DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), NAGPUR, NAGPUR vs. MS AVC HOMES, NAGPUR

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ITA 383/NAG/2023Status: DisposedITAT Nagpur09 June 2025AY 2018-199 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that both appeals filed by the Revenue are dismissed. For ITA No. 383/NAG/2023, the Tribunal noted that the tax effect on the disputed amount was Rs. 50,07,8096/-, which is below the revised monetary limit of Rs. 60 lakhs as per CBDT Circular No. 09 of 2024. The Tribunal clarified that this limit applies to pending appeals. Therefore, the Revenue's appeal was dismissed on this ground. The Revenue was granted liberty to seek recall if the appeal falls under any exceptions in the circular. For ITA No. 384/NAG/2023, the Tribunal concurred with the CIT(A)'s findings. The CIT(A) had observed that Document B-6 was a loose paper, appearing to be rough calculation workings, and lacked explicit mention or evidence of the appellant receiving cash amounts. There were no customer signatures confirming cash payments, no revenue stamps, and no corroborative evidence that the document materialized into transactions. The CIT(A) also noted that the presumption under Section 132(4A) applies to the person from whom documents are seized, and the documents here were seized from a third party, making it illegal to raise a demand on the appellant based on such presumption. The Tribunal agreed that the AO failed to make meaningful investigation with customers and cross-link receipts with sale deeds, rendering the penalty unsustainable. The CIT(A)'s deletion of the penalty was justified.

What were the facts?

The Revenue filed two appeals (ITA Nos. 383 & 384/NAG/2023) against the orders of the CIT(A) for Assessment Year 2018-19. ITA No. 383/NAG/2023 challenges the deletion of an addition of Rs. 64,82,600/- made by the AO under Section 69A as undisclosed income, based on a seized document (B/6) from the residential premises of Shri Vyankatesh Kunawar, a partner in the assessee firm, M/s. AVC Homes. ITA No. 384/NAG/2023 challenges the deletion of a penalty of Rs. 1,34,20,434/- levied under Section 271D, also based on the same seized document. The assessee is a firm engaged in real estate business. A search action at Shri Kunawar's residence and a survey at the assessee's business premises yielded documents indicating unrecorded income from plot sales. The AO made the addition and levied the penalty, which the CIT(A) subsequently deleted. The Revenue's appeals are now before the ITAT.

What were the issues?

1. Whether the CIT(A) erred in deleting the addition of Rs. 64,82,600/- on account of undisclosed income under Section 69A, made by the AO based on seized Document No. B/6, which the Revenue contends has evidentiary value and was found at the premises of a partner of the assessee firm. 2. Whether the CIT(A) erred in deleting the penalty of Rs. 1,34,20,434/- levied under Section 271D, based on the same seized document, which the Revenue argues is sufficient evidence for additions and penalties. Assessee's Contention (for both appeals): The tax effect on the disputed amounts is below the revised monetary limit of Rs. 60 lakhs for appeals before the Tribunal, as per CBDT Circular No. 09 of 2024, rendering the Revenue's appeals not maintainable. Revenue's Contention (for both appeals): The seized document (B/6) has evidentiary value. During search/survey, loose papers and incriminating documents hold high value and can be treated as a base for additions and penalties. The onus to explain the notations on loose papers lies on the assessee. The CIT(A) failed to appreciate these facts.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3),Section 153C,Section 271D,Section 269SS,Section 132(4A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR

Before: SHRI V. DURGA RAO, HON’BLEAND

For Appellant: Shri Saket Bhattad, Advocate
For Respondent: Shri Sandipkumar Salunke, CIT(DR)

PER K.M. ROY, ACCOUNTANT MEMBER

1.

