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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI C.N. PRASAD, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
O R D E R PER S. RIFAUR RAHMAN 1. This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) – 16, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 31.10.2019 for the A.Y. 2012-13.
Brief facts of the case are, assessee filed its return of income for the assessment year 2012 – 13 on 30.09.2012 declaring total income at ₹.Nil after setting off of brought forward losses ₹.74,0 40/–, Assessee paid tax under MAT provisions under section 115JB of the Income Tax Act, 1961
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., (in short ‘Act’) on book profit ₹.1,02,162/–. The return of income was processed under section 143 (1) of the act. Subsequently, the case was selected for scrutiny and notice under section 143(2) and 142(1) were issued and served on the assessee. In response to the above said notices, assessee filed relevant information as called for.
The assessee is engaged in the business of hotel and resort. The assessing officer observed that it is High End Hotel and Resort, run by the assessee in the Name of “Whispering Woods Country Club Resorts” at Lonavala, provides the facility of boarding and lodging as well as recreational facilities. During this year, it has also undertaken another hotel project at Goregaon, Mumbai under the name and style “Whispering Woods, Goregaon”. A survey action under section 133A of the Income Tax Act was carried out on 18.01.2013. During survey, loose paper folder marked Annexure A/1 was impounded. In the above said loose paper folder at Page No. 41, there is a statement under the caption “Income Schedule from 1.4.2011 to 31.12.2011” relating to the assessee company. For the sake of clarity, it is reproduced below: Room Club Go Month F&B Misc Total Rev House Karting April 2912509 57849 1549704 854652 887699 6262413 May 2621088 42984 1179404 1246520 412404 5502400 June 2815290 56789 1474041 919662 948609 6214091 July 2921880 58485 1674040 859665 421210 5935280 August 2921550 57985 1664789 875665 410892 5930881 September 2625108 58549 1264504 865464 1000537 5814162
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., Room Club Go Month F&B Misc Total Rev House Karting October 2525140 59549 1411504 854658 876636 5727487 November 2650105 58554 1654879 1124520 228273 5716331 December 3210415 65584 1245159 1246511 328498 6096167 TOTAL 53199212
The assessing officer observed that the contents of the above statement shows the month-wise details of income of the assessee from various operation/activities of its business for the period April to December’ 2011. The total of the income disclosed in the above statement shown at ₹.5,31,99, 212/–. It is observed that the above income is not reflected in the audited balance sheet/regular books of accounts maintained by the assessee. The assessing officer observed that the assessee has shown very low or receipts in its regular books of accounts as compared to the statement found during survey proceedings. When the assessee was called upon to explain the same, assessee has submitted in reply dated 27.3.2015, in which the assessee has explained that the assessee is having a term loan account in the State Bank of India which was classified as NPA since assessee could not service the interest on the term loans. In order to settle the TERM loan which has become NPA by giving property in Goregaon on leave and license basis in order to avail lease rent discounting facility from Janakalyan Sahakari Bank Ltd. For that purpose, assessee has prepared a document which consist of projections for the period April 2011 to December 2011. This fact was (A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., already explained at the time of survey proceedings that the term loan for which the above documents were prepared and the bank has not sanctioned or disbursed any facility to the assessee.
5. After considering the submissions of the assessee, assessing officer rejected the contention of the assessee and further assessing officer observed that during survey proceedings, based on inputs received from Sales Tax Department that assessee was one of the beneficiaries of having taken accommodation entries of purchases. When confronted the assessee has accepted to have availed such accommodation entries and in post-survey assessee has disallowed the above said bogus purchases in capital work in progress. Since the assessee has involved in the above said issues in capital assets purchases. Further, he found strength from the pre-survey report on the basis of spot verification that assessee was not issuing proper invoices or receipts to its clients. Accordingly, he made the whole addition as per the loose paper found during survey as the income of the assessee for the current assessment year.
