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

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 5 of 74 Issue No. Issue Description 3 Alleged Investment in M/s K. D. Developers No. Amount 2258 3 1,40,93,500/- 2259 2 to 4 4,45,37,000/- Total Amount 586,30,500/- Issue No. Issue Description 4 Alleged Investment in M/s Global Star Realtors (P Ltd. ITA No. Ground No. Amount 2260 3 1,41,90,000/- 2261 3 345,00,000/- Total Amount 486,90,000/- Issue No. Issue Description 5 Alleged Undisclosed Payment to Mr. Jayanti Lal Jain ITA No. Ground No. Amount 2260 4 1,91,86,765/- Total Amount 191,86,765/- Issue No. Issue Description 6 Alleged Cash collected in developed project with PIPL ITA No. Ground No. Amount 2261 4 2,07,05,000/- 2262 3 5,27,96,670/- 2263 2 3,40,00,004/- 2264 2 23,98,326/-

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 6 of 74 Total Amount 10,99,00,000/- Issue No. Issue Description 7 Alleged Cash Receipt on sale of Shares in MA Smart Builders & Developers, Mangaluru No. Amount 2264 3 1,05,00,000/- Total Amount 1,05,00,000/- Issue No. Issue Description 8 Alleged Cash Receipt towards Construction of Sahakari Sadan (MA Smart) ITA No. Ground No. Amount 2373 2 86,00,000/- 2374 2 87,50,000/- 2375 2 885,67,000/- 2376 2 538,55,000/- Total Amount 15,97,72,000/-

Issue No. Issue Description 9 Alleged Cash Receipt towards Construction of Garden City Project (Hindustan Bawa) No. Amount 2373 2 113,30,000/- 2374 2 219,00,000/- 2375 2 142,56,200/- 2376 2 190,00,000/-

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 7 of 74 Total Amount 6,64,86,200/- Issue No. Issue Description 10 Alleged Cash Receipt towards Construction of Oceanic View Project (Mamko Builders) No. Amount 2375 2 157,00,000/- 2376 2 66,19,500/- Total Amount 2,23,19,500/- Issue No. Issue Description 11 Alleged Cash Receipt towards Construction of Other Projects ITA No. Ground No. Amount 2375 2 561,67,500/- Total Amount 5,61,67,500/-

3. Now we take note of the issues raised by the revenue in its nine appeals and the same are as per the following Chart:- Issue No. Issue Description 1 Deletion of the Addition made by the AO u/s 69A No. Amount 1630 2 183,00,000/- Total Amount 1,83,00,000/- Issue No. Issue Description 2 Deletion of the Protective Addition made by the AO as unexplained Cash Investment ITA No. Ground No. Amount 2334 2 510,98,250/-

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 8 of 74 Total Amount 5,10,98,250/- Issue No. Issue Description 3 Deletion of the Addition made by the AO on Allegation of payment of On Money for 3 Projects No. Amount 2356 2 340,00,004/- 2357 2 580,00,000/- Total Amount 920,00,004/- Issue No. Issue Description 4 Deletion on the basis of Retraction of various Additions made by the AO ITA No. Ground No. Amount 2457 4 7,00,00,000/- Total Amount 7,00,00,000/- Issue No. Issue Description 5 Direction of CIT (A) to estimate income @ 8% out of alleged cash receipts as against addition by the AO of the entire amount of cash Receipts Rs. 199.30 lacs in A. Y. 2014 – 15, Rs. 306.50 Lacs in A. Y. 2015 – 16, Rs. 1746.91 Lacs in A. Y. 2016 – 17 and Rs. 794.75 Lacs in A. Y. 2017 – 18 ITA No. Ground No. Amount 2453 to 2 2803.66 Lacs 2456 Total Amount 2803.66 Lacs

4. After the oral hearing was over, learned AR of the assessee was directed to file brief written submissions containing assessed summary of oral arguments advanced

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:-

I. General submission on Facts:

1. 1. No incriminating material, undisclosed income/ assets/ expenditure was found in the Assessee's premises or in his possession or control.

