounted, are contract receipts, on which tax could be levied on the income, not on receipts. It would not be out of context to point out here that level of evidence required is preponderance of probabilities. Thus, based on the evidence available, the AO is directed to compute turnover, after deleting the to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 64 of 74 accounted (cheque) amount from the above said amount. Income there from could be computed @ 8% on the said amount. Credit should be given from this income so computed of the income declared in the returns on account of these projects declared in any year, if these receipts are included therein. In the result, the appeal is partly allowed on this issue.” “5.4. I now proceed to decide the ground in respect of additions made of cash receipts from following projects viz., a) Garden City Project — M/s.Hindustan Bawa Rs. 1,42,56,200 b) Oceanic View Project — Namko Builder Rs.1,57,00,000 c) Other Projects Rs. 5,61,67,500 5.4.1. The AO in the order of assessment has made above three additions based on the loose sheets impounded during the survey conducted at M/s. Coastal Construction, proprietary concern of the appellant, based on the said loose sheets, and also based on the declaration in the statement recorded during the survey conducted under Section 133A of the Income tax Act. 5.4.2. Further, AO while making addition of Rs.5,61,67,500/- as cash receipts from other projects, has multiplied the figures in the loose sheets, especially copies of the impounded materials at page numbers 1-13 and 17 vide document No.A/AAH/06 by observing that, details of cash receipts were with respect of various projects. The AO further suspected that some of the entries were made in code words- by virtue of these code words the Appellant has deliberately reduced two decimals of number. Finally, while concluding assessment she has stated that, only cash receipts brought to tax and the fact that, cash payments are originate from these receipts no disallowance is called for as the payments are also not brought to the books as detected hence, appellant also not given the benefit of claiming the expenses against the receipts since the expenses invariably calls for a disallowance u/s.40A(3) and 40a(ia) of the Act. 5.4.3. On the other hand, in the AR's written submissions dated 09.09.2019. the AR has forcefully argued in respect of entire cash receipts based on the loose sheets impounded during survey, which is as under.

AO is not correct in coming to the conclusion that. on money is exchanged between the parties based on a loose sheet found in the premises of M/s.Coastal Construction. To sustain the addition, the AO should have conducted an independent inquiry about the value of the project and ascertain whether any under valuation is done, if so what is the correct value of the project. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 65 of 74 Further, the AO did not bring on record any evidence to support her contention to say that there is on-money exchanged between the parties. In the absence of proper inquiry and sufficient evidences, there is no reason to confirm addition made by the AO towards on money. The AO merely acted upon the statement given by the appellant, which was subsequently retracted by him, It was a settled position of law that unless the statement is tested under the cross examination, the same cannot be considered as evidence against the assessee. The AO used the admission made in the statement recorded under section 132(4) of the Act. But, the AO failed to note that. admission itself cannot be considered as conclusive evidence against the assessee, unless there is corroborative evidence on record. To tax any particular receipts, primary evidence is very much necessary and unless there is primary evidence, circumstantial evidence cannot be considered as conclusive evidence against any person to tax any particular receipts. Circumstantial evidence plays an important role in income tax proceeding. But the receipt of on money is purely a factual issue which cannot be decided based on circumstantial evidence. The AO without bringing on record any evidence to prove that. on money  is exchanged between the parties, merely discussing upon the loose sheet, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The AO is required to bring further evidence on record to show that, actual on money is exchanged between the parties. but literally failed to do so. The AO did not conduct any independent inquiry relating to the value of the project instead, merely relied upon the statement, which is not correct. The AO made additions purely on assumptions and presumptions. The AO in the absence of any cogent evidences and corroboration in support of the entries in loose sheets no to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 66 of 74 adverse conclusion can be drawn against the Appellant on mere guess and pure suspicion. Further. there is no proof of origin and destination of on money. The AO failed to prove how the money was arranged and also failed to prove the deployment of unaccounted money by the payer by any form of evidence. Under these circumstances, based on paper jottings as conclusive evidence on money cannot be brought to tax as income from undisclosed sources. 5.4.4. Finally, during the appellate proceedings, the AR has produced before me the following decisions and argued that, these decisions are squarely applicable to appellant's case.