Aggrieved with the above order, assessee preferred an appeal before Ld.CIT(A) and even before Ld.CIT(A) assessee submitted a detailed submission in writing. After considering the detailed submission of the assessee Ld.CIT(A) rejected the contentions of the assessee after
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., considering the remand report from assessing officer. For the sake of clarity, it is reproduced below: “6.1.4 I have considered facts of the case, submissions made, remand report from AO, reply to remand report from the appellant and evidences before me. The loose paper containing details captioned Income Schedule from 01.04.2011 to 31.12.2011' illustrating month wise revenue from various operational activity of the appellant was found during survey. The same was explained by appellant as the estimates of revenue submitted to bank for availing loan facility. However, the same could not be availed. 6.1.5 The explanation of the appellant that the same was only an estimate could not be accepted as requirement of bank for availing any credit facility is to illustrate the income generation and loan repayment capability of the borrower. Even in case the revenue figures for 9 months are inflated; the same cannot be at more than 5 times, of the total revenue earned by the company in 12 months, without any basis. The appellant must have worked out some calculations before presenting the revenue income to banking authorities. The same ought to represent the revenue generation on estimated basis. 6.1.6 Further, Ld. AO mentioned the fact that in Inspectors pre survey report that no proper invoices or receipts are issued to the clients against the payments received for various facilities. It could be inferred from above fact that the loose paper illustrating the income schedule of Rs.5,31,99,212/- also take in account unaccounted receipts. Further, as noted by Ld. AO the appellant has also been a beneficiary party of having taken accommodation entries of purchase. The fact that the appellant accepted the above contention substantiate that it is generating unaccounted cash through business operations. The genuineness of the billing and accounting is questionable. Thus, the Ld. AO was justified in adding unaccounted income. 6.1.7 Further, I would decide on the contention that based on the tariffs the maximum revenue that could be earned was ₹.1.29 crores in entire year. The calculations provided by appellant has only considered 3 weekdays for calculating revenue and is misleading. Further, the same do not include the revenue earned for other operational and recreational activities. Thus, the same is not acceptable as the calculations are deceiving and do not give true picture. 6.1.8. The agitation of appellant that only Profit can be taxed and not the entire sales also do not stand. Any prudent businessman may deflate its income to avoid taxes but would never exclude any (A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., genuine expense incurred by him from claiming against the income. As prudent business practice it is assumed that the claim of genuine expenses has already been awarded to appellant and what remains is only unaccounted income. 6.1.9. Considering above discussion, I decide the amount of Rs.5,31,99,212/- to be added as unaccounted receipts of appellant. Hence, the appeal of appellant is dismissed and in favor of revenue.”
Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal: “1. On the facts and circumstances of the case the Ld.CIT(A) erred in confirming the Assessment Order passed by the Ld. Assessing Officer u/s. 143(3) assessing the total income at ₹.4,71,98,420/- and thereby erred in confirming the addition of ₹.5,31,99,212/- on account of unaccounted receipts based on some loose paper found at the time of survey on the appellant.
3. The Ld.CIT(A) erred in confirming the charging of interest under section 234B and 234C of the Income Tax Act, 1961.
4. The Ld.CIT(A) erred in confirming the initiation of penalty proceedings u/s. 271(1)(c) of the Income Tax Act, 1961.
5. The assessee craves leave and add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing.”
At the time of hearing, Ld AR submitted that all previous assessment year’s assessments were completed under section 143(3) and its gross income is less than ₹.1 crore. Since the assessee’s financial position was bad and in order to close the term loan facility maintained with State Bank of India, assessee wanted to avail bank loan from Jana Kalyan Sahakari Bank Ltd. Assessee projected an income which is based on estimated income for availing bank loan. This is part of projection documents
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., prepared by the assessee in order to submit the same to the bank and this piece of information is part of the loose sheets found during survey. He submitted that the assessee has made submission before Ld.CIT(A) that the facility available with the assessee is only 12 rooms and revenue is relating to only on these rooms. Even if hundred percent of the facilities applied for earning the income, the assessee can earn only to the extent of ₹.1.29 crores. Based on the above submission, Ld.CIT(A) has called for a remand report from the assessing officer. Assessing officer has submitted the same and the remand report is placed on record at Page No. 54 of the paper book. Ld AR submitted that the earning capacity of the assessee was clearly accepted by the assessing officer and confirmed by the assessing officer that the detailed sales register for the period was verified by him and it matches with the audited balance sheet and profit and loss submitted by the assessee during assessment proceedings. Further he also brought to our notice the assessment orders for assessment year 2008–09, 2009–10 and 2010–11, which is placed on record and he brought to notice the earning capacity of the assessee in those years, the revenue and profit achieved by the assessee. He submitted that the profit earned by the assessee in these years were declining year on year.