2. The entire assessment and the additions made are towards the alleged cash investment/ receipts in the various business transactions of the firms/ companies in which the assessee is a partner/ director.

3. The additions are based on digital evidence, allegedly stored in a pen drive belonging to a third person or documents found during survey in third party's premises. None of the digital evidences relied upon was in the possession or control of the assessee.

4. No evidence of any on-money exchange in any of the transactions was found and the additions are not corroborated by any shred of evidence.

5. The addition has been made based on the statement recorded during the search action, even though it was subsequently retracted, wherein the circumstances of disclosure and the need for retraction has been explained, in detail. The A.0 has merely relied on a statement recorded in duress and denial whereas the A.0 has disregarded a statement which has been given after proper verification of facts.

6. The projects were developed by Firms/ companies. However, the alleged cash investment/ receipts have been taxed in the hands of the assessee. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 14 of 74 II. Submission on Principles:

1. 1. No addition can be made based on pen drive data, unless there are corroborative evidence. The contents of digital evidence created and stored in a pen drive of a third party cannot be imposed on the assessee, without any corroborative evidence to support the same.

2. Loose documents have no evidentiary value, unless there are corroborative evidence 3. Additions cannot be made, merely based on disclosure statement, unless there are corroborative evidences. Confessions extracted during search proceedings should be supported by collection of evidence of income 4. Additions made based on alleged evidence found in possession of third party / statement of third party, without providing opportunity of cross examination to assessee is not tenable 5. Absence of corresponding entries in the accounts/ confirmation of opposite party makes the addition untenable 6. Burden of proof is on Revenue / Assessing Officer who is making allegations of on money transactions 7. Survey findings cannot be used for the purposes of S.153A 8. Alleged income of firms/ companies cannot be assessed in the hands of the directors ISSUE No. 1 Mr. M. N. Rajendra Kumar A.Y 2011-12 ; Mr. Subhakar Dombayya Kotian A.Y. 2011-12 ; ITA No.2254/Bang/2019 Cash investment in purchase of plot in Ulwe, Navi Mumbai for projects undertaken by Om Sai Siddhi Riddhi Developers (OSSRD) Facts of the issue to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 15 of 74 10. Om Sai Siddhi Riddhi Developers (OSSRD) is a partnership firm in which the assessee and Mr. Kotian are partners, having share of 75 % and 25 % respectively. This firm had constructed three projects, Exotica, Nakshatra and Paradise at Navi Mumbai.

Gist of our submission Even a cursory look at the documents cited as evidence will show that i) the documents are unreliable. For instance, as per the assessment order itself, the cash component in the transaction is Rs 52,25,000. But the excel sheet has mentioned an amount of Rs 92,00,000 as cash amount. Also, the A.O has recorded that the sheet mentions the share of the assessee as 50 %, but the A.O has assessed 75% in the Assessee's hands. The addition has been made purely on assumptions and presumptions based ii) on the pen drive data, belonging to Mr. Sanjay, without any corroborative evidence. It is settled principle that digital evidence stored in a pen drive cannot be the basis of addition, without any corroborative evidence to support the to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 16 of 74 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 makes the addition untenable. No attempt has been made to make any verification on the veracity of the loose sheets and the excel sheet in the pen drive. 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 projects are carried out by the firm and the vii) land purchases were made by the firm. As such, the alleged cash component cannot be taxed in the hands of the partners.