5.4.5. I have considered the facts of the case and case laws as well as board circular relied on by the AR, the ratio laid down in the said cases are applicable to the appellant's case. 5.4.6. The AO merely acted upon on the statement given by the accountant Mr. Makeem, which was subsequently retracted by him. It is a settled position of law that unless the statement is tested under the cross examination, the same cannot be considered as evidence against the assessee. The AO also used the admission made in the statement recorded under section 132(4) of the Act. But, the assessing officer failed to note that, admission itself cannot be considered as conclusive evidence against the assessee, unless there is corroborative evidence on record; besides, the appellant has in effect retracted this statement as well. 5.4.7. To tax any particular payments, primary evidence is necessary and unless there is primary evidence, circumstantial evidence cannot be considered as conclusive evidence against any person to tax any particular payments. Circumstantial evidence plays an important role in income tax to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 67 of 74 proceeding. The payment/receipt of on money is purely a factual issue which cannot be decided based on circumstantial evidence. 5.4.8. I have considered the facts of the case and case laws as well as board circular relied on by the AR. The fundamental issue is that since appellant did not appear before the AO, therefore, the entire receipt of contract had to he charged to tax, in the absence of explanation by the appellant. I find that the basis for multiplying the figures by 100 and 1000 is not validly delineated. No Enquiries in this regard have been conducted. The logic for multiplying the figures, even those of cheques. is improper. Perhaps, this emanates for the statement of the accountant Shri. Makeem, in which case he should have been allowed to be cross examined. If it emanates from the statement recorded during search of the appellant, then he has in effect retracted it; AO as failed to explain why the retraction is inadmissible, specially in the face of the evidence gathered which is claimed to have zeros missing; but this conclusion is not based on valid gathering of evidence as the accountant Shri. Makeem has not been cross examined. The principles of natural justice have also been violated, in the sense that the cross examination opportunity has not been provided. Besides, receipt by cheque have been treated as being at par with receipt by cash without providing the reason thereof. Hence, there is no merit in making additions based merely on the verbal statement, which have since been in effect retracted. On the other hand, I find that, the appellant is a contractor. He is not the developer of the buildings himself. Even in his disclosure during search, he has disclosed the said "receipts", not income. Thus, the receipts on account of the project, even if unaccounted, are contract receipts, on which tax could be levied on the income, not on receipts. It would not be out of context to point out here that level of evidence required is preponderance of probabilities. Thus, based on the evidence available, the AO is directed to compute turnover, after deleting the accounted (cheque) amount from the above said amount. Income there from could be computed @ 8% on the said amount. Credit should be given from this income so computed of the income declared in the returns on account of these projects declared in any year, if these receipts are included therein. In the result, the appeal is partly allowed on this issue.”

“6.3.8 I have considered the facts of the case and case laws relied on by the AR, the ratio laid down in the said cases are applicable to the appellant's case. Considering all the aspects, I hold that, the additions made is purely based on the statement made by the appellant without any corroborative evidence by the AO. The statement in oath considering acceptance, but lacks basis. In the absence of basis, the appellant could successfully retract that part of the statement. In the instant case, the appellant has denied having exchanged the on money for investment in dairy land. Even after the Appellant's case is covered under search operations under section 132, the department did not unearth any evidence regarding exchange of cash in sale transaction except statement of the appellant at the time of search operation. In the absence of proper inquiry and sufficient evidences, I find no reason to confirm addition made by the AO towards on money. Hence, I delete the additions made amounting to Rs.1,00,00,000/-, being unexplained expenditure in Global Export, Ullal.” “6.4.9 I have considered the facts of the case and case laws relied on by the AR, the ratio laid down in the said cases are applicable to the appellant's case. Considering all the aspects, I hold that, the additions made is purely based on the statement made by the appellant without any corroborative evidence by the AO. The statements on oath contain admission; but it is not backed by any evidence. In the absence of evidence, the appellant could successfully retract that part of the statement. In the instant case, the appellant has denied having exchanged the on money for investment in Sai Siddi Develpers. Even after the Appellant's case is covered under search to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 73 of 74 operations under section 132, the department did not unearth any evidence regarding exchange of cash in sale transaction except statement of the appellant at the time of search operation. In the absence of proper inquiry and sufficient evidences, I find no reason to confirm addition made by the AO towards on money. Hence. I delete the additions made amounting to Rs.5,00,00,000/-, being investment in Sai Siddi Developers.” “6.5.9 I have considered the facts of the case and case laws relied on by the AR, the ratio laid down in the said cases are applicable to the appellant's case. Considering all the aspects, I hold that, the additions made is purely based on the statement made by the appellant without any corroborative evidence by the AO. The statements on oath contain admission; but it is not backed by any evidence. In the absence of evidence, the appellant could successfully retract that part of the statement. In the instant case, the appellant has denied having exchanged the on money for investment in factory building of Kusuma Cashew. Even after the Appellant's case is covered under search operations under section 132, the department did not unearth any evidence regarding exchange of cash in sale transaction except statement of the appellant at the time of search operation. In the absence of proper inquiry and sufficient evidences, I find no reason to confirm addition made by the AO towards on money. Hence, I delete the additions made amounting to Rs.1,00,00,000/-, being unexplained expenditure in Global Export, Ullal.”