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., 9. Further he submitted a detailed written submission, which is reproduced below: “7. The appellant further would like to submit that: - • In the Survey conducted in assessee's office and hotel premises at Lonavala in January 2013, after a search for two days, no evidence was found by the Income Tax department to show any concealment of income. In fact, the officers went through the 'Day book' of the business, showing 'all' cash/cheque/credit card entries and did not find any concealment of income. • Even the loose sheet' of paper showing 'estimates', at page No. 41 of the loose paper folder, found at the time of Survey (on the basis of which the A.O has made the addition) (Pg 30 of PB) was in existence at the time of Survey and no declaration and/or addition on account of unaccounted receipts was made. • The appellant was desperately trying to revive the Company out of its NPA status with STATE BANK OF INDIA and therefore applied to several banks to take over the credit facilities from SBI. One such bank was Jankalyan Sahakari Bank Ltd. (JKSBL) • The appellant had applied to JKSBL for sanctioning Lease Rent Discounting (LRD) credit facility to bring the company out of its NPA status. The estimates were given to JKSBL as part of the paper work 'projecting future revenues (Pg 29 of PB). This same admission was made by assessee as 'statement under oath' at the time of Survey to Q. no. 8 wherein it was stated by appellant that Pg. No. 41- Projected income schedule of Lonavala from April 2011 to 31st December 2011 - to avail of loan probably given to bank. (copy of statement Pg No. 19 PB). This demonstrates that the Appellant had never earned such Revenues and this chart was mere projections to the Bank. With regard to the same, appellant have submitted evidences in paper book pg. no.27 to 32 as follows which proves that the documents were submitted to the Jankalyan Sahakari Bank Ltd. for Lease rental discounting: - (A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., Sr. No. Particulars Pg. No.
Copy of letter to Jankalyan Sahakari Bank Ltd. for Lease 27-28 rental discounting credit facility dated 28.03.2011 with stamp of bank 6. Copy of letter to Jankalyan Sahakari Bank Ltd. for Lease 29-30 rental discounting credit facility dated 30.03.2011 with stamp of bank and also the projected income schedule for the period 01.04.2011 to 31. 12. 2011 7. Copy of letter to Jankalyan Sahakari Bank Ltd. dated 31 25.11.2019 to provide confirmation that LRD facility was not provided when applied for in 201 8. Copy of letter from Jankalyan Sahakari Bank Ltd. dated 32 08.01.2020 providing confirmation that LRD facility was availed but not sanctioned by bank Thus, based on above papers it is proved that the loose sheet was a projected estimate to avail loan facility from bank and which was submitted to Jankalyan Sahakari Bank Ltd. On the above discussion the addition needs to be deleted.
8. The appellant further submitted a Chart showing Comparative Revenue and Expenditure Statement of the company since inception of the hotel, i.e from A.Y. 2006-07 to A.Y. 2013-14 (Pg No. 36 of Paper Book). This chart clearly demonstrates the TREND of Total Income of the assesse year after year. This gives a fair idea of what the Reenues of the company are, from year to year. Tehse figures are nowhere close to the figures estimated by the Ld. AO. Also this clearly shows that the Ld. AO and Ld.CIT(A) has not considered the same while passing such a harsh and unjust order.