ISSUE No. 2 Mr. M. N. Rajendra Kumar A.Y 2011-12 & A.Y 12-13 ; and 2259/Bang/2019 Cash payments made to Deepak Pawar towards investment in project executed by KD Builders and for other purposes 13. Based on the excel sheet found in the pen drive of Mr. Sanjay, the A.O has surmised that the assessee has made the following cash payments to one Mr. Deepak Pawar, over a period of 2008 to 2011, for the following purposes

Investment in KD Builders 4,45,37,000 i) Payment for personal purposes 85,00,000 ii) Hi) Payment for link road and Vasri hill 55,93,500 Total 5,86,30,500 14. Out of the above amounts, the amounts at i) of Rs 4,45,37,000 was assessed in A.Y 2012-13 and the amount at ii) and iii) aggregating to Rs. 1,40,93,500 was assessed in A.Y 2011-12. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 17 of 74 15. The CIT(A) upheld the additions but held that only those payments related to the year under consideration should be assessed to tax in the relevant year and the payments related to the earlier years were deleted by the CIT(A).

Gist of our submission i) The A.O has only stated that details of the cash paid were recorded in the excel sheet found in the pen drive of Sanjay and typed out the details in the order. The actual excel sheet is not brought on record nor was it produced before the assessee, during assessment proceedings. Hence, the document cited is unreliable. The addition has been made purely on assumptions and presumptions based ii) on the pen drive data, belonging to Mr. Sanjay, without any corroborative evidence. It is settled principle that digital evidence stored in a pen drive cannot iii) 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 and the excel sheet in the pen drive. The A.O has not brought on record who the other party is (Mr. Pawar) and vi) verification of the alleged transactions with him Burden of proof is on Revenue / Assessing Officer who is making vii) allegations of on money transactions, which has not been discharged The A.O had admitted that the project is carried out by the firm and the land viii) purchases were made by the firm. As such, the alleged cash component cannot be taxed in the hands of the partners.

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 18 of 74 ISSUE No. 3 Mr. M. N. Rajendra Kumar A . Y 2 0 1 3 - 1 4 , A . Y 2 0 1 4 - 1 5 , A . Y 2 0 1 5 - 1 6 ; I T A N o . 2 2 6 0 , 2 2 6 1 , 2262/Bang/2019 Mr. Subhakar Dombayya Kotian A.Y. 2013-14, 2014-15 & 2015-16 ; 2256, 2257/Bang/2019 M/s. Om Sai Riddhi Siddhi Developers A.Y. 2014-15 ; 2334/Bang/2019 Cash investment in purchase of land by OSSRD 16. Om Sai Siddhi Riddhi Developers (OSSRD) is a partnership firm in which the assessee and Mr. Kotian are partners, having share of 75 % and 25 % respectively.

A.Y Amount M. N. Rajendra Kumar Kotian 2013-14 1,50,00,000 1,12,50,000 (Wrongly 37,50,000 Mentioned 11,25,000 Rs as in the order 2014-15 5,10,98,250 3,83,23,687 1,27,74,562 2015-16 25,00,000 18,75,000 6,25,000 Total 6,85,98,250 5,14,48,687 1,71,49,562

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 19 of 74 Gist of our submission The A.O has made the addition based on surmises and assumptions, i) based on the excel sheet in the pen drive of Mr. Sanjay, without bringing any corroborative evidence on record. It is settled principle that digital evidence stored in a pen drive ii) 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 iii) 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 iv) opposite party make the addition untenable. No attempt has been made to make any verification on the veracity of the loose sheets and the excel sheet in the pen drive. Burden of proof is on Revenue / Assessing Officer who is making v) allegations of on money transactions, which has not been discharged The A.O had admitted that the projects are carried out by the firm and vi) the land purchases were made by the firm. As such, the alleged cash component cannot be taxed in the hands of the partners. ISSUE No. 4 Mr. M. N. Rajendra Kumar A.Y 2013-14 & A.Y 2014-15 ; and 2261/Bang/2019 Cash investment in purchase of land for projects executed by Global Star Realtors Pvt. Ltd 18. Global Star Realtors Pvt. Ltd is a company in which the assessee is a director. Based on the loose sheets found during survey action in the SCDCC bank, the A.O had surmised that the assessee had made payment of Rs 4,86,90,000 in cash towards purchase of land for the projects executed by the company. This amount was assessed over two years, Rs 1,41,90,000 in A.Y 2013-14 and Rs 3,45,00,000 in A.Y 2014-15.