The Revenue has filed these appeals challenging two impugned orders passed by the learned Commissioner of Income Tax (Appeals) – 3, Nagpur [hereinafter in short “Ld.CIT(A)”] vide respective Order No. & Date of order as stated below: - Passed ITA No. & A.Y. Order No. under Dated section (A.Y. 2018-19) CIT(A)-3, Nagpur/10603/2016-17, U/s. 153C 28.09.2023 CIT(A)-3, Nagpur/10691/2017-18 & r.w.s. 143(3) CIT(A)-3, Nagpur/10449/2018-19 & 384/NAG/2023 M/s. AVC Homes

Passed ITA No. & A.Y. Order No. under Dated section (A.Y. 2018-19) CIT(A)-3, Nagpur,/10737/2017-18 U/s. 271D 28.09.2023 Revenue has raised following grounds of appeal in its appeal: - 3.

“1. The Ld. CIT(A) has erred in deleting the addition of Rs.64,82,600 /- on account of undisclosed income u/s 69A of the Act made by the AO which was based on the seized Document No. B/6 seized from residential premises of Shri Vyankatesh Kunawar (Party A-2) who is a partner in the assessee firm and the said documents have the evidentiary value.

2. The Ld. CIT(A) has failed to appreciate the facts that the addition of Rs.64,82,600/-was made on account of undisclosed income u/s 69A of the Act based on the seized Document No. B/6 seized from residential premises of Shri Vyankatesh Kunawar (Party A-2) who is a partner in the assessee firm, and the same was offered by the assessee for taxation during the course of assessment as mentioned in Para-3 of the assessment order.

3. The Ld. CIT(A) has failed to appreciate the facts that that during the course of search/survey, loose paper or any incriminating documents hold the high value and the same would be treated as base for making any addition and is sufficient to take it as evidence against the assessee.

4. The Ld. CIT(A) has failed to appreciate the facts that there are noting on the loose papers and the onus to explain the noting on the loose paper lies on the assessee. 5 Any other ground that may be raised during the course of appellate proceedings.”

& 384/NAG/2023 M/s. AVC Homes

4.

Brief facts of the case are, assessee is a firm engaged in the business of all kinds of allied activities in real estate business. Search and seizure action was conducted under section 132 of the Act at Residential premises of Vyankatesh Kunawar on 25.06.2019 and Survey action at business premises of Assessee. During the search and Seizure Document B-6 Pg 39-89 was found at the premises of Vyankatesh Kunawar and Document A-1/1,A-1/2, A-1/3, A-1/ 13 and A-1/15 were found at premises of M/s Saptagiri Builders, relating to assessee. The seized document provided details pertaining to unrecorded income against sale of Plots amounting to total of Rs.1,24,29,273/-. During the assessment proceedings, Assessing Officer after considering the documents and submissions of the Assessee framed assessment order under section 143(3) r.w.s 153C on 28.05.2021 by making addition on account of Undisclosed Income under section 69A of Rs.64,82,600/-.

Being aggrieved, Assessee preferred an appeal before Ld.CIT(A). After 5. considering the submissions of the Assessee, Ld.CIT(A) allowed the appeal of the Assessee by deleting made by the Assessing Officer under section 69A of the Act.

Being aggrieved, Revenue is in appeal before us by raising the above 6. grounds.

At the outset, the learned Authorized Representative (in short “Ld.AR”) 7. appearing for the assessee submitted that the tax effect on the amount disputed by the Revenue is below the revised monetary limit of Rs.60 lakhs applicable to & 384/NAG/2023 M/s. AVC Homes appeal before the Tribunal, as per CBDT Circular No.09 of 2024, dated 17/09/2024. Thus, the learned AR submitted that the Revenue’s appeal being covered under the aforesaid Circular is not maintainable.

The learned Departmental Representative agreed that the tax effect on the 8. amount disputed by the Revenue is below the monetary limit of Rs.60 lakhs for the appeal under consideration.

Having heard the arguments of rival parties, perused the material available 9. on record and gone through the orders of the authorities below, we are of the view that the tax effect on the amount disputed by the Revenue in the present appeal is below the revised monetary limit of Rs.60 lakhs as per CBDT Circular cited supra. The tax demand involved in the appeal is Rs.50,07,8096/- as per Form 36. It also stands clarified by the CBDT that the revised monetary limit of Rs.60 lakh, as per the aforesaid CBDT Circulars, would also apply to all pending appeals. In view of the aforesaid, Revenue’s appeal deserves to be dismissed. However, the Revenue is given liberty to seek recall of this order if, at a later point of time, it is found that the appeal falls under any of the exceptions provided in the CBDT Circular referred supra.