The reasons on which addition ought to be deleted are as under: a. The Appellant had only 12 rooms in the hotel. Copy of Lodging & Boarding (L&B) License showing permission for 12 rooms. (Pg. no. 35 of paper book) b. Total Sales figures of 8 years since starting of the hotel have been provided wherein nowhere are the figures close to the projected figures. (Pg. No.36 of Paper Book) c. It should be noticed that as travelling on the Mumbai Pune Expressway became faster and easier, people began making (A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., only 'day trips' to Lonavala and as a result Room Revenues fell over the years. d. In the year 2005 when the business began, there were only about 80 hotels in Lonavala. Now there are more than 350 hotels. This competition has eaten into the business of the appellant. As a result, room rates could not be increased commensurate with rising costs year after year and had to remain stagnant. e. Revenues also started falling in 2011-12 as the hotel/resort lost its newness and this also resulted in having to keep room rates low. f. There was tremendous fall in Go-karting sales in 2011-12. The appellant started with 10 go-karts in 2004. These karts are machines and have a lifespan of about 5 years. g. The appellant could charge customers for Club House games like billiards and table tennis and for Swimming Pool only for 2 years. In the initial years the appellant could charge the members and later they had to offer it for free to attract customers. h. In fact, falling revenues was the reason the Directors decided to give the hotel for running on Leave & License basis w.e.f 1.04.2013 at a rent of Rs. 1,00,000/- per month totaling Rs. 12 lakhs in a year. Thus, it was better to earn Rs. 12 lakhs p.a. than earn between Rs. 4 lakhs to Rs. 7 lakhs p.a by running the resort on our own. i. Now if rental received by us is Rs. 12 lakhs p.a. and in past we have never achieved a Net Profit of more than Rs. 7 lakhs, it is impossible to state that appellant earned Rs. 5.32 crores in 9 months and did not declare the same. Thus establishing that the loose paper' in question was merely a statement created to get additional finance from bankers. No additions in previous years wherein order passed under Section 143(3).
It is also pertinent to note that the Ld. AO, had accepted the Returned Income of the Company for the Asst. Years 2007-08, 2008- 09, and 2009-10 with no additions. (Copy of Orders under section 143(3) for 3 years, pg. No. 45-51) 11. Also, the Ld. A.O. Re-opened assessments for the Asst. Years 2008-09, 2009-10 and 2010-11 u/s 148, after the Survey, and ultimately found no concealment of income.
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., Thus, if the loose paper was true, then the Ld. A.O would have also estimated 'higher' income for the previous years, which he has not done. Thus, establishing the fact that the 'loose paper' was merely projections and not the true state of affairs.
During the year in appeal, the Room Tariff of the appellant's hotel was Rs. 3,750 per day for weekdays and Rs. 4,750 for weekends (Pg. No. 33 and 34 of PB). At the max., the room rate, without any discount, can be charged at Rs 4,750/-per room per day. The Appellant has only 12 rooms. The resort is at Lonavala, which is normally occupied only on Saturday nights. Hypothetically, let's say, 2 nights in the weekdays are also occupied, being a best case scenario, the turnover of the resort would be, without prejudice, as under: Rs.4750/- per room x 12 rooms = Rs. 57,000/- 3 days per week x Rs. 57,000 = Rs. 1,71,000/- 52 weeks x Rs. 1,71,000 = Rs. 88.92 lakhs Turnover shown by appellant is Rs.82.06 lakhs for the year under appeal. The revenue shown by appellant are after discounts, while what has been worked out above are gross tariff rates at the maximum. Thus, even on this count, the loose paper' cannot be believed as true state of affairs. The Ld.A.O and CIT(A) have not considered the tariff card of that year.
13. Further the G.P of the Appellant for 3 years is as under: A. Y. G.P 2010-11 3.81% 2011-12 5.47% 2012-13 1.25%
The principle laid down by the Supreme Court and various Tribunals is that as per Section 34 of the Evidence Act, 1872, loose sheets of paper are not to be considered as ‘books’ and hence entries made therein are inadmissible as evidences and canot be relied upon. Additions made merely on the basis of loose sheets and torn papers is not justified and revenue has to bring some corroborative evidence to show that the loose papers and sheets actually show some transaction and that the assessee has earned income out of it, which is undisclosed from the department. The Revenue can tax only those receipts, which must have been proved to be income in the hands of the recipient.