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.

Gist of our submissions The addition has been made purely on assumptions and i) presumptions based on the pen drive data, belonging to Mr. Sanjay, without any corroborative evidence. It is settled principle that file created and stored in a pen drive of a ii) third party 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 iii) there are corroborative evidence. Confessions extracted during search should be supported by collection of evidence of income Absence of any verification/ confirmation of opposite party makes iv) the addition untenable Burden of proof is on Revenue / Assessing Officer who is making v) allegations of on money transactions.

ISSUE No. 6 Mr. M. N. Rajendra Kumar A.Y. 2014-15, 2015-16, A.Y 2016-17 & A.Y 2017-18 ; 2262, 2263 & 2264/Bang/2019 Mr. Rohan Monteiro

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 22 of 74 A.Y. 2016-17 ; Cash received in projects developed with Property Infra Tech India Pvt. Ltd (PIPL) 21. Property Infra Tech India Pvt Ltd (PIPL) was a company in which Mr. Rohan Monteiro was a director. Global Star Realtors Pvt Ltd was a company in which the assessee was a director. These two companies have entered into MoU's for development of three projects, namely Micasa, Ventura and Premiero projects.

Gist of our submission i) From the assessment order, it is clear that the loose sheets of digital 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. 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 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 23 of 74 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. 7 Mr. M. N. Rajendra Kumar A.Y 2017-18 ; Cash received on the sale made by M/s Smart builders & Developers 23. Based on the loose sheets found during survey action in the SCDCC bank, the A.O had surmised that the assessee had received an amount of Rs.1,05,00,000/- in cash, over and above the price stated in the agreement for sale of commercial complex developed by M/s Smart builders & Developers. This amount was added as undisclosed income in the hands of the assessee.

Gist of our submission i) From the assessment order, it is clear that the loose sheets of digital 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.

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.

ISSUE No. 9 — Revenue Appeal Mr. M. N. Rajendra Kumar A.Y 2016-17 ; Unexplained expenditure in Global exports Ullal (Building lease) 27. M/s Global export is a partnership firm in which the assessee is a partner. It has taken a factory building on lease from M/s India Fish metal.

It is settled position of law that unless disclosure statement is i) tested under cross examination, the same cannot be considered as evidence against the assessee Admission itself cannot be considered as conclusive evidence, unless there ii) is corroborative evidence on record 30. The finding of the CIT(A) is correct on principles, upheld by many decisions of higher judicial authorities and needs to be upheld.

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 26 of 74 ISSUE No. 10 — Revenue Appeal Mr. M. N. Rajendra Kumar A.Y 2016-17 ; Unexplained expenditure in Om Sai Siddhi Developers (SS Developers) 31. Based on certain entries in some loose sheets found in the seized records, the A.O had surmised that the assessee has made substantial cash investment in various other projects and estimated such investment to be Rs 10 Crores and added the same to the Assessee's income.

It is settled position of law that unless disclosure statement is i) tested under cross examination, the same cannot be considered as evidence against the assessee Admission itself cannot be considered as conclusive evidence, unless ii) there is corroborative evidence on record 33. The finding of the CIT(A) is correct on principles, upheld by many decisions of higher judicial authorities and needs to be upheld.

ISSUE No. 11 — Revenue Appeal Mr. M. N. Rajendra Kumar A.Y 2016-17 ; Unexplained investment in construction of factory of Kusuma Cashew 34. The A.O had surmised that during search action, the assessee had declared an amount of Rs. 1 Crore towards unexplained investment in the factory premises of Kusuma Cashew and added the same to the undisclosed income of the assessee. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 27 of 74 35. As this addition was without any basis and without any evidence, the CIT(A) deleted the addition, on the following grounds:

It is settled position of law that unless disclosure statement is tested i) under cross examination, the same cannot be considered as evidence against the assessee Admission itself cannot be considered as conclusive evidence, unless ii) there is corroborative evidence on record 36. The finding of the CIT(A) is correct on principles, upheld by many decisions of higher judicial authorities and needs to be upheld.