In the result, appeal filed by the Revenue is dismissed. 10. (A.Y. 2018-19) Revenue has raised following grounds of appeal in its appeal: - 11.

& 384/NAG/2023 M/s. AVC Homes “1. On the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty of Rs.1,34,20,434/- levied by the Addl.CIT which was based on the seized document No. B/6 of party A-2 from Shri Vyankatesh Kunawar and the said document have the evidentiary value.

2.

On the fact and in the circumstances of the case, the Ld. CIT(A) failed to appreciate the facts that during the course of search/survey, loose papers or any incriminating documents hold the high value and the same would be treated as base for making any addition or levying penalty and is sufficient to take it as evidence against the assessee.

3.

On the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate the facts that noting on the loose papers and the onus to explain the noting on the loose papers lies on the assessee.

4. Any other ground that may be raised during the course of appellate.”

The solitary issue raised by the Revenue is relating to deletion of penalty of 12. Rs.1,34,20,434/- under section 271D levied by the Addl. CIT, Central Range-2, Nagpur based on the seized document No. B/6 of party A-2 from Shri Vyankatesh Kunawar considering that the document has an evidentiary value and receipt in cash over Rs.20,000/- towards sale of plots is clearly explicit ex-facie on such document.

We have heard both the sides and perused the material available on record.

13.

It is pertinent to refer to the observation of the Ld.CIT(A) who has granted relief by holding as under: - “The first ground of Appeal is whether Ld. Addl. JCIT is justified in levying the penalty of Rs. 1,34,20,434/ - u/s 271D of Income Tax Act, 1961 at the amount equal to amount considered to be received in cash in excess of Rs. 20,000/-, without considering the facts and circumstances of the case. The entire case revolves around Document B-6 which is found from the Residential Premises of Mr. Vyankatesh Kunnawar. After a rigorous and comprehensive review of Document B-6, it is evident that it's a loose paper. This fact is also acknowledged by the AO in his questionnaire dated 01/02/2021.

& 384/NAG/2023 M/s. AVC Homes

During the course of Arguments, the Ld. AR. Pointed out various defects in the documents and stated that there have been no corroborative evidences brought forth by the AO in support of additions made by him. The Ld. AR stated that the document recovered from the search premises are non- speaking and dumb documents. I have gone through the relevant document, Assessment Order and submission of the Ld. AR. Upon careful examination of the mentioned documents, it becomes evident that certain pages appear to be rough calculation workings. Notably, the documents lack explicit mention or evidence indicating that the appellant received any cash amount. There are no signatures from customers confirming cash payments to the appellant, no revenue stamps on any page, and a significant portion of the columns remain unfilled. Significantly, the said documents were received from the residential premises of Mr. Vyankatesh Kunnawar. More importantly, the presumption of Section 132 (4A) goes against the person from whose possession documents are seized or impounded. In the present case, the documents were seized from some third party residence, which cannot be at all presumed that the particular documents found at the third party residence are the documents of the appellant, and it will be illegal to raise a demand on appellant with this presumption. Therefore, there is no question of addition on basis of said documents in the hands of appellant where the document seized from third person without any corroborative evidence. The appellant has cited various case laws on loose sheets while arguing the case orally. It is settled law that Loose Sheets without corroborative evidence have no evidentiary value. In the case of CIT vs. Anil Bhalla [2010] 322 ITR 191 (Delhi), the Hon'ble Tribunal held that until independent evidences exist, the addition on the basis of notings and jottings cannot be upheld. Reliance can be placed on- 1. CENTRAL BUREAU OF INVESTIGATION CBI VERSUS Vs. SHUKLA & ORS [1998] 1998 taxmann.com 2155 (SC) 2. COMMON CAUSE (A REGISTERED SOCIETY) AND OTHERS VERSUS UNION OF INDIA AND OTHERS [2017] 77 taxmann.com 245 (SC) 3. PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-2 VERSUS UMESH ISHRANI [2019 (4) TMI 1947 - BOMBAY HIGH COURTI 4. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-21, MUMBAI VERSUS M/S. LAYER EXPORTS PVT. LTD. [2016 (10) TMI 1024 - ITAT MUMBAI] 5. S.P. GOYAL VERSUS DEPUTY COMMISSIONER OF INCOME- TAX [2002 (4) TMI 952 - ITAT MUMBAI] & 384/NAG/2023 M/s. AVC Homes

6.