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., The point is that certain papers which are maintained would have relevance at the time of assessment. However, loose papers or noting’s cannot be considered as independent evidence for the purposes of making additions. RELIANCE IS PLACED ON:- Supreme Court in CBI v. V.C. Shukla 1998 AIR Vol. 3 SC 410, wherein it was held that entries in the loose sheets, may not have any evidentiary value. In following cases the Tribunal have held that merely on the basis of entries in loose sheets there cannot be an addition - • S. K. Gupta v. Dy. CIT [1999] 63 TTJ 532 (Del). • Shri Ram Bhagwandas Raheja v. Asstt. CIT [ITA (S&S) No.118/Mum/1996, Bench "B", Order dated 23rd September, 1998]. • Ashwani Kumar v. ITO [1992] 42 TTJ (Del.) 644: [1991] 39 ITD 183 (Del.). • Kishenchand Shobhrajmal v. Asst. CIT [1992] 42 TTJ (Jp) 423: [1992] 41 ITD 97 (Jp). • D.A. Patel v. Dy. CIT [2001] 70 TTJ (Mumbai) 969: [2000] 72 ITD 340 (Mumbai). • Satnam Singh Chhabra v. DCIT [2002] 74 TTJ (Lucknow) 976. • Amar Natvarlal Shah 68 TTJ 51G (All) Additions on the basis of loose papers not sustainable. Further Punjab & Haryana High Court in the case of CIT v. Ram Kumar [2007] 294 ITR 78 (P&H) have held that if assessee claims that loose sheets contain rough calculations, the onus is on the revenue to rebut with material evidence. Therefore, merely loose sheets or diaries found in the course of search, may not be sufficient for the Revenue to prove that the entries represent undisclosed income of the assessee the burden is on the Department to prove, beyond reasonable doubt that the entries represent the undisclosed income of the assessee. Thus, the addition made on the basis of bad-assessment order is also bad-in-law and required to be deleted. Regarding the Remand Report given by Ld.A.O dated 19.07.2019 (Pg. No. 52-55 of PB) the appellant would like to state as under:- The Ld. A.O., during remand proceedings, gave an opportunity to the Appellant for verification where the Appellant made the submissions
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., with additional evidences. The Ld. A.O in subsequent para has perused the submissions and additional evidence filed by Appellant, considering the Rates on the Tariff Card and the fact that the hotel cum resort has only 12 rooms'. To prove this the Appellant had also filed his copy of L&B License and the same was accepted by the Ld. A.O.(Pg. no. 35 of PB) The Ld. A.O submits that he has verified the sales figures as above, the sales figures in books of accounts and has confirmed that there was no discrepancy on Pg. no. 55 of PB. Having accepted that the sales shown in books and what could have been sold by referring to tariff card as correct, the Ld. A.O. has denied the loose paper which demonstrated an exceptionally high sales and made only to impress the bank to obtain a loan. Further the Remand Report is in favour of appellant which the Ld. CIT(A) has not considered and passed the appellant order without any application of mind. Thus, when Remand Report passed by Ld. AO, after verification of additional evidence, is in favour of assesse, then without application of mind and without referring to the Remand Report passed by Ld. AO the Ld. CIT(A) has confirmed the addition which is bad in law and needs to be deleted. It is pertinent to note that it is this same CIT(A) who wrote to the Ld. A.O. for the Remand Report and then passed an Order without considering the facts mentioned in it. In view of the above, we request you to delete the addition made merely by relying on the loose paper' found and not considering the evidences filed which prove otherwise. The Ld. A.O and CIT(A) have not considered the aforesaid materials. Ground No.2 On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in charging interest under section 234B and 234C of the Income Tax Act, 1961. Thus on the facts and circumstances of the case the Ld.CIT(A) erred in charging Interest under sec 234B and 234C of Income Tax Act, 1961. Ground No. 3 On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in confirming the initiation of the penalty proceeding under section 271(1)(c) of the Income tax act 1961. Consequently, the Ld. CIT(A) erred in confirming the initiation of the penalty under sec 271(1)(c) of the Income Tax Act, 1961.”
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., 10. On the other hand, Ld. DR submitted that during survey proceedings a loose sheet was found in which income for 9 months were found and he submitted that the return of income filed by the assessee is only after the survey. He also brought to notice that assessee has accepted the bogus purchases of assets and revised the above said purchases in its financial statements which shows that assessee is indulging in recording accommodation entries in its books of accounts and he also submitted that the authenticity of the documents found in loose sheets and its ownership is not denied. He submitted that in order to avail the loan, assessee should have prepared position for 12 months not for 9 months and he also brought to notice the profit and loss account in Page 43 of the paper book in which assessee has not disclosed any detail of the revenue and he supported the findings of the assessing officer and conclusion of the Ld.CIT(A). He submitted that the information in loose sheet is having a bearing in assessee’s real income.