ISSUE No. 12 — Revenue Appeal Mr. M. N. Rajendra Kumar A.Y 2017-18 ; Unexplained investment of in Om Sai Siddhi Developers ( SS Developers) in Novodaya Estate Land Development 37. The A.O had surmised that during search action, the assessee had declared an amount of Rs 10 Crores towards unexplained investment in Novodaya Estate Land Development and added the same to the undisclosed income of the assessee.

It is settled position of law that unless disclosure statement is tested iii) under cross examination, the same cannot be considered as evidence against the assessee Admission itself cannot be considered as conclusive evidence, unless iv) there is corroborative evidence on record 39. The finding of the CIT(A) is correct on principles, upheld by many decisions of higher judicial authorities and needs to be upheld.

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 28 of 74 OTHER GROUP CASES: ISSUE No. 13 Walter Noronha A.Y 2015-16 ; Unexplained cash invested in finance business 40. This assessee, a former driver in KSRTC, is a former driver of Mr. Rohan Monteiro and has no other source of income. Search was conducted in the residence of this assessee.

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 29 of 74 ISSUE No. 14 Mohammed Ameer A.Y 2014-15, 2015-16, 2016-17 & 2017-18 ; 2374, 2375 & 2376/Bang/2019 Cash receipts towards construction of projects 44. Search action was taken in the case of this assessee. The assessee was having a proprietary concern by name, M/s Coastal Construction. This has entered into an agreement with various developers for construction of three commercial buildings and site development.

Sahakari Sadan by MA Smart builders & developers i) Garden city Project by Hindustan Bawa and ii) Oceanic view by Namko Builders iii) 46. The A.O added the alleged cash received from these projects in various years, as detailed in the assessment order.

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 30 of 74 Gist of our submission The A.O has made the addition based on surmises and i) assumptions, based on certain loose sheets, without bringing any corroborative evidence on record. It is settled principle that additions cannot be made merely on the basis of ii) loose sheets, without any corroborative evidence Additions cannot be made, merely based on disclosure statement, unless iii) 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 iv) opposite party make the addition untenable. No attempt has been made to make any verification on the veracity of the loose sheets and the excel sheet in the pen drive. Burden of proof is on Revenue / Assessing Officer who is making v) allegations of on money transactions, which has not been discharged The A.O had admitted that the projects are carried out by the firm vi) and therefore, the alleged cash component cannot be taxed in the hands of the assessee. ISSUE No. 15 — Departmental Appeal Mohammed Ameer A.Y 2014-15, 2015-16, 2016-17 & 2017-18 ; 2374, 2375 & 2376/Bang/2019 Cash Receipts towards construction of projects 49. Search action was taken in the case of this assessee. The Assessee has entered into an agreement with various developers for construction of three commercial buildings and site development.

Gist of our submission The A.O has made the addition based on assumptions, based on certain i) loose sheets, without bringing any corroborative or fresh evidence on record. All the books of accounts were audited books of accounts and were ii) uploaded. The assesse has uploaded all relevant documents in the e-portal and iii) has also filed its Return of Income in reply to the notice issued u/Section 153C of the Act A.O has grossly erred in estimating the income at 8% on the figures iv) noted/mentioned in the note book by multiplying the same some by Rs100 or some by Rs. 1,000/- without any basis. ISSUE No. 16 - Mohammed Ameer - Revenue appeal A.Y 2014-15, 2015-16, 2016-17 & 2017-18 ; 2454, 2455 & 2456/Bang/2019 Investment in Jewellery 51. Based on certain purchase bills found during search, the A.O had surmised that the assessee has made undisclosed investment in jewellery and added the same in various years, as detailed in the assessment order.