NISHANT CONSTRUCTION PVT. LTD. VERSUS ACIT, CIRCLE-5, AHMEDABAD [2017 (3) TMI 1048 - ITAT AHMEDABAD 7. D.A. PATEL VERSUS DEPUTY COMMISSIONER OF INCOME- TAX [1999 (3) TMI 639 - ITAT MUMBAI 8. INCOME TAX OFFICER, 5 (2) (2), MUMBAI VERSUS KRANTI IMPEXPVT. LTD. AND VICE-VERSA [2018 (3) TMI 424 - ITAT MUMBAI It seems to me the pages are just an excel working for the purpose of putting a proposal by Field Executives as explained by the ld.AR. It is true that there are no cogent corroborative evidences on record. There are no statements from any of the customers recorded by the AO on record to prove cash transaction. There were no hard cash seized. This is another crucial facet of appeal is the absence of supporting corroborative evidence to substantiate the assertions made by AO. There is no corroborative evidence that on record and finding on record that such document has materialized into transactions. Therefore, I adjudicate the first ground in favour of appellant and is therefore "allowed". Hence Penalty of Rs1,34,20,434/- u/s 271D for violation of Section 269SS contending the whole amount received in cash stands deleted. The Second Ground raised

by the Ld. AR is whether the Assessing Officer erred in law and on facts by levying the penalty u/s 271D in absence of Concrete Evidence on record. I have already discussed in the preceding paragraphs that there was no corroborative evidence on record. There is no clear evidence of accepting or taking loans or specified sum. No such definite evidence is available in this case to show that the appellant contravened provisions of Section 269SS to justify the penalty under Section 271D of the Income Tax Act. In the case of ITAT in Navin Kumar v/s JCIT (2006)

99. TTJ 267

98. ITD 242 (TM) (ITAT Amritsar), it is held that unless the fact of breach of provision is proved beyond doubt and the act or omission falls within four corners of the provision of law, penalty should not be levied. I agree with the contention of Ld. AR that the presumption can only arise on the basis of 'books of account' or 'documents' or 'assets' found during search only against the person from whom it is seized. In the present case, the documents were seized from some third party residence, which cannot be at all presumed that the particular documents found at the third party residence are the documents of the appellant, and it will be not legal to raise a demand on appellant with this presumption. In my considered opinion, the AO erred in law and on facts by levying the penalty u/s 271D in absence of Concrete Evidence on record. Therefore, I adjudicate the Second ground in favour of appellant and is therefore "allowed".

& 384/NAG/2023 M/s. AVC Homes

14.

At the time of hearing before us, Ld.CIT(DR) (in short “Ld.DR”) could not pointed out any infirmity to dislodge the cogent findings of the Ld.CIT(A). As already held above, it is not clear that whether the transaction has actually taken place because the Assessing Officer did not make any meaningful investigation with the customers of the flat as to whether they have actually paid cash and further subsequent cross linking with sale deed. The Assessing Officer failed to correlate these receipts with the registered sale deed to conclusively establish that the transactions have crystalized. The half-baked inquiry fails to inspire confidence about the materialization of these transactions. When the transactions itself are non-existent and unfounded, imposition of penalty is unsustainable because the same cannot be imposed in vacuum. Accordingly, there is no scope of interfering with the order of the Ld.CIT(A) who has justifiably deleted imposition of penalty. Accordingly grounds raised by the revenue are dismissed.

In the result, appeal of the revenue is dismissed. 15. To sum-up, both the appeals filed by the revenue are dismissed. 16. Order pronounced in the open Court on 09/06/2025

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