In the rejoinder, Ld.AR submitted that the full details of the income generation is already submitted before assessing officer, is placed in Page No. 36 of the paper book. He further reiterated that the assessee has prepared the projection only for availing the bank loan and assessee has actually earned the profit between 3 to 6% over the years.
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., 12. Considered the rival submissions and material on record. We notice that during survey proceedings, the Department found certain loose papers and one of the papers containing the details of earnings of the assessee in its different operations during the period April 2011 to December 2011. The assessee has submitted that this information is prepared by the assessee as a projection in order to avail bank loan and it is only a projection based on the estimate that assessee will earn the above said income after availing of the bank loan. In survey proceedings assessee was confronted with 2 issues one was towards accommodation entries availed by the assessee from various operators for the purpose of capital work in progress and second is towards the loose sheets relating to undisclosed income as per the income chart. Based on information from Sales Tax Department, assessee has accepted the accommodation entries recorded in its books of account which is relating to the new project undertaken at Goregaon and it has offered the same and rectified the books of accounts. With regard to chart found in loose papers, assessee has submitted that it is only a projection prepared by the assessee in order to avail bank loan. During assessment proceedings assessing officer once again confronted with the assessee and assessee to substantiate the undisclosed income which is not disclosed by the assessee in its return of income. Once again assessee submitted that it is only a (A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., projection for bank facility. Since the assessee is involved in availing accommodation entries for its capital work in progress and certain information from the inspector in pre-survey stage, Assessing Officer formed the opinion that assessee has concealed the income.
Further, we notice that in remand proceedings, the assessing officer has acknowledged that assessee is having only 12 rooms in its resort and assessing officer also verified registers of customer occupation and found to be correct, matching with the books of account submitted by the assessee. In all probabilities, even if hundred percent occupation is considered to be the income of the assessee, the income cannot be more than ₹.2.07 crores for the whole year (₹.57,000 X 7 days X 52 weeks). In hotel industry, the occupancy rate which determines the total income including the income from Allied services. No hotel will function with hundred percent occupancy and considering the income declared by the assessee over the period and in particular this assessment year the occupancy rate is in and around 40% – 50%.
Further we notice that Ld.CIT(A) has not verified the submissions of the assessee with the facts and Ld.CIT(A) sustained the addition confirming that the addition made by the assessing officer is towards the profit rather than the receipts from the operation. Further Ld.CIT(A)
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., observed that assessee has already claimed the total expenditure for the operation and whatever income disclosed by the assessee is only towards its undisclosed profit. If we accept the above analogy the profit of the assessee will be 665% of the total cost claimed by the assessee in its profit and loss account. If the assessee can earn so much of profit in its operation, assessee will not be facing any financial difficulties. In reality assessee is having huge financial burden with the banks and not able to serve even the interest. If the assessee can make so much of profit, then assessee will be owning the whole Lonavala area in few years.
Considering the financial position and profitability declared by the assessee over the years, in our view the claim of the assessee that the assessee has prepared this projection only to avail bank loan. There is no other cogent material in the possession of the assessing officer or with the Department to substantiate that it is part of the undisclosed income of the assessee. In our view it is only addition made by the assessing officer based on his presumption and conjuncture without any cogent material in support of his claim. Therefore, the circumstances denote that the claim of the assessee seems to be proper and correct. Accordingly, we are inclined to agree with the assessee and allow the Ground No. 1 raised by the assessee
(A.Y: 2012-13) M/s Dreamz Achievers (India) Pvt. Ltd., 16. Assessee also raised Ground No. 3 which is consequential in nature and we are remitting this issue back to the file of Assessing Officer to determine the proper interest under section 234B and 234C after considering the findings in Ground No. 1 raised by the assessee. With regard to Ground No. 4 since we already deleted the addition made by the assessing officer, this ground becomes infructuous. With regard to Ground No. 5 it is general in nature and in the grounds of appeal assessee has wrongly numbered the grounds by missing the Ground No 2.
In short, appeal filed by the assessee is partly allowed.
Order pronounced in the open court on the 08th June, 2020