No gold was physically found during search, i) corresponding to the bills, thereby supporting the claim that these were purchased on behalf of family members The assessee had sufficient drawings to explain the ii) purchases 53. The decision of the CIT(A) is based on facts and nothing has been brought on record to counter the same. to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 32 of 74 M/S PROPERTY INFRATECH INDIA PRIVATE LIMITED A.Y.2016-17 under Section143(3) Conformance with the CBDT Circular No.17 of 2019: 54. The Assessee's case falls directly under the CBDT Circular No.17/2019 as the addition made by the Department is to a tune of Rs.24,60,098, thereby keeping it out of the ambit of monetary limit set for appeals to be made by the department.

Addition made towards adjustment of cash component in the developed projects 56. Assessee is a company engaged in the real estate business. Consequently, there was a search which was conducted in the premises of Mr. M. N. Rajendra Kumar on 01.02.2017. During the course of search, no incriminating material was found that would bear addition on the assessee's Income.

Mr. MOHAMMED AMEER 78. Assessee Appeal in 2374, 2375, 2376/Bang/2019 for the A.Y.2014-15 to 2017-18 under Section144 r.w.s 153A

1. Appellant begs to submit that, the Commissioner of Income tax (Appeals) while upholding the additions made has grossly overlooked the fact that, Additions made is purely on assumptions and presumptions based on the loose sheets and AO has multiplied the figures in the loose sheets with multiples of hundreds/thousands, even for transactions made through account payee cheques purely based on the assumptions and presumptions. While multiplying the figures with 100/1000, the AO totally failed to cross verify the same with the third party who have received either cash or cheque payments.

4. The AO did not conduct any independent inquiry relating to exchange of money (sale) instead, merely relied upon the statement, which is not correct. Further, there is no proof of origin and destination of on money.

However, the CIT(A) deleted the addition by accepting the contention of the assessee that, i) No gold was physically found during search, corresponding to the bills, thereby supporting the claim that these were purchased on behalf of family members ii) The assessee had sufficient drawings to explain the purchases 87. The decision of the CIT(A) is based on facts and nothing has been brought on record to counter the same.

ITA No. 2254 to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 41 of 74 97. Now, we reproduce the written submissions filed by the learned DR of the revenue in the case of Shree Walter Neronha, and the letters filed by the learned DR of the revenue seeking time to file written submissions in reply to the written submissions filed by the learned AR of the assessee in respect of the remaining appeals. The same are as under:-

“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.

Ref: 1) ITA.No.2258-2457 - Sri. M.N.Rajendra Kumar 2) ITA.N0.2254-2257 - Sri. Shubhakar Dombayya Kotian 3) ITA.No. 2356 of 2019 Property Infratech India Pvt Ltd 4) ITA.No2334 of 2019 - M/s Om sai Riddhi Sidddhi Developers 5) ITA.no.2357 of 2019 - Sri. Rohan Monterio 6) ITA.No.2373 - 2356 - Sri. Mohammed Ameer 7) ITA.No.1630 of 2019 - Walter Noronha Ref: 2 This office letter of even no. dated 2-7-2020 & 29-7-2020 *************

Kindly refer to the above. Written submission in the case of Walter Noronha:

This office has received the report from the field in the case of Walter Noronha of 2019 on 7-8-2020 and written submission will be filed within 3 days in respect of the same.

Written submission in respect of other cases: to 2264, 2457, 2334, 1630, 2356, 2357,2373 to 2376 & 2453 to 2456/Bang/2019 Page 43 of 74 The Assessing Officer DCIT, Central Circle, Mangalore vide his letter dated 31-7-2020 has submitted that the 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. The said sealed hard disk can be opened only in the presence of the assessee or assessee's representative in order to furnish the same before the Hon'ble ITAT. In view of the prevailing pandemic situation the assessee's representative has expressed his inability to vest the office to facilitate the opening of the hard disk which contains the evidence.

In view of this, it is requested to issue necessary directions to the assessee to extend his cooperation to the Department to facilitate the production of a cloned copy with a certified hard copy to the ITAT which will be a material evidence to be considered by the ITAT.

Further, it was intimated by the Assessing Officer that during the month of July, he was in home quarantine for 14 days being a primary contact to a person tested positive for Corona. In addition to this, there was a complete lockdown in Dakshina Kannada District from 15.07.2020 to 23-7-2020. Further as per the orders of the competent authority the officers and staff are directed to work on rotation as per the specified roster with minimum staff. In view of this the Officials are reporting for duty only on alternate days subject to the containment zone restrictions. Hence there is a inevitable delay in culling out the details from assessment records, search folders and seized materials in respect of the 24 cases for which the written submissions are called for. The AO has filed the report in the case of Shri. Mohammed Ameer which were subsequently transferred to "A" Bench.

In the circumstances, it is requested to grant further time to furnish the detailed submission and case may be heard after the full submissions are made by the Department in all the cases as issues are interconnected.

Yours faithfully, (0,... (PRADEEP KUMAR) Commissioner of Income tax (ITAT-3), Bangalore. al•IPTN 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.

F.No.CIT (DR)/ITAT-3/ BNG/2020-21 Sub: Request time for filing of Written Submission to be made before ITAT-C To Bench Bangalore in Shri. M.N. Rajender Kumar Group Search related cases Reg. Ref: 1) ITA.No.2258-2457 - Sri. M.N.Rajendra Kumar 2)ITA.NO.2254-2257 - Sri. Shubhakar Dombayya Kotian 3)1TA.No. 2356 of 2019 Property Infratech India Pvt Ltd 4)ITA.No2334 of 2019 - M/s Om sai Riddhi Sidddhi Developers 5)ITA.no.2357 of 2019 - Sri. Rohan Monterio Sir, 6)ITA.No.2373 - 2356 - Sri. Mohammed Ameer 7)ITA.No.1630 of 2019 - Walton Noronha ** ** ** * * * **** The Hon'ble ITAT, Bench - C heard the above mentioned appeals on 23-62020 and directed both the Department and the Assessee's Representative to file a detailed written submission covering mainly the issues related to additions made in the assessments. The written submissions were to be first filed by the Assessee (by 29th June) and then by the Department (by 6th July).

Copy of the assessee's written submission was received in this office on 30-62020. Report on the assessee's submissions has been called for from the Assessing Officer, DCIT, Central Circle, Mangalore and is yet to be received. Hence it is requested to grant two weeks time to file written submission by the Department.

Yours faithfully,

(PRADEEP KUMAR) Commissioner of Income tax (ITAT-3), Bangalore.

“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.”

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.

2. CIT Vs. P.V. Kalyansundaram (164 Taxman 78) (SC).

6. CIT, Central — III Vs. Arpit Land (P) Ltd. (78 Taxmann.com 300)(Bombay).

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.”

6.7 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. The case laws relied on by the AO is not applicable to this case, which is more clearly stated in para supra. Considering all the aspects, I hold that, retraction cannot be countered unless there are other supportive evidence. I find that no serious effort has been made to trace the persons named in the loose paper beyond merely asking the appellant to provide the address. The details written on the loose sheet have not been properly deciphered. It is not established as to what they stand for. In the absence of these deciphering and unearthing of meaning and correlation and understanding the mathematics and the meaning of the transactions entered in the loose sheet, all of which may perhaps have been attempted by the AO, but without success. Hence, 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. Therefore, I have no option but to delete the additions amounting to Rs.1,83,00,000/-. This covers Ground no.1 to 6.

“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.”

Pronounced in the open court on the date mentioned on the caption page.